By MICHAEL HUDSON

This is a major expansion of Dr Hudson’s piece that ran for some hours on yesterday’s site. AC/JSC

Martin Wolf started off his Financial Times column for February 11 with the bold question: “Has Barack Obama’s presidency already failed?” The stock market had a similar opinion, plunging 382 points.

Having promised “change,” Mr. Obama is giving us more Clinton-Bush via Robert Rubin’s protégé, Tim Geithner. Tuesday’s $2.5 trillion Financial Stabilization Plan to re-inflate the Bubble Economy is basically an extension of the Bush-Paulson giveaway – yet more Rubinomics for financial insiders in the emerging Wall Street trusts. The financial system is to be concentrated into a cartel of just a few giant conglomerates to act as the economy’s central planners and resource allocators. This makes banks the big winners in the game of “chicken” they’ve been playing with Washington, a shakedown holding the economy hostage. “Give us what we want or we’ll plunge the economy into financial crisis.” Washington has given them $9 trillion so far, with promises now of another $2 trillion– and still counting.
A true reform – one designed to undo the systemic market distortions that led to the real estate bubble – would have set out to reverse the Clinton-Rubin repeal of the Glass-Steagall Act so as to prevent the corrupting conflicts of interest that have resulted in vertical trusts such as Citibank and Bank of America/Countrywide/Merrill Lynch. By unleashing these conglomerate grupos (to use the term popularized under Pinochet with Chicago Boy direction – a dress rehearsal of the mass financial bankruptcies they caused in Chile by the end of the 1970s) the Clinton administration enabled banks to merge with junk mortgage companies, junk-money managers, fictitious property appraisal companies, and law-evasion firms all designed to package debts to investors who trusted them enough to let them rake off enough commissions and capital gains to make their managers the world’s highest-paid economic planners.

Today’s economic collapse is the direct result of their planning philosophy. It actually was taught as “wealth creation” and still is, as supposedly more productive than the public regulation and oversight so detested by Wall Street and its Chicago School aficionados. The financial powerhouses created by this “free market” philosophy span the entire FIRE sector – finance, insurance and real estate, “financializing” housing and commercial property markets in ways guaranteed to make money by creating and selling debt. Mr. Obama’s advisors are precisely those of the Clinton Administration who supported trustification of the FIRE sector. This is the broad deregulatory medium in which today’s bad-debt disaster has been able to spread so much more rapidly than at any time since the 1920s.
The commercial banks have used their credit-creating power not to expand the production of goods and services or raise living standards but simply to inflate prices for real estate (making fortunes for their brokerage, property appraisal and insurance affiliates), stocks and bonds (making more fortunes for their investment bank subsidiaries), fine arts (whose demand is now essentially for trophies, degrading the idea of art accordingly) and other assets already in place.

The resulting dot.com and real estate bubbles were not inevitable, not economically necessary. They were financially engineered by the political deregulatory power acquired by banks corrupting Congress through campaign contributions and public relations “think tanks” (more in the character of doublethink tanks) to promote the perverse fiction that Wall Street can be and indeed is automatically self-regulating — a travesty of Adam Smith’s “Invisible Hand.” This hand is better thought of as covert. The myth of “free markets” is now supposed to consist of governments withdrawing from planning and taxing wealth, so as to leave resource allocation and the economic surplus to bankers rather than elected public representatives. This is what classically is called oligarchy, not democracy.

This centralization of planning, debt creation and revenue-extracting power is defended as the alternative to Hayek’s road to serfdom. But it is itself the road to debt peonage, a.k.a. the post-industrial economy or “Information Economy.” The latter term is another euphemistic travesty in view of the kind of information the banking system has promoted in the junk accounting crafted by their accounting firms and tax lawyers (off-balance-sheet entities registered on offshore tax-avoidance islands), the AAA applause provided as “information” to investors by the bond-rating cartel, and indeed the national income and product accounts that depict the FIRE sector as being part of the “real” economy, not as an institutional wrapping of special interests and government-sanctioned privilege acting in an extractive rather than a productive way.

“Thanks for the bonuses,” bankers in the United States and England testified this week before Congress and Parliament. “We’ll keep the money, but rest assured that we are truly sorry for having to ask you for another few trillion dollars. At least you should remember our theme song: We are still better managers than the government, and the bulwark against government bureaucratic resource allocation.” This is the ideological Big Lie sold by the Chicago School “free market” celebration of dismantling government power over finance, all defended by complex math rivaling that of nuclear physics that the financial sector is part of the “real” economy automatically producing a fair and equitable equilibrium.

