'Intelligent discontent is the mainspring of civilization.' -- Eugene V. Debs

Sunday, March 29, 2009


More troops for Afghanistan, 4,000 more in addition to the 17,000 already ordered, in the service of a confused policy:

The commanders in the field wanted a firmer and long-term commitment of more combat troops beyond the 17,000 that Mr. Obama had already promised to send, and a pledge that billions of dollars would be found to significantly expand the number of Afghan security forces.

Defense Secretary Robert M. Gates and Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, pressed for an additional 4,000 troops to be sent to Afghanistan — but only to serve as trainers. They tempered the commanders’ request and agreed to put off any decision to order more combat troops to Afghanistan until the end of this year, when the strategy’s progress could be assessed.

During these discussions, Mr. Biden was the voice of caution, reminding the group members that they would have to sell their plans to a skeptical Congress.

In this article, Helene Cooper and Eric Schmitt of the New York Times have pulled away the curtain and revealed the way that decisions are made in the Obama administration, much as Ron Susskind did in regard to the Bush administration in 2004. The contrast is striking, with the missionary hubris of the neoconservatives absent, replaced by, as has become the signature feature of the new administration, a reliance upon experts, leavened by the necessity to account for political considerations.

No longer do White House staffers arrogantly exclaim, we make our own reality, rather, the emphasis is now upon choosing among unpalatable alternatives, with strengths and weaknesses described in varying shades of gray. Even so, such a radical transformation has not resulted in an improvement in policy, merely a perpetuation of catastrophic foreign policy initiatives by different means. The evangelically inspired grandiosity of Bush invariably expressed itself in reductionist, broad strokes like the invasions of Afghanistan and Iraq as primary features of a utopian war on terror, while Obama now administers over the chaotic imperial system that it has created through an attention to detail.

Hence, commanders on the ground in Afghanistan ask the White House for 4,000 ground troops in addition to 17,000 already dispatched, which, upon consideration by Gates and Mullen in the Pentagon, is amended to 4,000 troops to serve only as trainers to our Afghan surrogates, as if the successful or failure of the mission is dependent upon such distinctions. Obama, ever wary of the domestic consequences of an escalation that is too visible, consequences to which his Vice President is especially attuned, agrees with Gates and Mullen, with the paradox being that a policy that is presumably being developed through the application of objective criteria (yes, you guessed it, Obama is also going to gauge performance in Afghanistan against benchmarks) is undermined by bureaucratic and political influences.

Such an approach, with Obama consciously in the background, should have been easily anticipated, after all, one of the strongest lines of attack upon Bush by liberal commentators was his purported willingness to rely upon incompetents to develop and administer policy, as if an ideologically flawed approach could be rescued by relying upon better trained, better educated academics and bureaucrats. Liberals have centered their case for governance upon such elitism for many years, I first recall encountering it during the Reagan years. Of course, it has the redeeming feature of allowing liberals to compete for political power without threatening entrenched interests with dramatic changes in policy. Apparently, empires slowly decay from within as memorialized through innumerable memoranda.

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Friday, March 27, 2009

Gaming the System 

On Monday, Treasury Secretary Timothy Geithner announced his plan, long anticipated, for addressing the trillions of dollars in toxic debt held by US financial institutions:

Administration officials outlined a three-part Public-Private Investment Program that offers private investors vast amounts of cheap, taxpayer-supported financing for every dollar they put up of their own money.

In essence, the Treasury and the Federal Reserve will be offering at least a tablespoon of financial sugar for every teaspoon of risk that investors agree to swallow.

“There is no doubt the government is taking a risk,” Mr. Geithner acknowledged at a briefing for reporters. “The question is how best to do it.”

Under one main component of the plan, the Federal Deposit Insurance Corporation would oversee a program in which banks offer bundles of whole mortgages for sale to investors. The F.D.I.C. would set up an auction for each bank portfolio, allowing a bank to sell the mortgages to the investor that offers the highest bid.

But the crucial incentive for investors — traditional fund managers, hedge funds, private equity funds, pension funds and possibly even banks — is that the government would lend as much as 85 percent of the purchase price for each portfolio of mortgages.

On top of that, the Treasury would invest one dollar of taxpayer money for every dollar of private equity capital to cover the remaining 15 percent of the portfolio’s purchase price.

The arrangement is similar to some of the distressed-asset sales arranged by the Resolution Trust Corporation, the federal agency that was responsible for cleaning up the savings-and-loan debacle of the early 1990s.

But the scale of the new program is much bigger.

In addition to the F.D.I.C.’s program, the Treasury would help finance a series of public-private investment funds to buy up unwanted mortgage-backed securities, or pools of mortgages that have been packaged into bonds with a credit rating.

Those two programs alone could buy $500 billion to $1 trillion worth of troubled assets, according to Mr. Geithner. The Treasury would kick in $75 billion to $100 billion from the Troubled Asset Relief Program as equity.

