Cheney's Paper Trail Preserved

A US District Court Judge has forbidden the destruction of documents from Vice President Dick Cheney's years in the White House.

As you may have guessed, Cheney was opposing this. I suspect he'd like to leave a lot of his paper trail in the form of ashes. That seems to be what the judge thought too. From CBC.CA:

A private group, Citizens for Responsibility and Ethics in Washington, is suing Cheney and the Executive Office of the President in an effort to ensure that no presidential records are destroyed or handled in a way that makes them unavailable to the public.
The judge said the administration's legal position "heightens the court's concern" that some records may not be preserved.

In a 22-page opinion, Kollar-Kotelly revealed that in recent days lawyers for the administration balked at a proposed agreement between the two sides on how to proceed with the case.

She said the administration wanted any court order on what records are at issue in the case to cover only the office of the vice-president, not Cheney himself or the other defendants in the lawsuit: the Executive Office of the President and the National Archives.

The suit alleges that the administration's actions over the past 7½ years raise questions over whether the White House will turn over records created by Cheney and his staff to the National Archives when the newly elected administration takes over in January.

Now, all those who believe Dick Cheney is going to leave the paper trail intact, please raise your right hands and board the bus to Fantasyland.

Your Daily Laugh - Palin for President

Bombs Don't Work

For the past seven years we've been playing a furious game of Whack-a-Mole with radical Islam. Even by conventional terms - tonnage of weapons dropped, etc. - this has been a major war.

What lies in the future may depend on who gets elected in the US in November. One guy looks pretty keen on keeping these wars ticking over and maybe adding one, perhaps even two, while stirring the embers of another Cold War to boot. The other guy - who knows? He doesn't appear as bellicose but there are no guarantees.

We're at the threshold of an era of multi-dimensional, global change. We've launched a massive expansion of Eastern economies, particularly the giant states of China and India.

There are a lot of problems looming that will eclipse Islamic fundamentalism. There's anthropogenic global warming and all the associated climate change issues - droughts, floods, storms; species extinctions and migrations (ours too); desertification; freshwater exhaustion; land, air and water pollution; the spread of insects and diseases. Then in an increasingly busy world we're going to have to tackle frictions over resources caused by the exhaustion of renewables and depletion of non-renewables. Add to that all the related problems associated with overpopulation and we've got a heaping plateful of existential challenges even without looking for wars to wage.

I don't think we can afford wars any longer, at least not like we used to in the 20th Century. They suck up too many resources and deplete the energies we need to deal with everything else that's knocking on our door at the moment. They're an unacceptable distraction.

Take Islamist terrorism, for example. That's "Islamist" as in radical Islam as in Wahabism. As the Muslim world goes, the Islamist movement is relatively small but we've done an awfully poor job at combating it.

Muslim kids go in the front door of these Madrassas and out the back door all fired up and ready for the Islamist training camps. Our approach has been to bomb'em into extinction once they've gone through this process. However to succeed in our approach, we have to wipe them out faster than they can come through the religious indoctrination level and we're not even coming close on that score.

If the Islamist movement has a fundamental vulnerability it lies in its inability to sustain itself. It needs money and the active support of sympathizers, most of whom are not Islamists. We need to sort out what drives ordinary, rank and file Muslims, the "Arab Street," to support these extremists.

I think there's no end of reasons for the ongoing support of this extremism. A very powerful one is historical. The West has been powerfully meddling in Arab affairs for more than a century - shaping the place to suit our interests with little regard for theirs. We bundled together places like Pakistan and Iraq and Syria out of the spoils we picked up from the collapse of the Ottoman Empire following WWI. We even parcelled the Kurds out among at least six nations, sort of like sending the orphan kids off to live with various, distant relatives. In the process, we have persistently lied to and betrayed these people. We have persistently manipulated them to suit our purposes.

We've been astonishingly racist toward Arabs. We've treated them as though because they're Arabs or Muslims or something they don't need or aspire to the same things we insist upon - little things like human rights and democracy. Think I'm kidding? Look at the state of human rights and democratic movements in the West's two closest Arab states - Egypt and Saudi Arabia. Do you think it's just oversight that we constantly focus on the anti-democratic repression in Muslim states we don't like - places like Iran and Syria - but seem not to mind when the oppressors are on our side?

Do you think the Arab people don't see this? Do you think they don't see that we support the status-quo that keeps them down, just so long as the tyrants are our pals?

We've contributed to a state of affairs in which radical Islam is the only vehicle of change remaining to so many of these Arab peoples. Okay, so we've done our bit to narrow their options down to one. Why are we surprised when they're drawn to it?

The Islamists - whether you call them Hezbollah, al-Qaeda or any of the lesser groups - get a lot of their support because they stand defiant of the very order that oppresses these people. It's more a "my enemy's enemy" sort of thing than a genuine alliance of immersed interests. They know the Islamists aren't working for democratic change but they're also the only bunch that's taking a swing at their common foes.

For a while we gave the Arab Street reason to believe we were coming to spread democracy through their region. Now that's something we've promised them before and they're painfully aware of our past betrayals but when they did get a chance to exercise democracy we rushed right in to shut it down.

The Palestinians elected Hamas because they saw Fatah as atrophied, hopelessly corrupt and willing to sell them out to Israel and the US. They saw in Hamas their only real hope for change. And how did we react? We pretended like they didn't vote, as though they didn't choose. We acted as though Fatah had won. We even channeled money and arms to Fatah to stage a coup to oust Hamas.

Lebanese elections ended with Hezbollah winning a number of seats. We were outraged, it was unacceptable!

But wait a minute. Weren't many of Israel's early leaders key figures in its own, nationalist terrorist movements? Some of them were butchers, real murderers. Did that stop us from dealing with them? No, of course not. Now you may not have that little inconsistency in the forefront of your mind but you can bet the farm that it's always in the minds of the Arab Street.

