Bugger the Bankers by The Austerity Allstars

Necessity Makes People Entrepreneurial, but Where is the Start Up Cash?

There are two main incentives for entrepreneurship:

1. opportunity—a perceived business opportunity
2. necessity—a need to get more income due to job loss or pay cuts.

Examining data from the Global Entrepreneurship Monitor survey and matching that data with locations across the USA, researchers from the University of Missouri Truman School of Public Affairs found that from 2007-2010, the amount of necessity entrepreneurship rose from 16 to 28 percent of total entrepreneurship in the US. So the number of Americans engaging in entrepreneurship has risen significantly, even though the country was entering a depression similar to that of the 1930s. Thomas Johnson, a professor in the MU Truman School of Public Affairs, and co-author of the study, said:

From economic stress, great ideas are born. Many large, profitable businesses have been created due to entrepreneurship during economic downturns. Hopefully that will be the case for this period as well.

Maria Figueroa-Armijos, whose doctoral work comprised the study, agrees:

We’ve seen similar trends occur in past economically slow periods that have led to economic booms. The doldrums in the 1980s led to increased entrepreneurship and the economic growth in the 1990s.

So the trend has potential positives but they can only come to fruition when this increase of necessity driven entrepreneurship is matched by increased support of the entrepreneurs:

Currently, there is much more economic support for opportunity entrepreneurs than for people starting their own businesses out of necessity. With the rise of necessity entrepreneurs during the recession there is obviously a need for more help from lenders and policy makers. These necessity entrepreneurs could create jobs and economic growth for long-term economic prosperity.

Banks at present are hanging on to our money because they can in some magical way make more money by keeping it for dodgy trading than lending it to businesses as they used to. Naked Capitalism reports from the Telegraph that Professor Tim Congdon of International Monetary Research said US bank loans have fallen at an annual pace of almost 14pc in the three months to August—from $7,147bn to $6,886bn.

There has been nothing like this in the USA since the 1930s. The rapid destruction of money balances is madness.

The MU study also found an increase in entrepreneurship among African Americans, and it is certain that upper middle class white bankers will be even more reluctant to lend to descendents of their former slaves than they are to some redneck tea party goer.

Figueroa-Armijos also found that rural entrepreneurship levels have not decreased during the recession, despite previous research showing that rural areas lack the necessary resources for successful entrepreneurism:

These findings offer policy makers an opportunity to permanently increase entrepreneurial involvement of historically under represented groups. Considering the decline of rural populations, rural development strategies must be re-examined. Increased support for “necessity driven” self-employment not only offers a way of improving the incomes of rural residents, but also provides an opportunity to create more overall entrepreneurial activity following the recession.

The federal administration gave the banks trillions of US tax dollars to stop them from failing, so it is time it introduced legally binding obligations for banks to do what entrepreneurial bankers originally conceived them for—to lend money deposited with them to embryonic businesses at interest to get money in circulation again, and not kept for the banksters’ own nefarious purposes. To encourage them, the Fed ought to tax every wired deal—a Robin Hood tax set at a level to make it more profitable for the Banksters to lend money rather than trade it. Naturally, the redneck tea party goer will get what little money is going because he would not want to receive any such “socialist” money. The capitalist banksters like such ironies, and will take every opportunity to kick sand in the faces of those who could do with a little help.

Barclays Bankers Show Banking is Bent

So Barclays Bank have been fined a fortune for fiddling their books in cahoots with other banks to seem more prosperous than they really were when other banks were in dire muck a few years back. Bob Diamond, Barclays CEO has offered to forgo his bonus this year, presumably therefore accepting responsibility. He was in charge of the fiddling division at the time. What an honest Joe he is!

My understanding is that insider trading is a serious crime. How is senior bankers fiddling interest rates to their advantage any less a serious crime? How is it even possible. We poor dumbos down here thought interest rates were set by governments or by a state bank, the Bank of England in the UK, but now we find that is not so. bankers set their own rates, and evidently can set them to their own advantage.

Can we be told why an autistic computer hacker can be extradited to the USA for alleged potential threats to computer networks, with the prospect of a long period of incarceration in some US semi-feudal dungeon full of violent muderers and psychopaths, but the genial, smiling mega crook, Bob Diamond, is not even investigated by the police here in the UK?

And whose money pays those massive fines? Is it Diamond's? Even his annual bonus of £several million is puny by comparison, and he is careful to tell us he will not be receiving it this year. Next year he will receive double to make it up!

This man and his weaselly fellow crooks throughout the bent banking kingdom should be arrested and properly brought before the courts of justice, with no permissible excuses like suspected senile dementia, no last minute conversions to the way of God, truth and light, and no fobbing off the case with some legal technicality. All of these have been used to get rich crooks off the punishment they deserve. Where then are the police? Where are the MPs asking questions like these in defence of the rights of the citizens who elected them?

The truth is that they are all cheaply bought by men like Murdoch and the bankster mafiosi. If no one in public office demands action over this criminality, then we know what a diseased state western society has fallen into. All our public servants are greedy opportunists, cheaply bought by latter day robber barons. Are there any honest people of principle left in public office? If so, let them show themselves!

Basic Arguments for Socialism by Tony Benn, former UK Minister

Tony Benn, who was a cabinet minister under Labour Prime Ministers Harold Wilson and James Callaghan, and represents the now disappointly small socialist wing of the Labour Party, has written in his diaries (published 1988):

As a minister, I experienced the power of industrialists and bankers to get their way by use of the crudest form of economic pressure, even blackmail, against a Labour Government (1). Compared to this, the pressure brought to bear in industrial disputes [by trades unions] is minuscule (2). This power was revealed even more clearly in 1976 when the IMF secured cuts in our public expenditure (3). These lessons led me to the conclusion that the UK is only superficially governed by MPs and the voters who elect them. Parliamentary democracy is, in truth, little more than a means of securing a periodical change in the management team, which is then allowed to preside over a system that remains in essence intact (4). If the British (or American) people were ever to ask themselves what power they truly enjoyed under our political system they would be amazed to discover how little it is, and some new Chartist agitation might be born and might quickly gather momentum.

In the present crisis these words mean more than ever:

1. We have given £1 trillion (£1 million million) to banks (mainly) and various industrial groups and scammers
2. The government and press blame trades unionists and workers defending their work and conditions for “living beyond our means”, and all those with low IQs accept it!
3. The money magicked out of the treasury into bankers' coffers is to be replaced, not by taxing bankers and their wealthy chums, but by laying off public servants and cutting benefits for the poor
4. Our so called democracy is smoke and mirrors, intended to pull the wool over the eyes of simpletons. Regrettably, we have a lot of them, mainly yes-men in comfortable jobs, but many who think politicians and the media cannot tell a lie!
5. Both Britain and the USA have a two party system but with only one policy between them—lining the pockets of the rich and powerful, and blaming working people for being idle!

