The Nature of the Beast

While the above analyses and analogies are both apt and colorful, they are also flawed as they fail to address the actual disease which is what is truly terrifying the bankers (whether they know it or not), that being the self-devouring nature of unfettered capitalism.

David Ignatieff in the Washington Post: "What scares the central bankers now is the evaporation of trust from the system. Banks don't believe each other's numbers; since nobody knows the real value of these mortgage-backed securities everyone is holding, they assume the worst. They start hoarding cash as a buffer against their own losses and because they're nervous about lending to anyone else."

One of the great myths bandied about right and left is that the last 30 years have seen steady growth in American productivity. But as economist, Henry Liu points out, the Clinton economy was a mirage: "there was no productivity boom in the US in the last two decades of the 20th century; there was an import boom that came with productivity fallouts. What’s more, this boom was driven not by the spectacular growth of the American economy; it was driven by debt borrowed from the low-wage countries producing this wealth. The acceleration of productivity was accomplished by someone else doing the producing without getting proper credit for it. It was called a “bubble” for a reason.

Marx understood this basic flaw in capitalism over 150 years ago. The capitalists profit not by selling their product at a price above the cost of materials plus labor, but by paying their workers less than the value of their labor. So the banker is not the only parasite, the investor,(which include our cherished 401k's and pension funds) is feasting on the 'body' as well. Clearly in such a scenario the diseased, diminishing body (the American worker) can only be saved by cleansing and recapturing its lost blood (progressive taxation) and shrinking the parasites. So while Clinton's tax increase did not grow the economy, it provided the vital infusion it required to survive... until the bloodsuckers recouped and grew stronger.

The worker can never be burdened with sufficient debt to sustain endless profit. It's not that the scorpion is evil or the parasite is stupid. It's just the nature of the beast.

The System Cannot Be Saved

It was painful to watch an albeit under the weather Jon Stewart try to explain to Rachel Maddow his motive behind the DC rally. For while the discussion centered on the cable news media the elephant in room was as invisible as it had been to the 200,000 Daily Show fans gathered in Washington to 'Rally for Sanity' and rebuke Glenn Beck. For while Rachel, incisive intellect that she is, wrings her hands at Stewart's suggestion that she and Bill O'Reilly are ethically equivalent, she is forced to pretend that the problem that divides us is something other than the slow but incontrovertible death of American capitalism.

Put simply. Enslaved to the global financiers our system has grown to opaque and complex to be competently managed. By defending capital while placing the burden of profits on the working stiff our late stage capitalism has devoured its head.

As macroeconomist, Mancur Olson explains in “Power and Prosperity” 'A society that does not shift resources from the losing activities to those that generate a social surplus is irrational, since it is throwing away useful resources in a way that ruins economic performance without the least assurance that it is helping individuals with low incomes. A rational and humane society, then, will confine its distributional transfers to poor and unfortunate individuals.”

The Tea Party faithful are correct to blame our corporate government but their remedy is naive. Contrary to Washington's supposed wisdom, it is not limiting handouts to the poor that defines a free and dynamic economy but limiting rents that flow to the privileged. And the public though confused understands, as did Henry Ford, that a working economy necessarily means putting the power to purchase not in the hands of the investor but the worker. And so does China.

The British economist Samah El-Shahat, writing in August 2009 stated:

"China hasn't allowed its banking sector to become so powerful, so influential and so big that it can call the shots or highjack the bailout. In simple terms, the government preferred to answer to its people and put their interests first before that of any vested interest or group. And that is why Chinese banks are lending to the people and their businesses in record numbers."

In the US and UK, by contrast:

"[B]anks have captured all the money from the taxpayers and the cheap money from quantitative easing from central banks. They are using it to shore up and clean up their balance sheets rather than lend it to the people. The money has been hijacked by the banks and our governments are doing absolutely nothing about that. In fact, they have been complicit in allowing this to happen."

Why, you might ask? Because while we have the surplus labor, thanks to our regressive tax rates which essentially guarantee a woeful commitment to public education we lack the skills to nimbly adapt or attract foreign capital.

