How Bad Will the Economy Get? Really, Really Bad

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Historically, every financial and economic crisis has been used to further centralize power and concentrate wealth. This one is no different.

Thomas Greco, Jr.
July 14, 2009 - AlterNet

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Historically, every financial and economic crisis has been used to further centralize power and concentrate wealth. This one is no different, and in fact the moves being promoted by the Obama administration and the central banks of the Western powers will take the whole world to the pinnacle of financial despotism -- unless enough people wake up and claim their own "money power."

In recent months, the Fed has expanded its "assets" from about $800 billion to more than $2,000 billion. Those so-called assets are securities it bought from financial institutions and loans made to central banks in other countries. But the Fed refuses to name the specific recipients of those funds, while admitting that by doing so they are manipulating the value of the US dollar on foreign exchange markets. (Congressman Alan Grayson Grills Fed Vice Chair Donald Kohn.)

Where does the Fed get the money to buy those "assets" or to make those loans? Quite simply, it creates the money. Unlike you or me or any other economic entity, the Fed has the power to create Federal Reserve dollars by effectively writing a check against no funds. This is the function known as "Open Market Operations."

What is the economy experiencing now, and what is in prospect for the future? Despite unprecedented inflation of the money supply, we are now (mid-July, 2009) in a period of depression. How can we have simultaneous inflation of the currency and still have economic depression?

It is a matter of where the money is going. While the public sector (federal government) is being lavishly funded to maintain a global empire, and the banks are being bailed out to try to keep a dysfunctional and destructive financial system from collapsing, the private productive sector is being starved for credit. As a result, businesses are bankrupting, people are losing their jobs and their incomes, and lower levels of government are being squeezed because their tax revenues are shrinking.

There is also the matter of the real estate bubble that was created by the financial institutions as they loaded up the private sector with a debt burden that was way beyond its ability to bear. Now that burden is being shifted to the public sector as the government assumes those "toxic" loans. Unfortunately, it is not the poor suckers who were lured into the debt trap that are being relieved, but the predatory lenders who laid the traps. So mortgages are being foreclosed at an unprecedented scale, people are losing their equity as housing values plunge, and more Americans are being made homeless.

These are the factors that have so far kept the effects of monetary inflation from becoming extreme. Ultimately, however, such abusive issuance of political money shows up as rising prices.

When will the price effects of hyper-inflation begin to kick in? How will the government respond to it? What will be the social and political fallout? What can ordinary people do to protect themselves from monetary and legislative abuses? These are the questions that beg for answers.

Already there are rumblings and signs that the U.S. dollar is about to lose its status as the global reserve currency. When that happens, imports of energy and other necessities will become more expensive. The U.S.'s massive trade deficits will not be sustained into the future. China, the OPEC countries, and others that have been buying massive amounts of U.S. government bonds with their dollar earnings, are indicating that their appetite has been sated. Bilateral and multilateral trade agreements are being made that bypass the use of the dollar for international trade.

One thing is clear -- we cannot rely upon the government to act in the best interests of the people. Already, President Obama has moved to give the Federal Reserve even more power to control the people's credit and financial resources. According to a June 18 article in the Wall Street Journal, "The central bank would win power to monitor risks across the financial system, and sweeping authority to examine any firm that could threaten financial stability, even if the Fed wouldn't normally supervise the institution." This is not a new plan; it was floated as a trial balloon during the Bush administration. As early as March 2008, then Treasury Secretary Paulson was proposing to "give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system."

Ostensibly that would be done to prevent the errant financial institutions from repeating their sins of the recent past, but more likely it will have the effect of suppressing any private initiative that might compete with the financial cartel. The Fed is, after all, a private company run by the bankers for the bankers. A recent Reuters article is critical of Obama's move because of the Fed's lack of accountability. It is a plan that seeks to preserve at all costs the credit monopoly that exists under the central banking regime and to perpetuate the looting of the economy by monetization of federal government debts and other ultimately worthless "assets."

