Junk Economics

 

Over the weekend, the US Senate passed the most drastic rewrite of America’s tax system since the Reagan administration, which is expected to mostly benefit the wealthiest Americans.

This new tax cut legislation should provide further proof that the United States is hardly a republic and is instead ruled by a tiny number of the super-rich, against the concerns and interests and needs of everyone else.

Which leads to a question–After 40 years of tax cuts enacted by Republicans with the promise of trickle-down economics, how is it in this day-and-age of runaway inequality that anyone believes this shit?

In my opinion, Americans do not take seriously enough the influence of propaganda upon their lives. The elite that rule our country have created an entire economic language that’s designed to deceive. In order to manufacture consent for the retrograde economic policies that favor bankers and financial interests, they need Americans to internalize the logic that if they aren’t rich it’s their own damn fault. There is no fact-based reason to believe this whatsoever, but because America is saturated in these propaganda narratives, they believe it.

In his new book, J is for Junk Economics, heterodox economist Michael Hudson provides support for this argument and claims that junk economics provide the justification for the rich to loot and pillage the rest of us. He  says this has happened because the wealthy and the think tanks and economists that work for them have seized the language of economics, in the process deceiving millions of Americans who expected the new economy — the global economy, the digital economy, the service economy, the sharing economy — to produce new jobs, better jobs.  And it did generate enormous wealth, but mostly for a narrow, highly urbanized slice of the population. Income inequality has increased so dramatically that the American world now resembles the nineteenth-century

We can watch junk economics in real time with the recent tax cut legislation, with Republican lawmakers arguing that tax cuts for the wealthy and corporations they control will result in a torrent of new investment, in the process creating jobs.

However, corporations are not investing nor planning on investing because shareholders pressure managers to deliver immediate returns and because industries are so consolidated that dominant firms don’t actually need to invest or innovate to remain competitive. Private investors are not putting their money into productive new enterprises, but rather are earning their returns from the sky-rocketing value of assets—stocks, financial products, real estate, art—that can be passed down to future generations.

For the rest of us, wages haven’t kept up with the cost of living and debt has been substituted.

Hudson goes further and says that our economy has become financialized and that debt is used as a method of control. He draws a clear distinction between productive and extractive economies, and says that the bought and paid for corporate economists have succeeded in blurring the two together. This has helped bring about a financial oligarchy in the US that extracts payments, in the form of rents, interest and dividends. Most of the cost of living of average Americans is made up housing (rising rents and mortgage debt service), healthcare costs, monopoly products such as pharmaceuticals, and bank debt (including exploding student loans which can’t be discharged in bankruptcy). Hudson describes this arrangement as–neofeudalism.

Looking ahead, consider Hudson and J is for Junk Economics an inoculation against the oncoming swarm of bullshit.

As the tax cut legislation goes to reconciliation and Republicans threaten a government shutdown over the budget, there is no doubt in my mind that you will be confronted with junk economic theories promulgated by politicians and the corporate media.

One of the most pernicious of the junk economic falsehoods out there is the one that goes like this:“Our government is just like your household and the most important thing we can do to bring about economic growth is to balance our budget.” 

It will be only a matter of time before this whopper will be trotted out.

Shortly after that that the Democrats will decry the deficit (created by the tax cuts) and agree, reluctantly, to join with the Republicans in a bi-partisan gesture to cut “entitlements” for the good of the country.

Count on it.

Update: That didn’t take long.

Republicans Plan to Cut Food Stamps as Homelessness Rises in the US

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Yay Resistance!

 

Members of the Trump Resistance are turning handsprings over the guilty plea of President Trump’s former National Security Adviser Michael Flynn for lying to the FBI about pre-inauguration conversations with the Russian ambassador.

But, this case and its ramifications should trouble anyone who believes in the rule of law.