We Westerners celebrate all the struggles our ancestors went through to create the democracies we supposedly cherish today. Why do we find those same aspirations so outrageous when they involve the Arab peoples? One reason is because we've been groomed to be blind to it. We're told, again and again, that all the Muslim people want to do is conquer the world - our world, that is - for Islam, for the Prophet. We're told they're on a suicide mission from their God to wipe us out because they can't stand our Western societies, our freedom, our very democracies. Okay, anyone believing that, line up on the right under the sign that reads "Morons."

Those arguments deny these people their essential humanity. This thinking presents Arabs as less than human. No, no, they don't want to raise families, send their kids to school, have a few nice things and live in peace. No, Johnny, only human beings want those things, not Arabs. Sure some of them live in concentration - er, "refugee" camps, but that's because they're okay with it.

If there is a Christian God, what must he think of his adherents who act this way?

But I digress. If we want to get Arab terrorism under control, we have to repair the Arab Street. We have to accept that the only real leadership they have - at the moment - is in the radical movement, just as the Israeli leadership was birthed.

Then, and here's the hard part, we have to believe in democracy and place our faith in its power. Yes, Arab peoples may begin electing outfits like Hamas and Hezbollah and, yes, the early years of their democratic experiment are apt to be uneven, at times even turbulent, but we have to believe that democracy will defeat extremism because it removes the common bond between Islamist extremists and the Arab Street without which the fundamentalists wither and die.

It's time to do some major arm twisting in Cairo and Riyadh. It's time we threw our support behind democracy movements in Egypt and Saudi Arabia - economic and political support. If we can make change happen there, we really have the basis of spreading reform through the rest of the Middle East - by example, not by gunfire.

Or let's just keep doing what's worked out so wonderfully for us these past seven years. Bomb, bomb, bomb; bomb, bomb Iran.

Sarah Palin's Welfare State - Alaska

Poor old Sarah Palin. She and the Geezer pitched her as the frontierswoman leader of a tough, independent, self-reliant frontier state, Alaska. Yessir, she was going to bring some of that self-reliant, "can do" attitude to Washington where it's so badly needed.

Except, as AlterNet inconveniently points out, Sarah Palin's Alaska is, in fact, America's number one welfare state:

Actually, much of Alaska long ago lost the tradition of self-help. Palin might be campaigning on an anti-government, do-it-yourself platform, but her state is the most dependent on the federal government of all 50 states. Washington sends Alaska more money per capita than any other state. Alaskans receive back from the federal government almost $2 for every $1 they send to Washington. It's a sweet deal.

And when it comes to government pork, Alaska is king. As USA Today noted back in March, Palin's state ranks number one -- no other state is even close. In 2007 Alaska received some 2.5 times as much as runner-up Hawaii and 15 times more than the national average.

Alaska has by far the most state government employees per capita as any other state and about five times as many as Obama's Illinois.

The part of Alaska not dependent on federal government largesse is dependent on big oil. Almost 90 percent of Alaska's general budget comes from royalties and taxes on oil, which explains how the state can be number one in state government spending while ranking far down the list in taxes its residents pay. Alaska has no income tax or sales tax. Recently, its legislature suspended the gasoline tax.

So, there goes the McCain campaign's narrative about Sarah Palin, straight into the dumper.

Are We Losing Pakistan to the Taliban?

It's no secret that anti-Americanism is spreading fast through Pakistan. American air attacks and special forces raids intended to strike at al-Qaeda and Taliban leadership seem to be backfiring by renewing both sympathy and support for the insurgents.

Put simply, the Pakistani people are outraged at the idea of American military strikes against their homeland. American justifications don't seem to make any difference.

A suicide bomber yesterday blew up the Marriot Hotel in Islamabad, killing about forty people. That atrocity didn't generate much anger toward the attackers.

BBC correspondent Owen Bennet-Jones has written a stark account of the shifting attitude of formerly moderate, pro-Western Pakistanis:

http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/7623097.stm

This is a hell of a rotten outcome to the campaign Washington began seven years ago. A guy who knows this troubled region about as well as anyone is The Independent's correspondent, Robert Fisk. Today he questions why the US thinks it can win in Afghanistan:

As the Algerian journalist Hocine Belaffoufi said with consummate wit the other day, "According to this political discourse ... the increase in attacks represents undeniable proof of the defeat of terrorism. The more terrorism collapsed, the more the attacks increased ... so the stronger (terrorism) becomes, the fewer attacks there will be."

We, of course, have been peddling this crackpot nonsense for years in south-west Asia. First of all, back in 2001, we won the war in Afghanistan by overthrowing the Taliban. Then we marched off to win the war in Iraq. Now – with at least one suicide bombing a day and the nation carved up into mutually antagonistic sectarian enclaves – we have won the war in Iraq and are heading back to re-win the war in Afghanistan where the Taliban, so thoroughly trounced by our chaps seven years ago, have proved their moral and political bankruptcy by recapturing half the country.

Oddly, back in the Eighties, I heard exactly the same from a Soviet general at the Bagram airbase in Afghanistan – yes, the very same Bagram airbase where the CIA lads tortured to death a few of the Afghans who escaped the earlier Russian massacres. Only "terrorist remnants" remained in the Afghan mountains, the jolly Russian general assured us. Afghan troops, along with the limited Soviet "intervention" forces, were restoring peace to democratic Afghanistan.

...And now? After the "unimaginable" progress in Iraq – I am quoting the fantasist who still occupies the White House – the Americans are going to hip-hop 8,000 soldiers out of Mesopotamia and dump another 4,700 into the hellfire of Afghanistan. Too few, too late, too slow, as one of my French colleagues commented acidly.

