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ECON 101 LESSON: America’s Deceptive 2012 Fiscal Cliff By Michael Hudson


When World War I broke out in August 1914, economists on both sides forecast that hostilities could not last more than about six months. Wars had grown so expensive that governments quickly would run out of money. It seemed that if Germany could not defeat France by springtime, the Allied and Central Powers would run out of savings and reach what today is called a fiscal cliff and be forced to negotiate a peace agreement.

But the Great War dragged on for four destructive years. European governments did what the United States had done after the Civil War broke out in 1861 when the Treasury printed greenbacks. They paid for more fighting simply by printing their own money. Their economies did not buckle and there was no major inflation. That would happen only after the war ended, as a result of Germany trying to pay reparations in foreign currency. This is what caused its exchange rate to plunge, raising import prices and hence domestic prices. The culprit was not government spending on the war itself (much less on social programs).

But history is written by the victors, and the past generation has seen the banks and financial sector emerge victorious. Holding the bottom 99% in debt, the top 1% are now in the process of subsidizing a deceptive economic theory to persuade voters to pursue policies that benefit the financial sector at the expense of labor, industry, and democratic government as we know it...


Weekend Economists:Auld Acquaintance Should Be Forgot December 28-30, 2012

Fling out the old, ring in the new...or something like that. This is our year-end clearance sale on people, places, ideas long past their sell date.

We have made it (mostly) through a year that will live in infamy: a year in which the Rule of Law went on the lam, many over-educated elitists lost their collective minds, their honor and their way, and the global economy winked in and out with alarming irregularity. Let's not even talk about democracy, okay? I don't want to burst into tears.

Post (if you like) short obits. on the people who left this madness for the peace of the grave, national, international, personal....let us grieve together, and then, let us work like beavers to see that next year things turn around.

Ladies and Gentlemen, I give you 2013. The old year is dead, long live the new!

Fueled by Deficit Hysteria, Obama and the Republicans Are Choosing the Path of “Economicide”


In the “fiscal cliff” negotiations and the subsequent debt limit talks between Obama and the Republican leadership of the House of Representatives, it appears that there will be no “good guys” because the talks and policy framework within which they are operating are at odds with the welfare of the American people. Set up by a series of interactions over the last four years between Obama and his nominal opponents in the Republican Party, the framework of the negotiations ignores the way that the US government finances itself as well as the only known economic policy orientation which will allow our economy to thrive; the proposed policies and negotiations have been to date economically illiterate. The biggest losers in these talks if they “succeed” according to the self-evaluations of the Republican and Democratic leaderships will be the American people and politically the Democrats who go along with a framework that demands cuts in federal budget deficits at all costs.

The 2011 Budget Control Act, initiated by the Republican controlled House, is one of the most foolish pieces of legislation ever passed into law by Congress, as it forces the government to attempt to “balance” its budget and reduce the budget deficit. National government budget deficits, which are the net contribution of government spending to economic growth, are actually integral to economic growth, contrary to the anti-scientific conventional budget lore upon which deficit hysteria has been built. Without government budget deficits, the economies of nations with trade deficits CANNOT grow in monetary terms due a matter of simple arithmetic; those few nations (China, Germany, not the US) with large trade surpluses MIGHT be able to grow without a budget deficit but always with the cooperation of other nations financing those surpluses through trade and, in most cases, government budget deficits on the side of the net-importing nation.

A fiat currency-issuing national government, unlike a local government, business or a household, does not depend upon tax or other income and therefore is not and should not pretend to be bound by conventional balance sheet accounting, which was perhaps a more applicable, though not particularly successful, means of national government accounting during the gold standard era. The reasons for transitioning away from the gold-standard, the rigidities which it imposed on aggregate demand and the money supply, have been suppressed from public discourse in an era in which deficit hysterics like those at “Fix the Debt” hold honored seats at the policymaking and policy advocacy tables. These deficit hysterics, funded by Wall Street tycoons freelancing as economic pundits, would like Washington insiders and the media to believe that the gold-standard never went away, specifically for the purpose of cutting social programs that stand in the way of Wall Street’s expansion into new markets.

