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

Posted on January 22, 2017 by Reid Mukai

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.

Neoliberalism: Serving the Interests of the International Business Elitists

Posted on November 25, 2016 by Reid Mukai

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.

Democracy Is Dead

Posted on September 21, 2016 by Reid Mukai

By Gilbert Mercier

Source: News Junkie Post

From the west to the east, and the south to the north of our global horizon, it is the same tableau: the horrendous killing fields of disaster capitalism where its cohorts of 18-wheelers, heavy road machinery and police patrol cars roam the landscape continuously and are turning us and the better principles of our humanity into countless road kills. Hell on Earth is to be our common fate, and we might have already reached a point of no return. The corporate hyenas and political vultures that generally constitute the global elite are joyfully feeding on the carcasses of justice and morality; rationality and empathy; common sense and the notion of public good; sound governance without corruption and equality before the law; and last but not least, freedom and fair governance through democracy.

Comparing this small group of depraved elite sociopaths, with not a trace of compassion or even consciousness to the scavengers of the natural world, is actually unfair to vultures and hyenas. Scavengers in nature have an important function in the ecosystem for their role of recycling waste. On the other hand, the few thousand rulers of global corporate imperialism are parasites weakening our common life force. If vultures are the useful garbage collectors of the natural world, the corrupt rulers of globalization are tics and leeches gorging on our blood. The British exit vote from the European Union, known as Brexit, has to be understood in the context of rejection of globalization. The global corporate world order has only worked for its masters but certainly not for the vast majority of the people, who are becoming the serfs of a new feudalism.

Calling the vote in favor of Brexit xenophobic doesn’t address the issues at stake. Cheap labor coming from Eastern Europe has served the interests of corporations and the rich very well, but it has had a negative impact on the welfare of British-born workers. This problem is general across the EU. The purpose of the EU was never to be a capitalist paradise where a free circulation of people, money, goods, and services would cater to the needs of multinational corporations, and where people ultimately would be uprooted to become the slaves of the so-called free market. The EU project was not centered on economic considerations but instead on cultural and social-value notions. It was a way out of the nightmare eras of World War I and World War II for founding members France and Germany. The formation of the EU was about a resolute rejection of war to embrace lasting peace. Other countries might follow the British people in their intention of leaving supra-national entities such as the EU. Paradoxically, the United Kingdom itself might disintegrate with the independence of Scotland, Wales, and Northern Ireland.

Globalists of all stripes are calling this nationalist revival narrow-minded and obscurantist. Their leading argument is that global problems such as climate change, overpopulation, and poverty require institutions with global authority. But what they should keep in mind is that those various supra-national institutions or entities, which started with stated good intentions, such as the United Nations, the World Bank, and the International Monetary Fund (IMF), not only have failed to solve any global problems but have, by their corrupt nature made them worse. In the case of the supra-national North Atlantic Treaty Organization (NATO), there is no pretense of being a do-gooder. The armed fist of the Orwellian empire is in the business of globalization of war with decisions made in Washington, DC. In Orwellian times, many supra-national organizations behave like corporations under humanitarian pretenses, when they are in fact parasitic organisms depleting our strength. Meanwhile, no one represents We The People at all. In the world of humanitarianism for profit, public servants have vanished and been replaced by corrupt incompetent groups operating like crime families.

All members of the fake left advocate that the system must be changed progressively from within and that a collapse would be mainly a disaster for the poor and weak. This notion is as valid as to claim that a building destroyed by an earthquake is in need of some fresh window dressing. Regardless of the global elite’s arrogance, a systemic collapse is on its way and will exponentially take hold of the planet within two or three decades. The super-rich will eventually have nowhere to run or hide, and no private armies to protect them from the wrath of nature. Forcefully resisting the brand of globalization imposed on us by the thugs and slave drivers of disaster capitalism is a moral obligation all world citizens should embrace. When people in power live in the castle of their own lies, it is time to dismantle the fortress. When governance has lost all moral ground and reason, it is time to call for a revolution.