...The Soviet general at Bagram now has his amanuensis in General David McKiernan, the senior US officer in Afghanistan, who proudly announced last month that US forces had killed "between 30 and 35 Taliban" in a raid on Azizabad near Herat. "In the light of emerging evidence pertaining (sic) to civilian casualties in the ... counter-insurgency operation," the luckless general now says, he feels it "prudent" – another big sic here – to review his original investigation. The evidence "pertaining", of course, is that the Americans probably killed 90 people in Azizabad, most of them women and children. We – let us be frank and own up to our role in the hapless Nato alliance in Afghanistan – have now slaughtered more than 500 Afghan civilians this year alone. These include a Nato missile attack on a wedding party in July when we splattered 47 of the guests all over the village of Deh Bala.

Joseph Conrad, who understood the powerlessness of powerful nations, would surely have made something of this. Yes, we have lost after we won in Afghanistan and now we will lose as we try to win again. Stuff happens.

The Ghost of Ronald Reagan

America's current fiscal meltdown lies squarely at the feet of a man most Americans revere, Ronald Reagan. It was Reagan along with his budget director David Stockman who spawned "supply side economics" and the "trickle-down theory" that were subsequently merged into "Reaganomics."

Ronald Reagan was as powerful a president as America has known since FDR. He was seen as a fiscal reformer. In reality, however, he saddled his nation with voodoo economics. In 198o, when Reagan came to power, the US was the world's largest creditor nation. In just a few years of Reaganomics, America became the world's largest debtor nation.

To help you understand how this rot set in nearly three decades ago, I've linked to two articles from the Atlantic Monthly. The first, entitled "The Education of David Stockman" was published in December, 1981.

http://www.theatlantic.com/unbound/flashbks/classics/stockman.htm

The second, entitled "The Morning After," appeared in the October, 1987 edition of the magazine:

http://www.theatlantic.com/unbound/flashbks/budget/afterf.htm

By the time The Morning After hit the news stands, the future undoing of America had already been mapped out. It's really quite astonishing stuff.

After leaving Reagan's White House, David Stockman retreated to his family's dairy farm in Michigan. He subsequently entered the business world. As Wikipedia notes, the past few years haven't been pleasant for David Stockman and the next 30-years look even worse:

On March 26, 2007, federal prosecutors in Manhattan indicted Stockman in "a scheme ... to defraud [Collins & Aikman]'s investors, banks and creditors by manipulating C&A's reported revenues and earnings." At the same time, the Securities and Exchange Commission brought civil charges against Stockman related to actions he took while CEO of Collins & Aikman.[3] Stockman faces up to 30 years in prison.

Where Does a Country That's Already Broke Find 700-Billion Dollars?

First things first. The United States of America is broke. The government relies on hundreds of billions of dollars worth of foreign loans to prop up its national Ponzi scheme. It runs its foreign wars on borrowed foreign money. It finances its tax cuts for the very rich on borrowed foreign money. It finances its monthly balance of trade deficits on borrowed foreign money.

The last ten days has seen that same US government shove over a hundred billion dollars into propping up its astonishingly unregulated financial sector to prevent strategic collapses. The takeover of Fannie Mae and Freddie Mac, the nationalization of AIG. Yesterday it announced $50-billion in loan guarantees for troubled money market funds. And now, the jewel in the crown - SEVEN HUNDRED BILLION DOLLARS or to you arithmetic types 700,000,000,000 dollars, all of it borrowed, to buy bad mortgages.

This floats the US national debt ceiling to $11.3 TRILLION dollars. (That's $11,300,000,000,000.00) Now that's some serious, serious money even at ridiculously low interest rates.

So, just how does the government get another 0.7-trillion bucks? Why the old-fashioned way, of course. It pledges the good credit (or what's left of it) of the American taxpayer. That'd be the working class and middle class wage earners and their children and their grandchildren. Some day all this will be transcribed into American family tree charts. Neat, eh? "Yes, it was in great-great-great-grandad Fred's time that you kids were sold down the river."

Before they're done they'll be looking at close to a trillion dollars siphoned out of working class wallets to make good the recklessness of the country's financial sector.

Talk about running on empty! But here's the 800-pound gorilla in the room - inflation. Can the American government pump all this additional borrowed money into the economy without triggering a wave of inflation? If inflation does set in, how does the US government meet its interest obligations?

Foreign lenders took a hit over the last two years with the devaluation of the greenback. As the US dollar tanked against all other currencies, their loans - and the interest they received - dropped in value substantially. Despite that these lenders held on to their belief that America was the safest place to invest their surplus cash. What remains to be seen is will they swallow another hit if these trillion dollar bailouts spark a wave of inflation?

Is America so far into these foreign lenders that they no longer have any choice but to keep propping up the US economy no matter how recklessly it's managed, no matter how inflationary the bailouts? I think we're going to see the answer to that question over the next twelve to eighteen months.
We could just be witnessing the decline and fall of the American Empire.

By the way, if you're still unclear as to how the Reagan Revolution came crashing down, check out this item from The Globe & Mail. It's all pretty much there:

http://www.theglobeandmail.com/servlet/story/RTGAM.20080919.whouses0920/BNStory/International/home?cid=al_gam_mostview

Sixes and Sevens and Nines...

Is John McCain the riverboat gambler of the 2008 US presidential elections?

He took a gambler's gut instinct roll on his choice of running-mate, Sarah Palin.

"Always in a hurry, I never stop to worry,

Dont you see the time flashin by.

Honey, got no money,

Im all sixes and sevens and nines.

Say now, baby, Im the rank outsider,

You can be my partner in crime.

But baby, I cant stay,

You got to roll me and call me the tumblin,

Roll me and call me the tumblin dice."

Good Money After Bad - NATO

US Defense Secretary Robert Gates has put the NATO membership on notice that they'll be expected to pick up their share of the costs of expansion of the Afghan National Army.