I have recently proposed that we rename the so-called budget deficits specifically of currency-issuing governments, the government’s “net contribution to monetary/economic growth” so that the confusion no longer persists that these so-called deficits are by their nature “bad” and to be avoided. The fiat currency issuer can never run out of its own money, can never be in “deficit” in it; “net contribution” is a better formal description of the excess of spending over taxes for specifically a fiat currency-issuing government. The government spending over taxes collected becomes the incremental increase in the money supply for the real economy as it grows in real terms, underneath the pro-cyclical expansion and contraction of money available from bank credit (i.e. expands in a boom and collapses in a bust). Too much price inflation is a possibility with too much government spending over-and-above taxes collected but demand-led inflation in our current situation would be a “high quality problem” indicating that we have reached full capacity in our economy, which is not nearly the case. Right now we have a very large output gap as well as high demand for government-led expenditures on things like infrastructure, public services and education, making increased government expenditures very unlikely to cause inflation.

The foolishness of the 2011 Budget Control Act has been compounded by its timing...


The Fed Has Removed $425 Billion Worth Of Interest Income From The Economy


Every time the Fed announces another round of QE we hear the "know-nothings" in the media, on Wall Street and in the mainstream economics community tell us that we're getting more stimulus. And when the Fed does nothing, they scream about how we need more stimulus.

Well, be careful what you wish for!

For as the chart below clearly shows, the Fed actions have removed an enormous amount of interest income from the economy. In fact, it has removed over $100 bln more in interest income than the total net gain in private wages and salaries since it began undertaking these extraordinary measures.

Followers of Modern Monetary Theory (MMT) know why this is true: Quantitative easing is nothing more than an asset swap. The Fed removes one asset--a Treasury, for example--and replaces it with a cash balance (reserves) in the banking system. The result is that the private sector is stripped of the interest it would have earned on that Treasury, which is more than the zero-percent it earns on cash balances. Case in point, the $80 bln in profits that the Fed earned and turned over to the Treasury last year, was from income earned on the assets it bought. That was income that would have been earned by the private sector if it still had those bonds and securities.

So while the net change in wages and salaries since 2008 has been an increase of $317 bln, personal interest income dropped by $425 bln. That's not a stimulus by any means. It's mind boggling that the mainstream economics community and the Fed itself, doesn't understand this when they incessantly call for more "stimulus."

interest income

6 Ways to Juice Up the Labor Movement


...While Michigan's unions regroup and begin the twin processes of trying to survive and retain dues-paying members in the face of RTW and trying to find a way to overturn the law, it's clear that the national labor movement needs to do more than just fight defensive battle after defensive battle. To kick-start a conversation, AlterNet spoke with several of the smartest organizers and labor thinkers we know, and asked them for their suggestions on how labor can go on the offensive in the next year.

  1. Stephen Lerner, architect of the Justice for Janitors campaign: “It's time to reinvent the strike—the strike as guerrilla warfare"...in his work with Justice for Janitors, Lerner learned that bosses weren't ready for short, quick strikes. “If you look at the strike as a way to make them pay a price for how they treat you, you do short strikes, in and out strikes,” he notes. “Part of the reason it's so difficult to organize workers now is most people work multiple jobs, they have not a moment to participate. If you view the strike as having multiple goals, one is it allows workers to publicly declare and demonstrate they're unhappy. Second, because they're not at work they can talk to the media, go to churches. Third, it's something very concrete that they can do that does start to make the bosses a little crazy.”

    The second thing Lerner suggests is a re-politicization of bargaining. “We need bargaining not to just be about workers but what's good for the community,” he says, “So that we're bargaining for broader issues, especially in the public sector. So that it's not bargaining for the few, it's bargaining for the many.” Chicago's teachers, he notes, raised the issue of the city divesting from banks that were foreclosing on people. “We need to make it so that people see that when those workers win, we all win, rather than they're negotiating for something we don't have.”

  2. Jonathan Westin, executive director, New York Communities for Change, organizer of recent fast food strikes: “We believe that the future of the labor movement is really organizing low wage service sector jobs. These are the jobs we're stuck with, we need to make them livable jobs,” says Westin, whose organization, despite not being a labor union, has been organizing low-wage workers across New York City, from McDonald's and Wendy's to grocery stores and car washes. It's not just about who you're organizing, Westin notes, it's also about how you do it. “It's about constantly pressuring employers from as many angles as possible. It's leveraging not only NLRB elections but back wage claims to pressure the employers, leveraging community pressure, boycotts, strikes. We did a strike at the car wash in the Bronx and they came to the table. That's the lesson, it's not just any one strategy, you have to come at them at every different angle.”


