Market Manipulation “Bear Raid” Contributed to the 2007 Financial Crisis

Professor Yaneer Bar-Yam, President of New England Complex Systems Institute (NECSI), and his team of analysts support suspicions that a type of market manipulation called bear raids played a role in the market crash at the beginning of the financial crisis in November 2007. Any bear raid would have been prevented by a regulation that was repealed by the Securities and Exchange Commission (SEC) in July 2007. The regulation, known as the price test or the “uptick rule”, meant to prevent manipulation and promote stability was in force from 1938 as part of the government response to the 1928 market crash and its consequences.

At a critical point in the financial crisis, the stock of Citigroup was attacked by the bear raid—traders sold stock they did not own (so called “borrowed shares”) with the expectation of buying the stock cheaper when the price fell (“short-selling”) thereby getting a profit from trading in a falling market. If enough rich do this in cahoots, the glut of lower priced stock actually causes the price to fall, inducing panic selling by other price watching traders—or their price watching robots! Thus the risk can be totally eliminated by coordinated trading like this. Of course, if a single trader is wealthy enough, it might be that no co-ordination is needed!

Through its analysis of stock market data not generally available to the public, namely the “borrowing” of shares, NECSI reconstructs the chain of events. On November 1, 2007, Citigroup experienced an unusual increase in trading volume and decrease in price. This decline coincided with an anomalous increase in “borrowed shares” by 100 million shares, valued at almost $6 billion, the selling of which was a large fraction of the total trading volume. The trading on November 1 was almost four times the usual volume. The newly borrowed shares represented over three-quarters of the volume on that day, driving prices down by almost 7 percent. The selling of borrowed shares cannot be explained by news events as there is no corresponding increase in selling by share owners. A similar number of shares were returned on a single day six days later. By the time the shares were returned, it had dropped nearly 20 percent. The magnitude and coincidence of borrowing and returning of shares is evidence of a concerted effort to drive down Citigroup’s stock price and achieve a profit, ie, a bear raid.

This was no coincidence. Professor Yaneer Bar-Yam maintains:

When 100 million shares are borrowed on a single day and then returned on a single day, the evidence that this is a concerted action is hard to refute. The likelihood of such an event happening by coincidence is one in a trillion.

The NECSI scholars are concerned that the incident was allowed to happen. Selling shares to deliberately cause a price drop, to induce others to buy or sell is illegal. Interpretations and analyses of financial markets should consider the possibility that the intentional actions of individual actors or coordinated groups can impact market behavior. Markets are not sufficiently transparent to reveal even major market manipulation events. Regulations are needed to prevent intentional actions that cause markets to deviate from equilibrium and contribute to crashes. Bar-Yam said:

There used to be a rule that prevented it from happening by forbidding borrowed shares from being sold in large blocks that drive the price down. Last year, the authors of the report sent preliminary results of their study to the financial services committee of Congress, and Congressmen Barney Frank and Ed Perlmutter sent it to the SEC.

Unfortunately, the SEC has not acted to identify or prosecute those responsible or to prevent its occurring in the future. Enforcing the law after it is violated is much less effective than preventing it from happening in the first place. Enforcement actions cannot reverse severe damage to the economic system. Prevention may be achieved through improved availability of market data and the original uptick rule or other transaction limitations.

After the market crash, the SEC received thousands of requests from the public to reinstate the price test rule. Hedge funds that invest the money of wealthy individuals opposed its reinstatement. Eventually, the SEC put into place an “alternative” rule that only applies a price test when the price of a share drops more than 10 percent, but that is insufficient. Professor Bar-Yam points out:

This watered-down rule would not have stopped the bear raid on Citigroup on November 1, 2007. This is only one example of the deleterious effects of the weakened rule. The overall effect of unregulated selling of borrowed shares is surely much larger and continues today.

Media and Ruling Class Undermine Social Values by Labelling Valid Demands as Extreme

Ever wonder why the media will report a few protesters breaking windows or fighting police when a hundred times as many register their protest peacefully? Naturally, like much media focus, it distracts from the purpose of the protest, but new research shows how support for a popular cause can be cut by labeling it as “radical” or “extreme”. Thomas Nelson, co-author of the study and associate professor of political science at Ohio State University, said that is why calling political opponents extremists is so effective, and popular as a political tactic. he added:

The beauty of using this “extremism” tactic is that you don’t have to attack a popular value that you know most people support. You just have to say that its supporters are going too far or are too extreme.

And people fall for it because we mostly consider ourselves civilized, and not at all extreme, and so tend to divorce ourselves from the extreme cause or group, even though we might actually prefer it given a fair chance. Thus people supported a gender equality policy when other supporters were not mentioned, but when the proposers of the same policy were described as “radical feminists”, participants in the study supported the policy much less.

Experiments in Evidence

1. 233 undergraduate students were asked to read and comment on an essay that they were told appeared on a blog. The blog entry discussed the controversy concerning the Augusta National Golf Club’s “men only” membership policy. This policy caused a controversy in 2003 before the club hosted the Masters Tournament. Participants read one of three versions of an essay which argued that the PGA Tour should move the Masters Tournament if the club refused to change this policy:

1. One group read that the proposal to move the tournament was led by “people” or “citizens”.
2. Another group read that the proposal was led by “feminists”.
3. The third group read that the proposal was led by “radical feminists”, “militant feminists”, and “extremists”.

Additional language reinforced the extremist portrayals by describing extreme positions that the groups allegedly held on other issues, such as getting rid of separate locker room and restroom facilities for men and women.

Participants were then asked to rate how much they supported Augusta changing its membership rules to allow women members, whether they supported the Masters tournament changing its location, and whether, if they were a member, they would vote to support female membership at the club.

The findings showed that participants were more supportive of the golf club and its rules banning women, less likely to support moving the tournament, and less likely to support female membership, when the proposal to move the tournament was described in language redolent of extremism and radical feminism. Nelson explained:

All three groups in the study read the exact same policy proposals. But those who read that the policy was supported by “radical feminists” were significantly less likely to support it than those who read it was supported by “feminists” or just “citizens”.

By associating a policy with unpopular groups, opponents are able to get people to lose some respect for the value it represents, like feminism or environmentalism.

2. In another experiment, 116 participants read the same blog entry used in the previous experiment. Again, the blog entry supported proposals to allow women to join the golf club. One version simply attributed the proposal to citizens, while the other two attributed them to feminists or radical feminists.

Next, the subjects ranked four values in order of their importance as they thought about the issue of allowing women to join the club:

1. upholding the honor and prestige of the Masters golf tournament
2. freedom of private groups to set up their own rules
3. equal opportunities for both men and women
4. maintaining high standards of service for members of private clubs.

How people felt about the relative importance of these values depended on what version of the essay they read:

1. Of those participants who read the proposal attributed simply to citizens, 42 percent rated equality above the other three values. But only 32 percent who read the same proposal attributed to extremists thought equality was the top value.
2. On the other hand, 41 percent rated group freedom as the top value when they read the proposal attributed to citizens. But 52 percent gave freedom the top ranking when they read the proposal attributed to extremists.