But the Treasury could pump almost $1 trillion more into the toxic-asset effort through a program called the Term Asset-Backed Securities Loan Facility, or TALF, a joint venture with the Federal Reserve.

Joseph Stiglitz was not impressed, and probably lost any future invitations to Obama administration economic policy forums with his scathing remarks:

The U.S. government plan to rid banks of toxic assets will rob American taxpayers by exposing them to too much risk and is unlikely to work as long as the economy remains weak, Nobel Prize-winning economist Joseph Stiglitz said on Tuesday.

"The Geithner plan is very badly flawed," Stiglitz told Reuters in an interview during a Credit Suisse Asian Investment Conference in Hong Kong.

U.S. Treasury Secretary Timothy Geithner's plan to wipe up to US$1 trillion in bad debt off banks' balance sheets, unveiled on Monday, offered "perverse incentives," Stiglitz said.

The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said.

"Quite frankly, this amounts to robbery of the American people. I don't think it's going to work because I think there'll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer."

Even if the plan clears banks of massive toxic debt, worries about the economic outlook mean banks could still be unwilling to make fresh loans, while the prospect of a higher tax burden to pay for various government stimulus plans could further undermine U.S. consumers, he said.

But you really didn't need a Nobel Prize winning economist to tell you that, did you? And, of course, you must already know that the banks that went broke making these loans have already figured out how to game the system:

As Treasury Secretary Tim Geithner orchestrated a plan to help the nation's largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market, sources told The Post.

Both Citi and BofA each have received $45 billion in federal rescue cash meant to help prop up the economy and jumpstart the housing market.

But the banks' purchase of so-called AAA-rated mortgage-backed securities, including some that use alt-A and option ARM as collateral, is raising eyebrows among even the most seasoned traders. Alt-A and option ARM loans have widely been seen as the next mortgage type to see increases in defaults.

One Wall Street trader told The Post that what's been most puzzling about the purchases is how aggressive both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay.

Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids.

The secondary market represents a key cog in the mortgage market, and serves as a platform where mortgage originators can offload mortgages in bulk that have been converted into bonds.

Yields on such securities can be as high as 22 percent, one trader noted.

BofA said its purchases of secondary-mortgage paper are part of its plans to breathe life back into the moribund securitization market.

"Our purchases in [mortgage-backed securities] increase liquidity in the mortgage market allowing people to buy a home," said BofA spokesman Scott Silvestri.

A Citi spokesman declined to comment, though people familiar with the bank say it argues the same point.

Citi's and BofA's purchases highlight the challenges both banks face while operating under intense public scrutiny.

While some observers concur that the buying helps revive a frozen market, others argue the banks are gambling away taxpayer funds instead of lending.

Michael Hudson describes in this informative article why the government subsidy for this program induces banks to engage in the behaviour already attributed to Bank of America and Citigroup.

As for long term consequences, Mike Whitney nails it, connecting the toxic assets plan with Geithner's request for more regulatory powers that would enable him to seize non-bank financial companies, such as insurance companies, hedge funds and investment firms:

Prediction: If Geithner is granted these special powers by the braindead Congress, the country will undergo the greatest period of bank consolidation in its 230 year history. This is a blatant power grab by a shifty character who has risen to his present pay-grade by nosing his way up the political stepladder. Congress had better get its act together and put an end to this nonsense or the nation will continue its fast-paced metamorphosis into a feudal oligarchy run by the Bank Mafia and Wall Street racketeers.

Geithner, Summers and Bernanke aren't just allowing transnational financial institutions to game government assistance programs purportedly required to stabilize the economy, no, it is bigger than that. They are allowing them to game the entire American political system, with the intention of consolidating even more power within a small financial elite.

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Wednesday, March 25, 2009

One Rule for Them, Another for Us 

Apparently, universities, even public ones, operate in an alternative universe, along with transnational financial institutions:

The University of California's worst financial crisis in years has not prevented the hiring of high-salaried administrative talent or the awarding of pay raises, promotions and perks to a dozen executives, university records show.The new appointments reflect the university's commitment to providing "management effectiveness and accountability," said UC spokesman Paul Schwartz, adding that the system also needs to provide competitive salaries and benefits to attract and retain those qualified to run a major academic institution.

Last week, for example, the governing Board of Regents appointed two executives at salaries of more than $350,000 a year and authorized paid administrative leaves to two former campus chancellors - one receiving $402,200 a year and the other $315,000.

Over the last two months, the board also granted pay increases of as much as 22.3 percent to a half dozen senior managers and approved higher salary ranges for several additional department manager positions at UCSF and at the university's headquarters in Oakland.

But such appointments, pay raises and perks have infuriated UC's primary union of 11,000 staff members, University Professional and Technical Employees Local 9119, which called Tuesday for a hiring freeze of UC administrators earning more than $200,000 a year.