“What is arguably most disturbing about this case is that then-National Security Adviser Flynn was pushed into a perjury trap by Obama administration holdovers at the Justice Department who concocted an unorthodox legal rationale for subjecting Flynn to an FBI interrogation four days after he took office, testing Flynn’s recollection of the conversations while the FBI agents had transcripts of the calls intercepted by the National Security Agency,” says long time investigative reporter Robert Parry. 

“While Flynn’s humiliation has brought some palpable joy to the anti-Trump “Resistance” – one more Trump aide being taken down amid renewed hope that this investigation will somehow lead to Trump’s resignation or impeachment – many of the same people would be howling about trampled civil liberties if a Republican bureaucracy were playing this game on a Democratic president and his staff.

But the inclusion of this Israeli element shows how far afield the criminal Russia-gate investigation, headed by former FBI Director Robert Mueller, has gone. Though the original point of the inquiry was whether the Trump team colluded with Russians to use “hacked” emails to defeat Hillary Clinton’s campaign, the criminal charge against Flynn has nothing to do with election “collusion” but rather President-elect Trump’s aides weighing in on foreign policy controversies during the transition. And, the first initiative was undertaken at the request of Israeli Prime Minister Netanyahu, not Russian President Vladimir Putin.

The second item, cited by Mueller’s prosecutors, referenced a Dec. 29 Flynn-Kislyak conversation, which received public attention at the time of Flynn’s Feb. 13 resignation after only 24 days on the job. That phone call touched on Russia’s response to President Obama’s decision to issue new sanctions against the Kremlin for the alleged election interference.

The complaint alleges that Flynn didn’t mention to the FBI that he had urged Kislyak “to refrain from escalating the situation” and that Kislyak had subsequently told him that “Russia had chosen to moderate its response to those sanctions as a result of his request.”

The Dec. 29 phone call occurred while Flynn was vacationing in the Dominican Republic and thus he would have been without the usual support staff for memorializing or transcribing official conversations. So, the FBI agents, with the NSA’s transcripts, would have had a clearer account of what was said than Flynn likely had from memory. The content of Flynn’s request to Kislyak also appears rather uncontroversial, asking the Russians not to overreact to a punitive policy from the outgoing Obama administration.

In other words, both of the Flynn-Kislyak conversations appear rather unsurprising, if not inconsequential. One was taken at the behest of Israel (which proved ineffective) and the other urged the Kremlin to show restraint in its response to a last-minute slap from President Obama (which simply delayed Russian retaliation by several months).”

What I have heard from many liberals in recent months is that they don’t care about the unfairness of the Russia-gate process or the dangerous precedents that such politicized prosecutions might set. They simply view Trump as such a danger that he must be destroyed at whatever the cost.

Not only that but lately I’m noticing more and more liberals jumping on the Russia-gate bandwagon as a result of the non-stop corporate media coverage. Every time a new bombshell report, like the Flynn guilty plea, is released liberals go crazy, pointing excitedly to the new evidence and screaming–we told you so. Join us and help us impeach the orange menace.

Sorry. That’s not how I roll.

I’ll never tell my readers what they need to believe, but I will strongly encourage you to think for yourselves.

For me, it’s become clear that the Russia-gate scandal was planned by Democratic Party insiders from the moment Donald Trump defeated Hillary Clinton as a way to avoid examining the rot in the Democratic Party.

According to the book ‘Shattered’, which describes the Clinton campaign, the decision to blame Russia for her loss was made a day after Trump’s victory: “That strategy had been set within twenty-four hours of her concession speech. Mook and Podesta assembled her communications team at the Brooklyn headquarters to engineer the case that the election wasn’t entirely on the up-and-up. For a couple of hours, with Shake Shack containers littering the room, they went over the script they would pitch to the press and the public. Already, Russian hacking was the centerpiece of the argument.”

Actions have consequences. While liberals and Hillary supporters in the Democratic Party focus relentlessly on Russia-gate, the Republicans in congress took another step towards outright plutocracy.

Late last night, the US Senate passed the most drastic rewrite of America’s tax system since the Reagan administration, which is expected to mostly benefit the wealthiest Americans while further crippling the nation’s already broken healthcare system. It even includes a late addendum to allow oil drilling in the Arctic National Wildlife Refuge.