Hospital ‘Facility Fees’ Boosting Medical Bills, and Not Just For Hospital Care By Fred Schulte


After Vermont hospitals started buying up the medical practices of local physicians, state Sen. Kevin Mullin of Rutland, began hearing complaints that prices some patients were paying for routine medical care had soared. One family accustomed to paying about $120 in out-of-pocket costs for doctor visits and other medical services was outraged when they ended up forking over more than $1,000 for similar visits, Mullin said, mostly for seeing doctors whose practices had been bought out by a local hospital.
“The only thing that was different was the office was now hospital-owned,” said Mullin, a Republican. “All of a sudden everything was charged differently."
The root of these increases are controversial charges known as “facility fees,” and they are routinely tacked on to patients’ bills not just for services actually provided in hospitals, but also by outpatient care centers and doctors’ offices simply because they’ve been purchased by hospital-based health care systems. Hospitals argue they can’t afford to keep the doors open without facility fees. Hospitals have billed them at least since 2000 when Medicare set billing standards for doctors employed by hospitals, and private insurers went along. Since then, the fees have grown increasingly common, costly and controversial. Critics argue that the billing practice needlessly adds billions of dollars to the nation’s ballooning health care costs and needs to be revamped. Some private insurers have protested the fees and in some cases even refused to pay them, which can add to the patient’s share of the bill. But getting rid of the charges — or even requiring medical offices to post facility fees — has proved daunting, reformers say. Mullin introduced legislation earlier this year to ban the practice in his state, only to see the bill “watered down” to simply require that the fees be disclosed in advance. The state Senate approved the amended bill, but it failed to pass in the House, even though the state hospital association supported it.

Now, as budget cutters on Capitol Hill drill into Medicare payment policies in hopes of finding new veins of cost savings, the fairness of these fees is facing new scrutiny — including from the federal commission that advises Congress on Medicare spending policy. Hospitals are fighting back and have enlisted support from the Service Employees International Union, which represents more than one million nurses, doctors and other health care workers. The stakes are high indeed. A decision by Medicare to quit allowing the fees would almost certainly lead private insurers to do the same across the country and all but put an end to them....

Fees for more than hospital care

Facility fees are a routine part of any hospital bill. But patients can also be hit with facility fees when they seek care from:

  • Private physicians who have sold their medical practices to a hospital and stayed on as employees. More than half the nation’s doctors now work on salary. When that happens, patients may suddenly get a bill from the doctor and a separate one from the hospital that owns the office. Some prestigious health systems, such as the Cleveland Clinic, also put their doctors on salary and charge a facility fee for office visits.

  • Outpatient medical centers that are part of a hospital-owned network, including centers treating serious diseases such as cancer or operating specialized clinics for the elderly.

  • Urgent care centers set up by hospitals largely to treat relatively minor ailments. Thousands of these centers exist nationwide, about one third believed to be hospital-owned. Some don’t tell patients in advance about facility fees.

  • Outpatient surgery centers where doctors perform routine operations. The centers can charge facility fees that run into the thousands of dollars. As deductibles rise on some insurance policies, patients may not realize they can get stuck with paying larger hunks of these bills than in the past.

    The fees date back to April 2000, when Medicare clarified its policy for billing by health groups that hired physicians. At the time, CMS officials acknowledged that critics wanted the agency to forbid hospitals from buying up medical practices for the purpose of converting them to hospital “facilities” that could tender higher fees for the same services. In a response published at the time in the Federal Register, CMS said it understood the concerns, but lacked the authority to “prohibit this practice.” The issue popped up last year when the House passed legislation that extended the payroll tax holiday and unemployment compensation benefits. Tucked into the “Middle Class Tax Relief and Job Creation Act” was a provision to cut about $6.8 billion in Medicare costs by targeting doctor services in hospital-owned offices...The hospital industry fought back hard — and ultimately successfully. The cuts never passed the Senate and were not in the final conference committee bill signed by President Obama in February...


  • The coming drone attack on America Naomi Wolf


    Drones on domestic surveillance duties are already deployed by police and corporations. In time, they will likely be weaponised. By 2020, it is estimated that as many as 30,000 drones will be in use in US domestic airspace...People often ask me, in terms of my argument about "ten steps" that mark the descent to a police state or closed society, at what stage we are. I am sorry to say that with the importation of what will be tens of thousands of drones, by both US military and by commercial interests, into US airspace, with a specific mandate to engage in surveillance and with the capacity for weaponization – which is due to begin in earnest at the start of the new year – it means that the police state is now officially here.