I know, why don't we just declare the Afghan National Army a bankrupt US investment bank? In the long run it's about as stable and should pay off just as handsomely as, say, Lehman Brothers.

Sorry Bob but we're already $22-billion in the hole on this totally botched adventure. You can pick up this tab.

Meanwhile Brit PM Gordon Brown is passing the begging bowl to raise handouts for Georgia. Sorry Gord, I gave at the office.

According to the Associated Press, Germany and some other European NATO members intend to block further American efforts to get Georgia into NATO this year. Maybe the idea of President Palin slapping on a fresh coat of lipstick and then getting NATO into a shooting match with Russia over Georgia has made some people open their eyes.

America's Credit Crisis - What's In Store for Us?

The credit crisis now gripping the US appears to have come as a surprise, even to the rich and powerful. Now you have to ask yourself why and just what does that mean?

If you want to understand what's happening and where America, our economic Big Brother, is heading, a good place to begin is by reading Kevin Phillips book, "American Theocracy." I really believe that Phillips lays out how America got where it is today and what lies in store for the United States - and the rest of us - over the next two decades.

Kevin Phillips IS NOT a liberal. He's a Republican, through and through. He's an insider, a former Republican strategist. He's been a political and economic commentator for thirty years. He's written several books including, "The Emerging Republican Majority", "Staying on Top" and "American Dynasty." Kevin Phillips is about as red, white and blue as they come. He's not going to contaminate your pristine mind with any socialist dogma. All he's going to do is point out the truth that he knows today's Republicans simply don't want to hear.

The complete title of this book is "American Theocracy, The Peril and Politics of Radical Religion, Oil, And Borrowed Money In The 21st Century." It was written, I believe, in 2005 which actually makes it a lot more interesting today than it was just three years ago.

Here are just a few gems from Chapter 9 entitled "Debt - History's Unlearned Lesson."

Because the past repeats only in general resemblance, there is always something different, something new. This truth, together with the usual effects of the passage of time, makes it easy for later generations to dismiss any awkward precedents - and so it has been with the demobilization of manufacturing and embrace of debt in the contemporary United States.

...conductors of the orchestra of American hubris wave star-spangled batons and the chorus resounds: Washington rules, the world manufactures for the United States, and our current-account deficit reflects nothing more than global anxiety to invest in U.S. prosperity. Who knows, the Treasury may even be planning a statue of an American consumer supporting the world on his back.

However, if pride goeth before a fall, cocksureness about the manageability of U.S. public and private indebtedness may as well, given threats that range from debt crises to currency humiliation. Crippling indebtedness is like the ghost of leading world economic powers past, a familiar Shakespearean villain come to stalk the current hegemon.

...None of these hegemons [Holland, Spain and Britain] started with well-developed finance. They began with simpler vocations. Castile, the heart of Spain, was a culture of high-plateau wool growers and skilled soldiers who had spent centuries reconquering the Iberian peninsula from Muslim emirs before conquistadores found gold and silver in Central and South America. The Dutch, as we have seen, had a unique talent for vocations having to do with ships, seas and winds. The English pioneered coal development and superseded the Dutch as masters of the seas. But after several generations of success in soldiering, seafaring, or manufacturing, these peoples, in their respective heydays, were drawn farther in the direction of globalism, financial services and capital management.

...Excluding the unusual case of Spain, the leading economic powers have followed an evolutionary progression: first, agriculture, fishing and the like, next commerce and industry, and finally finance. Several historians have elaborated this point. Brooks Adams contended that 'as societies consolidate, they pass through a profound intellectual change. Energy ceases to vent through the imagination and takes the form of capital.'

In 1908, ...Winston Churchill, then president of the British Board of Trade, vented a similar historical interpretation in finding 'the seed of imperial ruin and national decay' in 'the unnatural gap between the rich and the poor' and 'the swift increase of vulgar jobless luxury.'

...The word "rentier" - meaning a person living off unearned income - comes from the French, as do so many other words connected with money and plunder: financier, profiteer, buccaneer. Over the last four centuries, however, it was first Spain, then Holland and Great Britain, and now the United States that created the most notable rentier cultures. Each ultimately became vulnerable as a result.

...Because intermittent high debt ratios were so central to the evolution of each of the leading world economic powers, each became comfortable - too comfortable - with debt as a long-standing experience, practice, and tactic. Particular overconfidence was instilled by memories of how often previous debt problems had been surmounted, even at extreme levels (100 to 200 percent) of GDP or GNP.

...Understandable as this cockiness might be, history teaches a crucial distinction: nations could martial the necessary debt-defying high-wire walks and comebacks during their youth and early middle age, when their industries, exports, capitalizations, and animal spirits were vital and expansive, but they became less resilient in later years. During these periods, as their societies polarized and their arteries clogged with rentier and debt buildups, wars and financial crises stopped being manageable. Of course, clarity about this develops only in retrospect. However, even though war-related debt seems to have been part of each fatal endgame, the past leading world economic powers seem to have made another error en route. They did not pay enough attention to establishing or maintaining a vital manufacturing sector, thereby keeping a better international balance and a broader internal income distribution than financialization allowed."

Any of this sounding familiar?

American Theocracy is a "must read" if you want to understand the current economic crisis in the United States and the long-term consequences we all may be facing. It's a well-written book, well documented and full of clear logic and history.

Get a copy. Have a read.

Palin Craters - Score One for the Blogosphere

At first Sarah Palin was a balloon lifting John McCain's stagnant campaign. Now that balloon has burst as people see Palin for what she is/was - a totally cynical ploy by John McCain and Americans are beginning to reject her with the same passion they so recently embraced her.

Markos Moulitas of Daily Kos credits the blogosphere for not letting McCain get away with it:

Bloggers and tradmed reporters took a hard look at Sarah Palin and began raking her over the coals for myriad transgressions. She is a liar with theocratic tendencies, sports an intellect that makes Bush look like a Mensa member, and features an obvious fondness for Cheney-style abuses of power. And that's not even the worst of it.

