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Monday, September 15, 2014

Sophisticated Slavery



Guest Post By Marco den Ouden

One of the by-products of the American Civil War was the abolition of slavery. Well, sort of!

The Civil War resulted in the elimination of formal slavery. However, it did not get rid of essential slavery. What does this mean? Let's go back to pre-Civil War America to find out.

The Southern U.S. states were not sophisticated slave states. Slaves were held as chattel. The plantation owner literally "owned" his slaves. They were his property. He kept them and cared for them just as he kept and cared for cattle and other domestic livestock. He housed them, fed them and clothed them, and, of course, he made them work for him. If they did not suit him, he sold them.

But suppose slavery was not abolished in the 19th Century, but rather it evolved into a more sophisticated system. How might it have changed? First a slave owner might have thought, "Hey, what if I can get the benefit of slave labor without the exorbitant cost of feeding, clothing and sheltering them?" Some slave owner may have taken the first path to sophistication by paying his slaves a nominal wage (less than it cost to keep them on the plantation) and told them, "I'm going to start paying you for your work but you must go and find your own food and shelter. You are free to go about your own business except that you must come to the plantation to work every day. After all, I still own you."

Other slave owners notice he's saving a bundle on costs and also adopt the practice. Soon the entire society has adopted this new mode of slavery.

The slaves have so much free time on their hands that some start moonlighting. While it's still nickel and dimes, the slave owners look the other way. But after a while they notice something quite unexpected. The slaves are not the stupid, backward people they thought they were. Some used their spare time to get educated and now earn as much, if not more, off the plantation as on.

A very sophisticated slave owner puts two and two together. "My slaves can generate more wealth on their own time than working for me," he reasons. "Why don't I give them complete freedom to choose their own line of work and develop wealth in their own way. Instead of having them work on the plantation, which would under-utilize their skills, I'll let them do what they are best suited for in the marketplace. I'll hire some poor white trash and slaves who can't find other work for the fields. And as for my slaves, they will give me 50% of all they earn. After all, I still own them."

If the slave owner is really sophisticated, he will notice that skills and aptitudes vary greatly among his slaves. The unskilled ones will not be able to survive on the small remuneration he pays for farm work. The original concept was to save on the costs of feeding, clothing, and sheltering his slaves by paying them and letting them fend for themselves. He decides that he will not demand any tribute from slaves who can do little besides farm work. He decides to graduate the tribute demanded according to how much the slave earns. The more they earn, the greater the percentage they pay to the slave owner. He carefully crafts the rates of tribute so the slaves still have an incentive to better themselves and earn more. He calls this sliding scale a "progressive" tribute system.

Soon other slave owners follow suit and the slave society reaches its ultimate level of sophistication. The slaves are formally free to do what they want to do. Formal slavery has been abolished. But essentially, they are still slaves. They must pay a tribute based on their earnings to their masters. The essence of slavery is working for the benefit of others rather than yourself, not by choice (as in supporting your family or giving to charity) but by force. To paraphrase Frederick Douglas, who escaped from slavery in 1838, a slave is someone who "toils so that another may reap the fruit."

The American Civil War resulted in the end of formal slavery. But it did not end essential slavery. In fact, over the years, essential slavery has expanded to include not just former slaves, but everyone. And everyone is a partial slave owner as well. We have, to paraphrase Abraham Lincoln, a system of slavery "of the people, by the people and for the people." The instrument of its implementation is the income tax!

Until we abolish coercive taxation, the forced taking of the fruits of the labor of those who have earned it for the benefit of those who have not, we will not have abolished the essence of slavery. Until we see the rise of another great emancipator who can educate the world to the evil of slavery down to its essential core, we will not be a truly free people!







Lifting The Fog Of Pretense


Guest Post  by James H Kunstler via Kunstler.com,

There are times when events are in charge, not personalities. The unseen forces that hold the affairs of nations and economies in equilibrium dissolve, particles fly out of the many centers, and things heat up toward criticality.

Glance in the rear-view mirror and say goodbye to the Era of Wishful Thinking.

