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|Principal-agent problem||Quiet coup||Pecora commission||History of Casino Capitalism||Casino Capitalism Dictionary :-)||Humor||Etc|
Financialization is a process whereby financial markets, financial institutions, and financial elites gain greater influence over economic policy and economic outcomes. Financialization transforms the functioning of economic systems at both the macro and micro levels.
Its principal impacts are to (1) elevate the significance of the financial sector relative to the real sector, (2) transfer income from the real sector to the financial sector, and (3) increase income inequality and contribute to wage stagnation. Additionally, there are reasons to believe that financialization may put the economy at risk of debt deflation and prolonged recession.
Financialization operates through three different conduits: changes in the structure and operation of financial markets, changes in the behavior of nonfinancial corporations, and changes in economic policy.
Countering financialization calls for a multifaceted agenda that (1) restores policy control over financial markets, (2) challenges the neoliberal economic policy paradigm encouraged by financialization, (3) makes corporations responsive to interests of stakeholders other than just financial markets, and (4) reforms the political process so as to diminish the influence of corporations and wealthy elites.
Thomas Palley, See http://www.levyinstitute.org/pubs/wp_525.pdf
|Speculation and gambling were always a part of Wall Street but since the 1930’s
they were just a side-show, now they are the show.
Comment to Matt Taibbi article Fannie, Freddie, and the New Red and Blue t
“The sense of responsibility in the financial community
for the community as a whole is not small. It is nearly nil.”
-- John Kenneth Galbraith, The Great Crash of 1929
The term Casino Capitalism generally is symonim of neoliberalism (also called economic liberalism), but it also point out to a specific phase of neoliberal transformation of capitalism. Politically it was slow motion corporate coup d'état, which started in 70th and is now accomplished in the USA and other Western countries which buries social-democratic (New Deal style) model of capitalism.
It hypertrophied police functions of state (in the form of national-security state) while completely avoiding economic sphere in ways other then enforcement of laws (with a notable exclusion from this top 1% -- "Masters of the Universe"). Like bolshevism it uses the state for the enforcement of the social system. On top level this is crony capitalism for major corporation. On low level of medium and small business owners it presupposed a deregulated economy (in a sense of the "law of jungle" as a business environment).
Casino capitalism presupposes strong militarized state, suppressing all the attempts to challenge the new "nomenklatura" (much like was the case in the USSR). It is quite different from traditional liberalism:
“Liberalism” can refer to political, economic, or even religious ideas. In the U.S. political liberalism has been a strategy to prevent social conflict. It is presented to poor and working people as progressive compared to conservative or Right wing. Economic liberalism is different. Conservative politicians who say they hate “liberals” — meaning the political type — have no real problem with economic liberalism, including neoliberalism.
In other words this is neoliberal model of corporatism during the period of "cheap hydrocarbons". The period that is probably near the end and which by some estimate can last only another 50 years or so (less than 100 years). The major crisis of casino capitalism in 2008 was connected both with financial excesses (caused by moving to semi-criminal ways of extracting return on capital, typical for casino capitalism), but also with the rise of the price of oil and decrease of Energy returned on energy invested (EROEI). In this sense the last low oil price period which started in late 2014 and ended in spring 2018 can be viewed as the "last hurrah" of the casino capitalism.
In understanding neoliberal transformation of the society since early 80th it is important to understanding of the key role of financialization in this process. When major services are privatized (education, healthcare, pension plans) financial institution insert themselves as intermediaries in this arrangement and make it the main source of their profits. Also contrary to neoliberal propaganda this process is aided and abetted by state. State is used by neoliberalism as a tool of enforcing market relations even where they are not useless or even harmful (education). All this talk about irresolvable controversy between market and state is for gullible fools. In reality, being Trotskyism for rich, neoliberalism uses power of the state to enforce market relations by force on reluctant population even in areas where this can do no good. That make really it close to Soviet social experiment, which lasted from 1917 to 1991 or almost 75 years. As Marx noted "History repeats itself, first as tragedy, second as farce."
A very good discussion of the role of Financialisation in entrenchment of neoliberalism in modern societies can be found in the book by Costas Lapavitsas. Some highlights are provided in his Guardian article Finance's hold on our everyday life must be broken
This extraordinary public largesse towards private banks was matched by austerity and wage reductions for workers and households. As for restructuring finance, nothing fundamental has taken place. The behemoths that continue to dominate the global financial system operate in the knowledge that they enjoy an unspoken public guarantee. The unpalatable reality is that financialisation will persist, despite its costs for society.
Financialisation represents a historic and deep-seated transformation of mature capitalism. Big businesses have become "financialised" as they have ample profits to finance investment, rely less on banks for loans and play financial games with available funds. Big banks, in turn, have become more distant from big businesses, turning to profits from trading in open financial markets and from lending to households. Households have become "financialised" too, as public provision in housing, education, health, pensions and other vital areas has been partly replaced by private provision, access to which is mediated by the financial system. Not surprisingly, households have accumulated a tremendous volume of financial assets and liabilities over the past four decades.
The penetration of finance into the everyday life of households has not only created a range of dependencies on financial services, but also changed the outlook, mentality and even morality of daily life. Financial calculation evaluates everything in pennies and pounds, transforming the most basic goods – above all, housing – into "investments". Its logic has affected even the young, who have traditionally been idealistic and scornful of pecuniary calculation. Fertile ground has been created for neoliberal ideology to preach the putative merits of the market.
Financialisation has also created new forms of profit associated with financial markets and transactions. Financial profit can be made out of any income, or any sum of money that comes into contact with the financial sphere. Households, for example, generate profits for finance as debtors (mostly by paying interest on mortgages) but also as creditors (mostly by paying fees and charges on pension funds and insurance). Finance is not particular about how and where it makes its profits, and certainly does not limit itself to the sphere of production. It ranges far and wide, transforming every aspect of social life into a profit-making opportunity.
The traditional image of the person earning financial profits is the "rentier", the individual who invests funds in secure financial assets. In the contemporary financialised universe, however, those who earn vast returns are very different. They are often located within a financial institution, presumably work to provide financial services, and receive vast sums in the form of wages, or more often bonuses. Modern financial elites are prominent at the top of the income distribution, set trends in conspicuous consumption, shape the expensive end of the housing market, and transform the core of urban centres according to their own tastes.
Financialised capitalism is, thus, a deeply unequal system, prone to bubbles and crises – none greater than that of 2007-09. What can be done about it? The most important point in this respect is that financialisation does not represent an advance for humanity, and very little of it ought to be preserved. Financial markets are, for instance, able to mobilise advanced technology employing some of the best-trained physicists in the world to rebalance prices across the globe in milliseconds. This "progress" allows financiers to earn vast profits; but where is the commensurate benefit to society from committing such expensive resources to these tasks?
The term "casino capitalism" was coined by Susan Strange who used it as a title of her book Casino Capitalism published in 1986. She was one of the first who realized that
According to Susan Strange transformation of industrial capitalism into neoliberal capitalism ("casino capitalism") involved five trends. All of them increased the systemic instability of the system and the level of political corruption:
Now it is pretty much established fact that the conversion from "industrial capitalism" to neoliberal, completely financialialized "casino capitalism" is the natural logic of development of capitalism. In early and incomplete matter this trend was noticed at early 1990th by many thinkers. This is just the second iteration of the same trend which was interrupted by the Great Depression and subsequent WWII. So, in a way, replacement of industrial capitalism with financial capitalism in a natural tendency within the capitalism itself and corruption was contributing, but not decisive factor. The same is true about globalization, especially about globalization of financial flows, typical for casino capitalism, which is a form of colonialism (neocolonialism).
Also this conversion did not happen due to lack of oversight or as a folly. It was a couscous choice made by the US and GB elite, both of which faced deterioration of rates of return on capital. Also unlike "industrial capitalism" which was more-or-less stable system, able to outcompete the neo-theocratic system of the USSR, the financial capitalism is unstable in the same sense as radioactive elements are unstable. And this instability tend to increase with time. So there is probably natural half-life period for neoliberalism as a social system. It might be already reached in 2008. In we assume that global victory of neoliberalism happened in 1990. It is just 18 years. If we think that it happened in late 60th, then it is closer to 50 years.
The global crisis of neoliberal capitalism which started from bursting the USA subprime housing bubble in 2008 undermined ideological legitimacy of its central claim that "free markets" lead to faster and more uniform economic development of all countries. While the peak of its "ideological" power might be over (much like the peak of attractiveness of "command socialism" was over after WWII), it will exist in a zombie state for a long time due to economic and military power of the USA and G7. And as we know from Hollywood films, zombies can be especially bloodthirsty. It probably will remain the dominant force for at least the next two decades pursuing the same policy of "forceful" opening of energy rich and resource countries for western multinationals intact using color revolutions and local wars. But as Napoleon quipped "You can do anything with bayonets, you just can't sit on them".
Conversion to neoliberal capitalism was a reaction on stagnation of industrial production and as such it was nurtured and encouraged by a series of government decisions for the last 50 years. Stagnation of industrial production made expansion of financial sector of paramount importance for the ruling elite and by extension for Congress which represents this elite. House vote 377:4 for Commodity Futures Modernization Act of 2000 is pretty telling in this respect.
There were also at least two important parallel developments.
"Appetite comes with eating" and banks which initially rise as an alternative to usury gradually became indistinguishable from them, the new usury (vampire squid as Matt Taibbi called GS).
Financial institutions brass became dominant political force partially displacing (or more correctly complementing) media-military-industrial complex and oil-energy complex... Sen. Dick Durbin, on a local Chicago radio station blurted out an obvious truth about Congress which, despite being quite obvious, is rarely spoken "press scorps" :
“And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”
In other words the US political system is a brand of corporatism with financial capital standing on the top stop on interval to Washington, DC corporate hierarchy and holding the most of political power.
Most respectable authors like Henry Giroux in his article in Counterpunch generally consider the term "casino capitalism" to be an equivalent to the term Neoliberalism. Here is a relevant quote from Henry Giroux's Authoritarian Politics in the Age of Casino Capitalism :
There is more at work here than simply a ramped up version of social Darwinism with its savagely cruel ethic of “reward the rich, penalize the poor, [and] let everyone fend for themselves,” [ii] there is also a full scale attack on the social contract, the welfare state, economic equality, and any viable vestige of moral and social responsibility. The Romney-Ryan appropriation of Ayn Rand’s ode to selfishness and self-interest is of particular importance because it offers a glimpse of a ruthless form of extreme capitalism in which the poor are considered “moochers,” viewed with contempt, and singled out to be punished. But this theocratic economic fundamentalist ideology does more. It destroys any viable notion of the and civic virtue in which the social contract and common good provide the basis for creating meaningful social bonds and instilling in citizens a sense of social and civic responsibility. The idea of public service is viewed with disdain just as the work of individuals, social groups, and institutions that benefit the citizenry at large are held in contempt.
As George Lakoff and Glenn W. Smith point out, casino capitalism creates a culture of cruelty: “its horrific effects on individuals-death, illness, suffering, greater poverty, and loss of opportunity, productive lives, and money.”[iii]
But it does more by crushing any viable notion of the common good and public life by destroying “the bonds that hold us together.”[iv] Under casino capitalism, the spaces, institutions, and values that constitute the public are now surrendered to powerful financial forces and viewed simply as another market to be commodified, privatized and surrendered to the demands of capital. With religious and market-driven zealots in charge, politics becomes an extension of war; greed and self-interest trump any concern for the well-being of others; reason is trumped by emotions rooted in absolutist certainty and militaristic aggression; and skepticism and dissent are viewed as the work of Satan.
If the Republican candidacy race of 2012 is any indication, then political discourse in the United States has not only moved to the right—it has been introducing totalitarian values and ideals into the mainstream of public life. Religious fanaticism, consumer culture, and the warfare state work in tandem with neoliberal economic forces to encourage privatization, corporate tax breaks, growing income and wealth inequality, and the further merging of the financial and military spheres in ways that diminish the authority and power of democratic governance.[v] Neoliberal interests in freeing markets from social constraints, fueling competitiveness, destroying education systems, producing atomized subjects, and loosening individuals from any sense of social responsibility prepare the populace for a slow embrace of social Darwinism, state terrorism, and the mentality of war — not least of all by destroying communal bonds, dehumanizing the other, and pitting individuals against the communities they inhabit.
Totalitarian temptations now saturate the media and larger culture in the language of austerity as political and economic orthodoxy. What we are witnessing in the United States is the normalization of a politics that exterminates not only the welfare state, and the truth, but all those others who bear the sins of the Enlightenment — that is, those who refuse a life free from doubt. Reason and freedom have become enemies not merely to be mocked, but to be destroyed. And this is a war whose totalitarian tendencies are evident in the assault on science, immigrants, women, the elderly, the poor, people of color, and youth.
What too often goes unsaid, particularly with the media’s focus on inflammatory rhetoric, is that those who dominate politics and policymaking, whether Democrats or Republicans, do so largely because of their disproportionate control of the nation’s income and wealth. Increasingly, it appears these political elite choose to act in ways that sustain their dominance through the systemic reproduction of an iniquitous social order. In other words, big money and corporate power rule while electoral politics are rigged. The secrecy of the voting booth becomes the ultimate expression of democracy, reducing politics to an individualized purchase—a crude form of economic action. Any form of politics willing to invest in such ritualistic pageantry only adds to the current dysfunctional nature of our social order, while reinforcing a profound failure of political imagination. The issue should no longer be how to work within the current electoral system, but how to dismantle it and construct a new political landscape that is capable of making a claim on equity, justice, and democracy for all of its inhabitants. Obama’s once inspiring call for hope has degenerated into a flight from responsibility.
The Obama administration has worked to extend the policies of the George W. Bush administration by legitimating a range of foreign and domestic policies that have shredded civil liberties, expanded the permanent warfare state, and increased the domestic reach of the punitive surveillance state. And if Romney and his ideological cohorts, now viewed as the most extremists faction of the Republican Party, come to power, surely the existing totalitarian and anti-democratic tendencies at work in the United States will be dangerously intensified.
Alternatively, we could have spent more time studying the work of Hyman Minsky. We could also
have considered the possibility that, just as Keynes’s ideas were tested to destruction in the
1950s, 1960s and 1970s, Milton Friedman’s ideas might suffer a similar fate in the 1980s, 1990s
and 2000s. All gods fail, if one believes too much. Keynes said, of course, that "practical men
… are usually the slaves of some defunct economist". So, of course, are economists, even if the defunct economists are sometimes still alive.
Casino capitalism is a nickname for nailibelism. Probably more properly nickname would be financial corporatism. While the key idea of corporatism: that political actors are not individual people, but some associations and first of all corporations (which are officially considered to be "persons" and have rights as well as trade unions and some other associations) remains intact, financial corporatism is different from classic corporatism in several major ways:
Historically corporatism in various modifications became dominant social system after WWII and defeated "command socialism" as was implemented in the USSR. Here is an instructive review of corporatism history (The Economic System of Corporatism):
In the last half of the 19th century people of the working class in Europe were beginning to show interest in the ideas of socialism and syndicalism. Some members of the intelligentsia, particularly the Catholic intelligentsia, decided to formulate an alternative to socialism which would emphasize social justice without the radical solution of the abolition of private property. The result was called Corporatism. The name had nothing to do with the notion of a business corporation except that both words are derived from the Latin word for body, corpus.
The basic idea of corporatism is that the society and economy of a country should be organized into major interest groups (sometimes called corporations) and representatives of those interest groups settle any problems through negotiation and joint agreement. In contrast to a market economy which operates through competition a corporate economic works through collective bargaining. The American president Lyndon Johnson had a favorite phrase that reflected the spirit of corporatism. He would gather the parties to some dispute and say, "Let us reason together."
Under corporatism the labor force and management in an industry belong to an industrial organization. The representatives of labor and management settle wage issues through collective negotiation. While this was the theory in practice the corporatist states were largely ruled according to the dictates of the supreme leader.
One early and important theorist of corporatism was Adam Müller, an advisor to Prince Metternich in what is now eastern Germany and Austria. Müller propounded his views as an antidote to the twin dangers of the egalitarianism of the French Revolution and the laissez faire economics of Adam Smith. In Germany and elsewhere there was a distinct aversion among rulers to allow markets to function without direction or control by the state. The general culture heritage of Europe from the medieval era was opposed to individual self-interest and the free operation of markets. Markets and private property were acceptable only as long as social regulation took precedence over such sinful motivations as greed.
Coupled with the anti-market sentiments of the medieval culture there was the notion that the rulers of the state had a vital role in promoting social justice. Thus corporatism was formulated as a system that emphasized the positive role of the state in guaranteeing social justice and suppressing the moral and social chaos of the population pursuing their own individual self-interests. And above all else, as a political economic philosophy corporatism was flexible. It could tolerate private enterprise within limits and justify major projects of the state. Corporatism has sometimes been labeled as a Third Way or a mixed economy, a synthesis of capitalism and socialism, but it is in fact a separate, distinctive political economic system.
Although rulers have probably operated according to the principles of corporatism from time immemorial it was only in the early twentieth century that regimes began to identify themselves as corporatist. The table below gives some of those explicitly corporatist regimes.
|Corporatist Regimes of the Early Twentieth Century|
|National Corporatism||Italy||1922-1945||Benito Mussolini|
|Country, Religion, Monarchy||Spain||1923-1930||Miguel Primo de Rivera|
|National Socialism||Germany||1933-1945||Adolph Hitler|
|National Syndicalism||Spain||1936-1973||Francisco Franco|
|New State||Portugal||1932-1968||Antonio Salazar|
|New State||Brazil||1933-1945||Getulio Vargas|
|New Deal||United States||1933-1945||Franklin Roosevelt|
|Third Hellenic Civilization||Greece||1936-1941||Ioannis Metaxas|
|Justice Party||Argentina||1943-1955||Juan Peron|
In the above table several of the regimes were brutal, totalitarian dictatorships, usually labeled fascist, but not all the regimes that had a corporatist foundation were fascist. In particular, the Roosevelt New Deal despite its many faults could not be described as fascist. But definitely the New Deal was corporatist. The architect for the initial New Deal program was General Hugh Johnson. Johnson had been the administrator of the military mobilization program for the U.S. under Woodrow Wilson during World War I. It was felt that he did a good job of managing the economy during that period and that is why he was given major responsibility for formulating an economic program to deal with the severe problems of the Depression. But between the end of World War I and 1933 Hugh Johnson had become an admirer of Mussolini's National Corporatist system in Italy and he drew upon the Italian experience in formulating the New Deal.
It should be noted that many elements of the early New Deal were later declared unconstitutional and abandoned, but some elements such as the National Labor Relations Act which promoted unionization of the American labor force are still in effect. One part of the New Deal was the development of the Tennessee River Valley under the public corporation called the Tennessee Valley Authority (TVA). Some of the New Dealer saw TVA as more than a public power enterprise. They hoped to make TVA a model for the creation of regional political units which would replace state governments. Their goal was not realized. The model for TVA was the river development schemes carried out in Spain in the 1920's under the government of Miguel Primo de Rivera. Jose Antonio Primo de Rivera, the son of Miguel Primo de Rivera, was the founder of Franco's National Syndicalism.
Corporatist regime typically promote large governmental projects such as TVA on the basis that they are too large to be funded by private enterprise. In Brazil the Vargas regime created many public enterprises such as in iron and steel production which it felt were needed but private enterprise declined to create. It also created an organized labor movement that came to control those public enterprises and turned them into overstaffed, inefficient drains on the public budget.
Although the above locates the origin of corporatism in 19th century France it roots can be traced much further back in time. Sylvia Ann Hewlett in her book, The Cruel Dilemmas of Development: Twentieth Century Brazil, says,Corporatism is based on a body of ideas that can be traced through Aristotle, Roman law, medieval social and legal structures, and into contemporary Catholic social philosophy. These ideas are based on the premise that man's nature can only be fulfilled within a political community.
The central core of the corporatist vision is thus not the individual but the political community whose perfection allows the individual members to fulfill themselves and find happiness.
The state in the corporatist tradition is thus clearly interventionist and powerful.
Corporatism is collectivist; it is a different version of collectivism than socialism but it is definitely collectivist. It places some importance on the fact that private property is not nationalized, but the control through regulation is just as real. It is de facto nationalization without being de jure nationalization.
Although Corporatism is not a familiar concept to the general public, most of the economies of the world are corporatist in nature. The categories of socialist and pure market economy are virtually empty. There are only corporatist economies of various flavors.
These flavors of corporatism include the social democratic regimes of Europe and the Americas, but also the East Asian and Islamic fundamentalist regimes such as Taiwan, Singapore and Iran. The Islamic socialist states such as Syria, Libya and Algeria are more corporatist than socialist, as was Iraq under Saddam Hussain. The formerly communist regimes such as Russia and China are now clearly corporatist in economic philosophy although not in name.
Sine ira et studio
Tacitus, see Wikipedia
The term "Quiet coup" which means the hijacking of the political power in the USA by financial oligarchy was introduced by Simon H. Johnson, a British-American economist, who currently is the Ronald A. Kurtz Professor of Entrepreneurship at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. From March 2007 through the end of August 2008, he was Chief Economist of the International Monetary Fund. The term was introduced in his article in Atlantic magazine, published in May 2009(The Quiet Coup - Simon Johnson - The Atlantic). Which opens with a revealing paragraph:
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government
The wealth of financial sector gave it unprecedented opportunities of simply buying the political power iether directly or indirectly (via revolving door mechanism):
Becoming a Banana Republic
In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.
But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.
Top investment bankers and government officials like to lay the blame for the current crisis on the lowering of U.S. interest rates after the dotcom bust or, even better—in a “buck stops somewhere else” sort of way—on the flow of savings out of China. Some on the right like to complain about Fannie Mae or Freddie Mac, or even about longer-standing efforts to promote broader homeownership. And, of course, it is axiomatic to everyone that the regulators responsible for “safety and soundness” were fast asleep at the wheel.
But these various policies — lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits — such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998—were ignored or swept aside.
The financial industry has not always enjoyed such favored treatment. But for the past 25 years or so, finance has boomed, becoming ever more powerful. The boom began with the Reagan years, and it only gained strength with the deregulatory policies of the Clinton and George W. Bush administrations. Several other factors helped fuel the financial industry’s ascent. Paul Volcker’s monetary policy in the 1980s, and the increased volatility in interest rates that accompanied it, made bond trading much more lucrative. The invention of securitization, interest-rate swaps, and credit-default swaps greatly increased the volume of transactions that bankers could make money on. And an aging and increasingly wealthy population invested more and more money in securities, helped by the invention of the IRA and the 401(k) plan. Together, these developments vastly increased the profit opportunities in financial services.
Not surprisingly, Wall Street ran with these opportunities. From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.
The great wealth that the financial sector created and concentrated gave bankers enormous political weight — a weight not seen in the U.S. since the era of J.P. Morgan (the man). In that period, the banking panic of 1907 could be stopped only by coordination among private-sector bankers: no government entity was able to offer an effective response. But that first age of banking oligarchs came to an end with the passage of significant banking regulation in response to the Great Depression; the reemergence of an American financial oligarchy is quite recent.
He further researched this theme in his book 2010 book 13 Bankers The Wall Street Takeover and the Next Financial Meltdown (ISBN 978-0307379054), coauthored with James Kwak. They also founded and regularly contributes to the economics blog The Baseline Scenario. See also History of Casino Capitalism
The net effect of the ideological counter-revolution based on market fundamentalism ideology was that it restored the power of financial oligarchy typical for Gilded Age. As Simon Johnson argues that was partially done by subverting regulators and that oversize institutions always disproportionately influence public policy:
The second problem the U.S. faces—the power of the oligarchy—is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy.
Oversize institutions disproportionately influence public policy; the major banks we have today draw much of their power from being too big to fail. Nationalization and re-privatization would not change that; while the replacement of the bank executives who got us into this crisis would be just and sensible, ultimately, the swapping-out of one set of powerful managers for another would change only the names of the oligarchs.
Ideally, big banks should be sold in medium-size pieces, divided regionally or by type of business. Where this proves impractical—since we’ll want to sell the banks quickly—they could be sold whole, but with the requirement of being broken up within a short time. Banks that remain in private hands should also be subject to size limitations.
This may seem like a crude and arbitrary step, but it is the best way to limit the power of individual institutions in a sector that is essential to the economy as a whole. Of course, some people will complain about the "efficiency costs" of a more fragmented banking system, and these costs are real. But so are the costs when a bank that is too big to fail—a financial weapon of mass self-destruction—explodes. Anything that is too big to fail is too big to exist.
To ensure systematic bank breakup, and to prevent the eventual reemergence of dangerous behemoths, we also need to overhaul our antitrust legislation. Laws put in place more than 100years ago to combat industrial monopolies were not designed to address the problem we now face. The problem in the financial sector today is not that a given firm might have enough market share to influence prices; it is that one firm or a small set of interconnected firms, by failing, can bring down the economy. The Obama administration’s fiscal stimulus evokes FDR, but what we need to imitate here is Teddy Roosevelt’s trust-busting.
Caps on executive compensation, while redolent of populism, might help restore the political balance of power and deter the emergence of a new oligarchy. Wall Street’s main attraction—to the people who work there and to the government officials who were only too happy to bask in its reflected glory—has been the astounding amount of money that could be made. Limiting that money would reduce the allure of the financial sector and make it more like any other industry.
Still, outright pay caps are clumsy, especially in the long run. And most money is now made in largely unregulated private hedge funds and private-equity firms, so lowering pay would be complicated. Regulation and taxation should be part of the solution. Over time, though, the largest part may involve more transparency and competition, which would bring financial-industry fees down. To those who say this would drive financial activities to other countries, we can now safely say: fine.Two Paths
To paraphrase Joseph Schumpeter, the early-20th-century economist, everyone has elites; the important thing is to change them from time to time. If the U.S. were just another country, coming to the IMF with hat in hand, I might be fairly optimistic about its future. Most of the emerging-market crises that I’ve mentioned ended relatively quickly, and gave way, for the most part, to relatively strong recoveries. But this, alas, brings us to the limit of the analogy between the U.S. and emerging markets.
Emerging-market countries have only a precarious hold on wealth, and are weaklings globally. When they get into trouble, they quite literally run out of money—or at least out of foreign currency, without which they cannot survive. They must make difficult decisions; ultimately, aggressive action is baked into the cake. But the U.S., of course, is the world’s most powerful nation, rich beyond measure, and blessed with the exorbitant privilege of paying its foreign debts in its own currency, which it can print. As a result, it could very well stumble along for years—as Japan did during its lost decade—never summoning the courage to do what it needs to do, and never really recovering. A clean break with the past—involving the takeover and cleanup of major banks—hardly looks like a sure thing right now. Certainly no one at the IMF can force it.
In my view, the U.S. faces two plausible scenarios. The first involves complicated bank-by-bank deals and a continual drumbeat of (repeated) bailouts, like the ones we saw in February with Citigroup and AIG. The administration will try to muddle through, and confusion will reign.
Boris Fyodorov, the late finance minister of Russia, struggled for much of the past 20 years against oligarchs, corruption, and abuse of authority in all its forms. He liked to say that confusion and chaos were very much in the interests of the powerful—letting them take things, legally and illegally, with impunity. When inflation is high, who can say what a piece of property is really worth? When the credit system is supported by byzantine government arrangements and backroom deals, how do you know that you aren’t being fleeced?
Our future could be one in which continued tumult feeds the looting of the financial system, and we talk more and more about exactly how our oligarchs became bandits and how the economy just can’t seem to get into gear.
The second scenario begins more bleakly, and might end that way too. But it does provide at least some hope that we’ll be shaken out of our torpor. It goes like this: the global economy continues to deteriorate, the banking system in east-central Europe collapses, and—because eastern Europe’s banks are mostly owned by western European banks—justifiable fears of government insolvency spread throughout the Continent. Creditors take further hits and confidence falls further. The Asian economies that export manufactured goods are devastated, and the commodity producers in Latin America and Africa are not much better off. A dramatic worsening of the global environment forces the U.S. economy, already staggering, down onto both knees. The baseline growth rates used in the administration’s current budget are increasingly seen as unrealistic, and the rosy "stress scenario" that the U.S. Treasury is currently using to evaluate banks’ balance sheets becomes a source of great embarrassment.
Under this kind of pressure, and faced with the prospect of a national and global collapse, minds may become more concentrated.
The conventional wisdom among the elite is still that the current slump "cannot be as bad as the Great Depression." This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite. Let us hope it is not then too late.
It is pretty interesting to see how financial oligarchy filters information provided to the population to fit their biases. For example, the key facts about repeal of Glass-Steagall law (BTW Joe Biden voted for it) mostly hidden from the public:
The measure, which Mr. Gramm helped write and move through the Senate, also split up oversight of conglomerates among government agencies. The Securities and Exchange Commission, for example, would oversee the brokerage arm of a company. Bank regulators would supervise its banking operation. State insurance commissioners would examine the insurance business. But no single agency would have authority over the entire company.
"There was no attention given to how these regulators would interact with one another," said Professor Cox of Duke. "Nobody was looking at the holes of the regulatory structure."
The arrangement was a compromise required to get the law adopted. When the law was signed in November 1999, he proudly declared it "a deregulatory bill," and added, "We have learned government is not the answer."
Commodity Futures Trading Commission — under the leadership of Mr. Gramm’s wife, Wendy — had approved rules in 1989 and 1993 exempting some swaps and derivatives from regulation. In December 2000, the Commodity Futures Modernization Act was passed as part of a larger bill by unanimous consent after Senator Gramm dominated the Senate debate...
"He was the architect, advocate and the most knowledgeable person in Congress on these topics," Mr. Donovan said. "To me, Phil Gramm is the single most important reason for the current financial crisis."
"The virtually unregulated over-the-counter market in credit-default swaps has played a significant role in the credit crisis, including the now $167 billion taxpayer rescue of A.I.G.," Christopher Cox, the chairman of the S.E.C. and a former congressman, said Friday.
But you will never find discussion of flaws and adverse consequences Phil Gram (or Greenspan for a change) initiatives in Heritage Foundation and other right-wing think tanks publications.
So what we are experiencing is a the completion of the transformation of one phase of capitalism to another. It happened in stages:
Manufacturing stagnated and can't provide the "decent" rate of growth. Competition from
re-built Europe and Asian markets severely stressed the US manufacturing. due to competition
return of capital dropped and in several industries became negative.
Computers brought innovations into financial markets. They make possible real time trading
of induces like S&P500, complex financial instruments like derivatives, etc. Later they enables superfast
trading (HFT). All those instruments dramatically increased the possibilities of extracting the rent
by financial institutions from the society.
Globalization kicked in due to new opportunities offered by high speed global communications
(Internet). And that is not limited to outsourcing. Due to globalization the sheer size of the
financial markets increased to the extent that they started to represent a different, new transnational
phenomena allowing new types of redistribution of wealth to be practiced. Integration of Russian
elite (oligarchs) is just one example of this process. In case of pro-western oligarchs (fifth
column) West went to significant length to protect them and their racket (Mikhail
Khodorkovsky - Wikipedia,)
Commercial banks turned into investment banks to exploit this opportunity.