If, as human beings, we could understand that We The People should be all of us, regardless of geographic location, then perhaps the concept of globalization would serve a purpose and be beneficial. No workers in Europe and the United States should tolerate that people in places like Haiti, Vietnam, Bangladesh, and Honduras be paid slave wages; otherwise, down the line they will either lose their jobs or be exploited by the same corporations. Under the globalization of the plantation owners, the people are living in chains. Once upon a time, words like freedom, liberty, and democracy had meaning. They have largely been gutted out and are just empty shells, ghosts in a play of smoke and mirrors animated by the sinister masters of ceremony of the universal rat race. A first necessary step to take would be for all people still able to exercise free will and critical thinking to understand that what government and political representation has become is precisely the opposite of democracy. Voting under these kinds of circumstances is as delusional as giving substance to the figments of our own imaginations. When democracy is dead, it is time to boycott elections.

Gilbert Mercier is the author of The Orwellian Empire.

Fellow Americans, Wake Up & Escape The Matrix

Posted on August 7, 2016 by Reid Mukai

Where Do Matters Stand?

On the eve of World War II the United States was still mired in the Great Depression and found itself facing war on two fronts with Japan and Germany. However bleak the outlook, it was nothing compared to the outlook today.

By Paul Craig Roberts

Source: Covert Geopolitics

Has anyone in Washington, the presstitute Western media, the EU, or NATO ever considered the consequences of constant military and propaganda provocations against Russia? Is there anyone in any responsible position anywhere in the Western world who has enough sense to ask: “What if the Russians believe us? What if we convince Russia that we are going to attack her?”

The same can be asked about China.

The recklessness of the White House Fool and the media whores has gone far beyond mere danger. What do the Russians think when they see that the Democratic Party intends to elect Hillary Clinton president of the US? Hillary is a person so crazed that she declared the president of Russia to be “the new Hitler” and organized through her underling, neocon monster Victoria Nuland, the overthrow of the democratically elected government of Ukraine. Nuland installed Washington’s puppet government in a former Russian province that until about 20 years ago was part of Russia for centuries.

I would bet that this tells even the naive pro-western part of the Russian government and population that the United States intends war with Russia.

Ever since Russia stood up to Obama over Syria, the Russians have been experiencing hostile propaganda and military operations on their borders. These provocations are justified by Washington and its NATO vassals as a response to “Russian aggression.” Russian aggression consists of nothing but obviously false assertions that Russia is about to invade the Baltics, Poland, and Romania and recreate the Soviet Empire, the Eastern European part of which, together with the former Russian provinces of Georgia and Ukraine, now belong to the American Empire.

The Russians know that the propaganda about “Russian aggression” is a lie. What is the purpose of the lie other than to prepare the Western peoples for war with Russia?

There is no other explanation.

Even morons such as Obama, Merkel, Hollande, and Cameron should be capable of understanding that it is extremely dangerous to convince a major military power that you are going to attack. To simultaneously also convince China doubles the danger.

Clearly, the West is incapable of producing leadership capable of preserving life on earth.

What can be done when the entire West demonstrates a death wish for Planet Earth?

Until the criminal regimes of Clinton, George W. Bush, and Obama, American presidents from John F. Kennedy forward worked to reduce tensions with the Soviets. Kennedy worked with Khrushchev to reduce tensions caused by US missiles in Turkey and Soviet missiles in Cuba. President Nixon negotiated SALT I (the Strategic Arms Limitation Treaty) and the Anti-Ballistic Missile Treaty. President Carter negotiated SALT II, which was never ratified by the US Senate but was observed by the executive branch. President Reagan negotiated with Soviet leader Gorbachev the end of the Cold War. President George H.W. Bush in exchange for Gorbachev’s agreement to the reunification of Germany promised that NATO would not move one inch to the East.

All of these achievements were thrown away by the neoconized Clinton, George W. Bush, and Obama regimes, each a criminal regime on par with Nazi Germany.

Today life on Planet Earth is far less secure than during the darkest days of the Cold War. Whatever threat global warming poses, it is miniscule compared to the threat of nuclear winter. If the evil that is concentrated in Washington and its vassals perpetrates nuclear war, cockroaches will inherit the earth.