Benn himself had to fight to get a seat in the British House of Commons after he inherited—at his father's death and the previous death in action of his elder brother—the peerage his father had been awarded earlier for his public service. The constitutional point about this is that peers (Lords) were confined to the feudal House of Peers and were, for constitutional reasons, not allowed to stand in the commons. But nor were they allowed to renunciate their peerage to do so. Already an MP for ten years, Benn had tried to introduce renunciation bills to allow those, like himself, who did not wish to inherit a title, they personally had not earned, to renunciate their inheritance. Both houses refused them.

Benn had his parliamentary seat removed, and a by-election was arranged, for which Benn sought and received selection by his local constituency party. Benn then won with a vastly increased majority, but was not allowed to take his seat. Two senior judges were appointed to test Benn's case which was based on some precedent, but mainly on the fact that, in a modern democracy, a properly elected candidate ought to be able to take a seat if constituents had vote for him. The judges found Benn's case inadequate and his losing opponent was given the seat. There was such a public outcry that the government of the day had to introduce a bill allowing a peer to renounce his peerage and take up a legitimately elected seat in the commons. So Benn returned, convinced that the system was designed to maintain the status quo, but that concerted public action could change things.

Benn's call for a new Chartist agitation has been answered in the UK, where there is a charter movement, but unfortunately not strong enough, not least because the non-democratic media tell us nothing about it. Needless to say, the odious sociopathic crook, Tony Blair, partner in murderous crime of the pathetic G W Bush, gets every chance to defend his get-rich-quick policies such as the PFI, as it is called, which has driven large hospitals into bankruptcy and has doubtless put many other public enterprises into the red, all the better for greedy corporations to privatize them.

Benn elsewhere pointed out that the Labour party of 1935 proposed in its election manifesto to nationalize the banks. The crisis then was similar to the one we are experiencing now. The present one is, if anything, worse. Why then is there no demand by the Labour Party to nationalize our banks instead of putting our taxes directly into the share dividends of people rich enough to go without their unearned incomes for years, and still be rich?

There are millions times more people who are poor or only moderately well off, yet so many of them are deluded into thinking they are among the rich. The 1% is richer than most people can imagine, let alone sensibly defend as being in their own best interests. Support a people's charter. You'll probably find there is a charter group near you. If not, draw one up and get your friends and fellow workers to support it. If we do nothing look around the world at what our ruling classes are willing to do to others. Think you'll be any different when push comes to shove? Don't delude yourselves.

Tax the Rich Every Last Penny Until the Money Banks Stole is Replaced

Too many people believe the political and media propaganda that we have overspent and we must cut back.

Keep reminding them that the banks overspent, thinking mortgage collateral—houses—would rise in value to cover it—in fact, on the assumption that housing prices would rise indefinitely. They spent money they didn’t have, giving themselves massive bonuses for doing it, then, when the housing market collapsed, they told governments, governments!, they were too big to fail, and told governments, supposedly our governments, they had to give them £$trillions from national treasuries—our money collected as taxes—to replace the money the inept bankers had lost on junk mortgages and junk bonds. What did we have to do with it?

We have already paid the banks—the money they were given was not the government’s money, it was our money, entrusted by us to governments for nation wide social use—yet these governments, supposedly our governments are making us pay again, through enforced austerity measures that have nothing to do with us overspending. Tell them to stuff their austerity measures that hit everyone except the super rich, and to get every penny back from the rich leeches who do nothing and deserve nothing of ours.

Impose a Supertax to Recoup the Money Robbed from our National Treasuries

After the UK bank bailouts in 2007-8, which the National Audit Office said emptied the British exchequer by almost a trillion pounds, UK Labour Chancellor, Alistair Darling, said the banks were henceforth to show restraint, and boasted of the 50 percent supertax he had imposed on bankers’ bonuses. Actually, it was a one-off payroll tax that would only raise £550 million—about 0.06 percent of the money the robbers had received. The bleating professional defenders of the City called it a fresh attack on that sacred institution, but nothing is being said about it now that banks are rewarding their executives, like Stephen Hester of RBS, for that staggering robbery of the treasuries of all the leading capitalist countries, leaving everyone except the ruling junker class tantamount to being bankrupt.

The measure, feeble and ineffective as it was, would prompt defections from the City, the publicity lobbyists claimed. All of these bankers can, apparently, get immensely rewarding jobs anywhere else in the world, and now they shall! It is their own propaganda, though doubtless, like all greedy opportunists, they believe it. And Darling said the banks would actually pay the bonuses tax, so the burden again falls on us, guileless slaves of the rich, whether it is through the exchequer or through the banks that we are robbed. John Whiting, tax policy director of the Chartered Institute of Taxation, immediately warned that the banks would find ways around the tax!

Bonuses are only part of the problem. Income tax is not merely unfair, it is regressive—the richer you are, the less you pay. One of the very richest men in the USA, Warren Buffett, has openly admitted that his tax rate (18 percent) is lower than that of his lower class secretary (30 percent). Can anyone deny that it is grossly unfair that the rich should pay less national tax than those who are much poorer? How is it possible? When income tax was introduced temporarily in 1842, even Queen Victoria paid it. The monarchy later, when it became a normal feature of government funding, was excused it. But in 1992, the British Queen volunteered to pay it again—no doubt with some persuasion—but hoping to gain popularity at a time when monarchy was under criticism.

In 1909, British Chancellor of the Exchequer, Lloyd George, set income tax at 9d (9 pence) in the pound (3.75 cents in the dollar), for incomes less than £2,000, which amounts to about £160,000 at 2012 values. He set a higher rate of 12d (one shilling, or 5 percent) for incomes above £2,000, and an additional “surtax” or “supertax” of 6d (another 2.5 percent) on the amount by which incomes of £5,000 (£400,000 today) or more exceeded £3,000 (£240,000 today). This scheme, applied today, would mean rich people simply pay tax, not supertax, on earnings up to £240,000, but would owe the exchequer £4,000 as soon as they earned £400,000. Effectively, the rich would experience a hike in tax of just 1 percent of their income when they went through the £400,000 barrier, hardly a backbreaking jump. As things stand, the megarich would simply hire top accountants, lawyers and lobbyists to ensure the nation never gets the money they owe it, if everyone else does! But, if this sudden hike were sufficiently large, and avoidance and evasion of it were treated strictly as criminal, banks and corporations would not be inclined to overpay directors, and they would not want to recieve more than the limit and suffer the penalty of the tax barrier.

Republicans brag that, when they took Congress in 1994, they lowered taxes creating an improvement in the economy, and higher tax revenues. Since then they have perpetually called for the same strategem, even though the improvement they boasted of was short lived. What they want is lower taxes for the rich, but it is cutting taxation of the poor and middle classes that improves spending, business transactions, and ultimately the economy as a whole. Money rises like a gas through the classes of any capitalist society like ours, it does not trickle down like water, at least, if it does, it does not trickle down at home where it is needed!