This horrible tax bill passed while everyone was distracted by the bogus Russia-gate story. Indeed, this morning, “Trump and Flynn” is still trending on Twitter in the US.

The Republicans are handing the Democrats one of those golden opportunities to actually run on an issue that benefits them in every way. The Republicans passed an enormously unpopular tax bill that hurts the vast majority of Americans while benefiting the Republican donor class. The Democrats, while posing as an opposition party, have refused to take the gift, instead amplifying the Russia-gate story and in the process empowering the deep state intelligence agencies and Military/Industrial/Complex that is salivating over a new Cold-War with Russia.

The Democratic response to Donald Trump is not surprising.

American political system, since at least 1968, has been operating like a ratchet, and both parties — Republicans and Democrats — play crucial, mutually reinforcing roles in its operation. The electoral ratchet permits movement only in the rightward direction. The Republican role is fairly clear; the Republicans apply the torque that rotates the thing rightward. The Democrats’ role is a little less obvious. The Democrats are the pawl. They don’t resist the rightward movement — they let it happen — but whenever the rightward force slackens momentarily, for whatever reason, the Democrats click into place and keep the machine from rotating back to the left.”

(Picture of a mechanical ratchet)

 

This is why what now passes for the liberal in the United States is considered right-wing in most first world countries.

Yay Resistance!

 

 

 

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The Rehabilitation of George W. Bush

 

Nothing says United States of Amnesia quite like the rehabilitation of George W. Bush.

Articles in the New York Times, the Washington Post, and even the Guardian eagerly reported Bush’s recent speech with its implicit criticisms of Trump as a hopeful sign of resistance from the responsible Republican right.

There’s a big problem with this analysis.

Trump isn’t an aberration. He represents a distinguishable line of continuity with all previous American presidents since WWII, where the chief-executive has been granted extraordinary powers over a vast corporate empire.

The corporate media cannot and will not go there. US history must be Disney-fied and any deviation censored in the ongoing campaign to bathe it in the soft, warm glow of American exceptionalism.

For instance, the New York Times article allowed Bush to state, without correction, this whopper–“Since World War II, America has encouraged and benefited from the global advance of free markets, from the strength of democratic alliances, and from the advance of free societies.”

As Alfred McCoy demonstrates in his recent book, In the Shadows of the American Century, this is a remarkable case of projection. Instead of advancing free societies and promoting democracy, the US has a 70 year history of destroying free-societies and deterring democracy.

“A list of examples would perhaps begin with the 1953 British and U.S.-backed coup against the democratically elected Iranian Prime Minister Mohammad Mossadegh that would install the despotic Shah in power in that country.  It would certainly continue with the 1954 U.S. and United Fruit Company coup against Jacobo Arbenz, the democratically elected president of Guatemala (an early instance of Washington’s post-World War II “encouragement” of anything-but-free-trade); the 1960 CIA-backed coup against, and the murder of, Congolese Prime Minister Patrice Lumumba; and the 1973 military coup in Chile. An honest history would also include the active “encouragement” of societies that were anything but free, including those run by juntas, dictators, or military governments in Greece, Brazil, Argentina, the Philippines, Indonesia, Nicaragua, El Salvador, Honduras, Uruguay, Iraq, and South Korea, to name just a few.”

The rehabilitation of W. and for all US presidents, is serious business.

All American presidents must be rehabilitated. Going further, not just rehabilitated but absolved of all the blood they spill in our name.

We have to absolve them to absolve us.

If we want to change our country for the better we need to acknowledge these uncomfortable truths about US presidents.

Otherwise, in a few years we’ll be rehabilitating Trump too

 

 

 

 

 

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Propagandized

 

I’m so sick of reading letters-to-the-editor in our local paper blaming Russia for besmirching our precious democracy and electing Donald Trump.