During the Great Depression, President Franking Roosevelt, upon taking office in 1933, declared a "bank holiday." He ordered all banks to close. Many of those banks never reopened and many people lost their savings. He also demanded that all Americans turn in their gold holdings in return for paper currency, which was one of the biggest robberies in history up to that time. Some pundits are predicting that another such bank holiday is being planned to put the brakes on price increases, once they begin in earnest, by depriving people of access to their savings, as was done in Argentina in 2002.

Governments that mismanage money invariably use the force of law to prevent the sheep from escaping from the shearing pen (or the slaughter house). So long as people are completely dependent upon political money and banks, they will docilely (or grudgingly) accept whatever "solutions" the political leadership puts forth, and do whatever the government demands of them.

Fortunately there is a way out. The primary purpose of money is to facilitate the exchange of goods and services in the markets. But it is possible to mediate the exchange process without using political money as the payment medium, and without borrowing from banks.

There is plenty of precedent for this sort of cashless trading. It involves a process of direct credit clearing among associated buyers and sellers. During the Great Depression the entrepreneurial middle class in Switzerland organized themselves into the WIR Economic Circle Cooperative. After 75 years, the WIR clearing circle continues to thrive with more than 60,000 member businesses trading the equivalent of about US$1.3 billion per year.

The past four decades have seen the emergence of a new industry comprised of commercial trade exchanges, sometimes called "barter" exchanges, that act as "third part record keepers" enabling the same sort of direct credit clearing for thousands of businesses in cities around the world. Efforts at the grassroots by social entrepreneurs to localize exchange and finance have been similarly widespread in many communities over the past twenty-five years.

Measures to properly reform the money and banking system by political means have about as much chance as the proverbial snowball in hell. However, what is possible, and what seems to be gaining traction to transcend the dominant system, is the materialization of voluntary, private initiatives that enable the cashless exchange of goods and services. As these systems continue to improve, proliferate, and scale up, they will provide a pathway toward a sustainable economy, greater local control, and a better quality of life for all.

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Thomas H. Greco, Jr. is the director of the Community Information Resource Center, which he founded in 1992. CIRC is a nonprofit consulting organization and networking hub dedicated to economic equity, social justice, and community improvement, specializing in community currency and mutual credit design, development, and implementation. His newest book is The End of Money and the Future of Civilization.

Celebrating Cronkite While Ignoring What He Did

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Glenn Greenwald
July 18, 2009 - Salon.com

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"The Vietcong did not win by a knockout [in the Tet Offensive], but neither did we. The referees of history may make it a draw. . . . We have been too often disappointed by the optimism of the American leaders, both in Vietnam and Washington, to have faith any longer in the silver linings they find in the darkest clouds. . . .

"For it seems now more certain than ever that the bloody experience of Vietnam is to end in a stalemate. . . . To say that we are closer to victory today is to believe, in the face of the evidence, the optimists who have been wrong in the past" -- Walter Cronkite, CBS Evening News, February 27, 1968.

"I think there are a lot of critics who think that [in the run-up to the Iraq War] . . . . if we did not stand up and say this is bogus, and you're a liar, and why are you doing this, that we didn't do our job. I respectfully disagree. It's not our role" -- David Gregory, MSNBC, May 28, 2008.

When Pulitzer Prize-winning journalist David Halberstam died, media stars everywhere commemorated his death as though he were one of them -- as though they do what he did -- even though he had nothing but bottomless, intense disdain for everything they do. As he put it in a 2005 speech to students at the Columbia School of Journalism: "the better you do your job, often going against conventional mores, the less popular you are likely to be . . . . By and large, the more famous you are, the less of a journalist you are."

