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Neoliberalism as a New, More Dangerous, Form of Corporatism

 The ideology that dare not speak it's name

Version 6.3

Skepticism and Pseudoscience  > Who Rules America > Neoliberal Brainwashing

News An introduction to Neoliberalism Recommended books Recommended Links Neoliberalism war on organized labor Neoliberalism as Trotskyism for the rich Globalization of Financial Flows
Brexit as the start of the reversal of neoliberal globalization Neoliberal rationality Neoliberal "New Class" as variant of Soviet Nomenklatura Neoliberalism and Christianity Key Myths of Neoliberalism Ayn Rand and her Objectivism Cult Anti-globalization movement
Zombie state of neoliberalism and coming collapse of neoliberalism Pope Francis on danger of neoliberalism  Over-consumption of Luxury Goods as Market Failure Definitions of neoliberalism Neoliberal Brainwashing Neoclassical Pseudo Theories  US Presidential Elections of 2016 as a referendum on neoliberal globalization
Media-Military-Industrial Complex Neocons New American Militarism Casino Capitalism Neocolonialism as Financial Imperialism War is Racket Inverted Totalitarism
Financial Crisis of 2008 as the Crisis of Neoliberalism and shift to neo-fascism Neoliberal corruption Financial Sector Induced Systemic Instability of Economy Corruption of Regulators "Fight with Corruption" as a smoke screen for neoliberal penetration into host countries   Deconstructing neoliberalism's definition of 'freedom' Resurgence of neofascism as reaction on crisis of neoliberalism and neoliberal globalization
Alternatives to Neo-liberalism Elite Theory Compradors Fifth column Color revolutions  Key Myths of Neoliberalism Audacious Oligarchy and "Democracy for Winners"
If Corporations Are People, They Are Psychopaths IMF as the key institution for neoliberal debt enslavement Gangster Capitalism Neoliberalism as a Cause of Structural Unemployment in the USA Neoliberalism and inequality Blaming poor and neoliberalism laziness dogma Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime
Peak Cheap Energy and Oil Price Slump The Deep State Predator state Disaster capitalism Harvard Mafia Small government smoke screen Super Capitalism as Imperialism
The Great Transformation Monetarism fiasco Neoliberalism and Christianity Republican Economic Policy  In Goldman Sachs we trust: classic example of regulatory capture by financial system hackers Ronald Reagan: modern prophet of profligacy Milton Friedman -- the hired gun for Deification of Market
Libertarian Philosophy Media domination strategy Neoliberal Brainwashing -- Journalism in the Service of the Powerful Few YouTube on neoliberalism History of neoliberalism Humor Etc


Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare. “There’s class warfare, all right, "Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning."

- New York Times

Make no mistake, the neo-Liberal fuckers are just as bad as the Stalinists

May '68 and its Afterlives [Review]

GB: once a great cultured nation, now a poorly-educated gangster mafia state, ruled by oligarchs and inhabited by soccer hooligans

The Kremlin Stooge

Greatly simplifying Neoliberalism = Casino Capitalism = "Transnational elites, Unite!"  It is a neo-Trotskyism with the word "proletarians" substituted by the word "elites"  in famous  slogan  "Proletarians of all countries, Unite!" and permanent "Color revolutions" as a variation and enhancement of Trotsky idea of  "Permanent revolution"

Neoliberalism is a very interesting social system which by-and-large defeated and replaced both New Deal capitalism and socialism (and facilitated the dissolution of the USSR by buying out Soviet nomenklatura, including KGB brass). It is the only social system in which the name of the system is somehow is prohibited by MSM to mention.  In this system, like under Stalin's version of socialism, the state play the leading role in enforcing the social system upon the people, brainwashing them with wall-to-wall 24 x 7 USSR-style propaganda an, if necessary, by state violence (As Sheldon Volin mentioned neoliberalism try  to use violence selectively, as overuse of state violence undermines the social system, see  Inverted Totalitarism).

Instead of regulating predatory tendencies  of capitalism like under New Deal, state became just a corrupt policeman that serve large corporations and against the people. In this sense any neoliberal country is to certain extent is an "occupied country" and the neoliberal regime is occupying regime, much like Bolsheviks (with their theocratic state) were in USSR space. Much like during Robber barons era, when the state helped to squash West Virginia miner upraising in 1912-21.

The neoliberal state justifies its decisions, policies and rules in terms that are commensurable with the logic of markets. Neoliberalism might therefore be defined as the elevation of market-based principles and techniques of evaluation to the level of state-endorsed norms. To the level of a secular religion in which "market" and "competition" are new deities.

Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, who exercise they political power mainly buying and selling, the process which supposedly rewards merit (producing market winners) and punishes inefficiency. It postulates a primitive (and wrong)  dogma that “the market” always delivers benefits that are always superior and could never be achieved by planning. Which is definitely untrue for military contractors. In a way "market" under neoliberalism is a kind of  "all powerful deity". Which makes neoliberalism a variation of a secular religion (compare with "God building" faction of Bolsheviks Party which included such prominent figures as Lynacharsky) . As such it, like Marxism before, is hostile to Christianity. And while Marxism absolutize the power of human compassion and redefines paradise as a social system that supposedly can be built on Earth (communism), neoliberalism denigrates the power of human compassion. In this sense it is more like a branch of Satanism, with greed as a virtue ("Greed is good"), speculation as a noble activity (while according to Chris Hedges "Speculation in the 17th century was a crime. Speculators were hanged." )  and the slogan "Homo homini lupus est" as one of the key Commandments.  See Neoliberalism and Christianity

This social system can be viewed as dialectical denial of socialism and represents the other extreme in classic triad "Thesis, antithesis, synthesis". We do not know yet what the synthesis will be like, but neoliberalism as a social system after 2008 shows definite cracks. Much like the USSR after the second world war when people serving in Red Army discovered what the standard of living was in Central and Western European workers and start to understand that "state socialism" as practiced in the USSR can't deliver promise high standard of living. And that helped decimated communist propaganda once and for all, although Bolshevism as a social system still was around for another 40 years or so. Like Bolshevism before it, neoliberalism proved to be unstable social system, which is unable to deliver promised benefits to the common people, and which destabilizes capitalism in comparison with  New Deal capitalism, producing periodic crisis with increasing severity ("savings and loans" crisis, dot com bubble burst, and the financial  crisis in 2008 which led to the Great Recession.  In 2008 the large banks, which are the core of neoliberal economics,  were saved from facing consequences of their  "transgressions" only by massive state intervention. All powerful market was unable to save those sick puppies. The consequences of 2008 crisis did buried neoliberal ideology which from this point looks like cruel and primitive hypocrisy designed to restore the power of financial oligarchy, which the latter enjoyed in 1930th. 

In the absence of alternatives neoliberalism managed somewhat recover, and even counterattacked in some countries (Argentina, Brazil, Greece),  but the Great Recession still left of huge and ugly scar on the neoliberal face. In any case glory days of triumphal march of neoliberalism all over globe are over. First of all die to decimation of middle class and lowering standard of living of people outside top 10-20% in the USA -- the citadel of neoliberalism.  Which led to impoverishment of lower 80% of the society, creating of a third world country within the USA,  and the rise of far right nationalism. After approximately 40 years of global dominance is shows cracks. Backlash against neoliberal globalization became strong enough to provide upsets, albeit temporary, which demonstrated itself in Brexit, and election of Trump. Who, despite his election-time claims to be a fighter against neoliberal globalization, for restoration of local jobs, and against the wars for expanding neoliberal empire, folded in two-or three months  after the inauguration and morphed into Bush III.  

Like Soviet version of Communism before it,  Neoliberalism failed to meet its promises of rising standard of living  (and the key idea of justifing of raising of inequality and redistribution of wealth up under neoliberalism was "rising water lifts all boats" mantra, or as Kenneth Galbraith famously defined it  “Trickle-down theory - the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows.” ). Current opiod epidemics in the USA is not that different from epidemics of alcoholism in the USSR under Brezhnev's "well developed socialism".  It is important to understand that under neoliberalism that priority is the maintenance of global neoliberal empire *which makes is similar to Trotskyism)   which is vital for the interest of transnational corporations and that means that the government takes on, arbitrarily and without justification, an adversarial attitude towards its citizenry. They are, by definition, the second class citizens.

Neoliberalism is a somewhat  fuzzy concept which defy simple definition (and it does evolve, much like Bolshevism evolved from Leninism to Stalinism and then to Brezhnev's socialism  ). In various countries it can morph into quite different "regimes", despite common core.  The simplest way to define is is to view it as "socialism for the rich, feudalism for the poor" or, more correctly "Trotskyism for the rich" ("Elites of all countries unite !"  instead of “Proletarians of all countries, Unite! ...).  So Stalins's idea of socialism in a single country mutated into "socialism for the upper strata of population". In this sense neoliberals are as "internationalists" as communists were at their time, and may be even more. They just used the term "globalism" instead. And like "communist International", the  "Neoliberal International" accepts the elite from any country, but only a very narrow strata of the elite and only on a certain conditions, with the leading role reservied for the USA elite.  Much like in Comintern the role of Moscow as a leader was something that can't be even discussed.  Only taken for granted.  Although spying capabilities of "Neoliberal International" via "five eyes" are tremendously more powerful then the rudimentary capabilities of Comintern and the technology of staging color revolutions is more polished then Trotskyite approach to staging proletarian revolutions. Neoliberal also have more money and that matters.  and more powerful "fifth column" in countries other  then G7 who are on the receiving end of neoliberal expropriation of wealth to the top countries of Neoliberal International.  Like in Comintern, all pigs are created equal, but some pigs are more equal then others. 

The key idea of obtaining power by training the cadre of "professional revolutionaries" introduced by social-democratic parties and, especially, Bolsheviks  are replaced with no less effective the network of neoliberal think tanks. In other words neoliberalism borrowed and perverted almost all major ideas of social-democratic parties. The party core typical for Bolsheviks, and instrumental to the success of their coup d'état in October 1917 against Provisional government by Kerensky was essentially replaced by the network of thinktanks that Koch and other billionaires have sponsored. Monte Perelin society (the initial neoliberal think tank)  explicitly tried to adapt successful idea of western social democratic parties and Bolsheviks to neoliberal doctrine. One such "appropriations" is the level of secrecy and existence of "underground" part of the party along with "legal" parliamentary faction (a set of honorable (in a sense, what hey such politicians for example in the USA congress (honorable politician is the one who after he was bought stays bought) politicians are just a tip of the iceberg), . Some important work was also done by renegade Trotskyites in the USA (aka neoconservatives, especially by James Burnham as well as staunch neoliberals like James Buchanan (The Guardian)

The papers Nancy MacLean discovered show that Buchanan saw stealth as crucial. He told his collaborators that “conspiratorial secrecy is at all times essential”. Instead of revealing their ultimate destination, they would proceed by incremental steps. For example, in seeking to destroy the social security system, they would claim to be saving it, arguing that it would fail without a series of radical “reforms”... Gradually they would build a [well-paid] “counter-intelligentsia”, allied to a “vast network of political power” that would become the new establishment.

It also created it's own Neoliberal newspeak  and a set of myths ("greed is good", "invisible hand", "the efficient markets hypothesis", "rational expectations scam", Shareholder value scam, supply side voodoo aka "rising tide lifts all boats", etc).  In "neoliberal newspeak" the term "freedom" is used as the excuse for ripping down public protections on behalf of the very rich.  For example "free market" means the market free from any coercion by the state (read "free from regulations") which makes it the corporate jungle where the most powerful corporation dictate the rules of the game and eat alive small fish with complete impunity.  In no way neoliberal "free market" is fair.  Actually neoliberals try to avoid to discuss the issue of farness of the market. This is anathema for them. As such neoliberalism has distinct Social Darwinism flavor and  enforces scapegoating and victimization of poor and unemployed

It facilitates over-consumption and getting into the debt both on the country (neo-colonialism)  and on the individual workers (debt-slavery) levels, and has sophisticated mechanisms  of  enforcing this situation on unsuspecting population (IMF, World banks on the level of the countries), credit card companies, mortgages, student debt on individual level. And a worker with a large debt is, essentially,  a debt-slave. Atomization (neoliberalism is openly and forcefully anti-union) and enslavement of the workforce is exactly what neoliberalism is about: recreation of the plantation economy on a new technological and social levels. Not that unions are without problems in their own right, but crushing the union is the goal of every neoliberal government starting with Thatcher and Reagan. The same model that is depicted in famous song  Sixteen Tons. With replacement  of the company store debt and private corporate currencies with credit card debt. 

Like Trotskyism it is pretty militaristic creed and the dream of global Communist empire led from Moscow was replaced by the dream of global neoliberal empire led by Washington.  Neocons in this sense is just a specific flavor of neoliberals --" neoliberals with the gun" as in Al Capone maxim "You Can Get Much Further with a Kind Word and a Gun than with a Kind Word Alone" ;-). This "institualized gangsterism" of the US neocons represents probably the greatest threat to the survival of modern civilization.  

Neoliberalism elevates of market-based principles and techniques of evaluation to the level of state-endorsed norms. The authority of the neoliberal state is heavily dependent on the authority of neoliberal economics (and economists). When this authority collapses the eventual collapse of neoliberalism is imminent. This is a classic "the castle built of sand story. "

Due to the size the introduction was moved to a separate page --  Neoliberalism: an Introduction


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[Dec 10, 2017] blamePutin continues to be the media's dominant hashtag. Vladimir Putin finally confesses his entire responsibility for everything bad that has ever happened since the beginning of time

Highly recommended!
Dec 10, 2017 | off-guardian.org

by VT

The decline of the falsely self-described "quality" media outlet The Guardian/Observer into a deranged fake news site pushing anti-Russian hate propaganda continues apace. Take a look at this gem :

The Russian president, Vladimir Putin, has accused prominent British businessman Bill Browder of being a "serial killer" – the latest extraordinary attempt by the Kremlin to frame one of its most high-profile public enemies.

But Putin has not been reported anywhere else as making any recent statement about Browder whatever, and the Observer article makes no further mention of Putin's supposed utterance or the circumstances in which it was supposedly made.

As the rest of the article makes clear, the suspicions against Browder were actually voiced by Russian police investigators and not by Putin at all.

The Observer fabricated a direct quote from the Russian president for their propaganda purposes without any regard to basic journalistic standards. They wanted to blame Putin personally for the suspicions of some Russian investigators, so they just invented an imaginary statement from him so they could conveniently do so.

What is really going on here is the classic trope of demonisation propaganda in which the demonised leader is conflated with all officials of their government and with the targeted country itself, so as to simplify and personalise the narrative of the subsequent Two Minutes Hate to be unleashed against them.

When, as in this case, the required substitution of the demonised leader for their country can't be wrung out of the facts even through the most vigorous twisting, a disreputable fake news site like The Guardian/Observer is free to simply make up new, alternative facts that better fit their disinformative agenda. Because facts aren't at all sacred when the official propaganda line demands lies.

In the same article, the documents from Russian investigators naming Browder as a suspect in certain crimes are first "seen as" a frame-up (by the sympathetic chorus of completely anonymous observers yellow journalism can always call on when an unsupported claim needs a spurious bolstering) and then outright labelled as such (see quote above) as if this alleged frame-up is a proven fact. Which it isn't.

No evidence is required down there in the Guardian/Observer journalistic gutter before unsupported claims against Russian officials can be treated as unquestionable pseudo-facts, just as opponents of Putin can commit no crime for the outlet's hate-befuddled hacks.

The above falsifications were brought to the attention of the Observer's so-called Readers Editor – the official at the Guardian/Observer responsible for "independently" defending the outlet's misdeeds against outraged readers – who did nothing. By now the article has rolled off the site's front page, rendering any possible future correction nugatory in any case.

Later in the same article Magnitsky is described as having been Browder's "tax lawyer" a standard trope of the Western propaganda narrative about the case. Magnitsky was actually an accountant .

A trifecta of fakery in one article! That makes crystal clear what the Guardian meant in this article , published at precisely the same moment as the disinformation cited above, when it said:

"We know what you are doing," Theresa May said of Russia. It's not enough to know. We need to do something about it.

By "doing something about it" they mean they're going to tell one hostile lie about Russia after another.


michaelk says November 26, 2017

https://www.theguardian.com/news/2017/nov/26/big-issue-who-will-step-in-after-bullies-have-silenced-dissenters

From the 'liberal' Guardian/Observer wing of the rightwing bourgeois press, spot the differences with the article in the Mail on Sunday by Nick Robinson?

michaelk says November 26, 2017
http://www.dailymail.co.uk/debate/article-5117723/Nick-Robinson-Putin-using-fake-news-weaken-West.html

This thing seems to have been cobbled together by a guy called Nick Robinson. The same BBC Nick Robinson that hosts the Today Programme? I dunno, one feels really rather depressed at how low our media has sunk.

michaelk says November 23, 2017
I think huge swathes of the media, in the eyes of many people, have never really recovered from the ghastly debacle that was their dreadful coverage of the reasons for the illegal attack on Iraq.

The journalists want us to forget and move on, but many, many, people still remember. Nothing happened afterwards. There was no tribunal to examine the media's role in that massive international crime against humanity and things actually got worse post Iraq, which the attack on Libya and Syria illustrates.

rtj1211 says November 29, 2017
Exactly: in my opinion there should be life sentences banning scribblers who printed lies and bloodthirsty kill, kill, kill articles from ever working again in the media.

Better still, make them go fight right now in Yemen. Amazing how quickly truth will spread if journalists know they have a good chance of dying if they print lies and falsehoods ..

michaelk says November 23, 2017
At a time when the ruling elite, across virtually the entire western world, is losing it; it being, political legitimacy and the breakdown of any semblance of a social contract between the ruled and the rulers the Guardian lurches even further to the political right . amazing, though not really surprising. The Guardian's role appears to be to 'coral' radical and leftist ideas and opinions and 'groom' the educated middle class into accepting their own subjugation.

The Guardian's writers get so much, so wrong, so often it's staggering and nobody gets the boot, except for the people who allude to the incompetence at the heart of the Guardian. They fail dismally on Trump, Brexit and Corbyn and yet carry on as if everything is fine and dandy. Nothing to complain about here, mover along now.

I suppose it's because they are actually media aristocrats living in a world of privilege, and they, as members of the ruling elite, look after one another regardless of how poorly they actually perform. This is typical of an elite that's on the ropes and doomed. They choose to retreat from grubby reality into a parallel world where their own dogmas aren't challenged and they begin to believe their propaganda is real and not an artificial contruct. This is incredibly dangerous for a ruling elite because society becomes brittle and weaker by the day as the ruling dogmas become hollow and ritualized, but without traction in reality and real purpose.

The Guardian is a bit like the Tory government, lost and without any real ideas or ideals. The slow strangulation of the CIF symbolizes the crisis of confidence at the Guardian. A strong and confident ruling class welcomes criticism and is ready to brush it all off with a smile and a shrug. When they start running scared and pretending there is no dissent or opposition, well, this is a sign of decadence and profound weakness. They are losing the battle of ideas and the battle of solutions to our problems. All that really stands between them and a social revolution is a thin veneer of 'authority' and status, and that's really not enough anymore.

All our problems are pathetically and conviniently blamed on the Russians and their Demon King and his vast army of evil Trolls. It's like a political version of the Lord of the Rings.

WeatherEye says November 21, 2017
Don't expect the Guardian to cover the biggest military build-up (NATO) on Russia's borders since Hitler's 1941 invasion.

John Pilger has described the "respectable" liberal press (Guardian, NYT etc) as the most effective component of the propaganda system, precisely BECAUSE it is respectable and trusted. As to why the Guardian is so insistent in demonising Russia, I would propose that is integrates them further with a Brexit-ridden Tory government. Its Blairite columnists prefer May over Corbyn any day.

rtj1211 says November 29, 2017
The Guardian is now owned by Neocon Americans, that is why it is demonising Russia. Simple as that.
WeatherEye says November 29, 2017
Evidence?
Harry Stotle says November 21, 2017
The Guardian is trying to rescue citizens from 'dreadful dangers that we cannot see, or do not understand' – in other words they play a central role in 'the power of nightmares' https://www.youtube.com/embed/LlA8KutU2to
rtj1211 says November 21, 2017
So Russians cannot do business in America but Americans must be protected to do business in Russia?

If you look at Ukraine and how US corporations are benefitting from the US-funded coup, you ask what the US did in Russia in the 1990s and the effect it had on US business and ordinary Russian people. Were the two consistent with a common US template of economic imperialism?

In particular, you ask what Bill Browder was doing, his links to US spying organisations etc etc. You ask if he supported the rape of Russian State assets, turned a blind eye to the millions of Russians dying in the 1990s courtesy of catastrophic economic conditions. If he was killing people to stay alive, he would not have been the only one. More important is whether him making $100m+ in Russia needed conditions where tens of millions of Russians were starving .and whether he saw that as acceptable collateral damage ..he made a proactive choice, after all, to go live in Moscow. It is not like he was born there and had no chance to leave ..

I do not know the trurh about Bill Browder, but one thing I do know: very powerful Americans are capable of organising mass genocide to become rich, so there is no possible basis for painting all American businessmen as philanthropists and all Russians as murdering savages ..

michaelk says November 21, 2017
It's perfectly possible, in fact the norm historically, for people to believe passionately in the existence of invisible threats to their well-being, which, when examined calmly from another era, resemble a form of mass-hysteria or collective madness. For example; the religious faith/dogma that Satan, demons and witches were all around us. An invisible, parallel, world, by the side of our own that really existed and we were 'at war with.' Satan was our adversary, the great trickster and disseminator of 'fake news' opposed to the 'good news' provided by the Gospels.

What's remarkable, disturbing and frightening is how closely our media resemble a religious cult or the Catholic Church in the Middle Ages. The journalists have taken on a role that's close to that of a priesthood. They function as a 'filtering' layer between us and the world around us. They are, supposedly, uniquely qualified to understand the difference between truth and lies, or what's right and wrong, real news and propaganda. The Guardian actually likes this role. They our the guardians of the truth in a chaotic world.

This reminds one of the role of the clergy. Their role was to stand between ordinary people and the 'complexities' of the Bible and separate the Truths it contained from wild and 'fake' interpretations, which could easily become dangerous and undermine the social order and fundamental power relationships.

The big challenge to the role of the Church happened when the printing press allowed the ordinary people to access the information themselves and worst still when the texts were translated into the common language and not just Latin. Suddenly people could access the texts, read and begin to interpret and understand for themselves. It's hard to imagine that people were actually burned alive in England for smuggling the Bible in English translation a few centuries ago. That's how dangerous the State regarded such a 'crime.'

One can compare the translation of the Bible and the challenge to the authority of the Church and the clergy as 'guardians of the truth' to what's happeing today with the rise of the Internet and something like Wikileaks, where texts and infromation are made available uncensored and raw and the role of the traditional 'media church' and the journalist priesthood is challenged.

We're seeing a kind of media counter-reformation. That's why the Guardian turned on Assange so disgracefully and what Wikileaks represented.

WeatherEye says November 21, 2017
A brilliant historical comparison. They're now on the legal offensive in censoring the internet of course, because in truth the filter system is wholly vulnerable. Alternative media has been operating freely, yet the majority have continued to rely on MSM as if it's their only source of (dis)information, utilizing our vast internet age to the pettiness of social media and prank videos. Marx was right: capitalist society alienates people from their own humanity. We're now aliens, deprived of our original being and floating in a vacuum of Darwinist competition and barbarism. And we wonder why climate change is happening?
tutisicecream says November 21, 2017
Apparently we are "living in disorientating times" according to Viner, she goes on to say that "championing the public interest is at the heart of the Guardian's mission".

Really? How is it possible for her to say that when many of the controversial articles which appear in the Guardian are not open for comment any more. They have adopted now a view that THEIR "opinion" should not be challenged, how is that in the public interest?

In the Observer on Sunday a piece also appeared smearing RT entitled: "MPs defend fees of up to £1,000 an hour to appear on 'Kremlin propaganda' channel." However they allowed comments which make interesting reading. Many commenter's saw through their ruse and although the most vociferous critics of the Graun have been banished, but even the mild mannered ones which remain appear not the buy into the idea that RT is any different than other media outlets. With many expressing support for the news and op-ed outlet for giving voice to those who the MSM ignore – including former Guardian writers from time to time.

Why Viner's words are so poisonous is that the Graun under her stewardship has become a agitprop outlet offering no balance. In the below linked cringe worthy article there is no mention of RT being under attack in the US and having to register itself and staff as foreign agents. NO DEFENCE OF ATTACKS ON FREEDOM OF THE PRESS by the US state is mentioned.

Surely this issue is at the heart of championing public interest?

https://www.theguardian.com/world/2017/nov/18/mps-kremlin-propaganda-channel-rt#comments

The fact that it's not shows clearly the fake Guardian/Observer claim and their real agenda.

WE ARE DEFINITELY LIVING IN DISORIENTATION TIMES and the Guardian/Observer are leading the charge.

tutisicecream says November 21, 2017
Correction: DISORIENTATING TIMES
Peter says November 21, 2017
For the political/media/business elites (I suppose you could call them 'the Establishment') in the US and UK, the main problem with RT seems to be that a lot of people are watching it. I wonder how long it will be before access is cut. RT is launching a French-language channel next month. We are already being warned by the French MSM about how RT makes up fake news to further Putin's evil propaganda aims (unlike said MSM, we are told). Basically, elites just don't trust the people (this is certainly a constant in French political life).
Jim says November 21, 2017
It's not just that they don't allow comments on many of their articles, but even on the articles where CiF is enabled, they ban any accounts that disagree with their narrative. The end result is that Guardianistas get the false impression everyone shares their view and that they are in the majority. The Guardian moderators are like Scientology leaders who banish any outsiders for fear of influencing their cult members.
BigB says November 20, 2017
Everyone knows that Russia-gate is a feat of mass hypnosis, mesmerized from DNC financed lies. The Trump collusion myth is baseless and becoming dangerously hysterical: but conversely, the Clinton collusion scandal is not so easy to allay. Whilst it may turn out to be the greatest story never told: it looks substantive enough to me. HRC colluded with Russian oligarchy to the tune of $145m of "donations" into her slush fund. In return, Rosatom gained control of Uranium One.

A curious adjunct to this corruption: HRC opposed the Magnitsky Act in 2012. Given her subsequent rabid Russophobia: you'd have thought that if the Russians (as it has been spun) arrested a brave whistleblowing tax lawyer and murdered him in prison – she would have been quite vocal in her condemnation. No, she wanted to make Russia great again. It's amazing how $145m can focus ones attention away from ones natural instinct.

[Browder and Magnitsky were as corrupt as each other: the story that the Russians took over Browder's hedge fund and implicated them both in a $230m tax fraud and corruption scandal is as fantastical as the "Golden Shower" dossier. However, it seems to me Magnitsky's death was preventable (he died from complications of pancreatitis, for which it seems he was initially refused treatment ) ]

So if we turn the clock back to 2010-2013, it sure looks to me as though we have a Russian collusion scandal: only it's not one the Guardian will ever want to tell. Will it come out when the FBI 's "secret" informant (William D Cambell) testifies to Congress sometime this week? Not in the Guardian, because their precious Hillary Clinton is the real scandal here.

jag37777 says November 20, 2017
Browder is a spook.
susannapanevin says November 20, 2017
Reblogged this on Susanna Panevin .
Eric Blair says November 20, 2017
This "tactic" – a bold or outrageous claim made in the headline or in the first few sentences of a piece that is proven false in the very same article – is becoming depressingly common in the legacy media.

In other words, the so-called respectable media knowingly prints outright lies for propaganda and clickbait purposes.

labrebisgalloise says November 20, 2017
I dropped a line to a friend yesterday saying "only in a parallel universe would a businessman/shady dealer/tax evader such as Browder be described as an "anti-corruption campaigner."" Those not familiar with the history of Browder's grandfather, after whom a whole new "deviation" in leftist thinking was named, should look it up.
Eric Blair says November 20, 2017
Hey, MbS is also an "anti-corruption" campaigner! If the media says so it must be true!
Sav says November 20, 2017
Some months ago you saw tweets saying Russophobia had hit ridiculous levels. They hadn't seen anything yet. It's scary how easily people can be brainwashed.

The US are the masters of molesting other nations. It's not even a secret what they've been up to. Look at their budgets or the size of the intelligence buildings. Most journalists know full well of their programs, including those on social media, which they even reported on a few years back. The Guardian run stories by the CIA created and US state funded RFE/RL & then tell us with a straight face that RT is state propaganda which is destroying our democracy.

A Petherbridge says November 20, 2017
Well said – interesting to know what the Guardian is paid to run these stories funded by this arm of US state propaganda.
bevin says November 20, 2017
The madness spreads: today The Canary has/had an article 'proving' that the 'Russians' were responsible for Brexit, Trump, etc etc.

Then there is the neo-liberal 'President' of the EU charging that the extreme right wing and Russophobic warmongers in the Polish government are in fact, like the President of the USA, in Putin's pocket..

This outbreak is reaching the dimensions of the sort of mass hysteria that gave us St Vitus' dance. Oh and the 'sonic' terrorism practised against US diplomats in Havana, in which crickets working for the evil one (who he?) appear to have been responsible for a breach in diplomatic relations. It couldn't have happened to a nicer empire.

Admin says November 21, 2017
The Canary is publishing mainstream russophobia?

[Dec 10, 2017] Neoliberlaism is barbarism

Dec 10, 2017 | www.defenddemocracy.press

"It's barbarism. I see it coming masqueraded under lawless alliances and predetermined enslavements. It may not be about Hitler's furnaces, but about the methodical and quasi-scientific subjugation of Man. His absolute humiliation. His disgrace"

Odysseas Elytis, Greek poet, in a press conference on the occasion of receiving the Nobel Prize (1979)

[Dec 09, 2017] MIT Professor Angrist Publishes Obviously Misleading Analysis of Uber Driver Economics....With Uber Chief Economist as Co-Autho

Notable quotes:
"... Uber and Lyft are fraudulent schemes based on selling false hope to desperate drivers on one hand, while promising investors the 'opportunity' of getting in on the ground-floor of a new, and 'disruptive technology', sure to become a profitable monopoly, and so make a fortune when it they take it public. ..."
"... new and disruptive technology ..."
"... It's not a good job, it's not a good investment, it's not a 'new and disruptive technology', it's a scam, and anyone trying to sell any portion of it is a fraud. ..."
"... I think it's worse than a scam. It's a scam on the drivers and users, but I suspect that the investors know just what is up: destroy the taxi market, supplant it with Uber/Lyft, and enjoy your monopoly rents forever. Libertarianism indeed! That's the ground floor they're getting in on: entrepreneurial feudalism. ..."
"... Most of the litigation regarding Uber drivers is predicated on proving an employment relationship, contrary to Uber's assertion that the drivers are independent contractors. ..."
"... These drivers are overworked, underpaid, deceived, exploited employees of uber all but in name, the independent contractor nonsense is bulls***. Tell me how this is a win for the driver?? ..."
"... The assumption goes further than that. If you are depreciating an asset (wearing out your car), that's a cost. Replacing tires more often, paying for a commercial car rider (which Uber riders are supposed to do but Uber does not enforce) are all costs that need to be included even if the driver owns his car outright. ..."
"... That depreciation and upwardly trending running costs are ommited in the analysis seems to me to be gross incompetence or willful deception by the authors. ..."
"... That is my buddy in Seattle's experience with Lyft. He got laid off from his tech job and started driving after a lengthy unsuccessful job search but has no illusions about the "gig economy", doing it mostly just to get out of the house. The other day he told be he'd driven over 4 hours for slightly over $50. That's below the Seattle minimum wage and that's before accounting for his expenses. ..."
"... People may like the cheap fares, but that's only because they are heavily subsidized by flushing VC down the toilet and drivers working basically at a loss once expenses are considered. ..."
"... I'm not a frequent Uber user, but when I do I ask the driver what it's like. All say that it's much harder to make money now than it used to be. One driver actually attributed that to the ouster of Kalanick, on the belief that Kalanick had been ousted because he was pro-driver. (I didn't argue). That same driver told me he was getting $8 of my $22 Friday night fare. ..."
"... So, I think The Point with Uber it that it is mostly a political research project. What those VC investors actually pay for is to test to what extent they can get away with undercutting wages, how agressive and blatant one can cut corners on legal compliance, what the consequences for doing this are in different regions. What are the stakeholders? How should these be managed/manipulated? ..."
"... When a ride is requested the customer knows where they are going and about how much it will cost. Uber and Lyft have the same information. But the driver only gets a customer rating and an estimated time to pick up, and 10-15 seconds to decide if they will accept the ride. They are not allowed to call the customer and ask for the destination. If they cancel the ride, they are punished. When the driver shows up, the customer has up to five minutes to get in the vehicle before the driver can cancel on that person, and five minutes is a horrible waste of time to someone who is compensated pennies per minute for waiting. The driver has no idea how much the customer is actually paying (which is often a violation of state laws requiring full disclosure of fares). Drivers have no information, a very unfair economic reality. ..."
"... The companies are praying that elimination of drivers via automated vehicles will solve their financial problems, however I suspect that these companies are going to learn a hard lesson about the true cost of maintaining a fleet of hi tech vehicles. ..."
"... Out in San Francisco proper the number of ridehailing vehicles with expired registrations has increased dramatically. Savvy taxi drivers and ridehailing drivers are earning less across the board. Drivers are coming from San Diego to drive in the SF Bay Area. Plateless toll evasion on the toll bridges has skyrocketed since ridehailing came on the scene. ..."
Dec 09, 2017 | www.nakedcapitalism.com

MK , December 8, 2017 at 6:20 am

In Buffalo last weekend for a family event. Tried Uber and Lyft around 7 pm Saturday from our hotel in Cheektowaga to get to Town of Tonawanda. Not one single car available on either service. Call to taxi dispatch, taxi at our hotel in less than 10 minutes.

Uber and Lyft absolutely failed in that scenario and left a poor impression for what would have been our first rideshare trip.

Watt4Bob , December 8, 2017 at 7:36 am

I drove a taxi for many years, and I now work in IT for a group of auto dealers.

Last week, one of the general sales managers at work explained to me that people are ' selling ' cars to us in order to get out from under the expense of payments. Many of these people are 'up-side-down' in their loans, meaning they owe more than the car is worth. These folks are having to pay us to take the car off their hands, for example one customer paid us $8,000 to ' buy ' his car.

Now understand that this is only part of the potential cost of attempting to make part of a living by driving for Uber or Lyft.

You've wasted a year, making much less money than promised, you put 40K miles on your car instead of the average 20K, and you end up with a car that isn't worth nearly what you owe on it.

So now you've wised up to the fact that this is not a real 'opportunity', you've damaged your financial situation and you're worse off than you were before.

That nice car that was going to help you make a living is now a weight holding you down, it's hard for you to even look at it, and you can't afford to pay someone to 'buy' it from you.

Uber and Lyft are fraudulent schemes based on selling false hope to desperate drivers on one hand, while promising investors the 'opportunity' of getting in on the ground-floor of a new, and 'disruptive technology', sure to become a profitable monopoly, and so make a fortune when it they take it public.

It's not a good job, it's not a good investment, it's not a ' new and disruptive technology ', it's a scam, and anyone trying to sell any portion of it is a fraud.

Thuto , December 8, 2017 at 8:12 am

Watt4Bob, my sentiments exactly, see my comment below.

Wukchumni , December 8, 2017 at 8:19 am

I've only taken Uber a few times, and when a Cuban-American fellow in Miami picked us up in his $40k new SUV and told us how Uber was going to be his way out of the rat race, I thought along the same lines as you, this is never going to work.

Martin Finnucane , December 8, 2017 at 10:29 am

It's not a good job, it's not a good investment, it's not a 'new and disruptive technology', it's a scam, and anyone trying to sell any portion of it is a fraud.

I think it's worse than a scam. It's a scam on the drivers and users, but I suspect that the investors know just what is up: destroy the taxi market, supplant it with Uber/Lyft, and enjoy your monopoly rents forever. Libertarianism indeed! That's the ground floor they're getting in on: entrepreneurial feudalism.

Also, maybe that the way investment tends to work.

Watt4Bob , December 8, 2017 at 11:40 am

It's a scam on the drivers and users, but I suspect that the investors know just what is up: destroy the taxi market, supplant it with Uber/Lyft, and enjoy your monopoly rents forever.

Anybody who has been following this discussion here at NC knows that is the play, as it has been sold to investors, however, there is very little evidence that it will work to investors benefit outside of a profitable IPO.

IMHO, that IPO has always been the end game.

As has been pointed out previously, it will be very hard, maybe impossible to drive enough of the taxi industry out of business to create that monopoly, and thus make the IPO look enticing.

My bet would be that Uber and Lyft miss that mark by a wide margin, and go down in history as a foolish misadventure on the part of investors.

As the number of disappointed investors, and ex-drivers mounts up, it will be harder and harder to recruit new 'sub-contractors' and I wouldn't rule out a class-action suit by drivers, investors, or both.

Anon , December 8, 2017 at 1:32 pm

As the number of disappointed investors, and ex-drivers mounts up, it will be harder and harder to recruit new 'sub-contractors' and I wouldn't rule out a class-action suit by drivers, investors, or both.

Probably not from the drivers -- Uber drivers for the last several years (~2013 or so, I think?) have been subject to an arbitration clause with a class action waiver. There is an opt-out provision (most likely in place only to support the ridiculous argument that the class action waiver doesn't violate Section 7 of the NLRA because of the right, under Section 7, to refrain from participating in concerted activity) but no doubt the vast majority of drivers have not opted out and are probably unaware of it. The numerous class actions against Uber have either involved drivers who stopped working for Uber prior to their implementation of arbitration or have tried to attack the enforceability of the arbitration clause. Unfortunately, those arguments haven't been, and the pending ones are unlikely to be, very successful. The argument involving Section 7 of the NLRA is currently pending before SCOTUS, but based on oral arguments, this looks likely to result in another 5-4 partisan split in favor of employers.

Watt4Bob , December 8, 2017 at 3:13 pm

The argument involving Section 7 of the NLRA is currently pending before SCOTUS, but based on oral arguments, this looks likely to result in another 5-4 partisan split in favor of employers.

Ah, yes, which brings up another matter;

Q. When is an employer not an employer

A. any time it matters to the 'employed'.

Anon , December 8, 2017 at 3:50 pm

Most of the litigation regarding Uber drivers is predicated on proving an employment relationship, contrary to Uber's assertion that the drivers are independent contractors.

You are correct that asserting any rights under the NLRA will require proving a common-law employment relationship, which is unfortunately a more restrictive standard than the FLSA's broad "suffer or permit to work" standard (and used by many state laws).

This is actually being investigated by the NLRB, who has consolidated numerous charges filed by Uber drivers into a single investigation in the San Francisco region .

Unsurprisingly, Uber's response has been to hire Littler and Gibson Dunn to stonewall the investigation by playing games like ignoring NLRB administrative subpoenas, requiring the NLRB to petition a district court for an order enforcing the subpoenas. The order the NLRB sought was eventually granted by the court , but this game managed to delay the proceedings for several months. And with the NLRB now under complete Republican control, both on the GC and Board side, it's hard to have hopes for a positive outcome for the drivers.

Knifecatcher , December 8, 2017 at 11:42 am

And there are even worse possible scenarios than making less money than expected. A friend of mine used a small inheritance ($5k or so) as a down payment to buy a new-ish car, with the idea of driving for Lyft. The hope was that he would at least make enough money to pay the note on his off-hours and have a more modern / reliable / fuel efficient car to get to his other 2-3 jobs. My friend is very much part of the precariat, so this felt like a win from his perspective.

This went on for a couple of months or so and things went more or less according to his meager expectations, so he was happy. Until he got rear ended in his nice new car. The car was totaled, the guy who hit him uninsured. His cut rate insurance company paid off the car at 2k or so less than he owed on it. Of course he had no gap coverage to cover that, and his down payment is long gone. I let him borrow an old pickup until he was able to get the insurance sorted out and arrange another beater so he didn't lose his other job(s).

Damn the "sharing economy" to hell.

Louis Fyne , December 8, 2017 at 1:14 pm

Absolutely this!

In addition to the obvious costs (fuel) and abstract costs (depreciation), drivers have a non-zero chance of death, injury, or plain old fender benders. And I'd bet most drivers don't take that into account.

Zero workers comp, zero disability, and Uber's collision insurance has a high deductible that guarantees risk is shifted onto its drivers, but for the long-tail crashes.

Not to mention drivers have only a vague idea what demand is like at any given time, while Uber HQ has 100% perfect information on the level of demand and its algos can make a reasonable guess as to the near-term expected demand.

Norbert Haering , December 8, 2017 at 7:50 am

The biased Research that you take apart here, is part of a wider and worrying phenomenon. Uber Money is dominating economic Research on ride-hauling platforms. Uber is contracting with many top-economists with their close links to prestigous publication channels. Even reputable journals publish the resulting PR as if it was science. Critical Researchers have no chance to compete, because they will not get the exclusive Uber-data, which Uber-loving researchers like Angrist and Levitt can work with.

There is an article in German Business newspaper "Handelsblatt" on this, http://www.handelsblatt.com/my/unternehmen/handel-konsumgueter/von-uber-finanzierte-studien-public-relations-oder-wissenschaft/20364132.html?ticket=ST-1630133-4TdJOLrZkvGWS3rsDDPg-ap

which is translated and slightly extended here:

http://norberthaering.de/en/home/32-english/news/920-uber-research

Rosario , December 8, 2017 at 12:40 pm

Yep, it already works in politics: https://www.npr.org/sections/money/2012/01/06/144737864/forget-stocks-or-bonds-invest-in-a-lobbyist

From Uber's perspective, why not game academia as well to help build the social values they desire. Further proof that, despite the libertarian truisms, markets are absolutely a product of politics and society rather than a natural phenomenon.

Thuto , December 8, 2017 at 8:09 am

The embedded assumption for this analysis is that the average uber driver owns their car outright (i.e. no vehicle finance/ lease repayments) and is available to work during peak demand hours. This idealised "be your own boss, set your own hours and make lots of money" myth has been shown up to be marketing fluff to attract gullible drivers who aren't savvy enough to see through the obfuscated numbers uber presents at its driver recruitment seminars. I'd wager that depreciation and dead miles, because they bite ever so silently by piling on hour by hour, mile by mile without seemingly affecting earnings dropping down into drivers "bottom lines", aren't ever mentioned at such seminars. IOW, drivers naively believe that their net earnings are 75%, when they're anything but.

In my neck of the woods the situation is even more dire because uber has partnered with South African banks and car dealerships to offer leases to unsuspecting drivers seduced by the marketing cool aid and exaggerated earnings potential, with lease terms transferring the bulk (read all) of the transaction risk to the driver. This has the effect of immediately exploding the "work part time/set your own hours" myth because said drivers are now tethered to uber (and have their free time rapaciously confiscated) in order to make their monthly repayments to the banks. With obligations to the banks on a monthly basis top of mind, asset down time becomes the bane of most of these drivers tenures with uber, with dead mile upon dead mile driven in the hope of positioning oneself close enough to areas of peak demand (leading to oversupply in such areas), artificially boosting supply for uber while wearing out both asset and driver.

These drivers are overworked, underpaid, deceived, exploited employees of uber all but in name, the independent contractor nonsense is bulls***. Tell me how this is a win for the driver??

Yves Smith Post author , December 8, 2017 at 8:28 am

The assumption goes further than that. If you are depreciating an asset (wearing out your car), that's a cost. Replacing tires more often, paying for a commercial car rider (which Uber riders are supposed to do but Uber does not enforce) are all costs that need to be included even if the driver owns his car outright.

Thuto , December 8, 2017 at 8:50 am

I totally agree, and I should have made it explicitly clear that even if you own your car outright the economics are junk owing to "hidden costs". I was addressing specifically the tacit assumption this analysis hinges on to arrive at its conclusion that uber should be a no brainer in the decision calculus of a driver looking to drive part time. That depreciation and upwardly trending running costs are ommited in the analysis seems to me to be gross incompetence or willful deception by the authors.

lyman alpha blob , December 8, 2017 at 8:23 am

So though Uber says you can drive whenever you want, drivers often only work from, say, 7 a.m. to 11 a.m. or from 3 p.m. to 8 p.m., because fares are too low at other times.

That is my buddy in Seattle's experience with Lyft. He got laid off from his tech job and started driving after a lengthy unsuccessful job search but has no illusions about the "gig economy", doing it mostly just to get out of the house. The other day he told be he'd driven over 4 hours for slightly over $50. That's below the Seattle minimum wage and that's before accounting for his expenses.

He rarely even tries to drive during non-peak hours as there's no money in it. Some fares earn him around $3 which is less than what it takes to ride the damn bus. I would never have dreamed of getting in a cab in Seattle and paying less than $5 to get anywhere in Seattle, and that was 25 years ago.

People may like the cheap fares, but that's only because they are heavily subsidized by flushing VC down the toilet and drivers working basically at a loss once expenses are considered.

gk , December 8, 2017 at 8:48 am

I'm not a frequent Uber user, but when I do I ask the driver what it's like. All say that it's much harder to make money now than it used to be. One driver actually attributed that to the ouster of Kalanick, on the belief that Kalanick had been ousted because he was pro-driver. (I didn't argue). That same driver told me he was getting $8 of my $22 Friday night fare.

I agree with the takedown of this piece, and the points previously made here about the economics of ride-sharing and the implausibility of Uber ever deriving Amazon-like network effects. I do think their app was a huge improvement over pre-Uber taxi dispatching (here in DC, call a phone number, hope someone answers, then hope a taxi shows up). Also, I think that it's at least possible that a demand-based per-ride fare structure would (assuming good faith) better match supply and demand than traditional taxi time and distance-based fares. Operating the system that enables the demand-based fares wouldn't be a ticket to world domination, but it might improve utility for drivers and riders.

fajensen , December 8, 2017 at 10:49 am

I do think their app was a huge improvement over pre-Uber taxi dispatching

The bar for "tech-disruption" is set pretty low with Uber. The local taxi companies (Taxi Skåne) all have one, even in backwards Germany, where they might not take any card payments but there is an app for getting a taxi wherever you are.

*Anyone*, literally, doing steady business can afford to have a decent "Rendevous-app" made. Give a bunch of Norwegian teenagers err App Development Company three, six months and about 15-50 kEUR and it is Done.

I can probably even get one to track my retriever on the app-store – but I don't need it since she is a proper retriever, she finds stuff and comes back with it.

So, I think The Point with Uber it that it is mostly a political research project. What those VC investors actually pay for is to test to what extent they can get away with undercutting wages, how agressive and blatant one can cut corners on legal compliance, what the consequences for doing this are in different regions. What are the stakeholders? How should these be managed/manipulated?

The information gathered until Uber craters will be used to better tailor more serious parasitic business ventures. It is an investment in the Next-Thing.

Kukuzel , December 8, 2017 at 4:41 pm

Great point! They are looking to test the limits of the system for sure in all the wrong ways.

UserFriendly , December 9, 2017 at 1:14 am

Just because they could develop an app doesn't mean they would. Next to none of them did till Uber became a threat. Not that I'm a fan of Uber.

Louis Fyne , December 8, 2017 at 9:55 am

People complain about bitcoin energy use? Let's talk about uber deadhead miles/idling. If you're in a city where uber cars must wear trade dress Just stand at a downtown corner and watch all the empty cars drive by.

Certainly not convinced ridehail is a net plus. Uber HQ would have that data and if it is not a talking point, the data must not be good

fajensen , December 8, 2017 at 10:28 am

What a shame Uber is not a listed company. That is a short-indicator if there ever was one. At least Iceland could afford a real Harward Professor write a paper declaring the robust health of their economy right before it tanked.

Wukchumni , December 8, 2017 at 10:32 am

Mishkin Accomplished!

Wukchumni , December 8, 2017 at 12:16 pm

p.s.

Not a Harvard dude, another MIT professor, ha!

Jim H. , December 8, 2017 at 12:16 pm

The money mustache guy in Longmont, CO recently posted his experience as an "underground" uber guy. Seems to confirm what I've heard around here (Berkeley/SF) about it not being the pot of gold at the end of the rainbow. Certainly has added to the snarled traffic as people use them to avoid walking short distances and as drivers carry on like amateurs. They drive like part timers and stop in the middle of streets, rather than pulling to the side of streets.
http://www.mrmoneymustache.com/2017/11/22/mr-money-mustache-uber-driver/

Basil Pesto , December 8, 2017 at 1:18 pm

Recently in Australia I've noticed when my friends have been catching Ubers that they have been subject to surge pricing for little-to-no reason. I couldn't help but wonder if this is a concerted effort by Uber to get their customers more accustomed to paying surge rates, for when Uber can no longer afford to subsidise the rides.

Noni Mausa , December 8, 2017 at 3:01 pm

It has always seemed to me that the Uber business model could only exist in a transient economic situation -- that is, a time where the economy had done poorly enough to leave many people unemployed, but before then had done well enough that many of those hard up people owned a private car. A business model that depends on transient conditions will yield, of course, transient business.

Joel , December 8, 2017 at 3:27 pm

A small correction:

the Boston market, which has a particularly high level of licensed cabs per capita, nearly twice as high as New York City.

They're talking about the City of Boston, which is only a tiny % of the Combined Statistical Area and has far more people than population during the workday. A better comparison than City of Boston-NYC would be City of Boston-Manhattan. I'm surprised that the City of Boston doesn't have a much higher number of taxis per resident.

Comparing different municipalities in the US rarely makes sense since the size of a municipality is so arbitrary. Combined Statistical Areas is a better focus since they're standardized by social scientists working for the government.

Mista T , December 8, 2017 at 3:40 pm

Knowledge is power, and drivers are given NONE.

When a ride is requested the customer knows where they are going and about how much it will cost. Uber and Lyft have the same information. But the driver only gets a customer rating and an estimated time to pick up, and 10-15 seconds to decide if they will accept the ride. They are not allowed to call the customer and ask for the destination. If they cancel the ride, they are punished. When the driver shows up, the customer has up to five minutes to get in the vehicle before the driver can cancel on that person, and five minutes is a horrible waste of time to someone who is compensated pennies per minute for waiting. The driver has no idea how much the customer is actually paying (which is often a violation of state laws requiring full disclosure of fares). Drivers have no information, a very unfair economic reality.

The service is a terrific idea, but the economics of it are not realistic. Currently the discounts are all being subsidized by a combination of VC money and drivers' lack of knowledge.

The companies are praying that elimination of drivers via automated vehicles will solve their financial problems, however I suspect that these companies are going to learn a hard lesson about the true cost of maintaining a fleet of hi tech vehicles.

artiste-de-decrottage , December 8, 2017 at 5:43 pm

Well, but this takes the cake.

"Rent a car, drive for Uber or Lyft"

"$1000 per week before rental fees"

http://hyrecar.com/

Joel , December 8, 2017 at 6:15 pm

The question that has always confused me: since Uber offers a nicer "experience" than taxis, why didn't they charge a premium for that from the beginning? Why dedicate yourself to such an extreme burn rate?

Race2Bottom Isreal , December 9, 2017 at 12:02 pm

Out in San Francisco proper the number of ridehailing vehicles with expired registrations has increased dramatically. Savvy taxi drivers and ridehailing drivers are earning less across the board. Drivers are coming from San Diego to drive in the SF Bay Area. Plateless toll evasion on the toll bridges has skyrocketed since ridehailing came on the scene.

The situation is not sustainable. There are way too many vehicles out there. Generally there are less rides too now. Services like Chariot or Ford Bike share have reduced ridership for taxi/ridehailing. Apps like Tinder/Grinder reduce the need for barhopping. Services like Munchery or Uber Eats eliminate a round trip for going out to eat.

Oddly enough Uber Eats competes against itself, UberX, as every delivery takes away two rides from the livery side of the equation. People that get a ride out to eat need a ride home.

[Dec 09, 2017] Hyping the Russian Threat to Undermine Free Speech by Max Blumenthal

Highly recommended!
This is a simply a brilliant article. Probably the best written on the subject so far. Kudos to Max Blumenthal
Thinks tanks are really ideological tanks -- formidable weapon in propaganda wars that crush everything on its way. And taken together far right think tanks financed by defense sector or intelligence agencies are really a shadow far right political party with its own neocon agenda. Actually subverting the will of American people (who elected Trump) for more peaceful relations (aka detente) with Russia in favor of interest of weapon manufactures and the army of "national security parasites".
At a time when the ruling elite, across virtually the entire western world, is… losing it; it being, political legitimacy and the breakdown of any semblance of a social contract between the ruled and the rulers those think tanks decides to create a fake narrative and blame Russians. Is not this a classic variant of projection ?
The slow strangulation of the US MSM means the crisis of confidence. A strong and confident ruling class welcomes criticism and is ready to brush it all off with a smile and a shrug. When they start running scared and pretending there is no dissent or opposition, well, this is a sign of of degradation of the ruling elite. They are losing the battle of ideas and the battle of solutions to social problems. All that really stands between them and a social revolution is a thin veneer of 'authority' and status, as well as intelligence agencies spying on everybody.
Now all those well paid ( and sometimes even talented) war propagandist intend to substitute the real crisis of neoliberalism in the USA demonstrated during the recent Presidential Elections for the artificial problem of Russian meddling. And they are succeeding in this unfair and evil substitution. The also manage to "poison the well" -- relation between two nations were now at the level probably lower then during Cold War (when many Russians were sympathetic to the USA). I think 70% of Democratic voters now are convinced the Russia was meddling in the USA election and about 30% of Republican voters also think so. For the creators of 'artificial reality" such numbers signify big success. A very big success to be exact.
Notable quotes:
"... In perhaps the most chilling moment of the hearings, and the most overlooked, Clint Watts, a former U.S. Army officer who had branded himself an expert on Russian meddling, appeared before a nearly empty Senate chamber. Watts conjured up a stark landscape of American carnage, with shadowy Russian operatives stage managing the chaos ..."
"... The spectacle perfectly illustrated the madness of Russiagate, with liberal lawmakers springboarding off the fear of Russian meddling to demand that Americans be forbidden from consuming the wrong kinds of media ..."
"... A former U.S. Army officer who spent years in obscurity at a defense industry funded think tank called the Foreign Policy Research Institute (FPRI), Watts has become a go-to source for cable news producers and print journalists on the subject of Russian bots, always available with a comment that reinforces the sense that America is under sustained cyborg attack. This September, his employers at FPRI hailed him as "the leading expert on developments related to Russian-backed efforts to not only influence the 2016 presidential election, but also to inflame racial and cultural divisions within the U.S. and across Europe." ..."
"... Watts boasts an impressive-looking bio that is replete with fancy sounding fellowships at national security-oriented outfits, including George Washington University's Center Cyber and Homeland Security. His bio also indicates that he served on an FBI Joint Terror Task Force. ..."
"... Though Watts is best known for his punditry on Russian interference, it's fair to say he is as much an expert on Russian affairs as Harvey Weinstein is a trusted voice on feminism. Indeed, Watts appears to speak no Russian, has no record of reporting or scholarship from inside Russia, and has produced little to no work of any discernible academic value on Russian affairs. ..."
"... Whether or not he has the substance to support his claims of expertise, Watts has proven a talented salesman, catering to popular fears about Russian interference while he plies credulous lawmakers with ease. ..."
"... In the widely publicized testimony, Watts explained to the panel of senators that he first noticed the pernicious presence of Russian social media bots after he co-authored an article in 2014 in Foreign Affairs titled, " The Good and The Bad of Ahrar al Sham ." The article urged the US to arm a group of Syrian Salafi insurgents known for its human rights abuses , sectarianism and off-and-on alliances with Al Qaeda. Watts and his co-authors insisted that Ahrar al-Sham was the best proxy force for wreaking havoc on the Syrian government weakening its allies in Iran and Russia. Right below the headline, Watts and his co-authors celebrated Ahrar al-Sham as "an Al Qaeda linked group worth befriending." ..."
"... Watts rehashed the same argument at FPRI a year later, urging the U.S. government to harness jihadist terror as a weapon against Russia. "The U.S. at a minimum, through covert or semi-covert platforms, should take advantage and amplify these free alternative [jihadist] narratives to provide Russia some payback for recent years' aggression," he wrote. In another paper, Watts asked , "Why shouldn't the U.S. redirect some of the jihadi hatred towards those with the dirtiest hands in the Syrian conflict: Russia and Iran?" Watts did not specify whether the theater of covert warfare should be limited to the Syrian battlefield, or if he sought to encourage jihadists to carry out terrorist acts inside Russia and Iran. ..."
"... Next, Watts introduced his signature theme, claiming that Russia manipulated civil rights protests to exploit divisions in American society. Declaring that "pro-Russian" outlets were spreading "chaos in Black Lives Matter protests" by deploying active measures, Watts did not bother to say what those measures were. ..."
"... Watts then moved to the main course of his testimony, focusing on how Trump employed Russian "active measures" to attack his opponents. Watts told the Senate panel that the Russian-backed news outlets RT and Sputnik had produced a false report on the U.S. airbase in Incirlik, Turkey being "overrun by terrorists." He presented the Russian stories as the anchor for a massive influence operation that featured swarms of Russian bots across social media. And he claimed that then-Trump campaign manager Paul Manafort invoked the incident to deflect from negative media coverage, suggesting that Trump was coordinating strategy with the Kremlin. In reality, it was Watts who was spreading the fake news. ..."
"... Watts has pushed his bogus narrative of RT and Sputnik's Incirlik coverage in numerous outlets, including Politico . Democratic Sen. Jeanne Shaheen echoed Watts' false account on the Senate floor while arguing for legislation to force RT out of the U.S. market on political grounds. And Jim Rutenberg, the New York Times' media correspondent, reproduced Watts' distorted account in a major feature on RT and Sputnik's "new theory of war." Almost no one, not one major media organization or public figure, has bothered to fact check these false claims, and few have questioned the agenda behind them. ..."
"... The episode began during a Trump rally at the height of the 2016 presidential campaign, when Trump read out an email purportedly from longtime Hillary Clinton confidant Sidney Blumenthal (the father of this writer), hoping to embarrass Clinton over Benghazi. The text of the email turned out to be part of a column written by the pro-Clinton Newsweek columnist Kurt Eichenwald, not an email by Blumenthal. ..."
"... The source of Trump's falsehood appeared to have been a report by Bill Moran, then a reporter for Sputnik, the news service funded by the Russian government. Having confused Eichenwald's writing for a Blumenthal email, Moran scrubbed his erroneous article within 20 minutes. Somehow, Moran's retracted article had found its way onto the Trump campaign's radar, a not atypical event for a campaign that had relied on material from far-out sites like Infowars to undercut its opponents. ..."
"... In his column at Newsweek, Eichenwald framed Moran's honest mistake as the leading edge of a secret Russian influence operation. With help from pro-Clinton elements, Eichenwald's column went viral, earning him slots on CNN and MSNBC, where he howled about the nefarious Russian-Trump-Wikileaks plot he believed he had just exposed. (Glenn Greenwald was perhaps the only reporter with a national platform to highlight Eichenwald's falsifications .) Moran was fired as a result of the fallout, and would have to spend the next several months fighting to correct the record. ..."
"... When Moran appealed to Eichenwald for a public clarification, Eichenwald staunchly refused. Instead, he offered Moran a job at the New Republic in exchange for his silence and warned him, "If you go public, you'll regret it." (Eichenwald had no role at the New Republic or any clear ability to influence the magazine's hiring decisions.) Moran refused to cooperate, prompting Eichenwald to publish a follow-up piece painting himself as the victim of a Russian "active measures" campaign, and to cast Moran once again as a foreign agent. ..."
"... Representing himself in court, Moran elicited a settlement from Newsweek that forced the magazine to scrub all of Eichenwald's articles about him -- a tacit admission that they were false from top to bottom. This meant that the most consequential claim Watts made before the Senate was also a whopping lie. ..."
"... The day after Watts' deception-laden appearance, he was nevertheless transformed from an obscure national security into a cable news star, with invites from Morning Joe, Rachel Maddow, Meet the Press, and the liberal comedian Samantha Bee, among many others. His testimony received coverage from the gamut of major news outlets, and even earned him a fawning profile from CNN. From out of the blue, Watts had become the star witness of Russiagate, and one of corporate media's favorite pundits. ..."
"... Dr. Strangelove ..."
"... It was not until this summer, however, that the influence operation Watts helped establish reached critical capacity. He had approached one of Washington's most respected think tanks, the German Marshall Fund, and secured support for an initiative called the Alliance for Securing Democracy. The new initiative became responsible for a daily blacklist of subversive, "pro-Russian" media outlets, targeting them with the backing of a who's who of national security honchos, from Bill Kristol to former CIA director and ex-Hillary Clinton surrogate Michael Morrell, along with favorable promotion from some of the country's most respected news organizations. ..."
Nov 13, 2017 | www.truthdig.com

Nearly a year after the presidential election, the scandal over accusations of Russian political interference in the 2016 election has gone beyond Donald Trump and reached into the nebulous world of online media. On November 1, Congress held hearings on "Extremist Content and Russian Disinformation Online." The proceedings saw executives from Facebook, Twitter and Youtube subjected to tongue-lashings from lawmakers like Republican Sen. Chuck Grassley, who howled about Russian online trolls "spread[ing] stories about abuse of black Americans by law enforcement."