Why, you’d almost think that there was a propaganda effort afoot to get gullible Americans to believe such a thing.

Oh, wait.

During Russia-gate, all the usual standards of proof and logic have been jettisoned. If something serves the narrative, no matter how dubious, it is embraced by corporate media, like CNN, which – for the past year – has taken a lead role in the anti-Trump “Resistance.”

You would have thought that we’d learned our lesson about trusting the corporate media after their behavior in the run-up to the invasion of Iraq. Back then the “fake news” was published by the New York Times and Washington Post. Editors and writers saw that being pro-war was the route to fame and fortune while questioning US motives was a certain career-killer, as Phil Donahue discovered.

I guess that every day is a brand new day in America. Gore Vidal nailed it when he described us as the United States of Amnesia. In a country where critical thinking is seen as some sort of nerdy fashion, I suppose that we deserve to be propagandized.

What’s maddening is that many of the liberals who’ve climbed on the Russia-gate bandwagon aren’t dumb. Many of them are highly educated with professional degrees. The big problem is that all this knowledge is silo-ized. You might be a socialogist or an engineer, but you’re not allowed to have awareness of any other field of study. This makes Americans easy marks for the type of sophisticated propaganda that our country specializes in.

“The answer is that their problem isn’t a lack of intelligence, it’s a lack of self-awareness,” claims iconoclastic blogger Caitlin Johnstone. “You can have a PhD and an exceptionally high IQ, but if you haven’t done enough rigorous self-reflection in your life, you often won’t have enough awareness of your own mental processes to be able to tell the difference between agendaless information and ham-fisted attempts to manipulate you.”

As someone who grew up disbelieving everything I was told, it puzzles me to see how people believe this shit. At times I feel like a geologist who’s fortunate enough to witness not one but two volcanic eruptions. First of all, I got to marvel at how effective American propaganda was in the run up to the invasion of Iraq, and now I get to watch the whole Russia-gate thing unfold.

Is this great country, or what?

Here’s the million-dollar question–why have the Russians become the official enemy again, 25 years after the end of the Cold War and dissolution of the Soviet Union?

Maybe because the Russians have stymied our empire-centric foreign policies?

This process of turning Russia into an enemy and restarting the Cold-War was well underway during Obama’s second term. The election of Trump with his promise to reset relations between the two nuclear-armed powers kicked the campaign into high gear. For the neoconservatives and the security state, the idea of normal relations was anathema. Going back to the first Bush administration, the neocons, led by Paul Wolfowitz, had articulated a belligerent foreign policy that prohibited any challenge to US hegemony.

Long time investigative journalist Robert Parry offers the best account of the sheer hubris of the neocons during the Obama administration, and especially their fury at Russian interference in Syria, where they hoped to overthrow Syrian ruler–Bashar Assad. “There is a “little-old-lady-who-swallowed-the-fly” quality to neocon thinking. When one of their schemes goes bad, they simply move to a bigger, more dangerous scheme.”

What the Russian intervention in Syria exposed and what most American fail to understand is that despite the whole smoke and mirrors trickery around the official war-on-terror franchise, the dirty little secret is that the US deploys terrorists to carry out its nefarious foreign policies.

For instance, Washington has for years given the impression of fighting against Islamist terrorist while actually weaponizing jihadism since the 1980s by deploying it against rival countries like the Soviet Union in Afghanistan, the Iraqi government in 2014, the Syrian state in 2012, and Libya’s Gaddafi in 2011.

The US hit the wall of resistance to their terrorist-friendly policies in Syria. Russia teamed up with Syrian, Iranian and Hezbollah forces to defeat the Sunni-terrorists backed by the US, Saudi Arabia, Qatar, and Israel. And now, following a two-year Russian intervention in the region, which has resulted in the defeat of the Islamic State in Syria and the preservation of the Assad regime, the Kremlin is moving on to bring together regional and global powers to revive long-stalled efforts to reach a settlement expected to cement the Syrian president in power.

If you want to understand the demonization of Russia, as well as Iran, look no further than this salient development.