...we continued to focus on Palin. Republicans were busy trying to build a positive narrative about Palin -- the "hockey mom" who was so folksy she could "field dress a moose" and had "said no to the Bridge to Nowhere and other government waste" and was overflowing with "small town values." McCain had shot up in the polls because of Palin. Common sense dictated it would be hard to knock him back down as long as she consolidated her popularity."

Then he points to the numbers. In just one week Palin's approval numbers fell from 52 down to 42% while her disapproval numbers climbed from 32 to 46% - all in just one week.

"That's a shocking 21-point collapse in a single week. She went from being just about the most popular person on the top of the ticket, to the (lipstick wearing?) goat.

...Palin will continue to excite and energize the wingnut base. She was designed for that purpose, and won't fail at that task. But her cratering popularity now hampers McCain's efforts to expand beyond that core base.

All of this is happening because we did not relent on Palin, blocking Republican efforts to paint her in a positive light. The results are speaking for themselves."

Moulitas also points out that there's been a change in the latest McCain ads. A week ago they were "McCain-Palin." Lately they've gone back to just "McCain."

Palin is trending down and it's hard to see that she has any other way to go. Now even her husband is refusing to appear to hearings after being subpoenaed. Todd must've got the word that top Republicans - or their spouses - are above the law.

Krugman Explains Meltdown - More Coming?

For years, the Right has treated Paul Krugman as though he was Satan's retarded child. What was his mortal sin? He outlined the inevitability of the very meltdown that's happening now. Ooopsie!

So here is the Princeton economist and New York Times' columnists insight into where this is heading:

"...banks are normally able to borrow from each other at rates just slightly above the interest rate on U.S. Treasury bills. But Thursday morning, the average interest rate on three-month interbank borrowing was 3.2 percent, while the interest rate on the corresponding Treasuries was 0.05 percent. No, that’s not a misprint.

This flight to safety has cut off credit to many businesses, including major players in the financial industry — and that, in turn, is setting us up for more big failures and further panic. It’s also depressing business spending, a bad thing as signs gather that the economic slump is deepening.

And the Federal Reserve, which normally takes the lead in fighting recessions, can’t do much this time because the standard tools of monetary policy have lost their grip. Usually the Fed responds to economic weakness by buying up Treasury bills, in order to drive interest rates down. But the interest rate on Treasuries is already zero, for all practical purposes; what more can the Fed do?

Well, it can lend money to the private sector — and it’s been doing that on an awesome scale. But this lending hasn’t kept the situation from deteriorating.

...government takeovers may be the only way to get the financial system working again.

Some people have been making that argument for some time. Most recently, Paul Volcker, the former Fed chairman, and two other veterans of past financial crises published an op-ed in The Wall Street Journal declaring that the only way to avoid “the mother of all credit contractions” is to create a new government agency to “buy up the troubled paper” — that is, to have taxpayers take over the bad assets created by the bursting of the housing and credit bubbles. Coming from Mr. Volcker, that proposal has serious credibility.

Thursday night Ben Bernanke and Mr. Paulson met with Congressional leaders to discuss a “comprehensive approach” to the problem.
We don’t know yet what that “comprehensive approach” will look like. There have been hopeful comparisons to the financial rescue the Swedish government carried out in the early 1990s, a rescue that involved a temporary public takeover of a large part of the country’s financial system. It’s not clear, however, whether policy makers in Washington are prepared to exert a comparable degree of control. And if they aren’t, this could turn into the wrong kind of rescue — a bailout of stockholders as well as the market, in effect rescuing the financial industry from the consequences of its own greed."

Now remember, it's the same clown car full of pols and regulators who allowed this to occur in the first place. And they're going to fix it? Remember back when we used to envy American taxpayers?

Hey, all you Right-Wingers out there. Remind us how great your free market economic theories are. I can't seem to remember how that goes.

World Rejoices As Washington Takes Over Wall Street

See, socialism isn't all that bad. Now that Washington has taken a page out of Fidel's book and begun nationalizing its mortgage, securities, investment banks and insurance industries, stock prices are on the rebound and worried investors are breathing a huge sigh of relief. And today they announced a starter (you watch) fund of $50-billion in loan money for money market mutual funds.

Ain't life grand.

Of course, as pointed out in a McClatchey Newspapers item recently, the American way is to privatize gains and socialize only the losses. That way the rich folk actually do get their cake and get to eat it too no matter how badly they've screwed up. And that's what makes America the greatest land of all.

I saw a pity piece in one of the American papers lamenting the downfall and suffering of the former head of Lehman Brothers. The article showed that this guy had lost too - big time. Why he used to get paid $34-million a year (that's just shy of $3-million a month) and now he's out of work. His holdings in Lehman were valued at $1-billion last month and now they're a million, tops. Of course nobody wants to point out that this guy raked in hundreds of millions of tax sheltered bucks while he was asleep at the wheel, driving his company's investors straight off a cliff. I might feel sorry for the guy - if an angry mob had actually flayed him alive - but it sounds to me like he's come out of this just fine.

Early on in his administration, George w. Bush realigned America's tax system to shift the burden of feeding his insatiable government off the shoulders of the investor class, the rentiers, and more directly onto the shoulders of the working people, let's just call them wage earners. He largely freed capital gains, the money made by investors, from Washington's tax grab - which shifted that little obligation over to the silly wage earners.

Now, did the little guy's taxes go up to reflect that new tax burden? Of course not. Why not? Because it was all floated on borrowed, foreign money. You might have had all those wage earners marching down Pennsylvania Avenue in the middle of the night with torches and pitchforks if you were open with them and handed them the rich folks' tax bill. Best to get the foreigners to loan you the cash and not trouble the little people with these petty details. Don't worry, you'll find some of that money when you start trimming their Social Security cheques.