This was the time when the USA was inspired by its Master Wish: to be able to keep driving to Wal-Mart forever. Looked at closely, the contemporary idea of Utopia was always a shabby package. On one side, all the pointless driving. For most Americans it was nothing like the TV advertising fantasy of a lone luxury car plying a coastal highway in low, golden light. More like being stuck near the junction of I-55 and I-90 in Chicago at rush hour in July in an overheating Dodge Grand Caravan with three screaming ADD kids whose smart phone batteries just died — plus your fiercely over-filled bladder and no empty Snapple bottle to resort to.

On the other side, there’s the Wal-Mart part: the unbelievable cornucopia of insanely cheap plastic goodies, like, somewhere in the 1990s America became one giant loading dock for nearly free stuff. Wasn’t that fun? Now, everybody has got the full rig, from the flatscreen to the salad shooter, but we’re tired of seeing Kim Kardashian’s booty, and nobody really liked salad, even when you could shoot the stuff into a bowl. The thrill is gone, and so is the paycheck that was your ticket to the orgy. It’s especially gloomy over in the food department, where the boxes of Lucky Charms are suddenly half the weight and twice the price. And that was going to be the family dinner! Must be Nature’s way of telling you it’s time for a new tattoo.

In this weird liminal time since the so-called Crash of 2008 leadership has depended on lies and subterfuges to prop up the illusion of resilience.

One biggie is the shale oil revolution, kind of a national parlor trick to wow the multitudes for a long enough moment to convince them that their troubles with the national energy supply are over. Even people paid to think were hosed on this one. Wait until they discover that the shale oil producers have never made a buck producing shale oil, only on the sale of leases and real estate to “greater fools” and creaming off the froth of the complex junk financing deals behind their exertions. Expect that mirage to dissipate in the next 24 months, perhaps sooner if the price of oil keeps sinking toward the sub $90-a-barrel level, where there’s no economically rational reason to bother drilling and fracking.

The lies, frauds, and cons run between the axis of Wall Street and Washington had two fatal consequences with still-lagging effects.

1) They destroyed the capacity for markets to establish the real price of anything - rendering markets useless.

2). They disabled capital formation to the degree that we might not have the money to rebuild an economy to replace the “financialized” matrix of rackets that currently pretends to function. A lot of observers like myself have been waiting for the moment when the fog of pretense lifts and exposes all the broken machinery within.

We may be so close now that you can smell it.

Change is in the air, literally, as we wake this still-summer morning with the thermometer so low you wish the furnace was prepped and ready to run. Much is in the air, too, where the news of events near and far provoke swirls of transformation in the disposition of people, nations, and affairs. Who would have guessed a few years ago how nervous Scotland would make the whole Western world? The sharpies at the Pentagon, and the White House, and the CIA may be waiting with indigestion and palpitations for the next ISIS decapitation video, but maybe you have to wonder instead which of five thousand shopping malls across this land will be visited by black-flagged desperados armed with automatic rifles and RPG’s.

Finally, there are the people themselves of this sclerotic polity: too dumb and distracted to help themselves, full of inchoate grievance and resentment, tending ever deeper into darkness. Welcome to the season of the witch in the Era of Bad Feeling. Somewhere “out there” there is a light of virtue waiting for us, but we are a long way from finding our way to it.

A Simple Primer On "War Propaganda" From An Unexpected Source



Stop us when this becomes familiar:
"The receptivity of the great masses is very limited, their intelligence is small, but their power of forgetting is enormous.
In consequence of these facts, all effective propaganda must be limited to a very few points and must harp on these in slogans until the last member of the public understands what you want him to understand by your slogan.
As soon as you sacrifice this slogan and try to be many-sided, the effect will piddle away, for the crowd can neither digest nor retain the material offered.
In this way the result is weakened and in the end entirely cancelled out."
Source: Chapter 6, "War Propaganda" of Adolf Hilter's 1926 "Mein Kampf"

 We need to rid ourselves of the single man view of history.  If it wasn't Hitler, make no mistake it would have been someone else to head that particular parade.  Society has a velocity and trajectory that is not the will of one man, but the confluence of a million tiny pushes from everywhere. Politicians and powerful people are just a special breed that can diagnose this and position themselves in front. This is why individualism is far superior as a check on such collectivist madness.

