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December 31, 2014
Weekend Economists Ring in the New! New Year 2015
Well, it's come to that point in time when we can say goodbye to all that: 2014 is OVER! And I am so Over 2014! It was a stinky year, a year of strife, disappointment, loss and fear. And not just for me--anybody in the lower 99% who stayed there is feeling the same. And of course, the 1% are never happy anyway, so they contribute to the grumble-load....
So, see if you can find anything good, promising, or funny, and post it here! This thread is active until the actual weekend.
December 31, 2014
We don’t wish to be rude, but if you are not one of us – part of the 1 Percent, that is – you are not meant to be reading this message. With some exceptions, you should go back to whatever it is you have been doing. If you happen to be some kind of troublemaker, inclined, say, to question things or work toward change – a terrorist, to be frank – be assured that we know what you are doing. Thanks to our creeping surveillance apparatus we will soon put an end to your efforts, whether by misrepresenting your position, holding you up to public ridicule, sending you to jail, or making war with you. If you are not a terrorist, then we don’t much care what it is you have been doing. But be comforted in the knowledge that you must be doing it well, because you have not inconvenienced us in the slightest. We thank you for your cooperation. Now kindly go away.....We take it, now, that the 99 Percent have departed and gone back to whatever it is they do, and that it is therefore safe for us – the 1 Percent – to cut the niceties and be forthright. The fact is that, in recent times, various snippets of knowledge normally privy only to ourselves have seeped out to small sections of the 99 Percent. For those unfamiliar with the new terminology, by “99 Percent” we mean what are sometimes called the sheeple or, in less precious times, trash. Some on our more liberal wing preferred “human” trash. Considering their humanity is far from obvious, on balance the pithier version of the old terminology seems more apt. Whatever. We digress.
The key point is that certain elementary truths usually reserved for our good selves have penetrated the dull consciousness of a small minority of the 99 Percent. This process was most recently aided by the platinum coin saga (h/t to Tom Hickey for the link), which, if it had been allowed to proceed unimpeded, would have exposed to more of the 99 Percent the existence of these simple truths, some of which are not even comprehended by the dimmer members of our own, uppermost percentile. Fortunately, our president is on the same side as the Treasury, Fed, and GOP on this issue. Our side. For now, at least, any light that might have been revealed remains concealed. Good o. The least ignorant of the subhumans – we’re sorry, the 99 Percent – are beginning to cotton on to the fact that for societies in which the government issues its own currency and allows its external value to float, such as the US, the UK, Japan, Canada, and many others (though, happily for us, not the member nations of the European Monetary Union), a number of simple truths apply. For these governments – the currency sovereigns – the following points hold.
1. Money, as most of us know, need not constrain economic activity below potential, since it is created out of thin air. It is resources (including labor resources) that matter and that present the only real constraint on what we do. As long as the supply of goods and services can be expanded along with any extra monetary demand the government might create, there will be no threat in terms of inflation. We pretend otherwise, of course, because we don’t want the government to create money for the benefit of the 99 Percent. It should only be done in pursuit of noble causes, such as rescuing banks, redistributing wealth upwards, or engaging in wars with those who threaten our economic interests.
So, for example, when there are unemployed workers, it is obvious to anyone but a blithering idiot that it is possible to produce more goods and services for the 99 Percent. Or, at least, it would be obvious if we had not done such a great job of bamboozling people! The real cost of such employment would simply be the time and effort expended by those willing and able to do the work along with the raw materials they fashioned into goods or services. The money needed to pay them is no object, because it can be created out of thin air. We can see how dangerous this aspect of reality is. If it were widely understood, everyone who wanted a job would be enabled to find one. The 99 Percent would feel a greater financial security, have less fear, and be more difficult to control. They might start demanding stuff, like higher pay, better working conditions, or more entitlements, rather than being resigned to having less of all these things.
Similarly, since there is currently idle capacity in factories, warehouses, restaurants, motels, theme parks, and the list goes on, there is obviously the capacity to produce more goods and services at current prices. All that is lacking is the ability of consumers to pay for more goods and services, and this ability is easily solved by providing them with more of what can be created out of thin air: money. Here, too, you can see how undesirable this would be. That’s why we pretend the government can run out of money. It is in the hope that the 99 Percent will be gullible enough to believe us. (So far, so good!) That way, goods and services that could easily be produced are not, and entitlements that could easily be provided are taken away. LOL!