Remember that video clip of George addressing a black tie dinner when he got that grin on his face and scanned the crowd and said he saw "the haves and the have-mores - my base." He wasn't joking. He meant it and he's shown that repeatedly over the past eight years.

The past eight years have seen a powerful class war waged in the United States by the big and powerful against the little and weak. So why haven't the little people risen up? Why haven't they used their voting power to elect a government that serves their needs, their interests - you know, that government of the people, by the people, for the people deal?

Why? Because they've been blinded to it. You don't know that your savings are gone until somebody opens the vault door. Keep that door shut by using money borrowed from foreigners and they won't know the difference. And, if somebody does try to warn them, a latter day Paul Revere sort of thing, well you simply jam the message. You get the powerfully corporatized media and the blatantly partisan Fox News and all those angry, open mouth radio guys like Limbaugh and Savage and their ilk to denounce the left, the looney left. Americans have been subjected to propaganda on a level not seen outside the Communist world since the 30's.

Why has there been no action on global warming? Because that would interfere with wealth. Why has there been no attempt to restore fiscal sanity to government? That would interfere with wealth. Why are they blowing the tops off mountains in West Virginia and rendering the valleys toxic waste dumps? I suppose that too would be about wealth.

Where is the public debate on these issues? You won't hear it from the Republicans, they know better, but why aren't the Dems using this obviously powerful stuff? One reason is that they're not far enough removed from this chicanery themselves. They've supported a lot of this stuff. Another reason is that anyone who talks about this is branded a "liberal" and, to many Americans, liberal = elitist = socialist = revolutionary = traitor. They get fed that nonsense every day.

To me, America resembles one giant, cheque-kiting scheme. I became familiar with those back when I did fraud work. They often start off quite small and then they build to a higher level, almost a plateau for a while, and then they tend to go full bore usually just before the police show up or the bad guy heads for the airport with the cops hot on his trail.

The American government and especially the Pentagon quietly let on that they see China as America's emerging strategic threat. They're not keeping it secret, they just don't go on about it. Now China, by all appearances, is set to become the world's next economic giant, outstripping the US.

The Bush Doctrine, the policy that Sarah Palin had never heard of, holds that America reserves the right to use its military muscle to subdue any nation or group of nations that rises to become as economically or militarily powerful as America. In other words, growing bigger than America will be taken as an act of war, a casus belli as it were. That would seem to put China on its way into America's crosshairs.

Okay, let's work this through. You've identified C as your looming strategic threat. You ship your industrial base to C and use your wealth to grow C's economy. Meanwhile you can't resist a pipeline of cheap money loaned back to you by C, putting your country in hock to your strategic rival. Then you financialize your economy which leaves you extremely vulnerable to creditors - especially foreign countries just like C - while you drive your country with its financialized economy steadily deeper into deficits, debt and unfunded obligations which is sort of like giving a box of Havana cigars to a lung cancer patient.

What gives? Here's a way to make sense of this. Years ago a psychiatrist explained to me that even when people do self-destructive things, they do it because they get something out of it. In other words, this may seem like madness but you have to realize that someone, some influential group, is getting something out of this no matter that, overall, it all seems harmful to the United States of America.

At least you can't say this is boring.

Sarah Palin Doesn't Know What She Doesn't Know - And She Could Care Less

It's becoming increasingly plain that John McCain's chosen running mate, Alaskan governor Sarah Palin is grossly unprepared to serve as America's vice president.

The Washington Post published this interesting assessment of Palin by Chuck McLean of the Denver Research Group that produces the Global Power Barometer:

"The selection of another incurious, ill-schooled politician with no foreign policy judgment and a simplistic "the military can solve everything" view of foreign policy will continue the dramatic slide of the U.S.'s global influence. It will also dig us much deeper into a foreign policy hole that has already brought us to an international situation more dangerous than the darkest days of the Cold War.

As we've watched world reaction to the Bush administration over the years, the people and leaders of the world are not as much interested in "experience" per se as they are two critical human traits: 1) curiosity about the world, and, 2) a knowledge of the history and cultures of their nations. Governor Palin has neither and that's downright dangerous.

The Governor, who obtained her first passport less than two years ago, has traveled outside the U.S. only once, to visit Alaska National Guardsmen stationed in Germany and Kuwait. She claimed a visit to Ireland, but the Irish quickly pointed out that a refueling stop in which you don't leave the airport is not a "visit." In fact, she has never even visited Alaska's important next-door neighbor, Canada.

Consistent with a complete lack of curiosity about the world around her, Governor Palin has never had any formal education in history (of the U.S. or the world,) let alone any experience with global culture or politics that might serve as a substitute for formal education.

In the current crisis with Russia, an understanding of Russian culture, history and 20th-century experience (and, of course, the right judgment to apply the lessons of that history) would have avoided creating the situation in which Russia had little choice but to draw the line at South Ossetia and Abkhazia.

The U.S. has a history as long as a blink of an eye in comparison to much of the rest of the world, so it may be understandable that we have little interest in world history. U.S. citizens are some of the least traveled among developed countries, so that may explain our lack of knowledge of other cultures. But in order just to protect ourselves and avoid mistakes that strengthen our enemies and weaken the U.S., we need leaders who are curious about the world, its history and its cultures. The nomination of Sarah Palin sends exactly the wrong message to the world and guarantees four more years of foreign policy and military mistakes in a world far more dangerous than it was eight years ago."

Just Leave NATO Alone

One of Britain's top think tanks wants a halt to NATO expansion.

The International Institute of Strategic Studies warns it would be a "strategic error" to admit Georgia and the Ukraine into the Alliance. From The Indepdendent:

"The policy of Nato enlargement now, we believe, would be a strategic error," the head of the IISS , John Chipman, told journalists yesterday. Speaking at the launch of the organisation's annual review of world affairs, he criticised the 26-nation military alliance for viewing enlargement as an "institutional priority" - "as if riding a bicycle eastwards is necessary to keep the bicycle upwards."