Observations and Conclusions

Nelson commented:

Tying the proposal to feminist extremists directly affected the relative priority people put on gender equality v group freedom, which in turn affected how they felt about this specific policy. Perhaps thinking about some of the radical groups that support gender equality made some people lose respect for that value in this case.

This tactic of attacking a policy by tying it to supposedly extremist supporters goes on all the time in politics. Opponents of President Obama’s health care reform initiative attacked the policy by calling Obama a “socialist” and comparing the president to Adolf Hitler. Nelson explained:

These tactics can work when people are faced with competing values and are unsure what their priorities should be.

Environmental values, for example, may sometimes conflict with economic values if clean air or clean water laws make it more difficult for companies to earn a profit.

If you want to fight against a proposed environmental law, you can’t publicly say you’re against protecting the environment, because that puts you in the position of fighting a popular value. So instead, you say that proponents of the proposed law are going to extremes, and are taking the value too far.

The problem with this tactic for society is that it damages support of the underlying values, as well as the specific policy. Nelson:

If you use this extremism language, it can make people place less of a priority on the underlying value. People may become less likely to think environmentalism or gender equality are important values.

Maybe that is why supporters of the Republican Party in the USA seem to be utterly immoral and obnoxious in general, although large numbers of them profess Christianity. As their bibles say, if they ever got round to reading them, you cannot serve God and Mammon. They serve Mammon, and so their Christian values, if they had them in the first place, evaporate.

When the media run down anyone whose policies seem fair and right, remember these studies. Even civilized people might have to protest violently to stop the propagation of obnoxious and selfish ones by the 1% and their media and academic lackeys. So look carefully at what extremists are extreme about. You might agree with them.

Antisemitism, a Convenient Hatred

The Huffington Post invites authors to publish articles about antisemitism but suppresses any critical responses. Antisemitism, a Convenient Hatred was one such written by Phyllis Goldstein and published a few days ago. It is a plug for her book, A Convenient Hatred: A History of Antisemitism. It is a short article with little that is not accepted in it, such as the role of Christianity in antisemitism, and the behavior of the church and European aristocracy. The real question is whose aims today is this hatred convenient for? Goldstein begins thus:

Many people thought antisemitism would disappear after the Holocaust, but it did not. Nor did it disappear when many Christian churches acknowledged that Jews were not responsible for the crucifixion. And antisemitism and other hatreds have persisted despite tough laws against discrimination, hate crimes and hate speech. To understand why hatreds endure, we have to confront history. Histories that are not confronted can never be reconciled and yet most people—including many Jews—know very little about the history of antisemitism.

Thereafter she goes back to those ancient histories mention above. What she does not address, and perhaps it was because the article was too short to do so, is the most relevant explanation today. It is that antisemitism is a valued tool of Zionism. I therefore pointed it out. The comment never got published! I wrote:

Modern antisemitism is being studiously promoted by Zionists and the Zionist state of Israel as the recent adverts calling upon Jews to return to Israel show. The notion of the fear of a future holocaust however goes right back to the Jewish scriptures. It is the fear generated by the strictures of the Mosaic law and emphasized by the Deuteronomic Historian. "Obey the law or be reduced to a remnant." The threat of such a destruction strengthens a community by emphasizing the bonds that unite it and distinguish it.

Zionists have made the most of this idea since the war, using the millions of Jewish dead to promote their own racialist and elitist, neo-fascist politics. Uri Avnery cites Yehayahu Leibowitz as having said to him, "The Jewish religion died 200 years ago. Now there is nothing that unifies the Jews around the world apart from the Holocaust." It defines goyim as potentially irrational mass murderers of Jews, generating distrust in the diaspora while promoting antisemitism and emigration to the Zionist state, and making "vengeance into an acceptable western value", according to Gilad Atzmon.

"The Jew" is the new God of the Zionist religion, Atzmon, a Jew himself, tells us, the idealized image of the suffering, innocent Jews of the Nazi death camps, they use for their political ends, though the Zionist Jews of Israel are the bullies of the Middle east today, backed by the world's big bully, the pro-Zionist leadership of the USA.

What Zionist Jews Need To Remember

From Moses to Jeremiah and Isaiah, the Prophets taught… that the Jewish claim on the land of Israel was totally contingent on the moral and spiritual life of the Jews who lived there, and that the land would, as the Torah tells us, “vomit you out” if people did not live according to the highest moral vision of Torah. Over and over again, the Torah repeated its most frequently stated mitzvah (command):

When you enter your land, do not oppress the stranger; the other, the one who is an outsider of your society, the powerless one and then not only “you shall love your neighbor as yourself” but also “you shall love the other”.

Rabbi Lerner

Ha Aretz (The Land) was granted to the Jews as a tenancy only on certain conditions as Rabbi Lerner says. Jews were not to oppress the stranger. And God also said what the punishment would be for not complying. Ezekiel (33:24-29) received Yehouah's words of warning to the Jews who boasted that “the land is given to us for a possession”, as follows:

So says the Lord Yehouah: You eat on the blood, and you lift your eyes up to your idols, and you shed blood. And shall you possess the land? You stand on your sword, and you each do abominations, defiling his neighbor's wife. And shall you possess the land?
Says the Lord Yehouah: I will give the one who is on the face of the field to the beasts to be eaten, and those in the forts and in the caves shall die by the plague. For I shall make the land desolate and a waste, and the pride of her strength shall cease. And the heights of Israel shall be a waste that none will go through.
And they shall know that I am Yehouah, when I have made the land desolate and a waste because of all their abominations which they have done.

Many Zionists think or assume that Ha Aretz was given to the Jews as their possession, and base their religious and political beliefs on this thinking, but it is not so. The most orthodox Jews rightly reject it. So too should Christians. To be serious, they should be proselytizing Israelis, but that they fail to do. At the very least they should be deterring Jews from oppressing Palestinians as being utterly contrary to anything that Jesus taught. They do that even less.

Primate Leaders Chosen for Popularity not Dominance or Aggression

The best leaders of the wild chacma baboons of Namibia are the most sociable ones, those with lots of friends. Dr Andrew King of the Royal Veterinary College in the University of London, who led the study, wanted to know how groups of baboons manage to stick together when searching for food. When deciding where to eat, it makes sense for individual baboons to agree on where to go and then go together, otherwise they would lose the benefits of being in a group.

Initially the researchers thought the leaders’ grunting or backward glances might have been the cue that triggers the troop to follow. But it wasn’t. Baboons glancing back were less likely to be followed. These monkeys live in open country where looking and following may be more important than grunting, but in wooded and forested areas making noises might have been more important.

Nor did sex or dominance matter, even though the alpha male did tend to be more successful than most at initiating foraging trips. The troop do not automatically follow the dominant male everywhere. When any baboon sets off in search of food, the others may follow, depending on whether the initiator is popular in the grooming network. The troop is unlikely to follow less popular baboons. The alpha male might lead the troop but not because he is dominant or aggressive, but because he is popular. That in itself might be enhanced by his dominance and value as an ally. King et al likens it to humans being more likely to respond to suggestions by popular figures.

Social relationships are really important. Research by colleagues working with baboons in Kenya and Botswana has shown that female baboons who get on best with others tend to have more babies, and these babies are more likely to get to adulthood and have young of their own.