2. The government’s deficit equals, by definition, the surplus of the non-government. By logical extension, the national debt mirrors, by definition, the accumulated net financial wealth of the non-government. This means that an attempt to reduce the government’s deficit is actually an attempt to inhibit the non-government’s attempt to earn more than it spends, and an effort to reduce the national debt is at the same time an attempt to annihilate non-government net financial wealth. Some of us may wonder, then, why we do this. The truth is, we don’t. We are not really trying to reduce the deficit or the national debt. Rather, we want to use the deficit and national debt as an excuse to cut entitlements, social services, and implement other austerity measures designed to undermine the living standards of the 99 Percent. The beauty is that, in doing so, there will be negative impact on demand, output, employment, income, and therefore tax revenue, limiting the impact of any cuts in government spending on the size of the deficit and allowing further increases in the national debt. If, at the same time, the taxes on ourselves are cut further, or government spending or central-bank operations can be used for the purposes of extending more privileges to ourselves, the scenario repeats itself quite exquisitely. A year from now the budget will still be in deficit and the national debt higher than now, justifying further austerity measures. All this can continue for as long as the gullible 99 Percent buy our story, which, for going on five years, they have. ROTFL!
3. The interest owed on the national debt is at the discretion of the central bank, since it sets the terms on which the government issues its own liabilities. Unfortunately for those of us in the 1 Percent, there is no hope of bond vigilantes forcing higher interest rates on this debt against the will of the currency issuer (for newcomers, see here and here). It is unfortunate because interest on debt is our main form of corporate welfare. For doing absolutely nothing productive, we stand to receive a large transfer from the currency issuer whenever debt is issued! Now, if the 99 Percent ever caught on, they might question why government issues debt at all. There is no real need to do so. The laws that currently require it have been retained to disguise our corporate welfare as a return on supposedly necessary lending. Rather than issuing debt, it would be much simpler if the government permitted itself just to spend money into existence, as appropriate, without borrowing from anybody. Bank reserves could simply be allowed to mount, with no need at all for them to attract positive interest unless the government deemed it appropriate. Needless to say, any such move must be prevented from happening at all costs! Otherwise, reality would be easily perceived even by many in the 99 Percent, making it more difficult to justify our corporate welfare as legitimate income. For an awkward moment, during the platinum coin debate, these simple truths threatened to slip out. Thankfully, the danger has now been averted. For the foreseeable future, it promises to be business as usual.
Awesome.
What We in the 1 Percent Don’t Want the 99 Percent to Know (SUPPOSED HUMOR)
http://heteconomist.com/what-we-in-the-1-percent-dont-want-the-99-percent-to-know/#more-6890We don’t wish to be rude, but if you are not one of us – part of the 1 Percent, that is – you are not meant to be reading this message. With some exceptions, you should go back to whatever it is you have been doing. If you happen to be some kind of troublemaker, inclined, say, to question things or work toward change – a terrorist, to be frank – be assured that we know what you are doing. Thanks to our creeping surveillance apparatus we will soon put an end to your efforts, whether by misrepresenting your position, holding you up to public ridicule, sending you to jail, or making war with you. If you are not a terrorist, then we don’t much care what it is you have been doing. But be comforted in the knowledge that you must be doing it well, because you have not inconvenienced us in the slightest. We thank you for your cooperation. Now kindly go away.....We take it, now, that the 99 Percent have departed and gone back to whatever it is they do, and that it is therefore safe for us – the 1 Percent – to cut the niceties and be forthright. The fact is that, in recent times, various snippets of knowledge normally privy only to ourselves have seeped out to small sections of the 99 Percent. For those unfamiliar with the new terminology, by “99 Percent” we mean what are sometimes called the sheeple or, in less precious times, trash. Some on our more liberal wing preferred “human” trash. Considering their humanity is far from obvious, on balance the pithier version of the old terminology seems more apt. Whatever. We digress.
