Bill Totten's Weblog

Saturday, January 31, 2009

Where Credit Is Due

A Timeline of the Mortgage Crisis: A field guide to the loan sharks and politicos who got us into the predatory lending mess.

by Nomi Prins (July 02 2008)

1913: Federal Reserve Act creates national banking system.

1914: Federal Trade Commission Act prohibits unfair or deceptive business practices.

1933: With memories of 1929 stock crash still fresh, Glass-Steagall Act separates "commercial banks" focusing on consumer activities (checking, savings) from "investment banks", which deal with speculative trading and mergers.

1968: Truth in Lending Act requires banks to disclose loan terms & fees.

1970: Bank Holding Company Act Amendments first step toward weakening Glass-Steagall; allow commercial banks, via holding companies, to both accept deposits and make commercial loans.

1978: Supreme Court's Marquette decision gives banks the right to make loans in states other than where they are headquartered; lenders rush to places with the weakest consumer protections, for example Delaware and South Dakota.

1980: After interest rates rise thirteen percentage points in two years, President Carter signs law further hollowing out Glass-Steagall. The measure - pushed through by Senator Jake Garn (R-Utah), a former insurance executive - demolishes usury caps for mortgages and raises bar for prosecuting lenders.

January 1981: Senator Garn becomes chair of Senate Banking, Housing, and Urban Affairs Committee with fellow deregulation advocate M Danny Wall as majority staff director. American Banker exults that "lobbyists here view Mr Wall's promotion as a gift swept to shore by the [Republican Party] tide last election day".

1982: Senator Garn coauthors Garn-St Germain Depository Institutions Act, which deregulates savings and loan industry.

1984: S&Ls start crashing in Texas as oil boom peters out. More than 1,000 thrifts nationwide will fail between 1986 and 1995; debacle will cost $500 billion, including $124 billion in taxpayer money.

April 2 1987: Senator John McCain meets with federal regulators to discuss investigation of Lincoln Savings and Loan. The thrift's owner, Charles Keating, was the senator's business partner and campaign contributor, and flew McCain around on his private jet.

September: Drexel Burnham Lambert, home to "junk-bond king" Michael Milken, creates "collateralized debt obligations" (cdos) - securities made up of myriad loans and bonds with different risk levels.

December 9 1988: Silverado S&L collapses, leaving $1.3 billion taxpayer liability; board members include Neil Bush, who engineered loans to friends in what federal Office of Thrift Supervision will call "multiple conflicts of interest". Bush later tells Congress a few of his deals may have looked "a little fishy".

February 6 1989: President George H W Bush bails out S&L industry; among those helped is his son, Jeb, as government takes over most of a $5 million second mortgage on his Miami office building.

September 30 1995: Congress enacts Truth in Lending Act "reform", easing regulations on creditors; bill powered through by Representative Bill McCollum (R-Florida), a key recipient of finance, insurance, and real estate (FIRE) donations ($136,000 in 1993-94).

December 22: As part of Newt Gingrich's Contract With America, Congress enacts a measure making it more difficult to sue companies for securities fraud.

August 2 1996: Office of Thrift Supervision issues rule preempting almost all state laws regulating S&L credit activities.

1997-1998: FIRE sector spends more than $200 million on lobbying and $150 million on political donations; top agenda items include repealing Glass-Steagall to facilitate mergers.

March 4 1998: First Union acquires The Money Store, nation's 5th-largest subprime lender (and home to ex-Yankee broadcaster Phil Rizzuto's commercials).

April 1998: Citicorp and Travelers announce biggest-ever corporate merger ($70 billion); transaction technically illegal under Glass-Steagall; CEO Sandy Weill launches $12 million campaign to repeal law.

June 1998: Conseco purchases mobile home lender turned subprime powerhouse Green Tree in $6 billion deal.

July 1999: North Carolina General Assembly bucks deregulation trend, passing landmark measure to curb predatory lending.

November 1999: Gramm-Leach-Bliley Act guts Glass-Steagall, setting off wave of megamergers among banks and insurance and securities companies. Driving force is Senator Phil Gramm (R-Texas), who has received $4.6 million from FIRE sector over previous decade.

June 20 2000: Treasury and HUD urge Federal Reserve to investigate subprime units of major banks. No Federal Reserve action follows.

June 26: First Union closes The Money Store, takes $2.8 billion write-down.

December 14: As Congress heads for Christmas recess, Senator Gramm attaches 262-page amendment to an omnibus appropriations bill. Commodity Futures Modernization Act will deregulate derivatives trading, give rise to Enron debacle, and open door to an explosion in new, unregulated securities.

December 27: American Homeownership and Economic Opportunity Act makes it harder for consumers to get out of lender-required insurance. National Association of Realtors lobbies hard for it, spending $9 million, plus $4 million in contributions.

March 6 2001: FTC sues Citigroup and its subsidiary Associates, nation's second largest subprime originator, charging "systematic abusive lending practices" involving two million borrowers; eighteen months later Citigroup settles for a paltry $215 million.

April 6: Federal Reserve chairman Alan Greenspan signals concern with "abusive lending practices that target vulnerable segments of the population and can result in unaffordable payments, equity stripping, and foreclosure".

July 27: "'Predatory' is really a high-profile word with no definition", Ameriquest chairman Stephen W Prough tells Congress, urging rollback of subprime regulations.

April 22 2002: Georgia's new anti-predatory law signed; Ameriquest helps lead campaign against it and announces that it won't do business in Georgia until law is changed. Standard & Poor's refuses to rate Georgia mortgage securities, choking credit supply to state's home buyers; law gutted within a year.

October 7: Swiss investment bank UBS announces that Senator Gramm is joining it to "advise clients on corporate finance issues and strategy"; he will also lobby Congress, Treasury, and Federal Reserve on banking and mortgage issues as industry pushes to eliminate predatory-lending rules.

December 18: Conseco files for bankruptcy, mostly due to its purchase of subprime lender Green Tree. In all, thirteen banks have failed during 2002 - most, according to a Federal Reserve report, because of bad loans and "improper accounting related to the securitizing of assets".

March 2003: HSBC acquires Household Finance, nation's fourth-largest subprime lender.

May 1: New Jersey's anti-predatory-lending law signed. Again, Ameriquest and other lenders launch campaign to kill it and Standard & Poor's says it won't rate certain New Jersey securities; law gutted within a year.

2004: Ameriquest employees give total of $200,000 to Bush campaign; founder Roland Arnall and wife Dawn give more than $5 million to pro-Bush PACS. Arnall later appointed ambassador to Netherlands.

January 7 2004: Federal Office of the Comptroller of the Currency issues final rule to preempt states from applying most of their credit laws to national banks and their subsidiaries.

March 2005: Representative Robert Ney (R-Ohio) - who will later go to prison on corruption charges related to Abramoff scandal - introduces Responsible Lending Act, billed as an anti-predatory-lending measure but in fact designed to preempt stronger state laws. Key supporters include New Century Financial, nation's second-largest subprime lender, which has contributed nearly $50,000 to Ney's campaign. Consumer advocates call it "Loan Shark Protection Act".

April: Bankruptcy Abuse Prevention and Consumer Protection Act makes it far harder for consumers (but not businesses) to discharge debts. Chief sponsor, Senator Charles Grassley (R-Iowa), has received $2 million-plus from FIRE sector since 1989.

September 1: As housing bubble begins to deflate, administration economist Patrick Lawler announces, "There is no evidence here of prices topping out. On the contrary, house price inflation continues to accelerate."

September 22: Illinois Supreme Court hands mortgage lenders a victory, blowing away a three percent cap on fees for loans with more than eight percent interest.

January 23 2006: Ameriquest settles 49-state investigation into deceptive subprime practices for $325 million.

April 27: Federal Reserve chairman Ben Bernanke acknowledges "signs of softening" in housing market, but says a "sharp slowdown" unlikely.

July 10: Henry M Paulson Jr sworn in as Treasury secretary, leaving job as Goldman Sachs chairman and CEO. In 2005, Goldman securitized $68 billion in residential mortgages and $23 billion in "other assets" primarily related to CDOs.

January 2 2007: Representative Barney Frank (D-Massachusetts) assumes chairmanship of House Financial Services Committee. FIRE sector tops his list of contributors, with total of $746,000 for 2005-06 cycle.

January 29: Paulson tells Congress, "One of the pleasant surprises I had coming to government has been the strong economy we have today".

February 22: HSBC's head of mortgage-lending business resigns. Its losses reach $10.5 billion.

February 28: Bernanke tells House Budget Committee the housing sector "is a concern, but at this point we don't see it as being a broad financial concern or a major factor in assessing the course of the economy".

February 28: New-home sales reported down 20.1% from previous year.

March 12: Senator John McCain's presidential campaign announces that Senator Gramm will join it as cochair and economic policy adviser.

April 2: Subprime giant New Century Financial files for Chapter Eleven after being forced to repurchase billions of dollars of bad loans.

May 3: UBS shuts down Dillon Read Capital Management, its US subprime arm. GM's finance unit announces deep losses on subprime mortgages. SEC task force begins meeting to examine Wall Street's handling of subprime loans.

June 9: In Wall Street Journal interview, former Federal Reserve governor Edward Gramlich accuses Greenspan of blocking a 2000 proposal to increase scrutiny of subprime lenders. Greenspan responds there are "a very large number of small institutions, some on the margin of scrupulousness and very hard to detect when they are doing something wrong".

July 16: Jim Cramer, host of CNBC's Mad Money, says the subprime "lending thing" is "completely meaningless ... It has no relevance whatsoever". Less than three weeks later, Cramer will have meltdown on air, pleading with Federal Reserve to cut rates and save Wall Street.

July 19-20: In congressional testimony, Bernanke cuts growth forecasts for 2007 and 2008, blaming problems in housing market; warns that subprime crisis could cost up to $100 billion.

August 6: American Home Mortgage, one of the largest US independent home-loan providers, files for Chapter Eleven.

August 16: Countrywide, biggest US mortgage lender, narrowly avoids bankruptcy by taking out emergency $11.5 billion loan.

August 31: Ameriquest goes out of business.