Time series suggest that governments resist raising tax from the rich except in crises. Then they have sometimes lifted taxation into the supertax category of over 90 percent. When this is done, the revenue is fed in at the base of the economy in public projects and better benefits, lifting spending power at the base and thereby stimulating the economy throughout by the multiplier effect—the way each dollar or pound is spent over and over again, once someone poor gets it to spend in the first place, and the way an initial expenditure triggers further ones, like a tin of paint for the front door stimulating the decoration of the rest of the house, which now looks shabby, then new furniture, and with fresh aspirations, a new car, a new home, and so on. It is Keynesianism. It works! So, taxing the richest boosts the economy. Reducing taxes on the rich induces them to accumulate more capital which they regretably are too often ready to invest overseas for even better profits. Meanwhile, our own economy is deprived of liquidity and unemployment and poverty rise. Tax rates for the richest were being cut until 1928, but they failed to stop, and arguably exacerbated the Great Crash of 1929 and the following long depression, ended only by WWII. Our situation today is frighteningly similar.

Curiously, considering that the upper classes in the USA—not to mention many of the middle classes too, albeit perhaps influenced too much by patriotic propaganda—constantly demand foreign wars, the top rates of income tax go up while wars are being fought and afterwards when their costs have to be met. In WWI, the top US rate of income tax reached 77 percent, but in the aftermath of WWII it went as high as 94 percent. The US Right Wing, who bleat their propaganda line that Obama is a “commie” when he is not being a Moslem or a Satanist, would be certain that supertax equates to communism. Yet it has inevitably preceded the US economy picking up, so that the supertax was soon lifted. Perhaps too soon. UK supertax was lifted in 1973, but replaced by rates of income tax progressiing from zero for the very poorest to much higher levels for the rich, albeit falling short of a supertax. Maybe now, it should be a permanent feature of the modern capitalist state.

HM Revenue and Customs (UK) claims that twice in the post-war years, special tax rates have pushed income tax above 100 percent. Sad parasites of other people’s work received unearned income from stocks and shares, and apparently paid the taxman more than they earned. They must have been Warren Buffets living in cardboard boxes under railway arches. It is a highly dubious calculation which must assume that the different rates are applied additively. They were not. Some rates were either/or, not both in succession. No wonder the tax men leave the calculations to each of us ourselves to submit via self assessment. The people who do pay rates of over 100 percent are the poorest—those on benefits who lose all of certain benefits when they earn above certain levels of income. Unless the increase in income exceeds that lost by loss of benefits, income declines, so the effective tax rate of such poor people is over 100 percent. This is very common indeed, and explains why many people give up looking for work.

When a nation is divided into two contending classes, both cannot have their own way. Democracy is meant to ensure the majority rules, subject to its laws not oppressing the minority, but, for that, it has to be fair. It is not fair when one section owns all the media, and the rich can do that through their wealth. The American paranoia about socialism leads ordinary Americans to accept the rich man’s propaganda, and support the rich man’s interests contrary to their own. So that when sensible policies are proposed the people are confused by those who want a less practicable and more greedy policy, so that what emerges is precisely the wrong kind—acquiescence in wasteful policies, such as militarism and imperialism, rather than taking steps in the right direction.

The British Labour Party has exactly the same problem. Beguiled by Blairism and topped up in the Blair years with careerists and opportunists, it is quite incapabale of taking the right decisions. Even though the Con Dem coalition is on shaky ground, and the people are sick of the succession of Thatcherite policies over the last thirty years by successive governments, the Labour leadership is tied to its outdated mode of thinking—deregulated neo-liberalism—when something new, and actually left wing is needed in the face of the bankers and the junkers.

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 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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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.

America Stops Laughing to Correct Apoplectic Republican Comic, Rush Limbaugh

Alternet has a plethora of interesting articles and often more interesting and informative comments. This link is to a comment thread to a short article about the right wing propagandist Rush Limbaugh, who is no repecter of the truth or even of facts. A comment by passnthru2 noted:

1. The richest 1 percent has 43 percent of the nation’s wealth—6 times that of the bottom 80 percent, which has just 7 percent
2. the richest 5 percent has 72 percent of the nation’s wealth—10 times that of the bottom 80 percent
3. the top 20 percent has 93 percent of the nation’s wealth—23 times that of the bottom 80 percent
4. the top 50 percent has 97.5 percent of the nation’s wealth—39 times that of the bottom 50 percent which has 2.5 percent

44 percent of Americans couldn’t get $2000 together if their lives depended on it, while the richest 400 families:

1. have $1.4 trillion, and yet,
2. pay under 14% income tax

These rich people and the big corporations they own are sitting on piles of cash, yet they refuse to pay decent wages, and do everything in their power to lower the workers wages, for example using professional bigots like Rush Limbaugh whose splenetic rants impress a substantial section of the redneck population. It explains why there is a recession, and illustrates the huge fault in capitalism.

The rich always want more, and have to drive up profits to get more. They can do it by charging more and by paying their workers proportionally or absolutely less. They can even move their businesses abroad and pay the domestic worker nothing at all! But when people have less to spend whether it is absolutely less through wage cuts or relatively less by price inflation, they cannot afford to buy as much as they could previously. The retail trade goes into recession, and manufacturing businesses follow.

RustyCannon observed that if they were to pay people better, retail and therefore industry would be stimulated. Poor workers necessarily spend what they receive in earnings. They do not earn enough to save it. So the economy would be stimulated if the rich would just realize that they are starving the economy of liquidity by their greed. If the rich will not do it then the government must. President Carter created jobs, then Reagan came in, cut taxes for the rich, and drove unemployment through the roof.

The theory was “trickle down”. Give the rich more tax breaks and less regulations and they will spend more readily, employing people to expand their businesses. It doesn’t work. Republican President, George W Bush did not create as many jobs in the two terms of his presidency as did Carter in the single term he had. The rich just begin to expect more tax breaks to accumulate more risk free wealth—it is easier than taking the risks of trading. 30 years of this has just lead to manufacturers closing factories and destroying lives at home to move maufacture abroad to low labor cost countries. 50,000 manufacturing companies went in the Bush administration alone.

The large and enterprising middle class that was the economic engine of the USA is being impoverished by the stranglehold the rich have on the nation’s ready money—the top 400 wealthiest own more than the bottom 150 million. The economy is starved of demand. Middle class wages have been flat for 3 decades, yet the cost of living has continued to climb. Two income homes are now needed just to get by. The middle class no longer has as much disposable income, and what it has is falling, leaving its demand for products and services lower, with knock-ons to other small businesses dependent on them.