But of course, this can't happen in America, or can it?




Sunday, September 14, 2014

The Terrifying Future of The United States


Guest Post by StormCloudsGathering


The Fed is Coming to Fleece Your Towns, Benefits and Pensions Because There is No Recovery


 Guest Post Ellen Brown

The Fed's bizarre new rules transfer power from the public sector, once again.

In an inscrutable move that has alarmed state treasurers, the Federal Reserve, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, just changed the liquidity requirements for the nation’s largest banks. Municipal bonds, long considered safe liquid investments, have been eliminated from the list of high-quality liquid collateral. assets (HQLA). That means banks that are the largest holders of munis are liable to start dumping them in favor of the Treasuries and corporate bonds that do satisfy the requirement.

Muni bonds fund the nation’s critical infrastructure, and they are subject to the whims of the market: as demand goes down, interest rates must be raised to attract buyers. State and local governments could find themselves in the position of cash-strapped Eurozone states, subject to crippling interest rates. The starkest example is Greece, where rates went as high as 30% when investors feared the government’s insolvency. Sky-high interest rates, in turn, are the fast track to insolvency. Greece wound up stripped of its assets, which were privatized at fire sale prices in a futile attempt to keep up with the bills.

The first major hit to US municipal bonds occurred with the downgrade of two major monoline insurers in January 2008. The fault was with the insurers, but the taxpayers footed the bill.  The downgrade signaled a simultaneous downgrade of bonds from over 100,000 municipalities and institutions, totaling more than $500 billion. The Fed’s latest rule change could be the final nail in the municipal bond coffin, another misguided move by regulators that not only does not hit its mark but results in serious collateral damage to local governments – maybe serious enough to finally propel them into bankruptcy.

Why this unprecedented move by US regulators? It is not because municipal bonds are too risky, since corporate bonds with lower credit ratings are accepted under the new rules. Nor is it that the stricter standard is required by the Basel Committee on Banking Supervision (BCBS), the BIS-based global regulator agreed to by the G20 leaders in 2009. The Basel III Accords set by the BCBS are actually more lenient than the US rules and do not include these HQLA requirements. So what’s going on?

From the Inscrutable, Unaccountable Fed

The rule change was detailed by Pam Martens and Russ Martens in a September 4th article titled “The Fed Just Imposed Financial Austerity on the States.” They write that on September 3rd:
The Federal regulators adopted a new rule that requires the country’s largest banks – those with $250 billion or more in total assets – to hold an increased level of newly defined “high quality liquid assets” (HQLA) in order to meet a potential run on the bank during a credit crisis. In addition to U.S. Treasury securities and other instruments backed by the full faith and credit of the U.S. government (agency debt), the regulators have included some dubious instruments while shunning others with a higher safety profile.

Bizarrely, the Fed and its regulatory siblings included investment grade corporate bonds, the majority of which do not trade on an exchange, and more stunningly, stocks in the Russell 1000, as meeting the definition of high quality liquid assets, while excluding all municipal bonds – even general obligation municipal bonds from states with a far higher credit standing and safety profile than BBB-rated corporate bonds.

This, rightfully, has state treasurers in an uproar. The five largest Wall Street banks control the majority of deposits in the country. By disqualifying municipal bonds from the category of liquid assets, the biggest banks are likely to trim back their holdings in munis which could raise the cost or limit the ability for states, counties, cities and school districts to issue muni bonds to build schools, roads, bridges and other infrastructure needs. This is a particularly strange position for a Fed that is worried about subpar economic growth.
Not Sufficiently Liquid?