Raises and bonuses for them, austerity for us. That's the rule that will they will continue to vigorously apply, until we stop it. Much like executives with financial institutions, they are grabbing everything that's not nailed down before the entire rotten edifice collapses. Meanwhile, economists at UCLA and the University of the Pacific forecast over 12% unemployment for California before the recession loosens its grip.

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Monday, March 23, 2009

The Beginning of the End (Part 1) 

The handwriting is on the wall in regard to decline of American economic power:

China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.

Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.

“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.

Hongbin is deliberately understating the situation. The problem is not the fact that the US Federal Reserve is printing money, but, rather, that the Fed is printing money in an attempt to preserve the global preeminance of US financial institutions that would otherwise be moribund, with the risk assumed by foreign holders of dollar denominated assets. If the Fed was printing money in support of a policy that would revive the US consumption of Chinese exports, the People's Bank of China would not be nearly as alarmed.

But the Fed is doing the opposite, as US banks cut back on the extension of credit and Americans pay down their debt and increase their rate of savings. As a consequence, the US is slowly, but surely, moving towards reduced consumption, if measured by expectations before the recession, and increased domestic manufacture of products at the expense of foreign countries dependent upon the US market. Hence, the lack of concern by the Obama administration and the Federal Reserve about the inevitable decline in the dollar that will result from the bailout and the stimulus plan. The policy is also alluring from a geopolitical standpoint, as a decline in China's manufacturing base would be perceived quite positively by the military-industrial complex, a way of perpetuating US global hegemony.

Accordingly, if accepted on its own terms, the internal logic of such a policy is quite compelling. There are, however, good reasons to speculate as to whether Americans will accept the sacrifice involved in such a painful transition, as noted here last fall. In effect, the US would be atttempting to preserve its financial and military dominance through a conscious policy of import substitution, a policy that would initially require a form of shock therapy that prices many imports out of the reach of most Americans. Generations of people accustomed to possessing the most advanced Japanese, Chinese and European products will be stunned to discover that they only the wealthy will still be able to purchase them. Increased social unrest is very likely as the effects of the policy become evident, although the prospect that such unrest, predominately populist in nature, will result in more equitable social policies appears slight.

Furthermore, the policy also assumes that China does nothing in response, clearly, a misguided belief, as this article demonstrates. China has substantial reserves, and can direct them towards the creation of domestic market to replace foreign ones like the US. One suspects that the leadership of the Chinese Communist Party anticipated this threat before the recession because Hu Jintao has been emphasizing the need for a more equitable distribution of income within China for several years. It has been common to dismiss these concerns as a mere rhetorical effort to address growing unrest, but, perhaps, there was something much more serious beneath the surface, a recognition that China had to become more economically independent of the US in order to avoid a preemptive US financial strike against it through devaluation of the dollar.

Projecting the future is a dangerous business, but the advantage here would appear to lie with China. Debtor nations rarely, if ever, succeed in reestablishing the dominance they possessed in their manufacturing and export heydeys. Of course, I shouldn't ignore the possibility that it will all end badly for all concerned. Even so, East and South Asia seems more favorably positioned to weather the storm. And, then, there are the workers themselves. How will they react to these tumultuous changes, changes that, in all instances, will result in even more rapacious forms of primitive accumulation within the societies in which they live? Or, to put it more simply, how will they react to more extreme expropriations of their wealth, expropriations required to facilitate future capitalist development? So far, with the exception of continental Europe, there are few, if any signs, of an emerging collective consciousness required to resist it.

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Friday, March 20, 2009

Zionist Iconography 

From Haaretz:

Dead babies, mothers weeping on their children's graves, a gun aimed at a child and bombed-out mosques - these are a few examples of the images Israel Defense Forces soldiers design these days to print on shirts they order to mark the end of training, or of field duty. The slogans accompanying the drawings are not exactly anemic either: A T-shirt for infantry snipers bears the inscription "Better use Durex," next to a picture of a dead Palestinian baby, with his weeping mother and a teddy bear beside him. A sharpshooter's T-shirt from the Givati Brigade's Shaked battalion shows a pregnant Palestinian woman with a bull's-eye superimposed on her belly, with the slogan, in English, "1 shot, 2 kills." A "graduation" shirt for those who have completed another snipers course depicts a Palestinian baby, who grows into a combative boy and then an armed adult, with the inscription, "No matter how it begins, we'll put an end to it."

There are also plenty of shirts with blatant sexual messages. For example, the Lavi battalion produced a shirt featuring a drawing of a soldier next to a young woman with bruises, and the slogan, "Bet you got raped!" A few of the images underscore actions whose existence the army officially denies - such as "confirming the kill" (shooting a bullet into an enemy victim's head from close range, to ensure he is dead), or harming religious sites, or female or child non-combatants.

With such blatantly racist attitudes towards Palestinians, it is any wonder that Israeli troops in Gaza went on a killing spree? With the passage of time, we are discovering what the IDF really did there:

A squad leader said: "At the beginning the directive was to enter a house with an armoured vehicle, to break the door down, to start shooting inside and – I call it murder – to shoot at everyone we identify. In the beginning I asked myself how could this make sense? Higher-ups said it is permissible because everyone left in the city [Gaza City] is culpable because they didn't run away."

