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Contents Bulletin Scripting in shell and Perl Network troubleshooting History Humor

Neoliberalism as a New, More Dangerous, Form of Corporatism

Neoliberalism = Casino Capitalism = "Transnational elites, Unite!"
(It is a neoTrotskyism with the word "proletarians" substituted by the word "elites"
 in famous "Proletarians of all countries, Unite!" slogan
and "Color revolutions" instead of Communist  "Permanent revolution"  )

Version 4.1

Skepticism and Pseudoscience  > Who Rules America > Neoliberal Brainwashing


News Who Rules America Recommended books Recommended Links Neocolonialism as Financial Imperialism Neo-fascism Neocons as USA neo-fascists
Corporatism Casino Capitalism Neoliberal Brainwashing Neoclassical Pseudo Theories  Corruption of Regulators New American Militarism Anatol Leiven on American Messianism
Financial Crisis of 2008 as the Crisis of Neoliberalism and shift to neo-fascism Two Party System as polyarchy Audacious Oligarchy and "Democracy for Winners" Ayn Rand and Objectivism Cult The Deep State Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime Deconstructing neoliberalism's definition of 'freedom'
Elite Theory The Iron Law of Oligarchy Compradors Fifth column Color revolutions Anti-globalization movement Inverted Totalitarism
Super Capitalism as Imperialism Media-Military-Industrial Complex If Corporations Are People, They Are Psychopaths Jeremy Grantham On The Fall Of Civilizations Psychological Warfare and the New World Order Neoliberalism as a Cause of Structural Unemployment in the USA Neoliberalism and inequality
Neoliberal corruption "Fight with Corruption" as a smoke screen for neoliberal penetration into host countries IMF as the key institution for neoliberal debt enslavement Blaming poor and neoliberalism laziness dogma Predator state Disaster capitalism Media domination strategy
The Great Transformation Harvard Mafia Friedman --founder of Chicago school of deification of market Republican Economic Policy Monetarism fiasco Small government smoke screen Gangster Capitalism
Libertarian Philosophy Media domination strategy Alternatives to neoliberalism Globalization of Financial Flows History of neoliberalism Humor Etc

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

- New York Times

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

May '68 and its Afterlives [Review]

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

The Kremlin Stooge


Neoliberalism is a new form of corporatism based on the ideology of market fundamentalism, dominance of finance and cult of the rich ("greed is good") instead of ideology based on racial or national superiority typical for classic corporatism. It might be more properly called neo-corporatism. It is a powerful ideology, currently dominant ideology in the worlds, which displaced both communism and social-democracy models.  It absolutizes the value of competition in social systems using as a smoke screen an abstract, ideologically charged construct called "free market" (free for whom? why not "fair market" ?) . Simplifying you can see it as a power grab by globalized economic elite and a race to the bottom for the rest of world population. In this sense neoliberalism is not simply about the redistribution of wealth up, toward the top 0.1%.  It is mainly about putting the elite outside the the framework of the law and  institualizing fraud and deception as a business model for elite (and only for elite). Much like in feudalism. This ability of the elite to commit criminal acts with impunity is the key component of neoliberalism as a political system.

Neoliberalism enjoyed strong political ascendance since 1980th, although ideology is much older and its origins can be traced to first decade after WWII; the seeds were firmly planted in 1965 with the establishment of free trade zones and Mexican maquiladoras (factories that produce for export) under so called the Border Industrialization Program. Even at this, early stage the key feature of neoliberalism were evident -- outsourcing labor to the third word countries, as the method of undermining power of unions in the USA. Along with the elimination of unions, classic neoliberalism promotes reduced taxation of rich and corporations, reduced regulation, and minimizing redistributive function of government and favoring the rich and powerful elite and first of all financial oligarchy. This minimization of government functions is not about the reduction of military budget, but about dismantling of safety net established under New Deal, including the privatization of health and retirement benefits. In countries outside the USA neoliberalism is also a strong proponent of opening up of the economy to foreign competition. Supporters of neoliberalism created real "fifth column" out of universities economic departments with small targeted grants and various forms of corruption of large percentage of professors (speaking engagements, higher salary, exorbitant consulting fees, etc).

In its essence neoliberalism is a counterrevolution aimed at destroying established after WWII compromise between workers and capitalists, which in the US was called the New Deal.  In most simple form neoliberalism can be defined as an attempt to restore the rule of international financial oligarchy over society.  Unlike classic forms of corporatism such as German and Italian fascism here we do not see the dominant nationalistic, far right political party that suppresses all the political opponents. Instead this is an organized movement of the top echelon of corporations and, first of all, global corporations, who decided to enforce the same indirect and mostly economic form of  control over population that was  polished within corporate environment and in battles with the unions. It is called Inverted Totalitarism or, as some call it, "fascism in velvet gloves".

As a social system is a derivative, a new form of classic corporatism and involves complete dominance of large corporations over government, including but not limited to conversion of goals of multinationals into state foreign policy goals (achievable by wars, if other means fail). The usurpation of large multinationals of political life of the country is achieved mainly by economic means but assassinations are not excluded as "deep state" is a part of neoliberal power structure and has capabilities of physically eliminating opponents.   Still the main form is by buying politicians and controlling all major political appointments, including the selection of Presidential Candidates). In a way the society became "occupied" in a very precise meaning of this word (and that's why "Occupy Wall Street" movement is misnomer; it should be called anti-occupation movement). Citizens and most countries are transformed into indented servants of large corporations and their economic and political interests.

Debt slavery is the standard, prefered tool of neoliberal control both over individuals and countries. One of the key strategy of subduing the countries by neoliberal elite is enforcing on the country large unplayable debt, essentially converting such a country into debt slave. Greece and Ukraine are two most recent examples of this policy in action. Typically this is done with giving the country large loams for questionable projects, and large part of allocated money is promptly stolen by local neoliberal elite. Then when crisis struck and institutions that took the load can't pay, they are bailed out by  converting those loads from private to public via IMF. This is the key mechanism of redistribution of wealth -- profits are private, but losses s are public.

Neoliberalism is corporatism that had outgrown national boundaries and became global. In other words in 70th of the last century, the civilization made an interesting turn, returning to the state where a supranational structures, which in the middle ages were called religious orders, returned to the prime scène in the form of transnational corporations, IMF (which represents interests of US financial oligarchy) and World Bank with budgets that exceed the GDP of most States and political influence, exceeding traditional political influence of international institutions such as UN, UNESCO, etc.   An interesting nuance is that national three letter agencies also became important players in this new global governing corporatist alliance, acquiring a political role similar to transnational corporations as the key part of National Security State and forming the core of so called "deep state":

Yes, there is another government concealed behind the one that is visible at either end of Pennsylvania Avenue, a hybrid entity of public and private institutions ruling the country according to consistent patterns in season and out, connected to, but only intermittently controlled by, the visible state whose leaders we choose. My analysis of this phenomenon is not an exposé of a secret, conspiratorial cabal; the state within a state is hiding mostly in plain sight, and its operators mainly act in the light of day. Nor can this other government be accurately termed an “establishment.” All complex societies have an establishment, a social network committed to its own enrichment and perpetuation. In terms of its scope, financial resources and sheer global reach, the American hybrid state, the Deep State, is in a class by itself. That said, it is neither omniscient nor invincible. The institution is not so much sinister (although it has highly sinister aspects) as it is relentlessly well entrenched. Far from being invincible, its failures, such as those in Iraq, Afghanistan and Libya, are routine enough that it is only the Deep State’s protectiveness towards its higher-ranking personnel that allows them to escape the consequences of their frequent ineptitude. [2]

... ... ...

The Deep State does not consist of the entire government. It is a hybrid of national security and law enforcement agencies: the Department of Defense, the Department of State, the Department of Homeland Security, the Central Intelligence Agency and the Justice Department. I also include the Department of the Treasury because of its jurisdiction over financial flows, its enforcement of international sanctions and its organic symbiosis with Wall Street. All these agencies are coordinated by the Executive Office of the President via the National Security Council. Certain key areas of the judiciary belong to the Deep State, such as the Foreign Intelligence Surveillance Court, whose actions are mysterious even to most members of Congress. Also included are a handful of vital federal trial courts, such as the Eastern District of Virginia and the Southern District of Manhattan, where sensitive proceedings in national security cases are conducted. The final government component (and possibly last in precedence among the formal branches of government established by the Constitution) is a kind of rump Congress consisting of the congressional leadership and some (but not all) of the members of the defense and intelligence committees. The rest of Congress, normally so fractious and partisan, is mostly only intermittently aware of the Deep State and when required usually submits to a few well-chosen words from the State’s emissaries.

The American and British elite in 70th (starting with President Carter in the USA but coming into full force with President Reagan; Thatcher played similar role in GB) decided to liquidate the New Deal coalition and to cover up the upward redistribution of income with a smokescreen of neoliberal ideology. Which also served as anesthetic for lemmings which were mercilessly deprived of most safety net that they acquired due to New Deal ;-). As Lames Levy noted in his comment to Why the Claims Neoliberals Make About Markets Are Wrong naked capitalism

 Jefferson’s notion of “marketplace of ideas” doesn’t apply to the ideology of the market. Bad ideas, like bad people, often thrive. Many of us were taught that this was not the case–good triumphs over evil, virtue is its own reward, and the arc of history is long, but it bends towards justice. The older I get, the more I doubt these things, the less evidence I see for them, and the less self-correction I see in scholarship

Extremism of Neoliberalism, Neoconservatives as militant faction of neoliberals

Like in case of Communism/Bolshevism/Trotskyism  a distinguishing feature of neoliberalism is its clincher argument: there is no alternative”(TINA).  Instead of Communist manifesto neoliberals use so called Washington Consensus and instead of Capital Milton's Friedman book Capitalism as Freedom. They also re-define the meaning of the word "freedom"  (Deconstructing neoliberalism's definition of 'freedom').  Instead Roosevelt classic four freedoms, they put as the cornerstone the corner cult of possessions (see also Ayn Rand and her Objectivism Cult). That makes neoliberalism as powerful extremist ideology as communism, or radical Islam, if you wish ;-). Because of its ideological extremism: it recognizes no competitors, and allows its adherents ignore the possibility of viable alternatives.  The extremist, jingoistic wing of neoliberals in the USA is represented by so called neoconservatives (Paul Wolfowitz, Bush Jr.’s Deputy Secretary of Defense even managed to became the President of the World Bank, confirming the idea that finance is a war by other means) . Since Clinton the position of Secretary of State is occupied by warmongering female neocons, with Hillary Clinton as the the most recent example

Neoliberalism and Christianity

For thousand years various religions attempted to take the greed in man, as this is a prerequisite for stability and  functioning of society. In this respect neoliberalism is really Devil Creed as it consider greed to to be a virtue ("greed is good"). In other words from the point of view of Christian theology neoliberalism is nothing but a flavor of Satanism (wikipedia):

Its core beliefs revolves around individualism, egotism, Epicureanism, self-deification and self-preservation, and  propagate a worldview of natural law, materialism, Social Darwinism, Lex Talionis ("eye for an eye"), and mankind as animals"

... ... ...

It is atheistic philosophy which asserts that "each individual is his or her own god and there isno room for any other God. "

Neoliberalism explicitly rejects the key ideas of Christianity -- the idea of ultimate justice for all sinners. The idea that a human being should struggle to create justice in this world while realizing that the the ultimate solution is beyond his grasp.

As Reinhold Niebuhr noted a world where there is one center of power and authority (financial oligarchy under neoliberalism) "preponderant and unchallenged... its world rule almost certainly violate basic standard of justice". The same is true about globalization as

"no world government could possibly possess for generations to come, the moral and political authority to redistribute power between nations to the degree in which highly cohesive national communities have accomplished this end in recent centuries". 

He warned that

"Lacking a deep understanding of the complexities of national aspirations and cultural differences, US foreign policy often lingers between two extremes of offering economic advantage to secure cooperation or overcoming intransigence through military force".

The problem with "greed is good" slogan it cultivates cruelty toward other people, As Pope Francis noted "To sustain a lifestyle which excludes others ... a globalization of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion ..."

Here are selected quotes from Evangelii Gaudium, Apostolic Exhortation of Pope Francis, 2013

... Such an [neoliberal] economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.

Human beings are themselves considered consumer goods to be used and then discarded. We have created a “disposable” culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the “exploited” but the outcast, the “leftovers”.

54. In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalization of indifference has developed.

Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase; and in the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.

No to the new idolatry of money

55. One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.

No to a financial system which rules rather than serves

57. Behind this attitude lurks a rejection of ethics and a rejection of God. Ethics has come to be viewed with a certain scornful derision. It is seen as counterproductive, too human, because it makes money and power relative. It is felt to be a threat, since it condemns the manipulation and debasement of the person. In effect, ethics leads to a God who calls for a committed response which is outside of the categories of the marketplace. When these latter are absolutized, God can only be seen as uncontrollable, unmanageable, even dangerous, since he calls human beings to their full realization and to freedom from all forms of enslavement. Ethics – a non-ideological ethics – would make it possible to bring about balance and a more humane social order. With this in mind, I encourage financial experts and political leaders to ponder the words of one of the sages of antiquity: “Not to share one’s wealth with the poor is to steal from them and to take away their livelihood. It is not our own goods which we hold, but theirs”.[55]

58. A financial reform open to such ethical considerations would require a vigorous change of approach on the part of political leaders. I urge them to face this challenge with determination and an eye to the future, while not ignoring, of course, the specifics of each case. Money must serve, not rule! The Pope loves everyone, rich and poor alike, but he is obliged in the name of Christ to remind all that the rich must help, respect and promote the poor. I exhort you to generous solidarity and a return of economics and finance to an ethical approach which favours human beings.

No to the inequality which spawns violence

59. Today in many places we hear a call for greater security. But until exclusion and inequality in society and between peoples is reversed, it will be impossible to eliminate violence. The poor and the poorer peoples are accused of violence, yet without equal opportunities the different forms of aggression and conflict will find a fertile terrain for growth and eventually explode. When a society – whether local, national or global – is willing to leave a part of itself on the fringes, no political programmes or resources spent on law enforcement or surveillance systems can indefinitely guarantee tranquility. This is not the case simply because inequality provokes a violent reaction from those excluded from the system, but because the socioeconomic system is unjust at its root. Just as goodness tends to spread, the toleration of evil, which is injustice, tends to expand its baneful influence and quietly to undermine any political and social system, no matter how solid it may appear. If every action has its consequences, an evil embedded in the structures of a society has a constant potential for disintegration and death. It is evil crystallized in unjust social structures, which cannot be the basis of hope for a better future. We are far from the so-called “end of history”, since the conditions for a sustainable and peaceful development have not yet been adequately articulated and realized.

60. Today’s economic mechanisms promote inordinate consumption, yet it is evident that unbridled consumerism combined with inequality proves doubly damaging to the social fabric. Inequality eventually engenders a violence which recourse to arms cannot and never will be able to resolve. This serves only to offer false hopes to those clamouring for heightened security, even though nowadays we know that weapons and violence, rather than providing solutions, create new and more serious conflicts. Some simply content themselves with blaming the poor and the poorer countries themselves for their troubles; indulging in unwarranted generalizations, they claim that the solution is an “education” that would tranquilize them, making them tame and harmless. All this becomes even more exasperating for the marginalized in the light of the widespread and deeply rooted corruption found in many countries – in their governments, businesses and institutions – whatever the political ideology of their leaders.

Ideology of Financial Elite

"Poverty wants much; but greed wants everything."

Publilius Syrus

Historically neoliberalism emerged as an ideology of the financial elite, specifically as the ideology of financial revanchism,  brought to light as a band aid during the crisis of state capitalism in 70th. If socialism absolulitized state, neoliberalism fall into another extreme (and remember that extremes meet) -- absolutization of market and the law of jungle in competition (which means unconditional surrender of all power to the largest transnationals and first of all banks and rape and plunder of smaller firms and states, probably more fierce then under any form of state capitalism). As David Harvey noted in his book A brief History of Neoliberalism:

Redistributive effects and increasing social inequality have in fact been such a persistent feature of neoliberalization as to be regarded as structural to the whole project. Gérard Duménil and Dominique Lévy, after careful reconstruction of the data, have concluded that neoliberalization was from the very beginning a project to achieve the restoration of class power. (Chapter 1)

It was a false, misleading and pretty seductive ideology from the very beginning created with a specific goal to deceive by people who can be called intellectual criminals. The most interesting part of neoliberalism is that the whole ideology was custom created for particular political goals of financial elite, which managed to hire stooges like Milton Friedman and others to accomplish the task.

So one of the most interesting features of neoliberalism is that it was created specifically for restoration of power of  financial elite, or, as they are called after 2008, for banksters. But it proved to be more relevant and long lasting then band aid covering post New Deal financial revanchism of banksters, acquiring a life of its own.

Gradually it became full fledged ideology, much like Marxism before (and it did borrowed a lot from Marxism, especially from Trotskyism, and first of all the idea that politically organized minority can always dictate its will to unorganized majority as well as  "permanent revolution" memo (concertized into 'export democracy"  instead of "liberation from capitalism oppression and in a very slick way replacing uprising of "proletarian" with uprising of fifth column specifically organized and financed to accomplish a  "color revolution".  In both case criminal elements are welcomed (especially in the form of football fanatics). In both cases the preliminary phase was creation or establishing control over the sizable part of MSM (in modern days that included TV  channels, not only newspapers like in classic Marxism). Role of Communist International emissaries was adopted by staff of the US embassies. The goal is also the same in both case -- violent acquisition of power of aq new elite by whatever means possible.

Like Marxist political economy, neoliberalism has certain economic postulates (see "Washington Consensus"). As a philosophy is oscillating between atheistic Satanism ("greed is good"), Randism ("cult of entrepreneurships", "Entrepreneurs aka "creative class" as Ubermench")  and post modernism ("rejection of absolute truth").

 In 80th in the USA it essentially became  a new  "secular religion" for the elite, shredding remnants of Christian morality. As foundations of neoliberalism such as neoclassical economy and Trotskyism are disconnected from the reality, both requires from the followers blind, unquestioned  obedience like in high demand cults.  But remuneration under neoliberalism to top echelon of functionaries is much better ;-) While in both case a good money are paid for the top layer of the sect, under neoliberalism the pay acquired obscene levels; that actually includes paid stooges in economic department which were bough "en mass".  Bribes in a form of fees for "lectures" reach a several hundred thousand dollars).

It is difficult to define neoliberalism more precisely bu the restoration of unlimited power of financial oligarchy is definitly its one of key features. The same level of unlimited unchecked power it enjoyed at the beginning of XX century and which was destroyed by the Great Depression.

As such the neoliberal project has multiple dimensions all of which are supported by a hypertrophied, intrusive spying apparatus of neoliberal state which reminds the Third Reich with the aggressive, militarized  police. A combination which make protests or, god forbid revolt against neoliberalism much more difficult.

Three principal dimensions of neoliberalism -- political, ideological and cultural

As the latest stage of predatory capitalism, neoliberalism is part of a broader economic and political project of restoring class power and consolidating the rapid concentration of capital, particularly financial capital (Giroux 2008; 2014).  In his article   “Protesting Youth in the Age of Neoliberal Cruelty”, Professor Henry A. Giroux points out that like communism,  neoliberalism can be viewed in three principal dimensions -- political, ideological and cultural.

The real goal of neoliberalism is re-distribution of power and related redistribution of wealth up id a tru feudal fashion. That's why neoliberalism also can be called neo-feudalism (which is another similarity with Bolsheviks and USSR)  The neoliberal project is really about weakening the power of middle class and impoverishing everybody other then top 20% of population in favor of maximizing the power of the tiny elite (the top 0.1%). 

As such, neoliberalism  is a broad strategy of economic (and first of all financial), political, cultural and military elites to destroy social-democratic state and to restructure power relationships, institutions, by injecting into the society, like narcotic, an artificial and a priory false ideology (civil religion), which is extremely beneficial for the promotion of interests of the top 0.1% (aka "super-elite", represented mainly by financial oligarchy both in the US and in in other countries; in the latter they represent the fifth column of neoliberal globalization).

Marx famous phase "Religion is the opium of the people" here acquires different and more modern and more menacing context as neoliberal dogma really serve the role of opium.  And the way it is distributed strongly reminds opium wars of British empire.  The full quote from Karl Marx translates as: "Religion is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people".

Like communism before, it is an ideology with its own international movement. If the slogan of Communist International (aka Comintern) was "workers of all countries unite" the slogan of neoliberal revolution are both "Elites of all countries unite" and "viva the law of jungles" or "if you see that guy who is ready to fall push him in the back". Of course with the appropriate PR smoke screen about free markets, freedomdemocracy and equal opportunity.

Like Marxism neoliberal ideology is the ideology of class hegemony (just for a different class ;-), which serves multiple roles

Some authors define neoliberalism differently. For example, Robert McChesney, defines neoliberalism as an economic paradigm that leaves a small number of private parties in control and able to maximize their profit at the expense of the other smaller players and the rest of population. It posits that business domination of society proceeds most effectively when there is a representative democracy along with a weak and ineffectual polity typified by high degrees of depoliticization, especially among the poor and working class. He notes that unlike in classic corporatism, which relies on mass mobilization, neoliberalism relies on the opposite trend (along the lines of "inverted totalitarism"): a distracted or apathetic or depoliticized public essentially "goes along" with this, using the dominance of consumerism as a Trojan horse of depolitization and the loss of community spirit("Bread and circuses"). In sum, neoliberalism is the immediate and foremost enemy of genuine participatory democracy, not just in the United States but across the planet, and will be for the foreseeable future. Globalization is the result of powerful governments, especially that of the United States, pushing trade deals and other accords down the throats of the world's people to make it easier for corporations and the wealthy to dominate the economies of nations around the world without having obligations to the peoples of those nations

This stress of depolitization is very important. It proved to be as efficient as mass mobilization of classic corporatism and achieve the same purposes with less violence. This stress of depolitization of population is commonly called Inverted Totalitarism. Indeed, promotion of envy and suppression of any honest and candid debates about neoliberalism in the United States and elsewhere is one of its most striking features suggesting communality with medieval Catholicism. Neoliberalism's loudest message is that there is no alternative to the status quo, "there is no alternative".

Perverted definition of freedom

David Harvey, the author of  A Brief History of Neoliberalism, defines neoliberalism as attempt to undermine power and sovereignty of governments by transnational corporations and establish the regime in which the power of financial oligarchy (aka power of "free market") is dominant in the society using the concept of freedom as a smokescreen.  For this purpose, neoliberal propaganda perverts the definition of 'freedom' in such a way, that it conceals redistribution of wealth up. Unlimited, unrestricted accumulation of money (aka greed") now is equated with human freedom.

Neoliberal state protects capital and at the same time tries to sheds as much social responsibility for the wellbeing of citizenry as possible. That's why neoliberal stat in 2008 bailed out corporate interests from bad decision making them whole, while destroying the safety net for "subprime" homeowners and lower part of the population. That's why neoliberal policies always result in rising inequality, slower economic growth, and drastic redistribution of income toward the upper class.

Neoliberalism has distinct tendency to convert state in national security states, in which as we noted before two distinct modes co-exists: permissive for capital and repressive for labor and social programs.  Here is one Amazon review of the book:

Malvin  on September 28, 2006 

Deconstructing neoliberalism's peculiar definition of 'freedom'

"A Brief History of Neoliberalism" by David Harvey is a concise and razor-sharp deconstruction of the neoliberal movement. Mr. Harvey convincingly demonstrates that neoliberalism is an ideology that has been wielded to enshrine elite privilege at the expense of people and the environment. Assiduously researched and cogently argued, Mr. Harvey offers a jargon-free and readable text that helps readers gain a greater understanding about the political economy of our neoliberal world and what this might hold for us in the future.

 Mr. Harvey explains that neoliberal propaganda has succeeded in fixating the public on a peculiar definition of 'freedom' that has served to conceal a project of upper class wealth accumulation. In practice, the neoliberal state assumes a protective role for capital while it sheds as much responsibility for the citizenry as possible. Mr. Harvey details how neoliberal theory is ignored whenever it comes time to bail out corporate interests from bad decision making while the safety net for the working class has been gradually eviscerated. The author effectively intersperses the text with graphs to illustrate how thirty years of neoliberalist policies has resulted in rising inequality, slower economic growth, higher incomes among the upper class, and other measures that serve to convincingly support and prove his thesis.

Mr. Harvey's history of how neoliberalism has gained ascendancy mostly treads through familiar ground but also highlights some key events that are sometimes overlooked by others. For example, Mr. Harvey relates the well-known stories of how the Chilean coup in 1973 opened the door for Augusto Pinochet to implement the first national experiment in neoliberalism, followed by Margaret Thatcher in Great Britain in 1979 and Ronald Reagan in the U.S. in 1980. However, we also gain greater appreciation about the importance of the New York City bankruptcy in the 1970s. We learn how the city's financial crisis allowed for the imposition of neoliberal reforms in a manner that would prove to be a familiar template around the world: the rollback of labor rights, the privatization of public assets, cuts in public services, and increased policing, surveillance and political repression of a markedly polarized population.

Mr. Harvey surveys neoliberalism around the world to discover connections and to analyze its effects. He finds that the U.S. economy has benefited immensely from its ability to extract tribute from other nations, including the U.S. financial community's probable engineering of crises in developing nations in order to scoop up devalued assets on the cheap. The author discusses how economic restructuring programs imposed on poor countries has benefited U.S. and other foreign investors while it has bolstered or created a small but powerful class of wealthy individuals in Mexico, South Korea, Sweden and elsewhere. In China, Mr. Harvey remarks about the ease with which neoliberalism has found a home in an authoritarian state where the political elite have amassed their fortunes by exploiting a defenseless working class. The author is particularly concerned about the symbiotic relationship that has developed between the U.S. and China and muses about the potentially catastrophic financial situation that the two countries' mounting debts might pose for each other and the world economy.

There are also other definitions. But all-in-all any viable definition need to underline the fact that neoliberalism is about the transnational economic elite taking larger share of resources, income and political power in the society away from middle class. So it always means "class war", as well as blatant enrichment of top 1% at the expense of other 99%.

Those new masters of the universe in expensive suits managed to plunder almost the same number of countries on the globe under the smokescreen of  protection of human rights, as Western powers during acquisition of colonies in XIX century. Any even after creating the most acute economic crisis in 2008 in the USA they still managed to privatize public assets and socialize all the losses. BTW the defense of human right never preclude the alliance with the most odious political regimes on the planet if such an alliance is about cheap hydrocarbons. Recently under the slogan "let us not allow bastards Russian dominate in our beloved Europe, they managed royally "f*ck EU, by cutting it from Russian hydrocarbons,  as Victoria Nuland deftly admitted in her famous remark". After that the U.S. financial oligarchs deftly dropped the Euro to the floor and knocked any attempts of economic integration of EU with Russia.

In this "enrichment of top 1%" (which means first and foremost the US oligarchs and their British counterparts) aspect neoliberalism is based on a strategies of capital accumulation based on the plunder of weaker countries by transnational capital. The integration (or re-integration as is case with the USSR) of most countries in global production and financial system was based of forming a narrow strata of comprador elite (aka fifth column). Transnational fraction of local elites in competition with nationally-oriented fractions won the state power (that's what color revolutions were about). They utilized this acquired power to restructure national economy in the interest of transnational corporation, sell assets to transnationals for pennies on a dollar, put the countries into huge debt (see Ukraine, Greece, almost all Southern Europe) and merge them into the new global manufacturing and finance system with the center at the USA in the role of powerless vassals.

This a new global, transnational corporations based social system emerged by breakdown of First World Keynesian capitalism (welfare states) and Third World "developmentalist" capitalism by abolishing two key features:

Globalization became a new efficient strategy of capital accumulation as it allowed to shake off compromises and concessions that has been imposed by middle class with upper strata or industrial workers on national governments of G7 countries in the preceding epoch, when the USSR exists as a countervailing force and by the mere fact of its existence suppresses appetite of internal financial oligarchy.  With the demolishing of gold standard in 1973 financial capital acquired unprecedented mobility and became able to operate across the borders in a new ways, which allows to eliminate the power of trade unions and state intervention, altering the balance of power in favor of international corporations. Emerging transnational elites instituted polices of deregulation, "supply-side" economics and regressive taxation creating new incentives for capital. Labor force was de-unionized and pushed into deregulated conditions with elimination of full time positions and adoption of "flexible labor" schemes. Via neoliberalism the world has became just a unified playing table for global corporations and states that support them. Material and political obstacles were removed as all states which undergone neoliberal revolutions shifted from post-WWII Keynesian social contract to serving transnational capital and transnational elites.

Neoliberalism also signifies a new historical period in the development of capitalism, the period of dominance of "monopoly-finance capital," and associated "Stagnation-Financialization trap" (SF trap) that drives processes of financial expansion in the economy from one bubble to another due to desperate attempts to stave off the tendency for stagnation of the "real economy" under the neoliberal regime.

While ideological postulates behind neoliberalism (Washington consensus) were discredited after financial crisis of 2008, it now persists in "zombie stage" as there is no viable alternatives and because the ability of transnational elite to find and fund a sufficient part of national elite (compradors) proved to be overwhelming for most states. And it is a quite powerful zombie which still is able to attack and suck blood from other countries which was recently demonstrated in Libya and Ukraine (Maidan).

Since 2007 some Latin American countries got governments that openly oppose neoliberalism. Direct military invasion against them is now more difficult as the threat of communism (which justified such invasions in the past) is off the map. But we can expect attempts to stage color revolutions or classic Coup d'état to reverse those events. One such color revolution (White revolution in Russia in 2011-2012) recently failed. Another (Maidan in Ukraine) is ongoing.

For G7 nations the neoliberalism in zombie stage might have staying power to survive until the end of the period of "abundant hydrocarbons" whether it means the next twenty or the next two hundred years. In any case they, and first of all the USA and GB, bet their prosperity on the viability of neoliberal regime and they now can't abandon it without significant losses.

Still ideological crash of neoliberalism in 2008 has its effects and the rest of the world gradually becoming less and less enthusiastic about neoliberalism, although few dare to openly argue with the USA policies. And for now the USA remains the sole superpower (new Roman Empire) and can economically squeeze or destroy dissident as we are now observing with Russia. 

But it is intellectually bankrupt doctrine, no question about it. Not long ago, the cold war ended with the restoration and triumph of capitalism in the form of neoliberalism on a global scale, and then, less than three decades later, neoliberal form of capitalism is, in turn, became as intellectually bankrupt as communism was in 1990th. By all accounts, the financial catastrophe of 2008 was not only the worst since the Great Depression economic crisis, but a political crisis that somewhat reminds the crisis of Marxist ideology in the USSR in 1960th and 1970th.

As neoliberalism no longer can be sold as the only viable ideological model for other countries, it is now force fed using the strength of American economics and American and NATO bayonets. As well as the strength of transnational elite interested in maintaining status quo (Soros, Rockefellers, Rothschilds, etc)

The vast technological and cultural superiority of the West also matters, although to a lesser extent, as China now became the key factory for the world and as such possesses most of the modern technologies on its factories (which belong to foreign corporation, but still are on China territory).

Another factor that prolongs the life of neoliberalism is that no viable alternative exists, although attempts of partial restoration of the power of national states in a form of state capitalism (Russia, China, USA) and more balanced approach between interests of national population and international corporations are attempted in various forms in various countries (Hungary, many Latin American countries).

Trotskyism for the rich;
Ideology of neoliberalism as the replacement of both Marxism and state capitalism

We can view neoliberalism as Totrsiim for the rich. See  Neoliberalism as Trotskyism for the rich

From political point of view neoliberalism vision is somewhat close to Communists vision. It also relies on state repression (despite demagogy of Washington consensus about "free markets") and generally can't exist without police state (or National Security State as we now call it; Total surveillance is just icing on  the cake). Under neoliberalism the state become more repressive toward lower 80% of population and, especially, labor, but much less repressive toward various forms of capital and, especially, large capital.

In this sense the only difference is the location of the capital: while the USSR was the holy land of communist world and Moscow its global capital, now the holy land of neoliberalism is the USA and the capital is Washington. With the USA government and Washington headquarters of IMF and World Bank making close analogy to Politburo of CPSU. Due to their strong tendency for political dictate US embassies in Eastern Europe and xUSSR space are sometimes called "Washington Obcoms".  As in following post in


Funny how clueless are foreigners about Russian commies. Putin plays tough man for better bargain positions while actually he accepts orders from Washington obcom (regional committee of CPSU). Putin serves to interests of oligarchs and conducts actually liberal anti-Russian policy. He like helps oligarchic vampires to suck out money from Russian economy and invest them in US economy and Western banks what is absolutely unacceptable for Russian commies.

Like with Comminist International, other states are just vassals who implement directions from benevolent "Washington Obcom" and install the leaders recommended by it, or face ostracism (YouTube) or, worse, direct military invasion... Funny, but it was the corrupt communist elite which put the major effort in helping to implement this vision via the dissolution of the USSR.

As Pope Francis noted that like Marxism in the past neoliberalism represents a new philosophy, new kid on the block. He see  principal feature of this new philosophy in what he called the "idolatry of money" and turning inequality into moral imperative (Evangelii Gaudium, Apostolic Exhortation of Pope Francis, 2013):

No to the new idolatry of money

55. One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.

Simultaneously neoliberalism proved to be the most capable ideology to fight and displace Marxism. It actually inherited quite a bit from Trotskyism (see below), so in a way it was "evil twin" of Marxism. And it was relevant and effective not because it was a "better ideology", but because Marxism as ideology self-destructed due to several major problems caused by actual experience with state socialism as implemented in USSR and other countries of Warsaw block:

Neoliberalism as a strategy of class struggle for transnational elite

Bushonomics is the continuous consolidation of money and power into higher, tighter and righter hands

George Bush Sr, November 1992

Neoliberalism is not a collection of theories meant to improve the economy. Instead, it should be understood as a strategy of "class struggle" (in Marxist terms) designed to redistribute wealth upward toward an increasingly narrow fraction of population (top 1%). The essence of neoliberalism is well reflected in the listed above George Bush Sr. quote "...the continuous consolidation of money and power into higher, tighter and righter hands". Kind of revolt of the elite against common people, instead of revolt of proletarians against capitalists. The attempt to redistribute the wealth of nations in favor of the top 1% and especially top 0.01%.

From the very beginning neoliberalism was a project to restore of class power of US corporations owners and first of all financial oligarchy ("financial revanchism" was the major driver of neoliberalism), which was undermined by New Deal.

So it is not surprising the during neoliberal revolution (or more correctly counter-revolution) in the USA all redistributive postwar state capitalism policies that hurt financial elite came under attack. With the demise of the USSR, the necessity of such policies to ensure social peace disappeared and the elite (and first of all financial elite) got a carte blanch for decimating middle class, and redistributing the wealth up. Golden days of the US middle class not ended not exactly with the election of Reagan (remember his decimation of air traffic controller union) but with the election of Mr. Gorbachov. And they became a distant past under Clinton who sold Democratic Party to financial oligarchy and only become worse and worse under Bush II and Obama (who, social policy-wise, is just well-tanned Bush III). And on international arena brutal enforcement of Washington consensus became a norm. So Ukraine got under the same neoliberal steamroller.

Neoliberalism promises of "better future" for population outside top 1% were by and large political scam. In best case no more then top 20% of population can benefit from neoliberal policies. And that's in best case, which is applicable probably only to G7 countries. And the other bottom 80% experience a sharp decline of their standard of living. For "peripheral countries like Ukraine, Iraq, Chili, etc) instead of 80:20 the proportion in probably 90:10.

All-in-all neoliberalism as a social system always lower the average standard of life of people in countries which adopted it, never rise it. That happened even in countries which historically has very low standard of living of middle class such as former USSR republics and Eastern Europe. At the same time it tremendously improved standard of living of upper 10% (20% in case of G7 countries) of population, and, especially, the top 1% - the new aristocracy. And that top 10% has enough political power to keep and consolidate neoliberal counter-revolution and with help of G7 countries to spread it around the globe.

Transnational elite "International" proved be both more viable and durable then "proletarian International" envisioned by Marx and his followers. That does not mean that elites from other countries are treated as equal partners. No they are treated as "villagers that came to the city" but still they are given a chance to "merge" with local "aristocracy of wealth".

The USA is the center on neoliberal order, its capital. Neoliberalism is supported by projection of the USA military power and the use of US capital. It forces global economic integration on US terms at whatever costs to others. But with those reservations it is as close to "oligarchy of all countries unite" as one can get.

In a way Marx probably is turning in his grave, as his ideas were hijacked and implemented by the part of population he considered to be doomed. In other words Marxist idea of "class struggle" was turned to its head and converted into pervert "revolt of the elite" (and first of all financial oligarchy), unsatisfied with the piece of the pie it is getting from the society and stimulated by technological revolution (emergence of Internet and cheap mass produced computers). Neoliberal philosophy can be distilled into a single phrase: "Humanity begins at the rank of CEO" or as George Bush Sr, aptly said November 1992 it is "...the continuous consolidation of money and power into higher, tighter and righter hands."

Some authors like Colin Cronch in The Strange Non-death of neoliberalism consider it to be a new ruling class alliance. His basic idea is that at least in USA neoliberalism represents the shift of loyalty of the upper management class: following the Great Depression of 1930 a political alliance emerged between the upper management class and "salaried middle class" (which includes the top layer of blue and white collar workers, including quasi-management, clerical workers, and professionals, and which cannot be reduced to the traditional "working-class"). A severe profitability crisis of the 1970s with its inflationary excesses caused a fracture between upper management and "salaried middle class". From that point upper management allied with owners and financial oligarchy forming a new ruling class.

This neoliberal transformation of the society with the redistribution of wealth to the top 1% (or, more correctly, the top 0.01%) "have and have more" (as unforgettable G.W.Bush quipped) was completed in the USA in late 90th. The rest of population (aka moochers) and organization such as trade unions were undermined and decimated by financial oligarchy with near complete indifference to what happens with the most unprotected lower quintile of the population.

Like Russia in the past under Bolsheviks the USA became occupied country. And much like Bolsheviks in the past, the neoliberal reformers don't care about failures and contradictions of the economic system which drive the majority of country population into abject poverty. No they care about that their action such a blowing out financial bubble like in the USA in 2008 which definitely could move national economics toward the disaster ("off the cliff"). They have somewhat childish, simplistic "greed is good" mentality: they just want to have their (as large as possible) piece of economic pie fast and everything else be damned.

To that extent they have mentality of criminals and neoliberalism is a highly criminogenic creed, but it tried to conceal the racket and plunder it inflicts of the societies under dense smoke screen of "free market" Newspeak. That means that outside the USA and G7 countries which are the major beneficiaries of this "hyper globalization of élites" neoliberalism is an unstable social order, as plunder can't continue indefinitely. and as natural resources become more scarce, the fight for them might give advantages to "Asian" autocratic flavor of state capitalism.

Problems inherent in neoliberal model were also by-and-large masked for two decades by a huge shot in arms Neoliberalism got with the dissolution of the USSR. This particular event (which was just a decision of part on nomenklatura including KGB to join neoliberal counter-revolution) put on the dinner table of neoliberal elites half a billion people and quite a bit of resources to plunder. This gift of a century from Bolsheviks slowed down the process of plunder of G7 own population, especially in the USA. It is interesting to note that, like Bolsheviks in the past, neoliberal elite behaves more like occupiers of the country, then as a traditional, "native" aristocracy; this phenomenon was especially pronounced in Russia (privatization under Yeltsin regime) and other xUSSR countries. And in xUUSR space new neoliberal lords were almost as brutal as German occupiers during WWII.

So later neoliberalism in came under pressure even in G7 countries, including the USA, as slogan on a corner Wall Street cafe "Jump Suckers !" demonstrated so aptly in 2008 and later in Occupy Wall Street Movement (which probably should be named "get rid of Wall Street occupation of the country"). The latter was quickly undermined, dissipated by the emerging National Security State. Total surveillance makes opposition movements practically impossible.

Neoliberalism was also partially reversed in Chile (the first country on which neoliberal counter-revolution was launched), Russia, and several other countries. It was never fully adopted in northern Europe or Asian countries. The model of autocratic state capitalism used in Asian countries actually serves as the only viable and competing with the neoliberalism modern social organization. Move of manufacturing centers to China and other East Asian countries also moves political influence toward this region, away from the USA and G7. Recently China managed slightly push back western global brands in electronics (especially in Eastern European markets), producing competitive smartphones (Huawey, Fly, Lenovo), tablets (Lenovo), PCs and networking equipment such as routers and switches under this own brand names.

Neoliberalism was enforced under dense smoke screen of propaganda. One can see an example of this smoke screen in Thatcher's dictum of neoliberalism: "There is no such thing as society. There are only individuals and families." In foreign policy neoliberalism behaves like brutal imperialism (aka neocolonialism) which subdue countries instead of brute force either by debt slavery or combination of debt slavery with direct military intervention. In neoliberal view the world consist of four concentric cycles which in order of diminishing importance are

  1. Finance
  2. Economics
  3. Society
  4. Planet

In other words, finance and transnational financial institutions are considered to be the most important institutions of the civilization, the institutions which should govern all other spheres of life. It is clear that such one-dimensional view is wrong, but neoliberals like communists before them have a keen sense of mission and after they managed to accomplish its "long march through the institutions" (during which they gradually hijacked them in what is called Quiet coup) they changed the way Americans think (Using the "Four M" strategy -- money, media, marketing, and management)

A well-oiled machine of foundations, lobbies, think-tanks, economic departments of major universities, publications, political cadres, lawyers and activist organizations slowly and strategically took over nation after nation. A broad alliance of neo-liberals, neo-conservatives and the far right (including neo-fascists and religious right) successfully manufactured a new common sense, assaulted Enlightenment values and formed a new elite, the top layer of society, where this "greed is good" culture is created and legitimized.

As Crouch says in his book The Strange Non-death of neoliberalism:

a polity in which economic resources were very unequally shared would be likely to be one in which political power was also concentrated, economic resources being so easily capable of conversion into political ones. (Page 125)

... ... ...

...the state, seen for so long by the left as the source of countervailing power against markets, is today likely to be the committed ally of giant corporations, whatever the ideological origins of the parties governing the state. (Page 145)

Idolatry of money and finance; "Greed is good" as the key ethical principle of neoliberalism

Its key ethical principle of neoliberalism (only for the elite, never for prols or middle class) is "Greed is good" (as Gordon Gekko the personage of Wall Street (1987 film) quipped in the film). This strata of people (which starts on the level of CEO of major corporation) who preach those principle is assumed to be Übermensch. People below are considered to be "under humans", or "inferior humans" (Untermenschen)

According to Wikipedia, the inspiration for the "Greed is good" speech seems to have come from two sources. The first part, where Gekko complains that the company's management owns less than three percent of its stock, and that it has too many vice presidents, is taken from similar speeches and comments made by Carl Icahn about companies he was trying to take over. The defense of greed is a paraphrase of the May 18, 1986, commencement address at the UC Berkeley's School of Business Administration, delivered by arbitrageur Ivan Boesky (who himself was later convicted of insider-trading charges), in which he said, "Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself".

As Pope Francis notes glorification of greed is socially destructive. While in all previous "classic" religions (including such social religion as Marxism) excessive greed was morally condemned, neoliberalism employed a slick trick of adopting "reverse", Nietzschean Ubermench morality. Here is a relevant quote from his Evangelii Gaudium, Apostolic Exhortation of Pope Francis, 2013

One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.

No to a financial system which rules rather than serves

57. Behind this attitude lurks a rejection of ethics and a rejection of God. Ethics has come to be viewed with a certain scornful derision. It is seen as counterproductive, too human, because it makes money and power relative. It is felt to be a threat, since it condemns the manipulation and debasement of the person. In effect, ethics leads to a God who calls for a committed response which is outside of the categories of the marketplace. When these latter are absolutized, God can only be seen as uncontrollable, unmanageable, even dangerous, since he calls human beings to their full realization and to freedom from all forms of enslavement. Ethics – a non-ideological ethics – would make it possible to bring about balance and a more humane social order. With this in mind, I encourage financial experts and political leaders to ponder the words of one of the sages of antiquity: “Not to share one’s wealth with the poor is to steal from them and to take away their livelihood. It is not our own goods which we hold, but theirs”.[55]

Like Bolshevism and National Socialism before neoliberalism needs a huge propaganda machine comparable with the propaganda machines of Bolsheviks and the Third Reich. Neoliberal ethics is pushed through the throat by hundreds of radio stations, cable TV channels (with Fox as the most prominent stooge of neoliberal propaganda), magazines and newspapers (Wall Street Journal, NYT, etc). This ethics is presented as a specific philosophy of Randism which is an ultimate expression of neoliberal ethics.

Here analogy with Bolshevism became even more stark. When you think about the current Republican Party, you can distinguish a small circle of ideologues consisting by-and-large of Ayn Rand followers. In a way it reminds the original Ann Rand circle called "collective", which like Bolshevik's core consisted of Jewish intellectuals, such as Greenspan. And that is not a positive characteristic. Murray Rothbard, a member of Rand's circle for several months in 1958, described the Randroids as “posturing, pretentious, humorless, robotic, nasty, simple-minded....dazzlingly ignorant people.” (Sex, Ayn Rand and the Republican Party)

Like in Marxism the view of other classes (in this case lower classes) by this new alliance is hostile. They are parasites, moochers, etc (exactly like capitalist class in Marxism), all feeding from the state, which in turn deprives "masters of the university" the spoils of their ingenious activity. Neoliberalism professes open and acute hostility to "lower classes", as if modeled on Bolsheviks hatred of "capitalists". This hate (like hate in general) paradoxically gives neoliberalism a driving force: as Irish novelist Elizabeth Bowen quipped: "Some people are molded by their admirations, others by their hostilities."

And this Ubermench feature of neoliberalism attracts young people in the same way they were attracted to national socialism with its hate of racially inferior nations. In a way neoliberalism converted the concept of "Arian race" into the concept of morally and intellectually superior transnational elite.

Neofascism and neoliberalism

One of first experiments in introduction of neoliberal ideology (Pinochet putsch in Chile) has definite neofascist colors.

The worst violence occurred in the first three months of the coup's aftermath, with the number of suspected leftists killed or "disappeared" (desaparecidos) soon reaching into the thousand.[6] In the days immediately following the coup, the Assistant Secretary of State for Inter-American Affairs informed Henry Kissinger, that the National Stadium was being used to hold 5,000 prisoners, and as late as 1975, the CIA was still reporting that up to 3,811 prisoners were still being held in the Stadium.[7] Amnesty International, reported that as many as 7,000 political prisoners in the National Stadium had been counted on 22 September 1973.[8] Nevertheless, it is often quoted in the press, that some 40,000 prisoners were detained in the Stadium.[9] Some of the most famous cases of "desaparecidos" are Charles Horman, a U.S. citizen who was killed during the coup itself,[10] Chilean songwriter Víctor Jara, and the October 1973 Caravan of Death (Caravana de la Muerte) where at least 70 persons were killed.[11] Other operations include Operation Colombo during which hundreds of left-wing activists were murdered and Operation Condor, carried out with the security services of other Latin American dictatorships.
Memorial to victims of the Dirty war in Chile

Following Pinochet's defeat in the 1988 plebiscite, the 1991 Rettig Commission, a multipartisan effort from the Aylwin administration to discover the truth about the human-rights violations, listed a number of torture and detention centers (such as Colonia Dignidad, the ship Esmeralda or Víctor Jara Stadium), and found that at least 3,200 people were killed or disappeared by the regime.

A later report, the Valech Report (published in November 2004), confirmed the figure of 3,200 deaths but dramatically reduced the alleged cases of disappearances. It tells of some 28,000 arrests in which the majority of those detained were incarcerated and in a great many cases tortured.[12] Some 30,000 Chileans were exiled and received abroad,[13][14][15] in particular in Argentina, as political refugees; however, they were followed in their exile by the DINA secret police, in the frame of Operation Condor which linked South-American dictatorships together against political opponents.[16] Some 20,000-40,000 Chilean exiles were holders of passports stamped with the letter "L" (which stood for lista nacional), identifyng them as persona non grata and had to seek permission before entering the country.[17] Nevertheless, Chilean Human Rights groups maintain several hundred thousand were forced into exile.[14]

According to the Latin American Institute on Mental Health and Human Rights (ILAS), "situations of extreme trauma" affected about 200,000 persons; this figure includes individuals killed, tortured (following the UN definition of torture), or exiled and their immediate relatives.[citation needed] While more radical groups such as the Movement of the Revolutionary Left (MIR) were staunch advocates of a Marxist revolution, it is currently accepted that the junta deliberately targeted nonviolent political opponents as well

A court in Chile sentenced, on March 19, 2008, 24 former police officers in cases of kidnapping, torture and murder that happened just after a U.S.-backed coup overthrew President Salvador Allende, a Socialist, on September 11, 1973.[18]

Neofascist puch in Chile got stamp of approval personally from Milton Friedman, who actually was instrumental in moving Chile into neoliberal orbit (Neoliberalism - Wikipedia, the free encyclopedia):  

In 1955, a select group of Chilean students (later known as the Chicago Boys) were invited to the University of Chicago to pursue postgraduate studies in economics. They worked directly under Friedman and his disciple Arnold Harberger, while also being exposed to Hayek. When they returned to Chile in the 1960s, the Chicago Boys began a concerted effort to spread the philosophy and policy recommendations of the Chicago and Austrian schools, setting up think tanks and publishing in ideologically sympathetic media. Under the military dictatorship headed by Pinochet and severe social repression, the Chicago boys implemented radical economic reform. The latter half of the 1970s witnessed rapid and extensive privatization, deregulation, and reductions in trade barriers. In 1978 policies that would reduce the role of the state and infuse competition and individualism into areas such as labor relations, pensions, health, and education were introduced.[2] These policies resulted in widening inequality as they negatively impacted the wages, benefits and working conditions of Chile's working class.[49][50] According to Chilean economist Alejandro Foxley, by the end of Pinochet's reign around 44% of Chilean families were living below the poverty line.[51] In The Shock Doctrine, Naomi Klein argues that by the late 1980s the economy had stabilized and was growing, but around 45% of the population had fallen into poverty while the wealthiest 10% saw their incomes rise by 83%.[52]

Two decades after it was first used by pro-market intellectuals in the 1960s, the meaning of neoliberalism changed. Those who regularly used the term neoliberalism in the 1980s typically applied it in its present-day, radical sense, denoting market fundamentalism.

In 1990 the military dictatorship ended. Hayek argued that increased economic freedom had put pressure on the dictatorship over time and increased political freedom. Many years earlier, in The Road to Serfdom (1944), Hayek had argued that "economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends."[53] The Chilean scholars Javier Martínez and Alvaro Díaz reject that argument pointing to the long tradition of democracy in Chile. The return of democracy had required the defeat of the Pinochet regime though it had been fundamental in saving capitalism. The essential contribution came from profound mass rebellions and finally old party elites using old institutional mechanisms to bring back democracy.[54]

The essence of neoliberalism is globalization of corporatism, which previously have distinct national boundaries and some forms of which were rabidly nationalistic (for example German national socialism). Just imagine a single global state with the capital in Washington with the typical for such a superstate flow of people to capital and you essentially catch the essence of the USA elite neoliberal dream -- Pax Americana.  There are also second class cities such as London, Berlin, Tokyo, etc which while not as attractive are much better then the "deep province", such as Prague, Warsaw or Sanct-Petersburg. to say nothing about "countside" such as Kiev, Tallin, Riga, Vilnus.

So the flow of people and commodities (and first of all oil) has distinct direction from the periphery to the center. To keep each country in the line and this flow of commodities uninterrupted, this "Capitalist International" relies on the part of national capitalist class and elite which is connected to international corporations serving the same role as Communist Parties or Communist International. Such as part is often called Compradors or Fifth Column of Globalization

And this "international elite" is even more responsive to pressure from Washington,  as its fortunes and often families reside if "first class cities" of G7. This way neoliberalism is able to suppress the other part of the elite of particular country which favors "national" development and typically resides inside the country. As a PR smokescreen neoliberalism pay lip service to national development, but in essence it is hostile to it and favor "underdevelopment" of nations outside G7. It's anti-social and has distinct schadenfreude attitude to weak nations: it derives pleasure from seeing the misfortunes of other nations and it try to exploit such moments ("disaster capitalism"). Vae victis as Romans used to say (Victor's justice).

And the winner in neoliberal revolutions is not the middle class and lower strata of population (although they might be sold on it and fight for it, being deceived by propaganda as is the case with the current generation of Americans), but international and local oligarchy represented via international corporations and banks. For bottom 90% population the hangover after the neoliberal revolution comes really quick. This affect was clearly visible after successful color revolution in Serbia, Georgia and Ukraine.

In cases of Georgia and Ukraine the neoliberal leaders lost power after their term and there were efforts to put them in jail for abuse of power and corruption, which were not successful only due to USA pressure (only former Ukrainian Prime Minister Julia Timoshenko, the Joan of Arc of Orange revolution was jailed). In any case popularity of leaders of neoliberal revolutions drops to almost unheard levels with Victor Yushchenko commanding 2% approval rating in Ukraine before the end of his term.

Neoliberalism as an integral part of American Messianism

Neoliberalism is not merely a new pseudo-religious, cult-like version of globalized corporatism. Like national socialism before it is also simultaneously a powerful ideological export product. It is the core of Pax Americana, which the USA tries to impose of the rest of world. As Samuel P. Huntington(1927 – 2008), the author of the concept of  Cleft country expressed this view, the idea of Pax Americana means that:

"a world without US primacy will be a world with more violence and disorder and less democracy and economic growth than a world where the United States continues to have more influence than any other country in shaping global affairs. The sustained international primacy of the United States is central to the welfare and security of Americans and to the future of freedom, democracy, open economies, and international order in the world."

Similar ideas were expressed in 1998 book The Grand Chessboard American Primacy And Its Geostrategic Imperatives by  Zbigniew Brzezinski. From one of Amazon reviews:

And ponder the meaning of these statements in a post-9-11 world:

While this is typically associated with neocon thinking, it is shared belief of the majority of the US elite. In 1992, the US Defense Department, under the leadership of Secretary of Defense Dick Cheney [later to be George Bush Jr.’s VP], had the Pentagon’s Under Secretary of Defense for Policy, Paul Wolfowitz [later to be George Bush Jr.’s Deputy Secretary of Defense and President of the World Bank], write up a defense document to guide American foreign policy in the post-Cold War era, commonly referred to as the “New World Order.”  The Defense Planning Guidance document was leaked in 1992, and revealed that,

“In a broad new policy statement that is in its final drafting phase, the Defense Department asserts that America’s political and military mission in the post-cold-war era will be to ensure that no rival superpower is allowed to emerge in Western Europe, Asia or the territories of the former Soviet Union,” and that, “The classified document makes the case for a world dominated by one superpower whose position can be perpetuated by constructive behavior and sufficient military might to deter any nation or group of nations from challenging American primacy.”

Further, “the new draft sketches a world in which there is one dominant military power whose leaders ‘must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role’.” 

As  the official state ideology of the USA where it became an integral part of American Messianism it was successfully exported to many countries.  And it now permeates many aspects of social cooperation and culture. Like in the USSR the whole generation of people in the USA had growth being brainwashed by this ideology. It dictates an extremely militant almost jingoistic (does not hesitate to exercise force or overthrows the governments), foreign policy (Trotskyites idea of export of revolution in full swing), it is as deceptive as bolshevism (what Washington means by the "spread of democracy" is actually spread of neoliberalism), missionary (regards itself as a monopolist of the "truth" and protector of "universal values" ) and colonizing (serving simultaneously the ideology behind Neocolonialism). Like Communism it is also messianic as in "the end justifies the means" and does not abstain from using dirty methods including black propaganda and color revolutions for achieving its goals. In the level of hypocrisy and methods used against "natives" it reminds British empire or the USSR (your choice ;-). 

It blackmails antagonists as depraved, primitive, and below par. A good sample of neoliberal blackmail can be extracted from the US press coverage of preparations to Iraq war( US press enlists for war on Iraq) and Libya coup d'état. Another good set of samples provides Guardia press coverage of Putin's Russia and Ukraine EuroMaidan events.  Funny but Russia occupies the middle ground between neoliberalism and resource nationalism, so in principle it coul be an alli of the USA and GB,  but as a large country and possible geopolitical opponent it also was in crosshairs of the US elite.  One of the reasons for Russia's defeat in Chechnya between 1994 and 1996, was an attempt by America in the 1990s, with tremendous help from the comprador part of Russian elite it managed to create, to turn Russia into a standard neoliberal vassal state, whose elites would be subservient to the US foreign policy and would exist to export raw materials to the West and to transfer money to Western bank accounts. That attempt failed with Putin coming to power. So now the level of animosity from the USA and British elites and serving them MSM now goes over the roof .

With the notable exception of the USA itself, neoliberalism is hostile to nationalism. That does not exclude flirting with neo-fascist elements in countries were neoliberalism is under attack from the left or from the resource nationalists. But those forces are viewed more like tactical allies (Ukraine is a good example) and can be thrown under the bus, when they do their dirty job. Inside the USA, the holy city of neoliberal ideology, it to a certain extent merged with American Exceptionalism; the USA is viewed as exemplarity neoliberal country, the shining city on the hill which has right to impose their views and interests on the rest of the globe with impunity, standing outside the law.

Redistribution of income and lowering the standard of living of the bottom 80% of population

While welfare state presuppose redistribution of income down, the "free market capitalism" presupposes even more powerful redistribution of income up, toward the most wealthy part of the population.

Unlike previous revolutions (with the exception of Bolsheviks revolution) the unique feature of neoliberal revolution is drastic lowering the standard of living of middle class and poor, along with dramatic enrichment of top 1% of population and international corporations. Standard of living of top 20% also grow, albeit not so dramatically. In a way it is equivalent to selling of local population into slavery to international corporations by local oligarchy. with the interesting Pareto style 80:20 split. In other words only 20% of population get something from neoliberal revolution with over 50% concentrated at, way, the top 5%, and lion share in top 1%. This "top 20%" of beneficiaries constitute "fifth column of neoliberalism" in the particular state.

Lower 80% of population standard of living typically dramatically drops after neoliberal revolution and never recover.  That does not mean that those capitalists who favor "national" development are considerably less brutal in exploiting lower 80% population, but at least the "spoils" of this exploitation are left by and large in the country and used to improve infrastructure, housing, education  and such while neoliberal model of exploitation often is sucking the vassal states dry. Former Eastern European countries such as Bulgaria, Rumania and Serbia provide especially interesting and educational example of how neoliberalism deforms the economy and impoverish population. Especially Bulgaria, this basket case of Europe.

There are some exceptions like China (which practice not pure neoliberalism bus a mixture of neoliberalism with national development, kind of "neoliberalism with Chinese face" ;-), but even in China this process of dramatic enrichment of top 1% is clearly visible although it is not accompanied with drastic lowering of standards of other 99% of population like happened in Russian, Ukraine and other post Soviet republics. Again in the level of decimation of local middle class and poor neoliberal revolutions have a lot in common with Bolshevik's revolution in Russia of 1917.

Here is a quote from insightful Amazon review by razetheladder of Chalmers Johnson book Blowback The Costs and Consequences of American Empire:

Johnson's strength is in recounting the specificities of US foreign policy; he's much weaker at an overall understanding of imperialism. He seems to think that American policymakers have naively built up the economic strength of their Japanese, Korean, and now Chinese competitors by focusing on maintaining their own military power. This is an old critique, resting on the notion that imperialism hurts the imperialists.

But Johnson is relying on the idea that "America" is a unitary entity, so that the hollowing out of industry hurts "America", not specific social groups within the country. In reality, US foreign policymakers work to advance the interests not of "America", but of those same business elites that have benefited from turning Asia into the world's sweatshop and undermining the unions that built their strength on American industry. American economic imperialism is not a failed conspiracy against the people of Asia, but an alliance between American elites and their Japanese, Korean, Indonesian, and Chinese counterparts - against the potential power of the working majority in all those countries.

But it's more complex than that, too, since the US seeks to prevent the emergence of an independent military challenge (especially China, but also Japan) to its Asia hegemony while seeking to expand the power of American commercial interests in the region, even as it tries to keep Asian elites happy enough with the status quo to prevent their rebellion against it.

Elite and the second and third world countries

Neoliberalism as an ideology can be succinctly defined as "Transnational elites Uber Alles". But it uses the concept of elite on the level of the of the countries too. Neoliberalism distinguishes between to types of countries, and. respectively, there are two forms of neoliberalism, one for G7 countries (elite) where while squeezing middle class it operates with "velvet gloves", and a more brutal practice from "prols" countries outside G7 (vassal countries with local elites as fifth column of globalization). Neoliberalism relies mainly on financial mechanisms and banks and use brute force only as a secondary weapon for subduing people and minor countries (you can get much farther with a kind neoliberal word and cruise missiles, then with just kind neoliberal word alone). In time, it generally coincides with computer and Internet revolution, which made globalization of labor via outsourcing of production and services to poor countries much more attractive.

In principle we can define two distinct types of neoliberalism: one for elite countries and the other every other country:

Actually some elements of the idea of "national superiority" were preserved by reserving for the USA special "shining beacon on the Hill" status (American Exceptionalism) and in a form superiority of "creative class" which includes capitalists, financial oligarchy, and "executives" (top layer of transactional corporate elite) plus narrow social strata of people who are serving them (and that includes most journalists, programmers and IT staff, and such).

In a way, neoliberalism considers this so called "creative class" to be a new Arian race. Everybody else are Untermensch and should be treated as disposables.  In other words it is more like a religion that claim  supremacy of particular ethnic group or a class.  See for example a Guardian reader comment made in 2011 (you need to brose the comments as direct link does not work; recently Guardian screwed its comment system completely):

ITS1789 13 Sep 2011 14:15

I'm not from the left, and I personally do really, really well out of the capitalist system, and enjoy a life of relative luxury, but then I can afford to give half my annual income away to charity and still live very well. I like capitalism, it's been very good to me, and my family for over two centuries, but the ghastly version that's swept the world over the last thirty years is something else.

I think neoliberalism is something close to a malignant cancer growing inside a healthy capitalism, and with equally disastrous consequences. So my criticism comes not from the left, but from the right, for what that's worth.

Neoliberalism is a kind of pseudo-religion, a dogma, which is passionately believed by its disciples, despite the evidence showing that it simply doesn't work in the real world, but like most religious fanatics, the real world doesn't matter much to them. Which is another reason they remind me of Stalinists in the old Soviet system.

... ... ...