Financial sector completely corrupted academic science converting most economists to pay prostitutes
which serve their interests.
Collapse of the USSR provided the financial sector major shoot in the arm and a golden, once
in century opportunity to finance new half-billion consumers and stole for a penny on a dollar huge
industrial assets and natural resources as well as put most of those countries in the debt (Latin-Americanization
of xUSSR space). Harvard Mafia (with some
support from London) did the bidding of western banks in xUSSR space. As more becomes known about
the laundering of Russian money in Western banks, many in the United States will likely try to hide
behind stories of faraway organized crime. But U.S. policy toward Russia has contributed to that
country's sorry conditions--with the Harvard Institute for International Development's Russia project
(HIID) playing a major role (Harvard's
'Best and Brightest' Aided Russia's Economic Ruin ). Professor
Jeffery Sacks provided
a bogus idea of "shock therapy" to achieve spectacular for Western banks result. As a result all
xUSSR space became new Latin America with typical for Latin America problems like huge level of inequality,
prostitution, child poverty, and prominent role of organized crime.
Banks became dominant political force on western societies with no real counterbalance from
other parts of the elite. The first president completely subservient to banking elite was elected
in the USA in 1992. Bill Clinton regime lasted eight years and along with
economic rape of xUSSR space in best colonial powers tradition, it removed what was left of financial
regulations after the flurry of deregulation of the early 1980s. And they behaved as an occupying
force not only in xUSSR space but in the USA as well. They deprived workers out of their jobs, they
abolished the US pension system as it impede playing with population money and replaced in with widely
inadequate 401K plans. They deprived municipalities out of their revenues and assets, while municipalities
became just a den of bond traders looking for then next mark which give them the ability to put municipalities
deeper in debt.
Newly acquired political power of financial elite speeded the shift to bank "self-regulation"
created huge shadow banking system which dwarf "official" under the smoke screen of "free-market"
propaganda and PR from a coterie of corrupts academics (Chicago
Scholl, Harvard Mafia, etc) . It engaged
in pursuit of short term profits and self-enrichment of top brass which became new elite by-and-large
displacing not only the old one, but also the newly minted IT elite of dot-com boom. Using newly
acquired power financial elite remove all regulations that hamper their interests.
Glass-Steagall was repealed at the last
days of Clinton presidency, financial derivatives became unregulated.
Deindustrialization kicked in. As financial speculation proved to be much more profitable
to other activities deindustrialization kicked in the USA as the financial center of the world. Outsourcing
which first was limited to manufacturing jobs now extent its reach on IT and decimate previously
profitable sector and its export potential.
Externalities can no longer be suppressed and economics became unstable. Growth of inequality,
job insecurity, as well as frequency of financial crises were natural consequences of financialization
of the economy. They create huge imbalances, like bubble in residential real estate which was blown
with the help and full support of the USA government as a way to overcome dot-com crisis consequences.
Debt crisis strikes. Growth of debt became unsustainable and produces the financial crisis
of enormous proportions. By their reckless policies and greed financial sector caused huge financial
crisis of 2008 and now they are forcing national governments to auction off their cultural heritage
to the highest bidder. Everything must go in fire sales at prices rigged by twenty-something largest
banks, the most corrupt institutions the world has ever known.
Devastating "local" wars became "new normal". Due to financial crisis, the overconsumption in western economies came under threat. Debt expansion which led to overconsumption within the western economies affected (or infected) by financialization. To sustain the current standard of living financial expansion became the necessity. It took the form of a competition for spheres of influence in the area of energy supplies, which we see in post USSR space, Iraq, Libya and elsewhere. And central banks play critical role in financing wars. After all Banks of England was created with this exact purpose.
I think by 2008 when the second major financial crisis hit the USA, the transformation on the USA economy into casino capitalism, which is essentially implementation of neoliberal doctrine (or more correctly the US brand of corporatism) was by-and-large complete.
In short we are living in a new politico-economic system in which financial capital won victory over both labor and industrial capital. We might not like what we got, but financial elite is now a new ruling class and this fact is difficult to dispute. As a result. instead of the robber barons of the early 20th century (some of whom actually created/consolidated new industries), we have the top executives from investment banks, insurers and mortgage industry who represent a new Rentier class, much like old aristocracy.
They are living off parasitic monopolization of access to any (physical, financial, intellectual, etc.) kind of property and gaining significant amount of profit without contribution to society (see Rentier capitalism which is a very fuzzy term for neoliberal model of capitalism).
Stagnation of industrial manufacturing droved up financial speculation as the method to compensate for falling rate on return on capital. This stagnation became prominent during Reagan administration (which started the major shift toward neoliberalism), although signs of it were present from early 60th.
For example Chicago which was a manufacturing center since 1969 lost approximately 400K manufacturing jobs which were replaced mainly by FIRE-related jobs, In 1995 over 22% of those employed by FIRE industries (66K people) were working in executive and managerial positions. Another 17% are in marketing, sales and processional specialty occupations (computer system analysts, PR specialists, writer and editors).
Those changes in the structure of employment had several consequences:
The key to understanding of Casino Capitalism is that it was a series of government decisions (or rather non-decisions) that converted the state into neoliberal model. In other words casino capitalism has distinct "Government property" mark. It was the USA elite, which refused to act responsibly in the face of changing economic conditions resulting from its own actions, and instead chose to try to perpetuate, by whatever means it had at its disposal, the institutional advantages of dollar as a reserve currency which it had vis-à-vis its main economic rivals and grab as large part of the world economic pie as it can. And this power grab was supported first of all by the role of dollar as currency in which oil is traded.
There might be some geo-strategically motives as well as the US elite in late 80th perceived that competitiveness is slipping out of the USA and the danger of deindustrialization is real. Many accuse Reagan with the desire to ride dollar status as a world reserve currency (exorbitant privilege) until the horse is dead. That's what real cowboys do in Hollywood movies... But the collapse of the main rival, the USSR vindicated this strategy and give a strong short in the arm to financialization of the economy. Actually for the next ten years can be called a triumphal ascend of financialization in the USA.
Dominance of FIRE industries clustered up and in recent years reached in the USA quite dramatic proportions. The old Bolsheviks saying "When we say Lenin we mean the Party and when we say the Party we mean Lenin" now can be reworded: "Now it we say US banks, we mean the US government and vise versa if we say US government we mean US banks".
According to the Center for Responsive Politics, the FIRE sector was and is the biggest contributor to federal candidates in Washington. Companies cannot give directly, so they leave it to bundlers to solicit maximum contributions from employees and families. They might have been brought down to earth this year, but they’ve given like Gods: Goldman Sachs, $4.8 million; Citigroup, $3.7 million; J.P. Morgan Chase & Co., $3.6 million; Merrill Lynch, $2.3 million; Lehman Brothers, $2.1 million; Bank of America, $2.1 million. Some think the long-term effect of such contributions to individual candidates was clear in the roll-call votes for the bailout.
Take the controversial first House vote on bailout of major banks on Sept. 29, 2008. According to CRP, the "ayes" had received 53 percent more contributions from FIRE since 1989 than those who voted against the bill, which ultimately failed 228 to 205. The 140 House Democrats who voted for the bill got an average of $188,572 in this election cycle, while the 65 Republicans backing it got an average of $185,461 from FIRE—about 23 percent more than the bill’s opponents received. A tinkered bill was passed four days later, 263 to 171.
According to the article Fire Sale (The American Conservative) half of Obama’s top ten contributors, together giving him nearly $2.2 million, are FIREmen. The $13 million contributed by FIRE executives to Obama campaign is probably an undercount. Democratic committee leaders are also dependent of FIRE contributions. The list includes Sen. Dodd ( please look at Senator Dodd's top donors for 2007-8 on openSecrets.org ) and Sen. Chuck Schumer ($12 million from FIRE since 1989), Rep. Barney Frank ($2.5 million), and Rep. Charlie Rangel ($4 million, the top recipient in the House). All of them have been accused of taking truckloads of contributions while failing to act on the looming mortgage crisis. Dodd finally pushed mortgage reform last year but by then as his hometown paper, The Hartford Courant stated, "the damage was done."
At the same time rise of financial capital dramatically increased instability. An oversized financial sector produces instability due to multiple positive feedback loops. In this sense we can talk about Financial Sector Induced Systemic Instability of Economy. The whole society became "House of cards", "Giant Enron" and "extension of Las Vegas". Reckless management, greed and out-right stupidity in playing derivatives games was natural consequence of the oversized financial sector, not just a human folly. In a way it was dramatic manifestation of the oversized financial sector negative influence of the economy. And in 2008 it did brought out economy to the brink of destruction. Peak oil added to suffocating effect on the economy of reckless gambling (and related debts) of financial sector producing the economic calamity that rivals Great Depression. Also, like Socialism, Casino Capitalism demands too much of its elite. And in reality, the financial elite much like Bolsheviks elite, is having its own interests above the interests of the society.
As Kevin Phillips noted "In the United States, political correctness, religious fundamentalism, and other inhibitions sometimes dumb down national debate". And the same statement is true for financial elite that became the center of power under the Casino Capitalism. Due to avalanche of greed the society became one giant Enron as money that are made from value addition in the form of manufacturing fade in significance to the volume of the money that is made from shuffling money around. In other was the Wall Street's locked USA in the situation from which there is no easy exit.
Self-reinforcing ‘positive’ feedback loops prevalent in Casino Capitalism trigger an accelerating creation of various debt instruments, interest of which at some point overwhelm the system carrying capacity. Ability to lend against good collateral is quickly exhausted. At some point apparently there is no good collateral against which lending freely was possible, even at high rates. This means that each new stage of financial innovation involves scam and fraud, on increasing scale. In other words Ponzi economy of "saving and loans" is replaced with Madoff economy.
Whether you shift the resulting huge private debt to public to increase confidence or not, the net result is of this development of events is a crisis and a huge debt that society needs to take. Actually the debt bubble in 2008 can only be compared to the debt bubble of 1933. The liquidation of Bear Sterns and Lehman was only a start of consolidation of finances and we need to find something that replace financial sector dominance in the national economy. It would be nice is some technological breakthrough happened which would lift the country out of this deep hole.
See Financial Sector Induced Systemic Instability of Economy for more details.
Like Bolshevism was marked by deification of teaching of Marx and Lenin, converting them into pseudo-religious doctrine, the Casino Capitalism has its own deified ideological doctrine. It is the ideology of Neoliberalism. The latter as an ideology and an agenda seeks to topple democratic capitalism and replace it with a de facto unaccountable autocratic government which serves as channel of a wealth transfer from the public to a rentier elite. In a way it is a spectacular example of a successful (in a very negative sense) pseudo-religious doctrine.
Addiction of the societies to disastrous politico-economical doctrines are similar to addictions to alcohol and drugs in individuals. It is not easy to recover and it takes a long, long time and a lot of misery. As dissolution of the USSR aptly demonstrated not all societies can make it. In this case the USSR elite (nomenklatura) simply shed the old ideology as it understood that it will be better off adopting ideology of neoliberal capitalism; so it was revolution from above. this abrupt switch created chaos in economics (which was applauded by Washington which under Clinton administration adopted the stance the Carnage needs to be destroyed and facilitated the process), criminal privatization of major industries, and pushed into object poverty the 99% of population of those countries. For some period under "drunk Yeltsyn" Russia sees to exist as an independent country and became a vassal of Washington.
This also means that "society at large" did not had effective brakes to the assent of financial plutocracy (aka financial oligarchy). I would add to this the computer revolution and internet that made many financial transaction qualitatively different and often dramatically cheaper that in previous history. Computers also enabled creation of new financial players like mutual funds (which created a shadow banking system with their bond funds) , hedge funds, exchange-traded funds (ETFs), as well as high-frequency trading and derivatives.
From the historical view Reaganomics also can be considered to be the US flavor of Lysenkoism with economics instead of genetics as a target. Here is how Reaganomics is defined in Wikipedia
Reaganomics (a portmanteau of "Reagan" and "economics") refers to the economic policies promoted by United States President Ronald Reagan. The four pillars of Reagan's economic policy were to:
- reduce the growth of government spending,
- reduce marginal tax rates on income from labor and capital,
- reduce government regulation of the economy,
- control the money supply to reduce inflation.
In attempting to cut back on domestic spending while lowering taxes, Reagan's approach was a departure from his immediate predecessors.
Reagan became president during a period of high inflation and unemployment (commonly referred to as stagflation), which had largely abated by the time he left office.
Please not that the Number 1 idea ("reduce government spending") was essentially a scam, a smoke screen designed to attract Rednecks as a powerful voting block. In a way this was a trick similar to one played by Bolsheviks in Russia with its "worker and peasants rule" smokescreen which covered brutal dictatorship. In reality all administrations which preached Reagonomics (including Clinton's) expanded the role of state and government spending. The number two was applied by-and-large to top 1%. The number three means deregulation in the interests of financial oligarchy and dismantling all social program that hamper profit of the latter (including privatizing of Social Security). The number fours is a scam, in the same sense as number one. As soon as financial institutions get in trouble, money are printed as if there is no tomorrow.
While the essence of Reagonomics was financial deregulation, the other important element was restoring the Gilded Age level of power of financial oligarchy which influence was diminished by FDR reforms. In this sense we can say that Reagan revolution was essentially a counter-revolution: an attempt to reverse the New Deal restrictions on financial sector and restore its dominance in the society.
Like it was the case in Bolshevism the ideology was developed and forced upon the society by a very small group of players. The key ideas of Casino Capitalism were formulated and implemented by Reagan administration with some contribution by Nixon (the role of rednecks aka "moral majority", "silent majority" as an important part of republican political base, which can be attracted to detrimental to its economic position policies by the smoke screen of false "moral" promises).
It was supported by each president after Reagan (paradoxically with Clinton having the most accomplished record -- he was the best Republican President in a very perverted way). Like in case of Lysenkoism opponents were purged and economic departments of the country were captured by principless careerists ready to tow the party line for personal enrichment. Like in case of Bolshevism, many of those special breed of careerists rotated from Republican Party into Fed and other government structures. A classic example of compulsive careerists that were used by finance sector to promote its interests was Alan Greenspan.
One of the key ideas of Reaganomics was the rejection of the sound approach that there should be a balance between too much government regulation and too little and that government role is important for smooth functioning of the market. In this area Reagan and its followers can be called Anarchists and their idea of 'free market" is a misnomer that masks the idea of "anarchic market" (corporate welfare to be exact -- as it was implemented). Emergence of corporate welfare Queens such as GS, Citi, AIG, are quite natural consequence of Reaganomics.
|Reaganomics was a the US flavor of Lysenkoism with economics instead of generics as a target... It can and should be called Economic Lysenkoism.|
The most interesting part of Reaganomics was that the power of this ideology made it possible to conditioned "working class" and middle class to act against their own economic interests. It helped to ensure the stagnation of wages during the whole 25 years period, which is close to what Soviets managed to achieve with working class of the USSR, but with much more resentment. This makes it in many ways very similar to Bolshevism as a whole, not just Lysenkoism (extremes meet or in less flattering way: "history repeats, first as a tragedy, then as farce).
Along with the term Reaganimics which implicitly stresses the deregulation, the other close term "market fundamentalism" is often used. Here is how market fundamentalism is defined (Longview Institute):
Market Fundamentalism is the exaggerated faith that when markets are left to operate on their own, they can solve all economic and social problems. Market Fundamentalism has dominated public policy debates in the United States since the 1980's, serving to justify huge Federal tax cuts, dramatic reductions in government regulatory activity, and continued efforts to downsize the government’s civilian programs.
Some level of government coercion (explicit or implicit ) is necessary for proper labeling of any pseudo-scientific theory with the term Lysenkoism. This holds true for both Market Fundamentalism (after all Reagan revolution was "revolution from above" by financial oligarchy and for financial oligarchy and hired guns from academia just do what powers that be expected) and, especially, Supply side economic. The political genius of those ideas is evident. Supply-side economics transformed Republicans from a minority party into a majority party. It allowed them to promise lower taxes, lower deficits and, in effect, unchanged spending. Why should people not like this combination? Who does not like a free lunch?
In this sense the Republican Party played the role very similar to the Communist Party of the USSR.
For example supply side economics was too bizarre and would never survive without explicit government support. This notion is supported by many influential observers. For example, in the following comment for Krugman article (Was the Great Depression a monetary phenomenon):
Market fundamentalism (neoclassical counter-revolution — to be more academic) was more of a political construct than based on sound economic theory. However, it would take a while before its toxic legacy is purged from the economics departments. Indeed, in some universities this might never happen.
Extreme deregulation and extreme regulation (Brezhnev socialism) logically meets and both represent a variant of extremely corrupt society that cannot be sustained for long (using bayonets as in the case of USSR or using reserve currency and increasing leverage as is the case of the USA). In both cases the societies were economically and ideologically bankrupt at the end.
Actually, elements of market fundamentalism looks more like religious doctrine than political philosophy — and that bonds its even closer to Lysenkoism. In both cases critics were silenced with the help of the state. It is interesting to note that Reaganomics was wiped into frenzy after the dissolution of the USSR, the country which gave birth to the term of Lysenkoism. In a way the last act of the USSR was to stick a knife in the back of the USA. As a side note I would like to stress that contrary to critics the USSR was more of a neo-feudal society with elements of slavery under Stalin. Gulag population were essentially state slaves; paradoxically a somewhat similar status is typical for illegal immigrants in industrialized countries. From this point of view this category of "state slaves" is generally more numerous that gulag inmates. Prison population also can be counted along those lines.
It look like either implicitly or explicitly Reagan's bet was on restoration of gilded Age with its dominance of financial oligarchy, an attempt to convert the USA into new Switzerland on the "exorbitant privilege" of dollar status as the global fiat currency.
Casino Capitalism is characterized by political dominance of FIRE industries (finance, insurance, and real estate) and diminished role of other and first of all manufacturing industries. It was also accompanied by the drastic growth of inequality (New Gilded Age). Its defining feature is "the triumph of the trader in assets over the long-term producer" in Martin Wolf's words.
Attempts of theoretical justification of Economic Lysenkoism fall into several major categories:
Those can be called pillars, cornerstones of Economic Lysenkoism. Each of the deserves as separate article (see links above).
Historically especially important was Chicago school of market fundamentalism promoted pseudo-scientific theories of Milton Freedman (Chicago School) as well as supply side economics.
The huge boost of Casino Capitalism was given by the collapse of the USSR in 1991. That gave a second life to Reagan era. Collapse of the USSR was used as a vindication of market fundamentalism. After it New Deal regulations were systematically destroyed. Dumped down variants of Nietzsche philosophy like bastardatized variant promoted by Russian emigrant became fashionable with an individual "creative" entrepreneur as a new Übermensch, which stands above morality.
"The word Übermensch [designates] a type of supreme achievement, as opposed to 'modern' men, 'good' men, Christians, and other nihilists ... When I whispered into the ears of some people that they were better off looking for a Cesare Borgia than a Parsifal, they did not believe their ears." Safranski argues that the combination of ruthless warrior pride and artistic brilliance that defined the Italian Renaissance embodied the sense of the Übermensch for Nietzsche. According to Safranski, Nietzsche intended the ultra-aristocratic figure of the Übermensch to serve as a Machiavellian bogeyman of the modern Western middle class and its pseudo-Christian egalitarian value system.
The instability and volatility of active markets can devalue the economic base of real lives, or in more macro-scenarios can lead to the collapse of national and regional economies. In a very interesting and grotesque way it also incorporates the key element of Brezhnev Socialism in everyday life: huge manipulation of reality by mass media to the extend that Pravda and the USSR First TV Channel look pretty objective in comparison with Fox news and Fox controlled newspapers. Complete poisoning of public discourse and relying on the most ignorant part of the population as the political base (pretty much reminiscent of how Bolsheviks played "Working Class Dictatorship" anti-intellectualism card; it can be called "Rednecks Dictatorship").
While transformation to casino capitalism was an objective development, there were specific individuals who were instrumental in killing New Deal regulations. We would single out the following twelve figures:
There is no question that Reagan and most of his followers (Greenspan, Rubin, Phil Gramm, etc) were rabid radicals blinded by ideology. But they were radicals of quite different color then FDR with disastrous consequences for society. Here again the analogy with Bolsheviks looms strong. In a way, they can be called financial terrorists inflicting huge damage on the nation and I wonder if RICO can be use to prosecute at least some of them.
In Bailout Nation (Chapter 19) Barry Ritholtz tried to rank major players that led country into the current abyss:
1. Federal Reserve Chairman Alan Greenspan
2. The Federal Reserve (in its role of setting monetary policy)
3. Senator Phil Gramm
4-6. Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings (rating agencies)
7. The Securities and Exchange Commission (SEC)
8-9. Mortgage originators and lending banks
11. The Federal Reserve again (in its role as bank regulator)
12. Borrowers and home buyers
13-17. The five biggest Wall Street firms (Bear Stearns, Lehman Brothers, Merrill Lynch,Morgan Stanley, and Goldman Sachs) and their CEOs
18. President George W. Bush
19. President Bill Clinton
20. President Ronald Reagan
21-22. Treasury Secretary Henry Paulson
23-24. Treasury Secretaries Robert Rubin and Lawrence Summers
25. FOMC Chief Ben Bernanke
26. Mortgage brokers
27. Appraisers (the dishonest ones)
28. Collateralized debt obligation (CDO) managers (who produced the junk)
29. Institutional investors (pensions, insurance firms, banks, etc.) for
buying the junk
30-31. Office of the Comptroller of the Currency (OCC); Office of Thrift
32. State regulatory agencies
33. Structured investment vehicles (SIVs)/hedge funds for buying the junk
Hyman Minsky argued that a key mechanism that pushes an economy towards a crisis is the accumulation of debt and the fact the financial system represents a positive feedback loop that tend to destabilize the system, creating ossilations in the form of boom and bust cycles. . He identified 3 types of borrowers that contribute to the accumulation of insolvent debt: Hedge Borrowers; Speculative Borrowers; and Ponzi Borrowers. That corresponds to three stages of Casino Capitalism of increasing fragility:
Growth of debt and increased levarate at some point create predocition of the crash. The stage of business cycle at which those preconditions are met is called "Minsky moment":
A Minsky moment is the point in a credit cycle or business cycle when investors are starting to have cash flow problems due to spiraling debt they have incurred in order to finance speculative or Ponzy investments.
At this point, a major selloff begins due to the fact that no counterparty can be found to bid at the high asking prices previously quoted, leading to a sudden and precipitous collapse in market clearing asset prices and a sharp drop in market liquidity.
After the collapse of the USSR there were a lot of chest thumping of the status of America as a hyper power (American exceptionalism) and the "end of history" where neoliberalism that displaced Brazhvev socialism (and wiped out the socialist camp) was supposed to reign supreme forever.
But this triumphal march of neoliberalism was short lived. The system proved to be self-destructive due to strong positive feedback look from the unregulated financial sector.
But in 2000 the first moment to pay the piper arrives. It was postponed by Iraq war and housing bubble, but reappeared in much more menacing form in 2008. In 2009 the USA experienced a classic Minsky moment with high unemployment rate and economy suppressed by (and taken hostage) by Ponzi finance institutions which threaten the very survival of the capitalist system and way of life. Huge injection freom the state halped to save the economy from disintration, but the price was very high. And after 2009 the US economy entered the period prologed stagnation, called the perios of "secular stagnation".
In events preceding 2008 the shift from speculative toward Ponzi finance was speed up by increased corruption of major players. The drive to redistribute wealth up destroyed any remnants of the rule of the law in the USA. It became a neo-feudal two casts society with "Masters of the Universe" as the upper cast (top 1% ) and "despicables" (lower 80%) as the lower cast. With some comprador strata of professional in between (top 20% or so), who generally support the upper cast.
Loweer cast experienced deterioration of the standard of living, loss of well paying jobs to outsourcing and offshoring and in 2016 revolted electing Trump, who defeated Hillary Clinton, who became a real symbol of the corruption of neoliberal system.
"As Minsky observed, capitalism is inherently unstable. As each crisis is successfully contained, it encourages greater speculation and risk taking in borrowing and lending. Financial innovation makes it easier to finance various schemes. To a large extent, borrowers and lenders operate on the basis of trial and error. If a behavior is rewarded, it will be repeated. Thus stable periods naturally lead to optimism, to booms, and to increasing fragility.
A financial crisis can lead to asset price deflation and repudiation of debt. A debt deflation, once started, is very difficult to stop. It may not end until balance sheets are largely purged of bad debts, at great loss in financial wealth to the creditors as well as the economy at large."
For more information see
For Strange the speed at which computerized financial markets work combined with their much larger size and near-universal pervasiveness is an important qualitative change, that changes the social system into what he called "casino capitalism". She actually popularized the term "Casino Capitalism" with her important book Casino Capitalism published in 1997.
One of the side effects of this change is that volatility extends globally. Approximately $1.5 trillion dollars are invested daily as foreign transactions. It is estimated that 98% of these transactions are speculative. In comparison with this casino Las Vegas looks like a aborigine village in comparison with Manhattan.
Susan Strange (June 9, 1923 - October 25, 1998) was a British academic who was influential in the field of international political economy. Her most important publications include
- Casino Capitalism,
- Mad Money,
- States and Markets and The retreat of the State: The Diffusion of Power in the World Economy.
For a quarter of a century, Susan Strange was the most influential figure in British international studies. She held a number of key academic posts in Britain, Italy and Japan. From 1978 to 1988, she was Montague Burton Professor of International Relations at the London School of Economics and Political Science (LSE), the first woman to hold this chair and a professorial position in international relations at the LSE. She was a major figure in the professional associations of both Britain and the US: she was an instrumental founding member and first Treasurer of the British International Studies Association (BISA)  and the first female President of the International Studies Association (ISA) in 1995.
It was predominantly as a creative scholar and a forceful personality that she exercised her influence. She was almost single-handedly responsible for creating ‘international political economy’ and turning it into one of the two or three central fields within international studies in Britain, and she defended her creation with such robustness, and made such strong claims on its behalf, that her influence was felt—albeit not always welcomed—in most other areas of the discipline. She was one of the earliest and most influential campaigners for the closer integration of the study of international politics and international economics in the English language scholarship.
In the later period of her career, alongside the financial analyses offered in Casino Capitalism (the analysis in which she felt was vindicated by the South-East Asian financial crisis) and Mad Money, Strange's contributions to the field include her characterisation of the four different areas (production, security, finance and knowledge) through which power might be exercised in International Relations. This understanding of what she termed "structural power", formed the basis of her argument against the theory of American Hegemonic Decline in the early eighties.
Her analysis particularly in States and Markets focused on what she called the ‘market-authority nexus’, the see-saw of power between the market and political authority. The overall argument of her work suggested that the global market had gained significant power relative to states since the 1970s.
This led her to dub the Westphalia system Westfailure. She argued that a ‘dangerous gap’ was emerging between territorially-bound nation states and weak or partial intergovernmental cooperation in which markets had a free hand which could be constructive or destructive.
Among important early critiques of casino capitalism was John K. Galbraith. He promoted a pretty novel idea that the major economic function of Governments is to strengthen countervailing powers to achieve some kind of balance between capital and labor.
While unions are far from being perfect and tend to slide into corruption due to "iron law of oligarchy" when thier management stop representing interests of thwe worksers and start to reprreesnt interest of thier own narry strate of fat cats, there were the only sizable countewailing power that made the New Seal possible.
His prediction proved to be wrong as government actually represent the capitalist class and is not that interested in creating this balance, which was convincingly demonstrated by Thatcher and Reagan. Both Britain and the USA start sliding into a new form of corporations, called neoliberalism which actually does not allocate any space for uniot at the negotiation table and strive for their complete elimination and "atomization" of work force, when each invididual is up to himself to find employment and group solidarity is suppressed by instilling neoliberal ideology in schools and universitites as well as via MSM (which in the USA surprisingly never were allowed to use the work neoliberlaism, as if it represents some secret Masonic cult)
And it does not look like there is any renewed support of unions right (including important right to organize) at the post subprime/derivatives/shadow_banking crisis stage of neoliberalism, when neoliberal ideology became sufficiently discredited to allow rise of populist politicians such as Trump.
Still John K. Galbraith critique of primitive market fundamentalism of Milton Freedman and the whole pseudoscience of neoclassical economics which like Marxist political economy is one of there pillars of neoliberalism (along with Randism as philosophy and Neoconservatism or "Trotskyism for the rich" in politics), still has its value today. As Joseph Stiglitz noted (CSMonitor, Dec 28, 2006):
...In many ways, Galbraith was a more critical observer of economic reality.
Driven to understand market realities
Galbraith's vivid depictions of the good, bad, and ugly of American capitalism remain a sorely needed reminder that all is not quite as perfect as the perfect market models – with their perfect competition, perfect information, and perfectly rational consumers – upon which so much of Friedman's analysis depended.
Galbraith, who cut his teeth studying agricultural economics, strove to understand the world as it was, with all the problems of unemployment and market power that simplistic models of competitive markets ignore. In those models, unemployment didn't exist. Galbraith knew that made them fatally flawed
... ... ...
In his early research, Galbraith attempted to explain what had brought on the Great Crash of 1929 – including the role of the stock market's speculative greed fed by (what would today be called) irrational exuberance. Friedman ignored speculation and the failure of the labor market as he focused on the failures of the Federal Reserve. To Friedman, government was the problem, not the solution.
What Galbraith understood, and what later researchers (including this author) have proved, is that Adam Smith's "invisible hand" – the notion that the individual pursuit of maximum profit guides capitalist markets to efficiency – is so invisible because, quite often, it's just not there. Unfettered markets often produce too much of some things, such as pollution, and too little of other things, such as basic research. As Bruce Greenwald and I have shown, whenever information is imperfect – that is, always – markets are inefficient; hence the need for government action.
Galbraith reminded us that what made the economy work so well was not an invisible hand but countervailing powers. He had the misfortune of articulating these ideas before the mathematical models of game theory were sufficiently developed to give them expression. The good news is that today, more attention is being devoted to developing models of these bargaining relationships, and to complex, dynamic models of economic fluctuations in which speculation may play a central role.
While Friedman never really appreciated the limitations of the market, he was a forceful critic of government. Yet history shows that in every successful country, the government had played an important role. Yes, governments sometimes fail, but unfettered markets are a certain prescription for failure. Galbraith made this case better than most.
Galbraith knew, too, that people aren't just rational economic actors, but consumers, contending with advertising, political persuasion, and social pressures. It was because of his close touch with reality that he had such influence on economic policymaking, especially during the Kennedy-Johnson years.
Galbraith's penetrating insights into the nature of capitalism – as it is lived, not as it is theorized in simplistic models – has enhanced our understanding of the market economy. He has left an intellectual legacy for generations to come. And he has left a gap in our intellectual life: Who will stand up against the economics establishment to articulate an economic vision that is both in touch with reality and comprehensible to ordinary citizens?