The IISS noted that the West was divided on Nato integration and argued that "Europeans have a strong case to argue that it is in Nato's strategic interest to pause its enlargement policy." It accused the "irresponsible" Georgian government of having "weakened its case" for membership by ordering the 7 August assault on the South Ossetia capital which led to the "vindictive" Russian military retaliation. "It openly defied its main strategic patron, the US, by seeking to recover its lost territories" before calling on the West "to sort out the mess it created."

The Socialist People's Republic of America?

A couple of insights on the Wall Street meltdown from McClatchey Newspapers:

"Once upon a time, the average American had to make a choice to invest on Wall Street. Now, all the average taxpayer has to do is wait around for the government to take over the latest ailing financial behemoth.

Last week, the feds placed wobbling mortgage giants Fannie Mae and Freddie Mac into conservatorship — effectively nationalizing the housing finance business.

..We are entering a new and unsettling phase in the relationship between government and business, one that neither sector particularly wants but cannot avoid. One result is that the line between public and private interests increasingly is being blurred so much as to become unrecognizable.

Nowhere is that more obvious that at Fannie and Freddie, two massive enterprises that combined their government-sponsored creation and backing with publicly traded stock. Fannie and Freddie were perfect fodder for the sort of mischief that privatizes gains while socializing losses."

A Basket of Broken Eggs

America's biggest, and hence most important, economic sector isn't manufacturing or agriculture or resources, it's America's financial sector.

For better than 20-years the financial sector - stocks, bonds, insurance, banking - has been the real economic engine of the United States.

The America of my youth was a manufacturing powerhouse. The rest of the industrialized world had largely been bombed out in WWII but America (Canada too) had come through that with its industrial base intact, even thoroughly modernized as a result of the conflict.

I don't have the study at hand but, if memory serves, the US came out of WWII with something in the order of 70% plus of the world's entire manufacturing capacity. Detroit ruled unchallenged in the global automotive market. Airplanes? They were made all over the United States in plants from Wichita to Seattle, plants that had just a couple of years earlier been churning out warplanes en masse.

The whole thing made us really, really prosperous. Single income families with stay at home moms were relatively common. It was the birthing of Suburbia. The car companies changed the style of their cars every year because there were always buyers lined up to get the latest and greatest. No gasoline shortage, no shortages of any kind for that matter. Clean air, clean water (although we were unwittingly busy putting an end to that). No hole in the ozone layer. All this bounty and just a third of the population the earth wallows under today.

But all things must pass. It took a couple of decades but the rest of the industrialized world bounced back and global competition took on a whole new dimension. For a while we had a buffer in an enormous military-industrial sector but, in the long run, that really wasn't enough.

Like other societies before us we finally began looking for new opportunities. Manufacturing was virtually disparaged. Our future would rest not in making things but in providing services, in the financialization of our economies. Globalize production, outsource it. We would make our wealth in the trade in those outsourced products and commodities, we would move paper and manipulate data.

Remember the Dot.Com bubble? Can you recall how the believers preached the "new economy" which was to bring us all great blessings in the future? Anyone who clung to fundamentals was a dinosaur, lacking the grand vision to prosperity. Vision, yes indeed. The sort of vision that allowed one to see the Emperor's clothes were none existed.

When you produce cars it's very hard to delude yourself about what and how well you're doing. You have a huge lot where you can see what you've made and you can monitor the trucks and trains carrying your vehicles to waiting buyers. If the lot is full but the trucks and trains aren't moving, it's not hard to see you're in trouble. You can't delude yourself on that score (although Detroit has tried awfully hard to prove me wrong).

When it comes to paper and data, however, you're the kid in the toystore of delusion. Anything becomes plausible even if not remotely possible. Wealth and prosperity become mere states of mind. You're happy, you're rich.

Let's return to the Dot.Com bubble. Here, apparent wealth came to be as valid as actual wealth. Millionaires, even billionaires were created out of thin air. When that bubble burst there was wailing and moaning about massive wealth that had been suddenly wiped out. But, in the main, it was wealth that never existed except in people's minds, wealth that was nothing more than an entry in a ledger.

Wealth that never existed and yet people would sell you things on the strength of it. Banks would lend you money on it. Little people invested their life savings in it. Bill Clinton actually balanced his government's budget on tax revenues flowing out of this grand illusion.

You woulda thunk we'd have learned our lesson from the Dot.Com bubble but no, not really. It was barely over when our American cousins seized onto the bizarre notion that their houses were acutally machines that would generate bags of cash forever and ever amen.

Housing prices skyrocketed. There was going to be no end to it. Just a year or two back, two out of three new mortgages written in California were "interest only." There was no intention of paying down that debt, only to service it for a year or two while that house skyrocketed in value at the end of which you would sell it and grab your windfall.

There was no end to the games that were being played. Mortgages became commodities. Brokers lured borrowers into taking their mortgages with low, introductory rates. A year or two later that mortgage interest zoomed up. It was on the expecation of the return from that deferred, higher rate that these mortgages were bundled and flogged to major lenders. Meanwhile the home buyer had no intention of hanging around to pay that adjusted rate. The house, after all, would just keep soaring in value. Toward the end of the cheap interest period the homeowner would "re-fi" - get a new mortgage, again with a cheap introductory teaser rate, and so the game would go on and on and on.

Before long the mortgage brokers ran out of qualified borrowers, people who could actually make mortgage payments. That left them facing a dire shortage of paper to flog as derivatives - the place they now made their money. So they went to option B - the unqualified buyers, the subprime.