For me neoliberalism is a primitive and dangerous delusion about society, economics, and human nature, comparable to extreme forms of socialism, which are equally hairbrained and destructive, and arguably just as bloody.

Thatcherism was classic, class-warfare politics, but launched from the extreme right instead of the left, and it was wildly successful, at least for those it benefitted, a narrow strata at the top of society. Now that the entire charade is collapsing, and taking the welfare state, the middle class, and probably capitalism itself, with it, it's time to pay the bill for this long, illusory, party.

Neoliberalism, cheap hydrocarbons, and economic crisis of 2008

There essence of neoliberalism is not only dominance of finance over other sectors of the economy, but also free movement of goods and people by global corporations without any respect for national borders. And that is the source of increasing efficiency and dropping prices on many categories of goods. An interesting question is how much the rise of neoliberalism was forced on humanity by the short historical period of availability of cheap hydrocarbons.

"Cheap Energy" is important driver of globalization. Even the previous stage of globalization: the creation of colonial empires by Great Britain, France, Germany and Spain was at least partially based on availability of steam power and coal.

Now it is an oil that serves the same role for the global neoliberal empire. The latter allow cheap global transportation, mass air travel and powers huge US military machine which has no equals in the globe and serves as a guarantor of security of neoliberal regimes all over the globe. Out of three major components of globalization -- the US as a sole superpower, cheap international shipping and air travel, and (to lesser extent) global telecommunication networks the first two definitely depends of cheap energy. And, BTW, Google is also not running of holy spirit; it is one of the top consumers of electrical energy in the USA.

While it is unclear to what extent neoliberalism will be affected by rising energy prices, it seems few things arouse more passions these days then "oil plato" (or how it is often, but incorrectly, called the oil peak) and how it affects the civilization and different countries. The key fact is that EROEI (energy return on energy invested) of oil extraction is rising dramatically for the last two decades and it looks like this trend will continue. The current world oil production has EROEI around 40 so you extract forty times as much of energy then you spend for extraction.

New oil discoveries have EROEI around 10 (with bitumen oil sand EROEI in single digits). And EROEI also the source of the current disconnect between the purchasing power of money and the resources available to back that up. Pessimists say that a further increase in fuel prices is inevitable, and sooner or later the world will face a kind of "offshoring apocalypse". That's unlikely as important part of neoliberal regime is the new level of global communications and this part will be by-and-large intact. But transportation costs will affect the globalization in a negative way without any dount. For example with EROEI in single digits mass air travel will come to a screeching halt.

At the same time the end of cheap hydrocarbons era might marks the start of fuel wars, which, as such, will be a drastic reversal of globalization, playing the same role as WWI. When each state will try to pull the energy blanket, globalization trends will definitely suffer.

Rise of cost of energy makes both offshoring of manufacturing and outsourcing of service jobs to other countries less viable. A growing number of American companies are moving their manufacturing back to the United States. This emerging "re-shoring movement" has to be kept in proportion. Most of the multinationals involved are bringing back only some tiny fraction of their production destined for the American market. Much of what they had moved over the past few decades remains overseas. Moreover some firms like Caterpillar decided to move research and development facilities in China as split between manufacturing and research badly affects both research and the quality of final products.

But re-shoring tendencies can't be easily dismissed. They are driven by powerful forces which might only get stronger with time. Boston Consulting Group (BCG) in April 2012, notes that 37% of those with annual sales above $1 billion are planning shifting production facilities from China to America. Of the very biggest firms, with sales above $10 billion, the number reached 48%. Among reason sites are rising Chinese labor costs and transportation costs. Many shipping companies slowed the speed of their ship (increasing the delivery time) in order to fight rising oil prices. As Economist, the flagship of neoliberal establishment thought in GB, noted (Reshoring manufacturing):

The Massachusetts Institute of Technology looked at 108 American manufacturing firms with multinational operations last summer. It found that 14% of them had firm plans to bring some manufacturing back to America and one-third were actively considering such a move. A study last year by the Hackett Group, a Florida-based firm that advises companies on offshoring and outsourcing, produced similar results. It expects the outflow of manufacturing from high- to low-cost countries to slow over the next two years and the reshoring to double over the previous two years. “The offshoring of manufacturing is now rapidly moving towards equilibrium [zero net offshoring],” says Michel Janssen, the firm’s head of research.

By contrast, pay and benefits for the average Chinese factory worker rose by 10% a year between 2000 and 2005 and speeded up to 19% a year between 2005 and 2010, according to BCG. The Chinese government has set a target for annual increases in the minimum wage of 13% until 2015. Strikes are becoming more frequent, and when they happen, says one executive, the government often tells the plant manager to meet workers’ demands immediately. Following labour unrest, wages at some factories have gone up steeply. Honda, a Japanese carmaker, gave its Chinese workers a 47% pay rise after strikes in 2010. Foxconn Technology Group, a subsidiary of Hon Hai Precision Industries, a Taiwanese firm that does a lot of manufacturing for Apple and other big technology firms, doubled pay at its factory complex in Shenzhen after a series of suicides. Its labour troubles are still continuing.

...As soon as 2015, says Hal Sirkin, a consultant at the firm, it will cost about the same to manufacture goods for the American market in certain parts of America as in China in many industries, including computers and electronics, machinery, appliances, electrical equipment and furniture. That calculation takes into account a wide variety of direct costs, including labour, property and transport, as well as indirect ones such as supply-chain risk.

...“Pay for senior management in several emerging markets, such as China, Turkey and Brazil, now either matches or exceeds pay in America and Europe”

So while production and service outsourcing overseas or offshoring can still provide substantial cost savings for many companies, the question arise whether those cost savings are sustainable (Can outsourcing overseas provide sustainable cost savings).

Crisis of 2008 undermined the legitimacy of neoliberalism much like WWII undermined the legitimacy of communism. But alternatives did not exits and instead of wreaking neoliberalism it converted it is aggressive, bloodthirsty zombie stage, which is the current stage of neoliberalism development (see below). It is interesting to note that  three competing perspectives on the crisis do not include the role cheap hydrocarbons in development of neoliberalism and the crisis of 2008 (Palley, 2012, cited via 


Stages of development of neoliberalism

Neoliberalism was not an accident, it was a development that appeared slightly different forms in many countries, including such diverse as the USA (Reagan), GB (Thatcher), China (Deng Xiaoping was a neoliberal reformer), Chile(Pinochet), Russia (Yeltsin gang), and many other countries. Since the late 1970s, a shift of economic activity from the production of goods and non-financial services to finance has been adopted as mean to escape diminishing return on capital.  The oil crisis of the 1970s was probably another factor in the decision of the elite (and it was decision, a conscious choice, not an accident) to switch to neoliberal policies. 

During its history which starts around 70th (with the first major success the Pinochet's coup de etat in Chile, which was supported by the USA), neoliberalism undergone several basic stages of development:


Hegemony of the USA and its allies

The USA was and probably will remain the center of neoliberalism and firmly established as most important and the most powerful promoter of the doctrine (in some case, like with Serbia, Iraq and Libya, on the tips of bayonets).

After the dissolution of the USSR the US elite felt that "everything is permitted" and essentially started to pursue global Roman style imperial policy. The USA military forces are active over most of the globe: about 226 countries have US military troops, 63 of which host American bases, while only 46 countries in the world have no US military presence. This is a projection of military power that makes the Roman, British, and Soviet empires pale in comparison. In his 1919 essay, “The Sociology of Imperialisms,” Joseph Schumpeter wrote of Rome during its years of greatest expansion.

There was no corner of the known world where some interest was not alleged to be in danger or under actual attack. If the interests were not Roman, they were those of Rome’s allies; and if Rome had no allies, then allies would be invented. When it was utterly impossible to contrive such an interest—why, then it was the national honor that had been insulted.

The fight was always invested with an aura of legality. Rome was always being attacked by evil-minded neighbors, always fighting for a breathing-space. The whole world was pervaded by a host of enemies, and it was manifestly Rome’s duty to guard against their indubitably aggressive designs.*

As G. John Ikenberry, professor of geopolitics at Georgetown University noted in Foreign Affairs:

The new grand strategy [initiated by the Bush administration]…. begins with a fundamental commitment to maintaining a unipolar world in which the United States has no peer competitor. No coalition of great powers without the United States will be allowed to achieve hegemony. Bush made this point the centerpiece of American security policy in his West Point commencement address in June: “America has, and intends to keep, military strengths beyond challenges—thereby making the destabilizing arms races of other eras pointless, and limiting rivalries to trade and other pursuits of peace.”

…The United States grew faster than the other major states during the decade [of the 1990s], it reduced military spending more slowly, and it dominated investment in the technological advancement of its forces. Today, however, the new goal is to make these advantages permanent—a fait accompli that will prompt other states to not even try to catch up. Some thinkers have described the strategy as “breakout,” in which the United States moves so quickly to develop technological advantages (in robotics, lasers, satellites, precision munitions, etc.) that no state or coalition could ever challenge it as global leader, protector and enforcer (“America’s Imperial Ambition,” Foreign Affairs, October 2002).

Perhaps one of extreme expressions of this neo-Roman imperial policy became that book by The Grand Chessboard: American Primacy And Its Geostrategic Imperatives by Zbigniew Brzezinski. This is how Brzezinski views the (supposedly sovereign) nations of Central Asia (sited from Amazon review by "A Customer" Jan 3, 2002 as pawns in a greater game for geopolitical domination:

The quote "... the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep the barbarians from coming together." (The Grand Chessboard p.40) is probably the most revealing. Just ponder the meaning of these statements in a post-9-11 world:

To most Americans the people of the world and other nations are just that -- people, just like us, with a right to self-determination. To Brzezinski, they are merely pawns on a chessboard. At the same time, despite the fact that the analogy are not perfect, Rome fell, Napoleon fell, Hitler fell, USSR fell. Countries with too aggressive foreign policy ultimately self-destruct, because they over-extend their own countries resources to the point when people wellbeing drops to the levels of some colonies. The USA have over million people with the security clearance. So in a way it is becoming a copy-cat of the USSR. And while the US military is busy fighting for oil interests all around the world, those wars were launched by borrowing money and it's unclear who will pay the bills.

Neoliberalism beginning as ideology start was pretty modest. It was never considered a "right" ideology, ideology for which people are ready to fight and die. It was just an "ideology of convenience", an eclectic mix of mutually incompatible and incoherent mosaic of various ideologies (including some ideas of Trotskyism and national socialism) that served as useful tool to counter communist ideology. This is the tress of Friedman pretty weak opus "Capitalism and Freedom" -- which can be considered to be close analog of Communist Manifesto for neoliberalism. It also was useful for fighting some Keynesian excesses. Only later it become favorite ideology of financial oligarchy.

So in fight against "Godless communism" which does not respect private property and used "all-powerful" state, it idealized private property ownership, the role of "free" (as in free shooting) market and stressed the necessity to control the size of the government. As a tools to fight communist ideology those were reasonably effective tools. But at some point this deeply flawed, but useful for the specific purpose framework went out of control and became the cult of the deified markets and explicitly stated the necessary of diminishing the role of the state to minimum to ensure the high level of inequality the new neoliberal elite strived for (note not optimizing for a given historical conditions and technology available, but unconditionally diminishing to the point of elimination). Reagan famous phase "Government is not a solution to our problem, government is the problem." is a perfect example of how to "Throw out the baby with the bath water". But the meaning is more sinister: it meant "throw out of the water middle class".

That happened when financial oligarchy understood that a tool created for fighting communism is perfectly suitable for fighting elements of "New Deal". And it proved to be pretty effective in dismantling of set of regulations of financial sector that were the cornerstone of "New Deal". That was a very smooth ride "deregulatory" ride until 2008. But after 2008 the USA (citadel of neoliberalism) faces the set of problems that at least on the surface look similar to the problem that USSR faced before its disintegration, although the USA still have much more favorable conditions overall and disintegration is not among the current threats. Among them:

Still there are important difference with Marxism: despite extremely flawed to the point of being anti-scientific neoliberal ideology is still supported by higher standard of living of population in selected Western countries (G7). If also can rely on five important factors:

  1. Military dominance of the USA and NATO. There are very few countries in the globe without explicit or implicit USA military presence.
  2. Financial dominance of USA and its allies. The role of dollar as world currency and the role of USA controlled global financial institutions such as World Bank and IMF
  3. Technological dominance of USA and G7. Continuing brain drain from "Third world" and xUSSR countries to G7 countries.
  4. Cultural dominance of the USA (although this is gradually diminishing as after 2008 countries started of assert their cultural independence more vigorously).
  5. Ideological dominance, neoliberalism as yet another major civic religion

Military dominance of USA and NATO

The American society and the U.S. armaments industry today are different then it was when Dwight Eisenhower in his farewell speech (Eisenhower's Farewell Address to the Nation) famously warned Americans to beware the "military-industrial complex." See also The Farewell Address 50 Years Later. The major opponent, the USSR left the world scene, being defeated in the cold war. That means that currently the USA enjoy world military dominance that reminds the dominance of Roman Empire.

The USA now is the world's greatest producer and exporter of arms on the planet. It spends more on armed forces than all other nations combined -- while going deeply into debt to do so.

The USA also stations over 500,000 troops, spies, contractors, dependents, etc. on more than 737 bases around the world in 130 countries (even this is not a complete count) at a cost of near 100 billions a year. The 2008 Pentagon inventory includes 190,000 troops in 46 nations and territories, and 865 facilities in more than 40 countries and overseas U.S. territories. In just Japan, the USA have 99,295 people who are either members of US forces or are closely connected to US. The only purpose is to provide control over as many nations as possible.

Funny but among other thing the Pentagon also maintain 234 golf courses around the world, 70 Lear Jet airplanes for generals and admirals, and a ski resort in the Bavarian Alps.

Military dominance of the USA and NATO were demonstrated during Yugoslavia bombing and then invasion of Iraq. It's clear the Yugoslavia bombing would be out of question if the USSR existed.

Neoliberalism and militarism

Under neoliberalism, markets are now fused with the logic of expansion and militarization is the most logical was of securing expansion, improving global positions, and the ordering of social relations in a way favorable to the transnational elite.

Under neoliberal regime the United States is not only obsessed with militarism, which is shaping foreign policy , but wars have become real extension of the politics, the force that penetrates almost every aspect of daily life. Support of wars became a perverted version of patriotism.

As Henry A. Giroux noted in his interview to Truth-out (Violence is Deeply Rooted in American Culture), paradoxically in the country of "advanced democracy" schools and social services are increasingly modeled after prisons. Four decades of neoliberal policies have given way to an economic Darwinism that promotes a politics of cruelty.

Police forces are militarized. Popular culture endlessly celebrating the spectacle of violence. The Darwinian logic of war and violence have become addictive, a socially constructed need. State violence has become an organizing principle of society that has become the key mediating force that now holds everyday life together. State violence is now amplified in the rise of the punishing state which works to support corporate interests and suppress all forms of dissent aimed at making corporate power accountable. Violence as a mode of discipline is now enacted in spheres that have traditionally been created to counter it. Airports, schools, public services, and a host of other public spheres are now defined through a militarized language of "fight with terrorism", the language of discipline, regulation, control, and order. Human relations and behaviors are dehumanized making it easier to legitimate a culture of cruelty and politics of disposability that are central organizing principles of casino capitalism.

The national news became a video game, a source of entertainment where a story gains prominence by virtue of the notion that if it bleeds it leads. Education has been turned into a quest for private satisfactions and is no longer viewed as a public good, thus cutting itself off from teaching students about public values, the public good and engaged citizenship. What has emerged in the United States is a civil and political order structured around the criminalization of social problems and everyday life. This governing-through-crime model produces a highly authoritarian and mechanistic approach to addressing social problems that often focuses on the poor and minorities, promotes highly repressive policies, and places emphasis on personal security, rather than considering the larger complex of social and structural forces that fuels violence in the first place.

The key reference on the topic is the book The New American Militarism (2005) by Andrew Bacevich. Here is one Amazon review:

In his book The New American Militarism (2005), Andrew Bacevich desacralizes our idolatrous infatuation with military might, but in a way that avoids the partisan cant of both the left and the right that belies so much discourse today. Bacevich's personal experiences and professional expertise lend his book an air of authenticity that I found compelling. A veteran of Vietnam and subsequently a career officer, a graduate of West Point and later Princeton where he earned a PhD in history, director of Boston University's Center for International Relations, he describes himself as a cultural conservative who views mainstream liberalism with skepticism, but who also is a person whose "disenchantment with what passes for mainstream conservatism, embodied in the present Bush administration and its groupies, is just about absolute." Finally, he identifies himself as a "conservative Catholic." Idolizing militarism, Bacevich insists, is far more complex, broader and deeper than scape-goating either political party, accusing people of malicious intent or dishonorable motives, demonizing ideological fanatics as conspirators, or replacing a given administration. Not merely the state or the government, but society at large, is enthralled with all things military.

Our military idolatry, Bacevich believes, is now so comprehensive and beguiling that it "pervades our national consciousness and perverts our national policies.

" We have normalized war, romanticized military life that formally was deemed degrading and inhuman, measured our national greatness in terms of military superiority, and harbor naive, unlimited expectations about how waging war, long considered a tragic last resort that signaled failure, can further our national self-interests. Utilizing a "military metaphysic" to justify our misguided ambitions to recreate the world in our own image, with ideals that we imagine are universal, has taken about thirty years to emerge in its present form.

It is this marriage between utopians ends and military means that Bacevich wants to annul.

How have we come to idolize military might with such uncritical devotion? He likens it to pollution: "the perhaps unintended, but foreseeable by-product of prior choices and decisions made without taking fully into account the full range of costs likely to be incurred" (p. 206). In successive chapters he analyzes six elements of this toxic condition that combined in an incremental and cumulative fashion.

  1. After the humiliation of Vietnam, an "unmitigated disaster" in his view, the military set about to rehabilitate and reinvent itself, both in image and substance. With the All Volunteer Force, we moved from a military comprised of citizen-soldiers that were broadly representative of all society to a professional warrior caste that by design isolated itself from broader society and that by default employed a disproportionate percentage of enlistees from the lowest socio-economic class. War-making was thus done for us, by a few of us, not by all of us.
  2. Second, the rise of the neo-conservative movement embraced American Exceptionalism as our national end and superior coercive force as the means to franchise it around the world.
  3. Myth-making about warfare sentimentalized, sanitized and fictionalized war. The film Top Gun is only one example of "a glittering new image of warfare."
  4. Fourth, without the wholehearted complicity of conservative evangelicalism, militarism would have been "inconceivable," a tragic irony when you consider that the most "Christian" nation on earth did far less to question this trend than many ostensibly "secular" nations.
  5. Fifth, during the years of nuclear proliferation and the fears of mutually assured destruction, a "priesthood" of elite defense analysts pushed for what became known as the Revolution in Military Affairs (RMA). RMA pushed the idea of "limited" and more humane war using game theory models and technological advances with euphemisms like "clean" and "smart" bombs. But here too our "exuberance created expectations that became increasingly uncoupled from reality," as the current Iraq debacle demonstrates.
  6. Finally, despite knowing full well that dependence upon Arab oil made us vulnerable to the geo-political maelstroms of that region, we have continued to treat the Persian Gulf as a cheap gas station. How to insure our Arab oil supply, protect Saudi Arabia, and serve as Israel's most important protector has always constituted a squaring of the circle. Sordid and expedient self interest, our "pursuit of happiness ever more expansively defined," was only later joined by more lofty rhetoric about exporting universal ideals like democracy and free markets, or, rather, the latter have only been a (misguided) means to secure the former.

Bacevich opens and closes with quotes from our Founding Fathers. In 1795, James Madison warned that "of all the enemies of public liberty, war is perhaps the most to be dreaded, because it comprises and develops the germ of every other." Similarly, late in his life George Washington warned the country of "those overgrown military establishments which, under any form of government, are inauspicious to liberty, and which are to be regarded as particularly hostile to republican liberty."

Financial dominance

With dollar role as the primary world reserve currency the USA still rides on its "Exorbitant privilege". But there are countervailing forces that diminish dollar importance, such a euro. Financial dominance under neoliberalism became the primary tool of ensuring the control over the nations. See Neocolonialism as Financial Imperialism

US and Western banks dominate the globe with New York and London as two world financial centers.

Things little changed after 2008 despite the fact that the US economy in entered a deep debt crisis, which is amplified by the level of destruction of real economy by offshoring and outsourcing achieved under the umbrella of neoliberalism during previous four decades. While the USA remains the sole super power its imperial problems now reached such a level that they may start to affect the foreign policy. Troubles of organizing an invasion in Syria are probably symptomatic. It proved to be more difficult undertaking that similar invasion of Iraq a decade earlier.

Economic troubles have important side effect: the ideological dominance, achieved by the USA during 1989 till 2008 is now under attack. There are a lot of skeptic and in a way neoliberalism goes the way of Marxism with the major difference that there were probably some sincere followers of Marxism at least during the first 30 years of its development.

Centrality of transnational financial flows (including emerging countries debt) and financial oligarchy in neoliberal regime

Since the late 1970s, there was a radical shift of economic activity from the production of goods and non-financial services to finance with the rapid growth since then of the share of financial profits in total corporate profits. Also reflective of this process of "financialisation of the Economy" was the explosive growth of private debt as a proportion of gross domestic product, and the piling of layers upon layers of claims with the existence of instruments like options, futures, swaps, and the like, and financial entities like hedge funds and structured investment vehicles.

With financialisation, the financial masturbation -- speculation directed on making money within the financial system, bypassing the route of commodity production, increasingly became the name of the game. Using Marxist terminology the general formula for capital accumulation, M-C-M', in which commodities are central to the generation of profits, was replaced by M-M', in which money simply begets more money with no relation to production.

This is related to the reason which brought on the financialization of the economy in the forefront: beginning with the sharp recession of 1974-75, the US economy entered a period of slow economic growth, high unemployment/underemployment and excess capacity. That happened after around 25 years of spectacular ascent following the second world war. So financialisation was thought a s a remedy to this "permanent stagnation" regime. And for a while it performed this function well, although it was done by "eating the host".

Finance under any neoliberalism-bound regime can be best understood as a form of warfare, and financial complex (typically large Western banks as locals are not permitted, unless specially protected by remnants of the nation state) as an extension of military-industrial complex. Like in military conquest, its aim is to gain control for occupying country of land, public infrastructure, and to impose tribute putting the country in debt and using dominance of dollar as world reserve currency. This involves dictating laws to vassal countries (imposing Washington consensus, see below) and interfering in social as well as economic planning using foreign debt and the necessity to service the foreign loans as a form of Gosplan.

The main advantage of neoliberalism in comparison with the similar practice of the past is the conquest is being done by financial means, without the cost to the aggressor of fielding an army. But the economies under attacked may be devastated as deeply by financial stringency as by military attack when it comes to demographic shrinkage, shortened life spans, emigration and capital flight. Actually following s successful attack of neoliberalism and conquest of the country by neoliberal elite Russian economy was devastated more then during WWII, when Hitler armies reached banks of Volga river and occupies half of the country.

This attack is being mounted not by nation states alone, but by a cosmopolitan financial class and international financial institutions such as World bank and IMF with full support of major western banks serving as agencies of western governments. Finance always has been cosmopolitan more than nationalistic – and always has sought to impose its priorities and lawmaking power over those of parliamentary democracies.

Like any monopoly or vested interest, the financial "Trojan horse" strategy seeks to block government power to regulate or tax it. From the financial vantage point, the ideal function of government is to enhance profits via privatization and protect finance capital from the population to allow “the miracle of compound interest" to siphon most of the revenue out of the country. Some tiny share of this revenue is paid to compradors within the national elite. In good years such tactic keeps fortunes multiplying exponentially, faster than the economy can grow. This "paradise for rentiers" last until they eat into the core and cause deindustrialization and severe debt crisis. Eventually they do to the economy what predatory creditors and rentiers did to the Roman Empire.

Technological dominance

The globalist bloc of Western countries led by the USA achieved hegemony in the end of the twentieth century because it managed to become the center of technological progress and due to this acquired a commanding influence over industrial production and social life around the world, including the ability to provide rewards and impose sanctions. One or the reason of technical backwardness of the USSR just before the dissolution were technical sanctions imposed by the West via COCOM. As most of global corporations belong to G7 this lead to "natural" technological hegemony of this block. As Thatcher used to say "There is no alternatives", although she meant there is no alternatives to neoliberalism, not to Western technology from G7 nations. Only recently Asian countries started to challenge this status quo in some areas.

Global corporation managed to create a situation in which the same goods are used in most countries of the globe. Western brand names dominate. American and European airliners, Japanese, American and German cars, Korean and American smartphones, Chinese and American PCs, etc.

China became world factory and produces lion share of goods sold under Western brands.

Dominance in Internet and global communications

The debate about the USA dominance in internet and global communications reemerged in June 2008 due to revelations make about existence of the Prism program and similar program by British security services. For example, Jacob Augstein used the term "Obama's Soft Totalitarianism" in his article Europe Must Stand Up to American Cyber-Snooping published by SPIEGEL. The NSA's infrastructure wasn't built to fight Al Qaeda. It has a far greater purpose, one of which is to keep the USA as the last superpower.

The USA has capabilities of intercepting of lion share of global internet traffic and with allies tries to intercept all the diplomatic communication during major conferences and trade talk in direct violation of Vienna protocols. Latin American countries were one of the recent victims of this activity during trade talks with the USA. There were reports about snooping on UN personnel communications in NYC.

Here is an interesting comment of user MelFarrellSr in The Guardian discussion of the article NSA analysts 'willfully violated' surveillance systems, agency admits (August 24, 2013):

Here's the thing about the NSA, the GCHQ, Yahoo, Google, Microsoft, et al...

We all have to stop commenting as if the NSA and the GCHQ are in this thing on their own; the reality is that no one was supposed to know one iota about any of these programs; the NSA and the GCHQ began and put in place the structure that would allow all internet service providers, and indeed all corporations using the net, the ability to track and profile each and every user on the planet, whether they be using the net, texting, cell, and landline.

We all now know that Google, Yahoo, and the rest, likely including major retailers, and perhaps not so major retailers, are all getting paid by the United States government, hundreds of millions of dollars of taxpayer money, our money, to profile 24/7 each and every one of us..., they know how we think, our desires, our sexual preferences, our religious persuasion, what we spend, etc.; make no mistake about it, they know it all, and what they don’t currently have, they will very soon…

These agencies and indeed all those who are paid by them, will be engaged over the next few weeks in a unified program of "perception management" meaning that they will together come up with an all-encompassing plan that will include the release of all manner of statements attesting to the enforcement of several different disciplinary actions against whomever for "illegal" breaches of policy...

They may even bring criminal actions against a few poor unfortunate souls who had no idea they would be sacrificed as one part of the "perception management" game.

Has anyone wondered why, to date, no one in power has really come out and suggested that the program must be curtailed to limit its application to terrorism and terrorist types?

Here’s why; I was fortunate recently to have given an education on how networks such as Prism, really work, aside from the rudimentary details given in many publications. They cannot, and will not, stop monitoring even one individuals activity, because to do so will eventually cause loss of the ability to effectively monitor as many as 2.5 Million individuals.

Remember the “Two to Three Hop” scenario, which the idiot in one of the hearings inadvertently spoke of; therein lies the answer. If the average person called 40 unique people, three-hop analysis would allow the government to mine the records of 2.5 million Americans Do the math; Internet usage in the United States as of June 30, 2012 reached a total of over 245,000,000 million…

The following link shows how connected the world is…

We should never forget how the Internet began, and who developed it, the United States Armed Forces; initially it was known as Arpanet, see excerpt and link below…

"The Internet may fairly be regarded as a never-ending worldwide conversation." - Supreme Court Judge statement on considering first amendment rights for Internet users.

"On a cold war kind of day, in swinging 1969, work began on the ARPAnet, grandfather to the Internet. Designed as a computer version of the nuclear bomb shelter, ARPAnet protected the flow of information between military installations by creating a network of geographically separated computers that could exchange information via a newly developed protocol (rule for how computers interact) called NCP (Network Control Protocol).”

There is no government anywhere on the planet that will give up any part of the program…, not without one hell of a fight...

Incidentally, they do hope and believe that everyone will come to the same conclusion; they will keep all of us at bay for however long it takes; they have the money, they have the time, and they economically control all of us...

Pretty good bet they win...

That includes industrial espionage:


Or industrial espionage?

Absolutely. See EUROPEAN PARLIAMENT report dated 11 July 2001 (Note it was before the 9/11 attack in the US).

7. Compatibility of an 'ECHELON' type communications interception system with Union law

7.1. Preliminary considerations
7.2. Compatibility of an intelligence system with Union law

7.2.1. Compatibility with EC law
7.2.2. Compatibility with other EU law

7.3. The question of compatibility in the event of misuse of the system for industrial espionage
7.4. Conclusion

EntropyNow -> StrawBear

The fact that they snoop on us all constantly, that's the problem. I agree that the indiscriminate surveillance is a problem. However, with such vast powers in the hands of private contractors, without robust legal oversight, it is wide open to abuse and interpretation. I believe we need to pull the plug and start again, with robust, independent, legal oversight, which respects fundamental international human rights laws In the US, the NDAA is a law which gives the government the right to indefinitely detain US citizens, without due process, without a trial, if they are suspected to be associated with ‘terrorists’. Now define ‘terrorism’?

Section 1021b is particularly worrying, concerning “substantial support.” It is wide open to interpretation and abuse, which could criminalize dissent and even investigative journalism. See Guardian’s excellent article by Naomi Wolf, 17 May 2012::

As Judge Forrest pointed out:

"An individual could run the risk of substantially supporting or directly supporting an associated force without even being aware that he or she was doing so. In the face of what could be indeterminate military detention, due process requires more."

In an excellent episode of Breaking the Set Feb 7 2013 Tangerine Bolen (Founder and Director, Revolutiontruth) stated that ‘Occupy London’ was designated a ‘terrorist group” officially. There are independent journalists and civil liberty activists being targeted by private cyber security firms, which are contractors for the DOD, they are being harassed and intimidated, threatening free speech and liberty for everyone, everywhere. As Naomi Wolf concludes:

“This darkness is so dangerous not least because a new Department of Homeland Security document trove, released in response to a FOIA request filed by Michael Moore and the National Lawyers' Guild, proves in exhaustive detail that the DHS and its "fusion centers" coordinated with local police (as I argued here, to initial disbelief), the violent crackdown against Occupy last fall.

You have to put these pieces of evidence together: the government cannot be trusted with powers to detain indefinitely any US citizen – even though Obama promised he would not misuse these powers – because the United States government is already coordinating a surveillance and policing war against its citizens, designed to suppress their peaceful assembly and criticism of its corporate allies.”


It seems to me that potential terrorist threats come in two sorts: the highly organised and funded groups that could commit catastrophic destruction, and the local schmucks that are really just old-fashioned losers-with-a-grudge adopting an empowering ideology.

The first group would be immensely cautious with their communications, and fall outside this sort of surveillance. The second group, if Boston and Woolwich are any evidence, are not effectively detected by these measures.

It appears very clear to me that this is runaway state power, predictably and transparently deflected with cries of "terrorism". And, perhaps most worrying, that definition of terrorism is now as wide as the state requires. Anything that embarrasses or exposes the evils of our states, including rendition, torture, and all manner of appalling injustice, is classified as a matter of 'national security', which must not be exposed lest it aid the enemy.

I know Orwell's name gets tossed around too much... but Jesus! I really hope we're not bovine enough to walk serenely into this future.


...The NSA's infrastructure wasn't built to fight Al Qaeda. It has a far greater purpose, one of which is to keep the USA as the last superpower and moral authority for the rest of the time humanity has in this world.

All this muck is hurting bad. Obama is having a tough time from all sides. All the moralists think he is a villain doing everything he promised to change. All the secret society members think he is a clown who has spilled out every secret that was painstakingly put together over decades....

Cultural dominance

The temples of neoliberalism are malls and airports ;-). And they are build all over the glone is a very similar fashion. A drunk person accidentally transfered from New Jersey to, say Kiev and put in one of mjor malls can never tell the difference :-).

English became the major international language. Both language of technology and commerce. Much like Latin was before.

In developing countries goods are sold at considerable premium (up to 100%) but generally everything that can be bought in the USA now can be bought say in Kiev. Of course affordability is drastically different, but for elite itis not a problem. That create another opportunity for the top 1% to enjoy very similar, "internationalized" lifestyle all over the globe.

Hollywood films dominate world cinemas. American computer games dominate gaming space. In a way the USA culturally is present in any country. It was amazing how quickly remnants of communist ideology were wipes out in the xUSSR countries (Globalization, ethnic conflict and nationalism Daniele Conversi -

Contrary to the globalists or ideologues of globalization (Steger 2005), both Marxists and liberals have highlighted the ‘ pyramidal ’ structure underlying globalization. This metaphor applies well to cultural dissemination.

An elite of corporate, media, and governmental agencies sits at the pyramid’ s top level, small regional intermediary elites sit immediately below, while the overwhelming majority of humans are pushed well down towards the pyramid’ s bottom. In the realm of ‘ global culture ’ , this looks like a master-servant relationship with much of the world at the boot-licking end. Whether such a relationship really exists, or is even practical, this metaphorical dramatization can nevertheless help to understand collective self-perceptions. The consequences in the area of ethnic conflict are significant. Such a hierarchical structure makes it impossible for global exchanges to turn into egalitarian relationships based on evenly balanced inter-cultural communication and dialogue.

On the contrary, cultural globalization is not reflected in a genuine increase of inter-personal, inter-ethnic and inter-cultural contacts. As I shall argue, in most public areas ‘ cultural globalization ’ really means the unreciprocated, one-way flow of consumerist items from the US media and leisure machine to the rest of the world.

This top-down distribution ensures that a few individuals and groups, nearly all in the USA, firmly establish the patterns of behaviour and taste to be followed by the rest of mankind. Is this congruent with the view that there is a form of ‘ global centralization ’ in cultural-legal matters leaning towards Washington, DC? As for a supposed ‘ global culture ’, the symbolic capital would ideally be located in Hollywood, rather than Washington.

In fact, the term ‘ Hollywoodization ’ insinuates a media-enforced hierarchical structure with immediate symbolic resonance. It also offers a more cultural, perhaps less sociological, focus than the Weberian concept of bureaucratic ‘ McDonaldization ’ (Ritzer 1996).

Competing terminologies include ‘ Disneyfication ’ / ’ Disneyization ’ , with its stress on extreme predictability and the infantilization of leisure (Bryman 2004), ‘Walmarting ’ as the streamlining of the retail sector (Fishman 2005, Morrow 2004), or earlier Cold War terms like ‘ Coca-Colonization ’ (Wagnleitner 1994). We previously saw how the term ‘ McGuggenization ’ has been used to indicate art-related cultural franchising and other forms of Americanization in the Basque Country (McNeill 2000).

 All these equally refer to socio-economic trends originated in the USA and are hence forms of Americanization. However, ‘ Hollywoodization ’ has broader implications for ethnic relations and nationalist conflicts.

In practice, Hollywood-inspired simplifications have become the daily staple for millions of peoples around the world in their leisure time. In the area of ethnicity, ‘ Hollywoodization ’ has been elevated to the only known reality and the unique source of information about the outside world for increasing numbers of people, not only in the USA. Thus, the world is more likely to get its stereotypes of the Brits  from US movies like The Patriot or Saving Private Ryan than via British productions.Similarly, most of the world is likely to see Scotland through the lenses of US-made Braveheart , as the larger public can barely afford any access to Scottish cultural productions.

This monopoly of global stereotyping and ethnic imagery has serious implicationsf or the spread and continuation of ethnic conflict.

The tools of primary socialization were once under firm control of the family, either nuclear or extended. They were subsequently assumed by the state in the industrialization ‘ phase ’ , notably with post-1789 mass militarization and compulsory schooling (Conversi2007, 2008).

Under neo-liberal globalization, primary socialization has been seized by unaccountable cash-driven corporations and media tycoons. This has further reduced the space of inter-generational transmission and family interaction. If a community can no longer socialize its children according to its culture and traditions, then the very bases of local, regional, and national continuity are all visibly at stake. This threat to a group's survival is often seized upon by patriots and ethno-nationalists, whose political programs are founded on providing a new sense of social cohesion and security – even if the targets are often hapless and unprotected minorities.

That is partly how nationalism and xenophobia have expanded in tandem with globalization. Ethno-nationalism not only persisted through change, but is perceived by many as a response to the growth of globalization, providing a prêt-à-porter hope for national resistance and resilience. By depending on Hollywood as unique conveyor of ‘ globalization ’, inter-ethnic interaction is inevitably undermined. In some instances, international communication has practically evaporated.

... ... ...

I have described, and subsequently dismissed, the profit-oriented ideology that globalization, intended as Mcdonaldization and Hollywoodization, can contribute to better international understanding. On the contrary, it has ushered in a process of planetary cultural and environmental destruction, while hampering inter-ethnic communication and fostering human conflict. The notion of cultural security, so central to international relations and peaceful coexistence, has undergone unprecedented challenges.

...Insofar as cultural globalization is understood as uni-dimensional import of standardized cultural icons, symbols, practices, values, and legal systems from the United States, it can simply be re-described as Americanization (rather than Westernization in the broad sense), or ‘ globalization by Americanization ’ (Hilger 2008). This is of central importance for the study of ethnic conflict.

In fact, the outcome is scarce hybridization, amalgamation, and metissage . Rather than providing an inter-cultural bridge, this unilateral drive has often eroded the basis for mutual understanding, impeding inter-ethnic, inter-cultural, and international interaction. Given the current vertical, pyramidal structure of the ‘ cultural world order ’ , the opportunity of distinctive groups to communicate directly and appreciate each other’s traditions has decreased, except in the virtual area of long-distance communication. For an increasing number of individuals, an American mass consumer culture remains the only window on the world. Hence, to know and appreciate one ’ s neighbours has become an ever-arduous task. To recapitulate my point, wherever cultural globalization appears as synonymous with Americanization, it engenders conflicts on a variety of levels.

Because the process is one-way and unidirectional, the result is unlikely to be a fusion between cultures or, evenless, the blending of ethnic groups. Contrary to the globalist utopia, the imposition of more and more American icons means less and less possibility for direct inter-ethnic encounter and communication among nations. Together with the collapse of state legitimacy, this substantially contributes to the spread of ethnic conflict and nationalism.

Incorporation of "globalist" parts of national élites as second class citizens of the transnational ruling class

Another aspect of cultural power of neoliberalism is that it accepts national elites (on some, less favorable then "primary" elites conditions) as a part of a new transnational elite, which serves as the dominant class. By class, following classic Marxism we mean a group of people who share a common relationship to the process of social production and reproduction, positioned in the society relationally on the basis of social power.

The struggle between descendant national fractions of dominant groups and ascendant transnational fractions has often been the backdrop to surface political dynamics and ideological processes in the late 20th century. These two fractions have been vying for control of local state apparatuses since the 1970s.

Trans national fractions of local elites swept to power in countries around the world in the 1980s and 1990s. They have captured the “commanding heights" of state policymaking: key ministries and bureaucracies in the policymaking apparatus — especially Central Banks, finance and foreign ministries — as key government branches that link countries to the global economy.

They have used national state apparatuses to advance globalization and to pursue sweeping economic restructuring and the dismantling of the old nation-state–based Keynesian welfare and developmentalist projects.

They have sought worldwide market liberalization (following the neoliberal model), and projects of economic integration such as the North American Free Trade Agreement (NAFTA), the Asia Pacific Economic Cooperation (APEC) forum, and the European Union. They have promoted a supra-national infrastructure of the global economy, such as the World Trade Organization, as we discuss below.

In this new, transnational social system transnational corporations are intermixed with nation-states which they have special privileges. And the state itself now serves not the people of the country (which historically were upper classes) but primarily service the interests of the transnational corporations (and, by extension, narrow strata of "comprador" elite, much like aristocracy of the past). It is now extension and projection of corporate power ("What is good for GE is good for America"). Both the transactional elite (and first of all financial oligarchy) and transnational corporation enjoy tremendous privileges under such a regime (corporate socialism, or socialism for the rich). Like Bolshevik state was formally dictatorship of proletariat but in reality was dictatorship of the elite of an ideological sect called Communist Party (so called nomenklatura), transformed nation-states like the USA, GB, France, Russia, etc now to various degrees look like dictatorships of transnational elite (transnational bourgeoisie like Marxist would say ;-) while formally remaining sovereign democratic republics. Like with Communist Parties in various countries that does not excuse antagonism or even open hostilities.

That does not eliminates completely the elites competition and for example the EU elite put a knife in the back of the US elite by adopting the euro as completing with the dollar currency (so much about transatlantic solidarity), but still internalization of elites is a new and important process that is more viable that neoliberal ideology as such. Also for any state national elite is not completely homogeneous. While that is a significant part of it that favor globalization (comprador elite or lumpen elite) there is also another part which prefer national development and is at least semi-hostile to globalism. Still the comprador part of the elite represents a very important phenomenon, a real fifth column of globalization, the part that makes globalization successful. It plays the role of Trojan horse within nation states and the name "fifth column" in this sense is a very apt name. This subversive role of comprador elite was clearly visible and well documented in Russian unsuccessful "white revolution" of 2011-2012: the US supported and financed project of "regime change" in Russia. It is also clearly visible although less well documented in other "color revolutions" such as Georgian, Serbian, and Ukrainian color revolutions. comrade Trotsky would probably turn in his coffin if he saw what neoliberal ideologies made with his theory of permanent revolution ;-).

Great propaganda success of neoliberalism

As professor David Harvey noted in his A Brief History of Neoliberalism neoliberal propaganda has succeeded in fixating the public on a peculiar definition of "freedom" that has served as a smoke screen to conceal a project of speeding upper class wealth accumulation. In practice, the neoliberal state assumes a protective role for large and especially international corporations ("socialism for multinationals") while it sheds as much responsibility for the citizenry as possible.

The key component of neoliberal propaganda (like was the case with Marxism) was an economic theory. Like Marxism it has three components

For more information see

Ideological dominance, neoliberalism as yet another major civic religion

There is no question that neoliberalism emerged as another major world civic religion. It has its saints, sacred books, moral (or more correctly in this case amoral) postulates and the idea of heaven and hell.

Neoliberalism shares several fundamental properties with high demand religious cults. Like all fundamentalist cults, neoliberalism reduces a complex world to a set of simplistic dogmas (See Washington Consensus). All of society is viewed through the prism of an economic lens. Economic growth, measured by GDP, is the ultimate good. The market is the only and simultaneously the perfect mechanism to achieve this goal. Neoliberalism obsession with materialism have become normalized to the degree that it is hard to imagine what American society would look like in the absence of these structural and ideological features of the new and militant economic Darwinism that now holds sway over the American public. The mantra is well known: government is now the problem, society is a fiction, sovereignty is market-driven, deregulation and commodification are the way to a bright future, and the profit is the only viable measure of the good life and advanced society. Public values are a liability, if not a pathology. Democratic commitments, social relations, and public spheres are disposables, much like the expanding population of the unemployed and dispossessed. Any revolt is the threat to the neoliberal regime of truth and should be dealt with unrestrained cruelty. The market functions best with minimal or no interference from government or civil society and those who don't agree will be taken by police to the proper reeducation camps. All governments with possible exception of the US government should be minimized to allow unrestricted dominance of global corporations. The genius of neoliberalism as a cult, was its ability to cloak the US pretences of world hegemony in an aura of scientific and historical inevitability. Which again makes it very similar and in a way superior to Marxism as a cult. The collapse of the Soviet Union was the supreme, heaven sent validation of Margaret Thatcher’s claim that there was no alternative. There is only one blessed road to prosperity and peace and outside it there is no salvation, nor remission from sins.

The great economic historian Karl Polanyi observed, “The idea of a self-adjusting market implied a stark utopia.” And neoliberalism was a stunning utopia of economic determinism, one even more ambitious than that of Marx.

With all the big questions thus settled, history appeared to be at an end. There was one and only one route to prosperity and peace. All that was required was to make sure the model was correctly applied and all would be well. We all settled into our assigned roles. Capitalists retreated to the role of technocrats, eschewing risk themselves while shifting and spreading it throughout society. The rest of us were relegated to the roles not of citizens, but of consumers. Using our homes as ATMs, we filled our lives with Chinese-made goods, oblivious to the looming environmental and social costs of a runaway, unregulated consumer-driven society. Only a marginalized few questioned the basic economic structure. It was the era of homo economicus, humans in service to the economy.

Now that perfect machinery lies in pieces all around us and the global economic free fall shows no signs of ending any time soon. The fundamental reasons underlying the collapse aren’t all that difficult to discern. Central to the whole neoliberal project was the drive to rationalize all aspects of human society. Relentless efforts to cut costs and increase efficiency drove down the living standards of the vast majority, while the diminution of government and other non-commercial institutions led to increasing concentration of wealth at the very top of society. As high paying jobs in the industrial and technical sectors moved from developed countries to low wage export-based economies in the developing world, capacity soon outstripped demand and profits in the real economy began to sag. Not content with declining earnings, wealthy elites began to search for investments offering higher returns. If these couldn’t be found in the real economy, they could certainly be created in the exploding financial sector.

Once consigned to the unglamorous world of matching those with capital to invest with those with enterprises seeking to grow, finance became the powerful new engine of economic growth. No longer stodgy, bankers and brokers became sexy and glamorous. Exotic new financial instruments, called derivatives, traded on everything from commodities to weather.

This speculative frenzy was supported by a central bank only too happy to keep credit extremely cheap. Debt exploded among consumers, businesses and government alike. Creating new debt became the source of even more exotic investment vehicles, often bearing only the most tenuous of connections to underlying assets of real value, with unwieldy names such as “collateralized debt obligations” and “credit default swaps.”

All the debt and the shuffling of fictional wealth hid the underlying rot of the real economy. It was a house of cards just waiting for the slight breeze that would send it all crashing down. And a collapse in housing prices in 2008 laid bare the economic contradictions.

The fundamental contradiction underlying much that confronts us in the age of crises is an economic and social system requiring infinite growth within the confines of a finite planet. Any vision seeking to replace neoliberalism must take this contradiction into account and resolve it. The overriding market failure of our time has nothing to do with housing. It’s the failure to place any value on that which is truly most essential to our survival: clean air and water, adequate natural resources for the present and future generations, and a climate suitable for human civilization.

No such new vision is currently in sight. That this leaves everyone, neoliberals and their foes alike, in a state of uncertainty and doubt is hardly surprising. The seeming triumph of neoliberalism was so complete that it managed to inculcate itself in the psyches even of those who opposed it.

We find ourselves unsure of terrain we thought we knew well, sensing that one era has ended but unsure as to what comes next. We might do well to embrace that doubt and understand its power to free us. Our doubt allows us to ask meaningful questions again and questioning implies the possibility of real choice. Removing the intellectual straitjacket of neoliberal orthodoxy opens up the space necessary to reconsider the purpose of an economy and its proper role in a decent human society and to revisit the old debate over equity versus efficiency. It calls into question the assumption most central to homo economicus; that all humans act only to maximize their own interests.

It seems clear that the world emerging over the coming decades will look quite different from the one we now inhabit. Of necessity it will evolve in ways we can’t fully understand just yet. Old battle lines, such as the ones between capitalism and socialism, will likely fade away. Both of those models arose in a world of abundant and cheap fossil fuels and within the confines a planet with a seemingly endless capacity to absorb the wastes of our conspicuous consumption. New battle lines are already beginning to take shape.

The Revolution is Upon Us The Age of Crisis and the End of Homo Economicus Logos

I think that like is the case with Marxism, the staying power of neoliberalism is that propose the religion picture of world with its "creation history", saints, and way of salvation. In a way it plays the role similar to the role of Catholicism in middle ages (aka Dark Ages). The greed of catholic clergy in Middle ages (trade in indulgencies) is a match of the greed of neoliberals( with financial derivates replacing indulgencies ;-). It is equally hostile to any attempts to analyze it, with the minor difference that heretics that question the sanctity of free market are not burned at the stake, but ostracized. It support "new Crusades" with the same mechanism of "indulgences" for small countries that participate.

The level of hypocrisy is another shared trait. The great irony is that the USA, the world's leading proponent of neoliberalism (with the US President as a Pope of this new religion), systematically is breaking the rules when it find it necessary or convenient. With high deficit spending and massive subsidizing of defense spending and financial sector, the United States has generally use a "do as I say, not as I do" approach. And with the amount of political appointee/lobbyists shuttling back and forth between business and government, Adam Smith's "Invisible Hand" looks more and more like a crushing fist of corporatist thugs. It involves dogmatic belief that the society is better off when ruled by a group of wealthy financiers and oligarchs, than by a group of professional government bureaucrats and politicians with some participation of trade unions.

The USA also dominates the cultural scene:

The United States' position as the leading maker of global culture has been basically unchallenged for the last century or so, especially in the Western world. Yet the economic power of the Western world is waning even as new nations, with new models of economic and social life, are rising. Might one -- or several -- of these nations like China, India or Brazil become new centers of global culture?

I believe that the answer to this question for the foreseeable future is "no." While the U.S.'s cultural prominence is partially related to its political, military and economic power, such power is not the only cause of America's global cultural hegemony. Rather, the U.S. offers a unique convergence of several factors, including economic opportunity, political freedom and an immigrant culture that served as a test bed for new cultural products.

Let me offer a brief account of the rise of the American film industry to suggest the way political, economic and immigrant forces shaped American cultural hegemony. In the U.S., the film industry started as commercial enterprise largely independent of state control. Movies had to adapt to market conditions to earn profit for their producers. In order to achieve this goal, American movies needed to appeal to a diverse population made up of both native-born and immigrant citizens.

As a consequence, filmmakers had to make movies that could appeal to international audiences simply to meet domestic demand. This fact helped the American film industry become globally preeminent well before the U.S. became a superpower. In other words, while U.S. military and economic power strengthened the position of the U.S. movie industry as globally dominant, that position was not dependent on U.S. military and economic power. Instead, American producers had a competitive advantage in global markets that was later cemented in place by the U.S. post-war economic and military hegemony in the West.

After the dissolution of the USSR, the USA became natural center of the "neoliberal religion" a dominant force in the new world order (the world's only superpower). And they used their newly acquired status against states which were not "friendly enough" very similar to Catholicism with its Crusades, launching a series of invasions and color revolutions against "nonbelievers" in a globalist neoliberal model. The level of plunder of Russia after the dissolution of the USSR looks like a direct replay of Crusades with the siege of Constantinople as primary example (despite stated goals, Crusades were by-and-large a monetary enterprise of the time with fig leaf of spread of Catholicism attached). This period of neoliberal crusades still continued in 2013, sometimes using various proxy to achieve "the regime change" by military means.

As we already refereed to neoliberalism as a cult an interesting question is whether neoliberalism can be viewed new "civic religion". The answer is unconditional yes, and I think that like Marxism before it should be considered to be yet another civic religion. It has it's set of holy books, Supreme being to worship, path to salvation and set of Apostils. Like communism before it propose humanity grand purpose and destiny.


Theistic and civic religions are also similar in that they both offer visions of humanity’s grand purpose and destiny.

There are also significant differences between theistic religions and civil religions. Theistic religions explicitly rely on claims of divine authority for their validity, while civil religions rely on reason and the interpretation of commonly-accepted historical knowledge. Followers of theistic religions stress the importance of faith in times of adversity, while followers of civil religions tend to have a more pragmatic attitude when reality casts doubt on their beliefs.

Civil religions are more like big social experiments than actual religions because their central claims are much more falsifiable, and their followers show evidence of holding this perception (e.g. references to “the American experiment"; the voluntary abandonment of Communism throughout Eurasia when it became clear that it wasn't working).

Communism bears so much resemblance to Christianity because, as you mentioned last week, the Western imagination was thoroughly in the grip of Christianity when Communism emerged. Communism is similar to Christianity out of practical necessity: had it not been based on the Christian template, Communism probably would have been too intellectually alien to its Western audience to have ever taken off. Luckily for the founders of Communism, they were also subjected to this Christian cultural conditioning.

With all this in mind, and given that religion is evolving phenomenon, I think that civil religion is actually a distinct species of intellectual organism which has (at least in part) evolved out of religion.

Like Marxism, neoliberalism is first and foremost a quasi religious political doctrine. But while Marxism is aimed at liberation of workers , a political doctrine neoliberalism is aimed at restoring the power of capital. Neoliberalism originated in the rich countries of Anglo-Saxon world (GB and USA) so along with open despise of poor, it always has a distinct flavor of despise for peripheral countries. In global politics, neoliberalism preoccupies itself with the promotion of four basic issues:

As such, neoliberalism, in its crudest form, is crystallized in the Ten Commandments of the 1989 Washington Consensus (policy of debt slavery set for the world by the US via international financial institutions). While pushing the democracy as a smoke screen, they implicitly postulate hegemony of the financial elite (which is a part of "economic elite" that neoliberalism defines as a hegemonic class). Financialization of the economy also serves as a powerful method of redistribution of wealth, so neoliberalism generally lead to deterioration of standard of living for lower quintile of the population and in some countries (like Russia in 1991-2000) for the majority of the population. This is done largely via credit system and in this sense neoliberalism represents "reinters paradise". Neoliberal globalization was built on the foundation of US hegemony, conceived as the projection of the hegemony of the US capital and dollar as the dominant reserve currency. As such it is critically dependent of the power and stability of the US and the financial, economic, political and military supremacy of the US in every region. For this purpose the USA maintains over 500 military bases (737 by some counts) and over 2.5 million of military personnel.

But there are also important differences. Unlike most religions, neoliberalism is highly criminogenic (i.e., having the quality of causing or fostering crime). It is more criminogenic in countries with lower standard of living and in such countries it often lead to conversion of a "normal", but poor state into a kleptocratic state (Yeltsin's Russia is a good example) with the requisite mass poverty (Global Anomie, Dysnomie and Economic Crime Hidden Consequences of Neoliberalism and Globalization in Russia and Around the World). Unfortunately architects of this transformation (Harvard Mafia in case of Russia) usually avoid punishment for their crimes. Corruption of the US regulators which happened under neoliberal regime starting from Reagan is also pretty well covered theme.

While economic crisis of 2008 led to a crisis of neoliberalism, this is not necessary a terminal crisis. The phase of neoliberal dominance still continues, but internal contradictions became much deeper and the regime became increasingly unstable even in the citadel of neoliberalism -- the USA. Neoliberalism as an intellectual product is practically dead. After the crisis of 2008, the notion that finance mobilizes and allocates resources efficiently, drastically reduces systemic risks and brings significant productivity gains for the economy as a whole became untenable. But its zombie phase supported by several states (the USA, GB, Germany), transnational capital (and financial capital in particular) and respective elites out of the sense of self-preservation might continue (like Bolshevism rule in the USSR in 70th-80th) despite increasing chance of facing discontent of population and bursts of social violence.

Cornerstone of neoliberal regime, the economic power of the USA is now under threat from the rise of Asia. This is one reason of mutation of neoliberalism into aggressive neoconservative imperialism that we witness in the USA.

While intellectually neoliberalism was bankrupt from the beginning, after 2008 believing it in is possible only by ignoring the results of deregulation in the USA and other countries. In other words the mythology of self-regulating "free market" became a "damaged goods". In this sense, any sensible person should now hold neoliberal sect in contempt. But reality is different and it still enjoy the support of the part of population which can't see through the smoke screen. With the strong support of financial oligarchy neoliberalism will continue to exists in zombie state for quite a while, although I hope this will not last as long as dominance of Catholicism during European Dark Ages ;-). Still the US is yet to see its Luther. As was noted about a different, older sect: "Men are blind to prefer an absurd and sanguinary creed, supported by executioners and surrounded by fiery faggots, a creed which can only be approved by those to whom it gives power and riches".

Like communism in the USSR it is a state supported religion: Neoliberalism enjoys support of western governments and first of all the US government. Even when the US society entered deep crisis in 2008 and fabric of the society was torn by neoliberal policies it did not lose government support.

Market fundamentalism as an ideology of neoliberalism;
Washington Consensus

Market fundamentalism is an ideology of neoliberalism and represents a pseudo-scientific approach to economic and social policy based on neoclassical theories of economics that absolutized the role of the private business sector in determining the political and economic priorities of the state and consider privatization as the ultimate solution of all problems in the society.

Like social theories behind Italian and German versions of corporatism ideology of neoliberalism is pretty eclectic. It is discussed at some additional length at pages related to the topic Casino Capitalism on this site.

We need to note, there the neoliberal ideology adoption and implementation patterns varies from country to country, like it was actually with the classic corporatism as well. In the USA this form of corporatism emerged in most radical form. Another center of neoliberalism was GB in which it also has had a more radical form then, say, in Spain or Italy.

And we called the US version of neoliberalism radical, it is not a metaphor: corporatism under General Franco is a pale shadow of corporatism under Bush-Obama regime.

This new stage of capitalism development is often called "corporate socialism" of "socialism for rich" or "socialism for banks". The latter name is applicable because the key component of transnational elite is financial oligarchy. All of those terms reflect the key fact that at this stage of capitalism development it is the transnational elite and first of all financial oligarchy which completely dominates power structures of the society. Due to the role of financial oligarchy in this new elite this social system was also nicknamed Casino Capitalism.

Neoliberalism should probably be viewed as a further development of a form of corporatism that emerged in the USA in late 60th. It came to power in Ronald Reagan administration which was in a way Quiet coup. And it became completely dominant after the collapse of the USSR during Clinton regime during which Democratic Party also adopted neoliberalism as an official platform.

The term itself emerged in the 1970s, when some Latin American economists began using "neoliberalism" to designate their program of market-oriented reforms. It has come into wide use starting with 1973 Chilean coup d'état. After triumph of neoliberalism in Chile under Augusto Pinochet (from 1973) neoliberalism spread to Great Britain under Margaret Thatcher (from 1979) and then to the United States under Ronald Reagan (from 1981). Broadly speaking, neoliberalism seeks to transfer control of the economy from the public to the private sector with the state providing guarantees only to corporations and not to individual citizens like under socialism. That's why is often called "corporate socialism".

After dot-com bust of 2000-2002, however, the term "neoliberalism" had become a pejorative used to denigrate prostitution of economics performed by Milton Friedman and Chicago school . This trend increases after financial crisis of 2008-2012. So it is probably fare to say that right now neoliberalism entered the stage of decline. The last important victory of neoliberalism was probably navigating Russia into joining WTO, which happened in summer of 2012.

It has neoliberal Newspeak that include such terms as "free market", efficiency, consumer choice, transactional thinking and individual autonomy. In essence this is an modernized ideology of merger of state and corporate power that was hallmark of classic corporatism, with an additional twist of emphasizing the Arian style theories of inferiority of lower classes (reflected in promoting the "class of creators", entrepreneurs( Randism), etc) and "ultimate justice" of redistributing wealth to the top 1%.

On state level it tries to abolish social programs and completely shift the risks to individuals (replacing pensions with 401K plan in the USA), while fully providing social protection to corporations, especially financial giants involved in casino style gambling. In other words it socialize private losses and privatize social program that benefits of individual citizens.

Neocolonial aspects of neoliberalism are often called "Washington Consensus", a list of policy proposals that appeared to have gained consensus approval among the Washington-based international economic organizations (like the International Monetary Fund (IMF) and World Bank) and directed on making developing nations "debt slaves" of the industrialized nations. This policy got tremendous impetus with the dissolution of the USSR when the principal foe, which to certain extent limited the level of greed in such deals due to fear of "communist infiltration" if case deal is too one sided, folded.

The concept and name of the Washington Consensus were first presented in 1989 by John Williamson, an economist from the Institute for International Economics, an international economic think tank based in Washington, D.C. The list created by Williamson's included ten points:

  1. Legal security for property rights;
  2. Financialization of capital.
  3. Fiscal policy Governments should not run large deficits that have to be paid back by future citizens, and such deficits can only have a short term effect on the level of employment in the economy. Constant deficits will lead to higher inflation and lower productivity, and should be avoided. Deficits should only be used for occasional stabilization purposes.
  4. Redirection of public spending from subsidies to people to subsidies to corporations (tax breaks, preferred regime, etc). Especially hurt were classic socialist programs, which neoliberal call "indiscriminate subsidies" that neoliberal deem wasteful. They are limited to those what benefit corporations such as primary (but not university) education, primary health care and infrastructure investments. Pensions and other social problems need to be privatized.
  5. Tax reform– broadening the tax base by shifting tax burden to the poor and middle classes and adopting low taxes for corporations and top 1% with the states goal to encourage "innovation and efficiency";
  6. Interest rates that are market determined and positive (but moderate) in real terms;
  7. Floating exchange rates;
  8. Trade liberalization – liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by law and relatively uniform tariffs; thus encouraging competition and long term growth. Financial liberalization under the smoke screen of trade liberalization and complete dominance of foreign banks in local financial systems of developing countries.
  9. Liberalization of the "capital account" of the balance of payments, that is, allowing people the opportunity to invest funds overseas and allowing foreign funds to be invested in the home country
  10. Privatization of state enterprises; Promoting market provision of goods and services which the government can not provide as effectively or efficiently, such as telecommunications, where having many service providers promotes choice and competition.
  11. Deregulation – abolition of regulations that impede market entry or restrict competition, except for (G7 only) those justified on safety, environmental and consumer protection grounds, and prudent oversight of financial institutions;

A Decade Long Triumph of Neoliberalism after the Dissolution of the USSR

As we mentioned before, the greatest triumph of neoliberalism was the dissolution of the USSR in 1991. After this event, there was a period of "triumphal march of neoliberalism", which lasted probably till 2005, when each year it claimed as a victory yet another country (Yeltsin neoliberal gang rule in Russia lasted till 2000, all former socialist countries were converted to neoliberal regimes shortly after, Kosovo in 1999; Serbia in 2000; Iraq in May, 2003; Georgia in December 2003; Ukraine in 2004). It also managed to stabilize and improve the situation in the USA. Plunder of Russia and other xUSSR states along with Internet revolution were two factors that influenced relative prosperity of the USA in 1994-2000.

And like Catholicism in Europe in Middle Ages, in 90th neoliberalism looked like an incontestable ideology propagated by "sole superpower" (" anew holy Roman Empire") with the help of vassals and subservient financial institutions such as World Bank and IMF. The dominance on the USA in 1991 looked rock-solid and if somebody told me in 1999 that in less then 20 years the USA would be on ropes both politically and financially I would just laugh. Still after the dissolution of the USSR neoliberalism managed to dissipate most of the gains in approximately 20 years and in 2008 entered the phase of structural crisis. As of 2013 the idea of self-regulating market is dead and even solidarity of international elites, the hallmark of neoliberalism, is under question.