September 14: Representative Barney Frank in Boston Globe: Mortgage crisis "was in large part a natural experiment on the role of regulation".

September 20: Treasury secretary Paulson tells House Financial Services Committee that "fundamental reappraisals in the pricing and appetite of risk have taken place numerous times ... We are in the process of another such reappraisal".

September 30: UBS announces third-quarter losses of $690 million.

January 2008: Number of homes facing foreclosure up 57% compared to same month of previous year. US unemployment rises sharply.

January 10: Cleveland files lawsuit against numerous financial institutions alleging that their activities in connection with securitization of subprime mortgages created a "public nuisance". (Litigation still pending.)

January 15: Citigroup reports $9.8 billion loss for fourth quarter and writes down $18 billion in subprime losses.

January 22 & 30: Federal Reserve makes biggest rate cut in 25 years - 1.25 percentage points, to three percent.

February 6: Longest period of decline in nationwide house prices since 1990.

March 7: Former bosses of Merrill Lynch, Countrywide, and Citigroup questioned by a congressional panel about the $460 million in compensation they received between them during five years of subprime boom.

March 16: Bear Stearns announces takeover by JPMorgan Chase in Federal Reserve -engineered bailout; measure approved by Board of Governors with fewer votes than required by law, under a post-9/11 "national security emergency" exception.

March 25: In speech on housing market, Senator McCain calls for easing crisis by "removing regulatory, accounting, and tax impediments to raising capital".

April 18: Jerry Bowyer, chief economist for financial services firm Benchmark, says in New York Sun op-ed that fault for subprime crisis "lies with the small army of hard-left political hustlers who spent the early 1990s pushing risky mortgages on home lenders. And the fault lies especially with the legislators that gave them the power to do it."

April 29: Foreclosure activity reported up 112% from first quarter of 2007.

May 6: Bush announces he will veto legislation directing $15 billion to neighborhoods ransacked by foreclosures. Also threatens to veto legislation to provide $300 billion for struggling homeowners (and force lenders to renegotiate some mortgages) because it would be a "burdensome bailout" that "opens taxpayers to too much risk".

Mother Jones writer Nomi Prins has worked at Goldman Sachs and Bear Stearns.

Research assistance by Sara Abbas and Megan Kiefer

This article has been made possible by the Foundation for National Progress, the Investigative Fund of Mother Jones, and gifts from generous readers like you.

Copyright (c) 2008 The Foundation for National Progress

Bill Totten

The case for nationalizing the banks

by Barry Grey (January 19 2009)

Published by the International Committee of the Fourth International (ICFI)

Less than four months after Congress passed the Bush administration's Troubled Asset Relief Program (TARP), authorizing the Treasury Department to spend $700 billion in taxpayer money to bail out the banks, the same banks that received the government handouts are reporting massive losses and the incoming Obama administration is preparing to funnel hundreds of billions in additional funds to Wall Street.

In the interim, the financial crisis has deepened and precipitated a global recession that is acknowledged to be the worst since the Great Depression of the 1930s. Millions more workers, told last fall by Bush and Obama that the government bailout, supposedly designed to benefit "Main Street" and not "Wall Street", would avert a financial meltdown and mass unemployment, have lost their jobs, their homes and their life savings. Meanwhile, the bankers have refused to use their windfalls to lend to businesses and consumers and have instead either hoarded the government cash or used it to buy up smaller firms.

None of the CEOs and speculators whose corrupt and reckless policies brought their own institutions and the global economy to ruin, while they rewarded themselves with seven- and eight-figure compensation packages, and none of the government regulators who colluded in the plundering of the economy have been called to account. The bankers, with the complicity of the government, flatly refuse to reveal what they have done with the money they received from the Treasury.

The vote by the US Senate on Thursday, after intensive lobbying by the Obama transition team, to release the second $350 billion installment of the $700 billion slush fund sets the stage for an even more massive bailout. In a taste of things to come, the day after the Senate vote, the Treasury agreed to hand over another $20 billion to Bank of America as part of a new rescue package that will have the government absorb up to $118 billion of the bank's losses. Economists and Federal Reserve officials are openly saying that TARP will have to be followed by many more such bailout funds.

All of this adds up to a colossal fraud perpetrated on the American people - who overwhelmingly oppose the bailouts - for the sole purpose of protecting the interests of the financial aristocracy. There is not now, and there never was, a considered, worked-out plan to solve the financial crisis and avert a social catastrophe.

When Treasury Secretary Henry Paulson, the former CEO of Goldman Sachs, and Federal Reserve Chairman Ben Bernanke called an emergency meeting of congressional leaders in mid-September to demand that they sign off on their proposal to authorize the use of $700 billion in public funds to rescue the banks, the document they presented was less than three pages long.

Just three weeks after Congress passed the TARP legislation, Paulson announced that the plan he and Bernanke had put forward as the solution to the crisis was being scrapped. Instead of using the money to buy "troubled" subprime and other asset-backed securities from the banks, he decided to simply hand the banks billions in cash, with virtually no strings attached.

Suddenly a political and media establishment that had for decades lambasted the notion of "throwing money" at social problems and opposed any government intervention into the market spoke with one voice of the need for massive government action to place the resources of the people in the hands of the Wall Street elite. When it came to protecting the wealth of the bankers and big shareholders, the operative phrase was "anything goes".

The reality of class relations in America is being mercilessly exposed. The cost of the multi-trillion-dollar handout to Wall Street is to be borne by the working class. Obama cites the vast rise in budget deficits and government debt as a result of the bailouts as justification for sweeping cuts in social programs - including Social Security, Medicare and Medicaid - upon which tens of millions of workers and retirees depend.

The new wave of bank bailouts will do no more to solve the crisis than the last one. None of the measures being devised can seriously address the deepening economic catastrophe because they leave untouched the basic interests of the ruling class, which are rooted in its private ownership and control of the financial system.

For the same reason none of the financial wizards on Wall Street, in academia or in government can give a coherent explanation of the crisis. As defenders of the capitalist system, they dare not acknowledge that the global financial meltdown is an expression of the breakdown of the capitalist system itself.

The current crisis is the inevitable outcome of two inter-related processes: The protracted decline of American capitalism and a crisis of profitability in basic production that is rooted in fundamental contradictions of the capitalist system. Behind the colossal growth of financial parasitism and outright criminality is the attempt by the American ruling elite to overcome the mounting contradictions of its system by shifting investment from manufacturing to ever more exotic forms of financial speculation. Particularly over the past three decades the financial power brokers, supported by the government, have dismantled much of the industrial base of the United States to seek higher rates of profit from various forms of financial manipulation. The creation of wealth for the ruling class has been largely separated from the creation of real value in the production process.

Now the countless trillions of paper values are collapsing, leaving in their wake an economic and social disaster. To even begin to offset these losses the ruling class must intensify its exploitation of the working class, spreading unemployment, poverty and social misery.

No progressive economic plan to solve the crisis can be developed apart from taking the major banks and financial institutions out of private hands. They must be nationalized and transformed into public utilities under the democratic control of the working population. The vast financial resources that the banks control must be used to provide decent education, housing, health care, retirement benefits and well-paying jobs for all.

This should be carried out without compensation to their former owners, while securing the deposits and savings of working people and small business owners.

The books of the major banks, financial firms, insurance companies and hedge funds must be opened to public examination to lay bare their illegal and socially destructive activities.

There must be a public accounting of the fraud and corruption that have fueled the crisis, and those responsible must be held accountable, including by means of criminal prosecution.

The billions of dollars in social wealth diverted into the private accounts of speculators and bankers must be recovered, to be used for the expansion of social programs that benefit the masses.

This is not merely, or even primarily, a technical task. It is a political and revolutionary one. The power of the financial aristocracy must be broken. As with the ancien regime before the French Revolution, the continued sway of the American financial elite stands as an absolute obstacle to any socially progressive and rational economic policy. The financial elite adamantly opposes any measures that impinge on its wealth and prerogatives, regardless of the cost to society at large. Indeed, it is plotting every day, in league with its bribed agents in the Democratic and Republican parties, to exploit the crisis of its own making to monopolize an even greater share of the national wealth.

The prerequisite for the nationalization of the banks and their subordination to the needs of society is an independent political movement of the working class on the basis of socialist policies. It is a question of state power. No capitalist government can or will carry out this task. What is required is a political and revolutionary struggle to establish a workers' government.

Copyright (c) 1998-2009 World Socialist Web Site - All rights reserved

Bill Totten

Friday, January 30, 2009

The Swedish model is the best hope for western banks

by Christopher Wood

Financial Times (January 20 2009)

As newspaper headlines are full of stories about more forced capital injections by governments into leading American and British banks, it has surely become time to end the present ad hoc approach to the intensifying banking crisis.

In the US and Britain most of the big banks have now become a weird hybrid of public and private sector, given growing government equity stakes in these banks. This raises the issue of the deeply flawed policy response to the crisis. This is that if the authorities are not prepared to let insolvent financial institutions go bust, which would be the quickest, most effective way to correct excesses, as the Lehman precedent demonstrates, the next best way is to nationalise the, in effect bust, banks outright. This remains the opposite of what is happening in the US and the other country most vulnerable to an imploding financial services sector, namely Britain. Rather, what is happening is nationalisation by stealth.

This approach reached its ludicrous extreme in the November bail-out of Citigroup, where the US government put more money in than the entire market capitalisation of the company on the day the deal was announced. But the taxpayer ended up with only a 7.8 per cent equity stake while incumbent management was left in place! Yet now, just two months later, still more taxpayer money looks as if it is about to be poured into Citigroup, while a similar sweetheart deal has been done with Bank of America.

This approach is a recipe for gross conflicts of interest. It means the institutions receiving taxpayer money are encouraged to continue to avoid ultimately necessary writedowns because of the hope of yet more bail-outs. Yet the reality is that there is an established template for what to do in banking crises if governments remain determined, as they do, not to allow bank failures. That is the Swedish model of the early 1990s.