In perhaps the most chilling moment of the hearings, and the most overlooked, Clint Watts, a former U.S. Army officer who had branded himself an expert on Russian meddling, appeared before a nearly empty Senate chamber. Watts conjured up a stark landscape of American carnage, with shadowy Russian operatives stage managing the chaos.

"Civil wars don't start with gunshots, they start with words," he proclaimed. "America's war with itself has already begun. We all must act now on the social media battlefield to quell information rebellions that can quickly lead to violent confrontations and easily transform us into the Divided States of America."

Next, Watts suggested a government-imposed campaign of media censorship: "Stopping the false information artillery barrage landing on social media users comes only when those outlets distributing bogus stories are silenced: silence the guns and the barrage will end."

The censorious overtone of Watts' testimony was unmistakable. He demanded that government news inquisitors drive dissident media off the internet and warned that Americans would spear one another with bayonets if they failed to act. And not one member of Congress rose to object. In fact, many echoed his call for media suppression in the House and Senate hearings, with Democrats like Sen. Dianne Feinstein and Rep. Jackie Speier agreeing the most vehemently. The spectacle perfectly illustrated the madness of Russiagate, with liberal lawmakers springboarding off the fear of Russian meddling to demand that Americans be forbidden from consuming the wrong kinds of media -- including content that amplified the message of progressive causes like Black Lives Matter.

Details of exactly what transpired vis a vis Russia and the U.S. in social media in 2016 are still emerging. This year, the Office of the Director of National Intelligence published a declassified version of the intelligence community's report on "Assessing Russian Activities and Intentions in Recent U.S. Elections," written by CIA, FBI and NSA, with its central conclusion that Russian efforts to influence the 2016 presidential election represent the most recent expression of Moscow's longstanding desire to undermine the U.S.-led liberal democratic order."

To be sure, there is ample evidence that Russian-linked trolls have attempted to exploit wedge issues on social media platforms. But the impact of these schemes on real-world events appears to have been exaggerated. According to Facebook's data , 56 percent of Russian-linked ads appeared after the 2016 presidential election, and another 25 percent "were never shown to anyone." The ads were said to have "reached" over 100 million people, but that assumes that Facebook users did not scroll through or otherwise ignore them, as they do with most ads. Content emanating from "Russia-linked" sources on YouTube, meanwhile, managed to rack up hit totals in the hundreds , not exactly a viral smash.

Facebook posts traced to the infamous Internet Research Agency troll factory in Russia amounted to only 0.0004 percent of total content that appeared on the social network. (Some of these posts targeted "animal lovers with memes of adorable puppies," while another hawked an LGBT-themed " Buff Bernie coloring book for Berniacs.") According to its " deliberately broad" review , Twitter found that only 0.74 percent of its election-related tweets were "Russian-linked." Google, for its part, documented a grand total of $4,700 of "Russian-linked ad spending" during the 2016 election cycle. While some have argued that the Russian-linked ads were micro-targeted, and could have shifted key electoral voting blocs, these ads appeared in a media climate awash in a multi-billion dollar deluge of political ad spending from both established parties and dark money super PACs.

However, a blitz of feverish corporate media coverage and tension-filled congressional hearings has convinced a whopping 82 percent of Democrats that "Russian-backed" social media content played a central role in swinging the 2016 election. Russian meddling has even earned comparisons by lawmakers to Pearl Harbor, to "acts of war," and by Hillary Clinton to the attacks of 9/11 . And in an inadvertent way, these overblown comparisons were apt.

As during the aftermath of 9/11, the fallout from Russiagate has spawned a multimillion-dollar industry of pundits and self-styled experts eager to exploit the frenetic atmosphere for publicity and profits. Many of these figures have emerged out of the swamp that flowed from the war on terror and are gravitating toward the growing Russia fearmongering industrial complex in search of new opportunities. Few of these characters have become as prominent as Clint Watts.

So who is Watts, and how did he emerge seemingly from nowhere to become the star congressional witness on Russian meddling?

Dubious Expertise, Impressive Salesmanship

A former U.S. Army officer who spent years in obscurity at a defense industry funded think tank called the Foreign Policy Research Institute (FPRI), Watts has become a go-to source for cable news producers and print journalists on the subject of Russian bots, always available with a comment that reinforces the sense that America is under sustained cyborg attack. This September, his employers at FPRI hailed him as "the leading expert on developments related to Russian-backed efforts to not only influence the 2016 presidential election, but also to inflame racial and cultural divisions within the U.S. and across Europe."

Watts boasts an impressive-looking bio that is replete with fancy sounding fellowships at national security-oriented outfits, including George Washington University's Center Cyber and Homeland Security. His bio also indicates that he served on an FBI Joint Terror Task Force.

Though Watts is best known for his punditry on Russian interference, it's fair to say he is as much an expert on Russian affairs as Harvey Weinstein is a trusted voice on feminism. Indeed, Watts appears to speak no Russian, has no record of reporting or scholarship from inside Russia, and has produced little to no work of any discernible academic value on Russian affairs.

Whether or not he has the substance to support his claims of expertise, Watts has proven a talented salesman, catering to popular fears about Russian interference while he plies credulous lawmakers with ease.

Before Congress, a String of Deceptions

Back on March 30, as the narrative of Russian meddling gathered momentum, Watts made his first appearance before the Senate Select Intelligence Committee.

Seated at the front of a hearing room packed with reporters, Watts introduced Congress to concepts of Russian meddling that were novel at the time, but which have become part of Beltway newspeak. His testimony turned out to be a signal moment in Russiagate, helping transition the narrative of the scandal from Russia-Trump collusion to the wider issue of online influence.

In the widely publicized testimony, Watts explained to the panel of senators that he first noticed the pernicious presence of Russian social media bots after he co-authored an article in 2014 in Foreign Affairs titled, " The Good and The Bad of Ahrar al Sham ." The article urged the US to arm a group of Syrian Salafi insurgents known for its human rights abuses , sectarianism and off-and-on alliances with Al Qaeda. Watts and his co-authors insisted that Ahrar al-Sham was the best proxy force for wreaking havoc on the Syrian government weakening its allies in Iran and Russia. Right below the headline, Watts and his co-authors celebrated Ahrar al-Sham as "an Al Qaeda linked group worth befriending."

Watts rehashed the same argument at FPRI a year later, urging the U.S. government to harness jihadist terror as a weapon against Russia. "The U.S. at a minimum, through covert or semi-covert platforms, should take advantage and amplify these free alternative [jihadist] narratives to provide Russia some payback for recent years' aggression," he wrote. In another paper, Watts asked , "Why shouldn't the U.S. redirect some of the jihadi hatred towards those with the dirtiest hands in the Syrian conflict: Russia and Iran?" Watts did not specify whether the theater of covert warfare should be limited to the Syrian battlefield, or if he sought to encourage jihadists to carry out terrorist acts inside Russia and Iran.

The premise of these op-eds should have raised serious concerns about Watts and his colleagues, and even questions about their sanity. They had marketed themselves as national security experts, yet they were lobbying the US to "befriend" the allies of Al Qaeda, the group that brought down the Twin Towers. (Ahrar al-Sham was founded by Abu Khalid al-Suri, a Madrid bombing suspect who was named by Spanish investigators as Osama bin-Laden's courier.) Anyone cynical enough to put such ideas into public circulation should have expected a backlash. But when the inevitable wave of criticism came, Watts dismissed it all as a Russian bot attack.

Addressing the Senate panel, Watts said that those who took to social media to mock and criticize his Foreign Affairs article were, in fact, Russian bots. He provided no evidence to support the claim, and a look at his single tweet promoting the article shows that he was criticized only once (by @Navsteva, a Twitter user known for defending the Syrian government against regime change proponents, not an automated bot). Nevertheless, Watts painted the incident as proof that Russia had revived a Cold War information warfare strategy of "Active Measures," which was supposedly aimed at "crumbl[ing] democracies from the inside out [by] creating political divisions."

Next, Watts introduced his signature theme, claiming that Russia manipulated civil rights protests to exploit divisions in American society. Declaring that "pro-Russian" outlets were spreading "chaos in Black Lives Matter protests" by deploying active measures, Watts did not bother to say what those measures were. In fact, the only piece of proof he offered (in a Daily Beast transcript of his testimony) was a single link to an RT article that factually documented a squabble between Black Lives Matter protesters and white supremacists -- an incident that had been widely covered by other outlets, from the Houston Chronicle to the Washington Post . Watts did not explain how this one report by RT sowed any chaos, or whether it had any effect at all on actual events.

Watts then moved to the main course of his testimony, focusing on how Trump employed Russian "active measures" to attack his opponents. Watts told the Senate panel that the Russian-backed news outlets RT and Sputnik had produced a false report on the U.S. airbase in Incirlik, Turkey being "overrun by terrorists." He presented the Russian stories as the anchor for a massive influence operation that featured swarms of Russian bots across social media. And he claimed that then-Trump campaign manager Paul Manafort invoked the incident to deflect from negative media coverage, suggesting that Trump was coordinating strategy with the Kremlin. In reality, it was Watts who was spreading the fake news.

In the articles cited by Watts during his testimony, neither RT nor Sputnik made any reference to "terrorists" taking over Incirlik Airbase. Rather, these outlets compiled tweets by Turkish activists and sourced their coverage to a report by Hurriyet, one of Turkey's largest mainstream papers. In fact, the incident was reported by virtually every major Turkish news organization ( here , here , here and here ). What's more, the events appeared to have taken place approximately as RT and Sputnik reported it, with protesters readying to protect the airbase from a coup while Turkish police sealed the base's entrances and exits. A look at RT's coverage shows the network even downplayed the severity of the event, citing a tweet by a U.S.-based national security analysis group stating, "We are not finding any evidence of a coup or takeover." This stands entirely at odds with Watts' claim that RT exaggerated the incident to spark chaos.

Watts has pushed his bogus narrative of RT and Sputnik's Incirlik coverage in numerous outlets, including Politico . Democratic Sen. Jeanne Shaheen echoed Watts' false account on the Senate floor while arguing for legislation to force RT out of the U.S. market on political grounds. And Jim Rutenberg, the New York Times' media correspondent, reproduced Watts' distorted account in a major feature on RT and Sputnik's "new theory of war." Almost no one, not one major media organization or public figure, has bothered to fact check these false claims, and few have questioned the agenda behind them.

Questions emailed to Watts via his employers at FPRI received no reply.

Another Watts Deception, This Time Discredited in Court

During his Senate testimony, Watts introduced a second, and even more distorted claim of Trump employing Russian "active measures" to attack his political foes. The details of the story are complex and difficult for a passive audience to absorb, which is probably why Watts has been able to get away with pushing it for so long.

Watts' testimony was the culmination of a mainstream media deception that forced an aspiring reporter out of his job, drove him to contemplate suicide, and ultimately prompted him to take matters into his own hands by suing his antagonists.

The episode began during a Trump rally at the height of the 2016 presidential campaign, when Trump read out an email purportedly from longtime Hillary Clinton confidant Sidney Blumenthal (the father of this writer), hoping to embarrass Clinton over Benghazi. The text of the email turned out to be part of a column written by the pro-Clinton Newsweek columnist Kurt Eichenwald, not an email by Blumenthal.

The source of Trump's falsehood appeared to have been a report by Bill Moran, then a reporter for Sputnik, the news service funded by the Russian government. Having confused Eichenwald's writing for a Blumenthal email, Moran scrubbed his erroneous article within 20 minutes. Somehow, Moran's retracted article had found its way onto the Trump campaign's radar, a not atypical event for a campaign that had relied on material from far-out sites like Infowars to undercut its opponents.

In his column at Newsweek, Eichenwald framed Moran's honest mistake as the leading edge of a secret Russian influence operation. With help from pro-Clinton elements, Eichenwald's column went viral, earning him slots on CNN and MSNBC, where he howled about the nefarious Russian-Trump-Wikileaks plot he believed he had just exposed. (Glenn Greenwald was perhaps the only reporter with a national platform to highlight Eichenwald's falsifications .) Moran was fired as a result of the fallout, and would have to spend the next several months fighting to correct the record.

When Moran appealed to Eichenwald for a public clarification, Eichenwald staunchly refused. Instead, he offered Moran a job at the New Republic in exchange for his silence and warned him, "If you go public, you'll regret it." (Eichenwald had no role at the New Republic or any clear ability to influence the magazine's hiring decisions.) Moran refused to cooperate, prompting Eichenwald to publish a follow-up piece painting himself as the victim of a Russian "active measures" campaign, and to cast Moran once again as a foreign agent.

When Watts revived Eichenwald's bogus version of events in his Senate testimony, Moran began to spiral into the depths of depression. He even entertained thoughts of suicide. But he ultimately decided to fight, filing a lawsuit against Newsweek's parent company for defamation and libel.

Representing himself in court, Moran elicited a settlement from Newsweek that forced the magazine to scrub all of Eichenwald's articles about him -- a tacit admission that they were false from top to bottom. This meant that the most consequential claim Watts made before the Senate was also a whopping lie.

The day after Watts' deception-laden appearance, he was nevertheless transformed from an obscure national security into a cable news star, with invites from Morning Joe, Rachel Maddow, Meet the Press, and the liberal comedian Samantha Bee, among many others. His testimony received coverage from the gamut of major news outlets, and even earned him a fawning profile from CNN. From out of the blue, Watts had become the star witness of Russiagate, and one of corporate media's favorite pundits.

FPRI, a Pro-War Think Tank Founded by White Supremacist Eugenicists

Before he emerged in the spotlight of Russiagate, Watts languished at the Foreign Policy Research Institute, earning little name recognition outside the insular world of national security pundits. Based in Philadelphia, the FPRI has been described by journalist Mark Ames as "one of the looniest (and spookiest) extreme-right think tanks since the early Cold War days, promoting 'winnable' nuclear war, maximum confrontation with Russia, and attacking anti-colonialism as dangerously unworkable."

Daniel Pipes, the arch-Islamophobe pundit and former FPRI fellow, offered a similar characterization of the think tank, albeit from an alternately opposed angle. "Put most baldly, we have always advocated an activist U.S. foreign policy," Pipes said in a 1991 address to FPRI. He added that the think tank's staff "is not shy about the use of force; were we members of Congress in January 1991, all of us would not only have voted with President Bush and Operation Desert Storm, we would have led the charge."

FPRI was co-founded by Robert Strausz-Hupé, a far-right Austrian emigre, with help from conservative corporations and covert funding from the CIA. From the campus of the University of Pennsylvania, Strausz-Hupé gathered a "Philadelphia School" of Cold War hardliners to develop a strategy for protracted war against the Soviet Union. His brain trust included FPRI co-founder Stefan Possony, an Austrian fascist who was a board member of the World Anti-Communist League, the international fascist organization described by journalists Scott Anderson and Jon Lee Anderson as a network of "those responsible for death squads, apartheid, torture, and the extermination of European Jewry." True to his fascist roots, Possony co-authored a racialist tract, " The Geography of Intellect ," that argued that blacks were biologically inferior and that the people of the global South were "genetically unpromising." Strausz-Hupé seized on Possony's racialist theories to inveigh against anti-colonial movements led by "populations incapable of rational thought."

While clamoring for a preemptive nuclear strike on the Soviet Union -- and acknowledging that their preferred strategy would cause mass casualties in American cities -- Strausz-Hupé and his band of hawks developed a monomaniacal obsession with Russian propaganda. By the time of the Cuban missile crisis, they were stricken with paranoia, arguing on the pages of the New York Times that filmmaker Stanley Kubrick was a Soviet useful idiot whose film, Dr. Strangelove , advanced "the principal Communist objectives to drive a wedge between the American people and their military leaders."

Ultimately, Strausz-Hupé's fanaticism cost him an ambassadorship, as Sen. William Fulbright scuttled his appointment to serve in Morocco on the grounds that his "hard line, no compromise" approach to communism could shatter the delicate balance of diplomacy. Today, he is remembered fondly on FPRI's website as "an intellectual and intellectual impresario, administrator, statesman, and visionary." His militaristic legacy continues thanks to the prolific presence -- and bellicose politics -- of Watts.

The Paranoid Style

This year, FPRI dedicated its annual gala to honoring Watts' success in mainstreaming the narrative of Russian online meddling. Since I first transcribed a Soundcloud recording of Watts' keynote address, the file has been mysteriously scrubbed from the internet. It is unclear what prompted the removal, however, it is easy to understand why Watts would not want his comments examined by a critical listener. His speech offered a window into a paranoid mindset with a tendency for overblown, unverifiable claims about Russian influence.

While much of the speech was a rehash of Watts' Senate testimony, he spent an unusual amount of time describing the threat he believed Russian intelligence agents posed to his own security. "If you speak up too much, you'll get knocked down," Watts said, claiming that think tank fellows who had been too vocal about Russian meddling had seen their laptops "burned up by malware."

"If someone rises up in prominence, they will suddenly be -- whoof! -- swiped down out of nowhere by some crazy disclosure from their email," Watts added, referring to unspecified Russian retaliatory measures. As usual, he didn't produce concrete evidence or offer any examples.

"Anybody remember the reporters that were outed after the election? Or maybe they tossed up a question to the Clinton campaign and they were gone the next day?" he asked his audience. "That's how it goes."

It was unclear which reporters Watts was referring to, or what incident he could have possibly been alluding to. He offered no details, only innuendo about the state of siege Kremlin actors had supposedly imposed on him and his freedom-fighting colleagues. He even predicted he'd be "hacked and cyber attacked when this recording comes out."

According to Watts, Russian "active measures" had singlehandedly augmented Republican opinion in support of the Kremlin. "It is the greatest success in influence operations in the history of the world," Watts confidently proclaimed. He contrasted Russia's success with his own failures as an American agent of influence working for the U.S. military, a saga in his career that remains largely unexamined.

Domestic Agent of Influence

"I worked in influence operations in counter-terrorism for 15 years," Watts boasted to his audience at FPRI. "We didn't break one or two percent [increase in the approval rating of US foreign policy] in fifteen years and we spent billions a year in tax dollars doing it. I was paid off of those programs. We had almost no success throughout the Middle East."

By Watts' own admission, he had been part of a secret propaganda campaign aimed at manipulating the opinions of Middle Easterners in favor of the hostile American military operating in their midst. And he failed massively, wasting "billions a year in tax dollars."

Given his penchant for deception, this may have been yet another tall tale aimed at burnishing his image as an internet era James Bond. But if the story was even partially true, Watts had inadvertently exposed a severe scandal that, in a fairer world, might have triggered congressional hearings.

Whatever took place, it appears that Watts and his Cold Warrior colleagues are now waging another expensive influence operation, this time directed against the American public. By deploying deceptions, half-truths and hyperbole with the full consent of Congress and in collaboration with the mainstream press, they have managed to convince a majority of Americans that Russia is "trying to knock us down and take us over," as Watts remarked at the FPRI's gala.

In just a matter of months, public consent for an unprecedented array of hostile measures against Russia, from sanctions and consular raids to arbitrary crackdowns on Russian-backed news organizations, has been assiduously manufactured.

It was not until this summer, however, that the influence operation Watts helped establish reached critical capacity. He had approached one of Washington's most respected think tanks, the German Marshall Fund, and secured support for an initiative called the Alliance for Securing Democracy. The new initiative became responsible for a daily blacklist of subversive, "pro-Russian" media outlets, targeting them with the backing of a who's who of national security honchos, from Bill Kristol to former CIA director and ex-Hillary Clinton surrogate Michael Morrell, along with favorable promotion from some of the country's most respected news organizations.

In the next installment of this investigation, we will see how a collection of cranks, counter-terror retreads and online vigilantes overseen by the German Marshall Fund have waged a search-and-destroy mission against dissident media under the guise of combating Russian "active measures," and how the mainstream press has enabled their censorious agenda.

Read part two here .

Max Blumenthal is a senior editor of the Grayzone Project at AlterNet, and the award-winning author of " Goliath ," " Republican Gomorrah ," and " The 51 Day War ." He is the co-host of the podcast, Moderate Rebels . Follow him on Twitter at @MaxBlumenthal .

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[Dec 09, 2017] China, Saudi Arabia, and the US by James Petras

Financialization of the economy and the lust for war goes hand in hand. That means that "casino capitalism" is an aggressive capitalism.
" In the transition, politicians, who had no connection to domestic industry, found a powerful niche promoting overseas wars for allies , like Saudi Arabia and Israel, and disseminating domestic spats, intrigues and conspiracies to the voters." -- this is an astute observation.
Notable quotes:
"... Simultaneously, finance reversed its relation to industry: Industrial capital was now harnessed to finance, speculation, real estate, insurance sectors and electronic gadgets/play-by-yourself ' i-phones' promoting isolated ' selfies' and idle chatter. ..."
"... Wall Street, Silicon Valley and Hollywood replaced Detroit, Pittsburgh, Cleveland and Chicago. Stockbrokers proliferated, while master tool-and-die makers disappeared and workers' children overdosed on 'Oxy'. ..."
"... In the transition, politicians, who had no connection to domestic industry, found a powerful niche promoting overseas wars for allies , like Saudi Arabia and Israel, and disseminating domestic spats, intrigues and conspiracies to the voters. ..."
"... In this historic transformation, American political culture put on a new face: perpetual wars, Wall Street swindles and Washington scandals. It culminated in the farcical Hillary Clinton – Donald Trump presidential election campaign: the war goddess-cuckquean of chaos versus the crotch-grabbing real-estate conman. ..."
"... Trump's presidential election campaign went about the country pleasuring the business and finance elite (promises of tax cuts, deregulations, re-contamination and jacking up the earth's temperature with a handful of jobs), and successfully pushed aside the outrage over his crude rump grabbing boasts. Wars, Wall Street, Silicon Valley and Hollywood all gathered to set the parameters of the United States' political economy: The chase was on! ..."
Dec 09, 2017 | www.unz.com

... ... ...

The chaotic free-for-all in the US political economy is manipulated by scandalmongers, conspirators and flight capitalists. Instead of preparing an economic plan to ' make America great again' , they have embraced the political blackmailers and intriguers of Saudi Arabia in a sui-generis global political alliance. Both countries feature purges, resignations and pugnacious politicos who have never been weaned from the destructive bosom of war.

As a point of history, the United States didn't start out as a bloated, speculative state of crony capitalists and parasitical allies: The US was once a powerful industrial country, harnessing finance and overseas investments to securing raw materials for domestic industries and directing profits back into industry for higher productivity.

Fake, or semi-fake, political rivalries and electoral competition counted little as incumbents retained their positions most of the time, and bi-partisan agreements ensured stability through sharing the spoils of office.

Things have changed. Overseas neo-colonies started to offer more than just raw materials: They introduced low-tax manufacturing sites promising free access to cheap, healthy and educated workers. US manufacturers abandoned Old Glory, invested overseas, hoarded profits in tax havens and happily evaded paying taxes to fund a new economy for displaced US workers. Simultaneously, finance reversed its relation to industry: Industrial capital was now harnessed to finance, speculation, real estate, insurance sectors and electronic gadgets/play-by-yourself ' i-phones' promoting isolated ' selfies' and idle chatter.

Wall Street, Silicon Valley and Hollywood replaced Detroit, Pittsburgh, Cleveland and Chicago. Stockbrokers proliferated, while master tool-and-die makers disappeared and workers' children overdosed on 'Oxy'.

In the transition, politicians, who had no connection to domestic industry, found a powerful niche promoting overseas wars for allies , like Saudi Arabia and Israel, and disseminating domestic spats, intrigues and conspiracies to the voters. Vietnam and Watergate, Afghanistan and Volker, Iran-Contra and Reaganomics , Yugoslavia and Iraq, daily drone strikes and bombings and Bill Clinton's White House sex scandals giving salacious birth to SpecialProsecutors . . .

In this historic transformation, American political culture put on a new face: perpetual wars, Wall Street swindles and Washington scandals. It culminated in the farcical Hillary Clinton – Donald Trump presidential election campaign: the war goddess-cuckquean of chaos versus the crotch-grabbing real-estate conman.

The public heard Secretary of State Clinton's maniacal laugh upon her viewing the 'snuff-film' torture and slaughter of the wounded Libya's President Gadhafi: She crowed: ' We came, we saw and he died' with a sword up his backside. This defined the Clinton doctrine in foreign affairs, while slaughter of the welfare state and the bloated prison industry would define her domestic agenda.

Trump's presidential election campaign went about the country pleasuring the business and finance elite (promises of tax cuts, deregulations, re-contamination and jacking up the earth's temperature with a handful of jobs), and successfully pushed aside the outrage over his crude rump grabbing boasts. Wars, Wall Street, Silicon Valley and Hollywood all gathered to set the parameters of the United States' political economy: The chase was on!

... ... ...

Joe Levantine , December 5, 2017 at 9:13 am GMT

This great article is an elaborate intellectual expansion on what Mr. Gerald Celente of Trendsresearch.com has been proclaiming for years that" while the business of China is business, the business of America is war". Professor Petras is pointing to the moral decline that is behind the social and economic decline of the nation of America that was once a beacon of light to the world.
This analysis leaves the reader with little doubt as to the direction in which the momentum of historic leadership is moving; it is to the East away from the West in a reversal of the dawn of the Renaissance era of Europe. The last hope for the west to stay at the helm of civilisation is to have a leader who can ignite a moral renaissance in the West short of which the 21st century will definitely be China's century. The impetus for such a revival is a shake up of the world of finance that will chase the money changers out of the altar of the Western economy and put he lying scribes of the Western media in labour camp where they will be re educated about the virtues of truth and reality.
Astuteobservor II , December 6, 2017 at 3:01 am GMT
there are 2 types of elites.

elites who line their pockets and only their pockets.

elites who line their pockets and also makes sure the rest of the country gets a little too.

guess which one is the american and chinese?

the saudis aren't even in the same category. they are just pets on a leash.

jacques sheete , December 9, 2017 at 11:53 am GMT

Official truth has become a stinking mound of offal.

Has become?

A good thing about it is that we should know to laugh at it whenever we hear it, and accept the fact that "authority" is lying until proven otherwise.

Were I to indulge my own theory, I should wish [the states] to practise neither commerce nor navigation, but to stand with respect to Europe precisely on the footing of China. We should thus avoid wars

-Thomas Jefferson, letter To G. K. van Hogendorp , Paris, Oct. 13, 1785

Isn't Western "civilization" just peachy? Civilization?

jacques sheete , December 9, 2017 at 12:46 pm GMT
@Joe Levantine

moral renaissance

One has to have had a "naissance" of morals to experience a "re" of them, but yes, chasing the money changers out of the temple and money worship out of our souls would have helped.

Would have.

Our great mass of workers have labored for the money changers too long.

-Jacob Thorkelson, Rescue the Republic, p 9. 1939

Few listened. We've had a moral abortion.

Joe Hide , December 9, 2017 at 2:54 pm GMT
You're right about many things you presented, but you still don't understand the multi-layered gradually administered releases of mis-information, dis-information, and information, designed to awaken and transform our nation, planet, and human consciousness. Given that half the population has below average intelligence, new positive leadership does not merely announce that generations of psychopaths have manipulated them. As a personal example, half the people I communicate with are sub-average intelligence, and I've learned to very gradually wake them up, or they will, in their unreasonable thinking, try to make trouble for me. There's the saying, "Don't throw pearls before swine." I know this too harshly stated, and I should have gradually and gently presented it for half the reader's. Sorry.
P.S. . Unz.com and it's reader's are likely far above average.

[Dec 08, 2017] Banking came into existence as a fraud. The fraud was legalized and we've been living with the consequences, both good and bad, ever since.

Notable quotes:
"... Ryan deficit BS there was a commenter ex-SA with a John H. Hotson link that I want to see go viral because it simply explains the history of the Gordian Knot we face as a species ..."
"... "Banking came into existence as a fraud. The fraud was legalized and we've been living with the consequences, both good and bad, ever since. Even so it is also a great invention-right up there with fire, the wheel, and the steam engine." ..."
Dec 08, 2017 | www.moonofalabama.org

psychohistorian , Dec 8, 2017 6:22:05 PM | 18

@ Daniel ending with "This "Clash of Civilizations" type narrative is not encouraging." That is exactly what they want you to focus on as a narrative rather than the simple truth about the demise of private banking. On the previous thread about the Republican: Ryan deficit BS there was a commenter ex-SA with a John H. Hotson link that I want to see go viral because it simply explains the history of the Gordian Knot we face as a species

The link to a 1996 article: Understanding Money by John H. Hotson . The take away quote

"Banking came into existence as a fraud. The fraud was legalized and we've been living with the consequences, both good and bad, ever since. Even so it is also a great invention-right up there with fire, the wheel, and the steam engine."

Clash of Civilizations is as vapid a meme as the common understanding of the Capitalism myth as that article so clearly states. Spread his word far and wide to wake up the zombies. It is time!

[Dec 05, 2017] It seems to me that the Intelligence Services have colonized the media

This is two years old exchange from the Guardian reader forum. Nothing changed...
Notable quotes:
"... The Mighty Wurlitzer: How the CIA Played America, is a good book to read, it documents boasts from the CIA that they controlled western media and at the press of a button could hear the same tune played all over the western world. ..."
"... The people in the 'western' world think their media is 'free', 'unbiased', 'investigated' but in sad reality it is far from any of those things. It is a mega phone for the narrative the govts of the west (primarily US, UK, EU and sadly Australia) want amplified. ..."
"... I am not sure how it works with the MSM. What I have noticed over the years, is that in certain times of war or geopolitical maneuvorings, the BBC and Guardian (and others), but especially those two, seem to have some sort of agreement with the Intelligence Services/Foreign Office to write subtle propaganda or lead with a certain narrative. ..."
"... This means, the producers or editors at the BBC have agreed with the Security services to allow them to control the media at certain times. Likewise, we see the same in the Guardian, especially at certain times. ..."
Feb 09, 2015 | theguardian.com

RussBrown -> stregs101 9 Feb 2015 21:14

21st Century Wire founder was on cross talk recently with others that are trying to call the media out on these things.

>It seems to me that the Intelligence Services have colonised the media. The Mighty Wurlitzer: How the CIA Played America, is a good book to read, it documents boasts from the CIA that they controlled western media and at the press of a button could hear the same tune played all over the western world.

Really, it is up to Guardian and BBC journalists and broadcasters to take a long hard look at themselves and ask why am I being made to sell war propaganda? the BBC news 24 channel had someone on trying to talk up a war with Russia last night, as I was watching it I was wondering if the BBC News presenter, an intelligent man, would have enough moral fibre to realize he is being used to sell a warmongering narrative? But he didnt, which is why I can no longer pay that organisation anymore money.

stregs101 -> RussBrown 9 Feb 2015 21:00

I agree.

The people in the 'western' world think their media is 'free', 'unbiased', 'investigated' but in sad reality it is far from any of those things. It is a mega phone for the narrative the govts of the west (primarily US, UK, EU and sadly Australia) want amplified.

Last week there was an article promoting 'full scale war' in relation to arming Kiev. This type of reporting is actually deemed a 'crime against the peace' under Nuremberg.

By upholding the lies and fabrications of US foreign policy, the mainstream media is complicit in war crimes. Without media propaganda, this military agenda under the guise of counter-terrorism would fall flat, collapse like a deck of cards.

21st Century Wire founder was on cross talk recently with others that are trying to call the media out on these things.

RussBrown -> seaspan 9 Feb 2015 19:54

I am not sure how it works with the MSM. What I have noticed over the years, is that in certain times of war or geopolitical maneuvorings, the BBC and Guardian (and others), but especially those two, seem to have some sort of agreement with the Intelligence Services/Foreign Office to write subtle propaganda or lead with a certain narrative.

Take for example the BBC headlines yesterday, top story was 15 people killed in Ukraine and calls to arm Kiev against Russian aggression. Now the this was TOP news story, the BBC have totally ignored reporting Ukrainian civilian massacres (over 5000 have died), until they are selling a narrative they want to persuade everyone with, such as that we need to arm Kiev against Russian aggression.

This means, the producers or editors at the BBC have agreed with the Security services to allow them to control the media at certain times. Likewise, we see the same in the Guardian, especially at certain times.

[Dec 05, 2017] House Members Tee Up Bipartisan Bill to Kill CFPB Payday Lending Rule

Notable quotes:
"... By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in Asia and is currently working on a book about textile artisans. ..."
"... The Unbanking of America: How the New Middle Class Survives ..."
Dec 05, 2017 | www.nakedcapitalism.com

Posted on December 4, 2017 by Jerri-Lynn Scofield By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in Asia and is currently working on a book about textile artisans.

Three Democrats and three Republicans have co-sponsored a resolution, under the Congressional Review Act (CRA), to scuttle the Consumer Financial Protection Bureau's payday lending rule.

CRA's procedures to overturn regulations had been invoked, successfully, only once before Trump became president. Congressional Republicans and Trump have used CRA procedures multiple times to kill regulations (as I've previously discussed (see here , here , here and here ). Not only does CRA provide expedited procedures to overturn regulations, but once it's used to kill a regulation, the agency that promulgated the rule is prevented from revisiting the issue unless and until Congress provides new statutory authority to do so.

Payday Lending

As I wrote in an extended October post, CFPB Issues Payday Lending Rule: Will it Hold, as the Empire Will Strike Back, payday lending is an especially sleazy part of the finance sewer, in which private equity swamp creatures, among others, operate. The industry is huge, according to this New York Times report I quoted in my October post, and it preys on the poorest, most financially-stressed Americans:

The payday-lending industry is vast. There are now more payday loan stores in the United States than there are McDonald's restaurants. The operators of those stores make around $46 billion a year in loans, collecting $7 billion in fees. Some 12 million people, many of whom lack other access to credit, take out the short-term loans each year, researchers estimate.

The CFPB's payday lending rule attempted to shut down this area of lucrative lending– where effective interest rates can spike to hundreds of points per annum, including fees (I refer interested readers to my October post, cited above, which discusses at greater length how sleazy this industry is, and also links to the rule; see also this CFPB fact sheet and press release .)

Tactically, as with the ban on mandatory arbitration clauses in consumer financial contracts– an issue I discussed further in RIP, Mandatory Arbitration Ban , (and in previous posts referenced therein), the CFPB under director Richard Cordray made a major tactical mistake in not completing rule-making sufficiently before the change of power to a new administration- 60 "session days" of Congress, thus making these two rules subject to the CRA.

The House Financial Services Committee press release lauding introduction of CRA resolution to overturn the payday lending rule is a classic of its type, so permit me to quote from it at length:

These short-term, small-dollar loans are already regulated by all 50 states, the District of Columbia and Native American tribes. The CFPB's rule would mark the first time the federal government has gotten involved in the regulation of these loans.

.

House Financial Services Committee Chairman Jeb Hensarling (R-TX), a supporter of the bipartisan effort, said the CFPB's rule is an example of how "unelected, unaccountable government bureaucracy hurts working people."

"Once again we see powerful Washington elites using the guise of 'consumer protection' to actually harm consumers and make life harder for lower and moderate income Americans who may need a short-term loan to keep their utilities from being cut off or to keep their car on the road so they can get to work," he said. "Americans should be able to choose the checking account they want, the mortgage they want and the short-term loan they want and no unelected Washington bureaucrat should be able to take that away from them."

[Rep Dennis Ross, a Florida Republican House co-sponsor]. said, "More than 1.2 million Floridians per year rely on Florida's carefully regulated small-dollar lending industry to make ends meet. The CFPB's small dollar lending rule isn't reasonable regulation -- it's a de facto ban on what these Floridians need. I and my colleagues in Congress cannot stand by while an unaccountable federal agency deprives our constituents of a lifeline in times of need, all while usurping state authority. Today, we are taking bipartisan action to stop this harmful bureaucratic overreach dead in its tracks."

As CNBC reports in New House bill would kill consumer watchdog payday loan rule , industry representatives continue to denounce the rule, with a straight face:

"The rule would leave millions of Americans in a real bind at exactly the time need a fast loan to cover an urgent expense," said Daniel Press, a policy analyst with the Competitive Enterprise Institute, in a statement after the bill's introduction.

Consumer advocates think otherwise (also from CNBC):

"Payday lenders put cash-strapped Americans in a crippling cycle of 300 percent-interest loan debt," Yana Miles, senior legislative counsel at the Center for Responsible Lending, said in a statement.

Prospects Under CRA

When I wrote about this topic in October, much commentary assumed that prospects for CRA overturn were weak. I emphasized instead the tactical error of failing to insulate the rule from CRA, which could have been done if the CFPB had pushed the rule through well before Trump took office:

If the payday rule had been promulgated in a timely manner during the previous administration it would not have been as vulnerable to a CRA challenge as it is now. Even if Republicans had then passed a CRA resolution of disapproval, a presidential veto would have stymied that. Trump is an enthusiastic proponent of deregulation, who has happily embraced the CRA– a procedure only used once before he became president to roll back a rule.

Now, the Equifax hack may have changed the political dynamics here and made it more difficult for Congressional Republicans– and finance-friendly Democratic fellow travellers– to use CRA procedures to overturn the payday lending rule.

The New York Times certainly seems to think prospects for a CRA challenge remote:

The odds of reversal are "very low," said Isaac Boltansky, the director of policy research at Compass Point Research & Trading.

"There is already C.R.A. fatigue on the Hill," Mr. Boltansky said, using an acronymn for the act, "and moderate Republicans are hesitant to be painted as anti-consumer.

I'm not so sure I would take either side of that bet. [Jerri-Lynn here: my subsequent emphasis.]

A more telling element than CRA-fatigue in my assessment of the rule's survival prospects was my judgment that Democrats wouldn't muster to defend the payday lending industry– although that assumption has not fully held, as this recent American Banker account makes clear:

After the payday rule was finalized in October , it was widely expected that Republicans would attempt to overturn it. It's notable, though, that the effort has attracted bipartisan support in the House.

.

Passage in the Senate, however, may be a much heavier lift. The chamber's vote to overturn the arbitration rule in late October came down to the wire, forcing Republicans to call in Vice President Mike Pence to cast the tie-breaking vote.

Bottom Line

I continue to think that this rule will survive– as the payday lending industry cannot count on a full court press lobbying effort by financial services interests. Yet as I wrote in October, I still hesitate to take either side of the bet on this issue.

Dpfaef , December 4, 2017 at 10:53 am

I think this whole article is totally disingenuous. There is a serious need for many Americans to have access to small amount, short term loans. While, these lenders may appear predatory, they do serve a large sector of society.

Maybe you need to read: The Unbanking of America: How the New Middle Class Survives by Lisa Servon . It might be worth the read.

GF , December 4, 2017 at 11:02 am

Where's the Post Office Bank when you need it. This overturning of the rule is just an effort to stop the Post Office Bank from gaining traction as the alternative non-predatory source of small loans to the people. Most pay day lender companies are owned by large financial players.

Jerri-Lynn Scofield Post author , December 4, 2017 at 11:11 am

I agree that's a far better approach and indeed, I discussed the Post Office bank in my October post– which is linked to in today's post. Permit me to quote from my earlier post:

The payday lending industry preys on the poorest financial consumers. One factor that has allowed it to flourish is current banking system's inability to provide access to basic financial services to a shocking number of Americans. Approximately 38 million households are un or underbanked– roughly 28% of the population.

Now, a sane and humane political system would long ago have responded with direct measures to address that core problem, such as a Post Office Bank (which Yves previously discussed in this post, Mirabile Dictu! Post Office Bank Concept Gets Big Boost and which have long existed in other countries.)

Regular readers are well aware of who benefits from the current US system, and why the lack of institutions that cater to the basic needs of financial consumers rather than focusing on extracting their pound(s) of flesh is not a bug, but a feature.

So, instead, the United States has a wide-ranging payday lending system. Which charges borrowers up to 400% interest rates for short-term loans, many of which are rolled over so that the borrower becomes a prisoner of the debt incurred.

Wisdom Seeker , December 4, 2017 at 3:23 pm

With phrasing like "unbanked" or "underbanked", I worry that you've bought into the banking-industry framing of this issue, which I'm sure is not your intent.

Ordinary people should not need any bank (not even a government or post office bank) for everyday life, with the possible exception of mortgages. De-financialization of the medium of exchange, and basic payments, is something the public should be fighting for.

lyman alpha blob , December 4, 2017 at 3:30 pm

I would consider myself an ordinary person and I pay in cash when purchasing day to day items the vast majority of the time and yet I'd still prefer to deposit my money in a bank rather than hiding it in my mattress for any number of good reasons.

Banks aren't the problem – their predatory executives are.

Wisdom Seeker , December 4, 2017 at 3:44 pm

But there are, or at least ought to be, safe and secure ways to store money other than by lending it to banks or stuffing it into mattresses. Or carrying wads of cash.

For instance, a debit card (or possibly cell phone) with a secure identity / password can already act as a cashless wallet. The digital cash could be stored directly on the device, and accounted for through something similar to TreasuryDirect, without any intermediaries. But this would require the Federal Government to get serious about having a modern Digital Dollar of some kind (not bitcoin, shudder)

Cary D Berkelhamer , December 4, 2017 at 4:32 pm

Even better would be State Banks. Every state should have one. I believe the State Bank of North Dakota made money in 2008. While the TBTF Banks came hat in hand to our Reps. Of course OUR Reps handed them a blank check and told them to "Make it go Away". However Post Office Banks would be GREAT!!

diptherio , December 4, 2017 at 11:08 am

This is the boilerplate argument that always gets brought up by payday loan defenders, and there is a good bit of truth to it. However, what you are not mentioning is that there are already far superior options available to pretty much any person who needs a small, short term loan. That solution is your friendly neighborhood Credit Union, most of which offer very low interest lines of overdraft coverage. I don't mind saying that it has saved my heiny on more than one occasion. Pay check a little late in arriving? No problem, transfer $200 from your overdraft account into your checking account on-line and you're good to go. Pay it back at your convenience, also on-line, at 7% APR.

Payday lenders are legal loansharks. The problems with their predatory lending model and the damage it does to low-income people are well documented. Simply pointing out that there is a reason that people end up at payday lenders is not a valid justification for the business practices of those lenders, especially when there are much better alternatives readily available.

Vatch , December 4, 2017 at 11:19 am

Payday lenders are legal loansharks.

Very true! There are several web sites that point out how the fees associated with payday loans raise the effective annual percentage rate into the stratosphere, ranging from 300% to over 600%. Here's one:

http://paydayloansonlineresource.org/average-interest-rates-for-payday-loans/

Off The Street , December 4, 2017 at 12:10 pm

One frustration that I have with legislation in general, and finance legislation in particular, is that it does not tell the truth, the whole truth and nothing but the truth.

In my Panglossian world, I envision a financial services bill that lays out the following:

Define the problem
Unserviced people: X percent( for discussion, say 10% to make the math easy) of people are un-serviced (or under-, or rapaciously-serviced) by conventional financial companies, whether banks, credit unions or other, whatever other is conventionally.
Unserviced and don't want: Y percent of that X percent (say, 50% of 10%, so 5%) doesn't want services.
Unserviced and want: 1-Y percent of that X percent (say, 50% of 10%, so 5%) wants services but can not get them. That could be due to various factors, ranging from bad credit (how defined?, say FICO < 600?) to geographic remoteness (no branches within miles, no internet, precious little slow mail service, whatever).

Within that deemed unserved 5% of the population, what are the costs to serve and what are the alternatives?

What would an honest service provider need to provide service, accounting for credit risks and the like, and still make a profit sufficient to induce investment?

If I knew how to make and add a nice graphic, I'd include a waterfall chart here to show the costs and components of the interest and fees paid in regular and default mode. Sorry, please bear with me as I make up numbers.

Regular costs
Interest at 30%
Less: cost of funds at, say, 10%
Less: personnel, overhead, everything else at, say, 5%
Pre-tax profit: 15%

Default mode costs:
Interest at 275%
Plus: Fees at 25%
Less: cost of funds 20%
Less: personnel, overhead, etc 5%
Less: added default cost not in personnel etc line, say 25%
Pre-tax profit: 250%

In that little example, who couldn't make money at those rates?

Extending the notion of APR and Truth-In-Lending to include payday lenders and anyone else without a brick-and-mortar branch who wants to do business in the US, how about mandating some type of honest waterfall chart as dreamt of above?

Then cross-reference and publicize the voting on finance legislation with the campaign contributions from payday people and their ilk, and layer in the borrower costs and credit scores and other metrics in those Congressional districts and zip+4 codes and census tracts and whatever other level of granularity will help provide any amount of disinfecting sunlight to help see the scattering cockroaches.

a different chris , December 4, 2017 at 12:57 pm

The problem I suspect is that your "friendly neighborhood credit union" is actually rarely anywhere near the neighborhoods where people who need these kind of loans live.

They don't have cars and mass transit is non-existent or so slow they couldn't get to the Credit Union during business hours, and back again, anyway. That's the problem with expecting Private Enterprise to be a solution for people at the bottom. They don't set up shop where those people live, or the ones that do are not exactly do-gooders.

lyle , December 4, 2017 at 7:33 pm

I just checked and a lot of credit unions let you apply for a loan online, (earlier you can set up membership online). So the issue of transport and time is lessened assuming folks have some form of net access.

JTMcPhee , December 4, 2017 at 1:04 pm

One might ask why there are millions of people reduced to having to get ripped off by payday and auto-title lenders, to somehow survive from week to week. Maybe because people can't make a living wage? Can't save any money, however prudent and abstemious they may be? Because inter-citizen cruelty and Calvinism are so very strong a force in this rump of an Empire?

Some of the comments here seem to build on the baseline assumption that's part of the liberal-neoliberal mantra, "You get what's coming to you (or the pittance we can't quite squeeze out of you yet)".

diptherio, I am guessing you may mean that there are models of better alternatives readily available, like paying a living wage, a social safety net for the worst off, a postal bank, national health care, stuff like that. I don't see that there are any alternatives actually available to most real people "on the ground."

Wukchumni , December 4, 2017 at 1:08 pm

There is an alternative to excessive payday loans, but only if you're in the military, where it's capped @ 36%.

Why not 36% for everybody?

diptherio , December 4, 2017 at 1:27 pm

You are, of course, correct in that the underlying problem is that so many people are forced to live on so little that they need payday loans in the first place. Thanks for pointing that out.

My point is simply that in the short-term, as a matter of practicality for those of us who don't always make it until payday before running out of money, a CU overdraft account is a very good option.

mpalomar , December 4, 2017 at 1:36 pm

Agree. The AB article from October deadpans a description of the ins and outs governing the hellishness of the company town we're living in.

lyman alpha blob , December 4, 2017 at 1:32 pm

This is a far superior option and thank you for bringing it up. The only problem is most banks and credit unions will not tell you it exists because they make a lot more money if you just keep bouncing checks.

I only learned about it when I worked for WAMU. We were tasked by management with promoting various new products to customers as a condition of being paid a monthly bonus which was the only thing that made the job pay enough to live on. Funny, they never asked us to promote the overdraft line of credit (aka an ODLOC), ever. I do remember one of my managers tell me that circa 2000 or so, WAMUs operating costs for the entire company for the entire year were offset just by the fees they collected off of bounced checks etc.

The fees or interest you pay for using an ODLOC are a small fraction of what you'd pay for bouncing just one check. IIRC, if I overdrew by $200 or so and paid it back on my next payday, the interest was generally less than $1. My local credit union has since added a $5 fee for accessing the ODLOC on top of the interest, but it's still much less than a bounced check fee or interest on a payday loan. I believe that depending on your credit history, you can get an ODLOC of up to $2500 or so which pretty much negates the need for any payday loans.

sd , December 4, 2017 at 11:14 am

A friend of mine was evicted from her apartment because of a payday loan. She failed to pay it off in full quick enough and it spiraled out of control tripling in a very short time. I really fail to see how usury is beneficial to society.

RepubAnon , December 4, 2017 at 11:55 am

Yes, there's a need for high-interest loans that bankrupt borrowers:

Mom-and-Pop Loan Sharks Being Driven Out by Big Credit Card Companies

Frank Pistone is part of the dying breed known as the American Loan Shark. Not so long ago, the loan shark flourished, offering short-term, high-interest loans to desperate people with nowhere else to turn. Today, however, Pistone and countless others like him are being squeezed out by the major credit-card companies, which can offer money to the down-and-out at lower rates of interest and without the threat of bodily harm

FluffytheObeseCat , December 4, 2017 at 12:25 pm

I read Servon's book. It is not a brief on behalf of the payday loan industry. She worked at a couple of payday lenders and explains how they serve the communities they're in, but a few things need to be noted:

The business she was most sympathetic with was a small, local one with only a couple of storefronts, in an east coast inner city. The owner and his help knew the customer base, often by name. Much of her sympathy came from her respect for the women who were dishing out the loans at the windows, not the owners and not the business model. This local joint operated like the most benign of old time pawnbroker/loansharking operation from the early part of the last century.

Most "Cash America" storefront shops (on shabby, midcentury shopping strips in inner ring scuburbs across the US) aren't this decent. They aren't "part of a community" in any sense. And the rates are usurious any way, for all of them.

Thank you to Ms. Scofield for continuing to cover this and related businesses. The upper, cleaner part of our finance industry derives more filthy lucre from these kinds of loan shops than they ever want you to know (sub-prime lending shops, title loans shops . there are a lot of modalities for fleecing the poor and the near-poor nowadays).

JTMcPhee , December 4, 2017 at 12:35 pm

The NC staff must be pleased that it seems like so many subtle apologists for the looters, predators, "intelligence community," and so forth, appear to be turning up here early in the opening of new site posts. I'm guessing the Elite are not exactly quaking in fear that NC's reporting will catalyze some change that might sweep the political economy in the direction of what the mopery would categorize as "fairness," but still

ger , December 4, 2017 at 12:42 pm

Raised the dollar definition of middle class and declared a 'new middle class' or could it be 'new middle class' is actually referring to the 'new middle poor'. The former middle class is desperately trying to avoid a plunge into the pits of the 'poor poor'. Payday Loan predators are greasing the handrails.

Matthew Cunningham-Cook , December 4, 2017 at 3:15 pm

"Where will the money-changers change money if not in the Holy Temple? Aren't we starving the priests of much-needed revenue? This Jesus guy is totally disingenuous."

John , December 4, 2017 at 9:32 pm

In good neo liberal fashion that Jesus dude got exactly what he deserved. The effrontry of that guy to chase those hard working money lenders out of the temple square. Got exactly what was coming to him.

sd , December 4, 2017 at 11:11 am

H.J.Res.122 – Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Bureau of Consumer Financial Protection relating to "Payday, Vehicle Title, and Certain High-Cost Installment Loans".

December 1, 2017

Sponsor Rep. Ross, Dennis A. [R-FL-15] (Introduced 12/01/2017)
Rep. Hastings, Alcee L. [D-FL-20]
Rep. Graves, Tom [R-GA-14]
Rep. Cuellar, Henry [D-TX-28]
Rep. Stivers, Steve [R-OH-15]
Rep. Peterson, Collin C. [D-MN-7]

perpetualWAR , December 4, 2017 at 12:21 pm

Ahhh ..look at this list. TWO Florida lawbreakers introducing this banker bill. And one from Minnesota. Y'all know that Jacksonville, FL and St. Paul, MN are the two places where the forgeries continue to be provided to the financial crooks? So, it goes to figure that the lawbreakers are attempting to protect the financial crooks committing forgery in their prospective states! How appro.

jawbone , December 4, 2017 at 1:44 pm

If any of these House critters are "representing" you, time for lots of calls to them.

And thanks, SD, for listing them. I always wonder why our vaunted free press so seldom lists the sponsors of legislation when it's reported on . Hhmm .
m .

Mike R. , December 4, 2017 at 1:19 pm

I have mixed feelings about this specific issue.
The larger issue of a grossly skewed economic system is what needs to be fixed.
There will always be people that lack common sense and brains regarding money. There will always be people that will take advantage of that.
I don't know how or why you would try and legislate that away.
We need to move in the direction of solving the biggest problems and not get wrapped up in the little problems.
The numbers above sound horrendous, but 7 billion in profit on 46 billion loaned is 14% return. Credit card companies are worse. 7 billion in profit off of 12 million people is $600 per person. Alot for poor folks I recognize, but not necessarily life shattering for all.