This is not bad news for stockholders of more local and relatively healthy banks (healthy in the sense of avoiding negative equity). Their stocks soared and were by far the major gainers on Tuesday’s stock market, while Wall Street’s large Bad Banks plunged to new lows. Solvent local banks are the sort that were normal prior to repeal of Glass Steagall. They are to be bought by the large “troubled” banks, whose “toxic loans” reflect a basically toxic operating philosophy. In other words, small banks who have made loans carefully will be sucked into Citibank, Bank of America, JP Morgan Chase and Wells Fargo – the Big Four or Five where the junk mortgages, junk CDOs and junk derivatives are concentrated, and have used Treasury money from the past bailout to buy out smaller banks that were not infected with such reckless financial opportunism. Even the Wall Street Journal editorialized regarding the Obama Treasury’s new “Public-Private Investment Fund” to pump a trillion dollars into this mess: “Mr. Geithner would be wise to put someone strong and independent in charge of this fund – someone who can say no to Congress and has no ties to Citigroup, Robert Rubin or Wall Street.”

None of this can solve today’s financial problem. The debt overhead far exceeds the economy’s ability to pay. If the banks would indeed do what Pres. Obama’s appointees are begging them to do and lend more, the debt burden would become even heavier and buying access to housing even more costly. When the banks look back fondly on what Alan Greenspan called “wealth creation,” we can see today that the less euphemistic terminology would be “debt creation.”
http://www.counterpunch.org/hudson02122009.html