The first cracks in neoliberalism facade were caused by Clinton's attack on Yugoslavia in 1999, the first armed neoliberal crusade attempted under the smoke screen of protecting the right of Kosovo Muslims in Serbia. It failed to implement "regime change" in Serbia and despite overwhelming military superiority of NATO forces has shown that bringing neoliberal regime on the tips of bayonets is a costly and high risk exercise. It took another several years and a color revolution in Serbia to achieve those goals. It did established the second Muslim state in Europe (effectively NATO protectorate), which was a part of the plan.

Color revolution in Serbia started a series of other successful color revolutions in Serbia (Serbia's Bulldozer Revolution in 2000) ,Georgia (Saakashvili regime came to power in November 2003 as a result of "Rose revolution"), Ukraine (Viktor Yushchenko regime came to power in 2004 via Orange Revolution) and several other countries.

After those successes, there were several setback: color revolutions failed in Belorussia and Russia. Results of color revolution in Ukraine were partially reversed by government of Viktor Yanukovych who ousted Yushchenko government defeating Yulia Tymoshenko in 2010 election (with Yutchshenko personally having less the 3% support). They are close to partial reversal in Georgia where Saasaskvily regime is hanging in the air.

Fear of population and establishment of "National Security State"
to protect the interest of transnational elite

Politically neoliberalism correlates with growth of political power of financial oligarchy and media-military-industrial complex. Growth of political power of financial oligarchy among national elite has led to the dramatic growth of inequality and created growing fear of the top 0.01% (oligarchs) over preserving their power and financial gains.

That naturally leads to the establishment of National Security State" state, militarization of police and introduction of total surveillance over the citizens under the pretext of fighting against terrorists.

In the article GCHQ taps fibre-optic cables for secret access to world's communications by Ewen MacAskill, Julian Borger, Nick Hopkins, Nick Davies and James Ball, the authors describe blanket surveillance regime (21 June 2013, The Guardian) in comparison with which KGB and even STASI looks like complete amatures:

Britain's spy agency GCHQ has secretly gained access to the network of cables which carry the world's phone calls and internet traffic and has started to process vast streams of sensitive personal information which it is sharing with its American partner, the National Security Agency (NSA).

The sheer scale of the agency's ambition is reflected in the titles of its two principal components: Mastering the Internet and Global Telecoms Exploitation, aimed at scooping up as much online and telephone traffic as possible. This is all being carried out without any form of public acknowledgement or debate.

One key innovation has been GCHQ's ability to tap into and store huge volumes of data drawn from fibre-optic cables for up to 30 days so that it can be sifted and analysed. That operation, codenamed Tempora, has been running for some 18 months.

GCHQ and the NSA are consequently able to access and process vast quantities of communications between entirely innocent people, as well as targeted suspects.

This includes recordings of phone calls, the content of email messages, entries on Facebook and the history of any internet user's access to websites – all of which is deemed legal, even though the warrant system was supposed to limit interception to a specified range of targets.

As Glenn Greenwald wrote in his article Are all telephone calls recorded and accessible to the US government? (May 4, 2013, The Guardian):

Every day, collection systems at the National Security Agency intercept and store 1.7 billion e-mails, phone calls and other types of communications.

It would also help explain the revelations of former NSA official William Binney, who resigned from the agency in protest over its systemic spying on the domestic communications of US citizens, that the US government has "assembled on the order of 20 trillion transactions about US citizens with other US citizens" (which counts only communications transactions and not financial and other transactions), and that "the data that's being assembled is about everybody. And from that data, then they can target anyone they want."

Despite the extreme secrecy behind which these surveillance programs operate, there have been periodic reports of serious abuse. Two Democratic Senators, Ron Wyden and Mark Udall, have been warning for years that Americans would be "stunned" to learn what the US government is doing in terms of secret surveillance. Strangely, back in 2002 - when hysteria over the 9/11 attacks (and thus acquiescence to government power) was at its peak - the Pentagon's attempt to implement what it called the "Total Information Awareness" program (TIA) sparked so much public controversy that it had to be official scrapped. But it has been incrementally re-instituted - without the creepy (though honest) name and all-seeing-eye logo - with little controversy or even notice.

In his book "Brave New World Order" (Orbis Books, 1992, paper), Jack Nelson-Pallmeyer identifies seven characteristics of a such a state:

  1. The military is the highest authority. In a National Security State the military not only guarantees the security of the state against all internal and external enemies, it has enough power to determine the overall direction of the society.
  2. Political democracy and democratic elections are viewed with suspicion, contempt, or in terms of political expediency. National Security States often maintain an appearance of democracy. However, ultimate power rests with the military or within a broader National Security Establishment.
  3. The military and related sectors wield substantial political and economic power. They do so in the context of an ideology which stresses that 'freedom" and "development" are possible only when capital is concentrated in the hands of elites.
  4. Obsession with enemies. There are enemies of the state everywhere. Defending against external and/or internal enemies becomes a leading preoccupation of the state, a distorting factor in the economy, and a major source of national identity and purpose.
  5. The working assumption is that the enemies of the state are cunning and ruthless. Therefore, any means used to destroy or control these enemies is justified.
  6. It restricts public debate and limits popular participation through secrecy or intimidation. Authentic democracy depends on participation of the people. National Security States limit such participation in a number of ways: They sow fear and thereby narrow the range of public debate; they restrict and distort information; and they define policies in secret and implement those policies through covert channels and clandestine activities. The state justifies such actions through rhetorical pleas of "higher purpose" and vague appeals to "national security."
  7. The church is expected to mobilize its financial, ideological, and theological resources in service to the National Security State.

You can probably safely replace the term "military" with the term "finance" in the above list to make it more applicable to contemporary neoliberal societies. And if you think about, it finance is a new form of warfare. In any case National Security State is now reality and by-and-large displaced the previous form, called Inverted Totalitarism which existed from late 40th to late 80th.

Criminogenic effects of neoliberalism

The fact the neoliberalism is highly criminogenic is well established. The postulate "greed is good" implicitly assumes that the legal system is perfect. In order to distinguish greed from enlightened self-interest, we will define greed is self-interest taken to an extreme or unseemly degree. A “greedy” market participant that seeks to gain at the expense of others and the society at large. So in essence this is a parasitic behavior. This might be done within the legal framework exploiting loopholes in it, but most commonly it involves a violation of the law that is difficult to enforce and are supported internally by corporate brass (A Troubling Survey on Global Corruption -

A new survey of corporate officials and employees in 36 countries — in Europe, Africa and the Middle East, as well as India — indicates that there is plenty of corruption that needs investigating.

Over all, 20 percent of the respondents said they knew of incidents at their own companies within the previous year that could be construed as cooking the books — moves to either understate expenses or overstate revenue. Among senior managers and directors, the figure was 42 percent.

It is typically difficult to determine what the optimal set of laws is; lawmakers must make their best guess, and in most cases they pass laws that are proved to be suboptimal over time. Holes in those laws can be systematically exploited. Also law always lags behind market and technological developments; it is difficult for lawmakers to know how to regulate things like new products or new investment vehicles. That creates another opportunity to engage in destructive for the society as whole behavior without fear of punishment by the law. Neoliberalism also is "sociopath friendly" regime in a sense that sociopathic qualities became a desirable for the top brass. And with sociopathic leadership in place it is difficult to imagine what the improper business is. "Creative destruction" in this case becoming something like a pack of wolves against a sheep.

Wall Street also developed two step combination: first weaken the law, and then engage in criminal behavior that is now decriminalized. In other words, if one argues that it is perfectly acceptable for people to be greedy, the problem is that there is no mechanism to constrain greedy people so that they can do no harm to others. As history demonstrates pretty convincingly (with the 2008 crisis as the most recent example), the legal system typically fails to place the appropriate constraints on such market behavior. That's why additional mechanisms are important for society survival and prosperity, and that's why most world religions consider greed to be a vice. This brings us to works of John Kenneth Galbraith and his discussion of the necessity of countervailing economic forces. Neoliberalism destroyed those countervailing forces over the last several decades.

Since the legal system can not and never in reality guarantee that markets function efficiently, there is a role for other institutions to foster a more enlightened self-interest as a social norm and thus improve efficiency. It's mostly about how self-interest is channeled that makes the difference, since eliminating self-interest seems similarly sociopathic (the USSR is a perfect example here). We would be a lot better off to channel self-interest in financial sector productively, than let it run wild foraging on speculation, arbitrage, and monopolization.

But it is those institutions that can channel self-interest in a more productive way, that neoliberalism systematically tries to weaken. In this sense neoliberalism is not only criminogenic, it is self-destructive. Moreover, unethical behavior is arguably more of the rule of corporate conduct rather than the exception. As such it represents a systemic flaw of neoliberalism as a flavor of corporatism. And the Great Recession of 2008 is a direct manifestation of this systemic flaw. In other words it was not accidental, it was not the first and it is not the last.

Example of Russia neoliberal revolution of 1989-1994 is probably one of the most terrifying examples of this trend. But the situation in the USA after 2008 is structurally even worse as it entails much more sophisticated layers of corruption and first of all almost complete corruption of the government by financial oligarchy (nobody was prosecuted for the financial crisis of 2008). It signified the creation of two separate caste of citizens with the upper caste being above the law, much like it was with Nomenklatura in the USSR.

Neoliberalism also exploits fundamental problem that in any large bureaucracy dealing with huge sums of money people have bad and/or contradictory incentives and lack of accountability creates opportunity for corruption. So in way it is using corruption for the purposes of maintaining the neoliberal regime, which is pretty unique feature. And, despite appearance, all large bureaucracies are prone to corruption.

One of the key mechanisms of corruption that is used under neoliberal regime is so called "the revolving door". It works in both direction: from top corporate seats to government and back.

Typically people who moved to government from private industry are not forgetting your former friends, especially in crisis (Paulson is a very good example here, but any Secretary of Treasury probably is not much worse example either). There are also implicit incentives to help your former employer, when there is an opportunity for a multimillion dollar deal. Also in this variant of "revolving door" regime, those who are coming to the government or to the public service have the incentive structure and morale they acquired in their prior employer -- a large corporation.

When a long time government servant is expecting to join a corporation after leaving the government there is a strong, but implicit incentive not to hurt future friends. Income inequality is probably one of the root causes for this. If incomes in public and private sector were not so much out of balance, few people would be motivated to sell themselves out so shamelessly.

But with the current level on income inequality this mechanism works wonders to emasculate regulatory agencies top brass. The mechanism that efficiently replicates this governance systems and keeps it in place one of the central part of criminality of neoliberalism: the conscious breaking down of institutional capacity of state to regulate business activity. Thus creating the situation of "mafia state", with the oligarchy instead of regular Mafiosi.

The other key mechanism is bribing the press corps to present (often close to criminal) actions favorable to oligarchy (in a words of Margaret Thatcher), as "There Is No Alternative" (TINA). BTW in Russian "tina" is the highly viscosious, amorphous substance on the bottom of the lake or swamp. In the latter case it can swallow people or animals. This effect is the same as for "Neoliberal TINA". Typically "TINA" works by remapping the debate to exclude anything not favorable to the financial elite (Journalists in the service of Pete Peterson Remapping Debate). Here is how stealing from Social Security to preserve recent gains by financial elite was presented during debates on (note the terminology) "curbing the country’s “unsustainable” debt and deficits.":

  • Maria Bartiromo, 2011 (host, CNBC’s “Closing Bell with Maria Bartiromo”)
  • Tom Brokaw, 2012 (former anchor and managing editor, NBC Nightly News)
  • Erin Burnett, 2012 (host of CNN’s “Erin Burnett OutFront”)
  • John F. Harris, 2012 (editor-in-chief of Politico)
  • Gwen Ifill, 2011, 2010 (senior correspondent of “PBS NewsHour”)
  • Ezra Klein, 2011 (columnist, Washington Post)
  • Jon Meacham, 2010 (former editor-in-chief, Newsweek)
  • Bob Schieffer, 2010 (host, CBS “Face the Nation”)
  • Lesley Stahl, 2010 (reporter, CBS “60 Minutes”)
  • George Stephanopoulos, 2012 (host, ABC’s “This Week”)
  • David Wessel, 2012, 2011 (economics editor, Wall Street Journal)
  • George Will, 2011 (columnist, Washington Post)
  • Judy Woodruff, 2012, 2011 (host, “PBS NewsHour”)
Peterson, however, is hardly a disinterested and dispassionate observer of such discussions. In fact, he is now beginning his fourth decade of arguing that there is no alternative to enacting “entitlement reform” (read: cut Social Security and Medicare) and “tax reform” (read: raise regressive taxes and lower progressive ones) in the name of curbing the country’s “unsustainable” debt and deficits.

An essential and successful element of the Peterson strategy is to create an environment where it is widely if not universally believed that there is no alternative to his vision. The conceit is that those with “courage” will see past narrow, partisan concerns and embrace an ideal: a bipartisan consensus that has the strength to demand “shared sacrifice” from a childish and selfish populace. A review of the proceedings of the Fiscal Summits of the last three years makes agonizingly clear that most of the journalists who conducted interviews or moderated panel discussions both reflected and amplified the Peterson worldview...

So, for example, Lesley Stahl, the CBS “60 Minutes” reporter, was fully a part of the Erskine Bowles and Alan Simpson deficit-cutting team during her interview with both men: “You are going to have to raise taxes and cut things, big things, put restrictions on Social Security. Everybody knows that.”

Virtually none of the reporters thought to ask about or suggest an alternative path, such as preserving Social Security benefits and bolstering the system’s reserve by raising the cap of wages subject to Social Security taxes (currently annual wages above approximately $110,000 are not subject to any Social Security tax).

And most questioning proceeded either on the false assumption that deficits were derived from excessive spending on entitlements or as though they had mysteriously, but inevitably, come to pass.

Many journalists fairly shouted their personal desire to see greater cooperation and “compromise,” with groups realizing the importance of submerging their interests to the greater good. Who should do the submerging? In 2012, Tom Brokaw had a suggestion in the form of a question to former President Bill Clinton: after Wisconsin Governor Scott Walker pushed through a bill undermining the right of union members to collectively bargain, shouldn’t those workers have just sat down and negotiated with Walker as, Brokaw said, “has been traditionally done in this country” instead of “gather[ing] outside the capitol”?

There were a couple of exceptions to the rule. In a session moderated by Ezra Klein of the Washington Post in 2011, Klein posed a number of questions that reflected an unwillingness to operate from within the Peterson framework. For example, Klein asked New York Times columnist David Brooks whether, instead of blaming Americans for simply wanting benefits without paying for them, the causes of the debt should be located in the Bush tax cuts, two unfunded wars (Iraq and Afghanistan), and the federal government’s emergency response to the financial crisis.

Judy Woodruff, of the PBS NewsHour, generally asked questions from within the Peterson frame, but, at one point in 2012, posed a question that perhaps all the journalists should have been thinking about as well. She asked Rep. Christopher Van Hollen, Jr. (D-Md.) if “Democrats like you, by participating in forums like this one that is all focused on austerity, on cutting the deficit and the debt…really become also window dressing for a conservative agenda that is anti-jobs and anti-recovery and wrongheaded economics?”

Over the course of the three years of fiscal summits that Remapping Debate examined, the other journalist interviewers and moderators hewed strictly to the conventional Peterson wisdom. What follows are annotated illustrations of this recurring problem.

Neoliberalism as a key contributor to growth of amorality and economic crimes

Although neoliberal regime is not necessarily a kleptocracy (although Yeltsin regime definitely was), the difference is only in a degree. It does use corruption and criminality to stabilize the neoliberal regime and protect it from backlash that follow economic crisis caused by excessive appetite by financial oligarchy (if I am sounding like a communist here it is not accidental; as people of former USSR observed: communism was all wrong about socialism, but it was surprisingly realistic in its views of capitalism). And as for corruption it is pretty ironic that the USA tried to position itself as a leader of anti-corruption crusade, because as Niall Ferguson noted (quoted from Zero Hedge):

“It is corruption when corporations can buy regulation. It is corruption when laws are sponsored by Wall Street.

It is a sad state when the current level of corruption of the U.S. government is what was once only associated with third world countries ruled by dictators. The problem is that corruption of major institutions and first of all regulators is predicament for any country which adopted neoliberal model, and the US in no exception. Niall Ferguson called it "suffering from a third world disease.". In his new book The Great Degeneration he states the central question of the “great degeneration” is whether our institutions, and first of all institution which should uphold the rule of law are degenerating. He thinks that there are four symptoms of degeneration:

Quite frankly, like in the case of international financial capital, the most necessary constituents that define organized crime are in place so the difference in only in degree:

Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run for the purpose of engaging in illegal activity, most commonly for monetary profit

Quoting Wikipedia:

In the United States, the Organized Crime Control Act (1970) defines organised crime as "The unlawful activities of [...] a highly organised, disciplined association [...]".[3] Criminal activity as a structured group is referred to as racketeering and such crime is commonly referred to as the work of the Mob. In the UK, police estimate organized crime involves up to 38,000 people operating in 6,000 various groups.[4] In addition, due to the escalating violence of Mexico's drug war, the Mexican drug cartels are considered the "greatest organised crime threat to the United States" according to a report issued by the United States Department of Justice.[5]

By all estimates Mexican grug cartels dwarf the size and wealth of the US financial sector.

If you think that the increasing level of penetration of Mexican mafia into the US is the result of external forces think again. In a way Reagan regime was a clear invitations for any self-respectful international crime syndicate to start operating in the US territory. And the exposition of crime that was a side effect of neoliberal counterrevolution in Russia has a distinct blowback effect in the USA. The same reasoning is applicable to various sophisticated financial crimes including computer related. What you expect unemployed or semi-employed for 300 dollars a month programmers to do to in order to provide a living for themselves and their families.

Neoliberalism and propaganda of amorality

As Will Hutton noted in The Guardian neoliberalism doctrine entail direct propaganda of amorality( Across Europe, political leaders have lost the trust of their people:

There was a time when to live a life virtuously was well understood. It embraced personal integrity, commitment to a purpose that was higher than personal gain, a degree of selflessness and even modesty. Those at the top may have got there through ruthlessness and ambition, but they understood that to lead was to set an example and that involved demonstrating better qualities than simply looking after yourself.

No more. Perhaps the greatest calamity of the conservative counter-revolution has been the energy it invested in arguing that virtue, whatever its private importance, has no public value. The paradox, the new conservatives claim, is only through the pursuit of self-interest can the economy and society work best. Responsibilities to the commonweal are to be avoided.

The retreat of virtue has become the plague of our times. Greed is legitimate; to have riches however obtained, including outrageous bonuses or avoiding tax, is the only game in town. But across the west the consequences are becoming more obvious. Politics, business and finance have become blighted to the point that they are dysfunctional, with a now huge gap in trust between the elite and the people.

In the USA it took more then three decade to eliminate morality and to establish "law of jungle" mentality in the population. In other countries such as Russia this process was much quicker and run deeper. And in no way this newly acquired level of criminally is reflected in incarceration statistics. Most of "neoliberal-style: crimes are financial crimes and as such they are difficult to direct and difficult to procedure. sometimes they are impossible to procedure either because of the political influence of the players or potential effect on the economy if particular persons and institutions are brought to justice. The latter factor was acknowledged by the US justice department.

Neoliberalism propagates criminal behavior by creating acute means-ends discrepancies and due to excessive cultural emphasis on monetary or material success goals ("greed is good" mentality) for members of society. At the same time mobility is restricted and majority of members of the society has no realistic chances to attain those goals. Still media brainwashing incites the desire more than they have. Success stories of going from rags to riches make the American Dream more believable, despite the fact that it is deeply and irrevocably fake. As this cultural meme is internalized it creates a strain, which combined with the culturally induced underemphasize on the proper methods, stimulates deviance of various types. If the deviant solution is successful (i.e., perpetrators are not caught or adequately punished), this adaptation may become normative for others in a similar social context. To the extent that this solution is available to them (demand for illicit goods or services, access to illegitimate opportunity structures), they may adopt this role model -- and may be expected by their significant others to follow this path. This process creates a vicious circle toward higher rates of deviance and widespread anomie under neoliberal regime. Anomie is a withdrawal of allegiance from conventional norms and a weakening of these norms' guiding power on behavior. This is caused by structural contradictions within the neoliberal doctrine and affects deviance in two ways. One is associated with strain, relative deprivation, frustrations, and the almost obsessive focus on goals. This makes deviance thinkable, as conventional norms are regarded as nonbinding, at least temporarily. Rationalizations enable departures from otherwise accepted/internalized social rules, as actors convince themselves that in their particular circumstances an exception is acceptable. Through interactive processes, techniques of neutralization and rationalizations contribute to a context in which newly socialized actors may adopt normative referents and deviant behavior as a matter of course. If "this is the way business is done around here," people may engage in price fixing or misleading advertising or insider trading or running a prostitution ring. While those criminogenic effects of neoliberalism became prominent in the USA as was demonstrated by 2008 financial crisis, when most of financial players involved were engaged is behavior that is deeply and irrevocably asocial and amoral. However, a very similar process is now being reproduced throughout the world. Promises are made that are not fulfilled. People's expectations are exalted at a time when economic and power asymmetries increase and become less justifiable and intolerable in the eyes of the people affected. The logic of the market permeates popular thinking and introduces rationalizations, making the adoption of a criminal or unethical solution more acceptable. This high criminogenic impact of globalization and neoliberal policies is extremely difficult and costly to reverse.

Moral relativism and concept of "Justice for some"

Moral relativism means that anything that helps to achieve the goal is moral. It was actually pioneered by Marxism in context of means to be used to achieve "proletarian revolution". It is a part of Randism as a ersatz version of Nietzschean Philosophy.

Corruption, facilitated by the credibility trap, is the biggest problem facing the West today. That is the real subsidy, the most debilitating entitlement.

It is the belief of the elite that the power of their office is an achievement that rewards them with the right to lie, cheat and steal, both for themselves and their friends.

Although it is most important to understand that they would be shocked and insulted if one uses those words, lie, cheat and steal, to describe what they are doing. They view themselves as exceptionally hard working, as obligated by their natural gifts and superiority.

Through a long indoctrination that starts sometimes in their families, but is most often affirmed in their elite schools and with their circle of privileged friends, they learn to rationalize selective moral behaviour not as immoral but as 'the entitlement of success.' And they are supported by a horde of morally ambivalent enablers who will tell them whatever they wish to hear.

There are one set of rules for themselves and their friends, and another set of rules for the rest.

Few who actually do evil consciously choose to be evil. They rationalize what they do in any number of ways, but the deceit often hinges on their own natural superiority, and the objectification and denigration of the other. We are makers, and they are takers. Although many may work hard, they see their own work as having special value and merit, while the actions of the others are inconsequential and unworthy.

Given enough time, their rationalizations become an ideology, desensitized to the meaning and significance of others outside their own select group. This supremacy of ideology empties their souls, and opens the door to mass privation and even murder, although rarely done by their own hands.

This is what Glenn Greenwald calls 'justice for some.' Or even earlier what George Orwell captured in the slogan, 'Some animals are more equal than others.'

And just to be clear on this, with regard to the Anglo-American political situation, the tragedy is not that just some are corrupted, which is always the case. The tragedy is that the Democrats and the Labor Party learned that they could become as servilely corrupted by Big Money as the Republicans and the Conservative Party, while maintaining the illusion of serving their traditional political base.

And it has rewarded them very well in terms of extraordinarily well-funded political power, and almost unbelievable personal enrichment afterwards.

In such a climate of corruption, political discourse loses the vitality of ideas and compromise for the general good, and take on the character of competing gangs and crime families, engaged in aggressive schemes and protracted turf wars, tottering from one pitched battle and crisis to another.

As Jesse put in his blog Jesse's Café Américain
"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.

And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious, organized hypocrisy.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

The problem which the modern world has not yet grappled is how to react to the rise of a global elite, which considers itself to be above national restraints, and a law unto themselves.

Their success has been propelled by the dominance of Anglo-American financialization, and the rise of oligarchies in Russia, China, Latin America, and India. Countervailing power has been co-opted and in many cases eliminated. Any opposition has become marginalized and isolated.

The new oligarchs are supported by fiat currencies of respective national goverements, which together the increase of insubstantial 'cashlessness' in wealth. The latter provides much greater ability to reallocate wealth.

Legal arbitrage

Legal arbitrage is a powerful instrument for transnational corporations to press government into compliance. As soon as government tries to impose some restriction on their operations they threaten to leave.

This behavior is by-and-large conditioned by the low price of oil. With price of oil above, say $200 per barrel, transportation costs became big enough to make this behavior less likely

Globalization and deregulation supports selective justice, to the extreme detriment of local legal regimes (outside G7), and individual choice and freedom. The new global elite consider themselves to be a new Arab sheiks, a law unto themselves, above what they consider subhuman restraint. Or using Nietzschean terminology, Übermenschen.

“Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn't succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today's super-rich are increasingly a nation unto themselves...

A multibillion-dollar bailout and Wall Street’s swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider—and not unreasonable—fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble."

Chrystia Freeland, The Rise of the New Global Elite

The Consequences of Neoliberalism in Third World Countries and xUSSR space: stagnation instead of growth

Being an implementation of the "law of jungles" on international scene with the USA as a 100 pound gorilla, the neoliberal regime has distinct criminogenic character both within the USA (unpunished financial crimes made by top management of leading Wall Street banks and investment firms) and, especially, in "newly liberalized" countries of former USSR ("a New Latin America"). Which is the main "sphere of influence" of international corporations from G7 countries.

Along with internationalization of economies and integration of elites there was internalization of organized crime and growth in sophistication of criminal methods of appropriation of wealth, including those used by international corporations.

In this discussion we will follow key points of the article Global Anomie, Dysnomie, and Economic Crime Hidden Consequences of Neoliberalism and Globalization in Russia and Around the World


TRANSNATIONAL CRIME HAS RECENTLY ACQUIRED A PROMINENT PLACE IN PUBLIC debates. It is commonly presented as the most significant Crime problem at the turn of the millennium (Myers, 1995-1996; Shelley, 1995). Many have even suggested that it represents a serious domestic and international security threat (Paine and Cillufo, 1994; Williams, 1994). The argument is also made that a wave of transnational crime undermines policies and the functioning of an increasing number of market economies around the globe (Handelman, 1995; Shelley, 1994). As a consequence, the proposed remedies are often quite drastic and involve undercover operations, privacy-piercing approaches, and the participation of intelligence services in the fight against global crime (Andreas, 1997; Naylor, 1999; Passas and Blum, 1998; Passas and Groskin, 1995).

Yet, little attention and virtually no systematic research has been devoted to understanding the causes, structure, extent, and effects of serious cross-border misconduct (Passas, 1998). The risks it poses may be grossly exaggerated (Naylor, 1995; Lee, 1999). The draconian measures being contemplated and implemented in different countries, therefore, are essentially an exercise in shooting in the dark. Chances are good that the target will be missed and substantial "collateral damage" may be caused by ill-conceived policies in this "war" on crime. This risk is particularly high in countries in transition toward a market democracy. It would be much wiser, thus, to carefully study the problem before taking ineffective and possibly damaging actions.

This article seeks to make a contribution by concentrating on the causes of transnational economic crime. The main argument is that, contrary to conventional wisdom, neoliberalism and globalization contribute to processes leading to global anomie, dysnomie, and, ultimately, economic misconduct. They do so by activating the criminogenic potential of economic, political, legal, and cultural asymmetries, as well as by creating new such asymmetries (Passas, 1999). These asymmetries cause crime by furnishing opportunities for misconduct, by generating motives for actors to take advantage of such opportunities, and by weakening social controls. More specifically, means-ends disjunctions are systematically created, as neoliberal policies foster new needs and desires that are all too often left unfulfilled. Promises of more freedom, prosperity, and happiness for a larger number of people have turned out to be chimerical. Economic and power inequalities have widened within and across countries in the last two decades . The number of poor has reached unprecedented levels, while welfare programs and safety nets are reduced or abolished. Enormous populations have become more vulnerable to exploitation, criminal victimization, and recruitment in illicit enterprises or rebel and fundamentalist groups. Normative standards and control mechanisms are weak or completely absent exactly when they are needed the most.

This article begins with some basic conceptual clarifications and outlines the theoretical framework so far applied to the analysis of U.S. organizational and individual deviance. Then, the main features of globalization and neoliberalism are presented, followed by a contrast of promises made by proponents of neoliberal policies and their actual consequences. Attention then shifts to specific criminogenic effects of these outcomes and the case of Russia, which illustrates the different stages in the processes leading up to serious misconduct and anomie. The chief policy implication of this analysis is that the recently unleashed forces of neoliberalism need to be reined in and held in check, while government policies ought to better shield the least privileged from the adverse effects of globalization.

Some Conceptual Clarifications

Although there is no universally accepted definition of transnational crime, many commentators seem to think of it as a globalized form of the stereotypical "organized crime." This, however, leaves out corporate and governmental crimes, whose effects can be far more harmful than those of "professional" criminals and ethnic groups involved in the business of illegal goods and services. We therefore need a definition that is inclusive enough without becoming too relativistic and subjective. For our purposes, transnational crime refers to cross-border misconduct that entails avoidable and unnecessary harm to society, is serious enough to warrant state intervention, and is similar to other kinds of acts criminalized in the countries concerned or by international law. Crime will be viewed as transnational when the offenders or victims are located in or operate through more than one country (Passas, 1999).

Globalization is another term that is often used without clear definition. In the simplest sense, it refers to a growing interconnectedness and multilateral linkages across national borders. According to Keohane and Nye (2000: 104), globalism is a state of the world involving networks of interdependence at multicontinental distances. The linkages occur through flows and influences of capital and goods, information and ideas, and people and forces, as well as environmentally and biologically relevant substances (such as acid rain or pathogens).

Globalism has several dimensions, such as economic, cultural, environmental, or military, not all of which take place at the same time. So, whenever globalism increases and becomes thicker or more intense, we can speak of globalization. When globalism decreases, we can speak of de-globalization.

Finally, the term "criminogenic asymmetries" refers to structural discrepancies and inequalities in the realms of the economy, law, politics, and culture. Such asymmetries are produced in the course of interactions between unequal actors (individual or organizational) or systems with distinctive features. All asymmetries contain some criminogenic potential. Durkheim argued that crime cannot be eliminated, because we are and always will be different from each other. Even in a society of saints, minor deviations would be considered serious offenses. In modern societies, crimes are those behavioral differences (asymmetries) that have been outlawed by legislative bodies. There is always the opportunity for powerful actors to victimize less privileged ones (economic, political, and power asymmetries). This potential is not always materialized. Criminal opportunities are not necessarily taken advantage of. Mostly this is because actors do not always seek or wish to make use of illegal opportunities. They may not regard such action as appropriate (due to socialization, internalization of norms) or fear adverse consequences. The criminogenic potential is most likely to be activated when opportunities, motives, and weak controls are all present.

For example, a combination of legal/regulatory asymmetries with economic and political asymmetries has given rise to a huge illicit market for toxic waste disposal. Many Third World countries either did not regulate toxic waste or did so much less rigorously than did industrialized states. This provided an opportunity for maximum-profit-seeking companies to getrid of their hazardous waste in areas where rules were lax or nonexistent (Center for Investigative Reporting and Moyers, 1990; Critharis, 1990). Power and economic asymmetries between rich and poor countries have led waste recipients to allow this to go on because of their dependence on foreign investment, the need for cash to service external debt, or the desire to create jobs (Korten, 1995). Economic and knowledge asymmetries also shaped the motivation of local participants in this questionable trade. The decision to go along reflects an incomplete understanding of the extent or nature of the hazard, their desperate need for additional income, an effort to be competitive and attractive to foreign companies (race to the bottom), or corruption.

Anomie and Deviance

Both Durkheim (1983) and Merton (1968) have stressed how high rates of deviance should be expected when social expectations are out of balance with realistic opportunities to reach the desired goals. According to Durkheim, this means-ends discrepancy is caused by society's inability to regulate people's naturally limitless desires. This problem was particularly acute in the commercial and business sector, in which anomie was chronic during the industrial revolution, opening up new horizons and undermining society's ability to contain aspirations. A similar situation can be observed in contemporary societies, where electronic, information, and biological technologies constantly redefine what is possible and break new ground.

According to Merton, unrealistic hopes and expectations are not simply natural, but socially constructed and promoted. Structural problems are at the heart of the means-ends disjunction. The U.S. culture and the ideology of the American Dream encourage lofty expectations, while society fails to provide equal access to legal opportunities. Meanwhile, there is a cultural overemphasis on success goals at the expense of normative behavior (as further elaborated by Messner and Rosenfeld, 1994). Both of these factors make for deviance and anomie.

Without ignoring the differences between the two sociologists, it has been possible to use an elaborated version of their anomie theories to explain corporate crime in the context of capitalist economies (Passas, 1990). Regardless of whether people strive for "more" due to natural drives or because of cultural encouragement, the point is that market economies cannot perform without lofty aspirations, consumerism, emphasis on material/monetary goals, and competition. All this leads to the pursuit of constantly moving targets and systematic sources of frustration. A synthesis of anomie theory with reference group analysis made clear how means-ends discrepancies are socially generated and experienced by people in all social strata. It also showed how this theoretical framework is applicable to the analysis of crime without strain or problems (i.e., anomie theory is not a strain theory) and to "organized crime" even after discrimination or blockage of legitimate opportunities no longer affects minority groups (Passas, 1997).

In brief, the dynamic social process leading to structurally induced strain, anomie, and deviance without strain is as follows. Means-ends discrepancies are caused by a strong cultural emphasis on monetary or material success goals for all members of society, while a good number of them do not have a realistic chance to attain them. Socially distant comparative referents are constantly introduced and sustained through the school, family, politics, workplace, media, advertising, and even religion (Passas, 1994). Regardless of their social background and the social capital available to them, people are urged to desire more than they have. Success stories of going from rags to riches make the American Dream even more believable. As this cultural theme is internalized, competitive forces and consumerism foster normative referents on what is "normal" and appropriate. The widely internalized egalitarian discourse clashes in practice with widespread inequality (power and economic asymmetries). Consequently, those m embers who fail to meet such comparative and normative standards are likely to experience relative deprivation and frustration. This strain, combined with the culturally induced overemphasis on goals and the concomitant under-emphasis on the proper methods, makes for deviance of various types (see Merton's typology). A good part of the deviance is an individual search for a solution to these structural problems. If the deviant solution is successful (i.e., perpetrators are not caught or adequately punished), this adaptation may become normative for others in a similar social context. To the extent that this solution is available to them (demand for illicit goods or services, access to illegitimate opportunity structures), they may adopt this role model -- and may be expected by their significant others to follow this path -- even though the original source of strain has by now been eclipsed. Unless effective control measures are taken, this process continues in a vicious circle toward higher rates of deviance and widespread anomie (for a schematic representation of this process, see Figure 1 at the end of the article).

In the literature, anomie is often conceptually confused with its causes or effects. To keep its explanatory potential, this mistake should be avoided. Anomie is a withdrawal of allegiance from conventional norms and a weakening of these norms' guiding power on behavior. This is caused by structural contradictions and affects deviance in two ways. One is associated with strain, the other is not. The former is caused by relative deprivation, frustrations, and the almost obsessive focus on goals. This makes deviance thinkable, as conventional norms are regarded as nonbinding, at least temporarily. Rationalizations enable departures from otherwise accepted/internalized social rules, as actors convince themselves that in their particular circumstances an exception is acceptable (Aubert, 1968; Sykes and Matza, 1957). Through interactive processes, techniques of neutralization and rationalizations contribute to a context in which newly socialized actors may adopt normative referents and deviant behavior as a matter of course. If "this is the way business is done around here," people may engage in price fixing or misleading advertising without experiencing any prior frustration or problem.

Globalization and Neoliberalism

These structural problems have been most prominent in the USA. However, a very similar process is now being reproduced throughout the world through globalism and neoliberalism. Promises are made that are not fulfilled. People's expectations are exalted at a time when economic and power asymmetries increase and become less justifiable and intolerable in the eyes of the people affected. The logic of the market permeates popular thinking and introduces rationalizations, making the adoption of a criminal or unethical solution more acceptable. The horizontal lines in Figure 1, rather than representing controlling influences, at the global level point to the criminogenic impact of globalization and neoliberal policies.

Nowadays, globalism and neoliberalism seem to be indistinguishable empirically or even conceptually (Cox, 1993; Stewart and Berry, 1999). Nevertheless, I think it is useful to try to separate them analytically. As noted earlier, globalism refers to the degree of interconnectedness and the increase or decrease of linkages. By contrast, neoliberalism refers to an economic and political school of thought on the relations between the state on the one hand, and citizens and the world of trade and commerce on the other. Because it espouses minimal or no state interference in the market and promotes the lifting of barriers to trade and business transactions across regional and national borders, it certainly becomes a motor of globalization.

Globalization in the last two decades shows clear signs of deeper and thicker interconnections that affect many more people than ever before. The effects are now much faster, as shown by the financial crisis in Thailand in 1997. The world has shrunk and become "one place," with global communications and media, transnational corporations, supranational institutions, and integrated markets and financial systems that trade around the clock (McGrew, 1992; Sklair, 1995). The cultural landscape has changed under the influence of mass media. Through their ads, TV programs, movies, and music, they contribute to cultural globalism, target young children, and foster consumerism (e.g., "Image Is Everything," "Just Do It," or "Coke Is It"). Information technology is making for "distant encounters and instant connections" (Yergin and Stanislaw, 1998). Fresh normative and comparative ideals are thus promoted, legitimated, and presented as attainable. Scholars attribute the momentum of this process to the forces of capitalism (Wallerstein, 1983), technology (Rosenau, 1990), the presence of a hegemon (Gilpin, 1987), or a combination of them all (Giddens, 1990).

Neoliberalism, in particular, has made a major contribution to the dynamic and contradictory processes of globalization since the elections of Ronald Reagan, Margaret Thatcher, and Helmut Kohl. During the 1950s and 1960s, the dominant concerns revolved around distributive justice, neocolonialism, and dependency theory. These were displaced in the 1980s and into the 1990s by discourses of "free markets," individualism, and self-help (Woods, 1999). Policies of deregulation, privatization of state assets, and removal of tariffs implemented the doctrine that the state should get out of the way of free enterprise. Unemployment, inequality, and poverty were no longer explained by structural contradictions or constraints. The problems became individualized and blamed on corrupt administrations or on the poor themselves. The proposed medicine was more liberalization of the economy, free competition, privatization of inefficiently managed government agencies, abolition of capital controls, and permitting foreign capital to enter all markets.

The ideological underpinning of globalization, thus, has been the primacy of economic growth, which is thought to be benefiting the whole planet. Consistent with that prime directive, country after country has been persuaded (or forced) to promote "free trade" and consumerism, to reduce government regulation of business, and to adopt the same economic model regardless of local specificities and differences between industrialized and developing countries (Bello, 1999; Mander, 1996).

More specifically, shifts in the North, the East, and the South have been quite remarkable. In the North, the welfare state that used to care for citizens "from cradle to grave" has been replaced by a "pay as you go" social service system. Even public utilities have been privatized and have begun to charge "economic prices," as former subsidization systems were abolished. Further, "industrial interventionism and labour protection have given way to laissez-faire; and tax systems whose major purpose was to correct inequalities have been transformed into systems mainly intended to promote incentives and economic efficiency" (Stewart and Berry, 1999: 151).

In developing countries, similar shifts took place as a result of hegemonic influences from the North. Western-educated Third World "technocrats" returned to their home countries eager to introduce neoliberal policies (Burbach et al., 1997: 86; Newsweek, June 15, 1992). As the bandwagon of liberalization took off, few countries wished to be left out. As a World Bank official warned, "lagging countries risk being left farther behind....For economies that remain inward-looking, the risk of being marginalized is greater than ever" (cited in Klak, 1998: 21).

Yet, the shifts have not always been voluntary. A host of measures and conditions consistent with the neoliberal agenda were imposed on countries through international institutions, such as the International Monetary Fund (IMF), the World Bank, the OECD, the European Union, the G7, etc. Countries drowning in external debt sought additional loans to pay off their older ones -- chiefly to banks from the industrialized world. Billions of dollars were made available to them, but only if they introduced Structural Adjustment Programs (SAPs). Despite important differences among the various economies, SAPs shared the same basic elements: long-term "structural" reforms to deregulate the economy, liberalization of trade, removal of restrictions on foreign investment, promotion of an export orientation of the economy, wage reductions and controls, privatization of state enterprises, and short-term stabilization measures such as cutbacks in government spending, high interest rates, and currency devaluation (Bello, 1996 ; 1999).

Changes along these lines also took place in the East, where the switch from state-managed economies toward "free market" and parliamentary democracy has been quite drastic and swift (Glinkina, 1994; Woods, 1999). The problem is that the introduction of global neoliberalism has brought about enormous economic and political asymmetries, as its promises and theoretical expectations remain unfulfilled.

The Promises of Global Neoliberalism

The supporters of global neoliberalism make a series of claims. For instance, the world is shrinking following greater connectivity (IBM claims to offer "solutions for a smaller planet"). The distinction between core and periphery states is presumed to be getting fuzzier and irrelevant, as there are only winners from now on. Investment, trade, and development opportunities are more widely distributed around the world. There is a marked convergence into one world economy, in which everyone can find a market niche. Media and cultural influences are more widespread and multilateral, as foods, music, and art are imported to the North and integrated into local cultures. Finally, people are more integrated thanks to telecommunication technologies and immigration (Klak, 1998).

To [neoliberal] economists, all these trends are positive, even if short-term hardship is deemed necessary for some parts of the population. Global welfare is expected to be enhanced, as the forces of free competition within and between countries will encourage more efficient resource allocation and bring about higher productivity (Oman, 1999). A more open, trade-creating world should, therefore, benefit everyone, if unevenly. Trickle-down effects of wealth creation would ensure that virtually everyone will participate in this welcome trend (Korten, 1996).

The objective of SAPs was to render developing economies more efficient, drive up growth rates, and provide foreign exchange that could be used to repay debt. Higher growth rates are empirically associated with comparatively more equal income distribution (Alesina and Rodrik, 1994). Hence, neoliberal policies would bring about not only more economic growth, productivity, a better division of labor (multistate production and wider participation), lower unemployment, more wealth and prosperity, but also more democracy, less poverty, and fewer inequalities. Unfortunately, in most countries, these virtuous circles did not occur.

The Consequences of Global Neoliberalism

Throughout the world, the expectations raised by neoliberal theorists have not materialized despite the extensive application of their policy recommendations. Instead, most economies "fell into a hole" of low investment, decreased social spending and consumption, low output, decline and stagnation. Both the World Bank and the IMF retreated from SAPs and acknowledged their failure (Bello, 1999; Katona, 1999; Multinational Monitor, June 2000; Watkins, 1997).

In the North, GDP growth was lower in the 1980 to 1990 period than in the 1950s and 1960s. We also witness a higher volatility in growth (e.g., booms and busts). Lost in all the talk about huge technological advances ushering in the computer and Internet era is the fact that productivity growth now is half that of levels in the 1950s and 1960s. Unemployment in OECD (Organization for Economic Cooperation and Development) countries has risen from eight million in 1970 to 35 million in 1994. In the midst of U.S. prosperity and economic expansion, inequalities increased. The number of people living under the officially defined poverty level grew from 11.4% of the population in 1978 to 13.5% in 1990. Almost one in four new babies in the U.S. are born into poverty, while the top one percent of Americans saw their real income shoot up by 50% (Levy, 1998; Wilterdink, 1995). Also noteworthy is that U.S. and Western European international trade relative to GDP was greater a century ago than in recent years (Hirst and Thompson, 1996).

Neoliberal dreams proved to be even more chimerical in the South. Role models, like South Korea, Malaysia, and Indonesia plunged into crises in the 1990s. Mexico and Brazil, which faced their own scary periods, experienced growth of three percent in the last two decades, whereas that rate was six percent during the dirigiste period of 1950 to 1980. Wage gaps widened. Even in Costa Rica and Chile, models of success in Latin America, the results have been an unmitigated disaster for the lower social classes. The number of Costa Ricans below the poverty line rose from 18.6% in 1987 to 24.4% in 1991, while 42% of all Chileans are also living in poverty (Burbach et al., 1997: 86). Half of the investment flows to developing countries went to just three countries (China, Mexico, and Argentina). In addition, some investments had negative local effects. For instance, as diverse agriculture was converted into monocultures or to export-oriented flower plantations, self-sufficiency was undermined (Clinard, 1990; Klak, 1 998).

Moreover, the core-periphery distinction is as relevant as ever. Its real meaning relates to power, authority, and the accumulation of wealth, where the gaps (asymmetries) are increasing. Although production (of certain items) is more dispersed, the concentration of power, control, and benefits has become more pronounced. In 1991, 81% of the world stock of direct foreign investment was in the core triad of the USA, the European Union, and Japan -- up from 69% in 1967. The appearance of integrated markets also obscures the fact that 80% of all world trade is within the core triad, in which resides less than 20% of the planet's population (Hirst and Thompson, 1996; Klak, 1998).

In Latin America, debt jumped from $230 billion in 1980 to $600 billion in 1997. Capital had been fleeing those countries up to the early 1990s, when net inflows were the result of casino capital -- seeking short-term gains and likely to abandon those countries at the first hint of trouble. Consequently, new debts were created with a new round of borrowing (Robinson, 1998-1999). An important reason why developing countries cannot pay off their debt is that trade protectionism in the North has kept them from penetrating those markets. Trade liberalization has been inconsistent in that rich countries demand more open markets abroad, while continuing to subsidize their own economic sectors, such as agriculture (Andreas, 1999; UNDP, 2000; Watkins, 1997). Compounding these problems, aid to poor countries has been cut back. Whatever assistance is offered comes with strings attached, including the reduction of state intervention, which could have softened the effects for the most vulnerable (Watkins, 1997; Woods, 1 999). These policies further undercut food security, cause poverty, and increase economic and power asymmetries. For instance, the cost of living in the Caribbean and the U.S. is quite comparable. In 1997, however, per capita income in Trinidad and Tobago, the richest Caribbean state, was less than half that of Mississippi, the poorest U.S. state. The gap between skilled and unskilled workers widened even more: Haitian workers made clothing with Disney logos for less than 60 cents per hour, while Disney's CEO made $9,700 per hour (Klak, 1998).

The claim of multilateral and even cultural influences also masks tremendous asymmetries. Even though we listen to reggae in the North, 95% of TV programs in St. Lucia come from the U.S. The most widely read newspaper in the Caribbean is the Miami Herald. Consequently, U.S. affluence and opportunity, often romanticized, is especially well-known, deeply ingrained, and alluring to the Caribbean...[where] people are prone to set their living standard goals in accordance with what the U.S. media ascribe to the United States. And the imbalance in media flows is increasing with the Caribbean's economic crisis and neoliberalism, as local media have been slashed (Klak, 1998: 11).

As dreams of consumption are disseminated, 86% of total private consumption expenditures is accounted for by 20% of the world's people in industrialized countries (UNDP, 1998). For the people who live outside the consumption geographical area, big banks offer credit to only 10% of the people in developing countries, whereas ads for credit cards and consumer items are omnipresent (Barnet and Cavanagh, 1994). Well over one billion people are deprived of basic consumption needs. For hundreds of millions, basic sanitation, clean water, adequate housing, and health services are unattainable luxuries. Two billion people live on less than two dollars a day and 1.3 billion on less than one dollar a day (ICFTU, 2000). Struggling to survive, some decide to sell their body parts to make ends meet, which is the ultimate symbol of commodification (ScheperHughes, 2000).

A negative effect of the Internet is that it alters the relationship between our place of residence and our cultural preferences, experiences, and identities. A spreading global virtual reality disconnects locality from culture, weakens the bonds to particular communities, and estranges people from each other (Minda, 2000). Ladakh, a Himalayan province that prospered for a millennium despite harsh weather conditions, illustrates how (especially cultural) globalization devastated local communities (Norberg-Hodge, 1996). In 1962, isolated Ladakh was linked to the rest of India by an army-built road. The modernization that began in 1975 took about a decade to change the pride Ladakhis felt until then into a collective inferiority complex. Tourism and the media conveyed a picture of wealth, technology, power, and work that was alien and irresistible to them. Village life by comparison began to appear "primitive, silly, and inefficient" (Ibid.: 35). Ladakhis felt ashamed of their culture and strove for consumer items that symbolize modern life, such as sunglasses and Walkinans. As Western educational standards penetrated Ladakh, the intergenerational learning experience that helped them provide for themselves in their rough terrain gave way to schools that used texts imitating Indian and British models that were completely irrelevant to their lives (e.g., figuring out the angle of the Tower of Pisa and learning how to keep a London-like bedroom tidy). There used to be no such thing as a "paying job"; there was no money economy. Gradually, however, unemployment -- previously nonexistent -- became a serious problem, because naturally available resources were abandoned, cheap imports made local farming redundant, and people flocked to the cities to compete for scarce jobs. Radios and TVs chased away the traditions of singing together and group story telling. The points of reference ceased to be real people living nearby, but geographically and socially remote ideals. Consumerism bred new "needs," which could hardly be materialized. Family and other bonds disintegrated and divisions emerged between old and young, Buddhists and Muslims. The result was unprecedented violence, community breakdown, and anomie.

Criminogenic Effects: Systemic Strains and Global Anomie

What makes the ideology of the American Dream unique is a focus on money and material goods, a strong emphasis on "winning" (often, by all means), and success for everyone in a society where many opportunities for material advancement are available and plenty of "rags to riches" stories lend legitimacy and credibility to the egalitarian discourse. Legal opportunities, however, for achieving the lofty goals are inaccessible to most Americans. In such a consumption-driven culture, which highly values competition and individualism, the means-ends disjunction has entailed a significant criminogenic risk, much greater than in the rest of the world. Crime has been the flip side of economic growth, innovation, and better living standards for certain segments of the population. What sheltered other countries from this negative potential were things absent or minimized in the USA, such as rigid social stratification, low rates of social mobility, less materialism and time spent before TV boxes, safety nets for the underprivileged, more emphasis on other priorities (e.g., solidarity), etc.

This made it possible to explain the higher crime rates in the U.S. compared to other developed or developing countries. These protective factors, however, are now being gradually lost. Disjunctions between socially induced goals and legal means are few in societies that do not encourage high social mobility. In such societies, people may not feel that they are lacking anything, even when they are "objectively" deprived. Economic or other asymmetries are unknown or not experienced and perceived as intolerable. Global neoliberalism breaks down societal barriers and encourages new needs, desires, and fashions. It promotes the adoption of non-membership reference groups for comparisons that can be unfavorable and upsetting. New normative reference groups define what is "cool" to do. People's ideals in the South and the East may not be about getting from "a log cabin to the White House." However, they are being systematically driven to abandon old ways and values in order to consume. They do not necessarily think that they can be "like Mike," but they do fancy those pricey athletic shoes. So, fresh normative and comparative models create new "needs," together with the expectation that the fulfillment of such needs is vital and achievable.

Yet, as needs and normative models are "harmonized," people become conscious of economic and power asymmetries, and directly experience their impact. Globalization and neoliberalism heightened this awareness, further widened the asymmetries, and fostered the interpretation of them as unnecessary and changeable. In the end, most people realize that the attainment of their lofty goals and lifestyles is beyond reach, if they are to use legitimate means. The success in spreading neoliberalism has brought about a series of failures: more poverty, bigger economic asymmetries, ecosystem deterioration, slower and unsustainable growth patterns. At the time that societies most needed the shield of the state to cushion these effects, welfare programs, safety nets, and other assistance to the poor (individuals, companies, and states alike) forcibly declined or disappeared. Thus, global neoliberalism systematically causes relative deprivation as well as absolute immiseration of masses of people. In effect, it has generated new sources of criminogenesis and removed existing antidotes to it.

All this provides multiple motivations for criminality, as many would turn left and right for solutions and illicit opportunity structures become more international and accessible. At the same time, many weak states lose their autonomy, come to depend more on international organizations and transnational capital, and are unable to cope with emerging crime threats from criminal enterprises and powerful corporations. So, globalism and neoliberalism replace the "egalitarian discourse" of the American Dream in the scheme represented in Figure 1 in a process occurring in the industrialized world, developing countries, and those in transition from Communism to market democracies. Nowhere are these results more clearly visible than in the former USSR.

The Case of Russia

No one argues that there was no appetite for consumer goods in the years of the USSR or that such goods were widely available. Crime, corruption, illegal markets, and even underground factories could be found behind the official facade of the command system before glasnost and perestroika, although black marketers were not numerous and lived modestly. The government turned a blind eye to these activities, because they served as a safety valve in an inefficient system (Gleason, 1990; Handelman, 1995; Naylor, 1999b). Discontent, enormous structural problems, and an inability to deal with them characterized the pre-transition years. This is particularly true for the 1960s, when Khrushchev pledged that the USSR would overtake the U.S. in the production of industrial goods by the 1980s. Yet, as inefficiencies precluded such progress, demands for more consumer items "from an increasingly educated, by now self-assured, population, started to put pressure on a loyal expression of the citizens' request for the gradual delivery of promised well-being" (Castells. 2000: 25).

In the 1990s, however, the rates of fraud, prostitution, drug trafficking and abuse, alcoholism, smuggling, white-collar crime, violence, and corruption skyrocketed (Castells, 2000; Handelman, 1995; Holmes, 1997; Lee, 1994; Shelley, 1994). To be sure, Russia is unique in the degree of chaos and disintegration that accompanied the transition to a market economy and the implementation of neoliberal reforms. Few countries have experienced the speed and intensity of privatization, deregulation, and the lack of political leadership and administrative skills we witness in Russia. Indeed, it is the closest we can come to a social state of anomie, without a total collapse and anarchy. This does not mean that Russia is atypical. Very similar, albeit less intense, processes have occurred throughout the world (Lee, 1999; Mander and Goldsmith, 1996; van Duyne et al., 2000). Nevertheless, precisely because it is such an extreme case, it illustrates the theoretical points made here and the process toward anomie and economc crime.

Enter Neoliberalism

In the 1985 to 1989 period, reforms took place while the Communist Party was still in control. The Law on Cooperatives (1986) and the Law on Individual Labor Activity (1987) paved the way for further reforms, such as legalization of small businesses in 1989. Between 1990 and 1991, the USSR Supreme Soviet, with Yeltsin as chairman, introduced laws that made state and private enterprises equal, allowed state companies relative independence from government managers, abolished mostrestrictions on property bought by citizens, promoted privatization, and allowed foreign companies to operate in Russia. Such reforms did not take place at the same pace throughout the USSR. This set Russia apart from the Union and Yeltsin from Gorbachev. Legal asymmetries made the task of law enforcers impossible, as they did not know which laws to prioritize and apply (Afanasyef, 1994). Up to the 1991 coup and the collapse of the USSR, reforms were cautious and gradual, and had not challenged the core of the command economy system. F ollowing the failed coup and under Yeltsin, however, this changed dramatically. Demagogy and erroneous judgments on the feasibility of a swift transition to a market democracy compounded the problem. The Russian government was warned of the dire consequences of a speedy transition to a market economy without previous establishment of the necessary institutions and legal infrastructure. The chairman of an international advisory committee, which repeatedly issued warnings in 1992, was told that "forces in the Kremlin" favored a less "regulatory approach that would provide greater freedom of manoeuvre. Gaidar, supported by the IMF, believed firmly in the intrinsic capacity of market forces to remove obstacles by themselves, and people could use their vouchers to acquire shares" (Castells, 2000:188). Prices were liberalized, imports and exports became free, domestic trade restrictions were abolished, government intervention was minimized, and public property was massively privatized. By June 1994, officials were self-congratulatory over the fact that 70% of state assets had passed into private hands (Kuznetsova, 1994).

New Normative and Comparative Referents

The reforms initiated by Andropov and Gorbachev (perestroika and glasnost) allowed some freedom of speech and openness that let globalization and media influences into the USSR. The post-1991 changes, however, offered new hope out of the severe problems people were facing. Russian leaders fostered heightened aspirations by declaring that the country would soon be modernized and join the "civilized world." Authorities in the former Soviet republics made the same promise, arguing that '"since we gotrid of the Russians,' all obstacles to prosperity have been removed and Western standards are within reach" (Burbach et al., 1997: 118). There were forceful and impressive presentations of consumerist lifestyles as "desirable," "modern," and feasible. Distant comparative and normative referents were thus promoted by the media and advertising. Indeed, the yearning for Western lifestyles and consumption items made the initial acceptance of neoliberalism by the population much easier (Ibid.). Neoliberalism strengthened that desire and made consumerist dreams appear realistic. Even young Russians now would like to be like Mike and wear the same type of shoes or eat the same breakfast. As Glinkina (1994: 385) put it, an important factor contributing to the criminalization of the economy has been "a drastic stratification of the population's standard of living with a simultaneous loss, in a considerable part (especially among the youth), of socially important goals --replacing them with consumption ideals...."

It must be noted that the normative shift was far more radical in the former USSR and Eastern Europe than it was in Third World countries. The transition from socialism to capitalism by overzealous authorities espousing the new dogma of neoliberalism has had its own direct anomic effects, as will be seen below.

The Consequence: Means-Ends Discrepancies

The worldwide consequences of neoliberal policies were replicated in Russia. However, the effects have been far more disastrous than elsewhere: lower productivity, high unemployment, much steeper inequalities, increased levels of absolute poverty, disappearance of familiar safety nets, and administrations paralyzed by ineptness and corruption. The ensuing means-ends discrepancies are far more than a theoretical construct. They are painfully experienced by large numbers of people who realize that they simply cannot attain their goals. Within one year, inflation wiped outmost people's life savings, while the buying power of most wages dropped to the level of the 1950s. In the winter of 1993, funds were often insufficient to heat residential buildings (Burbach et al., 1997; Handelman, 1993).

As a new bourgeoisie emerged from the ashes of the Communist regime, one-third of the population became impoverished. The gap between the rich and the poor opened up suddenly and grew out of proportion. Official data indicate that in 1994 the difference between them was elevenfold. Researchers argue that the difference between the top 10% and the bottom 10% is 28-fold (Kuznetsova, 1994). Even the chair of the Privatization Commission admitted that the process created "pauper-proprietors" who "cannot survive without state protection" (cited in Burbach et al., 1997: 120).

Relative and Absolute Deprivation

The rising expectations of the 1960s led to disenchantment with Communism and paved the way for radical social change. The abandonment of the Soviet conservative model and very rapid implementation of neoliberal policies fueled hopes that a much better future was within reach. Russians rejected rigid stratification and strove for a socially mobile ideal. As has been noted, [the middle classes] believed that capitalism could offer even more. Thus, the modernization that had been promised by the neoliberals was perceived by the majority of the population as the modernization of consumption.... The Western model of consumption has finally triumphed, at least in the main cities. But for the majority of the people, the price is that even the former Soviet way of life has become an unattainable dream (Burbach et al., 1997: 124).

The aspiring yuppies have ended up as "dumpies," while a growing polarization makes them see a few of their compatriots enjoy luxuries attained by looting the remnants of the former USSR.

Thus, the post-Soviet Russian dream turned out to be a nasty nightmare (Handelman, 1995). As happened in many other countries, austerity, belt tightening, and lower (in some cases, no) salaries were imposed as consumerism took hold. The impact of these experiences on personal feelings is much more widespread, intense, and unpleasant due to the higher expectations. Even people who are not objectively deprived now feel relatively deprived. Comparisons between their present and past situations are unfavorable: "Formerly privileged sections of the Russian population, such as teachers, doctors, miners, and workers in the oil and gas industry, went on strike, for they could no longer survive on 50 to 70 dollars per month salaries" (Burbach et al., 1997: 125-126).

East-West political and administrative asymmetries, economic asymmetries, and relative deprivation in the aftermath of the collapse of the USSR and disillusionment with Western policies and capitalism have been clearly criminogenic (Handelman, 1994; Shelley, 1994). Motives for various types of crime became abundant, illegal opportunity structures multiplied, and control systems have been seriously damaged and undermined. The Mertonian category of "conformity" has almost become a rarity, as crime rates increased sharply. Even worse is the problem of economic crime. Recorded economic crimes rose almost 23% during the first seven months of 2000, compared with the same period in 1999 (Radio Free Europe/Radio Liberty, August 17, 2000). Strains and discontent have translated into a range of predatory misconduct, corruption, political violence, a variety of illegal markets, and expressive misconduct.

Search for Solutions and Anomie

In this context, many can be expected to "innovate," to employ illegal methods for survival or the satisfaction of their basic and newly acquired needs. Methods range from petty property crimes and prostitution to criminal enterprises and white-collar crime, depending on the social position of the offender. An electronics engineer, for example, could not live on his three dollars per month and moonlighted as a taxi driver. When his taxi broke down, he turned to selling poppy straw (OGD, 1996). Unpaid and depressed professionals with access to more valuable commodities, such as nuclear material, pose an even more serious threat (Lee, 1999). Consumerist teasing increased demand for goods made unavailable (e.g., cars or electronics) by the economic collapse, fueling smuggling operations, black market networks, and associated illegal enterprises. Shortages of other desired goods are artificially created by quickly adapting entrepreneurs.

Similar conditions outside Russia explain the illegal car trade between Eastern and Western Europe (van Duyne et al., 2000) and the illegal trade in various commodities between China and Hong Kong before unification (Vagg, 1992). In Russia, many took advantage of such supply-demand asymmetries, including the vory v zakonye (commonly described as "thieves in law"), who had been the dominant type of professional offenders in the USSR. Structural changes and globalization, however, brought about more competition from ethnic groups (Armenians, Azeris, Chechens, Georgians, etc.) in drugs and arms trafficking, as well as from loose and ad hoc associations of criminals in certain locations or industries. Unsettling reports assert a symbiotic relationship between criminal groups and active or retired intelligence officials. Deteriorating economic conditions have facilitated recruitment for employees in growing illegal markets. Criminal enterprises, for instance, have "...invested heavily in the opium business, financing much of the new cultivation by hiring peasants and even entire villages to plant and protect the poppy crops" (Lee, 1994: 401).

Another source of criminal opportunities sprang from the disintegration of institutions and the disarray in law enforcement. Legitimate businesses are exposed to blackmail and other criminal victimization, but the authorities are unable to assist them. Consequently, many domestic and foreign companies deal with criminal groups and seek their protection, rather than rely on the government (Lee, 1994). Not surprisingly, the majority of Russian experts consider the strengthening of criminal groups to be a "very significant" social consequence of the market reforms introduced in 1992 (Afanasyef, 1994).