In a September 3rd press release, Federal Reserve Governor Daniel K. Tarullo stated that while “most state and municipal bonds are not sufficiently liquid to serve the purposes of HQLA in stressed periods . . . the liquidity of some state and municipal bonds is comparable to that of the very liquid corporate bonds that can qualify as HQLA.” [Cite] Criteria were being developed, he said, for considering these assets. But “it is important to get this final rule adopted now, so that the largest banks can begin to prepare for its implementation on January 1.” In the meantime, muni bonds are in limbo, and it appears that most will still not be accepted as HQLA.

The regulators consider stocks to be more liquid than muni bonds because they are readily traded on the stock market. But as the Martens’ note, stock markets can be quite inaccessible in a crisis. Quoting from the Fed’s own archives on the crash of 1987:
Market makers in the over-the-counter market were not obligated to maintain an orderly market and many withdrew from trading. Delays in processing trades resulted in investors receiving prices very different from what they expected. Many brokers did not answer their phones, leaving investors unable to reach them. Erratic price movements and quotes resulted in frequent lock-ups in the electronic trading system used in the over-the-counter market.
In any case, switching the banks’ holdings from muni bonds to corporate bonds or Treasuries is liable to have little effect in a crash. The stricter rules are supposed to be a defense against bank runs; but in a major derivatives bust and bail-in, the available collateral will go first to the derivatives claimants, through a massive concession to financial institutions in the Bankruptcy Reform Act of 2005. (See my earlier article here.) The FDIC and the depositors are both liable to be out of luck, no matter what form the collateral takes.
The Martens’ conclude:
That the Fed and its regulatory cohorts have to resort to this implausible plan – which crimps the ability of states and localities to raise essential funds to operate – in a strained effort to pretend that they’ve found a means of avoiding another massive bailout of Wall Street in a crisis, is just further proof that the only way to seriously deal with too-big-to-fail banks is to restore the Glass-Steagall Act and break up these complex creatures before they strike again.
Gordon Gekko Goes Muni?

The rule change may not have much effect in a crash, but where it will have a major effect is on the cost of credit, which will increase for municipal governments and decrease for corporate and financial institutions. The result will be to further shift power and financial resources from the public sector to the private sector.
Why would regulators dangerously jeopardize state and local government budgets in this way? Skeptical observers speculate that the intent is to Detroit-ize municipal governments, so that assets can be stripped as is being done in that imperiled city. The international bankers got away with asset-stripping Greece. Why not make the US itself a wholly-owned subsidiary of private banking interests?

If that seems far-fetched, consider what is happening with Argentina, which has been forced into bankruptcy by a US court to satisfy the exaggerated claims of certain hold-out vulture funds. IMF regulators have discussed establishing an international bankruptcy court that could strip a country such as Argentina of its assets, including prime sections of real estate, to pay off the nation’s creditors.

In the US, there is already a trend to force state and municipal governments into austerity measures, if not outright bankruptcy, in order to eliminate labor unions, pension obligations and social services. Bankruptcies can be involuntary, forced by the creditors who caused them. Detroit is the US model. Michigan’s Constitution protects pensions, so the emergency manager appointed by the governor could not unilaterally cut those funds. But in a municipal bankruptcy, a judge would decide the fate of city workers’ pensions, making it an attractive option for banking interests. The oligarchs have long had their eyes on the massive sums represented by the pension funds.

Public Banks to the Rescue?

Whatever the explanation for the Fed’s game-changing move, the vulnerability of state and local governments to unpredictable and unaccountable federal regulators is another strong argument in favor of forming publicly-owned banks. Why be under the thumb of an erratic privately-owned central bank manipulated by Wall Street megabanks now caught in multiple frauds?

Like Eurozone countries, US states cannot print their own currencies. But unlike Eurozone countries, they can borrow from their own public banks, which can create money as credit on their books just as private banks do.

At least, they could if they had their own banks. Only one state – North Dakota – has currently taken advantage of that option. North Dakota is also the only state to have escaped the 2008 credit crisis, sporting a budget surplus every year since then. It has the lowest unemployment rate in the country, the lowest default rate on credit card debt, and one of the lowest foreclosure rates.