The "system" loves to wrangle around with issues like this (trivial in my mind) so the handful of big ones go unattended.

nonclassical , December 4, 2017 at 1:46 pm

some have apparently not felt it necessary to bail out family members for aggressive, egregious and immediate interest rates and escalations charged by these scammers

but there certainly appears concerted effort by (likely) shills to perpetuate scams (and to discredit Consumer Financial Protection Agency and Liz Warren )

Warren-Sanders 2020

Wisdom Seeker , December 4, 2017 at 3:37 pm

I think there's an error in the original article, where it says:

CRA's procedures to overturn legislation had been invoked, successfully, only once before Trump became president. Congressional Republicans and Trump have used CRA procedures multiple times to kill regulations (emphasis added)

My understanding is that CRA gives Congress the power to overturn executive branch regulations , not legislation (which Congress already can overturn anyway). Is that incorrect?

P.S. It's sad that it might not even matter. Nowadays the public can't tell the difference between regulations (written by unaccountable, unelected officials who take the revolving door back to working at the firms they regulated) and legislation (written by unaccountable, only notionally elected politicians who get paid off in various ways by lobbyists for the same firms)

Jerri-Lynn Scofield Post author , December 4, 2017 at 8:07 pm

You're correct– fixed it! Slip of the fingers there that I didn't catch when I proofread the post. As the rest of the paragraph makes clear, CRA procedures are used to overturn regulations.

Thanks for reading my work so carefully and drawing the error to my attention.

John k , December 4, 2017 at 8:26 pm

Finally bipartisan!
Trump loves it
Obomber woulda loved it
She who cannot be named woulda loved it, too.
Time for them all to get over that little spat she did it before trump should appoint her to something useful I bet she'd love secdef

Taras 77 , December 4, 2017 at 10:40 pm

Where is the lovely Debbie Wasserman schultz in all of this? She has not surprisingly been a leading cheerleader for these pay day lender sharks. but hey, what the hey, the lobby money is good!

[Dec 05, 2017] Rise of casino capitalism by Stefan Stern

This was written a decade ago. neoliberalism is a stable social system but nothing changed, although fault lines of the system became more evident.
Notable quotes:
"... "The prototype of the successful man in modern society is not the scientist, the inventor, the scholar. It is the financier, the gambler and those with social pull. The others share [in the winnings] sometimes, it is true, but their share is modest compared with the oligarchs and tycoons; and they don't usually keep their share for long. They are no match for the commercial prowlers." ..."
"... Mr Monks contrasted businesses' healthy profitability with the ruthless way some have treated their staff recently, whether through large-scale redundancies or the constant threat that jobs may be sent off-shore or outsourced. While median wages have stagnated, record executive salaries are legion. ..."
"... he was appalled by the increasingly "shameless", short-termist behaviour of overpaid corporate executives. "More and more they resemble the Bourbons - and they should be aware of what eventually happened to the Bourbons." ..."
"... "All this is too important to be left to the practitioners who have a vested interest in obscuring what they do from the rest of us," he said. And, with bonus season fast approaching, he took one final, sweeping aim at the high rollers of "casino capitalism". Their actions are "dangerous to economic stability, traditional industry and jobs", he said. "I would like to see the City pages of the press more challenging and less respectful on these matters . . . Our future - the world's future - is too important to place in the hands of the new capitalists." ..."
"... Half a century ago, Nye Bevan expressed a similar concern. In In Place of Fear he wrote: "There is a sense of injustice in modern society, and this induces a feeling of instability even in normal circumstances. The rewards are not in keeping with social worth, and the consciousness of this, both among the successful and the unsuccessful, will simmer and bubble, blowing up into geysers of political and social disturbance in times of economic stress." ..."
www.warc.ch

"The prototype of the successful man in modern society is not the scientist, the inventor, the scholar. It is the financier, the gambler and those with social pull. The others share [in the winnings] sometimes, it is true, but their share is modest compared with the oligarchs and tycoons; and they don't usually keep their share for long. They are no match for the commercial prowlers."

A snap-shot of London's Mayfair district, home to the burgeoning hedge-fund phenomenon, in November 2006? Actually, no. The above words were written in 1952 by the Labour politician Aneurin Bevan in his book In Place of Fear. Bevan had a gift - his most passionate supporters would say a genius - for exposing the truth of a situation in language that could be both scintillating and pungent.

Fifty years ago, he criticised the prime minister of the day, Sir Anthony Eden, for his reckless actions during the Suez crisis. "[He] has been pretending that he is now invading Egypt in order to strengthen the United Nations," Bevan said in a famous speech in Trafalgar Square. "Every burglar of course could say the same thing: he could argue that he was entering the house in order to train the police. So, if Sir Anthony Eden is sincere in what he is saying, and he may be . . . then he is too stupid to be a prime minister!" Here was political rhetoric with a touch of prophesy about it.

It was the enduring appeal of speeches such as these that helped draw a good crowd to the fifth annual Bevan memorial lecture in London last week. The lecture was to be given by John Monks, formerly general secretary of the British Trades Union Congress, now the Brussels-based leader of the European trade union confederation.

No one in the audience would have been expecting Bevanite rhetorical fireworks from Mr Monks. That has never been his style. Between 1993 and 2003, he led the British trade union movement with modesty and distinction. He was the moderate's moderate: avoiding confrontation wherever possible and advocating partnership at work between management and employees. Business leaders were happy to do business with him.

They would not have found this lecture so easy to deal with. Confronted by today's turbo-charged capitalism, Mr Monks cast off his former moderation. He even seemed to be on the verge of recanting his commitment to the partnership model. "Partnership with who?" he asked. There has been, he said, a "disintegration of the social nexus between worker and employer - a culture containing broad social rights and obligations. The new capitalism wants none of it."

Mr Monks contrasted businesses' healthy profitability with the ruthless way some have treated their staff recently, whether through large-scale redundancies or the constant threat that jobs may be sent off-shore or outsourced. While median wages have stagnated, record executive salaries are legion.

He admitted that he had possibly been a bit naive in the past. "I did not fully appreciate what was happening on the other side of the table," Mr Monks said. While he sympathised with business leaders for the relentless pressure they find themselves under - "It cannot be easy running a firm . . . when you are up for sale every day and every night of every year" - he was appalled by the increasingly "shameless", short-termist behaviour of overpaid corporate executives. "More and more they resemble the Bourbons - and they should be aware of what eventually happened to the Bourbons."

For someone like me, who has sat through 10 years of reasonableness from John Monks, this speech was remarkable, devastating stuff. Maybe there is something in the Brussels water. Perhaps the ghost of Nye Bevan was speaking through him. Or was it just anxiety over the career choice of his daughter's boyfriend? He is now working for - you guessed it - a hedge fund. Whatever its cause, a challenge was being thrown down.

"All this is too important to be left to the practitioners who have a vested interest in obscuring what they do from the rest of us," he said. And, with bonus season fast approaching, he took one final, sweeping aim at the high rollers of "casino capitalism". Their actions are "dangerous to economic stability, traditional industry and jobs", he said. "I would like to see the City pages of the press more challenging and less respectful on these matters . . . Our future - the world's future - is too important to place in the hands of the new capitalists."

Will corporate leaders - those that have read this far anyway - simply shrug their shoulders and get back to their slashing and burning ways? Is Mr Monks merely offering a wholly predictable, knee-jerk, lefty rant? I do not think so. This general secretary just does not do lefty rants. So business people should take note. When the John Monkses of this world say enough is enough, that the capitalist system itself is sick, you can be sure that elsewhere in the world there is deep-seated, lingering resentment and unhappiness.

Half a century ago, Nye Bevan expressed a similar concern. In In Place of Fear he wrote: "There is a sense of injustice in modern society, and this induces a feeling of instability even in normal circumstances. The rewards are not in keeping with social worth, and the consciousness of this, both among the successful and the unsuccessful, will simmer and bubble, blowing up into geysers of political and social disturbance in times of economic stress."

Reading these words, you can see why so many people were prepared to come out on a dark Tuesday night...

[Dec 05, 2017] Controlling speculation in world financial markets Progressive Christians Uniting by Gordon K Douglass

Highly recommended!
Nov 09, 2002 | www.prospect-magazine.co.uk

Financial markets 101
Early history
The Bretton Woods system
The power of financial actors
Consequences of global financial flows
Policy options
Theological and ethical considerations
A new financial architecture
What Christians can do
Want to know more?
Questions For Discussion


"During my whole career at Goldman Sachs - 1967 to 1991 - I never owned a foreign stock or emerging market bonds. Now I have hundreds of millions of dollars in Russia, Brazil, Argentina and Chile, and I worry constantly about the dollar-yen rate. Every night before I go to bed I call in for the dollar-yen quote, and to find out what the Nikkei is doing and what the Hang Seng Index is doing. We have bets in all these markets. Right now Paul [one of my traders] is long [on] the Canadian dollar. We have bets all over the place. I would not have worried about any of these twenty years ago. Now I have to worry about all of them."

Leon Coopermann, hedge fund manager1


Economic globalization is probably the most fundamental transformation of the world's political and economic arrangements since the Industrial Revolution. Decisions made in one part of the world more and more affect people and communities elsewhere in the world. Sometimes the consequences of globalization are positive, liberating inventive and entrepreneurial talents and accelerating the pace of sustainable development. But at other times they are negative, as when many people, especially in less-developed countries, are left behind without a social safety net. Globalization undermines the ability of the nation to tax and to regulate its own economy. This weakens the power of sovereign nations relative to that of large transnational corporations and distorts how social and economic priorities are chosen.

Economic globalization is most often associated with rapid growth in the flow of goods and services across international borders. Indeed, the economic "openness" of a nation is often measured by the value of its exports, imports, or their sum when compared to the size of its economy. Economic globalization also involves large investments from outside each nation, often by transnational corporations. These corporations often combine technology and know-how with their investments that enhance the productive capacity of a nation. Previous position papers of the Mobilization, contained in Speaking of Religion & Politics: The Progressive Church Tackles Hot Topics2, have dealt with globalization primarily in these terms.

But international trade and investment are only part of the openness that has come to be called globalization. Another part, and arguably the most important, is the quickening flow of financial assets internationally. While a small portion of this flow is directly associated with the "real" economy of production and exchange, its vast majority is composed of trades in the "paper" economy of short-term financial markets. This paper economy is enormous: The value of global financial securities greatly exceeds the value of annual world output of goods and services. Moreover, the paper economy often contributes to crises in the real economy. Thus it is important to the well being of humanity and the planet as a whole, yet it is little understood by most people. This essay undertakes to provide a basic understanding of this paper economy, especially as its more speculative features have multiplied during the last two or three decades, so that Christians and others concerned about what is happening in our world can join in an intelligent discussion of how the harmful consequences of financial markets can be controlled.


Financial markets 101

To better understand this paper economy, one first needs to know something about foreign exchange markets, international money markets, and "external" financial markets.

In an open economy, domestic residents often engage in international transactions. American car dealers, for example, buy Japanese Toyotas and Datsuns, while German computer companies sell electronic notebooks to Mexican businessmen. Similarly, Australian mutual funds invest in the shares of companies all over the world, while the treasurer of a Canadian transnational corporation parks idle cash in 90-day Bank of England notes. Most of these transactions require one or more participants to acquire a foreign currency. If an American buys a Toyota and pays the Japanese Toyota dealer in dollars, for example, the latter will have to exchange the dollars for yens in order to have the local currency with which to pay his workers and local suppliers.

The foreign exchange market is the market in which national currencies are traded. As in any market, a price must exist at which trade can occur. An exchange rate is the price of a unit of domestic currency in terms of a foreign currency. Thus, if the exchange rate of the dollar in terms of the Japanese yen increases, we say the dollar has depreciated and the yen has appreciated. Similarly, a decrease in the dollar/yen exchange rate would imply an appreciation of the dollar and a depreciation of the yen.

Foreign exchange markets can be classified as spot markets and forward markets. In spot markets currencies are bought and sold for immediate delivery and payment. In forward markets, currencies are bought or sold for future delivery and payment. A U.S. music company, say, enters into a contract to buy British records for delivery in 30 days. To guard against the possibility of the dollar/pound exchange rate increasing in the meantime, the company buys pounds forward, for delivery in 30 days, at the corresponding forward exchange rate quoted today. This is called hedging.

Of course, there has to be a counterpart to the music company's forward purchase of pounds. Who is the seller of those pounds? The immediate seller would be a commercial bank, as in the spot market. But the bank only acts as an intermediary. The ultimate seller of forward pounds may be another hedger, like the music company, but with a position just its opposite. Suppose, for example, that an American firm or individual has invested in 30-day British securities that it wants to convert back into dollars after the end of 30 days. The investor may decide to sell the pound proceeds forward in order to assure itself of the rate at which the pounds are to be converted back into dollars after 30 days.

Another type of investor may be providing the forward contract bought by the music company. This is the speculator, who attempts to profit from changes in exchange rates. Depending on their expectations, speculators may enter the forward market either as sellers or as buyers of forward exchange. In this particular case, the speculator may have reason to believe that the dollar/pound exchange rate will decrease in the next 30 days, permitting him to obtain the promised pounds at a lower price in the spot market 30 days hence.

The main instruments of foreign exchange transactions include electronic bank deposit transfers and bank drafts, bills of exchange, and a whole array of other short-term instruments expressed in terms of foreign currency. Thus, foreign exchange transactions do not generally involve a physical exchange of currencies across borders. They generally involve only changes in debits and credits at different banks in different countries. Very large banks in the main financial centers such as New York, London, Brussels and Zurich, account for most foreign exchange transactions. Local banks can provide foreign exchange by purchasing it in turn from major banks.

Although the foreign exchange market is dispersed in many cities and countries, it is unified by keen competition among the highly sophisticated market participants. A powerful force keeping exchange rate quotations in different places in line with each other is the search on the part of market participants for foreign exchange arbitrage opportunities. Arbitrage is the simultaneous purchase and sale of a commodity or financial asset in different markets with the purpose of obtaining a profit from the differential between the buying and selling price.

When foreign exchange is acquired in order to engage in international transactions involving the purchase or sale of goods and services, it is said that international trade has taken place in the real economy. When international transactions involve the purchase or sale of financial assets, they are referred to as international financial transactions. They constitute the paper economy.

Financial markets are commonly classified as capital markets or money markets. Capital markets deal in financial claims that reach more than one year into the future. Such claims include shares of stock, bonds, and long-term loans, among others. Money markets, on the other hand, deal in short-term claims, with maturities of less than one year. These include marketable government securities (like Treasury bills), large-denomination certificates of deposit issued by banks, commercial paper (representing short-term corporate debt), money market funds, and many other kinds of short-term, highly liquid (easily transferable) financial instruments. It is these short-term money market securities that account for most of the instability in the global paper economy.

Buying or selling a money market security internationally involves the same kind of foreign exchange risk that plagues buyers or sellers of merchandise internationally. If one wishes to guard against the possibility of an increase or decrease in the foreign exchange rate, one can insure against such fluctuations by "covering" in the forward market. By the same token, the decision about whether to own domestic or foreign money market securities is not simply a comparison of the rates of interest paid on otherwise comparable securities, because one must also take into account the gain (or loss) from purchasing foreign currency spot and selling it forward. Thus, choosing the security with the highest return does not necessarily imply the one with the highest interest rate.

People who trade in international money markets, moreover, need to take into account many other variables, including the costs of gathering and processing information, transaction costs, the possibility of government intervention and regulation, other forms of political risk, and the inability to make direct comparisons of alternative assets. Speculating in international money markets is a risky proposition.

International money markets involve assets denominated in different currencies. External financial markets involve assets denominated in the same currency but issued in different political jurisdictions. Eurodollars, for example, are dollar deposits held outside the United States (offshore), such as dollar deposits in London, Zurich, or even Singapore banks. The deposits may be in banks owned locally or in the offshore banking subsidiaries of U.S. banks. Deutsche mark deposits in London banks or pound sterling deposits in Amsterdam banks also are examples of external deposits. They are referred to as eurocurrency deposits. (The advent of a new common currency in the European Community - the Euro - will require the development of new nomenclature for external financial markets)

External banking activities are a segment of the wholesale international money market. The vast majority of eurocurrency transactions fall in the above $1 million value range, frequently reaching the hundreds of millions (or even billion) dollar value. Accordingly, the customers of eurobanks are almost exclusively large organizations, including multinational corporations, government entities, hedge funds, and international organizations, as well as eurobanks themselves. Like domestic banks, eurobanks that have excess reserves may make loans denominated in eurocurrencies, expanding the supply of eurocurrency deposits. The eurocurrency market funnels funds from lending countries to borrowing countries. Thus, it performs an important function as global financial intermediator.


Early history

The origins of what Karl Polanyi3 called haute finance can be traced to Renaissance Italy, where as early as 1422 there were seventy-two bankers or bill-brokers in or near the Mecato Vecchio of Florence.4 Many combined trade with purely financial business. By the middle of the fifteenth century, the Medici of Florence had opened branches in Bruges, London and Avignon, both as a means of financing international trade and as a way of marketing new kinds of financial assets. Many banking terms and practices still in use today originated in the burgeoning financial centers of Renaissance Europe.

By the early seventeenth century, the Dutch and East India Companies began issuing shares to the public in order to fund imperial enterprises closely linked to Holland and Britain. Their shares were made freely transferable, permitting development of a secondary financial market for claims to future income. Amsterdam opened a stock exchange in 1611, and shortly thereafter, the British government began issuing lottery tickets, an early form of government bonds, to finance colonial expansion, wars and other major areas of state expenditure. A lively secondary market in these financial instruments also emerged.5

Throughout these early years, financial markets were anything but riskless and stable. Consider the famous Dutch tulip mania of 1630, for example. This speculative bubble saw prices of tulip bulbs reach what seemed like absurd levels, yet "the rage among the Dutch to possess them [tulips] was so great that the ordinary industry of the country was neglected." Some investors in Britain and France shared this "irrational exuberance," though it was centered mostly in Holland. Then, not unlike speculative bubbles of more recent vintage, prices crashed6, pushing the economy into a depression and leaving many investors angry and confused.

Paris developed into an early financial center in the eighteenth century, but the Revolution of 1789 dissipated its power. The New York Stock Exchange was formally organized in 1792 and the official London Stock Exchange opened in 1802. The expansion westward of the railroads in the U.S. offered the financial community opportunity to sell railway shares and bonds that quickly became dominant in the financial markets. Indeed, the bond markets of London, Paris, Berlin, and Amsterdam were vehicles for collecting massive amounts of European savings and transferring it at higher returns to the emerging markets of the U.S., Canada, Australia, Latin America and Russia in the century preceding World War I.

Forward markets soon developed, especially in the U.S., in order to counter the impact of long distances and unpredictable weather. As capital and money markets expanded, other new financial instruments came into use. Joint stock companies were formed, enabled by legislation that clarified the distinction between the owners and managers of corporations. This, in turn, helped stimulate the growth of the American stock market in the late nineteenth century. To be sure, financial markets did not grow continuously in the nineteenth century. Lending to the emerging markets was interrupted by defaults in the 1820s, 1850s, 1870s and 1890s, but each wave of default was confined to a relatively small number of countries, permitting growth of financial flows to resume.7

In the four decades leading up to World War I, a truly worldwide economy was forged for the first time, extending from the core of Western Europe and the U.S. to latecomers in Eastern Europe and Latin America and even to the countries supplying raw materials on the periphery. Central to this expansion of trade and investment was an expanding system of finance that girded the globe. The amount was enormous: between 1870 and 1914 something like $30 billion,8 the equivalent in 2002 dollars of $550 billion, was transferred to recipient countries, in a world economy perhaps one-twelfth as large as today's.

During this "Gilded Age" of haute finance, the risks of participating in international trade and investment were generously shared with governments and the banking system. The reason is that foreign exchange rates were kept reasonably stable by the commitment of most governments to the "high" gold standard. In this way, businesses and individuals engaging in international transactions were reasonably certain that the value of their contracts was not going to change before they matured. Their exchange risk was shared with government by its willingness to buy or sell gold in order to keep the exchange rate constant. Because of this assurance, financial flows were reasonably free of regulation.

They were not immune from crises, however. When the sources of financial capital temporarily dried up, capital-importing countries occasionally found they could not expand export earnings sufficiently to avoid suspending interest payments on their debts or abandoning gold parity. On two occasions, the United States faced this possibility. The first was in 1893, when it switched in a sharp economic downturn to bimetallism (which caused William Jennings Bryan to denounce the "cross of gold"), and the second was in 1907, which led to the creation of the Federal Reserve System, handing to the government the function of lender of last resort previously carried out by Wall Street banks under the tutelage of J. Pierpont Morgan.

In his magisterial book The Great Transformation, Karl Polanyi reflected on the pervasive influence of haute finance on the policies of nations even in this "Gilded Age." The globalising financial markets and the gold standard, according to Polanyi, left very little room for states, especially smaller ones, to adopt monetary and fiscal policies independent of the new international order. "Loans, and the renewal of loans, hinged upon credit, and credit upon good behavior. Since, under constitutional government ..., behavior is reflected in the budget and the external value of the currency cannot be detached from the appreciation of the budget, debtor governments were well advised to watch their exchanges carefully and to avoid policies which might reflect upon the soundness of budget positions." Thus, even one hundred years ago the then-dominant world power, Great Britain, speaking as it did so often through the voice of the City of London, "prevailed by the timely pull of a thread in the international monetary network.9

Following World War I, the United States emerged not merely as a creditor country but as the primary source of new international financial flows. At first, the principal borrowers were the national governments of the stronger countries, but as the boom in security underwriting developed in the U.S, numerous obscure provinces, departments and municipalities found it possible to sell their bonds to American investors.10 Just as domestic construction, land, and equity markets went through speculative rises in the 1920s, so too did the U.S. experience a speculative surge in foreign investment. In the aftermath of successive defaults by foreign debtors in 1932, the Senate Committee on Banking and Currency concluded:

The record of the activities of investment bankers in the flotation of foreign securities is one of the most scandalous chapters in the history of American investment banking. The sale of these foreign issues was characterized by practices and abuses that violated the most elementary principles of business ethics.11

Speculation in the stock markets leading up to 1929 offers still another window on the instability of short-term financial flows. A speculative market can be defined as one in which prices move in response to the balance of opinion regarding the future movement of prices rather than responding normally to changes in the demand for and supply of whatever is priced. Helped by the willingness of Wall Street to allow people to buy stocks on margin, people were only too ready to bet prices would rise as long as others thought so too. Day after day and month after month the price of stocks went up in 1927. The gains by later standards were not large, but they had an aspect of great reliability. Then in 1928, the nature of the boom changed. "The mass escape into make-believe, so much a part of the true speculative orgy, started in earnest.12

Following World War I, the gold standard itself took on new form. Nations were allowed to hold their international reserves in either gold or foreign exchange. This worked for a while in the 1920s, but as speculation mounted and balances of payments disequilibria grew, fears of devaluation led central banks to try to replace their foreign-exchange holdings with specie in a "scramble for gold." The worldwide result of these shifts in central bank portfolios was an overall contraction of the supply of money and credit that sapped aggregate demand and forced prices to fall and output levels to shrink. Thus, it can be argued - persuasively in our view - that the Great Depression of the 1930s was as much, if not more, the result of mismanagement of money and credit as it was the result of protectionist policies. Protectionist policies were more likely the result of slowed growth and stalled trade. Countries that broke with the gold-exchange standard early, such as Britain in 1931, and pursued more expansionary monetary policies fared somewhat better.


The Bretton Woods system

During the darkest days of World War II, a radically new economic architecture was designed for the postwar world at a New Hampshire ski resort called Bretton Woods. With the competitive devaluation and protectionist policies of the 1930s still fresh in their minds, the mostly British and American delegates to the conference wanted most of all to design a system with fixed exchange rates that did not rely on national gold hoards to keep exchange rates stable. They decided to depend instead on strict controls of international financial movements. In this way, they hoped to allow countries to pursue full-employment policies through appropriate monetary (money and credit) and fiscal (tax and spending) policies without some of the anxieties associated with open financial markets. The role of monetary and financial stabilizer was given to the International Monetary Fund (IMF), which was provided with modest funds to assist nations to adjust imbalances in their external payments obligations. The International Bank for Reconstruction and Development (IBRD, later the World Bank) assumed the task of helping to finance post-war reconstruction.13

The IMF as it emerged from Bretton Woods had inadequate reserves to advance money for the long periods that many countries require for "soft-landings" from big current-account deficits. It would make only short-term loans. To make sure that borrowing nations were constrained, "conditionality" attached to IMF loans became standard practice, even in the early years of the Fund's operation. Policy limitations and "performance targets" tied to credit lines advanced under "standby agreements" began in the middle 1950s and were universal by the 1960s, long before the notions of "stabilization" and "structural adjustment" came into common parlance.

The Bretton Woods agreement also imposed a foreign exchange standard by which exchange rates between major currencies were fixed in terms of the dollar, and the value of the dollar was tied to gold at a U.S. guaranteed price of thirty-five dollars per ounce. By devising a system that controlled financial movements and assisted with the adjustment of countries' balances of payments, the new system succeeded in keeping exchange rates remarkably stable. They were changed only very occasionally, e.g., as when the value of sterling relative to the dollar was reduced in 1949 and again in 1966. This meant that companies doing business abroad did not need to worry constantly about the risk of exchanging one currency for another.

Among the reasons for this remarkable stability was the willingness of the central banks of other countries to hold an increasing proportion of their official reserves in the form of U.S. dollars. It was an essential part of the system that the dollars held by other countries would be seen as IOUs backed by the U.S. offer to exchange them for gold at a fixed pre-war price. But as the balance-of-payments of the U.S. moved more deeply into deficits in the 1960s, there were more and more U.S. dollars held by other countries, and this so-called "dollar overhang" became disturbingly large.15 General de Gaulle called it "the exorbitant privilege," meaning that the Americans were paying their bills - for defense spending to fight the Vietnam War among other things - with IOUs instead of real resources in the form of exports of goods and services.

Strict control over financial movements began to weaken as early as the 1950s, when the first eurodollar (later eurocurrency) deposits were made in London. At first a trickle, limited originally to Europe, these offshore banking operations soon expanded worldwide. The American "Interest Equalization Tax" (IET) instituted in 1963 raised the costs to banks of lending offshore from their domestic branches.16 The higher external rates led dollar depositors such as foreign corporations to switch their funds from onshore U.S. institutions to eurobanks. Thus, the real effect of the IET was to encourage the dollar to follow the foreigners abroad, rather than the other way around. Eurobanks paid higher interest rates on deposits and loaned eurocurrencies at lower rates than U.S. banks could at home. Still another large inflow of eurodeposits occurred in 1973-74 as the Organization of Petroleum Exporting Countries (OPEC) began "recycling" their surplus dollar earnings through eurobanks. Because of their existence, a country such as Brazil could arrange within a reasonably regulation-free environment to obtain multimillion-dollar loans from a consortium of offshore American, German and Japanese banks and thereby finance its oil imports. Net eurocurrency deposit liabilities that amounted to around $10 billion in the mid-1960s, grew to $500 billion by 1980.

These eurocurrency transactions taught the players in financial markets how to shift their deposits, loans, and investments from one currency to another whenever exchange rates or interest rates were thought to be ready to change. Even the ability of central banks to regulate the supply of money and credit was undermined by the readiness of commercial banks to borrow and lend offshore. Hence, the effectiveness of regulatory mechanisms that had been put in place to implement the Bretton Woods agreement - interest rate ceilings, lending limits, portfolio restrictions, reserve and liquidity requirements - gradually eroded as offshore transactions started to balloon.

The world economy developed at unprecedented rates during the roughly twenty-five years immediately following World War II. Growth and employment rates during these years were at historic highs in most countries. Productivity also advanced rapidly in most developing countries as well as in the technological leaders. These facts suggest that the system devised at Bretton Woods worked reasonably well, despite occasional adjustments. To be sure, it helped to sow the seeds of its own destruction by failing to retain operational control of international financial flows. But the twenty-five years of its survival leading up to August 15, 1971, when President Nixon closed the gold window, have nonetheless come to be called by some economic historians the "Golden Years."

Controlling private risk

Fixed exchange rates did not last long after the U.S. stopped exchanging gold for claims on the dollar held by foreign central banks. The pound sterling was allowed to float against the dollar in July, 1972. Japan set the yen free to float in February, 1973, and most European currencies followed suit shortly thereafter. The Bretton Woods gold-dollar system was doomed.

The fact that exchange rates no longer were fixed meant that companies doing business in different countries had to cope with the day-to-day shifts in the dollar's rate of exchange with other currencies. The risks of unexpected changes in the value of international contracts suddenly had shifted from the public to the private sector. Corporate finance officers now had to hedge against possible exchange losses by buying a currency forward and investing the equivalent in the short-term money market, or by investing in the eurocurrency market. The corporations' banks, in turn, tried to match each foreign currency transaction with another contrary transaction in order not to leave each of the banks exposed to foreign exchange risk overnight. Since no single bank was likely to balance its foreign exchange positions exactly, the need arose to swap deposits in different currencies in order to match corporate hedging transactions and to square the bank's books.

The price of this forward cover on inter-bank transactions - that is to say, the premium or discount on a currency's spot value - has tended to accord with the differences between interest-rates offered for eurocurrency deposits in different currencies. This is the connection between the foreign exchange market and the short-term credit markets, between exchange rates and interest rates. Whenever exchange rates move up or down, therefore, their influence is immediately transmitted through the eurocurrency markets to the credit markets.

It is this scramble to avoid private risk that accounted for the dramatic rise in international financial movements following the demise of the Bretton Woods system. By 1973, daily foreign exchange trading around the world varied between $10 and $20 billion per day. This amount was approximately twice the value of world trade at the time. Bank of International Settlements data suggests that the daily average of foreign exchange trading had climbed by 1980 to about $80 billion, and that the ratio between foreign exchange trading and international trade was more nearly ten to one. The data for 1992 was $880 billion and fifty to one, respectively; for 1995, $l,260 billion and seventy to one; and for 2000, almost $1,800 and ninety to one.

There is very little doubt, therefore, that the lion's share of international financial flows is relatively short-run. Indeed, about eighty percent of foreign exchange transactions are reversed in less than seven business days. Only a very small proportion is used to finance international trade and direct foreign investment. The vast majority must be used with the expectation of gain or to avoid losses that may result from changes in the value of financial assets. In general terms, they are speculative, made in hope of capital gain or to hedge against potential capital loss, or to seek the gains of arbitrage based on slight differences in rates of return in different financial centers.


The power of financial actors17

Foreign exchange markets and markets for money and credit seem remote and abstract to most people. This section introduces the real institutions that operate these markets and assesses the nature of their power.

According to recent work by political scientists, the power of these financial actors is based in part on a complicated "process of multiplication" of loans, assets and transactions. Many investors in financial markets buy financial instruments on very thin margins, based on loans obtained by pledging the assets as collateral. This is called "leverage" in the jargon of financial markets. In turn, the borrowed funds are invested in other financial assets, multiplying the demand for credit and financial assets. As demand rises, more sophisticated financial assets are invented, including many forms of financial derivatives. A major portion of the accumulated debt remains serviceable only as long as the prices of most assets will rise or at least remain relatively stable. If prices turn down, they easily can lead to a chain-reaction. If investors respond instinctively like a herd, they will bring a far-reaching collapse that constitutes a crisis.

As the flow of financial assets climbs, some bankers, brokers, and managers of financial institutions become prominent players in the competition for investor dollars. Some become known for picking profitable places to invest and for promoting their selections successfully. This can influence markets if people have confidence in their advice. A notorious example of the influence of prominent players was the attack on British sterling in 1992 by George Soros' Quantum Fund. Believing that sterling was overvalued, the Fund quietly established credit lines that allowed it to borrow $15 billion worth of sterling and sell it for dollars at the then "overvalued" price. Its purpose, of course, was to pay back the loan with cheaper pounds after they had depreciated. Having gone long on dollars and short on sterling, Soros decided to speak up noisily. He publicized his short-selling and made statements in newspapers that the pound would soon be devalued. It wasn't long before sterling was devalued; he made $1 billion in profit.

The point can be made more generally: financial markets are subject to manipulation because they have become socially structured. Market leaders and financial gurus are admired and followed (at least until very recently). The heavyweights thus dominate the business. An obvious consequence of this is that there is a strong tendency in financial markets for further concentration of resources.

Another source of the power of financial actors is their obvious affinity for the rampant free-market philosophy of neo-liberalism. The freedom with which they move financial capital around depends, of course, on the market-friendly policies of the so-called Washington Consensus.19 As long as they are seen as part of the governing coalition, they derive special powers to regulate themselves rather than be controlled by an independent government agency or civil society. Their power also is reinforced by the activities of several collective associations of financial actors,20 which lobby on their behalf.

One more source of power for the financial actors is their knowledge that if they are big enough and sufficiently interlaced with other financial actors, then the "system" will keep them from failing. Consider the case of Long-term Capital Management, a hedge fund partnership started in 1994. It was able to borrow from various banks the equivalent of forty times its capitalization in order to make bets on changes in the relative prices of bonds in the U.S. and abroad. When the Russian government announced a devaluation and debt moratorium in August, 1998, it produced losses that the fund could not sustain. Nor could some of the banks that had loaned large amounts to the fund. Accordingly, the Federal Reserve Bank of New York, fearful that the risk to the entire system was too high, orchestrated a private rescue operation by fourteen banks and other financial institutions, which re-capitalized the company for $3.5 billion.

Financial actors also have the power indirectly to influence non-financial actors such as firms or states. By providing economic incentives to gamble and speculate on financial instruments, global financial markets divert funds from long-term productive investments. In all probability, they also encourage banks and financial institutions to maintain a regime of higher real interest rates that reduce the ability of productive enterprises to obtain credit. The volatility of global financial markets, moreover, brings uncertainty and volatility in interest rates and exchange rates that are harmful to various sectors of the real economy, particularly international trade.

The above stories about George Soros and Long-term Capital Management are good illustrations of the consequences for non-financial actors of actions by financial actors. Both episodes are examples of games that are basically zero-sum, at least in the short-run. Nothing new was produced; no new values were created. In the 1992 case about speculating against sterling, the Quantum Fund's profits were at the expense of the British government, especially the Bank of England, and British taxpayers. In 1998, the losses suffered by Long-term Capital Management came out of the pockets of the stockholders of the banks that bailed it out, as the stock-market value of their shares depreciated. Hence, the financial system tends to feed itself by drawing more resources from other sectors of the economy, undermining the vitality of the real economy.


Consequences of global financial flows

The dominant economic ideology of the last twenty-five years has been embodied in the so-called Washington Consensus. It is a "market-friendly" ideology that traces its roots to longstanding policies of the IMF that encourage macroeconomic "stabilization;" to adoption by the World Bank of ideas in vogue in Washington early in the Reagan period concerning deregulation and supply-side economics; to the zeal of the Thatcher government in England for privatizing public enterprises; and perhaps most of all to the neo-liberal tendencies of the business community and the economics profession in the U.S. The implementation of these policies of economic "reform," by first "stabilizing" the macro-economy and then "adjusting" the market so that it can perform more efficiently, are supposed to pay off in the form of faster output growth and rising real incomes

Among these policy prescriptions is financial liberalization in both the developed and the developing countries. Domestically it is achieved by weakening or removing controls on interest and credit and by diluting the differences between banks, insurance and finance companies. International financial liberation, on the other hand, demands removal of controls and regulations on both the inflows and outflows of financial instruments that move through foreign exchange markets. It is the implementation of these reforms that is perhaps the single most important cause of the surge in global financial flows. To be sure, the influence of technological advances has broken the natural barriers of space and time for financial markets as twenty-four hour electronic trading has grown. The fact that throughout most of the 1980s and 1990s the developed countries suffered from over-capacity and overproduction in manufacturing may also have led the owners of financial capital to look for alternative profit opportunities.

It now is time to ask whether the implementation of all these reforms, on balance, has produced good or bad results. The focus of this section will be mostly on the consequences of large and expanding international financial flows. After all, they are the main concern of this essay. But first, we should ask whether or not the policies of growth and rising real incomes promoted by the Washington Consensus have borne fruit.

Growth and income

There is little doubt that the introduction of the Washington Consensus' policy mix expanded the volume of international trade. As a result, trade in goods and services has grown at more than twice the rate of global gross domestic product (GDP), and developing countries' share of trade has risen from 23 to 29 percent. Increasing numbers of firms from developing countries, like their industrial-country counterparts, engage in transnational production and adopt a global perspective in structuring their operations. The flow of foreign direct investments and foreign portfolio investments has multiplied even more rapidly than trade, despite the financial instability experienced in Asia, Brazil, Russia, and elsewhere in recent years.

The effects of liberalization have not been uniformly favorable, however. After at least ten full years of experience with the Washington Consensus, several recent studies have begun to assess the consequences for developing countries of this experiment in more open markets.21 Except for the years of crisis in a number of the countries studied, most developing countries achieved moderate growth rates of gross domestic product in the 1990s - considerably higher than in the l980s in Africa and Latin America during the debt crisis, but remarkably unchanged in most other regions. Moreover, average annual growth in the 1990s was slightly lower than in the twenty-five years preceding the debt crisis when a strategy of substituting domestic production for imports was in fullest use. When population growth rates are taken into consideration, the growth rate of per capita income in the developing countries studied during the 1990s also was somewhat lower than in the 1960s and 1970s. Toward the end of the 1990s, growth tapered off in many countries due to emerging domestic financial crises or external events. There is little evidence in these figures, therefore, to suggest the strategy of liberalization boosted growth rates appreciably.

Nor did the distribution of income improve in most developing countries in the 1990s. On the contrary, virtually without exception the wage differentials between skilled and unskilled workers rose with liberalization. The reasons for this varied widely among countries, but one of the most important reasons was the fact that the number of relatively well-paid jobs in sectors of the economy involved with international trade, though growing, was insufficient to absorb available workers, forcing many workers into more precarious and poorly paid employment in the non-traded, informal trade, and service sectors or where traditional agriculture served as a sponge for the labor market. Between the mid-1960s and the late-1990s, the poorest 20 percent of the world population saw its share of income fall from 2.3 to 1.4 percent. Meanwhile, the share of the wealthiest quintile increased from 70 to 85 percent.22

Risk and reward

While all markets are imperfect and subject to failure, financial markets are more prone than others to fail because they are plagued with three particular shortcomings: asymmetric information, herd behavior and self-fulfilling panics. Asymmetric information is a problem whenever one party to an economic transaction has insufficient information to make rational and consistent decisions. In most financial markets where borrowing and lending take place, borrowers usually have better information about the potential returns and risks associated with the investments to be financed by the loans than do the lenders. This becomes especially true as financial transactions disperse across the globe, often between borrowers and lenders of widely different cultures.

Asymmetric information leads to adverse selection and moral hazard. Adverse selection occurs when, say, lenders have too little information to choose from among potential borrowers those who are most likely to use the loans wisely. The lenders' gullibility, therefore, attracts more unworthy borrowers. Moral hazard occurs when borrowers engage in excessively risky activities that were unanticipated by lenders and lead to significant losses for the lender. Yet another form of moral hazard occurs when lenders indulge in lending indiscriminately because they assume that the government or an international institution will bail them out if the loans go awry.

A good illustration of asymmetric information is the story of bank lending following OPEC's large increase in oil prices following 1973. Awash in cash, the oil exporters deposited large amounts in commercial banks that then perfected the Euro-currency loan for developing countries. Eager to put excess reserves to use, the banks spent little time discriminating among potential borrowers, in part because they believed host governments or international agencies would guarantee the loans. At the same time, developing countries found they could readily borrow not only to import oil, but also to increase other kinds of expenditures. This meant they could use borrowed funds to maintain domestic spending rather than be forced to adjust to the new realities of higher prices for necessary imports. There is considerable evidence that moral hazard also was present in the Mexican crises in 1982 and 1994, and in the Southeast Asian crises in 1997-8.

Yet another illustration of asymmetric information is the tendency of financial firms, especially on Wall Street and in the City of London, to invent ever more complex derivatives to shift risk around the financial system. The market for these products is growing rapidly, both on futures and options exchanges (two of the several places where derivatives are traded). A financial engineer, for example, can take the risk in, say, a bond and break it down into a series of smaller risks, such as that inflation will reduce its real value or that the borrower will default. These smaller risks can then be priced and sold, using derivatives, so that the bondholder keeps only those risks he wishes to bear. But this is not a simple task, particularly when it involves assets with risk exposures far into the future and which are traded so rarely that there is no good market benchmark for setting the price. Enron, for instance, sold a lot of these sorts of derivatives, booking profits on them immediately even though there was a serious doubt about their long-term profitability. Stories of huge losses incurred in derivative trading are legion. The real challenge before central banks and regulatory bodies is to curb speculative behavior and bring discipline in derivative markets.

A second source of risk in financial markets is the tendency of borrowers and lenders alike to engage in herd behavior. John Maynard Keynes, writing in the 1930s, suggested that financial markets are like "beauty contests." His analogy was to a game in the British Sunday newspapers that asked readers to rank pictures of women according to their guess about the average choice by other respondents. The winner, therefore, does not express his own preferences, but rather anticipates "what average opinion expects average opinion to be." Accordingly, Keynes thought that anyone who obtained information or signals that pointed to swings in average opinion and to how it would react to changing events had the basis for substantial gain. Objective information about economic data was not enough. Rather, simple slogans "like public expenditure is bad," "lower unemployment leads to inflation," "larger deficits lead to higher interest rates," were then the more likely sources of changes in public opinion. What mattered was that average opinion believed them to be true, and that advance knowledge of, say, more public spending, lower unemployment, or larger deficits, respectively, offered the speculator a special advantage.

A financial market that operates as a beauty contest is likely to be highly unstable and prone to severe changes. One reason for this is that people trading in financial assets, even today, know very little about them. People who hold stock know little about the companies that issued them. Investors in mutual funds know little about the stocks their funds are invested in. Bondholders know little about the companies or governments that issued the bonds. Even knowledgeable professionals are often more concerned with judging how swings in conventional opinion might change market values rather than with the long-term returns on investments. Indeed, since careful analysis of risks and rewards is costly and time consuming, it often makes sense for fund managers and traders to follow the herd. If they decide rationally not to follow the herd, their competence may be seriously questioned. On the other hand, if fund managers follow the herd and the herd suffers losses, few will question their competence because others too suffered losses. When financial markets are operated like a beauty contest, everyone wants to sell at the same time and nobody wants to buy.

The financial markets behaved as predicted shortly after several industrial countries, including the U.S. and Germany, abolished all restrictions on international capital movements in 1973. The new system proved to be highly volatile, with exchange rates, interest rates, and financial asset-prices subject to large short-term fluctuations. The markets also were susceptible to contagion when financial tremors spread from their epicenter to other countries and markets that seemingly had little connection with the initial problem. In less than five years, it already was clear that both the surpluses and the deficits on the major countries' balance of payments were getting larger, not smaller, despite significant changes in the exchange rates.

In some cases, a financial crisis can be self-fulfilling. A rumor can trigger a self-fulfilling speculative attack, e.g. on a currency, that may be baseless and far removed from the economic fundamentals (unlike the Soros story above). This can cause a sudden shift in the herd's intentions and lead to unanticipated market movements that create severe financial crises. Consider, for example, the succession of major financial crises that have pock-marked the recent history of international financial markets, including Latin America's Southern Cone crisis of 1979-81, the developing-country debt crisis of 1982, the Mexican crisis of 1994-95, the Asian crisis of 1997-98, the Russian crisis of 1998, the Brazilian crisis of 1999, and the Argentine crisis of 2001-02.

Perhaps the Asian crisis of 1997-98 is the most interesting in this regard, for there were relatively few signals beforehand of impending crisis. All the main East Asian economies displayed in 1994-96 low inflation, fiscal surpluses or balanced budgets, limited public debt, high savings and investment rates, substantial foreign exchange reserves and no signs of deterioration before the crisis. This background has led many analysts to suppose that the crisis was a mere product of the global financial system. But what could have triggered the herd to stampede out of Asian currencies? No doubt several factors were at work. Before the crisis that started in the summer of 1997, there was a rise in short-term lending to Asians by Western and Japanese banks with little or no premiums, a fact that the Bank for International Settlement raised questions about. Alert investors, especially hedge funds, also noticed that substantial portions of East and Southeast Asian borrowings were going into non-productive assets and real estate that often were linked to political connections. In fact, some of the funds pouring into non-productive assets were coming out of the productive sector, mortgaging the longer-term viability of some real economies. Information about the structure and policies of financial sectors was opaque. Thus, opinions began to change among key lenders about the regulation of financial sectors in several Asian countries and their destabilizing lack of transparency. Suddenly, several important hedge funds reduced their exposure by shorting currency futures, followed quickly by Western mutual funds. The calling of loans led quickly to deep depression in several Asian countries. It has been estimated that the Asian crisis and its global repercussions cut global output by $2 trillion in 1998-2000.

Loss of government autonomy

Both economic theory and the experience of managing the external financial affairs of nations tell us that it is virtually impossible to maintain (1) full financial mobility, (2) a fixed exchange rate, and (3) freedom to seek macro-economic balance (full employment with little inflation) with appropriate monetary and fiscal policies. Only two of these policy objectives can be consistently maintained. If the authorities try to pursue all three, they will sooner or later be punished by destabilizing financial flows, as in the run up to the Great Depression around 1930 and in the months before sterling's collapse 1992. If a government tries to stimulate its economy with lax monetary policy, for example, and players with significant market power like George Soros sense that at a fixed exchange rate, foreigners will be unwilling to lend enough to finance the country's current account deficit, they will begin to flee the home currency in order to avoid the capital losses they will suffer if and when there is a devaluation. If reserve losses accelerate and more players follow suit, crisis ensues. The authorities are forced to devalue, interest rates soar, and the successful attackers sit back to count their profits.

For nations wishing to retain reasonably independent monetary and fiscal authority in order to cater to domestic needs, the solution is to allow the exchange rate to move up or down as conditions in the foreign exchange markets dictate, or to establish some sort of control over the movement of financial instruments in and out of the country, or to devise some combination of these two adjustment mechanisms. The debate over whether fixed or flexible exchange rates is the wiser policy continues to rage in academic quarters and in finance ministries all over the world. For the most part, the international business community prefers reasonably fixed exchange rates in order to minimize their costs of hedging foreign currency positions. Thus instituting some form of control over speculative financial movements may be an appropriate solution to the "trilemma."

The capacity of a nation to levy enough taxes to finance needed public expenditures is another important reason to retain independent authority. A central function of government has been to insulate domestic groups from excessive market risks, particularly those originating in international transactions. This is the way governments have maintained domestic political support for liberalizing trade and finance throughout the postwar period. Yet many governments are less able today to help citizens that are injured by freer markets with unemployment compensation, severance payments, and adjustment assistance because the slightest hint of raising taxes to pay for these vital public services leads to capital flight in a world of heightened financial mobility.

This is a dilemma. Increased integration into the world economy has raised the need of governments to redistribute tax revenues or implement generous social programs in order to protect the vast majority of the population that remains internationally immobile. At the same time, governments find themselves less able to maintain the safety nets needed to preserve social stability. It seems reasonable to suppose, therefore, that doing things that will bolster the ability of governments to levy sufficient taxes - curbing tax avoidance by transnational corporations, controlling offshore tax havens, regulating capital flight - would help make globalization slightly more democratic.

Winners and losers

The people who benefit from speculative financial movements are, for the most part, better educated and wealthier than the vast majority of fellow citizens. They are the elites, whatever the country. As noted above, they have fewer connections to the real economy of production and exchange than most people. And their purpose in trading financial assets, again for the most part, is to make a profit quickly rather than wait for an investment project to mature.

People who do not participate directly in the buying and selling of short-term financial instruments are nonetheless influenced indirectly by the macroeconomic instability and contagion that often accompany interruptions in financial market flows. This is true for people both in developed and developing countries. In developed countries, the voracious appetite of financial markets for more and more resources saps the vitality of the real economy - the economy that most people depend upon for their livelihood. It has been shown that real interest rates rise as a result of the expansion of speculative financial markets. This rise in real interest rates, in turn, dampens real investment and economic growth while serving to concentrate wealth and political power within a growing worldwide rentier class (people who depend for their income on interest, dividends, and rents).23 Rather, the long-term health of the economy depends upon directing investable funds into productive investments rather than into speculation.

In developing countries, attracting global investors' attention is a mixed blessing. Capital market inflows provide important support for building infrastructure and harnessing natural and human resources. At the same time, surges in money market inflows may distort relative prices, exacerbate weakness in a nation's financial sector, and feed bubbles. As the 1997 Asian crisis attests, financial capital may just as easily flow out of as into a country. Unstable financial flows often lead to one of three kinds of crises:

Although these three types of crises sometimes appear singly, they more often arrive in combination because external shocks or changed market expectations are likely to occur simultaneously in the market for government bonds, the foreign exchange market, and the markets for bank assets. Approximately sixty developing countries have experienced extreme financial crises in the past decade.24

The vast majority of people in the developing world suffer from these convulsive changes. They are tired of adjusting to changes over which they exercise absolutely no control. Most people in these countries view Western capitalism as a private club, a discriminatory system that benefits only the West and the elites who live inside "the bell jars" of poor countries. Even as they consume the consumer goods of the West, they are quite aware that they still linger at the periphery of the capitalist game. They have no stake in it, and they believe that they suffer its consequences. As Hernando deSoto puts it, "Globalization should not be just about interconnecting the bell jars of the privileged few."25

Social solidarity

Karl Polanyi in The Great Transformation sought to explain how the "liberal creed" contributed to the catastrophes of war and depression associated with the first half of the twentieth century. Polanyi's central argument, which in fact can be traced back to Adam Smith, is that markets do indeed promote efficiency and change, but that they achieve this through undermining social coherence and solidarity. Markets must therefore be embedded within social institutions that mitigate their negative consequences.

The evidence of more recent times suggests that the global spread of free-market policies has been accompanied by the decline of countervailing institutions of social solidarity. Indeed, a main feature of the introduction of market-friendly policies has been to weaken local institutions of social solidarity. Consider, for example, the top-down policy prescriptions of the IMF and World Bank during the developing world's debt crisis in the 1980s. These policies evolved into an intricate web of expected behaviors by developing countries. In order for developing countries to expect private businesses and financial interests to invest funds within their borders and to boost the growth potential of domestic economies, they needed to drop the "outdated and inefficient" policies that dominated development strategies for most of the postwar period and adopt in their place policies that are designed to encourage foreign trade and freer financial markets. Without significant adjustments in the ways economies were managed, it was suggested, nations soon would be left behind.

The list of Washington Consensus requirements was long and daunting:

In a provocative article, Ute Pieper and Lance Taylor point out that market outcomes often conflict with other valuable social institutions. In addition, they emphasize that markets function effectively only when they are "embedded" in society. The authors then look carefully at the experience of a number of developing countries as they struggled to comply with the policy prescriptions of the IMF and the Fund. In almost every case, they demonstrate conclusively that the impact of these efforts was to make society an "adjunct to the market."26

An appropriate balance is not being struck between the economic and non-economic aspirations of human beings and their communities. Indeed, the evidence is mounting that globalization's trajectory can easily lead to social disintegration - to the splitting apart of nations along lines of economic status, mobility, region, or social norms. Globalization not only highlights and exacerbates tensions among groups; it also reduces the willingness of internationally mobile groups to cooperate with others in resolving disagreements and conflicts.


Policy options

History confirms that free-markets are inherently volatile institutions, prone to speculative booms and busts. Overshooting, especially in financial markets, is their normal condition. To work well, free markets need not only regulation, but active management. During the first half of the post-war era, world markets were kept reasonably stable by national governments and by a regime of international cooperation. Only lately has a much earlier idea been revived and made an orthodoxy - the idea adopted by the Washington Consensus that, provided there are clear and well-enforced rules-of-the-game, free markets can be self-regulating because they embody the rational expectations that participants form about the future.

On the contrary, since markets are themselves shaped by human expectations, their behavior cannot be rationally predicted. The forces that drive markets are not mechanical processes of cause and effect, as assumed in most of economic theory. They are what George Soros has termed "reflexive interactions."27 Because markets are governed by highly combustible interactions among beliefs, they cannot be self-regulating.

The question before us then, is what could be done to better regulate financial markets and to bring active management back into the task of "embedding" markets in society, rather than the other way around? Monetary authorities such as the Federal Reserve System in the U.S. and the central banks of other countries were formed long ago in order to dampen the inherent instabilities of financial market in their home countries. But the evolution of an international regulatory framework has not kept pace with the globalization of financial markets. The International Monetary Fund was not designed to cope with the volume and instability of recent financial trends.

Capital controls

Given the problems outlined above about short-term speculative financial transactions, one might wonder why national policy-makers have not insulated their financial markets by imposing some sort of control over financial capital. The answer, of course, is that some have continued trying to do so despite discouragement from the IMF. For example, some have put limitations on the quantity, conditions, or destinations of financial flows. Others have tried to impose a tax on short-term borrowing by national firms from foreign banks. This is said to be "market-based" because it operates by altering the cost of foreign funds. If such transactions were absolutely prohibited, they would be called "non-market" interventions.

A more extreme form of financial capital controls, one that controls movement of foreign exchange across international borders, also has been tried in a number of countries. This form of control requires that some if not all foreign currency inflows be surrendered to the central bank or a government agency, often at a fixed price that differs from that which would be set in free market. The receiving agency then determines the uses of foreign exchange. The absence of exchange controls means that currencies are "convertible."

The neo-liberal argument opposing financial capital controls asserts that their removal will enhance economic efficiency and reduce corruption. It is based on two basic propositions in economic theory that depend for their proof on perfectly competitive markets in the real economy and perfectly efficient gatherers and transmitters of information in financial markets. Neither assumption is realistic in today's world. Indeed, a number of empirical studies have reported the effectiveness of capital controls in controlling capital flight, curbing volatile capital flows and protecting the domestic economy from negative external developments.

Developing countries have only recently abandoned, or still maintain, a variety of control regimes. Latin American countries traditionally have used market-based controls, putting taxes and surcharges on selected financial capital movements or tying them up in escrow accounts. Non-market based restrictions were more common in Asia until the early 1990s. Many commentators believe that their sudden removal in the early 1990s was a contributing cause to the Asian financial crises in 1997-8. The experience of two countries, Malaysia and Chile, with capital controls is especially instructive.

Malaysia, unlike its Asian neighbors, was reluctant to remove its restrictions on external borrowing by national firms unless they could show how they could earn enough foreign exchange to service their debts. Then when the Asian crises hit, its government imposed exchange controls, in effect making its local currency that was held outside the country inconvertible into foreign exchange. After the ringget was devalued, exporters were required to surrender foreign currency earnings to the central bank in exchange for local currency at the new pegged rate. The government also limited the amount of cash nationals could take abroad, and it prohibited the repatriation of earnings on foreign investments that had been held for less than one year. Thus, Malaysia's capital controls were focused mostly on controlling the outflow of short-term financial transactions. Happily, the authorities were able to stabilize the currency and reduce interest rates, leading to a degree of domestic recovery.28

Chile, on the other hand, tried to limit the inflow of short-term financial transactions. It did so by imposing a costly reserve requirement on foreign-owned capital held in the country for less than one year. Despite attempts to stimulate foreign direct investment of the funds, most of the reserve deposits were absorbed in the form of increased reserves at the central bank. In turn, this created a potential for expanding the money supply, which the government feared would lead to inflation. Rather than allow this to happen, the government "sterilized" the inflows by selling government bonds from its portfolio. But this pushed down the prices of bonds and pushed up the interest rates on them, discouraging business investment. Finally, when prices of copper (Chile's primary export) fell sharply in 1998, the control regime was scrapped.29

The tobin tax

A global tax on international currency movements was first proposed by James Tobin, a Yale University economist, in 1972.30 He suggested that a tax of one-quarter to one percent be levied on the value of all currency transactions that cross national borders. He reasoned that such a tax on all spot transactions would fall most heavily on transactions that involve very short round-trips across borders. In other words, it would be speculators with very short time-horizons that the tax would deter, rather than longer-term investors who can amortize the costs of the tax over many years. For example, the yearly cost of a 0.2 percent round trip tax would amount to 48 percent of the value of the traded amount if the round trip were daily, 10 percent if weekly and 2.4 percent if monthly. Since at least eighty percent of spot transactions in the foreign exchange markets are reversed in seven business days or less, the tax could have a profound effect on the costs of short-term speculators.