The corporate media loves to criticize Russia and North Korea for having state-run media, in the process obscuring from their viewers the reality that they live in the most brilliantly-propagandized nation on earth.

Caitlin Johnstone has a valuable piece of advice to help you recognize this all-American propaganda.

“Always remember that in a corporatist society, corporate media is state media.”

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Crackpot Centrism

 

I’m smitten.

Caitlin Johnstone is my new favorite blogger. She’s smart, funny and absolutely fearless. She also writes about the things I’m most interested in–political/economy, foreign policy, and media manipulation. Perhaps because she’s Australian, Johnstone deftly deconstructs US propaganda, following the lead of Noam Chomsky, and fellow Aussie, Alex Carrey, who wrote–Taking the Risk Out of Democracy.

Most importantly, Johnstone is a heterodox writer without a lot of the political-party bias that’s so common in the corporate media. Lately, she’s been calling bullshit on the whole Russia-gate story that the Democrats have seized upon as their means to depose Trump.

“People ask why I’m skeptical of the establishment Russia narrative. I’m skeptical because we’re being lied to every single step of the way by the news media who claim to be helping the public discover the truth. Trump lies because he’s a corrupt billionaire who knows he can get away with it, but that doesn’t make him a Russian agent. The media lies because they’re bolstering the stranglehold of America’s unelected power establishment, and that makes them traitors to our species.”

The corporate media yearns for a political center, a sort of mythical sweet-spot between the Republican Party and the Democratic Party; where cultural issues on the right obscure the Republicans corporate allegiance, while identity politics accomplishes the same goal on the Democrat side.

I call this state of affairs–crackpot centrism–paraphrasing C. Wright Mills.

Crackpot centrism enforces a neoliberal orthodoxy in domestic affairs, where any ideas about the Democrats abandoning Wall Street or  Medicare-For-All are swatted down as crazy left-wing populism. In fact, the corporate media spends the bulk of its efforts defending against any challenge from the left, as their one-sided coverage of Bernie Sanders during the 2016 presidential election clearly demonstrated.

Crackpot centrism also ensures that both parties and the corporate media remain fixated on endless wars to maintain the US empire. It’s more than ironic that the one time that the corporate media did praise Trump was in the wake of his cruise-missile attack on Syria, with TV hosts orgasmic over the prospect of more war.

Unfortunately, we’ve been here before. During the first Cold War, C. Wright Mills wrote of a “crackpot realism”, where US foreign policy mandarins evoked national security to disguise the operations of the corporate deep state. “For the first time in American history, men in authority are talking about an ’emergency’ without foreseeable end.”

Right now, crackpot centrism is focused on the dangers posed by Russian meddling in the 2016 election. Both parties warn of the risks to our fragile democracy, with neoconservative Republicans joining forces with liberal Democrats to attack Trump for daring to develop better ties between the two nuclear-armed countries. Unmindful of history, Democrats are engaged in a modern day McCarthy witch-hunt, while finding allies with the CIA and FBI.

Failure to conform to the crackpot centrism is a career-killer in Washington.

All the cool-kids are down with it.

Not Johnstone, who occupies the real center. She views liberals, conservatives, and the corporate media with distrust, while critically examining the evidence.

Here’s Johnston’s mission statement:

“I’ve been quite shameless about the fact that I’m happy to have my ideas advanced by people all across the political spectrum, from far left to far right. I will never have the ear of the US President’s eldest son, but if I did I wouldn’t hesitate to try and use that advantage if I thought I could get him to put our stuff out there. This wouldn’t mean that I support the US president, it would mean that I saw an opening to throw an anti-establishment idea over the censorship fence into mainstream consciousness, and I exploited the partisan self-interest of a mainstream figure to do that.