The key point is that certain elementary truths usually reserved for our good selves have penetrated the dull consciousness of a small minority of the 99 Percent. This process was most recently aided by the platinum coin saga (h/t to Tom Hickey for the link), which, if it had been allowed to proceed unimpeded, would have exposed to more of the 99 Percent the existence of these simple truths, some of which are not even comprehended by the dimmer members of our own, uppermost percentile. Fortunately, our president is on the same side as the Treasury, Fed, and GOP on this issue. Our side. For now, at least, any light that might have been revealed remains concealed. Good o. The least ignorant of the subhumans – we’re sorry, the 99 Percent – are beginning to cotton on to the fact that for societies in which the government issues its own currency and allows its external value to float, such as the US, the UK, Japan, Canada, and many others (though, happily for us, not the member nations of the European Monetary Union), a number of simple truths apply. For these governments – the currency sovereigns – the following points hold.
1. Money, as most of us know, need not constrain economic activity below potential, since it is created out of thin air. It is resources (including labor resources) that matter and that present the only real constraint on what we do. As long as the supply of goods and services can be expanded along with any extra monetary demand the government might create, there will be no threat in terms of inflation. We pretend otherwise, of course, because we don’t want the government to create money for the benefit of the 99 Percent. It should only be done in pursuit of noble causes, such as rescuing banks, redistributing wealth upwards, or engaging in wars with those who threaten our economic interests.
So, for example, when there are unemployed workers, it is obvious to anyone but a blithering idiot that it is possible to produce more goods and services for the 99 Percent. Or, at least, it would be obvious if we had not done such a great job of bamboozling people! The real cost of such employment would simply be the time and effort expended by those willing and able to do the work along with the raw materials they fashioned into goods or services. The money needed to pay them is no object, because it can be created out of thin air. We can see how dangerous this aspect of reality is. If it were widely understood, everyone who wanted a job would be enabled to find one. The 99 Percent would feel a greater financial security, have less fear, and be more difficult to control. They might start demanding stuff, like higher pay, better working conditions, or more entitlements, rather than being resigned to having less of all these things.
Similarly, since there is currently idle capacity in factories, warehouses, restaurants, motels, theme parks, and the list goes on, there is obviously the capacity to produce more goods and services at current prices. All that is lacking is the ability of consumers to pay for more goods and services, and this ability is easily solved by providing them with more of what can be created out of thin air: money. Here, too, you can see how undesirable this would be. That’s why we pretend the government can run out of money. It is in the hope that the 99 Percent will be gullible enough to believe us. (So far, so good!) That way, goods and services that could easily be produced are not, and entitlements that could easily be provided are taken away. LOL!
2. The government’s deficit equals, by definition, the surplus of the non-government. By logical extension, the national debt mirrors, by definition, the accumulated net financial wealth of the non-government. This means that an attempt to reduce the government’s deficit is actually an attempt to inhibit the non-government’s attempt to earn more than it spends, and an effort to reduce the national debt is at the same time an attempt to annihilate non-government net financial wealth. Some of us may wonder, then, why we do this. The truth is, we don’t. We are not really trying to reduce the deficit or the national debt. Rather, we want to use the deficit and national debt as an excuse to cut entitlements, social services, and implement other austerity measures designed to undermine the living standards of the 99 Percent. The beauty is that, in doing so, there will be negative impact on demand, output, employment, income, and therefore tax revenue, limiting the impact of any cuts in government spending on the size of the deficit and allowing further increases in the national debt. If, at the same time, the taxes on ourselves are cut further, or government spending or central-bank operations can be used for the purposes of extending more privileges to ourselves, the scenario repeats itself quite exquisitely. A year from now the budget will still be in deficit and the national debt higher than now, justifying further austerity measures. All this can continue for as long as the gullible 99 Percent buy our story, which, for going on five years, they have. ROTFL!