Dr A King

We humans are social primates. We choose our leaders nowadays by a popularity poll called an election, but we have no personal experience of the people we choose. We go by video clips and sound bites to judge who seems the most pleasant or dynamic, and since we very often find we are wrong within a few months, we know we are being misled more often than not. These men (mostly) have to seem nice, so have blindingly white teeth to match their rictus smiles, and are usually tolerably good looking.

The trouble is thast most of them are using us for their own personal gain, and not serving us as our representatives, as the founders of democracy imagined. Our real leaders are those rich enough to buy the politicians, have the power and money to do it, and the incentive to stay on top. They are the 1 percent. These people need to be controlled by law for democracy to work properly. That is the point of the revolution against our present bent system.

This is What a Police State Looks Like

This is What a Police State Looks Like

Health Act Review Will Show Whether the Supreme Court is Impartial

John Case of WSHC offers the following points in regard of the Supreme Court decision to “review” Obama’s health care act because its “mandate” for nearly universal coverage may be unconstitutional. Even the right wing majority of judges on the Supreme Court should only need to take about ten minutes to make their decision. The commerce clause of the US Constitution unambiguously declares:

Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.

If the health care act violates any supposed mandate preventing US citizens from being obliged to pay for general welfare as well as defense, then all taxation must be illegal too. It might sound like paradise for the rich 1 percent, but it will mean the country will cease to be manageable.

It would mean we can all refuse to pay for foreign wars, or refuse to pay for a fire department on the grounds that some of us don’t need it. We all need a fire service and we all need health care. A decision against the health care act will mean working people will be denied coverage for a host of pre-existing conditions for which they are now covered, under the act. Perhaps, instead of reviewing this act, they should review the Citizens United decision that has empowered the rich and corporations to corrupt the political process anonymously and without financial limit. The New York Times offers competent guidance in this case:

All of these issues are best resolved in the political system, not the courts. The Supreme Court ought to show judicial restraint, adhere to precedent and uphold the constitutionality of health care reform.

But don’t hold your breath. This Supreme Court:

• reversed the will of the American people in the Bush/Gore election
• stood by allowing Texas to become a death state
• okayed the arrests and imprisonment of refugees
• undercut the rights of women to control their own bodies
• nullifies democracy at every turn, in favor of corporate interests.

If it approves this phony move against health care it removes its cloak of legal impartiality. It will openly declare itself an arm of the Republican party.

Regulation and Severe Personal Penalties Needed to Get Ethical Management

Many accountants believed that markets are efficient and as such, a lot of the issues of earnings management would be corrected by the markets. But this belief has changed over time, and we understand better now that earnings manipulation occurs and does indeed affect markets.

Prof Ramy Elitzur, University of Toronto

The case of Enron is famous. The scandal in 2009 at Satyam Computer Services was called India’s Enron. The bank collapses in the last few years are worse. Satyam’s chairman, Ramalinga Raju, admitted to years of systematic inflation of earnings and assets, beginning with small manipulations of account statements that eventually inflated hugely. Elitzur:

For a long time we’ve asked ourselves, “How come smart, rational people carry out short term schemes that in the long-term undoubtedly are going to sink them?”.

So why do corporate managers do it? Why do they lie about their companies’ earnings eventually damaging themselves and their company. Elitzur, who is Edward J Kernaghan Professor in Financial Analysis said:

The answer is “we’re not rational”. We’re rational only in a limited sense.

A limited capacity to see the whole picture, known as “bounded rationality”, and a faulty ethical compass are the main reasons. More important perhaps, and certainly as important, is why shareholders let them get away with it. Elitzur’s study finds shareholders are just as guilty as their CEOs. They have the same weaknesses. In particular their opportunities for insider trading—an illegal practice still—is linked to the CEO’s earnings manipulation.

Prof Elitzur says that it took a decade to develop his model and get it published partly because of corporate resistance to his findings.

The study model combines game theory—used to predict strategic behaviour—with the idea of bounded rationality, that our decisions are always made within bounds, within the limits of available time, information, and the human capacity to analyze it. Rather obviously, Elitzur says:

If we would like to have managers who engage less in earnings manipulation and insider trading, we should look for managers who are more ethical, and suffer less from bounded rationality.

What is less obvious, indeed counter-intuitive, but potentially vitally important is that Elitzur’s model suggests that choosing less ethical managers is not in the best interests of shareholders, unless they are sold on dishonesty. Penalizing unethical and damaging behaviour and anyone encouraging it is the atraightforward way of stopping it from happening. Some provisions are already in place in the US to guard against these tendencies, the authors conclude.

But the fresh regulation that is desperately needed in our business and banking sectors, at the very top ought to include severe penalties for such transgressions. Pleas of ignorance should not be an adequate defence, for ignorance at the top is then negligence and that too should be severely penalized. Perhaps in such cases of criminal negligence, the notion of limited liability should be dropped. Negligent CEOs ought to be liable for the damage they have caused.

The Jolly Euro Roger—Euro Bankers’ Flag

Join the Protests against the Greedy Bankers and their Rich Clients

Politicians, most recently European ones, tell us the bankers know best, and so we are wise to let them be in charge of defaulting economies like Greece and Italy. No democratic elections have been held to let the voters pick a new government but technocrats are bringing in total banking domination, as the world’s real economies go down the tubes. So much for the democracy that our banking paid politicians go to wars so frequently in the name of.

Now bankers lent money to weak economies in the first place, so, in the logic of capitalism, bankers made bad investments, and when those weak nations default on their debts, the bankers ought to carry the can. Instead they are given control of the defaulting countries—with the cover propaganda echoing through our ever so fair and democratic media that the countries are bankrupt—so that they must impose austerity, squeeze the people, sack government employees, thereby increasing government costs and decreasing tax income, with the outcome that the banks can lend more to the blighted nation to incur more returns for the banks! It is insane for everyone except bankers and their clients, the über rich class.

At one time, pre-Reagan and Thatcher, if banks took undue risk, they were penalized by the system, but, since Reagan and Thatcher set the greed ball rolling, the more risk bankers take the greater the rewards they get, being bailed out at the cost of empty treasuries when necessary rather than letting the duds and cowboys go bankrupt, and to jail.

Interest rates are zero or fractional per cent so the money is not fed back to customers as a reward for keeping their assets safe, as they used to be, and banks were intended to do. While the banks pay negligible percent, they are lending the money, everyone put in their care, to defaulting countries at exhorbitant interest rates, effectively directly extracting the difference in interest earned from the people working in that country into the banker’s coffers. With bank deposits yielding almost nothing, and inflation growing, the banks are effectively robbing the accounts of their customers. Such blatant larceny and theft has not been seen since the Nazis stole from Jews and opponents in Germany in the 30s.

Yet these gangsters, banksters, bandits are being put in charge of our destinies to preserve the fortunes of the 1 percent of very wealthy people. Join the protests against them. Your own rights are rapidly disappearing. Defend them!

The Revolution Begins—Capitalist Police Don their Jackboots

The first casualty of war is truth, and the reason is that propaganda supercedes it. The propaganda war against the OWS protesters has started to accompany the first actions of the capitalist jackbooted riot police against the demonstrators.