Under this model banks were nationalised, fully aligning the interests of the institution with that of the taxpayer, while the depositor was fully protected. In the process shareholders were in effect wiped out, as they should be, and incumbent management was replaced, as it should be. This left none of the massive conflicts of interest, as well as perverse unintended consequences, caused by the present anomalous situation in the west where too many banks are being rewarded for failure - leading, incidentally, to a massive competitive disadvantage for those banks that managed their affairs more prudently.

A crucial principle of the Swedish model is that banks were forced to write down their assets to market and take the hit to their equity before the recapitalisation began. This is of course precisely what has not happened in either the US or Britain, where too many policy measures seek to delay asset price clearing and only add public sector debt on top of existing private sector debt. This is why the current approach in the west to the banking crisis can be compared more accurately with Japanese policy in the 1990s, and that clearly did not work. The outcome, as then, is increasingly zombie-like banks.

The ultimate endgame in countries such as the US and Britain is still likely to be full-scale nationalisation of most of the banking system, as the logic of such action finally becomes overwhelming. But it would be much better if this were done proactively rather than reactively, since it would accelerate resolution of the financial crisis. This is why nationalising the banks would also be bullish for stock markets, if not for the specific bank stocks themselves - although, obviously, there are powerful vested interests wanting to prevent such an ultimate course of action.

Another point about nationalisation, as in the Swedish model, is that it allows the government to separate the bad assets from banks' balance sheets and place them in one big "bad bank". This should enable whatever is left of the smaller "good" bank, which should be managed by old-fashioned commercial bankers, to become a viable private sector operator again more quickly. Another more technical, albeit important, point is that, given that many of the bad assets in this cycle will be derivative- related in some form or other, where two nationalised banks have been counterparties to the same transaction the derivative deal could be in effect terminated or cancelled because the government would be the owner of both entities. In this respect the limited number of counterparties in the $55,000 billion (as estimated by the International Swaps and Derivatives Association in mid-2008) credit default swap market could suddenly become a positive and not, as now, a systemic negative.

It is true the Swedish model is not a pain-free panacea. It would just mean the beginning of an orderly work out. Unfortunately, the deflationary pain is inevitable because of the scale of the credit boom of recent years, the excesses of which were ignored for so long by the relevant central bankers.

Christopher Wood, equity strategist for CLSA Ltd, in Hong Kong, is the author of The Bubble Economy (first published by Atlantic Monthly Press, 1992)

Copyright The Financial Times Limited 2009

"FT" and "Financial Times" are trademarks of the Financial Times.

(c) Copyright The Financial Times Ltd 2009.

Bill Totten

The Ecology of Social Change

by John Michael Greer

The Archdruid Report (January 28 2009)

Druid perspectives on nature, culture, and the future of industrial society

Last week's Archdruid Report post was a bit of a departure from this blog's normal fare, but it was a departure with a purpose. By turning a spotlight on the way that so many Americans have projected what amounts to a paranoid mythology of incarnate evil onto whichever side of the political spectrum they don't inhabit, I hoped to begin a conversation about the immense gap between expectation and reality that hamstrings most attempts at constructive social change, in America as elsewhere.

I have to say that the true believers in the mythology responded to their cue with a great deal of enthusiasm. I received a bumper crop of angry screeds assailing me, in lively and in some cases unprintable language, for suggesting that people should be judged by their actions rather than the intentions imputed to them by their most bitter enemies. My favorite among these comments rounded off a thumping denunciation by demanding that I resign at once from my position as archdruid. The author never quite got around to explaining why acceptance of his extremist ideology should be so vital a part of my job description, so I didn't take his advice.

Now it so happens that I spent much of the weekend reading Carl Jung's memorably weird autobiography Memories, Dreams, Reflections (1963), and so it was hard to miss the relevance of Jung's concept of shadow projection to all this. The shadow is Jung's name for the mental dumpster into which individuals and societies stuff the aspects of themselves they dare not face; when the dumpster gets too full, one refuge from self-knowledge lies in tipping its contents onto someone else, and claiming that the objectionable qualities belong to the scapegoat rather than oneself.

It needs to be recognized in this context that it's only in modern morality plays that scapegoats are invariably virtuous and innocent. In the real world, it often happens that the person targeted has his own faults, sometimes grievous ones, and that these are routinely used to justify whatever other accusations are heaped on him. This process seems universal among human beings - I very much doubt any of us are entirely free of the habit of seeing our own worst qualities in the people we dislike - but its intensity varies between individuals, cultures, and historical periods, and Jung is surely right to point out that it reaches peaks when an individual or a society get caught in the gap between what the world is assumed to be and what it actually is.

Survey any of the major historic outbreaks of mass scapegoating and violence and you'll find it in a context where socially acceptable belief systems failed to keep up with a changing world. Behind the European witch hunts, for example, lay the collapse of late medieval worldviews that hardened into dogma as they were cracking apart at the seams, just as the fatal mismatch between German fantasies of global dominion and Germany's actual status as a little country without oil reserves or defensible borders in an age of sprawling petroleum-fueled empires played a major role in setting the stage for its catastrophic 20th-century history.

What makes the situation in contemporary America interesting, from this perspective, is the way that its mainstream culture and its self-described alternative countercultures have fallen into versions of the same double-bind. Many posts here, and of course quite a bit of excellent analysis by other authors, have outlined the way that the narratives of the cultural mainstream in contemporary America built a worldview of perpetual progress and limitless abundance on the temporary foundation of cheap fossil fuels, and have been made hopelessly irrelevant by the end of the petroleum age. Less often discussed and, I believe, less often noticed is the way that most current proposals meant to replace the current order of society with a better one also rest on beliefs about the world that hold up very poorly in the face of experience.

The mismatch here can best be traced along a specific fault line dividing future visions from present realities. Page through any recent proposal for substantive social change and odds are that the better world it envisions is usually, at least in theory, better in terms of every variable its authors consider relevant. There are rarely any tradeoffs, or any sense of the bitter choices that so often constrain the decisions of real societies in the real world; the inhabitants of the better future do not have to choose between peace and freedom, between feeding the hungry and protecting the environment, or indeed between any two values; given the right social system, the implication seems to be, you can have it all.

Consider the ways in which these same proposals hope to bring about the change they envision and the same fracture opens up. Whether they put their faith in organization, political action and the like, or expect some deus ex machina, whether cataclysmic or mystical, to sweep away the old order of things and leave the field clear for the future to be born, nearly all of them assume that the only obstacles to a Utopian society, the only factors that force hard choices on people, are the institutions, individuals, or attitudes governing today's world.

These curious habits of thought unfold from a single assumption: that human choices and only human choices place limits on the perfection of human society. Back of this assumption lies the prestige of the Enlightenment cult of reason, with its conviction that building a better social mousetrap will cause the world to beat a path to your Utopian door. Yet it's hard to think of an assumption that has been more thoroughly disproved by experience. Consistently, the more Utopian a new society has appeared on paper, the more disastrous it has turned out to be in practice. Proponents of social change tend to insist that their new society will be different, but at this point in history, that insistence is starting to wear very thin.

The crucial flaw in most of today's ideas about social change, then, may just be that - even when they wrap themselves in environmental slogans - they are rooted in a fundamental denial of ecology. Imagine for a moment that instead of a human society, we are talking about some other ecosystem composed of living things. That ecosystem has evolved over many generations in relationship to other systems, animate and inanimate, and it maintains itself by complex balances that challenge any attempt at analysis. What happens when human beings set out to reengineer the ecosystem to suit their own preferences, especially if they assume as a matter of course that their new ecosystem will necessarily be stable, balanced, and healthy if it is pleasing to them?

Of course we don't have to speculate about the answer; the catastrophic results of human mismanagement of natural ecosystems are far too well documented. Our species has learned the hard way, over and over again, that tinkering with an ecosystem needs to be done with exquisite care. It can be done - traditional societies all over the world have evolved ways of shaping their environments for human benefit that still maintain the overall integrity of the ecosystem, and today's permaculturists and students of appropriate technology are moving in the same direction - but it can only be done in small steps, with a great deal of knowledge and an even greater supply of patience.

I am coming to suspect that exactly the same thing is true of human societies. The discipline of human ecology has shown that the same principles that shape the environmental relationships of other species and other communities also apply to our species and our communities. Like these other living things, human beings depend for their survival on natural cycles, and are subject to natural limits. Like the communities of other living things, human communities - from villages to nations - are shaped by their history, adapt to their environments, face hard choices between competing goods, and respond homeostatically in order to counter movements toward disruptive change.

Thus social change is possible, just as environmental change is possible, but it may need to be pursued in a very different spirit from the one that motivates the Utopian ideologies of the present and the recent past. If we are to take human ecology seriously, it seems to me, it's time to start trying to understand the ecological conditions - the relationships linking human beings to each other, to other living things, and to inanimate nature - that foster desirable social changes. Then, in the manner of tribal gardeners carefully replacing noxious plants with edible ones, those who desire those changes might work to bring about those conditions, keeping an eye on the results and letting experience rather than ideology guide their efforts.

As far as I know, the art of applied human ecology or social ecotechnics suggested here exists only in the most embryonic form, and no little effort will be needed even to begin the process of evolving it. Still, the attempt to better society by remaking it according to some ideological model or other has failed so consistently that it's high time to try something else.

´╗┐John Michael Greer has been active in the alternative spirituality movement for more than 25 years, and is the author of a dozen books, including The Druidry Handbook (2006) and The Long Descent (2008). He lives in Ashland, Oregon.

Bill Totten

Thursday, January 29, 2009

Bernanke's speech shows where BOJ failed

by Richard A Werner The Daily Yomiuri (January 29 2009)

US Federal Reserve Board Chairman Ben Bernanke gave an interesting speech at the London School of Economics in mid-January. Unusual for speeches by the head of a major central bank, Bernanke was fairly direct in his message and coherent in his analysis. He also gave some insights into what seems to be his actual thinking. If he does mean what he said, then this speech could be of significance for the world economy - and also of interest in Japan.

The Bank of Japan has for almost twenty years insisted that it did not have the tools to end the banking-bust depression, could not help the deflation, was basically powerless, and that it depended on some structural reform that was supposed to be implemented by others - the government in particular. By contrast, Bernanke emphasized that the Fed had the tools available to battle the financial and economic crisis, and was using them without delay.