I have been warning about the growing danger of a nuclear war resulting from the arrogance, hubris, ignorance, and evil personified by Washington. Recently, four knowledgable Russian-Americans spelled out the likely consequences of trying to drive Russia to submission with war threats: http://www.paulcraigroberts.org/2016/06/03/41522/

Don’t expect the brainwashed American population to have the moral conscience and fortitude to prevent nuclear war or even the intelligence to prevent their own vaporization. In a recent article in the Wall Street Journal Scott Sagan and Benjamin Valentino report that 59% of the US population support attacking Iran with nuclear weapons in the event that Iran sank one US Navy ship: http://www.wsj.com/articles/would-the-u-s-drop-the-bomb-again-1463682867

Republicans were much more likely than Democrats to approve attacking Iran with nuclear weapons with 81% of Republicans approving nuclear war compared to 47% of Democrats. Yet, the Democrats are behind Hillary who would be the first to use nuclear weapons. After all, a feminized woman has to prove how tough she is, just as Margaret Thatcher was “the Iron Lady.”

Before it is too late for Americans and all of humanity, arrogant Americans need to recall that “those who live by the sword, die by the sword.”

The economic picture is equally dismal and unpromising. The latest payroll jobs report was even more awful than reported. Hardly any new jobs were created, but what largely escaped reporting is the fact that the economy actually lost 59,000 full-time jobs.

Increasingly the US economy consists of part-time jobs that cannot support an independent existence. Thus, more Americans age 19-34 live at home with parents than independently with spouses or partners. Fully half of 25-year old Americans live in their childhood rooms in their parents’ homes.

This is the “New Economy” that the filthy lying neoliberal economists promised would be reward for the American work force giving up their manufacturing and professional skill jobs to foreigners. What a monstrous lie the neoliberal economists told so that corporate executives and shareholders could put into their own pockets the living wage of the American work force. These neoliberal economists, and, alas, libertarian “free market” ones, have not been held accountable for their impoverishment of the American work force deeply buried in debt with no future prospects.

Those few Americans who have any awareness are beginning to realize that the One Percent and the western governments that serve them are re-establishing feudalism. The brilliant and learned economist, Michael Hudson, has labeled our era the era of neo-feudalism.

He is correct. The majority of young Americans come out of university heavily indebted, primed for debtor prison. When half of 25-year olds cannot marry and form households, how can anyone believe that housing sales and prices are rising except as a result of speculative investors banking on rental income from a population that cannot even pay its student loans.

The United States is the sickest place on earth. There is no public or political discussion of any important issue or of the multiple crises that confront America or the crises that America brings to the world.

The American people are so stupid and unaware that they are capable of electing a criminal and a warmonger like Hillary president of the United States and be proud of it.

These “tough” Americans are so frightened of hoax dangers, such as “Muslim terrorists” and “Russian aggression” that they willingly sacrificed their depleted pocketbooks, the Constitution of the United States—an act of treason on the part of the American people who utterly failed their responsibility to protect the Constitution—and their own liberty to a universal police state that has all power over them.

It is extraordinary that once-proud, once-great European peoples look for leadership from a country of moronic non-entities who have pissed away the liberty, security, and prosperity that their Founding Fathers gave to them.

Fellow Americans, if you care to avoid vaporization and, assuming we do avoid it, live a life other than serfdom, you must wake up and realize that your most deadly enemy is Washington, not the hoax of “Russian aggression,” not the hoax of “Muslim terrorism,” not the hoax of “domestic extremism,” not the hoax of welfare bankrupting America, not the hoax of democracy voting away your wealth, which Wall Street and the corporations have already stolen and stuck in their pockets.

If you cannot wake up and escape The Matrix, your doom will bring the doom of the planet.

#Brexit confirms: the neoliberal center cannot hold

Posted on July 19, 2016 by Reid Mukai

By Jerome Roos

Source: ROAR Magazine

The post-Brexit pandemonium has less to do with Britain’s relationship to Europe than it has with elites losing control over the monsters they have created.

Britain finds itself in a general state of pandemonium. The UK is in the midst of a full-blown constitutional crisis, Prime Minister David Cameron has resigned, and both the country’s governing party and the opposition are in the throngs of a fierce internal power struggle.