    In February of this year, Congress passed the FAA Reauthorization Act, with its provision to deploy fleets of drones domestically. Jennifer Lynch, an attorney at the Electronic Frontier Foundation, notes that this followed a major lobbying effort, "a huge push by […] the defense sector" to promote the use of drones in American skies: 30,000 of them are expected to be in use by 2020, some as small as hummingbirds – meaning that you won't necessarily see them, tracking your meeting with your fellow-activists, with your accountant or your congressman, or filming your cruising the bars or your assignation with your lover, as its video-gathering whirs. Others will be as big as passenger planes. Business-friendly media stress their planned abundant use by corporations: police in Seattle have already deployed them. An unclassified US air force document reported by CBS news expands on this unprecedented and unconstitutional step – one that formally brings the military into the role of controlling domestic populations on US soil, which is the bright line that separates a democracy from a military oligarchy. (The US constitution allows for the deployment of National Guard units by governors, who are answerable to the people; but this system is intended, as is posse comitatus, to prevent the military from taking action aimed at US citizens domestically.)

    The air force document explains that the air force will be overseeing the deployment of its own military surveillance drones within the borders of the US; that it may keep video and other data it collects with these drones for 90 days without a warrant – and will then, retroactively, determine if the material can be retained – which does away for good with the fourth amendment in these cases. While the drones are not supposed to specifically "conduct non-consensual surveillance on on specifically identified US persons", according to the document, the wording allows for domestic military surveillance of non-"specifically identified" people (that is, a group of activists or protesters) and it comes with the important caveat, also seemingly wholly unconstitutional, that it may not target individuals "unless expressly approved by the secretary of Defense". In other words, the Pentagon can now send a domestic drone to hover outside your apartment window, collecting footage of you and your family, if the secretary of Defense approves it. Or it may track you and your friends and pick up audio of your conversations, on your way, say, to protest or vote or talk to your representative, if you are not "specifically identified", a determination that is so vague as to be meaningless.

    What happens to those images, that audio? "Distribution of domestic imagery" can go to various other government agencies without your consent, and that imagery can, in that case, be distributed to various government agencies; it may also include your most private moments and most personal activities. The authorized "collected information may incidentally include US persons or private property without consent". Jennifer Lynch of the Electronic Frontier Foundation told CBS:

    "In some records that were released by the air force recently … under their rules, they are allowed to fly drones in public areas and record information on domestic situations."
    This document accompanies a major federal push for drone deployment this year in the United States, accompanied by federal policies to encourage law enforcement agencies to obtain and use them locally, as well as by federal support for their commercial deployment. That is to say: now HSBC, Chase, Halliburton etc can have their very own fleets of domestic surveillance drones. The FAA recently established a more efficient process for local police departments to get permits for their own squadrons of drones. Given the Department of Homeland Security militarization of police departments, once the circle is completed with San Francisco or New York or Chicago local cops having their own drone fleet – and with Chase, HSBC and other banks having hired local police, as I reported here last week – the meshing of military, domestic law enforcement, and commercial interests is absolute. You don't need a messy, distressing declaration of martial law.

    And drone fleets owned by private corporations means that a first amendment right of assembly is now over: if Occupy is massing outside of a bank, send the drone fleet to surveil, track and harass them. If citizens rally outside the local Capitol? Same thing. As one of my readers put it, the scary thing about this new arrangement is deniability: bad things done to citizens by drones can be denied by private interests – "Oh, that must have been an LAPD drone" – and LAPD can insist that it must have been a private industry drone. For where, of course, will be the accountability from citizens buzzed or worse by these things?...We don't need a military takeover: with these capabilities on US soil and this air force white paper authorization for data collection, the military will be effectively in control of the private lives of American citizens. And these drones are not yet weaponized.

    "I don't think it's crazy to worry about weaponized drones. There is a real consensus that has emerged against allowing weaponized drones domestically. The International Association of Chiefs of Police has recommended against it," warns Jay Stanley, senior policy analyst at the ACLU, noting that there is already political pressure in favor of weaponization:

    "At the same time, it is inevitable that we will see [increased] pressure to allow weaponized drones. The way that it will unfold is probably this: somebody will want to put a relatively 'soft' nonlethal weapon on a drone for crowd control. And then things will ratchet up from there."