3. The interest owed on the national debt is at the discretion of the central bank, since it sets the terms on which the government issues its own liabilities. Unfortunately for those of us in the 1 Percent, there is no hope of bond vigilantes forcing higher interest rates on this debt against the will of the currency issuer (for newcomers, see here and here). It is unfortunate because interest on debt is our main form of corporate welfare. For doing absolutely nothing productive, we stand to receive a large transfer from the currency issuer whenever debt is issued! Now, if the 99 Percent ever caught on, they might question why government issues debt at all. There is no real need to do so. The laws that currently require it have been retained to disguise our corporate welfare as a return on supposedly necessary lending. Rather than issuing debt, it would be much simpler if the government permitted itself just to spend money into existence, as appropriate, without borrowing from anybody. Bank reserves could simply be allowed to mount, with no need at all for them to attract positive interest unless the government deemed it appropriate. Needless to say, any such move must be prevented from happening at all costs! Otherwise, reality would be easily perceived even by many in the 99 Percent, making it more difficult to justify our corporate welfare as legitimate income. For an awkward moment, during the platinum coin debate, these simple truths threatened to slip out. Thankfully, the danger has now been averted. For the foreseeable future, it promises to be business as usual.
Awesome.
December 29, 2014
https://www.youtube.com/watch?feature=player_embedded&list=UUExmL8PAa1O93bUIYN7BJ_A&v=0pXPZJXn20Q
Here's to a great 2015! from Robert Reich and MoveOn.org
http://front.moveon.org/reich_2014review/https://www.youtube.com/watch?feature=player_embedded&list=UUExmL8PAa1O93bUIYN7BJ_A&v=0pXPZJXn20Q
December 28, 2014
A deadly epidemic that could have global implications is quietly sweeping India, and among its many victims are tens of thousands of newborns dying because once-miraculous cures no longer work. These infants are born with bacterial infections that are resistant to most known antibiotics, and more than 58,000 died last year as a result, a recent study found. While that is still a fraction of the nearly 800,000 newborns who die annually in India, Indian pediatricians say that the rising toll of resistant infections could soon swamp efforts to improve India’s abysmal infant death rate. Nearly a third of the world’s newborn deaths occur in India....In visits to neonatal intensive care wards in five Indian states, doctors reported being overwhelmed by such cases.
These babies are part of a disquieting outbreak. A growing chorus of researchers say the evidence is now overwhelming that a significant share of the bacteria present in India — in its water, sewage, animals, soil and even its mothers — are immune to nearly all antibiotics. Newborns are particularly vulnerable because their immune systems are fragile, leaving little time for doctors to find a drug that works...While far from alone in creating antibiotic resistance, India’s resistant infections have already begun to migrate elsewhere.
Indeed, researchers have already found “superbugs” carrying a genetic code first identified in India — NDM1 (or New Delhi metallo-beta lactamase 1) — around the world, including in France, Japan, Oman and the United States...Health officials have warned for decades that overuse of antibiotics — miracle drugs that changed the course of human health in the 20th century — would eventually lead bacteria to evolve in a way that made the drugs useless...Some studies have found that developing countries have bacterial rates of resistance to antibiotics that are far higher than those in developed nations, with India the global focal point.
Bacteria spread easily in India, experts say, because half of Indians defecate outdoors, and much of the sewage generated by those who do use toilets is untreated. As a result, Indians have among the highest rates of bacterial infections in the world and collectively take more antibiotics, which are sold over the counter here, than any other nationality. A recent study found that Indian children living in places where people are less likely to use a toilet tend to get diarrhea and be given antibiotics more often than those in places with more toilet use. On Oct. 2, the Indian government began a campaign to clean the country and build toilets, with Prime Minister Narendra Modi publicly sweeping a Delhi neighborhood. But the task is monumental...India’s top neonatologists suspect the large number of resistant infections in newborns in their first days of life demonstrates that these dangerous bacteria are thriving in communities and even pregnant women’s bodies.
‘Superbugs’ Kill India’s Babies and Pose an Overseas Threat
http://www.nytimes.com/2014/12/04/world/asia/superbugs-kill-indias-babies-and-pose-an-overseas-threat.htmlA deadly epidemic that could have global implications is quietly sweeping India, and among its many victims are tens of thousands of newborns dying because once-miraculous cures no longer work. These infants are born with bacterial infections that are resistant to most known antibiotics, and more than 58,000 died last year as a result, a recent study found. While that is still a fraction of the nearly 800,000 newborns who die annually in India, Indian pediatricians say that the rising toll of resistant infections could soon swamp efforts to improve India’s abysmal infant death rate. Nearly a third of the world’s newborn deaths occur in India....In visits to neonatal intensive care wards in five Indian states, doctors reported being overwhelmed by such cases.