Of course, for those who believe in the efficiency of markets and the rationality of expectations, a transactions tax would only hinder market efficiency. They argue that speculative sales and purchases of foreign exchange are mostly the result of "wrong" national monetary and fiscal policies. While we readily admit that national policies sometimes do not accord with desired objectives, they nonetheless have little relevance for speculators focused on the next few seconds, minutes or hours.

Tobin did not intend for his proposal to involve a supranational taxation authority. Rather, governments would levy the tax nationally. In order to make the tax rate uniform across countries, however, an international agreement would have to be entered into by at least the principal financial centers. The revenue obtained from the tax could be designated for each country's foreign exchange reserve for use during periods of instability, or it could be directed into a common global fund for uses like aid to the poorest nations. In the latter case, the feasibility of the tax also would depend on an international political agreement. The revenue potential is sizeable, and could run as high as $500 billion annually.

There are two other advantages often cited by proponents of the Tobin tax. Tobin's original rationale for a foreign exchange transactions tax was to enhance policy autonomy in a world of high financial capital mobility. He argued that currency fluctuations often have very significant economic and political costs, especially for producers and consumers of traded goods. A Tobin tax, by breaking the condition that domestic interest rates may differ from foreign interest rates only to the extent that the exchange rate is expected to change (see p. 10), would allow authorities to pursue different policies than those prevailing abroad without exposing them to large exchange rate movements. More recent research suggests that this is only a very modest advantage.31

An additional advantage of the tax is that it could facilitate the monitoring of international financial flows. The world needs a centralized data-base on all kinds of financial flows. Neither the Bank for International Settlements nor the IMF has succeeded in providing enough information to monitor them all. This information should be regularly shared among countries and international institutions in order to collectively respond to emerging issues.

The feasibility issues raised by the Tobin tax are more political than technical. One of the issues is about the likelihood of evasion. All taxes suffer some evasion, but that has rarely been a reason for avoiding them. Ideally all jurisdictions should be a party to any agreement about a common transactions tax, since the temptation to trade through non-participating jurisdictions would be high. Failing that, one could levy a penalty on transactions with "Tobin tax havens" of, say, double the normal tax rate. Moreover, one could limit the problem of substituting untaxed assets for taxed assets by applying the tax to forwards, swaps and possibly other contracts.

Tobin and many others have assumed that the task of managing the tax should be assigned to the IMF. Others argue that the design of the tax is incompatible with the structure of the IMF and that the tax should be managed by a new supranational body. Which view will prevail depends upon the resolution of other outstanding issues. The Tobin tax is an idea that deserves careful consideration. It should not be dismissed as too idealistic or too impractical. It addresses with precision the problems of excessive instability in the foreign exchange markets, and it yields the additional advantage of providing a means to assist those in greater need.

Reforming the IMF

The IMF was established in 1944 to provide temporary financing for member governments to help them maintain pegged exchange rates during a period of internal adjustment. With the collapse of the pegged exchange rate regime in 1971, that responsibility has been eclipsed by its role as central arbiter of financial crises in developing countries. As noted above (p. 20), these crises may be of three different kinds: fiscal crises, foreign exchange crises, and banking crises.

Under current institutional arrangements, a nation suffering a serious fiscal crisis that could easily lead to default must seek temporary relief from its debts from three different (but interrelated) institutions: the IMF, which is sometimes willing to renegotiate loans in return for promises to adopt more stringent policies (see above); the so-called Paris Club that sometimes grants relief on bilateral (country to country) credits; and the London Club that sometimes gives relief on bank credits. This is an extremely cumbersome process that fails to provide debtor countries with standstill protection from creditors, with adequate working capital while debts are being renegotiated, or with ways to ensure an expeditious overall settlement. The existing process often takes several years to complete.

There is a growing consensus that this problem is best resolved with creation of a new international legal framework that provides for de facto sovereign bankruptcy. This could take the form of an International Bankruptcy Code with an international bankruptcy court, or it could involve a less formal functional equivalent to its mechanisms: automatic standstills, priority lending, and comprehensive reorganization plans supported by rules that do not require unanimous consent. Jeffrey Sachs recommends, for example, that the IMF issue a clear statement of operating principles covering all stages of a debtor's progression through "bankruptcy" to solvency. A new system of emergency priority lending from private capital markets could be developed, he suggests, under IMF supervision. He also feels that the IMF and member governments should develop model covenants for inclusion in future sovereign lending instruments that allow for priority lending and speedy renegotiation of debt claims.32

At the Joint Meeting of the IMF and the World Bank in September, 2002, the policy committee directed the IMF staff to develop by April, 2003, a "concrete proposal" for establishing an internationally recognized legal process for restructuring the debts of governments in default. It also endorsed efforts to include "collective action" clauses in future government bond issues to prevent one or two holdout creditors from blocking a debt-restructuring plan approved by a majority of creditors. The objective of both proposals is to resolve future debt crises quickly and before they threaten to destabilize large regions, as happened in Southeast Asia in 1997-98.

Member countries rarely receive support from the IMF any longer to maintain a particular nominal exchange rate. Because financial capital is so mobile now, pegged exchange rates probably are unsupportable. But there are special times when the IMF still might give such support during a foreign exchange crisis. International lending to support a given exchange rate is legitimate if the government is trying to establish confidence in a new national currency, or if its currency is recovering from a severe bout of hyperinflation. Ordinarily the foreign exchange should be provided from an international stabilization fund supervised by the IMF.

National central banks usually supervise and regulate the domestic banking sector. Thus, banking crises normally are handled by domestic institutions. This may not be possible, however, if the nation's banks hold large short-term liabilities denominated in foreign currencies. If the nation's central bank has insufficient reserves of foreign currencies to fund a large outflow of foreign currencies, there may be circumstances when the IMF or other lenders may wish to act as lenders-of-last-resort to a central bank under siege. Nations like Argentina that have engaged in "dollarization" are learning about the downside risks of holding large liabilities denominated in foreign currencies. The best way to avoid this problem is for governments and central banks to restrict the use of foreign currency deposits or other kinds of short-term foreign liabilities at domestic banks.

Overall, what is most needed is the availability of more capital in developing countries and much quicker responses, amply funded, to emerging financial crises.. George Soros has argued powerfully that the IMF needs to establish a better balance between crisis prevention and intervention.33 The IMF has made some progress in prevention by introducing Contingency Credit Lines (CCLs). The CCL rewards countries that follow sound policies by giving them access to IMF credit lines before rather than after a crisis erupts. But CCL terms were set too high and there have been no takers. Soros also has recommended the issuance of Special Drawing Rights (SDRs) that developed-countries would donate for the purpose of providing international assistance. Its proceeds would be used to finance "the provision of public goods on a global scale as well as to foster economic, social, and political progress in individual countries."34

A growing number of civil society institutions, however, oppose giving more money to the IMF unless it is basically reformed. They point out that it is a committed part of the Washington Consensus, the application of whose policies have made societies adjuncts of the market. They see the IMF as an instrument of the U.S. government and its corporate allies. The conditions it attaches to loans for troubled countries often do more to protect the interests of first world investors than to promote the long-term health of the developing countries. The needed chastening of speculative investors does not occur under these circumstances. There is evidence that in several major crises, IMF requirements for assisting nations have in fact worsened the situation and protracted the crises. The IMF opposed the policies that enabled Malaysia to weather the crisis in Southeast Asia, for example, while it urged the failed policies of other Southeast Asian nations. The vast literature cited by Pieper and Taylor (p. 22) is a convincing chronicle of earlier missteps. For such reasons as these, some civil society institutions argue that, unless IMF policies are changed, giving the institution more money will do more harm than good.

Fortunately, the IMF's policies are beginning to change, partly as a result of criticisms by civil society institutions, but more through recognition of the seriousness of the problems with the present system. In the wake of recent financial crises, leaders in the IMF as well as the World Bank are looking for ways to reform the international financial architecture. Arguably, their emphasis is shifting away from slavish devotion to the prescriptions of the Washington Consensus and toward more state intervention in financial markets. Joseph Stiglitz, the Nobel Laureate who has been particularly critical of the IMF, nonetheless acknowledges that its policy stances are improving.35

The IMF has begun to recognize the importance of at least functional public interventions in markets and the need to provide more supporting revenues. It has realized that controls on external financial movements and prudent regulation can help contain financial crises. It has abandoned the doctrine, long the backbone of structural adjustment policies, that raising the local interest rate will stimulate saving and thereby growth. Both the IMF and the World Bank have rolled over or forgiven the bulk of official debt owed by the poorest economies.

Whether these and other promising changes in IMF thinking and policy formation are sufficient to assure that its future responses to crises will be benign still is not clear. While celebrating what they view as belated improvements, many critics of the IMF among civil society institutions are not convinced that they are sufficiently basic. Even if the IMF avoids repeating some of its more egregious mistakes, some believe that it is likely to continue to function chiefly for the benefit of the international financial community rather than the masses of people. Rather, they believe that, at least in the long term, it would be much better for control over international finance to reside in new institutions under a restructured United Nations. They favor the U.N. because it has a broader mandate, is more open and democratic, and, in its practice, has given much greater weight to human, social, and environmental priorities.

Many civil society institutions want the primary focus of reform to be on taming speculation, restoring the control of their economies to nations, and embedding economies in the wider society. They believe that if these policies are adopted there will be less need for large funding to deal with financial crises. There remains, however, the fact that such crises are occurring and will continue to occur for some time. The IMF is the only institution positioned to respond to these crises. Hence, even for those who sympathize with the goals of the civil society institutions, there is a strong argument for more financing for the IMF.

A world financial authority

A variety of public and private citizens and institutions have recently proposed the establishment of a World Financial Authority (WFA) to perform in the domain of world financial markets what national regulators do in domestic markets. Some believe it should be built upon the foundation of global financial surveillance and regulation that have already been laid by the Bank for International Settlements in Basel, Switzerland. Others regard it as a natural extension of the activities of the IMF. Still others are less interested in the precise institutional form it would take than in the clear delineation of the tasks that need to be done by someone.

Its first task probably should be to provide sufficient and timely financial assistance during crises to avert contagion and defaults. This requires a lender-of-last-resort with sufficient resources and authority to disperse rescue money quickly. Perhaps the best example to date is the bailout loan to Mexico by the U.S. Treasury and the IMF at the end of 1994. It supplied sufficient liquidity for Mexico to make the transition back to stability and to pay back the loans ahead of time. The management of the Asian crises in 1997-8, on the other hand, was badly handled. The bailout packages offered by the IMF were not only significantly smaller than in the Mexico case; they also were constrained with so many conditions that a year later only twenty percent of the funds had been disbursed. This slow response to the crisis probably worsened the contagion. Surprisingly, the error was repeated in the Russian crisis in 1998 and the Brazilian crisis in 1999.

A World Financial Authority also should provide the necessary regulatory framework within which the IMF or a successor institution can develop as a lender-of-last-resort. As long as domestic regulatory procedures function properly, there will be no need for a world authority to be involved, any more than to certify that domestic regulatory procedures are effective. In countries where domestic financial regulation is unsatisfactory, the WFA would assist with regulatory reform. In this way, the WFA could aid financial reconstruction, reduce the likelihood of moral hazard, and give confidence to backers of the operation.

There is little appetite today, especially in Washington, to create a new international bureaucracy. This fact gives support to the idea of building the WFA from the existing infrastructure of the Bank for International Settlements (BIS). The BIS is a meeting place for national central bankers who have constructed an increasingly complicated set of norms, rules and decision-making procedures for handling and preventing future crises. Its committees and cooperative cross-border regulatory framework enjoy the confidence of governments and of the financial community. It may well be the best place to govern an international regulatory authority at the present time.


Theological and ethical considerations

While Christian theology cannot provide us with detailed recommendations on how to correct the adverse consequences of speculative financial movements, it can provide us with an empowering perspective or worldview. Our theological expressions of the faith describe the source of our spiritual energy and hope. They betray our ultimate values and the source of our ethical norms. They shape how we perceive and judge the "signs of the times."

God's world and human responsibilities

Nothing in creation is independent of God. "The earth is the Lord's and all that is in it, the world, and all those who live in it." (Ps. 24:1 NRSV) Thus, no part of the creation - whether human beings, other species, the elements of soil and water, even human-made things - is our property to use as we wish. All is to be treated in accord with the values and ground rules of a loving God, their ultimate owner, who is concerned for the good of the whole creation. All of God's creation therefore deserves to be treated with appropriate care and concern, no matter how remote from one's daily consciousness or existence.

The doctrine of creation reminds us that our ultimate allegiance is not to the nationalistic and human-centered values of our culture, but rather to the values of the loving Maker of heaven and earth. When we seek plenty obsessively, consume goods excessively, compete against others compulsively, or commit ourselves to Economic Fate, we are worshiping false gods. Modern idolatries are often encountered in economic forms, just as in the New Testament's warnings about the spiritual perils of prosperity in the parables of the rich, hoarding fool (Luke 12:15-21) and the rich youth (Matt. 19:16-24 and Luke 18:18-25).

The fact that so much of financial speculation is divorced from the real economy of production and exchange suggests that its paper transactions are more like bets in a casino than an essential component of God's real economy, which seeks the good of all creation. It is wrong to subject people to the effects of wholesale gambling. The fact that the practice of financial speculation is secretive, compulsively competitive, and frequented by lone rangers, moreover, hints at a cult of false idols. Its practitioners, including especially day-traders, seem interested only in exceedingly short-term personal financial advantage, unconcerned about the long-term consequences of their actions or their impact on others. This also indicates a degree of idolatry that contradicts the doctrine of creation.

Image of God

The conviction that human beings have a God-given dignity and worth (Gen. 1:26-28) unites humanity in a universal covenant of rights and responsibilities - the family of God. All humans are entitled to the essential conditions for expressing their human dignity and for participation in defining and shaping the common good. These rights include satisfaction of basic biophysical needs, environmental safety, full participation in political and economic life, and the assurance of fair treatment and equal protection of the laws. These rights define our responsibilities in justice to one another, locally, nationally and - because they are human rights - internationally.

Financial speculation often leads to unmanageable floods of funds into and out of host societies, creating unwanted bubbles and panics. Financial speculators normally ignore the human consequences of their activities on the rights of people in host societies, where economic adjustments are shared widely and painfully. Their primary interest is short-term personal financial gain. The absence of a sense of covenantal unity with their brothers and sisters of the developing world is a sad commentary on the governing ethic of speculators in the capital markets. Their arrogance calls for some form of control over foreign exchange and financial capital markets.

Justice in covenant

The rights and responsibilities associated with the image of God are inextricably tied to the stress on justice in Scripture and tradition. We render to others their due because of our loving respect for their God-given dignity and value. The God portrayed in Scripture is the "lover of justice" (Ps. 99:4, 33:5, 37:28, 11:7; Isa. 30:18, 61:8; Jer. 9:24). Justice is at the ethical core of the biblical message. Faithfulness to covenant relationships, moreover, demands a justice that recognizes special obligations, "a preferential option" to widows, orphans, the poor, and aliens, which is to say the economically vulnerable and politically oppressed. Hence, the idea of the Jubilee Year (Lev. 25) was meant to prevent unjust concentrations of power and poverty. Jesus' ministry embodies concern for the rights and needs of the poor; He befriended and defended the dispossessed and the outcasts.

The fact that the liberalization of trade and finance has failed to improve the distribution of incomes, indeed, that it has widened the gap between rich and poor in virtually every country, is not a sign of distributive justice but of its opposite. The standard of living for the least skilled, least mobile, and poorest citizens of many developing countries has declined absolutely. This, too, is an unjust result of a broken system. The fact that governments that wish to assist the vulnerable and weak of their societies are less able to do so, in part because they no longer can levy sufficient taxes on foreign interests, is a violation of justice in community.

Sin and judgment

Sin is a declaration of autonomy from God, a rebellion against the sovereign source of our being. It makes the self and its values the center of one's existence, in defiance of God's care for all. Sin tempts us to value things over people, measuring our worth by the size of our wealth and the quantity of goods we consume, rather than by the quality of our relationships with God and with others. Sin involves injustice because its self-centeredness defies God's covenant of justice, grasping more than one's due and depriving others of their due.

Sin is manifested not only in individuals, but also in social institutions and cultural patterns. These structural injustices are culturally acceptable ways of giving some individuals and groups of people advantage over others. Because they are pervasive and generally invisible, they compel our participation. They benefit some and harm many others. Whether or not we deserve blame as individuals and churches for these social sins depends in part on whether we defend or resist them, tolerate or reject them.

The fact that the freeing of financial markets has permitted financial speculators to engage in high-risk gambles without regard to the consequences for others is abundant evidence of both individual and institutional sin. The policies of the Washington Consensus frequently lead to adverse consequences for the poor and the environment, even as its proponents gain advantages from the implementation of such policies. They are another serious expression of social sin in our time. These policies inevitably increase the concentration of economic power in fewer hands. The fact that the global spread of free-market policies has led to the decline of countervailing institutions of

social solidarity means that it is easier for the centers of economic power to corrupt governments, control markets, alienate neighbors, manipulate public opinion, and contribute to a sense of political impotency in the public.

The Church's mission and hope

The church is called to be an effective expression of the Reign of God, which Jesus embodied and proclaimed. This ultimate hope is a judgment on our deficiencies

and a challenge to faithful service. God's goal of a just and reconciled world is not simply our final destiny but an agenda for our earthly responsibilities. We are called to be a sign of the Reign of God, on earth as it is in heaven, to reflect the coming consummation of God's new covenant of shalom to the fullest extent possible.


A new financial architecture

In her path-breaking book, Casino Capitalism,36 Susan Strange likens the Western financial system to a vast casino. As in a casino,

"the world of high finance today offers the players a choice of games. Instead of roulette, blackjack, or poker, there is dealing to be done - the foreign-exchange market and all its variations; or in bonds, government securities or shares. In all these markets you may place bets on the future by dealing forward and by buying or selling options and all sorts of other recondite financial inventions. Some of the players - banks especially - play with very large stakes. There are also many quite small operators. There are tipsters, too, selling advice, and peddlers of systems to the gullible. And the croupiers in this global finance casino are the big bankers and brokers. They play, as it were, "for the house.' It is they, in the long run, who make the best living."

She goes on to observe that the big difference between ordinary kinds of gambling and speculation in financial markets is that one can choose not to gamble at roulette or poker, whereas everyone is affected by "casino capitalism." What goes on in the back offices of banks and hedge funds "is apt to have sudden, unpredictable and unavoidable consequences for individual lives."

It is this volatility, this instability in financial markets that has given rise to recurring financial crises. They must be tamed. In the wake of recent financial crises, people are beginning to look for ways to reform the international financial architecture. Although it is difficult to move from general theological convictions to specific proposals, we offer the following suggestions for consideration by Christians and other persons of good will.

Of these recommendations, perhaps the most controversial is that more funds be given to the IMF. We noted above that much of the criticism of the IMF is justified. We also acknowledged that the IMF is improving its policies. We hope that these improvements will continue. Meanwhile, there is no other viable candidate to serve as lender-of-last-resort - an absolutely essential feature of any new financial architecture.

The major reason some civil society institutions resist funding the IMF further is its history of misguided structural adjustment policies, policies that are now widely recognized to have caused widespread suffering. We hope that recent changes will improve this situation as well and enable the IMF to perform the important role we recommend for it.

Along with the World Bank, it is beginning to contextualize its performance criteria and conditionalities, taking much more seriously the unique circumstances of particular economies. It is listening more and nitpicking less. To be sure, the IMF is not likely to abandon its policy of making its loans conditional on the adoption by borrowing countries of mutually agreed economic policies. Even so, there is considerable evidence that when it has had more resources on hand, conditionality has been correspondingly wiser and less draconian.

The IMF now recognizes that it can leave more decisions to developing countries partly because these have better informed and more sophisticated employees than was once the case. Certainly in Latin America and Asia and increasingly in Africa, country economic teams are better qualified technically than the lower rung Ph.D.s from American and European universities to whom the IMF and World Bank entrust their missions. Local economists can do financial programming and standard macroeconomic modeling as well as or better than the people from Washington can; they also know how to do investment project analysis. To be sure, decisions about financial and project plans must include input from many other elements of a society.

We can encourage the IMF (and World Bank) to reverse the typical procedure in setting conditions for multilateral loans. Instead of waiting for it to specify the policies that must be followed to justify additional financing, country economic teams, in consultation with other agencies of their government, should be allowed to propose economic programs to the IMF. Disagreements between Washington staff assessments and the local teams could be resolved directly or by third-party arbitration. The scope of economic conditionality could also be restricted, for example, just to a balance-of-payments target, while the country could pursue its own agenda regarding inflation, income distribution, and growth.


What Christians can do

A primary part of the "principalities and powers" referred to in the Bible is composed of the political-economic institutions and processes that govern how people relate economically to each other and to God's whole creation. The church has a stake in their design. Yet many church members feel powerless to change basic political-economic reality. They think either that the economic conditions of society result "naturally" from the forces of markets that are only marginally within the power of human control, or that economic conditions result from powerful interests that are beyond the reach of ordinary citizens. Thus, there's nothing that can be done about it, or there's nothing we can do about it.

On the contrary, Mobilization for the Human Family believes that the political economy is shaped by deliberate social policy decisions; that conditions at any given time are the result of those decisions; that conditions can be changed by human decisions; and that the will of a nation's and the world's citizens about what the commitments and purposes of the nation and the world should be can be expressed in the political economy through the framework of democratic process provided in our national and transnational polity. Accordingly, we offer below some suggestions for action that may be taken by individual Christians and by our churches and their denominations to correct some correctable flaws of financial globalization.

Actions by individual Christian

Actions by churches and denominations


Want to know more?

Globalization is a vast topic. For a general introduction, see Sarah Anderson and John Cavanagh, Field Guide to the Global Economy (New York: New Press, 2000) and Thomas Friedman, The Lexus and the Olive Tree: Understanding Globalization (New York: Farrar Straus Giroux, 1999). A classic introduction to the financial side of globalization is Susan Strange, Casino Capitalism, (New York: Mnchester University Press, 1986). See also Kavaljit Singh, The Globalisation of Finance: A Citizen's Guide (London: Zed Books, 1999) and John Eatwell and Lance Taylor, Global Finance at Risk: The Case for International Regulation (New York: The New Press, 2000). The best introduction to the Tobin Tax is Mahbub ul Haq et al (eds), The Tobin Tax: Coping with Financial Volatility (New York: Oxford University Press, 1996). For how church people might react, see Pamela Brubaker, Globalization at What Price? (Cleveland: Pilgrim Press, 2001).


Questions For Discussion

  1. How have the linkages and interconnections of international finance impacted your life? On balance, do you regard them as advantages or disadvantages for a healthy Christian life?
  2. The frequency and severity of recent financial crises have fueled calls for a radical redesign of the rules of global finance. If you were the advisor to an international commission asked to design "A New International Financial Architecture," what would you recommend?
  3. Do you favor allowing sovereign nations to declare bankruptcy? What Christian traditions might be invoked to support or deny such an action?
  4. A growing number of civil society institutions oppose giving more money to the IMF. They point out that it is part of the Washington Consensus, the application of whose policies have made societies adjuncts of the market. Yet this paper suggests that the IMF needs more money. As a committed Christian, which view do you favor?
  5. Is it too late to expect justice in a globalizing world? Since much of the direction the global economy has taken is irreversible, how can a balance between market and society be negotiated? How might Christians play a role in those negotiations?

[Dec 05, 2017] Reviews Cowardly capitalism by Daniel Ben-Ami Prospect Magazine December 1998 issue 36

Susan Strange, who died just after the publication of her latest book, was one of the most compelling academic advocates of the view that the global casino is out of control.
Notable quotes:
"... Susan Strange, who died just after the publication of her latest book, was one of the most compelling academic advocates of the view that the global casino is out of control. Although she is not a household name, she played an important role in developing the intellectual framework to support the casino thesis. Her Casino Capitalism (1986) is a Keynesian account of the damage inflicted on the world as a result of financial deregulation which was taken up by many better known writers such as William Greider in the US and Will Hutton in Britain. ..."
"... Mad Money, the sequel to Casino Capitalism, takes into account the impact of information technology and the rise of financial crime. It also places new emphasis on the role of international institutions. For example, she backs George Soros's plan for an international credit insurance corporation as a complement to the IMF. ..."
Dec 01, 1998 | Prospect Magazine

The dominant image of the financial markets is that of a giant casino. Brash young men in red braces, driven by insatiable greed, gamble with huge sums every day. When the bets go wrong the innocent suffer. Reckless financial markets pose an immediate threat to the future prosperity of humanity.

Susan Strange, who died just after the publication of her latest book, was one of the most compelling academic advocates of the view that the global casino is out of control. Although she is not a household name, she played an important role in developing the intellectual framework to support the casino thesis. Her Casino Capitalism (1986) is a Keynesian account of the damage inflicted on the world as a result of financial deregulation which was taken up by many better known writers such as William Greider in the US and Will Hutton in Britain.

With the onset of the Asian financial crisis Strange's account of financial markets has become almost mainstream. Her ideas inform many of the discussions about a "new international financial architecture." Economists who would once have scorned her views now agree with her that deregulation has gone too far and that new forms of regulation are needed. The British government has floated the idea of a world financial authority to regulate global finance.

The IMF, once a bastion of free market economics, has conceded that capital controls may be necessary under some circumstances.

Mad Money, the sequel to Casino Capitalism, takes into account the impact of information technology and the rise of financial crime. It also places new emphasis on the role of international institutions. For example, she backs George Soros's plan for an international credit insurance corporation as a complement to the IMF.

... ... ...

[Dec 05, 2017] Inside Casino Capitalism by Max Holland

Notable quotes:
"... Barbarians at the Gate: The Fall of RJR Nabisco ..."
"... The Wall Street Journal ..."
"... The triumph of gossip over substance is manifest in many other ways. Wall Street's deft manipulation of the business press is barely touched upon, and the laissez-faire ..."
"... Fulminations about the socially corrosive effects of greed aside, the buyout phenomenon may represent one of the biggest changes in the way American business is conducted since the rise of the public corporation, nothing less than a transformation of managerial into financial capitalism. The ferocious market for corporate control that emerged during the 1980s has few parallels in business history, but there are two: the trusts that formed early in this century and the conglomerate mania that swept corporate America during the 1960s. Both waves resulted in large social and economic costs, and there is little assurance that the corporate infatuation with debt will not exact a similarly heavy toll. ..."
"... the high levels of debt associated with buyouts and other forms of corporate restructuring create fragility in business structures and vulnerability to economic cycles ..."
"... Germany and Japan incur higher levels of debt for expansion and investment, whereas equivalent American indebtedness is linked to the recent market for corporate control. That creates a brittle structure, one that threatens to turn the U.S. government into something of an ultimate guarantor if and when things do fall about. It is too easy to construct a scenario in which corporate indebtedness forces the federal government into the business of business. The savings-and-loan bailout is a painfully obvious harbinger of such a development. ..."
"... The many ramifications of the buyout mania deserve thoughtful treatment. Basic issues of corporate governance and accountability ought to be openly debated and resolved if the American economy is to deliver the maximum benefit to society and not just unconscionable rewards to a handful of bankers, all out of proportion to their social productivity. It is disappointing, but a sign of the times, that the best book about the deal of deals fails to educate as well as it entertains. ..."
Washington DeCoded

Inside Casino Capitalism Barbarians at the Gate: The Fall of RJR Nabisco
By Bryan Burrough and John Helyar
Harper & Row. 528 pp. $22.95

In 1898, Adolphus Green, chairman of the National Biscuit Company, found himself faced with the task of choosing a trademark for his newly formed baking concern. Green was a progressive businessman. He refused to employ child labor, even though it was then a common practice, and he offered his bakery employees the option to buy stock at a discount. Green therefore thought that his trademark should symbolize Nabisco's fundamental business values, "not merely to make dividends for the stockholders of his company, but to enhance the general prosperity and the moral sentiment of the United States." Eventually he decided that a cross with two bars and an oval – a medieval symbol representing the triumph of the moral and spiritual over the base and material – should grace the package of every Nabisco product.

If they had wracked their brains for months, Bryan Burrough and John Helyar could not have come up with a more ironic metaphor for their book. The fall of Nabisco, and its corporate partner R.J. Reynolds, is nothing less than the exact opposite of Green's business credo, a compelling tale of corporate and Wall Street greed featuring RJR Nabisco officers who first steal shareholders blind and then justify their epic displays of avarice by claiming to maximize shareholder value.

The event which made the RJR Nabisco story worth telling was the 1988 leveraged buyout (LBO) of the mammoth tobacco and food conglomerate, then the 19th-largest industrial corporation in America. Battles for corporate control were common during the loosely regulated 1980s, and the LBO was just one method for capturing the equity of a corporation. (In a typical LBO, a small group of top management and investment bankers put 10 percent down and finance the rest of their purchase through high-interest loans or bonds. If the leveraged, privately-owned corporation survives, the investors, which they can re-sell public shares, reach the so-called "pot of gold"; but if the corporation cannot service its debt, everything is at risk, because the collateral is the corporation itself.

The sheer size of RJR Nabisco and the furious bidding war that erupted guaranteed unusual public scrutiny of this particular piece of financial engineering. F. Ross Johnson, the conglomerate's flamboyant, free-spending CEO (RJR had its own corporate airline), put his own company into play with a $75-a-share bid in October. Experienced buyout artists on Wall Street, however, immediately realized that Johnson was trying to play two incompatible games. LBOs typically put corporations such as RJR Nabisco through a ringer in order to pay the mammoth debt incurred after a buyout. But Johnson, desiring to keep corporate perquisites intact, "low-balled" his offer. Other buyout investors stepped forward with competing bids, and after a six-week-long auction the buyout boutique of Kohlberg, Kravis, Roberts & Company (KKR) emerged on top with a $109-a-share bid. The $25-billion buyout took its place as one of the defining business events of the 1980s

Burrough and Helyar, who covered the story for The Wall Street Journal, supply a breezy, colorful, blow-by-blow account of the "deal from hell" (as one businessman characterized a leveraged buyout). The language of Wall Street, full of incongruous "Rambo" jargon from the Vietnam War, is itself arresting. Buyout artists, who presumably never came within 10,000 miles of wartime Saigon, talk about "napalming" corporate perquisites or liken their strategy to "charging through the rice paddies, not stopping for anything and taking no prisoners."

At the time, F. Ross Johnson was widely pilloried in the press as the embodiment of excess; his conflict of interest was obvious. Yet Burrough and Helyar show that Johnson, for all his free-spending ways, was way over his head in the major leagues of greed, otherwise known as Wall Street in the 1980s. What, after all, is more rapacious: the roughly $100 million Johnson stood to gain if his deal worked out over five years, or the $45 million in expenses KKR demanded for waiting 60 minutes while Ross Johnson prepared a final competing bid?

Barbarians is, in the parlance of the publishing world, a good read. At the same time, unfortunately, a disclaimer issued by the authors proves only too true. Anyone looking for a definitive judgment of LBOs will be disappointed. Burrough and Helyar do at least ask the pertinent question: What does all this activity have to do with building and sustaining a business? But authors should not only pose questions; they should answer them, or at least try.

Admittedly, the single most important answer to the RJR puzzle could not be provided by Burrough and Helyar because it is not yet known. The major test of any financial engineering is its effect on the long-term vitality of the leveraged corporation, as measured by such key indicators as market share (and not just whether the corporation survives its debt, as the authors imply). However, a highly-leveraged RJR Nabisco is already selling off numerous profitable parts of its business because they are no longer a "strategic fit": Wall Street code signifying a need for cash in order to service debts and avoid bankruptcy.

If the authors were unable to predict the ultimate outcome, they still had a rare opportunity to explain how and why an LBO is engineered. Unfortunately, their fixation on re-creating events and dialogue – which admittedly produces a fast-moving book – forced them to accept the issues as defined by the participants themselves. There is no other way to explain the book's uncritical stance. When, for example, the RJR Nabisco board of directors tried to decide which bid to accept, Burrough and Helyar report that several directors sided with KKR's offer because the LBO boutique "knew the value of keeping [employees] happy." It is impossible to tell from the book whether the directors knew this to be true or took KKR's word. Even a cursory investigation would have revealed that KKR is notorious for showing no concern for employees below senior management after a leveraged buyout.

The triumph of gossip over substance is manifest in many other ways. Wall Street's deft manipulation of the business press is barely touched upon, and the laissez-faire environment procured by buyout artists via their political contributions is scarcely mentioned, crucial though it is. Nowhere are the authors' priorities more obvious than in the number of words devoted to Henry Kravis's conspicuous consumption compared to those devoted to the details of the RJR deal. In testimony before Congress last year, no less an authority than Treasury Secretary Nicholas Brady – himself an old Wall Street hand – noted that the substitution of tax-deductible debt for taxable income is "the mill in which the grist of takeover premiums is ground."

In the case of RJR Nabisco, 81 percent of the $9.9 billion premium paid to shareholders was derived from tax breaks achievable after the buyout. This singularly important fact cannot be found in the book, however; nor will a reader learn that after the buyout the U.S. Treasury was obligated to refund RJR as much as $1 billion because of its post-buyout debt burden. In Barbarians, more time is spent describing Kravis's ostentatious gifts to his fashion-designer wife than to the tax considerations that make or break these deals.

Fulminations about the socially corrosive effects of greed aside, the buyout phenomenon may represent one of the biggest changes in the way American business is conducted since the rise of the public corporation, nothing less than a transformation of managerial into financial capitalism. The ferocious market for corporate control that emerged during the 1980s has few parallels in business history, but there are two: the trusts that formed early in this century and the conglomerate mania that swept corporate America during the 1960s. Both waves resulted in large social and economic costs, and there is little assurance that the corporate infatuation with debt will not exact a similarly heavy toll.

As the economist Henry Kaufman has written, the high levels of debt associated with buyouts and other forms of corporate restructuring create fragility in business structures and vulnerability to economic cycles. Inexorably, the shift away from equity invites the close, even intrusive involvement of institutional investors (banks, pension funds, and insurance companies) that provide the financing. Superficially, this moves America closer to the system that prevails in Germany and Japan, where historically the relationship between the suppliers and users of capital is close. But Germany and Japan incur higher levels of debt for expansion and investment, whereas equivalent American indebtedness is linked to the recent market for corporate control. That creates a brittle structure, one that threatens to turn the U.S. government into something of an ultimate guarantor if and when things do fall about. It is too easy to construct a scenario in which corporate indebtedness forces the federal government into the business of business. The savings-and-loan bailout is a painfully obvious harbinger of such a development.

The many ramifications of the buyout mania deserve thoughtful treatment. Basic issues of corporate governance and accountability ought to be openly debated and resolved if the American economy is to deliver the maximum benefit to society and not just unconscionable rewards to a handful of bankers, all out of proportion to their social productivity. It is disappointing, but a sign of the times, that the best book about the deal of deals fails to educate as well as it entertains.

[Dec 05, 2017] Further sabotage of the Iran deal would not bring success -- only embarrassment

This is two years old article. Not much changed... Comments sound as written yesterday. Check it out !
The key incentive to Iran deal is using Iran as a Trojan horse against Russia in oil market -- the force which helps to keep oil prices low, benefitting the USA and other G7 members and hurting Russia and other oil-producing nations. Iran might also serve as a replacement market for EU goods as Russian market is partially lost. Due to sanctions EU now lost (and probably irrevocably) Russian market for food, and have difficulties in maintaining their share in other sectors (cars, machinery) as Asian tigers come in.
Notable quotes:
"... The waning clout stems from the lobby siding with the revanchist Israeli Prime Minister Binyamin Netanyahu, whose Iran strategy since the 2012 US presidential campaign has been to unabashedly side with Republican hawks. AIPAC's alignment with the position effectively caused the group to marginalize itself; the GOP is now the only place where AIPAC can today find lockstep support. The tens of millions AIPAC spent lobbying against the deal were unable to obscure this dynamic. ..."
"... Senator Lindsey Graham of South Carolina took to the floor during the debate and pulled out an old trick from the run-up to the Iraq war: blaming Iran for 9/11 and saying a failure to act would result in a worse attack – is any indication, even Democrats like the pro-Israel hawk Chuck Schumer will find it untenable to sidle up to AIPAC and the Republicans. ..."
"... The problem with the right in the USA is that they offer no alternatives, nothing, nada and zilch they have become the opposition party of opposition. They rely on talking point memes and fear, and it has become the party of extremism and simplicity offering low hanging fruit and red meat this was on perfect display at their anti Iran deal rally, palin, trump, beck and phil robinson who commands ducks apparently. ..."
"... Is it any wonder the Iranians don't trust the US. After the US's spying exploits during the Iraqi WMD inspections, why are you surprised that Iran asks for 24 days notice of inspection (enough time to clear out conventional weapons development but not enough to remove evidence of nuclear weapons development). ..."
"... Most Americans don't know the CIA overthrew the Iranian government in 1953 and installed the Shaw. Most Republicans know that most Americans will believe what Fox news tells them. Republicans live in an alternate universe where there is no climate change, mammon is worshiped and wisdom is rejected hatred is accepted negotiation is replaced by perpetual warfare. Now most Americans are tired of stupid leadership and the Republicans are in big trouble. ..."
"... AIPAC - Eventually everything is seen for what is truly is. ..."
"... Israel is opposed because they wish to maintain their nuclear weapons monopoly in the region ..."
"... With the threat you describe from Israel it seems only sensible for Iran to develop nuclear weapons - if my was country (Scotland) was in Iran's place and what you said is true i would only support politicians who promised fast and large scale production of atomic weapons to counter the clear threat to my nation. ..."
"... Netanyahu loves to play the victim, but he is the primary cause that Jews worldwide, but especially in the United States, are rethinking the idea of "Israel." I know very few people who willingly identify with a strident right wing government comprised of rabid nationalists, religious fundamentalists, and a violent, almost apocalyptic settler community. ..."
"... The Israeli electorate has indicated which path it wishes to travel, but that does not obligate Jews throughout the world to support a government whose policies they find odious. ..."
"... As part of this deal the US and allies should guarantee Iran protection against Israeli aggression. Otherwise, considering Israel's threats, Iran is well justified in seeking a nuclear deterrent. ..."
"... AIPAC's defeat shows that their grip on the testicles of congress has been broken. ..."
"... Their primary goal was to keep Iran isolated and economically weak. They knew full well that the Iranians hadn't had a nuclear program since 2003, but Netanhayu needed an existential threat to Israel in order to justify his grip on power. All of this charade has bee at the instigation of and directed by Israel. And they lost They were beaten by that hated schwartze and the liberals that Israel normally counts on for unthinking support. ..."
"... No doubt Netanyahu will raise the level of his anger; he just can't accept that a United States president would do anything on which Israel hadn't stamped its imprimatur. It gets tiresome listening to him. ..."
"... It is this deal that feeds the military industrial complex. We've already heard Kerry give Israel and Saudi Arabia assurances of more weapons. And that $150 billion released to Iran? A healthy portion will be spent for arms..American, Russian, Chinese. Most of the commenters have this completely backwards. This deal means a bonanza for the arms industry. ..."
"... The Iran nuclear agreement accomplishes the US policy goal of preventing the creation of the fissionable material required for an Iranian nuclear weapons program. What the agreement does not do is eliminate Iran as a regional military and economic power, as the Israelis and Saudis -- who have invested hundreds of millions of dollars to lobby American politicians and brainwash American TV viewers -- would prefer. ..."
"... Rejection equals war. It's not surprising that the same crowd most stridently demanding rejection of the agreement advocated the disastrous invasion and occupation of Iraq. These homicidal fools never learn, or don't care as long as it's not their lives at risk. ..."
"... And how did the Republicans' foreign policy work out? Reagan created and financed Al Qaeda. Then Bush II invades Iraq with promises the Iraqis will welcome us with flowers (!), the war will be over in a few weeks and pay for itself, and the middle east will have a nascent democracy (Iraq) that will be a grateful US ally. ..."
"... I've seen Iranian statements playing internal politics, but I have never seen any actual Iranian threats. I've seen plenty about Israel assassinating people in other countries, using incendiaries and chemical weapons against civilians in other countries, conducting illegal kidnappings overseas, using terrorism as a weapon of war, developing nuclear weapons illegally, ethnically cleansing illegally occupied territories, that sort of thing. ..."
"... Iran is not a made-up country like Iraq it is as old as Greece. If the Iraq war was sold as pushover and failed miserably then an Iran war would be unthinkable. War can be started in an instant diplomacy take time. UK, France, Germany & EU all agree its an acceptable alternative to war. So as these countries hardly ever agree it is clear the deal is a good one. ..."
"... Rank and file Americans don't even know what the Iran deal is. And can't be bothered to actually find out. They just listen to sound bites from politicians the loudest of whom have been the wildly partisan republicans claiming that it gives Iran a green light to a nuclear weapon. Not to mention those "less safe" polls are completely loaded. Certain buzz words will always produce negative results. If you associate something positive "feeling safe" or "in favor of" anything that Iran signs off on it comes across as indirectly supporting Iran and skews the results of the poll. "Iran" has been so strongly associated with evil and negative all you have to do is insert it into a sentence to make people feel negatively about the entire sentence. In order to get true data on the deal you would have to poll people on the individual clauses the deal. ..."
"... American Jews are facing one of the most interesting choices of recent US history. The Republican Party, which is pissing into a stiff wind of unfavorable demographics, seems to have decided it can even the playing field by peeling Jews away from the Democrats with promises to do whatever Israel wants. So we have the very strange (but quite real) prospect of Jews increasingly throwing in their lot with the party of Christian extremists whose ranks also include violent antiSemites. ..."
"... The American Warmonger Establishment (that now fully entrenched "Military Industrial Complex" against which no more keen observer than President Dwight Eisenhower warned us), is rip-shit over the Iran Agreement. WHAT? We can't Do More War? That will be terrible for further increasing our obscene 1-percent wealth. Let's side with Israeli wingnut Netanyahu, who cynically leverages "an eye for an eye for an eye for an eye" to hold his "Power." ..."
"... AIPAC is a dangerous anti-american organization, and a real and extant threat to the sovereignty of the U.S. Any elected official acting in concert with AIPAC is colluding with a foreign government to harm the U.S. and should be considered treasonous and an enemy of the American people. ..."
Sep 14, 2015 | The Guardian

The waning clout stems from the lobby siding with the revanchist Israeli Prime Minister Binyamin Netanyahu, whose Iran strategy since the 2012 US presidential campaign has been to unabashedly side with Republican hawks. AIPAC's alignment with the position effectively caused the group to marginalize itself; the GOP is now the only place where AIPAC can today find lockstep support. The tens of millions AIPAC spent lobbying against the deal were unable to obscure this dynamic.

We may not look back at this as a sea change – some Senate Democrats who held firm against opposition to the deal are working with AIPAC to pass subsequent legislation that contains poison pills designed to kill it – but rather as a rising tide eroding the once sturdy bipartisan pro-Israeli government consensus on Capitol Hill. Some relationships have been frayed; previously stalwart allies of the Israel's interests, such as Vice President Joe Biden, have reportedly said the Iran deal fight soured them on AIPAC.

Even with the boundaries of its abilities on display, however, AIPAC will continue its efforts. "We urge those who have blocked a vote today to reconsider," the group said in a spin-heavy statement casting a pretty objective defeat as victory with the headline, "Bipartisan Senate Majority Rejects Iran Nuclear Deal." The group's allies in the Senate Republican Party have already promised to rehash the procedural vote next week, and its lobbyists are still rallying for support in the House. But the Senate's refusal to halt US support for the deal means that Senate Democrats are unlikely to reconsider, especially after witnessing Thursday's Republican hijinx in the House. These ploys look like little more than efforts to embarrass Obama into needing to cast a veto.

If Republicans' rhetoric leading up to to their flop in the Senate – Senator Lindsey Graham of South Carolina took to the floor during the debate and pulled out an old trick from the run-up to the Iraq war: blaming Iran for 9/11 and saying a failure to act would result in a worse attack – is any indication, even Democrats like the pro-Israel hawk Chuck Schumer will find it untenable to sidle up to AIPAC and the Republicans.

Opponents of the deal want to say the Democrats played politics instead of evaluating the deal honestly. That charge is ironic, to say the least, since most experts agree the nuclear deal is sound and the best agreement diplomacy could achieve. But there were politics at play: rather than siding with Obama, Congressional Democrats lined up against the Republican/Netanyahu alliance. The adamance of AIPAC ended up working against its stated interests.

Groups like AIPAC will go on touting their bipartisan bona fides without considering that their adoption of Netanyahu's own partisanship doomed them to a partisan result. Meanwhile, the ensuing fight, which will no doubt bring more of the legislative chaos we saw this week, won't be a cakewalk, so to speak, but will put the lie to AIPAC's claims it has a bipartisan consensus behind it. Despite their best efforts, Obama won't be the one embarrassed by the scrambling on the horizon.

TiredOldDog 13 Sep 2015 21:47

a foreign country whose still hell bent on committing war crimes

I guess this may mean Israel. If it does, how about we compare Assad's Syria, Iran and Israel. How many war crimes per day in the last 4 years and, maybe, some forecasts. Otherwise it's the usual gratuitous use of bad words at Israel. It has a purpose. To denigrate and dehumanize Israel or, at least, Zionism.

ID7612455 13 Sep 2015 18:04

The problem with the right in the USA is that they offer no alternatives, nothing, nada and zilch they have become the opposition party of opposition. They rely on talking point memes and fear, and it has become the party of extremism and simplicity offering low hanging fruit and red meat this was on perfect display at their anti Iran deal rally, palin, trump, beck and phil robinson who commands ducks apparently.

winemaster2 13 Sep 2015 17:01

Put a Brush Mustache on the control freak, greed creed, Nentanhayu the SOB not only looks like but has the same mentality as Hitler and his Nazism crap.

Martin Hutton -> mantishrimp 12 Sep 2015 23:50

I wondered when someone was going to bring up that "forgotten" fact. Is it any wonder the Iranians don't trust the US. After the US's spying exploits during the Iraqi WMD inspections, why are you surprised that Iran asks for 24 days notice of inspection (enough time to clear out conventional weapons development but not enough to remove evidence of nuclear weapons development).

mantishrimp 12 Sep 2015 20:51

Most Americans don't know the CIA overthrew the Iranian government in 1953 and installed the Shaw. Most Republicans know that most Americans will believe what Fox news tells them. Republicans live in an alternate universe where there is no climate change, mammon is worshiped and wisdom is rejected hatred is accepted negotiation is replaced by perpetual warfare. Now most Americans are tired of stupid leadership and the Republicans are in big trouble.

ByThePeople -> Sieggy 12 Sep 2015 20:27

Is pitiful how for months and months, certain individuals blathered on and on and on when it was fairly clear from the get go that this was a done deal and no one was about cater to the war criminal. I suppose it was good for them, sucking every last dime they could out of the AICPA & Co. while they acted like there was 'a chance'. Nope, only chance is that at the end of the day, a politician is a politician and he'll suck you dry as long as you let 'em.

What a pleasure it is to see the United States Congress finally not pimp themselves out completely to a foreign country whose still hell bent on committing war crimes. A once off I suppose, but it's one small step for Americans.

ByThePeople 12 Sep 2015 20:15

AIPAC - Eventually everything is seen for what is truly is.

ambushinthenight -> Greg Zeglen 12 Sep 2015 18:18

Seems that it makes a lot of sense to most everyone else in the world, it is now at the point where it really makes no difference whether the U.S. ratifies the deal or not. Israel is opposed because they wish to maintain their nuclear weapons monopoly in the region. Politicians here object for one of two reasons. They are Israeli first and foremost not American or for political expediency and a chance to try undo another of this President's achievements. Been a futile effort so far I'd say.

hello1678 -> BrianGriffin 12 Sep 2015 16:42

With the threat you describe from Israel it seems only sensible for Iran to develop nuclear weapons - if my was country (Scotland) was in Iran's place and what you said is true i would only support politicians who promised fast and large scale production of atomic weapons to counter the clear threat to my nation.

nardone -> Bruce Bahmani 12 Sep 2015 14:12

Netanyahu loves to play the victim, but he is the primary cause that Jews worldwide, but especially in the United States, are rethinking the idea of "Israel." I know very few people who willingly identify with a strident right wing government comprised of rabid nationalists, religious fundamentalists, and a violent, almost apocalyptic settler community.

The Israeli electorate has indicated which path it wishes to travel, but that does not obligate Jews throughout the world to support a government whose policies they find odious.

Greg Zeglen -> Glenn Gang 12 Sep 2015 13:51

good point which is found almost nowhere else...it is still necessary to understand that the whole line of diplomacy regarding the west on the part of Iran has been for generations one of deceit...and people are intensely jealous of what they hold dear - especially safety and liberty with in their country....

EarthyByNature -> Bruce Bahmani 12 Sep 2015 13:45

I do trust your on salary with a decent benefits package with the Israeli government or one of it's slavish US lobbyists. Let's face it, got to be hard work pouring out such hateful drivel.

BrianGriffin -> imipak 12 Sep 2015 12:53

The USA took about six years to build a bomb from scratch. The UK took almost six years to build a bomb. Russia was able to build a bomb in only four years (1945-1949). France took four years to build a bomb. https://en.wikipedia.org/wiki/France_and_weapons_of_mass_destruction

The Chinese only took four years. http://www.china.org.cn/english/congress/228244.htm

steelhead 12 Sep 2015 12:48

As part of this deal the US and allies should guarantee Iran protection against Israeli aggression. Otherwise, considering Israel's threats, Iran is well justified in seeking a nuclear deterrent.

BrianGriffin -> HauptmannGurski 12 Sep 2015 12:35

"Europe needs business desperately."

Sieggy 12 Sep 2015 12:32

In other words, once again, Obama out-played and out-thought both the GOP and AIPAC. He was playing multidimensional chess while they were playing checkers. The democrats kept their party discipline while the republicans ran around like a schoolyard full of sugared-up children. This is what happens when you have grownups competing with adolescents. The republican party, to put it very bluntly, can't get it together long enough to whistle 'Yankee Doodle Dandy' in unison.

They lost. Again. And worse than being losers, they're sore, whining, sniveling, blubbering losers. Even when they've been spanked - hard - they swear it's not over and they're gonna get even, just you wait and see! Get over it. They lost - badly - and the simple fact that their party is coming apart at the seams before our very eyes means they're going to be losing a lot more, too.

AIPAC's defeat shows that their grip on the testicles of congress has been broken. All the way around, a glorious victory for Obama, and an ignominious defeat for the republicans. And most especially, Israel. Their primary goal was to keep Iran isolated and economically weak. They knew full well that the Iranians hadn't had a nuclear program since 2003, but Netanhayu needed an existential threat to Israel in order to justify his grip on power. All of this charade has bee at the instigation of and directed by Israel. And they lost They were beaten by that hated schwartze and the liberals that Israel normally counts on for unthinking support.

Their worst loss, however, was losing the support of the American jews. Older, orthodox jews are Israel-firsters. The younger, less observant jews are Americans first. Netanhayu's behavior has driven a wedge between the US and Israel that is only going to deepen over time. And on top of that, Iran is re-entering the community of nations, and soon their economy will dominate the region. Bibi overplayed his hand very, very stupidly, and the real price that Israel will pay for his bungling will unfold over the next few decades.

BrianGriffin -> TiredOldDog 12 Sep 2015 12:18

"The Constitution provides that the president 'shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two-thirds of the Senators present concur'"

http://www.senate.gov/artandhistory/history/common/briefing/Treaties.htm

Hardly a done deal. If Obama releases funds to Iran he probably would be committing an impeachable crime under US law. Even many Democrats would vote to impeach Obama for providing billions to a sworn enemy of Israel.

Glenn Gang -> Bruce Bahmani 12 Sep 2015 12:07

"...institutionally Iranclad(sic) HATRED towards the west..." Since you like all-caps so much, try this: "B.S."

The American propel(sic) actually figured out something else---that hardline haters like yourself are desperate to keep the cycle of Islamophobic mistrust and suspicion alive, and blind themselves to the fact that the rest of us have left you behind.

FACT: More than half of the population of Iran today was NOT EVEN BORN when radical students captured the U.S. Embassy in Teheran in 1979.

People like you, Bruce, conveniently ignore the fact that Ahmedinejad and his hardline followers were voted out of power in 2013, and that Supreme Leader Ali Khamenei further marginalized them by allowing the election of new President Hassan Rouhani to stand, though he was and is an outspoken reformer advocating rapprochement with the west. While his outward rhetoric still has stern warnings about anticipated treachery by the 'Great Satan', Khamenei has allowed the Vienna agreement to go forward, and shows no sign of interfering with its implementation.

He is an old man, but he is neither stupid nor senile, and has clearly seen the crippling effects the international sanctions have had on his country and his people. Haters like you, Bruce, will insist that he ALWAYS has evil motives, just as Iranian hardliners (like Ahmedinejad) will ALWAYS believe that the U.S. has sinister motives and cannot EVER be trusted to uphold our end of any agreement. You ascribe HATRED in all caps to Iran, the whole country, while not acknowledging your own simmering hatred.

People like you will always find a 'boogeyman,' someone else to blame for your problems, real or imagined. You should get some help.

beenheretoolong 12 Sep 2015 10:57

No doubt Netanyahu will raise the level of his anger; he just can't accept that a United States president would do anything on which Israel hadn't stamped its imprimatur. It gets tiresome listening to him.

geneob 12 Sep 2015 10:12

It is this deal that feeds the military industrial complex. We've already heard Kerry give Israel and Saudi Arabia assurances of more weapons. And that $150 billion released to Iran? A healthy portion will be spent for arms..American, Russian, Chinese. Most of the commenters have this completely backwards. This deal means a bonanza for the arms industry.

Jack Hughes 12 Sep 2015 08:38

The Iran nuclear agreement accomplishes the US policy goal of preventing the creation of the fissionable material required for an Iranian nuclear weapons program.

What the agreement does not do is eliminate Iran as a regional military and economic power, as the Israelis and Saudis -- who have invested hundreds of millions of dollars to lobby American politicians and brainwash American TV viewers -- would prefer.

To reject the agreement is to accept the status quo, which is unacceptable, leaving an immediate and unprovoked American-led bombing campaign as the only other option.

Rejection equals war. It's not surprising that the same crowd most stridently demanding rejection of the agreement advocated the disastrous invasion and occupation of Iraq. These homicidal fools never learn, or don't care as long as it's not their lives at risk.

American politicians opposed to the agreement are serving their short-term partisan political interests and, under America's system of legalized bribery, their Israeli and Saudi paymasters -- not America's long-term policy interests.

ID293404 -> Jeremiah2000 12 Sep 2015 05:01

And how did the Republicans' foreign policy work out? Reagan created and financed Al Qaeda. Then Bush II invades Iraq with promises the Iraqis will welcome us with flowers (!), the war will be over in a few weeks and pay for itself, and the middle east will have a nascent democracy (Iraq) that will be a grateful US ally.

He then has pictures taken of himself in a jet pilot's uniform on a US aircraft carrier with a huge sign saying Mission Accomplished. He attacks Afghanistan to capture Osama, lets him get away, and then attacks Iraq instead, which had nothing to do with 9/11 and no ties with Al Qaeda.

So then we have two interminable wars going on, thanks to brilliant Republican foreign policy, and spend gazillions of dollars while creating a mess that may never be straightened out. Never mind all the friends we won in the middle east and the enhanced reputation of our country through torture, the use of mercenaries, and the deaths and displacement of hundreds of thousands of civilians. Yeah, we really need those bright Republicans running the show over in the Middle East!

HauptmannGurski -> lazman 12 Sep 2015 02:31

That is a very difficult point to understand, just look at this sentence "not understanding the fact in international affairs that to disrespect an American president is to disrespect Americans" ... too much emperor thinking for me. We have this conversation with regard to Putin everywhere now, so we disrespect all 143 million Russians? There's not a lot of disrespect around for Japanese PM Abe and Chinese Xi - does this now mean we respect them and all Japanese and Chinese? Election campaigns create such enormous personality cults that people seem to lose perspective.

On the Iran deal, if the US had dropped out of it it would have caused quite a rift because many countries would have just done what they wanted anyway. The international Atomic Energy Organisation or what it is would have done their inspections. Siemens would have sold medical machines. Countries would grow up as it were. But as cooperation is always better than confrontation it is nice the US have stayed in the agreement that was apparently 10 years in the making. It couldn't have gone on like that. With Europe needing gazillions to finance Greece, Ukraine, and millions of refugees (the next waves will roll on with the next spring and summer from April), Europe needs business desparately. Israel was happy to buy oil through Marc Rich under sanctions, now it's Europe's turn to snatch some business.

imipak -> BrianGriffin 11 Sep 2015 21:56

Iran lacks weapons-grade uranium and the means to produce it. Iran has made no efforts towards nuclear weapons technology for over a decade. Iran is a signatory of the NPT and is entitled to the rights enshrined therein. If Israel launches a nuclear war against Iran over Iran having a medical reactor (needed to produce isotopes for medicine, isotopes America can barely produce enough of for itself) that poses no security threat to anyone, then Israel will have transgressed so many international laws that if it survives the radioactive fallout (unlikely), it won't survive the political fallout.