www.chomsky.info, January 24, 2009

Barack Obama is recognized to be a person of acute intelligence, a legal scholar, careful with his choice of words. He deserves to be taken seriously — both what he says, and what he omits. Particularly significant is his first substantive statement on foreign affairs, on January 22, at the State Department, when introducing George Mitchell to serve as his special envoy for Middle East peace.
Mitchell is to focus his attention on the Israel-Palestine problem, in the wake of the recent US-Israeli invasion of Gaza. During the murderous assault, Obama remained silent apart from a few platitudes, because, he said, there is only one president — a fact that did not silence him on many other issues. His campaign did, however, repeat his statement that “if missiles were falling where my two daughters sleep, I would do everything in order to stop that.” He was referring to Israeli children, not the hundreds of Palestinian children being butchered by US arms, about whom he could not speak, because there was only one president.
On January 22, however, the one president was Barack Obama, so he could speak freely about these matters — avoiding, however, the attack on Gaza, which had, conveniently, been called off just before the inauguration.
Obama’s talk emphasized his commitment to a peaceful settlement. He left its contours vague, apart from one specific proposal: “the Arab peace initiative,” Obama said, “contains constructive elements that could help advance these efforts. Now is the time for Arab states to act on the initiative’s promise by supporting the Palestinian government under President Abbas and Prime Minister Fayyad, taking steps towards normalizing relations with Israel, and by standing up to extremism that threatens us all.”
Obama is not directly falsifying the Arab League proposal, but the carefully framed deceit is instructive.
The Arab League peace proposal does indeed call for normalization of relations with Israel — in the context — repeat, in the context of a two-state settlement in terms of the longstanding international consensus, which the US and Israel have blocked for over 30 years, in international isolation, and still do. The core of the Arab League proposal, as Obama and his Mideast advisers know very well, is its call for a peaceful political settlement in these terms, which are well-known, and recognized to be the only basis for the peaceful settlement to which Obama professes to be committed. The omission of that crucial fact can hardly be accidental, and signals clearly that Obama envisions no departure from US rejectionism. His call for the Arab states to act on a corollary to their proposal, while the US ignores even the existence of its central content, which is the precondition for the corollary, surpasses cynicism.
The most significant acts to undermine a peaceful settlement are the daily US-backed actions in the occupied territories, all recognized to be criminal: taking over valuable land and resources and constructing what the leading architect of the plan, Ariel Sharon, called “Bantustans” for Palestinians — an unfair comparison because the Bantustans were far more viable than the fragments left to Palestinians under Sharon’s conception, now being realized. But the US and Israel even continue to oppose a political settlement in words, most recently in December 2008, when the US and Israel (and a few Pacific islands) voted against a UN resolution supporting “the right of the Palestinian people to self-determination” (passed 173 to 5, US-Israel opposed, with evasive pretexts).
Obama had not one word to say about the settlement and infrastructure developments in the West Bank, and the complex measures to control Palestinian existence, designed to undermine the prospects for a peaceful two-state settlement. His silence is a grim refutation of his oratorical flourishes about how “I will sustain an active commitment to seek two states living side by side in peace and security.”
Also unmentioned is Israel’s use of US arms in Gaza, in violation not only of international but also US law. Or Washington’s shipment of new arms to Israel right at the peak of the US-Israeli attack, surely not unknown to Obama’s Middle East advisers.
Obama was firm, however, that smuggling of arms to Gaza must be stopped. He endorses the agreement of Condoleeza Rice and Israeli foreign minister Tzipi Livni that the Egyptian-Gaza border must be closed — a remarkable exercise of imperial arrogance, as the Financial Times observed: “as they stood in Washington congratulating each other, both officials seemed oblivious to the fact that they were making a deal about an illegal trade on someone else’s border — Egypt in this case. The next day, an Egyptian official described the memorandum as `fictional’.” Egypt’s objections were ignored.
Returning to Obama’s reference to the “constructive” Arab League proposal, as the wording indicates, Obama persists in restricting support to the defeated party in the January 2006 election, the only free election in the Arab world, to which the US and Israel reacted, instantly and overtly, by severely punishing Palestinians for opposing the will of the masters. A minor technicality is that Abbas’s term ran out on January 9, and that Fayyad was appointed without confirmation by the Palestinian parliament (many of them kidnapped and in Israeli prisons). Ha’aretz describes Fayyad as “a strange bird in Palestinian politics. On the one hand, he is the Palestinian politician most esteemed by Israel and the West. However, on the other hand, he has no electoral power whatsoever in Gaza or the West Bank.” The report also notes Fayyad’s “close relationship with the Israeli establishment,” notably his friendship with Sharon’s extremist adviser Dov Weiglass. Though lacking popular support, he is regarded as competent and honest, not the norm in the US-backed political sectors.
Obama’s insistence that only Abbas and Fayyad exist conforms to the consistent Western contempt for democracy unless it is under control.
Obama provided the usual reasons for ignoring the elected government led by Hamas. “To be a genuine party to peace,” Obama declared, “the quartet [US, EU, Russia, UN] has made it clear that Hamas must meet clear conditions: recognize Israel’s right to exist; renounce violence; and abide by past agreements.” Unmentioned, also as usual, is the inconvenient fact that the US and Israel firmly reject all three conditions. In international isolation, they bar a two-state settlement including a Palestinian state; they of course do not renounce violence; and they reject the quartet’s central proposal, the “road map.” Israel formally accepted it, but with 14 reservations that effectively eliminate its contents (tacitly backed by the US). It is the great merit of Jimmy Carter’s Palestine: Peace not Apartheid, to have brought these facts to public attention for the first time — and in the mainstream, the only time.
It follows, by elementary reasoning, that neither the US nor Israel is a “genuine party to peace.” But that cannot be. It is not even a phrase in the English language.
It is perhaps unfair to criticize Obama for this further exercise of cynicism, because it is close to universal, unlike his scrupulous evisceration of the core component of the Arab League proposal, which is his own novel contribution.
Also near universal are the standard references to Hamas: a terrorist organization, dedicated to the destruction of Israel (or maybe all Jews). Omitted are the inconvenient facts that the US-Israel are not only dedicated to the destruction of any viable Palestinian state, but are steadily implementing those policies. Or that unlike the two rejectionist states, Hamas has called for a two-state settlement in terms of the international consensus: publicly, repeatedly, explicitly.
Obama began his remarks by saying: “Let me be clear: America is committed to Israel’s security. And we will always support Israel’s right to defend itself against legitimate threats.”
There was nothing about the right of Palestinians to defend themselves against far more extreme threats, such as those occurring daily, with US support, in the occupied territories. But that again is the norm.
Also normal is the enunciation of the principle that Israel has the right to defend itself. That is correct, but vacuous: so does everyone. But in the context the cliche is worse than vacuous: it is more cynical deceit.
The issue is not whether Israel has the right to defend itself, like everyone else, but whether it has the right to do so by force. No one, including Obama, believes that states enjoy a general right to defend themselves by force: it is first necessary to demonstrate that there are no peaceful alternatives that can be tried. In this case, there surely are.
A narrow alternative would be for Israel to abide by a cease-fire, for example, the cease-fire proposed by Hamas political leader Khaled Mishal a few days before Israel launched its attack on December 27. Mishal called for restoring the 2005 agreement. That agreement called for an end to violence and uninterrupted opening of the borders, along with an Israeli guarantee that goods and people could move freely between the two parts of occupied Palestine, the West Bank and the Gaza Strip. The agreement was rejected by the US and Israel a few months later, after the free election of January 2006 turned out “the wrong way.” There are many other highly relevant cases.
The broader and more significant alternative would be for the US and Israel to abandon their extreme rejectionism, and join the rest of the world — including the Arab states and Hamas — in supporting a two-state settlement in accord with the international consensus. It should be noted that in the past 30 years there has been one departure from US-Israeli rejectionism: the negotiations at Taba in January 2001, which appeared to be close to a peaceful resolution when Israel prematurely called them off. It would not, then, be outlandish for Obama to agree to join the world, even within the framework of US policy, if he were interested in doing so.
In short, Obama’s forceful reiteration of Israel’s right to defend itself is another exercise of cynical deceit — though, it must be admitted, not unique to him, but virtually universal.
The deceit is particularly striking in this case because the occasion was the appointment of Mitchell as special envoy. Mitchell’s primary achievement was his leading role in the peaceful settlement in northern Ireland. It called for an end to IRA terror and British violence. Implicit is the recognition that while Britain had the right to defend itself from terror, it had no right to do so by force, because there was a peaceful alternative: recognition of the legitimate grievances of the Irish Catholic community that were the roots of IRA terror. When Britain adopted that sensible course, the terror ended. The implications for Mitchell’s mission with regard to Israel-Palestine are so obvious that they need not be spelled out. And omission of them is, again, a striking indication of the commitment of the Obama administration to traditional US rejectionism and opposition to peace, except on its extremist terms.
Obama also praised Jordan for its “constructive role in training Palestinian security forces and nurturing its relations with Israel” — which contrasts strikingly with US-Israeli refusal to deal with the freely elected government of Palestine, while savagely punishing Palestinians for electing it with pretexts which, as noted, do not withstand a moment’s scrutiny. It is true that Jordan joined the US in arming and training Palestinian security forces, so that they could violently suppress any manifestation of support for the miserable victims of US-Israeli assault in Gaza, also arresting supporters of Hamas and the prominent journalist Khaled Amayreh, while organizing their own demonstrations in support of Abbas and Fatah, in which most participants “were civil servants and school children who were instructed by the PA to attend the rally,” according to the Jerusalem Post. Our kind of democracy.
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Obama’s Money Cartel