The accounts, which also describe apparently indiscriminate destruction of property, were given at a post-operation discussion by graduates of the Yitzhak Rabin pre-military course at the Oranim Academic College in northern Israel. The transcript of the session in front of the head of the course – details from which were published by the newspaper Haaretz – prompted the Israel Defence Forces (IDF) military advocate general Avichai Mendelblit yesterday to announce a military police investigation into the claims. Haaretz said the airing of the "dirty secrets" would make it more difficult for Israelis to dismiss the claims as Palestinian propaganda. The course principal, Danny Zamir, told the newspaper that after being "shocked" by the testimonies on 13 February he told the IDF chief of staff Gabi Ashkenazi he "feared a serious moral failure" in the IDF.

In one account, an infantry squad leader describes how troops released a family who had been held in a room of their house for several days. He said: "The platoon commander let the family go and told them to go to the right. One mother and her two children didn't understand and went to the left, but they forgot to tell the sharpshooter on the roof they had let them go and it was okay... The sharpshooter saw a woman and children approaching him. He shot them straight away. I don't think he felt too bad about it, because, as far as he was concerned, he did his job according to the orders he was given. And the atmosphere in general, from what I understood from most of my men who I talked to, the lives of Palestinians, let's say, is something very, very less important than the lives of our soldiers."

A second squad leader, who described the killing of the elderly woman, says he argued with his commander over loose rules of engagement that allowed the clearing out of houses by shooting without warning residents beforehand. After the orders were changed, soldiers had complained that "we should kill everyone there [in the centre of Gaza]. Everyone there is a terrorist." The squad leader said: "To write 'death to the Arabs' on walls, to take family pictures and spit on them, just because you can. I think this is the main thing: To understand how much the IDF has fallen in the realm of ethics."

Of course, this shouldn't be that surprising to us. Our troops engaged in similar practices in attempting to suppress the Iraqi insurgency. Indeed, the practice of permitting troops to engage in indiscriminate violence against civilians as a purported means of self-protection has been commonly accepted by the US military for a long time.

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Thursday, March 19, 2009

Please, Please, Just Go Away and Leave Us Alone 

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Tuesday, March 17, 2009

Africa, AIDS and the Catholic Church 

Pope Benedict XVI is traveling through Africa, and, as one might expect, hypocrisy and insensitivity are accompanying him on his journey:

Pope Benedict XVI said condoms are not the answer to the AIDS epidemic in Africa and can make the problem worse, setting off criticism Tuesday as he began a weeklong trip to the continent where some 22 million people are living with HIV.

Benedict's first statement on an issue that has divided even Catholic clergy working with AIDS patients came hours before he arrived in Cameroon's capital -- greeted by thousands of flag-waving faithful who stood shoulder-to-shoulder in red dirt fields and jammed downtown streets for a glimpse of the pontiff's motorcade.

In his four years as pope, Benedict had never directly addressed condom use, although his position is not new. His predecessor, Pope John Paul II, often said that sexual abstinence -- not condoms -- was the best way to prevent the spread of the disease.

Benedict also said the Roman Catholic Church was at the forefront of the battle against AIDS.

''You can't resolve it with the distribution of condoms,'' the pope told reporters aboard the Alitalia plane heading to Yaounde. ''On the contrary, it increases the problem.''

The pope said a responsible and moral attitude toward sex would help fight the disease, as he answered questions submitted in advance by reporters traveling on the plane. His response was presumably also prepared in advance.

As noted elsewhere in the article, three-quarters of all AIDS deaths worldwide in 2007 were in sub-Saharan Africa, where some 22 million people are infected with HIV -- accounting for two-thirds of the world's infections.

I could go on and on about this, but that really says it all. People are dying because of this nonsense, dying in large numbers, and it is an ongoing outrage. There should be protests directed against the Church exponentially larger than those ignited by the sexual molestation scandals.

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Sunday, March 15, 2009

Punk: Created By African Americans? 

Well, not quite. The story is a little more complicated than that. But, as this article indicates, the discovery that three African American brothers in Detroit performed and recorded music that anticipated the punk explosion of the late 1970s remains quite striking, given that punk was often described as the antithesis of disco, drawing a stark racial boundary. Of course, it wasn't true, as both punk and disco emphasized multiculturalism, but that was the perception manipulated by the mainstream.

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Bailout Follies 

From today's New York Times:

The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

The payments to A.I.G.’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation. Mr. Geithner last week pressured A.I.G. to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance.

The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government’s efforts to prop up Wall Street. Past bonuses already have prompted President Obama and Congress to impose tough rules on corporate executive compensation at firms bailed out with taxpayer money.