We should all be willing to do this. We should all get very clear that America’s unelected power establishment is the enemy, and we should shamelessly attack it with any weapons we’ve got. I took a lot of heat for expressing my willingness to have my ideas shared by high profile individuals on the far right, and I see the same outrage converging upon Assange. Assange isn’t going to stop attacking the establishment death machine with every tool at his disposal because of this outrage, though, and neither am I. The more people we have attacking the elites free from any burden of partisan or ideological nonsense, the better.”

 

 

 

 

 

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Friends like these

 

There’s an effort underway to force the US to attack Iran. The pressure is coming from the putative allies of the US in the Middle-East: Saudi Arabia and Israel.

Of course this crazy idea is also supported by the neoconservatives, who never met a war they didn’t love. The neocons are seething because Iran has emerged as the clear winner from the invasion of Iraq and subsequent attempt to overthrow Syrian leader Bashar al-Assad.

But, how to justify an attack on Iran?

I know, blame the Iranians for 9/11.

It sounds crazy, but the neocons are nothing if not inventive. Remember how the Bush Administration, in its haste to invade Iraq, came up with all kinds of justifications–yellowcake uranium, mushroom clouds, biological-weapon-crop-dusters, and most significantly, Saddam’s supposed ties to Al-Qaeda?

Hell, it might work. American citizens are largely clueless about foreign affairs, and most of them couldn’t be bothered to find Iran on the map, or even look up from their device. More importantly, even with their record of failure, the neocons are still fully plugged into the elite foreign affairs network–a sort of echo chamber between the Council on Foreign Relations, the Hudson Institute, tthe Washington Post and New York Times.

Right now, the most immediate pressure to attack Iran is coming from key Middle-East ally, Saudi Arabia, a Wahhabist-Sunni state that views Shia-Iran as the existential enemy.

However, Saudi Arabia is undergoing a severe crisis.

The always reliable, Asian Times journalist, Pepe Escobar, claims that–“War has broken out within the House of Saud, as Asia Times had anticipated back in July. Rumors have been swirling for months about a coup against Mohammed bin Salman in the making. Instead, what just happened is yet another MBS pre-emptive coup.”

It gets crazier.

Right before this preemptive coup, Lebanon’s Prime Minister Saad al-Hariri, flew to Saudi Arabia, and resigned. In his resignation speech, Hariri lashed out against Hezbollah, the Shia militia that is supported by Iran, saying its arms were targeting the “chests of Lebanese and Syrians.” He repeated a long-held demand that all arms should be in the hands of the Lebanese State, and not with non-state players, be they Shiite or Sunni. Hariri also lashed out at the Iranians who back Hezbollah, saying: “The evil that Iran spreads in the region will backfire on it.” 

If that wasn’t enough drama, Yemen, a country that Saudi Arabia is ravaging, retaliated by firing a surface-to-surface missile that hit the airport in Riyadh.

Predictably, Saudi Arabia blamed Iran. “Saudi Arabia charged Monday that a missile fired at its capital from Yemen over the weekend was an “act of war” by Iran, in the sharpest escalation in nearly three decades of mounting hostility between the two regional rivals.”

In the US, President Trump tweeted his support of MBS, and there is considerable evidence that the preemptive coup was planned by Trump’s son-in-law and foreign policy advisor–Jared Kushner. Trump also tweeted that the Saudi’s needed to do their I.P.O. of Aramco, the priceless Saudi state oil company, on the New York Stock exchange.

Even with all the distraction, the Saudis, the Israelis and the neocons all remained focused on their bete-noire: Iran.

Unfortunately, there is a serious problem with their claim that Iran is the main sponsor of terrorism, or somehow responsible for 9/11.

In my opinion, Iran’s influence in the region has grown over the past decade precisely because aggressive policies by the United States and its allies have been spectacular failures, creating chaos and suffering that Iran has exploited as a matter of self-defense and self-interest.

Furthermore, the truth of the matter is that Saudi Arabia is the leading sponsor of terrorism, hands down.

Going further, the US has used Saudi jihadism as a way to maintain empire, as this explosive article by Daniel Lazare makes abundantly clear.