By PAM MARTENS

Wall Street, known variously as a barren wasteland for diversity or the last plantation in America, has defied courts and the Equal Employment Opportunity Commission (EEOC) for decades in its failure to hire blacks as stockbrokers. Now it’s marshalling its money machine to elect a black man to the highest office in the land. Why isn’t the press curious about this?
Walk into any of the largest Wall Street brokerage firms today and you’ll see a self-portrait of upper management racism and sexism: women sitting at secretarial desks outside fancy offices occupied by predominantly white males. According to the EEOC as well as the recent racial discrimination class actions filed against UBS and Merrill Lynch, blacks make up between 1 per cent to 3.5 per cent of stockbrokers — this after 30 years of litigation, settlements and empty promises to do better by the largest Wall Street firms.
The first clue to an entrenched white male bastion seeking a black male occupant in the oval office (having placed only five blacks in the U.S. Senate in the last two centuries) appeared in February on a chart at the Center for Responsive Politics website. It was a list of the 20 top contributors to the Barack Obama campaign, and it looked like one of those comprehension tests where you match up things that go together and eliminate those that don’t. Of the 20 top contributors, I eliminated six that didn’t compute. I was now looking at a sight only slightly less frightening to democracy than a Diebold voting machine. It was a Wall Street cartel of financial firms, their registered lobbyists, and go-to law firms that have a death grip on our federal government.
Why is the “yes, we can” candidate in bed with this cartel? How can “we”, the people, make change if Obama’s money backers block our ability to be heard?
Seven of the Obama campaign’s top 14 donors consisted of officers and employees of the same Wall Street firms charged time and again with looting the public and newly implicated in originating and/or bundling fraudulently made mortgages. These latest frauds have left thousands of children in some of our largest minority communities coming home from school to see eviction notices and foreclosure signs nailed to their front doors. Those scars will last a lifetime.
These seven Wall Street firms are (in order of money given): Goldman Sachs, UBS AG, Lehman Brothers, JP Morgan Chase, Citigroup, Morgan Stanley and Credit Suisse. There is also a large hedge fund, Citadel Investment Group, which is a major source of fee income to Wall Street. There are five large corporate law firms that are also registered lobbyists; and one is a corporate law firm that is no longer a registered lobbyist but does legal work for Wall Street. The cumulative total of these 14 contributors through February 1, 2008, was $2,872,128, and we’re still in the primary season.
But hasn’t Senator Obama repeatedly told us in ads and speeches and debates that he wasn’t taking money from registered lobbyists? Hasn’t the press given him a free pass on this statement?
Barack Obama, speaking in Greenville, South Carolina on January 22, 2008:
“Washington lobbyists haven’t funded my campaign, they won’t run my White House, and they will not drown out the voices of working Americans when I am president”.
Barack Obama, in an email to supporters on June 25, 2007, as reported by the Boston Globe:
“Candidates typically spend a week like this – right before the critical June 30th financial reporting deadline – on the phone, day and night, begging Washington lobbyists and special interest PACs to write huge checks. Not me. Our campaign has rejected the money-for-influence game and refused to accept funds from registered federal lobbyists and political action committees”.
The Center for Responsive Politics website allows one to pull up the filings made by lobbyists, registering under the Lobbying Disclosure Act of 1995 with the clerk of the U.S. House of Representatives and secretary of the U.S. Senate. These top five contributors to the Obama campaign have filed as registered lobbyists: Sidley Austin LLP; Skadden, Arps, et al; Jenner & Block; Kirkland & Ellis; Wilmerhale, aka Wilmer Cutler Pickering.
Is it possible that Senator Obama does not know that corporate law firms are also frequently registered lobbyists? Or is he making a distinction that because these funds are coming from the employees of these firms, he’s not really taking money directly from registered lobbyists? That thesis seems disingenuous when many of these individual donors own these law firms as equity partners or shareholders and share in the profits generated from lobbying.
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Syed Hamad Ali
Published 06 October 2008

The controversial author speaks to newstatesman.com about India and Kashmir and her view that even if he’s elected Barack Obama will govern like just another white man.