In that same speech, Halberstam cited as the "proudest moment" of his career a bitter argument he had in 1963 with U.S. Generals in Vietnam, by which point, as a young reporter, he was already considered an "enemy" of the Kennedy White House for routinely contradicting the White House's claims about the war (the President himself asked his editor to pull Halberstam from reporting on Vietnam). During that conflict, he stood up to a General in a Press Conference in Saigon who was attempting to intimidate him for having actively doubted and aggressively investigated military claims, rather than taking and repeating them at face value:

Picture if you will rather small room, about the size of a classroom, with about 10 or 12 reporters there in the center of the room. And in the back, and outside, some 40 military officers, all of them big time brass. It was clearly an attempt to intimidate us.

General Stilwell tried to take the intimidation a step further. He began by saying that Neil and I had bothered General Harkins and Ambassador Lodge and other VIPs, and we were not to do it again. Period.

And I stood up, my heart beating wildly -- and told him that we were not his corporals or privates, that we worked for The New York Times and UP and AP and Newsweek, not for the Department of Defense.

I said that we knew that 30 American helicopters and perhaps 150 American soldiers had gone into battle, and the American people had a right to know what happened. I went on to say that we would continue to press to go on missions and call Ambassador Lodge and General Harkins, but he could, if he chose, write to our editors telling them that we were being too aggressive, and were pushing much too hard to go into battle. That was certainly his right.

Can anyone imagine any big media stars -- who swoon in reverence both to political power and especially military authority -- defying military instructions that way, let alone being proud of it? Halberstam certainly couldn't imagine any of them doing it, which is why, in 1999, he wrote:

Obviously, it should be a brilliant moment in American journalism, a time of a genuine flowering of a journalistic culture . . .

But the reverse is true. Those to whom the most is given, the executives of our three networks, have steadily moved away from their greatest responsibilities, which is using their news departments to tell the American people complicated truths, not only about their own country, but about the world around us. . . .

Somewhere in there, gradually, but systematically, there has been an abdication of responsibility within the profession, most particularly in the networks. . . . So, if we look at the media today, we ought to be aware not just of what we are getting, but what we are not getting; the difference between what is authentic and what is inauthentic in contemporary American life and in the world, with a warning that in this celebrity culture, the forces of the inauthentic are becoming more powerful all the time.

All of that was ignored when he died, with establishment media figures exploiting his death to suggest that his greatness reflected well on what they do, as though what he did was the same thing as what they do (much the same way that Martin Luther King's vehement criticisms of the United States generally and its imperialism and aggression specifically have been entirely whitewashed from his hagiography).

So, too, with the death of Walter Cronkite. Tellingly, his most celebrated and significant moment -- Greg Mitchell says "this broadcast would help save many thousands of lives, U.S. and Vietnamese, perhaps even a million" -- was when he stood up and announced that Americans shouldn't trust the statements being made about the war by the U.S. Government and military, and that the specific claims they were making were almost certainly false. In other words, Cronkite's best moment was when he did exactly that which the modern journalist today insists they must not ever do -- directly contradict claims from government and military officials and suggest that such claims should not be believed. These days, our leading media outlets won't even use words that are disapproved of by the Government.

Despite that, media stars will spend ample time flamboyantly commemorating Cronkite's death as though he reflects well on what they do (though probably not nearly as much time as they spent dwelling on the death of Tim Russert, whose sycophantic servitude to Beltway power and "accommodating head waiter"-like, mindless stenography did indeed represent quite accurately what today's media stars actually do). In fact, within Cronkite's most important moments one finds the essence of journalism that today's modern media stars not only fail to exhibit, but explicitly disclaim as their responsibility.