Other illicit opportunities were furnished by the privatization process, such as selling state assets at extremely low prices or driving down the prices of privatized companies so as to cheaply purchase vouchers owned by individuals desperate to make ends meet. Privatization in countries with an existing bourgeoisie and experienced managers and entrepreneurs facilitated certain corporate crimes and abuses of power by respected professionals. In Russia, the mix of offenders was different: former company directors, the nomenklatura, professional criminals, and new entrepreneurs with a black market background (Glinkina, 1994; Kuznetsova, 1994; Shelley, 1994). The attempt of former Communist officials to dominate this field did not prove lasting. Many were not competent to run private businesses and had to sell them or lose control. The main beneficiaries seem to be former black marketers and outsiders to the old order (Naylor, 1999b). The abuse of privatization has had an anomic effect as the impunity of offenders became widely known, to the point that Russians began to refer to privatization (privatizatsiya) as prikhvatizatsiya, which means "grabbing" (Handelman, 1995: 104).

Crime and corruption in the midst of privatization fervor are not unique to Russia. (On other previously Communist states, see Popescu-Birlan, 1994; on Latin America, see Saba and Manzetti, 1996-1997.) As a former World Bank official put it, "everything we did from 1983 onward was based upon our new sense of mission to have the south privatized or die; towards this end we ignominiously created economic bedlam in Latin America and Africa" (cited in Katona, 1999). Another similarity with other parts of the world is the degree of authoritarianism that accompanied neoliberal policies. While stimulating rapid accumulation of private capital, the role of the state is reduced to implementing financial austerity. When people started to oppose such measures, "Yeltsin resorted, with Western support, to establishing a semi-authoritarian regime. Making Russian 'reformers' invincible to political and legal challenges inside the country contributed to further criminalization of the Russian State, which acquired an oligarchic character" (Beare, 2000:6). As similar processes occurred around the world, from Pinochet's Chile to Suharto's Indonesia, one wonders if such reforms would have been possible in a democracy.

Legal organizations also "innovate" by cutting corners and breaking the law due to the environment created by unsystematic legal reforms. Unable to navigate a sea of legal gaps and inconsistencies, "...most managers of private as well as state-owned enterprises cannot run their businesses without committing crimes" (Afanasyef, 1994: 437). Many companies cannot handle the competitive challenges generated by globalism and require state protection. The subsidization of privatized companies, however, introduces further regulatory and price asymmetries that foster the smuggling of goods across newly created borders within the former USSR (see below on nonferrous materials). Enterprises that do not enjoy state intervention are at a disadvantage and may be forced into bankruptcy or crime as a last resort. This is analogous to the situation in all countries that abolish trade barriers, let transnational corporations in, and eliminate preferential treatment for domestic industries.

High-level corruption and banking crimes have become quite common, as the networks of mobsters, financiers, businessmen, and high-level officials extend beyond Eurasia (Beare, 2000). The ongoing investigations into billions of dollars (possibly IMF-provided funds) laundered through the Bank of New York have expanded to include British, Swiss, and Italian entities and actors.

Moreover, pyramid schemes and other frauds have devastated gullible investors, as is the case with other post-Communist countries. Independent Oil, Lenin Trade and Financial Corporation, Aldzher (a security corporation), and other companies defrauded more than a million depositors and investors. Just as the Lincoln Savings and Loan frauds were committed in midst of obsessive deregulation in the U.S. against "the weak, the meek, and the old," Russian pensioners have been the main fraud victims (Glinkina, 1994).

Economic asymmetries among countries produce another set of criminal opportunities, as many become strongly motivated to flee the problem and search for a better future in the West, where the "goodies" are available. However, neoliberalism has promoted the free movement of everything but labor. Quotas and restrictions in promised lands generate demand for illegal services such as the smuggling of humans (Chin, 1999). This leads to opportunities for criminal exploitation, corruption, child/cheap labor, slavery, and forced prostitution.

Women, who are increasingly breadwinners but make up two-thirds of the newly unemployed in Russia, are even more vulnerable in this respect. Economic desperation drives many of them to prostitution or high risk taking. Lack of opportunity makes Russians and East Europeans softer targets for human traffickers. They are more likely to be lured to the West with promises of well-paying, respectable jobs only to end up blackmailed, beaten up, and forced into prostitution (Bruinsma, 1999; Shelley, 1994). The same problems faced by Thai, Mexican, and other women in the U.S. have led to a public hearing before the House Subcommittee on International Operations and Human Rights (September 14, 1999).

Relative deprivation and experience of injustice have a revolutionary potential too. International communications convey the message that injustice and inequality are avoidable. Events in one corner of the earth affect feelings and encourage people elsewhere to rebel against aggression. This may inspire change and foster rebellion. Just as the ideals of the French Revolution led to rebellions in the Balkans against the Ottoman rule (Hovannisian, 1994), the independence of the Baltic states and the U.N. response to Iraq's invasion of Kuwait inspired the East Timorese to fight against the Indonesian autocratic rule (Dunn, 1994). The uprising of Zapatistas in Mexico was deliberately started on January 1, 1994, the day NAFTA went into effect, "as a highly symbolic way to protest neoliberalism and globalisation in Mexico and Latin America" (Robinson, 1998-1999: 123-124).

Repressed nationalism, globalism, and bad times have jointly contributed to several armed conflicts and rebellions in the former USSR (the Caucasus, Moldova, Crimea, Tajikistan, and Chechnya). Rebellion and illegal markets become interconnected, as armed conflicts necessitate training, weapons, intelligence, and financing. The cases of Chechnya, Tajikistan, Afghanistan, and Colombia show how political revolts are associated with corruption, money laundering, the traffic in arms, drugs, and even nuclear material and other crimes that go unpunished (Kuznetsova, 1994: 445; Lee, 1999; Naylor, 1999b; OGD, 1996). Chechnya, which survives thanks to donations from criminal organizations based in other parts of Russia, has become such a paradise for these activities that some depict the war there as "a crusade against a 'mafia republic,'" while others think of it as "a conflict between opposing criminal elites for the control of oil and the financial resources held by the government in Grozny" (Politi, 1998: 44).

Finally, "retreatism" is the only option left to those lacking access to illegal opportunities or who are unwilling to assume the associated risks of violence and arrest. Hence, expressive crimes could be expected. More important, the rates of alcohol and drug abuse (further facilitated by the decriminalization of drug use in Russia in 1991) increased geometrically, especially in the cities, and fueled the demand for things provided in illegal markets (Lee, 1994; OGD, 1996).


The transition from a command to a market economy practically legalized large parts of the black market and made legal business dependent on criminals' protection. The dismantling of borders and increased contact among previously isolated ethnic groups contributed to the formation of new, wider networks of illegality (Politi, 1998). The result was that one could hardly tell criminals from businessmen, particularly when some outlaw groups act on instructions from government officials or the police (Handelman, 1993). Given official efforts to ensure that the transition to a market economy would occur before substantial opposition could build and that the changes would be irreversible, too many shady actors were allowed to take advantage of this official shield (Glinkina, 1994; Naylor, 1999b). In this light, common views on government-criminal interfaces and symbiosis are plausible, although difficult to prove. Surveys in 1994 showed that the concern of Russians over organized crime was second only to their fears of triple-digit inflation (Afanasyef, 1994). At the perceptual level, therefore, this interface is real and has real consequences: demoralization and anomie.

The corrupted process of privatization has generated widespread rationalizations, such as, "it is OK to steal from the state" or "everyone is doing the same thing." Taking an example pointing to international security risks, Lee (1999: 21) has noted that, "perhaps the most serious problem is the growth of a privatization mentality within the nuclear complex. Economic reform has meant a license to steal. This has resulted in broad systemic corruption and a variety of insider threats and conspiracies."

An additional sign of anomie is what has been described as a "culture of urgency" among young killers:

For them there is no hope in society, and everything, particularly politics and politicians, is rotten. Life itself has no meaning, and their life has no future.... So, only the moment counts, immediate consumption, good clothing, good life, on the run, together with the satisfaction of inducing fear, of feeling powerful with their guns (Castells, 2000: 210).

Only effective social controls can halt the process toward further deviance and a higher degree of anomie (deviance without strain). Unfortunately, in Russia and elsewhere, a decreased level of autonomy for certain states, the increased power of international organizations and transnational corporations, and dysnomie add to the fuel.

Dependence, Deregulation, and the Race to the Bottom

"Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?" "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.... I've always thought that underpopulated countries in Africa are vastly under-polluted; their air quality is vastly inefficiently low compared to Los Angeles or Mexico City" (1991 memo attributed to World Bank official Lawrence Summers, who later became U.S. Secretary of Treasury; it is widely believed that he did not write it, even though he has accepted responsibility for it. At any rate, this illustrates the neoliberal mindset).

The loss of autonomy and reduced sovereignty of the state relative to capital referred to earlier (Korten, 1996; Watkins, 1997) is particularly acute in the former Communist countries. Speculative capital will quickly flee each country at the first sign trouble or wavering over neoliberal reforms. External debt grew in all former Communist countries, but especially in Russia, which bears the marks of Africa-like dependent capitalism and "colonial subjugation. The country exports fewer and fewer industrial products and more and more raw materials. Meanwhile, it imports low-quality mass consumption goods, obsolete and hence cheap technology, luxury items and radioactive waste" (Burbach et al., 1997: 120-121). An instance of the direct and blatant interference of foreign governments and transnational corporations in domestic matters was when Chase Manhattan urged the Mexican government to crush the Zapatista rebellion to calm down U.S. investors (Silverstein and Cockburn, 1995; see also Clinard, 1990).

Ironically, the higher degree of dependency in the South and East has lowered the accountability of politicians and corporations. They can now blame globalization for the loss of jobs and lower wages, and prescribe more "efficiency," deregulation, short-term austerity, and declining levels of public spending so as to keep capital in place or attract more. Thus, economic and political leaders appear to be protectors of the public interest and a stabilizing force, while they dismantle existing safety nets (economic neoliberalism has also undermined political liberalism; Klak, 1998).

The Russian government's aversion to regulation (Glinkina, 1994) is observable in other countries, where deregulation turned into competitive deregulation and a race to the bottom. Even in the U.S., the savings and loan disaster and the asymmetric regulation of hazardous wastes demonstrate how criminogenic this process has been. This made it possible to dump legally in Pennsylvania what was prohibited in New Jersey, in what has been termed "crimes without law violations" (Passas, 1999). Such crimes are most likely in the global context given the overwhelming influence of TNCs over national laws and macroeconomic policies. This has prompted some to speak of "rationalized corporate colonialism" (Mander, 1996). Such asymmetries of power make for legal norms that allow overseas that which is, for good reason, criminalized in the base country (e.g., toxic waste dumping, testing drugs on humans, bribery, tax evasion, as well as the patenting of life forms by biotechnology companies and other outrageous practices) (see King and Stabinsky, 1998-1999; Shiva, 1997). The legal asymmetries and uneven power of transnational corporations that create or perpetuate these and other asymmetries give rise to crimes without law violations. Thus, entire countries become vulnerable to victimization by TNCs, a significant problem that is often neglected in conventional discussions of transnational crime. The volatile combination of low wages, bad working conditions, tax breaks only for the rich/corporations, lower environmental standards, deregulation, and less corporate and political accountability with the government relegated to the protection of the international free trade system has predictably made for crises (e.g., Korea, Malaysia, Indonesia, Mexico, and Brazil). It also makes for dysnomie.

Dysnomie and Further (Global) Anomie

Dysnomie literally means "difficulty to govern" and obtains when the following three conditions are present: a lack of a global norm-making mechanism, inconsistent enforcement of existing international rules, and the existence of a regulatory patchwork of diverse and conflicting legal traditions and practices. Russia is in this respect a microcosm that reflects what is happening in the entire world.

Since reforms took place at an uneven pace in each Soviet Republic, an asymmetry grew wider following the collapse of the USSR. In addition, this collapse suddenly created thousands of miles of new borders that had to be policed, just as state resources were diminished. This made for porous borders that offered no resistance to smugglers. This is how Estonia became the largest exporter of nonferrous materials, even though it does not produce any (Glinkina, 1994). Extensive legal changes accelerated the transition to a market economy, but they were marked by inconsistencies and lacked the necessary legal and institutional infrastructure (Handelman, 1995). For example, the law against private entrepreneurship and commercial mediations was repealed only on December 5, 1991. The law against black market transactions, which defined them as "the buying up and reselling of goods or other items for profit-making," was first amended in February 1990 to increase penalties for certain offenses, was then officially rein terpreted to refer only to trade in commodities sold at state-fixed prices (October 1990), and was finally repealed in February 1991 (Afanasyef, 1994: 429). Lack of resources made the problem worse, as underpaid, ill-equipped, and outgunned police could not be expected to do an effective job.

Weak controls allow criminals to get away and to regard themselves as successful. Deviant "solutions" came to be seen as keys to "success." Successful deviance then becomes a normative referent, contributing to a wider normative breakdown and overemphasis on goals at the expense of normative means. In the context of massive cultural shifts -- from the criminalizing of private profit and the hiring of labor outside the household to making them central values for a new social order -- the sense of right and wrong became fuzzy. As the deputy minister of Internal Affairs admitted at a 1992 press conference, "even our specialists find it difficult to determine the legal from the illegal -- to determine, for instance, what is profiteering and what is honest trade" (cited in Handelman, 1993). Corruption grew so much that up to 30% of illegal gains are reportedly paid to government officials (Glinkina, 1994; Lee, 1999). In the end, distinctions between white-collar crime, organized crime, corruption, and legitimate business are almost impossible to make. Lawbreaking behavior and success are fused. As a businessman told Handelman (1995: 139), "the truth is, everything you see around you, all our success, is not thanks to our wonderful economic laws. It's thanks to the fact that we do not obey them."

Dysnomic conditions also bring about anomie at the global level. As argued elsewhere (Passas, 1999), international law is more essential now than ever for the maintenance of world order and security. Yet, big powers are reluctant to contribute to the required pooling of sovereignty and have been blocking the development of an international criminal code and specific legislation to restrain their corporations. Dependent on rich countries for its operations, the U.N. has not been overly aggressive in pursuing these aims or in establishing a permanent international criminal tribunal. Globalism has thus run ahead of the creation of a desperately needed normative and enforcement infrastructure.

Existing international laws are applied selectively and never against one of the permanent members of the U.N. Security Counsel. This ad hoc approach and the extraterritorial application of national laws undermine the legitimacy of current laws and procedures. We are left with a legal patchwork of inconsistent and conflicting rules. An example of the effect of such asymmetries is the secrecy and anonymity available in certain jurisdictions that hinder investigative work by covering the tracks and proceeds of global offenders, de facto shielding them against prosecution and punishment. By exploiting the cracks between diverse state rules, companies continually commit crimes without law violation. Globalism also leads to a relativization of norms and facilitates law violations with a clear conscience (rationalizations and techniques of neutralization).

Finally, the border-policing problem in the former USSR is not unique, even if the underlying causes were specific to it and other European countries (Yugoslavia, Czechoslovakia). More generally, borders become porous, as technology and mobility enabled people, money, goods, and ideas to travel quickly and cheaply. Criminals can take advantage of this shrinking world, but law enforcement agencies are constrained by parochial laws and procedures. Though the reasons for the porousness may differ, the process and results are the same.


Tremendous structural strains have overwhelmed even the usually patient and submissive Russians. The economic situation deteriorated further, hopes were dashed, opportunities for criminal gain and for looting the USSR's assets multiplied, and the anomic societal context offered no assistance to anyone seeking to restore some law and order. In Russia and around the world, the neoliberal operation was successful, but the patients are being systematically frustrated, are starving, and subject to exploitation by corporations, criminal enterprises, and corrupt politicians. In short, globalization and neoliberalism spread analytically similar criminogenic processes that were once unique to the U.S. culture of the American Dream in a context of structural inequalities. Just as the world supposedly became freer, wealthier, more democratic, more enjoyable, and more equal, people find themselves poorer, more exploited, and facing increased hardships. Just as the need for strong normative guidance grows, norms break down or lose their legitimacy. Just as effective controls become necessary to slow down or stop the vicious cycle leading to higher rates of crime, a dysnomic regulatory patchwork remains in place largely because of nationalist insistence on sovereignty and states' unwillingness to allow the introduction of common principles and law enforcement mechanisms.

Two main points need to be reiterated here. First, it appears that global neoliberalism and serious crime go hand in hand. However, it would be erroneous to argue that stereotypical organized criminals are giving capitalism a bad name and undermining neoliberal policies. The implication is that, were we to rid ourselves of some very bad apples, everything would be fine. Rather, it appears that serious organizational misconduct is a consequence of such policies. Second, when we discuss transnational crime, we should bear in mind that it is not just the stereotyped ethnics who cause most problems. It may be that the biggest threat emanates from legitimate corporations and other organizations.

Detailed discussion of policy implications is beyond the scope of this article. The horizontal arrows in Figure 1 hint at the points of possible policy intervention. Myriad concrete ideas can be found in the literature, ranging from legal changes to informal controls, grass-roots movements, integration of economic growth with environmental and social protection, relocalization of production and consumption, etc. The most important ray of hope, however, is implicit in the foregoing analysis. Neoliberal policies and globalization are largely the fruit of (some) governments. They affect and are affected by governance. Therefore, governments have the ability to reverse some of these processes and to mitigate their adverse consequences. Otherwise, the current processes of globalization and neoliberalism will prove to be unsustainable and at a huge cost.

Neoliberal globalization as a catalyst for the rise of ultra-nationalism and neo-fascism

In 2014 a lot of people here condemned excesses of Ukraine nationalism, especially the part of Galician nationalism the has clear neo-fascist flavor and that now attempts to colonize South and Eastern Ukraine in a kind of replay of Drang nach Osten.

But rise of nationalism is a pan-European phenomenon now. And it is observable in almost any county, including but not limited to France, Germany, Poland, Hungary, Greece, and even UK.

Is not this is a (somewhat pervert) reaction to excesses of neoliberalism and neoliberal globalization? In other words is not the key side effects of neoliberal globalization is the rise of ultra nationalist and neo-fascist movements all over the world?  Many researchers think that yes (Globalization, ethnic conflict and nationalism Daniele Conversi -

The force of nationalism has spread well over the nineteenth century into the age of globalization. There are thus parallels between modernization and globalization as sti-mulating factors for nationalism and ethnic conflict. Although the reach of globalizationis historically unprecedented, some of its features accompanied the rise of modernity andthe advent of the modern nation state. In particular, both resulted in the demise of older boundaries and the construction of new ones. Whereas industrialization destroyed localand regional boundaries by superimposing national boundaries on them, globalizationdestroyed national boundaries by superimposing a plethora of supra-national and corpo-rate networks on them, including mafias, organized crime, and multi-national corpora-tions (MNCs), none of which are as easily identifiable on a political map as sovereign, countries still are. The adoption of planetary rules to comply with the standards set by the International Monetary Fund (IMF) and the World Bank has unsurprisingly resulted in global disempowerment, at least according to the perception of influential NGOs activists (Korten 2001).

Has all this also led to a decline in national identities? Not at all. Partly because nationalcultures have been seriously damaged or reshaped by globalization, we have seen a global intensification of ethnic belligerence. Moreover, the formation of new elites and the spread of capitalist wealth have led to nationalist self-assertion, while cultural impoverishment spurred a generalized need for compensatory ethnic assertiveness.

... ... ...

If nationalism cannot be explained independently from the onset of modernity andmodern state-making, both are enmeshed in the expansion of warfare. Nationalism manifested itself in an era of inter-state competition, the collapse of boundaries, economic expansion, mass migration, general insecurity, political centralization, obsessivelaw-making, societal policing, and drastic militarization, finally leading to war. In them eanwhile, the Pax Britannica ensuing Waterloo provided the impetus for colonialexpansion while fomenting inter-imperial rivalries and competition (Conversi 2007).Thus, just as Europe was accumulating wealth, power, and armaments in anticipation of the unprecedented conflagration, its global economic reach affected broader and broader areas of the world. Economic competition and destructive warfare were just beingexported beyond European borders. Linda Colley notes:

the profit and the price of this hundred-year partial European peace was unprecedented Western, and especially British, freedom to concentrate on global empire. In 1800, the European powers, together with Russia and the United States, laid claim to some 35 percent of the globe’s total land area. By 1914 [their] proportion of the globe … had risen to 84 percent (Colley 2002:311).

By 1914, the West had also accumulated enough economic wealth and weapons of mass destruction to unleash the greatest manslaughter in human history. The totalitarian era following the First World War has been described as the culmination of a pattern of mass dislocation founded on modernity (Arendt 1958; Bauman 1989). As we shall see later, the emergence of totalitarianism in Europe coincided with the first wave of deep Americanization, including the triumph of Hollywood, cigarette consumption, the car culture, and other US products meant for mass distribution.

... ... ...

The expansion of nationalism throughout the globe is hence the spreading out of aWestern idea. In other words, nationalism is an essential component of Westernization.As I have argued, nationalism cannot be understood outside the devastating impact of modernity, particularly industrialization, with its demise of traditional lifestyles, skills,cultures, and communities (Gellner 2006). Such a devastation was suciently all-pervasiveto argue that the victory of nationalism represented the victory of a surrogate sense of community, which for some was a colossal
‘ fraud’ (Gellner 2006) or an invented tradition (Hobsbawm 1983). Thus, for Gellner the nationalists spoke in defence of a hypo-thetical Gemeinschaft, but actually practiced the construction of a novel Gesellschaft, the two being largely incompatible. For both Gellner and Hobsbawm nationalism was not much less than a form of cultural
brainwashing. For others, the whole process was not only counterfeit, it was based on the conspiracy of emerging rapacious economic and political elites, which used selected elements of popular tradition while invoking nationhood, just as populists often invoke the defence of the people. For instance, the role of secret societies like the Italian carbonari is a widely known and omni-present feature of nineteenth-century century mobilization. Secret paramilitary groups of patriots played a pivotal role in the spread of most nationalist movements. Karl Marx’s characterization of nationalism as a form of false consciousness manipulated by the bourgeoisie is a well-known example of this conspiracy approach. Traditionalist, anarchical, conservative, and even liberal approaches often share similar views of nationalism as a strategy of elites. The broader trend is often known as instrumentalism(Smith 1998),because it emphasizes the mere instrumentality of nationhood. Nations do no exist assuch; they are simply cultural tools in the hands of elites or proto-elites who seek to mobilize the masses on the basis of an emotional appeal to a common but fictitious nationality.

As we shall see, in its current shape cultural globalization is often understood as a one-way importation of standardized cultural items and icons from a single country, the United States of America, to the rest of the world regardless of the fact that most of theitems are actually made in China. For many, globalization is synonymous with Westernization (la Branche 2003, 2005, Latouche 1996) or, more accurately, Americanization.The international consequence of Americanization is a widespread sense of cultural insecurity vis-à-vis an unfathomable force that nobody seems capable of containing(Amin 2004). Because this perception has been so far unable to produce organized, rational and universal responses, it tends to express itself through visceral, rudimentary,and unpredictable forms of anti-Americanism (Barber 1995).

Former Secretary of State Madeleine Albright showed insights about the US full-spectrum dominance cultural policy when she said that Cultural factors play a pivotalrole in many of the international challenges we face
our cultural programs are central -- and I underline that —  central to the success of American foreign policy
(Albright2000). Once out of office, she adopted a more cautious position, considering the risks and damages infl
icted by extreme forms of Americanization. For Bacevich (2002), the economic openness implicit in neoliberalism produces a form of globalization that is inevitably synonymous with Americanization, since it is predicated on a national security approach founded on global dominance.


Situation with neoliberalism in the USA now is an almost perfect illustration of the credibility trap. One cannot allow the illusion to falter, even a little, to the bitter end. And as the fraud fades, the force intensifies, becoming almost rabid in its deflection. Because that illusion has become the center of a hollowed people's being, their raison d'être, a mythological justification for their existence. Chris Hedges made an apt analogy with The Fall of Berlin 1945

I came across a nice, compact interview with Chris Hedges which illuminates his thesis of the decline of the American Empire and the illusions and the end of rational thinking that accompanies it. Empires seem to give off quite a bit of flash in their latter stages, rather like the last gasp of a dying star.

The interviewer, Allan Gregg, does a particularly nice job of drawing Hedges out.

I would like to add an observation I came to in thinking further about the Sophie Scholl piece which I put up earlier today. Perhaps there is something about gardening that focuses the mind.

The almost frenetic preoccupation and adherence to the Nazi ideology in the latter stages of the war, when it was obvious to any rational observer that they could not win, is remarkable. I had been particularly struck in my reading some time ago with the 'wolf packs' of Nazis who had raged through Berlin, rounding up old men and even boys who had not joined the Volkssturm, and hanging them, even while the Russians were shelling the Reichstag. It never made sense to me until today.

"The radio announced that Hitler had come out of his safe bomb-proof bunker to talk with the fourteen to sixteen year old boys who had 'volunteered' for the 'honor' to be accepted into the SS and to die for their Fuhrer in the defense of Berlin. What a cruel lie! These boys did not volunteer, but had no choice, because boys who were found hiding were hanged as traitors by the SS as a warning that, 'he who was not brave enough to fight had to die.'

When trees were not available, people were strung up on lamp posts. They were hanging everywhere, military and civilian, men and women, ordinary citizens who had been executed by a small group of fanatics. It appeared that the Nazis did not want the people to survive because a lost war, by their rationale, was obviously the fault of all of us. We had not sacrificed enough and therefore, we had forfeited our right to live, as only the government was without guilt."

Dorothea von Schwanenfluegel, Eyewitness account, Fall of Berlin 1945

I was reminded of this phenomenon by the trial of Sophie Scholl, and her words to the judge Roland Freisler, as he ranted his virulent condemnations at them. 'Soon you will be in our place,' she said to him. He did escape the hangman's noose at Nuremburg, but only by virtue of an Allied bomb in 1945. When his body was brought to hospital an orderly remarked, 'It was God's verdict.' He was buried in an unmarked grave, without ceremony and unmourned. Much like his beloved Fuhrer.

This is an almost perfect illustration of the credibility trap. One cannot allow the illusion to falter, even a little, to the bitter end. And as the fraud fades, the force intensifies, becoming almost rabid in its deflection. Because that illusion has become the center of a hollowed people's being, their raison d'être, a mythological justification for their existence.

If the ideology had been a lie, then they are not heroes and gods on earth, but monsters and criminals, and their life has been self-serving and meaningless, without significance and honor. And that is the credibility trap.

And this is the US financial system today.

So the legitimacy of neoliberalism is gone since events of 2008 and consequences of this epochal event are still unclear. As chances that the USA will get rid of neoliberalism voluntarily are slim, we might be present in a crush of yet another empire. That might mirror the destiny of the USSR which fell when its ideology became delegitimized. With the key difference that the USA elite is much more aggressive and ready to use whatever means possible to preserve its status when it is under threat.

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[Aug 31, 2015] The Case for Realism in the Social Realm

"...So there is nothing to choose. Current economics consists of political economics, which is scientifically worthless, and theoretical economics, which is logically and materially inconsistent. Luckily, Jackson Hole shows: economists are clueless but never speechless."
"...We will understand that there are real social processes, mechanisms, and powers; that they derive from the actions and agency of actors; and that these processes can be traced out through fairly direct sociological and historical research. And we will understand too that claims about the reality of "capitalism", the world financial system, or fascism are to be understood less weightily than they first appear. Capitalism exists in a time and place; but it is understood to be an ensemble of relations and actions by the people of the time."
Aug 31, 2015 | Economist's View

RC AKA Darryl, Ron -> djb...

[Yes, I know mine is exactly 6.25 inches because I measured it, but I can only guess that yours is shorter because there is no way that I am ever going to measure it :

Egmont Kakarot-Handtke said...

Always clueless, never speechless
Comment on 'U.S. Inflation Developments'

For a dispassionate observer Stanley Fischer's speech and the tidal wave of blog comments makes it pretty clear that there is an intellectual black hole where something like a true economic theory should be.

There is absolutely no use in entering into the morass of conflicting nonsense. Here are two fixpoints to secure some orientation.

• Inflation theory has never risen much above the commonplace Quantity Theory. The QT is plausible but ultimately untenable. The correct formula for the overall price level is given here details see (2015, eq. (12)).

• Alternative macroeconomic approaches like Krugman's IS-LM are fundamentally flawed since Keynes and Hicks (2014) without any economist ever spotting the provable formal defect.

So there is nothing to choose. Current economics consists of political economics, which is scientifically worthless, and theoretical economics, which is logically and materially inconsistent. Luckily, Jackson Hole shows: economists are clueless but never speechless.

Egmont Kakarot-Handtke

Kakarot-Handtke, E. (2014). Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It. SSRN Working Paper Series, 2392856: 1–19. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL

RC AKA Darryl, Ron -> RC AKA Darryl, Ron...

[WOW! Typepad really screwed up that post. Here is what it dropped.

Keynes' definitions are debatable. I am in no way advocating the comment from yesterday's 'U.S. Inflation Developments' thread that I copy here nor its linked academic papers. I am actually defending Little's poorly written paper on this thread because there is a cogent point buried in his muddled over elaborated treatise on the distinctions between physical and social sciences. After reviewing the following and considering the sources of the actual "metrics" used in macro (e.g., interest, GDP, unemployment) then you might ask whether formalization or usefulness are the more important goals for macroeconomics.

For my part, then I find no fault in a heuristic approach as long as we know where we are trying to go. I am a huge fan of Keynes.]

RogerFox said...

"First, there are no theories in the social sciences that have the predictive and explanatory success of the physical sciences ..."

That admission necessarily puts the sword to social science theorizing, including interventionist macro, as an ethical guide to real world decision-making - the intervenors themselves admit they don't know whether the consequences of their interventions will make things worse or better.

Away with all the charlatans who insist on meddling anyway.

ilsm -> RogerFox...

Admission? Nah!

But there are no pentagon theories for war that can be relied upon.

See Vietnam, Iraq three times, Afghanistan.......

Fox admission only applies if you ignore reality.

djb -> RogerFox...

Yes RogerFox

Daniel Little who represents all people who have ever studied economics has let the cat out of the bag

That economists don't know anything

We were all hoping no one would notice, but of course, you are too sharp for us

Now of course it is probably too difficult for your shrunken brain to understand that your laissez faire philosophy is an economic concept, the results of which be studied and tested

But that's alright you got us

DAMN !!!

Peter K. -> RogerFox...

"interventionist macro,"

How can macro not be interventionist? In the middle of Krugman's latest blog post, he writes:

"What determines where we end up on that curve? Monetary policy. The Fed sets interest rates, whether it wants to or not — even a supposed hands-off policy has to involve choosing the level of the monetary base somehow, which means that it's a monetary policy choice."

"the intervenors themselves admit they don't know whether the consequences of their interventions will make things worse or better."

Not so, it's often easy to judge result.

What is Mr. Fox's school of thought? Know-nothingism? The Austrian school?

Peter K. -> Peter K....

"The immigration of large numbers of Irish and German Catholics to the United States in the period between 1830 and 1860 made religious differences between Catholics and Protestants a political issue. Violence occasionally erupted at the polls. Protestants alleged that Pope Pius IX had put down the failed liberal Revolutions of 1848 and that he was an opponent of liberty, democracy and Republicanism. One Boston minister described Catholicism as "the ally of tyranny, the opponent of material prosperity, the foe of thrift, the enemy of the railroad, the caucus, and the school."

"The origin of the "Know Nothing" term was in the semi-secret organization of the party. When a member was asked about its activities, he was supposed to reply, "I know nothing." Outsiders called them "Know-Nothings", and the name stuck."

One can imagine an old-timey Donald Trump railing against Irish and German immigrants.

Lafayette said...

{We will understand that there are real social processes, mechanisms, and powers; that they derive from the actions and agency of actors; and that these processes can be traced out through fairly direct sociological and historical research. And we will understand too that claims about the reality of "capitalism", the world financial system, or fascism are to be understood less weightily than they first appear. Capitalism exists in a time and place; but it is understood to be an ensemble of relations and actions by the people of the time.}

Good point.

Capitalism is a mechanism, a tool. All outcomes depend upon how it is employed in a given socioeconomic context.

Have all property owned by the state, then all profits will also be owned by the state, since individuals will receive only income. Of course, they tried that (calling it commune-ism), and it worked very badly.

Having property owned by individuals is just as bad if said properties generate Income that trickles-up to Wealth, then is used to manipulate political outcomes that favor uniquely a certain class of individuals. (Which, for lack of a better word, we can call "Plutocrats".)

Who then, because they think they are good-parents, leave their riches to their children thus extending dynastically the inherent Income Disparity into Wealth Disparity. That's not the case? Then why does Domhoff show this class breakdown of Net Worth (Wealth - Debt) in 2010:
Top 1% Next 19% Bottom 80%
35.4% .....53.5% .....11.1%

No wonder the relatively poorer classes remain poor. Because if you don't have the educational qualifications (vocational, college, university) to scramble into the next class breakdown (the 20Percenters), then forget of any pretense to an existence without constant worry about how solid your job-prospects will be throughout your lifetime.

And, with that, any social coverage for either illness or pension, etc. - ad nauseam.

ilsm -> Lafayette...

Capitalism is a tool [scam] to keep useful fools asking for more flogging.

likbez -> Lafayette...

"Capitalism is a mechanism, a tool. All outcomes depend upon how it is employed in a given socioeconomic context."

I think outcomes can be by-and-large predicted from the form of social relations capitalism enforces. Looks like Marx prediction about increasing misery of the proletariat (or bottom 80%, if you wish) holds, despite temporary reversal of the trend in 1945-1985.

Yes, the current form of capitalism which is neoliberalism is a tool, but it is a tool only for financial oligarchy. The tool of oppression to be exact.

For workers of Asian sweatshops and Mexican maquiladoras and probably for a large part of Americans who face shrinking working hours (with the redefinition what full employment means -- now it does not mean 40 hours a week) and push into contractors without any social protection and McJobs, it is more of a prison then a tool.

Here we get into the concept of countervailing force. Without countervailing force capitalism inevitably degrades into horrible, comparable with feudalism and slavery level of oppression of human beings. And in a way it creates such forces by the mere fact of its existence. In this sense the collapse of the USSR, while improved fortunes of top 20% in the USSR region, was a huge blow to lower 80% of Americans.

Despite Margaret Thatcher pronouncement about TINA, now mankind (including large part of commenters of this blog ;-) is trying to find another viable countervailing force that can held neoliberalism in check.

Very high oil prices might do the trick, as they will reverse globalization but they also can lead to the collapse of Western civilization as we know it.

Some countries, like several in Latin America, try to revive elements of socialism on a new (post USSR crash) level, some elements of religious fundamentalism (with the most strong trends in Islam and Catholicism), some like Russia and China -- elements of state capitalism.

But those development should be probably be understood in the context of the reaction on neoliberalism, not as completely independent developments.

EugenR said...

You speak here about Social sciences about economic factors that drive the society, about the political power in the society, and out there it is not relevant at all. Out there in the other half of the world, which is banging on the doors of your world, the main agenda is tribalism, cultural and ethical belonging.

The leading agenda of these people, in the other half of the world is the faith in their local tribal myths. Their myth is not about God and submission to it, but about conspiracy theory of being victims. Victims of whom? Not of political and spiritual leaders from their tribes, who dragged them to the desperate existential problems. Not against the belief system, that pushes them to legitimize self imposed slavery, submission to the cruelest authority, and above all faith causing self imposed ignorance to knowledge. They don't see themselves victims of those among them, who by using force and violence, actively oppose learning and adaptation of modern teachings about social justice, political correctness, ethical systems of morality, legality, equality, fraternity.

No! They will chose to be stuck in their old belief system familiar to them. Ancient tribal stories full of contradictions, indoctrinating and legitimating hatred, murder of the different, slavery, inequality, female discrimination, minority suppression, racism, etc. All these values, that created the political social systems and brought all this destruction in their homeland, from where they try in these days to run away, still remains to be THEIR value system. They will blame all the "others" who caused them their misery. The European colonists, the US Imperialists, the Zionists, the infidels, the homosexuals, the women exposing their natural beauty to admiration of man and women, the atheists, the scientists who still stick to their rational way of thinking, etc. But most of all will be hated those who gave them hand, when they most needed it, the humanitarian volunteers, because they are the first others, whom they encounter, when they exited from their burning world of destruction, and hate.

They will start a fight against all the ideas of Western philosophers from Descartes to the post modernists, who seemingly successfully brought to the awareness of most of the "Western world" population the idea of human-centralism, following the disastrous WWII caused by similar myth imitators . After they settle down in their now homes, they will not torn their "Holly books", indoctrinating hate and violent action against the humanists, who put in front of their God the human being. They will not torn the burqa, the symbol of women's submission to arrogant male domination upon the women. Their spiritual leaders, when they will stand up in their legal or illegal houses of "GOD", and point to those who have to be hated. And it is not to hard to guess who they will be.

RC AKA Darryl, Ron -> EugenR...

Colonialism breeds reactionary radicalism among indigenous souls. On a grand scale nations do eventually reap a bit more than they sewed. Call it karma for lack of a better word.

EugenR -> RC AKA Darryl, Ron...

You are right, colonialism was a creepy, disastrous idea, even if at certain stage of human history it helped in the development of human understanding of the realities of the world. In the late nineteen century it became a very lousy business, and partially brought the first world war. Still to blame the Western colonialism that ended more than 50 years ago, for all the misery of Africa and the Arab world is just self deception...

ilsm said...

Observations on economics are blurred by the con artists and snake oil salesmen ruining civil society.

Observer and instrument effects are symptoms.

Peter K. said...

"If this is the approach we take, then our claims about what is "real" in the social realm will be more modest that some have thought. We will understand that there are real social processes, mechanisms, and powers; that they derive from the actions and agency of actors; and that these processes can be traced out through fairly direct sociological and historical research."

It's all shorthand. What needs to be kept in mind is that words and phrases are shorthand and don't really capture the concept or "real thing" they are relating between the person who employs them and the listener or reader. Math and equations too obviously are shorthand. You can follow the word or phrase with qualifying sentences to specify and clarify what you mean by it.

So when we talk about inflation, or full employment or "real" full employment or potential GDP or the Wicksellian Natural Rate or expected inflation, they are often contested concepts because they are shorthand and don't apply in an obvious manner to something "real" out there we can touch.

Because of all of this, people disagree on some basic ideas about the social realm. Monetary policy doesn't work they say. Fiscal policy doesn't work they say. Even if most of the smart, objective, honest, knowledgeable people you meet - or dead authors you read - say otherwise.

Just look at Mr. Fox. Language (shorthand) and contestable ideas bend easily to those under the influence of power, privilege and money.

[Aug 31, 2015] China can ride out this crisis. But we're on course for another crash

"...Conclusion: dramatic market fluctuations of the past few weeks were primarily irrational !! Most losses have already been recouped and for all of the sound and fury, corrections appear to be marginal, not precipitous."
"...There is every reason to fear more fallout from casino capitalism"
"...A dysfunctional model of capitalism, built on deregulation, privatisation and low wages, crashed and burned seven years ago. But the fallout from that crisis is still ricocheting around the world, from Europe to the "emerging economies", as the attempt to refloat a broken model with cheap credit inflates asset bubbles and share buybacks – or enforce it with austerity – fuels new crises."
"...That's one reason why the anti-austerity movement and the demand for economic alternatives is growing across Britain, Europe and the US. The elites so evidently don't know what they're doing, even as they rake in the spoils. "
"...Steve Keen, for example, saw the 2008 crash coming, and continues to provide very good, reasoned analysis about what continues to occur."
"...Is it the West's fault?

In this case, a resounding yes. West caused this crisis by promoting and exporting neoliberal capitalism, a system that thrives on instability. You can regard it as a virus infecting the organism of interconnected world economy."
"...First, we all know that markets have been rigged since QE was introduced to pull the Establishment's irons out of the fire. But surely there is an uncomfortable paradox in the knowledge that, in this latest saga, while the world's greatest totalitarian regime was signally unable to rig its market, conversely it took only a day for the great champion of free market capitalism to do so?"
"...In 2013, 45.3 million people (14.5 percent) in the USA were in poverty."

Aug 30, 2015 | The Guardian

Market mayhem is the product of the aftershocks of 2008. No wonder calls for alternatives are growing

It may not yet be the moment to get in supplies of tinned food. That was what Gordon Brown's former adviser during the 2008 crash, Damian McBride, suggested on Monday as stock markets crashed from Shanghai to New York and $1tn was wiped off the value of shares in one day. But seven years after the collapse of Lehman Brothers brought down the global financial system and plunged half the world into a slump, it's scarcely alarmist to see the financial panic as the harbinger of a new crisis in a still crippled world economy.

The market gyrations that followed "Black Monday" this week and the 40% drop in the value of Chinese stocks since June have only underlined the fragility of what is supposed to be an international recovery. For all the finger-wagging hubris of western commentators over the fact that the latest mayhem has erupted in China, this is a global firestorm. And after three decades of deregulation punctuated by financial crises and a systemic meltdown, there is every reason to fear more fallout from casino capitalism.

Financial markets pumped up with credit and quantitative easing to keep the real economy afloat are in any case ripe for a crash – or "correction", as the market players like to call it. The only question is how far and fast they go – and how great is the price paid by the rest of us.

Paradoxically, Beijing may be better placed than others to ride out this storm. China's economy is slowing down, as it shifts from export-led growth to consumption. But it's still growing at 7%, nearly three times as fast as Britain and the US, which are supposed to be the west's current star performers. Even if China's figure is overstated, its growth is still at least double the Anglo-American rate: the kind of economic problem the rest of the world would be happy to have.

That follows three decades when Chinese growth averaged 10% a year, delivering the fastest economic development and reduction in poverty in world history – as well as rising inequality and environmental degradation. But China's stock market is small compared with its western equivalents and relatively insulated from the rest of the economy.

Despite its huge private sector, China is still a hybrid economy, dominated by state banks and publicly owned corporations. That means its financial system is shielded from the impact that a stock market crash on this scale would have in a western-style private banking system.

China rode out the 2008 crash by pumping public investment into the economy, delivering 78% growth between 2007 and 2014, while the US managed 8%. That has left it with a huge debt pile, estimated at 282% of national income, which some now believe will bring China's economy to a juddering halt.

But that is mostly debt between state-owned institutions, so there is no basis for a speculative Lehmans-type collapse. In fact, some of the problems China is now facing as it tries to bring the stock market crisis under control, such as capital outflow, stem from the liberalisation urged on it by the World Bank and its own home-grown would-be oligarchs.

There is every reason to fear more fallout from casino capitalism

China's room for manoeuvre would certainly be much narrower if it had gone for their full deregulation and privatisation package. But the main drag on the Chinese economy isn't the failings of its own economic model, but stagnation in the rest of the world. Global trade suffered its largest contraction since 2008 in the first six months of this year, partly as a result of the ongoing crisis in the eurozone. Eight years after the financial crisis erupted in the US, its aftershocks are still being felt across the world.

A dysfunctional model of capitalism, built on deregulation, privatisation and low wages, crashed and burned seven years ago. But the fallout from that crisis is still ricocheting around the world, from Europe to the "emerging economies", as the attempt to refloat a broken model with cheap credit inflates asset bubbles and share buybacks – or enforce it with austerity – fuels new crises.

That is what has been played out across financial markets this week, in which China has been a transmission belt rather than the motor. Any idea that the western economies that generated stagnation have been fixed is not serious. Their recoveries have been the slowest on record and interest rates remain at a historic low – because owners of capital are prepared to invest in anything except the productive economy. The likelihood must be that this stagnation continues indefinitely, punctuated by financial upheavals. Without far-reaching change in economic policy, they can be expected to trigger crises that will tip western economies, and others, back into full-blown recession.

That's one reason why the anti-austerity movement and the demand for economic alternatives is growing across Britain, Europe and the US. The elites so evidently don't know what they're doing, even as they rake in the spoils. In such a context, calls for large-scale public investment, ownership and quantitative easing for the real economy made by Labour's leadership frontrunner, Jeremy Corbyn, look far more realistic than the business-as-usual offered by his rivals.

If the current market chaos turns into another crash, the demand for much stronger measures will become unstoppable.

the_thoughtful_one 29 Aug 2015 06:47

well said article - and in the BBC news the ex Sainsbury's boss attacks a living wage - while he earns 176 times that wage and hardly presided over a great Sainsbury's did he - because their share price dropped 30% after his shift, his foundations

and they still pay 3p/hr less than Tesco after a 4% pay rise so you can see this was forced on the company

people of his ilk "ARE" the problem.

HeinzH 29 Aug 2015 06:37

With todays capitalism ,which derailed under Thatchers/Reagans reign,the problem is not deregulation and privatisation but looting of the economy.Free hands to the bank establishment has given us a never ending criminality in the markets and a rising number of extremly rich people in the industrialized world.Is it that difficult to understand that the amassment of riches amongst the already rich is no way for creating a just and sustainable society?

soundofthesuburbs 29 Aug 2015 06:26

The timeline for the collapsing global economy.

Japanese banks had been on a maniacal lending spree into real estate and the bubble popped in 1989. Rather than own up to losses and admit their bankers were fools, they covered up the problems with loose monetary policy.

Japan then had the rest of the world to trade with that was still doing well but it never really recovered.

US banks went on a maniacal lending spree into real estate and the bubble popped in 2008. Rather than own up to losses and admit their bankers were fools, they covered up the problems with loose monetary policy.

US banks used complex financial instruments to spread this problem throughout the West.

"It's nearly $14 trillion pyramid of super leveraged toxic assets was built on the back of $1.4 trillion of US sub-prime loans, and dispersed throughout the world" (pg 404, "All the Presidents Bankers", Nomi Prins).

Rather than own up to losses and admit their bankers were fools, the UK and Euro-zone
covered up the problems with loose monetary policy.

Japan, the UK, the US and the Euro-zone had the BRICS nations to trade with that were still doing well but they never really recovered.

The BRICS nations are now heading for recession.

Doesn't look good does it.

coplani 29 Aug 2015 04:45

The fundamental question is simply this....

Can millions of people continue to make a living from sitting on their backsides and investing or gambling on the stock markets.
"Loads of Money" and "Money Making Money from Investing"...

Is it sustainable in a World where growth is no more...

Markets and asset values at an all time high...Can this money making money from investing continue indefinitely...Especially when others are joining in by the million.

Our whole way of life is now dependent on the markets and they cannot be allowed to go down in value...Thus Q.E. and record low interest rates....Currency devaluation could be next as has already happened elsewhere...

Investment funds, Pension Schemes, Banks, Massive Financial Institutions etc now depend wholly on money making money....

Any enterprise started, which seems to be profitable is snapped up by the market looking for money to make money...

For how long can this be sustained....That is the question.

KassandraTroy 28 Aug 2015 19:06

Yup. The definition of insanity is doing the same thing over and over and expecting different results.

Yet here we are, courtesy of the new "free trade agreements", ready to turn 40% of the global economy over to these same players right when we need to put on the brakes. Because, of course, the oligarchs have bought our governments. I shudder to think of a world ruled by the multi national corporations. It'll probably collapse in 6 months...maybe a few more for the planet to just stop

nnedjo 28 Aug 2015 15:16

Their recoveries have been the slowest on record and interest rates remain at a historic low – because owners of capital are prepared to invest in anything except the productive economy.

Well, something like this, only more exclusively, says also a former Greek Finance Minister Yanis Varoufakis. In his article "How I became an erratic Marxist" Varoufakis says:

Today, turning to the European crisis, the crisis in the United States and the long-term stagnation of Japanese capitalism, most commentators fail to appreciate the dialectical process under their nose. They recognise the mountain of debts and banking losses but neglect the opposite side of the same coin: the mountain of idle savings that are "frozen" by fear and thus fail to convert into productive investments.

So, indeed, it seems that rich people of today are chosen only to remain rich, and to enjoy life. So they keep their money in banks, not taking anything with them, nor even think to invest it in something and so increase their capital. Accordingly, in addition to reducing the number of workers as a result of the automation of production, modern capitalism is faced with another phenomenon. He is in danger of losing the capitalists too.

And, capitalism that has no workers, and at the same time has no capitalists too, in many ways resembles Marx's ideal of a classless society by the name of communism. :-)

konga76 28 Aug 2015 15:08

The author's message is suspect. The stock market crash of the last week was mostly panic. Fundamentals in China market are unchanged, Western investor participation in said market was severely limited by Chinese law, and Western exposure to market contraction was meager.

In US, where biggest Western drop was seen, only 1% of economy hurt by China contraction. Additionally, there is considerable doubt that the author's 7% growth in China is accurate. Many economists inside and out of China believe it to be significantly less, and these suspicions are not of recent vintage. And, recent data corrections have shown US economy grew at 3.5% earlier this year, not the 2% previously reported.

Conclusion: dramatic market fluctuations of the past few weeks were primarily irrational !! Most losses have already been recouped and for all of the sound and fury, corrections appear to be marginal, not precipitous.

ID401112 -> goodlife9 28 Aug 2015 13:28

Good post. Economics is imprecise, granted, and it doesn't help that most world leaders are completely financially illiterate. But there are different schools of thought and economist that offer very robust analysis of the current economic situation. They're just not listened to because the needed measures are both in direct conflict with the needs of party donors, and expectations of the voting public.

Steve Keen, for example, saw the 2008 crash coming, and continues to provide very good, reasoned analysis about what continues to occur.

Similary, the Austrian school of economics gives very good critique on the inherent dangers and problems associate with fiat money.

But who in power would significantly reduce the value of housing or return to a gold standard as party policy.

OstanesAlchemy 28 Aug 2015 09:57

Who thought a debt based monetary system was a good idea? Oh yes, it was those people who had capital they wanted to "leverage" (multiply) without obligation.

So why don't we face the fact that over 90% of the money in the economy was issued as debt, and that leads to the mathematical certainty that the debt is, not only never going to be paid off, but thanks to the compound interest, completely unsustainable.

We must be so stupid as a species to allow the massive excess capacity in our economies to go to waste, and for our populations to go without for the want of the right numbers, in the right places on a computer chip. A problem that could literally be solved (or at least alleviated) at the stroke of a few keys.

nishville -> Limiting_Factor 28 Aug 2015 02:14

Is it the West's fault?

In this case, a resounding yes. West caused this crisis by promoting and exporting neoliberal capitalism, a system that thrives on instability. You can regard it as a virus infecting the organism of interconnected world economy.

RalphTheStaller 28 Aug 2015 01:17

As the dust settles on the latest "correction", one is left with a sense of unease.

First, we all know that markets have been rigged since QE was introduced to pull the Establishment's irons out of the fire. But surely there is an uncomfortable paradox in the knowledge that, in this latest saga, while the world's greatest totalitarian regime was signally unable to rig its market, conversely it took only a day for the great champion of free market capitalism to do so?

Secondly, we all know that when a market is challenged it is either the earnings base which is called into question or the multiplier used to capitalise the income. Would it not have been healthier for the philosophical base of neo-capitalism if the challenge to valuation had come from bond investors seeking a real return rather than fears that corporate earnings would not fulfil expectations?

nnedjo lib410 28 Aug 2015 00:36

And some of the former Soviet and Communist bloc countries have already reached about 50% of this level, after only about 10 years of EU membership?

More precisely, only one of the former socialist countries and it is Slovenia. Also, it should be noted that Slovenia was the most developed of the former Yugoslav republics. And former Yugoslavia had never belonged to the eastern bloc - Warsaw Pact, and besides that, by its economic development was roughly at the level of the least developed European countries, like for example Greece.

So the fact that Slovenia, which had previously been economically developed as Greece, after 25 years of capitalism has again reached Greece in average salaries, for you is "an incredibly fast transformation".

A very interesting observation, I must admit. :-)

OneCommentator 27 Aug 2015 21:49

Hunger eliminated in the developed world?? You must be a comedian.

Here's a statistic for you to chew on:
"According to the United States Department of Agriculture (USDA), 15.8 million children under 18 in the United States live in households where they are unable to consistently access enough nutritious food necessary for a healthy life.

And another:
"In 2013, 45.3 million people (14.5 percent) in the USA were in poverty.

You say "very few cases" -
You mean 15% or 1-in-7 qualifies as "very few"?

Here's another fact:
"Nearly 70 percent of the households served by food banks report that their most common spending tradeoff was between paying for utilities or food.

If you're saying that 15% of American households are in poverty because they're drug-addicted, that's delusional. They're in jobs & paying their bills - But they can't keep up with expenses.

eminijunkie 27 Aug 2015 19:24

Henry Ford is one of the very few people of the modern, or near modern perhaps, age who actually understood the basic concept of a consumer based economy. There must be consumers, consumers must have the means to obtain what the consume, and if they consume those that produce that which is consumed can make a living by selling the goods that are consumed.

Cut back on the money people have with which to purchase things and you strangle the economy as a whole. This is called austerity, and so naturally it does not work. The less one pays consumers to consume, the less they consume and the less the producers produce and eventually the whole scheme grinds to a point of catharsis of some sort.

The idea of a small number of people becoming extravagantly by gained vast wealth is something that is entirely destructive of the whole idea of any economy, whether you call it communistic or capitalistic.

The problem, of course, is that the earth just might not have unlimited resources, but there is such a thing as recycling and alternate forms of energy etc. The one thing there can't is a rich of inordinately wealthy hoarding all the money and mobs of consumers who don't have the wherewithal to consume.

Ultimately, of course, if that continues too long and too seriously, history tells us the day will come when the consumers consume the wealthy.

Perhaps some compromise will come first.

As a side note, there was a problematic gentleman in Germany in the 1930's that listened to Ford and got himself on the cover of time magazine a number of times as an economic miracle worker, but we no longer pay any attention to him or what he accomplished by implementing the above concept of solving a server economic crisis by just giving citizens money to spend.

People without wealth who are given money go right out and spend it all, and that's good for business everywhere.

And a person who works hard enough and/or smart enough to make a billion dollars will, for the most part, work just as hard to earn a million if that's all he or she can get, because a measly million beats the public dole any day of the week.

smalltownboy shaun 27 Aug 2015 19:15

It means that the question is, who will now buy US treasuries? (Who will now back-stop the dollar?).

Don't worry your pretty little head about it, shaun. There are lots of takers for US treasuries. China had no problem selling some of their stockpile in an an effort to prop up the yuan, which is still pegged to a basket of world currencies, including the dollar. You need to stop getting your financial news from Zero Hedge and RT.

nnedjo nnedjo 27 Aug 2015 17:48

Thus, the average EU-28 wage per hour amounts to about 18 euros, according to this chart.

Realworldview 27 Aug 2015 17:48

China can ride out this crisis. But we're on course for another crash

We are certainly in for another crash, and its scale will be beyond all previous crashes, also China will not ride it out, it will crash along with other nations. The consequences of the looming financial collapse will last for centuries, because the era of economic growth is over meaning debt cannot be paid down. How Economic Growth Fails provides a plausible explanation, with the consequences explored in Deflationary Collapse Ahead? These extracts reveal a major blind spot in the discipline of economics that means economic and political elites fail to understand the impact of limits on the economy and why their "conventional" economic policies are failing:

Today's general level of understanding about how the economy works, and energy's relationship to the economy, is dismally low. Economics has generally denied that energy has more than a very indirect relationship to the economy....

Economics modelling is based on observations of how the economy worked when we were far from limits of a finite world. The indications from this modelling are not at all generalizable to the situation when we are reaching limits of a finite world. The expectation of economists, based on past situations, is that prices will rise when there is scarcity. This expectation is completely wrong when the basic problem is lack of adequate wages for non-elite workers. When the problem is a lack of wages, workers find it impossible to purchase high-priced goods like homes, cars, and refrigerators. All of these products are created using commodities, so a lack of adequate wages tends to "feed back" through the system as low commodity prices. This is exactly the opposite of what standard economic models predict.

For a comprehensive overview of our situation and just how limited our future options are, this article by Nicole Foss posted on The Automatic Earth website is a must read: Nicole Foss: The Boundaries and Future of Solution Space. These extracts reinforce the role of plentiful cheap fossil fuel based energy in our industrial civilisation, and the unwelcome consequences of its future unaffordability once a global deflationary collapse has occurred:

We are facing limits in many ways simultaneously – not surprising since exponential growth curves for so many parameters have gone critical in recent decades, and of course even more so in recent years. Some of these limits lie in human systems, while others are ecological or geophysical. They will all interact with each other, over different timeframes, in extremely complex ways as our state of overshoot resolves itself (to our dissatisfaction, to put it mildly) over many decades, if not centuries. Some of these limits are completely non-negotiable, while others can be at least partially mutable, and it is vital that we know the difference if we are to be able to mitigate our situation at all. Otherwise we are attempting to bargain with the future without understanding our negotiating position.

The vast majority has no conception of the extent to which our modernity is an artefact of our discovery and pervasive exploitation of fossil fuels as an energy source. No species in history has had easy, long term access to a comparable energy source. This unprecedented circumstance has facilitated the creation of turbo-charged civilization.

Huge energy throughput, in line with the Maximum Power Principle, has led to tremendous complexity, far greater extractive capacity (with huge 'environmental externalities' as a result), far greater potential to concentrate enormous power in the hands of the few with destructive political consequences), a far higher population, far greater burden on global carrying capacity, and the ability to borrow from the future to satisfy the insatiable greed of the present. The fact that we are now approaching so many limits has very significant implications for our ability to continue with any of these aspects of modern life. Therefore, any expectation that a future in the era of limits is likely to resemble the present (with a green gloss) are ill-founded and highly implausible.

nnedjo Hippokl, 27 Aug 2015 17:43

Well, these are the data obtained from Eurostat, the statistical office of the European Union. And on the left side of the graph you have data for the EU-28, and the Euro area EU-18. In the previous post I am slightly increased earnings per hour in the EU-28 at 25 euros, because it is in fact the information when other labour costs are added to the wages and salaries.

nnedjo 27 Aug 2015 17:16

Let's simplify things a bit. Technological development leads inevitably to the fact that things that were previously available only to a few individuals become available to most average people. The reason is that the development of technology increases the productivity of the average man, so that someone who previously could produce goods only for a few people, now can produce goods for the huge number of people.
So, if we neglect the economy, judging solely on the basis of technological development should not be such a thing as stagnation in production, and every man would become constantly richer and richer because he would have received more and more goods, as well as other values in the field of health care, education, entertainment, recreation, ... etc.
And, since even today is nothing wrong with technology, it is obvious that this is not a technological crisis, but this is the economic crisis.

And, how did it come to this economic crisis? Well, advocates of austerity measures obviously claim that the crisis was created so that people are spending more than they earn, and this is why they must now spend less, or to agree to austerity measures. However, if someone is spending more than it earns, then someone else had to earn more than what he spent. In other words, if this is true, then the economic crisis would have occurred only in some countries and not in all countries of the world, including the most developed ones. That's the obvious flaw of this argument, and it is clear that this is a classic crisis of capitalism, like many that have occurred previously, and on which, among others, Karl Marx also was talking about.

So the basis of Marx's teaching is precisely the fact that the employer pays employees based on quantitative measures of labor, ie the number of hours spent at work, and not on the basis of what he can really produce for the same number of hours. In this way, the worker always produces more values than it receives from the employer as wages. And in this way the owner appropriates this surplus of created values , and thus becomes more and more rich.

However, that the surplus of produced values turned into capital, the owner must sell goods in the market. But who is going to buy the goods, if most customers are workers who also produced more goods than they get money for it? In other words, on the market appears surplus of goods, which nobody can buy. You have on one side the huge number of empty houses, and on the other side, you have a huge number of the homeless. (Does this sound familiar?). You have overproduction of food on one side, and on the other side, you have an army of hungry. Or, on the one hand, the huge number of cars, and on the other hand, people go on foot.
And, since it is impossible to sell previously manufactured goods, it is clear that there is no purpose to increase the new production. In other words, production is decreasing, and the economy falling into recession.

And how this crisis of capitalism can be overcome? Advocates of austerity say that capitalism can be saved only "by becoming more capitalist". Or in other words, so that the workers will be paid even less than before, either from private owners or by the state, and commodity (electricity, gas, water, etc ...) will become even more expensive. But, whether is not the main cause of the crisis precisely because the goods have become expensive for people who are not paid enough to be able to buy it? And then, how austerity measures may increase production and pull the economy out of recession? It is obvious that they can not, which means that the solution is not "capitalism that will become more capitalistic". Recession can be solved only in that way that capitalism will become more socialist, or roughly with the introduction of those measures that Jeremy Corbyn suggests. In that sense I would say that Seumas Milne is right because he gives Jeremy Corbyn for the right.

MarkThomason 27 Aug 2015 17:11

I should add that I know of three stores near me that had been in business a long time, and closed because their usual suppliers were unable to extend the usual terms for inventory, because the suppliers had lost their credit lines. None had new risks or new problems, they just had their long-standing arrangements cancelled on them due to the financial crisis.

Meanwhile, the casino ran full blast with borrowed money provided by the government.

[Aug 31, 2015] Ukrainian guardsman killed in protests against vote on rebel autonomy

Guardianisa with their British elite hypocrisy at their best: they were even afraid to put this horrible news on the front page...
Note how those neoliberal stooges report the grenade attack on police defending Parliament Building (clearly a terrorist act) which as attack on Parliament is worse then Charlie Hebdo attack in Paris: "A Reuters TV cameraman at the scene said several police officers were knocked off their feet by a grenade explosion."
Aug 31, 2015 | The Guardian

A Ukrainian national guardsman has died and many more have been injured in clashes with nationalist protesters outside parliament in Kiev, the interior minister said.

A Reuters TV cameraman at the scene said several police officers were knocked off their feet by a grenade explosion. Two officers were treated for wounds at the scene and there were pools of blood on the street, the cameraman said.

Clashes had erupted outside parliament in Kiev on Monday as politicians gave initial approval to constitutional changes granting more autonomy to pro-Russia separatists in eastern Ukraine.

The western-backed constitutional reforms are required under the terms of a peace deal signed in February, which called for Kiev to implement "decentralisation" by the end of this year. But critics have branded the reforms "un-Ukrainian".

A total of 265 politicians voted in favour of the reforms at a stormy session of parliament, with protests both inside and outside the buidling.

Dozens of demonstrators scuffled with police, Agence France-Presse journalists said. Protesters fired at least one grenade that sent up a cloud of black smoke outside the building. Teargas was used by both sides, an AFP correspondent said.

An adviser for the interior minister, Arsen Avakov, said one person had died. "A soldier from the National Guard has died of a gunshot wound in the heart," the adviser, Anton Gerashchenko, said. "Apart from using grenades, the provocateurs were using firearms, fired secretly."

The controversial reforms have been sought by Kiev's western allies, who see them as a way of trying to end the armed conflict in the east that has claimed more than 6,800 lives over the past 16 months.