“Five years ago, we almost never saw these kinds of infections,” said Dr. Neelam Kler, chairwoman of the department of neonatology at New Delhi’s Sir Ganga Ram Hospital, one of India’s most prestigious private hospitals. “Now, close to 100 percent of the babies referred to us have multidrug resistant infections. It’s scary.”
These babies are part of a disquieting outbreak. A growing chorus of researchers say the evidence is now overwhelming that a significant share of the bacteria present in India — in its water, sewage, animals, soil and even its mothers — are immune to nearly all antibiotics. Newborns are particularly vulnerable because their immune systems are fragile, leaving little time for doctors to find a drug that works...While far from alone in creating antibiotic resistance, India’s resistant infections have already begun to migrate elsewhere.
“India’s dreadful sanitation, uncontrolled use of antibiotics and overcrowding coupled with a complete lack of monitoring the problem has created a tsunami of antibiotic resistance that is reaching just about every country in the world,” said Dr. Timothy R. Walsh, a professor of microbiology at Cardiff University.
Indeed, researchers have already found “superbugs” carrying a genetic code first identified in India — NDM1 (or New Delhi metallo-beta lactamase 1) — around the world, including in France, Japan, Oman and the United States...Health officials have warned for decades that overuse of antibiotics — miracle drugs that changed the course of human health in the 20th century — would eventually lead bacteria to evolve in a way that made the drugs useless...Some studies have found that developing countries have bacterial rates of resistance to antibiotics that are far higher than those in developed nations, with India the global focal point.
Bacteria spread easily in India, experts say, because half of Indians defecate outdoors, and much of the sewage generated by those who do use toilets is untreated. As a result, Indians have among the highest rates of bacterial infections in the world and collectively take more antibiotics, which are sold over the counter here, than any other nationality. A recent study found that Indian children living in places where people are less likely to use a toilet tend to get diarrhea and be given antibiotics more often than those in places with more toilet use. On Oct. 2, the Indian government began a campaign to clean the country and build toilets, with Prime Minister Narendra Modi publicly sweeping a Delhi neighborhood. But the task is monumental...India’s top neonatologists suspect the large number of resistant infections in newborns in their first days of life demonstrates that these dangerous bacteria are thriving in communities and even pregnant women’s bodies.
“Our hypothesis is that resistant infections in newborns may be originating from the maternal genital tract and not just the environment,” Dr. Paul said in an interview.
December 27, 2014
In England and the United States, the police were invented within the space of just a few decades—roughly from 1825 to 1855.
The new institution was not a response to an increase in crime, and it really didn’t lead to new methods for dealing with crime. The most common way for authorities to solve a crime, before and since the invention of police, has been for someone to tell them who did it.
Besides, crime has to do with the acts of individuals, and the ruling elites who invented the police were responding to challenges posed by collective action. To put it in a nutshell: The authorities created the police in response to large, defiant crowds. That’s
— strikes in England,
— riots in the Northern US,
— and the threat of slave insurrections in the South.
So the police are a response to crowds, not to crime.
MORE
Origins of the police
https://worxintheory.wordpress.com/2014/12/07/origins-of-the-police/In England and the United States, the police were invented within the space of just a few decades—roughly from 1825 to 1855.
The new institution was not a response to an increase in crime, and it really didn’t lead to new methods for dealing with crime. The most common way for authorities to solve a crime, before and since the invention of police, has been for someone to tell them who did it.
Besides, crime has to do with the acts of individuals, and the ruling elites who invented the police were responding to challenges posed by collective action. To put it in a nutshell: The authorities created the police in response to large, defiant crowds. That’s
— strikes in England,
— riots in the Northern US,
— and the threat of slave insurrections in the South.
So the police are a response to crowds, not to crime.
MORE
December 27, 2014
Weekend Economists Ring Out the Old December 26-28, 2014
Well, we are into the 2nd, 3rd and 4th days of Christmas on this thread, and I am scrabbling for material that relates, so as to complete the promised month of the holiday season, for which Xchrom asked so nicely.
Perhaps we could look at non-religious music, plays and films?