    And the risk of that? The New America Foundation's report on drone use in Pakistan noted that the Guardian had confirmed 193 children's deaths from drone attacks in seven years. It noted that for the deaths of ten militants, 1,400 civilians with no involvement in terrorism also died. Not surprisingly, everyone in that region is traumatized: children scream when they hear drones. An NYU and Stanford Law School report notes that drones "terrorize citizens 24 hours a day".

    If US drones may first be weaponized with crowd-control features, not lethal force features, but with no risk to military or to police departments or DHS, the playing field for freedom of assembly is changed forever. So is our private life, as the ACLU's Stanley explains:

    "Our biggest concerns about the deployment of drones domestically is that they will be used to create pervasive surveillance networks. The danger would be that an ordinary individual once they step out of their house will be monitored by a drone everywhere they walk or drive. They may not be aware of it. They might monitored or tracked by some silent invisible drone everywhere they walk or drive."

    "So what? Why should they worry?" I asked.

    "Your comings and goings can be very revealing of who you are and what you are doing and reveal very intrusive things about you – what houses of worship you are going to, political meetings, particular doctors, your friends' and lovers' houses."

    I mentioned the air force white paper. "Isn't the military not supposed to be spying on Americans?" I asked.

    "Yes, the posse comitatus act passed in the 19th century forbids a military role in law enforcement among Americans."

    What can we do if we want to oppose this? I wondered. According to Stanley, many states are passing legislation banning domestic drone use. Once again, in the fight to keep America a republic, grassroots activism is pitched in an unequal contest against a militarized federal government.

    Weekend Economists' Christmas 2012

    Wishing you all bright stars, warmth, comfort and joy....

    It started snowing around 3 PM, the first serious snow of the winter, here in Ann Arbor. And in that peaceful falling snow, Christmas seemed finally possible.

    It's been a hard, horrible year for many of us, but in the comfort and support of our patient friends, always willing to listen and affirm every whining whimper, we find the strength to persevere, to try and try and try again. Until we prevail.

    Susan B. Anthony gave us the ultimate gift: "Failure is impossible."

    And in that, she gave the REASON for democracy, for all time. Susan B. never got to vote. But she was right.

    Fight on, people! And if you can, fight dirty. Martyrdom is too chancy.

    Three Heads, We Lose: Gun Control Without Equality Means More Massacres, Not Fewer


    Although the massacre in Newtown is not the type of rebellion-like rampage massacre that I usually write about — where employee attacks his workplace and his co-workers, or middle-class school kids attack their school and fellow students — a few things about the culture around this crime stand out.

    First, Connecticut has the second worst rate of income inequality in the US, thanks to all the Wall Street fundies and insurance executives who live secluded from some of the starkest poverty outside of the Deep South. Even more telling is the way Connecticut degenerated from the late 1970s, when it was one of the most egalitarian states in the union, to today’s banana republic-levels of inequality. One study ranks Connecticut as having the fastest-growing rate of inequality since Reagan took office of any state in the union. Since those Reagan years, there have been a number of mass shootings in Connecticut. I profiled some of them in Going Postal — the most recent (and most spectacular) workplace massacre in the state took place just two years ago at Hartford Distributors, leaving nine people dead.

    This is a point that has gone largely unconsidered during the post-Newtown furore: gun control without broader social justice is pointless. And the two apparently separate proposals that Obama and the Democrats are floating this month— gun control laws simultaneous with austerity measures including an inexplicable assault on Social Security — are worse than pointless: It’s rancid neoliberal politics at its sleaziest and nihilistic worst. And if history is anything to go by, it’s only going to increase the chance of future massacres. Obama's proposals are the very opposite of the sort of transformative gun politics I wrote about in my last piece on the history of gun-fanatic politics: rancid shock doctrine politics that exploits the tragedy of the Newtown mass-murder as cover for slashing Social Security benefits to those who need it most, transferring that plundered wealth into the pockets of Wall Street bond-holders. Targeting gun-owners while taking away their benefits can only lead to one outcome: even more keenly focused hate, rising paranoia and a public even easier to manipulate than they already are. Hard as that is to imagine...This is gun politics guaranteed to fail, as doomed to failure as libertarian gun-nut politics which combines austerity and rising inequality with flooding guns into the population and pushing vigilante laws.