Galbraith was vindicated in his belief that the only economics possible is political economics and that government is always an agent of dominant class. As such it always pursue poklitics favorable to this class, just making marginal efforts to prevent the open revolt of lower classes.
In 2008 neoliberal economist such as Krugman and (to a lesse extent) Stiglitz both have eaten humble pie, because according to neoclassical economics the crises should not have happened. Both should now reread Galbraith's The Great Crash: 1929 (see also extracts). Krugman also need to shred his previous writings with this mathiness execises of using differential equations to justify the dominance of financial oligarchy, and eat them with borsch ;-)
BTW it is interesting that in 1996 neoliberal stooge Paul Krugman criticized limitations of Galbright vision in the following way:
To be both a liberal and a good economist you must have a certain sense of the tragic--that is, you must understand that not all goals can be attained, that life is a matter of painful tradeoffs. You must want to help the poor, but understand that welfare can encourage dependency. You must want to protect those who lose their jobs, but admit that generous unemployment benefits can raise the long-term rate of unemployment. You must be willing to tax the affluent to help those in need, but accept that too high a rate of taxation can discourage investment and innovation.
To the free-market conservative, these are all arguments for government to do nothing, to accept whatever level of poverty and insecurity the market happens to produce. A serious liberal does not reply to such conservatives by denying that there are any trade-offs at all; he insists, rather, that some trade-offs are worth making, that helping the poor and protecting the unlucky may have costs but will ultimately make for a better society.
The revelation one gets from reading John Kenneth Galbraith's The Good Society is that Galbraith--who is one of the world's most celebrated intellectuals, and whom one would expect to have a deeper appreciation of the complexity of the human condition than a mere technical economist would -- lacks this tragic sense. Galbraith's vision of the economy is one without shadows, in which what is good for social justice always turns out to have no unfavorable side effects. If this vision is typical of liberal intellectuals, the ineffectuality of the tribe is not an accident: It stems from a deep-seated unwillingness to face up to uncomfortable reality.
Similar limited understanding of Galbright is demonstrated in London Times (cited from comment to Economist's View blog) :
Some motifs of Galbraith’s work have entered popular consciousness. Galbraith wrote of private opulence amid public squalor, illustrating it with a memorable metaphor of a family that travels by extravagant private car to picnic by a polluted river.
Yet while arguing for increased public expenditure on welfare, Galbraith gave scant attention to the limits of that approach. His writings perpetuate a debilitating weakness of modern liberalism: a reluctance to acknowledge that resources are scarce.
In Galbraith’s scheme, said Herbert Stein, the former chairman of the Council of Economic Advisers: “The American people were only asked whether they wanted cleaner air and water . . . The answers to such questions seemed obvious — but they were not the right questions.”
This idea of "casino capitalism" as a driver of financial instability was developed further in the book The Crisis of Global Capitalism by prominent financial speculator and staunch neoliberal George Soros (1998), who after Minsky highlights the potential for disequilibrium in the financial system, and the inability of non-market sectors to regulate markets.
the latter is a prominant feature of Casino Capitalism, which can be defined as economic system were financial barons run amok.Although the insights of the Soros critique of global capitalism are scarcely new, they were articulated with such candor and accuracy that the book made a significant impact. The following is a sampling of Soros' insights.
Bank lending also contributes to the instability, because the price of real and financial assets is set in part by their collateral value. The higher their market price rises the larger the loans banks are willing to make to their buyers to bid up prices. When the bubble bursts, the value of the assets plummets below the amount of the money borrowed against them. This forces banks to call their loans and cut back on the lending, which depresses asset prices and dries up the money supply. The economy then tanks-until credit worthiness is restored and a new boom phase begins.
When I bought shares in Lockheed and Northrop after the managements were indicted for bribery, I helped sustain the price of their stocks. When I sold sterling short in 1992, the Bank of England was on the other side of my transactions, and I was in effect taking money out of the pockets of British taxpayers. But if I had tried to take social consequences into account, it would have thrown off my risk-reward calculation, and my profits would have been reduced.
Soros argues that if he had not bought Lockheed and Northrop, then somebody else would have, and
Britain would have devalued sterling no matter what he did. "Bringing my social conscience into
the decision-making process would make no difference in the real world; but it may adversely affect
my own results." One can challenge the Soros claim that such behavior is amoral rather than immoral,
but his basic argument is accurate. His understanding that it is futile to look to individual morality
as the solution to the excesses of financial markets is all too accurate.
Publicly owned companies are single-purpose organizations-their purpose is to make money. The tougher the competition, the less they can afford to deviate. Those in charge may be well-intentioned and upright citizens, but their room for maneuver is strictly circumscribed by the position they occupy.
They are duty-bound to uphold the interests of the company. If they think that cigarettes are unhealthy or that fostering civil war to obtain mining concessions is unconscionable, they ought to quit their jobs. Their place will be taken by people who are willing to carry on.
Though not specifically mentioned by Soros, this is why corporations were in the past (at least
partially) excluded from the political processes (although it was never complete and it is well known
fact that Crusades and
Siege of Constantinople
(1204) were financed by Genoese
bankers upset by lack of access to the Byzantium markets). But at least formally other parts of the
society can define their goals and the rules of the marketplace and suppress excessive appetities
of banker, if nessesary by brute force. Financial oligarchy is incapable of distinguishing
between private corporate interests and broader public interests. And that situation became even
worse with the the global dominance of corporatism in the form of neoliberalism.
"Foreign ownership of capital deprives peripheral countries of autonomy and often hinders the development of democratic institutions. The international flow of capital is subject to catastrophic interruptions."
In times of uncertainty financial capital tends to return to its country of origin, thus depriving
countries at the periphery of the financial liquidity necessary to the function of monetized economies.
"The center's most important feature is that it controls its own economic policies and holds in its
hands the economic destinies of periphery countries."
Monetary values [under neoliberalism] have usurped the role of intrinsic values, and markets have come to dominate spheres of existence where they do not properly belong.
Law and medicine, politics, education, science, the arts, even personal relations-achievements or qualities that ought to be valued for their own sake are converted into monetary terms; they are judged by the money they fetch rather than their intrinsic value."
Because financial "capital is free to go where most rewarded, countries vie to attract and retain capital, and if they are to succeed they must give precedence to the requirements of international capital over other social objectives.
One notable later researcher of casino capitalism, especially "free market" fundamentalism propaganda Cambridge University researcher Ha-Joon Chang. In 2011 he published a fascinating book 23 Things They Don't Tell You About Capitalism. Here is a Youtube lecture at LSE (23 Things They Don't Tell You About Capitalism ). We will reproduce two Amazon reviews that shed some light at the key ideas of the book:
William PodmoreLoyd E. Eskildson
Ha-Joon Chang, Reader in the Political Economy of Development at Cambridge University, has written a fascinating book on capitalism's failings. He also wrote the brilliant Bad Samaritans. Martin Wolf of the Financial Times says he is `probably the world's most effective critic of globalization'.
Chang takes on the free-marketers' dogmas and proposes ideas like
- there is no such thing as a free market;
- the washing machine has changed the world more than the internet has --[ I respectfully disagree --NNB];
- we do not live in a post-industrial age;
- globalization isn't making the world richer;
- governments can pick winners;
- some rules are good for business;
- US (and British) CEOs are overpaid;
- more education does not make a country richer;
- and equality of opportunity, on its own, is unfair.
He notes that the USA does not have the world's highest living standard. Norway, Luxemburg, Switzerland, Denmark, Iceland, Ireland, Sweden and the USA, in that order, had the highest incomes per head. On income per hours worked, the USA comes eighth, after Luxemburg, Norway, France, Ireland, Belgium, Austria and the Netherlands. Japan, Switzerland, Singapore, Finland and Sweden have the highest industrial output per person.
Free-market politicians, economists and media have pushed policies of de-regulation and pursuit of short-term profits, causing less growth, more inequality, more job insecurity and more frequent crises. Britain's growth rate in income per person per year was 2.4 per cent in the 1960s-70s and 1.7 per cent 1990-2009. Rich countries grew by 3 per cent in the 1960s-70s and 1.4 per cent 1980-2009. Developing countries grew by 3 per cent in the 1960s-70s and 2.6 per cent 1980-2009. Latin America grew by 3.1 per cent in the 1960s-70s and 1.1 per cent 1980-2009, and Sub-Saharan Africa by 1.6 per cent in the 1960s-70s and 0.2 per cent 1990-2009. The world economy grew by 3.2 per cent in the 1960s-70s and 1.4 per cent 1990-2009.
So, across the world, countries did far better before Thatcher and Reagan's `free-market revolution'. Making the rich richer made the rest of us poorer, cutting economies' growth rates, and investment as a share of national output, in all the G7 countries.
Chang shows how free trade is not the way to grow and points out that the USA was the world's most protectionist country during its phase of ascendancy, from the 1830s to the 1940s, and that Britain was one of world's the most protectionist countries during its rise, from the 1720s to the 1850s.
He shows how immigration controls keep First World wages up; they determine wages more than any other factor. Weakening those controls, as the EU demands, lowers wages.
He challenges the conventional wisdom that we must cut spending to cut the deficit. Instead, we need controls capital, on mergers and acquisitions, and on financial products. We need the welfare state, industrial policy, and huge investment in industry, infrastructure, worker training and R&D.
As Chang points out, "Even though financial investments can drive growth for a while, such growth cannot be sustained, as those investments have to be ultimately backed up by viable long-term investments in real sector activities, as so vividly shown by the 2008 financial crisis."
This book is a commonsense, evidence-based approach to economic life, which we should urge all our friends and colleagues to read.
The 2008 'Great Recession' demands re-examination of prevailing economic thought - the dominant paradigm (post 1970's conservative free-market capitalism) not only failed to predict the crisis, but also said it couldn't occur in today's free markets, thanks to Adam Smith's 'invisible hand.' Ha-Joon Chang provides that re-examination in his "23 Things They Don't Tell You About Capitalism." Turns out that the reason Adam Smith's hand was not visible is that it wasn't there. Chang, economics professor at the University of Cambridge, is no enemy of capitalism, though he contends its current conservative version should be made better. Conventional wisdom tells us that left alone, markets produce the most efficient and just outcomes - 'efficient' because businesses and individuals know best how to utilize their resources, and 'just' because they are rewarded according to their productivity. Following this advice, countries have deregulated businesses, reduced taxes and welfare, and adopted free trade. The results, per Chang, has been the opposite of what was promised - slower growth and rising inequality, often masked by rising credit expansion and increased working hours. Alternatively, developing Asian countries that grew fast did so following a different version of capitalism, though to be fair China's version to-date has also produced much greater inequality. The following summarizes some of Chang's points:
- "There is no such thing as a free market" - we already have hygiene standards in restaurants, ban child labor, pollution, narcotics, bribery, and dangerous workplaces, require licenses for professions such as doctors, lawyers, and brokers, and limit immigration. In 2008, the U.S. used at least $700 billion of taxpayers' money to buy up toxic assets, justified by President Bush on the grounds that it was a necessary state intervention consistent with free-market capitalism. Chang's conclusion - free-marketers contending that a certain regulation should not be introduced because it would restrict market freedom are simply expressing political opinions, not economic facts or laws.
- "Companies should not be run in the interest of their owners." Shareholders are the most mobile of corporate stakeholders, often holding ownership for but a fraction of a second (high-frequency trading represents 70% of today's trading). Shareholders prefer corporate strategies that maximize short-term profits and dividends, usually at the cost of long-term investments. (This often also includes added leverage and risk, and reliance on socializing risk via 'too big to fail' status, and relying on 'the Greenspan put.') Chang adds that corporate limited liability, while a boon to capital accumulation and technological progress, when combined with professional managers instead of entrepreneurs owning a large chunk (e.g.. Ford, Edison, Carnegie) and public shares with smaller voting rights (typically limited to 10%), allows professional managers to maximize their own prestige via sales growth and prestige projects instead of maximizing profits. Another negative long-term outcome driven by shareholders is increased share buybacks (less than 5% of profits until the early 1980s, 90% in 2007, and 280% in 2008) - one economist estimates that had GM not spent $20.4 billion on buybacks between 1986 and 2002 it could have prevented its 2009 bankruptcy. Short-term stockholder perspectives have also brought large-scale layoffs from off-shoring. Governments of other countries encourage longer-term thinking by holding large shares in key enterprises (China Mobile, Renault, Volkswagen), providing greater worker representation (Germany's supervisory boards), and cross-shareholding among friendly companies (Japan's Toyota and its suppliers).
- "Free-market policies rarely make poor countries rich." With a few exceptions, all of today's rich countries, including Britain and the U.S., reached that status through protectionism, subsidies, and other policies that they and their IMF, WTO, and World Bank now advise developing nations not to adopt. Free-market economists usually respond that the U.S. succeeded despite, not because of, protectionism. The problem with that explanation is the number of other nations paralleling the early growth strategy of the U.S. and Britain (Austria, Finland, France, Germany, Japan, Korea, Singapore, Sweden, Taiwan), and the fact that apparent exceptions (Hong Kong, Switzerland, The Netherlands) did so by ignoring foreign patents (a free-market 'no-no'). Chang believes the 'official historians' of capitalism have been very successful re-writing its history, akin to someone trying to 'kick away the ladder' with which they had climbed to the top. He also points out that developing nations that stick to their Ricardian 'comparative advantage,' per the conservatives prescription, condemn themselves to their economic status quo.
- "We do not live in a post-industrial age." Most of the fall in manufacturing's share of total output is not due to a fall in the quantity of manufactured goods, but due to the fall in their prices relative to those for services, caused by their faster productivity growth. A small part of deindustrialization is due to outsourcing of some 'manufacturing' activities that used to be provided in-house - e.g.. catering and cleaning. Those advising the newly developing nations to skip manufacturing and go directly to providing services forget that many services mainly serve manufacturing firms (finance, R&D, design), and that since services are harder to export, such an approach will create balance-of-payment problems. (Chang's preceding points directly contradict David Ricardo's law of comparative advantage - a fundamental free market precept. Chang's example of how Korea built Pohang Steel into a strong economic producer, despite lacking experienced managers and natural resources, is another.)
- "The U.S. does not have the highest living standard in the world." True, the average U.S. citizen has greater command over goods and services than his counterpart in almost any other country, but this is due to higher immigration, poorer employment conditions, and working longer hours for many vs. their foreign counterparts. The U.S. also has poorer health indicators and worse crime statistics. We do have the world's second highest income per capita - Luxemburg's higher, but measured in terms of purchasing power parity (PPP) the U.S. ranks eighth. (The U.S. doesn't have the fastest growing economy either - China is predicted to pass the U.S. in PPP this coming decade.) Chang's point here is that we should stop assuming the U.S. provides the best economic model. (This is already occurring - the World Bank's chief economist, Justin Lin, comes from China.)
- "Governments can pick winners." Chang cites examples of how the Korean government built world-class producers of steel (POSCO), shipbuilding (Hyundai), and electronics (LG), despite lacking raw materials or experience for those sectors. True, major government failures have occurred - Europe's Concorde, Indonesia's aircraft industry, Korea's promotion of aluminum smelting, and Japan's effort to have Nissan take over Honda; industry, however, has also failed - e.g.. the AOL-Time Warner merger, and the Daimler-Chrysler merger. Austria, China, Finland, France, Japan, Norway, Singapore (in numerous other areas), and Taiwan have also done quite well with government-picked winners. Another problem is that business and national interests sometimes clash - e.g.. American firms' massive outsourcing has undermined the national interest of maintaining full employment. (However, greater unbiased U.S. government involvement would be difficult due to the 10,000+ corporate lobbyists and billions in corporate campaign donations - $500 million alone from big oil in 2009-10.) Also interesting to Chang is how conservative free marketing bankers in the U.S. lined up for mammoth low-cost loans from the Federal Reserve at the beginning of the Great Recession. Government planning allows minimizing excess capacity, maximizing learning-curve economies and economies of scale and scope; operational performance is enhanced by also forcing government-owned or supported firms into international competition. Government intervention (loans, tariffs, subsidies, prohibiting exports of needed raw materials, building infrastructure) are necessary for emerging economies to move into more sophisticated sectors.
- "Making rich people richer doesn't make the rest of us richer." 'Trickle-down' economics is based on the belief that the poor maximize current consumption, while the rich, left to themselves, mostly invest. However, the years 1950-1973 saw the highest-ever growth rates in the U.S., Canada, Australia, and New Zealand, despite increased taxation of the rich. Before the 'Golden Age,' per capita income grew at 1-1.5%/year; during the Golden Age it grew at 2-3% in the U.S. Since then, tax cuts for the rich and financial deregulation have allowed greater paychecks for top managers and financiers, and between 1979 and 2006 the top 0.1% increased their share of national income from 3.5% to 11.6%. The result - investment as a ratio of national output has fallen in all rich economies and the pace at which the total economic pie grew decreased.
- "U.S. managers are over-priced." First, relative to their predecessors (about 10X those in the 1960s; now 300-400X the average worker), despite the latter having run companies more successfully, in relative terms. Second, compared to counterparts in other rich countries - up to 20X. (Third, compared to counterparts in developing nations - e.g.. JPMorgan Chase, world's 4th largest bank, paid its CEO $19.6 million in 2008, vs. the CEO of the Industrial and Commercial Bank of China, the world's largest, being paid $234,700. Read more ›
Willem Buiter in his FT article After the Crisis Macro Imbalance, Credibility and Reserve-Currency suggested that after financial crisis of 2008 there might be very long a painful deleveraging period aka secular stagnation. He was right.
In short each financial crisis make recovery longer and longer. That's why the US will most likely face a long period of stagnation: the digestion of huge excessive debt of the private sector might well take a decade:
Since the excess of debt is relative to income and GDP, the lower the rate of growth, the longer the required period of digestion. This explains for the paradox of trying to stimulate consumption when the economy faces a monumental crisis provoked exactly by excessive debt and excessive consumption. A cartoon line best captured the spirit of it: "country addicted to speculative bubbles desperately searches a new bubble to invest in. "
... ... ...
The roots of the crisis are major international macroeconomic imbalances. Despite the fact that the excesses of the financial system were instrumental to lead these imbalances further than otherwise possible, insufficient regulation should not be viewed as the main factor behind the crisis. The expenditure of central countries, spinned by all sort of financial innovations created by a globalized financial system, was the engine of world growth. When debt became clearly excessive in central countries and the debt-financed expenditure cycle came to an end, the ensuing crisis paralyzed the world economy. With the lesson of 1929 well assimilated, American monetary policy became aggressively expansionist. The Fed inundated the economy with money and credit, in the attempt to avoid a deep depression. Even if successful, the economies of the US and the other central countries, given the burden of excessive debt, are likely to remain stagnant under the threat of deflation for the coming years. The assumption of troubled assets by the public sector, in order to avoid the collapse of the financial system, might succeed, but at the cost of a major increase in public debt. Fiscal policy is not efficient to restart the economy when the private sector remains paralyzed by excessive debt. Even if a coordinated effort to increase public expenditure is successful, the central economies will remain stagnant for as long as the excessive indebtedness of the private sector persists. The period of digestion of excess debt will be longer than the usual recessive cycle. Since imports represent a drain in the effort to reanimate domestic demand through public expenditure, while exports, on the contrary, contribute to the recovery of internal demand, the temptation to central economies to also adopt a protectionist stance will be strong.
Willem Buiter also defined ‘cognitive regulatory capture’ which existed during the Greenspan years and when the Fed were just an arm of Wall Street.
This regulatory capture has resulted in an excess sensitivity of the Fed to financial market and financial sector concerns and fears and in an overestimation of the strength of the link between financial market turmoil and financial sector deleveraging and capital losses on the one hand, and the stability and prosperity of the wider economy on the other hand. The paper gives five examples of recent behavior by the Fed that are most readily rationalized with the assumption of regulatory capture. The abstract of the paper follows next. The latest version of the entire enchilada can be found here. Future revisions will also be found there.
No. 1: Reagan Fires Fed Chairman Volcker and Replaces Him With Greenspan in 1987:
Volcker also understood that financial markets need to be regulated. Reagan wanted someone who did not believe any such thing, and he found him in a devotee of the objectivist philosopher and free-market zealot Ayn Rand.
If you appoint an anti-regulator as your enforcer, you know what kind of enforcement you’ll get. A flood of liquidity combined with the failed levees of regulation proved disastrous.
Greenspan presided over not one but two financial bubbles.
I had opposed repeal of Glass-Steagall. The proponents said, in effect, Trust us: we will create Chinese walls to make sure that the problems of the past do not recur. As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest—toward short-term self-interest, at any rate, rather than Tocqueville’s "self interest rightly understood."
Stiglitz also refers to a 2004 decision by the SEC "to allow big investment banks to increase their debt-to-capital ratio (from 12:1 to 30:1, or higher) so that they could buy more mortgage-backed securities, inflating the housing bubble in the process."
Once more, it was deregulation run amuck, and few even noticed.
The Bush administration was providing an open invitation to excessive borrowing and lending—not that American consumers needed any more encouragement.
Here he refers to bad accounting, the failure to address problems with stock options, and the incentive structures of ratings agencies like Moodys that led them to give high ratings to toxic assets.
Valuable time was wasted as Paulson pushed his own plan, "cash for trash," buying up the bad assets and putting the risk onto American taxpayers. When he finally abandoned it, providing banks with money they needed, he did it in a way that not only cheated America’s taxpayers but failed to ensure that the banks would use the money to re-start lending. He even allowed the banks to pour out money to their shareholders as taxpayers were pouring money into the banks.
The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal. Looking back at that belief during hearings this fall on Capitol Hill, Alan Greenspan said out loud, "I have found a flaw." Congressman Henry Waxman pushed him, responding, "In other words, you found that your view of the world, your ideology, was not right; it was not working." "Absolutely, precisely," Greenspan said. The embrace by America—and much of the rest of the world—of this flawed economic philosophy made it inevitable that we would eventually arrive at the place we are today.
The flawed economic philosophy brought by Reagan, and embraced by so many, brought us to this day. Ideas have consequences, especially when we stop empirically testing them. Republican economics have created great pain to America and harmed our national interest.
The flaw that Greenspan found was always there: self-regulation does not work. As Stiglitz said:
As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest — toward short-term self-interest
Yes, for all their claims to science, the premise conflicts with tendencies of people.
This is the real legacy of Ronald Reagan and Alan Greenspan:
The whole scheme was kick-started under Ronald Reagan. Between his tax cuts for the rich and the Greenspan Commission’s orchestrated Social Security heist, working Americans lost out in a generational wealth transfer shift now exceeding $1 trillion annually from 90 million working class households to for-profit corporations and the richest 1% of the population. It created an unprecedented wealth disparity that continues to grow, shames the nation and is destroying the bedrock middle class without which democracy can’t survive.
Greenspan helped orchestrate it with economist Ravi Batra calling his economics "Greenomics" in his 2005 book "Greenspan’s Fraud." It "turns out to be Greedomics" advocating anti-trust laws, regulations and social services be ended so "nothing....interfere(s) with business greed and the pursuit of profits."
In Orwell's Animal Farm all animals are equal - except that some are more equal than others. All in the spirit of law, order and the proper functioning of society, of course. Fittingly, the animals that have chosen this role by themselves and for themselves, are the pigs.
Cut to US financial markets today. After years of swinish behavior more reminiscent of Animal House than anything else, the pigs are threatening to destroy the entire farm. As if it wasn't enough that they devoured all the "free market" food available and inundated the world with their excreta, they now wish to be put on the public trough. Truly, some businessmen believe they are more equal than others.
But do not blame the pigs; they are expected to act as swine nature dictates. The fault lies entirely with the farmers, those authorities entrusted by the people to oversee the farm because they supposedly knew better. While the pigs were rampaging and tearing the place apart, they were assuring us all that farms function best when animals are free to do as they please, guided solely by invisible hooves. No regulation, no oversight, no common sense. Oh yes, and pigs fly..
So what is to be done now? Two things:
- (a) Let financial markets sort themselves out, but with rock solid backing for bank depositors, pension funds and public institutions. The public purse should not be used to bail out - directly or indirectly - speculators in hedge funds, private equity funds and the like. Those that live by the leverage sword can defend themselves or perish by credit destruction.
- (b) Revamp public policy towards increasing earned income for working people.
In other words, the focus from now on should be on adding value by means of work and savings (capital formation), instead of inflating assets and borrowing.
Furthermore, we should realize that in a world already inhabited by close to 7 billion people and beset by resource depletion and environmental degradation, defending growth for growth's sake is a losing proposition. The wheels are already wobbling on the Permagrowth model; pumping harder on the accelerator is not going to make it go any faster and will likely result in a fatal crash.
Debt, and finance in general, should be left to re-size downwards to a level that better reflects the carrying capacity of our world. The Fed's current actions are shortsighted and "conservative" in the worst interpretation of the words: they are designed to artificially maintain debt at levels that myopically projects growth as far as the eye can see.
What level of resizing may be necessary? I hope not as much as at Bear Stearns, which got itself bought by Morgan at buzz-saw prices: $2 per share represents a 98% discount from its $84 book value. What scares me, though, is the statement by Morgan's CFO, who said the price reflected the risk the firm was taking, even though he was comfortable with the valuation of assets in Bear's books. It "...gives us the flexibility and margin of error that's appropriate given the speed at which the transaction came together", he said.
If it takes a 98% discount and the explicit guarantee of the Fed for a large portion of assets to buy one of the largest investment banks in the world, where should all other financial firms be trading at? ....Hello? Anyone? Is that a great big silence I hear, or the sound of credit imploding into a vacuum?
May 23, 2019 | www.unz.com
No other country in the Middle East is as important in countering America's rush to provide Israel with another war than Iraq. Fortunately for Iran, the winds of change in Iraq and the many other local countries under similar threat, thus, make up an unbroken chain of border to border support. This support is only in part due to sympathy for Iran and its plight against the latest bluster by the Zio-American bully.
In the politics of the Middle East, however, money is at the heart of all matters. As such, this ring of defensive nations is collectively and quickly shifting towards the new Russo/Sino sphere of economic influence. These countries now form a geo-political defensive perimeter that, with Iraq entering the fold, make a US ground war virtually impossible and an air war very restricted in opportunity.
If Iraq holds, there will be no war in Iran.
In the last two months, Iraq parliamentarians have been exceptionally vocal in their calls for all foreign military forces- particularly US forces- to leave immediately. Politicians from both blocs of Iraq's divided parliament called for a vote to expel US troops and promised to schedule an extraordinary session to debate the matter ."Parliament must clearly and urgently express its view about the ongoing American violations of Iraqi sovereignty," said Salam al-Shimiri, a lawmaker loyal to the populist cleric Moqtada al-Sadr .
Iraq's ambassador to Moscow, Haidar Mansour Hadi, went further saying that Iraq "does not want a new devastating war in the region." He t old a press conference in Moscow this past week, "Iraq is a sovereign nation. We will not let [the US] use our territory," he said. Other comments by Iraqi Prime Minister Adil Abdul-Mahdi agreed. Other MPs called for a timetable for complete US troop withdrawal.
Then a motion was introduced demanding war reparations from the US and Israel for using internationally banned weapons while destroying Iraq for seventeen years and somehow failing to find those "weapons of mass destruction."
As Iraq/Iran economic ties continue to strengthen, with Iraq recently signing on for billions of cubic meters of Iranian natural gas, the shift towards Russian influence- an influence that prefers peace- was certified as Iraq sent a delegation to Moscow to negotiate the purchase of the Russian S-400 anti-aircraft system.
To this massive show of pending democracy and rapidly rising Iraqi nationalism, US Army spokesman, Colonel Ryan Dillon, provided the kind of delusion only the Zio-American military is known for, saying,
"Our continued presence in Iraq will be conditions-based, proportional to need, in coordination with and by the approval of the Iraqi government."
Good luck with that.
US influence in Iraq came to a possible conclusion this past Saturday, May 18, 2019, when it was reported that the Iraqi parliament would vote on a bill compelling the invaders to leave . Speaking about the vote on the draft bill, Karim Alivi, a member of the Iraqi parliament's national security and defense committee, said on Thursday that the country's two biggest parliamentary factions -- the Sairoon bloc, led by Shia cleric Muqtada al-Sadr, and the Fatah alliance, headed by secretary general of the Badr Organization, Hadi al-Ameri -- supported the bill. Strangely, Saturday's result has not made it to the media as yet, and American meddling would be a safe guess as to the delay, but the fact that this bill would certainly have passed strongly shows that Iraq well understands the weakness of the American bully: Iraq's own US militarily imposed democracy.
Iraq shares a common border with Iran that the US must have for any ground war. Both countries also share a similar religious demographic where Shia is predominant and the plurality of cultures substantially similar and previously living in harmony. Both also share a very deep seeded and deserved hatred of Zio- America. Muqtada al-Sadr, who, after coming out first in the 2018 Iraqi elections, is similar to Hizbullah's Hassan Nasrallah in his religious and military influence within the well trained and various Shia militias. He is firmly aligned with Iran as is Fattah Alliance. Both detest Zio- America.
A ground invasion needs a common and safe border. Without Iraq, this strategic problem for US forces becomes complete. The other countries also with borders with Iran are Armenia, Azerbaijan, Turkmenistan, Turkey, Afghanistan and Pakistan. All have several good reasons that they will not, or cannot, be used for ground forces.
With former Armenian President Robert Kocharian under arrest in the aftermath of the massive anti-government 2018 protests, Bolton can check that one off the list first. Azerbaijan is mere months behind the example next door in Armenia, with protests increasing and indicating a change towards eastern winds. Regardless, Azerbaijan, like Turkmenistan, is an oil producing nation and as such is firmly aligned economically with Russia. Political allegiance seems obvious since US influence is limited in all three countries to blindly ignoring the massive additional corruption and human rights violations by Presidents Ilham Aliyev and Gurbanguly Berdimuhamedow .
However, Russian economic influence pays in cash. Oil under Russian control is the lifeblood of both of these countries. Recent developments and new international contracts with Russia clearly show whom these leaders are actually listening to.
Turkey would appear to be firmly shifting into Russian influence. A NATO member in name only. Ever since he shot down his first- and last – Russian fighter jet, Turkish president Recep Tayyip Erdogan has thumbed his nose at the Americans. Recently he refused to succumb to pressure and will receive Iranian oil and, in July, the Russian S-400 anti-aircraft/missile system. This is important since there is zero chance Putin will relinquish command and control or see them missiles used against Russian armaments. Now, Erdogan is considering replacing his purchase of thirty US F-35s with the far superior Russian SU- 57 and a few S-500s for good measure.
Economically, America did all it could to stop the Turk Stream gas pipeline installed by Russia's Gazprom, that runs through Turkey to eastern Europe and will provide $billions to Erdogan and Turkey . It will commence operation this year. Erdogan continues to purchase Iranian oil and to call for Arab nations to come together against US invasion in Iran. This week, Turkish Defense Minister Hulusi Akar renewed Turkey's resolve, saying his country is preparing for potential American sanctions as a deadline reportedly set by the US for Ankara to cancel the S-400 arms deal with Russia or face penalties draws near.