“There are a lot of terrible things that have happened in the last 18 months, but what’s happened at A.I.G. is the most outrageous,” said Lawrence H. Summers, President Obama’s chief economic adviser, during an appearance Sunday on “This Week With George Stephanopoulos.” “What that company did, the way it was not regulated, the way no one was watching, what’s proved necessary — is outrageous.”

Mr. Summers, who also appeared on CBS’s “Face the Nation,” suggested, however, that the government’s ability to require the bonuses be scaled back was restricted by preexisting contracts, even though he did not specify what those restrictions may be.

Allow me to translate this for you: everything is going according to plan, right down to the faux outrage expressed by Geithner and Summers. Summers' reliance upon pre-existing contracts to justify inaction is particularly mendacious. Out here in California, public sector workers are under unrelenting pressure to renegotiate collective bargaining agreements so as to legally authorize reduced salaries. The police in Sacramento have already agreed to lower salaries, school teachers in almost all districts face similar pressures, and the judiciary has permitted the Governor to unilaterally furlough state workers, and thereby reduce salaries, because of an ongoing fiscal emergency.

But AIG? AIG is the line in the sand where the sanctity of contract must be preserved at all costs. And there is an inexorable logic to it. As I wrote here just after Obama's election:

In the 1970s, capital interests responded to a global crisis of similar severity by embracing neoliberal policies that rendered the lives of workers more transient and insecure, policies ultimately adopted by both Republicans and Democrats. If capital determines that a merciless regime of subproletarianization of the workforce is required, including recourse to extreme methods of suppression, why should we feel confident that Obama will resist? Obama has skillfully fused his political skills with new technologies to excite millions, but it remains to be seen whether his efforts will ultimately be empowering, alienating, or even a more refined method of social control.

We are entering the early stages of this process, with capital retaining as many privileges as possible, despite the catastrophic failure of those who managed it, while the workers who have already been victimized, are called upon to sacrifice, even those with the contractual protections commonly utilized by bankers and investors. Will we eventually rebel? There is no sign of it. But if we do, how will Obama respond? Well, the Pentagon is already anticipating the deployment of troops to deal with domestic unrest.

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Saturday, March 14, 2009

Out of Kool-Aid 

From an e-mail that I received earlier this week:

Dear Friends,

Our President is gearing up for a fight against the corporate elites and their Republican allies in Congress. To prevail he's going to need our help. There are two quick and easy things you can do right now to support President Obama.

First, please click on the following link and sign up for our new xxxxxx 4 Obama group on the Organizing for America website: http://my.barackobama.com/page/group/xxxxxx4Obamaatxxxxxx. We will be working with President Obama's grassroots network in the weeks and months ahead to mobilize local support for the President's progressive agenda.

Second, please watch the short video below from Mitch Stewart, Organizing for America's national director. Then click on the link to sign the Organizing for America Pledge.

As President Obama said on that magical night last August at Mile High Stadium in Denver, "At defining moments like this one, the change we need doesn’t come from Washington. Change comes to Washington. Change happens because the American people demand it – because they rise up and insist on new ideas and new leadership, a new politics for a new time."

Now is that time. Please join us in supporting President Obama and his effort to bring real change to America.

In Peace & Solidarity,
xxxxxx x

Apparently, a lot of American liberals are engaging in a willful flight from reality. Obama, like Bush before him, is channeling trillions of dollars into bankrupt financial institutions, and he has expressed the intention of paying for it with reductions in Medicare and Social Security benefits. Meanwhile, he has sent more troops to Afghanistan and intensified the conflict in Pakistan while abandoning his pledge to withdraw US forces from Iraq.

Such actions, and the willingness of liberals to uncritically accept them, raises the question as to whether liberalism has any ideological grounding at all, whether it represents anything more than the substitution of one group in power with another. As the e-mail indicates, the rhetoric associated with this sort of politics reminds one of the partisanship usually associated with fans of professional sports, although, in actual fact, fans of various franchises express more criticism about their performance than most liberals do about the Obama administration. One noteworthy exception to this phenomenon are the lonely liberals at firedoglake, continuing to fight the good fight and reinvigorate liberalism as an ideological alternative to the left and the right. Unfortunately, I see no indication that their effort is gaining any traction at the local level, at least here in the Sacramento Valley.

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Thursday, March 12, 2009

Free Muntazer al-Zaidi 

Three years in prison for the man who threw his shoes at President Bush. Sometimes, the simplest things tell you more about the nature of American imperialism than the most thorough and sophisticated analysis.

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From the Archives: A Dystopian Perspective on the Coming Global Recession (Part 1) 

[Family and work demands have prevented me from posting so far this week, but I hope to return with something new soon. In the meantime, you might find this post from last October of continuing interest.]

As I said the other day, I try to avoid substituting survivalism for political and social analysis. But that doesn't mean that we shouldn't consider the possibility of some dire outcomes as a result of the current financial crisis. Apparently, there is an old adage that financial market bears are too early and too optimistic. Unlike many, I knew that the housing bubble, and the subsidized credit that created it, couldn't be sustained. Even so, I failed to perceive the catastrophic consequences that would ensue when it burst.

