F Financial Sector Induced Systemic Instability of Economy

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Financial Sector Induced Systemic Instability of Economy

While I believe in usefulness of capital markets, it is clear that they are double edge sword and that banks "in a long run" tend to behave like sociopathic individuals. Mr. Capone may have something to say about danger of banks :-).That means that  growth of financial sector represents a direct threat to the stability of the society. Positive feedback loops creates one financial crisis after another with the increasing magnitude leading up to a collapse of financial system like happened in 1927 and 2008.

News Casino Capitalism Recommended Links  Stability is destabilizing: The idea of Minsky moment Corruption of Regulators Quiet coup
Neoliberalism as a New Form of Corporatism Principal-agent problem Numbers racket Criminal negligence in financial regulation Corruption of FED Invisible Hand Hypothesis
The “Too Big To Fail” Problem In Goldman Sachs we trust Citi - The bank that couldn’t shoot straight JPMorgan AIG collapse Lehman
Free Markets Newspeak as Opium for regulators Derivatives Lobby Corrupts Congress Lobbying and the Financial Crisis Control Fraud
(crisis of corporate governance)
Stock Market with buybacks as a Ponzi scheme Derivatives
Small government smoke screen Financial Bonuses as Money Laundering Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime Corporatism   Financial obesity
Webliography of heterodox economists HFT Aleynikov vs. Goldman Sachs Casino Capitalism Dictionary Financial Humor Etc
  "Minsky's financial instability hypothesis depends critically on what amounts to a sociological insight. People change their minds about taking risks. They don't make a one-time rational judgment about debt use and stock market exposure and stick to it. Instead, they change their minds over time. And history is quite clear about how they change their minds. The longer the good times endure, the more people begin to see wisdom in risky strategies."

The Cost of Capitalism: Understanding Market Mayhem and Stabilizing our Economic Future, by Robert Barbera

The flaw with Capitalism is that it creates its own positive feedback loop, snowballing to the point where the accumulation of wealth and power hurts people — eventually even those at the top of the food chain. ”

Uncle Billy Cunctator
In comment to Economic Donkeys

 
  Banks are a clear case of market failure and their employees at the senior level have basically become the biggest bank robbers of all time. As for basing pay on current revenues and not profits over extended periods of time, then that is a clear case of market failure --  
  The banksters have been able to sell the “talent” myth to justify their outsized pay because they are the only ones able to deliver the type of GDP growth the U.S. economy needs in the short term, even if that kills the U.S. economy in the long term. You’ll be gone, I’ll be gone.  
  Unfortunately, many countries go broke pursuing war, if not financially, then morally (are the two different? – this post suggests otherwise).

I occurs to me that the U.S. is also in that flock; interventions justified by grand cause built on fallacy, the alpha and omega of failure. Is the financial apparatchik (or Nomenklatura, a term I like which, as many from the Soviet era, succinctly describes aspects of our situation today) fated also to the trash heap, despite the best efforts of the Man of the hour, Ben Bernanke?

 

Introduction

Financialization is a Damocles sword hanging over the neoliberal society

While I believe in usefulness of capital markets, it is clear that they are double edge sword and that banks "in a long run" tend to behave like sociopathic individuals. Mr. Capone may have something to say about danger of banks :-).That means that growth of financial sector represents a direct threat to the stability of the society (Keynesianism and the Great Recession )

Without adult supervision, as it were, a financial sector that was already inherently unstable went wild. When the subprime assets were found to be toxic since they were based on mortgages on which borrowers had defaulted, highly indebted or leveraged banks that had bought these now valueless securities had little equity to repay their creditors or depositors who now came after them. This quickly led to their bankruptcy, as in the case of Lehman Brothers, or to their being bailed out by government, as was the case with most of the biggest banks. The finance sector froze up, resulting in a recession—a big one—in the real economy.

Neoliberal revolution, or, as Simon Johnson called it after "quite coup" (Atlantic), brought political power to the financial oligarchy deposed after the New Deal. Deregulation naturally followed, with especially big role played by corrupt Clinton administration.  Positive feedback loops creates one financial crisis after another with the increasing magnitude. "Saving and loans" crisis followed by dot-com crisis of  2000, which in turn followed by the collapse of financial system in 2008, which looks somewhat similar to what happened in 1927.  No prominent financial honcho, who was instrumental in creating "subprime crisis" was jailed.  Most remained filthy rich.

Unless the society puts severe limits on their actions like was done during New Deal,  financial firms successfully subvert the regulation mechanisms and take the society hostage.  But periodic purges with relocation of the most active promoters of "freedom for banks" (aka free market fundamentalism) under the smoke screen of "free market" promotion does not solve the problem of positive feedback loops that banks create by mere existence. That's difficult to do while neoliberal ideology and related neoclassical economy dominates the society thinking (via brainwashing), with universities playing especially negative role -- most of economics departments are captured by neoliberals who censor any heretics. So year after year brainwashing students enter the society without understanding real dangers that neoliberalism brought for them.  Including lack of meaningful employment opportunities.

Of course, most of high level officers of leading finance institutions which caused the crisis of 2008-2009 as a psychological type are as close to  gangsters as one can get. But there is something in their actions that does not depend on individual traits (although many of them definitely can be classified as psychopaths), and is more related to their social position.  This situation is somewhat similar to Bolsheviks coup d'état of 1917 which resulted in capturing Russia by this ideological sect.  And in this sense quite coupe of 1980 is also irreversible in the same sense as Bolsheviks revolution was irreversible:  the "occupation" of the country by a fanatical sect lasts until the population rejects the ideology with its (now apparent) utopian claims.

Bolshevism which lasted 75 years, spend in such zombie state the last two decades (if we assume 1991 as the year of death of Bolshevism, its ideology was dead much earlier -- the grave flaws in it were visible from late 60th, if not after the WWII).  But only  when their ideology was destroyed both by inability to raise the standard of living of the population and by the growing neoliberal ideology as an alternative (and a new, more powerful then Marxism high-demand cult) Bolsheviks started to lose the grip on their power in the country. As a result Bolsheviks lost the power only in 1991, or more correctly switched camps and privatized the country. If not inaptness of their last General Secretary, they probably could last more. In any case after the ideology collapsed, the USSR disintegrated (or more correctly turn by national elites, each of which wanted their peace of the pie).

The sad truth is that the mere growth of financial sector creates additional positive feedback loops and increases structural instability within both the financial sector itself and the society at large. Dynamic systems with strong positive feedback loops not compensated by negative feedback loops are unstable. As a result banks and other financial institution periodically generate a deep, devastating crisis. This is the meaning of famous Hyman Minsky phrase "stability is destabilizing".

In other words, financial apparatchiks (or Financial Nomenklatura, a term from the Soviet era, which succinctly describes aspects of our situation today) drive the country off the cliff because they do not have any countervailing forces, by the strength of their political influence and unsaturable greed. Although the following analogy in weaker then analogy with dynamic systems with positive feedback loops, outsized financial sector can be viewed in  biological terms as cancer.

Cancer, known medically as a malignant neoplasm, is a broad group of diseases involving unregulated cell growth. In cancer, cells divide and grow uncontrollably, forming malignant tumors, and invading nearby parts of the body. The cancer may also spread to more distant parts of the body through the lymphatic system or bloodstream. Not all tumors are cancerous; benign tumors do not invade neighboring tissues and do not spread throughout the body. There are over 200 different known cancers that affect humans.[1]

Like certain types of cancer they depend of weakening "tumor suppressor genes"  (via "Quiet coup" mechanism of acquiring dominant political power) which allow then to engage in uncontrolled growth, destroying healthy cells (and first of all local manufacturing).   

The other suspicion is the unchecked financialization always goes too far and the last N percent of financial activity absorbs much more resources (especially intellectual resources) and creates more potential instability than its additional efficiency-benefits (often zero or negative) can justify. It is hard to imagine that a Hedge Fund Operator of the Year does anything that is even remotely socially useful to justify his enormous (and lightly taxed) compensation. It is pure wealth redistribution up based on political domination of financial oligarchy.  Significant vulnerabilities  within the shadow banking system and derivatives are plain vanilla socially destructive. Yet they persist due to inevitable political power grab by financial oligarchy  (Quiet coup).

Again, I would like to stress that this problem of the oversized financial sector which produces one devastating crisis after another   is closely related to the problem of a positive feedback loops. And the society in which banks are given free hand inevitably degrades into "socialism for banks"  or "casino capitalism" -- a type of neoliberalism with huge inequality and huge criminality of top banking officers.  

Whether we can do without private banks is unclear, but there is sound evidence that unlike growth of manufacturing, private financial sector growth is dangerous for the society health and perverts society goals.  Like cult groups the financial world does a terrific job of "shunning" the principled individuals and suppressing dissent (by capturing and cultivating neoliberal stooges in all major university departments and press),  so self-destructing tendencies after they arise can't be stopped within the framework of neoliberalism. In a way financial firm is like sociopath inevitable produces its  trail of victims (and sociopaths might be useful in battles exactly due to the qualities such as ability to remain cool in dangerous situation, that make them dangerous in the normal course of events).

This tendency of society with unregulated or lightly regulated financial sector toward self-destruction was first formulated as "Minsky instability hypothesis" -- and outstanding intellectual achievement of American economic Hyman Minsky (September 23, 1919 – October 24, 1996). Who BTW was pretty much underappreciated (if not suppressed) during his lifetime because his views were different from  orthodox (and false) neoclassic economic theory which dominates US universities, Like flat Earth theory was enforce by Catholic church before, it is fiercely enforced by an army of well paid neoliberal economics, those Jesuits of modern era. Who prosecute heretics who question flat Earth theory even more efficiently then their medieval counterparts; the only difference is that they do not burn the literally, only figuratively ;-)

Minsky financial instability hypothesis

Former Washington University in St. Louis economics professor Hyman P. Minsky had predicted the Great Recession decades before it happened.  Hyman Minsky was a real student of the Great Depression, while Bernanke who widely is viewed as a scholar who studied the Great Depression, in reality was a charlatan, who just tried to explain the Great Depression from the positions of neo-classical economy. That's a big difference.

Minsky instability hypothesis ("stability is destabilizing" under capitalism) that emerged from his analysis of the Great Depression was based on intellectual heritage of three great thinkers in economics (my presentation is partially based on an outstanding lecture by Steve Keen Lecture 6 on Minsky, Financial Instability, the Great Depression & the Global Financial Crisis). We can talk about three source of influence, there authors writing of which touched the same subject from similar positions and were the base of Hyman Minsky great advance in understanding of mechanics of development of financial crisis under capitalism and the critical role of financial system in it (neoclassical economics ignores the existence of financial system in its analysis): 

  1. Karl Marx influence
  2. Irving Fisher influence
  3. Joseph Schumpeter influence

Karl Marx influence

Minsky didn't follow the conventional version of Marxism  . And it was dangerous for him to do so due to McCarthysm. Even mentioning of Marx might lead to strakism fromthe academy those years.  McCarthy and his followers in academy did not understand the difference between Marx great analysis of capitalism and his utopian vision of the future. Impliedly this witch hunt helped to establish hegemony of neoclassical economy in economic departments in the USA.

While Minsky did not cited Marx in his writings and did use Marx's Labor Theory of Value his thinking was definitely influenced by Marx’s critique of  finance. We now know that he read and admired the Capital. And that not accidental due to the fact that his parents were Mensheviks -- a suppressed after Bolshevik revolution more moderate wing of Russian Social Democratic Party that rejected the idea of launching the socialist revolution in Russia --  in their opinion Russia needed first to became a capitalist country and get rid of remnants of feudalism. They escaped from Soviet Russia when Mensheviks started to be prosecuted by Bolsheviks.

And probably the main influence on Minsky was not Marx's discussion  of finance in Volume I of Capital with a "commodity" model of money, but critical remarks scattered in   Volumes II & III (which were not edited by Marx by compiled posthumously by Engels), where he was really critical of big banks as well as Marx's earlier works (Grundrisse, Theories of Surplus Value) where Marx was scathing about finance:

"A high rate of interest can also indicate, as it did in 1857, that the country is undermined by the roving cavaliers of credit who can afford to pay a high interest because they pay it out of other people's pocket* (whereby, however, they help to determine the rate of interest  for all) and meanwhile they live in grand style on anticipated profits. 