The police loyally align with the rich man’s state even though they are not rich men themselves. They should join the revolution, or stand aside in support of the 99%. That is democracy!

Apologies for the advert

The Ultra-rich—Intelligent? Talented? No, Lucky and Brutal

The ultra-rich 1% claim that they have unique qualities that explains why they are where they are—among the ultra rich. They credit themselves with success for which they were not responsible. Many got certain richly rewarded jobs by a ruthless greed or by being born to the right parents, talents that they would rather not boast about, so they claim it is intelligence, creativity, hard work, enterprise or acumen, much more acceptable talents.

In findings that have been widely replicated, psychologist, Daniel Kahneman, winner of a Nobel economics prize, studied for eight years the results of 25 wealth advisers. Their average performance was zero, but, when their results were above average, they got bonuses. Traders and fund managers across Wall Street had their massive compensation for success hardly or no better than random. Doubtless they got bonuses even when they did badly because everyone is allowed to have a bit of bad luck! Surprise, surprise, the city slickers did not want to hear Kahneman's findings.

So much for the financial sector and its super-educated analysts. As for other kinds of business, you tell me. Is your boss possessed of judgement, vision and management skills superior to those of anyone else in the firm, or did he or she get there through bluff, bullshit and bullying?

In another study “Crime and Law”, Belinda Board and Katarina Fritzon psychologically tested 39 senior managers and CEOs of leading British businesses, then performed the same tests on patients at Broadmoor hospital, a mental hospital for convicted criminals too insane for prison. On certain criteria, the manager’s scores matched or exceeded those of the criminally insane patients, beating even some psychopathic patients. These criteria are just those which closely resemble the characteristics that companies look for in managers. Some are:

• their skill in flattering powerful people to manipulate them
• egocentricity
• a strong sense of entitlement
• a readiness to exploit others
• a lack of empathy and conscience.

Paul Babiak and Robert Hare also point out in their book Snakes in Suits, that psychopathic traits are more likely to be selected and rewarded in modern management. So, while those with psychopathic tendencies born to a poor family are likely to go to prison, those with psychopathic tendencies born to a rich family are likely to end up as top managers. CEOs now take from their businesses “rewards” disproportionate to the work they do or the value they generate. Business has been rewarding the wrong skills.

The über-rich are called the wealth creators, but they have preyed upon the earth’s natural wealth and workers’ labour and creativity, impoverishing both people and planet. Now they have almost bankrupted us. The wealth creators of neoliberal mythology are actually wealth destroyers. In the US:

• between 1947 and 1979, productivity rose by 119%, while the income of the bottom fifth of the population rose by 122%
• between 1979 and 2009, productivity rose by 80% , while the income of the bottom fifth fell by 4%
• in roughly the same period, the income of the top 1% rose by 270%.

In the UK:

• the money earned by the poorest tenth fell by 12% between 1999 and 2009, while the money made by the richest 10th rose by 37%
• The Gini coefficient, which measures income inequality, climbed in this country from 26 in 1979 to 40 in 2009

The undeserving rich are now in the frame, and the rest of us want our money back.

George Monbiot

George Monbiot writes, usually excellently penetrative articles, in The Guardian and on his own website. In the article above, his latest (8 November) essay is summarized in slightly edited form. See the originals at the link given here, or at The Guardian.

The Best Protest Sign

This protest sign says it all. Society is grossly unfair. The top 1% get more than anyone can need, while the rest get the American Dream.

The Banker by C-J Moncur

The Banker

Hello, my name is Montague William 3rd
And what I will tell you may well sound absurd
But the less who believe it the better for me
For you see I'm in Banking and big industry

For many a year we have controlled your lives
While you all just struggle and suffer in strife
We created the things that you don't really need
Your sports cars and Fashions and Plasma TV's

I remember it clearly how all this begun
Family secrets from Father to Son
Inherited knowledge that gives me the edge
While you peasants, people lie sleeping at night in your beds

We control the money that controls your lives
Whilst you worship false idols and wouldn't think twice
Of selling your souls for a place in the sun
These things that won't matter when your time is done

But as long as they're there to control the masses
I just sit back and consider my assets
Safe in the knowledge that I have it all
While you common people are losing your jobs

You see I just hold you in utter contempt
But the smile on my face well it makes me exempt
For I have the weapon of global TV
Which gives us connection and invites empathy

You would really believe that we look out for you
While we Bankers and Brokers are only a few
But if you saw that then you'd take back the power
Hence daily terrors to make you all cower

The Panics the crashes the wars and the illness
That keep you from finding your Spiritual Wholeness
We rig the game and we buy out both sides
To keep you enslaved in your pitiful lives

So go out and work as your body clock fades
And when it's all over a few years from the grave
You'll look back on all this and just then you'll see
That your life was nothing, a mere fantasy

There are very few things that we don't now control
To have Lawyers and Police Force was always a goal
Doing our bidding as you march on the street
But they never realise they're only just sheep

For real power resides in the hands of a few
You voted for parties what more could you do
But what you don't know is they're one and the same
Old Gordon has passed good old David the reigns

And you'll follow the leader who was put there by you
But your blood it runs red while our blood runs blue
But you simply don't see its all part of the game
Another distraction like money and fame

Get ready for wars in the name of the free
Vaccinations for illness that will never be
The assault on your children's impressionable minds
And a micro chipped world, you'll put up no fight

Information suppression will keep you in toe
Depopulation of peasants was always our goal
But eugenics was not what we hoped it would be
Oh yes it was us that funded Nazis!

But as long as we own all the media too
What's really happening does not concern you
So just go on watching your plasma TV
And the world will be run by the ones you can't see

Written By Craig-James Moncur
16/10/2009

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The 30 Year War Against The American Dream: Henry Schoenberger

Henry Schoenberger, the author of How We Got Swindled By Wall Street Godfathers, Greed and Financial Darwinism, subtitled The 30 Year War Against The American Dream, points out that the OWS protests simply display the plethora of anger around in the USA. The level of poverty is now at its highest level ever—the poor are angry. The successful elderly planning on retirement after a lifetime of hard work are being hit—elderly retirers are angry. Young entrepreneurs, the foundation of our future economy, and those in their prime, whose enterprise should be creating new jobs to give a living to ordinary folk and a first step to the young—even many of those are angry.

Capitalism, as an economic philosophy, is only 200 years old, based as it is on the book by Adam Smith (1723-1790), the title of which is always given now as The Wealth of Nations, published in 1776. The United States declared its independence that same year.

Since then, the abuse and misuse of Capitalism has paralleled the use and abuse of Democracy.

Henry Schoenberger

Smith is often presented by right wing libertarians, Republicans, neoliberals, and assorted conservatives as the model entrepreneurial hero. Yet, he first held the chair of logic at Glasgow University, and then in 1752 became its chair of moral philosophy. So he was really one of those timeserving wasters lolling around a university with students and living off someone else's hard earned income! That, at least is how the right wing regard university teachers and research workers.