As the cheerleaders of the leave campaign dither with no clear plan on how to move forward, the financial consequences continue to ripple through the City: within days, the pound collapsed to its lowest level since 1985, the government’s credit rating was slashed by two full points, and world markets were sent into a tailspin, with a record $3 trillion shaved off stock values on Friday and Monday alone. As if things could not get any worse, recent days have also seen reports of an epidemic of hate crimes spreading across the UK.

Reading the headlines, one could easily be forgiven for experiencing the creeping sensation of living through the postmodern equivalent of the apocalypse: the financial press is providing minute-to-minute coverage of the “battering” of world markets; liberal establishment columnists repeatedly declare this to be Britain’s and Europe’s “worst crisis” since the Second World War; and the New York Times has already held Brexit up as the telltale sign of a world order that is slowly falling apart.

To top it all off, a hysterical Tony Blair took to the same pages last weekend to make a desperate plea in defense of globalization and for more of his failed Third Way recipe, proclaiming in characteristic platitudes that “the center must hold” — as if Yeats’ “blood-dimmed tide” and “mere anarchy” were about to be loosed upon the world once more.

The immediate cause for all the commotion is clear: Cameron’s risky bet to hold a referendum on Britain’s EU membership has backfired disastrously. The unexpected victory for the leave camp has shaken both Unions to their very core, dividing left and right on either side of the Channel and burning all bridges between them. There is no denying the historic nature of these developments; the world is a different place after last Thursday, and it is clear that Europe and Britain now find themselves in uncharted territory.

Yet the unspeakable truth is that, at a deeper level, the financial fallout and political pandemonium of recent days has less to do with Britain’s place in Europe than it has with the widening gulf between political elites and European citizens more generally. While racism and anti-immigrant sentiment have been central to the leave campaign from the very start, it is difficult to believe that all 52 percent of Britons who voted leave are committed fascists. Many of these people are ordinary working class folks who are simply fed up with the erosion of their living standards, the disintegration of their communities, and the lack of responsiveness of their political representatives and the unaccountable technocracy that has “taken control” over their lives. Brexit was first and foremost a political statement by the dispossessed and disempowered.

The reason this statement has proven so explosive is because the referendum happened to sit on the convergence point of a number of profoundly unstable social and political fault-lines, all of which were shaking well before Brexit, all of which would have trembled even in the absence of Brexit, and all of which will continue to quake and thunder for a very long time after Brexit. It is highly unlikely that a victory for remain would have produced a very different outcome in the long run — it would certainly not have stemmed any of the discontent, pacified any of the social tensions, or resolved any of the political conflicts that underlie the referendum’s shock outcome.

While Brexit clearly hands victory to the bigots of UKIP and the Tory right, a victory for remain would simply have perpetuated the anti-democratic neoliberal masochism that produced the motivation for people to align themselves with these bigots in the first place. In this light, we have to stop seeing the rabid nationalism of the far-right and the neoliberal cosmopolitanism of the pro-EU camp as polar opposites — in reality, the former is the logical outgrowth of the latter; its deformed Siamese twin in flesh and blood. The only thing the pro-EU camp was able to offer British voters was a continuation of the structural conditions that led to Brexit, combined with fanatical fear-mongering over the consequences of that outcome.

Ultimately, the British vote to leave the EU, whether it eventually materializes or not (and there is no guarantee that it will), is symptomatic of a much deeper and much more debilitating crisis: a structural crisis of democratic capitalism that has in recent years evolved from a global financial crisis into a deepening legitimation crisis of the political establishment, which is now in turn exploding into a full-blown crisis of governability of the existing social and political order. The fault-lines currently opening up in British and European politics would have eventually laid waste to the stability of the continent’s postwar order regardless of the outcome of this particular referendum. Brexit will simply speed up that ongoing process of political decomposition.