Bernanke has written about Japanese deflation and the policies of the Bank of Japan in his academic writings and has sharply criticized the Bank of Japan for its inaction and for allowing a banking crisis to be transformed into a multiyear economic downturn and depression.

Bernanke explained what he had written in his analysis of the Bank of Japan's policy many years ago in his lecture, namely that a central bank could eventually boost asset prices by creating money and putting it into circulation through purchases of assets and direct lending, and could in this way support and stimulate the economy. He used the term quantitative easing, which had become well known in the context of the Bank of Japan. Indeed, it is a term that was originally used in Japanese (ryoteki kanwa) in the early 1990s by critics of the Bank of Japan.

I have been one of the main users of this term because I wanted to contrast such needed policy from traditional ways of monetary stimulation or the monetarist way of referring to boosting the money supply. I wanted to emphasize that using the price mechanism of interest rates was not likely to help and therefore quantitative monetary policy was required.

What's wrong with the BOJ?

While the expression quantitative easing had been mainly used by Bank of Japan critics, this changed in 2001 when the Bank of Japan proclaimed it would try what critics had then been demanding for almost a decade - one can't fault the bank for rushing into new things ... Thus in March 2001, the Bank of Japan announced it was officially going to change its monetary policy by switching from its alleged use of interest rates to adopting quantitative easing (using the term ryoteki kanwa and translating this as quantitative easing in its English announcements).

However, the Bank of Japan's use of this term created much confusion because the policy it adopted in 2001 and many subsequent years was not the true quantitative easing that critics such as myself had demanded. The quantity that needs easing is the quantity of credit creation. This is necessary and sufficient for a recovery in a situation like this. The Bank of Japan, however, chose to merely increase the reserves of banks held at the central bank. This is a traditional monetarist policy prescription, which boosts a measure called high powered money, but the measure is pointless. I had warned many times that this was likely to fail.

What good does it do the economy if banks deposit more money in the central bank? More credit creation is needed. That can only come from the central bank or through the normal route - from commercial banks through the extension of bank loans. But the Bank of Japan failed to boost credit creation. Thus its quantitative easing policy failed. As a result of this failure, the Bank of Japan's leaders would in the following years give speeches stating that the critics had been proven wrong. They would claim they tried quantitative easing as critics recommended, and it failed!

However, we witnessed only the tatemae (facade) of quantitative easing, not the honne (actual fact). Before 2001, the Bank of Japan did not actually want to reflate the economy. As Bank of Japan leaders have said on the record, they were quite happy about the recession because they used it to put pressure on the government to change laws and introduce US-style deregulated free-market capitalism.

Despite its official conversion to quantitative easing in 2001, this stance did not change. The central bank kept the quantity of credit creation tight. Thus, despite the nominal rise in high-powered money, the economy remained mired in recession. There was a brief recovery in 2006 - and again this is a case in point - it was based on a temporary recovery in credit creation. However, this policy was reversed by the Bank of Japan as soon the first shoots of recovery had become visible and Japan has been heading back into deflation ever since. One can only hope that the Bank of Japan will follow former Fed Chairman Alan Greenspan's recent example and admit that the current global crisis has disproved and discredited the deregulated free-market model.

Monetize fiscal policy

What is interesting about the Fed's current policies is that there seems to be some real - in the correct meaning of the term - quantitative easing going on. Credit creation by the Fed is ballooning. This is done by direct purchases of assets by the Fed and by direct lending by the Fed. The Fed has now also started to purchase mortgage-backed securities. It seems that Bernanke is not using smoke and mirrors. What he says seems to be what he actually thinks and plans to do (his honne) - quite a revolutionary approach to central banking.

Many observers and experts are currently wondering whether the world is now going to go down the road that Japan has traveled over the past eighteen years - a road that includes rising unemployment, deflation, falling asset prices and a shrinking economy. The potential for this to occur exists because the credit bubbles in Britain, Ireland, Spain, the United States and a number of other countries operated on the same mechanics as the Japanese bubble economy of the 1980s. Excessive credit creation used for speculative purposes drove up asset prices, but it was predictable that it all had to turn into bad debts, busting the banking system and resulting in a credit-crunch recession.

The policy response taken by the key central bank may be where the parallels end. The current measures taken by the Fed and their scale are unusually aggressive and contrast sharply with the policies adopted by the Bank of Japan since 1991. The Fed also is monetizing fiscal policy, while the Japanese central bank has so far refused to do so. Thus at present, one can say that the US economy is likely to recover far more quickly than the economies of other countries, notably Japan. Where central banks continue to let credit creation stagnate, and where they refuse to monetize fiscal policy, economies will continue to shrink. At the moment, this includes Japan and Britain.

The British government's fiscal stimulation has been entirely unfunded, which means that all the government bonds issued to fund it have deprived the banking system of liquidity. Hence bank lending will continue to slow. For Britain and other post-bubble economies such as Ireland and Spain, we must expect a long slump, perhaps even on a Japanese scale. But that depends on the goals of the respective central banks.

One lesson we should learn is that there should be more public debate about the role of central banks in creating the current global crisis and the role they should play from now on. Over the past thirty years, central banks worldwide have become more independent from governments and parliaments. Yet, despite their increased power, macroeconomic performance has deteriorated and the world has seen an unusually large number of banking and economic crises.

In almost all cases, the crises were due to bubbles caused by excessive credit creation for speculative purposes - something I had warned needed monitoring and restricting by central banks. But the central banks chose to let credit creation rip. Only if the goal of central banks had been to create and exacerbate business cycles could we say that they have done a good job.

It seems clear, therefore, that the topic of central bank independence should be reviewed, for this independence has not had the desired results.


Werner is professor of international banking at the School of Management, University of Southampton, and author of the books Princes of the Yen (2003) - whose Japanese version En no Shihaisha (2001) was a bestseller - and New Paradigm in Macroeconomics (2005).

Bill Totten

Think Again

Climate Change

by Bill McKibben

Common Dreams (January 05 2009)

Act now, we're told, if we want to save the planet from a climate catastrophe. Trouble is, it might be too late. The science is settled, and the damage has already begun. The only question now is whether we will stop playing political games and embrace the few imperfect options we have left.

"Scientists Are Divided"

No, they're not. In the early years of the global warming debate, there was great controversy over whether the planet was warming, whether humans were the cause, and whether it would be a significant problem. That debate is long since over. Although the details of future forecasts remain unclear, there's no serious question about the general shape of what's to come.

Every national academy of science, long lists of Nobel laureates, and in recent years even the science advisors of President George W Bush have agreed that we are heating the planet. Indeed, there is a more thorough scientific process here than on almost any other issue: Two decades ago, the United Nations formed the Intergovernmental Panel on Climate Change (IPCC) and charged its scientists with synthesizing the peer-reviewed science and developing broad-based conclusions. The reports have found since 1995 that warming is dangerous and caused by humans. The panel's most recent report, in November 2007, found it is "very likely" (defined as more than ninety percent certain, or about as certain as science gets) that heat-trapping emissions from human activities have caused "most of the observed increase in global average temperatures since the mid-20th century".

If anything, many scientists now think that the IPCC has been too conservative - both because member countries must sign off on the conclusions and because there's a time lag. Its last report synthesized data from the early part of the decade, not the latest scary results, such as what we're now seeing in the Arctic.

In the summer of 2007, ice in the Arctic Ocean melted. It melts a little every summer, of course, but this time was different - by late September, there was 25 percent less ice than ever measured before. And it wasn't a one-time accident. By the end of the summer season in 2008, so much ice had melted that both the Northwest and Northeast passages were open. In other words, you could circumnavigate the Arctic on open water. The computer models, which are just a few years old, said this shouldn't have happened until sometime late in the 21st century. Even skeptics can't dispute such alarming events.

"We Have Time"

Wrong. Time might be the toughest part of the equation. That melting Arctic ice is unsettling not only because it proves the planet is warming rapidly, but also because it will help speed up the warming. That old white ice reflected eighty percent of incoming solar radiation back to space; the new blue water left behind absorbs eighty percent of that sunshine. The process amps up. And there are many other such feedback loops. Another occurs as northern permafrost thaws. Huge amounts of methane long trapped below the ice begin to escape into the atmosphere; methane is an even more potent greenhouse gas than carbon dioxide.

Such examples are the biggest reason why many experts are now fast-forwarding their estimates of how quickly we must shift away from fossil fuel. Indian economist Rajendra Pachauri, who accepted the 2007 Nobel Peace Prize alongside Al Gore on behalf of the IPCC, said recently that we must begin to make fundamental reforms by 2012 or watch the climate system spin out of control; NASA scientist James Hansen, who was the first to blow the whistle on climate change in the late 1980s, has said that we must stop burning coal by 2030. Period.

All of which makes the Copenhagen climate change talks that are set to take place in December 2009 more urgent than they appeared a few years ago. At issue is a seemingly small number: the level of carbon dioxide in the air. Hansen argues that 350 parts per million is the highest level we can maintain "if humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted". But because we're already past that mark - the air outside is currently about 387 parts per million and growing by about two parts annually - global warming suddenly feels less like a huge problem, and more like an Oh-My-God Emergency.

"Climate Change Will Help as Many Places as It Hurts"

Wishful thinking. For a long time, the winners-and-losers calculus was pretty standard: Though climate change will cause some parts of the planet to flood or shrivel up, other frigid, rainy regions would at least get some warmer days every year. Or so the thinking went. But more recently, models have begun to show that after a certain point almost everyone on the planet will suffer. Crops might be easier to grow in some places for a few decades as the danger of frost recedes, but over time the threat of heat stress and drought will almost certainly be stronger.

A 2003 report commissioned by the Pentagon forecasts the possibility of violent storms across Europe, megadroughts across the Southwest United States and Mexico, and unpredictable monsoons causing food shortages in China. "Envision Pakistan, India, and China - all armed with nuclear weapons - skirmishing at their borders over refugees, access to shared rivers, and arable land", the report warned. Or Spain and Portugal "fighting over fishing rights - leading to conflicts at sea".