In 1759, he wrote the Theory of Moral Sentiments about the standards of conduct that hold society together, explaining how benevolent human motives and activities lead to a society beneficial for all, and thereafter a virtuous circle. Adam Smith had a lifelong interest in the value of morality for the public good. In his book, The Wealth of Nations, he expressed a belief that allowing the entrepreneur to pursue his own interest essentially unfettered would lead to the betterment of all because it would lead to the better use of resources, including time. He never imagined that his theories could be so distorted by the ultra rich cornering one particular resource to the detriment of most of the rest of us—money!

Darwin published his book on the Origin of Species 85 years after The Wealth of Nations, and, although most Protestant pastors in the USA and their theologians who run the Republican Party cannot now abide the thought of evolution, for the first century of so they loved it. The survival of the fittest was a perfect expression of capitalism. So Darwin's theory applied even within human society. It was not restricted only to the wild.

This extension of Darwinism into society was dubbed “Social Darwinism”. It even made it respectable for the protestant churches to abandon Christianity—Christ blessed the poor and damned the rich—but now Social Darwinism made it clear, they thought, that God meant the rich were blessed and the poor were damned! It was a creed that was soon attacked by social scientists, and began to fall into disrepute. Reaganomics and deregulation revived it.

We all need to know a little about economic theories to understand the fallacious arguments advanced today for unfettered greed. For thirty years after WWII, the rate of growth of the incomes of rich and poor were broadly the same. John Maynard Keynes, before the War had shown how economies can be controlled by regulation, such as using taxation to slow down growth when the economy was overheating, and feeding back into feeble economies some of the tax take to boost spending during recessions. It worked wonderfully well.

Controlling self interest worked for decades in the aftermath of the Great Depression. The top tax bracket went up to 90% and still the ultra rich survived, but so did our middle class and our society was not demoralized. There was enough concern on both sides of the aisle to pass Civil Rights legislation and CEOs did not earn more than 40 times the average wage in their industry.

Henry Schoenberger

Interestingly, it was a closer match to Adam Smith's teaching than libertarian capitalists like to admit. Smith knew that regulation was sometimes necessary, and did not pretend otherwise. He believed that once the boundaries were suitably set, and the operators accepted them, then they would work to better themselves and society as a whole through the so called “invisible hand”. The trouble is, when things work well, smug, greedy people always want to try their luck at extending the conditions to their advantage.

That is what Reagan in the USA and Thatcher in the UK tried in the 1980s. In what was imagined as an economic “Big Bang”, a bonfire of the regulations was arranged on both sides of the Atlantic, neoliberalism became the watchword, and Social Darwinism was born again. Survival of the fittest became survival of the richest. In the last thirty years, the workers and even some middle class have lost income, the better off middle classes have maintained theirs, and the rich have multiplied their riches several fold!

In 1776, Adam Smith could not have seen that unregulated Wall Street financiers enjoying tariff free transfer of money anywhere in the world could manipulate markets and the rewards they had from them to the advantage of themselves as a new Brahman class in the supposedly classless western societies. Greed became endemic. Like the living dead they sucked the economic life blood—money—from the middle and working classes. The insatiable greed and selfishness of the rich has killed millions and millions of jobs, people's savings, their livelihoods and increasingly their lives, quite contrary to the ideas of the capitalists' holy book, The Wealth of Nations, by their innocent prophet, Adam Smith. Henry Schoenberger sums up:

Wall Street is a problem because for 30 years it has practiced innovative financial investment at the expense of our economy. Wall Street has turned away from real investment based on innovation for capital formation to create jobs to benefit our economy. Wall Street Trojan megabanks are a major part of the problem.

Government ought not to be the problem because it is the role of government to regulate, to ensure that the balance of society and its economy are right. Our governments neither guard the public good nor the public. The politicians lack all morality themselves, themselves infected with the zombie infection endemic among the rich and aspirants to riches, with the taste for more and more blood, salivating at the thought of more victims, us, and more dollars, ours.

Schoenberger points out that Goldman has inveigled the government at the highest level for three decades. The OWS movement should demand the removal of any Wall Street executive from any important government post, and equally that government servants should be banned from transferring their allegiance to Wall Street until 10 years after leaving government. Consulting and “Atlantic Bridge” style “charities” and think tanks should be illegal as soon as they get near to government in any direct way, or even indirectly, if the influence can amount to bribery, or any similar illegal approach. That applies too to lobbying, nothing more than approved bribery.

High Street deposit banks must be severed from the high risk investment banks. Bonuses should be illegal. As compensation they must be treated as pay and seriously taxed. Taxes must reflect the reality that 1 percent has 40 percent, so that taxation is at least fair by percentage, and preferably progressive, so that richer people should pay a higher percentage. If a rich man faced with a 60% tax rate gets a rise of $1 million, are we seriously to believe he would refuse to work rather than receive $400,000 after tax.

Schoenberger concludes it “is the time for a movement to kick out all members of congress who vote against jobs! And stop wall street godfathers from taking advantage of the 99% who do not practice unbridled greed!”

A Systemic Concentration of Power and Wealth

In 1906, an Economist named Vilfredo Pareto discovered that around 20 per cent of the population in his native Italy controlled around 80 per cent of the land. This observation has come to be known as Pareto’s Principle. He also found that, while ratios of wealth and control varied in detail from country to country, the broad distribution is always the same—wealth, regardless of human effort, tends to accumulate. That accumulation is also called wealth condensation, by analogy with the condensation of a gas. The popular expression is “money makes money”.

Now the New Scientist reports on a study of 43,000 transnational corporations and the share ownership which connected them. The Swiss Institute of Technology in Zurich used for the study a 2007 Orbis database of 37 million companies and investors spanning the globe.

A core of companies, mostly banks, has excessive power over the global economy. 1,318 companies with intertwined ownership structures, representing 20 per cent of global operating revenues, were on average connected to 20 other companies. This group of 1,318 controls most of the largest blue chip and manufacturing firms—the real economy—taking in 60 per cent of global revenues from goods and services. This group included a “super entity” of 147 companies that controls 40 per cent of the network’s wealth, several of the top 25 of which have familiar names:

1. Bank of America Corporation
2. Morgan Stanley
3. Goldman Sachs Group Inc
4. Merrill Lynch & Co Inc
5. JP Morgan Chase & Co…

The 147 of the surveyed companies controlling 40 per cent of the network have condensed—concentrated—a vast level of wealth into their coffers, just as Pareto would have predicted.

Forbes’ CEO Readership must Rethink OWS

“Will I be the next Gaddafi?”, is the sort of question that some corporate CEOs are beginning to wonder, according to Forbes’s Dov Seidman. The Arab Spring followed by the invasion of Libya, and the murder of the Libyan despot by rebels, and the movement now to protest all over the world against corporate greed and the demolition of society as a consequence has forced the question on to executives convinced until now that they could do no wrong because greed was the modern motivator.

CEOs of a multinational companies are worried that employees or consumers will organize against them, grab their ill-gotten gains and throw their corpses into a ditch.

Seidman points out that OWS demonstrators are demanding freedom from the current system. Employees that join the movement want less slave driving and more made of their creativity and collaborative spirit at work. The protesters have initiated an overdue discussion ignored by business and political leaders for too long. The protesters’ conversation may touch upon issues of fairness and justice, but it is fundamentally about freedom. They do not want a free ride, but the freedom to pursue a meaningful life and build a sustainable career. Our current economic system does not provide that freedom.