Everybody got into this game. Homeowners, those who arranged their mortgages, those who bundled and sold those mortgages, those who bought and traded in these bundled assets, those who insured the risks of those who bought and traded in these derivatives. It went right to the top - Wall Street.

This scam - and it really was a scam at all levels - bought America a decade of prosperity. It was tailor-made for a financialized economy but, as we're seeing today, it also played into the often unrecognized weaknesses and vulnerabilities of that financialized economy.

A decade of prosperity. Prosperity? How can a country have prosperity when it's saddled with massive debts and deficits? How can a country be prosperous when it's enduring murderous balance of trade shortfalls? How can a country and its people enjoy prosperity atop a mountain of unfunded obligations propped up by foreign borrowings? How can any nation, any people hope to remain prosperous when they're living wildly beyond their means?

What did Warren Buffet understand that Alan Greenspan couldn't grasp? Let's just call that "reality" for the purpose of this discussion. You see, it's bad enough having a financialized economy but it's downright lethal when that financialized economy isn't tightly bound to reality. You gotta tie it down. You have to sit on it. There's no letting up. It will constantly try to slip away into La La Land and, when it gets there, it causes boundless havoc.

America has become unbalanced, perhaps terminally so. In Canada we've been a bit more prudent. We've funded our social insurance plan. We've wrestled our government out of the red (we Liberals did that). We're not terribly reckless with debt. We have regular balance of trade surpluses and, best of all, we have a strong, resource-sector. Maybe we just never grew prosperous enough to do the same things our American cousins have done or maybe we are more comfortable with reality.

Can America get back to basics, restore its neglected economic sectors and reclaim its promise? It's possible but it would require a radical rethinking of just what America is and what it needs to become. I just don't see many encouraging signs that Americans are willing to give up their delusional thinking and, if they don't, their country's economic Mardi Gras isn't over.

But if Americans aren't yet ready to put their house in order, there's no excuse for us falling into their troubles. This is no time to be toying with continental integration. We need to keep our distance for the time being, wait to see if the fever passes.

Canada needs a healthy, vibrant America. We need an America grounded in reality. There are no guarantees that will come to pass anytime soon. In the meantime, let's keep our eggs dispersed in our own baskets.

Don't Buy That New Atlas Just Yet

The way things are going today's Atlas might be out of date before you know it, at least from the Middle East to the Caucasus.

Georgia seems about to look a lot lighter with the loss of South Ossetia and Abkhazia as "independent" republics under Russian protection.

Oh yeah, then there's the Crimea. Maybe you haven't read about this one but there's a move afoot by the Russian-leaning Crimean peninsula to say "no" to a Ukraine enlisted in NATO. That would, of course, leave Sevastapol, whose port is under lease to the Russian navy until 2017,under Russian control and eliminate any ideas of a viable Western presence in the Black Sea.

But wait, there's more.

Afghanistan, as we know from our Furious Leader's recent tacit admission of failure, remains very much in play. It's not just the Taliban any more. Other tribes are beginning to turn on Kabul as well. We've long since gone from "liberator" to "occupier" in the minds of the locals and, as Petraeus himself noted in his counterinsurgency field manual, once you lose your moral legitimacy in a guerrilla war, you've lost the war. Shit, oh dear!

It wasn't supposed to be this way. It was supposed to be a strong American military presence in Iraq and a strong American military presence in Afghanistan with Iran caught right in the middle. Like all half-assed plans, this one doesn't seem to have worked out as hoped.

You see there's Pakistan messing up the gears. Ah Pakistan, a classic example of a Western attempt to hobble together disparate tribes into a modern country. Ouch! Think I'm kidding? Look up the history behind the country's name.

Pakistan is somewhat less than the Western ideal of a stable, nuclear power. But we cannot sort out Afghanistan until we overcome the refusal of the Pakistanis to do our bidding in the untamed tribal homelands. Here's where we begin to run out of options.

One of these is to try to pursue al Qaeda and the Taliban into the agencies, particularly Waziristan, as US special forces have done a couple of times recently. It sounds like a plan except it infuriates the Pakistani people and turns them against us. That's why their military has issued orders to fire upon Western forces who show up inside Pakistan.

Maybe we should just wipe out the Pakistan military. Trouble is it's too large and far too well trained to be taken lightly. It's not at all a pushover outfit like Saddam's army was in 2003. And then there's that business about Pakistan's nukes. Add to that the inconvenient fact that America's ground forces have been all but trashed by the protracted nonsense in Iraq and you've got a problem, but that's just the start.

Pakistan, if pushed too hard, could jump into the other camp. I'm talking about the Shanghai Cooperation Organization or SCO, the ascendant East's equivalent of NATO for the 21st Century. Guess who else is trying to get under the SCO's skirts? You're right - Iran. Best get that map out again.

Think of these numbers. Kabul to Islamabad - 374 km. Kabul to Tehran - 1614 km. Kabul to Moscow - 2,095 km. Kabul to Beijing - 4,183 km. Kabul to Washington - 11, 134 km. Get the picture?

Paskistan already has observer status at the SCO. So does Iran. That's sort of like the touchy-feely deal Washington is forcing NATO into with Georgia and Ukraine. Is this beginning to sound blurry? It is.

Back to the map. Take a look at Afghanistan. Now imagine it isolated, surrounded on all sides by decidedly anti-Western Iran, Kazakhstan and Pakistan under the protection of Russia and China. Do you begin to see the picture? Hell, all China would have to do is to announce it would refuse to buy any more American debt. It doesn't have to raise a gun barrel to inflict crippling damage on the West. We can hardly grouse about it, we put that little weapon in their hands.

For more than two centuries Asians and South Asians have borne the yoke of Western domination. If you were in that situation, how would you feel about that?

Sorry, folks, but I think we may must have screwed the pooch this time. The Atlas, the one we created, may be about the change.

Your Daily Laugh

Check out this hilarious vid on Sarah Palin

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