It is a crime of the highest order to use weapons of mass destruction (although that didn't stop the Israelis using them against Palestinian civilians) and pre-emtive self-defence is why most believe Bush and Blair should be on trial at the ICJ, or (given the severity of their crimes) Nuremberg.

Israel's right to self-defense is questionable, I'm not sure any such right exists for anyone, but even allowing for it, Israel has no right to wage unprovoked war on another nation on the grounds of a potential threat discovered through divination using tea leaves.

imipak -> Jeremiah2000 11 Sep 2015 21:43

Iran's sponsorship of terrorism is of no concern. Such acts do not determine its competency to handle nuclear material at the 5% level (which you can find naturally). There are only three questions that matter - can Iran produce the 90-95% purity needed to build a bomb (no), can Iran produce such purity clandestinely (no), and can Iran use its nuclear technology to threaten Israel (no).

Israel also supports international terrorism, has used chemical weapons against civilians, has directly indulged in terrorism, actually has nuclear weapons and is paranoid enough that it may use them against other nations without cause.

I respect Israel's right to exist and the intelligence of most Israelis. But I neither respect nor tolerate unreasoned fear nor delusions of Godhood.

imipak -> commish 11 Sep 2015 21:33

I've seen Iranian statements playing internal politics, but I have never seen any actual Iranian threats. I've seen plenty about Israel assassinating people in other countries, using incendiaries and chemical weapons against civilians in other countries, conducting illegal kidnappings overseas, using terrorism as a weapon of war, developing nuclear weapons illegally, ethnically cleansing illegally occupied territories, that sort of thing.

Until such time as Israel implements the Oslo Accords, withdraws to its internationally recognized boundary and provides the International Court of Justice a full accounting of state-enacted and state-sponsored terrorism, it gets no claims on sainthood and gets no free rides.

Iran has its own crimes to answer, but directly threatening Israel in words or deeds has not been one of them within this past decade. Its actual crimes are substantial and cannot be ignored, but it is guilty only of those and not fictional works claimed by psychotic paranoid ultra-nationalists.

imipak -> moishe 11 Sep 2015 21:18

Domestic politics. Of no real consequence, it's just a way of controlling a populace through fear and a never-ending pseudo-war. It's how Iran actually feels that is important.

For the last decade, they've backed off any nuclear weapons research and you can't make a bomb with centrifuges that can only manage 20% enriched uranium. You need something like 90% enrichment, which requires centrifuges many, many times more advanced. It'd be hard to smuggle something like that in and the Iranians lack the skills, technology and science to make them.

Iran's conventional forces are busy fighting ISIS. What they do afterwards is a concern, but Israel has a sizable military presence on the Golan Heights. The most likely outcome is for Iran to install puppet regimes (or directly control) Syria and ISIS' caliphate.

I could see those two regions plus Iraq being fully absorbed into Iran, that would make some sense given the new geopolitical situation. But that would tie up Iran for decades. Which would not be a bad thing and America would be better off encouraging it rather than sabre-rattling.

(These are areas that contribute a lot to global warming and political instability elsewhere. Merging the lot and encouraging nuclear energy will do a lot for the planet. The inherent instability of large empires will reduce mischief-making elsewhere to more acceptable levels - they'll be too busy. It's idle hands that you need to be scared of.)

Israelis worry too much. If they spent less time fretting and more time developing, they'd be impervious to any natural or unnatural threat by now. Their teaching of Roman history needs work, but basically Israel has a combined intellect vastly superior to that of any nearby nation.

That matters. If you throw away fear and focus only on problems, you can stop and even defeat armies and empires vastly greater than your own. History is replete with examples, so is the mythologicized history of the Israeli people. Israel's fear is Israel's only threat.

mostfree 11 Sep 2015 21:10

Warmongers on all sides would had loved another round of fear and hysteria. Those dark military industrial complexes on all sides are dissipating in the face of the high rising light of peace for now . Please let it shine.

bishoppeter4 11 Sep 2015 20:09

The rabid Republicans working for a foreign power against the interest of the United States -- US citizens will know just what to do.

Jeremiah2000 -> Carolyn Walas Libbey 11 Sep 2015 19:21

"Netanyahu has no right to dictate what the US does."

But he has every right to point out how Obama is a weak fool. How's Obama's red line working in Syria? How is his toppling of Qadaffi in Libya working? How about his completely inept dealings with Egypt, throwing support behind the Muslim Brotherhood leaders? The leftists cheer Obama's weakening of American influence abroad. But they don't talk much about its replacement with Russian and Chinese influence. Russian build-up in Syria part of secret deal with Iran's Quds Force leader. Obama and Kerry are sending a strongly worded message.

Susan Dechancey -> whateverworks4u 11 Sep 2015 19:05

Incredible to see someone prefer war to diplomacy - guess you are an armchair General not a real one.

Susan Dechancey -> commish 11 Sep 2015 19:04

Except all its neighbours ... not only threatened but entered military conflict and stole land ... murdered Iranian Scientists but apart from that just a kitten

Susan Dechancey -> moishe 11 Sep 2015 19:00

Israel has nukes so why are they afraid ?? Iran will never use nukes against Israel and even Mossad told nuttyyahoo sabre rattling

Susan Dechancey 11 Sep 2015 18:57

Iran is not a made-up country like Iraq it is as old as Greece. If the Iraq war was sold as pushover and failed miserably then an Iran war would be unthinkable. War can be started in an instant diplomacy take time. UK, France, Germany & EU all agree its an acceptable alternative to war. So as these countries hardly ever agree it is clear the deal is a good one.

To be honest the USA can do what it likes now .. UK has set up an embassy - trade missions are landing Tehran from Europe. So if Israel and US congress want war - they will be alone and maybe if US keeps up the Nuttyahoo rhetoric European firms can win contracts to help us pay for the last US regime change Iraq / Isis / Refugees...

lswingly -> commish 11 Sep 2015 16:58

Rank and file Americans don't even know what the Iran deal is. And can't be bothered to actually find out. They just listen to sound bites from politicians the loudest of whom have been the wildly partisan republicans claiming that it gives Iran a green light to a nuclear weapon. Not to mention those "less safe" polls are completely loaded. Certain buzz words will always produce negative results. If you associate something positive "feeling safe" or "in favor of" anything that Iran signs off on it comes across as indirectly supporting Iran and skews the results of the poll. "Iran" has been so strongly associated with evil and negative all you have to do is insert it into a sentence to make people feel negatively about the entire sentence. In order to get true data on the deal you would have to poll people on the individual clauses the deal.

It's no different from how when you run a poll on who's in favor "Obamacare" the results will be majority negative. But if you poll on whether you are in favor of "The Affordable Care Act" most people are in favor of it and if you break it down and poll on the individual planks of "Obamacare" people overwhelming approve of the things that "Obamacare does". The disapproval is based on the fact that Republican's have successfully turned "Obamacare" into a pejorative and has almost no reflection of people feelings on actual policy.

To illustrate how meaningless those poll numbers are a Jewish poll (supposedly the people who have the most to lose if this deal is bad) found that a narrow majority of Jews approve of the deal. You're numbers are essentially meaningless.

The alternative to this plan is essentially war if not now, in the very near future, according to almost all non-partisan policy wonks. Go run a poll on whether we should go to war with Iran and see how that turns out. Last time we destabilized the region we removed a secular dictator who was enemies with Al Queda and created a power vacuum that led to increased religious extremism and the rise of Isis. You want to double down on that strategy?

MadManMark -> whateverworks4u 11 Sep 2015 16:34

You need to reread this article. It's exactly this attitude of yours (and AIPAC and Netanyahu) that this deal is not 100% perfect, but then subsequently failed to suggest ANY way to get something better -- other than war, which I'm sorry most people don't want another Republican "preemptive" war -- caused a lot people originally uncertain about this deal (like me) to conclude there may not be a better alternative. Again, read the article: What you think about me, I now think about deal critics like you ("It seems people will endorse anything to justify their political views.)

USfan 11 Sep 2015 15:34

American Jews are facing one of the most interesting choices of recent US history. The Republican Party, which is pissing into a stiff wind of unfavorable demographics, seems to have decided it can even the playing field by peeling Jews away from the Democrats with promises to do whatever Israel wants. So we have the very strange (but quite real) prospect of Jews increasingly throwing in their lot with the party of Christian extremists whose ranks also include violent antiSemites.

Interesting times. We'll see how this plays out. My family is Jewish and I have not been shy in telling them that alliances with the GOP for short-term gains for Israel is not a wise policy. The GOP establishment are not antiSemtic but the base often is, and if Trump's candidacy shows anything it's that the base is in control of the Republicans.

But we'll see.

niyiakinlabu 11 Sep 2015 15:29

Central question: how come nobody talks about Israel's nukes?

hello1678 -> BrianGriffin 11 Sep 2015 14:02

Iran will not accept being forced into dependence on outside powers. We may dislike their government but they have as much right as anyone else to enrich their own fuel.

JackHep 11 Sep 2015 13:30

Netanyahu is an example of all that is bad about the Israeli political, hence military industrial, establishment. Why Cameron's government allowed him on British soil is beyond belief. Surely the PM's treatment of other "hate preachers" would not have been lost on Netanyahu? Sadly our PM seems to miss the point with Israel.

http://www.telegraph.co.uk/news/politics/david-cameron/10692563/David-Cameron-tells-Israelis-about-his-Jewish-ancestors.html

talenttruth 11 Sep 2015 13:12

The American Warmonger Establishment (that now fully entrenched "Military Industrial Complex" against which no more keen observer than President Dwight Eisenhower warned us), is rip-shit over the Iran Agreement. WHAT? We can't Do More War? That will be terrible for further increasing our obscene 1-percent wealth. Let's side with Israeli wingnut Netanyahu, who cynically leverages "an eye for an eye for an eye for an eye" to hold his "Power."

And let's be treasonous against the United States by trying to undermine U.S. Foreign Policy FOR OUR OWN PROFIT. We are LONG overdue for serious jail time for these sociopaths, who already have our country "brainwashed" into 53% of our budget going to the War Profiteers and to pretending to be a 19th century Neo-Colonial Power -- in an Endless State of Eternal War. These people are INSANE. Time to simply say so.

Boredwiththeusa 11 Sep 2015 12:58

At the rally to end the Iran deal in the Capitol on Wednesday, one of the AIPAC worshipping attendees had this to say to Jim Newell of Slate:

""Obama is a black, Jew-hating, jihadist putting America and Israel and the rest of the planet in grave danger," said Bob Kunst of Miami. Kunst-pairing a Hillary Clinton rubber mask with a blue T-shirt reading "INFIDEL"-was holding one sign that accused Obama, Hillary Clinton, and John Kerry of "Fulfilling Hitler's Dreams" and another that queried, "DIDN'T WE LEARN ANYTHING FROM 1938?"

His only reassurance was that, when Iran launches its attack on the mainland, it'll be stopped quickly by America's heavily armed citizenry."

That is indicative of the mindset of those opposed to the agreement.

Boredwiththeusa 11 Sep 2015 12:47

AIPAC is a dangerous anti-american organization, and a real and extant threat to the sovereignty of the U.S. Any elected official acting in concert with AIPAC is colluding with a foreign government to harm the U.S. and should be considered treasonous and an enemy of the American people.

tunejunky 11 Sep 2015 12:47

AIPAC, its constituent republicans, and the government of Israel all made the same mistake in a common episode of hubris. by not understanding the American public, war, and without the deference shown from a proxy to its hegemon, Israel's right wing has flown the Israeli cause into a wall. not understanding the fact in international affairs that to disrespect an American president is to disrespect Americans, the Israeli government acted as a spoiled first-born - while to American eyes it was a greedy, ungrateful ward foisted upon barely willing hands. it presumed far too much and is receiving the much deserved rebuke.

impartial12 11 Sep 2015 12:37

This deal is the best thing that happened in the region in a while. We tried war and death. It didn't work out. Why not try this?

[Dec 05, 2017] A coalescence and consolidation of insurers effectively being single-payer, expensive private sector paying monopoly. This by-and-large parasitic industry consumes add 35-40% tot he costs feeding whose executives and employees do not contribute constructively to the CARE equation

Notable quotes:
"... Taking jefemt's thinking further, imagine the health insurance provider was not only monopolistic (owned the entire market), but was also a GSE (government sponsored enterprise). Now take it one more step and imagine it was an actual part of the government and not merely a GSE. ..."
"... I was thinking of this too as a reponse to Why Steve Bannon Wants You to Believe in the Deep State" [Politico]. "Like the Death Star, the American Deep State does not, of course, exist. " ..."
"... Indeed, I think of the insurance industry as being part of the deep state already. It seems that congress's preference is that this part of the deep state is outsourced. So that's it not a GSE, and not even a monopoly, but maintained as an oligopoly. And then, well hey whatever surplus it can hoover up is fair game. After all free-hand of the market and all that. [And heaven knows, we don't want to crowd that out.] ..."
"... The CIA has a long history of drug trafficking. The FBI traffics in blackmail. The NSA in network surveillance. DIA, special ops. NRO, satelite throughput. 11 more in the US of A and countless more globally. They all have opaque resources outside of regular channels. ..."
"... Great documentary about the 80's cocaine business in Miami called "Cocaine Cowboys." It's real life Scarface. Guess who the Feds sent to get a handle on the cocaine smuggling? See-eye-aye man George H.W. Bush. Coincidence? ..."
Mar 23, 2017 | www.nakedcapitalism.com
djrichard, March 22, 2017 at 5:35 pm

Just a bit of a thought experiment, building on some thinking from a comment yesterday by jefemt

Paradoxically, we appear to be seeing a coalescence and consolidation of insurers, we will end up being delightfully exceptional, again -- effectively being single-payer, private sector, paying a monopoly an add-on cost of 35-40% to a parasitic industry whose executives and employees do not contribute to the CARE equation.

Taking jefemt's thinking further, imagine the health insurance provider was not only monopolistic (owned the entire market), but was also a GSE (government sponsored enterprise). Now take it one more step and imagine it was an actual part of the government and not merely a GSE.

Conceivably, it wouldn't even have to live off appropriations from congress, assuming it was equally as extractive from the private sector as it is now (i.e. revenue model is the same). Talk about good living. Who knows, maybe they pocket their proceeds into some kind of surplus in Treasury dept.

But let's assume they had to give up on revenue models. [Afterall, it's easier to find partners in congress when you have an appropriations process that binds you to them.] Then they would be exposed. Somebody would get the bright idea that this agency doesn't need as much staffing since they are no longer revenue oriented. That indeed, they could have the same staffing profile as the agency responsible for medicare. Indeed they could be folded into medicare.

I was thinking of this too as a reponse to Why Steve Bannon Wants You to Believe in the Deep State" [Politico]. "Like the Death Star, the American Deep State does not, of course, exist. "

Indeed, I think of the insurance industry as being part of the deep state already. It seems that congress's preference is that this part of the deep state is outsourced. So that's it not a GSE, and not even a monopoly, but maintained as an oligopoly. And then, well hey whatever surplus it can hoover up is fair game. After all free-hand of the market and all that. [And heaven knows, we don't want to crowd that out.]

In contrast to other parts of the deep state that don't really have a revenue model. In which case, those parts need to be insourced by the Fed Gov.

human , March 22, 2017 at 7:46 pm

The CIA has a long history of drug trafficking. The FBI traffics in blackmail. The NSA in network surveillance. DIA, special ops. NRO, satelite throughput. 11 more in the US of A and countless more globally. They all have opaque resources outside of regular channels.

Ernesto Lyon , March 23, 2017 at 12:09 am

Great documentary about the 80's cocaine business in Miami called "Cocaine Cowboys." It's real life Scarface. Guess who the Feds sent to get a handle on the cocaine smuggling? See-eye-aye man George H.W. Bush. Coincidence?

[Dec 05, 2017] 2014 was the yeat cold War 2 started in full force

Today we know that the stupid denigration of the Sochi Olympics in "western" propaganda media was part of the plan for the coup in Ukraine. On of distinct features of psychopaths is a lack of 'strategic empathy'. One one commenter noted: "for me personally, discussing and seeking ideas an alternatives to the financial oligarchy hiding underneath the us$ is worth it.. it has nothing to do with Putin, or only in so far as he represents an alternative - something that western countries are not offering.. i "
Notable quotes:
"... The U.S. is ill informed about and underestimating Russia. Therein lies the possibility of serious miscalculations. ..."
"... Born in Krym, I came to the US critical of USSR, but was astounded at the viciousness (and lies) of anti-Soviet propaganda. Nothing prepared me for that. After the fall, there seemed to be a short respite - but now it's full speed ahead - see if we can replicate the worst of the Cold War. Simply heart-breaking... how much better the planet would be if the two countries cooperated. ..."
"... for me personally, discussing and seeking ideas an alternatives to the financial oligarchy hiding underneath the us$ is worth it.. it has nothing to do with putin, or only in so far as he represents an alternative - something that western countries are not offering.. i ..."
"... it might not be any different in russia, but the financial demons that are pushing for global domination via the us$ are no friends of mine or of the planet ..."
"... 2015 is likely to be a dangerous year because the Empire is going for broke, as unpleasantly as possible. But the bloodiness of its intentions is now amplified by economic war; and cutthroat oil devaluation may backfire, leaving them to stumble down unpredictable paths; and it is obvious that the ruling class is exposed by its desperation , with a more fragile hold of the reins than they realize. Their confidence is just as puffed up as their hubris. ..."
"... I believe that using a given Olympics as a platform to advertise one's country to the world is utterly futile, because no Olympics are ever even going to come close to the 1936 Summer Olympics, because of how Leni Riefenstahl filmed them in Olympia. Rammstein have kindly selected the highlights of Riefenstahl's brilliant film and used them in the video of their cover of Depeche Mode's Stripped. ..."
"... It should be noted that at the climax of the video – a throng of women gymnasts gleefully and ecstatically swinging their arms in perfect synchrony – the video cuts to a flying American flag taking up the whole screen. This is the only footage that is in the Rammstein video that was not taken from Riefenstahl's film. The message is clear: America has replaced Germany as the seat of fascism. ..."
"... blind worship of anything or anyone capitalist and representing the ruling classes is something to be skeptical and distrustful of. The ruling class is mostly capitalists and populism is a tool for such folks and not typically a core belief. ..."
"... Anyway, I say so far so good. I love Putin for his 2014 actions in Syria or Ukraine, which blocked Western imperial wins and saved many innocent lives. ..."
"... The few Ukie/NATO trolls that habituate themselves here say the same things over and over. Its amazing to see how many ways they can find to say "Putin lover" over and over again in the same paragraph, and literally nothing else. ..."
"... In the end they often achieve their goal because when your shilling for a lie, muddying the waters is as good as a win. ..."
"... It is not a bug, it is a feature - in Iraq, Afghanistan, Syria, Somalia, Libya .... ..."
"... Furthermore, the majority don't give a shit about history, other countries, or their history. ..."
"... It's not simply about the uneducated masses, the leaders are uniformly educated at conformist, grade-inflated Ivy League or Ivy League equivalent institutions where anyone, even George Bush Jr., can graduate with a B- average. ..."
"... Obama is disengaged, an affirmative action actor/spokesmodel who'd rather be smoking a joint at his Hawaii beach house. Biden and Bush are similar, but also morons. ..."
"... It is clear to me that 'b' overestimates the numerical strength and political power of the "non-poodle" components of Europe. ..."
"... It is clear to me that Germany in particular is a "poodle", as the saying goes, and in other words German political society is committed to being in alignment with the USA for good and for ill, for better and for worse. ..."
"... I expect him to remain a figurehead, but I expect the militias to continue to assert themselves. We'll see what comes of the prosecutions, that will be a tell. ..."
"... "It is therefore quite possible that Poroshenko is simply seeking to gain time and work on preparing the country for an all-out war, even though it is clear that people on all sides will suffer as a result. Or at the very least that he will be unable to stop the war drums even if he wishes to." ..."
Jan 05, 2015 | moonofalabama.org

The most moving event to me in 2014 was the closing ceremony (vid, best parts of opening start here) of the Winter Olympics in Sochi.

Today we know that the stupid denigration of the Sochi Olympics in "western" propaganda media was part of the plan for the coup in Ukraine.

That illegal regime change was itself part of a bigger plan to restart a cold war, which will allow the U.S. to assert even more control over Europe, and eventually for regime change in Russia.

I am confident that in 2015 the non-poodle parts of Europe and Russia itself will assert themselves and block and counter the neo-imperial U.S. moves. As my Do Svidanya Sochi piece said:

The Russians will be very proud of these games. They will be grateful to their government and president for having delivered them. The internal and external message is understood: Russia has again found itself and it is stronger than ever.

The U.S. is ill informed about and underestimating Russia. Therein lies the possibility of serious miscalculations.

My hope for 2015 is that any miscalculations will be avoided and that peace will mostly prevail.

My very best wishes to all of you for a happy year 2015.

Posted by b at 12:19 PM | Comments (56)

KMF | Dec 31, 2014 12:50:24 PM | 2

Happy new year to you too.

On what you say: 'Today we know that the stupid denigration of the Sochi Olympics in "western" propaganda media was part of the plan for the coup in Ukraine.' This strikes me as placing too much emphasis on design as opposed to miscalculation, or perhaps, as this blogpost suggests, a lack of 'strategic empathy': http://irrussianality.wordpress.com/2014/12/31/the-need-for-strategic-empathy/

GoraDiva | Dec 31, 2014 1:33:23 PM | 6

Best to you and thanks for running a great blog!

Born in Krym, I came to the US critical of USSR, but was astounded at the viciousness (and lies) of anti-Soviet propaganda. Nothing prepared me for that. After the fall, there seemed to be a short respite - but now it's full speed ahead - see if we can replicate the worst of the Cold War. Simply heart-breaking... how much better the planet would be if the two countries cooperated.

Combining Russian knowledge and creativity with American ingenuity and entrepreneurship... - yes, one can only dream. All we have now is an unstoppable desire to dominate and a complete failure of imagination. But nothing lasts forever... so let's hope for a brighter and more honest future.

Oui | Dec 31, 2014 3:19:45 PM | 7

Great stuff!

Oliver Stone on the narrative USA In Ukraine. Always love those comments, 2,473 and counting. Links to Pepe Escobar's analysis "The new European 'arc of instability,'" which indicates growing turbulence in 2015, as the US cannot tolerate the idea of any rival economic entity.

james | Dec 31, 2014 6:56:35 PM | 17

hey sloth.. for me personally, discussing and seeking ideas an alternatives to the financial oligarchy hiding underneath the us$ is worth it.. it has nothing to do with putin, or only in so far as he represents an alternative - something that western countries are not offering.. i

live in canada and when i see the country being raped by corps that have only as much concern for the environment as our politicians will demand, i get discouraged. these same politicians don't represent me or ordinary canucks, but these same corps wanting to take the resources while giving few jobs in return..

it might not be any different in russia, but the financial demons that are pushing for global domination via the us$ are no friends of mine or of the planet..

they will switch to another whore when the us$ is no more.. this isn't about hero worship.. it's about recognizing how we in the west are being conned and lied to by financial interests who own the press and have nothing to do with my best interests.. no hero worship on my part.

you saying folks put putin on a pedestal is your own wishful thinking bullshit.

okie farmer | Dec 31, 2014 7:05:26 PM | 18

BBC World Service this morning said Moscow's riot police had dispersed Navalny's demonstrators keeping them off the sidewalks etc. I watched a live feed of the demonstration for hours, I counted about 80 demonstrators and about 20 police. Actually the demonstration was in a small plaza and no one was "dispersed". The police, however, were on the sidewalks watching the demonstrators in the plaza, which BBC turned on it's head for propaganda purposes.

Copeland | Dec 31, 2014 8:43:40 PM | 23

2015 is likely to be a dangerous year because the Empire is going for broke, as unpleasantly as possible. But the bloodiness of its intentions is now amplified by economic war; and cutthroat oil devaluation may backfire, leaving them to stumble down unpredictable paths; and it is obvious that the ruling class is exposed by its desperation , with a more fragile hold of the reins than they realize. Their confidence is just as puffed up as their hubris.

I go into the New Year cheering b, our host at this bar. And I feel so much respect for those among us who resist, who constantly refuse to capitulate to the Forces of Darkness; and so I believe the spirit that sustains us will be here in abundance, in 2015: solidarity, imagination and ingenuity, indignation and revolt, love and catharsis, all strength of character to encourage, and yes, an ample measure of good luck.

May we live to see a better year.

Demian | Dec 31, 2014 10:18:13 PM | 26

To address the matter of the Sochi Olympics. I had wondered about what the performances were like, and since I don't have a TV, b's linking to a video of the highlights was the first opportunity I had to see what the Russians had done in an apparent effort to represent Russia as a solid part of Europe. (This is what reports said was the purpose of putting so much effort into these Olympics. Warning: I am not into ballet.)

I believe that using a given Olympics as a platform to advertise one's country to the world is utterly futile, because no Olympics are ever even going to come close to the 1936 Summer Olympics, because of how Leni Riefenstahl filmed them in Olympia. Rammstein have kindly selected the highlights of Riefenstahl's brilliant film and used them in the video of their cover of Depeche Mode's Stripped.

This is some of the best film making I have ever seen. Every single scene in the Rammstein video is mind blowing. Particularly notable are the sequence with the girls swinging their arms in tandem and the women and men diving into water. As far as I know, there is nothing like that elsewhere in cinema. It is a war crime that with cinematography and editing like that, Riefenstahl wasn't permitted by the occupying powers to continue making films.

It should be noted that at the climax of the video – a throng of women gymnasts gleefully and ecstatically swinging their arms in perfect synchrony – the video cuts to a flying American flag taking up the whole screen. This is the only footage that is in the Rammstein video that was not taken from Riefenstahl's film. The message is clear: America has replaced Germany as the seat of fascism.

Compared to Olympia, what the Russians did with the Sochi Olympics is nothing but Kitsch.

jfl | Jan 1, 2015 12:23:07 AM | 27

And in addition to Saker himself and Paul Craig, there is the WHITE PAPER posted by the former and alluded to by the latter : The DOUBLE HELIX: CHINA-RUSSIA. Seems very solid.

And towards the end, the Larchmonter makes some interesting observations on North Korea, and so, obliquely on the 'Lost U.S. Credibility On Cyber Claims'.

fairleft | Jan 1, 2015 6:29:10 AM | 29

slothrop | Dec 31, 2014 6:08:50 PM | 14

I don't see b or this blog in that way, but blind worship of anything or anyone capitalist and representing the ruling classes is something to be skeptical and distrustful of. The ruling class is mostly capitalists and populism is a tool for such folks and not typically a core belief.

But Putin's actions show he _is_ a real Russian nationalist, and he has a real-world, non-imperialist understanding of what Russian nationalism covers and doesn't cover.

Anyway, I say so far so good. I love Putin for his 2014 actions in Syria or Ukraine, which blocked Western imperial wins and saved many innocent lives. I just wish he (and China) had woken up sooner, in 2013, and maybe the rape of Libya could've been prevented. So, Putin is a major actor in world affairs, he's on the anti-imperial side of history, and as far as I can tell he is on the side of all who fight the Western financial borg's world dominance and austerity crusade.

However, the next twenty years is about China and what it decides to do and who it decides ultimately to ally with. Maybe Putin fever can be cured a bit if we imagine him checking his every major move with Xi Jinping. Quiet Xi is the real man going forward. Not as much fun at parties, not as animated facial expressions, not as direct or as artful in expression as Putin, but he (and what he represents) is the real power.

And, if Xi and Putin remain allied, this may really turn out to be the Chinese century. Hope no feelings are hurt but I don't guess it will be known as the Eurasian Century.

That said, the only thing I remember from Sochi are Yu Na and the other beautiful Asian figure skaters.

Happy New Year everyone!

guest77 | Jan 1, 2015 2:37:36 PM | 33

Looks like the US is already playing its games in Cuba.

Here is an event presented in the New York Times: a "sweeping roundup of dissidents":

[A performance artist] was detained at her mother's home hours before the event and released Wednesday afternoon, along with several others.

That's a "sweeping roundup of dissidents" - briefly questioning someone at their mother's home.

Of course the job of the New York Times is to blow things out of proportion. How else to can the NYTimes present the enforcement of mundane laws in Cuba (laws which all countries have) to the American people, who see their police forces daily murder people? The NYTimes has a job to do (as does any propagandist): they have to convince the home population that they are living under the best conditions possible while giving the impression that life anywhere else is a dystopian nightmare. Truth be told - for a significant sector of the US population, as events in NYC and Ferguson have recently shown - the reality is exactly reversed!

Consider too, what she was briefly detained for - seeking to assemble without a permit - and ask yourself: what happens in the United States when people attempt to assemble without a permit in some of the most heavily trafficked areas of the US largest cities? What would occur, should, say, the New Black Panther Party attempted to set up a rally in Times Square unannounced? What happened, indeed, when the Obama Administration had enough of the Occupy Movement? The tear gassing, the pepper spraying, the ejection of people from a park where they had a right to be.

Face the facts. The US allows no public displays of dissent without the approval of the authorities. Yet what is presented in the US as "public order" is, in Cuba, portrayed as some sort of totalitarian repression. This is sheer hypocrisy from those who have an interest in smashing an independent government in Cuba, and convincing the American people that we live in a "free" society.

It sort of says it all that she chose the location of the memorial to the sunken Maine Battleship - the incident that brought the most recent wave of US Imperialism to Cuba.

"She then announced a news conference and public gathering on the Malecón, ...at the memorial to the Maine, the American battleship that sank in Havana Harbor in 1898."
guest77 | Jan 1, 2015 2:53:39 PM | 34
You hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother's eye. Matthew 7:5

There is no statement more appropriate to present to those sitting in the US, smug in their conviction that their country is the righteous one, and that Russia and "evil" Putin are the aggressors.

The fact is, there is little in Russian behavior - at home or internationally - which one can point at negatively in which the United States doesn't out do them by a long stretch. From the military sphere, to the way it treats its smaller partners and neighbors, to the way it provides for its people at home.

May 2015 be the year hypocrisy faces consequences.

nomas | Jan 1, 2015 4:02:32 PM | 37

@ Oui @ 7

Yes that's great stuff. Cant say I enjoy reading the comments but over and over it becomes clear that the pro-US, pro NATO, pro IMF rah rah fools have NOTHING.

The most they can manage is "Putin lover" or "why don't you marry Putin if you love him so much"...etc., some turn it around and say instead "why don't you move to Russia if you hate America so much"..LOL.

The few Ukie/NATO trolls that habituate themselves here say the same things over and over. Its amazing to see how many ways they can find to say "Putin lover" over and over again in the same paragraph, and literally nothing else. When they do attempt to argue the extant facts they merely invert them and mimic the arguments of we anti imperialists, standing reality on its head. These are classic, textbook reactionary rhetorical "styles"...They cant argue facts because any facts they are willing to admit to almost never support their opinions. In the end they often achieve their goal because when your shilling for a lie, muddying the waters is as good as a win. The best way to deal with these trolls and shills ? Don't engage them directly at all, but address their nonsense obliquely and restate the true facts clearly and repeatedly .

Nana2007 | Jan 1, 2015 4:25:30 PM | 38

fairleft@29- Watching the 2008 Chinese Olympics opening ceremony I remember being bowled over by the precision and artistry. I remember thinking we in the US are truly screwed. With Sochi not so much -- kitschy as you would expect. However I think Russia's actions in 2014 were duly impressive. Your post made me think of Putin re Knut Rockne's quote: "One man practicing sportsmanship is far better than a hundred teaching it."

It 's funny I know next to nothing of Xi Jingping- I'll have to remedy that this year.

Happy new year everybody.

somebody | Jan 1, 2015 4:58:24 PM | 39

slothrop | Dec 31, 2014 6:08:50 PM | 14

I agree, it is not rational. But would you really say causing something like this is Putin's fault?

From the Washington Post

But now several of these units, especially those linked to oligarchs or the far right, are revealing a dark side. In recent months, they have threatened and kidnapped government officials, boasted that they will take power if Ukrainian President Petro Poroshenko fails to defeat Russia, and they served as armed muscle in illegal attempts to take over businesses or seize local governments.

In August, members of the Dnepr-1 battalion kidnapped the head of Ukraine's state land fund to prevent him replacing an official deemed inimical to business interests. On Dec. 15, these volunteer units interdicted a humanitarian convoy destined for the Russia-controlled Donbas, where a major emergency is emerging.

On Dec. 23, the Azov brigade announced that it was taking control of order in the eastern port city of Mariupol, without official approval from local or national officials.

Government prosecutors have opened 38 criminal cases against members of the Aidar battalion alone.

A pattern of blatant disregard for the chain of command, lawlessness and racketeering is posing a growing threat to Ukraine's stability at a critical juncture. Concern about volunteer groupings is widely shared in the Poroshenko administration, which reportedly raised the question of dealing with these dangers at a meeting in November of his National Security and Defense Council.

Most alarming, however, is the role of Ukraine's interior minister, Arsen Avakov. Instead of reining in these fighters, conducting background checks on their records and reassigning those who pass muster, he instead has offered them new heavy weapons, including tanks and armored personnel carriers, and given them enhanced brigade status. Amazingly, in September he even named a leader of the neo-Nazi Azov brigade to head the police in the Kiev region.

Equally worrying is the activity of Ihor Kolomoyskyy, the governor of Dnipropetrovsk oblast. Kolomoyskyy, who played a crucial and widely respected role in stabilizing his East Ukrainian region, is now flouting central authority by interdicting aid convoys headed to the Donbas and permitting brigades he finances to engage in activities that contravene the law.

What can be done? Poroshenko clearly wants this problem resolved but has been reluctant or unable to act. For him to succeed will likely require coordination with Prime Minister Arseniy Yatsenyuk, who has also been slow to address the threat, possibly because Avakov is one of his key political allies.

Now, we all know that Yatseniuk is Victoria Nuland's guy - so the US support war lordism in Ukraine?

It is not a bug, it is a feature - in Iraq, Afghanistan, Syria, Somalia, Libya ....

Demian | Jan 1, 2015 5:33:31 PM | 40

@somebody #39:

haha, here is how the author is described in that op-ed:

Adrian Karatnycky is a senior fellow at the Atlantic Council, where he co-directs the "Ukraine in Europe" initiative.
The author complains about "warlordism" in Ukraine, but it is the "Ukraine in Europe" "initiative" which has produced the warlordism. You really have to wonder how these people can live with themselves and keep on producing such pieces which studiously ignore the obvious.

brian | Jan 1, 2015 5:45:35 PM | 42

Today in Kiev, a torchlight parade honoring Ukrainian Nazi collaborator Stepan Bandera: https://www.youtube.com/watch?v=bMZPV1MmrLo

MRW | Jan 1, 2015 8:27:59 PM | 44

GoraDiva | Dec 31, 2014 1:33:23 PM | @6

I couldn't agree with you more, GoraDiva. But you have to understand how badly educated we Americans are. Furthermore, the majority don't give a shit about history, other countries, or their history.

And, literally, no Americans know how well-educated Russians are who went to university under the USSR system; they have no idea of the rigor. None. No one. They think Putin is some KGB agent who studied at the equivalent of a Police Academy, and managed to get lucky and win a few elections, and view him as someone similar to a Brooklyn mafia don. They don't know about Putin's Master's and PhD degrees, or what they were in.

They don't know that Lavrov can run rings around Kerry intellectually, and speaks, what? Five or six languages fluently?

They regurgitate what the former house-painter Sean Hannity thinks of Putin, who regurgitates what he heard growing up on the streets of New York. These guys don't read.

MRW | Jan 1, 2015 11:43:57 PM | 45

slothrop | Dec 31, 2014 6:08:50 PM | @14

I really don't understand why this blog became a living monument to Putin. At times, I think that b's hatred of the US has something to do with the gutless murder of civilian Hamburgers by allied bombers. On the other hand, the Red Army raped and murdered countless thousands of German civilians. And rather unlike the Russians, the American occupation was colossally more favorable to Hamburgers that was to anyone living in the Soviet bloc.
Maybe reading some history will help.

A Serious Case of Mistaken Identity by Benjamin Schwarz, LA Times
http://articles.latimes.com/2000/jun/22/local/me-43656

But the biggy is what Eisenhower did to German POWs just after the war. He killed a million, dumped lye on them, and ground them into the dirt. Story in Saturday Night, 1989. Make sure you scroll down to see the photos. Eisenhower made them live in hole in the ground.
Eisenhower's Death Camps-The Last Dirty Secret of World War Two by historian James Basque
http://www.whale.to/b/bacque1.html

fairleft | Jan 1, 2015 11:53:29 PM | 46

MRW | Jan 1, 2015 8:27:59 PM | 44

It's not simply about the uneducated masses, the leaders are uniformly educated at conformist, grade-inflated Ivy League or Ivy League equivalent institutions where anyone, even George Bush Jr., can graduate with a B- average.

And then the magic of connections and just doing what you're told can push an unqualified, uninterested dolt all the way to the top or near top.

Looking at Obama/Biden, Bush/Cheney, the only one who seemed smart and who knew and cared about what he was doing was the sociopath Cheney.

Obama is disengaged, an affirmative action actor/spokesmodel who'd rather be smoking a joint at his Hawaii beach house. Biden and Bush are similar, but also morons.

A Presidential candidate who is engaged, very smart and well-informed sticks out like a sore thumb and has a hard time earning the trust of the powers that be. Hillary Clinton in 2008 is a good example. (She's done a lot (of horrible things) since then to earn the PTB's trust, though.)

For the reason that being smart, engaged and well-read means you are potentially independent-minded in a sudden crisis. What if, for example, a sudden huge economic/mortgage crisis occurs and the extremely obvious thing to do is help homeowners directly, let the foolish banks who bankrupted themselves suffer the consequences, and pour money into public works and workers' pockets? In such a crisis, the PTB wants a bored, conformist, "don't give a shit" President who'll do exactly what Goldman Sachs tells him to do, not a smart, engaged, well-informed and potentially independent thinker/decider.

So the U.S. will continue to have an intellectual deficit at the top, and Russia will continue to win diplomatic and other battles with the U.S. even in situations where it's significantly 'outweighed'. Brains are too untrustworthy, they make the Wall Street boys nervous.

somebody | Jan 2, 2015 12:02:10 AM | 47

rufus magister | Jan 1, 2015 8:13:33 PM | 43

You have the same problem as b. The world is shades of grey not good and bad.

The "novorussian" side is fighting in the areas where Ukrainian/Russian oligarchs have interests who lost when Yanukovich was ousted. By withdrawing his own Russian nationalist fanatics Putin left the field to them. The non-destruction and shake down of Mariupol is a good case study of what is going on. Kolomoisky (Dnepopetrovsk) is in a take over fight with Akhmetov (Donbass).

There seems to be an agreement between Putin, Poroshenko and the EU (devolution and Donbass remaining part of Ukraine), just Poroshenko has not got the power (the security/military apparatus is in the hands of the Yatseniuk/Avakov/Kolomoisky faction backed by Victoria Nuland) to deal. Poroshenko's statements are devoid of any logic as he tries to cover the divide in his political coalition. At the same time obviously, he is in it for himself. On the other hand there is the issue of the funding of the Novorussian side. A lot of that will be a shake down of the oligarchs, too, and the genie probably has come out of the bottle there, too.

There is something intriguing about the Dniepopetrovsk private civilian and military airport run by Kolomoisky's airline. And there is a gap in the conspiracy theories of the usual Russian linked, Western left media outlets. Indian media is full of it, just google it.

According to reports in the media, Prime Minister Narendra Modi was scheduled to take off at 1 PM from Frankfurt on his way back to India from Brazil where he had gone for a meeting of the leaders of the BRICS countries. His flight eventually took off at 1:22 PM. Had Modi's flight taken off at 1 PM as the earlier reports had indicated, it would have been in the vicinity of the shooting within six minutes of the Malaysian Airlines flight being shot down. ... What makes the claim that MH 17 was mistaken for an Ukrainian military plane a highly questionable one is that the plane was just 20 miles from the Russian border and the Ukrainian government would not dare provoke Russia by sending military planes to cross over into Russian airspace. It is unlikely that the anyone could have mistaken a plane headed for Russia as an Ukrainian military aircraft. ... Modi's election in May as the Indian Prime Minister caused a huge geopolitical earthquake, and any harm to him will have great ramifications around the world.

Actually, Modi was on his return from Brazil where BRICS had just voted on the founding of a BRICS development bank.

Now, this is a very good conspiracy theory with all the necessary ingredients. How come this has been restricted to India?

fairleft | Jan 2, 2015 12:46:21 AM | 49

Well happy bad new year, the Western media works harder to whitewash fascist/Nazi Bandera. An absolutely brilliant comment by 'Jack' below the AFP puff piece:

This US imperialist propaganda piece must be written by one of the staff comedians! Bandera is Che Guevara! Chocolate king Poroshenko fought on the barricades!

Notice the backhanded support to these n@zis? Our propaganda machine wants you to think that only "Moscow" says Bandera fought on the side of Hitler and the N@zis. Notice how the article tries to justify Bandera's fighting with the n@zis by blaming the 1930s famine -- but not mentioning the famine affected the whole USSR and was made worse by US economic embargo (just like today!)

These are the n@zis on whom our US government of hypocrites spent 5 billion of our tax dollars to bring to power and overthrow an elected government. These n@zis have attacked all media and parties in Ukraine that oppose the US puppet junta.

The people of the east are overwhelmingly Russian speaking working class people, miners and factory workers, who refused their appointed oligarch governors and declared their independence of the junta.

Our US government wants to turn Ukraine into a low wage colony and establish first-strike nuclear missile bases in Ukraine directed against Russia. The restoration of capitalism in Ukraine has brought disaster.

No surprise that some US politicians mingle with N@zis in Louisiana!

brian | Jan 2, 2015 2:08:01 AM | 52

the nonpoodle parts of europe will have to be aware of sedition from its own peoples as with the various Arab springs and Ukraine's Maidan, where locals serve to agitate for a foreign power while talking about 'freedom and democracy'

Mina | Jan 2, 2015 2:25:14 AM | 53

Fascism in Ukraine
http://english.ahram.org.eg/NewsContent/2/9/119309/World/International/Thousands-of-Ukraine-nationalists-march-in-Kiev.aspx

And happy new year to all here!

Ghubar Shabih | Jan 2, 2015 3:20:03 PM | 54

Sergey Lavrov said on 15 Dec 2014: "We have overestimated the independence of the European Union [from the US]." http://itar-tass.com/en/russia/767282 . Lavrov made that comment in contemplation of the trade sanctions imposed by the EU on Russia last summer & autumn including particularly the manner in which the sanctions were discussed and not debated by EU political society.

It is clear to me that 'b' overestimates the numerical strength and political power of the "non-poodle" components of Europe. 'b' makes a bold declaration in his above post that "I am confident that in 2015 the non-poodle parts of Europe and Russia itself will assert themselves and block and counter the neo-imperial U.S. moves."

It is clear to me that Germany in particular is a "poodle", as the saying goes, and in other words German political society is committed to being in alignment with the USA for good and for ill, for better and for worse.

I repeat, the "non-poodle parts of Europe" have no teeth in Europe. You've seen that consistently in recent years, and you've no intelligent basis for supposing you're not going to be seeing it in 2015.

rufus magister | Jan 2, 2015 9:12:58 PM | 56

s'body @ 47 --

I'm sorry that I did not make my intent clear. I've been posting about the dangers posed by the militias and the rivalry btw. Poroshenko and Kolomoisky for a bit (good to see the WaPo has caught up, as you advise in 39 -- NYT is my MSM paper-of-record of choice, so I don't see the Post, thanks). I offered it as evidence of growing discord amongst the junta, not praise for Poroshenko's virtue. I expect him to remain a figurehead, but I expect the militias to continue to assert themselves. We'll see what comes of the prosecutions, that will be a tell.

I see the junta as shades of black -- midnight, charcoal, jet, ebony, etc. The Opposition Bloc is grey.

More grist for the mill -- nice pc. from Fort Russ, Is Poroshenko Preparing for Peace or War?. The whole pc. is worth reading, thorough consideration of Poroshenko's position, but here's the bottom line.

"It is therefore quite possible that Poroshenko is simply seeking to gain time and work on preparing the country for an all-out war, even though it is clear that people on all sides will suffer as a result. Or at the very least that he will be unable to stop the war drums even if he wishes to."

[Dec 05, 2017] AFP Calling Americans A Great People Is Anti-American

In reality Ukraine is run by neoliberals. Still this is an interesting propaganda twist. Actually "antisemitism" bait works perfectly well in most cases.
moonofalabama.org

This, by AFP, is one of the most misleading propaganda efforts I have ever seen.

The headline:

Ukraine run by 'miserable' Jews: rebel chief

80% of the readers will not read more than that headline.

The first paragraph:

Donetsk (Ukraine) (AFP) - Ukraine's pro-Russian rebel chief on Monday branded the country's leaders "miserable" Jews in an apparent anti-Semitic jibe.

Of those 20% of the readers who will read the first paragraph only one forth will also read the second one. The "anti-semitic" accusation has thereby been planted in 95% of the readership. Now here is the second paragraph:

Alexander Zakharchenko, leader of the self-proclaimed Donetsk People's Republic, claimed that Kiev's pro-Western leaders were "miserable representatives of the great Jewish people".

Saying that George W. Bush and Dick Cheney were "miserable representatives of the great American people" would be "anti-American"? What is anti-semitic in calling "the Jewish people" "great"?

The AFP reporter and editor who put that up deserve an Orwellian reward. It is one of the most misleading quotations I have ever seen. Accusing Zakharchenko of anti-semitism when he is actually lauding Jews.

Now I do not agree with Zakharchenko. There is no such thing as "the Jewish people" in the sense of a racial or national determination. There are people of various nationalities and racial heritages who assert that they follow, or their ancestors followed, religious Jewish believes. Some of them may have been or are "great".

But that does not make them "the Jewish people" just like followers of Scientology do not make "the Scientologish people".

Posted by b at 06:51 AM | Comments (76)

jfl | Feb 3, 2015 8:27:41 AM | 4

@1

Saker has a link to the youtube, the audio in Russian with English subtitles. It begins at about 12:30.

@3

When Sarkozy came in AFP really hit the skids. Like the NYTimes and Bush XLIII.

Lysander | Feb 3, 2015 12:02:09 PM | 13
What Zacharchenko did that was unforgivable is to draw attention to the fact that Kiev's current leadership is largely Jewish. From Yats to Petro (Waltzman) Poroshenko To Igor Kolomoiski. No matter how gracefully Zach would put it, it is the content that they hate.

Not saying there is anything wrong with that, but I guess there are some who would rather you not notice.

Lone Wolf | Feb 3, 2015 2:01:47 PM | 20

Right-wing nazi-rag KyivPost has a miserable coverage of same piece. "Agence France-Presse: Russia's guy says Ukraine run by 'miserable Jews'" Zhakharchenko is "Russia's guy," his picture under the headline with a totally unrelated caption, subtitled by the first paragraph of the AFP fake "news" (sic!)"Ukraine's pro-Russian rebel chief on Monday branded the country's leaders "miserable" Jews in an apparent anti-Semitic jibe.", and a link to Yahoo news reproducing the AFP piece in full.

https://tinyurl.com/nes4o9g

Zionazi thieves stole the word "semitic" to mean "Jews," when in fact it comprehends many other languages and peoples. Zhakharchenko's AFP phony "anti-Semitic jibe" would be insulting to all these many peoples.

https://en.wikipedia.org/wiki/Semitic_people

"...Semitic peoples and their languages, in ancient historic times (between the 30th and 20th centuries BC), covered a broad area which encompassed what are today the modern states and regions of Iraq, Syria, Israel, Jordan, Lebanon, Palestinian territories, Saudi Arabia, Kuwait, Oman, Yemen, Bahrain, Qatar, United Arab Emirates and the Sinai Peninsula and Malta..."

...The word "Semite" and most uses of the word "Semitic" relate to any people whose native tongue is, or was historically, a member of the associated language family.[35][36] The term "anti-Semite", however, came by a circuitous route to refer most commonly to one hostile or discriminatory towards Jews in particular...[37]

Yet another historical theft by the so-called "chosen" crooks.

[Dec 05, 2017] Ukraine: draft dodgers face jail as Kiev struggles to find new fighter by Shaun Walker

This article is two years old, but still sounds current. The only difference now is that the conflict between Western nationalists and neoliberal central government of President Poroshenko became more acute. Nationalists do not understand that "The Moor has done his duty, Moor can go" and neoliberal government of Poroshenko do not need (and actually is afraid of) them.
Vr13vr: "Even in Kiev they view Western Ukrainians as strangers" Historically Kiev was a Russian speaking city. Western Ukrainians typically were called "zapadentsi".
Notable quotes:
"... Even in Kiev they view Western Ukrainians as strangers. ..."
"... So they didn't have any hate back towards the West Ukrainians. Besides, West Ukraine was sufficiently far from Donbass for Russians there not to feel threatened. ..."
"... So the Western [Ukrainians] hate towards Russians vs. Russian neutral attitude towards Ukrainians has existed for decades. ..."
"... "criminalizes the denial or justification of Russia's aggression against Ukraine" with a fine equivalent to 22 to 44,000 USD for the first offense and up to three years in prison for repeat offenders. ..."
"... But isn't it wrong that the faith of those people will depend on what EU or US will allow them to do rather than on their natural desire? How does it co-exist with all those democratic ideas. ..."
"... They key thing in all of this is to stop being naive. Learn it, remember it. Our media will only care for the "right" journalists and will throw campaigns only for them and there will be rallies only over the death of "right" people, while we won't pay attention to thousands of deaths of the "wrong" people. ..."
"... The US actively encouraged the overthrow of the democratically elected president of Ukraine, a void filled by right wing nationalists and an act that led directly to the current conflict ..."
"... In turn, the maidan coup d'etat de facto disenfranchised the culturally russian majority in SE-ukr. ..."
"... the NW-ukr neonazi bands fighting in SE-ukr are de facto foreign in SE-ukr, both culturally and geo-politically, and are there to give this majority a lesson. ..."
"... In Zakarpattia Oblast, only 410 out of 1,110 people who received draft notices came to mobilization centers, Oleg Lysenko, a representative of General Staff said recently.(kyiv news) ..."
"... For some reason that isn't quite clear to me, discussion among Western experts has overwhelmingly centered not on the imminent economic apocalypse facing Kiev, but on whether or not the United States should supply it with advanced weapons systems to beat back the Russians. ..."
"... It might be inconvenient to note, but Russia is positively crucial to Ukraine's economy not merely as a source of raw materials and energy but as a destination for industrial production that would otherwise be unable to find willing customers. According to Ukrainian government data, Russia accounted for roughly a quarter of the country's total foreign trade. The equivalent figure from the Russian side? Somewhere between 6 and 7%. Given that reality, Russia's leverage over Ukraine is obviously much greater that Ukraine's leverage over Russia. ..."
"... During the Vietnam War, the draft was a huge issue with many thousands of young men going to Canada, thousand who were in the military receiving less than honorable discharges and still others doing jail time. The war was view as an unjust war by the better educated and those who didn't have to enlist for food and shelter ("three hots and a cot"). ..."
"... The rebellion against the draft in Ukraine tells us that the war against the people in the Eastern area is an unjust war. People don't need a degree in history to understand when they are being use in ways that is not in their interest. We find only the fascist battalion who are hungry for this war. The US and EU should keep out of this internal civil struggle in Ukraine. ..."
Feb 10, 2015 | The Guardian

vr13vr -> jezzam 10 Feb 2015 18:35

The distrust between the West and the rest of Ukraine is not 14 months old. It has always existed. Since the War at the very list. Even in Kiev they view Western Ukrainians as strangers. Western Ukrainians would call everyone a moscovite, and in the East and the South, the Russians were neutral because their lives were much closer to Russia than to all this Ukrainian bullshit. So they didn't have any hate back towards the West Ukrainians. Besides, West Ukraine was sufficiently far from Donbass for Russians there not to feel threatened.

So the Western [Ukrainians] hate towards Russians vs. Russian neutral attitude towards Ukrainians has existed for decades.

Systematic

A new law to likely be approved by the Rada "criminalizes the denial or justification of Russia's aggression against Ukraine" with a fine equivalent to 22 to 44,000 USD for the first offense and up to three years in prison for repeat offenders.

Meanwhile, while the law is not approved,

In February 8 in Mariupol a rally was planned against mobilization. On the eve the adviser of Interior Minister Anton Gerashchenko said that everyone who comes there will be arrested, "Everyone who comes to the rally tomorrow against mobilization, will be delayed for several hours for identification and after fingerprinting and photographing until released. Let me remind you that I and my fellow lawmaker Boris Filatov has filed a bill to impose criminal liability for public calls for the failure of mobilization "- he wrote on his page on Facebook. As a result, the action did not take place.

http://www.gazeta.ru/politics/2015/02/10_a_6407945.shtml

vr13vr -> SallyWa 10 Feb 2015 18:25

With all the hot headed claims of how the Soviet Union just grabbed the piece of land from Poland, Ukraine has a good chance to correct those misdeeds. Give West Ukraine to Poland, Transkarpathia - to Hungary, and the South West - to Romania. That would be restoring historical injustice.

vr13vr -> SallyWa 10 Feb 2015 18:18

But isn't it wrong that the faith of those people will depend on what EU or US will allow them to do rather than on their natural desire? How does it co-exist with all those democratic ideas.

Besides, federalization may or may not protect them. Kiev may or may not adhere to rules in the future, there will be a tax issue, there will be cultural issues as Kiev will try to Ukrainize those areas subtly - you know those programs that are not anti-Russian per se but that increase Ukrainian presence, thus diluting the original population. Remaining under the same roof with Kiev and L'vov isn't really the best solution for Donbass if they want to preserve their independence and identity.

SallyWa -> VladimirM 10 Feb 2015 18:16

They key thing in all of this is to stop being naive. Learn it, remember it. Our media will only care for the "right" journalists and will throw campaigns only for them and there will be rallies only over the death of "right" people, while we won't pay attention to thousands of deaths of the "wrong" people.

theeskimo -> ridibundus 10 Feb 2015 18:02

The US actively encouraged the overthrow of the democratically elected president of Ukraine, a void filled by right wing nationalists and an act that led directly to the current conflict. Now they want to arm a leadership with no national mandate who have ceded responsibility for prosecuting their war in the east to an ultra nationalist bunch of thugs.

I think it's you who should keep up with what's happening. By the time this is over, Ukraine will be no more.

newsflashUK 10 Feb 2015 18:01

Scraping the barrel for cannon fodder by pro-NATO puppet Poroshenko regime: "The draft officers have been tapping men from 20 to 60 years old and women of 20 to 50 years old with relevant military service experience and training. The age limit for senior officers that could be mobilized is 65 years. Vladyslav Seleznev, spokesman of General Staff, said" (Kyiv news).

theeskimo -> ridibundus 10 Feb 2015 18:02

The US actively encouraged the overthrow of the democratically elected president of Ukraine, a void filled by right wing nationalists and an act that led directly to the current conflict. Now they want to arm a leadership with no national mandate who have ceded responsibility for prosecuting their war in the east to an ultra nationalist bunch of thugs.

I think it's you who should keep up with what's happening. By the time this is over, Ukraine will be no more.

newsflashUK 10 Feb 2015 18:01

Scraping the barrel for cannon fodder by pro-NATO puppet Poroshenko regime: "The draft officers have been tapping men from 20 to 60 years old and women of 20 to 50 years old with relevant military service experience and training. The age limit for senior officers that could be mobilized is 65 years. Vladyslav Seleznev, spokesman of General Staff, said" (Kyiv news).

erpiu 10 Feb 2015 17:59

The focus on Putin and geopolitics forces the actual ukr people out of the picture and blurrs understanding.

The maidan was a genuinely popular NW-ukr rebellion after NW-ukr had lost all recent pre-2014 elections to the culturally Russian majority of voters mainly in SE-ukr.

In turn, the maidan coup d'etat de facto disenfranchised the culturally russian majority in SE-ukr.

the NW-ukr neonazi bands fighting in SE-ukr are de facto foreign in SE-ukr, both culturally and geo-politically, and are there to give this majority a lesson.

USA+EU weapons would only help the punitive "pacification" of SE ukr, the place that was deciding UKR elections until the coup.