    For one thing, the Democrats tried this already in 1994, when Clinton signed a federal law banning 19 assault weapons. Not only did employee workplace massacres — a new type of mass-murder crime that first appeared in the late 1980s — continue unabated after Clinton’s ban, but they spread a few years later to another setting once thought safe: middle America’s schoolyards. A few years after Clinton’s assault weapons ban, school kids — mostly white, mostly middle-class — were massacring their fellow students, most famously in Columbine. Clinton and the Democrats blamed their 1994 election blowout on the gun control law, and many still push that myth today. (A more obvious explanation is Clinton’s neoliberal politics, pushing through the NAFTA free-trade pact that kneecapped what was left of labor power, and making deficit reduction a priority over everything else in those first two years.) By the time Clinton left office, he’d abolished welfare, deregulated financial markets, and left a legacy of inequality that made Reagan look like a social democrat by comparison. In 2000, CEO’s earned 531 times what their average employees were paid. Even pro-business publications like Businessweek started getting queasy about Clinton’s politics of oligarchy, as the magazines's 2001 article, "We’re Back To Serfs and Royalty," shows:

    'The huge disparity between the compensation of CEOs and the people who really make most companies function is starting to raise questions of fairness. For instance, look at how CEO pay has skyrocketed -- by 434% since 1991, according to BusinessWeek's annual survey of executive compensation. Meantime, the paycheck of the typical worker grew only 34%.

    "We're back to serfs and royalty in the Middle Ages," declares Edward Lawler, professor of management at the University of Southern California's Marshall School of Business. And that's before the passage of President Bush's tax-cut plan, which would widen the advantage of the upper crust on an aftertax basis.'

    That was Businessweek way back in 2001 — but no one in DC took it seriously.

    In 2004, with the NRA bragging that it owned President Bush, Clinton’s assault weapons ban was lifted, and the inane theory that more guns equals greater safety was given another try. The result: Rampage massacres migrated from workplaces and schoolyards to a new setting, college campuses. And why wouldn’t they? The same underlying politics of concentration of wealth and political power accelerated further under Bush than they did under Clinton. The differences are minor: neoliberal politics is inequality plus gun control, libertarian politics is more inequality plus flooding the population with guns and setting them against each other.

    Income inequality is wrong for all sorts of obvious reasons, but also for a few less obvious ones, including health and longevity. Studies prove the obvious: that greater inequality leads to higher rates of mental illness. Psychiatric drug prescriptions for children and adults have been soaring over the past few decades — between 1987 and 1996, prescriptions doubled for children; and from 1996 to 2006, psychiatric drug prescriptions for children jumped another 50% (while prescriptions for adults soared 73% in that same 1996-2006 period). Meanwhile, the adolescent suicide rate soared 400% from the 1950s through 1999.

    And that is why Obama’s politics — the politics of austerity, cutting deeper into the most sacrosanct program, Social Security, a program that doesn’t even affect the deficit and is fully funded, but which has been a top political priority for the oligarchy for decades now — combined with feckless gun control laws and increased mental health care (which will barely cover the increase in mental illnesses caused by greater inequality) — is worse than failure, it’s nihilism and treachery in their purest rankest form. This is the sort of politics that creates worse and even more shocking rampage massacres — and while that’s bad for all of us, it’s good for the dominant politics of our age, because it means we’ll stay stuck in the same idiotic shouting matches pitting neoliberal calls for gun controls against libertarian calls for a nation of armed vigilantes. So long as both agree on the economic politics — and neoliberals and libertarians always have — the gun politics remain a shrill diversion.

    * * * *

    Another under-reported element to the Newtown massacre involves the Bushmaster assault weapon. While most attention has focused on the weapon itself and whether or not it should be banned, surprisingly little has been written about the private equity firm, Cerberus Capital, that currently owns Bushmaster. I say "currently" because the firm is vowing to sell Bushmaster, having suddenly been struck with a conscience. (By coincidence, Martin Feinberg, the father of Cerberus' founder, lives in Newtown. He told Bloomberg that the shooting was "devastating" and "horrendous, truly horrendous." That has to make for awkward dinner table conversation this Christmas.) Cerberus is the sociopathic embodiment of everything wrong and fucked up with our financialized economy — and, until recently, it didn't even try to hide this fact. For one thing, Cerberus is named itself after the mythical three-headed watchdog-monster with a serpent’s tail that guarded the gates of Hell (Hades), and devoured anyone who tried to escape. That's what we journalists are supposed to call a "red flag."