So, Turkey is out for both a ground war and an air war since the effectiveness of all those S-400's might be put to good use if America was to launch from naval positions in the Mediterranean. Attacking from the Black Sea is out since it is ringed by countries under Russo/Sino influence and any attack on Iran will have to illegally cross national airspace aligned with countries preferring the Russo/Sino alliance that favours peace. An unprovoked attack would leave the US fleet surrounded with the only safe harbours in Romania and Ukraine. Ships move much slower than missiles.
Afghanistan is out, as the Taliban are winning. Considering recent peace talks from which they walked out and next slaughtered a police station near the western border with Iran, they have already won. Add the difficult terrain near the Iranian border and a ground invasion is very unlikely
Although new Pakistani President Amir Khan has all the power and authority of a primary school crossing guard, the real power within the Pakistani military, the ISI, is more than tired of American influence . ISI has propagated the Taliban for years and often gave refuge to Afghan anti-US forces allowing them to use their common border for cover. Although in the past ISI has been utterly mercenary in its very duplicitous- at least- foreign allegiances, after a decade of US drone strikes on innocent Pakistanis, the chance of ground-based forces being allowed is very doubtful. Like Afghanistan terrain also increases this unlikelihood.
Considerations as to terrain and location for a ground war and the resulting failure of not doing so was shown to Israel previously when, in 2006 Hizbullah virtually obliterated its ground attack, heavy armour and battle tanks in the hills of southern Lebanon. In further cautionary detail, this failure cost PM Ehud Olmert his job.
For the Russo/Sino pact nations, or those leaning in their direction, the definition of national foreign interest is no longer military, it is economic. Those with resources and therefore bright futures within the expanding philosophy and economic offerings of the Russo/Sino pact have little use any longer for the "Sorrows of Empire." These nation's leaders, if nothing more than to line their own pockets, have had a very natural epiphany: War is not, for them, profitable.
For Iran, the geographic, economic and therefore geo-political ring of defensive nations is made complete by Syria, Lebanon and Iraq. Syria, like Iraq, has every reason to despise the Americans and similar reasons to embrace Iran, Russia, China and border neighbour Lebanon. Syria now has its own Russian S-300 system which is already bringing down Israeli missiles. It is surprising that Lebanon has not requested a few S-300s of their own. No one knows what Hizbullah has up its sleeve, but it has been enough to keep the Israelis at bay. Combined with a currently more prepared Lebanese army, Lebanon under the direction of Nasrallah is a formidable nation for its size. Ask Israel.
Lebanon and Syria also take away the chance of a ground-based attack, leaving the US Marines and Army to stare longingly across the Persian Gulf open waters from Saudi Arabia or one of its too few and militarily insignificant allies in the southern Gulf region.
Friendly airspace will also be vastly limited, so also gone will be the tactical element of surprise of any incoming attack. The reality of this defensive ring of nations means that US military options will be severely limited. The lack of a ground invasion threat and the element of surprise will allow Iranian defences to prioritize and therefore be dramatically more effective. As shown in a previous article, "The Return of the Madness of M.A.D," Iran like Russia and China, after forty years of US/Israeli threats, has developed new weapons and military capabilities, that combined with tactics will make any direct aggression towards it by American forces a fair fight.
If the US launches a war it will go it alone except for the few remaining US lapdogs like the UK, France, Germany and Australia, but with anti-US emotions running as wild across the EU as in the southern Caspian nations, the support of these Zionist influenced EU leaders is not necessarily guaranteed.
Regardless, a lengthy public ramp-up to stage military assets for an attack by the US will be seen by the vast majority of the world- and Iran- as an unprovoked act of war. Certainly at absolute minimum Iran will close the Straits of Hormuz, throwing the price of oil skyrocketing and world economies into very shaky waters. World capitalist leaders will not be happy. Without a friendly landing point for ground troops, the US will either have to abandon this strategy in favour of an air war or see piles of body bags of US servicemen sacrificed to Israeli inspired hegemony come home by the thousands just months before the '20 primary season. If this is not military and economic suicide, it is certainly political.
Air war will likely see a similar disaster. With avenues of attack severely restricted, obvious targets such as Iran's non-military nuclear program and major infrastructure will be thus more easily defended and the likelihood of the deaths of US airmen similarly increased.
In terms of Naval power, Bolton would have only the Mediterranean as a launch pad, since using the Black Sea to initiate war will see the US fleet virtually surrounded by nations aligned with the Russo/Sino pact. Naval forces, it should be recalled, are, due to modern anti-ship technologies and weapons, now the sitting ducks of blusterous diplomacy. A hot naval war in the Persian Gulf, like a ground war, will leave a US death toll far worse than the American public has witnessed in their lifetimes and the US navy in tatters.
Trump is already reportedly seething that his machismo has been tarnished by Bolton and Pompeo's false assurances of an easy overthrow of Maduro in Venezuela. With too many top generals getting jumpy about him initiating a hot war with Iraq, Bolton's stock in trade-war is waning. Trump basks in being the American bully personified, but he and his ego will not stand for being exposed as weak. Remaining as president is necessary to stoke his shallow character. When Trump's limited political intelligence wakes up to the facts that his Zio masters want a war with Iran more than they want him as president, and that these forces can easily replace him with a Biden, Harris, Bernie or Warren political prostitute instead, even America's marmalade Messiah, will lose the flavor of his master's blood lust for war.
In two excellent articles in Asia times by Pepe Escobar, he details the plethora of projects, agreements, and cooperation that are taking place from Asia to the Mid-East to the Baltics . Lead by Russia and China this very quickly developing Russo/Sino pact of economic opportunity and its intentions of "soft power" collectively spell doom for Zio-America's only remaining tactics of influence: military intervention. States, Escobar:
"We should know by now that the heart of the 21 st Century Great Game is the myriad layers of the battle between the United States and the partnership of Russia and China. The long game indicates Russia and China will break down language and cultural barriers to lead Eurasian integration against American economic hegemony backed by military might."
The remaining civilized world, that which understands the expanding world threat of Zio-America, can rest easy. Under the direction of this new Russo/Sino influence, without Iraq, the US will not launch a war on Iran.
This growing Axis of Sanity surrounds Iran geographically and empathetically, but more importantly, economically. This economy, as clearly stated by both Putin and Xi, does not benefit from any further wars of American aggression. In this new allegiance to future riches, it is Russian and China that will call the shots and a shooting war involving their new client nations will not be sanctioned from the top.
However, to Putin, Xi and this Axis of Sanity: If American wishes to continue to bankrupt itself by ineffective military adventures of Israel's making, rather than fix its own nation that is in societal decline and desiccated after decades of increasing Zionist control, well
That just good for business!
About the Author: Brett Redmayne-Titley has published over 170 in-depth articles over the past eight years for news agencies worldwide. Many have been translated and republished. On-scene reporting from important current events has been an emphasis that has led to his many multi-part exposes on such topics as the Trans-Pacific Partnership negotiations, NATO summit, Keystone XL Pipeline, Porter Ranch Methane blow-out, Hizbullah in Lebanon, Erdogan's Turkey and many more. He can be reached at: live-on-scene ((at)) gmx.com. Prior articles can be viewed at his archive: www.watchingromeburn.uk
RealAmerican , says: May 23, 2019 at 11:40 pm GMTWhen Trump's limited political intelligence wakes up to the facts that his Zio masters want a war with Iran more than they want him as president, and that these forces can easily replace him with a Biden, Harris, Bernie or Warren political prostitute instead, even America's marmalade Messiah, will lose the flavor of his master's blood lust for war.Jim Christian , says: May 24, 2019 at 3:45 am GMT
I believe you are far too generous in your estimation of his ability to distinguish between flavors of any type. Otherwise, your analysis is insightful and thorough.The U.S. is in the same position today that we were aboard Nimitz back in 1980. Too far from Tehran to start a war or even to find our people. We are perhaps in even a far worse position in that today, Iran holds no hostages. There's nothing so 'noble' as 44 hostages to inspire war today. This here is merely at the behest of Israel and the deep state profit centers for mere fun and games and cash and prizes. Iran, overall, is nothing. Obama put Iran away for what, a billion-five? And Jared, Bolton and Pompeo dredged it all back up again? Care to guess the first-night expense of a shock and awe on Tehran? It's unthinkable.Alfred , says: May 24, 2019 at 4:56 am GMT
I used to like Israel. The Haifa-Tel Av-iv-Jerusalem-Galili loop was pretty cool. The PLO hadn't quite started their game, we could move freely about the country. It's where the whole thing started. And, unlike Italy and Spain, they treated us Americans ok. They were somewhat war torn. But now? They're a destructive monolith, they're good at hiding it and further, they make disastrous miscalculations. Eliminating Saddam was huge. Turns out, Saddam was the only sane one. The last vestiges of Saddam's nuclear program went up in the attacks on the Osirak reactor that Israel bombed in 1981. Why did they push for the elimination of Saddam afterwards? Why the lies? Miscalculation.
This here with Iran won't travel further than threats and horseshit. I hope. Lots of bleating and farting. Someone agrees. Oil dropped three or four bucks today."the resulting failure of not doing so was shown to Israel previously when, in 2016 Hezbollah virtually obliterated its ground attack, heavy amour and battle tanks in the hills of southern Lebanon."Ilyana_Rozumova , says: May 24, 2019 at 5:22 am GMT
2006 please!I do particularly agree that elimination of Sadam was the greatest mistake US committed in Middle East. Devastating mistake for US policy. In the final evaluation it did create the most powerful Shi_ite crescent that now rules the Levant. Organizing failing uprising in Turkey against Erdogan was probably mistake of the same magnitude. Everything is lost for US now in the ME.animalogic , says: May 24, 2019 at 7:10 am GMT
Threatening Iran is now simply grotesque.
Concerning the article. The article evaluating the situation in ME is outstanding and perfect. Every move of US is a vanity. There is no more any opportunity to achieve any benefit for US. Who is responsible for all those screw ups ? US or Israel?Great article, cheered me up enormously.Apex Predator , says: May 24, 2019 at 7:37 am GMT
However, the other side of the military coin is economic -- specifically sanctions on Iran (& China). Here ( I suspect) the US has prospects. Iran has said it has a "PhD" in sanctions busting. I hope that optimism is not misplaced. That US sanctions amount to a declaration of war on Iran is widely agreed. Sadly, it seems the EU in its usual spineless way will offer Iran more or less empty promises.Is the author unaware of the nation of Saudi Arabia and the fact that they are new BFFs with Israel. They have come out quite openly they'd like to see Iran attacked. That whole Sunni Wahabism vs. Shia thing is a heck of alot older than this current skirmish.peter mcloughlin , says: May 24, 2019 at 8:21 am GMT
Being that SA has a border w/ the Persian Gulf and that Kuwait who is even CLOSER may be agreeable to be a staging area, why the hand wringing about this nation & that nation, etc. The US would be welcome to stage an air and sea assault using Saudi bases followed up by amphibious troop deployment if need be. But given the proximity they could probably strong arm Kuwait to act as a land bridge, in a pinch.
So will we expect the follow up article discussing this glaring omission, or am I missing some great development re: S.Arabia's disposition and temperament regarding all this.The transformed relationship between Russia and Turkey illustrates perfectly the shifting sands of strategic alliances as we cross the desert towards destiny. https://www.ghostsofhistory.wordpress.com/The Alarmist , says: May 24, 2019 at 8:24 am GMTI don't know if Russia and China have been showing restraint or still don't feel up to taking Uncle on very publicly or even covertly. The author assumes they might be willing to step up now for Iran, but the action in places like Syria suggests they might not.joeshittheragman , says: May 24, 2019 at 9:47 am GMT
As for the costs of taking on Iran, while one cannot underestimate the cocksuredness of Uncle to take on Iran with a 2003 "Iraq will be a cakewalk" attitude, the resulting air war will likely not be as costly to Uncle as the author believes, but the thought of flag-draped coffins in the thousands will certainly deter a land invasion. If there is any action at all, it will be air interdiction and missile attack.
It is curious that Uncle has not already resorted to his favorite tactic of declaring a No-Fly zone already but instead merely hinted that airliner safety cannot be guaranteed; this is likely just another form of sanction since Iran receives money for each airliner that transits its airspace, and a couple of Uncle's putative allies supply Iran with ATC equipment and services.
Uncle's Navy has already demonstrated a willingness to shoot down an airliner in Iranian airspace, so it is no idle threat, kind of like the mobster looking at a picture of your family and saying, "Nice family you have there; it would be a shame if anything happened to them.""War is a Racket" by Gen Smedley Butler (USMC – recipient of two Medals of Honor – no rear echelon pogue) is a must read. As true today as it was back when he wrote it.Tom Welsh , says: May 24, 2019 at 11:18 am GMT"The Axis of Sanity" – I like it, I like it! Probably quite closely related to the "reality-based community".Amerimutt Golems , says: May 24, 2019 at 11:29 am GMTWalter , says: May 24, 2019 at 11:46 am GMT
If the US launches a war it will go it alone except for the few remaining US lapdogs like the UK, France, Germany and Australia, but with anti-US emotions running as wild across the EU as in the southern Caspian nations, the support of these Zionist influenced EU leaders is not necessarily guaranteed.
Stasi " Merkel muss weg " (Merkel must go) is too weak to even think about taking Germanstan into such a foolish adventure.
Maybe the Kosher Kingdom of simpletons, especially under American-born Turkish "Englishman" (((Boris Kemal Bey))), another psycho like (((Baron Levy's))) Scottish warmonger Blair.built-up in Iraq geewhiz!sarz , says: May 24, 2019 at 11:51 am GMT
Iraqi MP: US after Turning Ain Al-Assad into Central Airbase in Iraq
"Karim al-Mohammadawi told the Arabic-language al-Ma'aloumeh news website that the US wants to turn Ain al-Assad airbase which is a regional base for operations and command into a central airbase for its fighter jets.
He added that a large number of forces and military equipment have been sent to Ain al-Assad without any permission from the Iraqi government, noting that the number of American forces in Iraq has surpassed 50,000.
Al-Mohammadawi said that Washington does not care about Iraq's opposition to using the country's soil to target the neighboring states.
In a relevant development on Saturday, media reports said that Washington has plans to set up military bases and increasing its troops in Iraq, adding the US is currently engaged in expanding its Ain al-Assad military base in al-Anbar province."The prime minister of Pakistan is IMRAN Khan, not AMIR Khan. Makes you wonder about all the other assertions.The scalpel , says: Website May 24, 2019 at 12:03 pm GMT@Apex Predatorsally , says: May 24, 2019 at 12:25 pm GMT
The US would be welcome to stage an air and sea assault using Saudi bases followed up by amphibious troop deployment if need be. But given the proximity they could probably strong arm Kuwait to act as a land bridge, in a pinch.
Sea assault? Amphibious troop deployment? Are you serious? This is not WWII Normandy, Dorothy. That would be an unmitigated massacre. Weapons have improved a bit in the last 70 years if you have not noticed.
Also minor point, LOL, but Kuwait is a "landbridge" between Saudi Arabia and Iraq Unless you are proposing the US attacks Iraq (again!) which it would have to do to achieve a "landbridge" to Iran. Another good reason Iraq is acquiring the S-400.
More minor points: 1. South Iraq is ALL shiite. 2. Kuwait is SMALL i.e. a BIG target for thousands of missiles@Ilyana_Rozumova your question of responsibility is very intuitive.. two general answers.. both need deep analysis..follyofwar , says: May 24, 2019 at 12:28 pm GMT
first is a conspiracy of Israeli owned, Wall Street financed, war profiteering privatizing-pirate corporations These corporations enter, invade or control the war defeated place and privatize all of its infrastructure construction contracts from the defeated place or state (reason for massive destruction by bombing) and garner control over all the citizen services: retail oil and gas distribution, food supplies, electric power, communications, garbage and waste collection and disposal, street cleaning, water provisioning. traffic control systems, security, and so on.. Most of these corporations are privately owned public stock companies, controlled by the same wealthy Oligarchs that control "who gets elected and what the elected must do while in sitting in one of the seats of power at the 527 person USA.
2nd is the impact of the laws that deny competition in a nation sworn to a method of economics (capitalism) that depends on competition for its success. Another group of massive in size mostly global corporations again owned from Jerusalem, NYC, City of London, etc. financed at wall street, use rule of law to impose on Americans and many of the people of the world, a blanket of economic and anti competitive laws and monopoly powers. These monopolist companies benefit from the copyright and patent laws, which create monopolies from hot thin air. These laws of monopolies coupled to the USA everything is a secret government have devastated competitive capitalism in America and rendered American Universities high school level teaching but not learning bureaucracies.
Monopolies and state secrets between insider contractors were suppose to deny most of the world from competing; but without competition ingenuity is lost. Monopoly lordships and state secrets were supposed to make it easy for the monopoly powered corporations to overpower and deny any and all would be competition; hence they would be the only ones getting rich.. But China's Huawei will be Linux based and Tin not Aluminium in design, far superior technology to anything these monopoly powered retards have yet developed especially in the high energy communications technologies (like 5G, Artificial Intelligence, and Robotics). In other words copyrights, patents and the US military were suppose to keep the world, and the great ingenuity that once existed in the person of every American, from competing, but the only people actually forced out of the technology competition were the ingenious, for they were denied by copyright and patents to compete. Now those in power at the USA will make Americans pay again as the corporations that run things try to figure out how to catch up to the Chinese and Russian led Eastern world. Modi's election in India is quite interesting as both China and Russia supported it, yet, Modi says he is going to switch to the USA for copyrighted and patented stuff?
on the issue of continued USA presence in Iraq, Syria, Yemen, Lebanon, ..
"Our continued presence in Iraq will be conditions-based, proportional to need, in coordination with and by the approval of the Iraqi government." <that's a joke, first off, I never desired to be in Iraq, and I do not desire USA military or American presence in Iraq, do You? <blatant disregard for the needs of America.. IMO. Bring the troops home. If the USA would only leave Iraq to the Iraqis and get to work making America competitive again they would once again enjoy a great place in the world. But one thing i can tell you big giant wall street funded corporations, and reliance on degree credentials instead of job performance, will never be the reason America is great.This article by Mr. Titley is the most hopeful article I've yet read demonstrating the coming death of US hegemony, with most of the rest of the civilized world apparently having turned against the world's worst Outlaw Nation.
Trump has allowed madmen Bolton and Pompeo to get this country into an awful mess – all for the sake of Israel and the Zionists.
He needs to find a face-saving way to get out before Washington gets its long needed comeuppance. But how can Trump accomplish this as long as Bolton, in particular, continues to be the man who most has his ear? If Titley is correct, then Trump had better start listening to his military leaders instead.
Netanyahu and the Ziocons better think twice about their longed for dream of the destruction of Iran. The Jews always push things too far. Karma can be a bitch.
May 24, 2019 | www.zerohedge.com
Scipio Africanuz , 42 minutes ago link
Fair enough. Because AG Barr, and Special Counsel Mueller are both servants of Law, whose side we really align with, we'll attempt to bring much needed clarity to the Russiagate brouhaha..
Some folks sought dirt (both sides), some folks colluded (both sides), some folks tampered (one side), some folks obstructed (one side), but one side alone, is stonewalling..
The Democrats sought dirt on Trump, their IC (Intelligence - really? - Community) allies, arranged to procure dirt, liasing with other IC (Not necessarily state employed) allies in other countries (Brits might be state though). They got the sexed up dossier, compiled for pay, possibly by some Ukrainian folks, who know some Georgian folks, who have as contacts, some Russian folks, who might have had some as friends, some shady Russian folks, who knew some folks, who used to work in the Russian IC..
The Russian government, state, or president were NOT involved and how to be sure, because if you know anything about Russians, or Putin in particular, it is this..They find it extremely difficult, and highly uncomfortable to be hypocritical, it's a cultural ethos and how so?
Because to vehemently complain about actions against the Russian state (American interference), while yet engaging in same, would undermine their credibility, moreover, Russia knows that if it did, the American IC would know, have the evidence, and throw it at them thus, discrediting any Russian grievances about American interference in internal Russian affairs..
Basically, the DNC was trolled via the IC, but NOT by the Russian government, and Mueller found evidence of that..it's hard to swindle a honest person.
Now, the Trump side also sought to obtain dirt on Clinton and made the egregious mistake of publicly calling upon Russia to provide emails that was in fact, available to any competent IA (Intelligence Agency), thus undermining his stated desire to rebuild relationship with Russia.
Fortunately for Trump, and unfortunately for Russia, a DNC staff had downloaded much revelatory data about DNC shenanigans, provided it to Wikileaks, who released it, and made Clinton's run doomed to failure. Russia was NOT involved, it was Trump's uncouth carelessness that created the impression of Russian involvement..
So far so good, along the way, investigations were undertaken by Comey's FBI, who discovered breaches and shenanigans, but was "stood aside" by Loretta "call it a matter" 'Lynch', in the hopes that a Clinton victory would truly bury the violations as a matter..
Comey, believing Clinton would win, and thus immunize him, decided however, to procure insurance just in case, by dropping the bombshell of "careless handling of communication", though still believing Clinton would win despite..
Well, it didn't work out that way and thus, stage 2 was embarked upon..
But we're getting ahead of ourselves..
The Trump campaign colluded with some middle eastern folks to interfere in legitimate US policies while yet a president had to finish his term, thus undermining American policy. Kushner was the middle man, pecuniary benefits were the motivation..
Now, let's unpack stage 2..
Having lost the election, and looking for a scapegoat, and intending to cover up DNC rigging shenanigans, amongst other violations, Clinton seized upon Trump's careless demand to Russia, that were it not for Russia, she would have won - the gambit is called denial of reality. Thus was innocent Russia embroiled in a situation it had nothing to do with..
The Russophobes, MIC, shell shocked Democrats, all sorts of political jobbers, media whores, and sundry folks on the make, egged on privately, saw an opportunity to cash in, and jumped on the Russiagate bubble, which then hired Mueller, who was thoroughly professional in ensuring decorum of golden silence while doing his task..
The media whores and jobbers however, pumped up the Russiagate bubble, wrote books, got shows, made out like bandits, along with the MIC who got a big boost to the "offense budget", and even European counterparts got in on the swindle and made big bucks..
And Russia? Poor Russia got hammered with sanctions, and when Crimea went home, even more severe sanctions. What the Europeans didn't expect however, was the Russian countersanctions which hit European economy like the "hammer of Thor", and you've heard of that hammer, right? Right!
So the Europeans started thinking that maybe sanctions were not a good idea after all but then, entered perfidious Albion, marketing the Skripal hoax, similar to the Steele dossier and foolish Europeans, they ramped up the sanctions, their economies suffered, Russia's acquired resilience and grew, ha!..
Then entered karma..
Brexit stalled, ripped Britain in two, destroyed the party of the "highly lijely" allegers, defenestrated the British economy, sent Gavin "toy soldier" Williamson packing, sent Theresa "let's try again" May packing, and handed the keys to the kingdom to Nigel Farage, sworn enemy of the Tories, ha!..
Meanwhile in Europe, the sanctioners are facing the revolt of the commons, with folks demanding, and seizing their sovereignty back and why? The economy goddamn it! The laws of unintended consequences strike again..
Back across the Atlantic, while the crescendo of Mueller time ramped up, the investigatee, began making series of mistakes to make the investigator go away, including obstructing the course of investigation, bombing folks, attempting to overthrow folks, bribing folks with the properties of others, which actions then unleashed a fresh round of karma, ha!..
Then just like that, the AG unleashed a round of terror, the Democrats parried, unleashed theirs, the AG ducked, unleashed some more missiles, the Democrats barraged the AG. And out of right field, a Republican rep answered his conscience, and tossed a Molotov cocktail in the mix, destabilising the equilibrium of strikes and counterstrikes..
As if that were not enough, a former Republican congressman fired an artillery shell of impeachment into the melee. Previous to that, the rattled investigatee had begun stonewalling, thus giving ammunition to his opponents to impeach him, who now accuse him of "covering up" and thus ramping up the pressure, and suggesting perhaps a "leave of absence" might help, and even praying for the mental wellbeing of the investigatee, ha!..
Then, out of central field enters Mueller, who offered to testify in private, further rattling the investigatee, which chance was utilized by the investigators to rattle him further, with the gambit of "infrastructure talks", which unbalanced the investigatee to declare "investigation or infrastructure, choose one!", thus revealing his rattledbess, which his antagonists utilized to declare chewing gum and walking, is easy peasy, thus negating the ultimatum..
Meanwhile, the investigatee just lobbed a tomahawk at his nemesis in the IC, thus escalating the feud as is absolutely necessary..
So, there you have the Russiagate mess, that doesn't involve Russia, but a lot of unscrupulous Americans, some Britons, and middle easterners, but no Russia, interesting, right? Right!
Now what happens next? Stay tuned, as ramps are upped. The problem for the investigatee, is that the legislative investigators will probably sacrifice some IC legates to win the feud, investigatee on the other hand, can't afford to sacrifice anyone because of proximity to person.
The investigators hold some aces, the other side? Well..
Concisely, there was no Russian (government) collusion, but there were lots of other crimes and misdemeanors on both sides, against the Law, cheers...
May 24, 2019 | www.zerohedge.com
whatafmess , 2 minutes ago linklearnofjesuits , 11 minutes ago link
where is the investigation into the Clinton Foundation and other "initiatives"? Where is the Wasserman Schultz/Awans mafia investigation? Where is the investigation into the DNC server? the Seth Rich murder?
good if any of those FBI, CIA, NSA traitors go under but really we want the top dogs, not the underlings only...ludwigvmises , 16 minutes ago link
dirty tricks of intelligence agencies:
- chemical weapons in Iraq never found
- 2 planes demolishing 3 skyscrapers - near free fall speed, symmetrically, through all steel, lots of material turned into dust - like really ???
- pizza parties with different pizza types in a house by a lake - exposed emails of democratic party - and Assange is chained
- Trump collusion accusations - no evidence found, secret court, intelligence agencies from few countries involved in dirty tricks, investigation led by political enemies - response to this attack will tell a lot about Trump I believe
always remember - all intelligence agencies are controlled by luciferian Vatican, NWO is agenda of luciferian Vatican to continue domination, Trump is protestant and conflict is on this plane (if there is real one)
wake up muricans, or you on drugs ?onewayticket2 , 13 minutes ago link
So how many millions of my tax payer money are they going waste on this useless sh**? And where's my wall to keep my daughters safe?fackbankz , 10 minutes ago link
useless?? if they're not investigated, i 100% guarantee you spying will be the norm 5 seconds after it's clear there's no real investigation into the crimes they committed.
so these criminals should just walk free? how can you take that position while simultaneously arguing that a wall should be put up to stop criminals from walking free - and into the USA.?CAPT DRAKE , 27 minutes ago link
It will be a lot less costly than the Mueller circus and a lot more devastating to the true "bad guys" here, the ones who used public resources to spy on political enemies and tried (are still trying) to pull off a coup.
I don't like Trump, but I can see this ******** for what it is, and we need to nip these banana republic-like tactics in the bud and excise these bad actors from our intelligence services.vofreason , 28 minutes ago link
Since when have these assholes cooperated with anyone?onewayticket2 , 22 minutes ago link
Yeah so we will learn what we already know that all of the investigating was justified based on evidence and then Trump will hypocritically block anything else looking into what actually happened. He's a con man and a stupid one.valerie24 , 13 minutes ago link
If that were the case, explain why Mueller and Weismann didn't throw the book at trump....you KNOW they wanted to......they had a court justified fishing expedition with no budget and no scope....40 FBI agents, 17 top democrat supporting DOJ lawyers....and nothing.
If, as you say, the "investigation" was justified, why didn't Mueller and Weismann put that on Page One... vs not mentioning it at all....? (and no....Trump stating "Hey Russia! if you have those emails, why don't you hand them over to the press....they'll reward you!" is not justification for spying on him)Vince Clortho , 36 minutes ago link
Yes, it is imperative because you can bet the MSM AKA Globalist propaganda arm will never tell the people the truth, which means that roughly 10% of the population might actually know what happened.spaniel , 39 minutes ago link
The political landscape just got interesting-er. Go long on finger-pointing, screeching, and general cacaphony.Scipio Africanuz , 32 minutes ago link
Yeah , everybody is guilty of something. Case closed ?chubbar , 23 minutes ago link
How do you know who's guilty without investigation or trial? American jurisprudence says "Innocent until found guilty", no? To trial, you must investigatee, and gather facts, right? Right!
Rule of Law - it's not just a phrase, it's the foundation of a stable society, cheers...valerie24 , 32 minutes ago link
Obama was running a covert operation called "The Hammer" against americans and politicians for the purposes of blackmail. This isn't some sort of tit for tat political game, it's ******* Treason and it could have been the last time we saw any part of our constitution enforced forever.
I want those fuckers hung, not humiliated. This isn't a "feud" or any of the other labels used to diminish what happened here. It's TREASON, words matter, let's start using the correct terms.yerfej , 1 hour ago link
Yeah whatever happened to Weinstein? Did they make it all go away and buy him his own Pedo island somewhere? Never did hear the outcome.Moving and Grooving , 55 minutes ago link
Everything will be released and the public will finally see how the Obingo regime, being confident of the Pantsuit Pig's coronation, attempted to destroy Trump and anyone connected to him. BUT what is going to be interesting is watching the left lie to themselves about the former (and current) Democratic leadership. Nothing in society will change until the left can be honest with themselves AND the public.
The US needs a strong Democratic party but all it is getting is delusional sixties type hippy liars.valerie24 , 28 minutes ago link
I'm sure many registered Ds are fine people. Their party is, however, currently controlled by neoliberal parasites... I wish I thought they were 60's hippies, but they look more like a fifth column bent on destroying America to me. Farage is dealing with a similar mess in Britain.onewayticket2 , 1 hour ago link
"Pantsuit Pig" - classic +1000 Haven't heard that before.larrythelogger , 54 minutes ago link
Not sold that Barr is the real deal yet. Sessions was supposed to be that (and he was the opposite). Wray at FBI was supposed to be and appears he's not.
I hope the admin is not just trying to get along as DC has done for decades (aka....two sets of laws). The democrats are at war with the republicans and the republicans are still operating under the Rodney King philosophy of "why cant we just get along??"onewayticket2 , 25 minutes ago link
Almost a Yahtzee. The Republicans are part of the coup. At best, they stand by and watch the deep state crimes take place in broad daylight like cows watching a passing train while one or two Republicans strut and fret, signifying nothing.