Of course, there are a few places we used to think of as possible winners - mostly the far north, where Canada and Russia could theoretically produce more grain with longer growing seasons, or perhaps explore for oil beneath the newly melted Arctic ice cap. But even those places will have to deal with expensive consequences - a real military race across the high Arctic, for instance.

Want more bad news? Here's how that Pentagon report's scenario played out: As the planet's carrying capacity shrinks, an ancient pattern of desperate, all-out wars over food, water, and energy supplies would reemerge. The report refers to the work of Harvard archaeologist Steven LeBlanc, who notes that wars over resources were the norm until about three centuries ago. When such conflicts broke out, 25 percent of a population's adult males usually died. As abrupt climate change hits home, warfare may again come to define human life. Set against that bleak backdrop, the potential upside of a few longer growing seasons in Vladivostok doesn't seem like an even trade.

"It's China's Fault"

Not so much. China is an easy target to blame for the climate crisis. In the midst of its industrial revolution, China has overtaken the United States as the world's biggest carbon dioxide producer. And everyone has read about the one-a-week pace of power plant construction there. But those numbers are misleading, and not just because a lot of that carbon dioxide was emitted to build products for the West to consume. Rather, it's because China has four times the population of the United States, and per capita is really the only way to think about these emissions. And by that standard, each Chinese person now emits just over a quarter of the carbon dioxide that each American does. Not only that, but carbon dioxide lives in the atmosphere for more than a century. China has been at it in a big way less than twenty years, so it will be many, many years before the Chinese are as responsible for global warming as Americans.

What's more, unlike many of their counterparts in the United States, Chinese officials have begun a concerted effort to reduce emissions in the midst of their country's staggering growth. China now leads the world in the deployment of renewable energy, and there's barely a car made in the United States that can meet China's much tougher fuel-economy standards.

For its part, the United States must develop a plan to cut emissions - something that has eluded Americans for the entire two-decade history of the problem. Although the US Senate voted down the last such attempt, Barack Obama has promised that it will be a priority in his administration. He favors some variation of a "cap and trade" plan that would limit the total amount of carbon dioxide the United States could release, thus putting a price on what has until now been free.

Despite the rapid industrialization of countries such as China and India, and the careless neglect of rich ones such as the United States, climate change is neither any one country's fault, nor any one country's responsibility. It will require sacrifice from everyone. Just as the Chinese might have to use somewhat more expensive power to protect the global environment, Americans will have to pay some of the difference in price, even if just in technology. Call it a Marshall Plan for the environment. Such a plan makes eminent moral and practical sense and could probably be structured so as to bolster emerging green energy industries in the West. But asking Americans to pay to put up windmills in China will be a hard political sell in a country that already thinks China is prospering at its expense. It could be the biggest test of the country's political maturity in many years.

"Climate Change Is an Environmental Problem"

Not really. Environmentalists were the first to sound the alarm. But carbon dioxide is not like traditional pollution. There's no Clean Air Act that can solve it. We must make a fundamental transformation in the most important part of our economies, shifting away from fossil fuels and on to something else. That means, for the United States, it's at least as much a problem for the Commerce and Treasury departments as it is for the Environmental Protection Agency.

And because every country on Earth will have to coordinate, it's far and away the biggest foreign-policy issue we face. (You were thinking terrorism? It's hard to figure out a scenario in which Osama bin Laden destroys Western civilization. It's easy to figure out how it happens with a rising sea level and a wrecked hydrological cycle.)

Expecting the environmental movement to lead this fight is like asking the USDA to wage the war in Iraq. It's not equipped for this kind of battle. It may be ready to save Alaska's Arctic National Wildlife Refuge, which is a noble undertaking but on a far smaller scale. Unless climate change is quickly de-ghettoized, the chances of making a real difference are small.

"Solving It Will Be Painful"

It depends. What's your definition of painful? On the one hand, you're talking about transforming the backbone of the world's industrial and consumer system. That's certainly expensive. On the other hand, say you manage to convert a lot of it to solar or wind power - think of the money you'd save on fuel.

And then there's the growing realization that we don't have many other possible sources for the economic growth we'll need to pull ourselves out of our current economic crisis. Luckily, green energy should be bigger than IT and biotech combined.

Almost from the moment scientists began studying the problem of climate change, people have been trying to estimate the costs of solving it. The real answer, though, is that it's such a huge transformation that no one really knows for sure. The bottom line is, the growth rate in energy use worldwide could be cut in half during the next fifteen years and the steps would, net, save more money than they cost. The IPCC included a cost estimate in its latest five-year update on climate change and looked a little further into the future. It found that an attempt to keep carbon levels below about 500 parts per million would shave a little bit off the world's economic growth - but only a little. As in, the world would have to wait until Thanksgiving 2030 to be as rich as it would have been on January 1 of that year. And in return, it would have a much-transformed energy system.

Unfortunately though, those estimates are probably too optimistic. For one thing, in the years since they were published, the science has grown darker. Deeper and quicker cuts now seem mandatory.

But so far we've just been counting the costs of fixing the system. What about the cost of doing nothing? Nicholas Stern, a renowned economist commissioned by the British government to study the question, concluded that the costs of climate change could eventually reach the combined costs of both world wars and the Great Depression. In 2003, Swiss Re, the world's biggest reinsurance company, and Harvard Medical School explained why global warming would be so expensive. It's not just the infrastructure, such as sea walls against rising oceans, for example. It's also that the increased costs of natural disasters begin to compound. The diminishing time between monster storms in places such as the US Gulf Coast could eventually mean that parts of "developed countries would experience developing nation conditions for prolonged periods". Quite simply, we've already done too much damage and waited too long to have any easy options left.

"We Can Reverse Climate Change"

If only. Solving this crisis is no longer an option. Human beings have already raised the temperature of the planet about a degree Fahrenheit. When people first began to focus on global warming (which is, remember, only twenty years ago), the general consensus was that at this point we'd just be standing on the threshold of realizing its consequences - that the big changes would be a degree or two and hence several decades down the road. But scientists seem to have systematically underestimated just how delicate the balance of the planet's physical systems really is.

The warming is happening faster than we expected, and the results are more widespread and more disturbing. Even that rise of one degree has seriously perturbed hydrological cycles: Because warm air holds more water vapor than cold air does, both droughts and floods are increasing dramatically. Just look at the record levels of insurance payouts, for instance. Mosquitoes, able to survive in new places, are spreading more malaria and dengue. Coral reefs are dying, and so are vast stretches of forest.

None of that is going to stop, even if we do everything right from here on out. Given the time lag between when we emit carbon and when the air heats up, we're already guaranteed at least another degree of warming.

The only question now is whether we're going to hold off catastrophe. It won't be easy, because the scientific consensus calls for roughly five degrees more warming this century unless we do just about everything right. And if our behavior up until now is any indication, we won't.

Bill Totten

Wednesday, January 28, 2009


This is how a government elected to stamp out sleaze became worse than its predecessor.

by George Monbiot

The Guardian (January 27 2009)

So now the circle is closed. The government which won a landslide victory in 1997 after Tory MPs were revealed to have taken cash for parliamentary questions now faces far graver allegations: cash for laws {1, 2}. Along the way, almost every policy which distinguished it from John Major's corrupt and pointless regime has been abandoned.

The difference between these two moments - 1997 and 2009 - is that now there is nowhere to turn. There are the minor parties, but they have been systematically excluded by another broken promise: the failure to reform the electoral system. New Labour has engineered the worst of all worlds: it has sustained a system which ensures that only one of two parties has a chance of power, and it has rooted out the policies which made a choice between the two worthwhile. At least when the Tories were in government we could dream of something better.

It is fitting and unsurprising that the scene of the new scandal is the unelected second chamber whose proper reform Blair and Brown have spent twelve years avoiding. The deregulation of the banks, the love affair with the neocons, the failure to tax the rich, Peter Mandelson ... is there any slithering cop-out which has not now returned to haunt this government?

The premise of Robert Harris's novel The Ghost (2007) - that Blair's premiership was the creation of a foreign intelligence service - is correct in spirit if not in substance. For twelve years the government of this country has acted as an agent of other powers: the US; big business; big money; anything except the electorate. It is hard now to believe that it was elected in a frenzy of hope very much like the excitement surrounding Barack Obama.

Tomorrow, with impeccable timing, the Alliance for Lobbying Transparency launches its campaign in parliament for public scrutiny of the contacts between legislators and professional hustlers {3}. There's a major lobbying scandal about once a month in this country, and no one who is aware of the government's failure to regulate this industry should be surprised. It was elected to stamp out sleaze, but since 1997 it has done almost nothing.

So do our noble lords, unmolested by the law, routinely put the interests of business above those of the people who didn't elect them? As SpinWatch records, in 2007 some of them were selling parliamentary passes to lobbyists for defence, transport, freight and legal companies {4}. In October of that year the Labour peer Lord Hoyle admitted that he had been paid by an arms company rep to introduce him to the minister for defence procurement, Lord Drayson {5}, although Lord Hoyle was cleared by a house of lords committee in May 2008. Last year, Lady Harris gave a researcher's pass to Robin Ashby, whose company lobbies ministers on behalf of BAE Systems and other weapons manufacturers. Lady Harris is paid by Mr Ashby as an adviser to another company he runs {6}.

But the problem is not confined to the House of Lords. Lobbying undermines democracy throughout the British government. In March last year, for example, we discovered that the government passed data which it had withheld from the public to the airport operator BAA. The data showed that a third runway at Heathrow would immediately breach European noise and pollution limits, ensuring that it could never be built. BAA and the government worked together to re-engineer the figures to fit the limits. Their fake data was then presented to the public in the government's consultation paper {7, 8}. It was used again this month to justify the decision to approve the third runway. This is the kind of wheeze you'd expect in Nigeria.

Like Nigeria, the UK has no effective safeguards against such collusion. As the House of Commons Public Administration Committee points out, "lobbying activity in the United Kingdom is subject to no specific external regulation" {9}. Nor is it subject to anything resembling self-regulation. The sleazebags who suborn our representatives operate in a world without rules.