The China Card

There is tendency in the 'West', one that it not difficult to pursue in light of its dismal human rights record, to accuse China of crassly exploiting Africa. A typical piece reads like this 2007 Ope-Ed in the NYTimes:

"The World Bank --- proposed a project based on the commonsense observation that there was no point in lending the Nigerians money without also tackling the corruption that had crippled the railways. After months of negotiation, the bank and Nigeria’s government agreed on a $5 million project that would allow private companies to come in and help clean up the railways.

But just as the deal was about to be signed, the Chinese government offered Nigeria $9 billion to rebuild the entire rail network — no bids, no conditions and no need to reform. That was when my friend (an aid-worker) packed his suitcase and went to the airport."

Ah yes, Western paternalism at its finest. Apparently Americans still believe Africans cannot count. And there the truth lies naked. Having learned from 100 years of colonial rule the fine distinction between imperialism and political corruption Africans have decided that an aspiring capitalist always sells to the highest bidder.

Another pet argument is that Chinese projects in Africa largely ignore environmental consequences. No doubt that is true but talk about the pot calling out the kettle. Where in Africa has a Chinese company left behind this kind of devastation?

Nigerian Delta courtesy of Shell Oil

How many activists have they caused to be killed.

The truth is the West had its chance to befriend the African. But instead, it stole his resources then left him a continent riven by war, racism and under-development. China, on the other hand, has not sought any overt quid pro quo beyond a chance to do business.. Take for example their approach to tackling the problem of snail fever. "We will share with them our methods so they can design their solutions according to their own situation," said Zhou Xiaonong, director of China's National Institute of Parasitic Diseases in Shanghai.

The West response to the end of the Cold War was to give Africa the cold shoulder. China saw its chance and grabbed it:

"[the] Chinese advantage has been that many countries in Africa, including Angola, Ethiopia, Mozambique, Namibia and Sudan, feel a sense of obligation toward China after it helped them when they were confronted with the spectre of civil war following the demise of the Soviet Union.

After a surge of attention on the continent during the Cold War, the US and Russia lost interest in spending money in Africa, leaving instability—and space for China to step in. The gaps the two big powers left that China has sought to fill were big ones, with many African nations having depended heavily on their Cold War sponsors in the 1960s and 1970s for state-building assistance after securing independence from their colonial masters. Withdrawal pulled the rug from under any prospects for stability."

The truth is the Chinese in Africa are on the right side of history. It is a history most Africans will not soon forget.

The War that Warmed Back from the Cold

Update- 3pm. EDT
Sad synchronicity: MSNBC is reporting another rig explosion in the gulf. Mile-Long Oil Sheen
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Every spring the bearded seal sings underwater songs of love to woo his new mate. That tender ritual's days are numbered now that the Arctic is in the cross-hairs of our oil-addicted race.

On August 29th 2001 a Russian ship sailed to the North Pole without need of an icebreaker. It was the first ship ever to have done so. Thanks to global warming and our thirst for hydrocarbons it will not be the last. A recently published Kremlin document announces Russian plans to establish army bases along the Arctic frontier to “guarantee military security in different military-political situations”.

China takes note.

According to, Linda Jakobson, a researcher from SIPRI (Stockholm International Peace Research Institute), “The prospect of the Arctic being navigable during summer months, leading to both shorter shipping routes and access to untapped energy resources, has impelled the Chinese government to allocate more resources to Arctic research.” China now owns the world’s largest non-nuclear icebreaker and one of the strongest polar scientific research programs in the world. However if the current warming trend continues such capabilities may be moot. Trade vessels that now travel between Europe and Asia through the Suez Canal may be able to use the Arctic’s Northwest Passage as early as 2013, shaving 40% of the distance at least during the summer when the passage could well be ice-free. But even then, China's access is not guaranteed.