It is important to remember in this respect that David Cameron did not call this referendum because he truly cared about the opinion of ordinary people on the EU. Like Alexis Tsipras last year, he called the referendum in a risky and desperate gambit to keep his flailing party together — to silence the Tories’ eurosceptic right wing, disarm the constant backbencher challenges to his leadership, and inoculate the government against future defections to UKIP. This vote was never really about the EU; it was about one of the figureheads of Europe’s crumbling neoliberal center trying to reassert his hold over a party that was once the stable bedrock of the UK’s landed aristocracy and its metropolitan bourgeoisie, but that is now rapidly disintegrating in the face of a resurgent reactionary right.

The ongoing coup against Jeremy Corbyn similarly has little to do with Europe. As an article in the Telegraph from June 13 confirms, Labour MPs and the Blairite wing of the party have been plotting an anti-Corbyn revolt for weeks, if not months, aiming to bring down their leftist leader in “a 24-hour blitz” after the referendum, regardless of its outcome. Again, this is not about the EU; it is about the incompetent lackeys of a crumbling neoliberal center trying to reclaim their hold over a party that was once Europe’s most enthusiastic cheerleader of neoliberalism, financialization and overseas military intervention, but that is now rapidly disintegrating — or realigning itself — in the face of an insurgent “hard” left.

In this respect, Blair’s apocalyptic reference to Yeats in his New York Times opinion piece was awkwardly on point: things are falling apart; the center cannot hold. This is the crux of the matter, and it helps explain the hysterical doomsday discourse of the centrist establishment: their globalized post-democratic fantasy world is crumbling before their very eyes, as their once-passive voter-cum-consumer base is suddenly gobbled up and mobilized by a motley crew of “angry populists” who thrive on the electoral spoils of a crippling legitimation crisis and feast on the popular discontent sowed by years of austerity and decades of neoliberal restructuring.

The answer to the steady disintegration of the established political order clearly cannot be more of the same. Against Blair’s hopeless cries that “the center must hold”, and against the thinly-veiled conspiracies of his neoliberal acolytes in Parliament — who are now closing in on Jeremy Corbyn in a last-ditch attempt to reclaim the Labour Party and destroy from within, once and for all, the only political force that could possibly pose an electoral counterweight to the far-right in this defining moment in British history — against all of these turncoats, the left must stand firm and insist: the center will fall.

But to avoid ceding the resulting void to the racists and reactionaries, the weakened and dispersed forces of the left will need to rally in face of the historic battles now coming their way. Despair as one may, this means the choice is now fairly straightforward: it’s Corbyn or nothing. Not because the embattled Labour leader will bring democratic socialism or fully automated luxury communism to a newly independent Britain, but because this decent, principled leftist is now the only bulwark still standing between ordinary working people of all colors, and the monsters that are about to be unleashed on them.

About the author:

Jerome Roos is the founder and editor of ROAR Magazine, and a researcher in International Political Economy at the European University Institute. For more on his research and writings, visit jeromeroos.com.

Brexit Is What Happens When the Pie Is Shrinking

Posted on July 8, 2016 by Reid Mukai

By Charles Hugh Smith

Source: Of Two Minds

This process of withdrawal into the relative safety of internally cohesive groups and group identities is intrinsically messy in globalized, multicultural societies.

A great many narratives are drifting around the Brexit pool: a return to sovereignty, class war, “controlled demolition,” nothing-but-another-political-Kabuki- spectacle, end of the European Union, etc.

I think it boils down to something much simpler: the pie is shrinking, and the illusion that it’s about to start growing has been shattered. For many communities in the developed world, the pie started shrinking in the 1970s, and has been shrinking (despite the narrative of “45 years of strong growth”) since then.

Labor’s share of the GDP has been declining for 45 years. Occasional blips higher during debt-fueled bubbles quickly fade when the bubble du jour pops, and the decline of labor’s share of the economy resumes its trendline decline.

Since 2008, the only group who feels the pie is growing is the class that has benefited from the unparalleled expansion of debt and leverage, financialization, globalization and central planning–roughly 20% of the work force, with the top 5% gathering most of the gains in income and wealth, and the top .1% gathering most of the increase in wealth. (See chart below)

For seven long years, the citizenry has been told the economy is expanding and therefore they’re “doing better.” But this narrative is not supported by their actual lived experience. Inflation is woefully under-reported by official statistics, and the rosy “rising employment” narrative is based largely on part-time jobs in hospitality and food services (bartenders, waiters, etc.) that are highly contingent on the spending of the top 10%.