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UPDATE: A reader reminds me that -- very shortly after Tim Russert's June, 2008 death -- long-time Harper's editor Lewis Lapham attended a party to mark the release of a new book on Hunter Thompson, and Lapham said a few words. According to New York Magazine's Jada Yuan, this is what happened:

Lewis Lapham isn't happy with political journalism today. "There was a time in America when the press and the government were on opposite sides of the field," he said at a premiere party for Gonzo: The Life and Work of Dr. Hunter S. Thompson on June 25. "The press was supposed to speak on behalf of the people. The new tradition is that the press speaks on behalf of the government." An example? "Tim Russert was a spokesman for power, wealth, and privilege," Lapham said. "That's why 1,000 people came to his memorial service. Because essentially he was a shill for the government. It didn't matter whether it was Democratic or Republican. It was for the status quo." What about Russert's rep for catching pols in lies? "That was bullshit," he said. "Thompson and Russert were two opposite poles."

Writing in Harper's a few weeks later, Lapham -- in the essay about Russert (entitled "An Elegy for a Rubber Stamp") where he said Russert's "on-air persona was that of an attentive and accommodating headwaiter, as helpless as Charlie Rose in his infatuation with A-list celebrity" -- echoed Halberstam by writing:

Long ago in the days before journalists became celebrities, their enterprise was reviled and poorly paid, and it was understood by working newspapermen that the presence of more than two people at their funeral could be taken as a sign that they had disgraced the profession.

That Lapham essay is full of piercing invective ("On Monday I thought I'd heard the end of the sales promotion. Tim presumably had ascended to the great studio camera in the sky to ask Thomas Jefferson if he intended to run for president in 1804"), and -- from a person who spent his entire adult life in journalism -- it contains the essential truth about modern establishment journalism in America:

On television the voices of dissent can't be counted upon to match the studio drapes or serve as tasteful lead-ins to the advertisements for Pantene Pro-V and the U.S. Marine Corps. What we now know as the "news media" serve at the pleasure of the corporate sponsor, their purpose not to tell truth to the powerful but to transmit lies to the powerless. Like Russert, who served his apprenticeship as an aide-de-camp to the late Senator Daniel Patrick Moynihan, most of the prominent figures in the Washington press corps (among them George Stephanopoulos, Bob Woodward, and Karl Rove) began their careers as bagmen in the employ of a dissembling politician or a corrupt legislature. Regarding themselves as de facto members of government, enabling and codependent, their point of view is that of the country's landlords, their practice equivalent to what is known among Wall Street stock-market touts as "securitizing the junk." When requesting
explanations from secretaries of defense or congressional committee chairmen, they do so with the understanding that any explanation will do. Explain to us, my captain, why the United States must go to war in Iraq, and we will relay the message to the American people in words of one or two syllables. Instruct us, Mr. Chairman, in the reasons why K-Street lobbyists produce the paper that Congress passes into law, and we will show that the reasons are healthy, wealthy, and wise. Do not be frightened by our pretending to be suspicious or scornful. Together with the television camera that sees but doesn't think, we're here to watch, to fall in with your whims and approve your injustices. Give us this day our daily bread, and we will hide your vices in the rosebushes of salacious gossip and clothe your crimes in the aura of inspirational anecdote.

That's why they so intensely celebrated Tim Russert: because he was the epitome of what they do, and it's why they'll celebrate Walter Cronkite (like they did with David Halberstam) only by ignoring the fact that his most consequential moments were ones where he did exactly that which they will never do.

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UPDATE II: In the hours and hours of preening, ponderous, self-serving media tributes to Walter Cronkite, below is a clip you won't see, in which Cronkite -- when asked what is his biggest regret -- says:

What do I regret? Well, I regret that in our attempt to establish some standards, we didn't make them stick. We couldn't find a way to pass them on to another generation.

It's impossible even to imagine the likes of Brian Williams, Tom Brokow and friends interrupting their pompously baritone, melodramatic, self-glorifying exploitation of Cronkite's death to spend a second pondering what he meant by that.

http://www.newseum.org/news/news.aspx?item=nh_CRON090714_2

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Glenn Greenwald was previously a constitutional law and civil rights litigator in New York. He is the author of the New York Times Bestselling book "How Would a Patriot Act?," a critique of the Bush administration's use of executive power, released in May 2006. His second book, "A Tragic Legacy", examines the Bush legacy.