Irving Fisher influence

The second source on which Minsky based his insights was Irving Fisher. Irving Fisher’s reputation destroyed by wrong predictions on stock market prices. In aftermath, developed theory to explain the crash and published it in his book  "The Debt Deflation Theory of Great Depressions". His main points are:

According to Fisher two key disequilibrium forces that push economic into the next economic crisis are debt and subsequent deflation

Joseph Schumpeter influence

Joseph Schumpeter was Joseph Schumpeter has more positive view of capitalism than the other two. He authored the theory of creative destruction as a path by which capitalism achieves higher and higher productivity. He capitalism as necessarily unstable, but for him this was a positive feature -- instability of capitalism the source of its creativity. His view of capitalism was highly dynamic and somewhat resembles the view of Marx (who also thought that capitalism destroys all previous order and create a new one):

Unlike Marx, who thought that the periodic crisis of overproduction  is the source of instability (as well as  gradual absolute impoverishment of workers), Minsky assumed that the key source of that instability of capitalist system is connected with the cycles of business borrowing and fractional bank lending, when "good times" lead to excessive borrowing leading to high leverage and overproduction and thus to eventual debt crisis (The Alternative To Neoliberalism ):

Minsky on capitalism:

The idea of Minsky moment is related to the fact that the fractional reserve banking periodically causes credit collapse when the leveraged credit expansion goes into reverse. And mainstream economists do not want to talk about the fact that increasing confidence breeds increased leverage. So financial stability breeds instability and subsequent financial crisis. All actions to guarantee a market rise, ultimately guarantee it's destruction because greed will always take advantage of a "sure thing" and push it beyond reasonable boundaries.  In other words, marker players are no rational and assume that it would be foolish not to maximize leverage in a market which is going up. So the fractional reserve banking mechanisms ultimately and ironically lead to over lending and guarantee the subsequent crisis and the market's destruction. Stability breed instability.

That means that fractional reserve banking based economic system with private players (aka capitalism) is inherently unstable. And first of all because  fractional reserve banking is debt based. In order to have growth it must create debt. Eventually the pyramid of debt crushes and crisis hit. When the credit expansion fuels asset price bubbles, the dangers for the financial sector and the real economy are substantial because this way the credit boom bubble is inflated which eventually burst. The damage done to the economy by the bursting of credit boom bubbles is significant and long lasting.

Blissex said...

«When credit growth fuels asset price bubbles, the dangers for the financial sector and the real economy are much more substantial.»

So M Minsky 50 years ago and M Pettis 15 years ago (in his "The volatility machine") had it right? Who could have imagined! :-)

«In the past decades, central banks typically have taken a hands-off approach to asset price bubbles and credit booms.»

If only! They have been feeding credit-based asset price bubbles by at the same time weakening regulations to push up allowed capital-leverage ratios, and boosting the quantity of credit as high as possible, but specifically most for leveraged speculation on assets, by allowing vast-overvaluations on those assets.

Central banks have worked hard in most Anglo-American countries to redistribute income and wealth from "inflationary" worker incomes to "non-inflationary" rentier incomes via hyper-subsidizing with endless cheap credit the excesses of financial speculation in driving up asset prices.

Not very hands-off at all.

Steve Keen is probably the most well know researcher who tried to creates model of capitalist economy based on Minsky work (  http://www.debtdeflation.com/blogs/manifesto/ )

John Kay in his January 5 2010 FT column very aptly explained the systemic instability of financial sector hypothesis: 

The credit crunch of 2007-08 was the third phase of a larger and longer financial crisis. The first phase was the emerging market defaults of the 1990s. The second was the new economy boom and bust at the turn of the century. The third was the collapse of markets for structured debt products, which had grown so rapidly in the five years up to 2007.

The manifestation of the problem in each phase was different – first emerging markets, then stock markets, then debt. But the mechanics were essentially the same. Financial institutions identified a genuine economic change – the assimilation of some poor countries into the global economy, the opportunities offered to business by new information technology, and the development of opportunities to manage risk and maturity mismatch more effectively through markets. Competition to sell products led to wild exaggeration of the pace and scope of these trends. The resulting herd enthusiasm led to mispricing – particularly in asset markets, which yielded large, and largely illusory, profits, of which a substantial fraction was paid to employees.

Eventually, at the end of each phase, reality impinged. The activities that once seemed so profitable – funding the financial systems of emerging economies, promoting start-up internet businesses, trading in structured debt products – turned out, in fact, to have been a source of losses. Lenders had to make write-offs, most of the new economy stocks proved valueless and many structured products became unmarketable. Governments, and particularly the US government, reacted on each occasion by pumping money into the financial system in the hope of staving off wider collapse, with some degree of success. At the end of each phase, regulators and financial institutions declared that lessons had been learnt. While measures were implemented which, if they had been introduced five years earlier, might have prevented the most recent crisis from taking the particular form it did, these responses addressed the particular problem that had just occurred, rather than the underlying generic problems of skewed incentives and dysfunctional institutional structures.

The public support of markets provided on each occasion the fuel needed to stoke the next crisis. Each boom and bust is larger than the last. Since the alleviating action is also larger, the pattern is one of cycles of increasing amplitude.

I do not know what the epicenter of the next crisis will be, except that it is unlikely to involve structured debt products. I do know that unless human nature changes or there is fundamental change in the structure of the financial services industry – equally improbable – there will be another manifestation once again based on naive extrapolation and collective magical thinking. The recent crisis taxed to the full – the word tax is used deliberately – the resources of world governments and their citizens. Even if there is will to respond to the next crisis, the capacity to do so may not be there.

The citizens of that most placid of countries, Iceland, now backed by their president, have found a characteristically polite and restrained way of disputing an obligation to stump up large sums of cash to pay for the arrogance and greed of other people. They are right. We should listen to them before the same message is conveyed in much more violent form, in another place and at another time. But it seems unlikely that we will.

We made a mistake in the closing decades of the 20th century. We removed restrictions that had imposed functional separation on financial institutions. This led to businesses riddled with conflicts of interest and culture, controlled by warring groups of their own senior employees. The scale of resources such businesses commanded enabled them to wield influence to create a – for them – virtuous circle of growing economic and political power. That mistake will not be easily remedied, and that is why I view the new decade with great apprehension. In the name of free markets, we created a monster that threatens to destroy the very free markets we extol.

While Hyman Minsky was the first clearly formulate the financial instability hypothesis, Keynes also understood this dynamic pretty well. He postulated that a world with a large financial sector and an excessive emphasis on the production of investment products creates instability both in terms of output and prices. In other words it automatically tends to generate credit and asset bubbles.  The key driver is the fact that financial professionals generally risk other people’s money and due to this fact have asymmetrical incentives:

This asymmetry is not a new observation of this systemic problem. Andrew Jackson noted it in much more polemic way long ago:

“Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out.”

This asymmetrical incentives ensure that the financial system is structurally biased toward taking on more risk than what should be taken. In other words it naturally tend to slide to the casino model, the with omnipresent reckless gambling as the primary and the most profitable mode of operation while an opportunities last.  The only way to counter this is to throw sand into the wheels of financial mechanism:  enforce strict regulations, limit money supplies and periodically jail too enthusiastic bankers. The latter is as important or even more important as the other two because bankers tend to abuse "limited liability" status like no other sector.

Asset inflation over the past 10 years and the subsequent catastrophe incurred is a way classic behavior of dynamic system with strong positive feedback loop.  Such behavior does not depends of personalities of bankers or policymakers, but is an immanent property of this class of dynamic systems. And the main driving force here was deregulation. So its important that new regulation has safety feature which make removal of it more complicated and requiring bigger majority like is the case with constitutional issues.

Another fact was the fact that due to perverted incentives, accounting in the banks was fraudulent from the very beginning and it was fraudulent on purpose.  Essentially accounting in banks automatically become as bad as law enforcement permits. This is a classic case of control fraud and from prevention standpoint is make sense to establish huge penalties for auditors, which might hurt healthy institutions but help to ensure that the most fraudulent institution lose these bank charter before affecting the whole system.  With the anti-regulatory zeal of Bush II administration the level of auditing became too superficial, almost non-existent. I remember perverted dances with Sarbanes–Oxley when it was clear from the very beginning that the real goal is not to strengthen accounting but to earn fees and to create as much profitable red tape as possible, in perfect Soviet bureaucracy style.

Deregulation also increases systemic risk by influencing the real goals of financial organizations. At some point of deregulation process the goal of higher remuneration for the top brass becomes self-sustainable trend  and replaces all other goals of the financial organization. This is the essence of  Martin Taylor’s, the former chief executive of Barclays,  article FT.com - Innumerate bankers were ripe for a reckoning in the Financial Times (Dec 15, 2009), which is worth reading in its entirety:

City people have always been paid well relative to others, but megabonuses are quite new. From my own experience, in the mid-1990s no more than four or five employees of Barclays’ then investment bank were paid more than £1m, and no one got near £2m. Around the turn of the millennium across the market things began to take off, and accelerated rapidly – after a pause in 2001-03 – so that exceptionally high remuneration, not just individually, but in total, was paid out between 2004 and 2007.

Observers of financial services saw unbelievable prosperity and apparently immense value added. Yet two years later the whole industry was bankrupt. A simple reason underlies this: any industry that pays out in cash colossal accounting profits that are largely imaginary will go bust quickly. Not only has the industry – and by extension societies that depend on it – been spending money that is no longer there, it has been giving away money that it only imagined it had in the first place. Worse, it seems to want to do it all again.

What were the sources of this imaginary wealth?

In the last two of these the bank was not receiving any income, merely “booking revenues”. How could they pay this non-existent wealth out in cash to their employees? Because they had no measure of cash flow to tell them they were idiots, and because everyone else was doing it. Paying out 50 per cent of revenues to staff had become the rule, even when the “revenues” did not actually consist of money.

In the next phase instability is amplified by the way governments and central banks respond to crises caused by credit bubble: the state has powerful means to end a recession, but the policies it uses give rise to the next phase of instability, the next bubble…. When money is virtually free – or, at least, at 0.5 per cent – traders feel stupid if they don’t leverage up to the hilt. Thus previous bubble and crash become a dress rehearsal for the next.

Resulting self-sustaining "boom-bust" cycle is very close how electronic systems with positive feedback loop behave and   cannot be explained by neo-classical macroeconomic models. Like with electronic devices the financial institution in this mode are unable to provide the services that are needed.

As Minsky noted long ago (sited from Stephen Mihm  Why capitalism fails Boston Globe):

Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.

...our whole financial system contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”

Minsky’s vision might have been dark, but he was not a fatalist; he believed it was possible to craft policies that could blunt the collateral damage caused by financial crises. But with a growing number of economists eager to declare the recession over, and the crisis itself apparently behind us, these policies may prove as discomforting as the theories that prompted them in the first place. Indeed, as economists re-embrace Minsky’s prophetic insights, it is far from clear that they’re ready to reckon with the full implications of what he saw.

And he understood the roots of the current credit bubble much better that neoclassical economists like Bernanke: 
As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled by the rise of far riskier borrowers - what [Minsky] called speculative borrowers, those whose income would cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose income could cover neither, and could only pay their bills by borrowing still further.

As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit.

Minsky’s financial instability hypothesis suggests that when optimism is high and ample funds are available for investment, investors tend to migrate from the safe hedge end of the Minsky spectrum to the risky speculative and Ponzi end. Indeed, in the current crisis, investors tried to raise returns by increasing leverage and switching to financing via short-term—sometimes overnight— borrowing (Too late to learn?):

In the church of Friedman, inflation was the ol' devil tempting the good folk; the 1980s seemed to prove that, let loose, it would cause untold havoc on the populace. But, as Barbera notes:

The last five major global cyclical events were the early 1990s recession - largely occasioned by the US Savings & Loan crisis, the collapse of Japan Inc after the stock market crash of 1990, the Asian crisis of the mid-1990s, the fabulous technology boom/bust cycle at the turn of the millennium, and the unprecedented rise and then collapse for US residential real estate in 2007-2008. All five episodes delivered recessions, either global or regional. In no case was there a significant prior acceleration of wages and general prices. In each case, an investment boom and an associated asset market ran to improbable heights and then collapsed. From 1945 to 1985, there was no recession caused by the instability of investment prompted by financial speculation - and since 1985 there has been no recession that has not been caused by these factors.
Thus, meet the devil in Minsky's paradise - "an investment boom and an associated asset market [that] ran to improbable heights and then collapsed".