The Arctic Council

Ten states currently lay claim to the Arctic Territory: Canada, Denmark, Finland, Greenland, the Faroe Islands, Iceland, Norway, Sweden, Russian and the USA. Five-- Canada, Denmark, Norway, Russia and the US have been busy filing suit, hoping to claim control of the coveted Northwest shipping lanes. At the council's urging the "Feuding Five" finally met last May in Greenland and declared their mutual commitment to the rule of law and to behaving peacefully. Seeing what's at stake, I would not be so sure.

Let the Drilling Begin!

Mere weeks after the Deepwater Horizon leak was finally plugged the drill for oil kicked off in Greenland's Arctic waters. The prize went to the U.K.'s Cairn Energy but with the Artic likely to possess 13 per cent of the planet's remaining oil and 30 per cent of its gas it is about to have plenty of company. Never mind that none of those companies have the slightest notion of how to deal with a potential spill.

An even bigger environmental threat is not from the wells but from the oil tankers. Pack ice, storms and icebergs mean that shipping accidents are almost inevitable, and spilt oil takes decades to break down in the cold Arctic waters. Nothing much can be done in the winter beyond tracking the ice, waiting for the oil to surface in the summer melt, then setting it alight. Yet despite the Gulf disaster, calls for an Arctic-wide moratorium on oil exploration until safety measures are in place have gone unheeded.

"This commercialization of the Russian Arctic has significant risks. There are almost no facilities for rescue up there if and when ships get into trouble. This danger was highlighted in May last year when the cargo ship Petrozavodsk ran aground on Bear Island, south of the Norwegian-owned Svalbard archipelago in the Barents Sea whose main island is Spitzbergen.

Bear Island is an important habitat for nesting seabirds and the Norwegian authorities managed to remove the 54 cubic metres of fuel oil on board before it leaked into the sea."

--Jonathan Manthorpe,Vancouver Sun

Holding Course to Destruction

The irony cuts deep to realize that in this market-worshiping age when citizens can no longer be sure that their livelihoods will be defended by their own governments our leaders still manage to cloak their corrupted designs in the robes of tribe and sovereignty. So Russia declares the Arctic to be its 'strategically vital territory' while Canada swears to defend its rightful share. But neither the average Russian nor most Canadians will see any worthwhile benefit. That will belong to our revolving-door politicians, lavishly-rewarded executives and the mega-rich stockholders perched atop the glorified heap. What we working stiffs stand doomed to inherit is the polluted, uninhabitable mess these 'masters of the universe' seemed determined to make of the planet.



Those lover's trills, sweeps, and moans may turn mournful in just a few summers.

Helping Stupid

There is a popular Chinese saying – “Taiwanese are old fashioned, Hongkonese are heartless and Americans are stupid.” So warns Yue Xi, an adviser to Americans hoping to do business in China.

What does it mean for the human experiment when citizens of the nation, or more accurately the empire, with the largest military, the biggest economy and the most pervasive cultural influence in history are generally considered a bunch of dim-witted numskulls? There are only two conclusions: either the empire is about to go bust or we're doomed... at least to a virtual comic-book universe:



It's not that we lack for geniuses... after all we did give the world I-pods, velcro and Miles Davis as well as Michael Jackson. I suspect the 'stupidity' the Chinese and others perceive is our great American Complacency. Our recent record in international basketball is a perfect example. We still have the talent but until the '08 Olympics our "Dream Teams" lacked heart, discipline ... and smarts.

We have the finest universities with the fattest endowments but our public school teachers are over-stressed and underpaid, our poorest schools are overcrowded and woefully decrepit. So is it surprise that half our high school graduates appear functionally illiterate? But hear us cheer, USA! USA! 'Cause remember, we're the greatest!

Then there are our great financial wizards-- like the head of Hewlett Packard who got sacked for falsifying records to hide an affair with a B movie actress. A steamy secret affair that apparently never got consummated. Talk about a poor investment choice. And you would think after the Enron bloodbath that the head of the Federal Reserve would not want to see that debacle repeated. No such Luck:

Fed Chairman, Ben Bernanke wants to let banks ignore existing guidelines requiring them to value assets at what they would be worth if sold on the market today. Instead of having to admit these toxic assets are currently worth 5 to 10 % of original value. Why worry? the chairman is thinking, sure, our economy may be on life support, we're still the mighty USA.