When people, encouraged by the sleepwalking bankers, began using the equity in their homes, they created a false demand bubble, and a false sense of prosperity. Disastrous greed among bankers who thought our money was theirs, led them to gamble with those unsound derivatives. Trading them backwards and forwards each day yielded immense bionuses for doing nothing in the least bit useful. That bubble burst, leaving us in the mess we are in, yet with no will to regulate the banksters and the rentiers, and sustained “head in the sand” insanity among Republicans determined to tie down Obama, and bring him down, if at all possible.

Further cuts as demanded by the Republicans can only make the situation worse, and that is the fault of the Republicans themselves who ought to have accummulated in the good years to spend in the bleak ones. They spent through the good years and now, when spending is the only way out of depression, they want to cut. Strong financial regulation and a New Deal like FDR’s will be necessary to reinvigorate the economy—measures that Republican bigots like Limbaugh call socialism for the sake of their indoctrinated disciples.

Are Americans Sick Of War?

A poll by “Pulse Opinion Research” shows that 72 percent of likely voters in the US think that the country is fighting too many wars abroad. Operations continue incessantly overseas and new ones always arrive when old ones seem to be getting settled, like Libya after Iraq. The US people increasingly want to know when the military will finally listen to the people and step back.

Americans see the country deep in hock, and millions unemployed and underemployed, while millions more, even middle class people, worry about the possibility of getting the bullet—fired! Or their compensation slashed in some economy drive. Yet administrations always have plenty of money to fight foreign wars. Something Americans can do without in these allegedly hard times is their tax dollars wasted on useless wars.

With Americans wanting out, this administration is doing little. Yet Obama campaigned under the banner of “Change”, of which ending war was one prominent constituent part, but like Clinton he has broken every promise and spinelessly has bent over to the militarists and the armamaments manufacturers, introducing the US into more wars on his watch. Even a Republican presidential candidate, Ron Paul, thinks these wars “endless” and “unwinnable”.

Is Paul doing the same as Obama? Codding the voter? Elections in the USA are an utter fraud. It does not matter who wins, the same policies—aimed at keeping the military and industrial barons and their financiers in banking and insurance swimming in profits—are retained, and the professional lobbyists in Washington with their bucketloads of bribery dollars can always get their own way with grasping representatives. They all have their price, and it isn’t high for the filthy rich minority with enough megabucks to control the USA.

Yankees threw off the yoke of the English, but now they'll have to throw off the yoke of their home grown oppressors. The Brits had to do the same. They threw out the king in the seventeenth century, but kings returned. In the nineteenth century, they had to strike and riot to get the two reform acts passed that pulled the greedy rich into some order for a couple of centuries. Now the British will have to do it again, too!

Why Scientists Often Have To Repeat Their Studies

Harvard sleep expert, Dr Charles Czeisler, has spent about $3 million over the years showing that doctors who don’t get enough sleep make mistakes on the job. Yet long shifts for interns and residents are a staple of hospital culture, and, as anyone’s welfare in hospital might be at stake, one might have thought it important to rectify excessive hours.

But it has taken Czeisler the best part of three decades getting the medical establishment to acknowledge it, and still the rules governing doctors’ working hours remain hard to change. When he gave evidence that workers on rotating shifts at a chemical plant suffered from disrupted sleep, the medical establishment said doctors were different. Czeisler’s data “was dismissed out of hand”. They kept using the same argument even when tests had refuted it. When he published results showing that physicians’ 24 hour plus shifts contributed to car accidents and attention lapses at work, some said it might be true—but not for them!

In 2008, the Institute of Medicine issued guidelines calling for limiting interns’ and residents’ shifts to 16 consecutive hours. Eventually, authorities did cut back to 16 hours, but only for interns. Czeisler had studied interns, so the establishment claimed they had seen no evidence for residents! Now Czeisler is having to research whether residents’ performance also is affected by lack of sleep. “I can’t believe we have to do this extra study.”

Science cannot accept a single study as definitive proof of its findings. Some error could have been made or some bias have been inadvertantly built in, and any such mistakes need independent repetition of the study to discount error. Repeating a previous study which confirms it multiplies the reliability of both studies. Moreover, this case on the working hours of hospital doctors shows another reason why some research has to be repeated—a refusal to act on well established scientific work for political or economic reasons, or simply reasons of will.

Daniele Fanelli, an expert on bias at the University of Edinburgh in Scotland, points this out. “People want to draw attention to problems” rather than aiming to find something new, especially when important policy decisions are being delayed by procrastination or lack of political will. Experts have to prove some things again and again to get decision makers to act. Some might object that it is not a scientist’s job to persuade decision makers, but it is the duty of all of us to do it, surely, especially when the proof is there that lack of action is costing lives.

“There are some subjects where it seems you can never publish enough”, says Ronald J Iannotti, a psychologist at the National Institutes of Health. “Think about the number of studies that had to be published for people to realize smoking is bad for you.” Almost 50 years after cancer and lung disease were first linked to smoking, work continues to be published because the extent of the problem is still challenged, not least by those who make money out of selling tobacco products. A detailed analysis in the Canadian Medical Association Journal has had painstakingly to lay out that secondhand smoke in cars is bad for children. Many people will say that is too obvious to merit funding, but cigarette vendors, and those still addicted to smoking evidently still need reminding that harming the health of kids is not excusable—it is wrong.

The Ig Nobel Prizes are spoof awards to mock improbable research. One winner was a study that found nose picking was common among teens. Some might consider the research is not only pointless but in bad taste(!), yet it can hardly be said to be obviously so, and finding that it is common has health consequences. Staphylococcus aureus is a bacterium that is getting highly dangerous through its growing resistance to antibiotics (MRSA).

Iannotti says, even if initial findings seem self evident “you still need to establish the facts. That’s how science moves forward—incrementally”. Plainly not every study is equally worthwhile, and some studies approved for funding might be bad decisions, but the danger is that an over zealous aim to cut back on wasteful research will succeed only in cutting out useful research.

It would be far more useful to cut back on the excessive rewards given to bankers for not doing much at all, and to stop giving them even bigger rewards for wrecking the national economy. It is far more costly and ridiculous to reward useless bankers than it is to hand out funds for occasionally poorly thought out scientific studies. Bankers reward themselves with millions of dollars each a year. Many useful studies cost buttons by comparison, but no one seems to object to us giving megabucks to greedy bankers for doing little of merit.

Is the Wagon Rolling Against the Robbing Rich?

Amid the recent fiscal carnage in Washington several studies of the US have been published concerning the situation of the average American. First, IMF economists analyzed the US public deficit and debt levels, and their relation to the demands aging Baby Boomers will place on the government’s Medicare and Medicaid healthcare programs, while the birth rate lags at a record low:

The United States is facing an untenable fiscal situation due to the combination of high fiscal deficits, an aging population and rapid growth in government provided healthcare benefits.