The world is hyper-connected and interdependent, so that instability is no longer localized. We rise and fall together. A banker anywhere can lose his company billions of dollars, force the resignation of his CEO and send shock waves throughout global finance. A vegetable market trader in Egypt can trigger the fall of Mubarak, which in turn offers the US and Nato an excuse to unseat Gaddafi to deny China access to Libyan oil, and dole it out to the allies on behalf of the über rich. General dissatisfaction can become specific. If a company mistreats a customer, a wave of protest might sweep him out of his office, or close down the corporation.

Employees are beginning to reject hierarchical structures, control processes, and performance based rewards and punishments. Seidman cites The HOW Report, commissioned by his own company and reported in The Economist, which show self governing organizations get more of what they want and less of what they don’t want. They:

1. yield five times more innovation
2. have three times the employee loyalty
3. give nine times the customer satisfaction
4. perform significantly better financially
5. are more likely to expose unethical conduct

than normal top down corporations. The command structures of the Industrial Age are no longer effective. People work to eat, that is obvious, but it has also been known for a century that, given that they will be paid adequately, people want to feel part of a communal effort to do something to be proud of. If money is the only incentive for work, then any employee will move for a better paycheck. If price is the only reason for a purchase, in hard times, they will go for the cheapest. Once consumers feel the pinch, business will fall into depression, so the intelligent CEO must favour fairness in society.

Unemployment is high and must be solved, but many of the OWS protesters have jobs. They are people, though, who see what too many CEOs do not, that corporate and class greed will wreck their own jobs and careers. Already many recent college graduates cannot find suitable employment for their ambitions, and to pay the cost of their education. The cornering of much of the money supply and stashing it in emerging economies by the 1% of über rich and the banks that manage their wealth, leaves too little in circulation here, forcing cuts in jobs and prices, cuts that eventually will sorely affect us all.

The banks must write off much of the debt they have imposed on the world, so that ordinary consumers will feel able to consume again. The über rich will take the hit, but they can afford it, and by so doing the values of their stocks have a chance of remaining buoyant, ensuring the recovery of upper class wealth in the longer term. Failure to do it leads to the Gaddafi scenario of rebellion, bloodshed and carnage, which the fascism state can only stop for a while, never for long, as modern dictatorships prove.

Arab Spring? Bring on a Bleak Winter for Rich Kleptomaniacs

The western media portray the political uprisings in the Middle East as motivated and led by technology savvy young people. Glen Rangwala, a lecturer in the Department of Politics and International Studies (POLIS), says that people in Arab countries have different reasons for supporting it.

POLIS has conducted surveys with pollsters, YouGov, of popular opinion across 18 Arab countries throughout 2011. The poll uses a mix of internet polling and “door to door” questioning. Political priorities ranged widely across the region:

1. the aspiration for civic equality—Bahrain
2. the freedoms of speech and of association—Syria—but barely at all in other Arab countries
3. personal security—Tunisia and Egypt
4. declining personal incomes—Yemen
5. anticipated increases in personal incomes—most Arab countries
6. concern over unemployment—countries still free of protests.

What is interesting about this list is that it applies to us Westerners just as much as it does to the Arabs. All of them will be of concern to someone or another of the OWS protesters, and some of them to Tea Partiers in the USA. If anything this rather gash survey serves to show that we are all interested in the same things—social justice.

Rangwala says the uprisings were not unified in their aims, being caused by different grievances and involving different types of people with distinct political aspirations:

What appears to unite them is the very idea of the Arab Spring, within which supporters, activists and even opponents of political reform contextualise the protests they see in their own countries. If people identify their national protest movements with the broader region wide phenomenon of the Arab Spring, the perceived success of a civic uprising in one country will reinforce the estimations of the likelihood of similar achievements at home.

The same thing seems true of the remarkable spread of the protests beginning with OWS. What is needed now is a Western Winter in which we shall freeze the nuts off the one percent of über rich fat cats with all our assets, crush and scatter them to the winds, leaving them impoverished, squealing and wishing they’d had more compassion when they had control. Of course, it is not just the assets we want returning, the control of our destiny is much more important.

Frances Fox Piven at OWS

Should the Poor be allowed to Die, or the Rich?

Al Dahler, a retired Air Force veteran highlights in the Virginia Newsleader the latest propaganda of Republican bloodsuckers. According to Robert J Samuelson writing in the Washington Post, America’s budget deficit is the fault of elderly Americans, people who are too greedy—they depend on social security and medicare to keep themselves alive. The Wall Street bailout had nothing to do with it. Irresponsible tax cuts for the 1 percent of Americans, who are already so well off they haven’t a clue what to do with their money, are also innocent of blame. The US permanent war economy, that has gotten worse since Bush and Cheney held the reins of power, naturally has no role at all in wasting the country’s wealth. The fault, according to the unspeakably selfish US right wing, rests with the poor and old folk, who should recognize they taking up some of the wealth that the rich could salivate over counting it again.

The poor have always been at fault. The conservative gospel is that the poor, the unemployed, the people unable to afford health insurance and the handicapped are scroungers, refusing to work to better themselves as all Americans should. Did they, the greedy rich? Some may have done but most have inherited wealth left to them by their enterprising fathers, grandfathers and even more distant ancestors. Far from money trickling down, the rich employ clever managers, not being clever enough themselves, to accumulate more money in exchange for a share of it called bonuses.

These rich billionaires have nothing in common with any of the remaining 99 percent of the population, but they fool those with aspirations to riches, many of the middle classes, and those unable to see that they are dupes of the rich, encouraged in their American Dreams, but with zero chance of ever realizing them. The Republican lie is that everyone is responsible for themself only and their immediate family, having no responsibility for anyone unable to work because they are elderly, sick or simply unable to get a job in the face of millions of unemployed better able and qualified than themselves.

These conservatives, so fond of boasting of their godliness, would have joined the crowds demanding the crucifixion of their “Lord” Jesus Christ, had they been there at the time. After all, this Jesus wandered around with a gang of ex-workers, ex-fishermen, ex-tax collectors and even ex-prostitutes, and, although described as the son of a carpenter, he never seemed to have built anything of wood himself. Moreover, he repeatedly backed the poor against the rich, so was obviously in the opposite camp from the parasites who drain us of our our fair share of the national product.

They have just enough religion to make them hate, but not enough to make them love others.

Jonathan Swift, paraphrased

If the Christian God were incarnated today, he would be organizing and addressing the OWS demonstrations, and once the state decides to clamp down on the occupiers of Wall Street, he as a leader would have had his death sentence again.

Veteran Dahler noticed that the sentiments of president F D Roosevelt were closer to those of Jesus than the odious hypocrites calling themselves Republicans. He said:

The test of progress is not whether we add more to the abundance of those who have much. It is whether we provide enough for those who have little?

It is as plain as day that for the last thirty years the US has ceased to progress, and has instead slid backwards. Republican candidates, trapped by the hypocritical piety of the religious right, have to deny the validity of the theory of evolution, because these so-called Christians have decided that their God is so feeble He cannot bear it. Yet despite it they do believe in evolution applied to society. It is wrong that the cleverest and most ruthless ape should eventually have human brains, but it is right that the cleverest and most ruthless entrepreneurs should have all the wealth—give or take a percent or two. They call this application of “nature red in tooth and claw” to society “Social Darwinism”.