Ever since she shot to global fame following her 1997 win of the Booker prize for The God of Small Things, Arundhati Roy seems to have concentrated her creative energy on raising awareness about pressing social and political issues.

This is the woman who described terrorism as the “privatisation of war” and called George Bush a “world nightmare incarnate.”
No surprise then she was dubbed “the Indian author of one good novel and many peevish essays” in a New York Times article.
Roy, who is an anti-globalisation campaigner, once famously said that the “only thing worth globalising is dissent.” As an opponent of the Iraqi invasion she walked a very fine line of what is considered acceptable when she was quoted urging people to “become the Iraqi resistance”, albeit through non-violent means.

Last month the Indian novelist wrote a lengthy newspaper article calling for Kashmir’s freedom in which she argued: “India needs azadi [freedom] from Kashmir just as much as – if not more than – Kashmir needs azadi from India.”

Predictably, accusations of “sedition” and of being a “loose cannon” were once again lobbed by critics inside the country’s political establishment.

“Here in India you have people saying that the government should do to Kashmir what the Russians are doing to Chechnya,” Roy tells the New Statesman. “There is a great admiration for military solutions right now.”

So it comes as no surprise her detractors would prefer Roy to keep quiet – especially when it comes to Kashmir.

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(Submitted by reader)

By ALEXANDER COCKBURN

I write these words at the end of a week in which:
A new Democratic president, Barack Obama, via his Attorney General, has explicitly endorsed Bush’s policy on renditions and Bush’s refusal to recognize the jurisdiction of US courts in any legal proceedings in this regard; also a week in which Obama’s solicitor general has explicitly endorsed Bush’s policy on enemy combatants.
I write not long after the New York Times reported that state welfare rolls are actually shrinking in months when unemployment has risen to real totals of 17 and 18 per cent – 1.7 million in Dec and Jan, hence when more and more people are in desperate straits. This is a consequence of a former Democratic president’s “reform” of welfare in the mid-90s.
Back then, Clinton reached out in the spirit of bipartisanship to Republicans to effect this piece of legislative savagery. In the same spirit of bipartisanship Obama invited a New Hampshire right-winger, Judd Gregg, to be his Commerce Secretary, while simultaneously pledging that Judd’s vacated seat would be filled by… a Republican! Ultimately, Judd contemptuously kicked away the proffered hand of friendship.
For much of last year progressives rallied support for Obama not just with scenarios of the destruction that would be wrought by John McCain, but with screams of fear at the menace of right-wing populist insurgency, embodied in the supposed threats to mainstream consensus represented by Ron Paul, Mike Huckabee and Sarah Palin. You know, fascists; at least two of them Christian fascists. Head for the deep shelters and vote Democrat! Vote for change.

The menace of the Christian hordes? Christians now exult that Obama is talking of a waiver on constitutional prohibitions concerning federal support for faith-based initiatives. As the Los Angeles Times editorialized angrily last week, “Like his predecessor, Obama has supported providing federal grants and contracts to social-service programs operated by religious groups. The surprise — an unpleasant one — is that he is equivocating on a campaign promise to condition such aid on an agreement by religious charities not to discriminate in hiring.”
And meanwhile, in America as across the planet, it’s economic devastation, near and far. Here in northern California I walk into a local plumbing store, a large place used by building contractors. There’s one other man in the store, buying a $5 plastic fitting. One of the owners says there’s zero new construction in the area. “We fix a few toilets. The only people actually building are the marijuana growers down in southern Humboldt.”

Take out Humboldt’s good fortune in being in the Emerald Triangle and multiply by every plumbing store in America. Throw in the idled lumber yards, construction stores, paint suppliers, and building crews. Count in the car lots that are going out of business because the banks won’t finance car loans. Go to the lost auto assembly jobs. It tots up to job loss across America just in December and January of 1,175,000. And that’s an underestimate. Every president since Reagan, particularly Clinton, has jimmied the unemployment criteria to produce an undercount. The actual number for the two months is nearer one and three quarter million. The actual total unemployment rate, according to statistician John Williams, on pre-Reagan criteria, rose to 18 per cent in January, from 17.5 per cent in December.