According the Barbera, "Minsky's financial instability hypothesis depends critically on what amounts to a sociological insight. People change their minds about taking risks. They don't make a one-time rational judgment about debt use and stock market exposure and stick to it. Instead, they change their minds over time. And history is quite clear about how they change their minds. The longer the good times endure, the more people begin to see wisdom in risky strategies."

Current economy state can be called following Paul McCulley a "stable disequilibrium" very similar to a state  a sand pile.  All this pile of  stocks, debt instruments, derivatives, credit default swaps and God know corresponds to a  pile of sand that is on the verse of losing stability. Each financial player works hard to maximize their own personal outcome but the "invisible hand" effect in adding sand to the pile that is increasing systemic instability. According to Minsky, the longer such situation continues the more likely and violent an "avalanche".

The late Hunt Taylor wrote, in 2006:

"Let us start with what we know. First, these markets look nothing like anything I've ever encountered before. Their stunning complexity, the staggering number of tradable instruments and their interconnectedness, the light-speed at which information moves, the degree to which the movement of one instrument triggers nonlinear reactions along chains of related derivatives, and the requisite level of mathematics necessary to price them speak to the reality that we are now sailing in uncharted waters.

"... I've had 30-plus years of learning experiences in markets, all of which tell me that technology and telecommunications will not do away with human greed and ignorance. I think we will drive the car faster and faster until something bad happens. And I think it will come, like a comet, from that part of the night sky where we least expect it."

This is a gold age for bankers as Simon Johnson wrote in New Republic (The Next Financial Crisis ):

Banking was once a dangerous profession. In Britain, for instance, bankers faced “unlimited liability”--that is, if you ran a bank, and the bank couldn’t repay depositors or other creditors, those people had the right to confiscate all your personal assets and income until you repaid. It wasn’t until the second half of the nineteenth century that Britain established limited liability for bank owners. From that point on, British bankers no longer assumed much financial risk themselves.

In the United States, there was great experimentation with banking during the 1800s, but those involved in the enterprise typically made a substantial commitment of their own capital. For example, there was a well-established tradition of “double liability,” in which stockholders were responsible for twice the original value of their shares in a bank. This encouraged stockholders to carefully monitor bank executives and employees. And, in turn, it placed a lot of pressure on those who managed banks. If they fared poorly, they typically faced personal and professional ruin. The idea that a bank executive would retain wealth and social status in the event of a self-induced calamity would have struck everyone--including bank executives themselves--as ludicrous.

Enter, in the early part of the twentieth century, the Federal Reserve. The Fed was founded in 1913, but discussion about whether to create a central bank had swirled for years. “No one can carefully study the experience of the other great commercial nations,” argued Republican Senator Nelson Aldrich in an influential 1909 speech, “without being convinced that disastrous results of recurring financial crises have been successfully prevented by a proper organization of capital and by the adoption of wise methods of banking and of currency”--in other words, a central bank. In November 1910, Aldrich and a small group of top financiers met on an isolated island off the coast of Georgia. There, they hammered out a draft plan to create a strong central bank that would be owned by banks themselves.

What these bankers essentially wanted was a bailout mechanism for the aftermath of speculative crashes -- something more durable than J.P. Morgan, who saved the day in the Panic of 1907 but couldn’t be counted on to live forever. While they sought informal government backing and substantial government financial support for their new venture, the bankers also wanted it to remain free of government interference, oversight, or control.

Another destabilizing fact is so called myth of invisible hand which is closely related to the myth about market self-regulation. The misunderstood argument of Adam Smith [1776], the founder of modern economics, that free markets led to efficient outcomes, “as if by an invisible hand” has played a central role in these debates: it suggested that we could, by and large, rely on markets without government intervention. About "invisible hand" deification, see The Invisible Hand, Trumped by Darwin - NYTimes.com.

The concept of Minsky moment

The moment in the financial system when the quantity of debt turns into quality and produces yet another financial crisis is called Minsky moment. In other words the “Minsky moment” is the time when an unsustainable financial boom turns into uncontrollable collapse of financial markets (aka financial crash). The existence of Minsky moments is one of the most important counterargument against financial market self-regulation.  It also expose free market fundamentalists such as "former Maestro" Greenspan as charlatans. Greenspan actually implicitly admitted that he is and that it was he, who was the "machinist"  who helped to bring the USA economic train off the rails in 2008 via deregulation  and dismantling the New Deal installed safeguards. 

Here how it is explained by Stephen Mihm in Boston Globe in 2009 in the after math of 2008 financial crisis:

“Minsky” was shorthand for Hyman Minsky, an American macroeconomist who died over a decade ago.  He predicted almost exactly the kind of meltdown that recently hammered the global economy. He believed in capitalism, but also believed it had almost a genetic weakness. Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.

In other words, the one person who foresaw the crisis also believed that our whole financial system contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”

Minsky believed it was possible to craft policies that could blunt the collateral damage caused by financial crises. As economists re-embrace Minsky’s prophetic insights, it is far from clear that they’re ready to reckon with the full implications of what he saw.

Minsky theory was not well received due to powerful orthodoxy, born in the years after World War II, known as the neoclassical synthesis. The older belief in a self-regulating, self-stabilizing free market had selectively absorbed a few insights from John Maynard Keynes, the great economist of the 1930s who wrote extensively of the ways that capitalism might fail to maintain full employment. Most economists still believed that free-market capitalism was a fundamentally stable basis for an economy, though thanks to Keynes, some now acknowledged that government might under certain circumstances play a role in keeping the economy - and employment - on an even keel.

Economists like Paul Samuelson became the public face of the new establishment; he and others at a handful of top universities became deeply influential in Washington. In theory, Minsky could have been an academic star in this new establishment: Like Samuelson, he earned his doctorate in economics at Harvard University, where he studied with legendary Austrian economist Joseph Schumpeter, as well as future Nobel laureate Wassily Leontief.

But Minsky was cut from different cloth than many of the other big names. The descendent of immigrants from Minsk, in modern-day Belarus, Minsky was a red-diaper baby, the son of Menshevik socialists. While most economists spent the 1950s and 1960s toiling over mathematical models, Minsky pursued research on poverty, hardly the hottest subfield of economics. With long, wild, white hair, Minsky was closer to the counterculture than to mainstream economics. He was, recalls the economist L. Randall Wray, a former student, a “character.”

So while his colleagues from graduate school went on to win Nobel prizes and rise to the top of academia, Minsky languished. He drifted from Brown to Berkeley and eventually to Washington University. Indeed, many economists weren’t even aware of his work. One assessment of Minsky published in 1997 simply noted that his “work has not had a major influence in the macroeconomic discussions of the last thirty years.”

Yet he was busy. In addition to poverty, Minsky began to delve into the field of finance, which despite its seeming importance had no place in the theories formulated by Samuelson and others. He also began to ask a simple, if disturbing question: “Can ‘it’ happen again?” - where “it” was, like Harry Potter’s nemesis Voldemort, the thing that could not be named: the Great Depression.

In his writings, Minsky looked to his intellectual hero, Keynes, arguably the greatest economist of the 20th century. But where most economists drew a single, simplistic lesson from Keynes - that government could step in and micromanage the economy, smooth out the business cycle, and keep things on an even keel - Minsky had no interest in what he and a handful of other dissident economists came to call “bastard Keynesianism.”

Instead, Minsky drew his own, far darker, lessons from Keynes’s landmark writings, which dealt not only with the problem of unemployment, but with money and banking. Although Keynes had never stated this explicitly, Minsky argued that Keynes’s collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff.

This insight bore the stamp of his advisor Joseph Schumpeter, the noted Austrian economist now famous for documenting capitalism’s ceaseless process of “creative destruction.” But Minsky spent more time thinking about destruction than creation. In doing so, he formulated an intriguing theory: not only was capitalism prone to collapse, he argued, it was precisely its periods of economic stability that would set the stage for monumental crises.

Minsky called his idea the “Financial Instability Hypothesis.” In the wake of a depression, he noted, financial institutions are extraordinarily conservative, as are businesses. With the borrowers and the lenders who fuel the economy all steering clear of high-risk deals, things go smoothly: loans are almost always paid on time, businesses generally succeed, and everyone does well. That success, however, inevitably encourages borrowers and lenders to take on more risk in the reasonable hope of making more money. As Minsky observed, “Success breeds a disregard of the possibility of failure.”

As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled by the rise of far riskier borrowers - what he called speculative borrowers, those whose income would cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose income could cover neither, and could only pay their bills by borrowing still further. As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit.

Once that kind of economy had developed, any panic could wreck the market. The failure of a single firm, for example, or the revelation of a staggering fraud could trigger fear and a sudden, economy-wide attempt to shed debt. This watershed moment - what was later dubbed the “Minsky moment” - would create an environment deeply inhospitable to all borrowers. The speculators and Ponzi borrowers would collapse first, as they lost access to the credit they needed to survive. Even the more stable players might find themselves unable to pay their debt without selling off assets; their forced sales would send asset prices spiraling downward, and inevitably, the entire rickety financial edifice would start to collapse. Businesses would falter, and the crisis would spill over to the “real” economy that depended on the now-collapsing financial system.

From the 1960s onward, Minsky elaborated on this hypothesis. At the time he believed that this shift was already underway: postwar stability, financial innovation, and the receding memory of the Great Depression were gradually setting the stage for a crisis of epic proportions. Most of what he had to say fell on deaf ears. The 1960s were an era of solid growth, and although the economic stagnation of the 1970s was a blow to mainstream neo-Keynesian economics, it did not send policymakers scurrying to Minsky. Instead, a new free market fundamentalism took root: government was the problem, not the solution.

Moreover, the new dogma coincided with a remarkable era of stability. The period from the late 1980s onward has been dubbed the “Great Moderation,” a time of shallow recessions and great resilience among most major industrial economies. Things had never been more stable. The likelihood that “it” could happen again now seemed laughable.

Yet throughout this period, the financial system - not the economy, but finance as an industry - was growing by leaps and bounds. Minsky spent the last years of his life, in the early 1990s, warning of the dangers of securitization and other forms of financial innovation, but few economists listened. Nor did they pay attention to consumers’ and companies’ growing dependence on debt, and the growing use of leverage within the financial system.

By the end of the 20th century, the financial system that Minsky had warned about had materialized, complete with speculative borrowers, Ponzi borrowers, and precious few of the conservative borrowers who were the bedrock of a truly stable economy. Over decades, we really had forgotten the meaning of risk. When storied financial firms started to fall, sending shockwaves through the “real” economy, his predictions started to look a lot like a road map.

“This wasn’t a Minsky moment,” explains Randall Wray. “It was a Minsky half-century.”

Minsky is now all the rage. A year ago, an influential Financial Times columnist confided to readers that rereading Minsky’s 1986 “masterpiece” - “Stabilizing an Unstable Economy” - “helped clear my mind on this crisis.” Others joined the chorus. Earlier this year, two economic heavyweights - Paul Krugman and Brad DeLong - both tipped their hats to him in public forums. Indeed, the Nobel Prize-winning Krugman titled one of the Robbins lectures at the London School of Economics “The Night They Re-read Minsky.”

Today most economists, it’s safe to say, are probably reading Minsky for the first time, trying to fit his unconventional insights into the theoretical scaffolding of their profession. If Minsky were alive today, he would no doubt applaud this belated acknowledgment, even if it has come at a terrible cost. As he once wryly observed, “There is nothing wrong with macroeconomics that another depression [won’t] cure.”

But does Minsky’s work offer us any practical help? If capitalism is inherently self-destructive and unstable - never mind that it produces inequality and unemployment, as Keynes had observed - now what?

After spending his life warning of the perils of the complacency that comes with stability - and having it fall on deaf ears - Minsky was understandably pessimistic about the ability to short-circuit the tragic cycle of boom and bust. But he did believe that much could be done to ameliorate the damage.

To prevent the Minsky moment from becoming a national calamity, part of his solution (which was shared with other economists) was to have the Federal Reserve - what he liked to call the “Big Bank” - step into the breach and act as a lender of last resort to firms under siege. By throwing lines of liquidity to foundering firms, the Federal Reserve could break the cycle and stabilize the financial system. It failed to do so during the Great Depression, when it stood by and let a banking crisis spiral out of control. This time, under the leadership of Ben Bernanke - like Minsky, a scholar of the Depression - it took a very different approach, becoming a lender of last resort to everything from hedge funds to investment banks to money market funds.