IMF study, An Analysis of US Fiscal and Generational Imbalances:
Who Will Pay and How?

To “go a long way in returning the United States to a fiscally sustainable path”, the US government must cut the entitlement programs and especially healthcare—among the most expensive in the world—that face rapidly rising costs in coming years. Americans will have to pay more taxes and the government will have to cut spending on Baby Boomers—those Americans between about 45 and 65—and their immediate heirs.

To eliminate all current deficits and long term shortfalls on social plans for the current generation “would require all taxes to go up and all transfers to be cut immediately and permanently by 35 percent”, and “delay in the adjustment makes it more costly”.

Unless currently living Americans pay more in net taxes or unless government spending on current generations is curtailed, future Americans will face net tax rates that are about 21.5 percentage points… higher than those facing current newborn Americans.

Of course, the IMF is an arm of US foreign policy, or rather, an arm of the international policies of the US uber rich class who rule the world for the sole purpose of making themselves richer than their already obscene levels of riches. The IMF always makes the people pay whenever the rulers of any country get its finances in a twist by their greedy machinations. The ruling clique in the US are among the main beneficiaries usually. It is time they paid! Normally, they pay least, often nothing!

But the average Yankee seems amazingly placid, or gets worked up over the wrong enemy, all too often supporting the greedy manipulators because they are all too easy to fool. Often, they seem to think that they are themselves among the uber rich, but less than a single percent of the population are. That one percent have gotten three times richer in real terms over the last 30 years, while the average Yankee has got poorer once inflation is accounted for.

Not surprisingly, more Americans say that their financial situation is worse not better in recent years. For the first time since 1972, 31.5 percent of Americans are “not at all” satisfied with their financial situation compared with 23.4 percent who are “pretty well” satisfied (General Social Survey, NORC, University of Chicago).

Americans are also more insecure about employment. A record 16.4 percent thought it “likely” (fairly or very) that they would lose their job or be laid off. As few as 52.2 percent thought it “not at all likely” that they would lose their job or be laid off, easily the lowest confidence ever recorded by the GSS. Those who thought their standard of living was “much better” or “somewhat better” than their parents declined.

The General Social Survey—which NORC has conducted for forty years based on 2,044 interviews—is a biennial survey that gathers data on contemporary American society to monitor and explain trends and constants in attitudes, behaviors, and attributes.

On top of these, American “happiness” has been measured and took some blows, but some American stoicism shone through here. While only 28.8 percent of Americans, the lowest percentage since 1972, were “happy”, another 14.2 percent were “not too happy”. Happiness was hit mainly because of the economy and people’s own finances. Even so, 85.8 percent of Americans were “happy”.

Not all aspects of happiness fell during the downturn. 97 percent of marriages were judged to be “happy” (very or pretty), and 86.0 percent of Americans claim to be “very satisfied” or “moderately satisfied” with their work, a steady average since 1972.

If anything, it suggests that the average American lives in a cocoon. They are concerned for themselves and their immediate family, and are satisfied that they are not being repossessed like the family over the street, and still have a job to hang on to. Despite the hugely vaunted Christianity of the Christian nation, the average American is indifferent to his neighbour, as long as he’s all right.

The motto is not “Do unto others as you would be done by”, it is “I’m all right, Bud, You look after yourself”.

Fortunately, recent proposed cuts in public services have been firmly rebutted by encouraging united strength and purpose. Is the US sleeping Leviathan waking up? Let’s hope so, then you smug financiers, corporate bosses, bankers and bought men will have to watch out! Once enough of the people stop being taken in by the great Washington Repucrat-Demoblican farce, then the wagon of unity may be rolling, and the callous and greedy exploiters of the rest of us will be crushed by its irresistible momentum.

Bonuses and Distribution of Wealth in the UK

UK society, like the US, is skewed horribly in favour of the rich and against the poor. Some 53 of the UK’s richest 1,000 are billionaires. The wealth of these 1000 people has increased from £98.99 billion in 1997 to £335.5 billion today. Over the past 12 months, they got richer by an incredible 29 per cent. Despite the worsening economic situation, this is the largest annual increase in the wealth of this rich minority. What these figures show is an increasingly unequal society that has enriched the already megarich at our expense. The amount of gross domestic product (GDP, annual national production) dedicated to wages and salaries has declined over the past three decades. There is no way that such a distribution of wealth can be said to favour the common good.

The injustice of wealth distribution is in need of urgent debate. Why is the argument for higher taxation on the highest earners continually rejected out of hand? If the country wants better services then they have to be paid for. It is not possible to have something for nothing. And those who earn the most—and usually have got most out of the system—should pay more tax. Justice should be applied to the economic system by restoring higher levels of tax on those most able to pay. If they want to leave the country, then the country can put an even higher tax on any wealth they propose to take with them? Then we can say good riddance to bad rubbish, and let our youth have the chances they are now being denied.

In 1976, wages and salaries accounted for 65.1 per cent of GDP, this had reduced to 52.6 per cent by 1996, a time when the wealth of the richest 1,000 increased threefold. But society took a fairer proportion of that wealth increase. Levels of taxation were far higher on the rich. Tax rates above 80 per cent on those earning the most were not uncommon. Society was more equal and cohesive as a result. Reagan’s pandering to the megarich demands for tax cutting spread to his lapbitch, Margaret Thatcher, then to Bush’s lapbitch, Tony Blair, leading to today’s gross inequality and unfairness, in imitation of the USA.

Top FTSE 100 chief executives earned 47 times median earnings in 2000 and 88 times in 2010. In the public sector the ratio is far lower, more like 12 to one. Even so, the top 1% of public officials earned an average of £120,000. Why does a senior executive need a financial incentive, when every other worker does not get them and makes do with an agree wage? Would executives refuse to work? Would a hospital director let people die if not awarded a bonus?

The Big Society is an austerity program. The coalition government cynically chants its slogan “we’re all in it together” in reducing the deficit. Yet the policy implemented cuts public services, freezes public sector workers pay, cuts jobs and reduces pension rights, while inviting billionaires from everywhere to live here untaxed! When we discover that 1,000 people in Britain now have over £300 million each, we should be seriously complaining that the entire cost of deficit reduction is falling on the poor 65 million of us. At present it is the poorest who continue to pay for the deficit while the megarich grow ever wealthier. This cannot be right.

It has been suggested that there would be no deficit at all, if the treasury recooped some of the wealth the rich have robbed us of in the last thirty of forty years. MP Austin Mitchell thinks this 1,000 people with the most wealth could yield 25 per cent of it for the sake of the economy upon which the rich depend for future wealth. It would clear £84 billion from the deficit. Another suggestion was that the top 1 percent of the richest people, about 650,000 in the UK, could give up 20 percent of their accumulated wealth, clearing the deficit all together. Note that these megarich people would still be megarich under either scheme. They would still have 75 to 80 percent of their amassed riches.