Society exists to protect each of us from the hazards of living separately in the wild. Being together allowed us to use our intelligence and our new found ability to respect each other and cooperate together to do remarkable things like building civilization. It required us to be concerned with others in our society even when they were not coping too well. Without assistance from us, they would have seen no sense in remaining with us, and our ur-band of mutuality would have soon fallen apart.

That is what these Republicans are advocating now. They have no concern for the poor and those unable to cope with pressures that most of the wealthy 1 percent could never imagine experiencing day in and day out. Jesus Christ ordered Christians to help the poor or be damned. But now Republicans cry in outrage that elderly people should have medical care as a reward for having contributed to society all their lives. They say they owe them nothing. Their idea of society owes them nothing. They have outlived their welcome and should do the decent thing and die! If they do not, then they will be charged large premiums to cover their health insurance, and as they will not be able to afford such expenditure, they will die in any case through being deprived of care. Limited health care leads to shorter lifespans, relieving the pressure on the social security system, and leaving more money for the rich to stash away.

President Obama and Secretary of State Clinton are fond of encouraging people in countries whose regimes they do not like, mainly because they assert their right to what is their own, to riot and even rebel, as in the case of Libya, to establish their basic human rights. Well, we have human rights too, and if Arabs have a right to rebel and kill their former leaders, H G Wells must have been correct to say that we have the same right. Wells, author of War of the Worlds, was a mild mannered man but wrote in despair, towards the end of his life, that we shall get nowhere in bringing about a fairer world until the rich were swinging from the lamp posts. Indeed, if it is a necessity in Libya, then why should it not be a necessity in the US? The fact is that revolution is one way societies end when they become too unjust. The greedy 1 percent of the USA are inviting their own destruction.

They could pay off much of the national debt themselves if they wanted to avoid it!

“I Am Not Moving.” The Shameful Hypocrisy of our Leaders

A brilliant little film which brings out the hypocrisy of our leaders when it comes to issues of rights.

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The News Media Help Us Understand the Wall Street Demonstrations

Posted originally by COMIC

The Great Hunger: Lessons Today of the Irish Famine 1845-1850

The Irish potato crop failed in 1845, 1846, 1848 and 1849, less than two present day lifetimes ago. A mysterious blight, now known as Phytophthora infestans, destroyed the potato harvest. The rural Irish poor, mainly subsistence farmers renting small plots of ground, were reliant on the potato as their staple food. The result was a dreadful famine in the United Kingdom—the Act of Union of 1801 had made Ireland part of the UK, then the most economically advanced place in the world. Huge numbers faced starvation, and 1 million Irish did die in “An Gorta Mór”, “The Great Hunger”.

Millions more fled the country, with the population of Ireland dwindling from around 9 million in 1845 to 6.1 million in 1851. The tide of emigration continued to swell long after the harvest failures—in 1866 Ireland’s population was roughly equivalent to its 1801 figure of 5.5 million. In comparative terms, the Great Irish Famine was one of the worst demographic tragedies of the nineteenth century and possibly the worst famine in recorded history when judged in terms of the mortality rate.

In Human Encumbrances: Political Violence and the Great Irish Famine, Dr David Nally, a Cambridge University academic, examines the political, economic and social context of the Irish Famine—throwing up disturbing parallels between what happened in the 1840s and what is happening in Africa today. From contemporary material, Nally drew out the perceptions that shaped political decision making and directly affected the lives of millions of poor Irish families. Such decisions are as relevant today as they were then, centering on the ethics of free markets and government aid.

Nally’s book takes its title from a pamphlet written by the controversial English MP, George Poulett Scrope (1797-1876). In a scathing critique of British policies in Ireland, Poulett Scrope claimed that the Irish were being treated as mere “human encumbrances” to the long march of progress and agricultural development that was European modernity. Poverty was deserved coming from idleness, lack of intelligence, and improvidence, so Irish smallholders were eminently expendable to the English, and their way of life was backward, immoral and needed to be urgently reformed.

Contemporary reports noted distinctions at every level, between ruler and ruled, the “deserving” and “undeserving”, the indolent and the industrious. Even the food of the Irish peasants was seen in moral terms. The Irish were feckless and slothful, so ate potatoes, whereas the thrifty and hard working English ate wheat. Nally comments:

In terms of perceptions, not much has changed since the nineteenth century. Dominant economic institutions like the World Bank still consider poverty in the Global South in much the same way as the Victorians judged the Irish—the natives are fundamentally incapable of autonomous development and, in certain situations, corrective measures will be needed to stimulate social reform and promote agricultural development.

This tendency to “blame the victim”, as it has been described, allows rulers and élites to ignore the deeper injustices that expose populations to calamities—making disasters like famine more likely to occur in the first place—and to leave untouched the political and economic arrangements from which they clearly benefit. You could say that we are blinded by an ideology of poverty that the Victorians bequeathed to us.

A key phrase in Nally’s book is “structural violence”—describing how institutional arrangements can make entire communities vulnerable to famine, and at the same time impede reforms that build local resiliencies. For Nally, the current emphasis on increasing food production through market integration and technological fixes, ignores the well established fact that there is enough food to feed the world’s present population—recent estimates suggest that there is 20 per cent more food than the world needs. The relationship between food supply and starvation has long been a contentious issue, and the Irish Famine is no exception. Contemporary accounts describe ships carrying relief from England passing ships sailing out of Ireland with cargos of wheat and beef to be sold for prices out of reach to the starving population. Nally observes:

In an analogous way, Africa, a land synonymous with disease and starvation, is a major supplier of raw materials—including diamonds, gold, oil, timber, food and biofuels—that underpin the affluence of Western societies. The current focus on food availability and supply effectively masks how resources are unevenly distributed and consumed.

Famines not only destroy lives but whole ways of life. The culture and language of the Irish people were victims of the Famine. In 1800, half of the population spoke Irish, in 1900, it was 14 per cent. Rural social relations were disrupted, and, in particular, an ethic of mutual care that characterised the Irish way of life before the Famine. After the Great Hunger, Hugh Dorian, an Irishman, described his native Donegal as a place “where friendship was forgotten and men lived as if they dreaded one another”. Such descriptions stand in contrast to accounts of middle class farmers, and some English and Scottish settlers, who gained land and power by dispossession of the smallholders. Nally continues:

Famines leave behind a tense landscape of “winners” and “losers”. We ought to be honest about the fact that life and death decisions are woven into the texture of economic relations. Hunger persists because its presence serves an important function in the global economy—scarcity and abundance, privilege and suffering, are in fact mutually constituted.

To tackle global hunger we must therefore address the legal and institutional structures that directly restrict certain people’s ability to subsist. The reason that this is not done is because these same structures guarantee the high standard of living that many of us have become accustomed to.