These are numbers out of the great Depression of the 1930s and it’s going to get worse in the next few months as businesses put up their shutters. The air is whistling out of the American economy. We’re now heading into the Feb-May trough dreaded by every retail store on every Main Street in America. Consumer spending is dropping longer and faster than at any time since they began keeping records in 1947. A quarter of all home-buyers are late on mortgage payments or in foreclosure. People inch through monthly payments on maxed out credit cards.

My own state of California – often touted as the eighth largest economy in the world — can’t pay its bills. There’s a shortfall in revenues and it can’t sell enough bonds. On January 26 the California State Controller John Chiang announced that the state is going to print its own money. If the state owes us money we’ll get this scrip as IOUs. Who knows, in happier times maybe we can hawk them on e-Bay. Student aid and payments to the disabled and needy will also come in the form of IOUs. Governor Schwarzenegger and his aides are negotiating with the banks to get them to accept the IOUs as deposits.

America is in economic meltdown. In Washington President Obama has been battling for his stimulus plan, with the Congress now totting up the exact total – somewhere around $800 billion. Although it’s the largest such package in US history the New York Times’ Paul Krugman, resplendent with his Nobel prize for Economics, has torn into it for being way too skimpy and conservative, far too respectful of Republican prejudices against hand-outs to anyone without a 10021 zip code, a Wall St business address and a mansion in Connecticut or Long Island.

The Republicans have elected to array themselves in implacable opposition to the package – surely the stupidest political strategy available for public inspection since Walter Mondale tried to beat Reagan in 1984 by promising to raise taxes. One of the maddest moments was when they raised Herculean guffaws at money requested for a program trying to figure out the decline of the honey bee. What use is the honey bee – damn bug, buzzing around in the spring, pollinating!

When Obama went last week to Elkhart, Indiana, where official unemployment is running at over 15 per cent because no one wants to buy a recreational vehicle, he invited Indiana Republican Senator Dick Lugar to come along. Lugar declined – a petty, sectarian display of a sort which could cost Republicans badly in the 2010 midterm elections.

Obama’s package is meant to generate three to four million new jobs which will maybe cope with job losses from December through next April if we’re lucky. It’s piecemeal: a wad of money for schools, for health insurance for all children, for “infrastructure” – which means good times for cement pourers. But as Paul Craig Roberts has pointed out many times on this site, to clamber out of this terrible economic hole Uncle Sam has to start making things he can sell abroad. That way the nation can offset the problem of running huge deficits importing things from China. “Infrastructure repair” doesn’t do that. It causes traffic jams for the next ten years as the highway lobby gets its new overpasses, underpasses, bridges, freeway exits and toll-road expressways, none of which can be sold overseas and all of which don’t restore America’s near-dead manufacturing economy.

Obama’s Treasury Secretary Tim Geithner tried to sell his bank bail-out plan earlier this week. He deservedly drew an F because in his mumbled prospectus he conceded he didn’t actually have a plan, but was toiling night and day to come up with one. Markets duly plunged. In outline, the prospective trillion-plus plan has the usual forced perspective of a banker, whose idea of rescue is to lend people money, thus drowning them in even more debt. Americans don’t need more debt. They need debt relief.

Obama’s bailout plan, added to the FY 2009 budget deficit he has inherited from Bush, opens a expenditure hole of about $3 trillion. As Roberts, former assistant secretary of the Treasury in the Reagan years, pointed out here last week, “Who is going to purchase $3 trillion of US Treasury bonds? Not the US consumer. The consumer is out of work and out of money. Private sector credit market debt is 174 per cent of GDP.” The sum is too big for the increasingly wary Chinese and Saudis to underwrite by buying Treasury bills where interest yields are have been so low that one joke, quoted by CounterPuncher P. Sainath, is that the US Treasury is the only institution in the world to be actually abiding by Islamic prohibitions on usury.

Failing everything else, there’s the government printing press, which can roll out the dollars and add inflation to unemployment.
The Republicans don’t have a plan, and though Obama has been energetically selling his package even his fans are beginning to wonder if he really has a convincing vision either. Americans can understand something big in the way of make-work – like Roosevelt’s dams, or the construction of the interstate highway system in the 1950s, or Kennedy’s space project or even, in its ultimate absurdity and waste, Reagan’s Star Wars plan , still unworkable and now consuming 19 per cent of the Defense budget. There’s nothing rhetorically tremendous in Obama’s stimulus plan, just a billion here and a billion there, on and on in an endless array.

There’s always something cloudy about Obama, just when I’ve almost persuaded myself to like the guy, always hedging his bets, doffing his cap to the ruling powers, even micromanaging his press conferences so there are no follow- up questions. That meant last week he didn’t have to deal with Helen Thomas following up on her initial inquiry as to whether he could name a nuclear power in the Middle East. Obama stalled until his aides could force Thomas to sit back down. The blacks his press secretary installed in the front row said later they were just put there as window dressing.