True, North Dakota also has oil. But the 2008 crisis happened before oil and gas had made a significant impact on state revenues; and the state was posting a budget surplus all during that period. Other oil and gas states are not doing so well.

Globally, 40% of banks are publicly owned; and they are largely in the BRIC countries – Brazil, Russia, India and China. These countries also escaped the credit crisis largely unscathed.
If state and municipal governments want to protect themselves from the fate of Greece and Detroit, they would do well to follow North Dakota’s lead and form their own publicly-owned banks. And time is of the essence, if they hope to beat the rush before the first US Cyprus-style bail-in consumes the collateral that local governments are counting on to protect their multi-billions in deposits.

The American Public: A Tough Soldier Or A Chicken Hawk Cowering In A Cubicle?



Guest Post by Mike Krieger of Liberty Blitzkrieg blog,

You gotta love the American public sometimes. For a mass of people so easily terrified by guys in caves funded and armed by our intelligence services and “allies” in the Persian Gulf, the same public talks with such armchair bravado when it comes to launching bombs from drones and sending other people’s children to die.

Makes you wonder though, which one is it? Is the American public actually the tough guy soldier it pretends to be when cheering overseas military interventions, or is it really a scared, propagandized, coward hiding in one of our nation’s endless cubicle rows? Unfortunately, based on recent opinion polls demonstrating approval for military action against ISIS, it appears to be the latter. The former is merely a front put on by that terrified, economically insecure, silently suffering automaton. I really wish this weren’t the case.

“ISIS as the new enemy” is a meme that has made me very uncomfortable from the start for several reasons, not the least being the fact that this group seemingly emerged out of nowhere just when it seemed corrupt politicians from both parties in Washington D.C. were becoming increasingly frustrated by their inability to launch missiles into Syria back in 2012, following well documented disastrous campaigns in Iraq and Libya. Not only that, it is quite clear that many of our so called “allies” such as Saudi Arabia, Qatar and Kuwait have been the major funders behind ISIS. Moreover, for a public so squeamish and outraged by beheadings, we hear barely a peep about the fact that beheadings hit a record level in Saudi Arabia during August, with nearly one unfortunate soul decapitated per day during the month. Nope, haven’t heard much about that at all.

But of all the inconsistency and irrationality that comes with increased support by the American public for military action against “ISIS,” nothing is more concerning than the fact that this recent approval appears to be based entirely on propagandized falsehoods. As usual, you can thank politicians and mainstream media for the latest assault on the public’s logic.
Trevor Timm encapsulates this perfectly in today’s Guardian op-ed. He writes:
Did you know that the US government’s counterterrorism chief Matthew Olson said last week that there’s no “there’s no credible information” that the Islamic State (Isis) is planning an attack on America and that there’s “no indication at this point of a cell of foreign fighters operating in the United States”? Or that, as the Associated Press reported, “The FBI and Homeland Security Department say there are no specific or credible terror threats to the US homeland from the Islamic State militant group”?

Probably not, because as the nation barrels towards yet another war in the Middle East and President Obama prepares to address that nation on the “offensive phase” of his military plan Wednesday night, mainstream media pundits and the usual uber-hawk politicians are busy trying to out-hyperbole each other over the threat Isis poses to Americans. In the process, they’re all but ignoring any evidence to the contrary and the potential hole of blood and treasure into which they’re ready to drive this country all over again.

The White House declared on Tuesday night that it needn’t bother to ask Congress for war powers, and Congress is more than happy to relieve itself of the responsibility of asking for them – or, you know, voting. Members of both parties have actually been telling the president to ignore the legislative branch entirely – as well as his constitutional and legal requirements. It seems so long ago now that presidential candidate Obama said, “The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.”

“What if it comes over and you can’t pass it?” asked Sen Lindsay Graham, as though he wouldn’t want democracy getting in the way of a nice war. The aforementioned Sen Nelson said he thinks the president should go aheadand strike Isis all he wants, but added that “there are some legal scholars who think otherwise, so let’s just put it to rest”. Those pesky legal scholars with their “laws” and that “Constitution” of theirs, always slowing things down.