The bill has sparked heated debate in Ukraine where opponents see it as an attempt to legalise the de facto rebel control of part of Ukraine's territory.

The reform bill grants more powers to regional and local politicians, including in the eastern areas currently under rebel control.

But contrary to separatists' expectations, it does not definitively hand the largely industrial eastern region the semi-autonomous status that the insurgents are seeking.

According to the text of the draft legislation, the region's status needs to be defined by a separate law.

Kiev and the west accuse Russia of backing the rebels militarily and deploying its troops to the conflict zone, claims that President Vladimir Putin and the Kremlin have repeatedly denied.

A group of Ukrainian politicians had earlier on Monday disrupted the parliament to block the vote on the constitutional reforms, which they condemned as "anti-Ukrainian" and "pro-Vladimir Putin".

Politicians from the Radical party – part of the pro-western coalition behind President Petro Poroshenko – had also blockaded the speaker's rostrum in an attempt to halt the crucial session.

Members of the extreme-right Pravy Sektor group blocked traffic outside the parliament, while several hundred activists from the nationalist party Svoboda rallied outside the building against the western-backed reform.

At the weekend, Poroshenko met politicians from the pro-presidential coalition who oppose the reform in an attempt to persuade them to change their minds.

[Aug 30, 2015] The Guardian view on the latest Ukraine ceasefire call: why this could be the one that works

"...This is not good journalism, nor objective, perceptive, informed reporting. It's hogwash- and from the Guardian!!! An effete, ignorant, vague, prejudiced, white washing survey of no value what so ever. "
"...The same old story on behalf of Washington DC."
"...It's just the Graun beating the drums of war on behalf of NATO...again."
"...The Guardian view on the latest Ukraine ceasefire call: why this could be the one that works... So there will be some enforcement on the West Ukrainians to observe it at last and curb the neonazi types?"
"...This article assumes wrongly that Russia and Putin are to blame when quite the opposite is true .

This all occurred due to the EU very aggressive expansionist policy in the Ukraine, Russia's backyard encouraged by a under funded sabre rattling Nato which has all gone horribly wrong .

Eastern Russian Ukrainian separatists have every right to self determination as do people in the Falkland islands or in Scotland and Gibraltar and yet not Ukrainian Russians ?? Why not !

The EU cannot afford to bail out Greece, never mind the Ukraine and costs are mounting daily .The EU is tilting imperially at windmills

Many people in the UK EU do not support their governments approach to Russia and cannot even understand it ,and see yet more double standards

The EU need desperately to get Russia back as a market particularly as China is starting to look wobbly any more talk of sanctions against Russia would be counter productive"

Aug 30, 2015 | The Guardian

Bosula -> Agrajag3k 30 Aug 2015 21:50

Russia's RTs budget is about a third of the amount that the US State Department spends of funding six state owned propaganda broadcasting services across the world.

At least one of these US state sponsored propaganda networks has a formal agreement with the Guardian to run their pro US stories on a regular basis (see stories by RFE, for example).

Does this help you understand that propaganda is complex. It not just a Russian game, if that is really what you thought.

The Russians are the little kids on the block in this ongoing propaganda 'war'.

annamarinja -> JakeBrumby 30 Aug 2015 21:49

You mean, only FauxNews provide the truth and only truth?

Winifred Kiddle 30 Aug 2015 21:36

You're reading different stuff to what I read according to my sources Putin is the person who masterminded Minsk. And Porky is the dude who signed an agreement but never kept to it. Something about kids living in basements that's how we'll win this war Yada Yada Yada. Oh that's right the Guardian employs Shaun Walker. Enough said. Please, please get your facts right and stop hoodwinked your readers.

Bosula HollyOldDog 30 Aug 2015 21:36

A no brainer for me - seek the protection of a friendly neighbour who shares your culture and language.

The period following the unconstitutional February 2014 coup in Kiev was a dangerous and lawless period.

HauptmannGurski Beckow 30 Aug 2015 21:45

The winter, yes, it is very important in that region, nearby Stalingrad, now Volgograd, etc. That's why a ceasefire before winter has better chances than one before summer, e.g. February.

As far as these jokers with a German name (Tintenfische) are concerned who delight in the idea of a Russian crash, they really got no idea what they are talking about. Russians do not give in, see Leningrad siege. Russia has received shock therapy with these sanctions and they wll now ensure that never again will they be overly dependend on foreign sources of funds, or even cooperation.

As the saying goes, if you need a helping hand look at what you find at the end of your right arm. The cooperation after the 1991 collapse was a failure, looked like a good idea at the time. They are very conscious of needing to focus on their own minds and resources, instead of sugar hits from foreign creditors like Ukraine and Greece. And then there are these people who go full frontal against Putin - being totally oblivious that the Putins, Obamas, Bushes come and go. Anyone who's engaging in these primitive Putin attacks just displays a low IQ.

Economies are in dire straights everywhere, so why should Russia be an exception. There is no country now that isn't plagued by excessive borrowings and Russia is barred from excessive borrowing, good. At least they are free of prooping up Ukraine now. Lets see how the other side likes propping them up.

poopin4putin PaddyCannuck 30 Aug 2015 21:21

It is truly stomach-churning stuff. Especially since the rubble is gaining. it was 70+ to US dollar last week, but closed Friday at around 65. Its gaining. oh wait it was around 35 a year or so ago. sorry.

Beckow -> Rudeboy1 30 Aug 2015 21:21

Almost everything you wrote is wrong.

Only 20-25% of Russia's economy is oil, gas and energy. The price crash was in dollars, in rubles the prices are almost the same as a year ago. In Russia they use rubles...

Russia is increasing both its cash reserves and gold holdings, check Bloomberg.
Putin increased defense budget.

Russia's population has been growing since 2011, their birth rates are higher than almost all EU countries. You want to see real demographic disaster, try Latvia - down 25% in 15 years, or Estonia, Germany, Italy, Spain, Bulgaria... Plus Russia gets second largest number of immigrants after US in the world.

Why are you way off on all your facts? Are you Obama's speech writer? Or do you think this is 1998?

Parangaricurimicuaro -> jezzam 30 Aug 2015 21:20

Food production is one of the areas in the Russian economy that is starting to show results in this new government guided import substitution. So when a cheese producer in western Europe sees images of tons of cheese been bulldozed then I don't consider that they were laughing. The creation of markets is a process that takes time and effort.

nadodi 30 Aug 2015 21:00

The same old story on behalf of Washington DC.

PaddyCannuck 30 Aug 2015 20:55

It's really breathtaking how so many of our rabid Russia-haters just ooze schadenfreude when commenting on the imagined effects of western sanctions and other economic measures which they gleefully fantasise as reducing the lives of ordinary Russians to abject misery.

But then, when it comes to Russian seizure and destruction of contraband goods or one of the daily articles of how bad Russia and Putin are, they're suddenly full of loving concern and compassion for those same ordinary Russians, and inundate us with a deluge of crocodile tears. Truly stomach-churning stuff.

Vlad Cheprasov 30 Aug 2015 21:18

According to recent big buzz 2000 russian soldiers killed vs. about 1500 Ukrainian soldiers official stats claims.
That means that majority in East are russian soldiers vs. ukrainian
That means that majority captured POW should be russian soldiers
Considering Ukrianian side is more effective (2000 vs 1500) they must've got more POW's
Why they provided 12 lost souls in 2014 and just 4 this year ?
Separatist side handed back more than thousand Ukrainian POW (official Ukrainian sources claim)
Where are those thousands of Russian soldiers/mercenaries?
Every time they got couple guys all MSM headers are blown with a really BIG news.

Bosula -> Agrajag3k 30 Aug 2015 21:14

if it works for you - go for it as an 'ethnic Australian'.

All Slavs in this part of this part of world share the same genetic heritage - regardless of what country they come from. Certainly Russians and Ukrainians are the same people genetically and share much in common, whether they like it on not

HollyOldDog -> Bosula 30 Aug 2015 20:28

The rest of Ukraine was descending into chaos, what with police and demonstrators being shot and killed by unknown assalients from rooftops. Odessa , where 45 plus Ukrainian citizens were trapped in a building which was set fire to by outside football supporters, then shot at and clubbed when the citizens climbed out of the burning building seeking help. Would you risk yourself and your family in such a situation or would you seek the protection of a friendly power?

HollyOldDog -> GhengisMao 30 Aug 2015 21:00

That is just what Poroshenko is praying for as it would mean more money flowing into the coffers of Ukraine. ( thereby into his own as well). Yats - Americas own man said that Ukraine should be given around $2billion per year for 3 years ( last years request).

But it will never happen and Poroshenko will be ordered to live up to his obligations in respect to the Minsk2 agreement. I suggest he starts now as the gaze of the EU drifts to the far more serious problem of these migrants who don't carry identity papers entering the EU. terrorist fractions could be in their midst, so the EU has to be diligent. So Poroshenko either get your act together and fulfill your obligations or be sidelined, to sink or swim on your own.

EugeneGur -> jezzam 30 Aug 2015 20:28

With you, no evidence, hard or otherwise, is ever required. "Everyone knows", "nobody believes" - is good enough for you.

The alternative is to believe that a ragbag army of separatists in a region of three million people can overwhelm the regular army of a country with 45 million people on their own.

This is a good example of you reasoning. We Russians call such "facts" "dragged by the ears". You claim to know Russian - you should understand what I refer to.
First, it isn't clear what was more ragbag - the Kiev army or separatists. Just because it is called regular army doesn't mean they know how, or are willing, to fight. Second, the whole 45 millions didn't go to fight, did they? Kiev has trouble assembling decent number of soldiers even now - separatists don't. What a difference motivation makes.

HollyOldDog -> alpamysh 30 Aug 2015 20:19

Ah, I was right all along.
The West Always Speaks With Fase Tongue.
Middle East and African countries should keep their own council and keep the Western Wolves from the door.

HollyOldDog -> jezzam 30 Aug 2015 20:14

The West in terms of the European West, wants a federated Ukraine that is not at war with itself and where one part ,the West is not trying to destroy another part the East. In this context the West of Ukraine has become a liability to Europe by insisting that it requires advanced NATO. weapons to defeat its opponent in Eastern Ukraine. Any Russian involvement other than sending food convoys to East Ukraine is pure speculation and/or wishful thinking by a beleaguered President of Ukraine who cannot/will not hold meaningful discussions with the East of Ukraine. Ultimately it's the responsibility of President Poroshenko to resolve the troubles of Ukraine peacefully, by negotiating with East Ukraine. No IFS, No BUTS just do it, or Ukraine could be just left behind in the mounting migrant crisis. Poroshenko could volunteer his country to take several thousand Syrian Migrants , just to show that he has the true German minded spirit.

DomesticExtremist -> nnedjo 30 Aug 2015 20:10

It's just the Graun beating the drums of war on behalf of NATO...again.

nnedjo 30 Aug 2015 20:03

It is too soon to be confident but this time the economic and political pressures may be mounting on Vladimir Putin to make agreements that will stick
Why is it so difficult to understand that Putin would be the last one to want the continuation of this fratricidal war?

For comparison, imagine that civil war breaks out in the UK between the Scots and the English. In that case whether it would be necessary to take any special pressure on the British Prime Minister to stop such a war?

Chillskier -> jezzam 30 Aug 2015 20:00

Ensure that Ukraine does not go under economically and eventually becomes a fully functioning and prosperous liberal democracy.
It seems to be working pretty well..

NO it is not.
You need to talk to people who actually live there, it is a catastrophe

HollyOldDog -> truk10 30 Aug 2015 19:46

Ukraine should be wary of false friends who may lead then down a blind alley. Only today I watched a very interesting TV program that puts the continueing existance of Monsanto into serious doubt. The program was about wheat in terms of the future of Global Warming where presentment her patterns within seasons would vary widely. Is it the right course of action to choose types of GM wheat where seasonal rains would pop up at inconvenient times ( which a farmer would pay 'through the nose for') or to allow your wheats to choose the correct wheat for the growing conditions it encounters. Some of the Wheats on test where from the times of the ancient Egyptians while the oldest variety was around 9000 years old. Instead of gene splicing and growing micro cultures in a lab followed by years of field testing , perhaps we should just look what our ancestors did.

I know this is not exactly on topic but I am trying to suggest Not to believe the latest SPIN, just because it is new. NEW SPIN does not equal TRUTH. IF something looks to be too good to be true then it is too good to be true - Forbes, verify your stories before you publish.

EugeneGur 30 Aug 2015 19:45

Vladimir Putin laid all the blame on the Ukrainian government, while Kiev has been warning that Russia is readying for new offensives

There is no need to listen to what Putin says and even less to what Kiev says. The MinskII agreements consists of only 13 point, and it is quite easy to ascertain for anyone who is doing, or not doing, what. MinksII demands certain actions on the part of the Kiev government, including constitutional reform with specific provisions for Donbass and restoration of social payments. None of this has been carried out by Kiev, which should be obvious for anybody, because Kiev doesn't even bother to deny it. They openly say they haven't done any of this and not going to. So, what does it matter what anyone says?

This marks the deadline for the internationally recognized border to come back under Ukrainian government control. At the moment, however, the Russians maintain an exclusive grip.

Correction - LPR/LPR maintain the firm grip. They will continue doing so - they aren't suicidal, not at all. The control of the border was supposed to be ceded to Kiev after all other provision of MinskII have been implemented. That hasn't happened, so the border is and will remain in the DPR/LPD hands for the time being. Kiev concentrates on that border issue like it was all they noticed in MinskII - must the Guardian repeat the Kiev narrative verbatum?

President Putin's recent language may nevertheless indicate that he is looking for a way out of what may have turned into something of a military and political quagmire.

May I remind the geniuses at the Guardian that it was precisely President Putin who engineered both MinskI and MinskII? If Putin hadn't put pressure on Donbass, they would've agreed to any of this. They don't want to be in Ukraine, and Putins had to use all his influence to make them agree. However, even his authority won't be enough to convince them to go for MinskII. So, it' Kiev's last chance.

There is rumor Russia will soon start giving Russian passports to DPR/LPR citizens, and Donbass will soon be holding a referendum about joining Russia. There is a very, very probable scenario.

Yet the separatist forces are a disorderly group that have shown themselves incapable of carving out a territory that could be held sustainably.

Really? This "disorderly group" inflicted devastating defeat on the Kiev valiant army not once, not twice, but three times. No matter how often the West repeats it was the Russian army, they know full well it is not so. Every independent observes ever to visit Donbass stated that there is no Russian troops there.
"The territory isn't sustainable" - how surprising they aren't prospering under almost complete blockade and while being shelled daily. How sustainable is Kiev with all the Western help? Nearing default, I hear. And the utility bills are larger than average salaries now. Good job, people - keep it up.

I wonder whether the Guardian editorial board must make a fool if itself all the time every time.

nnedjo 30 Aug 2015 19:42

The head of the Ukrainian General Staff has admitted that 90% of intelligence they have received about the war in the southeast later turned out to be false. Which means only 10% of the information was true.:-)

And even more interesting/funny is a statement of the US Permanent Representative to NATO:

The US Permanent Representative to NATO, Douglas Lute, has admitted that his knowledge about the ongoing conflict in eastern Ukraine comes mostly from social networks rather than intelligence reports.

"We should all ask ourselves: why is it that we know so little really about what is going on in Donbass," the US ambassador to NATO told "Friends of Europe" forum in Brussels.

"I mean, frankly, I read more on social media about what is going on in the Donbass than I get from formal intelligence networks. This is because the networks don't exist today," Lute said.

TomFullery alpamysh 30 Aug 2015 19:05

I think you're getting confused with Americanswho are famous for their completely over the top indiscriminate use of firepower to "solve" a problem.

I remember a SWAT team managed to burn down a whole neighbourhood block a few years ago while trying to apprehend a burglar who was holed up in one of the apartments.

Beckow impartial12 30 Aug 2015 18:41

"Ukraine is important to the West because of its encroachment strategy against Russia"

The strategy is to somehow take over Russia by either having Yeltsin-like puppets in power again, or maybe by physically taking it apart (separatism). The "encroachment" is just the means to that end.

Russians had two choices when the coup happened in Kiev on the last day of the Sochi Olympics:

The West was surprised that Russia went for the second option and decided to fight. I think Russia decided that this was their best chance to resist, and that facts on the ground in Ukraine were in their favor. So far it has worked for Russia, thus the almost hysterical anger in the West.

nnedjo 30 Aug 2015 18:24

though there are victims almost every day and one report, not independently verified, suggests Russian deaths may have reached 2,000.

So, here we have an article on the question of war or peace in a such a large country such as Ukraine, and on a possible entry into a total war with its even larger neighbor Russia. And one such article refers to "a report that has not independently verified", or let's just say is not verified at all. One must admit that It is rather frivolous approach to one serious topic like this. That would be about the same as if someone would advise a man seriously ill from cancer to contact the nearest medicine man for a treatment.

And how this alleged report was created in the first time?
Thus, the Ukrainian website "New Region" ("Новый Регион") has published an alleged picture of a web page from Russian website, which even by its design does not correspond to the original site, because the right margin (only the right!) is painted in gray-blue color. In addition, they claim that the site from which they took picture "immediately was changed by Russian censors", and it now looks like this. Which means that only they [the Ukrainians] are in possession of incriminating secret information about the number of the killed Russian soldiers, and we probably need to trust them on this.

What else is interesting about this?

Except that the Ukrainians were the first and only ones to notice "the self-incriminating" Russian webpage, their, therefore, the Ukrainian webpage that talks about it first was noticed (probably quite by chance too) by the famous author of anti-Russian articles, and former friend of the assassin of US President Kennedy, Lee Harvey Oswald. Of course, when one such "celebrity" like Paul Roderick Gregory publish one such "sensation" against Russia, and yet it is written in Forbes, it is then quickly spread all over the internet and finaly ends up here on the Guardian.

The only thing the Guardian "forgot" to specify that, in addition to 2000 killed, the "alleged-by the Ukrainians seen only-report" also mentions the 3200 wounded Russian soldiers on the Ukrainian front. Thus, on a total of 5200 Russian troops casualties, there are only 10 Russian soldiers who were captured in Ukraine(we read about it also in the Guardian, a year ago). An amazing proportion, you must admit!

Agrajag3k Bosula 30 Aug 2015 18:23

Most of Ukraine speaks Russian as a first or second language. This whole "ethnic Russian" nonsense is an invention of the Kremlin.

I speak English, share similar customs and very likely have distant relatives who live there, so from now on I'll call myself an "ethnic Australian". Is that how it works?

Andrew Nichols 30 Aug 2015 18:20

The Guardian view on the latest Ukraine ceasefire call: why this could be the one that works

So there will be some enforcement on the West Ukrainians to observe it at last and curb the neonazi types?

vr13vr Chirographer 30 Aug 2015 17:46

It wasn't a conflict between Russia and Ukraine. It was a conflict between Kiev and people of Crimea, unless you insist their opinion shouldn't matter at all. But you are right about Ukraine not being a NATO member and as such NATO should have never have gone into high gear and escalated its rhetoric over this.

dmitryfrommoscow gimmeshoes 30 Aug 2015 17:43

References to 'Euromaidan' sources cannot be accepted. What else can the Ukrainian Security Council say? Do you expect it to admit frankly that root-cause of the conflict in Donbass is found in their own imecilic far-right nationalism?

MaoChengJi 30 Aug 2015 18:13

That is not to say that Russia has given up on destabilising its neighbour, nor on trying to redraw Europe's security architecture to its advantage.

God, what a comedy... Russia is destabilising? Russia is "trying to redraw Europe's security architecture"?

You're trolling, admit it. I don't mind trolling myself, but not for annoying, bullying, and eventually cornering a nuclear power. Only idiots would do that.

Bosula Bob49 30 Aug 2015 18:10

What I can never understand is why three quarters of the Ukrainian army stationed in the Crimea joined the Russian army during or before the referendum?

No shots were fired?

How can this be an annexation?

We are talking about something like ten thousand troops here - close to a third to half of the fighting force of the Australian army.

Would half the Australian army voluntarily join the army of a foreign country If they tried to 'annex' Australia?

Could they take over Australia, my home, without firing a shot?

I don't think so.

We may not be able to defeat a large annexing force from Asia but we would at least fire our guns and put up a fight.

We certainly wouldn't 'party' hard about the annexation and vote to join the invading country - yet this is what occurred in the Crimea.

What is going on here?

Beckow dmitryfrommoscow 30 Aug 2015 18:06

Why does it matter who is doing the fighting? I am amused by the legalistic obsession with whose uniform someone wears before they go off to die. It is a distraction - there is a war there. What matters is who wins, not what "regular unit" they belong to. Clearly enough people on both sides feel strongly enough about it to risk their lives.

The only relevant military fact is that Russians said they will not let Donbass be overrun. Since nobody thinks that Kiev (or Kiev+...) can actually defeat Russia, that kind of puts an end to all military uncertainty.

This will be decided based on economy and how people feel about their living standards in a few years. If Ukraine is prosperous, inside EU (or close by), jobs are plentiful and incomes high, Donbass cannot and will not stay separate. Hell, even Crimeans might have second thoughts. On the hand, if Ukraine stays poor as it is today - or gets worse - than Donbass separatism will be the least of Kiev's problems.

Based on the reality we can all see, it is much more likely that we are about to see the second scenario. Fighting just postpones the inevitable and fogs up what is really going on - collapse of Ukraine's economy and living standards....

Beckow Tintenfische 30 Aug 2015 17:55

Stay sober. Russia's economy is down 4%, that's not "go down in flames". E.g. EU economy dropped 6-9% after '09, and people are ok, kind of.

The real issue is with the Ukrainian economy and living standards. Russia's per capita income this year is 10 times higher than Ukraine's. That's very substantial, that's why about 3 million Ukrainians work in Russia and more are coming each month.

The West tried to crash Russian economy ahead of the inevitable Ukrainian collapse, and it failed. So now the death-watch for the Ukraine's economy has started: default on loans, catastrophic drop in living standards and incomes, millions trying to emigrate, and energy dependency on Russia that might turn out to be fatal if there is a cold winter in Europe.

vr13vr CedricH 30 Aug 2015 17:55

Yeah, I can imagine Russians being jealous of Ukrainians. The economy is collapsing, the inflation is 40%, the far is going on, the armed Right Sector people are walking in the center of the city, the opposition leaders are suppressed and the actions are taking against the media that disagrees with Kiev. And while all of this, the corruption remains exactly where it used to be. Darn, the entire world is jealous of those lucky Ukrainians.

Beckow Tintenfische 30 Aug 2015 17:47

"it denies the Ukrainian people any sort of agency what so ever and at the same time ignores that the elections within the Ukraine have not been called free or fair for a generation"

I wrote 'assisted in an overthrow' - do you get the meaning of the verb "to assist"? Assisting in an overthrow of an elected president is by any definition illegal and unconstitutional - all else that followed has to be examined in that light.

Elections in Ukraine have been free and fair and declared so by EU itself many times. Yanukovitch won fair and square. Russian speakers (or supporters) used to get roughly 50% of the vote, sometimes more, sometimes little bit less. Their party - Party of Regions - was outlawed. So maybe they are listened to, but in a very constrained way - they are certainly not equal to the Western Ukrainians. That's why some of them started a civil war.

You don't address any of the disastrous economic consequences of Maidan and the war: Ukraine is suffering and is much worse off than two years ago. There is no economic prosperity possible in Ukraine without Russian cooperation (energy, imports, food, investments). That is a reality that cannot be wished away. Unless Ukraine adjusts to being a poor, agrarian country, that exports millions of workers, with living standards maybe like in Albania or Tunis (at best), they will have to make peace with Russia and its own Russian leaning population. There is no other way, even Germany and France have officially told Kiev that much. Only US nutcases don't care about economy or living standards and prefer to play geo-political games with Ukrainians...

SHappens -> Agrajag3k 30 Aug 2015 17:42

Ukraine can prosper perfectly well on its own, just like any other county under the right leadership.

which they dont have. On the other hand when a big part of the country doesnt want to align with the "West" they should be heard. That's what is called democracy

Bosula 30 Aug 2015 17:41

'The Minsk agreement will also come under further international scrutiny as the end of the year nears. This marks the deadline for the internationally recognised border to come back under Ukrainian government control.'

This editorial is a little like a snake - slides all over place and slithers around facts.

This is no mention of Minsk agreement preconditions for the border to come back under Ukrainian control.

This includes progress on constitutional reform and constructive negotiations with East Ukraine.

The editorial provides no assessment on progress on these important conditions.

Or don't they matter?

vr13vr -> alpamysh 30 Aug 2015 17:41

Kiev doesn't know what it wants. But you are right, why wouldn't Kiev leave Donbass and the entire region. That would stop all the tensions at once because I don't remember people from the East having any intend to go to the West Ukraine and bring the war there. Let Kiev stop the attempts and let the Donbass and Lugansk areas go and there will be peace.

vr13vr -> Bosula 30 Aug 2015 17:38

And they should leave them alone.

Falloe7 CedricH 30 Aug 2015 17:30

The Guardian news about 2000 Russians dead is out of date as Forbes news who printed it were found out to be a Load of Rubbish and made up. By load of Idiots by the sound of it who Forbes news believed Just goes to show you cannot believe all you read now can you

Bosula Nick Gresham 30 Aug 2015 17:30

The US is though - and war is good for the US economy.

pfbulmer 30 Aug 2015 17:27

This article assumes wrongly that Russia and Putin are to blame when quite the opposite is true .

This all occurred due to the EU very aggressive expansionist policy in the Ukraine, Russia's backyard encouraged by a under funded sabre rattling Nato which has all gone horribly wrong .

Eastern Russian Ukrainian separatists have every right to self determination as do people in the Falkland islands or in Scotland and Gibraltar and yet not Ukrainian Russians ?? Why not !

The EU cannot afford to bail out Greece, never mind the Ukraine and costs are mounting daily .The EU is tilting imperially at windmills

Many people in the UK EU do not support their governments approach to Russia and cannot even understand it ,and see yet more double standards

The EU need desperately to get Russia back as a market particularly as China is starting to look wobbly any more talk of sanctions against Russia would be counter productive

Beckow Tintenfische 30 Aug 2015 17:13

There is a difference between selling arms and funding rebellions that overthrow governments. US actually physically invaded Iraq.

US and EU assisted in an overthrow of the elected president in Ukraine. That's why we have the mess in Ukraine. If the democratic process was followed and all groups were listened to - including Russian speaking half of Ukraine - we would not have this disaster. And it is a disaster.

Beckow Tintenfische 30 Aug 2015 17:13

There is a difference between selling arms and funding rebellions that overthrow governments. US actually physically invaded Iraq.

US and EU assisted in an overthrow of the elected president in Ukraine. That's why we have the mess in Ukraine. If the democratic process was followed and all groups were listened to - including Russian speaking half of Ukraine - we would not have this disaster. And it is a disaster.

careforukraine 30 Aug 2015 16:47

The truth is that the west has realized that trying to continue on the same path is futile.
The public have grown tired of hearing false stories abouy russian aggression and more and more stories about nazism in kiev are becoming apparent.
Both these facts make it hard for the US to gain support from their own public.
Now its in the US best interests to cut ties with poroshenko.......and this is why poroshenko was reprimanded by merkel and hollande at the last meeting.
The has lost the stomach to continue

BastaYa72 alpamysh 30 Aug 2015 16:33

Moreover, a country with the agricultural resources of Ukraine

Land that has long since been signed over to Monsanto and DuPont as part payment for earlier loans. Ukraine's economy is in such a state that's it's obvious that it will form the next major refugee crisis, while Svoboda and Privvy Sector will almost certainly launch a coup to over-throw the Kiev government.

Iraq, Libya, Ukraine - you can pretty much guarantee that wherever the West intervenes or interferes, chaos and destruction is pretty much 'nailed-on'.

Laurence Johnson 30 Aug 2015 16:12



Thousands of Ukrainian far-right supporters have rallied in the Kiev's Independence Square calling for a referendum that would impeach the country's president Petro Poroshenko.

The peaceful rally held by the Right Sector movement saw thousands of people converge in the centre of Kiev on 21 July, waving Right Sector and Ukrainian flags and chanting "Glory to Ukraine".


vr13vr psygone 30 Aug 2015 16:11



Russia does not need options on Ukraine. Frankly, it doesn't care so much about Ukraine any more. All it needs to do is to keep this status quo in the East Ukraine, supporting Donbass and Lugansk. It will keep Kiev and Washington unhappy but little they could do about it.

It is Kiev who has no options to recapture the control of the region in face of local opposition there and it is Kiev that is looking for grace saving exit.


vr13vr 30 Aug 2015 16:09

Clueless. The "low intensity" fight continues, but it's evident that the chances of Kiev to establish full control of the area are non-existent, and it is Kiev who is looking for a grace saving exit at this point.

And as for West "helping Ukraine" by cutting down the debt by 20%, this is the freshest interpretation of the event I've ever heard. It wasn't done to "help" Ukraine. The West agreed to do so to avoid even messier and costlier option of default and loosing even more money in Ukraine. Other than talking about giving some more loans to Ukraine in the future, the help to Ukraine from the West is now minimum.

BastaYa72 -> alpamysh 30 Aug 2015 16:33

Moreover, a country with the agricultural resources of Ukraine

Land that has long since been signed over to Monsanto and DuPont as part payment for earlier loans. Ukraine's economy is in such a state that's it's obvious that it will form the next major refugee crisis, while Svoboda and Privvy Sector will almost certainly launch a coup to over-throw the Kiev government.

Iraq, Libya, Ukraine - you can pretty much guarantee that wherever the West intervenes or interferes, chaos and destruction is pretty much 'nailed-on'.

Laurence Johnson -> Beckow 30 Aug 2015 16:05

You make some very sober points. Ukraine is indeed destined to be a wasteland similar to Libya and Syria. The scorch and burn policy of "if I cant have it, nobody can have it" is very clear.

I suspect that in twenty years time East Ukraine will be an economic miracle that engages with Asia via Russia. As for Kiev I suspect they will still be arguing about which Oligarch has the biggest pair of balls.

normankirk 30 Aug 2015 15:56

under the Minsk agreement, the border comes back under Ukrainian control, only when Ukraine has done the necessary constitutional reform that grants autonomy to the Donbas. So far, Kiev has dragged the chain , and to this day has refused dialogue with the leaders of the DPR and LPR.Poroshenko has openly boasted of using the ceasefire to build up another military assault on the eastern Ukrainians , and has vowed to reclaim all the terrItory by force.All this is in breach of the Minsk agreement Articles like this, with their bias and misinformation destroys the credibility of the guardian

This time the ceasefire may work because Merkel and Hollande have pressured Poroshenko, but I'm not holding my breath.

Parangaricurimicuaro 30 Aug 2015 15:45

I think that Europe is having to much on its plate. Terrorism problems, energy insecurity, bailing out Greece, refugees escaping wars south of the Mediterranean, aging population etc. so maybe it is most than they could possible chew. Reality is sobering everyone.

SHappens Agrajag3k 30 Aug 2015 15:36

Russia has no interest in seeing the war end or seeing Ukraine prosper.

Ukraine cannot prosper without Russia's market, that's an economic truth. Ukraine can even less prosper without the Donbass. The West must accept to share Ukraine with Russia. Federalization can make this possible and fulfill every country's ambitions and will, except for one country overseas, taking part to the events, we dont know why or do we?

Beckow 30 Aug 2015 15:26

Half-truths are by definition not truths. To say:

"deadline for the internationally recognised border to come back under Ukrainian government control"

Minsk also requires that Donbass has autonomy before border is turned over. How does one leave out the other side of the story? It is like reporting on Soviet Union conquest of Berlin in 1945 without mentioning that Germany invaded Russia in 1941. Maybe that's next in the endless search for just the right narrative where friends are friends, and enemies are, well the enemy is Russia, end of story. No need to actually be accurate. About Minsk or anything else.

Ukraine is bankrupt - negotiating to not pay back the full principal is the definition of a default. You can call it a "haircut" all you want, Ukraine has just defaulted - as in: they will not pay their full debts back. Who is going to invest there now? Other than EU taxpayers and IMF funny money men?

Time is definitely not on Ukraine's side: economy is down by 15-17%, inflation is 40-50%, incomes are dramatically down to roughly Senegal-Nepal level, the exports to Russia that Ukraine used to live off are down by more than 50% and dropping - and nothing is replacing the Russian market. With living standards are on sub-African level and with no visa-free access to EU, no investments (see the default above), and energy dependence on Russia, how can time be on Kiev's side? How are they going to grow out of it? What and to whom are they going to export? How is the per capita income going to grow? Today Ukraine income is 1/10 of Russia's per capita income (that's right 10%). How is time on Kiev's side?

West triggered an unnecessary catastrophe in Ukraine by assisting in an overthrow of an elected government. Ukraine is divided, look at all elections, look at language usage, etc... half is pro-West, half is pro-Russian. It is impossible to have a prosperous Ukraine without both having a say in running the country. So sooner or later, Ukraine will either go back to its traditional role as a buffer state, or it will break-up. There is no way one group can permanently dominate the other. And that takes us back to the Minsk treaty that specifies that Donbass gets autonomy. Maybe we should ask Kiev what happened to that part of the treaty. Why isn't it even mentioned?

impartial12 Tintenfische 30 Aug 2015 15:19

That is funny considering the amount of armaments building up among the former nations of the Soviet Union neighboring Russia. The escalation in Ukraine had started with an illegal coup of an elected government. And don't even get me started on the neo-Nazi tendencies of the new regime. It takes two to tango, and the West clearly wants to play this game no matter what negative consequences it may bring.

SHappens 30 Aug 2015 15:14

Kiev, backed by Washington who is using Ukrainian army foot soldiers, paramilitaries, foreign mercenaries, Nazi-infested death squads and others hasn't stopped since initiated back in April 2014. Kiev flagrantly violated the Geneva and two Minsk ceasefire agreements straightaway. Moreover Kiev has repeatedly refused to sit and talk with the people in the East and grant them autonomy as per Minsk.

Surely Russia supports the eastern ukrainians, rightly, in a way or another, preventing in this way a full war offensive by Kiev, however Russian's army is not present in Ukraine. President Putin wants peace and has been calling for it since the very start of the event, that is the ATO launched by Kiev back in 2014.

This is the Donbass who fights against Kiev. It is the US citizens who are forced to devote scarce resources to the dying puppet regime in Kiev (who will not avoid the country's default anyway + they have been downgraded), while Russia can stay away making peace proposals. If the US wants to put the fire, they will put it so it is necessary to be able to quickly turn it off to preserve what is most precious. That's why Putin considers peace of vital importance.

We can only guess who will be most effective - the US with their fuel container or the Russians with their fire extinguisher?

[Aug 30, 2015] 15 Science-Backed Way4s To Fall Asleep Faster

"A power nap is a sleep session that happens during the day (ideally between 1:00 to 4:00 PM) lasting between 10 and 30 minutes. Any longer and you run the risk of developing "sleep inertia" — that unpleasant groggy feeling that takes a considerable amount of time to shake off. And naps later than 4:00 PM can disrupt your regular nighttime sleep."

[Aug 30, 2015] Schedule for Week of August 30, 2015

Aug 29, 2015 | Calculated Risk

Jackdawracy wrote on Sat, 8/29/2015 - 5:42 am


Nobody expected communism to fall apart in 1989, not a single person had any inkling what was coming, from within or without. For quite a long time previously it was wondered how it could keep on going, and it dutifully did until inertia had it's say.

In many ways capitalism is the flipside of communism, and the latter kept us honest, but once we lost them as an arch-rival, what did we need honesty for anymore?

lawyerliz wrote on Sat, 8/29/2015 - 5:45 am (in reply to...)

Yes we need an honorable enemy/rival. I don't think it will be China, but perhaps India could make an honorable frenemy. I like Indians and we have Britain in common.

Jackdawracy wrote on Sat, 8/29/2015 - 5:47 am

The current diaspora ascending on Europe reminds me of when communism fell apart, the difference being that the bloc party then was thought of as a good thing.

Jackdawracy wrote on Sat, 8/29/2015 - 5:49 am (in reply to...)

We've effectively taken over communism's role as being the dishonest player in terms of a rivalry, but there doesn't appear to be an honest rival anywhere, we're all the same now.

Jackdawracy wrote on Sat, 8/29/2015 - 5:57 am (in reply to...)

Without a rivalry, the space race never gets off the ground. Liftoff would be a word with no meaning whatsoever.

Folks in Florida right now would have an inkling of a hurricane coming from the Caribbean, but have no idea the direction, speed, etc.

dilbert dogbert wrote on Sat, 8/29/2015 - 6:03 am (in reply to...)

Jackdawracy wrote:

In many ways capitalism is the flipside of communism, and the latter kept us honest, but once we lost them as an arch-rival, what did we need honesty for anymore?

Been reading others making the same point. Unrestrained Capitalism, just like unrestrained compound interest spirals out of control.
I for one welcome our new Unrestrained Capitalist Overlords!!! PS: Rents are still too damned low!!! Impeach Now!!!

[Aug 29, 2015] Here's Why The Markets Have Suddenly Become So Turbulent

Aug 29, 2015 | Zero Hedge
Submitted by Charles Hugh-Smith via,

When stock markets are free-falling 10+% in a matter of days, it's natural to seek some answers to the question "why now?"

Some are saying it was all the result of high-frequency trading (HFT), while others point to China's modest devaluation of its currency the renminbi (a.k.a. yuan) as the trigger.

Trying to finger the proximate cause of the mini-crash is an interesting parlor game, but does it really help us identify the trends that will shape markets going forward?

We might do better to look for trends that will eventually drag markets up or down, regardless of HFT, currency revaluations, etc.

Five Interconnected Trends

At the risk of stating the obvious, let's list the major trends that are already visible.

1. The China Story is Over

And I don't mean the high growth forever fantasy tale, I mean the entire China narrative is over:

  1. That export-dependent China can seamlessly transition to a self-supporting consumer economy.
  2. That China can become a value story now that the growth story is done.
  3. That central planning will ably guide the Chinese economy through every rough patch.
  4. That corruption is being excised from the system.
  5. That the asset bubbles inflated by a quadrupling of debt from $7 trillion in 2007 to $28 trillion can all be deflated without harming the wealth effect or future debt expansion.
  6. That development-dependent local governments will effortlessly find new funding sources when land development slows.
  7. That workers displaced by declining exports and automation will quickly find high-paying employment elsewhere in the economy.

I could go on, but you get the point: the entire Story is over. (I explained why in a previous essay, Is China's "Black Box" Economy About to Come Apart? )

This is entirely predictable. Every fast-growing economy starting with near-zero debt and huge untapped reserves of cheap labor experiences an explosive rise as the low-hanging fruit is plucked and the same abrupt stall and stagnation when the low-hanging fruit has all been harvested, leaving only the unavoidable results of debt-fueled speculation: an enormous overhang of bad debt, malinvestment (a.k.a. bridges to nowhere and ghost cities) and policies that seemed brilliant in the good old days that are now yielding negative returns.

2. The Emerging Market Story Is Also Done

Emerging currencies and markets have soared on the back of the China Story, as China's insatiable demand for oil, iron ore, copper, soy beans, etc. drove global demand to unparalleled heights.

This demand pushed prices higher, which then pushed production (supply) higher, as the low cost of capital globally enabled marginal resources to be put into production with borrowed money.

Now that China's demand has fallen off—by some accounts, China's GDP is actually in negative territory, despite official claims that it's still growing at 7% annually—commodity prices have crashed, taking the emerging markets' stock and currency markets down. (Source)

Here is a chart of Doctor Copper, a bellwether for industrial and construction demand:

Here is Brazil's stock market, which has declined 54% in the past 12 months:

These are catastrophic declines, and with China's growth story over, there is absolutely nothing on the global horizon to push demand back up.

3. Diminishing Returns on Additional Debt

The simple truth is that expanding debt has fueled global growth. Though people identify China as the driver of global demand for commodities, China's growth is debt-driven. As noted above, China quadrupled its officially tracked debt from $7 trillion in 2007 to $28 trillion as of mid-2014—an astonishing 282 percent of gross domestic product (GDP). If we add the estimated $5 trillion of shadow-banking system debt and another year's expansion of borrowing, China's total debt of $35+ trillion is in excess of 300% of GDP—levels associated with doomed to default states such as Greece and Spain.

While China has moved to open the debt spigot in recent days by lowering interest rates and reserve requirements, this doesn't make over-indebted borrowers good credit risks or more empty high-rises productive investments.

Borrowed money that poured into ramping up production in emerging nations is now stranded as prices have plummeted, rendering marginal production intensely unprofitable.

In sum: greatly expanding debt boosted growth virtually everywhere after the Global Financial Meltdown of 2008-2009. That fix is a one-off: not even China can quadruple its $35+ trillion debt to $140 trillion to reignite growth.

Here is a sobering chart of global debt growth:

4. Limits on Deficit-Spending (Borrowed) Fiscal Stimulus

When the global economy rolled over into recession in 2008, governments borrowed money by selling sovereign bonds to fund increased state spending. In the U.S., federal borrowing soared to over $1 trillion per year as the government sought to replace declining private spending with public spending.

Governments around the world have continued to run large deficits, piling up immense debts since 2008. The global move to near-zero yields has enabled governments to support these monumental debt loads, but even at near-zero yields, the interest payments are non-trivial. These enormous sovereign debts place some limits on how much governments can borrow in the next global recession—a slowdown many think has already started.

Here is a chart of U.S. sovereign debt, which has almost doubled since 2008:

As noted on the chart: what structural inadequacies or problems did governments fix by borrowing gargantuan sums to fund state spending? The basic answer is: none. All the same structural problems facing governments in 2008 remain untouched in 2015. These include: over-indebtedness, bad debts that haven't been written down, insolvent banks, soaring social spending as the worker-retiree ratio slips below 2-to-1, externalized environmental damage that has yet to be remediated, and so on.

5. Central Bank Stimulus (Quantitative Easing) as Social Policy Has Been Discredited

In the wake of the Global Financial Meltdown of 2008-2009, central banks launched monetary stimulus programs aimed at pumping money into the economy via bank lending. The stated goals of these stimulus programs were 1) boost employment (i.e. lower unemployment) and 2) generate enough inflation to stave off deflation, which is generally viewed as the cause of financial depressions.

While it can be argued that these unprecedented monetary stimulus programs achieved modest successes in terms of lowering unemployment and pushing inflation above the zero line, they also widened wealth and income inequality.

Even as these programs made modest dents in unemployment and deflation, they pushed asset valuations to the moon—assets largely owned by the few at the top of the wealth pyramid.

Here is a chart of selected developed economies' income/wealth skew:

The widespread recognition that the benefits of central bank stimulus mostly flowed to the top of the pyramid places political limits on future central bank stimulus programs.

The 2008-09 Fixes Are No Longer Available

In summary, the fixes for the 2008-09 recession are no longer available in the same scale or effectiveness. Expanding debt to push up demand and investment, rising state deficit spending, massive monetary stimulus programs—all of these now face limitations. This means the central banks and states have very limited tools to reignite growth as global recession trims borrowing, investment, hiring, sales and profits.

What Ultimately Matters: Capital Flows

In Part 2: What Happens Next Will Be Determined By One Thing: Capital Flows, we'll look at the one dynamic that ultimately establishes assets prices: capital flows.

I personally don't think the world has experienced a period in which capital preservation has become more important than capital appreciation since the last few months of 2008 and the first few months of 2009. Other than these five months, the focus has been on speculating to obtain the highest possible yield/appreciation.

This suggests to me that the next period of risk-off capital preservation will last a lot longer than five months, and perhaps deepen as time rewards those who adopted risk-off strategies early on.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)


Sure would be nice if the the Tylers would post up a real discussion about the Markets vs the Real Economy, policy failures and problems aren't resolved with the same thinking that created them.

Except the Central Wankers aren't really interested in the real economy, only the fictious one that wears the mask of financial markets.

Are we experiencing the Great Recession of 2015 or merely a painful paradigm shift in how the global economy is run? Many in the West quickly blame China for mismanagement of its economy and currency. This may or may not be true, but this is only a small fraction of a much bigger story. Has anything been learned since the financial crisis of 2008?

CrossTalking with Mitch Feierstein, Stephen Keen, and Mark Weisbrot.


Last week, 28 billion pulled out of the Market.

28 billion pumped in by the PPT, to keep the market from accelerating into margin calls and panic.

Ready, set, go on Monday. .Anyone else want out while the fed props this crap up a little longer?


The markets are turbulent because people with insight are pulling their money out of the market, flight capital in the face of a fast spreading global war. Obama's ISIS is now out of control, there is a mass migration from war zones in the Middle East and North Africa and, worse of all, jihadists are pouring into Western Europe and America. Smiling, friendly jihadists like the guy who wanted to kill everyone on that French train. I wonder if, behind that smile, Obama also is a jihadist? Nah, he is a NWO follower through and through.


What Ultimately Matters: Capital Flows.....

Sounds like somebody's been reading Martin Armstron's blog


"We will not have any more crashes in our time."
- John Maynard Keynes in 1927


...he said, assuming that his sound policies would be followed to the letter.

That the fiscal policies of Keyenes have been ingored in favor of monetary policy that just feeds asset bubbles lets Keynes off the hook.

I might add that Keynes believed in cutting deficits and increasing taxes in prosperious years and the opposite in down years. No one can say that his policies have been followed in the least.


Quantitative Easing Redux?

Fed officials always try to disconnect the bank's actions from stock-market gyrations, but history doesn't support that indifference.

By Vito J. Racanelli

August 29, 2015

If a "rate hike" is Wall Street's obsession this year, the effective opposite, "quantitative easing," gets much less mention after three mammoth rounds of central-bank asset buying, or quantitative easing, in the past few years. But what's that we hear? Another thing the Fed's Dudley said last Wednesday was, "I'm a long way from quantitative easing. The U.S. economy is performing quite well."

Fed officials always try to disconnect the bank's actions from stock-market gyrations, but history doesn't support that indifference. "It will take less than a 20% decline in U.S. stock prices for the Fed to begin discussing a new round of quantitative easing," says Darren Pollock, a portfolio manager with Cheviot Value Management.

On several occasions in recent years, a Fed official has stepped in with easing statements following market routs. The Fed knows it can't let the stock market fall without backpedaling on its tough monetary talk, Pollock says. It must try to keep stock prices from plummeting and pulling down consumer confidence, which could affect the economy.

Stocks recovered big-time last week, but remain vulnerable. Should the market fall some more, Pollock says, "It may force the Fed to do a U-turn and speak of a willingness to provide more stimulus—like QE."

The Fed won't let all the effort and money invested in propping up the economy since 2008 go to waste. It won't stand at the plate and strike out looking. The Yellen put lives.

Temerity Trader

If the Fed bankers are so f***ing omnipotent, then they would NEVER let the markets drop at all. Why should they? It just makes the highly trained and obedient lemmings, get fearful and panic. The Dow tumbled almost 3,000 points from its recent Fed-enabled all time-high. Why did they not stop it, and stop EVERY fall, at -250 or so? Why did they not stop the last big decline to below 7K? Everyone would remain blissfully ignorant and living happily ever after in their personal 'Matrix'. If the Fed wound up owning 50% of the entire market float, who cares so long as millions of 401K's go up?

Or, are these falls engineered conspiracies only designed to allow the wealthy to put billions in cash to work, before the next Fed pump begins? Maybe. At any rate, if the "growth" story is really dead and millions more immigrants just accelerate the decline of America, than more debt to hide the mess will fail. Entitlements will have to be cut, sowing the seeds of more anger in the entitled masses.

In the end, Mr. Market will tame and humble even the arrogant Fed bankers and the multitudes who worship them.

I Write Code

CHS swings, and misses.

QE as social policy was never more than an academic's vaporous apparition, like the succubus scene in Ghostbusters.

Here's my take on the "China Story", which is they've now stolen all the manufacturing they can and now, for the first time in twenty years, can no longer grow by mere theft (of course I mean "theft" in a good way, they work smart and hard to "steal" manufacturing from the US and Europe, it's the vulture capitalists at *our* end who are the criminals).

And, maybe their vaunted central planners didn't see this coming and they smashed through the wall and over the cliff. Oops.

But y'know, it's not a disaster for all that, just an overshoot that requires a correction. It's not like China is about to dry up and blow away.


Charles Hugh Smith has done twice as well as I could have done here.

I like what he explained about China for instance. I'm still reading through it, think this would be great to forward to the DNC, RNC, and Congressmen.

The Federal Reserve Created our Banking System.

I think it is fair to place the blame on the FED and to end the FED on this basis... while stressing the S&L Crisis, the Deregulation, and the 2008 Global Financial Collapse which surely might have triggered a war with Europe. And the fact that the US TBTF Banks are much bigger than European Banks since the crisis even though the are responsible for poor stewardship of the World Reserve Currency and for Toxic Paper spread to pension funds world wide.

Of course the solutions will be more controversial than this article that lays out part of the problem or symptoms.

Solutions are like the Third Rail.

tall sarah

The multiple rounds of QE and ZIRP put the markets and the economy on a course for failure. There were four trends in place before the Great Depresion and FED POLICIES cemented those trends in place for this time period.

1. the rich got richer- thanks to QE/ZIRP

2. investing turned to speculation- on steroids thanks to QE/ZIRP

3. soaring market credit- thanks to QE and ZIRP

4. lagging business investment- stock buybacks are at all time highs since tracking began in 1990. Stock buy backs are not a business investmet. They are a disinvestment. A stock buy back is a loud and clear signal that there is no reason to invest in the business because economic conditions are not present that would allow the business to recoup those monies.

The FED is the ultimate cause of all our woes as everyone at this site knows. Spread the word to those who do not. Preaching to the choir will not bring the end to the FED.


Don't forget to mention that US and EU enables China's corruption to continue by providing a safe place for money laundering. Asset prices in US are dramatically effected by China and other EM's corrupt practices

[Aug 29, 2015] Fly Me To the Moon

Qualis dominus talis est servus.
As is the master, so is the servant.

Titus Petronius

Stocks came in weakly, but managed to rally in the last hour to closely largely unchanged.

The GDP revision for 2Q yesterday was a bit much.

The conversation on financial tv today was replete with interviews from that moveable feast of finance, from the rarified world at Jackson Hole, where the black swans of monetary policy return every so often to molt old forecasts and acquire new ones that are certain to work better than the last seven years of the same old thing.

Mostly it is just the usual nonsense. Alan Blinder had some interesting and surprisingly realistic things to say. Most of the others were just mouth breathing the talking points about our exceptional and improving economy which will allow the Fed to raise interest rates.

The research paper from the Fed asserting that the US is relatively immune (ok they said insulated) from global currency and economic shocks because of the position of the dollar as the settling currency of choice for international invoices was-- interesting. Why is it that so many economic, and especially monetary, theories feel so comfortable inhabiting an alternate universe where trees are blue and pigs can fly?

And as a particularly astute reader observed, if this is actually true, is there any wonder why the rest of the world would resent the dollar hegemony if it grants that sort of power to the single nation that controls it? That they are able to wreak havoc on the rest of the world, exporting malinvestment and willfully fraudulent financial instruments, without having to endure any consequences?

Well it doesn't work so nicely as that, but yes they do resent it for other reasons, and they have been doing more than resenting it for some time now. And that is the basis for the 'currency war' that these jokers still do not understand. They think it is only 'currency devaluations' which, along with tariffs, was the tactic of choice in the last currency war in the 1930's.

But the one that left me gaping was the tendentious conversation this afternoon on Bloomberg about how fragile China and its markets are. And as evidence they cited the 'obvious interventions' in their stock market this week, wherein the Chinese markets slump, but then miraculously recover in the last hours of trading. They are obviously doing this so the leadership will not be embarrassed for their 70th commemoration of the end of WWII next week. Which by the way, the US is gracelessly boycotting.

Knock, knock, hello? Is self-awareness or unintentional irony at home?

Is there any doubt that we have been seeing the exact types of intervention by a powerful unseen hand in our own stock markets this week, on steroids, after the Monday flash crash? Does that mean that our economy is fragile and doomed as well?

Do these people actually believe what they are saying, or is this just some clumsy attempt to try to reassure our public that if their public gets into trouble there is no need to panic because, wait for it, we are so much better, more wisely and so much more virtuously blessed to be led by those archangels of benevolent wisdom in Washington and New York.

One can only wonder.

Have a pleasant weekend.

[Aug 29, 2015] Maintaining Confidence - Keep On Dancing

Aug 29, 2015 | Jesse's Café Américain

The action was a bit heavy in the metals today, as the Powers-That-Be quietly attempted to restore confidence and a sense of well-being and recovery after the somewhat disconcerting equity market plunge of Monday.

There was intraday commentary here about some interesting Goldman Sachs activity in an otherwise exceptionally sleepy week at The Bucket Shop.

People often ask me for a possible motive as to why central banks might care about gold and silver. Willem Middelkoop does a decent job of briefly explaining why in the first pictorial below. It is all a part of the confidence game, when a series of bad decisions place a strain on one's full faith and credit.

The goal of the financial class is to keep the music going, and the public out there on the floor dancing so they don't have time to think.

Still out there bottom watching.

Have a pleasant weekend.

[Aug 29, 2015] Leveraged Financial Speculation to GDP in the US at a Familiar Peak, Once Again

Aug 29, 2015 |
"I believe myriad global "carry trades" – speculative leveraging of securities – are the unappreciated prevailing source of finance behind interlinked global securities market Bubbles. They amount to this cycle's government-directed finance unleashed to jump-start a global reflationary cycle.

I'm convinced that perhaps Trillions worth of speculative leverage have accumulated throughout global currency and securities markets at least partially based on the perception that policymakers condone this leverage as integral (as mortgage finance was previously) in the fight against mounting global deflationary forces."

Doug Noland, Carry Trades and Trend-Following Strategies

The basic diagnosis is correct. But the nature of the disease, and the appropriate remedies, may not be so easily apprehended, except through simple common sense. And that is a rare commodity these days.

Like a dog returns to its vomit, the Fed's speculative bubble policy enables the one percent to once again feast on the carcass of the real economy.

'And no one could have ever seen it coming.'

Once is an accident.

Twice is no coincidence.

Remind yourself what has changed since then. Banks have gotten bigger. Schemes and fraud continue.

What will the third time be like? And the fourth?

Do you think that Jamie bet Lloyd a dollar that they couldn't do it again?

Should we ask them to please behave, levy some token fines, watch the politicans yell and posture in some toothless public hearings, let all of them keep their jobs and their bonuses? And then bail them out, wind up the old Victrola, and have another go at the same old thing again?

Maybe we can vote for one of their hired servants, or skip the middlemen and vote for one of the arrogant hustlers themselves, and hope they get tired of taking us for a ride before we all go broke.

This policy we have now is the trickle down stimulus that the wealthy financiers have been sucking on with every opportunity that they have made for themselves since the days of Andrew Jackson. Whenever the ability to create and distribute money has been handed over by a craven Congress to private corporations and banking cartels without sufficient oversight and regulation, excessive speculation, financial recklessness, and moral hazard have acted like a plague of misery and stagnation on the real economy.

"Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the Bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank.

You tell me that if I take the deposits from the Bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin!

You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out."

From the original minutes of the Philadelphia bankers sent to meet with President Jackson February 1834, from Andrew Jackson and the Bank of the United States (1928) by Stan V. Henkels

I believe all of the above is entirely possible. Because we still have an unashamed cadre of quack economists and their ideologically blind followers blaming the victims, prescribing harsh punishments for the weak, laying all the blame on 'government' and not corrupt officials on the payrolls of Big Money, and giving the gods of the market and their masters of the universe a big kiss on the head, and expecting them to just do the right thing the next time out of the natural goodness of their unrestrained natures the next time. What could go wrong with that?

Genuine reform. It's too much work, and too much trouble.

Related: Comprehensive Tally of Banker Fraud

h/t Jesse Felder for the chart

[Aug 29, 2015] Joe Biden's Son Blames Russian Agents For Ashley Madison Profile

See also "Amorality and criminality of neoliberal elite"
Aug 29, 2015 | Zero Hedge
Last night we heard the best 'excuse' yet if you are caught with an Ashley Madison account, from Dan Loeb - "due diligence." Today, not to be outdone by a married hedge fund manager, Vice-President Joe Biden's son "Hunter" has unleashed his own set of excuses for member ship of the extramarital affairs website, as Breitbart reports - Biden thinks international agents, possibly Russian, who objected to his board membership with a Ukrainian gas company set up a fake account to discredit him. However, IP mapping suggests otherwise...

As Breitbart reports,

Vice President Joe Biden's son Hunter Biden's account on the extramarital dating website Ashley Madison was used and likely created on the Georgetown University campus while Biden was teaching there.

Business executive Robert "Hunter" Biden, reportedly an adviser to his father's political career, told Breitbart News Monday that he suspected his enemies of creating a fake Ashley Madison account for him in order to discredit him. The email address provided for "Robert Biden's" account matched a personal email address once used by Biden, the vice president's son confirmed.

Biden thinks international agents, possibly Russian, who objected to his board membership with a Ukrainian gas company set up a fake account to discredit him. A source close to Biden told People Magazine after the first Breitbart story ran that the IP address for the account traces to Jacksonville, Florida.

But account information shows that the profile, which was confirmed by a credit card purchase in 2014, was used at the latitude/longitude point of 38.912682, -77.071704.

That latitude-longitude point just happens to exist on the Georgetown University campus, at an administrative building on Reservoir Road. And Hunter Biden just happened to be teaching there around the time the account was set up.

* * *
Faced with the new information, representatives for Biden said that the vice president's son would not comment on the story beyond his original statements to Breitbart News denying that the account was his.


Biden's son discharged from Navy after testing positive for cocaine

He could be head of the ethics committee for the House of Lords.


At least his character flaws are in no way reflective of his father.
You know, apples never fall too far from the trees, stuff.

Hunter says: Hey, quit pickin' on me. Everybody has to try to get a head somehow!


ROFLMAO!!!!!!!!!!!!!!!! Can't wait until they find Joe's profile....


"The truth about the conflict with Russia"

Aw c'mon..

Chevron, Shell, Monsanto, Cargill and others all had deals worth hundreds of billions with Ukraine prior to the Nuland putsch.

When Yanukovych swung toward Russia's Trade Union instead of the EU, Nuland used the $5 billion of NGO and western sympathizers she bought over the years, spent a little more and engineered the violent coup and subsequent civil warfare.

The US sought to marginalize Russia and kick them out of Sevastopol but surprise, surprise the locals would have none of that. Neither would Russia and the next thing you know Crimea voted to be absorbed once again by Russia and Nuland is left with crap on her face. Since the Donbass would have none of that either, 6,000 people are now dead and the Ukraine is a basket case that the west will have to pay for.

There may be some ethnic animosities in play too, but the real motivations are geo-political and economical.


The most-credible bits of information I've found support your summary.

It's sad.

I doubt the West will pay for the cleanup in Ukraine without some form of ROI. That expense will fall on their non-Russian neighbors who will be directly affected by starving neighbors this winter, with Poland carrying the bulk.

I doubt the ethnic problems will play a significant role, aside from pro-Russia Ukrainians feeling less charitable than otherwise.


The most-credible bits of information I've found support your summary.

It's sad.

I doubt the West will pay for the cleanup in Ukraine without some form of ROI. That expense will fall on their non-Russian neighbors who will be directly affected by starving neighbors this winter, with Poland carrying the bulk.

I doubt the ethnic problems will play a significant role, aside from pro-Russia Ukrainians feeling less charitable than otherwise.


Demented mass-murderer Putin is also a hacker and a blackmailer?

Since the beginning of the week, the three most influential mass circulation newsmagazines of the United States, Britain, and Germany—Time, The Economist, and Der Spiegel—have published cover stories that combine wild accusations against Vladimir Putin with demands for a showdown with Russia.

The most striking and obvious characteristic of these cover stories is that they are virtually identical. The CIA has scripted them all. The stories employ the same insults and the same fabrications. They denounce Putin's "web of lies." The Russian president is portrayed as a "depraved" mass murderer.

[Aug 29, 2015] U.S. Inflation Developments

This establishment stooge can't care less about employment. All he cares is 0.1%.
"..."and the labor market is approaching our maximum employment objective..." I stopped reading there."
"...The wealthy special interests really want a rate hike. There must be a large amount of profit riding on a rate hike."
"..."The Fed is being clear. They are not going to be responsible for full employment. Full employment is up to Congress, fiscal policy and the administration. Of course, the GOP Congress will block fiscal stimulus." We are ruled by idiots. "
"...Idiots [pandering to those who will get a larger piece of the pie, and] who don't care that the "pie" shrinks. When the fed goes insane on rates the shorters (wall st gamblers/hedgers) and the cash hoarders will celebrate. It is not idiocy it is [class treachery] selling out the masses for the rentier class. A skirmish in the class wars, maybe Bernie would comment."
"...Industrial Deflation is what causes inflation to look "low". This was a problem in the 00's when consumer price inflation was being covered up by deflation in industrial prices. The way prices are computed and trimmed don't always reflect reality. The deflation caused by the tech revolution for industrial production needs to be outright stripped out of indices.

The mythical "full employment" or a overheated economy doesn't imply inflation is coming either. This is where I reject most of the analysis on this board. Inflation didn't see it in 97 or especially in 05. It failed. All you have left is to guess. "
"...What Fisher and the other governors can't and won't say is that they are very worried about another major global downturn, and they are worried about the fact that if interest rates are not higher when that recession hits, they will have no room to lower them sharply when they need to."

[A speech by Stanley Fischer at Jackson Hole turned into a pretend interview]

Hello, and thank you for talking with us.

Let me start by asking if you feel like it gives the Fed a bad image to have a conference in an elite place like Jackson Hole. Why not have the conference in, say, a disadvantaged area to send the signal that you care about these problems, to provide some stimulus to the area, etc.?

I am delighted to be here in Jackson Hole in the company of such distinguished panelists and such a distinguished group of participants.

Okay then. Let me start be asking about your view of the economy. How close are we to a full recovery?:

Although the economy has continued to recover and the labor market is approaching our maximum employment objective, inflation has been persistently below 2 percent. That has been especially true recently, as the drop in oil prices over the past year, on the order of about 60 percent, has led directly to lower inflation as it feeds through to lower prices of gasoline and other energy items. As a result, 12-month changes in the overall personal consumption expenditure (PCE) price index have recently been only a little above zero (chart 1).

Why are you telling us about headline inflation? What about core inflation? Isn't that what the Fed watches?