The proposals are all the more attractive because of the neglible tax that most of these people pay and have ever paid, through their use of corporate lawyers to exploit taxation loopholes, and simply defraud the exchequer. Strict taxation on the rich is a basic justice that should be implemented now. The complaint of ordinary middle class people in the late Roman empire was that their megarich paid no taxes, or simply increased rents to cover any they had to pay. Soon after, the western empire collapsed. The people preferred barbarians to their own rulers.

A recent government inquiry considered that there should be a maximum pay ratio of 20:1 between top and bottom. It was meant to be only in the public sector, but, if it was considered just, why not overall? It was a hostage to fortune even to suggest it, so it disappeared in the final report. Instead, it recommended bonuses as being fair! CEOs should have a marginal element of their pay “at risk”, subject to meeting agreed objectives. Then public services would not be offering rewards for failure.

No research has shown that bonuses improve performance, nor do firms paying them do better. Paying students to get better passes did not work. The ones who did well, did it because they enjoyed what they were doing. The same should be applied to bankers and CEOs. If they don’t like it, then let them quit and join the oridnary Joes who have to like it or survive in frugality on benefits. In any case, who would judge the CEO’s performance? A team of bureaucrats?

Schemes like this are bogus, even where performance can be measured. Sir Fred Goodwin of RBS was awarded a discretionary £16m pension pot, while he wrecked the biggest bank in the world. The package was approved by the bank’s remunerators and non-executives, his friends and associates. Directors rip off shareholders with the collusion of institutions, so they get bonuses whether good or useless. Bankers’ bonuses are the biggest because the City is a massive gang of monkeys scratching each others’ backs furiously.

Bonuses are not incentives. They are measures of greed and selfishness, and are possible because corporate leadership is no longer properly accountable. Such schemes were thought up in the 1980s to let top earners take ever larger sums of money from their companies. It was unfair, dishonest, and, for the banks, disastrous. Top executives are paid above the average to work harder and more successfully than the rest of us. If they fail, they should be fired, with no golden handshakes.

Pay should be fixed and pay scales fairly flat. The bonus anyone should get is acclaim by peers and the public for doing a good job.

Reporting from the UK Morning Star and the UK Guardian.

How Incentives Destroy Co-operation and Will Destroy Society

Human societies depend upon each of us helping our neighbors, and not exploiting them, and about 80 percent of us are willing to participate fairly in joint projects of mutual benefit. The other 20 percent are skivers, people who will try to get the benefits with as little effort as they can get away with. The skiving free loaders are not popular with the others who pull their weight, and usually sanctions or punishments are applied to those who try to exploit other people’s mutual effort for their own gain. It is called norm enforcement, the norm being that everyone should pull their weight, and those who do not are deviants from the norm.

Data like these are not difficult to get by testing in controlled situations. If my neighbor and I could each build a house on our acre plot in six months, but by co-operating we could do a better job making use of our complementary skills and finish the two houses in eight months, then we have a clear benefit from co-operating. If the houses still took six months each and were no better, we might as well build our own, and we only have ourselves to blame for anything that goes wrong. The act of co-operating must itself have a benefit or there is no point in it. So setting up a test in which people can share a sum of money they have been given with other participants to get a benefit from the pooled resource mimics my neighbor and I helping each other build a house, as long as it is likely that by sharing we can all be better off.

In such tests, Professor Stephan Meier, Assistant Professor in Management at Columbia Business School, and co-worker, Andreas Fuster, PhD candidate, Harvard University Department of Economics, discovered that when people were given private incentives, norm enforcement became less effective. The incentives seemed to take the edge off the hard feeling towards the skivers.

1. Participants were asked to contribute to a common pool of cash to be divided equally among them all at the end of each of six rounds, whether or not all participants contributed. No kind of norm enforcement was used. People gave only small amounts to begin with, and gave less in each round.
   
2. By adding an incentive to contribute (a lottery ticket), with no opportunity to enforce norms, people contributed more gladly, including free riders.
   
3. Norm enforcement was introduced to the first test, in the shape of a fine on free riders at the end of each round. Those who were fined, most of them, increased their contributions in subsequent rounds.
   
4. Adding the lottery ticket incentive made contributors scale back their punishment of free riders by almost half, and free riders were less likely to make larger contributions in subsequent rounds whether or not they were punished. The result tended towards the previous test without incentives.
   

Fuster says:

Individual incentives can really change the structure of how we deal with one another, what the norms are, and how we enforce norms. If social forces in an organization are important, managers need to be attuned to norm enforcement and peer effects. They should understand that adding monetary incentives can dramatically change this dynamic and lead to a net negative effect.

The point is that the lottery ticket became the aim of participating, there being nothing to be gained by sharing through the common pool. Free riding therefore became irrelevant. Everyone would give just enough to get a lottery ticket, whether a free rider or not.

On the face of it the experiments are flawed. There is no co-operative gain to be made by contributing to the common fund. The pool needs to be enhanced in some way to make it more like human co-operation. Even so, it is easy to see that a separate incentive can draw attention from the whole point of a co-operative venture—the advantages of co-operating—by distracting attention from the primary objective.

It is the reason, for example, why sports can be so easily disrupted by gambling. Whatever is to be gained from illegal betting can make sportsmen actually want to sabotage the supposedly co-operative team objective, and lose for their personal gain.

The same is true of senior managers and board members who begin to give themselves bonuses from the company’s earnings. The drive to maximize bonuses distract from the corporate aims, and when shareholders will not sack managers and board members who are lining their own pockets at the expense of the shareholder, then the managers can run amuck.

That is what happened in our banks. Barclays’ shares for example sank by a half over several years when top managers in most banks lifted their own compensation, including bonuses, by obscene amounts, and shareholders let them get away with it. Needless to say, the holders of large blocks of shares, able to sway any shareholders’ meeting, are often themselves large banks and city institutions, so effectively they are in a scam to rob the ordinary small shareholder and the customers.

Politicians are the same. Their objective is supposed to be to represent the interests of the people who vote for them, but they are all too easily distracted by the wads of maney waved at them from corporate bosses. Tony Blair is getting his compensastion now for his sacrifice of pretending to be a Labour Party Prime Minister, when he was a Republican Quisling. The incentives of the rich soon make most career politics forget what they are there for.

Our societies used to take an extremely dim view of bribery, but no longer. Bribes are today incentives, and the law enforcers themselves are too ready to accept them. A cabal of superrich people have corrupted the western world beyond redemption. Western society is decadent and immoral. Democracy is superficial. We are run by this megarich class, which controls every party with its incentives, incentives to do as they want, and not what is good for society.