The real festering conflict is the incompatibility of the anti-Russian feelings in NW ukr (little else is shared by the various maidan factions) with the cccp/russian heritage of most people in SE ukr... that incompatibility is the main problem that needs to be "solved".

Neither the maidan coup nor yanukovich&the pre-coup electoral dominance of SE ukr voters were ever stable solutions.

newsflashUK 10 Feb 2015 17:57

In Zakarpattia Oblast, only 410 out of 1,110 people who received draft notices came to mobilization centers, Oleg Lysenko, a representative of General Staff said recently.(kyiv news)

SallyWa 10 Feb 2015 17:51

Ukraine's Economy Is Collapsing And The West Doesn't Seem To Care

For some reason that isn't quite clear to me, discussion among Western experts has overwhelmingly centered not on the imminent economic apocalypse facing Kiev, but on whether or not the United States should supply it with advanced weapons systems to beat back the Russians.

It might be inconvenient to note, but Russia is positively crucial to Ukraine's economy not merely as a source of raw materials and energy but as a destination for industrial production that would otherwise be unable to find willing customers. According to Ukrainian government data, Russia accounted for roughly a quarter of the country's total foreign trade. The equivalent figure from the Russian side? Somewhere between 6 and 7%. Given that reality, Russia's leverage over Ukraine is obviously much greater that Ukraine's leverage over Russia.

http://www.forbes.com/sites/markadomanis/2015/02/09/ukraines-economy-is-collapsing-and-the-west-doesnt-seem-to-care/

TET68HUE 10 Feb 2015 17:35

During WW 2 Draft dodging was almost unheard of. The war was perceived as "just", a righteous cause. Thus, men correctly saw it as their duty to take up arms against fascism.

During the Vietnam War, the draft was a huge issue with many thousands of young men going to Canada, thousand who were in the military receiving less than honorable discharges and still others doing jail time. The war was view as an unjust war by the better educated and those who didn't have to enlist for food and shelter ("three hots and a cot").

The rebellion against the draft in Ukraine tells us that the war against the people in the Eastern area is an unjust war. People don't need a degree in history to understand when they are being use in ways that is not in their interest. We find only the fascist battalion who are hungry for this war. The US and EU should keep out of this internal civil struggle in Ukraine.

[Dec 05, 2017] Russians are concerned with the possibility of organizing Maidan in their country by Western intelligence and internal neoliberal fifth column

Now they should be twice concerned. But, in general, color revolutions became less effective in xUSSR space as more and more people started to understand the mechanics and financial source of "pro-democracy" (aka pro-Washington) protesters. BTW what a skillful and shameless presstitute is this Shaun Walker
Notable quotes:
"... Just because some Russians are paranoid about US interference, that doesn't mean they are wrong. ..."
"... The patriots are most probably a neurotic sort of reaction to what most Russians now perceive to be an attempt from NSA, CIA...and more in general of the US/EU geo-political strategies (much more of the US, of course, as the EU and Britain simply follow the instructions) to dismantle the present Russian system (the political establishment first and then the ARMY). ..."
"... Contrary to what is happening here in the west (where all media seem to the have joined the club of the one-way-thinking against Russia), some important media of that country do have a chance to criticize Putin and his policies. ..."
"... a minority can express their opinion, as long as they do not attempt to overthrow the parliament, which is an expression of Russian people. ..."
"... If you scrap off the BS from this article they do have a point, because it has been a popular tactic of a certain country to change another countries government *Cough* America *Cough* by organising protests/riots within a target country ..."
"... if that doesnt work they escalate that to fire fights and if that doesn't work they move onto say Downing a aeroplane and very quickly claiming its the other side fault without having any evidence or claim they have WMD's well anything to try to take the moral high ground on the situation even thou they caused the situation usual for selfish, arrogant and greedy reasons. ..."
"... Weren't the Maidan protests anti-democracy since they used violence to remove a democratically elected leader? Just another anti-ruskie hit piece from the Guardian. ..."
"... In the US you only get 2 choices - it may be twice as many as you get with a dictatorship but it's hardly democracy. ..."
"... Also the 'election' of the coup government was unconstitutional under article 111 of the Ukraine's own Constitution (Goggle - check for yourself). This is an undisputed and uncomfortable 'fact' which the US and the EU never mention (never) when drawn on the issue. ..."
"... A more interesting story would have been the similarities between this anti maidan group in Russia and Maidan in Kiev. Both have have their military arm, are dangerous and violent, and both very nationalistic and right wing. Both appear to have strong links to politicians as well. Such an analysis might show that Russian and Ukrainian nationalist groups have more in common than they would like to believe. ..."
"... Oh I see Russia has re-entered the media cross hairs in a timely fashion. I wonder what's going to happen in the coming weeks. ..."
"... And the US will continue to murder innocent civilians in the Middle East, Northern Africa and wherever else it wants to plant its bloody army boots. And will also continue to use its NGO's and CIA to foment colour revolutions in other countries, as it did in Ukraine ..."
"... Yes. Decisions should be made in Kiev, but why are they being made in Washington then? ..."
"... Potroshenko was elected with a turnout of 46%. Of this he scored say over half, hardly a majority ..."
"... "Under the slogan of fighting for democracy there is instead total fear, total propaganda, and no freedom." ..."
"... After witnessing what happened during Maidan, and subsequently to Ukraine, I understand some Russians reluctance to see a similar scenario played out in Russia. That being said, I am also wary of vigilantism. ..."
"... As for the anti-Maidan quotes - of course that was organised. Nuland said so, for crying out loud. Kerry and others were there, Brennan was there. Of course the Western powers were partly involved. And it wasn't peaceful protests, it was violence directed against elected officials, throwing Molotov cocktails at policemen. It culminated in the burning alive of 40+ people in Odessa. ..."
"... There were students from Lviv who said they were given "college credit" for being at Maidan. ..."
"... Putinbot = someone who has a different opinion to you ..."
"... How about the reporting on the indiscriminate slaughter of Eastern Ukrainians by Kiev's government troops and Nazi battalions?? ..."
Jan 16, 2015 | The Guardian

Patriotic group formed to defend Russia against pro-democracy protesters by Shaun Walker

The group, which calls itself anti-Maidan, said on Thursday it would fight any attempts to bring Russians on to the streets to protest against the government. Its name is a reference to the Maidan protests in Kiev last year that eventually led to the toppling of former Ukraine president Viktor Yanukovych.

"All street movements and colour revolutions lead to blood. Women, children and old people suffer first," said Dmitry Sablin, previously a long-standing MP from President Vladimir Putin's United Russia party, who recently became a senator in Russia's upper house of parliament.

"It is not acceptable for the minority to force its will upon the majority, as happened in Ukraine," he added. "Under the slogan of fighting for democracy there is instead total fear, total propaganda, and no freedom."

jgbg -> RunLukeRun, 16 Jan 2015 06:36

BINGO....well done. You've got Neo Nazi's, US Aid, CIA infiltrators, indiscriminate slaughter and Nazi battalions....all in just 8 sentences. great job

I guess these are exactly the sort of people who will enrich the EU:

Nazis on the march in Kiev this month

Would you like to claim that the Azov and Aidar battalions aren't a bunch of Nazis?

Here's a Guardian article about Azov.

The State Department funding of NGOs in Ukraine "promoting the right kind of democracy" to the tune of $5 billion is a matter of record, courtesy of "Fuck the EU" Nuland.

As for CIA involvement, the director of the CIA has visited Ukraine at least twice in 2014 - once under a false identity. If the head of the equivalent Russian organisation had made similar visits, that would be a problem, no?

TuleCarbonari -> garethgj 16 Jan 2015 06:21

Yes, he should leave Syria to paid mercenaries. Do you really want us to believe you still don't know those fighters in Syria are George Soros' militias? Come on man, go get yourself informed.

jgbg -> Strummered 16 Jan 2015 06:19

You can't campaign for greater democracy, it's dangerous, it's far too democratic.

The USA cannot pay people to campaign in Russia to have the right kind of democracy i.e. someone acceptable to the US government at the helm.

Instead of funding anti-government NGOs in other countries, perhaps the USA should first spend the money fixing the huge inequalities and other problems in their own country.

jgbg -> Glenn J. Hill 16 Jan 2015 06:12

What???? Have you been smoking?? Sorry but your Putin Thugs are NOT funded by my country.

I think he is referring the the NGOs which have spent large sums of money on "promoting democracy" in Georgia and Ukraine. Many of these are funded by the National Endowment for Democracy and the US State Department. Some have funding from organisations which are in turn, funded by George Soros. These organisations were seen to back the Rose Revolution in Georgia and both revolutions in Ukraine. Georgia ended up with a president who worked as a lawyer in a US firm linked to the right wing of the Republican Party. Ukraine has a prime minister who was brought up in the USA and a president whom a US ambassador to Ukraine described as "our insider" (in a US Embassy cable leaked by Wikileaks).

The funding of similar organisations in Russia (e.g. Soldiers' Mothers) has been exposed since a law was brought in, requiring foreign funded NGOs to register and publish annual accounts.

Just because some Russians are paranoid about US interference, that doesn't mean they are wrong.

Anette Mor -> Hektor Uranga 16 Jan 2015 06:09

He was let out to form a party and take part in Moscow mayor election. He got respectable 20%. But shown no platform other than anti- corruption. There is anti-corruption hysteria in Russia already. People asked for positive agenda. He got none. The party base disintegrated. The court against him was because there was a case filed. I can agree the state might found this timely. But we cannot blaim on Russian state absence of positive position in Navalny him self. He is reactive on current issues but got zero vision. Russia is a merit based society. They look for brilliance in the leader. He is just a different caliber. Can contribute but not lead. His best way is to choose a district and stand for a parliament seat. The state already shown his is welcomed to enter big politics. Just need to stop lookibg to abroad for scripts. The list of names for US sanction was taking from his and his mates lists. After such exposure he lost any groups with many Russians.

Anette Mor -> notoriousANDinfamous 16 Jan 2015 05:50

I do not disregard positive side of democracy or negative side of dictatorship. I just offer a different scale. Put value of every human life above any ideology. The west is full of aggressive radicals from animal activists and greens to extremist gays and atheists. There is a need to downgrade some concepts and upgrade other, so yhe measures are universal. Bombing for democracy is equaly bad as bombing for personal power.

Anette Mor -> gilstra 16 Jan 2015 05:41

This is really not Guardian problem. They got every right to choose anti-Russian rant as the main topic. The problem is the balance. Nobody watching it and the media as a whole distorting the picture. Double standards are not good too. RT to stay permitted in the UK was told to interrupt every person they interview expressing directly opposite view. Might be OK with some theoretical conversation. But how you going to interrupt mother who just most a child by argument in favor of the killer? The regulator said BBC is out of their reach. But guardian should not be. Yet every material is one sided.

Asimpleguest -> romans

International Observer

''The New Ukraine Is Run by Rogues, Sexpots, Warlords, Lunatics and Oligarchs''

PeraIlic

"Decisions should be made in Moscow and not in Washington or Brussels," said Nikolai Starikov, a nationalist writer and marginal politician.

Never mind that he's marginal politician. This man really knows how to express himself briefly:

An Interview with Popular Russian Author and Politician Nikolai Starikov

Those defending NATO expansion say that those countries wanted to be part of NATO.

Okay. But Cuba also wanted to house Soviet missiles voluntarily.
If America did not object to Russian missiles in Cuba, would you support Ukraine joining NATO?

That would be a great trust-building measure on their part, and Russia would feel that America is a friend.

imperfetto

This article contains unacceptable, apparently carefully wrapped up, distorsions of what is happening in Russia. A piece of journalism which tell us something about the level of propaganda that most mainstream media in our 'free' west have set up in the attempt to organise yet another coup, this time under the thick walls of the Kremlin. This newspaper seem to pursue this goal, as it shows to have taken sides: stand by NATO and of course the British interests. If this implies misguiding the readers on what is taking place in Russia\Ukraine or elsewhere (Syria for example) well...that's too bad, the answer would be. Goals justify the means...so forget about honesty, fair play and truthfullness. If it needs to be a war (we have decided so, because it is convenient) then... lies are not lies...but clever tools that we are allowed to use in order to destroy our enemy.

The patriots are most probably a neurotic sort of reaction to what most Russians now perceive to be an attempt from NSA, CIA...and more in general of the US/EU geo-political strategies (much more of the US, of course, as the EU and Britain simply follow the instructions) to dismantle the present Russian system (the political establishment first and then the ARMY).

The idea is to create an internal turmoil through some pretexts (gay, feminism, scandals...etc.) in the hope that a growing movement of protesters may finally shake up the 'palace' and foster the conditions for a coupe to take place. Then the right people will occupy the key chairs. Who are these subdued figures to be? They would be corrupted oligarchs, allowing the US to guide, control the Russian public life (haven't we noticed that three important ministers in Kiev are AMERICAN citizens!)

But, from what I understand, Russia is a democratic country. Its leader has been elected by the voters. Contrary to what is happening here in the west (where all media seem to the have joined the club of the one-way-thinking against Russia), some important media of that country do have a chance to criticize Putin and his policies. That's right, in a democratic republic. But, instead, the attempt to enact another Maidan, that is a FASCIST assault to the DUMA, would require a due response.

Thus, perhaps we could without any Patriots of the sort, that may feed the pernicious attention of western media. There should merely be the enforcement of the law:

a minority can express their opinion, as long as they do not attempt to overthrow the parliament, which is an expression of Russian people.

VladimirM

"The 'orange beast' is sharpening its teeth and looking to Russia," said The Surgeon, whose real name is Alexander Zaldostanov.

Actually, he used a Russian word "зверек", not "зверь". The latter can be rendered as "beast" but what he said was closer to "rodent", a small animal. So, using this word he just stressed his contemptious attitude rather than a degree of threat.

Kondratiev

There is at least anecdotal evidence that Maiden protestors were paid - see: http://www.globalresearch.ca/us-and-eu-are-paying-ukrainian-rioters-and-protesters/5369316 .

Bosula

These patriotic groups do seem extreme, but probably less extreme and odd than many of the current Ukrainian crop of politicians. Here is an article from the New York Observer that will get you up to speed....

The New York Observer:The New Ukraine Is Run by Rogues, Sexpots, Warlords, Lunatics and Oligarchs

Robert Sandlin -> GreenKnighht

Did you forget the people in charge of the Ukraine then were Ukrainian communists.That many of the deaths were also ethnic Russian-Ukrainians.And the ones making policy in the USSR as a whole,in that period were mostly not ethnic-Russians.The leader was Georgian,his secret police chief and many of their enforcers were Jewish-Soviets.And his closest helpers were also mostly non-ethnic Russians.Recruited from all the important ethnic groups in the USSR,including many Ukrainians.It is a canard of the Wests to blame Russia for the famine that also killed many Russians.I'm sick of hearing the bs from the West over that tragic time trying to stir Russophobia.

seventh

Well, you know a government is seriously in the shit when it has to employ biker gangs to defend it.

Robert Sandlin -> seventh

Really? The government doesn't employ them. Defending the government is the job of the police and military. These civilian volunteers are only helping to show traitors in the pay of Westerners that the common people won't tolerate treason like happened in Ukraine, to strike Russia.Good for them,that should let potential 5th columnists know their bs isn't wanted in Russia.

Bulagen

I watch here in full swing manipulation of public opinion of Europeans, who imagines that they have "democracy" and "freedom of speech". All opinions, alternative General line, aimed at all discredit Russia in the eyes of the population of Europe ruthlessly removed the wording that Putin bots hinder communication "civilized public." And I am even more convinced that all this hysteria about "the problems of democracy in Russia" is nothing more than an attempt to sell Denyen horse (the so-called democratic values) to modern Trojans (Russians).

jezzam -> Bulagen

All the wealthiest, healthiest and happiest societies adhere to "so-called democratic values". They would also greatly benefit the Russian people. Putin opposes these values purely because they would threaten his power.

sashasmirnoff -> jezzam

The "wealthiest, healthiest and happiest societies"? That is description of whom?

I will generalize here - if by those you mean the "West" you are mistaken. The vast majority of it's populace are carrying a huge burden of personal debt - it is the bank that owns their houses and new autos. There is a tiny stratum that indeed is wildly wealthy, frequently referred to as the 1%, but in fact is much less numerous.

The West is generally regarded as being the least healthy society, largely due to horrifying diet, sedentary lifestyle, and considerable stress due to (amongst other things) the aforementioned struggle to not drown in huge personal debt.

I'm not certain as to how you qualify or quantify "happiness", but the West is also experiencing a mental health crisis, manifested in aberrant behaviour, wild consumption of pharmaceuticals to treat or drown out depression, suicide, high rates of incarceration etc. All symptoms of a deeply unhappy and unhealthy society.

One more thing - the supposed wealth and happiness of the West is predicated on the poverty and misery of those the West colonizes and exploits. The last thing on Earth the West would like to see is the extension of "democratic values" to those unfortunates. That would totally ruin the World Order.

Robert Sandlin -> kawarthan

Well the Ukrainians have the corner on Black and Brown shirts.So those colors are already taken.Blue,Red,White,maybe those?

Paultoo -> Robert Sandlin

Looking at the picture of that "patriotic" Russian biker it seems that Ukraine don´t have the corner on black shirts!

WardwarkOwner

Why do these uprisings/ internal conflicts seem to happen to energy producing countries or those that are on major oil/gas pipeline routes far more often than other countries?

Jackblob -> WardwarkOwner

I don't see any uprising in Canada, Saudi Arabia, Kuwait, China, Mexico, the UAE, Iran, Norway, Qatar, etc.

So what exactly is your point?

Petros -> Sotrep Jackblob

Well there is problem in Sudan Iraq Syria Libya Nigeria . you have conflicts made up by USA to change governments and get raw materials . so ward is right . you just pretending to be blind . in mexico ppl dying pretty much each day from corrupt people .

PullingTheStrings

If you scrap off the BS from this article they do have a point, because it has been a popular tactic of a certain country to change another countries government *Cough* America *Cough* by organising protests/riots within a target country

if that doesnt work they escalate that to fire fights and if that doesn't work they move onto say Downing a aeroplane and very quickly claiming its the other side fault without having any evidence or claim they have WMD's well anything to try to take the moral high ground on the situation even thou they caused the situation usual for selfish, arrogant and greedy reasons.

Jackblob -> PullingTheStrings

For some reason I do not trust you to discern the BS from the truth since your entire comment is an act of deflection.

The truth is most Russians are very poor, more poor than the people of India. This latest economic turmoil will make it even worse. Meanwhile, Putin and a handful of his cronies hold all the wealth. He proved he did not care about his people when he sent the FSB to bomb Moscow apartment buildings to start a war in Chechnya and ultimately to cancel elections.

Now Putin sees the potential for widespread protests and he is preparing to confront any protests with violent vigilante groups like those seen in other repressive countries.

Bob Vavich -> Jackblob

Wow, this is quite an assertion that Russians are poorer than Indians. I have been to India and I have been to Russia and I don't like using anecdotes to make a point. I can tell you that I have never seen as much poverty as in India. I can also tell you that when I drove through the low income neighborhood of Detroit or Houston, I felt like I was in a post apocalyptic world. Burned out and boarded up houses. Loitering and crime ridden streets. I can go on and on about social injustice. Regardless your comments are even more slanted than the assertion you are making about "Pulling the Strings".

Jackblob -> Bob Vavich

I was just as surprised to learn that Indians earn more than Russians. My source for that info comes from PBS's latest broadcast of Frontline entitled "Putin's Way".

Also, I doubt you've visited many small and lesser known cities in Russia. It's as if the Soviet Union had just collapsed and they were forgotten. Worse, actually.

Hamdog

Weren't the Maidan protests anti-democracy since they used violence to remove a democratically elected leader? Just another anti-ruskie hit piece from the Guardian.

We in the West love democracy, assuming you vote for the right person.

In the US you only get 2 choices - it may be twice as many as you get with a dictatorship but it's hardly democracy.

E1ouise -> Hamdog

Yanukovych was voted out of office by the *elected parliment* after he fled to Russia. Why don't you know this yet?

secondiceberg -> E1ouise

Excuse me, he was forced out of the country at gunpoint before the opposition "voted him out" the next day.

Bosula -> secondiceberg

Yes. That is correct. And armed Maidan thugs (Svoboda and Right Sector) stood around the Rada with weapons while the vote taken.

Also the 'election' of the coup government was unconstitutional under article 111 of the Ukraine's own Constitution (Goggle - check for yourself). This is an undisputed and uncomfortable 'fact' which the US and the EU never mention (never) when drawn on the issue.

Sourcrowd

The soviet union didn't go through some kind of denazification akin to Germany after it disintegrated. Russia today looks more and more like Germany after WWI - full of self pity and blaming everyone but themselves for their own failures.

Down2dirt -> Sourcrowd

I would like to hear more about that denazification of Germany and how did that go.

Since the day one the West and the GDR used nazis for their laboratories, clandestine and civil services...State owned museums still refuse to give back artwork to their rightful owners that were robbed during 1930-45.

I don' t condone Putin's and Russia polity (one of the most neoliberal countries), but you appear to be clueless about this particular subject and don' t know what you are talking about.

Bosula -> Sourcrowd

Are you thinking about Ukraine here, maybe?

Bosula

A more interesting story would have been the similarities between this anti maidan group in Russia and Maidan in Kiev.

Both have have their military arm, are dangerous and violent, and both very nationalistic and right wing. Both appear to have strong links to politicians as well.

Such an analysis might show that Russian and Ukrainian nationalist groups have more in common than they would like to believe.

TuleCarbonari -> Bosula

A very important difference is the Russians are defending their elected government. The Ukrainians were hired by the West to promote a coup d'etat against an elected government, this against the will of the majority in Ukraine and only 3 months from general election in the country. The coup was indeed a way of stopping the elections.

Flinryan

Oh I see Russia has re-entered the media cross hairs in a timely fashion. I wonder what's going to happen in the coming weeks.

MarcelFromage -> Flinryan

I wonder what's going to happen in the coming weeks.

Nothing new - the Russian Federation will continue its illegal occupation of Crimea and continue to bring death and destruction to eastern Ukraine. And generally be a pain for the rest of the international community.

secondiceberg -> MarcelFromage

And the US will continue to murder innocent civilians in the Middle East, Northern Africa and wherever else it wants to plant its bloody army boots. And will also continue to use its NGO's and CIA to foment colour revolutions in other countries, as it did in Ukraine. Kiev had its revolution. Eastern Ukraine is having its revolution. Tit for Tat.

Velska

CIF seems flooded by Putin's sock puppets, i.e. mindless robots who just repeat statements favouring pro-Putinist dictatorship.

To be sure, there's much to hope for in the US democracy, where bribery is legal. I'm not sure whether bribery in Russia is a legal requirement or just a fact of life. But certainly Russia is far from democratic, has actually never been.

Bosula -> Velska

You can take your sock off now and wipe your hands clean.

secondiceberg -> Velska

What kind of democracy is the US when you have a federal agency spying on everything you do and say? Do you think they are just going to sit on what information they think they get?

What will you do when they come knocking at your door, abduct you for some silly comment you made, and then rendition you to another country so that you will not be able to claim any legal rights? Let Russia look after itself in the face of "war-footing" threats from the U.S.

Fight for social justice and freedom in your own country.

cichonio

"All street movements and colour revolutions lead to blood. Women, children and old people suffer first,"

That's why they are ready to use weapons and violence against a foe who hasn't really been seen yet.

Also,

"Decisions should be made in Moscow and not in Washington or Brussels,"

I think decisions about Ukraine should be made in Kiev.

Bosula -> cichonio

Yes. Decisions should be made in Kiev, but why are they being made in Washington then? How much does this compromise Kiev as its agenda is very different from the agenda the US have with Russia. Ukraine is weakened daily with its civil war and the killing its own people, but this conflict benefits the US as further weakens and places Russia in a new cold war type environment.

Why are key government ministries in Ukraine (like Finance) headed by overseas nationals. Utterly bizarre.

secondiceberg -> cichonio

So do I, by the legally elected government that was illegally deposed at gunpoint. Ukraine actually has two presidents. Only one of them is legal and it is not Poroshenko.

Bob Vavich -> cichonio

Yes, if they are taken by all Ukrainians and not a minority. Potroshenko was elected with a turnout of 46%. Of this he scored say over half, hardly a majority. More likely, the right wing Western Galicia came out to vote and the Russian speaking were discouraged. What would one expect when the new government first decree is to eliminate Russian as a second official language. Mind you a language spoken by the majority. Makes you think? Maybe. Probably not.

SHappens

"Personally I am a fan of the civilised, democratic intelligent way of deciding conflicts, but if we need to take up weapons then of course I will be ready," said Yulia Bereznikova, the ultimate fighting champion.

This quite illustrates Russians way of doing. Smart, open to dialogue and patient but dont mess with them for too long. Once on their horses nothing will stop them.

They are ready to fight against the anti Russian sentiment injected from outside citing Ukraine and Navalny-Soros, not against democracy.

"It is not acceptable for the minority to force its will upon the majority, as happened in Ukraine," he added. "Under the slogan of fighting for democracy there is instead total fear, total propaganda, and no freedom."

ploughmanlunch

After witnessing what happened during Maidan, and subsequently to Ukraine, I understand some Russians reluctance to see a similar scenario played out in Russia.
That being said, I am also wary of vigilantism.

FlangeTube

"Pro-democracy" protests? They have democracy. They have an elected leader with a high approval rating. Stop trying twisting language, these people are not "pro-democracy" they are anti-Putin. That, as much as this paper tries to sell the idea, is not the same thing.

Drumming up odd-balls to defend the elected government in Russia is all well and good, but I would think the other 75% (the ones who like Putin, and aren't in biker gangs) should get a say too.

As for the anti-Maidan quotes - of course that was organised. Nuland said so, for crying out loud. Kerry and others were there, Brennan was there. Of course the Western powers were partly involved. And it wasn't peaceful protests, it was violence directed against elected officials, throwing Molotov cocktails at policemen. It culminated in the burning alive of 40+ people in Odessa.

Sergei Konyushenko

Btw, Shaun is always very best at finding the most important issues to raise?

FallenKezef

It's an interesting point, what happened in the Ukraine was an undemocratic coup which was justified after the fact by an election once the previous incumbent was safely exiled.

Had that happened to a pro-western government we'd be crying foul. But because it happened to a pro-Russian government it's ok.

I don't blame Russians for wanting to avoid a repeat in their own country.

Spaceguy1 One

The Crimea referendum "15% for" myth - Human rights investigations

The idea that only 15% of Crimeans voted to join Russia is speeding around the internet after an article was published in Forbes magazine written by Professor Paul Roderick Gregory.

Professor Gregory has, dishonestly, arrived at his 15% figure by taking the minimum figure for Crimea for both turnout and for voters for union, calling them the maximum, and then ignoring Sevastopol. He has also pretended the report is based on the "real results," when it seems to be little more than the imprecise estimates of a small working group who were apparently against the idea of the referendum in the first place.

It appears that Professor Gregory is intent on deceiving his readers about the vote in Crimea and its legitimacy, probably as part of the widespread campaign to deny the people of Crimea their legitimate rights to self-determination and to demonize Russia in the process.

http://humanrightsinvestigations.org/2014/05/06/the-crimea-referendum-15-percent-for-myth/

vr13vr

This is not an unexpected result. EU and US governments are going out of way to stir people's opinion in the former Soviet republics. And they also set the precedent of conducting at least two "revolutions" by street violence in Ukraine and a dozen - elsewhere. There are obviously people in Russia who believe the changes have to be by discussion and voting not by street disturbance and stone throwing.

Beckow

Reduced to facts in the article, a group in Russia said that they will come out and protest in the streets if there are anti-government demonstrations. They said that their side also needs to be represented, since the protesters don't represent the majority.

That's all. What is so "undemocratic" about that? Or can only pro-Western people ever demonstrate? In a democracy a biker with a tatoo is equal to an urbane lawyer with Western connections. That's the way democracies should work.

About funding for Maidan protesters "for which there is no evidence". This is an interesting point. There were students from Lviv who said they were given "college credit" for being at Maidan. And how exactly have tens of thousands of mostly young men lived on streets in Kiev with food and clothes (even some weapons) with no support?

Isn't that a bit of circumstantial evidence that "somebody" supported them. I guess in this case we need to see the invoices, is that always the case or just when Russia issues are involved?

rezevici

Very sad news from Russia. If Putin or the government doesn't condemn this project of the "patriots", if he and government doesn't react against announcement of civilian militia's plan to use violence, I'll truly turn to observe Putin as a tsar.

The ethics of Russians will be on display.

Anette Mor -> rezevici

There are specific politicians who rejected participation in normal political process but chosen street riots instead. The door to politics is open, they can form parties and take part in elections. but then there is a need for a clear political and economical platform and patience to win over the votes. These people refuse to do so, They just want street riots. Several years public watch these groups and simply had enough. There is some edgy opposition which attracts minority but they play fair. Nobody against them protecting and demonstrating even when the call for revolutionary means for getting power, like communists or national-socialists. But these who got no program other than violent riots as such are not opposition. They still have an agenda which they cannot openly display. So they attract public by spreading slander and rising tension. Nothing anti-democratic in forming a group of people who confront these actions. They are just another group taking part in very complex process.

PeraIlic

by Shaun Walker: "Maidan in Kiev did not appear just like that. Everyone was paid, everyone was paid to be there, was paid for every stone that was thrown, for every bottle thrown," said Sablin, echoing a frequently repeated Russian claim for which there is no evidence.

There is evidence, but also recognition from US officials. That at least is not a secret anymore.

Is the US training and funding the Ukraine opposition? Nuland herself claimed in December that the US had spent $5 billion since the 1990s on "democratization" programs in Ukraine. On what would she like us to believe the money had been spent?

We know that the US State Department invests heavily -- more than $100 million from 2008-2012 alone -- on international "Internet freedom" activities. This includes heavy State Department funding, for example, to the New Americas Foundation's...

...Commotion Project (sometimes referred to as the "Internet in a Suitcase"). This is an initiative from the New America Foundation's Open Technology Initiative to build a mobile mesh network that can literally be carried around in a suitcase, to allow activists to continue to communicate even when a government tries to shut down the Internet, as happened in several Arab Spring countries during the recent uprisings.

Indeed, Shaun! On what would you like us to believe so much money had been spent?

RandolphHearst -> PeraIlic,

You antipathy against the author speaks volumes about the contents of his article.

susandbs12 , link

All of this stems from the stupid EU meddling in Ukraine.

We shouldn't get involved in the EUs regime change agenda. Time to leave the EU.

And also time for us to not get involved in any wars.

daffyddw

Thank you, thank you all, you wonderful putin-bots. I haven't enjoyed a thread so much in ages. Bless you all, little brothers.

susandbs12 -> daffyddw

Putinbot = someone who has a different opinion to you.

Presumably you want a totalitarian state where only your views are legitimate.

Grow up and stop being childish and just accept that there are people who hold different views from you, so what?

LaAsotChayim

Pro democracy protests?? Would that be same protests that Kiev had where Neo-nazis burned unarmed police officers alive, or the ones in Syria when terrorists (now formed ISIS) where killing Government troops? Are these the pro-democracy protests (all financed via "US aid" implemented by CIA infiltrators) that the Guardian wants us to care about?

How about the reporting on the indiscriminate slaughter of Eastern Ukrainians by Kiev's government troops and Nazi battalions?? Hey, guardian??!!

Anette Mor -> Strummered

Democracy is overrated. It does not automatically ensure equality for minorities. In Russia with its 100 nationalities and all world religions simple straight forward majority rule does not bring any good.

A safety net is required. Benevolent dictator is one of the forms for such safety net. Putin fits well as he is fair and gained trust from all faith, nationalities and social groups. There are other mechanisms in Russia to ensure equality. Many of them came from USSR including low chamber of Russian parliament called Nationalities chamber. representation there is disproportional to the number of population but reflecting minorities voice - one sit per nation, no matter how big or small.

The system of different national administrative units for large and small and smallest nationalities depending how much of autonomic administration each can afford to manage. People in the West should stop preaching democracy. It is nothing but dictatorship of majority. That is why Middle East lost all its tolerance. Majority rules, minorities are suppressed.

kowalli -> Glenn J. Hill

US has a separate line in the budget to pay for such "democratic" protests

kowalli -> Glenn J. Hill

U.S. Embassy Grants Program. The U.S. Embassy Grants Program announces a competition for Russian non-governmental organizations to carry out specific projects.

http://moscow.usembassy.gov/democracy.html

and this is only one of them, many more in budget.

MartinArvay

pro-democracy protesters?

like ISIL, Right Sector, UÇK?

They are right

[Dec 05, 2017] EU mulls response to Russia's information war

So the current anti RT campaign is not an aberration. It is continuation of long time efforts...
Jan 09, 2015 | https://euobserver.com/foreign/127135

EU Observer: EU mulls response to Russia's information war

The Netherlands is funding a study on how the EU can fight back against Russia's "information war", in one of several counter-propaganda initiatives.

The Dutch-sponsored study was launched in the New Year by the European Endowment for Democracy (EED), a Brussels-based foundation.

But little happened until the Netherlands stepped in with the EED grant after a passenger plane, flight MH17, was shot down over east Ukraine killing 193 Dutch nationals and 105 other people.

Evidence indicates Russia-controlled rebels caused the disaster using a Russia-supplied rocket system.

But Russian state media have tried to sow suspicion the Ukrainian air force did it in order to prompt Western intervention in the conflict

Denmark, Estonia, Lithuania, and the UK are drafting an informal paper on how EU institutions and Nato can co-ordinate "strategic communications"

Its foreign ministry spokesman, Karlis Eihenbaums, told this website that around 15 EU states back the project and that the news broadcasts should be available in Russia if they can get past its "jamming system".

But Riga is trying to play down expectations of a quick result.

"I don't think we can come to an agreement among the 28 [EU leaders] to come up with a new TV station in Russian. Euronews is already doing news in Russian, so it'll be difficult to get an additional channel", Latvian PM Laimdota Straujuma told press in the Latvian capital on Wednesday (7 January).

Well-funded Russian broadcasters, such as RT, have hired big names, including former CNN anchor Larry King, and air programmes in English, French, German, and Spanish as well as Russian.

Their work is backed up by pseudo-NGOs.

Putting the Dutch grant in perspective, the British think-tank, Chatham House estimates the Russian "NGO" component alone is worth $100 million a year.

Western media have caught Russian media using fake pictures and fake witness accounts of alleged Ukrainian atrocities.

Eihenbaums noted that any EU news channel "must be attractive, but with accurate information it must not be a propaganda organ".

He cited RFE/RFL, a US-funded broadcaster, and the BBC as models because they do both Ukraine-critical and Russia-critical stories.
###

If you can't smell the excrement off that, then get thee to a medic!

Now, considering the piece above, try not to hold back a large guffaw for this one!

[Dec 05, 2017] One-Pager on Latest Developments in Russia (RF Sitrep 20150129)

Jan 31, 2015 | Russia Insider

HOW TO READ THE WESTERN MEDIA.

When they say Kiev forces have re-taken the airport, know that they have lost it.

When they say giving up South Stream was a defeat for Putin, know it was a brilliant counter-move.

When they say Russia is isolated (a stopped clock, here's The Economist in 1999!), know that it is expanding its influence and connections every day.

When they say Russians are turning against Putin, know that the opposite is true. When they speak of nation-building in the new Ukraine, know it's degenerating into armed thuggery (see video).

Know that when they speak of Kyrzbekistan, they're not just stenographers, they're incompetent stenographers.

Take what they say, turn it upside down, and you'll have a better take on reality.

THE MERKEL MYSTERY. I, like many, thought, when the Ukraine crisis began, that German Chancellor Merkel would prove to be key in settling it. This has not proved to be the case at all; in fact she often throws more fuel on the fire. I believe that Gilbert Doctorow may have the answer. In essence, he believes that Berlin dreams the "pre-WWI dream of Mitteleuropa" with cheap, docile workers in Poland, Ukraine and the others forever. Of course, it hasn't worked out very well, but that, he thinks, was the plan. There was no "End of History" after all; a rebirth of history it seems.

[Dec 04, 2017] The Phillips Curve, Again

Dec 04, 2017 | everydayecon.wordpress.com

The Phillips Curve is back. In saying so, I do not mean to imply that being "back" refers to a sudden reappearance of a stable empirical relationship between unemployment (or the output gap) and inflation. The Phillips Curve is back in the same way that conspiracy theories about the assassination of JFK are back after the recent release of government documents. In other words, the Phillips Curve is something that people desperately want to believe in, despite the lack of evidence.

The Phillips Curve is all the rage among central bankers. Since the Federal Reserve embarked on quantitative easing, they have been ensuring the public that QE would not be inflationary because of the slack in the economy. Until labor market conditions tighten, there would be little threat of inflation. Then, as the labor market tightened, the Federal Reserve warned that they might have to start raising interest rates to prevent these tightening conditions from creating inflation.

What is remarkable about this period is that the Federal Reserve has undershot its target rate of inflation throughout this entire period -- and continues to do so today. So what does this tell us about the Phillips Curve and what can we learn about monetary policy?

If one looks at the data on unemployment and inflation (or even the output gap and inflation), you could more easily draw Orion the Hunter as you could a stable Phillips Curve. Fear not, sophisticated advocates of the Phillips Curve will say. This is simply the Lucas Critique at play here. If a Phillips Curve exists, and if the central bank tries to exploit it, then it will not be evident in the data. In fact, if you take a really basic 3-equation-version of the New Keynesian model, there is a New Keynesian Phillips Curve in the model. However, when you solve for the equilibrium conditions, you find that inflation is a function of demand shocks, technology shocks, and unexpected changes in interest rates. The output gap doesn't appear in the solution. But fear not, this simply means that monetary policy is working properly. The Phillips Curve is apparently like the observer effect in quantum mechanics in that when we try to observe the Phillips Curve, we change the actual result (this is a joke, please do not leave comments about why I've misunderstood the observer effect).

... ... ...

What all of this means is that even given the fact that the New Keynesian model features an equation that resembles the Phillips curve, this does not imply that there is some predictive power that comes from thinking about this equation in isolation. In addition, it certainly does not imply that changes in the output gap cause changes in the rate of inflation. There is no direction of causation implied by this one equilibrium condition.

[Dec 04, 2017] The neoliberal framework in antitrust is based on pecifically its pegging competition to consumer welfare, defined as short-term price effects and as such s unequipped to capture the architecture of market power in the modern economy

Notable quotes:
"... This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output. ..."
"... This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties. ..."
Feb 12, 2017 | economistsview.typepad.com
anne : February 11, 2017 at 11:43 AM , 2017 at 11:43 AM
http://www.yalelawjournal.org/article/amazons-antitrust-paradox

January, 2017

Amazon's Antitrust Paradox
By Lina M. Khan

Abstract

Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy, the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it. Elements of the firm's structure and conduct pose anticompetitive concerns -- yet it has escaped antitrust scrutiny.

This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output.

Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business lines may prove anticompetitive. These concerns are heightened in the context of online platforms for two reasons. First, the economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded. Under these conditions, predatory pricing becomes highly rational-even as existing doctrine treats it as irrational and therefore implausible. Second, because online platforms serve as critical intermediaries, integrating across business lines positions these platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit information collected on companies using its services to undermine them as competitors.

This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties.

[Dec 03, 2017] West has over-reached and can barely handle its own problems

The problem is that neoliberal ideology entered the state of the crisis in 2008 much like Bolshevik ideology entered the crisis after WWII. The USSR managed to survive for another 50 years after that.
Notable quotes:
"... Multipolar is just that – leave exercise of power and responsibility as close to the local situation as possible. Brussels telling Poland who should be a TV presenter, or Washington deciding what people in rural Hungary should read is idiotic. What's the point of all this busy-body behaviour? It is always justified by some slogans about preventing 'human rights violations'. Right. We have seen the results – a lot more people have died and suffered because of 'humanitarian' interventions than from anything else in the last 20+ years. ..."
"... I do find the current rapprochement between Russia and the major Moslem states amusing. It goes beyond Turkey and Iran, Moscow is working all of them, Egypt, Sudan, I suspect it is a clever attempt to beat US at its own game – US has spent about four decades arming and unleashing any Islamic force it could find against Russians (and Slavs in general), using methods that were beyond brutal and hypocrisy that eventually backfired. Maybe turning it around is a good strategy. It is inconsistent, but when you fight extreme stupidity, often the only thing that works is to use more stupidity ..."
"... Orwell's vision is but one of the possibilities. Another is Armageddon. Yet another is a "(Failed) West and a multipolar Rest". The latter is what I think will actually happen in the near and medium term. Things being what they are, it may even be the best we can hope for. ..."
"... I don't see any other power than the West (=US) aspiring to 'manage the world'. Maybe some ISIS fanatics have the same dream, but they are not in a position to achieve it. West has 'managed' it very poorly: mindless interventions, wars, migrants, hypocrisy, threats and blackmail. ..."
"... The other 'powers' have very modest, regional aspirations. Russia or China really don't care that much who wins the elections in Portugal, or what regional papers write in Hungary – US seems to be obsessed with it. And the only justification that Western defenders offer when pressed is that 'there would be a vacuum' and 'Russians would move in'. This is obvious nonsense and only elderly paranoid Cold Warrior types believe it ..."
"... Europeans have been invited to join the Eurasian Project, to create a continental market from "Lisbon to Vladivostok". Latent dreams of Hegemony hold at least some of their elites back. ..."
"... The West rode an ahistorical rogue wave of development to a point just short of Global Hegemony. That wave broke, and is now rolling back out into the world leaving the West just short of its civilizational resource requirements. No way to get back on a broken wave. In any case, China now holds the $$$ hammer, and Russia holds the military hammer, and they've now got the surfboard. Both of them, led by historically aware elites, know that Hegemony doesn't work, so will focus on keeping their neck of the woods as stable & prosperous as possible while hell blazes elsewhere. ..."
Dec 03, 2017 | www.unz.com

Beckow , December 2, 2017 at 4:19 am GMT

@peterAUS

"The same "hegemon with allies/vassals" as it is now, only in that case divided in three"

Why? There is absolutely nothing about 'multipolar' that dictates three, or four 'hegemons', or even lists who would the 'multis' be. The idea is simply that most people, most of the time are better off left alone.

Is that so hard to understand? Why should people in Washington (or Moscow, Beijing, Brussels, ) be intimately involved with how others live their lives, with their fights and alliances? Knowledge always dissipates with distance, and most of the 'masters of the universe' are not that smart to start with.

Multipolar is just that – leave exercise of power and responsibility as close to the local situation as possible. Brussels telling Poland who should be a TV presenter, or Washington deciding what people in rural Hungary should read is idiotic. What's the point of all this busy-body behaviour? It is always justified by some slogans about preventing 'human rights violations'. Right. We have seen the results – a lot more people have died and suffered because of 'humanitarian' interventions than from anything else in the last 20+ years.

I do find the current rapprochement between Russia and the major Moslem states amusing. It goes beyond Turkey and Iran, Moscow is working all of them, Egypt, Sudan, I suspect it is a clever attempt to beat US at its own game – US has spent about four decades arming and unleashing any Islamic force it could find against Russians (and Slavs in general), using methods that were beyond brutal and hypocrisy that eventually backfired. Maybe turning it around is a good strategy. It is inconsistent, but when you fight extreme stupidity, often the only thing that works is to use more stupidity

Erebus , December 2, 2017 at 8:48 am GMT
@Beckow

"The same "hegemon with allies/vassals" as it is now, only in that case divided in three"

Why? There is absolutely nothing about 'multipolar' that dictates three, or four 'hegemons', or even lists who would the 'multis' be. The idea is simply that most people, most of the time are better off left alone.

Peter's is the apocalyptic view made famous by Orwell. He may be right, it may all unravel and Oceania, Eurasia & Eastasia run a classic 3-power calculus of shifting alliances in a struggle for control of the "hinterlands". Not at all impossible, but certainly not what the proponents of the multipolar world want.

The idea is much more than the notion that most people want to "be left alone". The Multipolar world as it is actually being constructed by its proponents, from its monetary structures to its security, commercial and trade regimes, is precisely the attempt to prevent that Orwellian development in the face of Western decline. Their foundational tenet is that Globalization as a world-historical trend is here to stay (for at least the next few generations), and the "compartmentalization" of the world into alliances and hegemonies as historically occurred is no longer a viable option. The 3 Orwellian powers are all nuclear now, and the #1 priority is to mitigate the risk of war between them. Best to do that by dissolving them into a matrix of commercial and developmental programs that they'd be loathe to destroy.

EG: Though Russia considers both China and Iran "strategic partners", there is no formal alliance with either of them, and there won't be. Alliances cannot be "forbidden", but the countries that have signed onto the multipolar world program view alliances with suspicion.

As a introduction to the coming multipolar world, Kupchan's Western-centric analysis is a good place to start: https://www.amazon.com/No-Ones-World-Council-Relations/dp/0199325227
"Kupchan provides a detailed strategy for striking a bargain between the West and the rising rest by fashioning a new consensus on issues of legitimacy, sovereignty, and governance."

Assuming he even knows the least thing about what the multipolar world is trying to do, Peter's view is that their attempt will fail. Maybe so.
To "fashion a new consensus on issues of legitimacy, sovereignty, and governance" requires that the professional criminal class that grabbed the remains of Western power a decade and a half ago has been forced to let go. If not, the world indeed faces an abyss.

Orwell's vision is but one of the possibilities. Another is Armageddon. Yet another is a "(Failed) West and a multipolar Rest". The latter is what I think will actually happen in the near and medium term. Things being what they are, it may even be the best we can hope for.

Beckow , December 2, 2017 at 9:48 pm GMT
@Erebus

"(Failed) West and a multipolar Rest". The latter is what I think will actually happen in the near and medium term.

I think we already have it, except I don't think West has failed yet. Or it has in a way, the process of failing goes on, but the consequences have not been felt much in the West yet.

I don't see any other power than the West (=US) aspiring to 'manage the world'. Maybe some ISIS fanatics have the same dream, but they are not in a position to achieve it. West has 'managed' it very poorly: mindless interventions, wars, migrants, hypocrisy, threats and blackmail.

The other 'powers' have very modest, regional aspirations. Russia or China really don't care that much who wins the elections in Portugal, or what regional papers write in Hungary – US seems to be obsessed with it. And the only justification that Western defenders offer when pressed is that 'there would be a vacuum' and 'Russians would move in'. This is obvious nonsense and only elderly paranoid Cold Warrior types believe it (peterAUS?). What is really going on is that West has over-reached and can barely handle its own problems. So they scream 'Russians are coming' to distract, or to prolong the agony. Russians are not coming, they don't care in 2017, they can barely control their huge territory today. More you see squealing and lying in the Western media, more it shows that they have not much else to work with.

Erebus , Next New Comment December 3, 2017 at 7:18 am GMT
@Beckow

"(Failed) West and a multipolar Rest". The latter is what I think will actually happen in the near and medium term.

I think we already have it, except I don't think West has failed yet. Or it has in a way, the process of failing goes on, but the consequences have not been felt much in the West yet.

Well, exogenous events aside, "decline and fall" is necessarily a process. A series of steps and plateaus is typical. A major step occurred in 2007/8, when the money failed. The bankers, in a frankly heroic display of coordination, propped up the $$$ and the West got a decade long plateau. Things are going wobbly again, financially speaking and I suspect the next step function to occur rather soon. Stays of execution have been exhausted, so it'll be interesting how the West handles it, and how the RoW reacts.

Europeans have been invited to join the Eurasian Project, to create a continental market from "Lisbon to Vladivostok". Latent dreams of Hegemony hold at least some of their elites back. The USA has also been invited, but its dreams remain much more virile. That is, until Trump who's backers seem to read the writing on the wall better than the Straussians.

I don't see any other power than the West (=US) aspiring to 'manage the world' .
The other 'powers' have very modest, regional aspirations US seems to be obsessed with it.

The fact is that the rise of the West to global dominance is due to a historical anomaly. It was fuelled (literally) by the discovery and harnessing of the chemical energy embedded in coal (late 18thC) and then oil (late 19thC). The first doubled the population, and as first movers gave the West a running start. The second turned on the afterburners, and population grew >3.5 fold. Again the West led the way. To fuel that ahistorical step-function growth curve, control of resources on a global scale became its civilizational imperative.

That growth curve has plateaued, and the rest of the world has caught/is catching up developmentally. The resources the West needs aren't going to be available to it in the way they were 100 years ago. Them days is over, for everybody really, but especially for the West because it has depleted its own hi-ROI resources, and both of its means of control (IMF$ System & U$M) of what's left of everybody else's are failing simultaneously. So its plateau will not be flat, or not flat for long between increasingly violent steps.

The West rode an ahistorical rogue wave of development to a point just short of Global Hegemony. That wave broke, and is now rolling back out into the world leaving the West just short of its civilizational resource requirements. No way to get back on a broken wave. In any case, China now holds the $$$ hammer, and Russia holds the military hammer, and they've now got the surfboard. Both of them, led by historically aware elites, know that Hegemony doesn't work, so will focus on keeping their neck of the woods as stable & prosperous as possible while hell blazes elsewhere.

What is really going on is that West has over-reached and can barely handle its own problems.

IMHO, what's really going on is that the West's problems are simply symptomatic of what "decline and fall", if not "collapse" looks like from within a failing system. A long time ago I read the diary of a Roman nobleman who in the most matter-of-fact style wrote of exactly the same things Westerners complain about today. How this, that or the other thing no longer works the way it did. For all of his 60+ years, every day was infinitesimally worse than the day before, until finally he decides to pack up his Roman households and move to his estates in Spain. It took 170(iirc) more years of continuous decline until Alaric finally arrived at the Gates of Rome. If wholly due to internal causes, collapse is almost always a slow motion train wreck.

'there would be a vacuum' and 'Russians would move in'. This is obvious nonsense and only elderly paranoid Cold Warrior types believe it (peterAUS?).

Actually, it's just stupid. Cold Warrior or not, the view betrays a deep and abiding ignorance of both history and a large part of what drove the West's hegemonic successes. That both militate against anyone else ever even trying such a thing on a global scale can't be seen if you look at historical developments and the rest of the world through 10′ of 1″ pipe.

The idea that Russia wants/needs the Baltics is even more laughable than that it wants/needs the Ukraine or Poland. None of these tarbabies have anything to offer but trouble. Noisome flies on an elephant, it is only if they make themselves more troublesome as outsiders than they would be as vassals would Russia move.

Beckow , Next New Comment December 3, 2017 at 10:13 pm GMT
@Erebus

"Things are going wobbly again"

Why do you think so? I think we are about to enter an occasional plateau and things will be stable or even improve for a while. The Rome analogies are instructive, but they only take you so far. E.g. Rome was collapsing for about two centuries, on and off. Rome was also infinitely more brutal than today's West and the 'barbarians' were real barbarians, not aspiring migrants led by well-paid NGO comprador class. Why do you think it is getting wobbly?

[Dec 03, 2017] Brood of Vipers

May 07, 2015 | jessescrossroadscafe.blogspot.com
"The power and influence of the financial sector threatens a continuation of the regulatory capture that contributed to the financial crisis. Financial firms, too often, have significant say in the appointment of high regulatory officials.

The tendency of some former government officials to obtain highly lucrative positions in the financial sector after leaving government may well act as an inducement to those remaining in government to serve the interest of the financial sector rather than those of the public."

Brooksley Born, Finance & Society Conference, May 5, 2015


The Western Banks are all over these markets, from commodities to equities. They are creating huge amounts of money debt, and providing it to the financial industry as top down stimulus. What results is little aggregate or 'organic' growth and a series of paper asset bubbles. They should be ashamed but they are too busy plundering to feel any twinge of conscience. They are like a herd of swine, racing for the abyss.

I had to chuckle when the pampered princesses and giggling jackals were talking about the jobs report tomorrow, and said that the ideal situation would be 'a strong jobs number with no wage growth,' a true 'goldilocks' scenario.

I have given up any expectation of reform from within. There will have to be some eye-opening incidents to shake the complacency of the fortunate few.

Non-Farm Payrolls tomorrow.

Have a pleasant evening.

[Dec 03, 2017] Stephen Kotkin How Vladimir Putin Rules

Highly recommended!
This is two years old Foreign Affair article, which actually can be viewed as a precursor of the current anti-Russian witch hunt. Foreign Affairs firmly belong to the neocons swamp, so be prepared ;-). As usual for such publications as Foreign Affairs comments are more interesting that the article. BTW the resistance to the neoliberal empire led by the USA can probably be mentioned as a part of Russian national idea. In this sense Stanislav Belkovsky observation that "the search for Russia's national idea, which began after the dissolution of the Soviet Union, is finally over. Now, it is evident that Russia's national idea is Vladimir Vladimirovich Putin." Putin simply became expression of this resistance to neocolonial rule, much like Gandy became in India before.
The US neoliberal elite is fixated on the idea of destroying Russia much like Roman elite was fixated on the idea of destroying Carnage.
This analysis is from 2015 or two years from now. It Is interesting to compare it (along with comments) with he current situation and new developments...
Notable quotes:
"... "the search for Russia's national idea, which began after the dissolution of the Soviet Union, is finally over. Now, it is evident that Russia's national idea is Vladimir Vladimirovich Putin." ..."
"... Russia is classified as a high-income economy by the World Bank (having a per capita GDP exceeding $14,000). Its unemployment remains low (around five percent); until recently, consumer spending had been expanding at more than five percent annually; life expectancy has been rising; and Internet penetration exceeds that of some countries in the European Union. ..."
"... it is the predatory West's efforts to enslave people to the European weltanschauung. ..."
"... This is no World Order: it a man eat man world that has been created. ..."
"... Before America decided to KILL Gadhafi by indiscriminatingly arming gangsters to carry out their will, the incipient-unity state of Libya did not have the sectarian violence that we presently hear about. ..."
"... let us examine your assertion for a moment: Bush was a Moron but Saddam was a murderous dictator. By your logic we American must be the epitome of Moron-ness, for we ELECTED Bush; Iraqis must be a gentle and good people who were overpowered by the Saddam, the Murderous Dictator.. ..."
"... By the way, how many Iraqis did Saddam murder? And then, how many Iraqis were murdered, at the command of Bush? Since the Iraqis were killed/murdered at the command of Bush, and Americans elected Bush, Americans are responsible for the murders. We Americans have blood on our hands! ..."
"... My assertion is that America is responsible for 2'000'000 deaths in Iraq ..."
"... Dear Jamil: As an American citizen, I take my hat off to you for telling the exact truth -- that the terrorist state is the United States of America and our media's propaganda stream is now in overdrive, especially in regard to Russia, which is our latest target. ..."
"... The US State Department's Victoria Nuland and our CIA (+ Blackwater mercenaries) installed the puppet Yatsenyuk/Poroshenko govt. in Kiev (to do our bidding) and CIA Dir. James Brennan himself went to Kiev to launch the civil war against the Eastern provinces that Europeans, at least, are now trying to bring to a halt. The US does leave nothing but failed states behind it, and Western Ukraine will be the next failed state in a long list. Since the end of WWII, the best estimate is that the United States, in 67 military operations and countless covert CIA operations, has destroyed between 20 and 30 million people world-wide, largely in the interest of commandeering their resources or serving the interests of the banks to which they owe money--money they were usually cajoled into borrowing. ..."
"... I hold to my original point that Islamic terrorism has been created by unjustified Western interference. ..."
"... He advocates a world ruled by an elite (unspecified). ..."
"... You seem unable to differentiate between an imperialist and a "good Samaritan". You had earlier written that, as a street walker in Europe you had not seen any slaves, my response to that posting simply told you where you could go to see slavery. And specific reference to India was simply to help you find slavery most easily - with 14 million slaves India is the centre of Modern Slavery. However, in my conversations with Indians, especially the demi-literate ones, instead of admitting to the prevailing REALITY in India, they do not admit to seeing it. With their eyes open, the street walkers do not see it ..."
"... Putin-Putin-Putin-Putin-Putin-Putin... :)) Hmmm... oк, about Putin: Look at Putin's foreign agenda this past year: Latin America just as the sanctions came in - an intentional finger in Washington's eye, as I read it - then China, China again recently, Turkey more recently, India just now. He has not been to Iran, but there, as in all these other places, he has forged or reiterated promising relations. The deals cut are too numerous to list. A couple are worth mentioning. The twin gas deals with China, worth nearly three-quarters of a trillion dollars, are historic all by themselves. In six years' time China will be buying more gas from Russia than the latter now sells to Europe. And do not miss this: My sources tell me that this gas can be priced such as to crowd the U.S. at least partially out of the Asian market. Other side of the world: Putin has just canceled a planned pipeline to southeastern Europe, the South Stream. This is the defeat Western media put it over as, surely: Russia loses some customers ..."
Mar 28, 2015 | Foreign Affairs
How did twenty-first-century Russia end up, yet again, in personal rule? An advanced industrial country of 142 million people, it has no enduring political parties that organize and respond to voter preferences.