America is broke but here’s Obama , seemingly set on boosting a US force in Afghanistan where, according to the Center for Budgetary Analysis, it costs $775,000 per year to send a single soldier. And, as I noted at the outset, this week Obama punched his core supporters twice in the stomach by committing his administration to the same unconstitutional canons of secrecy and claims of executive immunity to the rule of law that made Bush one of the most hated presidents in history. His staff can’t seem to nail down safe appointments. In sum, in these crucial early weeks, Obama seems to have trouble setting his compass, as the ship heads towards the rocks. But hey, at least we have a Democrat in the White House, saving us from endless war, constitutional abuses and bank bailouts, right?

Could the Press Have Nailed Madoff Years Ago?

Bernie Madoff is one of the great thieves of history. He looted $50 billion. His criminal career stretched across a generation. Is it conceivable that no suspicions were aroused, no warning bells sounded the alarm? Of course they were and they did. As a stockbroker, CounterPunch’s Pam Martens was on to Madoff’s game in 1991. Wall Streeter Harry Markopolos had him cold in 1995 and gave a detailed outline of Madoff’s Ponzi game to the SEC which did nothing.
If only the press had gotten hold of Markopolos’ report. Just think what the Wall Street Journal would have done with it. Madoff would have been arrested and four more years of robbery – his biggest years – stopped in its tracks. But wait! The Wall Street Journal did get Markopolos’ report in 2005, straight from Markopolos. Markopolos says he also alerted the New York Times.

The incredible story of how the watchdogs of the Fourth Estate took good care to doze in their kennels is told at length by Eamonn Fingleton in the new edition of our CounterPunch newsletter. Amid the death throes of the old corporate press, Fingleton pitilessly excavates one of its greatest failures. The smoking gun was placed in their newsroom in-trays and they carefully looked the other way.
Also in this new edition of our newsletter Paul Craig Roberts concludes his three-part series on economics, — the shortest, sharpest guide ever written.

Let me quote a couple of paragraphs:
Modern economic theory is based on “empty-world” economics. But, in fact, today the world is full. In a “full world,” the fish catch is limited by the remaining population of fish, not by the number of fishing boats, which are man-made capital in excess supply. Oil energy is limited by geological deposits, not by the drilling and pumping capacity of man-made capital. In national income accounting, the use of man-made capital is depreciated, but the use of nature’s capital has no cost. Therefore, the using up of natural capital always results in economic growth.
For example, the dead zones in the Gulf of Mexico from fertilizer runoff from chemical fertilizer farming are not counted as a cost against the increase in agricultural output from chemical farming. The brown clouds that reduce light over large areas of Asia are not included as costs in the production of energy from coal. Economists continue to assume that the only limits to growth are labor, man-made capital, and consumer demand. In fact, the critical limit is ecological.
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By Dr. Manning Marable, PhD
BlackCommentator.com Editorial Board

[“Along The Color Line”, written by Manning Marable, PhD and distributed by.BlackCommentator.com, is a public educational and information service dedicated to fostering political dialogue and discussion, inspired by the great tradition for political event columns written by W. E. B. Du Bois nearly a century ago. Re-prints are permitted by any Black-owned or Black-oriented publications (print or electronic) without charge as long as they are printed in their entirety including this paragraph and, for electronic media, a link to http://www.BlackCommentator.com.]