    The billionaire who founded Cerberus is Stephen Feinberg, one of those right-wing populist blowhards who makes a big deal out of all the Harleys and Ford pickups he owns, and the hunting guns he used to kill deer, and his alleged "blue collar background." Feinberg made a lot of Galt-ian noise about his commitment to free-market principles, or lack of any principles that implied duty to his employees, especially after Cerberus took control of Chrysler in 2007. He hired Dan Quayle and Bush’s Treasury Secretary Jack Snow, and together they formed the three heads of the Cerberus beast from Hell. By late 2008, wouldntchaknowit, Feinberg had to crawl to Washington with hat in hand for a bailout, yammering about how he still considered himself a "patriot" and how sorry he was that he destroyed Chrysler and needed government moochers to bail him out of that investment (along with his investment into GM’s finance arm).

    A New York Times profile of Feinberg in 2009, capturing the Cerberus sociopath in a brief moment of affected humility, is worth recalling for a laugh:

    MR. FEINBERG, a longtime free-market enthusiast and a Republican who never envisioned himself needing the government for help, suddenly found himself running a company that needed federal support to stay alive.

    By early last December, with Chrysler bleeding cash, he had become a vocal presence in Washington, circulating around Congressional offices to get his story out.

    ...Cerberus now values its Chrysler stake at 19 cents on the dollar. It is a humbling and embarrassing figure for Mr. Feinberg. But it’s better than zero cents on the dollar, which is what his stake might have been worth had the government not bailed him out.

    Mr. Feinberg and his colleagues at Cerberus maintain to this day that their time at Chrysler was, in part, a reflection of their patriotism — a view that some analysts find hard to swallow.

    "It’s hard to believe that any of these firms — including Cerberus — will be viewed as patriots in 10 years," said John Rogers, a private equity analyst at Moody’s Investors Service, "because I don’t think their impact on any of these companies will be seen as so positive for the overall economy."

    Mr. Feinberg still begs to differ, saying his experience at Chrysler has left him feeling like a good citizen.

    "There were times we could have been tougher and pushed harder and gotten more," he says, "but it wasn’t the right thing for the country."


    On Killing Sprees


    ...The two most important things to understand are that gun control would reduce harm significantly, and that gun control is a palliative for a sick culture. The US does have more guns than anyone else, but countries like Finland have a pile of guns and people don’t kill nearly as many innocents with them. Likewise every military age male in Switzerland has an assault rifle, and they don’t have killing sprees.

    The first point first, China has people who go on sprees with knives. In fact there was one just recently in a school, 23 students were injured. That’s sad, but not one of them died. Not one. Guns make violence far, far more deadly. Reducing gun availability won’t stop attacks. It will reduce how deadly they are.

    The key points of leverage on harm reduction are reducing clip sizes, getting rid of automatics and semi-automatics and radically restricting ammunition purchases. Likewise soft-target ammunition – bullets intended to fragment, and hollow point ammunition need to go away. These bullets have no purpose but to kill civilians. You don’t use them against military or paramilitary targets because they suck against body armor. As such they have no place, even if you believe in a 2nd Amendment “fight the government” argument. If you’re fighting the government, you’ll want ammo that can pierce body armor.

    The second point is that America has far more of these attacks than anyone else. This is because America:

    1) is under economic pressure. The more people who are in economic trouble, the more attacks.

    2) has jobs which are intensely unpleasant, with the asshole boss being the norm. Don’t tell me otherwise.

    3) has a startling rise in diagnosed mental illness, and a startling rise in the use of psychoactive medications whose effects we don’t really understand. In particular, there has been a massive increase in the drugging of young children (males are who we care about in this context) with amphetamines and dextro-Amphetamines, officially starting as young as 3 years old, and unofficially, earlier. Long term use of amphetamines is associated with psychotic breaks and violence, this is not in question, we have a TON of historical evidence. You cannot keep people constantly on amphetamines and not expect these sort of eruptions.

    4) The increase in mental illness and medication is in large part because life in America is extraordinarily unpleasant. You live in a militarized surveillance society with no guaranteed health care and with a job market that doesn’t provide enough jobs for those who need it, allowing bosses to treat those who do have jobs like shit, and executives to take virtually all productivity gains for themselves. The economic model is to pile debt on consumers to create rental streams, but constant debt payments put people under major psychological pressure, all the time.

    5) People are suffering an epidemic of chronic physical diseases on top of this.

    You cannot have a pressure cooker society which is also militarized and swimming in guns. You simply cannot....
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