At worse, they fall down, roll over and **** themselves whenever a neocon whispers boo in their ears. This action should bring prison time for the coup criminals but alas, my guess is that it will continue to sell sheets and pillows and strawberries and home security systems via talk radio for the next two years and that is all that will happen.chubbar , 19 minutes ago link
....Huber was supposed to be and he's still not interviewed key witnesses after a year on the job. So, he was just for show.valerie24 , 7 minutes ago link
Yeah, but what has Durham been doing? It's been rumored he has been on the job for a year or so, not just a few weeks. Lots of moving parts. The next month or so will reveal the truth of the matter, one way or the other.ducksinarow , 1 hour ago link
Huber is a Utah guy which to me means he's likely Mormon, which also means he probably was appointed to get Romney off Trumps back as some sort of favor. Color me skeptical.Moving and Grooving , 49 minutes ago link
I have a visual impression of the media standing around with their mouths open to receive the manna from reporter heaven. The neoliberal side spitting it out as soon as it drops and the conservatives chewing on the information. Much like birds in the wild trying to feed its nest of birdling babies. Some will get the point and it will go over other's heads.
Then there will be another investigation deciding if Trump declassified only the information that makes him look good. At this rate, Congress is entirely useless as a legislative body attending to the needs of the country such as better health care rates, protection from murderous invaders, and cleaning up all of the unmitigated rules and legislation that keeps business with its hands tied behind their backs if they are legitimately trying to sell product.ducksinarow , 1 hour ago link
'Congress is entirely useless as a legislative body'
And they [the Congress] don't seem to grasp that voters have been very aware of that and are watching them more closely. 2020's election may be a Waterloo for establishment pols who have revealed themselves as partisan and stupid, as well as utterly corrupt.
My take? Primary as many incumbents as possible, then beat as many of the rest as we can in the General. There's nothing like watching those around you getting fired (and perhaps arrested) to refocus you on your job and your bosses opinion of how well you're doing it, right?HuskerGirl , 1 hour ago link
I would take that bet if it was not about to be Summer and all the nasty little buggers will be on vacation out of the reach of the physical hands of the law enforcement.
I would expect a lot of vacation time will be spent in Countries that have tough expedition laws, probably paid for in advance by those who figured they might get caught at some time in the future but were having too much fun playing risky games with the lives of the voters.Bounder , 1 hour ago link
What better example of twisted neoliberal logic is it that the left cries that Trump releasing documents is the next phase of the "cover up" Yet, that is exactly what Schiff is crying about today"
"While Trump stonewalls the public from learning the truth about his obstruction of justice, Trump and Barr conspire to weaponize law enforcement and classified information against their political enemies," Schiff wrote. "The coverup has entered a new and dangerous phase. This is un-American."
Trump fully cooperated with Mueller. Now it's time to uncover the real corruption.onewayticket2 , 1 hour ago link
Only to twisted mind of a democrat could releasing information be considered a cover up!Moving and Grooving , 1 hour ago link
There is so much insanity coming out of the left.....it's all they have.
Faced with an obama admin that illegally spied on private citizens, campaigns, etc...unmasked, etc.....and after 2 years of a special prosecutor who knew - on Day1 - there was no collusion (afterall, they'd had spies in the campaign for a year already)....the democrats claim TRUMP is a threat to democracy BC he pushes back on their OBVIOUS illegal activity.
The T admin better go SCORCHED EARTH on the left or they're toast in 2020.HuskerGirl , 1 hour ago link
It's probably too much to ask that Schiff be revealed as one of the scum that pushed this along. Water and Cummings too, while we're at it. As far as Nadler is concerned, I think Trump loves to squeeze him and make him squeal. I kind of like that too, but he'll need to get clobbered by all this to even things out a little.SickDollar , 1 hour ago link
It should go all the way back to Obama and Hillary. And if it shows they've accepted anything from Soros he needs to go down too.TheAnswerIs42 , 1 hour ago link
I hope this really goes somewhere. The corruption is so deepvalerie24 , 46 minutes ago link
Anyone think they will go the Grand Jury route or instead proceed directly to court? The whole process shouldn't take that long as all the groundwork has been done over the last 2 years and $35M worth of investigation. Will they start at the bottom and work their way up or go right for the jugular?LEEPERMAX , 1 hour ago link
Jugular I hope. Coney, Brennan, Clapper first - not last. Absolutely have to get them before the 2020 elections or you won't get them at all.freedommusic , 1 hour ago link
Mueller time is over. The Barr tab is due.LEEPERMAX , 1 hour ago link
> Speaking of Barack, where has big mouth Obuttface been lately?
I was thinking the SAME EXACT THING this morning. Where the hell is band-aid Barry ?
Look no further than Barack Obama's 8,200-square-foot, $5.3-million Kaloroma mansion just two miles away from the White House and into the nerve center of the mounting insurgency against his successor, President Donald J. Trump.
May 24, 2019 | www.zerohedge.com
Microsoft will reportedly become the latest tech giant to 'suspend' its relationship with Huawei, according to the South China Morning Post .
One week after Washington first imposed strict limits on Huawei and its affiliates that will make it almost impossible for American firms buy Huawei products or sell American-made components to the company, a handful of chipmakers, telecoms companies and tech firms (Alphabet) have reportedly scaled back or severed their relationship with Huawe.
Though Microsoft said yesterday that it hadn't made a decision, the SCMP reported Friday morning that Microsoft had decided to stop accepting new orders from Huawei for operating systems and other content-related services: Windows operating systems for laptops and other content-related services. The US software giant has already removed Huawei laptops from its online stores.
CatInTheHat , 1 minute ago linkme or you , 11 minutes ago link
Yeah but Microsoft and Google aren't part of the military security apparatus and have nothing to do with foreign policy.
Funny Google and Microsoft have operations out of China .
Cant wait til China retaliated bigly on these assholes.CheapBastard , 29 minutes ago link
Just follow India steps.:
Indian State Saves Over $400 Million by Choosing LinuxGrosserBöserWolf , 38 minutes ago link
Feinstein and Biden are not going to like this.CashMcCall , 38 minutes ago link
Good by US monopoly on software. This will only accelerate new developments.john.b , 12 minutes ago link
Just one more prime example why no companies should use Microsoft software.
The issue is clear as a bell. Become dependent on a US supplier and the Gov of the USSA could cut off your contracts with impunity. That risk is too high for any manufacturing entity.
I am not a fan of Linux. I do not like the way it manages memory. Also while it has gotten better, it remains something of an unmade bed in that much of the software doesn't work particularly well. But the same cold be said for Microsoft. How many times does Windows OFFICE have to lock up before you comprehend the nightmarish patch system which has become Windows?
GNU meaning not Unix never developed into a GUI. Ghost BSD looks interesting, BSD PC has limited compatibility but UNIX is flatly superior in how it handles memory. Unix is brilliant. I also love Open Office, it is better than Microsoft Office and you can save all your files to the Microsoft format if you want. Open Office is perfect transitional software and FREE! Why are school districts paying microsoft instead of using Open Office.
Win 10 is invasive garbage. I don't want anything managing my computer "automatically".
Huawei is a real wakeup call for the world... the US is an unreliable trader. They can never be trusted. This is not just about that lunatic Turmp. If AOC ever got to the White House she could do the same under the New Green Deal NATIONAL SECURITY EMERGENCY.
The Constitution gave Congress the exclusive power over Commerce but over time, the Congress delegated more and more power to the Exec with this kind of dreadful outcome. Founding Fathers wanted checks and balances. But here you have one person, interrupting commerce and contracts with the stroke of a pen that has never been approved by Congress. That is simply too much risk.
The Chinese like anyone else make mistakes. BUT CHINA does not repeat the same mistake twice unlike the USSA that seems to be caught in the revolving door of mistakes.
Better that this happens early in the life of Huawei than much later. China could actually lead the world into the adaptation of open source destroying both Microsoft, Google and Apple at the same time. Remember Apple took BSD and then made proprietary changes. That is the APPLE OS which is much more stable than anything Windows ever made.
While people knock apple Iphone for cost, the Apple laptops are very stable and essentially virus and worm immune. For a novice users that's why Apples are great.
I have had Unix based machines run for years with never being turned off, always rock stable. It is head and shoulders above everything. FreeBSD
Here is a UNIX GUI. I know nothing about these guys but will check it out. A non power user only needs a solid browser, and a good word processor, Open Office works with BSD.
Personally I don't think Apple should be grouped with Google and microsoft. I don't see as Apple has done anything wrong other than selling their products at a premium to the novices. That's not a crime and novices benefit. So quit packaging Apple in with Google and Microsoft.
BTW, Blackberry OS is Unix based. It is a canadian company so likely a US poodle.SMD , 45 minutes ago link
Canada is a US puppet, but treated like a **** by US.Wild Bill Steamcock , 43 minutes ago link
Huawei were attacked because they are a threat to Apple, not to "our national security." The only thing Trump cares about are the profits of big companies.JailBanksters , 1 hour ago link
BuyDash cut ties with Microsoft years ago.
Yes, but the real question is did you cut ties with the NBA, Nike, grape Kool-Aid, McDonald's, Popeye's, your parole officer, KFC, crotch-grabbing, your six illegitimate children and the local welfare office?silverer , 40 minutes ago link
WHoAreWe made Microsoft's Phones, and Microsoft killed the Phone without any help from anyone.JailBanksters , 23 minutes ago link
I knew Nokia was doomed when it partnered with Microsoft. They should have instead partnered with and help fund the Open Source Software community. By now, we'd have spectacular phones, free of logjams of spyware, bloatware, and ads.dark fiber , 1 hour ago link
Now you have Windoze PC's with logjams of spyware, bloatware, and ads. Well, unless you hack it to make it a Workable PC. It's weird having to Hack your own PC to make it sane.Cassandra.Hermes , 1 hour ago link
EU take note. You are not even building or developing the damn things. But you want to dictate policy to the US. Asshats.Coin Techs , 1 hour ago link
Why shouldn't Corning glass or Micron flash memory be sold to Huawei for use in phones bound for Europe? Huawei sells 30 times more phone in Europe than USA. I bought Huawei phone in Norway and I think is my best phone ever, I use Samsung Galaxy Note 9 in USA, but I carry the Huawei for photos and for WiFi calls from Norway. Try to do wifi calls from the Galaxy using Starbucks wifi and then using the same wifi try Huawei, you would see the difference right away.Reality_checkers , 1 hour ago link
They were up to dirty tricks with the dirty dems and DT is shutting them down.
The US is going to sanction itself into economic irrelevance as the rest of the world says F you. We only have two friends now, Israel and KSA. Nice work, Donnie.
May 24, 2019 | www.zerohedge.com
May, the second - but certainly not the last - female prime minister in the UK, will abandon her supremely unpopular withdrawal agreement instead of trying to force it through the Commons for the fourth time. May's decision to call for a fourth vote on the withdrawal agreement, this time packaging it in a bill that could have opened to door to a second confirmatory referendum, was more than her fellow conservatives could tolerate. One of her top cabinet ministers resigned and Graham Brady, the leader of the Tory backbenchers, effectively forced May out by rounding up the votes for a rule change that would have allowed MPs to oust her.
During her tumultuous tenure as PM, May survived two no-confidence votes.
Though May will stay on as caretaker until a new leader can be chosen, the race to succeed May begins now...odds are that a 'Brexiteer' will fill the role. Whatever happens, the contest should take a few weeks, and afterwards May will be on her way back to Maidenhead.
"It is and will always remain a deep regret for me that I was not able to deliver Brexit...I was not able to reach a consensus...that job will now fall to my successor," May said.
Between now and May's resignation, May still has work to do: President Trump will travel to the UK for a state visit, while Europe will also celebrate the 75th anniversary of D-Day.
It's fitting that May touted the virtues of her moderate approach to governance during her resignation speech, considering that her attempts to chart a middle path through Brexit ended up alienating hard-core Brexiteers and remainers alike. Her fate was effectively sealed nearly two years ago, after she called for a general election that cost the Tories their majority in Parliament and emboldened Labour leader Jeremy Corbyn.
The pound's reaction was relatively muted, as May's decision to step down had been telegraphed well in advance.
CheapBastard , 18 minutes ago linkkeep the bastards honest , 39 minutes ago link
Crying May. What a Loser. Plus, she may have well co-conspired against Trump.
They should lock her up in the Tower.bluecollartrader , 45 minutes ago link
She didn't cry for syrians when she declared bombing Syria and using the firm her husband is involved in,. They made billion, and she didn't cry over her makeover afterwards new hair clothes and big jewels and cuddles with her husband in the media.HRClinton , 27 minutes ago link
She and John Boehner should start a therapy group.
There's no crying in politics.HRClinton , 16 minutes ago link
The plan was Merkel, May and Hillary.
That's a hell of a bullet we just dodged.
Riiiight. Instead, 10,000 Pentagram "Monitors" will be dodging bullets and bombs in the ME.
"(Bibi,) you'll be so tired of winning" - Candidate Trump
Why, you didn't think that he was talking about America's Main Street, did you? Sucker !
Many women in esteemed positions are just affirmative action or window dressing to placate the masses with supposed maternal love but they end up being wicked as heck.
Perhaps, but it's worse than that:
They are part of the Divide & Conquer strategy, while (((Global-lusts))) are plundering the Wealth Of Nations and taking over the real reigns of power.
Americants are easily distracted or fooled.
ps. "...wicked as heck." Wicked? Heck? What's up with the careful avoidance of "cuss words"? It's ok, you're safe... No "ladies or preachers" (bitches or scammers) nearby. And the Tylers or NSA won't rat you out.
May 23, 2019 | www.nakedcapitalism.com
... ... ...
So whoever chose to be Prime Minister and set the Brexit time bomb ticking (which would have to have happened at some point, although May's rush to send in the Article 50 notice was one of her major mistakes) would be destined to preside over a colossal mess. However, the distinguishing feature of May's time in No. 10, her astonishing ability to take pain and fight off challenges, was enabled by the Fixed Term Parliaments Act, which made it far more difficult to dissolve Parliament. Under the old rules, May would have been gone long ago. But the result may have been a series of coalition governments, or alternatively, a coalition that couldn't agree on anything regarding Brexit while that clock was ticking.
Even though I do feel a bit of sympathy for May, the flip side is that her record at Home Office, particularly with the Windrush scandal, means there is not likely to be much that historians will be able to find to cast her as anything other than relentless and exceptionally unimaginative, except in her idiot-savant genius at political maneuvering.
It was vlade who I believe typed her out as the sort of manager who won't change course even when circumstances make clearer that a revision in plans is necessary. Of course, May did in the end, witness her getting to a deal with the EU, but only after beating her head against the wall for many months.
I imagine May's one hope for near term solace is if Boris is indeed the next prime minister. Even she will benefit from being compared to him.
John A , May 23, 2019 at 8:12 am
"Watching Boris be utterly outclassed "
That's immaterial. Boris is exactly like Trump, he lies and lies and lies, and even when caught out lying, he simply does not care and carries on lying.
As for Leadsom saying a second referendum would be 'dangerously divisive', what planet is she on? The first referendum has proved incredibly dangerously divisive. To the extent, I doubt there can ever be any general acceptance of either leave or stay, whichever happens.
vlade , May 23, 2019 at 5:42 am
If turnout is high, and Farage polls > than LD+SNP+GREEN+TIG, it could be seen as a strong signal for no deal. Low turnout means little.
High turnout + result can mean something. But what exactly depends on the result. Even then, high turnout with Farage winning (even getting less votes than remain) could easily generate some pro no-deal headlines.
Best pro-remain result (but IMO extremely highly unlikely) would be high turnout (>50%), Farage +/- same as LD (say even with LD second but only by a few points), but significantly less than LD+G+SNP+TIG.
Ignacio , May 23, 2019 at 6:34 am
Thank you vlade! We will have to wait until Sunday. The results will be interesting anyway. This are not routine post-dem elections anymore. It migth mark the end of the end of history hahahahahah!
BIllS , May 23, 2019 at 6:48 am
I know this is anecdotal, but many of my European friends would like the Brits to stay in the EU. However, as vlade mentions, the EU elections are being viewed as a second referendum on Brexit as well as a test of populist parties in general. If the populist gains are weak in the EU elections and the Farage clique receives a mandate for hard Brexit, it is possible that the EU will severely punish the UK. Many European citizens want the Brits to stay, but are tired of their whinging and the anti-european propaganda being vomited forth by the UK tabloid press. Assaults on EU citizens speaking European languages are becoming all too common. If Farage is elected with a big turnout, EU citizens will demand punishment.
Synoia , May 23, 2019 at 3:28 pm
There is no mandate granted by the EU elections, because there is no method a small EU splinter faction (Farage's Faction, large only in his imagination) can achieve anything against the "we are in the EU to stay" majority in the European Parliament.
The Farage Faction in the EU parliament, will be less effective that the Lone Libertarian Senator in the US Senate, who is only there to demonstrate that the Republican Party are no completely crazy, and do have one of two realistic policies.
Synoia , May 23, 2019 at 3:44 pm
Two possible outcomes:
1. No GE, May for Ever, Brext limbo, EU Membership continues until the UK stops paying the EU, or the people over 50 die and the young eliminate this circus.
2. The Labor, Green, Scot's Nat's, and LibDems form a collision (intended) Government, and continue (1).
Parliament has clearly demonstrated the wishes of the British people: No to the EU, No to the EU EU dictated withdrawal agreement (aka the MAY (Make Everybody Yell in pain) agreement, and No Crash out (No British 2 fingered salute, equivalent to the US 1 fingered salute)*
What remains is Limbo, without flexibility – Remain but with Denial, and a change from a Badly Managed County, to a Badly Managed Country by a different set of Clowns.
As Maggie Thatched remarked: There Is No Alternative.
* The UK uses a two fingered salute, because British Men can consider two things at the same time, Beer and Women, unlike the French (Hereditary Enemies) who can only consider one thing at a time.
**Just to clarify – British men can CONSIDER two things at the same time. Actually performing two things at the same time runs into the standard limitations of the Male Brain.
The Rev Kev , May 23, 2019 at 4:45 am
And to think that it was only yesterday that yet another Brexit date went by. That was the one agreed to in March where the EU agreed to delay Brexit until May 22nd if British MPs back Prime Minister Theresa May's deal. The idea was that any later and a resentful UK would be taking part in the EU elections. Well, that didn't work out for anybody.
It turns out that Margaret Thatcher was wrong. There is such a thing as society. It is that which forms the bonds not only between people themselves but those who are supposed to run the country. The UK has cut those bonds and the results are so bad that the United Nations has come out with a report ( https://undocs.org/A/HRC/41/39/Add.1 ) saying that they have created a "harsh and uncaring" environment for people, that '14 million UK residents live in poverty, and that some 1.5 million of them were unable to afford basic essentials in 2017.' No wonder people feel little connection between themselves and those running the country
I was just listening to the news and it sounds like May was making all sorts of concessions in the deal that she was working on without consulting anybody else in government. There are so many people leaving her side now, that she may be the last person left standing in government. She is still clinging onto power but her own party members are busy stomping on her fingertips as a tipping point has been reached. Labour does not seem to be gaining by this either as they are bleeding votes to other parties due to their own Brexit position. This is going to get ugly when it comes time to choose a new leader. Prime Minister Nigel Farage anybody?
skk , May 23, 2019 at 11:07 am
Knickers ! No " underwear " please, we are British" ( with apologies to the British farce from the late 60s).
ambrit , May 23, 2019 at 1:23 pm
Yaargh for the "No Sex Please" reference!
Plus, "skidmarks" is a common reference of an insulting nature here Down South. Kudos!
The infamous joke ends with; " and the dude had skidmarks on the front of his drawers!"
So, 'skidmarks' is all too likely a result from the upcoming EU elections.
fajensen , May 23, 2019 at 6:47 am
I am pessimistic. She will never resign on her own volition. The Tories have no way of forcing her to resign. There is nothing they can offer to trade with her in return for her resigning because she won't listen, ever, to anyone so she simply won't hear the offer being made over the din of her own droning.
Maybe The Queen can legally send some heavy-booted people over to physically drag her out of parliament?
vlade , May 23, 2019 at 6:56 am
There were rumours yesterday that she blocked the door to No 10 with a sofa..
PlutoniumKun , May 23, 2019 at 9:11 am
I heard she is taking refuge in the Ecuadorian embassy.
vlade , May 23, 2019 at 9:23 am
Can she skateboard?
shtove , May 23, 2019 at 10:29 am
Dirty protest? Armoured cars and tanks and guns
Anders K , May 23, 2019 at 7:05 am
AFAIK, the 1922 Committee can change the rules to allow her to be challenged. The issue – just as with Trump – is that dealing with someone who breaks the informal consensus by breaking the formal consensus (changing the rules, even if it is just "for a special case") is not necessarily easy or sure to lead to the desired outcome (what if the special vote fails to oust May? Will the next leader be challenged early, too?).
After all, if the 12-month grace period has been set aside once, it can surely be done again, and no presumptive Tory PM is interested in being more restrained by the committee (for both noble and ignoble reasons, I'm sure, though I suspect the ratio to be tilted in the latter direction).
shtove , May 23, 2019 at 7:25 am
But she's the Queen's prime minister. Doesn't matter if she's not leader of her party. Or does it? There have been mixed rumours on HM's views on the EU, which I suppose shows her subtlety. But if she is subtle, HM will find a way not to get involved.
PlutoniumKun , May 23, 2019 at 9:11 am
Now there is a prospect – May refusing to relinquish No.10, even if she is thrown out of the Tory Party.
shtove , May 23, 2019 at 10:52 am
I hadn't considered that! What if May is summoned by the chief whip and suspended, just like Heseltine when he declared he was going to vote for the Lib Dems? Can she dismiss the chief whip with a click of her fingers? L'etat, c'est moi.
I've no idea about the formal route for expulsion from the party, but it seems Widdecombe was subjected to the rules when she declared for Whatever Nigel's Having.
ChrisPacific , May 23, 2019 at 5:06 pm
Now I have a mental image of a barricaded Theresa May taking to the airwaves and calling upon the military to come to her aid by suppressing her own party in the name of the Queen.
David , May 23, 2019 at 8:33 am
It's important to remember (and too easily forgotten) that the challenge to May's position is as leader of the Conservative party, not as Prime Minister. Of course historically the two have been coterminous, but they don't absolutely have to be. Normally, what happens is that a PM's political missteps result in forced resignation or a leadership challenge, and the winner of the ensuing competition becomes PM. Eden resigned after Suez, Heath was forced out after losing the 1974 election etc. But both of these cases (and indeed Thatcher in 1990) were rather like sacking the managing director of an unsuccessful company. The Tory Party wanted to get back in power, or make sure it stayed there, and internal political and personal divisions didn't matter that much. (The Tory Party was more Thatcherite in 1990 than it was in 1975 when she took over: it was simply that the party didn't think it could win another election with her in charge.)
What we have now is different. Not only has May made a disastrous mess of Brexit, she has also had to manage a bitterly divided party, full of people who hate each other and have completely irreconcilable political views and agendas. Whilst there have been Cabinets before with warring cliques, and PMs struggling to manage divided parties, I don't think there has ever been a situation like this, where the two are lethally combined, and the incumbent PM is not capable of dealing with either. It's possible to imagine another leader having done a better job in managing the politics and diplomacy of Brexit: it's hard to imagine anyone doing it worse. But it is also hard to imagine anyone else having done a less bad job of keeping a violently fractious party together.
Paradoxically, May's actual performance under both headings has had little impact on the strength of her position. It seems to be acknowledged that she has been as a disaster as PM, but the problem is that getting rid of her is not a solution. Indeed, it would probably make the situation worse, and destroy the Tory Party completely, which is why she is still where she is. I don't think even those who want to get rid of her most fervently believe that doing so would unite the party or make it more electable. It's all about personal and political agendas. Far from resolving the crisis, her departure, which can't now long be delayed, will only exacerbate it: the first time this has happened, I think, in modern British history.
Under all the normal rules of politics, May would have been gone months, if not years, ago. That's not in dispute. But in the past there were heavyweight challengers already waiting to take over from the PM of the day, and parties (especially the Tories) would rally round a new leader to stay in power or have a better chance of taking it. It's an index of how completely the Tory Party has been destroyed by Thatcher and her successors, that it's a talent-free zone made up of people who would happily destroy a party, a government and perhaps a country, out of ambition and jealousy. The situation now resembles the last days of a weak and discredited monarch, with no apparent successor and courtiers manoeuvring for advantage. Historically, that usually led to a civil war of some kind, and I expect that, mutatis mutandis , that's what we're in for now.
PlutoniumKun , May 23, 2019 at 9:02 am
I think your last two lines are highly significant. I've been trying to get my head around how it is that Johnson has suddenly become the favourite to become PM, when he is supposedly almost universally loathed within the party hierarchy and seemed to have blown what little chance he had last year. But it is, as you say, more like the lethal jostling when a monarch is dying without a successor – half the people around are trying to manoeuvre for the crown, the other half are trying to make sure they don't lose their head if the 'wrong' person gets selected. It has nothing to do with regular democratic politics anymore.
Whatever else, it will make the next Tory party conference rather entertaining viewing now that GoT is over.
flora , May 23, 2019 at 10:53 am
For forty years now the economic and political philosophy of Milton Friedman has dominated and guided politics in the UK and the US. Reading some of his most famous quotes makes clear why it has all ended so badly, failed so spectacularly. As long as enough of the old system held on to keep things working the con continued. That's over now, even if the current crop of "talent-free people who would happily destroy a party, a government and perhaps a country, out of ambition and jealousy. " don't realize it's over.
Matthew G. Saroff , May 23, 2019 at 9:20 am
Theresa May has made a dogs breakfast of everything that she has ever done.
How has she managed to fail upward in a manner that would make Dick Cheney blush?
shtove , May 23, 2019 at 11:00 am
The phrase is, "dog's Brexit". Smooth texture on the palate, then a little gagging, and a somewhat sour aftertaste. Mmm.
Pavel , May 23, 2019 at 10:29 am
I'm afraid I have absolutely zero sympathy for May, Yves. Apart from the Windrush scandal, she has always been absolutely horrific on civil liberties. And let's not forget she has approved the sales of arms to the Saudis for their genocide in Yemen. As a believer in Scottish independence, however, if she enables a second referendum in Scotland, that would be one accomplishment, though not an intended one for her!
PlutoniumKun , May 23, 2019 at 11:31 am
As someone who shares her physical clumsiness, I used to feel quite sorry for her when she was on the receiving end of so much abuse, she seemed to me to be admirable in the way she had made her way through such a pit of vipers to get to the top. But I think the cumulative evidence now is that, quite simply, she is a genuinely hateful person – she's been responsible for too many genuinely horrible policies, many of which were promoted solely for her personal ambition. There are many, many more people deserving of sympathy.
TG , May 23, 2019 at 11:28 am
Suggestion: watch carefully what happens to May when she finally leaves office (as the surgeons say, all bleeding stops eventually). Will May sink into a shabby retirement? Or will she be quietly feted by the big banks, put on the boards of directors of various companies, end up a multi-millionaire etc., like Tony Blair was?
In other words: was May merely stupid, or was she a useful agent of chaos? Follow the money, and eventually, we will know.
Joe Well , May 23, 2019 at 8:15 pm
skk , May 23, 2019 at 12:15 pm
The current crop of first-line politicians in the UK truly are a bunch of talentless gits. I've now watched several weeks of ITN news, Peston, BBC Question Time and I struggle for phrases to describe this bunch. I found some choice ones in this article – https://www.belfasttelegraph.co.uk/opinion/news-analysis/eilis-ohanlon-judging-current-crop-of-politicians-by-those-of-the-past-is-like-comparing-x-factor-rejects-with-the-beatles-37907555.html
Now I'm all for changing one's mind when the facts change/emerge – as I did – from a BrExiter ( aka a kick up the arse to the EU ( for Greece ) and the UK establishment ) to 2nd referendum/remain as the complexities, particularly the N.I. / Eire border aspect, came into focus – but this continual changes in positions by ALL sort of main-party politicians amazes me – when you compromise and STILL fail to deliver, its truly hapless, inept.
As the Belfast Telegraph put it ( back in March at that ! ):
The repeated failure to make Brexit less of a shambles suggests that politicians on all sides share that lack of conviction in their own judgment.
What's more terrifying still is that it increasingly looks as if they are right to think so little of their own abilities.
The terrifying thing is this is only the first stage.
Paradoxically, as the mess unfolds, my regular conversations and emails with Brit family and friends, all always politically engaged, this is mygen, nextgen, + nextgen+1 are less and less about it. They are all just getting on with their daily lives. I'm perhaps more animated about this than they are ! Just yesterday, all we talked about was our booking for a 4 day narrow-boat/canal boat trip and how excited the nextgen+1 are. So there is that, I suppose.
Harry , May 23, 2019 at 12:21 pm
Treeza "Apres moi, le deluge" May. I often wonder why the BoE decided to put her in "Clearing Services".
Andy Raushner , May 23, 2019 at 5:51 pm
I bet she moves onto the Mayland of Europe.
RBHoughton , May 23, 2019 at 6:53 pm
I completely agree and fervently hope that Brexit is the end of Thatcherism in the UK. We want to return to government of the people, by the people, etc., and not this constant flow of concessions to merchants that the moneymen in parliament enact to profit from. It has never yet been the case that electors in UK vote for companies – that's just the Tories working their insidious evil through the Chambers of Commerce – off with their heads. Back to Keynes and caring government.
Joe Well , May 23, 2019 at 8:17 pm
This made me smile: Glenn Greenwald gloating over Theresa May's fall . Back in the day, she detained his future husband to pressure Greenwald over the Snowden docs.
May 23, 2019 | www.nakedcapitalism.com
https://eus.rubiconproject.com/usync.html <img src="http://b.scorecardresearch.com/p?c1=2&c2=16807273&cv=2.0&cj=1" /> FAA Won't Say When Boeing 737 Max Might Fly Again; Foreign Regulators Uppity Posted on May 23, 2019 by Yves Smith The 737 Max situation has developed not necessarily to Boeing's advantage.
A FAA news conference which presumably had restoring faith in the plane and the agency as a major goal didn't appear to make much progress on either front. And it also appears that the FAA placing way too much trust in Boeing had led to the regulator losing its hegemony in certifications. Nicely played!
Boeing's two largest US customers, Southwest and American Airlines, had made statements that they anticipated returning the 737 Max to service in August. That timetable was almost certainly the result of expectations set by Boeing.
That plan has gone up in smoke. The FAA said it wouldn't give an idea as to when the 737 Max would be deemed airworthy again, and a year was not out of the picture, although commentators seemed to regard that long as highly unlikely.
On top of that, the FAA mentioned that Boeing had missed several deadlines for submitting a software fix for the FAA to evaluate, and was set to get it in this week. Not a good look as far as the airlines with mothballed planes are concerned.
Moreover, while the US press for the most part was putting a positive spin, given the givens, on the FAA's press conference, the Financial Times reported that foreign regulators, who are set to meet with the FAA today (Thursday) are taking a tough line on the 737 Max recertification, including insisting on simulator training as a requirement. This confirms a risk we and others had raised before: that the FAA, by doggedly defending the 737 Max when other regulators were proven correct in grounding it, is no longer fully in charge of the certification process. At best, it is having to negotiate terms with key foreign regulators.