For example, I didn't believe that home prices in Sacramento County, a housing bubble epicenter and my county of residence, would fall almost 50% from their peak in the summer of 2006. Nor did I realize that the worthlessness of subprime mortgage debt issued to purchase these homes here and elsewhere was the equivalent of an infectious disease that would contaminate the global financial system, paralyzing its ability to extend credit. I didn't anticipate that the deleveraging of this debt, and the derivatives associated with it, would spread exponentially, requiring the injection of hundreds of billions, if not trillions of dollars, in an attempt to arrest a deflationary spiral that would push the global economy into a protracted recession.

My anxieties were initially limited to a belief that we would experience a slow, grinding sub-proletarianization of America, as the lives of the lower middle class and many within the middle class are increasingly characterized by economic insecurity through foreclosures, job losses and the lack of access to credit. Collectively, this transformation will result in an alarming degradation of the quality of life within many American communities. More recently, I pondered whether the crisis was being manipulated for the purpose of consolidating the power of the dominant capital class. I am now, however, beginning to wonder if we are facing something much more serious.

Over the last 30 to 35 years, the expansion of the money supply through credit has been an essential feature of the neoliberal economic order constructed by Reagan, Thatcher, and, less commonly known, Deng Xiaoping. It is generally recognized that this expansion constituted a temporary substitute for stagnant wage growth during this period. Less emphasized is the extent to which it also facilitated the creation of a global system of finance, transport and telecommunications. Emerging markets, and the corporations within them, better known to us on the left as lesser developed countries, were now able to access capital through the issuance of debt, equity and the privatization of state controlled resources and services.

Transportation and communications systems were constructed out of this massive pool of capital as the architects exploited new technologies, such as the personal computer and fiberoptics. Two important things happened along the way. First, everything was fragmented, meaning any business enterprise, including those associated with the transportation and communications spine of the global economy, relied upon goods, services and skills that were dispersed, if not across the globe, then, at least regionally and continentally, as there was a merciless exploitation of the most efficient division of labor, which could now be accessed hundreds, and even thousands, of miles away.

Second, all of these enterprises relied upon business models that necessitated the use of significant sums of short, intermediate and long term debt, obtained directly from capital markets. Funding such activities through monies obtained through operations and state subsidy was out of the question, as the costs of this new infrastructure was too great, and, anyway, it was pretty much prohibited by the arbitrators of the global economic system, the IMF and the World Bank. Both the fragmentation of operations and their expansion through access to debt required reliable access to funds on capital markets at cheap rates. With the passage of time, it became an anomaly for any business enterprise to be able to conduct its day to day operations without perpetual recourse to short term credit.

Of course, the creation of this global system of finance, transportation and communication has not been a smooth one. It has proceeded in fits and starts. There has been much turbulence. After the euphoria of the fall of the wall, there was the 1995 peso crisis, the 1998 one involving a highly leveraged hedge fund, Long Term Capital Management, and, of course, the bursting of the NASDAQ bubble. Lesser ones afflicted individual countries and regions. But none of these crises, as serious as some of them were, threatened the ability of the enterprises to access the capital they needed to continue operations, or, perhaps, it can more accurately said that they did not do so to such a degree that they threatened to impair the functioning of the overall system. There were liquidations, consolidations, mergers and retrenchments, but the movement toward integration proceeded, with the inevitable jerkiness associated with neoliberal capitalism.

Now, it feels different, very different. Financial institutions are not doing business with one another, even for short periods of time. Lending to businesses, including the transnationals, is either drying up or becoming cost prohibitive, even if the duration of these loans is short. If this persists, the consequences could be very severe. Commerce can only sharply contract when its participants cannot access the funds they need to operate. If they are subjected to significantly increased costs for accessing it, they may be forced to reduce the scope of their activities, and passively permit the degradation of their equipment and services.

If we were living in the 1930s or the 1960s, Keynesian stimulus measures would probably suffice to overcome the problem. But we don't. Remember the two major consequences of credit expansion in the neoliberal era: fragmentation of goods, services and skills within the business enterprise and increased dependence upon access to credit markets to conduct operations. A prolonged period of lack of access to credit risks the unraveling of the global network. Communication and transport collapse. It becomes impossible to bring together, sometimes materially and sometimes virtually, the goods, services and skills necessary to manufacture an array of consumer products like cars, flat panel televisions, personal computers, and even furniture, clothes and other textiles. It becomes impossible to ship them to retailers, impossible to market them to the public.

Obviously, the more likely outcome is that credit is going to beome more costly as opposed to unavailable. Even so, we shouldn't be too reassured about the outcome. If credit becomes too expensive, under new, more rigorous standards, then there will still be a substantial reduction in the scope of service, creating the prospect that, in more and more places, global transport and communication will operate erratically, if at all, with similar outcomes as already described. Accordingly, while it would not lead to the systemic collapse provoked by a loss of access to credit, it could result in less reliability in the provision of consumer goods, somewhat reminiscent of the old USSR, but probably not as pronounced. It would also ignite the reversal of the neoliberal globalization process, as corporations would be forced, through application of a remorseless cost-benefit analysis, to decide whether more concentrated or atomized production platforms were more appropriate. In some instances, they would decide that shutting down production entirely was required.