Well, the Chinese seem to think Bernanke is dumb enough to think they're the ones who are stupid. Beijing has been busy dumping dollars and buying euros. But while it reflects a lack of faith for a U.S. recovery in the long run, by boosting the euro right after bailing out Greece while the "smart" money ran for cover, the erstwhile communists may end up saving a lot of complacent capitalists.

I won't even talk about our brilliant politicians... they can speak for themselves...

Recalling All Music

The Ayatollah Ali Khamenei. Iran's supreme leader, has declared that music is not to be practiced nor taught in the country. Better, he said, a young person "spend their valuable time in learning science and essential and useful skills, and fill their time with sport and healthy recreations."

I find it hard to understand how someone who claims to be a spiritual leader can be hostile to the most complex and transcendental of artistic expressions. Surely, I thought, this ban is not to be taken seriously. Apparently, I was wrong. Ali Bagherzadeh, head of the private- schools office in the Iranian Education Ministry wholeheartedly agrees: “The use of musical instruments is against the principles of our value system,”

Ironically, these principles of the Ayatollah's "value system" are neither particularly "non-Western" nor uniquely Muslim. I sometimes ponder what sublime creations the world may have been denied thanks to a certain 18th century Archbishop.

Archbishop Hieronymus, aka Count Colloredo, was determined to modernize Salzburg. Strapped for money he closed the local theater and reserved the performance of orchestral works for rare occasions. Singing in church was restricted to German hymns and a young composer then in his employ saw his salary and status reduced to little more than a footman or a scullery maid. That composer was Wolfgang Amadeus Mozart. But before you judge the Archbishop too harshly, what the world may have lost of Mozart's genius during those underused and under-appreciated ten years was Salzburg's gain thanks to the Archbishop's commitment to science and progress.

Similarly, the Ayatollah's vision, like the Archbishop's priorities, are no doubt admired in China where it recently banned the Mozart Requiem, Handel's Messiah and a proposed performance of Carmina Burana (the last ban, I concede, may be a point in favor of good taste.) In China's defense they do cotton to most secular Western music, just not Bob Dylan.

It troubles the heart and depresses the soul, this fear of music. A random survey finds: Israel now bans music cd's from entering Gaza, Afghan music was previously banned under the Russians. Now Saudi clerics want music and women both banned from television. Fortunately bans seldom last long or even work. Hitler failed to banish jazz from Germany, as did Stalin in the Soviet Union.

In a world in which most of us are powerless to set the terms of "progress" the power of music is our last redoubt, a fortress for restoring a place for dreams and finer ambitions. As someone wrote: "By correlating musical developments with historical events or conditions, we can see not only why certain styles of music were written when they were, but also how the times dictated the styles as much as the styles dictated the times." Poets may be dreamers steering a way to the future but as Auden so aptly wrote: "Poetry is reflective; it stops to think. Music is immediate, it goes on to become."

And what it becomes, archbishops and ayatollahs be damned, moves far beyond the reach of edicts or official interpretation.

The Enclaved

When I first saw the name I wondered why on earth Buick would name its new line "Enclave". (Webster's defines an 'enclave' as a place or territory surrounded by a foreign country.) Turns out the 'Enclave' is the perfect name to describe the new kinship between G.M. and China. Not only is Buick the biggest star in Shanghai, Chinese companies have been busy carving out enclaves of their own in post-colonial Africa.

The New Enclave



As labor scholar Ching Kwan Lee explains: the Chinese translation of enclave, feidi, means 'flying lands' and like GM's niche in China aptly describes China's presence in Africa.

There are many ironies in this post Cold War development. While global capitalism has encouraged greater inter-national collaboration most managers are imported and personal contact is minimal. Workers are often made to feel like aliens in their own countries. Despite Chinese investment in Africa their presence is restricted to isolated enclaves. The Chinese live together, they construct their own compounds.