On the other side of the fence, there are a few feeble constraints on the behaviour of MPs and officials. For example, former ministers and civil servants who want to work for the companies they used to regulate have to apply to the Advisory Committee on Business Appointments. Its members are a representative sample of British society: three lords and three knights, all white, all male, all educated at Oxford or Cambridge, all over seventy {10}. These young firebrands never stop anyone from taking up a post in business, advising only that former ministers and officials do not become "personally involved in lobbying" for twelve months after they leave the government {11}. This doesn't prevent them from telling their new employers who needs to be lobbied and how, and where the most lucrative opportunities might lie.

The rules have actually slackened over the past few years. The new ministerial code published in 2007 dropped the requirement that meetings between ministers and lobbyists should be recorded {12}. It's not just that contacts between legislators and business lobbyists are virtually unregulated; we're not even allowed to see what's going on.

Earlier this month, the public administration committee proposed a series of anti-corruption rules. They're a reasonable start, which would take us more or less to the position the United States reached in 1946, when the Federal Regulation of Lobbying Act was passed. Since then the US Congress, which admittedly has even graver cases of corruption to contend with, has passed a series of further laws, culminating in the 2007 Honest Leadership and Open Government Act. Anyone can now see, with a quick internet search, who is lobbying whom, whom they represent and how much they are being paid. Lobbyists who fail to comply with the rules can be imprisoned for five years {13}. Last week Barack Obama signed an executive order banning everyone working for the government from participating in any matter relating to their former employment for two years after leaving office {14}.

But even the public administration committee's timid and dated proposals have been received with horror by government ministers. The Cabinet Office minister Tom Watson told the committee "we have a pretty good system in the UK" and demanded that it show him evidence of a systemic problem within the lobbying industry {15}.

Some of us believe that a major scandal every few weeks is as much evidence as anyone would need, but Watson's Fork is a cunning device. Without the regulations the committee proposes, whose purpose is to open the system up to public scrutiny, it's impossible to accumulate the comprehensive evidence Mr Watson demands. Without this level of evidence, he won't introduce regulations.

So what else should the government expect? The sleaze scandals, as they did during the dying days of the last Conservative government, will now emerge thick and fast, as disillusioned officials risk their liberty by leaking documents that should have been freely available, and journalists, scenting blood, close in. Labour will be driven from office with the same howls of execration that saw off the Tories in 1997. But this time there'll be no bonfires, no bunting, no dancing in the streets, just the tired shuffling sound of a million more voters turning away from politics.


1. Jonathan Calvert, Claire Newell and Michael Gillard, 25th January 2009. Whispered over tea and cake: price for a peer to fix the law. The Sunday Times.

2. Philippe Naughton, 26th January 2009. Peers apologise, but deny wrongdoing, as Sunday Times releases audio. Times Online.

3. Lobbying Exposed, 28th January 2009, 10 am, Portcullis House. The Alliance for Lobbying Transparency.

4. SpinWatch, April 2008. Lobbying: Access and influence in Whitehall - Public Administration Committee. Supplementary memorandum.

5. David Leigh and Rob Evans, 26th October 2007. Peer was paid to introduce lobbyist to minister. The Guardian.

6. James Macintyre, 26th June 2008. Exposed: the arms lobbyist in Parliament. The Independent.

7. Marie Woolf and Jon Ungoed-Thomas, 9th March 2008. Evidence fix led to third runway being approved. The Sunday Times.

8. See also Toby Helm, 18th January 2009. Fury at airport lobby links to No 10. The Observer.

9. House of Commons Public Administration Select Committee, 5th January 2009. Lobbying: Access and influence in Whitehall. Volume I, para 44.


11. House of Commons Public Administration Select Committee, ibid, para 96.

12. The Committee on Standards in Public Life, cited by the House of Commons Public Administration Select Committee, ibid, para 187.

13. Craig Holman, 2008. Making the US Lobbying Disclosure Act Work as Intended: Implications for the European Transparency Initiative. Public Citizen.

14. Barack Obama, January 2009. Executive Order - Ethics Commitments by Executive Branch Personnel.

15. Tom Watson, 19th June 2008. Public Administration Committee - Minutes of Evidence.

Copyright (c) 2006

Bill Totten

State of Cringe

Clusterfuck Nation

by Jim Kunstler

Comment on current events by the author of
The Long Emergency
(2005) (January 26 2009)

Just as Mr Obama has danced into the oval office, we've arrived at a moment when a lot of people have a hard time imagining the future. This includes especially the mainstream media, which has reached a state of zombification parallel to that of the banks. But even in the mighty blogosphere, with its thousands of voices unconstrained by craven advertisers or pandering managing editors, the view forward dims as a dark and ominous fog rolls over the landscape of possibilities.

For at least a year several story-lines have been slugging it out inconclusively for supremacy of the Web-waves. The main event has been the Deflationists versus the Inflationists. The first group basically says that so much "money" is being welshed out of existence that it dwarfs the new "money" being shoveled into existence in the form of bail-outs, tarps, and office re-decoration stipends. The Deflationists see the tattered remnants of the consumer credit economy auguring ever deeper into a hole until it is buried so far down that all the back-hoes ever sold will not be able to dig it out. The competing Inflationists say that the massive truckloads of shoveled-in "money" will soon overtake vanishing "wealth" and, in the process, make the US dollar worthless.

Some of us see both outcomes in sequence: the deflationary "work out" of bad debt currently underway - of loans that will will never be paid back, of acronymic paper securities revealed as frauds, of "non-performing" contracts entering the swamps of foreclosure, of banks pretending to still exist, of hallucinated "wealth" rushing into the cosmic worm-hole of oblivion - can only go for so long before everyone who can go broke will go broke. Then, just as we find ourselves a nation of empty pockets, the tsunami of shoveled-in "money" designed to "reboot the consumer" (created not from productive activity but just printed recklessly), will start churning through the "economy," chasing products and commodities that became scarce during the deflationary phase - and the result is hyper-inflation, the eraser of debt, destroyer of fortunes, and suicide pill of feckless governments.

I guess the basic difference is that the hardcore Deflationists seem to think that their process can go on forever. The society just gets poorer and poorer until we're back at something like a scene out of Pieter Bruegel the Elder. The Inflationists see a fork in the road leading to more overt destruction, especially political turmoil as a lot of negative emotion joins the work-out orgy and overwhelms government.

But in this moment, the week after a new president's inauguration, the deadly fog has rolled in and absolutely everyone dreads what lurks on the other side of it, without being able to discern the path through it. For example, the "bail-out fatigue" being reported suggests that congress may just call a halt to money-shoveling. Where would that leave Mr Obama's urgent call for "stimulus?" Not to mention further TARP injections for redecorating bank offices.

I've been skeptical of the "stimulus" as sketched out so far, aimed at refurbishing the infrastructure of Happy Motoring. To me, this is the epitome of a campaign to sustain the unsustainable - since car-dependency is absolutely the last thing we need to shore up and promote. I haven't heard any talk so far about promoting walkable communities, or any meaningful plan to get serious about fixing passenger rail and integral public transit. Has Mr Obama's circle lost sight of the fact that we import more than two-thirds of the oil we use, even during the current price hiatus? Or have they forgotten how vulnerable this leaves us to the slightest geopolitical spasm in such stable oil-exporting nations as Nigeria, Mexico, Venezuela, Libya, Algeria, Columbia, Iran, and the Middle East states? And we're going to rescue ourselves by driving cars?

I know it is difficult for Americans at every level to imagine a different way-of-life, but we'd better start tuning up our imaginations, because endless motoring is not our destiny anymore. The message has not moved from the grassroots up, and so at this perilous stage the message had better come from the top down. Mr Obama needs to go on TV and tell the American public that were done cruisin' for burgers. He could do that by drastically reviving his stimulus proposal as it currently stands.

Putting aside whether this "stimulus" represents reckless money-printing in an insolvent society, let's just take it at face-value and ask where the "money" might be better directed:

-- We have to rehabilitate thousands of downtowns all over the nation to accommodate the new re-scaled edition of local and regional trade that will follow the death of national chain-store retail of the WalMart ilk. Reactivated town centers and Main Streets are indispensable features of walkable communities. The Congress for the New Urbanism ( ought to be consulted on the procedures for accomplishing this and for rehabilitating the traditional neighborhoods connected to our Main Streets.

-- We have to reform food production (aka "farming"). Petro-dependent agri-biz will go the same way as the chain stores. Its equations will fail, especially in a credit-strapped society. That piece of the picture is so dire right now, as we prepare for the planting season, that many crops may not be put in for lack of front-money. This portends, at least, much higher food prices at the end of the year, if not outright scarcities and shortages. And the new government wants to gold-plate highway off-ramps instead? Earth to Rahm Emanuel: screw your head back on.

-- As mentioned above, we have to get passenger rail going again because the airlines are going to die the next time there is an uptick in oil prices, or a spot shortage of oil. Let's not be too grandiose and attempt to build expensive high-speed or mag-lev networks - certainly not right now - because they require entirely new track systems. Let's fix those regular tracks already out there, rusting in the rain, or temporarily replaced by bike trails.

Those are three biggies for moment and enough to keep this society busy for a couple of years. But more to the point of this blog, observers of all stripes are having trouble imagining any way out of our multiple predicaments. All the possible actions tried so far have have seemed absurd. Why even try to prop up inflated house values when the single most crucial need in this sector is for house prices to return to parity with incomes so the shrinking pool of ordinary people still employed can begin to think about buying one? Well, the obvious explanation is that politicians can't bear the pain of watching mass foreclosures and the ruination of families. This is pretty understandable, and it is tragic indeed. Frankly, I don't know of any political narcotic that can mitigate the pain that results from having made poor choices in life - even if those choices were promoted and reinforced by the mighty ideology of "American Dreaming". Anyway, the foreclosures are well underway now, and perhaps the salient question is how long will the public's fury remain constrained while they hear about Wall Street executives buying $80,000 area rugs? Surely there is a tipping point of collective distress that is not too far from where we're at now.