If one has a particularly survivalist bent, one can imagine all kinds of deliciously nightmarish scenarios, with people around the world unable to purchase clothes and baby formula, much less computers and blackberries. Social order breaks down as people formerly used to effortlessly buying clothes and food from thousands of miles away can no longer reach others 150 miles away to obtain them. Farmers purchase automatic weapons to deter hungry urbanites and suburbanites intent upon seizing their organic blueberries. A flourishing black market in bicycle tires enriches a generation of anarchist bike repair geeks.

I wouldn't go so far as to say that such scenarios are impossible. But I still believe that they are not very likely. I do believe, however, that we are about to experience a serious decline in the quality of life, if one defines we as the middle and upper middle class of the developed world. The relaxed assurance that comes with knowing that the system works for us, and will continue to effortlessly convey consumer goods to us to fulfill our daily needs, whether real or perceived, is about to end. In other words, we are about to discover how the vast of majority of the world has lived under neoliberalism, and even the more benign aspects of it that we will experience are not going to be very pleasant.

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Friday, March 06, 2009

The Sub-Proletarianization of America (Part 4) 

Not surprisingly, this New York Times article, written in the paper's time honored method of recourse to authority, ignores the more serious social implications of the economic restructuring that it describes. The reporters, Peter Goodman and Jack Healy, walk up to the edge of the water by recognizing that many of the jobs lost during this recession, particularly within manufacturing, finance and retail, are never going to return, but, fearful of getting their feet wet, they shrink away from the troubling consequences. Curiously, they also fail to recognize the extent to which job growth in recent years was driven by ancillary goods and services associated with the housing bubble. Here in Northern California, contractors are experiencing the economic equivalent of a nuclear winter. It is hard to imagine how all of them will survive, given that they are outside the system of unemployment compensation. For those of you interested in the serious, profound social dimensions of this recession evaded by Goodman and Healy, go here.

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Thursday, March 05, 2009

SEIU: No Dissent in the Labor Movement Allowed (Part 2) 

An update on the conflict between the Service Employees International Union and California health care workers, as initially posted here a month ago:

Healthcare workers have taken another giant step forward. At the same time, the Service Employees International Union (SEIU) stands exposed as never before. Corporate unionism – Andy Stern’s contribution to the long decline of organized labor in the US – is up against the wall in California.

This contest is a fight with big implications. The prize is “a free choice” for workers, a right rarely enjoyed in late-imperial America, but with a California twist – it is “a free choice” in choosing a union – California healthcare workers are fighting for the right to have a union of their own, a union that they control and that works in their interests, not, in this case, the SEIU.

On Thursday afternoon ( February 26) the new National Union of Healthcare Workers (NUHW) made an historic advance – it filed petitions asking that the National Labor Relations Board (NLRB) conduct decertification (rescind legal recognition)elections at Kaiser Permanente, the nation’s largest non-profit health care provider. These petitions were signed by more than 50 per cent, (that is, an absolute majority) of all California’s 50,000 of Kaiser’s SEIU represented healthcare workers. The petitions represent, starkly, the desire of these California healthcare workers to leave SEIU.

This petition campaign is the culmination of one phase in what has become the war to form the NUHW – yet it is an astonishing achievement. It is all the more impressive as it represents just the core of an ongoing drive in which, so far, workers at 380 California facilities (employing 80,000 workers – the majority of members of SEIU’s once flagship local, United Healthcare Workers-West (UHW) – have rejected SEIU and petitioned for recognition of NUHW as their union. And this in less than one month! 10,000 home care workers will file Monday in Fresno.

Not surprisingly, SEIU is not taking this lightly:

As predicted the stall has begun - the clock runs and back home on the job, intimidation, harassment, threats.

Here are four examples, I’ve seen dozens:

*On February 1, Inez Moreno, a shop steward at 269-bed Mercy Hospital in Bakersfield, received a phone call from an SEIU organizer. Moreno was told not to circulate petitions. If she refused, the organizer would call the hospital’s Human Resources Department on Monday and have her terminated. “She said I had been stripped of my stewardship… She thinks she can call me and treat me like nothing…”

*On February 9th, Maria Garcia, a Certified Nursing Assistant and elected shop steward at 99-bed Bay Point Healthcare Center in Hayward, was fired for circulating a petition to join NUHW. Her boss phoned SEIU Trustee Eliseo Medina and told her that if Medina didn’t approve of the petition, she would be fired. Days later, he terminated Garcia, who is an immigrant from Mexico and a single mother of three children.