The military is sprawling yet tame; the immense secret police are effectively in one man's pocket. The hydrocarbon sector is a personal bank, and indeed much of the economy is increasingly treated as an individual fiefdom. Mass media move more or less in lockstep with the commands of the presidential administration.

Competing interest groups abound, but there is no rival center of power. In late October 2014, after a top aide to Russia's president told the annual forum of the Valdai Discussion Club, which brings together Russian and foreign experts, that Russians understand "if there is no Putin, there is no Russia," the pundit Stanislav Belkovsky observed that "the search for Russia's national idea, which began after the dissolution of the Soviet Union, is finally over. Now, it is evident that Russia's national idea is Vladimir Vladimirovich Putin."

Russia is classified as a high-income economy by the World Bank (having a per capita GDP exceeding $14,000). Its unemployment remains low (around five percent); until recently, consumer spending had been expanding at more than five percent annually; life expectancy has been rising; and Internet penetration exceeds that of some countries in the European Union.

But Russia is now beset by economic stagnation alongside high inflation, its labor productivity remains dismally low, and its once-vaunted school system has deteriorated alarmingly. And it is astonishingly corrupt. Not only the bullying central authorities in Moscow but regional state bodies, too, have been systematically criminalizing revenue streams, while giant swaths of territory lack basic public services and local vigilante groups proliferate.

Across the country, officials who have purchased their positions for hefty sums team up with organized crime syndicates and use friendly prosecutors and judges to extort and expropriate rivals. President Vladimir Putin's vaunted "stability," in short, has turned into spoliation. But Putin has been in power for 15 years, and there is no end in sight. Stalin ruled for some three decades...

Jamil M Chaudri

Interesting but slanted and one-sided, myopic analysis. Why would the 1.6 billion Muslims spread over three continents, accept Mr Kotkin's concept of "World Order".

There is no World Order; it is the predatory West's efforts to enslave people to the European weltanschauung. It is an effort by the colonialists to prolong their hegemony over Muslim lands and people.

One of the biggest mistakes Pakia made was to join the West in destroying Soviet Russia. A bi-polar world was a better world than a unipolar world, where the west is destroying Muslim nations (one after the other).

This is no World Order: it a man eat man world that has been created.

Jamil M Chaudri -> JACK RICE

Before the invasion (and total destruction) of Afghanis there was no daily violence in Afghania. Before the invasion (and total destruction) of Iraqia, there is no daily violence in Iraqia. Before Pakia allied itself with America (leading to the further debasement of an evolving state) there were no (practically) daily suicide bombings in Pakia. Before America decided to aid Ethiopia (and joined it) in destroying Somalia, the state of Somalia had a pretty vibrant civil society, and no gangster precipitate violence.

Before America decided to KILL Gadhafi by indiscriminatingly arming gangsters to carry out their will, the incipient-unity state of Libya did not have the sectarian violence that we presently hear about. Before America decided to Destroy the Syrian State, by leading a crusade (guised as a push for, of all things, DEMOCRACY), Syria was a fast-developing state. ......... This list could be stretched back to the days of Pilgrim Fathers. But I am hoping you follow the drift.

If the hat fits, wear it! If the shoe fits, wear them!! From the top of the head to the sole of the shoes, everything is dyed deep in BLOOD.

At the moment with more than 2'000'000 deaths in Iraqia, and more than 250'000 deaths in Afgania and more than 10'000 deaths in Pakia,

Jamil M Chaudri -> BAKER ALLON

Take some smelling salts, and read what happened in North and South America, when whole nations were destroyed by the colonialists, and kept in RESERVATIONS; their children were taken to missions for conversion to Christianity, their dwellings were destroyed. Read about the Trail of Tears, when a whole nation was banished from their ancestral lands. Read about 2'000'000 deaths in Afghania. For you destruction of HUMAN LIFE is less important than destruction of statues? Shows the kind of person you are. There are many clips available on the internet showing the destruction of Human Life in most parts of Iraqia(including Mosel) by the blood thirsty invaders. Harping about statues and museums, and totally callus about human lives (millions of them) you are indeed a museum piece! Go back to the shelf you have come off.

Renee Barclay -> Jamil M Chaudri • 19 days ago

Bush was a moron but that doesn't change the fact that Saddam was a murderous dictator. And Saddam's sons were known rapists and murderers.
Iraqi Sunnis and Shiites turned on each other after Bush eliminated Saddam and that's the simple fact. And they're STILL killing each other to this day. Google it.

Jamil M Chaudri -> Renee Barclay

I do not have to Google such assertions. They are non sequitur, in nature. Even then, let us examine your assertion for a moment: Bush was a Moron but Saddam was a murderous dictator. By your logic we American must be the epitome of Moron-ness, for we ELECTED Bush; Iraqis must be a gentle and good people who were overpowered by the Saddam, the Murderous Dictator..

By the way, how many Iraqis did Saddam murder? And then, how many Iraqis were murdered, at the command of Bush? Since the Iraqis were killed/murdered at the command of Bush, and Americans elected Bush, Americans are responsible for the murders. We Americans have blood on our hands!

My assertion is that America is responsible for 2'000'000 deaths in Iraq.

On your non-sequitur. If a good man has evils sons, does the man become evil? Again, Sunnis turned against Shias; so what? About the American Civil War, Google says: Though the number of killed and wounded in the Civil War is not known precisely, most sources agree that the total number killed was between 640,000 and 700,000.

There was no civil war in Iraq before American Invasion and destruction of Iraqi State and Society. Thus, America is TOTALLY responsible for 2'000'000 deaths in Iraq.

Vivienne Perkins -> Jamil M Chaudri

Dear Jamil: As an American citizen, I take my hat off to you for telling the exact truth -- that the terrorist state is the United States of America and our media's propaganda stream is now in overdrive, especially in regard to Russia, which is our latest target.

The US State Department's Victoria Nuland and our CIA (+ Blackwater mercenaries) installed the puppet Yatsenyuk/Poroshenko govt. in Kiev (to do our bidding) and CIA Dir. James Brennan himself went to Kiev to launch the civil war against the Eastern provinces that Europeans, at least, are now trying to bring to a halt. The US does leave nothing but failed states behind it, and Western Ukraine will be the next failed state in a long list. Since the end of WWII, the best estimate is that the United States, in 67 military operations and countless covert CIA operations, has destroyed between 20 and 30 million people world-wide, largely in the interest of commandeering their resources or serving the interests of the banks to which they owe money--money they were usually cajoled into borrowing.

As for political corruption, I don't know much about Russian levels of corruption, but I know a lot about the total corruption of our system of government and the evisceration of all of our civil liberties, subsequent to the passage of the so-called and mis-named Patriot Act. By the provisions of the NDAA, any US citizen can be picked up and held in indefinite military detention without charge or trial. I wonder how much worse is Russia than that?

And since Citizens United, nearly every legislator in our Congress is absolutely bought and paid for. Maybe we should leave Russia alone and think about how to restore what we once thought of as a democratic system of governance h ere in the United States.

jlord37 -> Vivienne Perkins

One thing has nothing to do with the other. While I'm in agreement with you on the Ukrainian matter, lets not forget that Vladimir Putin's Russia also has a very big problem with Islamic extremists in their territories as does a number of countries around the world .

Vivienne Perkins -> jlord37

I'm not sure I get your point. Maybe we should think about why the West has trouble with Islamic extremists. Might it be because for over a hundred years the Western powers have chosen the dictatorial rulers of Muslim countries, drawn their boundaries, supported leaders or removed them at its own whim (as S. Hussein in Iraq, the Shah in Iran, Mubarak in Egypt, Khaddafi in Libya, etc.) and inserted Israel into Arab territory for its own reasons. Has it ever occurred to you that if Muslim nations had been allowed to develop according to their own preferences, we might possibly have a more rational and peaceful world today? I can't prove this obviously, but it does seem clear that the more the US attacks and interferes, the more hostile the Muslims become. As an American I would like to see my country behave in a more decent way and with less self-serving propaganda.

jlord37 -> Vivienne Perkins

And was America to blame for Jihadi activity thousands of years ago before its existence? Do you not realize that their actvity is given full sanction, and indeed commands them to go to war with the Kufar? Currently, there is Jihadi activity in countries stretching from India toChechnya and in several African countries. They all have to do with Islamic aggression against there neighbors and almost nothing to do with " western imperialism'

Vivienne Perkins -> jlord37

"Thousands of years ago" Islam did not exist. I hold to my original point that Islamic terrorism has been created by unjustified Western interference.

jlord37 -> Vivienne Perkins

Islam first appeared on the world stage in about the year 620 AD.

Vivienne Perkins -> jlord37

Which means it is now 1,395 years old (not thousands) and I doubt that it's legitimate to equate its idea that it was entitled to make forcible conversions to the present situation, which seems to me to have arisen fairly recently as a response to Western meddling in Arab lands.

Jamil M Chaudri -> jlord37

The answer to the one of your question is a LOWD Yes: It was the FIRST CRUSADES that brought religiosity into the GAME OF KINGS: enlarging kingdoms at the expense of neighbouring kingdoms. The First Crusade was indeed nearly a thousand years ago. The only differences between JIHAD and CRUSADE are:

1. CRUSADERS are more cruel, surreptitious, deceptive, etc.

2. Crusades have no moral component, the goal is political supremacy. Jihad is about moral supremacy, justice and equality.

Since you bring religion into the mix, try to re-read the bible (the new and the old, both of which) PRESCRIBE DEATH to heretics and non-believers. Here is a action in pursuance of such biblical dictate:

"A Spanish missionary, Bartolome de las Casas, described eye-witness accounts of mass murder, torture and rape. 2 Author Barry Lopez, summarizing Las Casas' report wrote:

"One day, in front of Las Casas, the Spanish dismembered, beheaded, or raped 3000 people. 'Such inhumanities and barbarisms were committed in my sight,' he says, 'as no age can parallel....' The Spanish cut off the legs of children who ran from them. They poured people full of boiling soap. They made bets as to who, with one sweep of his sword, could cut a person in half. They loosed dogs that 'devoured an Indian like a hog, at first sight, in less than a moment.' They used nursing infants for dog food." 3

Currently there is CRUSADING MISSIONARY activity in all non-Christian lands by religious warrior-fanatics (wearing the piety hat of the Christian hue). Read about the recent reaction local Hindu population in India against such activity.

First the Western nations used the RELIGION hat to subdue MORALLY SUPPERIOR but less BLOOD-THURSTY peoples; When that strategy ceased to work they rolled out a second version called DEMOCRACY. The second is as much of a sham as the earlier attempt.

Even internal to American, the "down trodden" masses are beginning to cry foul. The prevailing poverty rate in America is staggering. See the figures in most authoritative publications.

Reading does bring enlightenment. That is why I read from diverse sources.

jlord37 -> Jamil M Chaudri

Yes that's why millions of people are seeking to emigrate by any means necessary., and not the reverse. I can assure the " impoverished masses" in the west are in a lot better shape than they are in your neck of the woods.

But I think your trying to deflect once again. That Christianity ad well as other religions has had a bloody past, is no revelation, band I for one am no big fan. But steps have been taken since than, to temper the extremism that brought on these acts. One does not read of to many beheadings and or sucide bombings in the name of Jesus, Buddha, or Shiva. This is not meant as a criticism of Muslim people per se, or a put down of that particular of the world, it is merely mea by as a critique of some of the problems that I, and countless others see in the Islamic faith. There's no question that the leadership in the west, can be very corrupt and rapacious at times, but I think the general trend is towards an attempt at understanding and accommodation. Now, I think it is time for the Muslim world to attempt some sort of inner dialogue where they take steps towards a dressing and correcting their own problems. I enjoyed our discussion, and I hope we will be able to part in civil terms. Best wishes.

Jamil M Chaudri -> jlord37

First of all let me disabuse your notion of "my neck of the woods". In one of my earlier posting I have clearly stated that I am a proud American Citizen, living in a well wooded and watered part of the US of A. But as my country has gone wayward (essentially in pursuit of the buck) from its charter I am trying to bring America back to its promise.

You have levied accusation against me of "deflecting" arguments. Let me tell you what your problem is: you want to levy unsubstantiated accusations against others, and when they, with references, confront your falsehoods and soothsaying, you accuse the other of "deflecting" or "hijacking" the discussion! Pot calling the kettle black? Man, it is you who is unable to stick to the argument – but then, as you have no argument, of course, you have nothing to stick to. Your statements are based on your penchant for name-calling, bad mouthing, others. Perhaps your mind-set suggests that with such strategies, you will be the last "man standing" (?).
.
In my first posing on Dr Kotkin's article, I simply wanted to repudiate the so called "World Order". By what right have Great Britain and France seats at the Security Council. By definition in a democratic set-up, every unit has equal rights. What Dr Kotkins calls a World Order is therefore a sham democracy, created to benefit the West.

Under the guise of bringing democracy to Iraqia, Afghania, Libya, the Yemen, etc. the west is simply trying to prolong its hegemony. It is a sham democracy they impose on weak nations. Pliant regimes are being installed, and millions of people being killed. Any voice that is raised against such pseudo-democracy is silenced by force, by the thugs installed as "democratic" regimes. This is western patronage.

Presently, you read about EXCESSES done by the lunatic fringes of the Muslim Society (these groups, by the way, were created by and operate with the support of CIA – so that organisations like HOMELAND Security can get more dollars), because 90% of the news buzz is created by American media.

The USA is a state trying to improve its democracy on a continuous basis. In 1777 did America treat all people the same way? When was the promulgation of freedom (of SLAVES) passed in America? When was the voting rights acts passed? Are the economic developments of the Whites and Blacks (call it Afro-American, if you like) even TODAY at the same level?

I wish you and your, the very best. May Allah have his mercy on us as a Nation, so that we can STANDING TOGETHER still sing the Star-Spangled Banner.

jlord37 -> Jamil M Chaudri

We currently have a black president, black attorney General, a black director of homeland security, and a black national security adviser. That's not to mention the various statutes and regulations on the books that are strictly enforced to prevent discrimination and instances of inequality. Are these details of such small consequence? With regards to your observations of so called regime change, I am in complete agreement with you . I against such interventions wether it is Cairo or Kiev. It is up to the indigenous population of that country to determine the course that their country should take, and not have to be subjected to outside interference. However, I have to ask the question, do you really think that the CIA bears the sole responsibility for the for the existence of these groups? Could it be that they're trying to co opt them and use them for their own purposes? Im almost certain that the CIA didn't create the leaders who take certain texts and use them for recruitment purposes. All I'm suggesting is that we need to hear more from the moderate elements, and that some sort of reformation May have to be undertaken, much in the way it occurred in other religions. ( Christianity for example )

Finally, Im not sure where you got the idea that I " have a penchant of bad mouthing others" but nevertheless, I sincerely apologize if I have offended you in anyway. You are a worthy opponent, and it's been an enlightening discussion to say the least.

Robert Munro -> Jamil M Chaudri

Stephen Kotkin is a Jewish shill for the oligarchy.

Jamil M Chaudri -> Robert Munro

I only knew Dr Kotkin's background as a historian; his religious affiliation did not concern me. The only part of his writing that offended me was the concept of "World Order". I do not accept nor do I want anybody else to be suppressed by the unbridled-capitalists.

Unfortunately, to exercise unbridled capitalism, the underpinning is provided by exercise of power over others. It is the RAPE OF NATIONS.

Robert Munro -> Jamil M Chaudri

I've read Kotkin before. He advocates a world ruled by an elite (unspecified). However, from his background and affiliations, it's very possible that his mind-set matches that of Baruch Levy, below..........

"The Jewish people as a whole will become its own Messiah. It will attain world domination by the dissolution of other races, by the abolition of frontiers, the annihilation of monarchy and by the establishment of a world republic in which the Jews will everywhere exercise the privilege of citizenship.

In this New World Order, the children of Israel will furnish all the leaders without encountering opposition. The Governments of the different peoples forming the world republic will fall without difficulty into the hands of the
Jews. It will then be possible for the Jewish rulers to abolish private property and everywhere to make use of the
resources of the state.

Thus will the promise of the Talmud be fulfilled, in which it is said that when the Messianic time is come, the Jews will have all the property of the whole world in their hands."

Baruch Levy, Letter to Karl Marx (1879), printed in La Revue de Paris, p. 574, June 1, 1928

Given the 3000 year history of Judaism, its religious writings, its possession of nuclear weapons and control of the American government/economy/media, it seems appropriate to take such claims very seriously.

Robert Munro -> BAKER ALLON

Here's some more "fantasy" about your barbaric cult............

http://www.haaretz.com/news/di...

http://www.richardsilverstein....

http://www.btselem.org/downloa...

BTW- All three of the links above are to Jewish web sites - civilized Jews.

Robert Munro -> BAKER ALLON

It is the cult for which you shill that is the disease.......for 3000 years you have been a malignant cancer trying to metastasize throughout our world.

Robert Munro -> BAKER ALLON

The disease that sickens and, hopefully, will kill your cult is truth...............

"To communicate anything with a Goy about our relations would be equal to the killing of all Jews, for if the Goyim knew what we teach about them, they would kill us openly." (found in both the Torah and Talmud)

Jamil M Chaudri -> ARJAN VELLEKOOP

Of course, of course. But then, there are even some people with eyes who do not see. For them it is a blessing, for they see no evil. It is really a mental condition due to aberrant eye. By the way, Yogi Berra is supposed to have said: "You can observe a lot just by watching". But perhaps street-walkers in Europe do not watch, because their game is different, and they are enjoying the benefits of their game.

I do not want to shatter your innocence, but slaves are not seen by street-walkers: Slaves are consigned to SLAVE QUARTERS. Present day, western world has built slave quarters in India, Pakistan, Sudan, Congo, etc. This is where the Western Worlds Slaves Live. If you want to read the whole report goto: http://www.globalslaveryindex....

India has the largest number of slaves in the world (14 million).

Mind you, A related concept is "wage slavery". To understand this concept requires sensibility.

Yet another but even more subtle concept is "mental slavery". A variation of this is known as the Stockholm Syndrome. Mental Slavery is a totally abject state where the person ceases to think eigenartig but assumes the likes and hates of the person/people who have programmed him/her.

From the last line in your post, I can only assume that deep programming has been done. Programmed consciousness is virtual reality.

ARJAN VELLEKOOP -> Jamil M Chaudri

So, now the west should care for what governments in other countries do with their citizens? I thought you hated imperialists! Your reference to India is just idiotic. Why should the west feel responsible for the condition India is in?! You are probably going to say the colonial past. Well, thats bullcrap since there are plenty of countries which have grown, since their liberty, into decent and reasonably wealthy states. The west is not responsible for India, India is responsible for itself.

Particularly the Middle Eastern countries have shown behaviour to shift the blame away from their own failures. Maybe it have to do with their Islamic background, in which so many actions are based/motivated from religious basis. And of course the prophet is never wrong, so it must be the fault of a imperialist outsider.

Get real. The countries which contain these so called slaves, can make their own choices. They dont have to be part of the capitalist terrible world order. They can make the better choice like you and other believe it. Sadly enough, that idea is, apparently, not that good. Because good ideas sell itself.

Jamil M Chaudri -> ARJAN VELLEKOOP

You seem unable to differentiate between an imperialist and a "good Samaritan". You had earlier written that, as a street walker in Europe you had not seen any slaves, my response to that posting simply told you where you could go to see slavery. And specific reference to India was simply to help you find slavery most easily - with 14 million slaves India is the centre of Modern Slavery. However, in my conversations with Indians, especially the demi-literate ones, instead of admitting to the prevailing REALITY in India, they do not admit to seeing it. With their eyes open, the street walkers do not see it.

There is absolutely no religious underpinning for State Government in any of the states where Muslims are in Majority. The Saudi Family are are there because of America; the present rule in Iran is a reaction to America (re-)installing the 2-cent "SHAH" to rule the Iranian Nation. The present excesses of the Iranian state are essentially defense postures against America intransigence, and mechanisms to harm (and if possible) destroy the Iranian Nation.

I experience reality every day. If you would just come out of your VIRTUAL REALITY, you might by just watching observe some. I know deprogramming is not easy, and self-deprogramming is even more difficult.

All the same, I suggest that you wake up and smell the Coffee; if not try some smelling salts.

Robert Munro -> ARJAN VELLEKOOP

And we have read the drivel of thousands of shills for the oligarchy and the Zionist/Fascist cult...............such as yourself.

Ivan Night Terrible

Putin-Putin-Putin-Putin-Putin-Putin... :)) Hmmm... oк, about Putin: Look at Putin's foreign agenda this past year: Latin America just as the sanctions came in - an intentional finger in Washington's eye, as I read it - then China, China again recently, Turkey more recently, India just now. He has not been to Iran, but there, as in all these other places, he has forged or reiterated promising relations. The deals cut are too numerous to list. A couple are worth mentioning. The twin gas deals with China, worth nearly three-quarters of a trillion dollars, are historic all by themselves. In six years' time China will be buying more gas from Russia than the latter now sells to Europe. And do not miss this: My sources tell me that this gas can be priced such as to crowd the U.S. at least partially out of the Asian market. Other side of the world: Putin has just canceled a planned pipeline to southeastern Europe, the South Stream. This is the defeat Western media put it over as, surely: Russia loses some customers. But two points:

[Dec 03, 2017] How Complex Systems Fail

Notable quotes:
"... complex systems are prone to catastrophic failure, how that possibility is held at bay through a combination of redundancies and ongoing vigilance, but how, due to the impractical cost of keeping all possible points of failure fully (and even identifying them all) protected, complex systems "always run in degraded mode". Think of the human body. No one is in perfect health. At a minimum, people are growing cancers all the time, virtually all of which recede for reasons not well understood. ..."
"... every major investment leads to further investments (no matter how dumb or large) to protect the value of past investments. ..."
"... Tainter argues that the energy cost (defined broadly) of maintaining the dysfunction eventually overwhelms the ability of the system to generate surpluses to meet the rising needs of maintenance. ..."
"... a combination of shrinking revenue base and the subordination of all systemic needs to the needs of individual emperors to stay in power and therefore stay alive. ..."
"... In each case, some elite individual or grouping sees throwing good money after bad as necessary to keeping their power and their positions. Our current sclerotic system seems to fit this description nicely. ..."
"... One point that Tainter made is that collapse is not all bad. He presents evidence that the average well being of people in Italy was probably higher in the sixth century than in the fifth century as the Western Roman Empire died. Somewhat like death being necessary for biological evolution collapse may be the only solution to the problem of excessive complexity. ..."
"... Good-For-Me-Who-Effing-Cares-If-It's-Bad-For-You-And-Everyone-Else ..."
"... The Iron Law of Institutions (agents act in ways that benefit themselves in the context of the institution [system], regardless of the effect those actions have on the larger system) would seem to mitigate against any attempts to correct our many, quickly failing complex social and technological systems. ..."
"... It is that cumulative concentration of wealth and power over time which is ultimately destabilizing, producing accepted social norms and customs that lead to fragility in the face of both expected and unexpected shocks. This fragility comes from all sorts of specific consequences of that inequality, from secrecy to group think to brain drain to two-tiered justice to ignoring incompetence and negligence to protecting incumbents necessary to maintain such an unnatural order. ..."
"... The problem arises with any societal order over time in that corrosive elements in the form of corruptive behavior (not principle based) by decision makers are institutionalized. I may not like Trump as a person but the fact that he seems to unravel and shake the present arrangement and serves as an indicator that the people begin to realize what game is being played, makes me like him in that specific function. ..."
"... However, the failure was made immeasurably worse due to the fact that Exxon had failed to supply that pump-station with a safety manual, so when the alarms started going off the guy in the station had to call around to a bunch of people to figure out what was going on. So while it's possible that the failure would have occurred no matter what, the failure of the management to implement even the most basic of safety procedures made the failure much worse than it otherwise would have been. ..."
"... . . .but it is also true that the incentives of the capitalist system ensure that there will be more and worse accidents than necessary , as the agents involved in maintaining the system pursue their own personal interests which often conflict with the interests of system stability and safety. ..."
"... In Claus Jensen's fascinating account of the Challenger disaster, NO DOWNLINK, he describes how the managers overrode the engineers' warnings not to fly under existing weather conditions. We all know the result. ..."
"... Globalization factors in maximizing the impact of Murphy's Law: ..."
"... Where one can only say: "Forgive them Father, for they know not what they do" ..."
"... Subsumption architecture ..."
"... The inverted pendulum ..."
"... Emergent behavior of swarms ..."
"... negative selection ..."
Aug 21, 2015 | naked capitalism

Lambert found a short article by Richard Cook that I've embedded at the end of the post. I strongly urge you to read it in full. It discusses how complex systems are prone to catastrophic failure, how that possibility is held at bay through a combination of redundancies and ongoing vigilance, but how, due to the impractical cost of keeping all possible points of failure fully (and even identifying them all) protected, complex systems "always run in degraded mode". Think of the human body. No one is in perfect health. At a minimum, people are growing cancers all the time, virtually all of which recede for reasons not well understood.

The article contends that failures therefore are not the result of single causes. As Clive points out:

This is really a profound observation – things rarely fail in an out-the-blue, unimaginable, catastrophic way. Very often just such as in the MIT article the fault or faults in the system are tolerated. But if they get incrementally worse, then the ad-hoc fixes become the risk (i.e. the real risk isn't the original fault condition, but the application of the fixes). https://en.wikipedia.org/wiki/Windscale_fire#Wigner_energy documents how a problem of core instability was a snag, but the disaster was caused by what was done to try to fix it. The plant operators kept applying the fix in ever more extreme does until the bloody thing blew up.

But I wonder about the validity of one of the hidden assumptions of this article. There is a lack of agency in terms of who is responsible for the care and feeding of complex systems (the article eventually identifies "practitioners" but even then, that's comfortably vague). The assumption is that the parties who have influence and responsibility want to preserve the system, and have incentives to do at least an adequate job of that.

There are reasons to doubt that now. Economics has promoted ways of looking at commercial entities that encourage "practitioners" to compromise on safety measures. Mainstream economics has as a core belief that economies have a propensity to equilibrium, and that equilibrium is at full employment. That assumption has served as a wide-spread justification for encouraging businesses and governments to curtail or end pro-stability measures like regulation as unnecessary costs.

To put it more simply, the drift of both economic and business thinking has been to optimize activity for efficiency. But highly efficient systems are fragile. Formula One cars are optimized for speed and can only run one race.

Highly efficient systems also are more likely to suffer from what Richard Bookstaber called "tight coupling." A tightly coupled system in one in which events occur in a sequence that cannot be interrupted. A way to re-characterize a tightly coupled system is a complex system that has been in part re-optimized for efficiency, maybe by accident, maybe at a local level. That strips out some of the redundancies that serve as safeties to prevent positive feedback loops from having things spin out of control.

To use Bookstaber's nomenclature, as opposed to this paper's, in a tightly coupled system, measures to reduce risk directly make things worse. You need to reduce the tight coupling first.

A second way that the economic thinking has arguably increased the propensity of complex systems of all sorts to fail is by encouraging people to see themselves as atomized agents operating in markets. And that's not just an ideology; it's reflected in low attachment to institutions of all sorts, ranging from local communities to employers (yes, employers may insist on all sorts of extreme shows of fealty, but they are ready to throw anyone in the dust bin at a moment's notice). The reality of weak institutional attachments and the societal inculcation of selfish viewpoints means that more and more people regard complex systems as vehicles for personal advancement. And if they see those relationships as short-term or unstable, they don't have much reason to invest in helping to preserving the soundness of that entity. Hence the attitude called "IBY/YBG" ("I'll Be Gone, You'll Be Gone") appears to be becoming more widespread.

I've left comments open because I'd very much enjoy getting reader reactions to this article. Thanks!

James Levy August 21, 2015 at 6:35 am

So many ideas . Mike Davis argues that in the case of Los Angeles, the key to understanding the city's dysfunction is in the idea of sunk capital – every major investment leads to further investments (no matter how dumb or large) to protect the value of past investments.

Tainter argues that the energy cost (defined broadly) of maintaining the dysfunction eventually overwhelms the ability of the system to generate surpluses to meet the rising needs of maintenance.

Goldsworthy has argued powerfully and persuasively that the Roman Empire in the West was done in by a combination of shrinking revenue base and the subordination of all systemic needs to the needs of individual emperors to stay in power and therefore stay alive. Their answer was endlessly subdividing power and authority below them and using massive bribes to the bureaucrats and the military to try to keep them loyal.

In each case, some elite individual or grouping sees throwing good money after bad as necessary to keeping their power and their positions. Our current sclerotic system seems to fit this description nicely.

Jim August 21, 2015 at 8:15 am

I immediately thought of Tainter's "The Complex of Complex Cultures" when I starting reading this. One point that Tainter made is that collapse is not all bad. He presents evidence that the average well being of people in Italy was probably higher in the sixth century than in the fifth century as the Western Roman Empire died. Somewhat like death being necessary for biological evolution collapse may be the only solution to the problem of excessive complexity.

xxx August 22, 2015 at 4:39 am

Tainter insists culture has nothing to do with collapse, and therefore refuses to consider it, but he then acknowledges that the elites in some societies were able to pull them out of a collapse trajectory. And from the inside, it sure as hell looks like culture, as in a big decay in what is considered to be acceptable conduct by our leaders, and what interests they should be serving (historically, at least the appearance of the greater good, now unabashedly their own ends) sure looks to be playing a big, and arguably the defining role, in the rapid rise of open corruption and related social and political dysfunction.

Praedor August 21, 2015 at 9:19 am

That also sounds like the EU and even Greece's extreme actions to stay in the EU.

jgordon August 21, 2015 at 7:44 am

Then I'll add my two cents: you've left out that when systems scale linearly, the amount of complexity, and points for failure, and therefore instability, that they contain scale exponentially–that is according to the analysis of James Rickards, and supported by the work of people like Joseph Tainter and Jared Diamond.

Ever complex problem that arises in a complex system is fixed with an even more complex "solution" which requires ever more energy to maintain, and eventually the inevitably growing complexity of the system causes the complex system to collapse in on itself. This process requires no malignant agency by humans, only time.

nowhere August 21, 2015 at 12:10 pm

Sounds a lot like JMG and catabolic collapse.

jgordon August 21, 2015 at 2:04 pm

Well, he got his stuff from somewhere too.

Synoia August 21, 2015 at 1:26 pm

There are no linear systems. They are all non-linear because the include a random, non-linear element – people.

Jim August 21, 2015 at 2:26 pm

Long before there were people the Earth's eco-system was highly complex and highly unstable.

Ormond Otvos August 21, 2015 at 4:37 pm

The presumption that fixes increase complexity may be incorrect.

Fixes should include awareness of complexity.

That was the beauty of Freedom Club by Kaczinsky, T.

JTMcPhee August 21, 2015 at 4:44 pm

Maybe call the larger entity "meta-stable?" Astro and geo inputs seem to have been big perturbers. Lots of genera were around a very long time before naked apes set off on their romp. But then folks, even these hot, increasingly dry days, brag on their ability to anticipate, and profit from, and even cause, with enough leverage, de- stability. Good thing the macrocosms of our frail, violent, kindly, destructive bodies are blessed with the mechanisms of homeostasis.

Too bad our "higher" functions are not similarly gifted But that's what we get to chat about, here and in similar meta-spaces

MikeW August 21, 2015 at 7:52 am

Agree, positive density of ideas, thoughts and implications.

I wonder if the reason that humans don't appreciate the failure of complex systems is that (a) complex systems are constantly trying to correct, or cure as in your cancer example, themselves all the time until they can't at which point they collapse, (b) that things, like cancer leading to death, are not commonly viewed as a complex system failure when in fact that is what it is. Thus, while on a certain scale we do experience complex system failure on one level on a daily basis because we don't interpret it as such, and given that we are hardwired for pattern recognition, we don't address complex systems in the right ways.

This, to my mind, has to be extended to the environment and the likely disaster we are currently trying to instigate. While the system is collapsing at one level, massive species extinctions, while we have experienced record temperatures, while the experts keep warning us, etc., most people to date have experienced climate change as an inconvenience - not the early stages of systemwide failure.

Civilization collapses have been regular, albeit spaced out, occurrences. We seem to think we are immune to them happening again. Yet, it isn't hard to list the near catastrophic system failures that have occurred or are currently occurring (famines, financial markets, genocides, etc.).

And, in most systems that relate to humans with an emphasis on short term gain how does one address system failures?

Brooklin Bridge August 21, 2015 at 9:21 am

Good-For-Me-Who-Effing-Cares-If-It's-Bad-For-You-And-Everyone-Else

would be a GREAT category heading though it's perhaps a little close to "Imperial Collapse"

Whine Country August 21, 2015 at 9:52 am

To paraphrase President Bill Clinton, who I would argue was one of the major inputs that caused the catastrophic failure of our banking system (through the repeal of Glass-Steagall), it all depends on what the definition of WE is.

jrs August 21, 2015 at 10:12 pm

And all that just a 21st century version of "apres moi le deluge", which sounds very likely to be the case.

Oregoncharles August 21, 2015 at 3:55 pm

JT – just go to the Archdruid site. They link it regularly, I suppose for this purpose.

Jim August 21, 2015 at 8:42 am

Civilizational collapse is extremely common in history when one takes a long term view. I'm not sure though that I would describe it as having that much "regularity" and while internal factors are no doubt often important external factors like the Mongol Onslaught are also important. It's usually very hard to know exactly what happened since historical documentation tends to disappear in periods of collapse. In the case of Mycenae the archaeological evidence indicates a near total population decline of 99% in less than a hundred years together with an enormous cultural decline but we don't know what caused it.

As for long term considerations the further one tries to project into the future the more uncertain such projections become so that long term planning far into the future is not likely to be evolutionarily stable. Because much more information is available about present conditions than future conditions organisms are probably selected much more to optimize for the short term rather than for the largely unpredicatble long term.

Gio Bruno August 21, 2015 at 1:51 pm

it's not in question. Evolution is about responding to the immediate environment. Producing survivable offspring (which requires finding a niche). If the environment changes (Climate?) faster than the production of survivable offspring then extinction (for that specie) ensues.

Now, Homo sapien is supposedly "different" in some respects, but I don't think so.

Jim August 21, 2015 at 2:14 pm

I agree. There's nothing uniquely special about our species. Of course species can often respond to gradual change by migration. The really dangerous things are global catastrophes such as the asteroid impact at the end of the Cretaceous or whatever happened at the Permian-Triassic boundary (gamma ray burst maybe?).

Ormond Otvos August 21, 2015 at 4:46 pm

Interesting that you sit there and type on a world-spanning network batting around ideas from five thousand years ago, or yesterday, and then use your fingers to type that the human species isn't special.

Do you really think humans are unable to think about the future, like a bear hibernating, or perhaps the human mind, and its offspring, human culture and history, can't see ahead?

Why is "Learn the past, or repeat it!" such a popular saying, then?

diptherio August 21, 2015 at 9:24 am

The Iron Law of Institutions (agents act in ways that benefit themselves in the context of the institution [system], regardless of the effect those actions have on the larger system) would seem to mitigate against any attempts to correct our many, quickly failing complex social and technological systems.

jgordon August 21, 2015 at 10:40 am

This would tend to imply that attempts to organize large scale social structures is temporary at best, and largely futile. I agree. The real key is to embrace and ride the wave as it crests and callapses so its possible to manage the fall–not to try to stand against so you get knocked down and drowned. Focus your efforts on something useful instead of wasting them on a hopeless, and worthless, cause.

Jim August 21, 2015 at 2:21 pm

Civilization is obviously highly unstabe. However it should remembered that even Neolithic cultures are almost all less than 10,000 years old. So there has been little time for evolutionary adaptations to living in complex cultures (although there is evidence that the last 10,000 years has seen very rapid genetic changes in human populations). If civilization can continue indefinitely which of course is not very clear then it would be expected that evolutionary selection would produce humans much better adapted to living in complex cultures so they might become more stable in the distant future. At present mean time to collapse is probably a few hundred years.

Ormond Otvos August 21, 2015 at 4:50 pm

But perhaps you're not contemplating that too much individual freedom can destabilize society. Is that a part of your vast psychohistorical equation?

washunate August 21, 2015 at 10:34 am

Well said, but something I find intriguing is that the author isn't talking so much about civilizational collapse. The focus is more on various subsystems of civilization (transportation, energy, healthcare, etc.).

These individual components are not inherently particularly dangerous (at a systemic/civilizational level). They have been made that way by purposeful public policy choices, from allowing enormous compensation packages in healthcare to dismantling our passenger rail system to subsidizing fossil fuel energy over wind and solar to creating tax incentives that distort community development. These things are not done for efficiency. They are done to promote inequality, to allow connected insiders and technocratic gatekeepers to expropriate the productive wealth of society. Complexity isn't a byproduct; it is the mechanism of the looting. If MDs in hospital management made similar wages as home health aides, then how would they get rich off the labor of others? And if they couldn't get rich, what would be the point of managing the hospital in the first place? They're not actually trying to provide quality, affordable healthcare to all Americans.

It is that cumulative concentration of wealth and power over time which is ultimately destabilizing, producing accepted social norms and customs that lead to fragility in the face of both expected and unexpected shocks. This fragility comes from all sorts of specific consequences of that inequality, from secrecy to group think to brain drain to two-tiered justice to ignoring incompetence and negligence to protecting incumbents necessary to maintain such an unnatural order.

Linus Huber August 21, 2015 at 7:05 pm

I tend to agree with your point of view.

The problem arises with any societal order over time in that corrosive elements in the form of corruptive behavior (not principle based) by decision makers are institutionalized. I may not like Trump as a person but the fact that he seems to unravel and shake the present arrangement and serves as an indicator that the people begin to realize what game is being played, makes me like him in that specific function. There may be some truth in Thomas Jefferson's quote: "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure." Those presently benefiting greatly from the present arrangement are fighting with all means to retain their position, whether successfully or not, we will see.

animalogic August 22, 2015 at 2:18 am

Well said, washunate. I think an argument could be run that outside economic areas, the has been a drive to de-complexity.
Non economic institutions, bodies which exist for non market/profit reasons are or have been either hollowed out, or co-opted to market purposes. Charities as vast engines of self enrichment for a chain of insiders. Community groups, defunded, or shriveled to an appendix by "market forces". The list goes on and on.
Reducing the "not-market" to the status of sliced-white-bread makes us all the more dependant on the machinated complexities of "the market" .god help us .

Jay Jay August 21, 2015 at 8:00 am

Joseph Tainter's thesis, set out in "The Collapse of Complex Societies" is simple: as a civilization ages its use of energy becomes less efficient and more costly, until the Law of Diminishing Returns kicks in, generates its own momentum and the system grinds to a halt. Perhaps this article describes a late stage of that process. However, it is worth noting that, for the societies Tainter studied, the process was ineluctable. Not so for our society: we have the ability -- and the opportunity -- to switch energy sources.

Moneta August 21, 2015 at 5:48 pm

In my grandmother's youth, they did not burn wood for nothing. Splitting wood was hard work that required calories.

Today, we heat up our patios at night with gas heaters The amount of economic activity based on burning energy not related to survival is astounding.

A huge percentage of our GDP is based on economies of scale and economic efficiencies but are completely disconnected from environmental efficiencies.

This total loss is control between nature and our lifestyles will be our waterloo .

TG August 21, 2015 at 8:20 am

An interesting article as usual, but here is another take.

Indeed, sometimes complex systems can collapse under the weight of their own complexity (Think: credit default swaps). But sometimes there is a single simple thing that is crushing the system, and the complexity is a desperate attempt to patch things up that is eventually destroyed by brute force.

Consider a forced population explosion: the people are multiplied exponentially. This reduces per capita physical resources, tends to reduce per-capita capital, and limits the amount of time available to adapt: a rapidly growing population puts an economy on a treadmill that gets faster and faster and steeper and steeper until it takes superhuman effort just to maintain the status quo. There is a reason why, for societies without an open frontier, essentially no nation has ever become prosperous with out first moderating the fertility rate.

However, you can adapt. New technologies can be developed. New regulations written to coordinate an ever more complex system. Instead of just pumping water from a reservoir, you need networks of desalinization plants – with their own vast networks of power plants and maintenance supply chains – and recycling plans, and monitors and laws governing water use, and more efficient appliances, etc.etc.

As an extreme, consider how much effort and complexity it takes to keep a single person alive in the space station.

That's why in California cars need to be emissions tested, but in Alabama they don't – and the air is cleaner in Alabama. More people needs more controls and more exotic technology and more rules.

Eventually the whole thing starts to fall apart. But to blame complexity itself, is possibly missing the point.

Steve H. August 21, 2015 at 8:30 am

No system is ever 'the'.

Jim Haygood August 21, 2015 at 11:28 am

Two words, Steve: Soviet Union.

It's gone now. But we're rebuilding it, bigger and better.

Ormond Otvos August 21, 2015 at 4:54 pm

If, of course, bigger is better.

Facts not in evidence.

Ulysses August 21, 2015 at 8:40 am

"But because system operations are never trouble free, human practitioner adaptations to changing conditions actually create safety from moment to moment. These adaptations often amount to just the selection of a well-rehearsed routine from a store of available responses; sometimes, however, the adaptations are novel combinations or de novo creations of new approaches."

This may just be a rationalization, on my part, for having devoted so much time to historical studies– but it seems to me that historians help civilizations prevent collapse, by preserving for them the largest possible "store of available responses."

aronj August 21, 2015 at 8:41 am

Yves,

Thanks for posting this very interesting piece! As you know, I am a fan Bookstaber's concept of tight coupling. Interestingly, Bookstaber (2007) does not reference Cook's significant work on complex systems.

Before reading this article, I considered the most preventable accidents involve a sequence of events uninterrupted by human intelligence. This needs to be modified by Cook's points 8, 9. 10 and 12.

In using the aircraft landing in the New York river as an example of interrupting a sequence of events, the inevitable accident occurred but no lives were lost. Thus the human intervention was made possible by the unknowable probability of coupling the cause with a possible alternative landing site. A number of aircraft accidents involve failed attempts to find a possible landing site, even though Cook's point #12 was in play.

Thanks for the post!!!!!

Brooklin Bridge August 21, 2015 at 8:47 am

A possible issue with or a misunderstanding of #7. Catastrophic failure can be made up of small failures that tend to follow a critical path or multiple critical paths. While a single point of origin for catastrophic failure may rarely if ever occur in a complex system, it is possible and likely in such a system to have collections of small failures that occur or tend to occur in specific sequences of order. Population explosion (as TG points out) would be a good example of a failure in a complex social system that is part of a critical path to catastrophic failure.

Such sequences, characterized by orders of precedence, are more likely in tightly coupled systems (which as Yves points out can be any system pushed to the max). The point is, they can be identified and isolated at least in situations where a complex system is not being misused or pushed to it's limits or created due to human corruption where such sequences of likelihood may be viewed or baked into the system (such as by propaganda->ideology) as features and not bugs.

Spring Texan August 21, 2015 at 8:53 am

I agree completely that maximum efficiency comes with horrible costs. When hospitals are staffed so that people are normally busy every minute, patients routinely suffer more as often no one has time to treat them like a human being, and when things deviate from the routine, people have injuries and deaths. Same is true in other contexts.

washunate August 21, 2015 at 10:40 am

Agreed, but that's not caused by efficiency. That's caused by inequality. Healthcare has huge dispariaties in wages and working conditions. The point of keeping things tightly staffed is to allow big bucks for the top doctors and administrators.

susan the other August 21, 2015 at 2:55 pm

Yes. When one efficiency conflicts with and destroys another efficiency. Eq. Your mother juggled a job and a family and ran around in turbo mode but she dropped everything when her kids were in trouble. That is an example of an efficiency that can juggle contradictions and still not fail.

JTMcPhee August 21, 2015 at 11:38 am

Might this nurse observe that in hospitals, there isn't and can't be a "routine" to deviate from, no matter how fondly "managers" wish to try to make it and how happy they may be to take advantage of the decent, empathic impulses of many nurses and/or the need to work to eat of those that are just doing a job. Hence the kindly (sic) practice of "calling nurses off" or sending them home if "the census is down," which always runs aground against a sudden influx of billable bodies or medical crises that the residual staff is expected to just somehow cope with caring for or at least processing, until the idiot frictions in the staffing machinery add a few more person-hours of labor to the mix. The larger the institution, the greater the magnitude and impact (pain, and dead or sicker patients and staff too) of the "excursions from the norm."

It's all about the ruling decisions on what are deemed (as valued by where the money goes) appropriate outcomes of the micro-political economy In the absence of an organizing principle that values decency and stability and sustainability rather than upward wealth transfer.

Will August 21, 2015 at 8:54 am

I'll join the choir recommending Tainter as a critical source for anybody interested in this stuff.

IBG/YBG is a new concept for me, with at least one famous antecedent. "Après moi, le déluge."

diptherio August 21, 2015 at 9:17 am

The author presents the best-case scenario for complex systems: one in which the practitioners involved are actually concerned with maintaining system integrity. However, as Yves points out, that is far from being case in many of our most complex systems.

For instance, the Silvertip pipeline spill near Billings, MT a few years ago may indeed have been a case of multiple causes leading to unforeseen/unforeseeable failure of an oil pipeline as it crossed the Yellowstone river. However, the failure was made immeasurably worse due to the fact that Exxon had failed to supply that pump-station with a safety manual, so when the alarms started going off the guy in the station had to call around to a bunch of people to figure out what was going on. So while it's possible that the failure would have occurred no matter what, the failure of the management to implement even the most basic of safety procedures made the failure much worse than it otherwise would have been.

And this is a point that the oil company apologists are all too keen to obscure. The argument gets trotted out with some regularity that because these oil/gas transmission systems are so complex, some accidents and mishaps are bound to occur. This is true–but it is also true that the incentives of the capitalist system ensure that there will be more and worse accidents than necessary, as the agents involved in maintaining the system pursue their own personal interests which often conflict with the interests of system stability and safety.

Complex systems have their own built-in instabilities, as the author points out; but we've added a system of un-accountability and irresponsibility on top of our complex systems which ensures that failures will occur more often and with greater fall-out than the best-case scenario imagined by the author.

Brooklin Bridge August 21, 2015 at 9:42 am

As Yves pointed out, there is a lack of agency in the article. A corrupt society will tend to generate corrupt systems just as it tends to generate corrupt technology and corrupt ideology. For instance, we get lots of little cars driving themselves about, profitably to the ideology of consumption, but also with an invisible thumb of control, rather than a useful system of public transportation. We get "abstenence only" population explosion because "groath" rather than any rational assessment of obvious future catastrophe.

washunate August 21, 2015 at 10:06 am

Right on. The primary issue of our time is a failure of management. Complexity is an excuse more often than an explanatory variable.

abynormal August 21, 2015 at 3:28 pm

abynormal
August 21, 2015 at 2:46 pm

Am I the only hearing 9″Nails, March of the Pigs

Aug. 21, 2015 1:54 a.m. ET

A Carlyle Group LP hedge fund that anticipated a sudden currency-policy shift in China gained roughly $100 million in two days last week, a sign of how some bearish bets on the world's second-largest economy are starting to pay off.
http://www.wsj.com/articles/hedge-fund-gains-100-million-in-two-days-on-bearish-china-bet-1440136499?mod=e2tw

oink oink is the sound of system fail

Oregoncharles August 21, 2015 at 3:40 pm

A very important principle:

All systems have a failure rate, including people. We don't get to live in a world where we don't need to lock our doors and banks don't need vaults. (If you find it, be sure to radio back.)

The article is about how we deal with that failure rate. Pointing out that there are failures misses the point.

cnchal August 21, 2015 at 5:05 pm

. . .but it is also true that the incentives of the capitalist system ensure that there will be more and worse accidents than necessary, as the agents involved in maintaining the system pursue their own personal interests which often conflict with the interests of system stability and safety.

How true. A Chinese city exploded. Talk about a black swan. I wonder what the next disaster will be?

hemeantwell August 21, 2015 at 9:32 am

After a skimmy read of the post and reading James' lead-off comment re emperors (Brooklin Bridge comment re misuse is somewhat resonant) it seems to me that a distinguishing feature of systems is not being addressed and therefore being treated as though it's irrelevant.

What about the mandate for a system to have an overarching, empowered regulatory agent, one that could presumably learn from the reflections contained in this post? In much of what is posted here at NC writers give due emphasis to the absence/failure of a range of regulatory functions relevant to this stage of capitalism. These run from SEC corruption to the uncontrolled movement of massive amount of questionably valuable value in off the books transactions between banks, hedge funds etc. This system intentionally has a deliberately weakened control/monitoring function, ideologically rationalized as freedom but practically justified as maximizing accumulation possibilities for the powerful. It is self-lobotomizing, a condition exacerbated by national economic territories (to some degree). I'm not going to now jump up with 3 cheers for socialism as capable of resolving problems posed by capitalism. But, to stay closer to the level of abstraction of the article, doesn't the distinction between distributed opacity + unregulated concentrations of power vs. transparency + some kind of central governing authority matter? Maybe my Enlightenment hubris is riding high after the morning coffee, but this is a kind of self-awareness that assumes its range is limited, even as it posits that limit. Hegel was all over this, which isn't to say he resolved the conundrum, but it's not even identified here.

Ormond Otvos August 21, 2015 at 5:06 pm

Think of Trump as the pimple finally coming to a head: he's making the greed so obvious, and pissing off so many people that some useful regulation might occur.

Another thought about world social collapse: if such a thing is likely, (and I'm sure the PTB know if it is, judging from the reports from the Pentagon about how Global Warming being a national security concern) wouldn't it be a good idea to have a huge ability to overpower the rest of the world?

We might be the only nation that survives as a nation, and we might actually have an Empire of the World, previously unattainable. Maybe SkyNet is really USANet. It wouldn't require any real change in the national majority of creepy grabby people.

Jim August 21, 2015 at 9:43 am

Government bureaucrats and politicians pursue their own interests just as businessmen do. Pollution was much worst in the non-capitalist Soviet Union, East Germany and Eastern Europe than it was in the Capitalist West. Chernobyl happened under socialism not capitalism. The present system in China, although not exactly "socialism", certainly involves a massively powerful govenment but a glance at the current news shows that massive governmental power does not necessarily prevent accidents. The agency problem is not unique to or worse in capitalism than in other systems.

Holly August 21, 2015 at 9:51 am

I'd throw in the theory of cognitive dissonance as an integral part of the failure of complex systems. (Example Tarvis and Aronon's recent book: Mistakes Were Made (But Not by me))

We are more apt to justify bad decisions, with bizarre stories, than to accept our own errors (or mistakes of people important to us). It explains (but doesn't make it easier to accept) the complete disconnect between accepted facts and fanciful justifications people use to support their ideas/organization/behavior.

craazymann August 21, 2015 at 10:03 am

I think this one suffers "Metaphysical Foo Foo Syndrome" MFFS. That means use of words to reference realities that are inherently ill-defined and often unobservable leading to untestable theories and deeply personal approaches to epistemological reasoning.

just what is a 'complex system"? A system implies a boundary - there are things part of the system and things outside the system. That's a hard concept to identify - just where the system ends and something else begins. So when 'the system' breaks down, it's hard to tell with any degree of testable objectivity whether the breakdown resulted from "the system" or from something outside the system and the rest was just "an accident that could have happened to anybody'"

maybe the idea is; '"if something breaks down at the worst possible time and in a way that fkks everything up, then it must have been a complex system". But it could also have been a simple system that ran into bad luck. Consider your toilet. Maybe you put too much toilet paper in it, and it clogged. Then it overflowed and ran out into your hallway with your shit everywhere. Then you realized you had an expensive Chinese rug on the floor. oh no! That was bad. you were gonna put tthat rug away as soon as you had a chance to admire it unrolled. Why did you do that? Big fckk up. But it wasn't a complex system. It was just one of those things.

susan the other August 21, 2015 at 12:14 pm

thanks for that, I think

Gio Bruno August 21, 2015 at 2:27 pm

Actually, it was a system too complex for this individual. S(He) became convinced the plumbing would work as it had previously. But doo to poor maintenance, too much paper, or a stiff BM the "system" didn't work properly. There must have been opportunity to notice something anomalous, but appropriate oversight wasn't applied.

Oregoncharles August 21, 2015 at 3:29 pm

You mean the BM was too tightly coupled?

craazyman August 21, 2015 at 4:22 pm

It coould happen to anybody after enough pizza and red wine

people weren't meant to be efficient. paper towels and duct tape can somettmes help

This ocurred to me: The entire 1960s music revolution would't have happened if anybody had to be efficient about hanging out and jamming. You really have to lay around and do nothing if you want to achieve great things. You need many opportunities to fail and learn before the genius flies. That's why tightly coupled systems are self-defeating. Because they wipe too many people out before they've had a chance to figure out the universe.

JustAnObserver August 21, 2015 at 3:01 pm

Excellent example of tight coupling: Toilet -> Floor -> Hallway -> $$$ Rug

Fix: Apply Break coupling procedure #1: Shut toilet door.
Then: Procedure #2 Jam inexpensive old towels in gap at the bottom.

As with all such measures this buys the most important thing of all – time. In this case to get the $$$Rug out of the way.

IIRC one of Bookstaber's points was that that, in the extreme, tight coupling allows problems to propagate through the system so fast and so widely that we have no chance to mitigate before they escalate to disaster.

washunate August 21, 2015 at 10:03 am

To put it more simply, the drift of both economic and business thinking has been to optimize activity for efficiency.

I think that's an interesting framework. I would say effeciency is achieving the goal in the most effective manner possible. Perhaps that's measured in energy, perhaps labor, perhaps currency units, but whatever the unit of measure, you are minimizing that input cost.

What our economics and business thinking (and most importantly, political thinking) has primarily been doing, I would say, is not optimizing for efficiency. Rather, they are changing the goal being optimized. The will to power has replaced efficiency as the actual outcome.

Unchecked theft, looting, predation, is not efficient. Complexity and its associated secrecy is used to hide the inefficiency, to justify and promote that which would not otherwise stand scrutiny in the light of day.

BigEd August 21, 2015 at 10:11 am

What nonsense. All around us 'complex systems' (airliners, pipelines, coal mines, space stations, etc.) have become steadily LESS prone to failure/disaster over the decades. We are near the stage where the only remaining danger in air travel is human error. We will soon see driverless cars & trucks, and you can be sure accident rates will decline as the human element is taken out of their operation.

tegnost August 21, 2015 at 12:23 pm

see fukushima, lithium batteries spontaneously catching fire, financial engineering leading to collapse unless vast energy is invested in them to re stabilize Driverless cars and trucks are not that soon, tech buddies say ten years I say malarkey based on several points made in the article, while as brooklyn bridge points out public transit languishes, and washunate points out that trains and other more efficient means of locomotion are starved while more complex methods have more energy thrown at them which could be better applied elsewhere. I think you're missing the point by saying look at all our complex systems, they work fine and then you ramble off a list of things with high failure potential and say look they haven't broken yet, while things that have broken and don't support your view are left out. By this mechanism safety protocols are eroded (that accident you keep avoiding hasn't happened, which means you're being too cautious so your efficiency can be enhanced by not worrying about it until it happens then you can fix it but as pointed out above tightly coupled systems can't react fast enough at which point we all have to hear the whocoodanode justification )

susan the other August 21, 2015 at 12:34 pm

And the new points of failure will be what?

susan the other August 21, 2015 at 3:00 pm

So here's a question. What is the failure heirarchy. And why don't those crucial nodes of failsafe protect the system. Could it be that we don't know what they are?

Moneta August 22, 2015 at 8:09 am

While 90% of people were producing food a few decades ago, I think a large percentage will be producing energy in a few decades right now we are still propping up our golf courses and avoiding investing in pipelines and refineries. We are still exploiting the assets of the 50s and 60s to live our hyper material lives. Those investments are what gave us a few decades of consumerism.

Now everyone wants government to spend on infra without even knowing what needs to go and what needs to stay. Maybe half of Californians need to get out of there and forget about building more infra there just a thought.

America still has a frontier ethos how in the world can the right investments in infra be made with a collection of such values?

We're going to get city after city imploding. More workers producing energy and less leisure over the next few decades. That's what breakdown is going to look like.

Moneta August 22, 2015 at 8:22 am

Flying might get safer and safer while we get more and more cities imploding.

Just like statues on Easter Island were getting increasingly elaborate as trees were disappearing.

ian August 21, 2015 at 4:02 pm

What you say is true, but only if you have a sufficient number of failures to learn from. A lot of planes had to crash for air travel to be as safe as it is today.

wm.annis August 21, 2015 at 10:19 am

I am surprised to see no reference to John Gall's General Systematics in this discussion, an entire study of systems and how they misbehave. I tend to read it from the standpoint of managing a complex IT infrastructure, but his work starts from human systems (organizations).