Thanks to this wall-to-wall fear mongering, a once war-weary public is now terrified. More than 60% of the public in a recent CNN poll now supports airstrikes against Isis. Two more polls came out on Tuesday, one from the Washington Post and the other from NBC New and the Wall Street Journal, essentially concluding the same thing. Most shocking, 71% think that Isis has terrorist sleeper cells in the United States, against all evidence to the contrary.

So where to from here? Well, those airstrikes the public have been scared into supporting, which already numbering the hundreds, will reportedly expand fast – not only in Iraq but into Syria. The White House even has shiny new euphemism for such military attacks, as the Wall Street Journal reported: “Mr. Obama could green-light the new ‘sovereignty strikes’ in his address on Wednesday.” George Orwell would be proud.

It’s also strange that we are unquestionably calling the Free Syrian Army (FSA) the “moderate” opposition and putting our faith in their abilities, despite manyactual experts claiming they’re far from moderate and far from a cohesive army.As George Washington University’s Marc Lynch wrote in the Washington Post recently, “The FSA was always more fiction than reality, with a structure on paper masking the reality of highly localized and fragmented fighting groups on the ground.” The New York Times reported two weeks ago that FSA has a penchant for beheading its enemy captives as well, and now the family of Steven Sotloff, the courageous journalist who was barbarically beheaded by Isis, says that someone from the “moderate” opposition sold their son to Isis before he was killed.

So how, exactly, will the administration accomplish “destroying” Isis, when no amount of bombs and soldiers have been able to destroy al-Qaida or the Taliban in nearly 13 years of fighting? The administration openly admits it has no idea how long it will take, only that it won’t be quick. “It may take a year, it may take two years, it may take three years,” John Kerry said.

He didn’t add, “it might take another 13”, but he might as well have.
Or it might take forever. Just say it Kerry, you know you want to.
Even more disturbing, if the American public knew the truth would it even matter? With a middle class lifestyle increasingly a pipe dream, it’s far easier for the public to support dropping bombs from drones halfway across the world than it is to deal with the real economic issues affecting their daily lives.
Meanwhile what ever happened to al-Qaeda? Seems to me their brand as a fear mongering tool has simply lost its effectiveness. So enter ISIS. Never forget the following passage from George Orwell’s 1984:
On the sixth day of Hate Week, after the processions, the speeches, the shouting, the singing, the banners, the posters, the films, the waxworks, the rolling of drums and squealing of trumpets, the tramp of marching feet, the grinding of the caterpillars of tanks, the roar of massed planes, the booming of guns — after six days of this, when the great orgasm was quivering to its climax and the general hatred of Eurasia had boiled up into such delirium that if the crowd could have got their hands on the 2,000 Eurasian war-criminals who were to be publicly hanged on the last day of the proceedings, they would unquestionably have torn them to pieces — at just this moment it had been announced that Oceania was not after all at war with Eurasia. Oceania was at war with Eastasia. Eurasia was an ally.

There was, of course, no admission that any change had taken place. Merely it became known, with extreme suddenness and everywhere at once, that Eastasia and not Eurasia was the enemy.

Oceania was at war with Eastasia: Oceania had always been at war with Eastasia.
For some of my previous thoughts on ISIS and related topics, see:

How The Washington Post and The New Yorker Refused to Publish an Article on Obama Admin Syria Lies
Before We Bomb Syria, What’s Happening in Libya?
 Why is the U.S. Allied with Al Qaeda in Syria?
America’s Disastrous Foreign Policy – My Thoughts on Iraq
Blockbuster Report from WND – Jordanian Official Claims Americans Trained ISIS
My Latest Interview with Financial Survival Network – Is ISIS a False Flag?
James Foley Worked Under USAID, a Known U.S. Intelligence Front. Was He More Than Just a Journalist?

What are the Facts and America's Goal in the Middle East and Ukraine ?



Guest Post by StormCloudsGathering