The often despised Arabs are showing more courage and awareness now than the once militant workers of the UK and France. Workers in the US have always been too easily fooled by their betters. Even after thirty years of declining real wages, longer hours and poorer conditions for those in work, and a labor pool of twenty or thirty million unemployed or part time workers, while the top thousand or so people have trebled their wealth, the average American is still beguiled by the moribund American dream, Republican crooks and pastors, and their own inability to comprehend what is going on. They are the ones without the incentives, but rather are offered carrots.

Carrots might be incentives for donkeys, but Americans ought to be more sophisticated than those famously uncomplaining beasts of burden. Its time they started to do what the Arabs have already begun. Get out in mass on to the streets, trash a few corporate HQs and banks, and threaten revolution. Social instability is one thing the rich do not like, and can do little about, except getting national guards to shoot citizens.

Then everyone will realize that the state is not theirs, and democracy is an illusion.

Downturn in Housing—Nothing has Changed

Nothing has changed in the last two years. Bankers still get obscene bonuses, and the ordinary Joe is still being robbed by a system arranged to suit the rich. A report from the W P Carey School of Business at Arizona State University suggests a new downturn in the housing market.

Foreclosures had been held steady by foreclosure moratoria, but as these played out, it seems the rate of foreclosure is going up to where it would have been otherwise. In the last few months of 2010, foreclosures had fallen to 30 percent, but, in January and February 2011, it had risen again to 43 percent of recorded sales. Associate professor of Real Estate Jay Butler, who wrote the report, said:

January 2011 showed a re-emergence of troubled times, which continued through February.

Housing prices were also being influenced by foreclosure related activity. 40 percent of normal market sales were resales of previously foreclosed on houses. Adding these to the 43 percent of sold foreclosed houses means 66 percent of the market in January and February related to foreclosed buildings. That and the absence of a strong move up market, which is fundamental to a housing recovery, is restricting growth in home prices, leaving many home owners in negative equity.

The median price for the traditional market in February was $127,500, which is an improvement over the $125,000 in January, but down from $140,000 last year. The foreclosed properties in February had a median price of $141,385 in contrast to $143,580 for January and $153,695 for a year ago. Even expensive homes continued to be foreclosed, with 19 being over $1 million in February, so people who consider themselves middle class are being hit too.

The ones who are not being hit are the 0.1 percent of the population who rule the country, the mega rich, whose wealth equals that of the poorest half of Americans. Half of Americans is around 150 million! The mega rich, have as much money as 50 percent of all Americans and the proportion is rising each year. These people are never satisfied by however much they have.

The sad thing is that so many Americans are intoxicated by the American dream, that they can, somehow, be one of the mega rich. A dream is all it is for 99.9 percent of Americans.

Wise up, Yankees!

How the Bankers’ Greed is Ruining the US Internationally

The United States has slipped from second place to 13th out of 34 countries in the number of students enrolled in university, and it is stagnating in science teaching—in 17th place—and doing poorly in math, in 25th place. In contrast, more Chinese are enrolling in universities, which means there will be more scientists in China than there are in the US, driving up Chinese scientific output, said Penn State professor Caroline Wagner at the annual meeting of the American Association for the Advancement of Science (AAAS).

At a time when the greed of bankers has forced United States and Europe to make severe cuts in government spending on social services, but also on support for industry and science, China has significantly increased spending on science and technology, said Denis Simon—a professor at Penn State University who is also the science and technology adviser to the mayor of the Chinese city of Dalian—at the AAAS meeting. Simon said that the Chinese hope to spend around 2.5 percent of gross domestic product (GDP), the sum of a nation’s annual output, on research and development by 2020.

In the United States, Republican lawmakers are talking about trimming a billion dollars from the National Institutes of Health (NIH), the world’s largest public research institute, and slashing funds for other science and research agencies, negating the billion dollar boost President Barack Obama proposed for science and health research in his 2012 budget. Republicans want to make Joe and Jane pay in poorer wages and conditions for the trillion dollar US deficit, much of which was incurred by the treasury in bailing out moribund banks “too big to fail”. Knowing that, the mainly Republican banksters milked their bonus scam—collecting huge bonuses for selling and reselling junk bonds in a type of Ponzi scheme which inevitably would collapse, but not before bankers and financiers had lined their pockets at the expense of the taxpayer.

The Republicans also want to slash funds for education by some $5 billion, even though Education Secretary, Arne Duncan, has warned that the United States must better educate its kids, especially in science and math, or risk becoming uncompetitive in the global economy.

Another sign that China is moving to the top of the science league, the number of quality scientific papers coming out of the country—measured by how often they are cited in other studies—is growing exponentially. How often a peer reviewed scientific paper is cited by another scientist is a key measure of quality. The proportion of Chinese papers being cited is up, while the proportion of citations of US and European papers is down. China already produces more research papers in the fields of natural science and engineering than the United States, which as yet remains in total the biggest producer of scientific papers in the world. But Wagner warned:

On current trends, China will publish more papers in all fields by 2015.

Getting Conned by Bogus Investment Schemes—and Real Ones!

University at Buffalo sociologist, Lionel S Lewis, author of four articles in the journal Society about Madoff investors, explains how the Ponzi scheme works. He says:

To understand how confused thinking is, you need to understand how a con game works and the fact that it requires a “mark” willing to suspend his or her judgment.

First, the “roper”, who could be a brother-in-law, approaches the “mark” and says, “Listen, Bernie can make you a lot of money—a 16 or 20 percent return”. Now this is a far greater return than the standard investment produces, but the “mark” is greedy, like many people, and suspends reason in pursuit of easy cash. Remember, the “mark” is always a willing participant in pursuit of an unlikely outcome.

The con man—Madoff in this case—takes the “mark”’s money and spends it. He doesn’t invest it. He doesn’t realize a “return” on an investment. He just pays millions of dollars in finder’s fees to the “ropers”, gets them to pull in more “marks”, and uses that cash to pay off any of the “marks” who pull out of the scheme early, and spends the rest on estates, cars, vacations and yachts until the money is used up. Eventually the scheme collapses. The “marks” lose their money. In con terms, they’re “trimmed”. At this point, it is the job of the roper and other inside men in the con to “cool the mark out”—calm the waters to protect those perpetrating the con.

They do this, Lewis says, by pointing out to the mark that “he knew he was taking a risk (‘16 percent return? What were you thinking?’) and could have lost more, then sends him off, embarrassed, with his tail between his legs, but with a little cash, glad he’s not living on the street in a refrigerator carton”. The well cooled mark, according to Lewis, recognizes his part in the con. He’s not happy but he doesn’t call the cops, grouse about his losses on TV or blow up Madoff’s house.