...measures of core inflation, which are intended to help us look through such transitory price movements, have also been relatively low (return to chart 1). The PCE index excluding food and energy is up 1.2 percent over the past year. The Dallas Fed's trimmed mean measure of the PCE price index is higher, at 1.6 percent, but still somewhat below our 2 percent objective. Moreover, these measures of core inflation have been persistently below 2 percent throughout the economic recovery. That said, as with total inflation, core inflation can be somewhat variable, especially at frequencies higher than 12-month changes. Moreover, note that core inflation does not entirely "exclude" food and energy, because changes in energy prices affect firms' costs and so can pass into prices of non-energy items.

So are you saying you don't believe the numbers? Why bring up that core inflation is highly variable unless you are trying to de-emphasize this evidence? In any case, isn't there reason to believe these numbers are true, i.e. doesn't the slack in the labor market imply low inflation?

Of course, ongoing economic slack is one reason core inflation has been low. Although the economy has made great progress, we started seven years ago from an unemployment rate of 10 percent, which guaranteed a lengthy period of high unemployment. Even so, with inflation expectations apparently stable, we would have expected the gradual reduction of slack to be associated with less downward price pressure. All else equal, we might therefore have expected both headline and core inflation to be moving up more noticeably toward our 2 percent objective. Yet, we have seen no clear evidence of core inflation moving higher over the past few years. This fact helps drive home an important point: While much evidence points to at least some ongoing role for slack in helping to explain movements in inflation, this influence is typically estimated to be modest in magnitude, and can easily be masked by other factors.

If that's true, if the decline in the slack in the labor market does not translate into a notable change in inflation, why is the Fed so anxious to raise rates based upon the notion that the labor market has almost normalized? Is there more to it than just the labor market?

...core inflation can to some extent be influenced by oil prices. However, a larger effect comes from changes in the exchange value of the dollar, and the rise in the dollar over the past year is an important reason inflation has remained low (chart 4). A higher value of the dollar passes through to lower import prices, which hold down U.S. inflation both because imports make up part of final consumption, and because lower prices for imported components hold down business costs more generally. In addition, a rise in the dollar restrains the growth of aggregate demand and overall economic activity, and so has some effect on inflation through that more indirect channel.

That argues against a rate increase, not for it. Anyway, I interrupted, please continue.

Commodity prices other than oil are also of relevance for inflation in the United States. Prices of metals and other industrial commodities, and agricultural products, are affected to a considerable extent by developments outside the United States, and the softness we've seen in these commodity prices, has in part reflected a slowing of demand from China and elsewhere. These prices likely have also been a factor in holding down inflation in the United States.

So you must believe that all of these forces holding down inflation (many of which are stripped out by core inflation measures, which are also low) that these factors are easing, and hence a spike in inflation is ahead?

The dynamics with which all these factors affect inflation depend crucially on the behavior of inflation expectations. One striking feature of the economic environment is that longer-term inflation expectations in the United States appear to have remained generally stable since the late 1990s (chart 6). ... Expectations that are not stable, but instead follow actual inflation up or down, would allow inflation to drift persistently. In the recent period, movements in inflation have tended to be transitory.

Let's see, lots of factors holding down inflation, longer-term inflation expectations have been stable throughout the recession and recovery, remarkably so, yet the Fed still thinks a rate raise ought to come fairly soon?

We should however be cautious in our assessment that inflation expectations are remaining stable. One reason is that measures of inflation compensation in the market for Treasury securities have moved down somewhat since last summer (chart 7). But these movements can be hard to interpret, as at times they may reflect factors other than inflation expectations, such as changes in demand for the unparalleled liquidity of nominal Treasury securities.

I have to be honest. That sounds like the Fed is really reaching to find a reason to justify worries about inflation and a rate increase. Let me ask this a different way. In the Press Release for the July meeting of the FOMC, the committee said it can be " reasonably confident that inflation will move back to its 2 percent objective over the medium term." Can you explain this please? Why are you "reasonably confident" in light of recent history?

Can the Committee be "reasonably confident that inflation will move back to its 2 percent objective over the medium term"? As I have discussed, given the apparent stability of inflation expectations, there is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further. While some effects of the rise in the dollar may be spread over time, some of the effects on inflation are likely already starting to fade. The same is true for last year's sharp fall in oil prices, though the further declines we have seen this summer have yet to fully show through to the consumer level. And slack in the labor market has continued to diminish, so the downward pressure on inflation from that channel should be diminishing as well.

Yet when these forces were absent -- they weren't there throughout the crisis -- inflation was still stable. But this time will be different? I guess falling slack in the labor market will make all the difference? More on labor markets in a moment, but let me ask if you have more to say about inflation expectations first.

...with regard to expectations of inflation, it is possible to consult the results of the SEP, the Survey of Economic Projections, which FOMC participants complete shortly before the March, June, September, and December meetings. In the June SEP, the central tendency of FOMC participants' projections for core PCE inflation was 1.3 percent to 1.4 percent this year, 1.6 percent to 1.9 percent next year, and 1.9 percent to 2.0 percent in 2017. There will be a new SEP for the forthcoming September meeting of the FOMC.
Reflecting all these factors, the Committee has indicated in its post-meeting statements that it expects inflation to return to 2 percent. With regard to our degree of confidence in this expectation, we will need to consider all the available information and assess its implications for the economic outlook before coming to a judgment.

You will need to consider all the available information, I agree wholeheartedly with that. I just hope that information includes how poor forecasts like those just cited have been in the past, and the Fed's own eagerness to see "green shoots" again and again, far before it was time for such declarations.

What might deter the Fed from it's intention to raise rates sooner rather than later?

Of course, the FOMC's monetary policy decision is not a mechanical one, based purely on the set of numbers reported in the payroll survey and in our judgment on the degree of confidence members of the committee have about future inflation. We are interested also in aspects of the labor market beyond the simple U-3 measure of unemployment, including for example the rates of unemployment of older workers and of those working part-time for economic reasons; we are interested also in the participation rate. And in the case of the inflation rate we look beyond the rate of increase of PCE prices and define the concept of the core rate of inflation.

I find these kinds of statement difficult to square with the statement that labor markets are almost back to normal. Anyway, what, in particular, will you look at?

While thinking of different aspects of unemployment, we are concerned mainly with trying to find the right measure of the difficulties caused to current and potential participants in the labor force by their unemployment. In the case of the core rate of inflation, we are mainly looking for a good indicator of future inflation, and for better indicators than we have at present.

How do recent events in China change the outlook for policy?

In making our monetary policy decisions, we are interested more in where the U.S. economy is heading than in knowing whence it has come. That is why we need to consider the overall state of the U.S. economy as well as the influence of foreign economies on the U.S. economy as we reach our judgment on whether and how to change monetary policy. That is why we follow economic developments in the rest of the world as well as the United States in reaching our interest rate decisions. At this moment, we are following developments in the Chinese economy and their actual and potential effects on other economies even more closely than usual.

I know you won't answer this directly, but let me try anyway. When will rates go up?

The Fed has, appropriately, responded to the weak economy and low inflation in recent years by taking a highly accommodative policy stance. By committing to foster the movement of inflation toward our 2 percent objective, we are enhancing the credibility of monetary policy and supporting the continued stability of inflation expectations. To do what monetary policy can do towards meeting our goals of maximum employment and price stability, and to ensure that these goals will continue to be met as we move ahead, we will most likely need to proceed cautiously in normalizing the stance of monetary policy. For the purpose of meeting our goals, the entire path of interest rates matters more than the particular timing of the first increase.

As expected, that was pretty boilerplate. When rates do go up, how fast will they rise?

With inflation low, we can probably remove accommodation at a gradual pace. Yet, because monetary policy influences real activity with a substantial lag, we should not wait until inflation is back to 2 percent to begin tightening. Should we judge at some point in time that the economy is threatening to overheat, we will have to move appropriately rapidly to deal with that threat. The same is true should the economy unexpectedly weaken.

The Fed has said again and again that it's 2 percent inflation target is symmetric with respect to errors, i.e. it will get no more worried or upset about, say, a .5 percent overshoot of the target than it will an undershoot of the same magnitude (2.5 percent versus 1.5 percent). However, many of us suspect that the 2 percent target is actually a ceiling, not a central tendency, or that at the very least the errors are not treated symmetrically, and statements such as this do nothing to change that view.

I have quite a few more questions, and I wish we had time to hear your response to the charge that the 2 percent target is functionally a ceiling, but I know you are out of time and need to go, so let me just thank you for talking with us today. Thank you.

bakho said...

The wealthy special interests really want a rate hike. There must be a large amount of profit riding on a rate hike.

The Fed is being clear. They are not going to be responsible for full employment. Full employment is up to Congress, fiscal policy and the administration. Of course, the GOP Congress will block fiscal stimulus. Wealthy special interests would like the economy to be less good by this time next year to tilt the presidential election their way.

ilsm -> pgl...

The fed (Cossacks) works for the .1% (Tsar).


"and the labor market is approaching our maximum employment objective..."

I stopped reading there.

Peter K. -> Sandwichman...

Yeah. Nice appointment, thanks Obama....

ilsm -> Sandwichman...

Mc Donald's may have to start paying $7.75!!

pgl -> ilsm...

Actually some are paying $9. Oh my - a Big Mac might actually cost something.

ilsm -> pgl...

The big mac is helping out your embalmer.

Joke is most of us cannot afford anything more than a cremator.

Cardiologists follow Mickey D sales!

anne -> Sandwichman...

"and the labor market is approaching our maximum employment objective..." I stopped reading there.

[ Really, really awful comment but limiting employment is what Stanley Fischer is all about so the only surprise is in the saying so. ]

pgl -> Sandwichman...

But later he admitted there was ongoing economic slack. He sounded very confused.

Peter K. -> pgl...

On the one hand he's trying to inspire confidence in the economy, cheerlead, and clap his hands to conjure the confidence fairy.

On the other he's being more realistic which hopefully is their frame of mind when making interest rate decisions.

One is public relations, one is where the rubber hits the road.

RC AKA Darryl, Ron -> Peter K....

A rubber chicken in every pot :<0

Peter K. said...

"Although the economy has made great progress, we started seven years ago from an unemployment rate of 10 percent, which guaranteed a lengthy period of high unemployment."

It didn't guarantee it. An insufficient monetary-fiscal mix guaranteed a lengthy period of high unemployment, wage stagnation and increasing inequality.

But at least inflation remained low and the deficit came down!

ilsm -> Peter K....

If UE rate counted people out longer than 26 weeks......

anne said...

January 4, 2015

Employment-Population Ratios, 2014

United States ( 76.7) *

Australia ( 78.8)
Austria ( 83.4)
Belgium ( 79.1)
Canada ( 81.2)

Denmark ( 82.0)
Finland ( 80.4)
France ( 80.5)
Germany ( 83.5)

Greece ( 62.4)
Iceland ( 85.7)
Ireland ( 72.3)
Israel ( 78.2)

Italy ( 67.9)
Japan ( 82.1)
Korea ( 75.7)
Luxembourg ( 83.7)

Netherlands ( 81.7)
New Zealand ( 81.8)
Norway ( 83.9)
Portugal ( 77.4)

Spain ( 67.4)
Sweden ( 85.4)
Switzerland ( 86.9)
United Kingdom ( 82.0)

* Employment age 25-54

anne said...

January 4, 2015

Employment-Population Ratios for Women, 2014

United States ( 70.0) *

Australia ( 72.0)
Austria ( 80.3)
Belgium ( 74.9)
Canada ( 77.4)

Denmark ( 78.4)
Finland ( 78.0)
France ( 76.2)
Germany ( 78.8)

Greece ( 53.1)
Iceland ( 82.1)
Ireland ( 66.6)
Israel ( 74.3)

Italy ( 57.6)
Japan ( 71.8)
Korea ( 62.7)
Luxembourg ( 76.8)

Netherlands ( 76.5)
New Zealand ( 74.9)
Norway ( 81.4)
Portugal ( 74.3)

Spain ( 62.3)
Sweden ( 82.8)
Switzerland ( 81.8)
United Kingdom ( 76.1)

* Employment age 25-54

anne -> anne...

As in the child's game, one of these things is not like the other, the United States employment-population ratio for men and women, and for women, from 25 to 54 was remarkably lower than 19 of 24 developed countries in 2014. The exceptions were the austerity beset countries Ireland, Spain, Italy and Greece as well as Korea in which women are just entering the workforce in significant numbers.

pgl -> bakho...

"The Fed is being clear. They are not going to be responsible for full employment. Full employment is up to Congress, fiscal policy and the administration. Of course, the GOP Congress will block fiscal stimulus."

We are ruled by idiots.

ilsm -> pgl...

Idiots [pandering to those who will get a larger piece of the pie, and] who don't care that the "pie" shrinks. When the fed goes insane on rates the shorters (wall st gamblers/hedgers) and the cash hoarders will celebrate. It is not idiocy it is [class treachery] selling out the masses for the rentier class.

A skirmish in the class wars, maybe Bernie would comment.

Mike Sparrow said...

Industrial Deflation is what causes inflation to look "low". This was a problem in the 00's when consumer price inflation was being covered up by deflation in industrial prices. The way prices are computed and trimmed don't always reflect reality. The deflation caused by the tech revolution for industrial production needs to be outright stripped out of indices.

The mythical "full employment" or a overheated economy doesn't imply inflation is coming either. This is where I reject most of the analysis on this board. Inflation didn't see it in 97 or especially in 05. It failed. All you have left is to guess.

Peter K. said...

Scroll, scroll, scroll:


"I just hope that information includes how poor forecasts like those just cited have been in the past, and the Fed's own eagerness to see "green shoots" again and again, far before it was time for such declarations."

Well put. This is probably why markets don't fear an uptick in inflation anytime soon. Quite the contrary. It's probably partly why longterm inflation expectations are "stable."

anne said...

August 28, 2015

A Cautionary History of US Monetary Tightening
By J. Bradford DeLong

BERKELEY – The US Federal Reserve has embarked on an effort to tighten monetary policy four times in the past four decades. On every one of these occasions, the effort triggered processes that reduced employment and output far more than the Fed's staff had anticipated. As the Fed prepares to tighten monetary policy once again, an examination of this history – and of the current state of the economy – suggests that the United States is about to enter dangerous territory.

Between 1979 and 1982, then-Fed Chair Paul Volcker changed the authorities' approach to monetary policy. His expectation was that by controlling the amount of money in circulation, the Fed could bring about larger reductions in inflation with smaller increases in idle capacity and unemployment than what traditional Keynesian models predicted.

Unfortunately for the Fed – and for the American economy – the Keynesian models turned out to be accurate; their forecasts of the costs of disinflation were dead on. Furthermore, this period of monetary tightening had unexpected consequences; financial institutions like Citicorp found that only regulatory forbearance saved them from having to declare bankruptcy, and much of Latin America was plunged into a depression that lasted more than five years.

Then, between 1988 and 1990, another round of monetary tightening under Alan Greenspan ravaged the balance sheets of the country's savings and loan associations, which were overleveraged, undercapitalized, and already struggling to survive. To prevent the subsequent recession from worsening, the federal government was forced to bail out insolvent institutions. State governments were on the hook, too: Texas spent the equivalent of three months of total state income to rescue its S&Ls and their depositors.

Between 1993 and 1994, Greenspan once again reined in monetary policy, only to be surprised by the impact that small amounts of tightening could have on the prices of long-term assets and companies' borrowing costs. Fortunately, he was willing to reverse his decision and cut the tightening cycle short (over the protests of many on the policy-setting Federal Open Markets Committee) – a move that prevented the US economy from slipping back into recession.

The most recent episode – between 2004 and 2007 – was the most devastating of the four. Neither Greenspan nor his successor, Ben Bernanke, understood how fragile the housing market and the financial system had become after a long period of under-regulation. These twin mistakes – deregulation, followed by misguided monetary-policy tightening – continue to gnaw at the US economy today.

The tightening cycle upon which the Fed now seems set to embark comes at a delicate time for the economy. The US unemployment rate may seem to hint at the risk of rising inflation, but the employment-to-population ratio continues to signal an economy in deep distress. Indeed, wage patterns suggest that this ratio, not the unemployment rate, is the better indicator of slack in the economy – and nobody ten years ago would have interpreted today's employment-to-population ratio as a justification for monetary tightening.

Indeed, not even the Fed seems convinced that the economy faces imminent danger of overheating. Inflation in the US is not just lower than the Fed's long-term target; it is expected to stay that way for at least the next three years. And the Fed's change in policy comes at a time when its own economists believe that US fiscal policy is inappropriately restrictive.

Meanwhile, given the fragility – and interconnectedness – of the global economy, tightening monetary policy in the US could have negative impacts abroad (with consequent blowback at home), especially given the instability in China and economic malaise in Europe....

Dan Kervick said...

"At this moment, we are following developments in the Chinese economy and their actual and potential effects on other economies even more closely than usual."

I think this is probably the most important sentence in the entire speech.

What Fisher and the other governors can't and won't say is that they are very worried about another major global downturn, and they are worried about the fact that if interest rates are not higher when that recession hits, they will have no room to lower them sharply when they need to.

Richard H. Serlin said...

But what about asymmetric loss Dr. Fischer?!

You have to know what that is.

Why don't you think the loss and overall risk is much bigger from pulling the trigger too early than from pulling the trigger too late?

How is inflation that gets up to 3%, 4%, even higher single digits more of a danger than a lost decade, severe unemployment (low labor force participation) and underemployment? Especially when overly high inflation is far easier to remedy?

I really really wonder what you're really thinking.

Richard H. Serlin -> Richard H. Serlin...

And I also seriously wonder how much of it has to do with the fact that no one ever making these decisions ever has any risk of ever being unemployed without means and with a family to support.

[Aug 29, 2015] Great Recession Job Losses Severe, Enduring

Nothing particularly surprising here -- the Great recession was unusually severe and unusually long, and hence had unusual impacts, but it's good to have numbers characterizing what happened:

Great Recession Job Losses Severe, Enduring: Of those who lost full-time jobs between 2007 and 2009, only about 50 percent were employed in January 2010 and only about 75 percent of those were re-employed in full-time jobs.
The economic downturn that began in December 2007 was associated with a rapid rise in unemployment and with an especially pronounced increase in the number of long-term unemployed. In "Job Loss in the Great Recession and its Aftermath: U.S. Evidence from the Displaced Workers Survey" (NBER Working Paper No. 21216), Henry S. Farber uses data from the Displaced Workers Survey (DWS) from 1984-2014 to study labor market dynamics. From these data he calculates both the short-term and medium-term effects of the Great Recession's sharply elevated rate of job losses. He concludes that these effects have been particularly severe.

Of the workers who lost full-time jobs between 2007 and 2009, Farber reports, only about 50 percent were employed in January 2010 and only about 75 percent of those were re-employed in full-time jobs. This means only about 35 to 40 percent of those in the DWS who reported losing a job in 2007-09 were employed full-time in January 2010. This was by far the worst post-displacement employment experience of the 1981-2014 period.
The adverse employment experience of job losers has also been persistent. While both overall employment rates and full-time employment rates began to improve in 2009, even those who lost jobs between 2011 and 2013 had very low re-employment rates and, by historical standards, very low full-time employment rates.
In addition, the data show substantial weekly earnings declines even for those who did find work, although these earnings losses were not especially large by historical standards. Farber suggests that the earnings decline measure from the DWS is appropriate for understanding how job loss affects the earnings that a full-time-employed former job-loser is able to command.
The author notes that the measures on which he focuses may understate the true economic cost of job loss, since they do not consider the value of time spent unemployed or the value of lost health insurance and pension benefits.
Farber concludes that the costs of job losses in the Great Recession were unusually severe and remain substantial years later. Most importantly, workers laid off in the Great Recession and its aftermath have been much less successful at finding new jobs, particularly full-time jobs, than those laid off in earlier periods. The findings suggest that job loss since the Great Recession has had severe adverse consequences for employment and earnings.

[Aug 28, 2015] Q2 GDP Revised up to 3.7%

Aug 28, 2015 | Economist's View


The Fed wants to raise interest rates:

- in the hope of preserving there institutional economic significance,

- out of a sense of loyalty to the Fed's history of financial influence using interest rates,

- because using rates to influence economic events increases their professional comfort,

- and because their economic grad school training was to fear wage push inflation above all else (they seem to believe that if inflation exceeds 2% it is a harbinger of hyper inflation).

Economists are post-industrial shamans whose witch doctor modeling impedes macro economic understanding. The precision of models is ersatz, more or less inversely proportional to its real world relevance. The delusion of being a scientist is critical to their professional self-respect.

Dan Kervick -> lower middle class...

A 3.7% quarter with several hands tied behind our backs by a don-nothing government. Think about what we could do if we were really trying.

pgl -> Dan Kervick...

YEA! Let's build that Mexican wall. Let's wage war on China. Lord - the stupidity here is multiplying!

Dan Kervick -> pgl...

This is an area in which you seem to be persistently incapable of avoiding lies.

You know very well that are a large number of ambitious long-term projects the US could do that are non-military, have nothing to do with immigration and could boost output tremendously.

You're becoming part of the LPTS crew: "liberal pundits terrified of socialism."

That's why Brad DeLong has an embargo on any talk about Bernie Sanders and his ideas.

That's why Paul Krugman is also avoiding Sanders like the plague and using daily red meet partisan servings to keep Democrats' attention riveted on the foibles of the Republicans.

That's why Brendan Nyhan has yet another column warning us all about the dangers of "Green Lanternism".

You're all pants-wetting terrified that the American people are tired of do-nothing neoliberal government, and will figure out that with a more assertive and economically engaged central government dynamic growth and social transformation are possible, and that the stagnation, predatory exploitation, cruel subjugation and social destruction wrought 40 years of neoliberalism was a horrible and completely avoidable mistake.

40% of this country has household income of under $40,000 per year. If we remove the plutocratic capitalist stranglehold on this economy, use government to more efficiently distribute and invest our national wealth, and demote private enterprise to its proper subordinate place, we could double that rapidly and drive a wave of high-growth social transformation with all of the liberated economic energy.

This is going to happen. Take your pick: we're either going to get the somewhat fascistic and racist Trump version on strong government or democratic socialist version. The Ivy League twits hanging on for dear life to their established networks, revolving doors, tit-for-tatting, sinecures and don't-rock-the-boat regime of stagnant managerialism are going to butts handed to them by history.

pgl -> Dan Kervick...

Blah, blah, blah. I guess we could employ more economists at the BEA to do what they are already doing at Census.

Dan Kervick -> pgl...

The Census doesn't and can't combine income distribution numbers with growth numbers on a monthly and quarterly basis. The BEA could collect this data, but doesn't, because it is part of their mission to pretend class conflict doesn't exist.

The top quintile in the US pulls down about 50% percent of the income. That means we could get 3.7% annualized growth if their income grew by 6% while everybody else's income grew by less than 1/2 a percent.

Is that what's happening? Inquiring minds want to know. It seems like a natural mission for the BEA to track this. But they don't.

pgl -> Dan Kervick...

You have no clue what these people do or the task you are whining about. With all you incessant babbling and whining - your keyboard is likely ready to just rot away.

Me? I'm headed down to the Starbucks to whine that they don't make tacos. Duh.

Dan Kervick -> pgl...

I know what they do, and I know what they don't do. Their mission should be expanded.

likbez -> Dan Kervick...


I think you are mistaken about "a natural mission for the BEA to track this". Our elected officials and Wall Street executives all have a vested interest in keeping the perception of a robust economy alive. The economy growth numbers and the employment data announced are critical to this perception, but a thorough analysis of the data suggests something quite different that what we are told.

Statistics now became more and more "number racket" performed, like in the USSR, in the interest of the powers that be.

  • Think about "substitution" games in measuring consumer inflation.
  • Think about "Birth/Death adjustment" in employment data.
  • Think about tricks they play with GDP measurement.

The net result of this tricks is that the error margin of government statistics is pretty high. And nobody in economic profession is taking into account those error margins.

So in no way we can accept this 3.7% annualized growth figure. This is a fuzzy number, a distribution from probably 2.7% to 3.7%. Only upper bound is reported. And if you delve into the methodology deeper this range might be even wider. What is actually the assumption of quarterly inflation in the USA used in calculation of this number?

Which is another factor that makes neoliberal economics a pseudoscience, a branch of Lysenkoism.

JohnH -> Dan Kervick...

This is very revealing...nobody provides regular statistics on distribution. That lack of interest makes it blatantly obvious that policy makers only care about the top number--GDP--and are totally uninterested in knowing whether most Americans are prospering or not.

There is one source that updates Census data on a monthly basis. It shows that real median household income is still 3.8% below where it was in 2008 or in 2001. In fact, it's back where it was in the 1980s.

Of course, the 'recovery' has trickled down a bit, just as you would expect from trickle down monetary policy. Real median household incomes are no longer 9.6% below where they were in 2008...they're now only 3.8% below.

Meanwhile, Saez and Montecino have pointed out that the 1% got 58% of the gains from the 'recovery,' while the 99% got 42%.

Of course, pgl doesn't even care enough about this to know where the data is...and, apparently, most 'liberal' economists are just as indifferent to distribution as he is.

Dan Kervick -> JohnH...

If it weren't for Piketty and Saez, we'd still be fumbling around in the dark on income and wealth distribution.

JohnH -> JohnH...

There's more here: real median household income by quintile 1967-2013

It shows the dramatic the separation between the top quintile and the bottom 80% during the Clinton years. Separation was even greater for the top 5%.

Yet the only thing that most economists ever notice is GDP growth...

pgl -> JohnH...

"Yet the only thing that most economists ever notice is GDP growth".

There you go again. Clueless as can be and lying your ass off.

likbez -> pgl...

And what you actually know about methodology of calculation of this GDP number. Inquiring minds want to know.

Correct calculation of nominal GDP depends on correct calculation of inflation, which is the most politicized of economic metrics and as such subject to tremendous level of manipulation.

Simon Kuznets, the economist who developed the first comprehensive set of measures of national income, stated in his first report to the US Congress in 1934, in a section titled "Uses and Abuses of National Income Measurements":

=== Start of quote ====
The valuable capacity of the human mind to simplify a complex situation in a compact characterization becomes dangerous when not controlled in terms of definitely stated criteria. With quantitative measurements especially, the definiteness of the result suggests, often misleadingly, a precision and simplicity in the outlines of the object measured. Measurements of national income are subject to this type of illusion and resulting abuse, especially since they deal with matters that are the center of conflict of opposing social groups where the effectiveness of an argument is often contingent upon oversimplification. [...]

All these qualifications upon estimates of national income as an index of productivity are just as important when income measurements are interpreted from the point of view of economic welfare. But in the latter case additional difficulties will be suggested to anyone who wants to penetrate below the surface of total figures and market values. Economic welfare cannot be adequately measured unless the personal distribution of income is known. And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income. The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.

JohnH -> JohnH...

Another look at the ineffectiveness of trickle down monetary policy: all but the top decile have suffered decreases in wages and compensation since 2007.

[Aug 27, 2015] Smoke and Mirrors of Corporate Buybacks Behind the Market Crash

"...What we're seeing is that short-term thinking really hasn't taken into account the long run. And that's why this is very much like the long-term capital market crash in 1997, when the two Nobel prize winners who said the whole economy lives in the short term found out that all of a sudden the short term has to come back to the long term."
"...Well, companies themselves have been causing this crisis as much as speculators, because companies like Amazon, like Google, or Apple, especially, have been borrowing money to buy their own stock. And corporate activists, stockholder activists, have told these companies, we want you to put us on the board because we want you to borrow at 1 percent to buy your stock yielding 5 percent. You'll get rich in no time. So all of these stock buybacks by Apple and by other companies at high prices, all of a sudden yes, they can make that money in the short term. But their net worth is all of a sudden plunging. And so we're in a classic debt deflation."
"...HUDSON: Well, what they cause is the runup–companies are under pressure. The managers are paid according to how well they can make a stock price go up. And they think, why should we invest in long-term research and development or long-term developments when we can use the earnings we have just to buy our own stock, and that'll push them up even without investing, without hiring, without producing more. We can make the stock go up by financial engineering. By using our earnings to buy [their own] stock.
So what you have is empty earnings. You've had stock prices going up without really corporate earnings going up. Although if you buy back your stock and you retire the shares, then earning the shares go up. And all of a sudden the whole world realizes that this is all financial engineering, doing it with mirrors, and it's not real. There's been no real gain in industrial profitability. There's just been a diversion of corporate income into the financial markets instead of tangible new investment in hiring.
"...What people don't realize usually, and especially what Lawrence Summers doesn't realize, is that there are two economies. When he means a bad situation, that means for his constituency. The 1 percent. The 1 percent, for them they think oh, we're going to be losing in the asset markets. But the 1 percent has been making money by getting the 99 percent into debt. By squeezing more work out of them. By keeping wages low and by starving the market so that there's nobody to buy the goods that they produce."

Michael Hudson, the author of Killing the Host: How Financial Parasites and Debt Destroy Global Economy, says the stock market crash on Monday has very little to do with China and all to do with shortermism and buybacks of corporations inflating their own stocks - August 25, 2015

... ... ...

And this is what most of the commentators don't get, that all this market runoff we've seen in the last year or two has been by the Federal Reserve making credit available to banks at about one-tenth of 1 percent. The banks have lent out to brokers who have lent out to big institutional traders and speculators thinking, well gee, if we can borrow at 1 percent and buy stocks that yield maybe 5 or 6 percent, then we can make the arbitrage. So they've made a 5 percent arbitrage by buying, but they've also now lost 10 percent, maybe 20 percent on the capital.

What we're seeing is that short-term thinking really hasn't taken into account the long run. And that's why this is very much like the long-term capital market crash in 1997, when the two Nobel prize winners who said the whole economy lives in the short term found out that all of a sudden the short term has to come back to the long term.

Now, it's amazing how today's press doesn't get it. For instance, in the New York Times Paul Krugman, who you can almost always depend to be wrong, said the problem is there's a savings glut. People have too many savings. Well, we know that they don't in America have too many savings. We're in a debt deflation now. The 99 percent of the people are so busy paying off their debt that what is counted as savings here is just paying down the debt. That's why they don't have enough money to buy goods and services, and so sales are falling. That means that profits are falling. And people finally realize that wait a minute, with companies not making more profits they're not going to be able to pay the dividends.

Well, companies themselves have been causing this crisis as much as speculators, because companies like Amazon, like Google, or Apple, especially, have been borrowing money to buy their own stock. And corporate activists, stockholder activists, have told these companies, we want you to put us on the board because we want you to borrow at 1 percent to buy your stock yielding 5 percent. You'll get rich in no time. So all of these stock buybacks by Apple and by other companies at high prices, all of a sudden yes, they can make that money in the short term. But their net worth is all of a sudden plunging. And so we're in a classic debt deflation.

PERIES: Michael, explain how buybacks are actually causing this. I don't think ordinary people quite understand that.

HUDSON: Well, what they cause is the runup–companies are under pressure. The managers are paid according to how well they can make a stock price go up. And they think, why should we invest in long-term research and development or long-term developments when we can use the earnings we have just to buy our own stock, and that'll push them up even without investing, without hiring, without producing more. We can make the stock go up by financial engineering. By using our earnings to buy [their own] stock.

So what you have is empty earnings. You've had stock prices going up without really corporate earnings going up. Although if you buy back your stock and you retire the shares, then earning the shares go up. And all of a sudden the whole world realizes that this is all financial engineering, doing it with mirrors, and it's not real. There's been no real gain in industrial profitability. There's just been a diversion of corporate income into the financial markets instead of tangible new investment in hiring.

PERIES: Michael, Lawrence Summers is tweeting, he writes, as in August 1997, 1998, 2007 and 2008, we could be in the early stages of a very serious situation, which I think we can attribute some of the blame to him. What do you make of that comment, and is that so? Is this the beginnings of a bigger problem?

HUDSON: I wish he would have said what he means by 'situation'. What people don't realize usually, and especially what Lawrence Summers doesn't realize, is that there are two economies. When he means a bad situation, that means for his constituency. The 1 percent. The 1 percent, for them they think oh, we're going to be losing in the asset markets. But the 1 percent has been making money by getting the 99 percent into debt. By squeezing more work out of them. By keeping wages low and by starving the market so that there's nobody to buy the goods that they produce.

So the real situation is in the real economy, not the financial economy. But Lawrence Summers and the Federal Reserve all of a sudden say look, we're not really trying–we don't care about the real economy. We care about the stock market. And what you've seen in the last few years, two years I'd say, of the stock runup, is something unique. For the first time the stock, the central banks of America, even Switzerland and Europe, are talking about the role of the central bank is to inflate asset prices. Well, the traditional reason for central banks that they gave is to stop inflation. And yet now they don't want, they're trying to inflate the stock market. And the Federal Reserve has been trying to push up the stock market purely by financial reasons, by making this low interest rate and quantitative easing.

Now, the Wall Street Journal gets it wrong, too, on its editorial page. You have an op-ed by Gerald [incompr.], who used to be on the board of the Dallas Federal Reserve, saying gee, the problem with low interest rates is it encourages long-term investment because people can take their time. Well, that's crazy Austrian theory. The real problem is that low interest rates provide money to short-term speculators. And all of this credit has been used not for the long term, not for investment at all, but just speculation. And when you have speculation, a little bit of a drop in the market can wipe out all of the capital that's invested.

So what you had this morning in the stock market was a huge wipeout of borrowed money on which people thought the market would go up, and the Federal Reserve would be able to inflate prices. The job of the Federal Reserve is to increase the price of wealth and stocks and real estate relative to labor. The Federal Reserve is sort of waging class war. It wants to increase the assets of the 1 percent relative to the earnings of the 99 percent, and we're seeing the fact that this, the effect of this class war is so successful it's plunged the economy into debt, slowed the economy, and led to the crisis we have today.

PERIES: Michael, just one last question. Most ordinary people are sitting back saying well, it's a stock market crash. I don't have anything in the market. And so I don't have to really worry about it. What do you say to them, and how are they going to feel the impact of this?

HUDSON: It's not going to affect them all that much. The fact is that so much of the money in the market was speculative capital that it really isn't going to affect them much. And it certainly isn't going to affect China all that much. China is trying to develop an internal market. It has other problems, and the market is not going to affect either China's economy or this. But when the 1 percent lose money, they scream like anything, and they say it's the job of the 99 percent to bail them out.

PERIES: What about your retirement savings, and so on?

HUDSON: Well, if the savings are invested in the stock market in speculative hedge funds they'd lose, but very few savings are. The savings have already gone way, way up from the market. And the market is only down to what it was earlier this year. So the people have not really suffered very much at all. They've only not made as big of gains as they would have hoped for, but they're not affected.
... ... ...

Michael Hudson is a Distinguished Research Professor of Economics at the University of Missouri, Kansas City. He is the author of The Bubble and Beyond and Finance Capitalism and its Discontents. His most recent book is titled Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.

[Aug 26, 2015] What If The Crash Is As Rigged As Everything Else

"...Oh yeah... EVERYTHING is rigged now. So we can't blame ourselves for any of it. Duhhhh. It's the fucking greed of all the Muppets to blame as well."
"...The reason why I know this was no engineered event is the damage control I have seen due to it. Even the lowliest podunk local talk show host was able to have on some talking head who was talking about why this was just an over reaction and macro is golden and our economy is the cat's meow."
"...Most of the actions taken by government are taken to increase debt. In the USA, the housing bubble was blown because of the dumb thought of "everyone should own a home" or, as the bankers like to think of it "Everyone should have a mortgage". Same shit with subprime auto loans, student loans. All these things involve creating massive new conduits for debt creation. If you don't exponentially grow, you blow. But, when these bubbles get blown, the extra $$ created has to go somewhere. And it chases yield that is greater than the inflation the debt creation creates. Before you know it BOOM."
Aug 26, 2015 | Zero Hedge
Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Take your pick--here's three good reasons to engineer a "crash" that benefits the few at the expense of the many.

... ... ...

3. Settling conflicts within the Deep State. I have covered the Deep State for years, in a variety of contexts--for example:

Is the Deep State Fracturing into Disunity? (March 14, 2014)

The Dollar and the Deep State (February 24, 2014)

Surplus Repression and the Self-Defeating Deep State (May 26, 2015)

Without going into details that deserve a separate essay, we can speculate that key power centers with the Deep State have profoundly different views about Imperial priorities.

One nexus of power engineers a trumped-up financial crisis (i.e. a convenient "crash") to force the hand of opposing power centers. As I have speculated here before, the rising U.S. dollar is anathema to Wall Street and its apparatchiks, while a rising USD is the cat's meow to those with a longer and more strategic view of dollar hegemony.

Take your pick--here's three good reasons to engineer a "crash" that benefits the few at the expense of the many.

remain calm

Everything is managed for control. They think they have control and can manage everything. They can't and then they lose control. They will lose control again. But the loss of control is not staged. Again, they think they can manage eveything. Their models fail. We are about to see a big failure. Some of you need to add another layer of tin foil added to your head. They will manage after the failure, again, because they think they know what they are doing.

Captain Debtcrash

I wrote on the "planned crash" scenario several months ago. Why would the fed raise rates into poor macro economic conditions, officially no inflation, with bubbles popping throughout the world, if not to cause or exacerbate a crash, all to allow them to try some new policy tools. After all the st Louis fed did come out and say QE is ineffective. I think they really want to ban cash and push rates significantly negative. Not possible under current statute, but that's easy enough to change with the politicians shitting themselves.

Crash N. Burn

"They will manage after the failure, again, because they think they know what they are doing."

Could be because "they" have done it before. People should be taught who "they" are

"The Rothschilds were universally acknowledged as the wealthiest clan on the planet in the 19th century. They never lost that wealth. We simply lost all knowledge of it. The House of Rothschild has effectively erased itself from our (so-called) history books. That takes power.

Are children taught in our classrooms that most of the (endless) wars between European powers during the 19th century were examples of House Rothschild already "playing" the governments of Europe against each other, like puppets? Are the children taught that a basically unknown cabal of bankers created the Bank for International Settlements in the early part of the 20th century, so that these Western bankers could do the money-laundering necessary to allow Western industrialists to supply armaments to the Third Reich?

They certainly aren't taught that one of those "industrialists" – Prescott Bush – was convicted of "trading with the Enemy". Because if they had been, clearly it would not have been possible for both his son and grandson to be elected as presidents of the United States, where they could serve the bankers.

Postulating a group of ringleaders for this banking crime syndicate other than House Rothschild is problematic. It involves manufacturing an entire mythology around such hypothetical ringleaders, whereas with this clan of megalomaniacs, the historical, financial, and political context is already in place.

Their wealth is undeniable. Their intentions are unequivocal. The amoral malice they hold toward the rest of humanity is documented, historical fact."

How Western Governments Will Steal Your Land, Part III

"They" are Rothschild!

"People without homes will not quarrel with their leaders."

- The Bankers Manifesto of 1892

"Simply put, there was/is no other clan on the planet that already possessed the wealth and power to make the pledges contained in The Bankers Manifesto of 1892, in 1892 – and then to (finally) pursue that crime-against-humanity to (near) fruition, in 2015."


They aren't that powerful. Why give them the benefit of the doubt? They (if there really is a they that has control) would like nothing more than for you to sit home whimpering, worried about how much control "they" have.

Macro has been in the shitter for years. China was bubblicious and bound to crack.

The reason why I know this was no engineered event is the damage control I have seen due to it. Even the lowliest podunk local talk show host was able to have on some talking head who was talking about why this was just an over reaction and macro is golden and our economy is the cat's meow.

Don't buy into it.

And fuck numerology too. The only way where they can set the closing price is if we are all stuck in a damn powerplant with tubes coming out of our body.

If that is the case, where the fuck are you Morpheus?

Beam Me Up Scotty

I'm not so sure. This article might be spot on. Consider this:

Federal Reserve can print and create INFINITE digital and physical dollars. With infinite dollars, they can control EVERYTHING. Both UP and DOWN. We can't audit the Fed, how do you know their balance sheet is really 4 trillion? Because they say so? They could literally decide the prices of every single thing in dollar terms with unlimited dollars at their disposal.


Yo pods, next time you get a bag of M&Ms, eat the red ones first,,,


I don't think the Skxawng in charge have the organizational capability to pull off an event of this magnitude with any reasonable expectation of success. They manipulate where they can and surf the waves just like the rest of us...


Most of the actions taken by government are taken to increase debt. In the USA, the housing bubble was blown because of the dumb thought of "everyone should own a home" or, as the bankers like to think of it "Everyone should have a mortgage". Same shit with subprime auto loans, student loans. All these things involve creating massive new conduits for debt creation. If you don't exponentially grow, you blow. But, when these bubbles get blown, the extra $$ created has to go somewhere. And it chases yield that is greater than the inflation the debt creation creates. Before you know it BOOM.


I truly wish it were all rigged… There could be some comprehensible intelligence behind all this disaster

Oh, no -- They were smart enough to wreck the machine in stripping out all its wealth, but THEY ARE NOT SMART ENOUGH TO UN-WRECK IT!


You blow a bubble.

As the bubble gets bigger, you know it is getting weaker. But a crowd cheers you to keep going cause they love the bubble. So you keep blowing.

Can someone step in and buy some futures to sway the futures market, sure. But the problem is that the price of credit is below market. When that happens, you get too much credit. Too much credit sloshes around wreaking havoc on all things of substance or fancy that might increase your worth (in your mind).

Now, crashes are a known side effect of the system, and they do take advantage of it, but they are not planned.


The horrible secret is that no one is manipulating the system. Instead it is run by the Greedy self interest of multiple parties a conspiracy of sorts with no real organization. The TARP program is an excellent example of bubblegum and bandaid repairs.


the system was designed to crash............all debt money systems are.....they knew in 1913 and they know it now


The UN will be meeting up next month to figure out how to replace the worthless Agenda 21 with the next step, what a wonderful time to have the markets in turmoil. Maybe we should schedule the Pope to talk to them and Congress about his vision of replacing evil capitalism with a benevolent world-wide central control, oops they already have him scheduled?

My question is what happens if you hold a 'fake' meltdown and something real happens when volatility is already really high? Nothing like people playing Russian roulette only they point the gun at your head, not theirs.


PTR's picture

Russian roulette only they point the gun at your head, not theirs.

That, sir, is an awesome quote and should be used repeatedly.

Wed, 08/26/2015 - 09:33 | 6472428 ThroxxOfVron

IF it is possible to move specific securites higher via HFT/deliberate buying/spoofing/etc. and concerted buying by institutions and/or the fabled PPT, then it is only logical to assume that the same activities and entities can move those same securites lower via HFT/spoofing/deliberate selling/naked shorting/etc...

I believe that the desks sell what they do not have and buy with funds that do not exist/re-hypothecated client funds ( 'MF Global-ation' ) interbank and/or inter-affiliate leverage.


"This Act (the Federal Reserve Act, Dec. 23rd 1913) establishes the most gigantic trust on earth. When the President signs this bill, the invisible government by the Monetary Power will be legalized. The people may not know it immediately, but the day of reckoning is only a few years removed. The trusts will soon realize that they have gone too far even for their own good. The people must make a declaration of independence to relieve themselves from the Monetary Power. This they will be able to do by taking control of Congress. Wall Streeters could not cheat us if you Senators and Representatives did not make a humbug of Congress... The greatest crime of Congress is its currency system. The worst legislative crime of the ages is perpetrated by this banking bill. The caucus and the party bosses have again operated and prevented the people from getting the benefit of their own government."

"The new law will create inflation whenever the trusts want inflation...they can unload the stocks on the people at high prices during the excitement and then bring on a panic and buy them back at low prices...the day of reckoning is only a few years removed."

"When the President signs this act [Federal Reserve Act of 1913],
the invisible government by the money power -- proven to exist
by the Monetary Trust Investigation -- will be legalized.
The new law will create inflation whenever the trusts want inflation.

*** From now on, depressions will be scientifically created. ***"

-Senator Charles A. Lindbergh

[Aug 23, 2015]Carter, Reagan, and Machiavelli - The New York Times

Rex Nutting has a very nice article about the reality of Jimmy Carter's presidency, which has been distorted out of recognition by the myth of Saint Reagan. As he points out, Carter presided over faster average job growth and lower unemployment than Reagan; unfortunately for Carter, his timing was bad, with vigorous growth for most of his presidency but a recession at the end.

Or to be more specific: the Federal Reserve put the US economy through the wringer from 1979 to 1982 in order to bring inflation down. Carter presided over the first part of that double-dip recession, and got wrongly blamed for it; Reagan presided over the second part, and wrongly got credit for the later recovery.

What you see in all this is the remarkable political dominance of recent rates of change over even medium-term comparisons. The chart shows real median family income, which rose a lot through 1979, and was still far from having returned to that peak by the end of Reagan's first term. Nonetheless, Carter was booted from office amid derision — "are you better off now than you were four years ago?" (actually yes), while Reagan won a landslide as a triumphant economic savior.

But Machiavelli knew all about this:

Hence it is to be remarked that, in seizing a state, the usurper ought to examine closely into all those injuries which it is necessary for him to inflict, and to do them all at one stroke so as not to have to repeat them daily.

Make sure that the bad stuff happens early in your rule; then you can claim credit when things get better, even if you leave the nation in a worse condition than it was when you arrived.

John is a trusted commenter Hartford

Carter does get something of a bum rap from the Stalinist history re-writers of the Republican party who have made the most absurd claims for Reagan (of which the attempts to elevate him to the same status as FDR is only the most ridiculous). That said there was undoubtedly a malaise in the air in late 1980 and there was little doubt Carter was doomed because of it. He had several considerable achievements including Camp David and the appointment of Volcker (who was ultimately dropped by Reagan in favor of Easy Al) but in truth, although he wasn't Hoover, he was at best an average president as indeed was Reagan despite the efforts to beatify him. Carter was probably done in by the quality of his team and something of a penchant for micro management. He certainly didn't commit any crimes while he was president as Reagan did, nor triple the debt, and he's probably one of the most decent people to occupy the office in US history. The fundamental problem is that the qualities of St Francis of Assisi are not ideally suited to the practice of politics while principles of government outlined by Machiavelli are.
John Lentini Big Pine Key, FL
One more helicopter on the hostage rescue mission might have saved us the ravages of Reagan.

Spencer England Woburn, MA 01801

Do not forget that Carter started a lot of the deregulation, airlines and trucking, for example, that tht Republicans try to take credit for. Especially those trying to make Ronnie into a saint.

John Foelster, Philadelphia, PA 14 hours ago

My impression of Reagan and Carter is that they are the 20th Centurys Andrew Johnson and Grant.

Johnson was controversial during his term of office but came to be admired enormously by the Lost Cause school of Historiography for opposing Reconstruction and the Radical Republicans, for their horrible presumption in trying to treat the Freedman like human beings. Hes now generally recognized as a racist incompetent.

Grant was a fundamentally decent human being who had a terrible reputation for circumstances largely outside of his control, whose Presidency is no longer thought of as being as bad as Early 20th Century Historians thought.

Hopefully the reputations of Reagan and Carter will be transformed by the historians of coming decades.

Side note, why am I forbidden from using apostrophes?

Rakesh, Fl

Of all the presidents I have lived under Carter was the best president. He did more solid economic reforms(deregulation etc), recognized the problems with an imported oil dependency, saw the benefits of harnessing solar energy. He was left with wringing out the ill effects of stagflation, he rebuilt the military that was run down, he gave some meaning to American moral power. He, not Reagan convinced the Germans to upgrade the US missiles in Europe. His big mistake was putting Brzezinski in charge of Foreign policy. He is the only ex president not to become a money grubbing salesman.

Stephen, RI

Or, you know, you could consider the obvious reason: Americans are pretty stupid. A majority still believe humans and dinosaurs coexisted. Almost 2/3rds can't name two of the three branches of government.

Americans overwhelmingly wanted to bomb Ukraine more the less well they could locate it on a map. They elected Reagan, a B list movie star who costarred with a chimpanzee, who went on to illegally sell arms to Iran, fund South American death squads, arm the Taliban, and shoot down a civilian airliner killing everyone on board. They elected George W. Bush, a man who said he wanted OBGYNs to be able to practice their love of women, said that "Rarely is the question asked: Is our children learning?", who blatantly lied us into a four trillion dollar decade long war, increased the deficit 1.8 trillion dollars, oversaw the worst disaster response in U.S. history, and who sat idly by during the worst economic collapse since the Great Depression.

They almost elected Sarah Palin, a woman who couldn't name a single newspaper she reads. They elected Michelle Bachmann, who thinks mass transit is a liberal plot, Ted Cruz, who thinks the U.N. is trying to steal U.S. golf courses, and James Inhofe, who thinks that snowballs disprove climate science. Ben Carson thinks affordable healthcare is worse than slavery. Huckabee thinks taxing pimps is our way to prosperity. Jeb Bush forced women to publish their sexual histories ahead of adoption, even if they were raped.

Pick up a newspaper.

Tim, Sutherlin 1 day ago

Didn't Carter put Volker in the Chairmanship of Fed? So.....

jmc, Stamford 1 day ago

Politifact of Wisconsin has done a reprise of just of few the "mostly false" claims by Paul Ryan about almost anything you can think of from Social Security to budget cuts to Medicare.

The truth is not in these people. heir followers are ignorant or worse.

I remember eight years of crazy before Carter.

Richard Nixon, Treasonous dealings with Vietnam during election. Watergate, Six years and many thousands of dead in Vietnam. A president and vice president forced to resign for official corruption. A criminal conspiracy that included Watergate, the Saturday Night Massacre, , 69 administration officials charged and 48 convicted, most sent to jail. Economic disaster, Secret bombings of Cambodia. Actively subverting governments in Portugal, Chile, Mozambique, Angola and more. Student Killings. Henry Kissinger, war criminal. Wage and Price Controls. 0verheated economy, inflation, stagflation. Patty Hearst.

Uniformed snipers all around the White House and rooftops Helicopters ferrying secret visitors. Air conditioning up, fireplaces lit. Paranoia ruled.

Hapless Jerry Ford. Nixon Pardon. Grand jury felony indictments avoided. "Whip Inflation Now," the infamous WIN button. Leave inflation and recession to someone else.

LBJ mixed triumph with Vietnam. Nixon began 8 years of uncharted hell, a harbinger of today's vicious and vindictive GOP.

Jimmy Carter was a cool drink of water on a hot day after all that.

Win no matter how began.

nastyboy, california 1 day ago

"Rex Nutting has a very nice article about the reality of Jimmy Carter's presidency, which has been distorted out of recognition by the myth of Saint Reagan."

morally, carter was/is far more saintly than reagan or any other president in the past 80 years or so. in this sense reagan doesn't even come close to carter. jimmy had some issues of continuing u.s. support for some brutal, genocidal governments but was one of our least violent presidents ever. morally and ethically he was out of his element as president.

Mark Shapiro, Chicago

Another reason that Reagan is so overrated and Carter so underrated:

the continuous operation of a huge conservative PR machine. The plutocracy has always had -- and will always have -- powerful PR operatives, but the Lewis Powell memo of 1971 really got it revved up. Now they have many think tanks, publications, talk radio, all of faux news, many Koch foundations and the tea party, big chunks of mainstream reporting, and now unlimited campaign funding.

The list keeps growing.

They have the means, motive, and opportunity to lionize plutocracy.

James Lee, Arlington, Texas

Carter also never received proper credit for his foreign policy achievements because of the failure to rescue the hostages. That humiliation displaced, in the public mind, the memory of the Camp David Accords and the agreement ceding control of the Panama Canal to its rightful owners. While the second achievement was not particularly popular at the time, it avoided a serious breech of relations between the U.S. and Panama. The first agreement ended hostility between Israel and Egypt, a significant step toward at least the possibility of peace in the Middle East.

Va Dawg, Virginia 1 day ago

Even more infuriating: Carter - in appointing Volcker - ought to get more credit than Reagan for taming inflation. And Carter wasn't a chickenhawk.

craig geary, redlands, fl 1 day ago
The day that Reagan took office the total US debt, accumulated from George Washing thru Jimmy Carter was $1 trillion. 17 debt ceiling increases and 96 months later the US debt was $2.9 trillion, a 190% increase.

Eureka College guy cheerleader, WW II dodger , Reagan found it necessary to: Arm the Afghan fundamentalists who changed their name to Taliban, arm Saddam Hussein, shoot down Iran Air 655, fund death squads in El Salvador, genocide in Guatemala, arm and fund the Contra terrorists, invade Grenada, refurbish WW II battleships, at $300M a pop, and "invest" hundreds of billions in a chimera know as Star Wars.

The republican saint, in his own words, "I don't worry about the federal debt. It's big enough to take care of itself."

Ronald Reagan

The Athenian, Athens, Oh 3 hours ago

Recall, also, selling arms to Iran to get off-the-books cash to fund the Contras.

larry, U.S.

You make a good point that economic circumstances favored Reagan getting the credit for things he didn't achieve, and Carter failing to get credit for what he did. But I think the myth of Saint Reagan has had an even larger effect. Repeat something over & over enough times on a media channel watched as much as Fox, or a radio channel listened to as much as Clear Channel, and people think it's Gospel-- even if they are not Christian Right people. Progressives need something just as large, as consistently progressive, as expert in messaging & as well financed, to get our views heard just as clearly as the Right's views.

Spencer England, Woburn, MA 01801

But Reagan also negotiated with Iran to release the hostages immediately after he took office.

Within three months large scale shipments of US military equipment started to flow. Of course the two were not connected, right?

Bob Dobbs, Santa Cruz, CA

I remember how eager George W. Bush's administration was to declare recession early in its first term when there wasn't one: fake crises are the easiest to solve. And of course gave political cover for their plans to "grow the economy"/hand Wall Street everything it wanted.

Jim Hansen, is a trusted commenter California

Carter's problem was that he was not Machiavellian enough. He was much too honest, much too sincere, and he was always trying to do the right silly.

Carter was too good of a man to be president...and he should have sent more helicopters.

Noni Mausa, Hennepin County, MN

Another advantage of doing all the bad stuff at once, is that those who would oppose you will have their energies divided and thus reduced, their complaints and injuries will compete with each other for attention and redress, and confusion among the general public will allow the injuries to become "old news" in a surprisingly short span of time.

Here in Canada, Harper is a master of this approach. He's only been PM for eight years, only had a majority since 2011, yet tore down a surprising number of national institutions with not a trace of shame. There are times when cleverness in our "princes" is a serious flaw.

[Aug 23, 2015] Clinton Takes Soft Swipe at Shortermism

Interview was conducted by SHARMINI PERIES, EXEC. PRODUCER, TRNN
"...Short-termism is a term used to describe how corporations run to create short-term profit for shareholders at the expense of long-term investment. Clinton's proposal, which her own campaign describes as progressive, would raise capital gains rates to up to six years on top of income bracket taxpayers, and according to her proposal encourage investment in communities that need it the most."
"...CEOs, if they're able to raise the price of their stocks, they're able to raise their bonuses and their incomes. And this is a big factor explaining the huge increase in inequality in the top 1 percent, or 0.01 percent, whose pay is 300, 400 times the average worker's pay. It also helps to explain why there's been relatively little investment, despite the massive increases in profits and CEO pay over the last several decades."
"...But what Bill Lazonick has proposed is actually making them illegal, these kinds of manipulative short-term buybacks. That kind of policy would be a lot stronger. Of course, the CEOs that support Hillary Clinton would in no way support that, but perhaps that's something that Bernie Sanders can come out in favor of. "
"...what they do is rather than spending money on R and D and invest in skill training for workers, it just gives the money back to the rich shareholders and the CEOs by raising the stock price. So what we find is that some of these companies who have massive profits, they go to the government to say, you know, they want the government to invest in research and development and so forth. But in fact the corporations themselves could do that with their own profits, but instead of doing that they're giving it back to the shareholders and manipulating their stock prices so the CEOs can make a killing. "
Aug 23, 2015 |

Short-termism is a term used to describe how corporations run to create short-term profit for shareholders at the expense of long-term investment. Clinton's proposal, which her own campaign describes as progressive, would raise capital gains rates to up to six years on top of income bracket taxpayers, and according to her proposal encourage investment in communities that need it the most.

PERIES: So Jerry, tell us first about what short-termism is, and why it's so important for the campaign.

EPSTEIN: Right. So this is an issue, a term that's been around for at least several decades. It refers to the orientation of CEOs of corporations, non-financial and financial corporations both, trying to make the quick buck, making their business decisions based on what will generate short-run returns, primarily to raise the value of their stock prices rather than thinking about the long term, and making the long-term investments that really contribute to economic growth, productivity growth, innovation.

Now, why do CEOs do this? Well, a main reason is that their pay is based on stock options and other things linked to the stock market. So CEOs, if they're able to raise the price of their stocks, they're able to raise their bonuses and their incomes. And this is a big factor explaining the huge increase in inequality in the top 1 percent, or 0.01 percent, whose pay is 300, 400 times the average worker's pay. It also helps to explain why there's been relatively little investment, despite the massive increases in profits and CEO pay over the last several decades.

PERIES: So then why is this advantageous for her, given that most of her support and perhaps dollars is going to come from Wall Street? And of course the CEOs themselves have a lot to say in terms of those contributions. Why is it advantageous for her to address this short-termism?

EPSTEIN: Well, I think this issue has, as I said, been around for a while. It's clearly linked up to this huge issue of growing inequality brought to the fore by the Occupy Wall Street movement and others. So this is a way for her to talk about an issue that's out there even in the business world. Even in the world of financial and non-financial managers who have been decrying this for a long time. So this is a way for her to make a mark, to make a stamp on this issue. But unfortunately the policies that she has proposed really aren't very strong and really won't do a lot about it.

It's good that she's actually getting this back on the agenda, but it's kind of a cheap shot in the sense that what she's proposing isn't going to really do all that much about it.

PERIES: The two main candidates, Clinton as well as Bernie Sanders, are all beginning to address this issue. How do they differ and where would you put your dollars behind?

EPSTEIN: Well this issue of short-termism has been addressed by Bernie Sanders with respect to Wall Street. And in particular he has proposed what's called a financial transactions tax, which is a tax that was first proposed by John Maynard Keynes in the 1930s, and my colleague Bob Pollin has proposed it and analyzed it, Dean Baker. Many others have analyzed it. And this is a tax on short-term trading in stock markets and securities markets that will raise the cost of those kinds of trades, discourage this kind of churning and short-term trading without at the same time discouraging long-term investments.

Now, Bernie Sanders has not actually addressed this broader issue of short-termism with respect to non-financial corporations and CEOs, and indeed it would be a good idea for, for him to do so. Hillary Clinton, in her speech, in decrying what she calls quarterly capitalism--that is, CEOs [of] non-financial corporations who are concerned about the profitability and the stock price over each quarter, as you said in your intro proposed raising the capital gains tax on investments held for less than a year. Try to get CEOs to have a much more long-term orientation.

The problem is that most of her policies really don't have much teeth, as economist Bill Lazonick who is at the University of Massachusetts Lowell has written about. Lazonick has pointed out that one of the big problems with short-termism is the fact that corporations use stock buybacks. That is, they take their profits and rather than reinvesting them in the corporation, increasing training, increasing wages, they use this money to buy back the stock. That's a way of raising the stock price. That's a way of benefiting financial institutions that own stock, benefiting CEOs. And what Hillary Clinton has done is said there should be more transparency about these stock buybacks.

But what Bill Lazonick has proposed is actually making them illegal, these kinds of manipulative short-term buybacks. That kind of policy would be a lot stronger. Of course, the CEOs that support Hillary Clinton would in no way support that, but perhaps that's something that Bernie Sanders can come out in favor of.

PERIES: Jerry, we know that many corporations such as AT&T and Fiverr spend more on buybacks than R and D. Do stock buybacks generate useful value for our economy or not?

EPSTEIN: Well according to Bill Lazonick, who again I think is the top expert on this topic, the answer is no. what they do is rather than spending money on R and D and invest in skill training for workers, it just gives the money back to the rich shareholders and the CEOs by raising the stock price. So what we find is that some of these companies who have massive profits, they go to the government to say, you know, they want the government to invest in research and development and so forth. But in fact the corporations themselves could do that with their own profits, but instead of doing that they're giving it back to the shareholders and manipulating their stock prices so the CEOs can make a killing.

So no, these kinds of buybacks in most cases have very little social benefit. It would be better for corporations to use this money to raise productivity and raise wages and skills for workers.

Gerald Epstein is codirector of the Political Economy Research Institute (PERI) and Professor of Economics. He received his Ph.D. in economics from Princeton University. He has published widely on a variety of progressive economic policy issues, especially in the areas of central banking and international finance, and is the editor or co-editor of six volumes.


If Clinton became president she would be an Obama clone. Loads of liberal rhetoric with Wall st. policies. More of the same.


I hope people don't get their hopes up about Mrs. Clinton doing anything about stock buybacks, it's just rhetoric, pure and simple

itsthethird > William W Haywood

Exactly thus a need for economic revolution to change division of resources and power to conform with 21st century advances whereby no longer labor or earnings for shareholders the means of distribution but community based systems with shared ownership responsibility to replace capitalist liability protections and cost externalization. Starting with banking reforms ending with personal identification reforms whereby individualism reflects fact that all earth is more an organism than property to be owned or controlled for private gains. There can be no individualism without community success and no advances of social gains without acknowledgement that nothing works in isolation. Today oligarchs control most all gains made possible by technology to expand ownership control over earth for private progeny not for all. What technology is shared is shared for ownership apartheid for oligarchy class which desires to maintain advantage gained over generations or expand same regardless of social costs such as austerity, war, murder, imprisonment etc. Oligarchs won't surrender without great social costs demanded. However the greater the costs imposed greater resistance expands until critical point of collapse then oligarchs may become more reasonable when systems are failing or maybe not.

Bernie Karpf

Ok.....Hillary Clinton is making bogus promises to re-configure the financial accounting tricks of the wealthy. Well, why shouldn't she? She represents them!


Corporatism controls world markets thus the populations governments which requires majority of shares held publicly be owned or controlled by corporate interests representing oligarchy controlled ownership which empowers oligarchs with extra-ordinary powers over government representation whereby pretense of elections simply give illusion of representation. How can public be represented when federal reserve banking cartel controls nations debt costs thus government? Banking cartels rule not citizens, citizens merely pay the bills. So is it any wonder that oligarchs favor short term gains over long term national equity?