In the realm of TARPS and other continued bail-outs aimed at the banks, the car-makers, and a host of other corporate special pleaders, I wonder if we have already reached the saturation point. But opinion on the Web is starkly divided and a prime manifestation is the debate over whether it was a terrible blunder or the right thing to let Lehman Brothers sink into bankruptcy. Both sides make valid arguments, but virtually all the other super-banks right now have lurched to death's door and we have no clear guidance on what we should do about them. Each one is touted as "too big to fail", as well as being interlocked with the others on credit default swaps that would bring them all crashing down if one counter party truly failed. It seems to me that this is what lies at the heart of the present situation. Nobody I've encountered in the sphere of opinion-and-comment thinks that these banks will survive, and this outcome beats a short path to the conclusion that the entire banking system is fatally ill - leading directly to a super-major crisis of political economy in which the whole reeking, leaking system just crashes. I think this is what lies behind Mr Obama's appeals for very urgent action.

But then we're back to square one: nobody, including Mr O himself, has really proposed a set of actions that have not already been tried in the way of money-shoveling. So this will be a week in which, perhaps, some wise and intrepid figures - perhaps even the president - will articulate something we haven't heard before, perhaps even something like bearing our hardships bravely. It'll be a very interesting week, I'm sure.

My new novel of the post-oil future, World Made By Hand, is available at all booksellers.

Bill Totten

Monday, January 26, 2009

Barack Obama: "America's First Jewish President"

by James Petras

Information Clearinghouse (December 12 2008)

Obama asks Shimon Peres: "What can I do for Israel?"
-- Haaretz (November 17 2008)

The UN Special Rappateur on Human Rights in the Palestinian Territories (Richard Falk) has said Israel's policies there amount to a crime against humanity ... He said the UN must act to protect the Palestinian population suffering what he called 'collective punishment' ... He said the International Criminal Court should also investigate whether the Israeli civilian leaders and military commanders for the Gaza siege should be indicted and prosecuted for violations of international criminal law.
-- BBC News (December 10 2008)

We need to ratchet up tough but direct diplomacy with Iran, making very clear to them than their development of nuclear weapons would be unacceptable, that their funding of terrorist organizations like Hamas and Hizbullah, their threats against Israel are contrary to everything we believe in ... We may have to tighten up those sanctions ... and give them a clear choice ... whether they want to do this the hard way or the easy way.
-- President-Elect Obama on NBC Meet the Press (December 07 2008)

According to a nationally prominent Zionist spokesperson, former Congressman, Federal Judge, White House Counsel to President Bill Clinton and early backer of Obama, Abner Mikvner, "Barack Obama is the first Jewish President". Mikvner's affirmation reflects both Obama's one-sided and longstanding commitment to the State of Israel and loyalty to the Zionist Power Configuration (ZPC) in the United States, as well as the long-term and successful effort of a network of financially and politically powerful Jewish Zionists to 'embed' Obama to their 'Israel First' political apparatus. What is striking about the latter is the demeaning and arrogant claims made by some leading Jewish Zionist about their 'central roles' in the making of Obama's professional and political careers - in effect denying the President-Elect any credit for his own academic or professional success. (Historically this has been mirrored in the continuous claims of some American Jews to have fought and won the battle of Civil Rights in the 1960s on behalf of African Americans - essentially denying black Americans any independent political role in their own struggle.) Even their personal flattery about his 'wisdom', 'brilliance' and 'intellectual acuity' is always linked with his unconditional support of the State of Israel. One can envision how quickly his Zionist colleagues would replace their plaudits with crude insults regarding his intelligence if he suggested Israel end its starvation blockade of Gaza ... Needless to say the Zionists know their man, as they confidently proclaim, he is a cautious and prudent politician, who measures power before he speaks, especially as he has filled the White House, economic councils and security apparatus with Zionist zealots.

The Making and Re-Making of Obama

The Chicago Jewish News, a nationally prominent Israel-First propaganda organ, published a lengthy article on 'Obama and the Jews' by Pauline Dubkin (October 24 2008), which quotes approvingly a 'long-time Jewish observer of the political scene', who declared that, "Jews made him (Obama). Wherever you look there is a Jewish presence."

This is not merely the usual arrogant self-aggrandizing boasts of a Zionist power broker, with which we are constantly bombarded on so many political topics, this reflects an important part of what Obama has become, especially in advancing his latter day political ambitions. The Zionist self-promoters (ZSP), ever ready to take credit for any success (no matter how notorious and immoral) - Wall Street speculators, Ivy League professors, Pentagon militarists, cultural gurus and even the key patrons of art forms like jazz and constantly rewrite history (or biography in the case of Obama) to maximize their self-importance in all aspects of American life. The ZSP conveniently fail to mention in their articles that Obama's white Gentile grandmother gave him the intellectual nurturing and encouragement and diligently petitioned for scholarships for him to attend elite private schools, which formed the basis for his intellectual skills to write, speak and reason as an educated man. The ZSP exclude from their 'revisionist and Judaized' biography of Obama, the central importance of Reverend Jeremiah Wright who transformed Obama from an elite Ivy university graduate into an effective social activist. Obama was able to participate and get involved in community organizing in Chicago's African-American neighborhoods because of Wright's endorsement and broad credibility. If it were not for Reverend Wright, Obama would never have had a social base or organizational experience to engage in Chicago politics. It is only after Obama had gained these skills and popular appeal that the Zionist politicos noticed him and went to work on his ego and ambitions, recruiting him to their pro-Israel agenda and financing his political career.

The Zionist re-write of his biography has gone curiously unchallenged by Obama. To suit his new mentors, the Israel-First ideologues and financial backers, he has willfully discarded and insulted his former mentors, as well as any current policy advisers and political colleagues who doesn't adhere to the Zionist line of unconditional support for Israel. Two cases come immediately to mind. When leading Zionist ideologues objected to the presence of Zbigniew Brzezinski and Robert Malley, among Obama's foreign policy advisors, the Zionists in Obama's inner circle immediately marginalized them with his approval. When the notorious torture-promoting Zionofascist Harvard Law Professor, Alan Dershowitz raised a howl about former US President Jimmy Carter (a principled critic of Israel's apartheid policies) speaking at the Democratic Party Convention (following a century-long political tradition of honoring former presidents) the Zionist operatives blatantly humiliated the elderly Carter by denying him even a five-minute speech - with Obama's approval. 'Professor' Dershowitz publicly crowed about his success and power over the Democratic nominee Obama in censoring the former President.

The conversion and promotion of Obama as an Israel-Firster is an excellent case study of the methods the ZPC has used to build a near invincible power base in the US political system. The construction of the ZPC is not the result of a cabal with a preplanned centrally controlled operation. Obama's conversion began through an ideologically diverse, individual, family and community-based effort. As Obama rose from local to national political office, Zionist promotion evolved from local into a nationally organized and concerted effort including campaign funding, business career appointments and paid propaganda and indoctrination junkets to Israel.

The ZPC offers positive inducements for the 'recruitable' and threats of retaliation and intimidation via media slanders and systematic public pillory through most Jewish communal organizations for the public political critics of Israel who remain recalcitrant and refuse to toe the Israel-First line.

Turning Obama into an Israel-Firster, according to the Chicago Jewish News article, began during his studies at Harvard Law School where he was 'spotted' by a Zionist professor, Martha Minow, as "smart, promising, and politically ambitious" and a likely recruit. The professor proudly recounts how she contacted family members, including her father, a major Democratic powerbroker, and fellow Zionists who ran a law firm in Chicago and recommended they hire the Obama. In brief, the first step in Zionist recruitment was using a prestigious academic post for initial contact, followed by a promise of career advancement through a professional network.

The next step was to introduce Obama to an association of 'friends and neighbors in the Jewish Community including prominent Zionist financial supporters. Obama's early promoters played a key role in convincing him that his political future depended on Zionist allies and that support depended on his total commitment to an Israel-First agenda. As Obama's ties with his Zionist-liberal backers in the Democratic Party thickened, his links to black community organizing and his pastor and former mentor, the progressive African-American minister, Reverend Jeremiah Wright weakened. By the end of the 1990s, Obama was firmly embedded in the liberal Zionist Democratic Party network and through it he teamed up with two key Zionist figures who were crucial to his presidential campaign: David Axelrod, Obama's chief political strategist since 2002 and the chief architect and tactician of his presidential campaign in 2008 and Bettylu Salzman, daughter of Phillip Klutznick, a billionaire real estate developer, slumlord and zealous Israel-Firster. Salzman/Klutznick admits she never would have bankrolled and promoted Obama simply because of 'his smarts' or liberal politics if he hadn't pledged his commitment to Israel's interests. She states, "Obviously I'm not going to support someone who is opposed to Israel and what it stands for. He's right on all the issues when it comes to Israel. He is in exactly the same place (Hillary) Clinton is, maybe stronger. He's a clearer thinker." (Chicago Jewish News, October 24 2008) While Obama served in the Illinois Senate, he shared an office with an Orthodox Jew and fanatical Israel-Firster, Ira Silverstein, who boasts of his role in 'educating' Obama about Jewish Orthodoxy and more important "shared pro-Israel feelings" to the point that ... "When Silverstein sponsored numerous resolutions condemning PLO bombings Obama eagerly signed on as a co-sponsor". (ibid)

Fully embedded in the Zionist Power Configuration of Chicago, Obama was advised by the Axelrods, Klutznicks and other key strategists to make the obligatory ritual pilgrimage to Israel and pay obeisance to its leaders in the course of his Senate campaign. During his trip to Israel, two years later in 2006, Obama was accompanied and guided by the executive vice-president of the Jewish Federation of Metropolitan Chicago. Under Zionist guidance, Obama 'connected' with the Israeli state, totally ignoring the plight of the Palestinians who were being savagely repressed by the Israel Army and assaulted on a daily basis by Zion-Fascist settlers. Obama returned a thoroughly committed Zionist African-American politician.

With the Israeli-ZPC certificate of approval, Obama's financial base of support widened to include some of the wealthiest pro-Israel Jewish Americans in the Midwest including Lester Crown, whose son, James Crown headed Obama's financial campaign in Illinois. According to Crown (pater), "From the time I met him, the times we talked about Israel and we talked about it several times, he has been an ardent backer of Israel's defense position (sic), Israel's security position". (Ibid)

To those Zionfascists who demand that Israel annex all of Palestine and expel 'the Arabs' and were disturbed by Obama's passing reference to a two-state solution, Crown assured them that Obama's proposal was couched in such outrageously impossible demands for concessions from the Palestinians that it was a dead letter.