At home China's nouveau riche crave the big shiny objects we Americans use to project our wealth but their success in Africa is due to the admiration Africans have for Chinese frugality and modest life style. "In contrast with Western expatriates, says Prof. Deborah Brautigam of American University’s School of International Service, the Chinese always live at or below “local standards” - even when it’s quite within their means to live lavishly."

With the ice caps melting and cheap oil drying up there is a lesson to be learned dear grasshopper.

Mad Money

George W. Bush, when asked how is history likely to judge his invasion of Iraq war, replied, "History, we don't know. We'll all be dead."

While some us shivered, wondering if this was the forecast of a Premillennial Dispensationalist with his thumb on a nuclear arsenal, it exposed the mind of a typically Western, short-term thinker. This is crucial to recognize if we are to survive these enormous financial and environmental crises of our own making. When John Keynes quipped to those who contend that in the long run the market always corrected itself that "in the long run everyone is dead” he meant that, by blindly pursuing profit, classical economists were sowing the seeds of Destruction. Marx knew he was railing at deaf ears. The committed capitalist will happily sell the rope that hangs him, for in his heart he adores a thief.

U.N. chief: "Drug Money saved Banks in Global Crisis"--the Guardian

"Drug money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer. Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year."

"Global crime has become an integral part of an economic system . . . the relationship among criminals, politicians, and members of the intelligence establishment has tainted the structures of the state and the role of its institutions . . . this system of global trade has fostered an unprecedented accumulation of private wealth alongside the impoverishment of large sectors of the world population," --Michel Chossudovsky, Professor of Economics, the University of Ottawa.

Mad For War

'When weighing possible benefits against the costs of the Iraq intervention, there is simply no conceivable calculus by which Operation Iraq Freedom can be judged to have been a successful or worthwhile policy.'-- the Center for American Progress

How early 20th century of our Progressive friends. To fathom neocon policy one has to grasp that for the Calvinist and committed capitalist their greatest impediment is the developed nation state. There is nothing more painfully amusing than listening to Dick Cheney bluster on about "defending America's interests". There are certainly many interests both here and abroad to be "defended" but they have nothing to do with the well-being of most Americans.

The Miraculous Rebound

In October 1983 the First National Bank of Midland, the largest independent bank in Texas went belly-up. The oil industry boom was over and by 1984 prices had tumbled. The number of Texas rigs fell from over 600 to 311. The downturn saw Halliburton's net income fall from $197 million in 1990 to $27 million in 1991 forcing a dramatic restructuring. The company was reduced to its Energy Services while retaining its engineering and construction subsidiary, Brown and Root. Come 1992 and the end of Gulf War I: Enter Dick.

Joined by Bush the Elder, the newly minted CEO promptly toured the Persian Gulf in search of business. With the former president at his side previously shut doors were suddenly flying open. As Halliburton’s CFO, Gary Morris, observed in wonder: ‘Having access is a great thing.’ There was just one problem: the biggest deals Mr. Cheney was being offered ran counter to U.S. law. So our Dick did what any red-blooded patriot would do, he sought a waiver. As the future Vice President said when challenged to explain his company's lavish deals with "terrorist states" like Iran and Libya: “The good Lord didn’t see fit to put oil and gas only where there are democratic regimes friendly to the United States.” [And just in case Uncle Sam tried poking his nose where it didn't belong Halliburton would tuck the loot in the Cayman islands]

Things were going swimmingly. Thanks to the former Secretary of Defense, from 1994 to 2002 Brown & Root was awarded over 600 Pentagon contracts. The company had expanded its global reach, and with the help of some well-greased hands, profits were soaring. Then our Dick made his one bad blunder: he acquired Dresser Industries and with it that company's 300,000 pending asbestos claims. Now our Vice-President Dick owed the company that had made him a very rich man (Cheney received $34 million when he resigned from Halliburton to return to government) and he owed them big time.

Cui Bono

Forget the Taliban, Lets Talk Iraq

It is hard to convince most folks that the people they elect are willing to see them and their children die for a ten percent return. Of all the rationales after the fact for Bush's decision to invade Iraq the only one to prove its value has been the Halliburton stock price.