The work is organized around aphorisms - Systems tend to oppose their own proper function - The real world is what it is reported to the system - but one or two from this paper should be added to that repertoire. Point 7 seems especially important. From Gall, I have come to especially appreciate the Fail-Safe Theorem: "when a Fail-Safe system fails, it fails by failing to fail safe."

flora August 21, 2015 at 10:32 am

Instead of writing something long and rambling about complex systems being aggregates of smaller, discrete systems, each depending on a functioning and accurate information processing/feedback (not IT) system to maintain its coherence; and upon equally well functioning feedback systems between the parts and the whole - instead of that I'll quote a poem.

" Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold; "

-Yates, "The Second Coming"

flora August 21, 2015 at 10:46 am

erm make that "Yeats", as in W.B.

Steve H. August 21, 2015 at 11:03 am

So, naturalists observe, a flea
Has smaller fleas that on him prey;
And these have smaller still to bite 'em,
And so proceed ad infinitum.

– Swift

LifelongLib August 21, 2015 at 7:38 pm

IIRC in Robert A. Heinlein's "The Puppet Masters" there's a different version:

Big fleas have little fleas
Upon their backs to bite 'em,
And little fleas have lesser fleas
And so, ad infinitum.

Since the story is about humans being parasitized and controlled by alien "slugs" that sit on their backs, and the slugs in turn being destroyed by an epidemic disease started by the surviving humans, the verse has a macabre appropriateness.

LifelongLib August 21, 2015 at 10:14 pm

Original reply got eaten, so I hope not double post. Robert A. Heinlein's (and others?) version:

Big fleas have little fleas
Upon their backs to bite 'em
And little fleas have lesser fleas
And so ad infinitum!

Lambert Strether August 21, 2015 at 10:26 pm

The order Siphonoptera .

Oregoncharles August 21, 2015 at 10:59 pm

"And what rough beast, its hour come round at last,
slouches toward Bethlehem to be born?"

I can't leave that poem without its ending – especially as it becomes ever more relevant.

Oldeguy August 21, 2015 at 11:02 am

Terrific post- just the sort of thing that has made me a NC fan for years.
I'm a bit surprised that the commentators ( thus far ) have not referred to the Financial Crisis of 2008 and the ensuing Great Recession as being an excellent example of Cook's failure analysis.

Bethany McLean and Joe Nocera's

All The Devils Are Here www.amazon.com/All-Devils-Are-Here-Financial/dp/159184438X/

describes beautifully how the erosion of the protective mechanisms in the U.S. financial system, no single one of which would have of itself been deadly in its absence ( Cook's Point 3 ) combined to produce the Perfect Storm.

It brought to mind Garett Hardin's The Tragedy Of The Commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons . While the explosive growth of debt ( and therefore risk ) obviously jeopardized the entire system, it was very much within the narrow self interest of individual players to keep the growth ( and therefore the danger ) increasing.

Ormond Otvos August 21, 2015 at 5:14 pm

Bingo. Failure of the culture to properly train its members. Not so much a lack of morality as a failure to point out that when the temple falls, it falls on Samson.

The next big fix is to use the US military to wall off our entire country, maybe include Canada (language is important in alliances) during the Interregnum.

Why is no one mentioning the Foundation Trilogy and Hari Seldon here?

Deloss August 21, 2015 at 11:29 am

My only personal experience with the crash of a complex, tightly-coupled system was the crash of the trading floor of a very big stock exchange in the early part of this century. The developers were in the computer room, telling the operators NOT to roll back to the previous release, and the operators ignored them and did so anyway. Crash!

In Claus Jensen's fascinating account of the Challenger disaster, NO DOWNLINK, he describes how the managers overrode the engineers' warnings not to fly under existing weather conditions. We all know the result.

Human error was the final cause in both cases.

Now we are undergoing the terrible phenomenon of global warming, which everybody but Republicans, candidates and elected, seems to understand is real and catastrophic. The Republicans have a majority in Congress, and refuse–for ideological and monetary reasons–to admit that the problem exists. I think this is another unfolding disaster that we can ascribe to human error.

Ormond Otvos August 21, 2015 at 5:17 pm

"Human error" needs unpacking here. In this discussion, it's become a Deus ex Humanitas. Humans do what they do because their cultural experiences impel them to do so. Human plus culture is not the same as human. That's why capitalism doesn't work in a selfish society.

Oldeguy August 21, 2015 at 5:52 pm

" capitalism doesn't work in a selfish society "
Very true, not nearly so widely realized as it should be, and the Irony of Ironies .

BayesianGame August 21, 2015 at 11:48 am

But highly efficient systems are fragile. Formula One cars are optimized for speed and can only run one race.

Another problem with obsessing about (productive or technical) efficiency is that it usually means a narrow focus on the most measured or measurable inputs and outputs, to the detriment of less measurable but no less important aspects. Wages are easier to measure than the costs of turnover, including changes in morale, loss of knowledge and skill, and regard for the organization vs. regard for the individual. You want low cost fish? Well, it might be caught by slaves. Squeeze the measurable margins, and the hidden margins will move.

Donw August 21, 2015 at 3:18 pm

You hint at a couple fallacies.

1) Measuring what is easy instead of what is important.
2) Measuring many things and then optimizing all of them optimizes the whole.

Then, have some linear thinker try to optimize those in a complex system (like any organization involving humans) with multiple hidden and delayed feedback loops, and the result will certainly be unexpected. Whether for good or ill is going to be fairly unpredictable unless someone has actually looked for the feedback loops.

IsabelPS August 21, 2015 at 1:02 pm

Very good.

It's nice to see well spelled out a couple of intuitions I've had for a long time. For example, that we are going in the wrong direction when we try to streamline instead of following the path of biology: redundancies, "dirtiness" and, of course, the king of mechanisms, negative feedback (am I wrong in thinking that the main failure of finance, as opposed to economy, is that it has inbuilt positive feedback instead of negative?). And yes, my professional experience has taught me that when things go really wrong it was never just one mistake, it is a cluster of those.

downunderer August 22, 2015 at 3:52 am

Yes, as you hint here, and I would make forcefully explicit: COMPLEX vs NOT-COMPLEX is a false dichotomy that is misleading from the start.

We ourselves, and all the organisms we must interact with in order to stay alive, are individually among the most complex systems that we know of. And the interactions of all of us that add up to Gaia are yet more complex. And still it moves.

Natural selection built the necessary stability features into our bodily complexity. We even have a word for it: homeostasis. Based on negative feedback loops that can keep the balancing act going. And our bodies are vastly more complex than our societies.

Society's problem right now is not complexity per se, but the exploitation of complexity by system components that want to hog the resources and to hell with the whole, quite exactly parallel to the behavior of cancer cells in our bodies when regulatory systems fail.

In our society's case, it is the intelligent teamwork of the stupidly selfish that has destroyed the regulatory systems. Instead of negative feedback keeping deviations from optimum within tolerable limits, we now have positive feedback so obvious it is trite: the rich get richer.

We not only don't need to de-complexify, we don't dare to. We really need to foster the intelligent teamwork that our society is capable of, or we will fail to survive challenges like climate change and the need to sensibly control the population. The alternative is to let natural selection do the job for us, using the old reliable four horsemen.

We are unlikely to change our own evolved selfishness, and probably shouldn't. But we need to control the monsters that we have created within our society. These monsters have all the selfishness of a human at his worst, plus several natural large advantages, including size, longevity, and the ability to metamorphose and regenerate. And as powerful as they already were, they have recently been granted all the legal rights of human citizens, without appropriate negative feedback controls. Everyone here will already know what I'm talking about, so I'll stop.

Peter Pan August 21, 2015 at 1:18 pm

Formula One cars are optimized for speed and can only run one race.

Actually I believe F1 has rules regarding the number of changes that can be made to a car during the season. This is typically four or five changes (replacements or rebuilds), so a F1 car has to be able to run more than one race or otherwise face penalties.

jo6pac August 21, 2015 at 1:41 pm

Yes, F-1 allows four power planets per-season it has been up dated lately to 5. There isn't anything in the air or ground as complex as a F-1 car power planet. The cars are feeding 30 or more engineers at the track and back home normal in England millions of bit of info per second and no micro-soft is not used but very complex programs watching every system in the car. A pit stop in F-1 is 2.7 seconds anything above 3.5 and your not trying hard enough.

Honda who pride themselves in Engineering has struggled in power planet design this year and admit they have but have put more engineers on the case. The beginning of this Tech engine design the big teams hired over 100 more engineers to solve the problems. Ferrari throw out the first design and did a total rebuild and it working.

This is how the world of F-1 has moved into other designs, long but a fun read.
http://www.wired.com/2015/08/mclaren-applied-technologies-f1/

I'm sure those in F-1 system designs would look at stories like this and would come to the conclusion that these nice people are the gate keepers and not the future. Yes, I'm a long time fan of F-1. Then again what do I know.

The sad thing in F-1 the gate keepers are the owners CVC.

Brooklin Bridge August 21, 2015 at 3:25 pm

Interesting comment! One has to wonder why every complex system can't be treated as the be-all. Damn the torpedos. Spare no expense! Maybe if we just admitted we are all doing absolutely nothing but going around in a big circle at an ever increasing speed, we could get a near perfect complex system to help us along.

Ormond Otvos August 21, 2015 at 5:21 pm

If the human race were as important as auto racing, maybe. But we know that's not true ;->

jo6pac August 21, 2015 at 5:51 pm

In the link it's the humans of McLaren that make all the decisions on the car and the race on hand. The link is about humans working together either in real race time or designing out problems created by others.

Marsha August 21, 2015 at 1:19 pm

Globalization factors in maximizing the impact of Murphy's Law:

  1. Meltdown potential of a globalized 'too big to fail' financial system associated with trade imbalances and international capital flows, and boom and bust impact of volatile "hot money".
  2. Environmental damage associated with inefficiency of excessive long long supply chains seeking cheap commodities and dirty polluting manufacturing zones.
  3. Military vulnerability of same long tightly coupled 'just in time" supply chains across vast oceans, war zones, choke points that are very easy to attack and nearly impossible to defend.
  4. Consumer product safety threat of manufacturing somewhere offshore out of sight out of mind outside the jurisdiction of the domestic regulatory system.
  5. Geographic concentration and contagion of risk of all kinds – fragile pattern of horizontal integration – manufacturing in China, finance in New York and London, industrialized mono culture agriculture lacking biodiversity (Iowa feeds the world). If all the bulbs on the Christmas tree are wired in series, it takes only one to fail and they all go out.

Globalization is not a weather event, not a thermodynamic process of atoms and molecules, not a principle of Newtonian physics, not water running downhill, but a hyper aggressive top down policy agenda by power hungry politicians and reckless bean counter economists. An agenda hell bent on creating a tightly coupled globally integrated unstable house of cards with a proven capacity for catastrophic (trade) imbalance, global financial meltdown, contagion of bad debt, susceptibility to physical threats of all kinds.

Synoia August 21, 2015 at 1:23 pm

Any complex system contains non-linear feedback. Management presumes it is their skill that keeps the system working over some limited range, where the behavior approximates linear. Outside those limits, the system can fail catastrophically. What is perceived as operating or management skill is either because the system is kept in "safe" limits, or just happenstance. See chaos theory.

Operators or engineers controlling or modifying the system are providing feedback. Feedback can push the system past "safe" limits. Once past safe limits, the system can fail catastrophically Such failure happen very quickly, and are always "a surprise".

Synoia August 21, 2015 at 1:43 pm

All complex system contain non-linear feedback, and all appear manageable over a small rage of operation, under specific conditions.

These are the systems' safe working limits, and sometimes the limits are known, but in many case the safe working limits are unknown (See Stock Markets).

All systems with non-linear feedback can and will fail, catastrophically.

All predicted by Chaos Theory. Best mathematical filed applicable to the real world of systems.

So I'll repeat. All complex system will fail when operating outside safe limits, change in the system, management induced and stimulus induced, can and will redefine those limits, with spectacular results.

We hope and pray system will remain within safe limits, but greed and complacency lead us humans to test those limits (loosen the controls), or enable greater levels of feedback (increase volumes of transactions). See Crash of 2007, following repeal of Glass-Stegal, etc.

Brooklin Bridge August 21, 2015 at 4:05 pm

It's Ronnie Ray Gun. He redefined it as, "Safe for me but not for thee." Who says you can't isolate the root?

Synoia August 21, 2015 at 5:25 pm

Ronnie Ray Gun was the classic example of a Manager.

Where one can only say: "Forgive them Father, for they know not what they do"

Oregoncharles August 21, 2015 at 2:54 pm

Three quite different thoughts:

First, I don't think the use of "practitioner" is an evasion of agency. Instead, it reflects the very high level of generality inherent in systems theory. The pitfall is that generality is very close to vagueness. However, the piece does contain an argument against the importance of agency; it argues that the system is more important than the individual practitioners, that since catastrophic failures have multiple causes, individual agency is unimportant. That might not apply to practitioners with overall responsibility or who intentionally wrecked the system; there's a naive assumption that everyone's doing their best. I think the author would argue that control fraud is also a system failure, that there are supposed to be safeguards against malicious operators. Bill Black would probably agree. (Note that I dropped off the high level of generality to a particular example.)

Second, this appears to defy the truism from ecology that more complex systems are more stable. I think that's because ecologies generally are not tightly coupled. There are not only many parts but many pathways (and no "practitioners"). So "coupling" is a key concept not much dealt with in the article. It's about HUMAN systems, even though the concept should apply more widely than that.

Third, Yves mentioned the economists' use of "equilibrium." This keeps coming up; the way the word is used seems to me to badly need definition. It comes from chemistry, where it's used to calculate the production from a reaction. The ideal case is a closed system: for instance, the production of ammonia from nitrogen and hydrogen in a closed pressure chamber. You can calculate the proportion of ammonia produced from the temperature and pressure of the vessel. It's a fairly fast reaction, so time isn't a big factor.

The Earth is not a closed system, nor are economies. Life is driven by the flow of energy from the Sun (and various other factors, like the steady rain of material from space). In open systems, "equilibrium" is a constantly moving target. In principle, you could calculate the results at any given condition , given long enough for the many reactions to finish. It's as if the potential equilibrium drives the process (actually, the inputs do).

Not only is the target moving, but the whole system is chaotic in the sense that it's highly dependent on variables we can't really measure, like people, so the outcomes aren't actually predictable. That doesn't really mean you can't use the concept of equilibrium, but it has to be used very carefully. Unfortunately, most economists are pretty ignorant of physical science, so ignorant they insistently defy the laws of thermodynamics ("groaf"), so there's a lot of magical thinking going on. It's really ideology, so the misuse of "equilibrium" is just one aspect of the system failure.

Synoia August 21, 2015 at 5:34 pm

Really?

"equilibrium from chemistry, where it's used to calculate the production from a reaction"

That is certainly a definition in one scientific field.

There is another definition from physics.

When all the forces that act upon an object are balanced, then the object is said to be in a state of equilibrium.

However objects on a table are considered in equilibrium, until one considers an earthquake.

The condition for an equilibrium need to be carefully defined, and there are few cases, if any, of equilibrium "under all conditions."

nat scientist August 21, 2015 at 7:42 pm

Equilibrium ceases when Chemistry breaks out, dear Physicist.

Synoia August 21, 2015 at 10:19 pm

Equilibrium ceases when Chemistry breaks out

This is only a subset.

Oregoncharles August 21, 2015 at 10:56 pm

I avoided physics, being not so very mathematical, so learned the chemistry version – but I do think it's the one the economists are thinking of.

What I neglected to say: it's an analogy, hence potentially useful but never literally true – especially since there's no actual stopping point, like your table.

John Merryman August 21, 2015 at 3:09 pm

There is much simpler way to look at it, in terms of natural cycles, because the alternative is that at the other extreme, a happy medium is also a flatline on the big heart monitor. So the bigger it builds, the more tension and pressure accumulates. The issue then becomes as to how to leverage the consequences. As they say, a crisis should never be wasted. At its heart, there are two issues, economic overuse of resources and a financial medium in which the rent extraction has overwhelmed its benefits. These actually serve as some sort of balance, in that we are in the process of an economic heart attack, due to the clogging of this monetary circulation system, that will seriously slow economic momentum.

The need then is to reformulate how these relationships function, in order to direct and locate our economic activities within the planetary resources. One idea to take into consideration being that money functions as a social contract, though we treat it as a commodity. So recognizing it is not property to be collected, rather contracts exchanged, then there wouldn't be the logic of basing the entire economy around the creation and accumulation of notational value, to the detriment of actual value. Treating money as a public utility seems like socialism, but it is just an understanding of how it functions. Like a voucher system, simply creating excess notes to keep everyone happy is really, really stupid, big picture wise.

Obviously some parts of the system need more than others, but not simply for ego gratification. Like a truck needs more road than a car, but an expensive car only needs as much road as an economy car. The brain needs more blood than the feet, but it doesn't want the feet rotting off due to poor circulation either.
So basically, yes, complex systems are finite, but we need to recognize and address the particular issues of the system in question.

Bob Stapp August 21, 2015 at 5:30 pm

Perhaps in a too-quick scan of the comments, I overlooked any mention of Nassim Nicholas Taleb's book, Antifragile. If so, my apologies. If not, it's a serious omission from this discussion.

Local to Oakland August 21, 2015 at 6:34 pm

Thank you for this.

I first wondered about something related to this theme when I first heard about just in time sourcing of inventory. (Now also staff.) I wondered then whether this was possible because we (middle and upper class US citizens) had been shielded from war and other catastrophic events. We can plan based on everything going right because most of us don't know in our gut that things can always go wrong.

I'm genX, but 3 out of 4 of my grandparents were born during or just after WWI. Their generation built for redundancy, safety, stability. Our generation, well. We take risks and I'm not sure the decision makers have a clue that any of it can bite them.

Jeremy Grimm August 22, 2015 at 4:23 pm

The just-in-time supply of components for manufacturing was described in Barry Lynn's book "Cornered" and identified as creating extreme fragility in the American production system. There have already been natural disasters that shutdown American automobile production in our recent past.

Everything going right wasn't part of the thinking that went into just-in-time parts. Everything going right - long enough - to steal away market share on price-point was the thinking. Decision makers don't worry about any of this biting them. Passing the blame down and golden parachutes assure that.

flora August 21, 2015 at 7:44 pm

This is really a very good paper. My direct comments are:

point 2: yes. provided the safety shields are not discarded for bad reasons like expedience or ignorance or avarice. See Glass-Steagall Act, for example.

point 4: yes. true of all dynamic systems.

point 7: 'root cause' is not the same as 'key factors'. ( And here the doctor's sensitivity to malpractice suits may be guiding his language.) It is important to determine key factors in order to devise better safety shields for the system. Think airplane black boxes and the 1932 Pecora Commission after the 1929 stock market crash.

Jay M August 21, 2015 at 9:01 pm

It's easy, complexity became too complex. And I can't read the small print. We are devolving into a world of happy people with gardens full of flowers that they live in on their cell phones.

Ancaeus August 22, 2015 at 5:22 am

There are a number of counter-examples; engineered and natural systems with a high degree of complexity that are inherently stable and fault-tolerant, nonetheless.

1. Subsumption architecture is a method of controlling robots, invented by Rodney Brooks in the 1980s. This scheme is modeled on the way the nervous systems of animals work. In particular, the parts of the robot exist in a hierarchy of subsystems, e.g., foot, leg, torso, etc. Each of these subsystems is autonomously controlled. Each of the subsystems can override the autonomous control of its constituent subsystems. So, the leg controller can directly control the leg muscle, and can override the foot subsystem. This method of control was remarkably successful at producing walking robots which were not sensitive to unevenness of the surface. In other words, the were not brittle in the sense of Dr. Cook. Of course, subsumption architecture is not a panacea. But it is a demonstrated way to produce very complex engineered systems consisting of many interacting parts that are very stable.

2. The inverted pendulum Suppose you wanted to build a device to balance a pencil on its point. You could imagine a sensor to detect the angle of the pencil, an actuator to move the balance point, and a controller to link the two in a feedback loop. Indeed, this is, very roughly, how a Segway remains upright. However, there is a simpler way to do it, without a sensor or a feedback controller. It turns out that if your device just moves the balance point sinusoidaly (e.g., in a small circle) and if the size of the circle and the rate are within certain ranges, then the pencil will be stable. This is a well-known consequence of the Mathieu equation. The lesson here is that stability (i.e., safety) can be inherent in systems for subtle reasons that defy a straightforward fault/response feedback.

3. Emergent behavior of swarms Large numbers of very simple agents interacting with one another can sometimes exhibit complex, even "intelligent" behavior. Ants are a good example. Each ant has only simple behavior. However, the entire ant colony can act in complex and effective ways that would be hard to predict from the individual ant behaviors. A typical ant colony is highly resistant to disturbances in spite of the primitiveness of its constituent ants.

4. Another example is the mammalian immune system that uses negative selection as one mechanism to avoid attacking the organism itself. Immature B cells are generated in large numbers at random, each one with receptors for specifically configured antigens. During maturation, if they encounter a matching antigen (likely a protein of the organism) then the B cell either dies, or is inactivated. At maturity, what is left is a highly redundant cohort of B cells that only recognize (and neutralize) foreign antigens.

Well, these are just a few examples of systems that exhibit stability (or fault-tolerance) that defies the kind of Cartesian analysis in Dr. Cook's article.

Marsha August 22, 2015 at 11:42 am

Glass-Steagall Act: interactions between unrelated functionality is something to be avoided. Auto recall: honking the horn could stall the engine by shorting out the ignition system. Simple fix is is a bit of insulation.

ADA software language: Former DOD standard for large scale safety critical software development: encapsulation, data hiding, strong typing of data, minimization of dependencies between parts to minimize impact of fixes and changes. Has safety critical software gone the way of the Glass-Steagall Act? Now it is buffer overflows, security holes, and internet protocol in hardware control "critical infrastructure" that can blow things up.

[Dec 03, 2017] Islamic Mindset Akin to Bolshevism by Srdja Trifkovic

Highly recommended!
Actually it was the West, especially the USA which created political Islam to fight Soviets. They essentially created Osama bin Laden as a political figure. The USA is also the main protector of Saudi Arabia were Wahhabism is the official religion. Then they tried to partition Russia by supporting Chechen islamists and financed the jihadist groups in Russia (especially in Dagestan).
Obama administration flirted with Muslim Brotherhood and unleashed the wars in Lybia and Siria were islamists were trying to take down the legitimate governments.
So Political Islam despite its anti-Western message used as a tool as a patsy for the destabilization of "unfriendly", the dogs that could be unleashed when weapons and money started to flow.
Now it looks like boomerang returns home.
Notable quotes:
"... I'd say that in modern times the main culprit was Zbigniew Brzezynski, who freely admitted in an interview with the French weekly magazine Le Nouvel Observateur in 1998 that he had this, as he called it, "brilliant idea" to let the Islamist genie out of the bottle to fight the Soviets in Afghanistan following the Soviet occupation in 1979. At that time he was President Carter's National Security Advisor. The transmission belt, from the CIA and various other U.S. agencies to the jihadists in Afghanistan, went via Pakistan. The ISI, the all-powerful military Inter-Service Intelligence-an institution which is pro-jihadist to boot-was used by the U.S. to arm elements which later morphed into al-Qaeda. The breeding ground for the modern, one might say postmodern form of jihadism, was Afghanistan-and it was made possible by U.S. policy inputs which helped its development. ..."
"... Instead of utter anarchy, I think we are more likely to see the ever more stringent control of the social media. The German government has already imposed on Google and Twitter which is based on the German draconian "hate speech" legislation, rather than on the universally accepted standards. On the whole we see everywhere in Europe that when you have a political party or a person trying to call a spade by its name, to call for a moratorium on immigration or for a fundamental change in the way of thinking, they will be demonized. ..."
"... The answer is fairly simple, but it would require a fundamental transformation of the mindset of the political decision-makers. It is to start treating Islamic activism not as "religious" but as an eminently political activity -- subversive political activity, in the same way as communist subversion was treated during the Cold War. ..."
"... To start with, every single potential U.S. citizen from the Islamic world needs to be interviewed in great detail about his or her beliefs and commitments. It is simply impossible for a believing Muslim to swear the oath of allegiance to the United States. None of them, if they are true believers, can regard the U.S. Constitution as superior to the Sharia-which is the law of God, while the U.S. Constitution is a man-made document. ..."
"... If there is to be a civil war in Europe, it would be pursued between the elite class which wants to continue pursuing multiculturalism and unlimited immigration --for example Germany, where over a million migrants from the Middle East, North Africa etc. were admitted in 2015 alone-and the majority of the population who have not been consulted, and who feel that their home country is being irretrievably lost. ..."
Feb 01, 2016 | chroniclesmagazine.org
View all posts from this blog

On January 23 Freedom and Prosperity Radio , Virginia's only syndicated political talk radio show, broadcast an interview with Srdja Trifkovic on the subject of Islam and the ongoing Muslim invasion of Europe. Here is the full transcript of the interview. ( Audio )

FPR: Your book The Sword of the Prophet was published back in 2002, yet here we are-15 years later-still scratching our heads over this problem. Defeating Jihad you wrote ten years ago, and yet we are still fumbling around in the dark. It seems like we don't have the ability to say what is right and what is wrong. We've lost the ability we had had during the Cold War to say out way is better than their way . . .

ST: I'm afraid the problem is deeper than that. It is in the unwillingness of the ruling elite in the Western world to come to grips with the nature of Islam-as-such. There is this constant tendency by the politicians, the media and the academia to treat jihadism as some sort of aberration which is alien to "true" Islam. We had an example of that in 2014, when President Obama went so far as to say that ISIS was "un-Islamic"! It is rather curious that the President of the United States assumes the authority of a theologian who can pass definite judgments on whether a certain phenomenon is "Islamic" or not. Likewise we have this constant repetition of the mantra of the "religion of peace and tolerance," which is simply not supported by 14 centuries of historical experience. What I've tried to emphasize in both those books you've mentioned, and in my various other writings and public appearances, is that the problem of Islam resides in the core texts, in the Kuran and the Hadith , the "Traditions" of the prophet of Islam, Muhammed. This is the source from which the historical practice has been derived ever since. The problem is not in the jihadists misinterpreting Islam, but rather in interpreting it all too well. This mythical "moderate Islam," for which everybody seems to be looking these days, is an exception and not the rule.

In answer to your question, I'd say that "scratching one's head" is-by now-only the phenomenon of those who refuse to face reality. Reasonable people who are capable of judging phenomena on their merits and on the basis of ample empirical evidence, are no longer in doubt. They see that the problem is not in the alleged misinterpretation of the Islamic teaching, but rather in its rigorous application and literal understanding. I'm afraid things will not get better, because with each and every new jihadist attack, such as the Charlie Hebdo slaughter in Paris a year ago, or again in Paris last November, or the New Year's Eve violence in Germany, we are witnessing-time and over again-the same problem. The Islamic mindset, the Islamic understanding of the world, the Muslim Weltanschauung , world outlook, is fundamentally incompatible with the Western value system and the Western way of life.

FPR: . . . It seems obvious, regarding Islam, that its "freedom of religion" is impacting other people, and it's dictated to do so-it must go out and fight the infidels. And that's where we have the disconnect. Maybe there is some traction to the statement, as you put it, that fundamentalism reflects a far more thorough following of Islam, and that it is simply incompatible with the Constitution?

ST: It is inevitable, because if you are an orthodox, practicing, mainstream Muslim, then you necessarily believe in the need to impose Sharia as the law of the land. Sharia is much more than a legal code. It is also a political program, it is a code of social behavior, it is the blueprint for the totality of human experience. That's why it is impossible to make Sharia compatible with the liberal principle of "live and let live": it is inherently aggressive to non-Islam. In the Islamic paradigm, the world is divided in the Manichean manner, black-and-white, into "the World of Faith," Dar al-Islam , literally "the world of submission," and "the World of War, Dar al-Harb .

It is the divine duty of each and every Muslim to seek the expansion of Dar al-Islam at the expense of Dar al-Harb until the one true faith is triumphant throughout the world. In this sense the Islamic mindset is very similar to Bolshevism. The Bolsheviks also believed that "the first country of Socialism" should expand its reach and control until the whole world has undergone the proletarian revolution and has become one in the march to the Utopia of communism. There is constant inner tension in the Islamic world, in the sense that for as long as non-Islam exists, it is inherently perceived as "the other," as an abomination. In that sense, Muslims perceive any concession made by the West-for instance in allowing mass immigration into Western Europe-not as a gesture of good will and multicultural tolerance, but as a sign of weakness that needs to be exploited and used as a means to an end.

FPR: The Roman Catholic Church has its Catechism which decides the issues of doctrine. Until there's an Islamic "catechism" which can say "no, this is no longer the right interpretation, this is not what it means any more"-and I don't think this would be a short-term thing, because you'd still have the splinter groups dissenting against the "traitors"-but is this the only way to go to the center of theological jurisprudence in the Islamic world?

ST: The problem is twofold. First of all, there is no "interpretation" of the Kuran . Classical Islamic sources are adamant that the Kuran needs to be taken at face value, literally. If it says in Sura 9, verse 5, "fight the infidels wherever you find them, and let them go if they convert," or if it says time and over again that the choice for a non-Muslim is to accept Islam, or to live as a second-class citizen-the dhimmi -under Islamic supremacy, or else to be killed it is very hard to imagine what sort of authority in the Islamic world would be capable of saying "now we are going to relativize and soften the message."

The second part of the problem is that there is no single authority in Islam. It is not organized in a hierarchical way like the Roman Catholic Church, where if the Pope speaks ex cathedra his pronouncements are obligatory for all Catholics everywhere. Islam is a diffused religion, with various centers of learning and various ullema who may or may not agree on certain peripheral details. Yet any any one of them who'd dare say "look, now we rally need to reinterpret the fundamental sources, the Kuran and the Hadith, so as to make it compatible with the pluralist society"-they'd immediately be condemned as heretics. We've seen attempts at reform in the past. In the end the orthodox interpretation always prevails, because it is-sadly-the right interpretation of the core texts. With neither the hierarchy capable of imposing a new form of teaching on the faithful, nor the existence of alternative core texts which would provide grounds for such reinterpretation, it is very hard to see how it could be done.

FPR: How do we go forward? . . . How does the end-game play out?

ST: I'd say that in modern times the main culprit was Zbigniew Brzezynski, who freely admitted in an interview with the French weekly magazine Le Nouvel Observateur in 1998 that he had this, as he called it, "brilliant idea" to let the Islamist genie out of the bottle to fight the Soviets in Afghanistan following the Soviet occupation in 1979. At that time he was President Carter's National Security Advisor. The transmission belt, from the CIA and various other U.S. agencies to the jihadists in Afghanistan, went via Pakistan. The ISI, the all-powerful military Inter-Service Intelligence-an institution which is pro-jihadist to boot-was used by the U.S. to arm elements which later morphed into al-Qaeda. The breeding ground for the modern, one might say postmodern form of jihadism, was Afghanistan-and it was made possible by U.S. policy inputs which helped its development.

But if we look at the past 14 centuries, time and over again we see the same phenomenon. The first time they tried to conquer Europe was across the Straits of Gibraltar and across the Iberian Peninsula, today's Spain. Then they crossed the Pyrinees and were only stopped at Poitiers by Charles Martel in 732AD. Then they were gradually being pushed back, and the Reconquista -- the reconquest of Spain-lasted 800 years, until 1492, when Cordoba finally fell to the Christian forces. Then came the second, Ottoman onslaught, in the XIVth century, which went across the Dardanelles into the Balkan Peninsula. The Turks were only finally stopped at the gates of Vienna in 1683. Pushing Turkey out of Europe went all the way to 1912, to the First Balkan War.

So we may say that we are now witnessing the third Islamic conquest of Europe. This time it is not using armed janissaries, it is using so-called refugees. In fact most of them are healthy young men, and the whole process is obviously a strategic exercise -- a joint venture between Ankara and Riyadh, who are logistically and financially helping this mass transfer of people from the Turkish and Middle Eastern refugee camps to the heart of Europe. The effect may be the same, but this time it is far more dangerous because, on the European side-unlike in 732, or 1683-there is no political will and there is no moral strength to resist. This is happening because the migrants, the invaders, see Europe as the candy store with a busted lock and they are taking advantage of that fact.

FPR: When you see the horrors of rapes and sexual assaults that took place across Germany, and now we see the Germans' response . . . vigilantes on their streets . . . this is something that we either control politically and with leadership, or else it falls apart into anarchy, Prof. Trifkovic?

ST: Instead of anarchy I think we will have a form of postmodern totalitarianism. The elite class, the government of Germany etc, and the media, will demonize those who try to resist. In fact we already have the spectacle of the minister of the interior of one of the German states saying that "hate speech" on the social networks and websites was far worse than the "incidents" in Cologne. And the Mayor of Cologne-an ultra-feminist who is also a pro-immigration enthusiast-said that in order to prevent such events in the future women should observe a "code of conduct" and keep distance "at an arm's length" from men. It's a classic example of blaming the victim. The victims of Islamic violence should change their behavior in order to adapt themselves to the code of conduct and values of the invaders. This is truly unprecedented.

Instead of utter anarchy, I think we are more likely to see the ever more stringent control of the social media. The German government has already imposed on Google and Twitter which is based on the German draconian "hate speech" legislation, rather than on the universally accepted standards. On the whole we see everywhere in Europe that when you have a political party or a person trying to call a spade by its name, to call for a moratorium on immigration or for a fundamental change in the way of thinking, they will be demonized. The same applies to Marine Le Pen in France and to her party, the Front National , or to Geert Wilders in Holland, or to Strache in Austria. Whoever tries to articulate a coherent plan of action that includes a ban or limits on Islamic immigration is immediately demonized as a right-wing fanatic or a fascist. Instead of facing the reality of the situation, that you have a multi-million Islamic diaspora in Europe which is not assimilating, which refuses even to accept a code of conduct of the host population, the reaction is always the same: blame the victim, and demonize those who try to articulate some form of resistance.

FPR: Dr. Trifkovic, how does a country such as ours, the United States, fix this problem . . .

ST: The answer is fairly simple, but it would require a fundamental transformation of the mindset of the political decision-makers. It is to start treating Islamic activism not as "religious" but as an eminently political activity -- subversive political activity, in the same way as communist subversion was treated during the Cold War. In both cases we have a committed, highly motivated group of people who want to effect a fundamental transformation of the United States in a way that is contrary to the U.S. Constitution, to the American way of life, and to the American values. It is time to stop the Islamists from hiding behind the "freedom of religion" mantra. What they are seeking is not some "freedom of religion" but the freedom to organize in order to pursue political subversion. They do not accept the U.S. Constitution.

To start with, every single potential U.S. citizen from the Islamic world needs to be interviewed in great detail about his or her beliefs and commitments. It is simply impossible for a believing Muslim to swear the oath of allegiance to the United States. None of them, if they are true believers, can regard the U.S. Constitution as superior to the Sharia-which is the law of God, while the U.S. Constitution is a man-made document. I happen to know the oath because I am myself a naturalized U.S. citizen. They can do it "in good faith" from their point of view by practicing taqqiya . This is the Arab word for the art of dissimulation, when the Muslim lies to the infidel in order to protect the faith. For them to lie to investigators or to immigration officials about their beliefs and their objectives does not create any conflict of conscience. The prophet of Islam himself has mandated the use of taqqiya if it serves the objective of spreading the faith.

FPR: Can a civil war come out of this? Is it conceivable?

ST: If there is to be a civil war in Europe, it would be pursued between the elite class which wants to continue pursuing multiculturalism and unlimited immigration --for example Germany, where over a million migrants from the Middle East, North Africa etc. were admitted in 2015 alone-and the majority of the population who have not been consulted, and who feel that their home country is being irretrievably lost. I do not believe that there will be many people fighting on the side of the multiculturalists' suicide, but nevertheless we still have very effective forces of coercion and control on the government side which can be deployed to prevent the articulation of any long-term, coherent plan of resistance.

FPR: Where can people continue to read you writings, Dr. Trifkovic?

ST: On Chroniclesmagazine.org where I publish weekly online commentaries, and also in the print edition of Chronicles where I have my regular column.

[Dec 03, 2017] Nokia Shareholders Fight Back

On the topic of outsourcing, IMO it can be cheaper if done right. On paper it always seems like a great idea, but in practice it's not always the best idea financially and/or getting the same or better result in comparison to keeping it in-house. I've worked for companies where they have outsourced a particular department/function to companies where I am the one the job is outsourced to. My observation has been the success of getting projects done (e.g.: programing) or facilitating a role (e.g.: sys admin) rely on a few factors regardless of outsourcing or not.
Notable quotes:
"... On the topic of outsourcing, IMO it can be cheaper if done right. On paper it always seems like a great idea, but in practice it's not always the best idea financially and/or getting the same or better result in comparison to keeping it in-house. I've worked for companies where they have outsourced a particular department/function to companies where I am the one the job is outsourced to. My observation has been the success of getting projects done (e.g.: programing) or facilitating a role (e.g.: sys admin) rely on a few factors regardless of outsourcing or not. ..."
Slashdot

noc007 (633443)

On the topic of outsourcing, IMO it can be cheaper if done right. On paper it always seems like a great idea, but in practice it's not always the best idea financially and/or getting the same or better result in comparison to keeping it in-house. I've worked for companies where they have outsourced a particular department/function to companies where I am the one the job is outsourced to. My observation has been the success of getting projects done (e.g.: programing) or facilitating a role (e.g.: sys admin) rely on a few factors regardless of outsourcing or not.

The first is a golden rule of sorts on doing anything:

You can only pick two; NO exceptions. I've encountered so many upper management types that foolishly think they can get away with having all three. In my experience 9/10 of the time it turns out a lack of quality bites them in the butt sometime down the road when they assumed they somehow managed to achieve all three.

The second is communication. Mostly everyone in at least the US has experienced the pain of being subjected to some company's outsourced customer service and/or tech support that can't effectively communicate with both parties on the same page of understanding one another. I really shouldn't need to explain why communication, understanding one another is so important. Sadly this is something I have to constantly explain to my current boss with events like today where my non-outsourced colleague rebooted a number of production critical servers when he was asked to reboot just one secondary server.

Third is the employee's skill in doing the job. Again, another obvious one, but I've observed that it isn't always on the hiring menu. Additionally I've seen some people that interview well, but couldn't create a "Hello World" HTML page for a web developer position as an example. There's no point in hiring or keeping a hired individual to do a job that they lack the skill to do; even if it's an entry-level position with training, that person should be willing to put for the effort to learn and take notes. I accept that everyone has their own unique skills that can aide or hinder their ability to learn and be proficient with a particular task. However, I firmly believe anyone can learn to do anything as long as they put their mind to it. I barely have any artistic ability and my drawing skills are stick figures at best (XKCD is miles ahead of me); if I were to put forth the effort to learn how to draw and paint, I could become a good artist. I taught an A+ technician certification class at a tech school a while back and I had a retired Marine that served in the Vietnam War as one of my students. One could argue his best skill was killing and blowing stuff up. He worked hard and learned to be a technician and passed CompTIA's certification test without a problem. That leads me to the next point.

Lastly is attitude of the end employee doing the actual work. It boggles my mind how so many managers loose the plot when it comes to employee morale and motivation. Productivity generally is improved when those two are improved and it usually doesn't have to involve spending a bunch of money. The employee's attitude should be getting the work done correctly in a reasonable amount of time. Demanding it is a poor approach. Poisoning an employee will result in poisoning the company in a small manner all the way up to the failure of the company. Employees should be encouraged through actual morale improvements, positive motivation, and incentives for doing more work at the same and/or better quality level.

Outsourcing or keeping things in house can be successful and possibly economical if approached correctly with the appropriate support of upper management.

Max Littlemore (1001285)

How dramatic? Isn't outsourcing done (like it or not) to reduce costs?

Outsourcing is done to reduce the projected costs that PHBs see. In reality, outsourcing can lead to increased costs and delays due to time zone differences and language/cultural barriers.

I have seen it work reasonably well, but only when the extra effort and delays caused by the increased need for rework that comes from complex software projects. If you are working with others on software, it is so much quicker to produce quality software if the person who knows the business requirements is sitting right next to the person doing design and the person cutting code and the person doing the testing, etc, etc.

If these people or groups are scattered around the world with different cultures and native languages, communication can suffer, increasing misunderstanding and reducing the quality. I have personally seen this lead to massive increase in code defects in a project that went from in house development to outsourced.

Also, time zone differences cause problems. I have noticed that the further west people live, the less likely they are to take into account how far behind they are. Working with people who fail to realise that their Monday morning is the next day for someone else, or that by the time they are halfway through Friday, others are already on their weekend is not only frustrating, it leads to slow turn around of bug fixes, etc.

Yeah, I'm told outsourcing keeps costs down, but I am yet to see conclusive evidence of that in the real world. At least in complex development. YMMV for support/call centre stuff.

-- I don't therefore I'm not.

[Dec 03, 2017] Business Has Killed IT With Overspecialization by Charlie Schluting

Highly recommended!
Notable quotes:
"... What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams, server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything worked, and I mean everything. ..."
"... Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free ticket for people to turn a blind eye. ..."
"... Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no." As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups. Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team is. ..."
"... The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate the efforts of another group and just implement something themselves. On and on, the arguments continue. ..."
Apr 07, 2010 | Enterprise Networking Planet

What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams, server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything worked, and I mean everything. Every application, every piece of network gear, and how every server was configured -- these people could save a business in times of disaster.

Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free ticket for people to turn a blind eye.

Specialization

You know the story: Company installs new application, nobody understands it yet, so an expert is hired. Often, the person with a certification in using the new application only really knows how to run that application. Perhaps they aren't interested in learning anything else, because their skill is in high demand right now. And besides, everything else in the infrastructure is run by people who specialize in those elements. Everything is taken care of.

Except, how do these teams communicate when changes need to take place? Are the storage administrators teaching the Windows administrators about storage multipathing; or worse logging in and setting it up because it's faster for the storage gurus to do it themselves? A fundamental level of knowledge is often lacking, which makes it very difficult for teams to brainstorm about new ways evolve IT services. The business environment has made it OK for IT staffers to specialize and only learn one thing.

If you hire someone certified in the application, operating system, or network vendor you use, that is precisely what you get. Certifications may be a nice filter to quickly identify who has direct knowledge in the area you're hiring for, but often they indicate specialization or compensation for lack of experience.

Resource Competition

Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no." As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups. Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team is.

The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate the efforts of another group and just implement something themselves. On and on, the arguments continue.

Most often, I've seen competition between server groups result in horribly inefficient uses of hardware. For example, what happens in your organization when one team needs more server hardware? Assume that another team has five unused servers sitting in a blade chassis. Does the answer change? No, it does not. Even in test environments, sharing doesn't often happen between IT groups.

With virtualization, some aspects of resource competition get better and some remain the same. When first implemented, most groups will be running their own type of virtualization for their platform. The next step, I've most often seen, is for test servers to get virtualized. If a new group is formed to manage the virtualization infrastructure, virtual machines can be allocated to various application and server teams from a central pool and everyone is now sharing. Or, they begin sharing and then demand their own physical hardware to be isolated from others' resource hungry utilization. This is nonetheless a step in the right direction. Auto migration and guaranteed resource policies can go a long way toward making shared infrastructure, even between competing groups, a viable option.

Blamestorming

The most damaging side effect of splitting into too many distinct IT groups is the reinforcement of an "us versus them" mentality. Aside from the notion that specialization creates a lack of knowledge, blamestorming is what this article is really about. When a project is delayed, it is all too easy to blame another group. The SAN people didn't allocate storage on time, so another team was delayed. That is the timeline of the project, so all work halted until that hiccup was restored. Having someone else to blame when things get delayed makes it all too easy to simply stop working for a while.

More related to the initial points at the beginning of this article, perhaps, is the blamestorm that happens after a system outage.

Say an ERP system becomes unresponsive a few times throughout the day. The application team says it's just slowing down, and they don't know why. The network team says everything is fine. The server team says the application is "blocking on IO," which means it's a SAN issue. The SAN team say there is nothing wrong, and other applications on the same devices are fine. You've ran through nearly every team, but without an answer still. The SAN people don't have access to the application servers to help diagnose the problem. The server team doesn't even know how the application runs.

See the problem? Specialized teams are distinct and by nature adversarial. Specialized staffers often relegate themselves into a niche knowing that as long as they continue working at large enough companies, "someone else" will take care of all the other pieces.

I unfortunately don't have an answer to this problem. Maybe rotating employees between departments will help. They gain knowledge and also get to know other people, which should lessen the propensity to view them as outsiders

[Dec 03, 2017] How Criminals Built Capitalism by Clive Crook

That explains why after dissolution of the USSR organized crime reached such level: this is standard capitalism development scenario.
Notable quotes:
"... In fact, the evolution of the modern economy owes more than you might think to these outlaws. That's the theme of " Forging Capitalism: Rogues, Swindlers, Frauds, and the Rise of Modern Finance " by Ian Klaus. It's a history of financial crimes in the 19th and early 20th centuries that traces a recurring sequence: new markets, new ways to cheat, new ways to transact and secure trust. As Klaus says, criminals helped build modern capitalism. ..."
"... Cochrane, in a way, was convicted of conduct unbecoming a man of his position. Playing the markets, let alone cheating, was something a man of his status wasn't supposed to do. Trust resided in social standing. ..."
"... The stories are absorbing and the larger theme is important: "Forging Capitalism" is a fine book and I recommend it. But I have a couple of criticisms. The project presumably began as an academic dissertation, and especially at the start, before Klaus starts telling the stories, the academic gravity is crushing. ..."
"... Nonetheless, Klaus is right: Give the markets' ubiquitous and ingenious criminals their due. They helped build modern capitalism, and they aren't going away. Just ask Bernie Madoff. ..."
Apr 05, 2015 | Bloomberg View

Whenever buyers and sellers get together, opportunities to fleece the other guy arise. The history of markets is, in part, the history of lying, cheating and stealing -- and of the effort down the years to fight commercial crime.

In fact, the evolution of the modern economy owes more than you might think to these outlaws. That's the theme of "Forging Capitalism: Rogues, Swindlers, Frauds, and the Rise of Modern Finance" by Ian Klaus. It's a history of financial crimes in the 19th and early 20th centuries that traces a recurring sequence: new markets, new ways to cheat, new ways to transact and secure trust. As Klaus says, criminals helped build modern capitalism.

And what a cast of characters. Thomas Cochrane is my own favorite. (This is partly because he was the model for Jack Aubrey in Patrick O'Brian's "Master and Commander" novels, which I've been reading and rereading for decades. Presumably Klaus isn't a fan: He doesn't note the connection.)

Cochrane was an aristocrat and naval hero. At the height of his fame in 1814 he was put on trial for fraud. An associate had spread false rumors of Napoleon's death, driving up the price of British government debt, and allowing Cochrane to avoid heavy losses on his investments. Cochrane complained (with good reason, in fact) that the trial was rigged, but he was found guilty and sent to prison.

The story is fascinating in its own right, and the book points to its larger meaning. Cochrane, in a way, was convicted of conduct unbecoming a man of his position. Playing the markets, let alone cheating, was something a man of his status wasn't supposed to do. Trust resided in social standing.

As the turbulent century went on, capitalism moved its frontier outward in every sense: It found new opportunities overseas; financial innovation accelerated; and buyers and sellers were ever more likely to be strangers, operating at a distance through intermediaries. These new kinds of transaction required new ways of securing trust. Social status diminished as a guarantee of good faith. In its place came, first, reputation (based on an established record of honest dealing) then verification (based on public and private records that vouched for the parties' honesty).

Successive scams and scandals pushed this evolution of trust along. Gregor MacGregor and the mythical South American colony of Poyais ("the quintessential fraud of Britain's first modern investment bubble," Klaus calls it); Beaumont Smith and an exchequer bill forging operation of remarkable scope and duration; Walter Watts, insurance clerk, theatrical entrepreneur and fraudster; Harry Marks, journalist, newspaper proprietor and puffer of worthless stocks. On and on, these notorious figures altered the way the public thought about commercial trust, and spurred the changes that enabled the public to keep on trusting nonetheless.

The stories are absorbing and the larger theme is important: "Forging Capitalism" is a fine book and I recommend it. But I have a couple of criticisms. The project presumably began as an academic dissertation, and especially at the start, before Klaus starts telling the stories, the academic gravity is crushing.

Trust, to be simple with our definition, is an expectation of behavior built upon norms and cultural habits. It is often dependent upon a shared set of ethics or values. It is also a process orchestrated through communities and institutions. In this sense, it is a cultural event and thus a historical phenomenon.

No doubt, but after a first paragraph like that you aren't expecting a page-turner. Trust me, it gets better. When he applies himself, Klaus can write. Describing the messenger who brought the false news of Napoleon's death, he says:

Removed from the dark of the street, the man could be seen by the light of two candles. He looked, a witness would later testify, "like a stranger of some importance." A German sealskin cap, festooned with gold fringes, covered his head. A gray coat covered his red uniform, upon which hung a star Neighbors and residents of the inn stirred and peered in as the visitor penned a note.

Tell me more.

My other objection is to the book's repeated suggestion that Adam Smith and other classical proponents of market economics naively underestimated the human propensity to deceive and over-credited the market's ability to promote good behavior. Klaus doesn't examine their claims at length or directly, but often says things such as:

The sociability in which Adam Smith had placed his hopes for harnessing self-interest was not a sufficient safeguard in the sometimes criminal capitalism of the ruthless free market.

Of course it wasn't. Smith didn't believe that the market's civilizing tendencies, together with humans' instinct for cooperation, were a sufficient safeguard against fraud or breach of contract or other commercial wrongs. He was nothing if not realistic about human nature. And by the way, many of the subtle adaptations to the shifting risk of fraud that Klaus describes were private undertakings, not government measures. Far from being surprised by them, Smith would have expected their development.

Nonetheless, Klaus is right: Give the markets' ubiquitous and ingenious criminals their due. They helped build modern capitalism, and they aren't going away. Just ask Bernie Madoff.

To contact the author on this story: Clive Crook at ccrook5@bloomberg.net

[Dec 03, 2017] The GOP tax bill is of the lobbies, by the PACs and for the money.

Dec 03, 2017 | www.nakedcapitalism.com

Jim Haygood , December 2, 2017 at 8:29 am

Renegade ( ex-? ) Republican David Stockman NAILS IT TO THE WALL:

To be sure, some element of political calculus always lies behind legislation. For instance, the Dems didn't pass the Wagner Act in 1935, the Voting Rights Act of 1965 or the Affordable Care Act of 2010 as exercises in pure civic virtue -- these measures targeted huge constituencies with tens of millions of votes at stake.

Still, threadbare theories and untoward effects are just that; they can't be redeemed by the risible claim that this legislative Rube Goldberg contraption being jammed through sight unseen ( in ACA redux fashion ) is for the benefit of the rank and file Republican voters, and most especially not for the dispossessed independents and Dems of Flyover America who voted for Trump out of protest against the failing status quo.

To the contrary. The GOP tax bill is of the lobbies, by the PACs and for the money. Period.

There is no higher purpose or even nugget of conservative economic principle to it. The battle cry of "pro-growth tax cuts" is just a warmed over 35-year-old mantra from the Reagan era that does not remotely reflect the actual content of the bill or disguise what it really is: namely, a cowardly infliction of more than $2 trillion of debt on future American taxpayers in order to fund tax relief today for the GOP's K Street and Wall Street paymasters.

On a net basis, in fact, fully 97% of the $1.412 trillion revenue loss in the Senate Committee bill over the next decade is attributable to the $1.369 trillion cost of cutting the corporate rate from 35% to 20% (and repeal of the related AMT). All the rest of the massive bill is just a monumental zero-sum pot stirring operation.

https://tinyurl.com/yal6ls89

Stockman, who knows federal budgeting better than most of us know the contents of our own homes, goes on to shred the tax bill item by item, leaving a smoking, scorched-earth moonscape in his deadly rhetorical wake. And he's not done yet.

But Lordy, how he scourges the last hurrah of the know-nothing R party, just before it gets pounded senseless at the polls next year. Bubble III is the last hope of the retrograde Republican Congressional rabble. But it's a 50/50 proposition at best that our beloved bubble lasts through next November. :-(

tegnost , December 2, 2017 at 8:56 am

thanks Jim, yes, this looks like it will knock the legs out of the "main st" economy, but over at versailles on the potomac they'll be listening to/playing the fiddle and watching the country burn while guzzling 300 dollar scotch and and admiring their campfire.

ambrit , December 2, 2017 at 9:19 am

Right next to "Versailles on the Potomac" is the site of the former Bonus Army camp, Anacostia Flats. The burning of the Bonus Army camp at Anacostia Flats could be seen, as a red glow, from the White House. Historians charitable to Herbert Hoover suggest that Gen. Douglass MacArthur 'conned' Hoover into letting the Army 'disperse' the Bonus Army. The resulting spectacle can be said to be one of the prime reasons why the American public rejected Hoover when he ran for re-election against Franklin Roosevelt.
I don't know if Hoover played the fiddle, but MacArthur was known to be able to play politicians like one.
The lesson here, if there is one, is that the present occupant of the White House had better be very circumspect about taking advice from Generals.

nonclassical , December 2, 2017 at 2:14 pm

"anacostia flats" bonus army raided by Wall Street General MacArthur which is reason in previous iteration of Wall Street power grab by "American Liberty League", ("The Plot To Seize the White House"-Jules Archer) Marine General Smedley Butler felt forced play whistle-blower, providing FDR leverage he needed to prosecute banksters.


Big River Bandido December 2, 2017 at 3:26 pm

The gist of the commenter's statement was true - Democrats are totally complicit in the end result of Republican economic and foreign policy. Until now, Republicans could only deliver on their promises when Democrats helped them out. The Democrats' enabling strategy eventually alienated their own core supporters. With this tax cut, the Republicans have shown, for the first time, the ability to enact and sign their own legislation.

The Democrats basically accommodated the Republicans long enough to ensure their own irrelevance. They will not rise again until their "mixed stances" and those who encourage them are purged.

[Dec 03, 2017] Another Democratic party betrayal of their former voters. but what you can expect from the party of Bill Clinton?

Highly recommended!
Dec 03, 2017 | www.nakedcapitalism.com

SpringTexan , December 2, 2017 at 12:08 pm

And I feel like the Democrats get so distracted. They have been talking about sexual harassment and stuff instead of the TAX BILL. It is so damn easy to get them to take their eyes off the ball! and get played again and again. . . and TRAGIC given the consequences . . .

Big River Bandido , December 2, 2017 at 3:10 pm

It's the perfect "distraction". Allows them to engage in virtue-signaling and "fighting for average Americans". It's all phony, they always "lose" in the end getting exactly what they wanted in the first place, while not actually having to cast a vote for it.

Kabuki theater in every respect.

jrs , December 2, 2017 at 3:18 pm

It's all related, less safety net and more inequality means more desperation to take a job, *ANY* job, means more women putting up with sexual harassment (and workplace bullying and horrible and illegal workplace conditions etc.) as the price of a paycheck.

Allegorio , December 2, 2017 at 11:07 pm

Horrible Toomey's re-election was a parallel to the Clinton/Trump fiasco. The Democrats put up a corporate shill, Katie McGinty that no-one trusted.

"Former lobbyist Katie McGinty has spent three decades in politics getting rich off the companies she regulated and subsidized. Now this master of the revolving-door wants Pennsylvania voters to give her another perch in government: U.S. Senator." Washington Examiner.

She was a Clintonite through and through, that everyone, much like $Hillary, could see through.

Expat , December 2, 2017 at 8:01 am

To paraphrase the Beatles, you say you want a revolution but you don't really mean it. You want more of the same because it makes you feel good to keep voting for your Senator or your Congressman. The others are corrupt and evil, but your guys are good. If only the others were like your guys. News flash: they are all your guys.

America is doomed. And so much the better. Despite all America has done for the world, it has also been a brutal despot. America created consumerism, super-sizing and the Kardashians. These are all unforgivable sins. America is probably the most persistently violent country in the world both domestically and internationally. No other country has invaded or occupied so much of the world, unless you count the known world in which case Macedonia wins.

This tax plan is what Americans want because they are pretty ignorant and stupid. They are incapable of understanding basic math so they can't work out the details. They believe that any tax cut is inherently good and all government is bad so that is also all that matters. They honestly think they or their kids will one day be rich so they don't want to hurt rich people. They also believe that millionaires got their money honestly and through hard work because that is what they learned from their parents.