Minsky’s other solution, however, was considerably more radical and less palatable politically. The preferred mainstream tactic for pulling the economy out of a crisis was - and is - based on the Keynesian notion of “priming the pump” by sending money that will employ lots of high-skilled, unionized labor - by building a new high-speed train line, for example.

Minsky, however, argued for a “bubble-up” approach, sending money to the poor and unskilled first. The government - or what he liked to call “Big Government” - should become the “employer of last resort,” he said, offering a job to anyone who wanted one at a set minimum wage. It would be paid to workers who would supply child care, clean streets, and provide services that would give taxpayers a visible return on their dollars. In being available to everyone, it would be even more ambitious than the New Deal, sharply reducing the welfare rolls by guaranteeing a job for anyone who was able to work. Such a program would not only help the poor and unskilled, he believed, but would put a floor beneath everyone else’s wages too, preventing salaries of more skilled workers from falling too precipitously, and sending benefits up the socioeconomic ladder.

While economists may be acknowledging some of Minsky’s points on financial instability, it’s safe to say that even liberal policymakers are still a long way from thinking about such an expanded role for the American government. If nothing else, an expensive full-employment program would veer far too close to socialism for the comfort of politicians. For his part, Wray thinks that the critics are apt to misunderstand Minsky. “He saw these ideas as perfectly consistent with capitalism,” says Wray. “They would make capitalism better.”

But not perfect. Indeed, if there’s anything to be drawn from Minsky’s collected work, it’s that perfection, like stability and equilibrium, are mirages. Minsky did not share his profession’s quaint belief that everything could be reduced to a tidy model, or a pat theory. His was a kind of existential economics: capitalism, like life itself, is difficult, even tragic. “There is no simple answer to the problems of our capitalism,” wrote Minsky. “There is no solution that can be transformed into a catchy phrase and carried on banners.”

It’s a sentiment that may limit the extent to which Minsky becomes part of any new orthodoxy. But that’s probably how he would have preferred it, believes liberal economist James Galbraith. “I think he would resist being domesticated,” says Galbraith. “He spent his career in professional isolation.”

Stephen Mihm is a history professor at the University of Georgia and author of “A Nation of Counterfeiters” (Harvard, 2007). © Copyright 2009 Globe Newspaper Company.

 

Some important albeit random (and overlapping) points about instability of financial system

The first thing to understand is that attempt to weaken positive feedback looks via regulation, approach that can be called  “regulation as a Swiss knife” does not work without law enforcement and criminal liability for bankers, as there is an obvious problem of corruption of regulators. In this sense the mechanism of purges might be the only one that realistically can work.

In other words it’s unclear who and how can prevents the capture of regulators as financial sector by definition has means to undermine any such efforts. One way this influence work is via lobbing for appointment of pro-financial sector people in key positions. If such "finance-sector-selected" Fed chairman does not like part of Fed mandate related to regulation it can simply ignore it as long as he is sure that he will be reappointed. That happened with Greenspan.  After such process started it became irreversible and only after a significant, dramatic shock to the system any meaningful changes can be instituted and as soon as the lessons are forgotten work on undermining them resumes.

In essence, the Fed is a political organization and Fed Chairman is as close to a real vice-president of the USA as one can get.  As such Fed Chairman serves the elite which rules that country, whether you call them financial oligarchy or some other name. Actually Fed Chairman is the most powerful unelected official in the USA. If you compare this position to the role of the Chairman of the Politburo  in the USSR you’ll might find some interesting similarities.

In other words it is impossible to prevent appointment of another Greenspan by another Reagan without changes in political power balance.  And the transition to banana republic that follows such appointment is irreversible even if the next administration water boards former Fed Chairman to help him to write his memoirs.  That means that you need to far-reaching reform of political system to be able to regulate financial industry and you need to understand that the measures adopted need vigilant protection as soon as the current crisis is a distant history.

Additional reading

Several other source of financial instability were pointed out by others:

There are some outstanding lectures and presentation on YouTube on this topic. Among them:

See an expended list at Webliography of heterodox economists

Dr. Nikolai Bezroukov


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[Sep 23, 2018] UK Begged Trump Not To Declassify Russia Docs; Cited Grave Concerns Over Steele Involvement

Notable quotes:
"... Steele also had extensive contacts with DOJ official Bruce Ohr and his wife Nellie, who - along with Steele - was paid by opposition research firm Fusion GPS in the anti-Trump campaign. Trump called for the declassification of FBI notes of interviews with Ohr, which would ostensibly reveal more about his relationship with Steele. Ohr was demoted twice within the Department of Justice for lying about his contacts with Fusion GPS. ..."
"... Perhaps the Brits are also concerned since much of the espionage performed on the Trump campaign was conducted on UK soil throughout 2016 . Recall that Trump aid George Papadopoulos was lured to London in March, 2016, where Maltese professor Joseph Mifsud fed him the rumor that Russia had dirt on Hillary Clinton. It was later at a London bar that Papadopoulos would drunkenly pass the rumor to Australian diplomat Alexander Downer (who Strzok flew to London to meet with). ..."
"... In short, it's understandable that the UK would prefer to hide their involvement in the "witch hunt" of Donald Trump since much of the counterintelligence investigation was conducted on UK soil. And if the Brits had knowledge of the operation, it will bolster claims that they meddled in the 2016 US election by assisting what appears to have been a set-up from the start . ..."
"... Steele's ham-handed dossier is a mere embarrassment, as virtually none of the claims asserted by the former MI6 agent have been proven true. ..."
"... I find it interesting that the Theresa May Govt in UK has the temerity to interfere with US politics (until they got caught out!), yet can't find the spine to stand up to the EU. ..."
"... THE UNITED KINGDOM along with ISRAEL & SAUDI ARABIA have always been the ones behind US Politics making, pulling the strings behind the curtains since the Petrodollar Inception, The Greater Israel project & the NWO initiative - only this time around Trump was not the UK's pick... ..."
"... England dominates the offshore money laundering havens where the super rich hide their money and evade taxes. They need to be brought down. No more African dictators looting their nation's resources and hiding the money first in offshore banks and then in JP Morgan and Brit banks. ..."
"... It is a test. If Trump doesn't go ahead with declassification, we know for sure he is no better than the globalists and neocons whose goal has always been to destroy and depopulate America. ..."
"... 'focusing on the former MI6 agent while ignoring the multitude of events which occurred on UK soil, is curious' ..."
"... Not at all. It's obvious - the problem ISN'T Steele. They're living in fear, as are many in DC and elsewhere, that Trump is going to pry the lid open and reveal at least some of their activities. If killing him would fix the problem, they would. It's too late, considering what Trump is threatening to do. I wonder if he'll back down, at least some? ..."
"... U.S. spies lure you overseas then...compromise you. ..."
"... Duh. This Started In London! Britain is the "foreign country" involved in our elections. Wake up everyone. It's LONDONGATE ..."
"... "t's hard to tell who's telling the truth and who isn't in this whole Russia narrative. Fact is, NOBODY is telling the truth. That is what I've determined after doing my own research.": https://youtu.be/2AA5BIfGj3g ..."
"... trump made promises before being elected, then lied and sold America out, just like every other corrupted assklown politician. he is no different than clinton bush obama, just as arrogant, just as corrupt, and just as much a traitor. ..."
Sep 23, 2018 | www.zerohedge.com

UK Begged Trump Not To Declassify Russia Docs; Cited "Grave Concerns" Over Steele Involvement

by Tyler Durden Sun, 09/23/2018 - 11:15 4.6K SHARES

The British government "expressed grave concerns" to the US government over the declassification and release of material related to the Trump-Russia investigation, according to the New York Times . President Trump ordered a wide swath of materials "immediately" declassified "without redaction" on Monday, only to change his mind later in the week by allowing the DOJ Inspector General to review the materials first.

The Times reports that the UK's concern was over material which "includes direct references to conversations between American law enforcement officials and Christopher Steele," the former MI6 agent who compiled the infamous "Steele Dossier." The UK's objection, according to former US and British officials, was over revealing Steele's identity in an official document, "regardless of whether he had been named in press reports."

We would note, however, that Steele's name was contained within the Nunes Memo - the House Intelligence Committee's majority opinion in the Trump-Russia case.

Steele also had extensive contacts with DOJ official Bruce Ohr and his wife Nellie, who - along with Steele - was paid by opposition research firm Fusion GPS in the anti-Trump campaign. Trump called for the declassification of FBI notes of interviews with Ohr, which would ostensibly reveal more about his relationship with Steele. Ohr was demoted twice within the Department of Justice for lying about his contacts with Fusion GPS.

Perhaps the Brits are also concerned since much of the espionage performed on the Trump campaign was conducted on UK soil throughout 2016 . Recall that Trump aid George Papadopoulos was lured to London in March, 2016, where Maltese professor Joseph Mifsud fed him the rumor that Russia had dirt on Hillary Clinton. It was later at a London bar that Papadopoulos would drunkenly pass the rumor to Australian diplomat Alexander Downer (who Strzok flew to London to meet with).

Also recall that CIA/FBI "informant" (spy) Stefan Halper met with both Carter Page and Papadopoulos in London.

Halper, a veteran of four Republican administrations, reached out to Trump aide George Papadopoulos in September 2016 with an offer to fly to London to write an academic paper on energy exploration in the Mediterranean Sea.

Papadopoulos accepted a flight to London and a $3,000 honorarium. He claims that during a meeting in London, Halper asked him whether he knew anything about Russian hacking of Democrats' emails.

Papadopoulos had other contacts on British soil that he now believes were part of a government-sanctioned surveillance operation. - Daily Caller

In total, Halper received over $1 million from the Obama Pentagon for "research," over $400,000 of which was granted before and during the 2016 election season.

In short, it's understandable that the UK would prefer to hide their involvement in the "witch hunt" of Donald Trump since much of the counterintelligence investigation was conducted on UK soil. And if the Brits had knowledge of the operation, it will bolster claims that they meddled in the 2016 US election by assisting what appears to have been a set-up from the start .

Steele's ham-handed dossier is a mere embarrassment, as virtually none of the claims asserted by the former MI6 agent have been proven true.

Steele, a former MI6 agent, is the author of the infamous and unverified anti-Trump dossier. He worked as a confidential human source for the FBI for years before the relationship was severed just before the election because of Steele's unauthorized contacts with the press.

He shared results of his investigation into Trump's links to Russia with the FBI beginning in early July 2016.

The FBI relied heavily on the unverified Steele dossier to fill out applications for four FISA warrants against Page. Page has denied the dossier's claims, which include that he was the Trump campaign's back channel to the Kremlin. - Daily Caller

That said, Steele hasn't worked for the British government since 2009, so for their excuse focusing on the former MI6 agent while ignoring the multitude of events which occurred on UK soil, is curious.


StychoKiller , 54 minutes ago

I find it interesting that the Theresa May Govt in UK has the temerity to interfere with US politics (until they got caught out!), yet can't find the spine to stand up to the EU. If I were Trump, not only would the shoe be dropping re: UK Govt involvement in US politics, but said shoe would be making an imprint across her face! (stoopid twat!)

texantim , 1 hour ago

I say release the docs and put sanctions on UK.

BitchesBetterRecognize , 1 hour ago

So the Motherland ******* up with the ex-colony yet again, huh?

THE UNITED KINGDOM along with ISRAEL & SAUDI ARABIA have always been the ones behind US Politics making, pulling the strings behind the curtains since the Petrodollar Inception, The Greater Israel project & the NWO initiative - only this time around Trump was not the UK's pick...

Oh, but those "civilized" Allies backstabbing each other for more power grip on the USA....

Baron von Bud , 2 hours ago

England dominates the offshore money laundering havens where the super rich hide their money and evade taxes. They need to be brought down. No more African dictators looting their nation's resources and hiding the money first in offshore banks and then in JP Morgan and Brit banks.

Many hedge funds are deep into this game. I'd wager on Carlyle Group and the Bush clan. Billions of people can't get ahead because the super rich are ******* crooks running the banks and governments. They don't pay taxes but force a small dry cleaner to pay 45% in fed/state taxes. These criminals include Hillary Clinton and many members of congress. Feinstein, Pelosi, Maxine and many more of both parties need to be investigated. How do they get so rich on a congressman's salary. Deep into tax evasion and payoffs? Release the documents and let MI6 hang.