Not all Jews accept this view of a Zionist-embedded Obama: Some racists reject him as an untrustworthy and unqualified 'Schvartze' because of his 'very close intimate relationship' with Reverent Jeremiah Wright. The Zionist-influenced mass media took their cue from the far-right and orchestrated a hate campaign against Reverend Wright and his links to Obama. The 'liberal Zionists', who strategized and ran Obama's presidential campaign, easily convinced Obama to publicly dissociate himself from his former minister and mentor of the 1980s. Obama complied. However, the alliance of the Republican Right and Zionfascists demanded Obama make a public denunciation of the Minister. The liberal Zionists prepared the script, which Obama recited, issuing a vicious condemnation of Reverend Wright and specifically listed Wright's defense of the sovereignty and self-determination of the Palestinians as one of his 'crimes'.

Obama had crossed the River Jordan. His capitulation to the Zionofascists was the inevitable consequence of his intimate and longstanding ties to his liberal-Zionist backers. The public purging and scourging of a renowned African-American Christian theologian of the oppressed was only the beginning of the Zionist makeover of Obama as the first Jewish (or better Zionist) President of the United States. It was followed by further purges of any 'centrist' or 'realist' establishment adviser, who might at any time in the past have issued the mildest criticism of Israel's policies or even praised or associated with any other critic of Israel or the Jewish Lobby in the US. It was 'guilt by association'.

The Zionofascists soon pressed their campaign to force Obama's liberal-Zionists to purge Zbigniew Brzezinski, the Cold Warrior National Security Adviser to former President Jimmy Carter, Samantha Power, author and lecturer at the Kennedy School of Government at Harvard University and Robert Malley, a former Clinton adviser for their perceived crimes against Zionism. Brzezinski was accused of advocating what he called "an even-handed Middle East policy", something clearly 'anti-Semitic' in the eyes of the unconditional supporters of Israel who dominate the Presidents of the Major American Jewish Organizations (PMAJO). Worse still he praised the Walt-Mearsheimer book critical of the Israel Lobby, a capital offense in the eyes of most of the Jewish political spectrum. Power and Malley also transgressed the Israel-First line. Although Brzezinski later recanted his praise of Professors Walt and Mearsheimers' study, he and the other members of the 'objectionable three' foreign policy specialists were marginalized and excluded from having any input on policy issues related to Middle East.

Control of Obama's Middle East policy was taken over by Dennis Ross, a virulent Zionist advocate of Israel's ultra-militaristic policies, including an armed preemptive attack on Iranian nuclear and military installations. Ross is an unconditional supporter of the Israeli starvation siege of the 1.5 million residents of the Gaza Strip and fully backed Israel's savage air attacks against civilian targets in Lebanon. Obama's appointment of Ross is the clearest guarantee to all Zionists, liberal, orthodox or fascist, that US policy in the Middle East will continue to be subordinated to the interests of the Israeli State and its military.

Obama's purge of any and all moderate voices on Middle East policy, his placement of fanatical Israel-Firsters in most key positions in his campaign and new Administration reflects his long-term, deep immersion into the Zionist Power Configuration. The result is a "Jewish President" - in the sense that most key White House, economic and security appointments reflect pre-election Zionist power in the making, indoctrination and scripting of the Obama candidacy.

The Configuration of the 'Jewish President'

One of Obama's longest supporters, Rabbi Arnold Jacob Wolf, provides a clue to Obama's affinity for Zionist appointments. According to Rabbi Wolf, "Obama is embedded in the Jewish world". While the Rabbi is presumptuous to assume that all Jews subscribe to his own Israel-First views, he is absolutely correct if he is referring to the Jewish-Zionist world.

Nothing better explains Obama's selection of demonstrably failed economists and security officials than his long-term, large-scale links to the ZPC.

Obama started with the appointments of dual US-Israeli citizen, Illinois Congressman Rahm Emmanuel and Zionist David Axelrod to top White House posts, as well as Lawrence Summers (long-time Harvard ally of the Judeo-fascist, torture advocate Alan Dershowitz) as chief White House economic adviser. Summers is a life-time Israel-Firster, who used his presidency at Harvard University as a bully pulpit to attack a student-faculty group critical of Israeli policies in the Occupied Terrtories. As the former Treasury Secretary under the Clinton regime he was a key architect of the speculator-dominated financial system, which is currently in total collapse. In line with the 'Jewish Presidency', Obama named one of the foremost, unconditional Israel-Firsters to be his key Middle East policymaker - Dennis Ross, a leading Zionist ideologue and co-author of a presidential position paper advocating pre-emptive war with Iran. Ross is the pivotal Zionist figure in Obama's entourage and his appointment is the guarantee for the 52 Presidents of the Major American Jewish Organizations (PMAJO) that the Obama regime will follow and support with American guns and American tax-payer money every Israeli war crime, assault or invasion on its Arab and Parsi-speaking regional neighbors. Ross, Axelrod, Summers, Emmanuel and their craven followers in Congress together with the AIPAC and the entire Zionist community-based network will ensure that Obama is inextricably 'embedded' in their agenda. They will not allow the publication or support of any intelligence investigation, judicial inquiry or United Nations report, which challenges Israel's occupation of Palestine and promotion of pre-emptive war with Iran based on the fabrication of data about its so-called nuclear threat. Each and every recently appointed Zionist has condemned the United Nations and International Atomic Agency reports refuting Israel's phony claims of an Iranian nuclear weapons program. They will make sure that newly appointed National Security Adviser, General James Jones will never bring up or make public his highly critical internal report based his on-site investigation of Israel's crimes against the civilian Palestinian population in the Occupied Territories.

Secretary of State Hillary Clinton, President Obama and Defense Secretary Gates are so deeply 'embedded' in the Zionist network and so deeply infused with the Israel-First ideology that ZPC 'pressure' will not be necessary. The three are, in effect, Zionized Zombies, eager to fawn and truckle, even to grotesque excesses, at every wink and gesture, signaling military handouts, UN vetoes and repeated provocative acts of war against Iran. They have even exceeded President Bush in their eagerness to please their Zionist mentors by recognizing Jerusalem as the 'undivided' capital of the Jews - effectively denying the rights of the Palestinian residents.

Nothing speaks to the dominance of the ZPC over US political life - domestic and foreign - than the election of their meticulously groomed first 'Jewish President' - and the subsequent takeover of strategic economic and security posts in his administration.


The ascent of a minority of ambitious power-driven political operatives acting first and foremost for a militarist colonial power in a strategic region of the world economy represents the biggest threat to world peace and to US democratic values in recent history.

Think about it: Not only do the Zionists and their embedded clones rule the White House, they also have the political apparatus (left, liberal, center and right) to silence, insult, witch hunt and isolate any critic of their agenda, their organizations and of the State of Israel. When confronted by a critic the entire apparatus brays in unison about 'anti-Semitism' and follows up with severe civil sanctions. As Obama's career under his Zionist handlers illustrates, they are capable of hurling repulsive denunciations against his former African-American mentor and spiritual councilor, Reverend Wright; capable of publicly humiliating and pushing aside a former President and Obama supporter, Jimmy Carter; capable of isolating and 'sanitizing' former top foreign policymakers from earlier Democratic Administration like Brzezinski, simply for pointing out Israeli crimes against humanity (although such observations are made daily in the European press and political circles).

The apparatus combines the carrot (embedding and promoting Obama) and the stick (stigmatizing Carter): It all depends on whether an individual, politician, academic, writer or journalist is 'useful' (that is, an unconditional supporter) or 'harmful' (that is, critical) to the State of Israel.

The Obama experience illustrates how a small, close knit, well-organized and well financed minority operating through prestigious professional posts and powerful economic enterprises can penetrate major political institutions, capture upwardly mobile politicians and 'turn' them into willing accomplices in promoting wars on behalf of a foreign colonial militarist power. If in the past we have experienced Zionist thuggery mugging our freedom of speech in civil society, think of what we can expect when these thugs have complete control of the White House. The 'First Jewish President' of the United States indeed! Where does that leave the American people, their rights, their interests and their country's independent foreign policy?


In early December 2008, Israel's right wing party, Likud, under the leadership of 'Bibi' Netanyahu, met and nominated its slate of candidates for the upcoming national elections (February 12 2009). The majority of candidates nominated represent what most Israeli journalists call the 'hard right' or what might be accurately described as Zionfascism. The Likud Party majority favors the expulsion of all Palestinians (that is non-Jews) from Greater Israel, the military seizure of Gaza, the end of any pretense of peace negotiations and the immediate bombing of Iran.

Currently Likud and its fascists have the support of a plurality of Israeli Jews. If they win, it is a virtual certainty they will receive the automatic support of all the principle respectable pro-Israel Jewish organizations in the US, who follow the line that: "It is not ours to question whom the Israelis vote for office. It is our duty to back the State of Israel."

The election of an Israeli-fascist regime will up the ante in Washington. Does Obama's embedding in the Zionist apparatus include support for Jewish fascism , the total ethnic cleansing of Palestine and their unilateral decision to 'nuke' Iran? Three weeks into his presidency Obama will face his biggest Middle East challenge, which will define the nature of US policy in the region.

Obama has recently suggested that Washington would nuke Iran to protect Israel - which has never yet signed a treaty with the US - to which the Bush Administration replied contemptuously that it would be very hard to convince American parents in Kansas that their sons should risk nuclear incineration for the sake of a small country in the Middle East. Clearly Obama is a greater war monger on issues involving Israel then even Bush: It comes with being a "Jewish President".


James Petras, a former Professor of Sociology at Binghamton University, New York, owns a 50-year membership in the class struggle, is an adviser to the landless and jobless in Brazil and Argentina, and is co-author of Globalization Unmasked (Zed Books). Petras' forthcoming book, Zionism, Militarism and the Decline of US Power, is due from Clarity Press, Atlanta, in August 2008. He can be reached at: Visit his website.

Bill Totten