"Halliburton's stock doubles as troop deaths double"--Halliburton Watch, Sept,2005.
"Since the beginning of the Iraq war, Halliburton, the Texas energy giant once headed by Vice President Dick Cheney, has seen its stock price more than triple in value. When the U.S invaded Iraq in March of 2003, Halliburton's stock was selling for $20 per share. The stock price at the close of market activity on Monday was $66."

Doh je: That's Cantonese for "thank you very much ..."

'The UK's Beyond Petroleum and China's CNPC have signed a contract to develop Iraq's Rumaila field, the largest oil field in the country. Rumaila holds the third biggest oil reserves in the world and the deal marks Iraq's biggest energy deal since Saddam Hussein was overthrown.'-- BBC World News

'China has emerged as one of the biggest economic beneficiaries of the war, snagging five lucrative deals. While Western firms were largely subdued in their interest in Iraq's recent oil auctions ... a testament to the lengths to which China will go to secure the oil it sorely needs to fuel its galloping economy' -- China Daily

Reading those quotes one has to wonder exactly how Cheney and his "neo-Conservatives" are still allowed to blow their smoke. They insist that our security demands spending ever more on the military even as we close down hospitals and lay off teachers. Are we credulous enough to believe Bill Kristol after his Weekly Standard describes the PRC as "a regime of hair-curling, systematic barbarity, or Washington Times' Bill Gertz bloviates about the great and present danger being posed by "Communist" China. Its past time someone ask their great benefactor, the Reverend Moon.

Automotive News: DETROIT, Sept. 25 /PRNewswire/ -- The Unification Church has joined a former U.S. diplomat and a major Korean industrial concern in an effort to create China's biggest car manufacturing facility. The project is being promoted by Panda Motors, a U.S.-registered corporation. The treasurer of Panda Motors is Pak Bo-Hi. He is also chairman of Newsworld Communications, which publishes the Washington Times and is controlled by the Rev. Sun Myung Moon and the Unification Church.

"In the late 1980s and 90s, transnational corporations (TNCs) saw China as the last frontier, the unlimited market that could endlessly absorb investment and endlessly throw off profitable returns. However, China's restrictive rules on trade and investment forced TNCs to locate most of their production processes in the country. By playing according to China's rules, TNCs ended up building a manufacturing base that produces more than China or the rest of the world can consume." --The Global Politician

64 million empty apartments

"Mainland’s property market remains dangerously overheated and failing to tame the speculative bubble could threaten financial and social stability," --South China Morning Post According to hedge fund manager, Tyler Durden, "China is covertly funding and creating a housing bubble that is at least 5 times as big as that of the United States."

Acknowledgment and Denial

The irony is that for centuries the Chinese rejected Western thinking. For our world to survive we need them to teach us to think less like Friedman and more like Confucius.

Short-term orientation [can be] identified with Truth, while long-term orientation can be identified with Virtue. "When information is manipulated or held to obtain a certain result, then one is simply going after the short-term orientation. There may be truth to the results, but the virtue of it has been removed."

Our "Masters of the Universe" are clearly worried about those torches and pitchforks. But can they perceive the distinction between equity and profit? Here's some of our committed capitalists' half-baked notions on "reform". Note the token Asian presence.

Where speculation ends, where real life starts, there consequently begins real, positive science,"--Karl Marx

Until our cherished Mad Men on Wall St. and TNC boardrooms recognize that without an ethos of pursuing virtue there is no useful reward. We will continue to see the fruits of all our labors blown up in the next best war-- then disappear on a dying planet.

Tortured by the American Dream

“Yes, the communist government in Beijing prevents free elections and free speech, continues to persecute religious groups, and has a record of pirating music and software as well as other intellectual property. But according to a recent study by the Council on Foreign Relations, China has also changed 2,600 legal statutes to comply with World Trade Organization rules.”
--CNBC's Larry Kudlow defending the Chinese government's woeful record on human rights.

A sad and bitter thing has happened as result of our rapprochement with Communist China. It began with a desire to counter the Soviet Union whom the Western oligarchy feared-- less as a potential existential threat posed by their long range missiles and nuclear arsenal-- than as a challenge to global capitalism.