*On February 11th, Angelica Valerio, a Certified Nursing Assistant and member of the elected Windsor Healthcare bargaining committee, was suspended from her job and nine others received written warnings for refusing to let an SEIU staffer bargain their contract. A majority of Windsor workers had already petitioned to disaffiliate from SEIU. With 29 nursing homes, for-profit Windsor Healthcare is one of the largest nursing home chains in California.

*On February 23rd, three SEIU organizers arrived at 1,049-bed California Pacific Medical Center, Sutter Health’s flagship hospital located in San Francisco. Two of the facility’s elected rank-and-file leaders, Helen York-Jones and Porfirio Quintano, asked the SEIU organizers to leave their hospital. York-Jones is a Cashier and 40-year employee who is the facility's Rep Chair and a former elected member of SEIU-UHW's Executive Board. Quintano, a Housekeeper with 10 years on the job, is a steward and an elected member of the union's bargaining committee. The two leaders told the SEIU staffers that a majority of the hospital’s workers had already submitted petitions to disaffiliate from SEIU, and they did not want SEIU organizers in their facility. The SEIU organizers reported them to the hospital's Human Resources Department. Two days later, York-Jones and Quintano received calls from Sutter management announcing that they had been placed on unpaid investigatory leave.

So much for protected activity! But no one said it would be easy.

Obviously, this is a crucial fight in the struggle for the creation of an independent, progressive trade union movement in the US. But we need more than the abandonment of failed leaders and institutions, like Stern and SEIU. It is essential that the labor movement adopt principles of democratic participation and direct action that it has historically repudiated.

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Monday, March 02, 2009

BOOK REVIEW: Anarchism: From Theory to Practice 

Daniel Guerin is a figure that is not much known in the United States. But, over the course of his life in France, he was, as a bisexual, an advocate for sexual liberation, a committed anti-fascist and, after a protracted journey in search of anti-Stalinist Marxist alternatives, an anarchist.

In other words, Guerin was someone whose social instincts invariably lead him to rely upon the ability of people to reach the the most just outcomes through reliance upon their own abilities and experiences. Few of his writings have been translated into English, with one of his most well known being Anarchism: From Theory to Practice. One is tempted to consider this work as outdated, having been published in 1969, but, when I saw it on the shelf at Moe's Books, I just couldn't resist it. For those of you who are interested, you can read it online, although please don't hesitate to support the good works of the Monthly Review Press by purchasing it directly.

My willingness to overcome a bias in favor of recently published books was rewarded upon reading it. Over the course of an easily digested 166 pages, Guerin introduces us to the emergence of anarchist theory in the 19th Century, and the attempt to put it into the practice in the early decades of the 20th. He concisely describes the doctrinal disputes, primarily over the role of the State, that resulted in the split between Marxists, social democrats and anarchists even as he takes the anarchist side. He also explains how anarchism was marginalized by the separation of individual anarchists from the trade union movement in the 1890s, and then reinvigorated by their reentry after the turn of the decade.

Such an analysis implicitly repudiates the notion that anarchists can effectively motivate the proletariat to liberate themselves from a hierarchical, capitalist system through violent vanguardist actions. It also points towards a critical question of our times. How can anarchists, or alternatively, libertarian socialists, persuade millions of workers around the world to voluntarily associate with one another to construct an alternative social system? One struggles to answer it when trade unions, organizations that Guerin considered politically and economically essential for the socialist transformation of society, are frequently on the decline, rendered innocuous through their incorporation into a capitalist system of management, production and distribution or, in many countries, non-existent.

Significantly, Guerin writes a great deal about various forms of anarchist economic theory, the necessity of putting the means of production in the hands of workers while acknowledging that they must interact with one another in federal or confederational forms. Interestingly, much of what he relates about attempts to put it into practice, especially during the early days of the Spanish Civil War, naturally, has been expropriated by management theorists that have advised corporations in recent decades, with the limitation, of course, that the workers are only supposed to be empowered to the extent that they can improve productivity. The primary, more profound democratization component has been reduced to the level of superficial appeals to personal motivation.

Along these lines, Guerin highlights a critical issue within anarchism itself: the global integration of the world economy and his insistence that anarchism must abandon social theories dependent upon communal, artisanal forms of production. As noted by Kevin Phillips, the early decades of the 20th Century constituted one of the most intense periods of globalization that that the world had ever encountered. Guerin allows the great Spanish anarchist, Santillan, to speak for him, a man, who, in the 1920s and 1930s, recognized that global economic interdependence had rendered the artisanal vision of anarchism infeasible.

But is that still true today? With the ongoing collapse of the financial system that funded a global system of resource extraction, product development, manufacture, production, transportion, retail distribution and consumption, are we about to experience a return to more local, sustainable economies? Or, is this crisis going to be exploited to create a global architecture of capital, labor and consumption, with an even more rigorous concentration of wealth within an international elite? Or, perhaps, paradoxically, even both simultaneously? For anarchism, or any form of socialism, to present the prospect of meaningful social change, these questions must be thoughtfully and effectively engaged.

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