“The arrangement worked for the United States, which acquired a useful diplomatic partner and an auxiliary military force that was cheap, effective, and deniable. It worked for gung-ho journalists traipsing through the wilds of Afghanistan, who assured the folks back home that the “muj” were nothing more than “ornery mountain folk who have not cottoned to a foreign power that has seized their land, killed their people, and attacked their faith,” to quote William McGurn, who went on to prominence as a speechwriter for George W. Bush.

It worked for nearly everyone until 19 hijackers, 15 of them Saudis, flew a pair of fuel-laden jetliners into the World Trade Center and a third into the Pentagon, killing nearly 3,000 people in all. The 9/11 attacks should have been a wake-up call that something had gone seriously amiss. But instead of pressing the pause button, the United States opted to double down on the same old strategy. From its perspective, it had little choice. It needed Saudi oil; it needed security in the Persian Gulf, global commerce’s most important chokepoint; and it needed a reliable ally in the Muslim world in general.

Consequently, Washington opted to work on the marriage rather than splitting up. This entailed three things. First, there was a need to cover up Riyadh’s considerable role in the destruction of the Twin Towers by, among other things, suppressing a crucial 29-page chapter in a joint congressional report dealing with Saudi links to the hijackers. Second, the Bush administration redoubled efforts to pin the blame on Saddam Hussein, Washington’s latest villain du jour. Need “best info fast,” Secretary of Defense Donald Rumsfeld ordered while the towers were still burning, according to notes taken by his aide Stephen Cambone. “…Judge whether good enough [to] hit S.H. at same time—not only UBL [i.e. Usama bin Laden]. Hard to get a good case. Need to move swiftly—Near term target needs—Go massive—sweep it all up, need to do so to get anything useful. Things related or not.” Washington needed a fall guy to get the Saudis off the hook.

Third was the need to prosecute the so-called “War on Terror,” which was never about terrorism per se but about terrorism unsanctioned by the United States. The goal was to arrange for jihadis only to strike at targets jointly approved by Washington and Riyadh. This meant, first and foremost, Iran, the Saudis’ bête noire, whose power, ironically, had grown after the U.S. invasion of Iraq had tipped the formerly Sunni-controlled country into the pro-Shi‘ite column. But it also meant Syria, whose president, Bashar al-Assad, is an Alawite, a form of Shi‘ism, and Russia, whose friendliness to both countries left it doubly marked in U.S. and Saudi eyes. Ideologically, it meant taking Wahhabist anger at Western powers such as America, Britain, and France and directing it at Shi‘ism instead. The doors to sectarianism were thus opened.

The war on terror turned out to be the longest route possible between Sunni terrorism and Sunni terrorism. Once again, the United States had tried to use Wahhabism to its own advantage, but with consequences that proved nothing less than disastrous.”

The corporate media and opportunistic legislators have been obsessed with Russian influence over our policies, when it’s our so-called allies–Saudi Arabia, and Israel–who are the far greater danger.

As the old saying goes–with friends like these, who needs enemies?

Update: The plot thickens“Explosive” Leaked Secret Israeli Cable Confirms Israeli-Saudi Coordination To Provoke War.

“The classified embassy cable, written in Hebrew, constitutes the first formal evidence proving that the Saudis and Israelis are deliberately coordinating to escalate the situation in the Middle East.”

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A Flaw in the Model

 

The election of Donald Trump was due, in no small part, to the abject corruption of our elite.

In my last post, I examined An Economic Theory of the Criminal Law, where 7th Circuit Judge Richard Posner states that the poor require criminal law to keep them within the confines of the “market.”

“The major function of criminal law in a capitalist society is to prevent people from bypassing the system of voluntary, compensated exchange-the “market,” explicit or implicit-in situations where, because transaction costs are low, the market is a more efficient method of allocating resources than forced exchange. Market bypassing in such situations is inefficient — in the sense in which economists equate efficiency with wealth maximization — no matter how much utility it may confer on the offender.”