Malvern Joe , 3 hours ago

It is a test. If Trump doesn't go ahead with declassification, we know for sure he is no better than the globalists and neocons whose goal has always been to destroy and depopulate America. It would represent the biggest sellout of this country since the creation of the Fed in 1913, He will go down as the biggest fraud ever and his base will deport his *** to the sums of India where he can defecate in public.

Bricker , 3 hours ago

You dont get to supply a rogue agent, that was probably told to do it in the first place, and then tell Trump not to do it out of harm, harm is all you BRIT DEEP STATES deserve

Moving and Grooving , 3 hours ago

'focusing on the former MI6 agent while ignoring the multitude of events which occurred on UK soil, is curious'

Not at all. It's obvious - the problem ISN'T Steele. They're living in fear, as are many in DC and elsewhere, that Trump is going to pry the lid open and reveal at least some of their activities. If killing him would fix the problem, they would. It's too late, considering what Trump is threatening to do. I wonder if he'll back down, at least some?

The sheer corruption of the Global Government is on display here, revealing itself, if you watch for it. Whether planned or not, the last 6 months or so have been astonishing to watch. The entire media has been shown to be liars, academia is shown to be an expensive provider of unprepared students, the corporate world is furiously rent-seeking and finding new ways to destroy humanity, and government is too busy selling Americans out to write a budget. In all countries around the world, adjusting for national status. Lawsuits in the west, machetes in the third world.

Ban KKiller , 4 hours ago

U.K. does not want the jurisdiction. U.S. spies lure you overseas then...compromise you.

John C Durham , 4 hours ago

Duh. This Started In London! Britain is the "foreign country" involved in our elections. Wake up everyone. It's LONDONGATE .

Anunnaki , 4 hours ago

May gonna owe Vlad an apology when Skripal is revealed to be Steele's source. Steele himself hadn't been to Russian in 15 years. Will he get life in prison for attempted murder?

PeaceForWorld , 4 hours ago

"t's hard to tell who's telling the truth and who isn't in this whole Russia narrative. Fact is, NOBODY is telling the truth. That is what I've determined after doing my own research.": https://youtu.be/2AA5BIfGj3g

I really like this woman "Shut the **** up!". She is a former Bernie supporter just like me. She has turned against Democrats just like me. She doesn't trust any of the Establishment parties.

Buddha71 , 4 hours ago

trump made promises before being elected, then lied and sold America out, just like every other corrupted assklown politician. he is no different than clinton bush obama, just as arrogant, just as corrupt, and just as much a traitor. he has broken the promises upon which he was elected, just like all the other fkn liars before him. no different. just a pos. he has not made america great again, just more of the same, unemployment is a lie, it is closer to 17%.

[Sep 23, 2018] The New York Times As Judge And Jury Zero Hedge

Notable quotes:
"... We've seen it before : a newspaper and individual reporters get a story horribly wrong but instead of correcting it they double down to protect their reputations and credibility - which is all journalists have to go on - and the public suffers. ..."
"... The Times' unsteady conviction is summed up in this paragraph, which the paper itself then contradicts only a few paragraphs later: "What we now know with certainty: The Russians carried out a landmark intervention that will be examined for decades to come. Acting on the personal animus of Mr. Putin, public and private instruments of Russian power moved with daring and skill to harness the currents of American politics. Well-connected Russians worked aggressively to recruit or influence people inside the Trump campaign." ..."
Sep 23, 2018 | www.zerohedge.com

We've seen it before : a newspaper and individual reporters get a story horribly wrong but instead of correcting it they double down to protect their reputations and credibility - which is all journalists have to go on - and the public suffers.

Sometimes this maneuver can contribute to a massive loss of life. The most egregious example was the reporting in the lead-up to the invasion of Iraq. Like nearly all Establishment media, The New York Times got the story of Iraq's weapons of mass destruction -- the major casus belli for the invasion -- dead wrong. But the Times , like the others, continued publishing stories without challenging their sources in authority, mostly unnamed, who were pushing for war.

The result was a disastrous intervention that led to hundreds of thousands of civilian deaths and continued instability in Iraq, including the formation of the Islamic State.

In a massive Times ' article published on Thursday, entitled, "A Plot to Subvert an Election: Unravelling the Russia Story So Far," it seems that reporters Scott Shane and Mark Mazzetti have succumbed to the same thinking that doubled down on Iraq.

They claim to have a "mountain of evidence" but what they offer would be invisible on the Great Plains.

With the mid-terms looming and Special Counsel Robert Mueller unable to so far come up with any proof of collusion between Russia and the Trump campaign to steal the 2016 election -- the central Russia-gate charge -- the Times does it for him, regurgitating a Russia-gate Round-Up of every unsubstantiated allegation that has been made -- deceptively presented as though it's all been proven.

Mueller: No collusion so far.

This is a reaffirmation of the faith, a recitation of what the Russia-gate faithful want to believe is true. But mere repetition will not make it so.

The Times' unsteady conviction is summed up in this paragraph, which the paper itself then contradicts only a few paragraphs later: "What we now know with certainty: The Russians carried out a landmark intervention that will be examined for decades to come. Acting on the personal animus of Mr. Putin, public and private instruments of Russian power moved with daring and skill to harness the currents of American politics. Well-connected Russians worked aggressively to recruit or influence people inside the Trump campaign."

But this schizoid approach leads to the admission that "no public evidence has emerged showing that [Trump's] campaign conspired with Russia."

The Times also adds: "There is a plausible case that Mr. Putin succeeded in delivering the presidency to his admirer, Mr. Trump, though it cannot be proved or disproved."

This is an extraordinary statement. If it cannot be "proved or disproved" what is the point of this entire exercise: of the Mueller probe, the House and Senate investigations and even of this very New York Times article?

Attempting to prove this constructed story without proof is the very point of this piece.

A Banner Day

The 10,000-word article opens with a story of a pro-Russian banner that was hung from the Manhattan Bridge on Putin's birthday, and an anti-Obama banner hung a month later from the Memorial Bridge in Washington just after the 2016 election.

On public property these are constitutionally-protected acts of free speech. But for the Times , "The Kremlin, it appeared, had reached onto United States soil in New York and Washington. The banners may well have been intended as visual victory laps for the most effective foreign interference in an American election in history."

Kremlin: Guilty, says NYT. (Robert Parry, 2016)

Why? Because the Times tells us that the "earliest promoters" of images of the banners were from social media accounts linked to a St. Petersburg-based click-bait farm, a company called the Internet Research Agency. The company is not legally connected to the Kremlin and any political coordination is pure speculation. IRA has been explained convincingly as a commercial and not political operation. Its aim is get and sell "eyeballs."

For instance the company conducted pro and anti-Trump rallies and social media messages, as well as pro and anti-Clinton. But the Times , in classic omission mode, only reports on "the anti-Clinton, pro-Trump messages shared with millions of voters by Russia." Sharing with "millions" of people on social media does not mean that millions of people have actually seen those messages. And if they had there is little way to determine whether it affected how they voted, especially as the messages attacked and praised both candidates.

The Times reporters take much at face value, which they then themselves undermine. Most prominently, they willfully mistake an indictment for a conviction, as if they do not know the difference.

This is in the category of Journalism 101. An indictment need not include evidence and under U.S. law an indictment is not evidence. Juries are instructed that an indictment is merely an accusation. That the Times commits this cardinal sin of journalism to purposely confuse allegations with a conviction is not only inexcusable but strikes a fatal blow to the credibility of the entire article.

It actually reports that "Today there is no doubt who hacked the D.N.C. and the Clinton campaign. A detailed indictment of 12 officers of Russia's military intelligence agency, filed in July by Mr. Mueller, documents their every move, including their break-in techniques, their tricks to hide inside the Democrats' networks and even their Google searches."

Who needs courts when suspects can be tried and convicted in the press?

What the Times is not taking into account is that Mueller knows his indictment will never be tested in court because the GRU agents will never be arrested, there is no extradition treaty between the U.S. and Russia and even if it were miraculously to see the inside of a courtroom Mueller can invoke states secrets privilege to show the "evidence" to a judge with clearance in his chambers who can then emerge to pronounce "Guilty!" without a jury having seen that evidence.

This is what makes Mueller's indictment more a political than a legal document, giving him wide leeway to put whatever he wants into it. He knew it would never be tested and that once it was released, a supine press would do the rest to cement it in the public consciousness as a conviction, just as this Times piece tries to do.

Errors of Commission and Omission

There are a series of erroneous assertions and omissions in the Times piece, omitted because they would disturb the narrative:

Trump: Sarcastically calls on Russia to get Clinton emails.

Distorts Geo-Politics

The piece swallows whole the Establishment's geo-strategic Russia narrative, as all corporate media do. It buys without hesitation the story that the U.S. seeks to spread democracy around the world, and not pursue its economic and geo-strategic interests as do all imperial powers.

The Times reports that, "The United States had backed democratic, anti-Russian forces in the so-called color revolutions on Russia's borders, in Georgia in 2003 and Ukraine in 2004." The Times has also spread the erroneous story of a democratic revolution in Ukraine in 2014, omitting crucial evidence of a U.S.-backed coup.

The Times disapprovingly dismisses Trump having said on the campaign trail that "Russia was not an existential threat, but a potential ally in beating back terrorist groups," when an objective view of the world would come to this very conclusion.

The story also shoves aside American voters' real concerns that led to Trump's election. For the Times, economic grievances and rejection of perpetual war played no role in the election of Trump. Instead it was Russian influence that led Americans to vote for him, an absurd proposition defied by a Gallup poll in July that showed Americans' greatest concerns being economic. Their concerns about Russia were statistically insignificant at less than one percent.

Ignoring Americans' real concerns exposes the class interests of Times staffers and editors who are evidently above Americans' economic and social suffering. The Times piece blames Russia for social "divisions" and undermining American democracy, classic projection onto Moscow away from the real culprits for these problems: bi-partisan American plutocrats. That also insults average Americans by suggesting they cannot think for themselves and pursue their own interests without Russia telling them what to do.

Establishment reporters insulate themselves from criticism by retreating into the exclusive Establishment club they think they inhabit. It is from there that they vicariously draw their strength from powerful people they cover, which they should instead be scrutinizing. Validated by being close to power, Establishment reporters don't take seriously anyone outside of the club, such as a website like Consortium News.

But on rare occasions they are forced to take note of what outsiders are saying. Because of the role The New York Timesplayed in the catastrophe of Iraq its editors took the highly unusual move of apologizing to its readers. Will we one day read a similar apology about the paper's coverage of Russia-gate? Tags Politics

[Sep 22, 2018] How Russian Sanctions Are Helping Putin Achieve His Most Desired Goal

Sep 22, 2018 | www.zerohedge.com

dirty fingernails , 47 seconds ago

Russia now awaits possible new sanctions as a result of its involvement in the United States election and as a result of the potential nerve agent attack in England.

Who the **** writes this ****? Who believes those baldfaced lies?

Hass C. , 49 minutes ago

A little glimpse into how much influence Putin has on his own economy. Which is not much. He is trying hard to remove Russia's testicles from the vice of US control but this is a slow process as the economy and capital market are totally open, except for military production which is under his own control and pretty much protected from the whims of markets.

The steady increase of sanctions has the objective of forcing Putin's hand into lashing out and trying a dirigistic neo-stalinist approach, but this would cut Russia from foreign technology and capital, make the best work force fly abroad, resulting in final implosion.

Whether Russia survives as an industrial economy till US and the dollar loses its power over it is anybody's guess. The more Russia is weakened at that time, the more likely China will flood it with its love.

Ms No , 51 minutes ago

The thing with Putin is that he is a great leader and Patriot. He wishes us no harm and would like to be our friends (the western population); however, Putin isn't motivated by saving the world, your nation or you personally. His loyalty is to his people and their future.

All actions that Putin has taken that ended up saving your *** were simply a benefit gained by the happenstance of what benefits us benefitting him.

Putin will save his own (hopefully) but you have to save yourself. Remember that.

LaugherNYC , 8 minutes ago

If Putin wants to be friends with the West, then why did he reverse the course of openness to the EU and NATO, the trend towards normalization, and turn hard right into an ultra-nationalist despot, starting to spout the diseased philosophy of Ilyin, becoming a xenophobic tin pot kleptocrat, like some African warlord, funneling funds and assets offshore through shell companies and his buddies?