I am enamored of the Grinch (original Bela Lugosi version, not the Jim Carrey schlock remake) and there's Mr. Magoo's Christmas Carol, which Boomers were brought up with. There's White Christmas, that creaky classic in its 60th anniversary. And the one and only Charlie Brown Christmas!
Due to the commercialization of youtube, we can only see pieces of these classics, so you will have to fill in the blanks as we go. So, let's crank up the projector, and get this retrospective going!
We will spend a modicum of time on TPTB and what they've been giving themselves for Xmas, as well...if only because it is the reason for the thread (if not the season).
December 26, 2014
A significant percentage of information on high-profile events (the confrontational situation in Ukraine, in our case), does not correspond to reality. The root cause of this is the use of such information for governmental propaganda purposes: in this case the news stories are used not to inform the public, but to impose certain opinions on them, which is generally beneficial to one side or another. This document will attempt to highlight the main methods used for identification of lies in mass media.
Let us begin by agreeing that we’ll attempt to work only with proven facts, and not with statements by either side. For example, if the Russian Ministry of Foreign Affairs makes a statement on some event in Ukraine, while the Ukrainian Ministry of Foreign Affairs or Ministry of Defence denies said statement, then we find ourselves in a classic scenario of “word against word”; two interested parties say that which benefits them. For this reason our website has so few refutations of verbal statements: they are possible only when someone contests information that is beneficial to them (for example, when Donetsk militants denied their seizure of “Grad” multi-rocket-launcher systems, which was reported by channel LifeNews, loyal to them). Therefore we shall try to speak of only facts.
Photo-fake
This is a more popular type of fake, but also it is easier to dispel. Using the Internet, it is usually possible to establish the credibility of any photo within a matter of seconds. As it turns out, however, most users are incapable of this; they instantly believe any “screaming” photo.
There are a number of ways to ID a photo-fake. If you use Google Chrome you simply need to right-click on an image and select the option of searching for the image in Google. If you use a different browser (one without this default image-search option), you can install a special plug-in; there are many. For example, a very useful one is Who stole my pictures. The benefit of this plug-in is that it can search not only on Google, but also on Yandex, Tineye, or all three at once.
MORE TECHNIQUES FOR DEBUNKING "FACTUAL" INFORMATION
How to Identify a Fake (AKA PROPAGANDA)
http://www.stopfake.org/en/how-to-identity-a-fake/A significant percentage of information on high-profile events (the confrontational situation in Ukraine, in our case), does not correspond to reality. The root cause of this is the use of such information for governmental propaganda purposes: in this case the news stories are used not to inform the public, but to impose certain opinions on them, which is generally beneficial to one side or another. This document will attempt to highlight the main methods used for identification of lies in mass media.
Let us begin by agreeing that we’ll attempt to work only with proven facts, and not with statements by either side. For example, if the Russian Ministry of Foreign Affairs makes a statement on some event in Ukraine, while the Ukrainian Ministry of Foreign Affairs or Ministry of Defence denies said statement, then we find ourselves in a classic scenario of “word against word”; two interested parties say that which benefits them. For this reason our website has so few refutations of verbal statements: they are possible only when someone contests information that is beneficial to them (for example, when Donetsk militants denied their seizure of “Grad” multi-rocket-launcher systems, which was reported by channel LifeNews, loyal to them). Therefore we shall try to speak of only facts.
Photo-fake
This is a more popular type of fake, but also it is easier to dispel. Using the Internet, it is usually possible to establish the credibility of any photo within a matter of seconds. As it turns out, however, most users are incapable of this; they instantly believe any “screaming” photo.
There are a number of ways to ID a photo-fake. If you use Google Chrome you simply need to right-click on an image and select the option of searching for the image in Google. If you use a different browser (one without this default image-search option), you can install a special plug-in; there are many. For example, a very useful one is Who stole my pictures. The benefit of this plug-in is that it can search not only on Google, but also on Yandex, Tineye, or all three at once.