Key bits from the Wall Street Journal :
cting Federal Aviation Administration chief Daniel Elwell appeared to undermine industry expectations that Boeing Co.'s grounded 737 MAX jets would be heading toward a smooth and predictable return to the skies.
Mr. Elwell repeatedly told reporters at a news conference Wednesday that he couldn't predict when the fleet would be back in the air, suggesting instead that the process of approving a proposed software fix for the aircraft remains open-ended and subject to various factors -- many outside his control.
Some of his comments seemed to signal potentially months of additional delay, as Mr. Elwell appeared to distance himself from plans by some U.S. airlines to put the jets back into operation in August
The Journal did mention, but downplayed, the further impediment of winning over foreign regulators. Stunningly, it included but failed to flag the significance of the notion that foreign regulators might not accept the FAA's clean bill of health:
In addition to verifying the revised software, the FAA has to establish new training requirements, create enhanced maintenance standards and -- most important -- persuade foreign regulators to endorse the bulk of the eventual U.S. plan
At Thursday's session, FAA officials will detail progress so far and seek suggestions from foreign participants. Weeks ago, air-safety regulators for Canada and the EU said they planned to conduct separate reviews of changes to the automated flight-control feature, called MCAS, along with a safety assessment of the entire aircraft.
"Other countries and other authorities may take longer" to put the planes back into service, Mr. Elwell said, "and they undoubtedly will." Meanwhile, the FAA is asking foreign regulators "what else they would like to see from us," Ali Bahrami, the FAA's top safety official, told reporters.
The Financial Times account is more pointed, perhaps because the reporters got input on where those foreign regulators stand:
Canada, Europe and Indonesia made clear ahead of the meeting that they would set their own conditions for determining when the plane is safe to fly again, threatening the FAA's goal of building consensus for a co-ordinated plan to put the 737 Max back into action.
At least with the pink paper, the Canadians were mum on their requirements, but per earlier remarks, training is on the list. Undermining the US role in certifying planes overseas, Indonesia said it is considering having Transport Canada or the European regulator EASA give a second opinion.
The Financial Times said that the Europeans had three "prerequisite conditions," which Investors Business Daily listed as :
- EASA must approve and mandate any design changes by Boeing
- EASA must complete an additional independent design review
- 737 Max flight crews must be "adequately trained"
And China will be even more stringent. Again from the Financial Times:
China, which was the first big regulator to ground the Max and a crucial market for Boeing, could be one of the last countries to lift its ban, aviation sources said.
Chinese regulators are likely to insist on additional checks before they clear the plane to fly. That could erode the existing convention by which nations recognise safety certifications from the manufacturer nation, and someday provide an opening for Beijing to push for easier recognition of the planes it is developing. Chinese airlines and leasing companies account for at least 10 per cent of Boeing's unfilled order book for the Max.
And the list of countries officially not deferring to the FAA includes Brazil:
Brazil, one of the few global regulators that mandated pilot training on the MCAS before allowing the Max to fly, said it continues to conduct "our own evaluations about the aircraft".
So Boeing's 737 Max crashes, and the FAA's complacency about them, have cost the regulator dearly. And there's no way for the agency to regain its authority. The US can't throw its weight around the way it once did.
Fred W , May 23, 2019 at 5:58 am
The problem is not the MCAS software which can certainly be reprogrammed, it is the aircraft itself that is unbalanced and unsafe. Boeing tried to be too clever, hoping that with covering software no aircrew would notice, and their criminal negligence has caught up with them.
Keep making 737 800NGs, and develop a replacement aircraft, otherwise you're stuffed. Why don't they get the message?
divadab , May 23, 2019 at 6:12 am
Because they think financial "engineering" is more important than actual engineering.
fajensen , May 23, 2019 at 7:05 am
Why don't they get the message?
Because Boeing has become a creature of The Money Pit . Congress will now have their backs forever and the regulators can go hang.
John Baker , May 23, 2019 at 7:45 am
Exactly! Software can do a lot of things for you, it can even temporarily mask a mechanical defect, but a workaround isn't a fix and in something as critical as an airplane, workarounds are unacceptable. I suspect even the MBAs are beginning to realize this.
marku52 , May 23, 2019 at 1:54 pmI once worked on a HW/SW add on for an inkjet printer that was supposed to identify and correct missing nozzles that would cause a print defect. Occasionally the device would misfire (usually due to a hair or spec of dust on the sensor.)
It would then delete entire rows of nozzles causing horrible print defects.
As I pointed out to management, "Any safety device powerful enough to be useful is also going to be dangerous." The device was worse than the problem it was supposed to solve and was removed.
It's clear that without MCAS, these 2 planes would not have crashed.
Carolinian , May 23, 2019 at 7:52 am
the aircraft itself that is unbalanced and unsafe
And yet it has been flying for two years now with the only crashes quite likely tied to broken AOA sensors rather than the balance. To be sure we have every reason to distrust Boeing management at this point–particularly as they won't even admit that they made a mistake. On that basis perhaps all Boeing planes should be grounded. But Boeing does have a strong incentive to make sure there's not another crash because if there is they are finished.
Darius , May 23, 2019 at 12:03 pm
There's no denying that MCAS is a workaround for engines that don't fit the airplane. You don't need an engineering degree to see that's unacceptable.
Carolinian , May 23, 2019 at 12:20 pm
You need to read the serious reports including the Seattle Times investigation. And my reading of that series says that MCAS was a marketing workaround so Boeing could sell the Max as the same plane. The MCAS only kicks in when the airplane is in a near stall and for professional pilots that's supposed to almost never happen -- even if the plane pitches up more than previously on takeoff. If the Max was constantly stalling then we'd be hearing a lot more about it as all sorts of buzzers and verbal warnings and "stick shakers" happen during a stall.
In other words "common sense" also needs accurate information and if any of the above is incorrect then happy to be corrected.
Anon , May 23, 2019 at 1:07 pm
" MCAS was a marketing workaround so Boeing could sell the Max as the same plane."
That is exactly the problem. MCAS was NOT a marketing workaround for occasional aircraft instability. It was a a mild engineering workaround that they marketed to buyers of the 737 Max, so Boeing could make MORE MONEY.
Synoia , May 23, 2019 at 1:22 pm
Engineering v Marketing:
1. You can bullshit Management
2. You Can bullishit the Customer
3. You cannot bullshit the electrons.
Edward , May 23, 2019 at 6:12 am
I don't understand how Boeing can avoid at least using a second Angle of Attack sensor with MCAS. Will the MCAS at least be re-classified as a critical system? If so, doesn't that make a second sensor mandatory?
I tried making this comment yesterday in the Links but it never went through. I sometimes have problems making comments on NC. I used to be able to edit comments.
Carolinian , May 23, 2019 at 7:53 am
Using both sensors has been announced as part of the fix.
Edward , May 23, 2019 at 8:26 am
So there was a second sensor available and MCAS just wasn't using it? I think Boeing wanted a configuration for MCAS that didn't require new training for 737 pilots. Do you know if critical systems are required to have 2 or 3 sensors?
Carolinian , May 23, 2019 at 8:42 am
It was all talked about in the Seattle Times series which can be googled up or was linked here. Any part of the plane that can cause a crash is supposed to use redundant sensors but the MCAS wasn't so designated which surprised even some Boeing engineers. It could be this decision was simply a mistake due to management inattention rather than trying to save money by only using one of the two sensors.
The fact that Boeing won't come clean is their biggest mistake and violates the Tylenol precedent where you try to restore confidence above all else. From what I've read the current Boeing CEO did rise up through the engineering side of the company but came over from their Defense Dept business where mistakes are par for the course and the customer–the Pentagon–doesn't seem to care very much. See the Andrew Cockburn Harper's article that Jerri-lynn linked yesterday.
Edward , May 23, 2019 at 10:08 am
Peter Lemme writes:
"For the first time, Boeing admits MCAS is an extension of Speed Trim, which I have long suspected, and why it was designed with a single input. Speed Trim is constantly applying stabilizer trim commands in manual flight. This masks MCAS trim commands. Further, MCAS trim commands are effectively a slowover and in the case of the Lion Air flights, intermittent.
These factors, combined with the flight deck effects from the high AoA value causing high workload, interfere with the expected human response. There has yet to be any acknowledgement of this, rather the opposite by ignoring it. The FAA repeatedly made the same assertion, the MCAS malfunction is easy to detect."
I think I read somewhere that Boeing was resisting altering MCAS to use two sensors because then 737 pilots would need new training.
Cockburn is also interviewed here: https://scotthorton.org/interviews/5-14-19-andrew-cockburn-on-the-military-industrial-virus/
Boeing used to have a rule that managers from the military part of the company were never transferred to the civilian side. Before becoming Boeing CEO, Muilenburg oversaw a pentagon program that wasted $20 billion before being cancelled.
Ian Perkins , May 23, 2019 at 10:35 am
"I think I read somewhere that Boeing was resisting altering MCAS to use two sensors because then 737 pilots would need new training." – me too. Two sensors would imply it was a critical piece of hardware, requiring pilot training, so they went with one.
Carolinian , May 23, 2019 at 12:22 pm
You'll have to say where you read that because I've not seen it. I don't think the Seattle Times stories said why two were not used–maybe just a mistake?
none , May 23, 2019 at 11:52 am
MCAS was considered non-critical because e.g. if it goes out all of a sudden, the pilot can fly the plane manually, they just have to control the pitch themselves. But for that, they need proper training and a way to turn the MCAS off.
GW , May 23, 2019 at 1:18 pm
A second sensor may not be enough. This system is of the highest criticality. Then there is the question of whether the sensor – which was never intended for direct control is good enough. Then there is the question of whether the sensor is mounted in a protected enough manner. Just think of bird strikes which tend to occur at a time when the sensor is most critical and proximity to ground is a given.
Then there is the question of using trim to do flight control. The several hundred RPMs of the trim wheel when active is imho. alone a safety no-go. And then think about sitting in a plane, not much distance to the ground and the pilots having to rewind under pressure what the automated system just added to their trim. The plane is rapidly gaining speed and after a not so high speed threshold the trim wheel becomes very hard or impossible to move.
And how do these scenarios interact with engine failure during take-off considering the forward mounted engines?
Synoia , May 23, 2019 at 1:53 pm
Simple financial equation : $70k max per passenger.
I believe those were the limits provided by the Warsaw convention agreed just after WW II. When flying, for a very small number of people was quite risky.
I can remember a Shower of Tomato Juice dropping from the ceiling of a plane over the Sahara Desert, me clapping and asking for a repeat performance!
Synoia , May 23, 2019 at 1:29 pm
Why are they mechanical sensors in this day and age, subject to bird shit, and bird strike, and ladder dings?
A spirit level glued (in three places, and with three level tubes) to the aircraft ceiling would work well. Aircraft have had artificial horizons port to starboard for decades. Why no artificial horizon device rotated through 90 degrees for front to back?
ChrisFromGeorgia , May 23, 2019 at 8:12 am
I think the best thing for all here would be for the US to just cut to the chase and bailout Boeing now.
Have the Fed buy up all the Max planes currently sitting in hangars, and have the FAA direct Boeing to turn them into scrap.
Any future orders would have to be cancelled. Fire the board and CEO and put in new one that will have a safety-first mandate. If the loss of revenue while re-engineering a future version of the 737 is severe enough to threaten Chapter 11, then do a GM-style bankruptcy or break up the company into "good co/bad co" and put all the rotten assets in the bad company and wind it down.
Whoamolly , May 23, 2019 at 9:02 am
Why exactly should taxpayers bail out Boeing? Everything else sounds about right to me.
P S BAKER , May 23, 2019 at 10:04 am
Because it's too big to fail?
Doggrotter , May 23, 2019 at 10:59 am
In civilian aircraft here is only Boeing and Airbus, I can't see the US letting Boeing go out out of business for just this reason. Boeing's military side is safe obviously. If the USA was genuinely a capitalist Boeing would go under.
It's funny how the Commie chinks are better at developing industry the the US running dogs.
doug , May 23, 2019 at 10:34 am
Given the bank bailouts, exactly why would the board and CEO have to be fired? Bank dudes got a raise
PlutoniumKun , May 23, 2019 at 9:16 am
My guess is that the Chinese are waiting in the long grass – this is far too juicy a chance for them to strike at the US in retaliation for the tariffs for them to pass up.
They will wait until the FAA gives the green light before they say anything. If they refuse to certify it without a complete redesign, then it kills the MAX stone dead – not just in Asia, but everywhere as no leasing agent will touch it, and European budget airlines like Ryanair will also have to give it a pass as they look to Asia for 'resales' for their used aircraft. It would become too risky a purchase for anyone but exclusively US based airlines.
Carolinian , May 23, 2019 at 9:36 am
But wasn't there some discussion here that the Chinese need the planes and Airbus production is booked up into the future while Max planes are piling up on storage runways? Also such a move for trade war purposes and not provable safety purposes would kick off the trade war in earnest
PlutoniumKun , May 23, 2019 at 10:52 am
China wants rather than needs the planes. It has its own Comac brand and Airbus has a manufacturing plant in China. Its airline industry would survive a shortfall, it just means they'd be running older aircraft longer that they'd want. The damage to China would be minimal compared to what would be inflicted on the US.
Synoia , May 23, 2019 at 1:49 pm
The Chinese have lots of fast trains, which are much more convenient, and provide shorter end-t-end times for trips < 800km.
Leave House: 3.5 hours before take off, fight time, Final destination: 3 hours after landing
Overhead 6.5 hours.
Flying at 300 mph (average), Car vs Plane vs High Speed Train
Effective speed door to door
1 hour flight:300/(6.5) = 61 mph.
2 hour flight:600/(7.5) = 80 mph.
3 hour flight:900/(8.5) = 106 mph (Limit of Car's effective speed).
4 hour flight:1200/(9.5) = 125 mph
5 hour flight:1500/(10.5) = 142 mph (Limit of Fast Train's effective speed)
That's why high speed trans are so popular in Europe and Japan and could be in the US.
Matthew G. Saroff , May 23, 2019 at 9:18 am
Given the nature of MCAS, there should be at least 3 AoA sensors (Airbus uses 4) and at least two separate and independent processors running different processors.
Ian Perkins , May 23, 2019 at 10:31 am
I was going to say much the same thing. The best a software fix can do is use data from the two existing sensors. Will foreign airlines and regulators be satisfied with that?
The Rev Kev , May 23, 2019 at 9:29 am
'The 737 Max situation has developed not necessarily to Boeing's advantage.' Hah! I like that. It's like the time that the Challenger Shuttle blew up on takeoff and a controller said 'Obviously a major malfunction'
This is all good information this. I was thinking about all the money that will have to be use to store those 737s, modify & upgrade them, re-certify them and then compensate the airlines for lost revenue. Hoo boy. At the very least it must be in the hundreds of millions. If the Europeans have three "prerequisite conditions" before certifying that plane, namely
EASA must approve and mandate any design changes by Boeing
EASA must complete an additional independent design review
737 Max flight crews must be "adequately trained"
Then that totally blows away the whole justification of the 737 MAX program. The idea of that program was to modify the 737 and tell airlines that it worked same as the old one and needed no training for the pilots and, by accepting the word of the FAA about its certification, the plane was ready to fly upon delivery. Now it is to be treated for what it is – a whole new plane redesign.
The biggest loser from this mess, apart from the dead that is, is the FAA. Instead of nailing their colours to the mast over the airworthiness of the 737 MAX , the FAA nailed their trousers to the mast instead which meant that they can no longer climb down. Their international status is now shot and there may be even more mistrust about sending black boxes to the US for decoding. You only have that in a no-trust situation. And you don't get trust back on this level except after years of hard work.
Carolinian , May 23, 2019 at 9:40 am
What? You think the FAA is going out of business? Distrust of the FAA may hurt the US airplane business but the US has ways to retaliate when it comes to Airbus and others.
Edward , May 23, 2019 at 10:52 am
"The biggest loser from this mess, apart from the dead that is, is the FAA."
What does it take to put the brakes on deregulation? Apparently, more then the 2008 financial crash. It seems like the U.S. will only relent on this when it is forced to with a gun to its head.
Marshall Auerback , May 23, 2019 at 11:47 am
'The 737 Max situation has developed not necessarily to Boeing's advantage.' I believe that is how Emperor Hirohito described the situation when he announced Japan's unconditional surrender to the Allied coalition.
As an aside, when these Boeing articles first started making their appearance in this blog (which was a very good thing), there was pushback from some readers in regard to the prevailing narrative. The implication was that the plane was fine and that this was a case of "pilot error". How odd that virtually none of the aviation authorities around the world view it in those simple terms.
flora , May 23, 2019 at 12:00 pm
Yes, that was the Emperor's description of the situation.
I'll offer this Milton Friedman quote for good measure of just how wrong Mr. Friedman was:
"Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government." – Milton Friedman
No need for regulations to protect public safety. That just gets in the way of the great market god, which is infallible /s
All this deregulation has degraded the "made in the USA" label to the point other governments now question its implied guaranty of safety and soundness. Hard to complain about "cheap Chinese imitations" when Boeing itself is only an imitation of its former self.
Carolinian , May 23, 2019 at 12:27 pm
Who said that? One of our commenters said that the pilots may have made some errors. That's not the same thing.
Boeing is of course to blame if their faulty software is at the root of the crashes. No faulty software, no crashes.
Ian Perkins , May 23, 2019 at 11:20 am
According to Satcom Guru, "Boeing has released a description of the MCAS related changes they are proposing.
1) Flight control system will now compare inputs from both AOA sensors. If the sensors disagree by 5.5 degrees or more with the flaps retracted, MCAS will not activate."
Since MCAS is there because of the Max's tendency to go nose up and stall, won't this mean that if one of the two sensors fails, MCAS won't kick in and the plane may try to go nose up and stall?
Any pilots out there to clarify?
Edward , May 23, 2019 at 11:35 am
I posed this question on an earlier thread and was told by 737 Pilot that
"As a general rule, commercial pilots try not to get anywhere near a stall.
There are circumstances that either from inattention or some environmental effect like windshear, the aircraft may get dangerously close to a stall, but these are decidedly rare events. Assuming that MCAS was designed right in the first place, it is entirely possible that the entire MAX fleet could operate for years before MCAS was ever needed.
There are numerous systems on any commercial aircraft that can malfunction. When that happens, we execute the appropriate procedures and either continue the flight to destination or land short at a suitable airport. In either case, the procedure will provide guidance on any additional precautions that should be taken. When the MAX is returned to service, I suspect that we will have a new non-normal procedure that will provide this guidance. Offhand, it will probably just advise pilots to exercise greater diligence and/or restrict the flight envelope."
MCAS may not be needed at all. Boeing's main motivation for installing this system may been to avoid a training requirement for 737 pilots.
Ian Perkins , May 23, 2019 at 12:28 pm
Pilots may "try not to get anywhere near a stall", but Max pilots were given 2 hours on an iPad and told it behaved like previous 737s. Thus, might they have found themselves unexpectedly going nose up and stalling without MCAS?
Carolinian , May 23, 2019 at 1:08 pm
Apparently the stall tendency is only when the engines are at full power. As anyone who's ever taken a flight knows, that's when you hear those engines start to roar as the plane moves down the runway on takeoff. One of the pilots is always at the controls and manually flying the plane as it lifts off. Also the flaps are down so the MCAS was not even able to come on until fully airborne (as designed it only works when the flaps are up and above 1000 ft). Meanwhile at cruising altitude the autopilot is robotically flying the plane unless there is turbulence or some such and therefore MCAS is irrelevant. When the plane lands the pilot(s) are once again manually flying the plane in case there's an emergency or the airplane has to go around to avoid an obstruction on the runway. And when descending it is slowing down, not speeding up so presumably MCAS is once again irrelevant.
Note in the Edward comment above the result should the now two AOA sensors disagree is to simply turn off the MCAS. You wonder why they didn't simply remove MCAS as the "fix."
JBird4049 , May 23, 2019 at 1:37 pm
Note in the Edward comment above the result should the now two AOA sensors disagree is to simply turn off the MCAS. You wonder why they didn't simply remove MCAS as the "fix."
The death of common sense? Boeing playbook seems to consist of only delay, evade, deny, lie, and if all else fails spew endless amount of bovine excrement over everything with the goal being to make as much money as possible right now .
Stopping, stepping back, and re-evaluating what they were doing would have required some self-awareness, at least a shred of responsibility and a conscience, plus a something beside the next quarter's pay and bonus amounts. It is as they were addicted to money, and like most addicts, could only think on how to get their next ever increasing fix. That is how most addicts destroy themselves by losing any sense of how their actions are affecting others, or worse, actively denying it to others. It is one think to mess up, and be destructive, for we are all human, but it is quite another to almost mindlessly destroy others for that damn fix. Boeing is not making mistakes. It is betraying everyone else.
May 23, 2019 | www.zerohedge.com
Gold Banit , 28 minutes ago link
Half of the DemoRat voters can't read...Sad
DETROIT (WWJ) – According to a new report, 47 percent of Detroiters are "functionally illiterate." The alarming new statistics were released by the Detroit Regional Workforce Fund on Wednesday.
WWJ Newsradio 950 spoke with the Fund's Director, Karen Tyler-Ruiz, who explained exactly what this means.
"Not able to fill out basic forms, for getting a job -- those types of basic everyday (things). Reading a prescription; what's on the bottle, how many you should take just your basic everyday tasks," she said.
"I don't really know how they get by, but they do. Are they getting by well? Well, that's another question," Tyler-Ruiz said.
Some of the Detroit suburbs also have high numbers of functionally illiterate: 34 percent in Pontiac and 24 percent in Southfield.
"For other major urban areas, we are a little bit on the high side We compare, slightly higher, to Washington D.C.'s urban population, in certain *** codes in Washington D.C. and in Cleveland," she said.
Tyler-Ruiz said only 10 percent of those who can't read have gotten any help to resolve it.
The report will be used to provide better training for local workers.
Note: Illiteracy rates are from the National Institute for Literacy , as reported in a new study by the Detroit Regional Workforce Fund .
May 22, 2019 | www.youtube.com
Axle Grind , 4 hours agoMary Czarnik , 6 hours ago
liz warren gains traction. she's built low to the ground for torque.G Watsittoyaa , 1 day ago
Dems only need few select states to campaign in and they will win elections all the time. Everybody is playing the racists card when they do not like what is said or done!!
Demoncrats run on Identity Politics ; thats all they see.
May 22, 2019 | www.zerohedge.comVia the Conservative Treehouse :
No-one really knows the extent of the current documents and/or information that may be subject to a Trump declassification request. However, this is the original list as outlined in September 2018, and the agencies who would be involved in the declassification process:
- All versions of the Carter Page FISA applications (DOJ) (DoS) (FBI) (ODNI).
- All of the Bruce Ohr 302's filled out by the FBI. (FBI) (ODNI)
- All of Bruce Ohr's emails (FBI) (DOJ) (CIA) (ODNI), and supportive documents and material provided by Bruce Ohr to the FBI. (FBI)
- All relevant documents pertaining to the supportive material within the FISA application. (FBI) (DOJ-NSD ) (DoS) (CIA) (DNI) (NSA) (ODNI);
- All intelligence documents that were presented to the Gang of Eight in 2016 that pertain to the FISA application used against U.S. person Carter Page; including all exculpatory intelligence documents that may not have been presented to the FISA Court. (CIA) (FBI) (DOJ) (ODNI) (DoS) (NSA)
- All unredacted text messages and email content between Lisa Page and Peter Strzok on all devices. (FBI) (DOJ) (DOJ-NSD) (ODNI)
- The originating CIA "EC" or two-page electronic communication from former CIA Director John Brennan to FBI Director James Comey that started Operation Crossfire Hurricane in July 2016. (CIA) (FBI) (ODNI)
♦ President Trump can prove the July 31st, 2016, Crossfire Hurricane counterintelligence operation originated from a scheme within the intelligence apparatus by exposing the preceding CIA operation that created the originating "Electronic Communication" memo. Declassify that two-page "EC" document that Brennan gave to Comey. [The trail is found within the Weissmann report and the use of Alexander Downer -- SEE HERE ]
♦ Release and declassify all of the Comey memos that document the investigative steps taken by the FBI as an outcome of the operation coordinated by CIA Director John Brennan in early 2016. [The trail was memorialized by James Comey -- SEE HERE ]
♦ Reveal the November 2015 through April 2016 FISA-702 search query abuse by declassifying the April 2017 court opinion written by FISC Presiding Judge Rosemary Collyer. Show the FBI contractors behind the 85% fraudulent search queries. [Crowdstrike? Fusion-GPS? Nellie Ohr? Daniel Richman?] This was a weaponized surveillance and domestic political spying operation. [The trail was laid down in specific detail by Judge Collyer -- SEE HERE ]
♦ Subpoena former DOJ-NSD (National Security Division) head John Carlin , or haul him in front of a grand jury, and get his testimony about why he hid the abuse from the FISA court in October 2016; why the DOJ-NSD rushed the Carter Page application to beat NSA Director Admiral Mike Rogers to the FISA court ; and why Carlin quit immediately thereafter.
♦ Prove the Carter Page FISA application (October 2016) was fraudulent and based on deceptions to the FISA Court. Declassify the entire document, and release the transcripts of those who signed the application(s); and/or depose those who have not yet testified. The creation of the Steele Dossier was the cover-up operation. [ SEE HERE ]
♦ Release all of the Lisa Page and Peter Strzok text messages without redactions . Let sunlight pour in on the actual conversation(s) that were taking place when Crossfire Hurricane (July '16) and the FISA Application (Oct '16) were taking place. The current redactions were made by the people who weaponized the intelligence system for political surveillance and spy operation. This is why Page and Strzok texts are redacted!
♦ Release all of Bruce Ohr 302's, FBI notes from interviews and debriefing sessions, and other relevant documents associated with the interviews of Bruce Ohr and his internal communications . Including exculpatory evidence that Bruce Ohr may have shared with FBI Agent Joseph Pientka. [And get a deposition from this Pientka fella] Bruce Ohr is the courier, carrying information from those outside to those on the inside.
♦ Release the August 2nd, 2017, two-page scope memo provided by DAG Rod Rosenstein to special counsel Robert Mueller to advance the fraudulent Trump investigation, and initiate the more purposeful obstruction of justice investigation . Also Release the October 20th, 2017, second scope memo recently discovered. The Scope Memos are keys to unlocking the underlying spy/surveillance cover-up. [ SEE HERE and SEE HERE ]
He–Mene Mox Mox , 22 minutes ago linkHaboob , 34 minutes ago link
If Obama's Intel Chiefs are Panicking over the Declassification of the "Bucket 5" Russiagate Docs by Trump, I am really surprised that they haven't ordered a hit squad to take out Trump. Isn't that normally how the CIA operates?
Think back! Didn't the CIA do that with Kennedy, when he threatened to shut them down? The enormity of the CIA's Bay of Pigs disaster came home to Kennedy to do something, and said to one of the highest officials of his Administration that he “wanted to splinter the C.I.A. in a thousand pieces and scatter it to the winds.” So, likewise, what is keeping them from terminating Trump to protect their turf?
Of course, Bernie Sanders would be facing the same problem too, since Bernie, during his 1974 campaign for the Senate on Vermont’s Liberty Union Party ticket, called the Central Intelligence Agency “a dangerous institution that has got to go.” Sanders complained that the CIA was only accountable to “right-wing lunatics who use it to prop up fascist dictatorships.”
Jeremy Bash, a former CIA chief of staff who was an adviser to Hillary Clinton’s campaign, told reporter Michael Crowley that Sanders’ comment “reinforces the conclusion that he’s not qualified to be commander in chief.”monty42 , 30 minutes ago link
Trump is a *** not worth defending anymore.monty42 , 38 minutes ago link
He's certainly a compliant slave of them at least. Anyone with his ego and self-importance, with such value on his legacy and his name, makes the perfect puppet over a barrel. Just like his predecessor who didn't care as long as he got to smile in the spotlight. It's enough to make a person sick, recycled over and over and over, and people keep chasing that tail.
But still refused to release JFK classified docs. I guess the cabal he works for is waiting until anyone who remembers him is dead, and all that's left are the new wave of retards they're pumping out of their indoctrination camps.
May 22, 2019 | www.zerohedge.com
monty42 , 44 minutes ago link
"Just need Trump re-elected, then he can really stick it to the so-called deep state." R zombie voter.
"Obama's going to close Guantanamo, just needs a second term to get everything done." D zombie voter.
May 22, 2019 | www.zerohedge.com
Gold Banit , 40 minutes ago link
Bend over you American sheep (people) and smile as your Masters (politicians) are going to **** you up the *** again...Fact
I hope I am wrong but nobody will get charged or go to jail, both parties are joined at the hip and are above the law....Fact
Welcome to America, the home of the dumb naive brainwashed and just ******* stupid....Fact
The USA Is The Most Corrupt Lying Nation On The Planet....Fact
Hillary Clinton will never be charged and will never go to jail...Fact
The USA was behind 911....Fact
The USA did not land a man on the Moon....Fact
Half of the USA can't read...Fact
Half of the USA is dumb naive brainwashed and stupid....Fact
Half of the USA still think that Russians voted in the 2016 election...Fact
Half of the USA think that Hillary Clinton is their President...Fact
Half of the USA can't find USA on a map...Fact
The USA has the most fat ugly people on the planet.....Fact
May 22, 2019 | www.zerohedge.com
CaptainMoonlight , 41 minutes ago linkmonty42 , 31 minutes ago link
Hang those traitors before the People do.
Problem is, you can't expect traitors to hang traitors.
May 21, 2019 | www.zerohedge.com
If there was any lingering doubt that President Trump has treated Huawei like a 'bargaining chip' during trade talks with the Chinese, Bloomberg just put the issue to rest.
In a report sourced to administration insiders, BBG reported that the Trump administration waited to blacklist Huawei until talks with the Chinese had hit an impasse, because they were concerned that targeting Huawei would disrupt the talks. Plans to punish Huawei - including possible economic sanctions - had been kicking around for months. And prosecutors took their first tentative steps toward holding Huawei 'accountable' by convincing Canada to arrest Huawei CFO Meng Wanzhou.
And once trade talks had broken down, there was a 'scramble' to implement the measures against Huawei.
Though BBG doesn't offer a definitive answer on this, it reports that some are suspicious that Trump is pressuring Huawei to 'gain a negotiating edge' with Beijing (meanwhile, the Chinese leadership are furious about the decision).
Timing of the U.S. action raised questions about whether President Donald Trump is punishing the company in part to gain a negotiating edge with Beijing in a deepening clash over trade. Talks between Beijing and Washington deadlocked this month as Trump accused China of backing out of a deal that was taking shape with U.S. officials, saying China reneged on an agreement to enshrine a wide range of reforms in law.