[Aug 23, 2015] The Voluntarism Fantasy

This is part of the introduction to an essay by Mike Konczal on how to "insure people against the hardships of life..., accident, illness, old age, and loss of a job." Should we rely mostly upon government social insurance programs such as Medicare and Social Security, or would a system that relies upon private charity be better? History provides a very clear answer:
The Voluntarism Fantasy: Ideology is as much about understanding the past as shaping the future. And conservatives tell themselves a story, a fairy tale really, about the past, about the way the world was and can be again under Republican policies. This story is about the way people were able to insure themselves against the risks inherent in modern life. Back before the Great Society, before the New Deal, and even before the Progressive Era, things were better. Before government took on the role of providing social insurance, individuals and private charity did everything needed to insure people against the hardships of life; given the chance, they could do it again.
This vision has always been implicit in the conservative ascendancy. It existed in the 1980s, when President Reagan announced, "The size of the federal budget is not an appropriate barometer of social conscience or charitable concern," and called for voluntarism to fill in the yawning gaps in the social safety net. It was made explicit in the 1990s, notably through Marvin Olasky's The Tragedy of American Compassion, a treatise hailed by the likes of Newt Gingrich and William Bennett, which argued that a purely private nineteenth-century system of charitable and voluntary organizations did a better job providing for the common good than the twentieth-century welfare state. This idea is also the basis of Paul Ryan's budget, which seeks to devolve and shrink the federal government at a rapid pace, lest the safety net turn "into a hammock that lulls able-bodied people into lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives." It's what Utah Senator Mike Lee references when he says that the "alternative to big government is not small government" but instead "a voluntary civil society." As conservatives face the possibility of a permanent Democratic majority fueled by changing demographics, they understand that time is running out on their cherished project to dismantle the federal welfare state.
But this conservative vision of social insurance is wrong. It's incorrect as a matter of history; it ignores the complex interaction between public and private social insurance that has always existed in the United States. It completely misses why the old system collapsed and why a new one was put in its place. It fails to understand how the Great Recession displayed the welfare state at its most necessary and that a voluntary system would have failed under the same circumstances. Most importantly, it points us in the wrong direction. The last 30 years have seen effort after effort to try and push the policy agenda away from the state's capabilities and toward private mechanisms for mitigating the risks we face in the world. This effort is exhausted, and future endeavors will require a greater, not lesser, role for the public. ...
The state does many things, but this essay will focus specifically on its role in providing social insurance against the risks we face. Specifically, we'll look at what the progressive economist and actuary I.M. Rubinow described in 1934 as the Four Horsemen of the Apocalypse: "accident, illness, old age, loss of a job. These are the four horsemen that ride roughshod over lives and fortunes of millions of wage workers of every modern industrial community." These were the same evils that Truman singled out in his speech. And these are the ills that Social Security, Medicare, Medicaid, food assistance, and our other public systems of social insurance set out to combat in the New Deal and Great Society.
Over the past 30 years the public role in social insurance has taken a backseat to the idea that private institutions will expand to cover these risks. Yet our current system of workplace private insurance is rapidly falling apart. In its wake, we'll need to make a choice between an expanded role for the state or a fantasy of voluntary protection instead. We need to understand why this voluntary system didn't work in the first place to make the case for the state's role in fighting the Four Horsemen. ...

[Aug 23, 2015] Netanyahu pressed for Iran attacks, but was denied: ex-defense chief

Looks like Bibi is a certified warmonger. Something like George Bush of Israel
Aug 23, 2015 | Reuters
... ... ..

In interviews to his biographers aired late on Friday by Israel's Channel Two, Barak said he and Prime Minister Benjamin Netanyahu had wanted military operations against Iranian nuclear facilities in 2010, 2011 and 2012.

... ... ...

Netanyahu's spokesman could not be reached for comment.

'Did Socialism Keep Capitalism Equal?'

"...The basic fact is that there is no question that when the Soviet system fell, and the USSR fell apart, and the Warsaw Pact and COMECON all ceased to exist, and communist parties fell out of power, the upshot was that Gini coefficients in all of these nations, as well as in China as well. What is not always talked about, although I have authored some papers with coauthors on this, now out of date, is that the rate of increase in inequality in these transition (really formerly transition) economies has varied enormously."
"...So, my speculation that one reason why we have seen higher price/earnings ratios in many western stock markets since 1990 has simply been indeed that the risk of nationalization has been removed. It was never that serious in the US, but it was still there in the background. But after the fall of Soviet communism, this perceived risk really went to basically zero. Upshot, a permanent jump in those price/earnings ratios, although maybe in some nations this will change.  "

Branko Milanovic:

Did socialism keep capitalism equal?: This is an interesting idea and I think that it will gradually become more popular. The idea is simple: the presence of the ideology of socialism (abolition of private property) and its embodiment in the Soviet Union and other Communist states made capitalists careful: they knew that if they tried to push workers too hard, the workers might retaliate and capitalists might end up by losing all.

Now, this idea comes from the fact that rich capitalist countries experienced an extraordinary period of decreasing inequality from around 1920s to 1980s, and then since the 1980s, contradicting what a simple Kuznets curve would imply, inequality went up. It so happens that the turning point in 1980s coincides with (1) acceleration of skill-biased technological progress, (2) increased globalization and entry of Chinese workers into the global labor market, (3) pro-rich policy changes (lower taxes), (4) decline of the trade unions, and (5) end of Communism as an ideology. So each of these five factors can be used to explain the increase in inequality in rich capitalist countries.

The socialist story recently received a boost from two papers.

I am not sure that this particular story can alone explain the decline in inequality in the West, and certainly it is a story that one hears less often in the US than in Europe, as the United States believed itself to be sufficiently protected from the Communist virus (although when you look at the repression in the 1920s and McCarthyism in the 1950s, one is not so sure). But even Solow's recent mention of the changing power relations between capitalists and workers (the end of the Detroit treaty) as ushering in the period of rising inequality is not inconsistent with this view. In a recent conversation, and totally unaware of the literature, an Italian high-level diplomat explained to me why inequality in Italy increased recently: "in then 1970s, capitalists were afraid of the Italian Communist Party". So there is, I think, something in the story.

The implication is of course rather unpleasant: left to itself, without any countervailing powers, capitalism will keep on generating high inequality and so the US may soon look like South Africa. That's where I think differently: I think there are, in the longer-term, forces that would lead toward reduction in inequality (and that would not be the return of Communism).

Posted by Mark Thoma on Saturday, August 22, 2015 at 11:52 AM in Economics, Income Distribution | Permalink Comments (65)


Is the implication unpleasant? Inequality will remain high unless the forces that aim to curb it reclaim some amount of social power; discursively, this will look like "socialism becoming more popular again," but put in these broader terms, the argument is almost tautological-- power will remain unequal if power remains unequal.
mulp ->  doug
Socialism is based on a free lunch economic theory...

What we have today in the US is basically free lunch economics that idiots call capitalism, but that is really pillage and plunder, monopoly rent seeking, with capital asset destruction to create monopoly power, and most important, government crony lending to consumers to pay for profits while trying to eliminate all workers to eliminate all labor costs.

The ideology is pervasive in the optimism that everyone else that works will be replaced by robots and the authors will be one of the elites getting paid to explain how great it is that there are no workers and how fantastic wealth has produced massive growth in consumer spending to generate Jeb!'s 4% GDP growth forever.

In free lunch economics, the ideal economy has profit equal consumer spending equal GDP and labor cost equal zero.

This replaced the dismal science economics of the era which created the middle class American Dream.

What was dismal is GDP was limited to the wages paid all the workers.

What was dismal was profits were pretty much zero every where and capitalists were rewarded with returns on their money they paid workers to build productive capital assets which came from paying workers enough to buy what the capital assets plus labor produced.

What was dismal was needing to have savings, steady income, to get a loan to buy an asset that cost more to build than the loan amount.

What was dismal was having to pay taxes to have the educated workers corporations needed, having to pay taxes to have the roads, rail, water, energy, air travel, etc workers and corporations needed for a growing economy.

Free lunch economics calls for replacing everything dismal with the invisible hand full of cash which will pay whatever price you charge for the stuff you produce without paying workers.

Workers might be suffering with low incomes, but if they can't or won't borrow and spend, the capitalist rent seekers suffer.

Mitt Romney, Jeb!, and Trump promise a free lunch - they will produce lots of paying customers buying a lot more GDP to produce high growth WITHOUT PAYING WORKERS A PENNY MORE by getting the dismal Obama out of the way who is blocking tax cuts that will put money in your pocket to spend, and blocking loans to buy the food and vacation you want on the stupid requirement you have income and assets.

DrDick ->  mulp

Obviously you have no understanding of communism or socialism, but that is just a small part of a much longer list. Capitalism is the embodiment of "free lunch economics", at least for the rich. Communism/socialism just rewards productive workers, not capitalist parasites. Reply Saturday, August 22, 2015 at 04:36 PM
Procopius ->  mulp
Actually, socialism is based on a "just deserts" social theory. Under capitalism, the owner of capital has power to distribute gains from an enterprise that employs both capital and labor. Under socialism, the owner of capital is the government, which is supposed to be more responsive to the needs of the people. In practice than hasn't worked out well, but that doesn't prove it couldn't. Capitalism works a lot better when there's some government intervention as a countervailing power, especially when they adopt policies permitting the organization of laborers, which has been seriously eroded since Reagan and Volcker.

ilsm ->  mulp

Socialism received only violent answers, because socialist free lunch for the masses is always better than the hoarding endemic to cappitalism as practiced by the fasicsts.

Violence breed violence and dictators.

The billionaires started it.

Bounader Lahcen

I find your idea very interesting, but it is hard to generalize this story. In some cases, I would say that it is socialism that creates more inequalities in society not the capitalism. Firstly, in a socialist economy there is no motivation to work hard and progress and this fact involves a huge gap between workers and the leadership of ,say, a state-owned firms. Secondly, when there is no motivation no progress, the stagnation would be in place and in this particularly case we can't talk about inequality because all people are in a bad situation (poverty). Finaly, socialism in my view is not efficient and the history said his word by the abolition of socialism.
Carol ->  Bounader Lahcen
Yep, we see all those lazy Scandinavians and French etc swanning around lacking motivation to work which is why they are more productive than US workers

anne ->  Bounader Lahcen

In some cases, I would say that it is socialism that creates more inequalities in society not the capitalism...

[ What country would serve as a specific example and in what way would there be more inequality in that more socialist country than in the United States? The United Kingdom, Australia, Canada, Germany, France, Netherlands, Japan

anne ->  anne

In some cases, I would say that it is socialism that creates more inequalities in society not the capitalism

[ I still cannot think of an example. ]

Procopius ->  anne

I suspect he's thinking of the former Soviet Union and such Eastern European countries as Albania. I don't know how we could compare the inequality in those places with the current U.S. Certainly there was great inequality, but it was based on family connections, party connections, and personal ability to bullshit. I don't see how that's different from what we're living with now, and the capitalist system uses government power to deflect wealth to the elite as much as the former "socialist" countries did. Reply Saturday, August 22, 2015 at 07:15 PM
Ben Groves ->  Bounader Lahcen
It depends on whether liberal or conservatives run socialism. Liberals would try to make it universal Christian melting pot. Conservatives would make it Pagan tribal and war against other tribes.

Many leftists over the years have a very conservative streak. 

ilsm ->  Ben Groves

Logical fallacies. 
DrDick ->  Bounader Lahcen
Another refugee from the John Birch chapter of the Chamber of Commerce. Do you have any idea what you are talking about?

Ben Groves ->  DrDick

I am the anti-Bircher. Birchers are rich, wall street scum trying to destroy the country. I despise Propertarianism. Lets remember, the split between the Democrats wasn't just necessarily the low income religious people, but from the elitist, secular types who saw the Democratic turn toward Affirmative Action and Forced Buses as racial treason. They may have been even ones that turned a blind eye toward years of Civil Rights, saying the time to move on had come. The 70's "reforms" were just to much. They saw the party backing away from Populism and instead, using special interest to keep their seat of power in the 70's to cultural groups. Hubert Humphrey very much warned us against that, yet, they did. I always saw the people attracted to AA and forced busing as "Progressive Republicans" hiding as Democrats. It is the deep injury in the Democratic Party that has never been shown to the public or healed. Their mentality and cheap parlor tricks were very Republican historically(which modern Republicans still use to support neo-conism, propertarianism and other wealthy schemes). Reply Saturday, August 22, 2015 at 09:38 PM
DrDick ->  Ben Groves
WTF? Do you have any idea what you are talking about? Having you been taking history lessons at Stormfront?

ilsm ->  Bounader Lahcen

Actually, basic science thrived in Soviet sphere. Reply Sunday, August 23, 2015 at 04:53 AM
ilsm ->  Bounader Lahcen
Start with fallacy and go down from there. Reply Sunday, August 23, 2015 at 04:55 AM


Vijay Prashad ‏@vijayprashad

The links between @jeremycorbyn and Genghiz Khan. Be very afraid.

anne ->  anne

August 4, 2015

Corbyn and the Cringe Caucus
By Paul Krugman

I haven't been closely following developments in UK politics since the election, but people have been asking me to comment on the emergence of Jeremy Corbyn as a serious contender for Labour leadership. * And I do have a few thoughts.

First, it's really important to understand that the austerity policies of the current government are not, as much of the British press portrays them, the only responsible answer to a fiscal crisis. There is no fiscal crisis, except in the imagination of Britain's Very Serious People; the policies had large costs; the economic upturn when the UK fiscal tightening was put on hold does not justify the previous costs. More than that, the whole austerian ideology is based on fantasy economics, while it's actually the anti-austerians who are basing their views on the best evidence from modern macroeconomic theory and evidence.

Nonetheless, all the contenders for Labour leadership other than Mr. Corbyn have chosen to accept the austerian ideology in full, including accepting false claims that Labour was fiscally irresponsible and that this irresponsibility caused the crisis. As Simon Wren-Lewis says, ** when Labour supporters reject this move, they aren't "moving left", they're refusing to follow a party elite that has decided to move sharply to the right.

What's been going on within Labour reminds me of what went on within the Democratic Party under Reagan and again for a while under Bush: many leading figures in the party fell into what Josh Marshall used to call the "cringe", basically accepting the right's worldview but trying to win office by being a bit milder. There was a Stamaty cartoon during the Reagan years that, as I remember it, showed Democrats laying out their platform: big military spending, tax cuts for the rich, benefit cuts for the poor. "But how does that make you different from Republicans?" "Compassion — we care about the victims of our policies."

I don't fully understand the apparent moral collapse of New Labour after an election that was not, if you look at the numbers, actually an overwhelming public endorsement of the Tories. But should we really be surprised if many Labour supporters still believe in what their party used to stand for, and are unwilling to support the Cringe Caucus in its flight to the right?


** http://mainly Reply Saturday, August 22, 2015 at 12:09 PM

anne ->  anne

August 14, 2015

With hundreds of thousands of new supporters, Labour is on the verge of something big – what a complete disaster!
Having loads of young voters engage with your party must be terrifying

It's easy to see why those in charge of the Labour Party are so depressed. They must sit in their office crying: "Hundreds of thousands of people want to join us. It's a disaster. And loads of them are young, and full of energy, and they're really enthusiastic. Oh my God, why has it all gone so miserably wrong?"

Every organisation would be the same. If a local brass band is down to its last five members, unsure whether it can ever put on another performance, the last thing it needs is young excited people arriving with trombones to boost numbers and raise money and attract large audiences. The sensible response is to tell them they're idiots, and announce to the press that they are infiltrators from the Workers' Revolutionary Party

anne ->  anne

The sheer nuttiness of the Labour elite's fear of Labour's Jeremy Corbyn, tells me that from conservative to so-called liberal political parties through the West the operating ideas and policies are startlingly similar and actually conservative. How nice to have alternative social-economic ideas in political play to limit conservatism.
anne ->  anne

Glenn Greenwald ‏@ggreenwald

Lady Boothroyd joins Lord Falconer in warning about the gauche leftist hordes regrettably allowed to vote for Corbyn

anne ->  anne

August 23, 2015

Labour heading for scrapheap if it elects Jeremy Corbyn, says Betty Boothroyd
Former Speaker of the Commons claims the leadership frontrunner's hard-left supporters are peddling same 'claptrap' that gripped the party in the 1980s
By Rajeev Syal - Guardian


Capitalism conquered socialism. Now it's in the process of conquering democracy.
ilsm ->  lilnev
Violent capitalism

DrDick ->  ilsm

Is there any other kind? Henry Ford mounted .50 caliber machine guns on the roof of the Rouge plant.
Carolyn Kay
From the book I'd write, if I could ever find a publisher:

"Human greed can, and often does, go too far by treading on the needs and rights of others. In addition, the human need for security and the illusion of certainty tends to encourage the leaders of businesses to collude to set prices, carve up markets, and combine forces by merging their companies. Totally unfettered, the end result of capitalism would be one big company that made and sold everything everywhere, and that kept competitive businesses from existing—by force, if necessary. If you were to want something not made by this master conglomerate, named something like MicroMax, perhaps, you would not be able to get it."
Reply Saturday, August 22, 2015 at 12:41 PM


The corporate titans won the kold war with the nixon-mao pact. Soon social democracy became a nuisance not a bulwark


no motivation to work in socialism?

This comes I think from an argument about alienation but really makes no sense at all. After all, the vast majority of the workforce in modern capitalist societies have no meaningful ownership over their companies or what they produce.

Incentives are an issue of policy (whether it be corporate policy or whatever) We don't live in a world of billions of small business owners we live in a world of huge collective organizations that use some form of centralized planning.

If people need to have a stake to have a work ethic, then support collectivization of private industry (which is communism). Reply Saturday, August 22, 2015 at 01:37 PM

Procopius ->  Niq

I think you're misunderstanding. The people who say that there's no motivation to work under socialism are thinking of CEOs of massive international corporations, who claim that the only reason they work is because they are paid millions of dollars a year.

They think that if people weren't forced into the "vast reserve army of the unemployed" on the verge of starvation, they's spend all their time watching reality shows on the electric teevee machine. 

ilsm ->  Niq
Only greed motivates!

ilsm ->  ilsm

Keeping your country from third world status is not a motivator.

The billionaires are fuill of it, but better comply or the US police equipped with MRAPs will take it out on you. Reply Sunday, August 23, 2015 at 05:00 AM

Dan Kervick

It's not just that socialism made capitalism more equal. Its presence in the intellectual-political mix produced a variety of mixed economy alternatives to capitalism which were adopted throughout the developed world. A large number of everyday and widely supported economic institutions and innovations originated in the thought of the socialists.

In many countries, everyone seems to understand that the economic system they live under reflects a fusion of capitalist and socialist ideas, and so they call it "social democracy", "democratic socialism" or what have you. Americans have traditionally insisted for deep-seated ideological reasons on using the term "capitalism", come what may, and are in permanent denial about the socialist elements of their own system.

One thing the arrival of socialist ideas helped do was prevent the pre-capitalist or nascent capitalist societies of early modern Christian Europe from evolving into full-blown total capitalist barbarisms under the pressure of industrialization. Socialism and other, older forms of religious and humanitarian thought worked together to prevent the infernal machinery of capitalism from devouring everything. Reply Saturday, August 22, 2015 at 01:41 PM


Brank Milanovic adds:

August 22, 2015

Did socialism keep capitalism equal?

I think the fundamental question that these and similar papers ask is the following: does capitalism contain "automatic stabilizers" that would curb the rise of inequality before it goes over the top; or do "stabilizers" always have to be revolutions, wars and economic crises? I do not think that we have an empirical answer to it. Reply Saturday, August 22, 2015 at 01:48 PM

anne ->  anne

Naomi Klein, I suspect, would argue that conservatives have a purpose in and have become adept at using social upheavals to force movement away from social-democratic institutions. Reply Saturday, August 22, 2015 at 01:51 PM
Second Best
Eminent domain powers of the ruling oligarchy, deeply embedded inseparably in markets and government, also eliminate private property. Predatory socialism is disguised as capitalism, otherwise known as privatized gains and socialized losses.

The top 1% has accumulated assets over $60 trillion including 49,000 families with assets over a billion dollars. Corporations contribute the lowest percentage of tax revenue in history, 1% of GDP.

The socialist-capitalist dichotomy is naive at best, anything but countervailing forces. Reply Saturday, August 22, 2015 at 01:54 PM

ilsm ->  Second Best

The new Dudes.

Naziism: "privatized gains and socialized losses."

No Krugge or "civil" Nazi was brought to Nuremburg.

Krugges abide! Reply Sunday, August 23, 2015 at 05:03 AM

Jim Harrison

It wasn't just communism. There were many countervailing forces: populism, the social gospel, democratic socialism of various kinds, labor movements, and political progressivism, not to mention the conservatism of older economic elites whose status was based primarily on land. What's novel about our situation is the scarcity of organized opposition to unfettered capitalism. Obviously that may change, but I'm impressed with the ability of the system to quickly co-opt its enemies. Reply Saturday, August 22, 2015 at 02:18 PM
Richard Lee Bruce Econ PhC
The turn around in income distribution for the United States was in 1973, long before the fall of communism. The percentage of income going to the top one percent was declining until 72 or 73.

The percentage falling below the poverty threshold was falling until 1973, and has not gotten back to the 73 level in the 42 years since then.

So 1973 was the inflection point. Of course 1973 was also the year that Roe was decided.

Abortion, Roe, the sexual revolution, and other social issues drove a wedge between religious voters and the Democratic Party. The Religious vote had been liberal, progressively it became conservative and Republican.

Religious voters have high voter turn out. Voting is a religious duty. So we particularly see the results in off year elections.

The religious are also far more fertile, so there influence grows, as they and their numbers grow.

On the other hand many factors are important and the article has mentioned one of them. Reply Saturday, August 22, 2015 at 03:30 PM

Paine ->  Richard Lee Bruce Econ PhC

But after the Nixon Mao pact

The turning point of no return 

Eric377 ->  Paine

Thanks. I think determining what happened would be very difficult. The increase in competition from non-Detroit manufacturers was pressuring the dollar value of the added value. It is only value to the limit that customers buy the product. When GM and Chrysler sought protection about 40 years after 1970, the claims on the value of these firms by the UAW members and retirees were a very large contributor to the unsustainable situations they found themselves in. The Detroit treaty effects lasted much longer than the 1970s, but there was a lot less value to share relative to expectations. 
Ellis ->  Eric377
In other words, the workings of capitalism drives down wages.

Redwood Rhiadra

"I think there are, in the longer-term, forces that would lead toward reduction in inequality (and that would not be the return of Communism)."

There is such a long term force, of course. It is called climate change, which will make everyone equal by either killing them all, or, at best, what few survivors remain will be reduced to a Stone Age subsistence lifestyle.

Not exactly a rosy scenario. I'd like a solution that leads to more equality *without* the complete collapse of human civilization. Unfortunately, I don't actually see one. Reply Saturday, August 22, 2015 at 05:33 PM

Paine ->  Redwood Rhiadra

Quietism till the rapture then ? Reply Saturday, August 22, 2015 at 06:00 PM

 Robert Waldmann

I think there are four bits of information which support the socialism kept capitalism equal hypothesis. They are massive land reforms in Japan, Taiwan, South Korea and Italy. In each case the reform was enacted by conservatives ranging from center right to far right. In the cases of S. Korea, Taiwan and Italy there were very strong communist threats to the current government. In Japan there was a strong communist party and a militant socialist party.

I think few doubted that the aim of the reformers was mainly to settle the issue. In fact, I think the pattern is that anti-communist egalitarianism actually works

This lead to the, to me, shocking fact that, while leftists (such as myself) hated Chiang Kai-Shek, Taiwan achieved rapid growth with an anomalously equal income distribution (compared to other countries with similar per capita incomes).

Notably sincere socialists didn't always manage so well. I think (as argued in the linked post) that an eagerness to settle the class conflict permanently tends to promote effective policy. Reply Saturday, August 22, 2015 at 06:56 PM

ilsm ->  Robert Waldmann


He was Mao's supply officer while the Birchers legislated huge arms support.

Once Mao got to the Yantgze Chiang's mask fell away.

Taiwan is about equally split today between Chiang fasicst, Formosans who see Chinese no better than Japanese and leftists favoring union.

Someday the enough fascists will be jailed for corruption

anne ->  Robert Waldmann

I think there are four bits of information which support the socialism kept capitalism equal hypothesis. They are massive land reforms in Japan, Taiwan, South Korea and Italy. In each case the reform was enacted by conservatives ranging from center right to far right. In the cases of S. Korea, Taiwan and Italy there were very strong communist threats to the current government. In Japan there was a strong communist party and a militant socialist party

[ Important argument, with which I would agree. Worth further writing about.

anne ->  Robert Waldmann

August 4, 2014

Real Gross Domestic Product for China, Japan, Korea and Taiwan, 1954-2011

(Percent change)

August 4, 2014

Real Gross Domestic Product for China, Japan, Korea and Taiwan, 1954-2011

(Indexed to 1954) Reply Sunday, August 23, 2015 at 05:33 AM

anne ->  Robert Waldmann

August 4, 2014

Real Gross Domestic Product for China, Italy and Spain, 1953-2011

(Percent change)

August 4, 2014

Real Gross Domestic Product for China, Italy and Spain, 1953-2011

(Indexed to 1953) Reply Sunday, August 23, 2015 at 05:42 AM

anne ->  Robert Waldmann

In fact, I think the pattern is that anti-communist egalitarianism actually works: .

This lead to the, to me, shocking fact that, while leftists (such as myself) hated Chiang Kai-Shek, Taiwan achieved rapid growth with an anomalously equal income distribution (compared to other countries with similar per capita incomes)

[ Do write more on this matter. ]

anne ->  Robert Waldmann

May 17, 2007

Land Reform in Venezuela
By Robert Waldmann

My personal thought is that it's about time. This article is interesting but I think it is slanted against the land reform which is described as "brutal and legal" because

"The violence has gone both ways in the struggle, with more than 160 peasants killed by hired gunmen in Venezuela, including several here in northwestern Yaracuy State, an epicenter of the land reform project, in recent years. Eight landowners have also been killed here."

Sounds to me that the resistance to land reform is roughly 20 times as brutal as the land reform effort. The disproportion between quotes of supporters and opponents is much less extreme.

The part that irritated me (and makes an alternative title "why do people hate economists") is that "economists" appear to be all opposed to land reform.

"Economists say the land reform may have the opposite effect of what Mr. Chavez intends, and make the country more dependent on imported food than before

. Agricultural economists say the government bureaucracy, which runs a chain of food stores, is also rife with inefficiencies." Finally economists get a name:

"Carlos Machado Allison, an agricultural economist at the Institute for Higher Administrative Studies in Caracas."

anne ->  anne

May 17, 2007

Clash of Hope and Fear as Venezuela Seizes Land
By SIMON ROMERO Reply Sunday, August 23, 2015 at 06:34 AM

Barkley Rosser

One basic fact and one speculation.

The basic fact is that there is no question that when the Soviet system fell, and the USSR fell apart, and the Warsaw Pact and COMECON all ceased to exist, and communist parties fell out of power, the upshot was that Gini coefficients in all of these nations, as well as in China as well. What is not always talked about, although I have authored some papers with coauthors on this, now out of date, is that the rate of increase in inequality in these transition (really formerly transition) economies has varied enormously.

So, the last measured Gini in the Soviet Union was .26, with Czechoslovakia around .20, and Maoist China at .16. Yes, these were probably too low due to non-counting of in-kind perks to nomenklatura elites, but, frankly, these generally were not all that great, and there were not that many privately held fortunes, given the lack of private ownership of capital. And if anybody does not think that Ginis in the US and other maraket capitalist nations are not understated, well, think about how much high income people hide their incomes and their wealth.

So, today US and China and Russia all have Ginis around .40. Much of western Europe and East Asia are in the upper 20s to mid-30s. But certain eastern European nations have maintained quite low Ginis, such as the Czech and Slovak Republics and Slovenia, and some other reasonably democratic and not overly corrupt of those nations, with Ginis still holding in the mid 20s. Big surprise that those that have maintained more equality have also generally done much better on many measures than those that have had their Ginis soar as corrupt new elites have seized control of the means of production.

So, my speculation that one reason why we have seen higher price/earnings ratios in many western stock markets since 1990 has simply been indeed that the risk of nationalization has been removed. It was never that serious in the US, but it was still there in the background. But after the fall of Soviet communism, this perceived risk really went to basically zero. Upshot, a permanent jump in those price/earnings ratios, although maybe in some nations this will change. 

Ben Groves ->  Barkley Rosser

Capitalism can continue on as long as the government bails it out. When it doesn't bail it out, you get depressions, collapse into socialism and tribalism. When there is nothing left for you, you bare arms and slaughter the decadent.
ilsm ->  Ben Groves
As long as greed exceed charity in the popular view. 

anne ->  Barkley Rosser

So, today US and China and Russia all have Ginis around .40. Much of western Europe and East Asia are in the upper 20s to mid-30s

[ When possible set down the reference link to the database being used: ? ? ]

Ben Groves

The US for example was a moderate fascist country from 1933-80 when the government ran investment cycles through public investment and using high marginal tax rates to literally force the wealthy to invest nationally. Then it became a Oligopoly slowly over time from 1983 onward, when the state began to disinvest and capital concentration took off by the 90's.

Another big part that went into that was the end of military spending and north sea oil findings. In 1979, everybody was bleak. The Soviet Union was going to last for the foreseeable future, keeping spending high. The world was running out of oil. That all changed by 1981. The Soviet empire was turning into a joke and its Afgan follies were looking bad. The North Sea oil finds helped spur the cheap economy oil onward. The "rich" became cool again. So the political theme was to allow them more latitude. Lets don't forget, businesses were pumping assets into foreign countries even in the 60's. One of them was China well before 1997. The final end of the cold war tripe pushed that on steroids.

So we live in a world without any real military threats outside "terrorists" (which itself is suspicious in their financing) and global capital flows. No longer is investment seen as the path toward happiness, but consumption. Real PCE replaced industrial production as "the" bean counter boosting valuations for the wealthy with credit expansion its chariot. 

ilsm ->  Ben Groves

Today the US spends more on war in real $ than when it had 500K engaged in Vietnam blowing up nationalists at decent profit per body count, with a good number a tripwire against the 40000 tanks the soviets had parked facing west. 

[Aug 22, 2015] Why Is Market Fundamentalism So Tenacious

One of the great economists of the twentieth century had the misfortune of publishing his magnum opus, The Great Transformation, in 1944, months before the inauguration of a new era of postwar economic growth and consumer culture. Few people in the 1940s or 1950s wanted to hear piercing criticisms of "free markets," let alone consider the devastating impacts that markets tend to have on social solidarity and the foundational institutions of civil society. And so for decades Polanyi remained something of a curiosity, not least because he was an unconventional academic with a keen interest in the historical and anthropological dimensions of economics.

As the neoliberal revolution instigated by Reagan and Thatcher in the 1980 has spread, however, Polanyi has been rediscovered. His great book – now republished with a foreword by Joseph Stiglitz – has attracted a new generation of readers.

But how to make sense of Polanyi's work with all that has happened in the past 70 years? Why does he still speak so eloquently to our contemporary problems? For answers, we can be grateful that we have The Power of Market Fundamentalism: Karl Polanyi's Critique, written by Fred Block and Margaret R. Somers, and published last year. The book is a first-rate reinterpretation of Polanyi's work, giving it a rich context and commentary. Polanyi focused on the deep fallacies of economistic thinking and its failures to understand society and people as they really are. What could be more timely?

The cult of free market fundamentalism has become so normative in our times, and economics as a discipline so hidebound and insular, that reading Polanyi today is akin to walking into a stiff gust of fresh air. We can suddenly see clear, sweeping vistas of social reality. Instead of the mandarin, quantitative and faux-scientific presumptions of standard economics – an orthodoxy of complex illusions about "autonomous" markets – Polanyi explains how markets are in fact embedded in a complex web of social, cultural and historical realities.

Markets can only work, for example, if political and legal institutions contrive to transform people, land and money into assets that can be bought and sold. Polanyi calls these "fictional commodities" because people, land and money are not in fact commodities. People and land have their own existence and purposes apart from the market – and money is a social institution, even if many pretend that gold is a self-evident medium of value.

Notwithstanding these realities, capitalist societies ahve created these fictional commodities. People have in effect been transformed into units of "labor" that can be bought and sold in the market, and discarded when their value is depleted. Land, too, is treated as a market asset that has no connection to a larger, living ecosystem or human community. Inevitably, people and users of land (and ecosystems themselves) rebel against their treatment as raw commodities. The result is a permanent counter-movement against those who insist upon treating people and land as commodities.

Unlike Keynes, who was willing to accept some of these economic illusions in order to have political impact, Polanyi rejected them as a recipe for a dangerous and unachievable utopianism. That is in fact what has emerged over the past several generations as business ideologues have advanced quasi-religious visions of free market fundamentalism. The planet's natural systems and our communities simply cannot fulfill these utopian dreams of endless economic growth, vast consumption of resources and the massive social engineering. And yet it continues.

Polanyi was courageous enough to strip away the pretenses that the economy is a "force of nature" that cannot be stopped. The economy, he said, is an "instituted process," not a natural one, and it can only survive through massive governmental interventions and cultural regimentation. The free market system is hardly autonomous and self-executing. It requires enormous amounts of government purchasing, research subsidies, legal privileges, regulatory agencies to enhance fairness and public trust, military interventions to secure access to resources and markets, and the sabotage of democratic processes that might threaten investments and market growth. The 2008 financial crisis revealed in outrageous detail how financial markets are anything but autonomous.

So what accounts for the insidious power of market fundamentalism and its illusions? Why do its premises remain intact and influential in the face of so much contrary evidence?

Block and Somers point to a closed and coherent ideational scheme that knits together several key belief systems. The first is the idea that the laws of nature govern human society, and thus the workings of the economy are seen as a biological and evolutionary inevitability. A second theme is the idea of "theoretical realism," a belief that the theoretical schema is more true and enduring than any single piece of empirical evidence, and thus one can argue from the claims of theory and not from facts. Free market narratives assert their own self-validating claims to what is true; epistemological categories trump all empirical challenges.

Finally, a "conversion narrative" enables free marketeers tell to neutralize and delegitimate any contrary arguments, and enabling them to introduce its alternative story. This approach is routinely used to re-cast the reasons (and blame) for poverty. Instead of acknowledging institutional or structural explanations for why many people are poor, the free market narrative boldly attacks government for making people poor through aid programs. Government programs supposedly have a perverse effect, aggravating, not aleviating poverty. The poor are cast as morally responsible – along with government – for their own sorry circumstances. Thus, a higher minimum wage is perverse, say free market champions, because it will hurt the poor rather than help them.

What makes The Power of Market Fundamentalism so illuminating is its patient, careful reconstruction of these recurring and deceptive polemical patterns. The wealthy invoke the same rhetorical strategies again and again over the course of hundreds of years in extremely different contexts. With their mastery of an enormous contemporary literature, Block and Somers document the remarkable parallels and show just how deep and durable Polanyi's analysis truly is.

[Aug 22, 2015] The Riddle of Obama's Foreign Policy by Robert Parry

his vision is more ideological than strategic
"...My view of Obama is somewhat different. It strikes me that Obama is what you might call a "closet realist." He understands the limits of American power and wants to avoid costly military entanglements. But he also doesn't want to challenge the neocon/liberal-hawk dominance of Official Washington.
In other words, he's a timid opportunist when it comes to reshaping the parameters of the prevailing "group think." He's afraid of being cast as the "outsider," so he only occasionally tests the limits of what the neocon/liberal-hawk "big thinkers" will permit, as with Cuba and Iran."
"...An elitist would keep the public in the dark while letting the hasty initial judgments stand, which is what Obama has done."
"...Kissinger: "To me, yes. It means that breaking Russia has become an objective; the long-range purpose should be to integrate it.""
"...But Obama the Timid Soul – afraid of being ostracized by all the well-connected neocons and liberal hawks of Official Washington – doesn't dare challenge the "group think," what everybody knows to be true even if he knows it to be false. In the end, Obama the Elitist won't trust the American people with the facts, so these international crises will continue drifting toward a potential Armageddon."
August 22, 2015 | | 0 Comments

By Robert Parry. This article was first published on Consortium News.

For nearly seven years of his presidency, Barack Obama has zigzagged from military interventionist to pragmatic negotiator, leaving little sense of what he truly believes. Yet, there may be some consistent threads to his inconsistencies, writes Robert Parry.

Nearing the last year of his presidency, Barack Obama and his foreign policy remain an enigma. At times, he seems to be the "realist," working constructively with other nations to achieve positive solutions, as with the Iran nuclear deal and his rapprochement with Cuba. Other times, he slides into line with the neocons and liberal hawks, provoking ugly crises, such as his "regime change" tactics in Honduras (2009), Libya (2011), Syria (over several years) and Ukraine (2014).

Yet, even in some of those "regime change" scenarios, Obama pulls back from the crazier "tough guy/gal" ideas and recognizes the catastrophes such schemes could create. In 2013, he called off a planned bombing campaign against the Syrian military (which could have led to a victory for Al Qaeda or the Islamic State), and in 2014, he resisted a full-scale escalation of Ukraine's war against ethnic Russian rebels resisting the new U.S.-backed political order in Kiev (which could have pushed the world to the brink of a nuclear war).

Yet, Obama also won't stand up to the neocons and liberal hawks by sharing crucial information with the American people that could undermine pro-intervention narratives.

For instance, Obama has held back the latest U.S. intelligence analysis describing who was responsible for the Aug. 21, 2013 sarin attack that almost precipitated the U.S. war on the Syrian military, and he won't release the intelligence assessment on who shot down Malaysia Airlines Flight 17 on July 17, 2014, the tragedy which ratcheted up the crisis with Russia over Ukraine.

In both cases, I'm told U.S. intelligence analysts have backed off early rushes to judgment blaming the Syrian government for the sarin attack, which killed hundreds, and the Russian-backed eastern Ukrainian rebels for the MH-17 crash, which killed 298 people. But Obama has left standing the earlier propaganda themes blaming the Syrian and Russian governments, all the better to apply American "soft power" pressure against Damascus and Moscow.

Thus, Obama's foreign policy has a decidedly zigzag nature to it. Or as former Secretary of State Henry Kissinger recently described Obama: "On the prudential level he's a realist. But his vision is more ideological than strategic," a typically cryptic Kissingerian phrasing that I interpret to mean that Obama is a prudent realist when it comes to major military actions but – short of all-out war – ideologically embraces neocon/liberal-hawk interventionism.

My view of Obama is somewhat different. It strikes me that Obama is what you might call a "closet realist." He understands the limits of American power and wants to avoid costly military entanglements. But he also doesn't want to challenge the neocon/liberal-hawk dominance of Official Washington.

In other words, he's a timid opportunist when it comes to reshaping the parameters of the prevailing "group think." He's afraid of being cast as the "outsider," so he only occasionally tests the limits of what the neocon/liberal-hawk "big thinkers" will permit, as with Cuba and Iran.

Obama is also fundamentally an elitist who believes more in manipulating the American people than in leveling with them. For instance, a leader who truly trusted in democracy would order the maximum declassification of what the U.S. intelligence community knows about the pivotal events in Syria and Ukraine, including the sarin attack and the MH-17 shoot-down.

An elitist would keep the public in the dark while letting the hasty initial judgments stand, which is what Obama has done.

Redirecting Conventional Wisdom

Obama never trusts the people to help him rewrite the narratives of these crises, which could create more space for reasonable compromises and solutions. Instead, he leaves the American public ignorant, which empowers his fellow "smart people" of Official Washington to manage national perceptions, all aided and abetted by the complicit mainstream U.S. media which simply reinforces the misguided "conventional wisdom."

Despite his power to do so, Obama won't shatter the frame of Official Washington's fun-house mirror of reality. That's why his attempt to invoke the memory of President John F. Kennedy's famous "we all inhabit this small planet" speech at American University in 1963 fell so flat earlier this month when Obama went to AU and offered a pedestrian, point-by-point defense of the Iran nuclear deal without any of Kennedy's soaring, universal rhetoric.

Presumably Obama feared that he would be cast as a starry-eyed idealist if he explained to the American people the potential for using the Iran agreement as a way to begin constructing a more peaceful Middle East. [See's "Obama's Pragmatic Appeal for Iran Peace."]

These limitations in Obama's personality and world view have probably doomed his legacy to be viewed as an overall failure to reshape America's approach to the world, away from a costly and confrontational strategy of seeking endless dominance to one favoring a more respectful and pragmatic approach toward the sensitivities and needs of other nations.

I realize some Obama critics feel that he is simply a tool of American imperialism putting a slightly less offensive face on the same interventionist policies. And no doubt he has served that role in many instances. He even boasted during his Iran speech that "I've ordered military action in seven countries." If some other world leader – say, Russian President Vladimir Putin – had made that claim, we would be hearing demands that he be dragged before the World Court as a war criminal.

But there is also the Obama whom Kissinger described as "on the prudential level he's a realist." And there is significant value in sidestepping the maximalist catastrophes that would be caused by policies favored by the neocons and liberal hawks, such as U.S. bombing to destroy the Syrian military (and open the gates of Damascus to a reign of Sunni terrorism) or a U.S. military escalation of the Ukraine crisis (to the point of a nuclear showdown with Russia).

While Obama's modicum of "realism" may seem like a modest thing, it isn't when you recognize that Official Washington's favored choices could contribute to the mass executions of Syria's Christians, Shiites, Alawites and other minorities under the swords of the Islamic State or could provoke a thermonuclear war with Russia that could end all life on the planet.

That acknowledgement aside, however, Obama has fallen far short of any profile in courage as he's allowed dangerously false narratives to develop around these and other international conflicts. The most hazardous of all is the Putin-bashing storyline about Ukraine, which holds that the entire ugly civil war was part of some nefarious scheme cooked up in the Kremlin to recreate the Russian Empire.

Though this notion that the Ukraine crisis was simply a case of "Russian aggression" is held by virtually every important person in Washington's current power circles, it was never true. The crisis was provoked by a U.S.-backed coup on Feb. 22, 2014, which overthrew Ukraine's elected President Viktor Yanukovych. Putin reacted to that provocation; he didn't instigate it.

Kissinger's Take on Ukraine

And if you don't believe me, perhaps you might listen to Henry Kissinger who explained the reality in a July interview with National Interest editor Jacob Heilbrunn, who noted: "we have witnessed a return, at least in Washington, DC, of neoconservatives and liberal hawks who are determined to break the back of the Russian government."

Kissinger: "Until they face the consequences. The trouble with America's wars since the end of the Second World War has been the failure to relate strategy to what is possible domestically. The five wars we've fought since the end of World War II were all started with great enthusiasm. But the hawks did not prevail at the end. At the end, they were in a minority. We should not engage in international conflicts if, at the beginning, we cannot describe an end, and if we're not willing to sustain the effort needed to achieve that end. …"

Heilbrunn: "How do you think the United States can extricate itself from the Ukraine impasse — the United States and Europe, obviously?"

Kissinger: "The issue is not to extricate the United States from the Ukrainian impasse but to solve it in a way conducive to international order. A number of things need to be recognized. One, the relationship between Ukraine and Russia will always have a special character in the Russian mind. It can never be limited to a relationship of two traditional sovereign states, not from the Russian point of view, maybe not even from Ukraine's.

"So, what happens in Ukraine cannot be put into a simple formula of applying principles that worked in Western Europe, not that close to Stalingrad and Moscow. In that context, one has to analyze how the Ukraine crisis occurred. It is not conceivable that Putin spends 60 billion euros on turning a summer resort into a winter Olympic village in order to start a military crisis the week after a concluding ceremony that depicted Russia as a part of Western civilization.

"So then, one has to ask: How did that happen? I saw Putin at the end of November 2013. He raised a lot of issues; Ukraine he listed at the end as an economic problem that Russia would handle via tariffs and oil prices.

"The first mistake was the inadvertent conduct of the European Union. They did not understand the implications of some of their own conditions. Ukrainian domestic politics made it look impossible for Yanukovych to accept the EU terms [for an association agreement] and be reelected or for Russia to view them as purely economic. …

"Each side acted sort of rationally based on its misconception of the other, while Ukraine slid into the Maidan uprising right in the middle of what Putin had spent ten years building as a recognition of Russia's status. No doubt in Moscow this looked as if the West was exploiting what had been conceived as a Russian festival to move Ukraine out of the Russian orbit. …

"If we treat Russia seriously as a great power, we need at an early stage to determine whether their concerns can be reconciled with our necessities. We should explore the possibilities of a status of nonmilitary grouping on the territory between Russia and the existing frontiers of NATO.

"The West hesitates to take on the economic recovery of Greece; it's surely not going to take on Ukraine as a unilateral project. So one should at least examine the possibility of some cooperation between the West and Russia in a militarily nonaligned Ukraine. The Ukraine crisis is turning into a tragedy because it is confusing the long-range interests of global order with the immediate need of restoring Ukrainian identity. …

"When you read now that Muslim units are fighting on behalf of Ukraine, then the sense of proportion has been lost." [For more on this reference, see's "Ukraine Merges Nazis and Islamists."]

Heilbrunn: "That's a disaster, obviously."

Kissinger: "To me, yes. It means that breaking Russia has become an objective; the long-range purpose should be to integrate it."

When Kissinger Makes Sense

It may be a little scary when Henry Kissinger makes relative sense, but that's only in contrast to the current dominant neocon/liberal-hawk "big thinkers" of Official Washington.

For Obama the Realist, the most practical way to begin moving toward a pragmatic resolution of the Ukraine crisis would be to stop the endless propaganda emanating from the U.S. State Department and repeated by the mainstream media and start telling the public the full truth – how the crisis really began, why the mantra "Russian aggression" is false, what on earth the U.S. government thinks it's doing collaborating with neo-Nazis and Islamic jihadists in killing thousands of ethnic Russian Ukrainians, and who was responsible for the key escalating moment, the shoot-down of MH-17.

But Obama the Timid Soul – afraid of being ostracized by all the well-connected neocons and liberal hawks of Official Washington – doesn't dare challenge the "group think," what everybody knows to be true even if he knows it to be false. In the end, Obama the Elitist won't trust the American people with the facts, so these international crises will continue drifting toward a potential Armageddon.

Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his latest book, America's Stolen Narrative, either in print here or as an e-book (from Amazon and You also can order Robert Parry's trilogy on the Bush Family and its connections to various right-wing operatives for only $34. The trilogy includes America's Stolen Narrative. For details on this offer, click here.

[Aug 16, 2015] Lawrence Wilkerson Travails of Empire - Oil, Debt, Gold and the Imperial Dollar

"...This includes the observation that "gold is being moved in sort of unique ways, concentrated in secret in unique ways, and capitals are slowly but surely divesting themselves of US Treasuries. So what you are seeing right now in the supposed strengthening of the dollar is a false impression."... "
"...The BRICS want to use oil to "force the US to lose its incredibly powerful role in owning the world's transactional reserve currency." It gives the US a great deal of power of empire that it would not ordinarily have, since the ability to add debt without consequence enables the expenditures to sustain it."
"...Later, after listening to this again, the thought crossed my mind that this advisor might be a double agent using the paranoia of the military to achieve the ends of another. Not for the BRICS, but for the Banks. The greatest beneficiary of a strong dollar, which is a terrible burden to the real economy, is the financial sector. This is why most countries seek to weaken or devalue their currencies to improve their domestic economies as a primary objective. This is not so far-fetched as military efforts to provoke 'regime change' have too often been undertaken to support powerful commercial interests."
"...A typical observation is that the US did indeed overthrow the democratically elected government of Mossadegh in 1953 in Iran. But 'the British needed the money' from the Anglo-Iranian oil company in order to rebuild after WW II. Truman had rejected the notion, but Eisenhower the military veteran and Republic agreed to it. Wilkerson says specifically that Ike was 'the last expert' to hold the office of the Presidency. "
August 15, 2015 | Jesse's Café Américain
"We are imperial, and we are in decline... People are losing confidence in the Empire."
This is the key theme of Larry Wilkerson's presentation. He never really questions whether empire is good or bad, sustainable or not, and at what costs. At least he does not so in the same manner as that great analyst of empire Chalmers Johnson.

It is important to understand what people who are in and near positions of power are thinking if you wish to understand what they are doing, and what they are likely to do. What ought to be done is another matter.

Wilkerson is a Republican establishment insider who has served for many years in the military and the State Department. Here he is giving about a 40 minute presentation to the Centre For International Governance in Canada in 2014.

I find his point of view of things interesting and revealing, even on those points where I may not agree with his perspective. There also seem to be some internal inconsistencies in this thinking.

But what makes his perspective important is that it represents a mainstream view of many professional politicians and 'the Establishment' in America. Not the hard right of the Republican party, but much of what constitutes the recurring political establishment of the US.

As I have discussed here before, I do not particularly care so much if a trading indicator has a fundamental basis in reality, as long as enough people believe in and act on it. Then it is worth watching as self-fulfilling prophecy. And the same can be said of political and economic memes.

At minute 48:00 Wilkerson gives a response to a question about the growing US debt and of the role of the petrodollar in the Empire, and the efforts by others to 'undermine it' by replacing it. This is his 'greatest fear.'

He speaks about 'a principal advisor to the CIA Futures project' and the National Intelligence Council (NIC), whose views and veracity of claims are being examined closely by sophisticated assets. He believes that both Beijing and Moscow are complicit in an attempt to weaken the dollar.

This includes the observation that "gold is being moved in sort of unique ways, concentrated in secret in unique ways, and capitals are slowly but surely divesting themselves of US Treasuries. So what you are seeing right now in the supposed strengthening of the dollar is a false impression."

The BRICS want to use oil to "force the US to lose its incredibly powerful role in owning the world's transactional reserve currency." It gives the US a great deal of power of empire that it would not ordinarily have, since the ability to add debt without consequence enables the expenditures to sustain it.

Later, after listening to this again, the thought crossed my mind that this advisor might be a double agent using the paranoia of the military to achieve the ends of another. Not for the BRICS, but for the Banks. The greatest beneficiary of a strong dollar, which is a terrible burden to the real economy, is the financial sector. This is why most countries seek to weaken or devalue their currencies to improve their domestic economies as a primary objective. This is not so far-fetched as military efforts to provoke 'regime change' have too often been undertaken to support powerful commercial interests.

Here is just that particular excerpt of the Q&A and the question of increasing US debt.

I am not sure how much the policy makers and strategists agree with this theory about gold. But there is no doubt in my mind that they believe and are acting on the theory that oil, and the dollar control of oil, the so-called petrodollar, is the key to maintaining the empire.

Wilkerson reminds me very much of a political theoretician who I knew at Georgetown University. He talks about strategic necessities, the many occasions in which the US has used its imperial power covertly to overthrow or attempt to overthrow governments in Iran, Venezuela, Syria, and the Ukraine. He tends to ascribe all these actions to selflessness, and American service to the world in maintaining a balance of power where 'all we ask is a plot of ground to bury our dead.'

A typical observation is that the US did indeed overthrow the democratically elected government of Mossadegh in 1953 in Iran. But 'the British needed the money' from the Anglo-Iranian oil company in order to rebuild after WW II. Truman had rejected the notion, but Eisenhower the military veteran and Republic agreed to it. Wilkerson says specifically that Ike was 'the last expert' to hold the office of the Presidency.

This is what is meant by realpolitik. It is all about organizing the world under a 'balance of power' that is favorable to the Empire and the corporations that have sprung up around it.

As someone with a long background and interest in strategy I am not completely unsympathetic to these lines of thinking. But like most broadly developed human beings and students of history and philosophy one can see that the allure of such thinking, without recourse to questions of restraint and morality and the fig leaf of exceptionalist thinking, is a terrible trap, a Faustian bargain. It is the rationalization of every nascent tyranny. It is the precursor to the will to pure power for its own sake.

The challenges of empire now according to Wilkerson are:

  1. Disequilibrium of wealth - 1/1000th of the US owns 50% of its total wealth. The current economic system implies long term stagnation (I would say stagflation. The situation in the US is 1929, and in France, 1789. All the gains are going to the top.
  2. BRIC nations are rising and the Empire is in decline, largely because of US strategic miscalculations. The US is therefore pressing harder towards war in its desperation and desire to maintain the status quo. And it is dragging a lot of good and honest people into it with our NATO allies who are dependent on the US for their defense.
  3. There is a strong push towards regional government in the US that may intensify as global warming and economic developments present new challenges to specific areas. For example, the water has left the Southwest, and it will not be coming back anytime soon.
This presentation ends about minute 40, and then it is open to questions which is also very interesting.
Lawrence Wilkerson, Distinguished Visiting Professor of Government and Public Policy at the College of William Mary, and former Chief of Staff to U.S. Secretary of State Colin Powell.
Related: Chalmers Johnson: Decline of Empire and the Signs of Decay

[Aug 16, 2015] Marxists and Conservatives Have More in Common than Either Side Would Like to Admit

"...That was the sad tragedy of Marx and Marxism. Instead of focusing on a practical agenda for achieving and sustaining a democratically administered state in an imperfect human world, a state based on a more equal distribution of capital, a workable balance between private and public ownership of capital, and a regulatory framework and rule of law designed to sustain this balance in the face of social and economic forces that will *always* be acting to disrupt it, Marx veered off into the fantasy lands"
Aug 15, 2015 | Economist's View

Chris Dillow on common ground between Marxists and Conservatives:

Fairness, decentralization & capitalism: Marxists and Conservatives have more in common than either side would like to admit. This thought occurred to me whilst reading a superb piece by Andrew Lilico.

He describes the Brams-Taylor procedure for cutting a cake in a fair way - in the sense of ensuring envy-freeness - and says that this shows that a central agency such as the state is unnecessary to achieve fairness:...

The appropriate mechanism here is one in which there is a balance of power, such that no individual can say: "take it or leave it."

This is where Marxism enters. Marxists claim that, under capitalism, the appropriate mechanism is absent. Marx stressed that ... the labour market is an arena in which power is unbalanced...

Nor do Marxists expect the state to correct this, because the state is captured by capitalists - it is "a committee for managing the common affairs of the whole bourgeoisie."...

Instead, Marx thought that fairness can only be achieved by abolishing both capitalism and the state - something which is only feasible at a high level of economic development - and replacing it with some forms of decentralized decision-making. ...

In this sense, Marxists agree with Andrew: people can find fair allocations themselves without a central agency. ...

Posted by Mark Thoma on Saturday, August 15, 2015 at 09:10 AM in Economics, Income Distribution, Unions | Permalink Comments (10)

Otto Maddox:

How silly. Marxism and its centralization of power will attract the hyper control freak who are not likely to ever give up power. Disingenuous utopianism.

Dan Kervick:

That was the sad tragedy of Marx and Marxism. Instead of focusing on a practical agenda for achieving and sustaining a democratically administered state in an imperfect human world, a state based on a more equal distribution of capital, a workable balance between private and public ownership of capital, and a regulatory framework and rule of law designed to sustain this balance in the face of social and economic forces that will *always* be acting to disrupt it, Marx veered off into the fantasy lands of his hectoring anarchist critics and adversaries, and came up with a social pseudo-science positing a millennarian heaven on earth where somehow perfect voluntariness and perfect equality magically come together. The Marxists are still twisted up in that foolishness, perpetually incapable of formulating practical political plans and agendas because they have some "crisis theory" telling them that the current messes are the harbingers of a revolution that are going to actualize that kingdom of heaven.

Peter K. -> pgl...

yes Kervick again provides a fact-free rant. The Communist Manifesto demanded many reforms that came pass:

"The section ends by outlining a set of short-term demands — among them a progressive income tax; abolition of inheritances; free public education etc.—the implementation of which would be a precursor to a stateless and classless society."

Dan Kervick -> Peter K....

"Short-term demands" as you say: Marx and Engels saw such socialist measures as merely a transitional stage on the way via the dictatorship of the proletariat to a classless and stateless society in which even the rule of law would not exist, since human beings would somehow manage to coordinate all of the economic functions of a complex society through 100% non-coercive means.

In this utopian future, every single person is intelligent, relaxed, cooperative, and preternaturally enlightened. There are no thieves, psychopaths, predators, raiders or uncooperative deadbeats and spongers. Since there is no law, there is no government; and since there is no government; there are no elections or other ways of forming government. There is also no division of labor, because somehow human beings have passed beyond the "realm of necessity" into the "realm of freedom."

Real-world possibilities for democratic socialist alternatives under a practical and egalitarian rule of law have frequently been thwarted and undermined by Marxian communists drunk on these infantile millenarian fantasies, and the Marxian pseudo-sciences of underlying dialectical laws of social evolution directing history toward this fantastical telos.

Marx himself was one of these underminers, pissing all over the very progressive Gotha program and the very idea of a well-governed state in the name of his dreamy "communist society."

Guess what guys. Maybe I have actually read some of this stuff.

likbez -> Dan Kervick...

Marxism has two district faces. A very sharp analysis of capitalist society and utopian vision of the future.

=== quote ===
Marx himself was one of these underminers, pissing all over the very progressive Gotha program and the very idea of a well-governed state in the name of his dreamy "communist society."
=== end of quote ===

Very true. Authors of Gotha programs were nicknamed "revisionists" by Orthodox Marxists.


"He describes the Brams-Taylor procedure for cutting a cake in a fair way - in the sense of ensuring envy-freeness - and says that this shows that a central agency such as the state is unnecessary to achieve fairness:..."

That is exactly the description of "authoritarian elite intellectual technocrats dictating how society works."

Conservatives would never accept that solution because they would immediately argue that not everyone deserves an equal portion, and that the liberal elites are dictating from on high.

Marx would simply point out that conservatives would never accept that based on their denial of equality as a principle and would require evolution of man, or too few or too many resources to care about dividing. But that would never satisfy conservatives....

Barkley Rosser:

Obviously actually existing socialist nations ruled by Communist parties have always featured highly centralized authoritarian non-democratic systems (although China is somewhat of an exception regarding the matter of centralization, with its provinces having a lot of power, but then, it is the world's largest nation in population).

As it was, Marx (and Engels) had a practical side. One can see it in the "platform" put forward at the end of the Communist Manifesto. Several of the items there have been nearly universally adopted by modern capitalist democracies, such as a progressive income tax and universal state-supported education. Others are standard items for more or less socialist nations, such as nationalizing the leading sectors of the economy.

Only one looks at all utopian, their call for ending the division between the city and the country, although this dream has inspired such things as the New Town movement, not to mention arguably the suburbs.

It was only in the Critique of the Gotha Program that Marx at one point suggested that eventually in the "higher stage of socialism" there would be a "withering away of the state." Curiously most nations ruled by Communist parties never claimed to have achieved true communism because they were aware of this statement and generally referred to themselves as being "in transition" towards true communism without having gotten there. Later most would turn around have transitions back towards market capitalism.

DrDick -> Barkley Rosser...

All existing and former communist countries are Leninist and not Marxist, with a large influence from whatever the prior local autocratic system was.

Dan Kervick -> Barkley Rosser...

"It was only in the Critique of the Gotha Program that Marx at one point suggested that eventually in the "higher stage of socialism" there would be a "withering away of the state.""

That's what I meant by the tragedy of Marxism. In the end, Marx had a very unrealistic view of human nature and history. His analytic and scientific powers were betrayed by an infantile romanticism that both weakened his social theory and crippled much of left progressive politics for a century. The problem is still floating around with the insipid anarcho-libertarian silliness of much of the late 20th and early 21st century left.


Actually Marxism was the source of social-democratic parties programs. Which definitely made capitalism more bearable.

The key value of Marxism is that it gave a solid platform for analyzing capitalism as politico-economic system. All those utopian ideas about proletariat as a future ruling class of an ideal society that is not based on private property belong to the garbage damp of history, although the very idea of countervailing forces for capitalists is not.

In this sense the very existence of the USSR was critical for the health of the US capitalism as it limited self-destructive instincts of the ruling class. Not so good for people of the USSR, it was definitely a blessing for the US population.

Now we have neoliberal garbage and TINA as a state religion, which at least in the level in their religious fervor are not that different from Marxism.

And neocons are actually very close, almost undistinguishable from to Trotskyites, as for their "permanent revolution" (aka "permanent democratization") drive.

Ben Groves -> nikbez...

You obviously think it wasn't that good for the USSR people, yet don't understand the Tsarist wreck that Russia itself had turned into. With the Soviet, they became strong at the expense of what they considered colonies.

The true origin of Bolshevism isn't Lenin or Trotsky, but the anti-ashkenazi anti-European movement. Stalin joined them in 1904 for this very reason and blasted the Menhs as jews. Thus the program had to cleanse out people who still insisted Russia be European and instead, push a Asiatic program they believed they really were.


Though I do love seeing this argument being made, I'm not sure we can derive any real benefits from having it anymore. Ideology is one thing. If we are discussing Power, and how it attracts the Power Hungry, that is a separate argument, one largely covered by Machiavelli.

As for Marx, I do not ever recall him advising on the abolishment of the State. He was not an Anarchist.

Ben Groves:

The state can't be abolished. It simply changes by what part of nature controls it.

Only the anarchists thinks the state can be abolished. The state is eternal. Whether it is the Imperial State (the true conservative organic ideal) City State, the Nation State, the Market State, the Workers State, the Propertarian State. There will always be rule.

DrDick -> Ben Groves...

The state is far from eternal. It is in fact a very recent development in humanity's 3.5 million year history, having arisen about 5500 years ago. States can and do collapse and disappear, as has happened in Somalia.


I think the discussion deviated from the key thesis "Marxists and Conservatives Have More in Common than Either Side Would Like to Admit"

This thesis has the right for existence. Still Marxism remains miles ahead of conservatives in understanding the capitalism "as is" with all its warts.

Neoliberalism is probably the most obvious branch of conservatism which adopted considerable part of Marxism doctrine. From this point of view it is a stunning utopia with the level of economic determinism even more ambitious than that of Marx...

=== start of quote ===

The simplest way to understand the power of neoliberalism as an ideology, is to view it as Trotskyism refashioned for elite. Instead of "proletarians of all countries unite" we have slogan "neoliberal elites of all countries unite". Instead of permanent revolution we have permanent democratization via color revolutions.

Instead of revolt of proletariat which Marxists expected we got the revolt of financial oligarchy. And this revolt led to forming powerful Transnational Elite International (with Congresses in Basel) instead of Communist International (with Congresses in Moscow). Marx probably is rolling in his grave seeing such turn of events and such a wicked mutation of his political theories.

Like Trotskyism neoliberalism has a totalitarian vision for a world-encompassing monolithic state governed by an ideologically charged "vanguard". One single state (Soviet Russia) in case of Trotskyism, and the USA in case of neoliberalism is assigned the place of "holy country" and the leader of this country has special privileges not unlike Rome Pope in Catholicism.

The pseudoscientific 'free-market' theory which replaces Marxist political economy and provides a pseudo-scientific justification for the greed and poverty endemic to the system, and the main beneficiaries are the global mega-corporations and major western powers (G7).

Like Marxism in general neoliberalism on the one hand this reduces individuals to statistics contained within aggregate economic performance, on the other like was in the USSR, it places the control of the economy in comparatively few hands; and that might be neoliberalism's Achilles heel which we say in action in 2008.