It will be interesting to see what happens when/if there is a real global investigation of Putin's offshored assets, and an expose of how he has plundered his country. He will be the very last to repatriate - nor should we want him to be forced into it. If you close his escape hatch, Vlad will be forced to live up to his rhetoric, which is very Rapture-esque, very nuclear nightmare, very Judgement Day Armageddon

Anonymous IX , 1 hour ago

Where's Billy Browder? What's next on his agenda? Billy, btw, the next time you allow anyone to film you, have your handlers minimize the obvious drug and/or electronic mind control over you a little earlier. You seem to "wake up" an awful lot...you know...where your head snaps up like you didn't realize something...or you're "waking up" from something. Just a helpful hint. You did so chronically throughout the Magnitsky film. Here's what a mind looks like on "mind control." Don't look for eggs in a frying pan.

Ms No , 50 minutes ago

So mind control looks something like sleep apnea?

Savvy , 1 hour ago

the desire to keep assets out of the reach of the United States Treasury

Can you say 'capital flight'? I knew you could. Not a country in the world is going to trust the US with a grain of salt.

Well done Trump and your $864billon/month deficit spending.

Ms No , 49 minutes ago

We really should stop referring to it as the US treasury. Its something else.

opport.knocks , 3 minutes ago

Lendery?

Cashlaudratomat?

Ponzi-prefecture?

The US Usury?

hooligan2009 , 1 hour ago

according to polls aired by tv station "euro news", putin's ratings are down 10% because he wants to raise the retirement ages of men to 65 from 60 (male life expectancy is 66) and womens retirement age from 55 to 60 (womens life expectancy is 71).

i guess this is proof that sanctions are working. putin has to raise the retirement age and russians die 12-15 years earlier than those in the west.

oh, the humanity!

sanctions work: they hurt the bottom 50%, not those better off.

Balance-Sheet , 58 minutes ago

Good to note this and it appears to be correct. Male life expectancy is 65/66 on average so many will die reaching for their first tiny pension check. I do not know why Putin simply does not seek to save money by ordering people to be shot at 65 as a humane measure. Russia has shot 10s of millions over the past 100 years so this will maintain a tradition.

I am interested in your remark on Putin's popularity- he appears to be slipping into megalomania also typical of Russian leaders so perhaps he will be removed. Raising the retirement age in Russia is recklessly stupid from a political perspective in an impoverished country established as Earth's largest resource treasure house.

Ms No , 44 minutes ago

War and sanctions are expensive. Through this evil the world is impoverished. Zionist fiat currency is also crushingly expensive. We would be exceedingly wealthy without all of this. A whole different world could exist.

That probably wont happen until the next age (a golden age) though because people now are inherently stupid and lack any connection. Sticking their appendenges in everything and sinking completely in dense materialism is more important.

Hass C. , 39 minutes ago

Can you specify why you say he "appears to be slipping into megalomania"? Been observing him for years and his megalomania index seems stable to me.

Also, Russian demography makes raising the retirement age necessary, they say. Their birth rate is increasing but so does life expectancy.

opport.knocks , 1 minute ago

He will not be able to run for re-election so now is the time to implement necessary but unpopular reforms.

Shemp 4 Victory , 38 minutes ago

according to polls aired by tv station "euro news"

Well, if "euro news" said, then so it is. Free European press can't lie.

hooligan2009 , 28 minutes ago

haha.. yes.. i watched it for ten minutes, so the same four headlines scrolled through in a cycle three times in those ten minutes. pope, a survivor underneath a boat after two days in lake victoria, blunt brexit and putins popularity.

nothing approcahing any quality whatsoever. i was just making sure the other side of the house hadn't got past "stupid"!!!

123dobryden , 1 hour ago

Rossia. Davaj

notfeelinthebern , 1 hour ago

Yeah, he's giving the west the proverbial finger. Instead of creating a bridge to trade and friendship, the west is doing nothing but trying to destroy an imaginary enemy.

Matteo S. , 1 hour ago

It is not imaginary from the anglo-saxon empire's point of view.

The anglo-saxon empire has been playing this game for more than 3 centuries.

It first constantly attacked France until it definitely emasculated it with Napoleon's downfall.

Then it immediately went to the jugular of Russia. And on this occasion was formulated Mackinder's gropolitics principles.

Then it went for Germany.

Then in again against USSR/Russia.

This is not due to imagination. This is a deliberate and structural way to interact with the rest of the world. The anglo-saxon empire hates competition and tries to destroy any potential competitor instead of agreeing to cooperate with peers.

Ms No , 42 minutes ago

The Anglo Saxon empire was occupied by Zionist money lending. They controlled the British empire. A lot of those blueblood royal were theirs to begin with also. They were also the bankers of Rome.

Matteo S. , 27 minutes ago

Forget your fantasies about the Catholic Church and the pope.

It is Protestants who have always dominated the anglo-saxon empire. Protestants from Britain but also from Netherlands, Germany, France, who allied with the English and Scot Protestants to build their mammonite empire.

And for one Rothschild family, you had the Astors, Vanderbilt's, Rockefellers, Carnegie's, Morgans, Fords, ... etc, none of which were jewish.

The Zionists are just the tail of the anglo-saxon dog.

justdues , 1 hour ago

"Russia now awaits possible new sanctions as a result of it,s ALLEGED involvement in the United States election and as a result of the ALLEGED nerve agent attack in England . FIFTylers

hooligan2009 , 1 hour ago

quite right. no trial, no evidence and harsh sentences/convictions via trade embargoes.

russia offered reciprocation so it could try Browder. the west said no, invented crimes culminating in a Magnitsy act.

if individuals in Europe, the UK or the US were convicted and imprisoned without trial governments in those places would be thrown out on their ear.

as it is, western governments can bring the entire planet to the brink of war, based on their political opinions - with no evidence, no trial and no opportunity to argue a case for a defence of charges.

JibjeResearch , 1 hour ago

lolz ahaha.... a bad choice..., any fiat is a bad choice...

Go phy.gold or cryptos (BTC, ETH, XTZ), phy.silver is good too...

An Shrubbery , 40 minutes ago

Cryptosporidiosis are no different than fiat, maybe even a little worse. They are NOT anonymous, and are becoming less and less so and eventually will be co-opted by deep state operatives such as googoyle, facefuck, Twatter, amazog, etc. for the deep state. There is an absolute record of your every transaction in the blockchain.

It's just a matter of time. There will be a crypto that we're all forced to use in the near future, and big brother will have absolute control of it.

my new username , 1 hour ago

This has zero impact on working class Americans. It only affects liberals and rich people.

DEDA CVETKO , 1 hour ago

Everything has impact on everything else. We are all, in some bizarre ways, interconnected. Deripaska (pictured above) has a virtual global monopoly on aluminum trade. Guess who uses aluminum? You guessed it: people like you and I. The airplane industry. Consumer industry. The military. Medical equipment industry. Construction industry. Food industry. Everyone!

There is no such thing as isolationism anymore. It wasn't possible even during Warren Harding's presidency, let alone now. This deranged notion that Donald Trump will somehow insulate us all from the effects of his aggressive overseas posturing is deranged beyond description.

[Sep 22, 2018] Putin Keeps Cool And Averts WWIII As Israeli-French Gamble In Syria Backfires Spectacularly

Sep 22, 2018 | www.zerohedge.com

Authored by Robert Bridge via The Strategic Culture Foundation,

By initiating an attack on the Syrian province of Latakia, home to the Russia-operated Khmeimim Air Base, Israel, France and the United States certainly understood they were flirting with disaster. Yet they went ahead with the operation anyways.

On the pretext that Iran was preparing to deliver a shipment of weapon production systems to Hezbollah in Lebanon, Israeli F-16s, backed by French missile launches in the Mediterranean, destroyed what is alleged to have been a Syrian Army ammunition depot.

What happened next is already well established : a Russian Il-20 reconnaissance aircraft, which the Israeli fighter jets had reportedly used for cover, was shot down by an S-200 surface-to-air missile system operated by the Syrian Army. Fifteen Russian servicemen perished in the incident, which could have been avoided had Israel provided more than just one-minute warning before the attack. As a result, chaos ensued.

Whether or not there is any truth to the claim that Iran was preparing to deliver weapon-making systems to Hezbollah in Lebanon is practically a moot point based on flawed logic. Conducting an attack against an ammunition depot in Syria – in the vicinity of Russia's Khmeimim Air Base – to protect Israel doesn't make much sense when the consequence of such "protective measures" could have been a conflagration on the scale of World War III. That would have been an unacceptable price to achieve such a limited objective, which could have been better accomplished with the assistance of Russia, as opposed to NATO-member France, for example. In any case, there is a so-called "de-confliction system" in place between Israel and Russia designed to prevent exactly this sort of episode from occurring.

And then there is the matter of the timing of the French-Israeli incursion.

Just hours before Israeli jets pounded the suspect Syrian ammunition storehouse, Putin and Turkish President Recep Erdogan were in Sochi hammering out the details on a plan to reduce civilian casualties as Russian and Syrian forces plan to retake Idlib province, the last remaining terrorist stronghold in the country. The plan envisioned the creation of a demilitarized buffer zone between government and rebel forces, with observatory units to enforce the agreement. In other words, it is designed to prevent exactly what Western observers have been fretting about, and that is unnecessary 'collateral damage.'

So what do France and Israel do after a relative peace is declared, and an effective measure for reducing casualties? The cynically attack Syria, thus exposing those same Syrian civilians to the dangers of military conflict that Western capitals proclaim to be worried about.

Israel moves to 'damage control'

Although Israel has taken the rare move of acknowledging its involvement in the Syrian attack, even expressing "sorrow" for the loss of Russian life, it insists that Damascus should be held responsible for the tragedy. That is a highly debatable argument.

By virtue of the fact that the French and Israeli forces were teaming up to attack the territory of a sovereign nation, thus forcing Syria to respond in self-defense, it is rather obvious where ultimate blame for the downed Russian plane lies.

"The blame for the downing of the Russian plane and the deaths of its crew members lies squarely on the Israeli side," Russian Defense Minister Sergey Shoigu said.

"The actions of the Israeli military were not in keeping with the spirit of the Russian-Israeli partnership, so we reserve the right to respond."

Russian President Vladimir Putin, meanwhile, took admirable efforts to prevent the blame game from reaching the boiling point, telling reporters that the downing of the Russian aircraft was the result of "a chain of tragic circumstances, because the Israeli plane didn't shoot down our jet."

Nevertheless, following this extremely tempered and reserved remark, Putin vowed that Russia would take extra precautions to protect its troops in Syria, saying these will be "the steps that everyone will notice."

Now there is much consternation in Israel that the IDF will soon find its freedom to conduct operations against targets in Syria greatly impaired. That's because Russia, having just suffered a 'friendly-fire' incident from its own antiquated S-200 system, may now be more open to the idea of providing Syria with the more advanced S-300 air-defense system.

Earlier this year, Putin and Israeli Prime Minister Benjamin Netanyahu reached an agreement that prevented those advanced defensive weapons from being employed in the Syrian theater. That deal is now in serious jeopardy. In addition to other defensive measures, Russia could effectively create the conditions for a veritable no-fly zone across Western Syria in that it would simply become too risky for foreign aircraft to venture into the zone.

The entire situation, which certainly did not go off as planned, has forced Israel into damage control as they attempt to prevent their Russian counterparts from effectively shutting down Syria's western border.

On Thursday, Israeli Major-General Amikam Norkin and Brigadier General Erez Maisel, as well as officers of the Intelligence and Operations directorates of the Israeli air force will pay an official visit to Moscow where they are expected to repeat their concerns of "continuous Iranian attempts to transfer strategic weapons to the Hezbollah terror organization and to establish an Iranian military presence in Syria."

Moscow will certainly be asking their Israeli partners if it is justifiable to subject Russian servicemen to unacceptable levels of danger, up to and including death, in order to defend Israeli interests. It remains to be seen if the two sides can find, through the fog of war, an honest method for bringing an end to the Syria conflict, which would go far at relieving Israel's concerns of Iranian influence in the region.


CoCosAB , 1 minute ago

The TERRORISTS keep doing the same **** all the time... And ***** PUTIN keeps cool!

Fecund Stench , 2 minutes ago

'There will, however, be some form of no-fly zone and as Vladimir Putin stated Russia will take "the steps that everyone will notice."'

http://thesaker.is/some-fast-thoughts-on-il-20-andrei-martyanov/

Failure to notice bespeaks complicity in the Ziomedia.

toady , 12 minutes ago

"...if it is justifiable to subject Russian servicemen to unacceptable levels of danger, up to and including death, in order to defend Israeli interests."