Identifying the Great Blob of Alaska (No, it's not Sarah Palin)

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Wesley Loy 
July 19, 2009 - Time

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A group of hunters aboard a small boat out of the tiny Alaska village of Wainwright were the first to spot what would eventually be called "the blob." It was a dark, floating mass stretching for miles through the Chukchi Sea, a frigid and relatively shallow expanse of Arctic Ocean water between Alaska's northwest coast and the Russian Far East. The goo was fibrous, hairy. When it touched floating ice, it looked almost black.

But what was it? An oil slick? Some sort of immense, amorphous organism adrift in some of the planet's most remote waters? Maybe a worrisome sign of global climate change? Or, as folks wondered who followed from faraway via the internet, was it something insidious and, perhaps, even carnivorous like the man-eating jello from the old Steve McQueen movie that inspired the Alaska phenomenon's nickname?

The hunters got word to the U.S. Coast Guard, which immediately sent two spill response experts to fly over the mass, which looked sort of rusty from the air. They also approached it by boat. The North Slope Borough, the local government for the vast and sparsely populated cap of Alaska, sent its own people out the main village of Barrow to have a look. They scooped up jars of the stuff for analysis in a state lab in Anchorage.

"We responded as if it were an oil product," says Coast Guard Petty Officer Terry Hasenauer. "It was described to us as an oil-like substance, thick and lingering below the surface of the water. Those characteristics can indicate heavy, degraded oil, maybe crude oil, or possibly an intermediate fuel oil." Meanwhile, the story spread over the internet like an oil-spill, giving lots of people a queasy feeling.

Test results released Thursday showed the blob wasn't oil, but a plant - a massive bloom of algae. While that may seem less dangerous, a lot of people are still uneasy. It's something the mostly Inupiat Eskimo residents along Alaska's northern coast say they could never remember seeing before.

Algal blooms are a common and often menacing event along many U.S. coastlines. Some strains are toxic and can close beaches and poison seafood, posing a hazard to consumers. The National Oceanic and Atmospheric Administration maintains a forecasting system for the Gulf of Mexico to warn of harmful Florida blooms. On Thursday, on the other side of the continent, U.S. Sen. Olympia Snowe, a Maine Republican, urged NOAA to direct at least $500,000 to assess a disastrous red tide - a form of algal bloom. "The state of Maine is currently besieged by the most virulent red tide event ever recorded in the region," Snowe wrote. "As a result of this outbreak, virtually the entire coast of our state has been closed to the harvest of clams, mussels, ocean quahogs, and other shellfish."

While Alaskans may find the algal blob unusual if not frightening, scientists say that algal blooms are nothing new in Arctic Ocean waters, though the blob itself might be a little weird. Brenda Konar, a marine biology professor at the University of Alaska Fairbanks, said algal outbreaks can and do occur even in icy Arctic waters. It just takes the right combination of nutrients, light and water temperature, she said. "Algae blooms," she says. "It's sort of like a swimming pool that hasn't been cleaned in a while." The blob, Konar said, is a microalgae made up of "billions and billions of individuals." "We've observed large blooms in the past off Barrow although none of them at all like this," Barry Sherr, an Oregon State University professor of oceanography, said in an e-mail. "The fact that the locals say they've never seen anything like it suggests that it might represent some exotic species which has drifted into the region, perhaps as a result of
global change. For the moment that's just a guess."

So far in Alaska, nothing suggests the Chukchi Sea blob is toxic, although the Coast Guard's Hasenauer said toxicity tests were planned. In any case, virtually no commercial seafood production comes from the waters along Alaska's northern coast, but residents do fish, hunt whales and harvest other animals as part of a traditional subsistence lifestyle. In the meantime, the blob for the most part is staying away from the shoreline and slowly drifting farther and farther away.