MORE TECHNIQUES FOR DEBUNKING "FACTUAL" INFORMATION
December 24, 2014
"Wassail" is an ancient toast meaning something like "Good health!" and also a mulled cider that was drunk as part of "wassailing" festivities, typically on the Twelfth Night of Christmas. The practice of wassailing is old and exists as a folk tradition in many parts of the United Kingdom, even today. We present here Ralph Vaughan Williams' 1913 joyful setting of the "Gloucestershire Wassail," perhaps the most famous of all the local wassail traditions. The performance was part of "Carols for Quire 5," at Trinity Cathedral, Cleveland, OH, December 20-22, 2013.
The next Wassail Song, unlike other Christmas carols, does not celebrate the nativity. The Wassail Song celebrates the New Year! "Wassail" is an old English word for a toast similar to "Good Health" and the wassail is the content of the glass or goblet ( spiced or mulled wine or ale) The author of the lyrics is unknown but it is known that the tradition of going wassailing dates back to 12th century England. The composer of the music to the wassail song is also unknown.
Weekend Economists Silent Night Christmas Eve 2014
The markets are closed (until Friday) and by all rights, this should be a silent thread (no posts) but the world is so crazy, we can't fall behind!
So, WEE are open for business! Funny business, too, if you can find any joy or humor. Carols, definitely! It's an eclectic celebration, to be sure! And, remember, it's not ALL about the Benjamins....
"Wassail" is an ancient toast meaning something like "Good health!" and also a mulled cider that was drunk as part of "wassailing" festivities, typically on the Twelfth Night of Christmas. The practice of wassailing is old and exists as a folk tradition in many parts of the United Kingdom, even today. We present here Ralph Vaughan Williams' 1913 joyful setting of the "Gloucestershire Wassail," perhaps the most famous of all the local wassail traditions. The performance was part of "Carols for Quire 5," at Trinity Cathedral, Cleveland, OH, December 20-22, 2013.
The next Wassail Song, unlike other Christmas carols, does not celebrate the nativity. The Wassail Song celebrates the New Year! "Wassail" is an old English word for a toast similar to "Good Health" and the wassail is the content of the glass or goblet ( spiced or mulled wine or ale) The author of the lyrics is unknown but it is known that the tradition of going wassailing dates back to 12th century England. The composer of the music to the wassail song is also unknown.
December 22, 2014
English translation of a pamphlet published in Russia by The Land Policy Association, St. Petersburg, Russia, April 1999
Instead of becoming wealthier and more like America since 1990, Russia is being turned into a third world country. In less than a decade the nation has been stripped of its capital and forced into debt to its former NATO adversaries. The point now has been reached where new credit merely covers the interest charges on past loans, so that the debt grows exponentially. Russia is being turned into an indebted raw materials exporter, told to sell off its natural resources and public utilities at distress prices to obtain the money to pay interest on its foreign debt – and to enable investors to convert their ruble earnings into foreign exchange. Even after this experience, Russia is being told to take yet more IMF advice as the price for obtaining new loans. The alternative is to be declared a pariah in the global economy. The policy leverage obtained by creditors thus threatens to lead to the industrial dismantling of Russia under continued austerity, or else to isolate Russia commercially much as Cold War containment did prior to 1990. One is tempted to amend von Clausewitz’s famous dictum to read that economic warfare is the continuation of military policy by financial means.
Russia’s financial distress was not inevitable. It is largely the result of having followed IMF and World Bank directives. Foreign advisors are telling Russia to depend on other countries for its food, consumer goods and most other manufactures. Russia is to pay for these imports by exporting more raw materials (thus depressing their world price, much to the benefit of industrial raw-materials importers) and selling off yet more of its public utilities to foreign buyers. The rental value of these assets is thus to be taken by their new owners, not by the public sector. Many Russians are coming to realize that this advice has been bad, but they may not realize the degree to which Western economies are experiencing a parallel financial distress. A real estate and stock market bubble that goes hand in hand with debt deflation is sweeping North America, Europe and the third world. Although this is heralded as a sign of prosperity, more and more income must be used to pay interest and amortization on the rising overhead of personal, corporate and government debt. This shrinks current spending on goods and services. The result has been a downsizing of employment and a slash in government spending and social safety nets in the West as well as in Russia. Meanwhile, a rising share of government budgets is being paid as interest.