Surely a few dozen Russians isn't comparable to all the Jews that died in the holocaust.

Just as all the Jews that died in the holocaust aren't comparable to all the the Russians that died in wwII.

isn't religion and the victim mentality a fun game to play?

JoeTurner , 13 minutes ago

Israel must have its lebensraum.....

bh2 , 45 minutes ago

Putin is not going to initiate WWIII over Syria or any military action within it. The outcome in Syria affects Russian national interests. But unlike Crimea, it does not affect any of Russia's vital national interests.

rejected , 35 minutes ago

If Syria was to shoot down one (1) American jet with one (1) pilot the US would respond like it was Pearl Harbor and Syria for sure isn't vital to America's national interests unless one considers results like Libya a national interest.

rejected , 1 hour ago

I seriously doubt Putin will allow the S-300 to Syria. Like the US, Russia is controlled by the 5th column Jews inside Russia itself except the control is not as complete as in the US. The Russian plane is Russia's USS Liberty.... and it is possible, and IMO that it was France that shot down the plane. The fact that they fired missiles at the same time and that has disappeared down the memory hole is very suspicious.

The West is out of control They talk International law but consider them selves above it. Israel, France, UK, US have no 'right' to attack Syria. They have no right to be within Syrian borders. They are now all allied with the terrorists and provide them with weapons. Israel actually provides for their wounds at Israeli hospitals.

By the old definition of terrorist, it is the West that fits the description.

As for Mr. Putin,,, He has done what was unthinkable a short time ago. He has allowed the murder of Russians. Not once,,, not twice,,, but now three times with only a whimper. He actually defended the aggressors this time. This will only serve to make them double down. If any more Russians are murdered it will be he who is guilty by lack of action. Even Somalia fought back when the US tried an attack.

The author here defends Putin as acting with a cool head as the author, like so many cowards thee days, dismisses those fifteen lives. He will also be responsible when the next batch of Russians are sacrificed for world peace as the Western marauders, the US especially, murders their way to world domination like Germany's Hitler and France's Napoleon.

It was Russia that saved the world from those two dictators and is why Russia stands proud today. It is Russia's history to savagely defend Russians and Russia. Today with thousands of Russians killed by Ukrainian Nazis supported and armed by the West (MAGA) and now Russians killed in Syria by the West with little to no response from Russia other than "Its against international law" and authors like this that nonchalantly discard Russian lives as necessary for world peace.

Mr. Putin just needs to hand over the keys to Russia,,, for world peace of course.

[Sep 22, 2018] The implications of US-China trade war - World Socialist Web Site

18 September 2018
Notable quotes:
"... Washington Post ..."
"... Popularity of National Socialism in capitalist country like Germany was exactly due to that process of corruption of working class who embassy stoped to question system as long as provided them with goods. ..."
"... Henceforth, most goods manufactured for US consumption were to be produced abroad, from Mexico to China. Once US based multinationals started down this road, European and even Japanese ones followed. This did not mean an increase in productive forces but a substitution of one labour force for another. ..."
"... Thus the rise of Chinese industry was as much a part of this process as the deindustrialisation of formerly prosperous parts of the US and the UK. This has nothing to do with the evolution of our species and everything to do with the evolution of capitalism. This is what I mean by globalisation. ..."
"... It has not eradicated national borders but is a major factor in the recent development of far right nationalism in Europe. It is a strong contributor to the restructuring of western economies so that only a minority of British workers have full time permanent jobs. It is also used as leverage to drive down wages in western economies. ..."
"... I do not believe what I mean by globalisation is progressive at all. It has been pushed by the most reactionary political forces in western societies as an integral part of what the WSWS calls a social counter revolution. As the WSWS again points out it makes the preservation of national welfare states or a decent standard of living for working class people impossible. I am not calling for this to be reversed under capitalism. ..."
"... "...globalised production is the exploitation of lower wage rates in developing countries." ..."
"... As if domestic production were not the same thing. The author is essentially arguing for "lesser evil" exploitation in the interests of society as a whole. Reformists always do. ..."
"... "The crisis also exposed in full glare another of the central myths of the capitalist order -- that the state is somehow a neutral or independent organisation committed to regulating social and economic affairs in the interests of society as a whole." - Ten years since the collapse of Lehman Brothers ..."
"... "Keynes was a reformist and capable of formulating policies which, if followed, would make capitalism more amenable to the interests of the majority of people." ..."
"... The most important theoretical source of his thinking is his own work "The General Theory of Employment, Money and Interest" which is available to read or download free online. ..."
"... The US wants to reinforce it's declining global hegemonic position at any cost. Now they started with economic war against countries they see as not cooperating to their demands, but under current conditions this could easily transform into Global war at some point in future. ..."
Sep 22, 2018 | www.wsws.org

In the aftermath of the global financial crisis ten years ago, the leaders of the world's major powers pledged that never again would they go down the road of protectionism which had such disastrous consequences in the 1930s -- deepening the Great Depression and contributing to the outbreak of world war in 1939.

Yesterday US President Donald Trump announced tariffs on $200 billion worth of Chinese goods in what the Washington Post described as "one of the most severe economic restrictions ever imposed by a US president."

A levy of 10 percent will be imposed starting from September 24 and will be escalated to 25 percent in 2019 if the US does not receive what it considers to be a satisfactory agreement. The new tariffs, which will cover more than 1,000 goods, come on top of the 25 percent tariff already imposed on $50 billion worth of industrial products. Trump has threatened further measures on the remaining Chinese exports to the US totalling more than $250 billion.

China has threatened retaliatory action including tariffs and other, as yet unspecified measures, against the US, meaning that the world's number one and number two economies are locked into a rapidly escalating trade war that will have global consequences.

Announcing the decision, Trump called on China to take "swift action" to end what he called its "unfair trade practices" and expressed the hope that the trade conflict would be resolved.

But there is little prospect of such an outcome because, while the US is demanding that the trade deficit with China be reduced, the conflict does not merely centre on that issue. China has made offers to increase its imports from the US, all of which have been rejected. The key US demand is that the Chinese government completely abandon its program of economic development and remain subservient to the US in high-tech economic sectors.

As the position paper issued by Washington in May put it: "China will cease providing market-distorting subsidies and other types of government support that can contribute to the creation or maintenance of excess capacity in industries targeted by the Made in China 2025 industrial plan."

In other words, China must completely scrap the foundational structures of its economy so that it presents no threat to the economic dominance of US capitalism, a dominance which the US intends to maintain, if it considers necessary, by military means. This was made clear earlier this year when Washington designated China as a "strategic competitor," that is, a potential military enemy. This is the inherent, objective, logic of the latest trade war measures.

Their full significance can only be grasped when viewed with the framework of the historical development of the global capitalist economy.

After the disastrous decade of the 1930s, and as the world plunged into war, leading figures within the Roosevelt administration recognised that this situation was due in no small measure to the division of the world into rival trade and economic blocs which tariff and other trade restrictions had played a major role in creating.

Post-war planning centred on trying to overcome this contradiction between the global economy and its division into rival great powers and blocs through the development of a mechanism that ensured the expansion of world trade. This was the basis of the series of measures set in place in the immediate aftermath of the war: the Bretton Woods monetary system which tied major currencies to the dollar in fixed exchange rates, the General Agreement on Tariffs and Trade that sought to bring down tariff barriers and the establishment of the International Monetary Fund and the World Bank to ensure international economic collaboration.

These measures, however, did not overcome the inherent contradictions of capitalism, above all between the global economy and the nation-state system. Rather, they sought to contain and mitigate them within a system based on the overwhelming economic dominance of the US.

But the growth of the world capitalist economy and the strengthening of the other major powers undermined the very foundations on which they were based -- the absolute dominance of the US. Within the space of a generation, the weakening of the US position was revealed in August 1971 when it scrapped the Bretton Woods monetary system declaring that the dollar would no longer be redeemable for gold.

The period since then has seen the ongoing weakening of the position of the US, which was graphically revealed in the financial meltdown ten years ago when the US financial system was shown to be a house of cards based on rampant speculation and outright criminal activity. This situation has continued in the subsequent decade, threatening, another, even more disastrous, financial crisis.

The US is now not only confronted with the economic power of its European rivals but a major new one in the form of China. It is striving to reverse this situation. As Leon Trotsky explained some eighty years ago, the hegemony of the US would assert itself most powerfully not in conditions of boom but above all in a crisis when it would use every means -- economic and military -- against all rivals to maintain its position.

The trade war measures against China are only one expression of this process. The US has already carried out protectionist measures against Europe and Japan through the imposition of tariffs on steel and aluminium and has threatened tariffs on cars and auto parts, which will be invoked unless they join its push on China.

And as the China tariffs are imposed, top officials of the European Union are meeting to discuss how they might overcome the financial sanctions the US will impose against European companies if they maintain economic ties with Iran after November 4 following the unilateral abrogation of the Iran nuclear deal.

The deal was not overturned because Iran had breached the agreement -- international agencies found that it had fully complied. Rather, the United States unilaterally abrogated the treaty in order to strengthen the strategic position of the US in the Middle East by countering the influence of Iran, and because European corporations stood to benefit from the opening up of new economic opportunities in that country at the expense of their US rivals.

Now the State Department has warned that European companies are "on the railroad tracks" if they defy US sanctions and firms that deal with the "enemy" will be barred from access to the US financial system.

Writing in the 1930s, Leon Trotsky explained that the interdependence of every country in the global economy meant that the program of economic nationalism, of the kind now being practised by the Trump administration, was a reactionary "utopia" insofar as it set itself the task of harmonious national economic development on the basis of private property.

"But it is a menacing reality insofar as it is a question of concentrating all the economic forces of the nation for the preparation of a new war," he wrote five years before the outbreak of World War II.

This "menacing reality" is now once again expressed in the fact that the trade war measures against China, as well as those against Europe and Japan, have all been invoked on "national security" grounds. Just as the US prepares for war, so too do all the other major powers. This drive does not arise from the heads of the capitalist politicians -- their actions are only the translation into politics of the objective logic and irresolvable contradictions of the capitalist system over which they preside.

But there is another more powerful logic at work. The very development of globalised production, which has raised the contradiction of the outmoded nation-state system with its rival great powers to a new peak of intensity, has laid the foundations for a planned world socialist economy. And it has created in the international working class, unified at an unprecedented level, the social force to carry it out.

The latest Trump trade war measures underscore the urgency for the political and theoretical arming of the working class with the program of world socialist revolution, fought for by the International Committee of the Fourth International, if civilisation is to go forward and the plunge into barbarism averted.

Nick Beams

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Warren Duzak4 days ago

Beams excellent piece included:
"As the position paper issued by Washington in May put it: "China will
cease providing market-distorting subsidies and other types of government support that can contribute to the creation or maintenance of excess capacity in industries targeted by the Made in China 2025 industrial plan."

This issue of "government support" in China is reflected in the U.S. but in a different way. Nashville and Tennessee governments alone have given hundreds of millions of dollars in "tax incentives," payment for worker training and outright "grants" to corporations in "government support."
Hospital Corporation of America (HCA) got millions for, of all things, furniture for new offices which included thousands of dollars for a guitar-shaped table.
Gaylord's Opryland Resort got almost $14 million from the city to build a $90 million hotel Waterpark that would only be open to hotel guests!
The state and its capitol are prepared to give Amazon more than $1.5 billion to have the corporation move is second U.S. headquarters here.
Like the Chinese government and oligarchs, neither state nor city will reveal the details or total amount.
As the WSWS has so correctly observed before, "the hypocrisy is breathtaking."

Jerome_Stern5 days ago
I should say I do not agree that globalised production is a beneficial or positive economic development. I accept that as a by product there is a positive political result namely the creation and expansion of the international working class. But the only reason for globalised production is the exploitation of lower wage rates in developing countries. If the cost of labour, taking into account currency exchange rates as well as wage levels, were the same in every country and region, there would be no advantage in producing most commodities in Asia for sale in North America or Europe (or vice versa). Also, I do not accept that free trade is in everyone's interest. The only argument ever advanced in it's favour by economists, the comparative advantage argument, is spurious. Even its originators, Adam Smith and David Ricardo, accepted that the benefits would only apply if capital was immobile across national boundaries, which hardly applies today. The US economy's industrial growth, though the result of several factors, was only possible because the US rejected free trade in favour of protective tariffs which protected its infant industries from foreign competition. What is the central fallacy in the comparative advantage argument is that the prosperity of the majority of a country's citizens under capitalism depends on a strong, capital intensive, manufacturing sector, but which also requires a large labour input. Only those jobs can pay a sufficiently high wage to workers. Their spending power also invigorates the whole economy.
Kalen Jerome_Stern4 days ago
Your quite reasonable concerns are partially addressed here with Quasi-Marxist analysis:

FALLACY OF FREE MARKET AND FREE TRADE: A THEORETICAL VIEW.
https://contrarianopinion.w...