The flip-side of Posner’s theory was that unlike the poor, the wealthy required only tort law to ensure their proper behavior.

Posner–“This means that criminal law is designed primarily for the non-affluent; the affluent are kept in line, for the most part, by tort law.” 

Coincidently, Alan Greenspan, former Fed Chairman and Ayn Rand fanboy, believed the very same theory. However, Greenspan, in the wake of the 2008 Wall Street Crash, was forced to recant his magical thinking and grudgingly admit that he had found a flaw in the model.

Why is this magical belief system so important?

For the last 40 years, under the rubric of neoliberalism, both Republicans and Democrats have held this very same theory: regulations and laws only apply to the little people, while the innovators and entrepreneurs that create wealth should be free from such nuisances because their honor and reputation would keep their animal spirits in check.

Consequently, punishment for crime committed by elites has all but collapsed over the past couple decades.

While the Republicans favor energy, manufacturing, and the Military/Industrial/Complex, Democratic party constituents represent a cross section of finance, high-tech, Hollywood, and, of course, the Educational/Industrial/Complex.

In a must read post at Naked Capitalism, Yves Smith, examines the student-loan-securitization complex and it’s Democratic supporters. In the process, she demonstrates not only how the mortgage-securitization process that crashed the US economy in 2008 was the template for the student-loan-securitization, but also that this new scam is ongoing precisely because of the stunning failure by the Obama administration to hold the banksters accountable.

This failure still makes my blood boil, so I’m going to include a big-steaming chunk of Yves indictment.

“There was a way to have brought the entire mortgage securitization complex to heel. As we chronicled, starting in 2003, more and more originators failed to take the steps necessary to transfer mortgages to securitization trusts. About 80% of the securitizations had elected New York law to govern the trust. New York trust law is ancient and well settled. It is also rigid. An asset has to be conveyed specifically to the trust; endorsements in blank don’t cut it. Separately, the securitizations had also required that the mortgages be transferred to the trust by a specific date for tax law reasons.

Normally, when something is screwed up in a contract, you simply write a lot of waivers and maybe someone has to pay for the waivers. But these contracts were rigid. You couldn’t write waivers to fix these problems. Instead, a mini-industry of document back-dating, forgeries, and fabrication grew up to create a paper trail covering up the original sin of the failed securitization.

That means the Obama Administration held a nuclear weapon which it refused to use. It could have called in all the servicers, the big dogs at the banks that owned them (to the extent they had banks as parents; some didn’t), and the big names among the investors, like Pimco and Blackrock.

They could have sat all, say, 50 of them in a room and said,: We know that legally, most of the securitizatons post 2003 are empty bags. The mortgages never got to the trust. And that can’t be fixed now. So you have two choices. Either we sit back and allow or maybe even help the parties that are exposing this massive securitization failure. That will lead massive losses and litigation on a scale that will destroy a lot of wealth and almost certainly a lot of institutions. Or you will give principal modifications to qualified borrowers. You figure it out but if you don’t do this we will blow you all up. It is not acceptable to have millions of unnecessary foreclosures because your servicers can’t be bothered to do them. You staff up and eat the costs. They are trivial compared to the alternatives.

It used to be routine for government to have chats like that (usually a bit more coded but the bottom line was clear) when businesses rode roughshod over the public interest. So don’t pretend it couldn’t have been done.

The Obama Administration chose not to do it.”

Right now, the Democrats, and indeed the entire elite class of politicians and journalists are focused on Russian interference into our sacred democratic process as a way to deflect from their own culpability in creating the corruption that brought us to where we are now.

Corruption is not a bug, but a feature of neoliberalism. Rather than pushing for a Laissez-faire role for government as some supporters and critics allege, neoliberals in both political parties promote an activist role for government, albeit a bifurcated one, where there are harsh penalties imposed on you and I if we stray from the savagery of the “market,” while elite criminals are massively enriched and celebrated.

A quote come to mind–“Steal a little and they throw you in jail; steal a lot and they make you king.” –Bob Dylan

 

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