The role of propaganda machine and journalists, writers, etc as the solders of the party that should advance its interests. Compete, blatant disregard of truth to the extent that Pravda journalists can be viewed as paragons of objectivity (Fox news)

== end of quote ==


Republicans (US 'capitalism' salespersons) believe that "liberty", the right of property, is necessary for "freedom".

State is necessary for property despite what the Hobbits (libertarians) preach.

Communism is as far from Marxism as the US billionaire empire is from capitalism.

Marx was a fair labor economist.



{Marx stressed that ... the labour market is an arena in which power is unbalanced...}

Which has nothing whatsoever to do with "capitalism", which is fundamentally this:

An economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.

Which was common up to and including the latter decades of the last century. Wherein, some countries adopted state-enterprises to have either entire monopolies or substantial presence in some sectors of the market-economy. The ownership of the means of production were owned by the state and management/workforce were state employees.

This applies to any entity the object of which is provide to a market goods and services. One can therefore say the defense of the nation is a service provided by a state-owned entity called the Dept. of Defense (in the US and similarly elsewhere).

Moreover that practice can be modified to other areas of public need, for instance health-care and education. Where the "means of production" of the service are owned once again by the state, but this time the management and workers are independent and work for themselves. (In which case they may or may not be represented by organizations some of which are called "unions".)

The above variations are all well known in European "capitalist" countries - which employ capital as central financial mechanism. Capital is "any form of wealth employed or capable of being employed in the production of more wealth."

Thus, capitalism is an integral and key part of the market-economy since it provides the means by which the other major input-component is labor. Capital is an investment input to the process, for which there is a Return-on-Investment largely accepted as bonafide criteria of any market-economy.

Likewise, there should therefore be accounted a Return on Labor, and that return should be paid to all who work in a company - not all equally but all equitably. A Return-on-Labor is also a bonafide criteria of any market-economy.

There is no real reason why the RoI should be the sole criteria for investment purposes, except that of common usage historically. RoC should also have its place as a bonafide criteria for investment purposes - and probably one that determines which "services" are better performed by government-owned agencies and which not.

How much is the RoC of Defense worth to you and our family? How much is HealthCare? How much Primary, Secondary and Tertiary Education?


[Aug 12, 2015]The Macroeconomic Divide

"...Too much of macro is ideologically driven conjecture, or worse. None of it rises to the level of demonstrated reliability necessary to ethically inform decision-making. Confronting that reality and the limits of the profession's knowledge and ability, and reining-in it's obsession to intervene in things it doesn't actually understand except at a political level - that will permit the profession to at long last begin to honor its highest ethical duty ... 'First, do no harm.'"
Economist's View
Paul Krugman:
Trash Talk and the Macroeconomic Divide: ... In Lucas and Sargent, much is made of stagflation; the coexistence of inflation and high unemployment is their main, indeed pretty much only, piece of evidence that all of Keynesian economics is useless. That was wrong, but never mind; how did they respond in the face of strong evidence that their own approach didn't work?
Such evidence wasn't long in coming. In the early 1980s the Federal Reserve sharply tightened monetary policy; it did so openly, with much public discussion, and anyone who opened a newspaper should have been aware of what was happening. The clear implication of Lucas-type models was that such an announced, well-understood monetary change should have had no real effect, being reflected only in the price level.
In fact, however, there was a very severe recession — and a dramatic recovery once the Fed, again quite openly, shifted toward monetary expansion.
These events definitely showed that Lucas-type models were wrong, and also that anticipated monetary shocks have real effects. But there was no reconsideration on the part of the freshwater economists; my guess is that they were in part trapped by their earlier trash-talking. Instead, they plunged into real business cycle theory (which had no explanation for the obvious real effects of Fed policy) and shut themselves off from outside ideas. ...

RogerFox said...

Both sides in this macro cat-fight have succeeded in demolishing the credibility of their opponents, at the expense of being demolished themselves - meaning none of them are left standing in the eyes of anyone except their own partisan groupies, who are well-represented on this site. That's nothing but good.

Too much of macro is ideologically driven conjecture, or worse. None of it rises to the level of demonstrated reliability necessary to ethically inform decision-making. Confronting that reality and the limits of the profession's knowledge and ability, and reining-in it's obsession to intervene in things it doesn't actually understand except at a political level - that will permit the profession to at long last begin to honor its highest ethical duty ... 'First, do no harm.'

RC AKA Darryl, Ron said in reply to RogerFox...

Confronting that reality and the limits of the profession's knowledge and ability, and reining-in it's obsession to intervene in things it doesn't actually understand except at a political level - that will permit the profession to at long last begin to honor its highest ethical duty ... 'First, do no harm.'

[That is some pretty ironic BS that you are totin' around. The profession does a very good job of NOT intervening in things that any one with half a brain should understand. How on earth do you think the 2008 financial crisis ever even happened? Economists could not intervene because they had black swans squatting on their hands, particularly those economist like Greenspan and Bernanke that were actually in a position to do something to prevent the crisis. Krugman wrote some articles warning about the risk, but undersold his case even to himself. Only Mike Stathis (an investments adviser and trader - not an economist) formally warned (in America's Financial Apocalypse: How to Profit from the Next Great Depression. 2006. ISBN 978-0-9755776-5-3) of the full scope of the coming disaster and that formal warning came a bit late and was almost entirely ignored. Nouriel Roubini (a.k.a. Doctor Doom), who is an economist, ran Stathis a close second on getting it correct. Dean Baker, also an economist, was in there too. It was entirely ignored by Greenspan and Bernanke, although I believe they knew what was going to happen but would rather clean up the mess than stop the party and get blamed for the fallout.

After the crisis several economists recognized the scale of the necessary stimulus to get the economy back on track, but a world of idiots, some of whom you may know, precluded an adequate response to prevent prolonged high unemployment.

Are you a market trader or just a rich man's tool? Anything else would make you just a plain ol' fool.]

DrDick said in reply to RogerFox...

"Both sides in this macro cat-fight have succeeded in demolishing the credibility of their opponents"

You, on the other hand. never had any credibility to begin with.

"Confronting that reality and the limits of the profession's knowledge and ability, and reining-in it's obsession to intervene in things it doesn't actually understand except at a political level"

You might take your own advice, as it is evident that you know nothing about economics or policy.

Peter K. said in reply to RogerFox...

Partisan groupies? Nope. We're the objective ones in this discussion.

Mr. Fox has no criteria upon which to judge and measure things, so of course he has no basis to criticize.

"First do no harm." How can you tell that harm has been done when you don't believe in anything?

You automatically believe that taking no action and the sin of omission is the better choice? But you have no basis on which to make that assumption.

"First do no harm" when it comes to government policy is conservative propaganda.

Paine said in reply to RogerFox...

If rog refuses to entertain any notion of macro nautic efficacy

He. Has taken his position
And perhaps he ought to be left to
sit on it
as long as he likes


If he has a test of say Lerner's
fiscal injections model he'd like to propose
A test that if past would change is mind

> Paine said in reply to Paine ...

Cockney takes over
when I sez his
it comes out is

RogerFox said in reply to Paine ...

I don't have a dog in this fight - but I do know that it's dangerously irresponsible and unprofessional to offer advice, or act on it, unless there is adequate evidence to justify the opinion that the advice will not plausibly make the situation worse than it is otherwise destined to be. The compiled track record of all theories of macro demonstrate that none of them yet meet that test - and this ongoing internecine cat-fight has done much to reinforce that view IMO.

Academics need to understand what real economy people who give advice professionally know very well - that an idea or theory could well be right and beneficial isn't enough to justify acting on it without proper consideration to the consequences should the approach prove to be wrong. Candidly assessing down-side risks seems to be anathema to all academics - almost as if they regard the entire matter as some sort of affront to their dignity.

The Crash of '08 and the Crash of '29 both happened, with academic macro-mavens leading us straight into both of them - eyes wide shut. Better for everyone if they'd just kept their mouths shut too.


"In the early 1980s the Federal Reserve sharply tightened monetary policy; it did so openly, with much public discussion, and anyone who opened a newspaper should have been aware of what was happening. The clear implication of Lucas-type models was that such an announced, well-understood monetary change should have had no real effect, being reflected only in the price level.In fact, however, there was a very severe recession — and a dramatic recovery once the Fed, again quite openly, shifted toward monetary expansion. These events definitely showed that Lucas-type models were wrong, and also that anticipated monetary shocks have real effects."

Note Krugman is referring to the 2nd Volcker monetary restraint which happened under Reagan's watch. Rusty needs to get his calendar out as he thinks this was all Carter. Actually Volcker was following the advise of JohnH. How did the early 1980's work out for workers?

Back in 1982/3 I heard some economist seriously saying that this recession was due to some notion that people still had high expected inflation. When I asked them WTF - they response was the Reagan deficits.

Yes macroeconomics confuses some people terribly. Look at a lot of the comments here for how confused some people get.

Paine said in reply to pgl...

Confused or partisan ?

Egmont Kakarot-Handtke said...

No divide
Comment on 'The Macroeconomic Divide'

Keynes's employment function was indeed incomplete (2012). So far, Lucas/Sargent had a point. But the NAIRU expectation-wish-wash was even worse. So far, Krugman has a point. The deeper reason is that economics not only has no valid employment theory but that it is a failed science.

Neither the loudspeakers of the profession nor the representative economists of the various schools have a clue about how the actual economy works. What unites the camps is scientific incompetence.*

Egmont Kakarot-Handtke

Kakarot-Handtke, E. (2012). Keynes's Employment Function and the Gratuitous Phillips Curve Desaster. SSRN Working Paper Series, 2130421: 1–19. URL

*For details see the cross-references

[Aug 12, 2015] Unwavering Fealty to a Failed Theory

"...Looking beyond the rhetoric and individual policies, however, lies the Republican Party's major problem: unwavering fealty to trickle-down economics. Virtually all Republicans since Ronald Reagan was elected president have run on a platform of supply-side policies, and the 2016 election will be no different. But it should be, because there is now a growing recognition that trickle-down economics has failed...."
"...Republican economic "thinking" is akin to a religion. No deviation from the gospel is allowed or you become an apostate.
Like Huckabee, who is running for president, believes that the world (universe?) is only 6500 years old. "

"...Just as FDR laid out the solution in 1935: you start by paying workers to build productive assets that will earn the money needed to pay the workers."
Aug 12, 2015 | Economist's View
Bad economic theory (but good if you are rich) has trickled down to this cycle's Republican presidential candidates:
Unwavering Fealty to a Failed Theory, by David Madland, US News and World Report: With their first debate set for tonight, Republican candidates have been trying mightily to claim they can help address the economic problems most Americans face. ...

While Jeb Bush declared in February that "the opportunity gap is the defining issue of our time," more recently he's been forced to backtrack from his statement that Americans "need to work longer hours" in order to boost their incomes. Sen. Marco Rubio's argument that if the United States is to "remain an exceptional nation, we must close this gap in opportunity," rings a bit hollow next to his tax plan that disproportionately benefits the wealthy. Gov. Scott Walker says he wants to help families achieve the "American Dream," but thinks the minimum wage is "lame," has stripped the words "living wage" from state laws, and has attacked workers' right to join together to collectively bargain for better wages.

Looking beyond the rhetoric and individual policies, however, lies the Republican Party's major problem: unwavering fealty to trickle-down economics. Virtually all Republicans since Ronald Reagan was elected president have run on a platform of supply-side policies, and the 2016 election will be no different. But it should be, because there is now a growing recognition that trickle-down economics has failed....

Posted by Mark Thoma on Thursday, August 6, 2015 at 10:16 AM in Economics, Politics, Taxes | Permalink Comments (21)

pgl :

The following is exactly right. We should note that a few pretend progressives around here are praising Jeb! for this 4% proposal even if what Jeb! is really proposing is the same old Art Laffer lies:

"Looking beyond the rhetoric and individual policies, however, lies the Republican Party's major problem: unwavering fealty to trickle-down economics. Virtually all Republicans since Ronald Reagan was elected president have run on a platform of supply-side policies, and the 2016 election will be no different. But it should be, because there is now a growing recognition that trickle-down economics has failed due to the fact that it rests on a fundamentally flawed premise. Trickle-down economics, the misguided theory that has controlled economic policymaking for more than three decades, is built on the idea that high levels of economic inequality are good. Tax cuts for the rich and less regulation of business supposedly provide incentives for the wealthy to invest and work more. Enabling "job creators" to get richer helps us all, the theory goes. So the fact that the top 1 percent now take home a greater share of the nation's income than they ever have, while incomes for the typical household are lower than they were in 1989, is not a problem in this way of thinking. In the trickle-down mindset, these facts are seen as good for the economy."

mulp said in reply to JohnH...

I see you, JohnH are equally brainwashed or brain damaged by the dominant free lunch economics principles that avoids the TANSTAAFL nature of the dismal science.

You stated absolutely nothing as an alternative that works because you do not want to pay anything, but just want a free lunch.

Just as FDR laid out the solution in 1935: you start by paying workers to build productive assets that will earn the money needed to pay the workers.

Given government is putting people to work who the private sector will not pay, the way they get paid is with taxes and fees associated with the things they build.

Conservatives call it tax and spend, but its really invest and tax.

Republicans totally oppose the bill that Reagan spoke of glowingly in 1983 which hiked taxes 125% to pay to create probably a million jobs building transportation capital assets.

Obama picked up the conservative free lunch alternative to invest and tax: public private partnerships. But conservatives expecting free lunch political solutions realized it was just dismal science: corporations would be collecting tolls that are higher than taxes would be to pay for monopoly profits.

Taxes and fees need to be higher on everyone.

Sorry Bernie, TANSTAAFL - taxing the rich is not the solution.

djb :

so much of this seems to come from the impact of Milton Friedman

his academic papers may have be somewhat restrained, but when you see him on tape talking, he sounds just like any supply sider or right wing politician talking today

especially negative on any possibility of fiscal interventions, and ridicules the concept that interventions can improve aggregate demand and thus the economy

according to Keynes, Ricardo did not believe that inadequate aggregate demand was even possible

David :

I don't think the appeal of trickle down is based on econ or empirical evidence, and as such whether it fails or not is completely irrelevant to the right.

It is a perversion of identity politics as a moral prejudice. Rich people by dint of their wealth are superior and poor people are inferior and deserve their lot. Race is key here. Poor Southern whites on Medicaid and food stamps vote against their interest bc they're not those people.

It's always divide and conquer with the right.

Fred C. Dobbs

(This ought to be a prominent Dem issue,
but it isn't. Why is that? The GOPsters
will pervert it, make it about turning
1%ers into .01%ers)

Why the New Research on Mobility Matters:
An Economist's View
via @UpshotNYT - Justin Wolfers - May 4

Hundreds of studies have demonstrated that the odds of economic success vary across neighborhoods. The far more difficult question is whether that's because neighborhoods nurture success (or failure), or whether they just attract those who would succeed (or fail) anyway.

A new study by the Harvard economists Raj Chetty and Nathaniel Hendren, when read in combination with an important study they wrote with Lawrence Katz, makes the most compelling case to date that good neighborhoods nurture success. ...

reason :

How about an alternative, bubble up economics. Money doesn't flow down - it flows UP. Spread money around and it will spent on things that companies owned by the wealthy produce, instead of concentrating on cutting costs, those companies can concentrate instead on increasing productivity and expanding production. The trick is that the market will pick the best producers, but the best producers of WHAT. Goods for everyman or trinkets for the wealthy.

gunste :

Republican economic "thinking" is akin to a religion. No deviation from the gospel is allowed or you become an apostate.
Like Huckabee, who is running for president, believes that the world (universe?) is only 6500 years old.

[Aug 10, 2015]Naryshkin: the US wants to grab the natural resources of other countries

For this purpose, according to the speaker, America and leads the sanctions against Russia. The United States plans not only to maintain the dollar as the sole world currency, but I want to get as close to the economic resources of other countries in the world, according to the Chairman of the state Duma Sergey Naryshkin.

"Actually, because of that, the U.S. has now published a new list of Russian organizations and individuals, giving instructions to their banks (and with them European) to work with our structures and look for any and all reasons," he said in his article published in "Rossiyskaya Gazeta".

Naryshkin believes that America "stops to help even the existence of global "printing press". "Do not save and complete control over NATO, wiretapping and blackmail "League" of European Union. The colonizers "model of the XXI century" - all this is not enough. The main goal is to assign to American jurisdiction global monopolies, and to maintain his influence on the financial system of the world, to stay here the only Potentate," said Naryshkin.

[Aug 09, 2015] The main points of this Gorbulin-Poroshenko Plan

yalensis, August 7, 2015 at 2:54 pm

Op-ed by Sergei Markov, a Russian political analyst who is considered to be close to the views of the Kremlin:

According to Markov, Kiev was only interested in the first part of the Minsk Accords, namely in a panic to stop counter-offensive of Novorossiya army, after their debacle at Debaltsevo.

But they have zero interest in carrying out the rest of the accords.

Plus, according to Markov, Kiev is under instructions from their American masters, to continue the war at all costs.
According to Markov, Kiev is actually carrying out a plan called the "Gorbulin-Poroshenko Plan", and I googled Gorbulin, but couldn't get any more information, so I don't know who this person is.

But the main points of this Gorbulin-Poroshenko Plan are said to be:

1. Kiev does not take on any (Minsk) obligations which involve peace-making moves.
2. Full blockade (of Donbass).
3. Continue artillery shelling of residential areas of Donbass, kill as many civilians as possible.
4. This in order to make life unbearable in Donbass.
5. The goal is to turn the residents against their leaders, in DPR and LPR.
6. Weaken Russia with sanctions.
7. Planning a military blitzkrieg against Donbass, on the model of the attack of Croatian army against Serbian Krajina.
8. NATO will station troops in Kharkov, Zaporozhie and Dnipropetrovsk.
9. NATO will beef up Ukrainian army and prepare for fatal strike against Donbass.
10. The police state/dictatorship in Ukraine will be strengthened.

marknesop, August 7, 2015 at 5:45 pm

Volodymyr (Ukraine has to spell it differently so they can all high-five each other, the way the British deliberately misspell "tire") Gorbulin is the former National Defense and Security Council (NDSC) Secretary, now a personal adviser to Poroshenko. Looks a right Himmler type.

[Aug 09, 2015] Seven countries near bankruptcy

Aug 08, 2015 |

Moody's Investors' Service rates seven countries Caa1 or worse, several tiers lower than Ba1, which still carries a significant credit risk. These countries are approaching or have narrowly escaped bankruptcy. Ukraine is rated Ca, which is currently the lowest credit rating of any country reviewed by Moody's.

... ... ...


> Moody's credit rating: Ca
> Moody's outlook: Negative
> 2015 Gov't debt (pct. of GDP): 94.1%
> 2015 GDP per capita (PPP): $8,278

Ukraine's conflict with Russia over its annexation of Crimea continues to fuel the country's financial problems. While the IMF approved Ukraine's debt restructuring plan in March, Ukraine has the worst credit rating of any country reviewed, downgraded this year from Caa3 to Ca, the second lowest possible level. Creditors can expect a 35% to 65% recovery rate on loans issued by the country. According to Moody's, "The likelihood of a distressed exchange, and hence a default on government debt taking place, is virtually 100%."

The same day that Moody's issued the downgrade, the National Bank of Ukraine announced the establishment of the Financial Stability Council. According to Governor of the National Bank of Ukraine Valeriia Gonatreva, the Council's function will be to "take a comprehensive and systemic approach to identify and mitigate the risks threatening the stability of the banking and financial systems of the country."

[Aug 08, 2015] The $12 Trillion Fat Finger How A Glitch Nearly Crashed The Global Financial System - A True Story

Aug 08, 2015 | Zero Hedge

For all the talk of how the financial world nearly ended in the aftermath of first the Lehman bankruptcy, then the money market freeze, and culminating with the AIG bailout, and how bubble after Fed bubble has made the entire financial system as brittle as the weakest counterparty in the collateral chain of some $100 trillion in shadow liabilities, the truth is that despite all the "macroprudential" planning and preparations, all the world's credit, housing, stock, and illiquidity bubbles may be nothing when compared to the oldest "glitch" in the book: a simple cascading error which ends up taking down the entire system.

Like what happened in the great quant blow up August 2007.

For those who may not recall the specific details of how the "quant crash" nearly wiped out all algo and quant trading hedge funds and strats in a matter of hours if not minutes, leading to tens of billions in capital losses, here is a reminder, and a warning that the official goalseeked crisis narrative "after" the fact is merely there to hide the embarrassment of just how close to total collapse the global financial system is at any given moment.

The following is a true story (courtesy of b3ta) from the archives, going all the way back to 2007:

I.T. is a minefield for expensive mistakes

There's so many different ways to screw up. The best you can hope for in a support role is to be invisible. If anyone notices your support team at all, you can rest assured it's because someone has made a mistake. I've worked for three major investment banks, but at the first place I witnessed one of the most impressive mistakes I'm ever likely to see in my career. I was part of the sales and trading production support team, but thankfully it wasn't me who made this grave error of judgement...

(I'll delve into obnoxious levels of detail here to add color and context if you're interested. If not, just skip to the next chunk, you impatient git)

This bank had pioneered a process called straight-through processing (STP) which removes the normal manual processes of placement, checking, settling and clearing of trades. Trades done in the global marketplace typically have a 5-day clearing period to allow for all the paperwork and book-keeping to be done. This elaborate system allowed same-day settlement, something never previously possible. The bank had achieved this over a period of six years by developing a computer system with a degree of complexity that rivalled SkyNet. By 2006 it also probably had enough processing power to become self-aware, and the storage requirements were absolutely colossal. It consisted of hundreds of bleeding edge compute-farm blade servers, several £multi-million top-end database servers and the project had over 300 staff just to keep it running. To put that into perspective, the storage for this one system (one of about 500 major trading systems at the bank) represented over 80% of the total storage used within the company. The equivalent of 100 DVD's worth of raw data entered the databases each day as it handled over a million inter-bank trades, each ranging in value from a few hundred thousand dollars to multi-billion dollar equity deals. This thing was BIG.

You'd think such a critically important and expensive system would run on the finest, fault-tolerant hardware and software. Unfortunately, it had grown somewhat organically over the years, with bits being added here, there and everywhere. There were parts of this system that no-one understood any more, as the original, lazy developers had moved company, emigrated or *died* without documenting their work. I doubt they ever predicted the monster it would eventually become.

A colleague of mine one day decided to perform a change during the day without authorisation, which was foolish, but not uncommon. It was a trivial change to add yet more storage and he'd done it many times before so he was confident about it. The guy was only trying to be helpful to the besieged developers, who were constantly under pressure to keep the wretched thing moving as it got more bloated each day, like an electronic 'Mr Creosote'.

As my friend applied his change that morning, he triggered a bug in a notoriously crap script responsible for bringing new data disks online. The script had been coded in-house as this saved the bank about £300 per year on licensing fees for the official 'storage agents' provided by the vendor. Money that, in hindsight, would perhaps have been better spent instead of pocketed. The homebrew code took one look at the new configuration and immediately spazzed out. This monged scrap of pisspoor geek-scribble had decided the best course of action was to bring down the production end of the system and bring online the disaster recovery (DR) end, which is normal behaviour when it detects a catastrophic 'failure'. It's designed to bring up the working side of the setup as quickly as possible. Sadly, what with this system being fully-replicated at both sites (to [cough] ensure seamless recovery), the exact same bug was almost instantly triggered on the DR end, so in under a minute, the hateful script had taken offline the entire system in much the same manner as chucking a spanner into a running engine might stop a car. The databases, as always, were flushing their precious data onto many different disks as this happened, so massive, irreversible data corruption occurred. That was it, the biggest computer system in the bank, maybe even the world, was down.

And it wasn't coming back up again quickly.

(OK, detail over. Calm down)

At the time this failure occurred there was more than $12 TRILLION of trades at various stages of the settlement process in the system. This represented around 20% of ALL trades on the global stock market, as other banks had started to plug into this behemoth and use its capabilities themselves. If those trades were not settled within the agreed timeframe, the bank would be liable for penalties on each and every one, the resulting fines would eclipse the market capital of the company, and so it would go out of business. Just like that.

My team dropped everything it was doing and spent 4 solid, brutal hours recovering each component of the system in a desperate effort to coax the stubborn silicon back online. After a short time, the head of the European Central Bank (ECB) was on a crisis call with our company CEO, demanding status updates as to why so many trades were failing that day. Allegedly (as we were later told), the volume of financial goodies contained within this beast was so great that failure to clear the trades would have had a significant negative effect on the value of the Euro currency. This one fuckup almost started a global economic crisis on a scale similar to the recent (and ongoing) sub-prime credit crash. With two hours to spare before the ECB would be forced to go public by adjusting the Euro exchange rate to compensate, the system was up and running, but barely. We each manned a critical sub-component and diverted all resources into the clearing engines. The developers set the system to prioritise trades on value. Everything else on those servers was switched off to ensure every available CPU cycle and disk operation could be utilised. It saturated those machines with processing while we watched in silence, unable to influence the outcome at all.

Incredibly, the largest proportion of the high-value transactions had cleared by the close of business deadline, and disaster was averted by the most "wafer-thin" margin. Despite this, the outstanding lower-value trades still cost the bank more than $100m in fines. Amazingly, to this day only a handful of people actually understand the true source of those penalties on the end-of-year shareholder report. Reputation is king in the world of banking and all concerned --including me-- were instructed quite explicitly to keep schtum. Naturally, I *can't* identify the bank in question, but if you're still curious, gaz me and I'll point you in the right direction…

Epilogue… The bank stumped up for proper scripts pretty quickly but the poor sap who started this ball of shit rolling was fired in a pompous ceremony of blame the next day, which was rather unfair as it was dodgy coding which had really caused the problem. The company rationale was that every blaze needs a spark to start it, and he was going to be the one they would scapegoat. That was one of the major reasons I chose to leave the company (but not before giving the global head of technology a dressing down at our Christmas party… that's another QOTW altogether). Even today my errant mate is one of the only people who properly understands most of that preposterous computer system, so he had his job back within six months -- but at a higher rate than before :-)

Conclusion: most banks are insane and they never do anything to fix problems until *after* it costs them uber-money. Did I hear you mention length? 100 million dollar bills in fines laid end-to-end is about 9,500 miles long according to Google calculator.

* * *

And here is Zero Hedge's conclusion: the next time you think all those paper reps and warranties to claims on billions if not trillions of assets, are safe and sound in some massively redundant hard disk array, think again.


Ha. Keep offshoring IT jobs to kraplocastan and fucking over your competent IT staff with furloughs, pay freezes, and no training you cheap cunts. I've seen this time and again over 25 years in IT and it fucks over everyone who tries to cheap out, but at least there are handy scapegoats in IT putting 18 hour days to fix it. Fucking assholes eat their seed corn all the time just to eek out quarterly numbers.


A fat finger may cause a few days of downtime, but it's unlikely to bring the whole system to an end or cause irreparable damage. These systems are designed to survive all kinds of disaster scenarios including some amount of human error.

[Aug 08, 2015]About the value of top secret documents

Yves Smith

No, you are wrong on this. It's more complicated than you think. Henry Kissinger sought out Daniel Ellsberg as one of his top priority meetings as a new government official . Ellsberg was highly respected as a world-reknown decision theorist, and as one of the most insightful people on Vietnam, having spend substantial time on the ground (as opposed to cloistered in Saigon) on behalf of the DoD and State. Ellsberg's description of that encounter from his book Secrets:

"Henry, there's something I would like to tell you, for what it's worth, something I wish I had been told years ago. You've been a consultant for a long time, and you've dealt a great deal with top secret information. But you're about to receive a whole slew of special clearances, maybe fifteen or twenty of them, that are higher than top secret.

"I've had a number of these myself, and I've known other people who have just acquired them, and I have a pretty good sense of what the effects of receiving these clearances are on a person who didn't previously know they even existed. And the effects of reading the information that they will make available to you.

"First, you'll be exhilarated by some of this new information, and by having it all — so much! incredible! — suddenly available to you. But second, almost as fast, you will feel like a fool for having studied, written, talked about these subjects, criticized and analyzed decisions made by presidents for years without having known of the existence of all this information, which presidents and others had and you didn't, and which must have influenced their decisions in ways you couldn't even guess. In particular, you'll feel foolish for having literally rubbed shoulders for over a decade with some officials and consultants who did have access to all this information you didn't know about and didn't know they had, and you'll be stunned that they kept that secret from you so well.

"You will feel like a fool, and that will last for about two weeks. Then, after you've started reading all this daily intelligence input and become used to using what amounts to whole libraries of hidden information, which is much more closely held than mere top secret data, you will forget there ever was a time when you didn't have it, and you'll be aware only of the fact that you have it now and most others don't….and that all those other people are fools.

"Over a longer period of time — not too long, but a matter of two or three years — you'll eventually become aware of the limitations of this information. There is a great deal that it doesn't tell you, it's often inaccurate, and it can lead you astray just as much as the New York Times can. But that takes a while to learn.

"In the meantime it will have become very hard for you to learn from anybody who doesn't have these clearances. Because you'll be thinking as you listen to them: 'What would this man be telling me if he knew what I know? Would he be giving me the same advice, or would it totally change his predictions and recommendations?' And that mental exercise is so torturous that after a while you give it up and just stop listening. I've seen this with my superiors, my colleagues….and with myself.

"You will deal with a person who doesn't have those clearances only from the point of view of what you want him to believe and what impression you want him to go away with, since you'll have to lie carefully to him about what you know. In effect, you will have to manipulate him. You'll give up trying to assess what he has to say. The danger is, you'll become something like a moron. You'll become incapable of learning from most people in the world, no matter how much experience they may have in their particular areas that may be much greater than yours."

Kurt Sperry

That doesn't really read to me as any sort of refutation of my skeptical assessment. This above top secret stuff is in Ellsberg's words "often inaccurate" and can thus lead or be used to lead the target away from more correct analyses by its inflated putative authority. As the sources for this in all likelihood cannot be fact checked or held accountable in any immediate way, it will tend to become an ad hoc vector for the deliberate injection of misinformation or highly biased analyses into the highest levels of policy decision making processes that can be used to influence policy outcomes in a completely opaque and unaccountable way. To cite the most obvious example, the entire Iraq War II was built around a false set of these "above top secret" assertions of fact that were fed to the highest levels of the executive, and in hindsight these could have been pretty easily debunked entirely using open sources. This "above top secret" intelligence turned out to be complete garbage and a major war was launched based on this garbage, which clearly says to me that "The stuff the spooks/deep staters/whatever tell the POTUS is probably in large measure just scaremongering bullshit tailored to elicit or lead the target towards a self serving set of policy choices."

Given this, it just feels "foily" to me to uncritically accept that there is a large body of highly secret and objective facts that top level decision makers have access to. If that stuff went through any real vetting or rigorous fact checking processes, Iraq War II would never have even happened. History says clearly and unambiguously that a system to do that fact checking isn't in place and thus the notion of a 'large body of highly secret and objective facts' is at best a distortion and probably often a complete fiction.

/neocons. /media_military /nulandgate. Fighting_russo*/ Neolib*/ Neocolon*/ /color_revolutions. /deep_state. /predator_state.

[Aug 08, 2015] Tyler Drumheller, CIA officer who exposed U.S. reliance on discredited Iraq source 'Curveball,' dies at 63

Aug 06, 2015 | The Washington Pos

Tyler S. Drumheller, a high-level CIA officer who publicly battled agency leaders over one of the most outlandish claims in the U.S. case for war with Iraq, died Aug. 2 at a hospital in Fairfax County. He was 63.

The cause was complications from pancreatic cancer, said his wife, Linda Drumheller.

Mr. Drumheller held posts in Africa and Europe over a 26-year career during which the CIA's focus shifted from the Cold War to terrorist threats. He rose to prominent positions at CIA headquarters, serving as chief of the European division at a time when the agency was abducting al-Qaeda suspects on the continent and U.S. allies there faced a wave of terrorist plots.

But he was best known publicly for his role in exposing the extent to which a key part of the administration's case for war with Iraq had been built on the claims of an Iraqi defector and serial fabricator with the fitting code name "Curveball."

In contrast to Hollywood's depiction of spies as impossibly elegant and acrobatic, Mr. Drumheller was a bulky, rumpled figure who often seemed oblivious to the tufts of dog hair on his clothes.

"I always thought of him as an overfed George Smiley," said Bill Murray, a former CIA colleague, referring to the character in John le Carré spy novels known for his espionage acumen but unassuming appearance.

Mr. Drumheller spent the bulk of his career as an undercover officer seeking to avoid public attention. But after retiring in 2005, he emerged as a vocal critic of the George W. Bush administration's use of deeply flawed intelligence to build support for its decision to invade Iraq in 2003.

Curveball, who had defected to Germany in the late 1990s, was the primary source behind the administration's assertions that Saddam Hussein's regime in Iraq had developed biological weapons laboratories — lethal germ factories supposedly built on wheels or rails to evade detection.

The claim was included in Bush's 2003 State of the Union speech as well as then-Secretary of State Colin Powell's presentation to the United Nations designed to marshal international support for intervention in Iraq.

"We had failed," he wrote. "It was bad enough that we had not prevented the Sept. 11 attacks and we were being blamed for that. Now the nation was about to embark on a war based on intelligence I knew was false, and we would surely be blamed for that, too."

A scathing 2005 report on the intelligence failures in Iraq did not mention Mr. Drumheller by name but concluded that officials in the agency's European division had "expressed serious concerns about Curveball's reliability to senior officials at the CIA," and that the warnings were inexplicably dismissed.

The allegation touched off a bitter feud. When then-CIA Director George J. Tenet denied that he had ever been warned about Curveball, Mr. Drumheller fought back in public, saying that "everyone in the chain of command knew exactly what was happening."

Mr. Drumheller was widely quoted in news accounts and appeared on the CBS program "60 Minutes."

No mobile germ warfare labs were found, and the defector, Rafid Ahmed Alwan al-Janabi, has since admitted that the story was a fiction he fed to German intelligence while seeking asylum.

The blow-up over Curveball coincided with Mr. Drumheller's retirement from the CIA. "I think he was really proud of standing up against the war," Linda Drumheller said in an interview. "That was his personal greatest achievement."

The son of an Air Force chaplain, Tyler Scott Drumheller was born in Biloxi, Miss., on April 12, 1952. He spent part of his childhood in Germany before attending the University of Virginia. He graduated in 1974 with a history degree and did postgraduate work in Chinese at Georgetown University before being hired by the CIA in 1979.

He met Linda Blocher while she was working at the spy agency as a secretary in the Africa division, and proposed to her in a stairwell at CIA headquarters after learning that he would soon be sent to Zambia. It was the first in a series of stops for the couple that would also include South Africa, Portugal, Germany and Austria. Two and sometimes three pet dogs accompanied every move.

Besides his wife, of Vienna, Va., survivors include a daughter, Livia Phillips of Great Falls, Va.; a sister, Alecia Ball of Chester, Va.; and a grandson.

Mr. Drumheller's affable manner made it easy for him to form lasting connections with people throughout his career, Linda Drumheller said. He also had a prodigious memory, she said, that enabled him to keep track of cryptonyms, children's birthdays and Detroit Tigers statistics.

Mr. Drumheller "understood human nature," Murray said. "Beneath that pleasant and fun kind of personality, he understood exactly what people were and what he was dealing with. Good or bad."

Mr. Drumheller had retained a young CIA recruit's enthusiasm for much of his career. But he seemed to grow tired of the internal conflicts after the Sept. 11 attacks. In his memoir, he wrote that in retirement he asked to have his Distinguished Career Intelligence medal delivered by mail rather than returning to headquarters for a ceremony.

When the envelope arrived, he wrote, "I opened it up and fell into a bit of a reverie, reflecting on my career and the years past, the successes and the friends gained, the colleagues lost and the mistakes made."

Juceam, 5:10 PM EDT

Drumheller's preoccupation with Curveball apparently did not allow him to uncover the real motivator for the Bush decision to invade Iraq.

The US invaded Iraq for Israeli national security interests, not those of the US. Iraq with WMD posed no threat to the US. They posed a potential threat to Israel.

In their book, The Israel Lobby, John Mearsheimer and Stephen M. Walt argue that among the more important impetuses for George W. Bush's invasion of Iraq in 2003 was the Israel lobby. Important evidence for this allegation was the central role played in propagandizing for the war by Israel lobby Neoconservative figures such as:

Richard Perle—was chairman of the Pentagon's Defense Policy Board.
Paul Wolfowitz —Deputy Defense Secretary, and member of Perle's Defense Policy Board.
Douglas Feith—Under Secretary of Defense and Policy Advisor.
David Wurmser—Special Assistant to the under-secretary for arms control and international security.
Lewis (Scooter) Libby -Dick Cheney's Chief of Staff.
John Hannah- National Security aide to Dick Cheney.
Douglas Feith established in the Pentagon the Office of Special Projects (OSP).

The OSP forged close ties to an ad hoc intelligence unit within Ariel Sharon's office in Israel. The purpose of the unit was to provide key people in the Bush administration "with more alarmist reports on Saddam's Iraq than Mossad was prepared to authorize." Thus, the OSP was getting cooked intelligence not only from its own intelligence unit, but also from an Israeli cell.

the3sattlers, 8/7/2015 10:24 AM EDT

"Sidney Blumenthal, a confidant who was paid by the Clinton Foundation, told the Select Committee on Benghazi Tuesday that the information he supplied the sitting Secretary of State came from a "respected former high-ranking CIA official," ...Sources close to the Benghazi investigation identified the official as Tyler Drumheller, a 25-year veteran of the CIA who retired from the agency in 2005 and has since worked in private consulting." Was it purposeful by WAPO to ignore this? Unimportant? Better to remember Iraq than more recent events? Tyler Drumheller RIP.

Even WAPO obits are biased and disgraceful. Great work, Miller.

jfschumaker, 8/6/2015 8:53 PM EDT

It's a great pity that Mr. Drumheller's doubts about "Curveball" were not more widely shared. It might have saved the country from a disastrous mistake, the invasion of Iraq.

That said, it's pretty clear that the political decision to launch the war was already made, and the intelligence was just gathered up to provide support for the idea, not to vet it.

It's also interesting that the Washington Post obit does not contain any information on Mr. Drumheller's most recent claim to fame, that he was reportedly Sidney Blumenthal's source for information provided to Secretary Clinton on Libya. I'm sure there must be a reason for that, but it escapes me. Washington is, after all, still "This Town."

[Aug 08, 2015]Keeping Ukraine whole

"...It does make a lot of sense from a psychopathic point of view. Psychopaths do not suffer from the effects of cognitive dissonance that we do. When faced with contradictions, hypocrisy and lies, we normal human beings suffer physiological discomfort and mental confusion. Psychopaths know that it weakens us and use the reversal of reality (if you are going to tell a lie, tell a big one) as a weapon against us. "
marknesop, August 6, 2015 at 9:51 am
I see. No goal should be so sacred as the one of "keeping Ukraine whole". But in dozens upon dozens of other examples, the USA has been enthusiastically behind the breakup of countries which resulted in the carving out of pro-western enclaves, and in fact hopes for Russia that it will be broken up into ethnic states. Yep, I believe that.

And I actually would have expected better from Nancy Pelosi – just as Kirill suggested, she is propagating the myth that Russia vetoing the tribunal means there will not be an investigation that leads to the truth. I personally think that is hopeless now anyway, the west is determined to whitewash Ukraine's role in it, but such investigations as there are going to be are proceeding unimpeded. How could anyone say anything so blatantly stupid in public? Russia simply refused to agree to accept the UN's verdict and the UN's awarding of punishment for it. After being told by the UN to quit whining after the attack on its Embassy in Kiev by Ukrainians, I think Russia is quite realistic on the issue of what it might expect in the way of fair treatment from the UN.

yalensis, August 6, 2015 at 3:16 pm
This doesn't make any sense!
American State Department accuses Russia of not doing enough to help them (='Muricans) fight Islamic state (IGIL=ISIS=ISIL=whatever).
State Department spokesperson Mark Toner, who looks like a barely-resuscitated zombie IMHO, chides Russia for not being engaged enough in the struggle against Islamic extremism.

[yalensis: If I was Russian government, I would respond thusly: "Jesus H. Christ what do you want from me? You want me to fight YOU? What is this, the fight club? I should fight YOU and bleed so that YOU can get your rocks off? You creepy zombie-looking fellow…. and by the way, this is highly illogical….."]

james@wpc, August 6, 2015 at 3:59 pm
It does make a lot of sense from a psychopathic point of view. Psychopaths do not suffer from the effects of cognitive dissonance that we do. When faced with contradictions, hypocrisy and lies, we normal human beings suffer physiological discomfort and mental confusion. Psychopaths know that it weakens us and use the reversal of reality (if you are going to tell a lie, tell a big one) as a weapon against us.

This is especially effective when they know that we know that they are lying. When they can get a response like Yalensis' above, they laugh because they have direct evidence that they are causing internal distress. Mission Accomplished.

To observe this in action, watch RT's Crosstalk when Peter Lavelle has a neocon think tank representative on. He (and it is usually a 'he') will reverse the truth without batting an eyelid. This then sends Peter and the other guests into animated protests. Meanwhile, the neocon sits there placidly and you may even detect a little smile – read smirk – on his face, confident that the others do not understand how he is controlling them.

Of course, once you see that the 'big lie' and the hypocrisy are signs of psychopathy and you know what psychopathy involves, they can no longer control you.

marknesop, August 6, 2015 at 4:15 pm
Incredible. The USA assumes unto itself the freedom to break any law so long as doing so allows it to achieve its objective. Having been frustrated in its desire to simply go in and bomb Syria until Assad submitted, it created an armed opposition to the armed opposition it had already created against Assad, then announced smugly that it would defend the opposition from the opposition, and if government forces got in the way, well, that'd just be too bad for them. Pilots do not know shit about what's going on on the ground, they just bomb targets they are told to bomb, so the people who always wanted to get Assad and remove him are in charge of assigning bombing targets in Syria. How is this in any way legal? It's not, is the short answer, but the USA has gone completely rogue and recognizes no authority but its own needs and desires.

Russia should announce that it will be delivering the S-400 system to Syria so that Syria can "defend itself", and that anyone who fires upon those delivering the systems will receive return fire, while once the system is in place, anyone who attacks government forces may be shot down. Assad has a marked advantage in this conflict, in that everybody is the enemy. He doesn't have any identification problems.

[Aug 08, 2015] What language are these people speaking?

"...One of the first thoughts that struck me when I listened to the infamous Nuland/Pyatt tape (Vicky's f**k the EU moment) was 'what language are these people speaking?' There was barely a coherent utterance from either party. Reading the comments above from Marc Veasey and Nancy Pelosi, it seems the US Congress must select its Ukraine 'specialists' by excluding anyone who can form sentences. "
yalensis, August 6, 2015 at 2:50 am
Members of U.S. Congress in Kiev today, expressing their fervent support for the Kiev junta, while not forgetting to mix metaphors as much as humanly possible.

Congressman Marc Veasey of Texas, a member of the Armed Services Committee:

Congressman Veasey.

Well, obviously, we want to see Ukraine push back the separatists. We believe that we want them to be successful in Crimea obviously and want to be supportive as much as we possibly can. On this trip we met with officials here in our U.S. Embassy. We also met with government officials and it's very important to us. We want to see Ukraine whole.

Q: What are the next steps to support Ukraine for the International Tribunal, [MH]17 air crash investigation?

[Demoratic Party] Leader [Nancy] Pelosi. Well, I think it was said very well when they said – when Russia vetoed the U.N. Security Council resolution that it was – that would make one suspicious or ask the question 'why?' Why would there not be the interest of everyone on an organization called the Security Council of the United Nations to have an investigation that would lead to the truth? And that's what people need to hear: the truth. And that's what's so important – taking us back to here. This is about shedding light about the angels, the heroes and the Heavenly Hundred – identified in so many ways for their courage to shed light on the need for more transparency and more light here.

Fern, August 6, 2015 at 6:01 am
One of the first thoughts that struck me when I listened to the infamous Nuland/Pyatt tape (Vicky's f**k the EU moment) was 'what language are these people speaking?' There was barely a coherent utterance from either party. Reading the comments above from Marc Veasey and Nancy Pelosi, it seems the US Congress must select its Ukraine 'specialists' by excluding anyone who can form sentences.

[Aug 08, 2015]Can the United States Stop a War With Russia?

"...America is heading for war with Russia. Some call the current situation "an increase of hostility" or "Cold War II." There are two sides to this story. I believe that American journalists from all political persuasions are not offering critical analysis. Understanding the Russian side and taking their arguments seriously can help prevent serious consequences."
"...Russia sees the US as the aggressor, surrounding Russia with military bases in Eastern Europe at every opportunity since the collapse of the Soviet Union."

America is heading for war with Russia. Some call the current situation "an increase of hostility" or "Cold War II." There are two sides to this story. I believe that American journalists from all political persuasions are not offering critical analysis. Understanding the Russian side and taking their arguments seriously can help prevent serious consequences.

Americans believe that Russians are fed propaganda by the state-controlled media. If Russians only could hear the truth, the thinking goes, they would welcome the US position. This is not so. There are more than 300 TV stations available in Moscow. Only 6 are state-controlled. The truth is that Russians prefer hearing the news from the state rather than the Internet or other sources. This is different from almost any other country. It is not North Korea where the news is censored. Each night during the Crimea crisis, anyone could watch CNN or the BBC bash Russia.

With regard to Ukraine, Russia has drawn a red line: It will never allow Ukraine to be part of NATO. Russia sees the US as the aggressor, surrounding Russia with military bases in Eastern Europe at every opportunity since the collapse of the Soviet Union. The US sees Russia as the aggressor against its neighbors. A small misstep could lead to war. This time the war will not be "over there." The Russian bombers flying off the California coast on July 4th clearly demonstrate this point. Russians understand that the US has not fought a war on its soil since the civil war. If new hostilities start, Russia will not let the war be a proxy war where the US supplies weapons and advisors and lets others do the "boots on the ground" combat. Russia will take the war to the US. How did we reach this critical point in such a short time?

Russia sees the US as the aggressor, surrounding Russia with military bases in Eastern Europe at every opportunity since the collapse of the Soviet Union. The US sees Russia as the aggressor against its neighbors.

First, some background. I moved to Moscow two and a half years ago. I went to Russia to build a non-government funded news channel with editorial views consistent with the Russian Orthodox Church. I have completed that task and returned to the west. I see both sides of this escalating conflict and unless there is a change in thinking, the result will be catastrophic. When I first arrived, the relationship between the US and Russia seemed normal. As an American, my ideas were welcomed, even sought after. At the time, Mr. Obama planned to attack Assad's army in Syria for crossing the "red line" for a chemical weapon attack. Russia intervened and persuaded Syria to destroy its chemical weapons. Mr. Putin had helped Mr. Obama save face and not make a major blunder in Syria. Shortly after, Mr. Putin wrote an editorial published in the New York Times, which was generally well-received. Relations appeared to be on the right course. There was cooperation in the Middle East and Russia phobia was easing.

Then Russia passed a law that prevented sexual propaganda to minors. This was the start of tensions. The LGBT lobby in the West saw this law as anti-gay. I did not. The law was a direct copy of English law and was intended to prevent pedophilia, not consenting relationships between adults. Gay relations in Russia are not illegal (although not accepted by the majority of the public). Regarding gay protests, they were restricted from view of children. I saw this in the same way that we in America restrict children from seeing "R" rated films. The punishment for breaking this law is a fine of less than $100. Double-parking a car in Moscow carries a heavier fine of $150. Nonetheless the reaction was overwhelming against Russia.

The boycott of the Sochi Olympics was the West's way of discrediting Russia. Russia saw this boycott as an aggressive act by the West to interfere with its internal politics and to embarrass Russia. Sochi was for Russians a great source of national pride and had nothing to do with politics. For the West, this was the first step in creating the narrative that Russia was the old repressive Soviet Union and Russia must be stopped.

Then came the color revolution in the Ukraine. When the president of Ukraine was overthrown, from a Russian viewpoint this was a Western organized coup. The overthrow of a democratically elected president signaled that the West was interested in an expansion of power, not democratic values. The leaked recorded conversations of Assistant Secretary of State Victoria Nuland and US Ambassador Geoffrey Pyatt suggested that the US was actively involved in regime change in the Ukraine. For Russia, the Ukrainians are their brothers, much more than any other group. The languages are similar; they are linked culturally and religiously. Kiev played a central role in the Christianization of Russia. Many Russians have family members in Ukraine. For Russians, this special relationship was destroyed by outside forces. Imagine if Canada suddenly aligned itself with Russia or China. The US would surely see that as a threat on its border and act decisively.

When the Soviet Union collapsed, from an American viewpoint, the borders of Eastern Europe were frozen. However in the late 1990s, the borders of Yugoslavia changed, breaking that country apart. Russians had accepted Kiev's rule of Crimea since 1954 as a trusted brother might watch a family property. But when that brother no longer is a part of the family, Russia wanted Crimea back. Crimea also wanted Russia back. Crimeans speak Russian and are closely tied to their 300-year Russian heritage. From the Russian point of view, this was a family matter and of no concern to the West, The sanctions imposed were seen as aggression by the West to keep Russia in its place.

Sanctions are driving Russia away from the West and toward China. Chinese tourism in Russia is at record levels. More transactions are now settled directly between Rubles and Yuan, with the US dollar's role as middleman being limited. Although the dollar remains strong now, this is deceptive. China has created the AIIB bank to directly compete against the IMF for world banking power and the US is having trouble preventing its allies from joining. This is the first crack in US financial domination as a direct result of sanctions.

We are moving closer and closer to a real war. Republicans and Democrats talk tough on foreign policy towards Russia. When all politicians are in agreement, there is no discussion of alternative approaches. Any alternative to complete isolation of Russia and a NATO build up on Russia's borders is a sign of weakness. Any alternative to this military build up is criticized as "appeasement," likened to the failed foreign policy of British Prime Minister Neville Chamberlain toward Nazi Germany between 1937 and 1939.

Liberal Democrats historically are anti-war, but not this time. In the Czech Republic, there was the start of an anti-war movement when NATO paraded its military along its borders. "Tanks but no thanks" became a rallying cry. Czechs became uncomfortable with a muscle flexing approach to the standoff. Only a lone libertarian, Ron Paul raises a critique of the wisdom of this military build up.

The mistake that will cost America dearly is the assumption that Russia has the same ambitions as the Soviet Union. The cold war strategy used against the Soviet Union cannot be repeated with the same result. The Soviet Union was communist and atheistic. Modern Russia has returned to its Christian roots. There is a revival in Russian Orthodoxy with over 25,000 new churches built in Russia after the fall of Communism. On any Sunday, the churches are packed. Over 70% of the population identifies themselves as Orthodox Christians. Combine this religious revival with renewed Nationalism and Russia is growing in self-confidence.

A war with Russia cannot be won economically. Russia has oil and an abundance of natural resources. It occupies the largest landmass in the world.

The Marxist ideology followed by the Soviet Union was evangelistic. Only when the whole world became communist will Marxist principles be realized. When collective farms missed their goals, it was because the whole world wasn't communist yet, not because the ideology destroyed individual initiative. For this reason, the Soviet Union needed to dominate the whole world. For modern Russia, world domination is not its goal. Russia wants to keep its Russian identity and not lose it to outside forces.

Russian history is filled with invaders trying to conquer Russia. Napoléon and Hitler are only the latest examples. Russia has always prevailed. Driving in from the airport, you can see exactly how close Hitler came to Moscow. You are also reminded that it was here that he was stopped. Russia is sure that they will repel the newest invader NATO.

A war with Russia cannot be won economically. Russia has oil and an abundance of natural resources. It occupies the largest landmass in the world. It is growing in its ability to replace goods restricted from the west. A proxy war using the Ukrainian army will not solve the problem.

There is still time to make a deal. More sanctions, and more isolation from the West are not the way to resolve differences. The US flexing its military muscle will not solve the problems. War is not the answer but too often in history becomes the only solution when two sides refuse to see the other's point of view.

Jack Hanick recently completed the development of a state of the art television network in Moscow, built without government funding. Its evening news program broadcasts to 65 million homes in Russia across eight time zones. Previously Jack was a TV director, where he won the New York Emmy in 1994 for best director. His biography of Desmond Tutu also won a New York Emmy. Currently Jack is Chairman of the Board of HellasNet, a group of TV stations in Greece.

[Aug 07, 2015]What Lindsey Graham Fails to Understand About a War Against Iran

Earlier this week, Senator Lindsey Graham, a hawkish Republican from South Carolina, used a Senate Armed Services Committee hearing to stage a theatrical display of his disdain for the Obama administration's nuclear deal with Iran.

The most telling part of his time in the spotlight came when he pressed Defense Secretary Ashton Carter to declare who would win if the United States and Iran fought a war:

Here's a transcript of the relevant part:

Graham: Could we win a war with Iran? Who wins the war between us and Iran? Who wins? Do you have any doubt who wins?

Carter: No. The United States.

Graham: We. Win.

Little more than a decade ago, when Senator Graham urged the invasion of Iraq, he may well have asked a general, "Could we win a war against Saddam Hussein? Who wins?" The answer would've been the same: "The United States." And the U.S. did rout Hussein's army. It drove the dictator into a hole, and he was executed by the government that the United States installed. And yet, the fact that the Iraqi government of 2002 lost the Iraq War didn't turn out to mean that the U.S. won it. It incurred trillions in costs; thousands of dead Americans; thousands more with missing limbs and post-traumatic stress disorder and years of deployments away from spouses and children; and in the end, a broken Iraq with large swaths of its territory controlled by ISIS, a force the Iraqis cannot seem to defeat. That's what happened last time a Lindsey Graham-backed war was waged.

Recommended: What ISIS Really Wants

But one needn't be an opponent of the Iraq war to glean its basic lessons.

Hawkish pols have a tendency to harken back to the late 1930s exclusively, but one need only look to the eve of World War I (to the Czar in Russia and the German Kaiser, say) to see that two countries can and do fight wars that both end up losing.

A war against the U.S. would likely be a disaster for Iran. And rigorous attempts to game out such a conflict suggest that it could be very bad for the U.S. as well.

My colleague Peter Beinart has written about this:

Robert Gates, who led the CIA under George H.W. Bush before becoming George W. Bush and Barack Obama's defense secretary, has said bombing Iran could prove a "catastrophe," and that Iran's "capacity to wage a series of terror attacks across the Middle East aimed at us and our friends, and dramatically worsen the situation in Iraq, Afghanistan, Lebanon and elsewhere is hard to overestimate."

Meir Dagan, who led Israel's external spy service, the Mossad, from 2002 to 2011, has warned that an attack on Iran "would mean regional war, and in that case you would have given Iran the best possible reason to continue the nuclear program." In the aftermath of a military strike, he added, "The regional challenge that Israel would face would be impossible."

Says Jeffrey Goldberg, another colleague, "War against Iran over its nuclear program would not guarantee that Iran is kept forever away from a bomb. It would pretty much guarantee that Iran unleashes its terrorist armies against American targets."

In 2004, my colleague James Fallows observed an Iran war game led by Sam Gardiner, a retired Air Force colonel who spent more than two decades conducting war games at the National War College and other military institutions––and whose prescience about aspects of the Iraq War, derived from simulations, came far closer to what happened than anything Senator Graham predicted.

Recommended: The Case for Reparations

Said Fallows:

The most important hidden problem, exposed in the war-game discussions, was that a full assault would require such drawn-out preparations that the Iranian government would know months in advance what was coming. Its leaders would have every incentive to strike pre-emptively in their own defense. Unlike Saddam Hussein's Iraq, a threatened Iran would have many ways to harm America and its interests.

Apart from cross-border disruptions in Iraq, it might form an outright alliance with al-Qaeda to support major new attacks within the United States. It could work with other oil producers to punish America economically. It could, as Hammes warned, apply the logic of "asymmetric," or "fourth-generation," warfare, in which a superficially weak adversary avoids a direct challenge to U.S. military power and instead strikes the most vulnerable points in American civilian society, as al-Qaeda did on 9/11. If it thought that the U.S. goal was to install a wholly new regime rather than to change the current regime's behavior, it would have no incentive for restraint.

What about a pre-emptive strike of our own, like the Osirak raid? The problem is that Iran's nuclear program is now much more advanced than Iraq's was at the time of the raid. Already the U.S. government has no way of knowing exactly how many sites Iran has, or how many it would be able to destroy, or how much time it would buy in doing so. Worse, it would have no way of predicting the long-term strategic impact of such a strike. A strike might delay by three years Iran's attainment of its goal—but at the cost of further embittering the regime and its people. Iran's intentions when it did get the bomb would be all the more hostile.

Here the United States faces what the military refers to as a "branches and sequels" decision—that is, an assessment of best and second-best outcomes. It would prefer that Iran never obtain nuclear weapons. But if Iran does, America would like Iran to see itself more or less as India does—as a regional power whose nuclear status symbolizes its strength relative to regional rivals, but whose very attainment of this position makes it more committed to defending the status quo. The United States would prefer, of course, that Iran not reach a new level of power with a vendetta against America. One of our panelists thought that a strike would help the United States, simply by buying time. The rest disagreed.

Iran would rebuild after a strike, and from that point on it would be much more reluctant to be talked or bargained out of pursuing its goals—and it would have far more reason, once armed, to use nuclear weapons to America's detriment.

Lindsey Graham's notion that the question of war between America and Iran is coherently reducible to "we win" or "they win" is facile, dangerous, and especially galling from a man who ought to have learned better from the last war he urged. Even the most severe Iranian losses would not necessarily mean that "we win."

This article was originally published at

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One thing these war mongers do not realize is; by America getting involved in these small regional fights all around the world is making us weaker not stronger. An old bear who fights multiple fights with small bears, receives multiple scars and finally is overtaken by competing bears. Russia and China are just waiting on side lines for this opportunity. Let's not foreign entities, like AIPAC get us involved in these local wars. America's interest should be set at higher and moral goals.

Ronald Mayle

For one. If we were not war mongers we would be speaking German or French right now. We would still be kissing the rear end of a queen. Russian banks are failing and China's economy is tied into ours. We fight that is who we are

Elizabeth A

Many Americans were speaking German before the world wars. It's time to quit the Chamberlain, Pearl Harbor, Holocaust, deranged John Wayne Brain Cold Warrior nonsense! Germany could not handle an invasion across the English Channel, 20 miles and not the 3,500 across the Atlantic Ocean. Germany was roughly the size of Ohio. Japan was roughly the size of California. Neither had the population or production or ability to invade, beat or defeat us over here or over there. So, save it because we are no longer scared! Are the commies gonna still get us too?


Si, you are absolutely correct. We are squandering our resources all around the globe fighting bush wars on behalf of others while the two nations that are actual existential threats to the US build their military assets for the confrontation both have openly acknowledged that they foresee coming down the road. Both Great Britain and Rome in their empire days fell for this trap of over extension and military exhaustion.


If victory is defined as who can kill more opposing soldiers, then the US has won all the wars its been part of since WWII.
However, if we look at the objective of any war being completed then we've lost all the wars since WWII (Korea, Vietnam, Afghanistan, Iraq).
So to answer Lindsey Graham - we will win by killing more opposing soldiers but lose because our objectives would not be completed.


My political beliefs, ideas, and my opinion on this deal put aside... that was just absolutely ridiculous. To talk about War, middle east politics and lives and future of millions of people as if we are talking about a UFC fight ( who would win? IDK, who won the Iraq war? what about the Afghanistan war? or Vietnam? or Korean war? can we honestly say that we "won" those wars? what did we win exactly?) that is just absolutely infuriating!! I tell you who would win a war with Iran, NOBODY WINS ANYTHING! WE ALL LOSE!

Sam Spade

The Iranians do not understand the nature of Satan's brothel. It is all about the money honey! Senator Lindsey Graham, like most American politicians, sides with those who bribe him. Sweet nothings whispered in the ear are not enough! You got to shell out some of them shekels to get some of that orgasmic bliss. The Iranians should get smart and start showering our political prostitutes with gold and silver. If they shell out love gifts, they will surely get some of that passionate love and affection (multiple ovations and ejaculations) which are now exclusively reserved for those handsome circumcised dashing gentlemen at AIPAC/Zionist/Israel.

Rudy t. Miller

Bernie Sanders: "While much more work remains to be done this framework is an important step forward. It is imperative that Iran not get a nuclear weapon. It also is imperative that we do everything we can to reach a diplomatic solution and avoid never-ending war in the Middle East. I look forward to examining the details of this agreement and making sure that it is effective ‎and strong."

Sanders vehemently OPPOSED the war in Iraq, one of the few in Congress who did. NO MORE CLINTONS OR BUSHES IN THE WHITE HOUSE!
Bernie Sanders for President, 2016!

[Aug 05, 2015]The end of capitalism has begun

This article probably should be published on Slashdot, not Guardian ;-)
"...Like Greece is finding out now, if you have to import virtually all your energy and can't export high energy finished products like Germany and Japan, then you are in trouble. "
"...Except the problem we have today is NOT Capitalism. Far from it in fact! We are in Neo-Corporatism and have left Capitalism in the past! "
"...Conventional oil peaked in 2005. Well, okay, effectively plateaued. We'll probably see the ultimate peak this year. We haven't reached peak debt…yet. What happens when we reach peak energy and peak debt? What happens when we reach Peak Everything?"
"...40 years ago the Limits to Growth study was published, based on a systems dynamics model of the world's population, economic production, resources and pollution, and how they would interact. It forecast the sort of trouble we are now seeing, and its "business-as-usual" scenario predicted system collapse in the mid-21st Century. Governments and society leaders should have taken note back then, but they didn't, and their behaviour shows how poorly "capitalism" does rise to the challenge of global problems - it obfuscates, it denies, it defers, and it goes on doing its own thing regardless in the face of all evidence that it is on a path to destruction. Now we are left with a world that is consuming the equivalent of one and a half planets a year, and still, many are in denial.

"...It sounds hopeful that economists are questioning the assumptions of neoliberalism, but if, as I suggested, the real change is less ideological and more to do with elites preferring to be elite even if in poorly functioning economies and dysfunctional societies, these criticisms may be ignored.

Anyway, if we get Jeremy Corbyn and Bernie Sanders, perhaps then we'll see! But it's up to everyone to keep making and refining the arguments, and to get them across. I think even the most indoctrinated people can change their views very quickly when they encounter good sense."

Jun 20, 2015 | The Guardian

hitandrun 20 Jul 2015 05:58

Spectacularly woolly waffle, much like the Gladwell, but its information value -- if I were pressed to