Lewis is saying that people are voluntarily conned. They take a silly risk with their own money, knowing it looks fishy, but are so greedy, they do not accept a quick profit themselves from the scam, and get out while they are in the black. Instead, they hang on and on, reaping in the ill-gotten gains, maybe investing some of it anew, until the scheme inevitably falls apart. It is a pyramid selling scheme. It is illegal, and no one is justifying Madoff. He is in jail where he belongs, but the victims are still beefing, though it was a case of caveat emptor. They were buying a share in the scam, and were getting paid as long as new “marks” were being found. Now, they say they are victims of an investment con, that there were proper investments and they did not get their proper share. But there never were any proper investments! Lewis says:

Despite the fact that Madoff never ran an investment fund, no money was “made” on their behalf and there are no profits to return to them.

The scheme got so big and collapsed so swiftly that the “marks” were never cooled out:

So we find them posturing loudly as enraged victims online and off—in the papers, on television and radio—demanding “profits” they apparently think actually exist—they do not—and are owed to them—which is not legally the case.

Lewis focused on 167 people who invested with Madoff. He collected oral and written testimony, including lengthy interviews, from 42 of them and used other written material. Some investors, however angry and ashamed they are, and regardless of how much money they lost, have not sued and made a fuss. A lot of those people won’t talk to anybody. Lewis says:

Some who lost a lot were grateful they hadn’t invested more or glad to get back even a tiny percentage of what they lost, while others who lost less want everything they were “promised”—the 16 or 20 percent profit. They won’t accept that the “promise”, along with their gullibility, was part of the con, that they never could have won at this game, and still can’t, no matter how many attorneys they hire or how often they get on television.

What is sad is that many of those “trimmed” in the scam had worked hard to put together some cash, then greed got the better of them, they thought they could join the ruling class, and make buckets of money, and opted for Bernie Madoff’s shortcut to riches. They were gambling with their life’s savings, and gamblers know that they should only play on their gains, and should cut their losses. Of course, any pyramid scheme ends up with far more losers than winners, but the few winners can make fortunes out of all the little steers who are roped in.

The answer with any gambling—investing, if you prefer to call it that—is not to invest more than you can afford to lose. The trouble these days, is that the ruling caste are forcing the small guy into risky investments because the return at interest has been cut to zero. We can leave our life savings in the banks earning nothing, but eroding away by inflation and bankers’ bonuses, so we have to put the cash into something riskier.

Stockmarket crashes suit banks and financial speculators because it is the small investor who loses by bad timing and their inability to swing markets with sheer volume of investment, or influence, by buying stocks, talking them up with rumours of takeovers and such like, then selling at a profit while the stock is high. Joe and Jane will read the rumours and buy in too late when the stock has started to rise, then find the stock crashing again when the big man sells out. They lose! These are not strictly scams because it is all legal since Reagan had his bonfire of the regulations, a reason for much closer new regulation of the money markets. But Republican propaganda has it that regulation is a bad thing. Yes, it is bad for the crooks at the top, but just fine for the rest of us.

Cash Bailouts Are Frittered as Added Executive Compensation

A business study of corporate bailouts has found that debt relief is more successful than cash injections. It revealed that, in the year after a cash bailout, executives paid themselves and some employees higher compensation!

Executives of firms that receive cash almost immediately give their employees and themselves raises.

Professor Kenneth Kim

The study of the performance of 104 corporate bailouts in 21 countries between 1987 and 2005, was carried out by Kenneth Kim, associate professor, and Zhan Jiang, assistant professor, at the University at Buffalo School of Management, and Hao Zhang, assistant professor, at the Rochester Institute of Technology.

They found also that bailed out firms could recover to a point where their performance was as good as before, depending upon several factors. Recovery was best for firms that had had a sudden decline for reasons outside management control, or because they had problems servicing their debt. Firms that had declined more gradually with no significant external factors, or were unprofitable, were genuinely sick, and could not recover as well despite the bailout, though many did survive. Kim noted:

The former were profitable, they just needed a hand. So, it makes more sense to rescue firms that have been otherwise strong than to keep afloat “prolonged decliner” firms that have been weak or inefficient for some time.

Firms recovered least from governmental bailouts, because governments:

1. don't monitor firms after the bailout as closely as large shareholders and banks
2. may bail out a firm to keep people employed or to keep the economy going, regardless of the firm's performance
3. are more inclined to bail out firms with government connections.

Tory Toff Cameron, British PM, Greets His Deputy, Liberal Toff, Nick Clegg

Cartoon by Chris Riddell from Guardian Newspapers and the Observer.

David Cameron is the British Prime Minister. He is a toff, a man with very rich parents who had a very expensive education, the best you can buy in the UK. The British Deputy Prime Minister is Nick Clegg. He is another toff from a banking family, and had a superior education, albeit not quite in the Cameron bracket.

Cameron is a Tory, the traditional conservative party of the UK, while Clegg is a Liberal Democrat, but the two have united in a coalition government against the New Labour Party created out of the traditional Labour party by the machinations of one odious opportunist, Tony Blair. The New Labour Party became unelectable because of the lies, spin, lack of principle, and the general careerism and dishonesty of most of Blair’s pick of grifters who stepped forward to be selected as a candidate for New Labour in the Blair and Brown years.

Clegg’s party pretended to have taken the mantle of the old Labour party in standing up for the ordinary worker and the middle classes, the old, the disabled, the deprived, and generally those struggling to manage in a world increasingly designed to favor the sharks and other financial raptors. But he welched on his promises, and joined David Cameron in the most vicious attack on the standards of anyone less than minted in almost a century.

Clegg, however, leads the junior arm of the coalition, and hence he is depicted as a doormat by Chris Riddell, having to endure the muck and mud of popular ire, and growing sense of betrayal by the Lib-Dems, because the attack on the people would have been impossible without Liberal help, and their full ire would have been directed against Cameron’s Tories.

As it is, the anger is growing, the pressure is mounting. Already students have wrecked the entrance of the Tory HQ on Millbank in London, knowing that good humored, quiet, and orderly demonstrations never get the demonstrators anywhere. They are ignored or subverted from their original aims.

Look at the orderly million strong demonstrations against the Iraq war. The antiwar feeling was rapidly extinguished and turned, by ceaseless military publicity and propaganda, into pro war sentimentality and “charities” like “Help The Heroes”, a way of keeping in the public eye the “heroism” of our soldiers killing peasant farmers, their wives, daughters and sons, in their own homes and homeland 4000 miles away.

All of this is meant to distract public attention from the way they have been robbed of trillions by the bankers and those who depend upon financial fiddling like Cameron and Clegg, not to mention the creepy Blair, so much admired, it seems, in the Land of the Free. Please take him and keep him, treating him to the same torture that he and Bush have meted out in the world, by Bush’s own admission, when the US eventually gets to prosecute war criminals instead of sheltering them.