While supporters of the status quo are quick to deride supporters of Brexit, the cold reality is the economic pie is shrinking, and Brexit is a direct result of that reality.

A shrinking economic pie generates widespread insecurity that pressures every status quo arrangement as people circle the wagons in an attempt to protect their remaining slice of the pie from others’ claims for a larger piece of the dwindling pie.

The general media line is that the Brexit vote arose out of anger with the status quo’s inequalities and asymmetries of wealth and power. While this is largely self-evident, it isn’t the most fundamental dynamic at work. I see Brexit as a reflection of our naturally-selected defensive response to insecurity and instability: circle the wagons.

By circle the wagons, I mean our tendency to withdraw into an internally cohesive group with defined membership and boundaries.

The largest such political group is the nation-state, and so it is natural for people with strong national identities to circle the wagons around their national identity.

We can also expect people to circle the wagons around ethnic, religious, localized and economic-social class identities. (Some people might feel more kinship with other fans of Manchester United than they do with any religion, ethnicity or state.)

As people identify themselves as members of the class that has not benefited from neoliberal/globalized crony capitalism, the ruling Elites become the “other,” i.e. “foreigners” with whom we have little contact, people who “aren’t like us”– in effect, an “enemy class” that is inherently opposed to our self-interests.

This process of withdrawal into the relative safety of internally cohesive groups and group identities is intrinsically messy in globalized, multicultural societies. No wonder populations are dividing into camps of increasingly angry people with little interest in compromise. Our instinct is to seek clear delineations of “us” and “them” and to seek the relative comfort of “us,” which in a multicultural nation, can contain quite a mixed bag of people who nonetheless feel a shared identity.

Much to the chagrin of political parties whose success is based solely on “identity politics,” the emerging group identities are not conforming to the political classes’ conventional fault lines. “Us” for many people includes everyone who isn’t a protected insider of the status quo, and “the enemy” is any protected insider of the status quo.

That includes virtually the entire political class, the entire class of state nomenklatura/technocrats, the entire banking sector and the wealthy class that’s benefited so handsomely from the globalized, debt-leverage bubbles and state / central bank support that characterize this era of neoliberal/globalized crony capitalism.

A Radically Beneficial World: Automation, Technology and Creating Jobs for All is now available as an Audible audio book.

What is the Big Lesson of the UK ‘Brexit’ Vote for Americans? It Was Done With Paper Ballots

Posted on July 1, 2016 by Reid Mukai

Voting in the UK is done on paper ballots, as her in the ‘Brexit’ referendum. In the US many vote on easily hacked computers that leave no paper trail.

By Dave Lindorff

Source: This Can’t Be Happening

The decision by a majority of UK voters to reject membership in the European Union in Wednesday’s hotly-contested referendum has been a devastating defeat for the corporatist domination of the European political and economic scene. It throws the corporate duopoly in the UK into turmoil, and also has the EU bureaucrats and the banking elite in Brussels and the financial capitals of Europe in a panic, lest other countries’ voters, as in Spain and Italy, or even France and the Netherlands, decide to follow suit. (Spain has a national election tomorrow which could be heavily influenced by the British referendum outcome, since if the united left wins, it could eventually lead to Spain’s exit from the EU.)

But for the US, which is not a party to the EU, there is also a huge lesson: ‘Brexit,’ despite being opposed by the political establishment — Conservative and Labor — and by the corporate elite of London’s City, the financial capital of Europe, won this vote. And the reason the opponents of UK membership in the EU were able to win against all that powerful opposition, has, in no small part, to do with the fact that all the voting was done on paper ballots.

Compare that to the US, where voting, for the vast majority of people, is done on machines, in many cases electronic machines that leave no paper trail of individual votes, or even of vote totals per machine. We are always hearing reports of faulty — or hacked — machines that are “flipping” votes, so that someone can cast a vote for a Democratic candidate or party slate and see it switched to Republican, reports of entire tallies for a day’s voting being simply lost, machines that don’t work, forcing would be voters to wait for hours to vote on a limited number of machines that supposedly are working, limited polling places because county or city governments claim they can’s afford to buy an adequate number of machines, a shortage of paper ballots when machines fail, etc.