Another take on what happened suggested that the decision to hold back on Huawei actually came from the bureaucracy, as administration officials were worried President Trump would just scrap the measures as a favor to Xi, like he did last year with ZTE Corp. Those concerns haven't entirely abated.
Washington has offered Huawei some wiggle room by suspending the new restrictions for 90 days. The company has been stockpiling chips, and reportedly already has enough to keep its business running for three months.
But this report effectively confirms that the administration wasn't being entirely truthful when it said there was 'no link' between Huawei and the trade talks. Trump said back in December that he would go so far as to intervene in efforts to extradite Meng Wanzhou if it would help with the trade talks. And although that would be extreme, we should rule it out just yet.
AChinese , 22 minutes ago linkB-Bond , 9 minutes ago link
What the art of deal? When the talk hits an impasse, threat them!Teamtc321 , 47 minutes ago link
"impasse"? Who's Your Friend─ChiCom 🤔 N. Korea 😆
EU and China struggle over key concerns ahead of summit😲
Yet the summit might not produce a joint statement - as previous Chinese pledges on speeding-up talks on an investment agreement, plus opening up its markets more to European companies, have failed to materialise.
"We can certainly agree on a joint statement, the question is how substantive this will be," a senior EU official said. The EU wants to see concrete steps from China.
Failing to agree on a joint statement, however, is a sign of the EU's unsuccessful bid to commit China to give greater access of its markets to European companies, and engage seriously in reforming global trade rules within the World Trade Organisation (WTO).
The EU hoped to make China address longstanding European complaints, and to commit to concluding an investment agreement that aims to secure better market access and fair treatment for European companies in China by 2020.
The EU also hopes to achieve an agreement on indications of geographical origins to protect European brands in China by the end of the year.
An EU official said that the recent foreign investment law adopted in China, does not address all the issues of concern for Europeans, for instance on prohibited sectors, dual regime for foreign and domestic operations, and on forced technological transfer.
"We agree there has been a lot of promises, it is time for action, not only words. […] We want to make sure we have a modern framework for investment protection in a binding agreement with mechanism to solve disputes," the EU official added.
Why China is cozying up to Europe🤔
“While the [European] Commission is getting tougher on China, at least for now it does not seem to be aiming for a confrontation with China,” he said.
But even if the EU doesn’t fully align itself with the increasingly hawkish Trump administration , a shift in China-EU relations seems inevitable.
“The EU has no interest in cooling its China relationship, but if it does not act now to protect its economy from unfair state-owned enterprise competition in the EU market, then the citizens of Europe might ask for more protection,” Wuttke said.
“[There is] growing realism in Europe and the end of naivety when it comes to China.”
Exclusive: In China, the Party’s push for influence inside foreign firms stirs fears😲
BEIJING (Reuters) - Late last month, executives from more than a dozen top European companies in China met in Beijing to discuss their concerns about the growing role of the ruling Communist Party in the local operations of foreign firms, according to three people with knowledge of the discussions.
https://www.reuters.com/article/us-china-congress-companies/exclusive-in-china-the-partys-push-for-influence-inside-foreign-firms-stirs-fears-idUSKCN1B40JUSickDollar , 1 hour ago link
China got fucked the minute they agreed to invest trillions into US debt securities in exchange for being given unlimited access to sell into the US market. This terrible arrangement set them up to be crushed economically if the US were to close its doors to Chinese exports, and to lose much of what they made from their trade surplus with the US if they ever tried to unload their holdings.
Their main stock market now is down over 30% since the tariffs went into force last June, and they are closing factories so fast that the price of oil to heat and power those factories has fallen by the same 30+% as the Chinese stock market. And now, were the Chinese to start off loading their US Treasury holdings, they would drive the bond market down about 10-20%, which would be another several hundreds of billions of dollars lost. A clean sweep mop up operation would be done by the Fed and Anointed Banks in a afternoon. Answer this, why is a good soldier to the PLA, HSBC advertising like crazy for deposit's in $ when they have unlimited access to the Yuan? BOOM !!!
China's future access to U.S. dollars via their exports is the sword hanging above their Chicom heads.
The Chinese were advised for a long time that they were going to have to make changes in their trade policies if they were to avoid their present troubles. They were told not to hold the US Treasury securities they were forced to buy, and instead sell them off slowly and re-invest the capital into domestic infrastructure projects that would expand the size of the Chinese middle class. And they were told to diversify their export markets, so that they would not be so dependent on the US consumer to buy Chinese products, The Chinese did little on the first initiative, and little on the second as well, although the second is difficult to accomplish since there are not many consumer markets that can buy anywhere near what the US can buy.
Not a pretty picture. But many saw this day coming. Unfortunately for China, not nearly enough of the decision makers in the Forbidden City did. Xi Jinping played the card to walk away from agreed upon section of the trade deal, he played his hand. Confusis say, you made your bed now sleep in it...............
China would go from having the largest overall trade surplus in the world to having a trade surplus smaller than Ireland if you take away the U.S. Trade Surplus China Steals……….
Xi Jinping has now lost Face and the Entire Globe now knows it.free corn , 1 hour ago link
I swear our politicians are so dumb, full of Hubris and excellent crooks
Aggression, Violence, and Threats never ever works
All you did is awaken the Dragon.CashMcCall , 1 hour ago link
Sure America is leader in Political Technology and has best politicians.CashMcCall , 1 hour ago link
Well that should end the extradition case of Ms Weng. Clearly politically motivated. Her attorney's Steptoe in DC are top drawer. This also means that Huawei may sue Trump for damages.Savvy , 1 hour ago link
That's because Steptoe never loses to the DOJ. There are three top firms in DC that are DOJ killers. Steptoe is one of them. Williams & Connolly another. The Ted Stevens Case was the greatest legal slaughter of the DOJ in history. 6 Gov attorney's sanctioned and threatened by the Judge for disbarment. That's the way to kick the Gov ***. All six counts dropped!
Meng is still in Canada so that is a Canadian Jurisdiction but the Canadian law is express that political motivation is insufficient grounds for extradition. This is evidence of precisely that.
All this over a charge of fraud... LOL. It doesn't get any weaker than that!CashMcCall , 46 minutes ago link
Canada isn't all that enamored of US trade policy atm. Like the rest of the planet. It's quite possible Canada's courts simply refuse the extradition.scaleindependent , 1 hour ago link
Trudeau is a wrist licking slime, hope your courts are apolitical.CashMcCall , 1 hour ago link
what would happen to apple and alphabet stock prices if China did the same thing to them, that we did to Huawei?
China will never do that. They are about business and they are not going to harm a customer over politics. Trump does this routinely. He puts sanctions on Venezuela to harm the women and children to soften up the Gov. He has done it with Russia. It is always indirect attacks to get something unrelated. The cowardly conduct of a bully. Hitler did the same sort of things. The siege of Stalingrad for example.
The damage Trump is doing to Google is incomprehensible. Huawei is one of Google's largest customers. Can you even imaging the implications?
If you were a manufacturer of smartphones and were licensing an OS from Google and Trump then blocks the license.... How many makers of smartphone do you think will want to be dependent on this kind of lunatic gov? No country should want to deal with the US for anything. Look at Russia, they were buying jet engines for their MC 21 and Trump Gov cuts them off. Now they are making their own engines not buying US made engines. How does that help the US manufacturer? Russia will make their engines and compete with the US makers.
None of what Trump does makes any sense at all.
May 21, 2019 | www.counterpunch.org
May 20, 2019 Private Equity is a Driving Force Behind Devious Surprise Billings by Eileen Appelbaum Surprise medical bills are in the news almost daily. Last Thursday, the White House called for legislation to protect patients from getting surprise doctor bills when they are rushed to the emergency room and receive care from doctors not covered by insurance at an in-network hospital.
The financial burden on patients can be substantial -- these doctor charges can amount to hundreds or even thousands of dollars.
What's behind this explosion of outrageous charges and surprise medical bills? Physicians' groups, it turns out, can opt out of a contract with insurers even if the hospital has such a contract. The doctors are then free to charge patients, who desperately need care, however much they want.
This has made physicians' practices in specialties such as emergency care, neonatal intensive care and anesthesiology attractive takeover targets for private equity firms.
As health reporter Bob Herman observed , acquisition of these health services "exemplifies private equity firms' appetite for buying health care providers that wield a lot of market power."
Emergency rooms, neonatal intensive care units and anesthesiologists' practices do not operate like an ordinary marketplace. Physicians' practices in these specialties do not need to worry that they will lose patients because their prices are too high.
Patients can go to a hospital in their network, but if they have an emergency, have a baby in the neonatal intensive care unit or have surgery scheduled with an in-network surgeon, they are stuck with the out-of-network doctors the hospital has outsourced these services to.
This stands in stark contrast to other health-care providers, such as primary-care physicians, who will lose patients if they are not in insurers' networks.
It's not only patients that are victimized by unscrupulous physicians' groups. These doctors' groups are able to coerce health insurance companies into agreeing to pay them very high fees in order to have them in their networks.
They do this by threatening to charge high out-of-network bills to the insurers' covered patients if they don't go along with these demands. High payments to these unethical doctors raise hospitals' costs and everyone's insurance premiums.
That's what happened when private equity-owned physician staffing firms took over hospital emergency rooms.
A 2018 study by Yale health economists looked at what happened when the two largest emergency room outsourcing companies -- EmCare and TeamHealth -- took over hospital ERs. They found:
" that after EmCare took over the management of emergency services at hospitals with previously low out-of-network rates, they raised out-of-network rates by over 81 percentage points. In addition, the firm raised its charges by 96 percent relative to the charges billed by the physician groups they succeeded."
TeamHealth used the threat of sending high out-of-network bills to the insurance company's covered patients to gain high fees as in-network doctors. The researchers found:
" in most instances, several months after going out-of-network, TeamHealth physicians rejoined the network and received in-network payment rates that were 68 percent higher than previous in-network rates."
What the Yale study failed to note, however, is that EmCare has been in and out of PE hands since 2005 and is currently owned by KKR. Blackstone is the once and current owner of TeamHealth, having held it from 2005 to 2009 before buying it again in 2016.
Private equity has shaped how these companies do business. In the health-care settings where they operate, market forces do not constrain the raw pursuit of profit. People desperate for care are in no position to reject over-priced medical services or shop for in-network doctors.
Private equity firms are attracted by this opportunity to reap above-market returns for themselves and their investors.
Patients hate surprise medical bills, but they are very profitable for the private equity owners of companies like EmCare (now called Envision) and TeamHealth. Fixing this problem may be more difficult than the White House imagines.
This column first appeared on The Hill .
May 21, 2019 | www.zerohedge.com
Washington announced last week that it would impose new prohibitions on Huawei, including a ban on US companies selling components or services to the telecoms giant. The seriousness of these actions is difficult to understate, as Rosenblatt Securities analyst Ryan Koontz explained. If Huawei is pushed to the brink of collapse, Beijing might label this 'an act of war'.
"The extreme scenario of Huawei's telecom network unit failing would set China back many years and might even be viewed as an act of war by China," Koontz wrote. "Such a failure would have massive global telecom market implications."
But bringing a massive global Chinese firm to its knees is one way to demonstrate to Beijing, and the rest of the world, which ignored Washington's warnings about Huawei, the true reach of American economic power. And it's one way to put a timer on talks with Beijing, ensuring that the trade skirmish won't drag on until the height of campaign season.
American firms weren't the only ones to act. In Europe, German chipmaker Infineon Technologies said it would suspend deliveries to Huawei, at least until it has had a chance to determine the significance of Washington's executive order (though company sources later denied these reports and said shipments to Huawei would continue).
Since hostilities with the US began, Huawei has been stockpiling components. It now has enough of a buffer supply to keep its business running without interruption for at least three months. Nikkei reported late last week that Huawei had reportedly asked suppliers to help it build up enough stockpiles to last it a year, but it's unlikely that Huawei has accumulated enough buffer stock to last it anywhere near as long.
If Washington refuses to back down, this three-month window might become the next critical deadline for the trade talks.
If it wasn't clear before, we now know that President Trump wasn't kidding when he said late last year that Huawei could become 'a bargaining chip' in the trade skirmish. Whether the prosecution of Meng Wanzhou factors into it remains to be seen, but President Trump did tell Fox News over the weekend that he wouldn't allow China to surpass the US on his watch.
Huawei's odds of finding replacement suppliers are slim, as Koontz explained. Huawei "is heavily dependent on U.S. semiconductor products and would be seriously crippled without supply of key U.S. components."
It's clear where Beijing stands on this. We wouldn't be surprised to see a 'consumer movement' emerge in China where middle-class consumers ditch foreign phones and proudly proclaim their support for Huawei.
pic.twitter.com/iAdB3MCJK7-- Hu Xijin 胡锡进 (@HuXijin_GT) May 20, 2019
On Sunday afternoon, President Trump threatened Iran with military intervention via tweet. Yet, analysts blamed the growing pressure on Huawei for the risk-averse trading atmosphere.
US stocks were on track to open lower. Meanwhile, Huawei's dollar-denominated corporate bonds tumbled again on Monday after one of their biggest declines in recent memory on Friday. The selloff comes as fears of a Huawei bankruptcy are beginning to intensify.
Beijing has maintained its aggressive posture, with its Ministry of Foreign Affairs warning in response to news of the Google ban that China would do what it needed to do to protect its companies' "legitimate rights", and also hinted at legal actions it might take. Over the weekend, Beijing compared the trade skirmish with its actions in the Korean War, about as clear a sign as any that we're in for a protracted conflict.
Whatever happens, it looks like the showdown over Huawei has eclipsed the broader trade-war narrative. So much for the Huawei crackdown being a 'separate issue' from the trade talks, like Trump officials had previously insisted.
Bottom line: If we don't get a deal by the end of June, this trade war is going to really heat up.
me or you , 2 minutes ago linkfrankthecrank , 5 minutes ago link
Imaging a phone without Google spyware or Intel backdoors...it's a win win for all of us.Herdee , 6 minutes ago link
So, Huawei is dependent upon Western semiconductor manufacturers. But I thought the Chinese were the leaders in innovation? That's all I hear on here and elsewhere. Seems to me that they should have invented and created their own semiconductor industry back in the 1800's when Westerners began to mess with them. One would think that the great and powerful and super duper intelligent Chinese would have discovered and invented it first in the first place. Certainly the Chinese or their pals in the USSR could have done so sometime in the '50s, '60s, '70s, '80s or '90s? No?giovanni_f , 13 minutes ago link
Christine Lagarde and the IMF team in China:
http://www.xinhuanet.com/english/2019-04/24/c_138005457.htmadmin user , 14 minutes ago link
The US might win this battle but it has already lost the war. It is in a position similar to Ukraine which was the richest and most developed Sovjet republic after the breakup - but which is now one of the biggest shitholes in the entire Galaxy, feasted upon by a bunch of Zionazi oligarchs. Think of the US as an Ukraine on steroids.
Trump and his diverse actions will hurt Huawei. Maybe even badly. Long term, maybe even short term, the US won't gain anything from it. It is in a position where it can only lose. Not because the potential of the US isn't "terrific" (actually it coud be the most promising country) - but because the US is designed to fail as it is basically a failed state already.cledus , 17 minutes ago link
Alphabet has announced that it will cut off Huawei Mobile's access to most of its Android operating system offerings
android is open source, anyone can download and modify it
you just wont get Google Play Store
What good is a phone call if you're unable to speak?Spaced Out , 19 minutes ago link
The real prob as I see it, Huawei can not be monitored or hacked into by the NSA, CIA and all the other US intelligence agencies.
They've been shut out and don't like it.Herdee , 27 minutes ago link
Lol, there are already better alternatives to android, such as /e/. This dumb move will only hasten the demise of google, etc. Mugs!HopefulJoe , 34 minutes ago link
http://www.xinhuanet.com/english/home.htmTo Hell In A Handbasket , 44 minutes ago link
Google is EVIL, no way they are walking away from an evil company, have they walked away from China also? No, they are giving them code daily...CheapBastard , 33 minutes ago link
The beginning of USSA mercantilism being played out. The USSA simply cannot compete and lagging behind in 5G is only the start.Shockwave , 44 minutes ago link
We have some of the best software engineers in the world...ask Sameer and Raja in our IT department.silverwolf888 , 53 minutes ago link
Im confused, how would not choosing to do business with Huawei possibly be considered an act of war?
Especially when China largely keeps their markets closed to the west?
After speaking to some Chinese immigrrants... according to them, they'll never come to any kind of fair agreement with the west. They're not interested in a level playing field at all. All they care about is making sure the Chinese state gets all the benefits in order to further Chinas power and influence.yerfej , 45 minutes ago link
Great news. Huawei already has completed development of its own OS, no doubt an Android clone. This finally gives us a path off of the Goolag/ Android OS. In 19 months Rabbi Trump will be gone, which is good, but his destroying the Android monopoly may be his biggest achievement.DelusionsCrowded , 39 minutes ago link
An android clone? No way that would be stealing again. No they will make their own special sauce OS that will electrocute the citizen if they don't adhere to the state directives.
There are so many other better ways to run a phone interface , I wonder if these two systems have been kept as monopolies so that the Spooks at the NSA and CIA are able to find their way around easily
May 20, 2019 | www.nakedcapitalism.com
Reader Petter S sent along a recent article The Myth of Convenience , by L.M. Sacasas, Director of the Center for the Study of Ethics and Technology. The piece covers a lot of ground in a relatively short space, so I encourage you to read it in full, along with his earlier post, Privacy Is Not Dying, We're Killing It .
The point of departure for Sacasas' post on convenience was an essay by Colin Horgan, The Tyranny of Convenience. As you'll see soon enough, Sacasas starts with familiar material and takes it in some unexpected but important directions.
Hogan, who provided the grist for the Sacasaa post, with well-warranted ire at the notion that JetBlue was using facial recognition, as described here:
He continues with other examples of "Are we sure we are really net positive from technology?"
In the ongoing and growing opposition to the seemingly dystopian world technology companies are building, convenience is often overlooked. But it's convenience, and the way convenience is currently created by tech companies and accepted by most of us, that is key to why we've ended up living in a world we all chose, but that nobody seems to want .
Convenience is signing up to a social media platform to keep in touch with friends and family and keep abreast of current events, and then discovering that the personal information you've been required to upload to enable your account has been used to micro-target you with disinformation.
Convenience is buying a digital assistant for your home to make hands-free information searches easier, and later finding out that employees of the company that makes it are able to listen to the commands you've been giving it -- or that its recordings of the ambient sounds of your home have been mailed to someone you don't know ,
Convenience is downloading a weather app to check whether you need to pack an umbrella, only to later realize that the app's code makes it easy for someone to track your movements with such specificity that no amount of anonymization of the data would hide that it was you entering a Planned Parenthood, or riding along with the mayor of New York City
Convenience is driving a car for a ride-hail company because it promises flexible hours, only to find yourself making less than minimum wage and subject to phantom price surge promises, the absolutism of personal star ratings, and constant surveillance, including messages that prompt you to get back to driving like a notification that your phone is unmounted.
Putting the Uber/Lyft driver case aside, which is more a case of misleading marketing, I find it hard to understand the appeal of these supposed conveniences. But some people who may not find the use cases all that useful if they thought about it are also swept along by social and institutional pressure. A lot of schools use Facebook to organize extracurricular activities, like sports teams. I wonder how many people got the Amazon Echo just to show their friends they were cool when it was still novel to have one.
And I don't mean to sound critical of MacKenzie Fegan, but if she was that bothered by having to stare into a camera, why didn't she say something then? Unless she was the very first in line (unlikely; pre-boarding types go first), she would have seen other people getting their mugs shot. You can opt out of the body-scanning machines. It looks as if what social psychologists call "group assent" (where people go along with something because those around them signal that it is OK) or fear of making a ruckus at a check point either desensitized or cowed her. 1
But let us return to the bigger theme, that of the supposed convenience advantage of technology. Overwhelmingly, the recent debate over technology is over the loss of privacy, as in giving up our data is the price of getting things that make our lives more "convenient". But even that premise isn't questioned that often, when the "convenience" benefit too often fails to materialize.
Technology allow advertisers to hound you with ads on flat screens in ride share vehicles and taxis. It's made voting less secure and at least from what I can tell in NYC, no faster (plus those old fashioned voting machine with the toggles were fun). Lambert describes how in one supposedly very tech savvy Asian city, they've installed pay by phone for their metro system .and it's way slower than using coins.
But despite the existence of counterexamples and tradeoffs .what exactly is this convenience supposed to be buying for us? Sacasas defines it as saving time. But how are we using that supposedly freed up time? Where does that minute someone saves by not printing out and retrieving a paper boarding pass, or say the ten minutes a day regained by being able to process e-mail while on hold with ahealth insurer go? I must have missed it, but I don't see a lot of stories about how someone was able to write a great novel, or even have more time to hang out with friends, walk in a park, or meditate, as a result of time freed by technology. Engagement with Internet=based technology seems to lead many, maybe most people to reinvest that liberated time back in the Internet. This may not just be the result of all of the dopamine-inducing tricks apps designer rely upon. There's also an element of intertia. You are sitting at a computer or staring at your mobile screen. The path of least resistance is to do more of the same. 2
And a pernicious side of technology is the way it hasn't freed up workers but almost entirely used to whip them harder. Employees do tasks that were once handled by a secretary, on top of job duties that have become more time compressed. Technology at work has served much more to increase output requirements than liberate workers, with Amazon-warehouse-worker monitoring a visible example. But even as of the early 2000s, senior managers, meaning a level or two below the C-suite in big companies, were being asked to do what was recently a job and a half or two job. And that's before you get to the rise of "on call" expectations for a lot of salaried white collar work.
Sacasas looks at different issues coming from convenience as time-saving:
Horgan's piece recalled to mind Thomas Tierney's The Value of Convenience: A Genealogy of Technical Culture ..
Tierney explains early on that there are two basic questions he is asking: "First, what is the value of technology to modern individuals? And second, why do they hold this value in such high esteem that, even when faced with technological dangers and dilemmas, they hope for solutions that will enable them to maintain and develop technical culture?"
... ... ...
Rafael , May 20, 2019 at 5:20 am
I have the exact same feeling towards some of the amenities of the modern world like Amazon Echo, social networks, body sensors etc. I feel like the alleged benefits don't offset the drawbacks and I simply don't use them. I just find it hard to believe that we reached the tipping point of the technology/convenience ratio exactly now, in my generation. Isn't it something a lot of people already thought before? Also when I consider some of the technological amenities I use (e.g. it wouldn't be so inconvenient to switch back to withdrawing cash instead of using a debit card given the privacy issues a debit card imposes), they could be (and are) considered not beneficial by many people from other generations.
I guess my point is: just like there's no end for the need of new technologies, there's no absolute of what's "enough" technology. This will always be a generational issue, whici of course doesn't mean we should not be critical of new technologies.
PlutoniumKun , May 20, 2019 at 5:31 am
What often surprises me is the shoulder shrug so many people give when you talk about this topic – and I include people I know who are very computer literate and know in detail how this works. And I'm guilty of this sometimes myself.
In some ways its like climate change – people know full well what is happening at some level, but day to day pressures and no doubt a sense of helplessness stop people demanding the changes needed.
vlade , May 20, 2019 at 6:42 am
The problem is, it's now so widespread, that in some cases it's like asking for cart and horse.
I don't do FB, but I do LI – it's hard not to professionaly, when people ask you about it. There were some minor HW things I could source only from Amazon or Alibaba. Take your poison pill.
Pre-schools, schools and most free-time activities do FB/Instagram etc. as a way to coordinate, share pictures.
In late 90s, early 20s I tried to stay away from a mobile. I think I managed to avoid having a mobile until about 2003 (getting a work mobile for the very specified times I was on call), but could not really do it post that. And from then on, it was one big slide towards email on phone etc.. And now, honestly, I don't see how I could ever try managing our house renovation w/o being able to call and hassle the builder every time of the day (since he's only responding to people who hassle him, in order of how much grief he gets. We tried to be nice, it cost us about a year of our lives and a lot of money. Talk about positive feedback loop.. ).
Steven B Kurtz , May 20, 2019 at 6:17 am
Have a look at https://en.wikipedia.org/wiki/A_Short_History_of_Progress
Modern technology depends upon exosomatic energy inputs, and there is always heat output from action. Finite resources are inputs. Pollution output. Finite planet. Plague phase of homo superstitious is here having quadrupled in the lifespan of living members like my 94 year old mother. Hubris keeps techno-optimists confident that anthropogenic systems can replace those we destroy. Bad bet. What we don't know about whole-system interactions dwarfs what we think we do know. Our progeny will not see nature the way we did, as megafauna are being eaten and traded for trinkets and superstitious myths. Sad, but real.
a different chris , May 20, 2019 at 8:02 am
It looks as if what social psychologists call "group assent" (where people go along with something because those around them signal that it is OK) or fear of making a ruckus at a check point either desensitized or cowed her.1
Well not everyone is the imitable Yves. :)
But actually this is a lot more complex than that. The whole feeling is "I want my privacy" which seems at first to inform you to not have your picture taken, but if you refuse then you paradoxically find yourself really standing out from the crowd.
Ugh. I think the issue is that you feel "cowed" when you think about either choice. And when you have fear, that's when you go with the group. And it's sad because USians are the most cattleish people on the planet at this point, so we know what the group is going to do.
Brooklin Bridge , May 20, 2019 at 8:11 am
We are in a sort of perfect storm where neo-liberalism meets human frailty and bad (exploitative) players and technology, and every kind of power from insidious 5G "smart phones" to macro economic to raw physical power is increasingly in the hands of the few and so on, and liberty itself, not to mention human dignity, is what is at stake; the very definition it, the way it is understood, the way is is or isn't valued. And no one, or precious few seem to be aware of what is being lost.
We will not come out the other side of this the same if we come out at all. The trick in in all this (including instantaneous teleportation) is to destroy the original. Then it doesn't matter that what comes out at the other end is a copy or not. It's all we've got. And talking to friends and acquaintances and pretty much anyone about issues of privacy vs. convenience and what we might be giving up; the horrible conclusion I can't avoid is that destruction of the original is going gang busters.
DJG , May 20, 2019 at 9:30 am
"While the Greeks thought that the satisfaction of bodily demands required careful attention and planning throughout the household, modernity treats the body instead as the source of limits and barriers imposed upon persons. What these limits require is not planning and attention, but the consumption of various technological devices that allow people to avoid or overcome such limits."
This is an excellent observation, and I note that the word "economy" comes from the Greek word for household (which would have been larger than a modern household and likely would have included a farm and weaving workshop making its own supplies). The horror of the body is deeply embedded in monotheism, which manifests as the idea and practice of mortification (killing) the body. We continue to see a kind of horror of sexuality and gender, which are manifestations of the body–various over-complicated schools of psychology and academic treatises, notwithstanding. The abortion debate seems to center on the inconvenience of pregnancy and who gets to bear the burden–with the added horror of being "inconvenienced" to bear the child of one's rapist.
No wonder there are fantasies like the Singularity and Jesus as My Personal Savior–both of which jettison the body, disdain the material world, and are quite happy to leave a mess behind.
Wukchumni , May 20, 2019 at 9:44 am
In the links thread Luddite piece, i've found i'm one of them, but really only in the way of doing things that computers can't. I've never seen one nurturing a hilly orchard, or taking a walk, or writing anything i'd opt to read, humor not being their long suit. I linked this yesterday, and it deserves another go. These young women from our town have no time for a smartphone
Keith Newman , May 20, 2019 at 10:06 am
An aspect not mentioned above is that the combination of pervasive surveillance and indefinite data storage means that you will be judged in the future by who you know and every detail of what you do today. So acquaintances/friends who are socially acceptable now may not be in 20-30 years. Not long ago having many Russian and Chinese friends wouldn't raise any eyebrows. But today it'll put you on higher surveillance. And tomorrow? Will you be passed over for a job, come under extreme surveillance, be barred from entering some countries, come under criticism if you seek public office? And what if you watch online porn, etc?
May 20, 2019 | www.nakedcapitalism.com
charles 2 , May 20, 2019 at 6:43 am
Or maybe it is just one front: I.e. making globalisation difficult for the Chinese :
by pushing non Chinese Asians countries to de-integrate their supply chains with China and
by cutting its supply of oil though shortages induced by tensions in the Gulf.
The US knows that it can't be the sole superpower anymore any longer, so the strategy is to reverse globalisation so that no other global superpower (a Russian-Chinese with a dominating Persia in the Middle East) can emerge.
Far too early to say if the strategy will be successful or not.
As far as I am concerned, the silver linings would be that a long period of oil shortage could finally be the trigger to switch industrial infrastructure worldwide away from liquid and gaseous fossils, and that less globalised supply chain would be more robust to shocks, but if these silver linings were the ultimate goals, I could think of less adversarial ways to achieve that globally, with less money wasted on the military
jackson , May 20, 2019 at 8:41 am
The benefits of joint pricing mechanisms are also enormous. Currently, Iran has no choice because of the sanctions but to sell its oil – including from the shared fields – at massively reduced pricing that is comprised of its official selling price (OSP) minus the sanctions discount minus the incremental risk discount. This has resulted in Iran offering 'cost, insurance, and freight' cargoes for 'free on board' pricing, with the difference between the two covered by Iran. "Under this new agreement, Iranian oil from these shared fields will be sold based on Iraq's much higher three month moving average OSP pricing for cargoes, with no discounts at all, and the three month moving average for the effective spot market that Iraq has created and now controls," said the oil source.
https://c.deployads.com/sync?f=html&s=2343&u=https%3A%2F%2Fwww.nakedcapitalism.com%2F2019%2F05%2Fon-the-cusp-of-war-why-iran-wont-fold.html <img src="http://b.scorecardresearch.com/p?c1=2&c2=16807273&cv=2.0&cj=1" />
Geo , May 20, 2019 at 3:02 am
Thanks for the in-depth info. Lots to digest and research.
the US has acted in such bad faith so often in the early stages of conflicts that it's sensible to wonder how much of this account is accurate. It is very frustrating to be dealing with an informational hall of mirrors.
It's depressing to say but I when I read anything from domestic official sources or the media I can't help but think it's mostly lies. Not under the illusion that foreign actors are all righteous and benevolent, but as you said, our nation's track record with the truth in these scenarios is pretty tainted at this point. Just as we found out with Saddam and Qaddafi, these leaders have little reason to poke the dragon, and a lot of reason to build up defenses.
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PlutoniumKun , May 20, 2019 at 5:35 am
Interesting observations if true, and they certainly do make sense of a lot of the things that have been happening.
I see it hasn't dissuaded Trump though, this morning he is reported as doubling down on his threats to Iran. A big fear now is that Iran does not seem to be in the mood to give Trump the sort of symbolic 'win' he can use to climb down gracefully (and sack Bolton). The Saudi's can probably be scared into stepping back, but the Israeli's and the neocons want a hot war.
Its easy to see this gradually ratchet up step by step into an uncontrolled region wide conflict.
Ignim Brites , May 20, 2019 at 8:54 am
Not sure what to make of this article but the Anglo-American press is not providing much context for the recent ratcheting up of confrontation with Iran.