Ironically, it was none other than President Carter who wooed the Chinese into our capitalist fold, despite having made human rights the centerpiece of his foreign policy. Indeed it was good old Jimmy Carter who restored formal diplomatic ties with the People's Republic of China and then granted it the Most Favored Trade status.

Republicans of course had howled about Carter's hypocrisy. Although a Sinophile himself, having worked in Beijing as U.S. trade representative, Bush I blasted the president's decision. "China has now seen just how easily we can be pushed around." Of course, once in office Bush rushed to renew China's MFN status even as they were cleaning the blood from Tiananmen Square.

So what has been the result of this lassez-faire attitude?
For China it has meant spectacular growth at the cost of gaping inequality. To be poor in China means living hand to mouth or toiling in prison. For the USA it has meant the ruin of half our cities, the demise of labor and the near extinction of the working middle class.

But the greatest price has been the erosion of our optimistic nature. Good Americans, lawyers, doctors and psychologists among them, are no longer ashamed to carry out torture. Most will blame the shift on 9-11 but I think the cause springs from someplace even darker and deeper. In our gut we know that we have sold our ideals to the dog-eat-dog logic of free-market totalitarianism.

We know because the evidence is there every day in our sewage-laden streams and our soured soil. In China the aping of our mindless pursuit has their urban survivors literally choking on air.

The last ironic twist to the story may be that China herself, having finally woken up to the fact that the beguiling road to success is a physical and spiritual death march, does the merciful thing and like the stingy German banks, ends our self-destructive habit of easy credit. Only then perhaps we will find the courage to face our tortured American Dream and see it perish--replaced by a more inspiring hope for the planet.

Gutting America

The American public is being challenged to rebel. Make no mistake, this $700 billion "bail-out" package will spell the end of our representative government. Understand-- the world knows that these mortgage assets Paulson proposes to repurchase are overvalued and the U.S. is headed for a major recession. So what is all that "cash for trash" supposed to pay for and where will it come from?-- simple-- China, who the global financiers are helping to buy the United States of America.

The de facto nationalization of the financial heavyweights will anchor the US and global financial market, analysts agreed. "It is good news for Chinese holders of mortgage-backed debt in the two companies," said Dong Yuping, an economist with the institute of finance and banking at the Chinese Academy of Social Sciences. "If the US government hadn't extended a helping hand, their insolvency would have brought serious losses to Chinese holders."

The deal was also done to prevent the government-sponsored companies from being declared insolvent, so it clearly benefits bond holders, said Stephen Green, a senior economist at Standard Chartered Bank in Shanghai.

The two companies account for $5 trillion worth of mortgages in the US - about 40 percent of its national total. Some $1.5 trillion of the debt is held by foreign investors.

"Since the US government intervened, the risks for Chinese holders have become fairly marginal," She Minhua, a Shanghai-based economist, said.

But the government bailout will not improve the US housing market's fundamentals.

Here is what a serious adjustment would entail:
Whenever there is a systemic banking crisis there is a need to recapitalize the banking/financial system to avoid an excessive and destructive credit contraction. But purchasing toxic/illiquid assets of the financial system is not the most effective and efficient way to recapitalize the banking system. Such recapitalization – via the use of public resources – can occur in a number of alternative ways: purchase of bad assets/loans; government injection of preferred shares; government injection of common shares; government purchase of subordinated debt; government issuance of government bonds to be placed on the banks’ balance sheet; government injection of cash; government credit lines extended to the banks; government assumption of government liabilities.

Instead, besides being unable to rebuild our decaying infrastructure or invest in alternative energy, the American taxpayer will be servicing debts held by foreign banks. Faced with corresponding losses most foreign banks are choosing to nationalize while keeping the onus for repayment on the banking industry.

"All UK banks with less than 65 percent of loans funded by deposits have now been nationalized or sold," Alex Potter, banks analyst at Collins Stewart, said.

While the public takeover puts even more risky assets on to the government's books only seven months after the nationalization of Northern Rock bank, Darling said the risk would be borne by the banking industry through a compensation scheme.