As several observers of the Irish Famine recognised, hunger is not a natural disaster—it is a human induced problem that demands political solutions. Effective solutions require joined up thinking:

At present, the problem of “food insecurity”—to adopt the modern, sanitised term for widespread starvation—is generally conceptualised as a scientific and technical matter—geneticists and plant scientists will engineer harvests that produce more efficient, more abundant crops that are more tolerant of climatic stress, more resistant to attacks by pathogens, and so on. This, we are told, will be the basis for ending global hunger. While the physical sciences do have an important role to play, it is wishful thinking to believe that hunger can be avoided by simply turbocharging nature—that we can, if you like, engineer our way out of scarcity.

The food activist and writer Frances Moore Lappé maintains that the real scarcity we face is one of democracy, not food. Nally insists that there is an important truth to that statement, which is routinely ignored:

One is reminded of the French writer Guy de Maupassant who apparently used to take his daily lunch at the Eiffel Tower because it was the only place in Paris where he did not have to look at the imposing structure. We are behaving a bit like Maupassant—we can continue to enjoy “lunch as normal” as long as we maintain the fiction that hides us from the ugly truth that is otherwise staring us in the face.

Images from: http://www.skibbereen.ie/famine.php

Anti Zionist Orthodox Jews Demonstrate Against Israel

On Sept 21, 2011, Anti Zionist Orthodox Jews demonstrated in front of the United Nations headquarters in New York City, for a free Palestine in the entire Holy Land and to express the Jewish opposition to Zionism and the occupation of Palestine.

Funding of Leading Credit Rating Agencies Must Change

Lloyd B Thomas Jr, a Kansas State professor of economics and the author of The Financial Crisis and Federal Reserve Policy, a book about the financial crisis, says:

Standard and Poor’s, Fitch, and Moody’s—the three leading credit rating agencies—behaved very poorly during the housing and credit bubbles of 2000-2006. Many buyers of mortgage backed bonds can only purchase those rated AAA. The rating agencies routinely stamped mortgage backed bonds and related derivatives AAA without carefully examining the quality of the individual mortgages that backed them.

This failure of the rating process helped feed an enormous expansion in the pipeline of credit to the housing sector, and its inevitable collapse after 2006 is the primary cause of the nation’s economic problems today. Many of these bonds were junk bonds because of the inferior quality of mortgages backing them. He continued:

These credit rating agencies have been funded by the very investment banks that built the toxic mortgage backed bonds and related securities.

It led to corruption of the ratings process as Standard and Poor’s, Moody’s and Fitch engaged in a “race to the bottom”. Such obvious conflicts of interest and poor performance are why the way leading credit rating agencies are funded should be changed:

Standard and Poor’s knew that if it failed to rate a mortgage backed bond AAA, the investment bank would take it’s business to Fitch or Moody’s, which would likely rate the bond AAA to collect its million dollar fee for its rating service from the investment bank. Clearly this obvious conflict of interest needs to be corrected by implementing a new way of funding the rating agencies.

How much evidence of corruption in the higher echelons of the country’s financial sector, and the rich minority that benefit from it, do we need to get enraged?

Americans Get More Antisocial as the Meanness of Capitalism Registers

Sociality is essential to humanity. It is the feeling of care and concern that people have towards each other, and is a deep instinct within us from the time when we lived for several hundred thousand years in small groups which gave us the advantage over fiercer animals that eventually made us king of the jungle and of the world. The instinct to work in small groups is still with us, but is getting weaker:

There is a lot of evidence that our democracy is based on having citizens connected with one another. When we connect with one another in associations we learn that our self interest is actually connected to the interests of others. That gives us a conception of the public good, common identity, and sense of common responsibility as a nation and as citizens. Any decline in that scholars see as potentially detrimental to democracy.

Pamela Paxton

Pamela Paxton is a sociology professor and Population Research Center affiliate from The University of Texas at Austin. She and Matthew A Painter II, an assistant professor of sociology at the University of Wyoming, used the Iowa Community Survey and the General Social Survey to explore the changing nature of voluntary association membership between 1994 and 2004, using responses from approximately 10,000 citizens in 99 small towns in Iowa, as well as a national sample of the United States population. They compared active members, who regularly attend local meetings, to checkbook members who do not attend any meetings and whose only requirement for membership was likely just to write a check.

Small town Iowans on average actively participated in about a quarter fewer associations in 2004 than they did in 1994. Active participation in recreational groups declined the most at 6 percent. The smallest declines in participation occurred for church and political/civic associations. Church participation declined by 3.5 percent, and active memberships in political and job related groups declined by 2 percent, the latter decline being less because 2004 was a presidential election year.

Overall, the evidence from Iowa suggests not only declining membership in general, but also a shift in how members participate in voluntary organizations. All categories show small but significant checkbook membership of all categories, except one which remained level, increased 1 to 1.6 percent. Paxton said:

Even if we thought these checkbook memberships were equivalent to being actively involved in an organization, the decline in the active associations is greater than any increase we are getting in checkbook memberships.

Paxton said scholars are still trying to understand the decline, but if it is happening in small towns in Iowa, the heartland of America, she expects the declines may be even more drastic elsewhere in country. Potential explanations for the shift from active to passive participation include:

• communities have less neighborhood interaction
• commutes are longer
• television and computer gaming inhibit interaction
• generational differences.

Academics have to think of the sources of their funding and therefore are often timid in expressing conclusions that funding bodies do not like. The fact is that capitalism is based on the ruthless exploitation of your neighbor, everyone wants to join the rich man’s club, and capitalism is supposed to be the way to the American dream, trust disappears, neighborliness and sociality seem old fashioned in the increasingly harsh America. People withdraw to their tellies and computers. Turn to any political forum and you find the defenders of the system, people who are doing all right out of it, and many, like these, who are plainly exasperated by unemployment, hardship, uncertainty, unfriendliness:

1. interactions between people now always have the motive of profit
2. the reality of commercial competition is that anything goes, to win
3. a monetarist system always breeds distrust
4. employers always have some angle or con going even against their own employees—I’m sick of it
5. the system of government and economics is designed for people to screw one another
6. I don’t trush anybody any more—I haven’t found one person worth trusting
7. poor people are disposable, there are so many of them they don’t individually matter
8. societies with large impoverished classes soon acquire repressive means of state control of those populations—the USofA used terrorist threats to set up more repressive mechanisms
9. I don’t think I’ve ever met anyone who isn’t some sort of con artist or predator or something—to hell with them
10. our country became great is because we wanted it to help the poor and the elderly
11. it is unfairness that is ruining the country—how does a corporation making billions in profits not pay taxes and get government disbursements every year?
12. tax dollars should help our communities not fund foreign wars and corporation bribes—decent government gives us back the tax we pay in better community services, benefits for our people out of work, community projects that create jobs, and community education, then interaction will grow
13. it is a sick society that keeps a huge prison population and pays most people peanuts for doing menial jobs like flipping burgers, but an immensely rich minority who takes everything to spend abroad—what’s fair?
14. society needs a social contract—without it, a society has no stake in its people, and is ripe for revolution.

Americans have been conditioned for decades to hate socialism, yet it simply means building a society that everyone wants to live in. It does not mean collecting tax dollars from the poor and middle classes to give to the megarich.

The six broad categories of organizations in the study were service and fraternal organizations, recreational groups, political and civic groups, job-related organizations, church-related groups, and all other groups and organizations.