NotTimothyGeithner , May 20, 2019 at 10:11 am
The MSM is mostly stenographers and right leaning pundits. If no one tells them, they wouldn't know.
Also, the DC elites were pretty irked by Obama's Iran deal. They deferred to Obama and the Europeans who demanded the deal, but I think they live in a world where DC's enemies are the enemies of the American people who overwhelmingly supported the Iran deal. DC hasn't come to grips with this.
JBird4049 , May 20, 2019 at 12:20 pm
but I think they live in a world where DC's enemies are the enemies of the American people who overwhelmingly supported the Iran deal. DC hasn't come to grips with this.
Yes, because all pain, real blood and death, misery and horror that they cause in fighting what they assume putatively are "the American people's enemies" are never suffered by them, but only everyone else including the American people; all the financial benefits do go to them so it is all gain and no cost.
Ian Perkins , May 20, 2019 at 9:11 am
Will Lavrov and Wang Yi's guarantees prevent an Israeli nuclear attack on Iranian facilities, followed by US pledges to fully support Israel's right to self defence?
jackson , May 20, 2019 at 10:01 am
There are two kinds of weapons in the world offensive and defensive. The latter are cheaper, a fighter plane compared to a bomber. If a country does not (or cannot afford to) have offensive intent, it makes sense to focus on defense. It is what Iran has done. Moreover, its missile centered defense has a modern deadly twist -- the missiles are precision-guided. As an Iranian general remarked when questioned about the carrier task force: some years ago it would've been a threat he opined; now it's a target. Iran also has a large standing army of 350,000 plus a 120,000 strong Revolutionary Guard and Soviet style air defenses. In 2016 Russia started installation of the S-300 system. It has all kinds of variants, the most advanced, the S-300 PMU-3 has a range similar to the S-400 if equipped with 40N6E missiles, which are used also in the S-400. Their range is 400 km, so the Iranian batteries are virtually S-400s. The wily Putin has kept trump satisfied with the S-300 moniker without short-changing his and China's strategic ally. The latter continuing to buy Iranian oil.
Iran has friends in Europe also. Angela Merkel in particular has pointed out that Iran has complied fully with the nuclear provisions of the UN Security Council backed Joint Comprehensive Plan of Action i.e. the Iran nuclear deal. She is mustering the major European powers. Already alienated with Trump treating them as adversaries rather than friends, they find Trump's bullying tiresome. President Macron, his poll ratings hitting the lowest, is hardly likely to engage in Trump's venture. In Britain, Theresa May is barely able to hold on to her job. In the latest thrust by senior members of her party, she has been asked to name the day she steps down.
So there we have it. Nobody wants war with Iran. Even Israel, so far without a post-election government does not want to be rained upon by missiles leaky as its Iron Dome was against homemade Palestinian rockets. Topping all of this neither Trump nor Secretary of State Pompeo want war. Trump is as usual trying to bully -- now called maximum pressure -- Iran into submission. It won't. The wild card is National Security Adviser John Bolton. He wants war. A Gulf of Tonkin type false flag incident, or an Iranian misstep, or some accident can still set it off. In Iran itself, moderates like current President Hassan Rouhani are being weakened by Trump's shenanigans. The hard liners might well want to bleed America as happened in Iraq and Afghanistan.
Thomas P , May 20, 2019 at 12:13 pm
I don't trust those air defenses too much, where have they ever performed well? The scary part is where Iran assumes that USA can through repeated air strikes wipe out their missiles. They will from the start find themselves in a "use them or lose them" scenario and may launch everything as response to even a limited US strike, since they can't know if it is limited or the beginning of a full scale attack, and I doubt Iran is willing to go down without doing everything it can to hurt their enemies. (Possibly excluding Israel which is crazy enough to go nuclear in response).
May 20, 2019 | www.nakedcapitalism.com
Yves here. Glenn F sent along this story about recent events in the US-Iran conflict, many of which don't appear to have been reported in the English language press. Interestingly, the article takes the position that it is the Saudis that have been doing their best and largely succeeding in suppressing these reports.
Going into the weekend, it looked as if the US was trying to turn down the Iran threat meter a notch. Both Iran and the Saudis said they didn't want war but were prepared for one. Then a mystery rocket landed in the Green Zone in Baghdad. Oopsie. From the Wall Street Journal:
No major destruction was inflicted by the rocket, which landed near a museum displaying old planes and caused some damage to a building used by security guards, according to an official in the interior ministry.
The interior ministry official, who declined to be identified, said the rocket had landed around a kilometer from the U.S. Embassy inside Baghdad's Green Zone, where many other diplomatic missions and Iraqi government offices are located.
No group claimed responsibility. But security officials said security forces had found and seized a mobile rocket launcher in an area of Baghdad where Shiite militias, including some with close links to Iran, have a presence.
But also note this:
The Trump administration last week ordered a partial evacuation of its diplomatic missions in Baghdad and Erbil citing increased threats posed by Iran and its allies in Iraq. The Iraqi government has varying degrees of control over an array of armed groups, some of which are closely affiliated with Iran.
... ... ...
May 20, 2019 | www.zerohedge.com
BitchesBetterRecognize , 28 minutes ago link
So we went from Russia meddling to China meddling? Really? Is that the new normal in Politics campaigning strategy nowadays?
what's next: Iran meddling? Turkey Meddling? Venezuelan Meddling?
May 20, 2019 | www.moonofalabama.org
During the last days a right wing politician in Austria was taken down by using an elaborate sting. Until Friday Heinz-Christian Strache was leader of the far right (but not fascist) Freedom Party of Austria (FPOe) and the Vice Chancellor of the country. On Friday morning two German papers, the Sueddeutsche Zeitung and Der Spiegel published (German) reports (English) about an old video that was made to take Strache down.
The FPOe has good connections with United Russia, the party of the Russian President Putin, and to other right-wing parties in east Europe. It's pro-Russian position has led to verbal attacks on and defamation of the party from NATO supporting and neoliberal circles.
In July 2017 Strache and his right hand man Johann Gudenus, who is also the big number in the FPOe, get invited for dinner to a rented villa on Ibiza, the Spanish tourist island in the Mediterranean. They are told that the daughter of a Russian billionaire plans large investments in Austria. It was said that she would like to help his party. The alleged daughter of the Russian billionaire, who is actually also Austrian, and her "friend" serve an expensive dinner. Alcohol flows freely. The pair offers a large party donation but asks for returns in form of mark ups on public contracts.
Unknown to Strache the villa is professionally bugged with many hidden cameras and microphones.
A scene from the video. Source: Der Falter (vid, German)
During the six hour long party several schemes get proposed by the "Russian" and are discussed. Strache rejects most of them. He insists several times that everything they plan or do must be legal and conform to the law. He says that a large donation could probably be funneled through an endowment that would then support his party. It is a gray area under Austrian party financing laws. They also discuss if the "Russian" could buy the Kronen Zeitung , Austria's powerful tabloid, and use it to prop up his party.
The evening goes on with several bottles of vodka on the table. Starche gets a bit drunk and boosts in front of the "oligarch daughter" about all his connections to rich and powerful people. He does not actually have these.
Strache says that, in exchange for help for his party, the "Russian" could get public contracts for highway building and repair. Currently most of such contracts in Austria go to the large Austrian company, STRABAG, that is owned by a neoliberal billionaire who opposes the FPOe. At that time Strache was not yet in the government and had no way to decide about such contracts.
At one point Strache seems to understand that the whole thing is a setup. But his right hand man calms him down and vouches for the "Russian". The sting ends with Strache and his companion leaving the place. The never again see the "Russian" and her co-plotter. Nothing they talked about will ever come to fruition.
Three month later Strache and his party win more than 20% in the Austrian election and form a coalition government with the conservative party OeVP led by Chancellor Sebastian Kurz. Even while the FPOe controls several ministries, it does not achieve much politically. It lacks a real program and the government's policies are mostly run by the conservatives.
Nearly two years after the evening on Ibiza, ten days before the European parliament election in which Strache's party is predicted to achieve good results, a video of the evening on Ibiza is handed to two German papers which are known to be have strong transatlanticist leanings and have previously been used for other shady 'leaks'. The papers do not hesitate to take part in the plot and publish extensive reports about the video.
After the reports appeared Strache immediately stepped down and the conservatives ended the coalition with his party. Austria will now have new elections.
On Bloomberg Leonid Bershidsky opines on the case:Strache's discussion with the Russian oligarch's fake niece shows a propensity for dirty dealing that has nothing to do with idealistic nationalism. Nationalist populists often agitate against entrenched, corrupt elites and pledge to drain various swamps. In the videos, however, Strache and Gudenus behave like true swamp creatures, savoring rumors of drug and sex scandals in Austrian politics and discussing how to create an authoritarian media machine like Hungarian Prime Minister Viktor Orban's.
I do not believe that the people who voted for the FPOe (and similar parties in other countries) will subscribe to that view. The politics of the main stream parties in Austria have for decades been notoriously corrupt. Compared to them Strache and his party are astonishingly clean. In the video he insists several times that everything must stay within the legal realm. Whenever the "Russian" puts forward a likely illegal scheme, Starche emphatically rejects it.
Bershidsky continues:Strache, as one of the few nationalist populists in government in the European Union's wealthier member states, was an important member of the movement Italian Interior Minister Matteo Salvini has been trying to cobble together ahead of the European Parliament election that will take place next week. On Saturday, he was supposed to attend a Salvini-led rally in Milan with other like-minded politicians from across Europe. Instead, he was in Vienna apologizing to his wife and to Kurz and protesting pitifully that he'd been the victim of a "political assassination" -- a poisonous rain on the Italian right-winger's parade.
This leaves the European far right in disarray and plays into the hands of centrist and leftist forces ahead of next week's election. Salvini's unifying effort has been thoroughly undermined, ...
This is also a misreading of the case. The right-wing parties will use the case to boost their legitimacy.
Strache was obviously set up by some intelligence services, probably a German one with a British assist. The original aim was likely to blackmail him. But during the meeting on Ibiza Strache promised and did nothing illegal. Looking for potential support for his party is not a sin. Neither is discussing investments in Austria with a "daughter of a Russian oligarch." Some boosting while drunk is hardly a reason to go to jail. When the incident provided too little material to claim that Strache is corrupt, the video was held back until the right moment to politically assassinate him with the largest potential damage to his party. That moment was thought to be now.
But that Strache stepped down after the sudden media assault only makes him more convincing. The right-wing all over Europe will see him as a martyr who was politically assassinated because he worked for their cause. The issue will increase the right-wingers hate against the 'liberal' establishment. It will further motivate them: "They attack us because we are right and winning." The new far-right block Natteo Salvini will setup in the European Parliament will likely receive a record share of votes.
Establishment writers notoriously misinterpret the new right wing parties and their followers. This stand-offish sentence in the Spiegel story about Strache's party demonstrates the problem:In the last election, the party drew significant support from the working class, in part because of his ability to simplify even the most complicated of issues and play the common man, even in his role as vice chancellor.
The implicit thesis, that the working class is too dumb to understand the "most complicated of issues", is not only incredibly snobbish but utterly false. The working class understands very well what the establishment parties have done to it and continue to do. The increasing vote share of the far-right is a direct consequence of the behavior of the neoliberal center and of the lack of real left alternatives.
Last week, before the Strache video appeared, Craig Murray put his finger on the wound:The massive economic shock following the banking collapse of 2007–8 is the direct cause of the crisis of confidence which is affecting almost all the institutions of western representative democracy. The banking collapse was not a natural event, like a tsunami. It was a direct result of man-made systems and artifices which permitted wealth to be generated and hoarded primarily through multiple financial transactions rather than by the actual production and sale of concrete goods, and which then disproportionately funnelled wealth to those engaged in the mechanics of the transactions.
The rejection of the political class manifests itself in different ways and has been diverted down a number of entirely blind alleys giving unfulfilled promise of a fresh start – Brexit, Trump, Macron. As the vote share of the established political parties – and public engagement with established political institutions – falls everywhere, the chattering classes deride the political symptoms of status quo rejection by the people as "populism". It is not populism to make sophisticated arguments that undermine the received political wisdom and take on the entire weight of established media opinion.
If one wants to take down the far right one has to do so with arguments and good politics for the working class. Most people, especially working class people, have a strong sense for justice. The political assassination of Christian Strache is unjust. What was done during the 2007-8 banking crisis was utterly corrupt and also unjust. Instead of going to jail the bankers were rewarded with extreme amounts of money for their assault on the well being of the people. The public was then told that it must starve through austerity to make up for the loss of money.
While I consider myself to be a strong leftist who opposes the right wherever possible, I believe to understand why people vote for Strache's FBOe and similar parties. When one talks to these people issues of injustice and inequality always come up. The new 'populist' parties at least claim to fight against the injustice done to the common men. Unlike most of the establishment parties they seem to be still mostly clean and not yet corrupted.
In the early 1990s Strache actually flirted with violent fascists but he rejected their way. While he has far-right opinions, he and his like are no danger to our societies. If we can not accept that Strache and his followers have some legitimate causes, we will soon find us confronted with way more extreme people. The neoliberal establishment seems to do its best to achieve that.
Posted by b on May 19, 2019 at 01:10 PM | Permalink
james , May 19, 2019 1:40:31 PM | 1b - thanks .. i agree "elaborate sting" and "the video was held back until the right moment"... clearly this was a set up.. strache says he is going to pursue this legally..Bratislav Metulski , May 19, 2019 1:40:51 PM | 2
"working class people, have a strong sense for justice. The political assassination of Christian Strache is unjust." injustices are being done on a constant basis now and being justified by the msm regularly.. i think this is part of the reason people are seeking alternatives - whatever they might be... power to the people..screw the neoliberal agenda and blackmail artists that are so rampant at present...Funny thing is e.g.- a German comedian Jan Böhmerman knew before. Already in April he said in a Video call live in Austian television duringthe TV-prize-giving of the trophy "Romy" that he couldn´t attend personally to receive the price because right know he was sitting together with some FPÖ-buddies in a Russian oligarch-villa on Ibiza, sniffing cocain, drinking and negotiating the takeover of the "Krone-Zeitung" (the biggest rag in Austira, smth like the "Bild" in Germany or "The sun" in Britain).Paul Damascene , May 19, 2019 1:43:18 PM | 3
Böhmers management released a statement yesterday that Böhermann did know before but didn´t name the source he knew it from.
Cui bono?Your article here raises a number of important issues. More or less at random:hallelujah hinton , May 19, 2019 1:55:07 PM | 4
* If I understand your characterization of your political leanings, based on this and on the perspectives MoA offers, I share many of your views. And whereas there may be a certain Schadenfreude at seeing a right-wing, B-team operator reveal himself, I agree that the forces behind the sting itself are of potentially far greater interest (and danger)..
* For every sting and smear such as this that we see, how many others take place sub rosa, corrupting our political and social landscapes, leaving no evidence that might trigger criticism or resistance?
* I'm not sure of how this plays out legally, but this seems not just to have been a sting, but entrapment, in which (if these were law enforcement agents) we could protest that the only illegal activity being proposed, was by those conducting the sting.
* If this was, as you suggest, authored by the BND, then this would be a clear instance of election "meddling" -- though not of the sort that our shining democracies are now being warned against. (At least President Putin will not be accused of conducting it, for once. That oligarch's daughter could have come from anywhere, but of course Russia.) Russia gets smeared is probably the larger aim, rather than this particularly Austrian politician.The "Russian" female is notably very attractive with a slender build. There is a honey-trap angle here as well. This would likely inspire the boasting (in order to impress her) on the part of the wingnut politician.somebody , May 19, 2019 1:56:55 PM | 5I think the word is protofascist. b. you have got a blind spot seeing geopolitics everywhere. Truth is most of this is simply a battle of billionaires. The key to understand the Ibiza video is the product placement. Everybody there drinks Red Bull plus alcohol (I am not sure about the alcohol the loss of control of the politicians who are present suggests cocaine).Arioch , May 19, 2019 1:58:49 PM | 6
The owner of Red Bull is an Austrian billionaire called Dietrich Mateschitz. Mateschitz is a right wing crank building a media empire in Austria including an "investigative platform" called addendum that is something like the Austrian version of Breitbart.
For some reason "addendum" began to shoot against Rene Benzko, an Austrian real estate billionaire, who intends to take over Kronenzeitung.
And guess what, Rene Benzko was mentioned in the video "as a friend", and a large part of the conversation centered on taking over Kronenzeitung something Rene Benzko is involved in.
Strache, Vice Chancellor of Austria, explained in the video for every Austrian to understand, that his party's scheme is based on accepting illegal contributions via a ngo, and lowering taxes in return. According to what he says in the video he also intends to charge for water by selling the right to the Latvian/Russien "niece of a Russian oligarch" or someone else prepared to pay to his party's ngo.
Anybody who is not a billionaire voting for FPÖ after this must be braindead.Sasha , May 19, 2019 2:05:52 PM | 7> with United Russia, the party of the Russian President Putin
Putin himself though stresses his non involvement in that party, he also tried to bootstrap organizations that could supplant or even challenge U.R. at least in some niches.
While U.R. probably is party of Russian ruling elites, it is hardly one-man-show of LDPR/Zhirinovsky kind and whether Putin is "gray cardinal" of U.R. is very questionable.It is said that children and drunk people always say the truth... Why is it not to be taken into account what he said once drunk enough?Bratislav Metulski , May 19, 2019 2:20:38 PM | 8
For to be a strong leftist, b, you spend a great effort in discharging this man, while whitewashing the far-right saying they are no danger for our societies and assuring that they are clean, when that is a thing you do not know since they have not had yet the possibility to rule.
They are neither cleaner nor inocuous for our societies. For starters they have chosen as scapegoat the migrants when who is to blame for the wave of migration is the US, NATO and their imperial ambitions, so as to throw poor against poor and that way the elites could continue quietly looting us, while we fight each other. You will never heard anything agsint banks ans elites from anybody in the far-right.
FYI, it is not Matteo Salvini who is forming a coalition of the far-right to conflude to European elections, but it is Bannon from his HQ in a Cisterciense monastery in Italy who is commanding this operation. Salvini is really a piece, having supported Guiado and the Venezuelan coup intend, and said what he would do with the Yellow Vests , "I don't go to the Yellow Vests with Molotov cocktails, if anything, I put them in prison" ...
Then it is AfD, who goes also in the block, whose members have claimed the Germans should be proud of the performance of the German Army during both WW....
Then Vox, financed by MEK and Israeli lobby and promoted by Bannon and the WH, who only wear clear neoliberal economic policies in their, for the rest, confusing program.
The best to test what the far-right will do in Europe is taking a look at what is happening in Brazil during these last days, an attack on education and research as if it was a military target ...This, after the moving of the embassy to Jerusalem and wide support to coup d´etat in Venezuela...He is also widely supported and financed by the US and Zionists.
The far-right is the Troy Horse of transnational corporations and capital and already discredited neoliberal stablishment which comes now disguised under the softening label of "populists". Beware, there seems to be a coordinated effort at several blogs in the ten previous days of the European elections to whitewash the far-right.@4 hallelujah hintonJackrabbit , May 19, 2019 2:26:38 PM | 9
Telepolis one of the oldest and biggest non-commercial online news and discussion platforms in Germany states in the following article, commenting on his statement at his resignation declaration:
"Glaubt er, man wäre bei Alkohol nachsichtiger? Offenbar schien er sich betrunken kaum mehr im Griff zu haben - und dies ist wohlgemerkt seine Erklärung für die Äußerungen im Video. Erst gegen Ende beginnt er eigenes Fehlverhalten einzuräumen und bittet insbesondere seine Frau um Verzeihung, mit der er ein wenige Monate altes Kind hat. Kenner Straches ahnten an dieser Stelle bereits, dass dieser sich bereits für Dinge entschuldigt, die zu diesem Zeitpunkt der Öffentlichkeit noch gar nicht bekannt sind."
Does he (Strache) really assume he would get more indulgence by blaming it on the alcolhol? Obviously when being drunken he wasn´t in control of himself anymore - and this is actually his explanation for his statements in the video. Somehow at the end he finally begins admitting own misconduct and especially asks his wife for forgiveness, with which he has a few months old child. Experts on Strache suspected from this moment on, that he apologized for things which at this moment are not known to the public, yet"
So this very much hints something more. Right now there is a debate of cocain being visible on the table but this accusation points more towards schnickle with a babe imho. The babe to his right is not that ugly, admittely.somebody @5:Zanon , May 19, 2019 2:30:32 PM | 0battle of billionaires.... Anybody who is not a billionaire voting for FPÖ after this must be braindead.Anyone who believes voting will change anything is braindead. Only supporting protest Movements (like Gillet Jeune) and free press/citizen journalism (Wikileaks/Assange) will have any real effect.Great piece - I dont see how Strache actually made anything wrong or atleast nothing not normal to politicians that constantly seek out support by big, powerful people. Most likely the deep state in Austria struck FPÖ just like FBI struck Trump.Arioch , May 19, 2019 2:36:33 PM | 1
As expected the hysteria of "russian" meddling have now publicized to weaken FPÖ in the EU election. Winners? NATO/US parties.@hallelujah hinton #4Sasha , May 19, 2019 2:38:57 PM | 2
Also notice how she pretended to be a niece.
Not some very close relative like daughter or sister, which may be fearsome, as "russian mafia" oligarch could be expected to "protect" her of ladykillers viciously. But also not some far relative who would be seen alien and have no financial support.
Just enough distance to be safe to hit on and try to share the oligarch's money. It was both honey&gold trap.Clueless Joe , May 19, 2019 2:44:05 PM | 4Anyone who believes voting will change anything is braindead.
@Posted by: Jackrabbit | May 19, 2019 2:26:38 PM | 9
If voting would be such a waste, why would had taken so hard and long to achieve voting for minorities and women? Why the parties go to such efforts to campaign and disguise themselves as wolves with sheepskin like the far-right?
Why would certain forces need to go to such editorial coordinated efforts through their several blogs out there to give an impression of certain candidates which is opposite to what they really are? Wikilieaks/Assange are part of this efforts, btwMetulski:Sasha , May 19, 2019 2:44:10 PM | 5
Seems indeed to be a honeypot aspect to the entrapment, and it's quite possible Strache stepped down at once to avoid that part to come to light, so that the public revelations would be limited to the economic shenanigans and influence-peddling level.
Also, this goes to show that the bulk of our Western politicians, across all the political spectrum, are a bunch of mediocre and quite corrupt fools. For him not to smell that this was a setup from the very first minute, it must be that such proposals are common place all across the board - which will only reinforce my suspicion that our societies, peoples and mankind as a whole would only benefit if we fully wiped out our economic, financial and political establishment and started from scratches.Spanish Colonel ( ret.) Pedro Baños, who was postulated for head of the CNI by the Socialist government of Pedro Sanchez, was object of slander campiagn as "pro-Russian" by the Spanish cluster of Integrity Initiative, only for declarations on the prejudice of sanctions for Spain, and nobody made such noise....hallelujah hinton , May 19, 2019 3:03:31 PM | 6Blackmail, smear campaigns, various traps via honey or corruption, hookers and blow, gay sex, paedofilia, or what-have-you, - all or in combination. Politicians are "all" compromised in these ways. Buck the system or threaten the status quo - whereby it gets somebody's serious attention and the shite hits the fan.the pair , May 19, 2019 3:16:52 PM | 7
Enforcement and and penalties are selective. Selective enforcement. It's how "The Law" operates. Not defending the wingnut pig in the article. I appreciate Sasha's Trojan Horse allegory above.wow...a bunch of elitist neoliberals with contempt for anyone lacking 10 zeroes on their paychecks and zero useful policies use "russian collusion" to entrap and embarrass a pseudo-right wing politician. who could ever imagine such a scenario? and why learn from the masses you represent when james o'keefe gives you all the inspiration you need?karlof1 , May 19, 2019 3:24:47 PM | 8
but at least they blocked the ascension of someone who would trade political favors for money. that kind of nonsense simply won't do in western society.Thanks for this explanation, b! I first saw this reported at Geroman's Twitter and used machine translation of the article he linked, but it lacked the context which you provided. This incident is subsumed within the larger conflict that's trying to keep EU from combining with BRI/EAEU, which means its roots/culprits are NATO/Outlaw US Empire--it points to desperation on their part.Jackrabbit , May 19, 2019 3:25:34 PM | 9the pair @17somebody , May 19, 2019 3:34:51 PM | 0
Some will fail to see the sarcasm. Best to use the /sarc tag.Posted by: hallelujah hinton | May 19, 2019 1:55:07 PM | 4Copeland , May 19, 2019 4:01:44 PM | 1
Sorry, you don't see the Latvian/Russian woman. You see Gudenus' wife who is from Serbia. Whatever the publishing papers got, it was a copy. More will come out.The savages in this neoliberal order use the secret services to subvert democracy. Deception and manipulation are the means used to corrupt the public domain. They would push the most pliable and ruthless leaders into office. Catastrophe and violence and disinformation are their most powerful weapons. But I still think that political processes and elections do matter; and what counts is a struggle to improve and reform the system of government. Doing our best to protect and maintain the integrity of electoral processes is something that requires both protests and political campaigns.BM , May 19, 2019 4:14:36 PM | 2Sasha , May 19, 2019 4:21:50 PM | 3So this very much hints something more. Right now there is a debate of cocain being visible on the table but this accusation points more towards schnickle with a babe imho. The babe to his right is not that ugly, admittely.
Posted by: Bratislav Metulski | May 19, 2019 2:20:38 PM | 8
The very strong implication certainly seems to be that there may be further video of Strache sleeping with the honey pot. He obviously knows what happened that night. If there were video cameras hidden everywhere, that was obviously one of the intentions behind the sting from the outset.
On the issue of "populism" and right-wing parties I confess I have a problem. I certainly want to see the Establishment thrashed, and especially in next week's EU elections, and there is no question that at the moment the right-wing parties have far more potential to upset the establishment than the left. If "Populist" parties are able to radically upset the EU Parliament, that should bring a much-needed hammer and axe to the anti-populist activities of the EU, and hopefully lead to the breakup of the EU.
On the other hand, unlike B, I do have extremely strong worries about the rising power of the far right and their connections to Nazis and neo-Nazis. I am concerned - even without the involvement of Bannon, but far more so with - that the rise of "populism" is a calculated policy of a Nazi segment of the Establishment that is designed specifically to usher in an international Nazi movement across Europe and Latin America under the leadership of and proxies of the - ever more and more Nazi behaving - US (which itself is in so many very real ways descended from Adolf Hitler's Nazi Party and the Japanese war criminals including Bush's family, tight connections with Nazi war criminals in the CIA, and historical leadership figures in the CIA). The large scale and extremely high level infiltration of hardcore Nazis in the German security services, Interior Ministry, Army, and CDU politics is a ticking timebomb waiting for its moment. There seems to be similar high level Nazi infiltration in many other countries.
We have to be careful what we wish for!
B, please do an article on the Nazi penetration of the German security services, Interior Ministry, Army, CDU etc, and links to the NSU affair, shredding of millions of documents by the Interior Ministry when demanded by the courts as evidence, links with the Board members and advisory board members of German big business especially Siemens and Deutche Bank and Bayer, etc.On how there is real danger with these wolves on sheepskin who only try to divide and conquer the working masses of the world, this old article by Ho Chi Minh on the importance of class conscience and the great labor of the University of the East in the former USSR to get workers of the world conscous and united in the common struggle. Also on the importance of having the right to vote:Colonialism is a leech with two suckers, one of which sucks the metropolitan proletariat and the other that of the colonies. If we want to kill this monster, we must cut off both suckers at the same time. If only one is cut off, the other will continue to suck the blood of the proletariat, the animal will continue to live, and the cut–off sucker will grow again. The Russian Revolution has grasped this truth clearly. That is why it is not satisfied with making fine platonic speeches and drafting "humanitarian" resolutions in favor of oppressed peoples, but it teaches them to struggle; and helps them spiritually, as proclaimed by Lenin in his theses on the colonial question. To the Baku Congress, twenty–one Eastern nations sent delegates. Representatives of Western workers' parties also participated in the work of this congress. For the first time, the proletariat of the conquering Western States and that of the subject Eastern countries fraternally joined hands and deliberated in common on the best means to defeat their common enemy, imperialism .
Following this historic congress, despite internal and external difficulties, revolutionary Russia has never hesitated to come to the help of peoples awakened by its heroic and victorious revolution. One of its first important acts was the founding of the University of the East.(...)
The sixty–two nationalities represented at the University form a "Commune." Its chairman and functionaries are elected every three months by all the students.
A student delegate takes part in the economic and administrative management of the University. All must regularly and in turn work in the kitchen, the library, the club, etc. All "misdemeanors" and disputes are judged and settled by an elected tribunal in the presence of all comrades. Once a week, the "Commune" holds a meeting to discuss the international political and economic situation. From time to time, meetings and evening parties are organized where the amateur artists introduce the art and culture of their country.
The fact that the Communists not only treat the "inferior natives of the colonies" like brothers, but that they get them to participate in the political life of the country, is highly characteristic of the "barbarity" of the Bolsheviks. Treated in their native country as "submissive subjects" or "protéges," having no other right but that to pay taxes, the Eastern students, who are neither electors nor eligible for election in their own country, from whom the right to express their political opinion is withdrawn, in the Soviet Union take part in the election of the Soviets and have the right to send their representatives to the Soviets. Let our brothers of the colonies who vainly seek a change of nationality make a comparison between bourgeois democracy and proletarian democracy.
These students have suffered themselves and have witnessed the sufferings of others. All have lived under the yoke of "high civilization," all have been victims of exploitation and oppression by foreign capitalists . Moreover, they passionately long to acquire knowledge and to study. They are serious and full of enthusiasm. They are entirely different from the frequenters of the boulevards of the Latin Quarter, the Eastern students in Paris, Oxford, and Berlin. It can be said without exaggeration that under the roof of this University is the future of the colonial peoples.
The colonial countries of the Near and Far East, stretching from Syria to Korea, cover an extent of more than 15 million square kilometers and have more than 1,200 million inhabitants. All these immense countries are now under the yoke of capitalism and imperialism. Although their considerable numbers should be their strength, these submissive peoples have never yet made any serious attempts to free themselves from this yoke. Not yet having realized the value of international solidarity, they have not known how to unite for the struggle. Relationships between their countries are not yet established as they are among the peoples of Europe and America. They possess gigantic strength and do not yet realize it. The University of the East, assembling all the young, active, and intelligent leaders of the colonized countries, has fulfilled a great task, namely:
-It teaches to the future vanguard militants the principles of class struggle, confused in their minds by race conflicts and patriarchal customs.
-It establishes between the proletarian vanguard of the colonies a close contact with the Western proletariat, thus preparing the way for the close and effective cooperation which will alone ensure the final victory of the international working class.
-It teaches the colonized people, hitherto separated from one another, to know one another and to unite, by creating the bases of a future union of E