But while sensible countries look to shield their taxpayers what Paulson and Congress are proposing amounts to wholesale theft. For once I can say kudos to the NYTimes for exposing the rats:

"Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.

"Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.

"At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.

"Nobody wants to be left out of Treasury's proposal to buy up bad assets of financial institutions."

Mr. Paulson can choose to buy from any financial institution that does business in the United States, or from pension funds, with wide discretion over what he will buy and how much he will pay. Under most circumstances, banks owned by foreign governments are not eligible for the money, but under some conditions, the secretary can choose to bail out foreign central banks.

Under the bill, the Treasury is to buy the securities at prices he deems appropriate. Mr. Paulson may set prices through auctions but is not required to do so.

Rarely if ever has one man had such broad authority to spend government money as he sees fit, with no rules requiring him to seek out the lowest possible price for assets being purchased.

That any legally elected Congress would sit still for such a blatant power-grab supports my suspicion that the vote-rigging that was exposed by the Bush coup of 2000 is an open bipartisan affair. The culture war with its steady nurturing of the nation's historical tendencies towards ethnic bigotry and religious zealotry and exacerbated by a phony red state/blue state divide has been the corporate smoke-screen for the slow, tactical destruction of our democracy.

Remember how this all started. It was the Dodd/Shelby bail-out plan that first allowed borrowers to not only receive rates the market wouldn't approve them for, but it would even artificially reduce their loan amounts. It also bought billions of bad loans that banks wanted to offload.

Those following the progress of the Dodd-Shelby mortgage rescue plan in the Senate might want to check out two solid pieces of enterprising reporting on the bill this weekend.

First, the Examiner's Tim Carney reports that the bailout section of the Dodd-Shelby bill is, in the words a lobbyist, "exactly what Bank of America and Countrywide wanted."

Is there a connection between Bank of America and Sen. Christopher J. Dodd (D-Conn.)? There is. Carney: "Bank of America's political action committee (PAC) has donated $20,000 to Dodd since he became chairman of the banking panel 17 months ago. From January 2007 to March 2008, Bank of America employees have donated at least $50,400 to Dodd's campaigns, according to the Center for Responsive Politics."

National Review's the Corner follows up, citing an internal Bank of America document:

"National Review Online has obtained an internal Bank of America "discussion document" (PDF here) on the subject of the FHA Housing Stabilization and Homeownership Retention Act of 2008, a.k.a. the Dodd-Shelby mortgage-lender bailout bill .... This discussion document (dated March 11, 2008) would appear to support the contention that BofA essentially wrote the bailout section of the bill."

Then there are these murky questions surrounding Chris Dodd and congressional corruption:

Lobbyists for the Texas Indian tribe that shelled out $4.2 million three years ago in a failed bid to get Congress to reopen a closed casino told the tribe that U.S. Sen. Christopher J. Dodd had been "greased" to get his help, its longtime consultant confirmed last week.

Dodd denies there was any quid pro quo yet two Democrats, Brian Lunde and George Burger paid $10,000 to a lobbyist linked to the senator, Lottie Shackelford, to secure the senator's support for the single-sentence rider that would have unshuttered the casino closed by Texas authorities.

Also, Federal Election Commission records show that Shackelford, now vice chairwoman of the Democratic National Committee, contributed $1,000 to Dodd in June 2002, four months before the passage of the notorious Help America Vote Act which allowed for non-certifiable electronic voting machines to be used in US elections.

Dodd, in his statement at the Indian Affairs Committee hearing, acknowledged that Shackelford "did approach my office during the waning hours of negotiations over the HAVA legislation to inquire whether recognition proposals for the Tigua tribe could be included in the bill."

The FEC records also show that Dodd collected $10,000 in contributions in 2002 and 2003 from four individuals and a political action committee associated with the big lobbying firm that employed Abramoff, Greenberg Traurig.

We know the enemy. He resides not in the wilds of Alaska or West Virginia, but in the off-shore banks, the corporate boardrooms and now plainly, the halls of Congress.