The list of excuses goes on and on. And why, one might ask, does America vote by electronic machines instead of on readily verifiable paper ballots? The only possible reason is pressure from the corporate media, whose sole interest in our elections is the “horse race” leading to a meaningless competition to get the results out first. Why should it matter though, if you think about it, whether we learn the results of an election an hour or two after the voting ends, or the next day, or even several days after the voting? Why, in fact, do we allow news organizations like AP or the New York Times to “call” elections based on faulty algorithms that are based on extrapolations of early counts in specific targeted voting districts?

Most recently, we witnessed the outrage of AP calling the Democratic national presidential primary for Hillary Clinton the morning that California and six other states totaling 15% of the total delegate count in the nation were holding primaries and then announcing the victory in California that evening when less than half of the votes cast had actually been counted (the rest were paper ballots — both mailed-in ones, and over a million “provisional” ballots that were given to voters who had registered close to election day, and whose registrations had not been provided in time to local voting district officials. As those votes are counted — and they are still being counted today, some two and a half weeks after the voting! — it is becoming clear that far from a rout by Hillary Clinton, the vote between Clinton and Sanders was very close, as will be the delegate count for each candidate.

A number of analysts have pointed out that there is serious evidence of vote rigging in the Democratic primary in favor of Clinton, with most of the states that she won outside of the deep South which had electronic voting machines having exit polls that showed Sanders should have won. There is no way to check those votes, however, because the machines don’t have a paper trail.

And that’s not all. The primary, like elections in prior years, has been rife with other examples of interfering with the right of Americans to cast their votes. There was massive voter suppression in New York’s Democratic primary, for example, with entire neighborhoods in Brooklyn and other jurisdictions — all of them likely to have favored Bernie Sanders — finding that their voter registration records had been wiped, making them ineligible to vote. Other venues, in New York and other states, found that people who had registered as Democrats were recorded as “independents,” making them, in closed-primary states, ineligible to vote in the primaries.

The list of such abuses and frauds goes on and on and, like the many examples of voter suppression by both Republican and Democratic governments in the past, make it clear that voting in the US is as corrupted as it is in many third-world countries where elections are understood to be only for show.

The lesson of Britain’s ‘Brexit’ referendum, like the hotly contested presidential election I witnessed and covered in Taiwan in 2004, both of which contests were conducted using paper ballots, and the latter which was subjected to a recount that returned an almost identical result after tons of paper and millions of ballots were painstakingly inspected and hand-counted all over again, is that democracy can only work if voting is scrupulously honest and absolutely verifiable. On both those counts the US fails miserably, meaning that besides all the other problems that make American democracy a joke — the grotesquely biased (and inane) media coverage, the widespread voter apathy and ignorance, a stultifying two-party political system that limits candidate choices to two virtually identical candidates and to two political positions that only differ in meaningless, but emotionally powerful ways, and a campaign-funding system that in reality is nothing but legalized bribery — American voters cannot really expect their votes to be honestly counted in the end.

If a referendum like ‘Brexit’ were to be held in a US-type electoral system, involving a major issue affecting powerful economic interests, it would have predictably failed. Of this there is little or no doubt. What in the ’60s we called “The System” would simply not have allowed opponents of EU membership to win.

A ‘Brexit’ Blow to the Establishment

Posted on June 26, 2016 by Reid Mukai

By Robert Parry

Source: Consortium News

The United Kingdom’s “Brexit” vote may cause short-term economic pain and present long-term geopolitical risks, but it is a splash of ice water in the face of the West’s Establishment, which has grown more and more insular, elitist and unaccountable over recent decades.

The West’s powers-that-be, in both the United States and the European Union, too often display contempt for real democracy, maintaining only the façade of respecting the popular will, manipulating voters at election time with red-meat politics and empty promises – before getting back to the business of comforting the comfortable and letting the comfortable afflict the afflicted.