Thy major point about this issue global or local is often completely missed namely that this dispute have nothing to do with Workers Socialist Revolution but to perhaps see ways how to save capitalism in a way of sharing more wealth with working class, how to suppress class struggle with Bread and Games or War, an old Roman method of divide and conquer.

Hence, capital controls, tarrifs , barriers, subsidies are instruments of having any possibility of real social policies in capitalism system making it more livable and longer lasting than in case of intensified pressure on working class and class struggle of globalism versus nationalism.

Popularity of National Socialism in capitalist country like Germany was exactly due to that process of corruption of working class who embassy stoped to question system as long as provided them with goods.

Little did they know, that they were in 1930 confronted with no permanent political solution to their class issues via improvement of standard of living and importance of their labor on the propaganda spectrum,but with dead end politics of submission to one political sellouts or another since their forced unity was just subordinated to capitalist imperative of ufettered economic and military growth via extreme exploitation.

And that is what's wrong with nationalism namely it is shutting down paths of class struggle toward class liberation, as it neuters this struggle.

Jerome_Stern Joe Williams4 days ago
There is a difference between the growth of global productive capacity and globalisation. Prior to the latter process, manufacturing capacity was increased including by western investment in developing countries, especially in Latin America. But production in those countries was for local regional and national markets.

The US accepted competition from the German economy as a price to be paid for avoiding the postwar threat of socialism. But the Japanese export driven model of growth was eventually unacceptable. The US demanded the Japanese destroy this model by raising their own currency to a level which made their exports much less competitive. The Japanese rich were given financial opportunities in the US as compensation.

However, when the South Koreans and other nations copied the Japanese model, the US government and US multinationals radically changed their economic policy. A conscious choice was made by the Reagon administration to export manufacturing jobs en masse to developing countries as well as attacking the incomes of US workers who had jobs.

Henceforth, most goods manufactured for US consumption were to be produced abroad, from Mexico to China. Once US based multinationals started down this road, European and even Japanese ones followed. This did not mean an increase in productive forces but a substitution of one labour force for another.

Thus the rise of Chinese industry was as much a part of this process as the deindustrialisation of formerly prosperous parts of the US and the UK. This has nothing to do with the evolution of our species and everything to do with the evolution of capitalism. This is what I mean by globalisation.

It has not eradicated national borders but is a major factor in the recent development of far right nationalism in Europe. It is a strong contributor to the restructuring of western economies so that only a minority of British workers have full time permanent jobs. It is also used as leverage to drive down wages in western economies.

Of course in recent years the Chinese and Indian economies have grown under these policies so that there is now an increase of global capacity. Nor do I believe this process has led to a genuinely more efficient system of production and distribution. To produce products in one part of the world for distribution to another part half way around the world is very inefficient, if the product could be made nearer to the point where it would be used. It however becomes profitable if the labour used to produce it is much cheaper than that available where the the object is to be sold.

I do not believe what I mean by globalisation is progressive at all. It has been pushed by the most reactionary political forces in western societies as an integral part of what the WSWS calls a social counter revolution. As the WSWS again points out it makes the preservation of national welfare states or a decent standard of living for working class people impossible. I am not calling for this to be reversed under capitalism.

That seems impossible. Only the overthrow of capitalism offers the possibility of positive change. But under international socialism, globalised production chains will finally be seen for what they are, an unnecessary and inefficient encumbrance on humanity.

Joe Williams Jerome_Stern3 days ago
I think you are largely confusing globalisation with imperialism. I think you are also misunderstanding the wsws position. The wsws does not call for xenophobic or nationalist policies to close borders and keep workers imprisoned in their home countries to be used as a captive labor force by the domestic bourgeoisie. The wsws calls for an internationalist and proletarian socialist movement in conformity with that advocated by the workers movement ever since the publication of the communist manifesto.
Hermit Crab Jerome_Stern3 days ago
profitability =/= efficiency
Hermit Crab Jerome_Stern2 days ago
I really could not care less what you call it. I just want people to start treating each other better. What makes those with sticky fingers think that they are so G.D. better than everyone else that they can condemn whole segments to poverty and even death, all for the sake of their bits of imaginary ego-boosts?

ALL of the "isms" in the world have never worked out a justification for greed and the lust for power. No matter what the system, crooked people always try to exploit others, and blame justify it all on their "good genes". (edited)

Capitalism is no better or worse because it just doesn't matter what the system is, the crooks will always cheat that system to get more than everyone else.

denis ross Joe Williams4 days ago
An interesting theory to describe what is essentially creation of a world customs union based on the model that created Germany in 1871, the Zollverein. Spreading the customs union (Zollverein) worldwide was the reason for the two world wars--instead of maintaining a world federation politically and economically. The United Nations was designed to be a federation, but under post-1945 changes in the USA and subsequent pressures on the UN and its member states, it began developing into a union, not a federation. This was accompanied with creation of a global Zollverein, tariff free borders and free trade.

The difference politically between a union and a federation is that in a federation the member states award limited operating powers to a central coordinating body which does what the members want; in a union the central body holds all the powers and tells the members what to do.

sumwunyumaynotno denis ross4 days ago
The United Nations "holds all the powers and tells the members what to do" ? That's news to me. As far as I can tell, the members do what they damn well please. The UN is more like a fractured federation with a nearly impotent central body - the so-called "Security Council" - which issues edicts but has no enforcement power. Same with the World Court.
Hermit Crab sumwunyumaynotnoa day ago
The UN was designed by the victors of WWII to be "crippled", mere window-dressing as a calming salve for the developing nations. From the start, it was meant to be largely ineffective as the world's policeman and justice system .

All the nation states with any significant power are still more interested in preserving as much their own power and hegemonic control as possible.

Greg Jerome_Stern4 days ago
"...globalised production is the exploitation of lower wage rates in developing countries."

As if domestic production were not the same thing. The author is essentially arguing for "lesser evil" exploitation in the interests of society as a whole. Reformists always do.

"The crisis also exposed in full glare another of the central myths of the capitalist order -- that the state is somehow a neutral or independent organisation committed to regulating social and economic affairs in the interests of society as a whole." - Ten years since the collapse of Lehman Brothers

Hermit Crab Greg3 days ago
I suppose the determination of what constitutes the "interests of society as a whole" depends on which end of the stick one's "society" is holding.
Greg Jerome_Sterna day ago
"However my fundamental advocacy of policy would be that of international socialism the result of which would be the handing of power to the working class to be exercised democratically ."

The "handing of power" from whom exactly?

As it is now, the minority holds the power. So it's reasonable to think you mean they would hand the power over to the majority.

Which would be silly. But whether or not that was your meaning, "the handing of power to the working class to be exercised democratically" besides being exactly backwards, is an opportunist "understanding" of Marxism. It implies a perspective where the state does not need to be destroyed.

"The crucial question for Marx was what was the social material force -- the class -- created by capitalist society itself, which would be the agency, the driving force, of this transformation." - A promotion of the "life-style" politics of the pseudo-left

It's a version of the frequently and historically repeated goal of replacing one petty bourgeoisie minority with another, betraying the material interests of the working class and the revolution every time.

It seems like you might have just mentioned that phrase as an aside but it might indicate the deeper problem.

Before you start analyzing which policies might be recommended (which seems to be mainly what interests you) you have to understand the class nature of the problem. That doesn't come down only to understanding that there are two classes in struggle in society and then applying your everyday petty bourgeois thinking to it.

Have you read David North's Lenin, Trotsky and the Marxism of the October Revolution ? It was written back in March yet it's still posted on the wsws main page--for a reason.

It provides a concise explanation of some of the fundamental ideas and way of thinking you have to understand if you want to have any kind of intelligent conversation about socialism.

sumwunyumaynotno Jerome_Stern4 days ago
Nick Beams did not say that "globalised production chains employed represent a genuinely beneficial development in some deep sense." He said that such an outcome is impossible under capitalism and the system of competing nation-states.

The only "deep sense" is that he said it would be possible for globalization to have a positive effect for humanity if the international working class were able to abolish capitalism, the pursuit of private profit, warring nation-states, and institute socialism.

imaduwa5 days ago
Thank you comrade Nick Beams. US's century is 20th and a bygone one. You finely point out on the basis of Trotskysm the mortal danger that humanity faces resulting from the inter-imperialist rivalry that is escalating by the day.

Besides, the US's taking up of its rival China, the second biggest economy, in trade war pose a military confrontation to which Russia could be attracted on to China side.

Also Russia has been taken up by American imperialism independently as a target. Brexit hard or soft would also confound economic nationalism that is gathering momentum hugely. US sanctions on Iran is bound to sharpen the conflict between European imperialists. Also India appears to be in crisis on whether to abide by US dictats as per its Iranian economic connection especially on oil purchase. US's increasing protectionism has already gone out of control as per its implications to global polity and military activity. In view of this critical situation the role of the working class, national and international, should determine the future of humanity. Role of the revolutionary triumvirate, ICFI/SEP/IYSSE, is of paramount importance. I appeal to national working classes to build SEP as your national party of the socialist revolution. I appeal to youth and students to build your national chapters of the IYSSE in schools, universities etc. as quickly as possible. World war is haunting. Very existannce of the humanity on this palnet is uncertain, if we unitedly as workers, youth and students fail to empower the party of the world revolution, ICFI. Victory to international socialist revolution. Death to protectionism whose major advocate is US capitalism/imperialism. Down with the psudo left and the trade unions.

Jerome_Stern5 days ago
Keynes, who designed the Bretton Woods system, also proposed an international banking system and currency (called the Bancor). The purpose was to prevent the kind of unbalanced world trade which now dominates the global economy. Under his proposed system, countries with chronic trade surpluses would be penalised, thus preventing a situation like the present with some nations being massive exporters and others massive importers. Instead, all countries would hover around balanced trade where their imports equaled their exports in value. The US government told Keynes to shut up about this plan or they would cancel their promised postwar loans to the UK. The reason was that at the time the US planned to be a net exporter. Incidentally, Keynes warned that if the system of managed currency exchange rates were abandoned, the financial markets would become a "virtual senate" which would have the power to dictate economic policies to nation states.
Greg Jerome_Stern4 days ago
"Keynes, who designed the Bretton Woods system, also proposed an international banking system and currency (called the Bancor). The purpose was to prevent the kind of unbalanced world trade which now dominates the global economy."

Perpetually caught in a "lesser evil" loop of some variety or another from which the reformist never escapes, applying the same failed (ruling class) logic over, and over and over and over...

"But this solves nothing because, as Marx's analysis showed, the crises of capitalism cannot be overcome by reforms to the monetary system because, while they necessarily express themselves there, they were rooted in the very foundations of the capitalist economy, in its DNA so to speak -- that is, in the social relations based on profit and the market system." -Ten years after Lehman: New financial crises in the making

Jerome_Stern Greg4 days ago
Keynes' suggestion would have "solved" or rather prevented one problem, but not every problem of capitalism. Keynes was a reformist and capable of formulating policies which, if followed, would make capitalism more amenable to the interests of the majority of people.

He was consciously trying to save capitalism from itself and said so. But you rightly point out there is a major problem with this thinking, namely that it ignores the self interest of governments and capitalists alike, who ignore such concepts of "enlightened" self interest in favour of short term advantage.

Political reality intruded in Keynes' well-intentioned designs immediately as I've mentioned and the whole Bretton Woods edifice was knocked down as soon as it proved inconvenient for US interests.

Similarly, I strongly suspect Keynes would have disapproved of financial deregulation, but the underlying development of US capitalism led to unstoppable political pressure for its implementation.

Greg Jerome_Stern3 days ago
"Keynes was a reformist and capable of formulating policies which, if followed, would make capitalism more amenable to the interests of the majority of people."

For the life of me I can't figure why you'd praise a policy that more effectively persuades or controls the masses to their own detriment and to the economic benefit of a minority--other than to conclude that like Keynes and the rest of the petty bourgeoisie, you're a reformist.