Several years ago, I was walking home to my Manhattan apartment from Columbia University, just having delivered a lecture on New York State’s notorious “Rockefeller Drug Laws.” The state’s mandatory-minimum sentencing laws had thrown tens of thousands of nonviolent drug offenders into state prisons with violent convicts. In my lecture I had called for more generous prisoner reentry programs, the restoration of felons’ voting rights, increased educational programs inside prisons, and a restoration of judges’ sentencing authority.
A white administrator from another local university, a woman, who I had always judged to be fairly conservative and probably a Republican, had attended my lecture and was walking along with me to go to the subway. She told me that my lecture about the “prison industrial complex” had been a real “eye opener.” The fact that two million Americans were imprisoned, she expressed, was a “real scandal.”
Then this college administrator blurted out, in a hurried manner, “You know, my son is also in prison … a victim of the drug laws.”
In a split second, I had to make a hard decision: whether to engage this white conservative administrator in a serious conversation about America’s gulags and political economy of mass incarceration that had collaterally ensnared her son, or to pretend that I had not heard her last sentence, and to continue our conversation as if she had said nothing at all. Perhaps this is a sign of generational weakness on my part, but the overwhelming feeling I had at that precise moment was that, one day, the white administrator would deeply regret revealing such an intimate secret with a black person. I might tell the entire world about it. Instead of proceeding on the basis of mutual trust and common ground, transcending the boundaries of color, it would be better to ignore what was said in haste.
All of this occurred to me in the span of one heartbeat. I decided to say nothing. Two seconds later, I could visually detect the signs of relief on the woman’s face. African Americans have survived in the United States for over four hundred years because, at least up to the most recent generation of black people, we have made it our business to study white Americans generally, and especially those who exercise power. This explains why so many African Americans, at the very core of their being, express fears that millions of white Americans will be unable to cast ballots for Obama for president solely due to his racial identity. Of course, the majority of them would deny this, even to themselves.
Among the remaining Democratic presidential candidates, former Senator John Edwards (albeit with a “suspended” campaign) has been consistently the most progressive on most policy issues, in my view. On issues such as health care and poverty, Edwards has been clearly to the left of both Obama and Hillary Clinton. But since Edwards probably cannot win the Democratic nomination the real choice is between Clinton and Obama.
We’ve all heard the arguments explaining why Obama’s “not qualified” to be president. Chief among them is that he “doesn’t have enough experience in government.” As a historian, I think it may be instructive to observe that three of the twentieth century’s most influential presidents had shorter careers in electoral politics than Obama. Theodore Roosevelt, for instance, served as New York’s governor for only two years, and was William McKinley’s Vice President for barely six months. Woodrow Wilson served as New Jersey’s governor for only two years before being elected president. And Franklin D. Roosevelt, our only four-term president, had served in Albany as New York’s governor for four years. None of these leaders was ever elected to Congress.
Obama’s seven years in the Illinois State Senate, according to the New York Times’ Nicholas Kristof, show that “he scored significant achievements there: a law to videotape police interrogations in capital cases; an earned income tax credit to fight poverty; an expansion of early childhood education.” To be perfectly honest, there are some public policy issues where I sharply disagree with Obama, such as health care. Obama’s approach is not to use “mandates” to force millions of healthy twenty-somethings into the national health insurance pool. He claims that you won’t need mandates, just lower the price of private health insurance and young adults will buy it on their own. Obama’s children are still small, so maybe he can be excused for such an irrational argument. Obama’s reluctance to embrace health mandates is about his desire to appeal to “centrists” and moderate Republicans.
That brings us back to Barack’s unspoken problem: white denial and voter flight. It’s instructive to remember what happened to David Dinkins, the first (and still only) African American elected mayor of New York City. According to Andrew Kohul, the current president of the Pew Research Center, the Gallup organization’s polling research on New York City’s voters in 1989 indicated that Dinkins would defeat his Republican opponent, Rudolph Giuliani, by 15 percent. Instead, Dinkins only narrowly won by 2 percent. Kohul, who worked as a Gallup pollster in that election, concluded that “poorer, less well-educated [white] voters were less likely to answer our questions;” so the poll didn’t have the opportunity to factor in their views. As Kohul admits, “Here’s the problem – these whites who do not respond to surveys tend to have more unfavorable views of blacks than respondents who do the interviews.”
So I return to the white college administrator whose son is in prison on drug charges. I made a mistake. People of color must break through the mental racial barricades that divide America into parallel racial universes. We need to mobilize and support the election of Barack Obama not only because he is progressive and fully qualified to be president, but also because only his campaign can force all Americans to overcome the centuries-old silences about race that still create a deep chasm across this nation’s democratic life. In the end, we must force our fellow citizens who happen to be white, to come to terms with their own whiteness, their guilt and fears about America’s terrible racial past.
If there is any hope for meaningful change inside U.S. electoral system in the future, it lies with progressive leaders like Barack Obama. If we can dare to dream politically, let us dream of the world as it should be.
BlackCommentator.com Editorial Board member, Manning Marable, PhD is one of America’s most influential and widely read scholars. Since 1993, Dr. Marable has been Professor of Public Affairs, Political Science, History and African-American Studies at Columbia University in New York City. For ten years, Dr. Marable was founding director of the Institute for Research in African-American Studies at Columbia University, from 1993 to 2003. Dr. Marable is an author or editor of over 20 books, including Living Black History: How Reimagining the African-American Past Can Remake America’s Racial Future (2006); The Autobiography of Medgar Evers: A Hero’s Life And Legacy Revealed Through His Writings, Letters, And Speeches (2005); Freedom: A Photographic History of the African American Struggle (2002); Black Leadership: Four Great American Leaders and the Struggle for Civil Rights (1998); Beyond Black and White: Transforming African-American Politics (1995); and How Capitalism Underdeveloped Black America: Problems in Race, Political Economy, and Society (South End Press Classics Series) (1983). His current project is a major biography of Malcolm X, entitled Malcolm X: A Life of Reinvention, to be published by Viking Press in 2009. Click here to contact Dr. Marable.
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Originally published on March 13, 2008, in the Times of India.

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