That has been the grim and tiresome reality with America’s two parties and with the E.U.’s bureaucrats. The average American and the average European have every reason to see themselves as a lesser concern to the politicians and the pundits than the special interests which pay the money and call the tune.

In the stunning “Brexit” vote – with 52 percent wanting to abandon the 28-nation European Union – U.K. voters rejected the West’s politics-as-usual despite dire warnings about the downsides of leaving. They voted, in effect, to assert their own nationalistic needs and aspirations over a commitment to continental unity and its more universal goals.

But, in the vote, there was also a recognition that the West’s Establishment has grown corrupt and arrogant, routinely imposing on the people “experts” who claim to be neutral technocrats or objective scholars but whose pockets are lined with fat pay checks from “prestigious” think tanks funded by the Military-Industrial Complex or by lucrative revolving-door trips to investment banks on Wall Street or The City.

Despite the Establishment’s self-image as a “meritocracy,” its corrupted experts and haughty bureaucrats don’t even demonstrate basic competence anymore. They have led Europe and the United States into catastrophe after catastrophe, both economically and geopolitically. And, there is another troubling feature of this Establishment: its lack of accountability.

In the United States, the rewards and punishments have been turned upside-down, with the benighted politicians and pundits who pushed for the Iraq War in 2003 still dominating the government and the media, from Hillary Clinton’s impending Democratic presidential nomination to the editorial pages of The New York Times and The Washington Post.

And, the Iraq War disaster was not a one-off affair. The neocons and their liberal interventionist sidekicks have their fingerprints on other “regime change” messes, from Libya to Ukraine to Syria (still in the works), with their predictable recommendations for more violence and more belligerence. Yet, they have impunity for their crimes and incompetence. They fail up.

Establishment Doesn’t Know Best

So, the West’s Establishment can’t even argue that it knows best anymore, which always had been its ace in the hole. The various insurgents could be painted as the dangerous option – and that is sometimes true as we’ve seen with Donald Trump – but it is arguably a toss-up as to whether Clinton or Trump would be the bigger risk to the world’s future.

Trump may be a blustering buffoon but he challenges the neocon “group thinks” about the wisdom of expanding the West’s war in Syria and launching a costly and existentially risky New Cold War against nuclear-armed Russia and China. Clinton surrounds herself with neocons and liberal hawks and shares their obsession with overthrowing the government of Syria and provoking Russia and China with military operations near their borders.

Trump and “Brexit” advocates also reject the Establishment’s neoliberal consensus on “free trade,” which has depressed (or eliminated) the wages of American and European workers while the benefits accrue mostly to financial and political elites. The Establishment’s embrace of the “winners” and its disdain for the “losers” have further enflamed today’s populism.

Yet, there are undeniably ugly features in the populist sentiment sweeping the U.S. and Europe. Some of it is driven by bigotry toward non-whites, especially immigrants. Some is inspired by wild conspiracy theories from a population that has understandably lost all faith in what it hears from Washington, Brussels and other capitals. Trump has espoused the scary know-nothing notion that the scientific evidence of global warming is “a hoax.”

There is always something unsettling when an incipient revolution takes shape and starts tearing down the old order. What follows is not always better.

In the end, the American election – like the “Brexit” referendum – may come down to whether voters feel more comfortable sticking with the status quo at least for a while longer or whether they want to blow up the Establishment and gamble on the consequences.

Right now, Clinton and the Democrats are carrying the banner of the Establishment, while Trump and his Republican insurgents fly the Jolly Roger. In a political year when the anti-establishment wave seems to be cresting, the Democrats may regret their choice of a legacy, status-quo candidate.

[For more on this topic, see Consortiumnews.com’s “Two Corrupt Establishments”; “Democrats – Too Clever by Half on Clinton”; “The Coming Democratic Crack-up”; “Neocons and Neolibs: How Dead Ideas Kill“; and “The State Department’s Collective Madness.”]

Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his latest book, America’s Stolen Narrative, either in print here or as an e-book (from Amazon and barnesandnoble.com).

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Tag Archives: EU

The post-Brexit pandemonium has less to do with Britain’s relationship to Europe than it has with elites losing control over the monsters they have created.

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