The entire world is experiencing a plague of debt, aggravated by a financial system that has become decoupled from the funding of new tangible investment. In the West, banks recycle about 70 percent of savings into the real estate market, while money market funds, mutual funds and retirement funds channel most of their savings inflows into the stock and bond markets. This pattern of recycling provides a rich field of speculative gains for global investors, but creates little new tangible capital. This phenomenon raises the question of whether Russia really wants to be like the West. Should it perhaps view the U.S., European, Asian and third world experience as an object lesson in what pitfalls to avoid? One is reminded of the popular joke that what the West warned about communism and its bureaucratic inefficiency is true, but what the communists said about capitalism and its inequities also turns out to have been true.
Ideally, a banking system’s objective should be to finance industrial modernization and employment. The government can support this aim by not taxing activities it wishes to promote. Instead of imposing income and sales taxes that fall on labor and capital – that is, instead of impeding tangible capital formation and a thriving consumer market for the products of national industry – Russia may tax the rental value of its land and natural resources. This option no longer is available to the West. Nearly all the net cash flow generated by its urban and rural real estate, mining and other resource extraction has been pledged as debt service on the loans that banks and other investors have attached to these assets. Russia’s land and natural resources remain free of such debt as banks have not lent money against these resources, thanks to the Duma’s resistance to Mr. Yeltsin’s proposed land privatization edicts. The rental cash flow of these resources amounts to 35 to 45 percent of national income, and as much as 90 percent of Russia’s foreign-exchange earning power. Public collection of this revenue would not impair the supply of these resources, for they are provided by nature. Their flow of rent exists regardless of whether it is taken by the banking system as interest, by the government as taxes, or is not collected at all (as often is the case in socialist economies). The government may free labor and industrial capital from the tax burden – and thereby promote their employment and upgrading – by basing its fiscal system on this rental value. Not to collect this rent would be to let it be taken in rising amounts by buyers and, at one remove, the creditors who lend these buyers the money to operate. The underlying fiscal question for Russia thus concerns who shall benefit from the enormous rent surplus capable of being generated by its land, mineral wealth land public utilities. Will the government collect their rental potential as taxes, thereby freeing industry and labor? Or will the revenue be turned over to foreigners and a domestic elite as interest and dividends?
MUCH MORE...A WORTHY READ! AND A GOOD LESSON FOR THE REST OF THE WESTERN WORLD
MICHAEL HUDSON: How Russia May Create a More Viable Financial and Fiscal System FROM 1999
http://michael-hudson.com/1999/04/how-russia-may-create-a-more-viable-financial-and-fiscal-system/English translation of a pamphlet published in Russia by The Land Policy Association, St. Petersburg, Russia, April 1999
Instead of becoming wealthier and more like America since 1990, Russia is being turned into a third world country. In less than a decade the nation has been stripped of its capital and forced into debt to its former NATO adversaries. The point now has been reached where new credit merely covers the interest charges on past loans, so that the debt grows exponentially. Russia is being turned into an indebted raw materials exporter, told to sell off its natural resources and public utilities at distress prices to obtain the money to pay interest on its foreign debt – and to enable investors to convert their ruble earnings into foreign exchange. Even after this experience, Russia is being told to take yet more IMF advice as the price for obtaining new loans. The alternative is to be declared a pariah in the global economy. The policy leverage obtained by creditors thus threatens to lead to the industrial dismantling of Russia under continued austerity, or else to isolate Russia commercially much as Cold War containment did prior to 1990. One is tempted to amend von Clausewitz’s famous dictum to read that economic warfare is the continuation of military policy by financial means.
Russia’s financial distress was not inevitable. It is largely the result of having followed IMF and World Bank directives. Foreign advisors are telling Russia to depend on other countries for its food, consumer goods and most other manufactures. Russia is to pay for these imports by exporting more raw materials (thus depressing their world price, much to the benefit of industrial raw-materials importers) and selling off yet more of its public utilities to foreign buyers. The rental value of these assets is thus to be taken by their new owners, not by the public sector. Many Russians are coming to realize that this advice has been bad, but they may not realize the degree to which Western economies are experiencing a parallel financial distress. A real estate and stock market bubble that goes hand in hand with debt deflation is sweeping North America, Europe and the third world. Although this is heralded as a sign of prosperity, more and more income must be used to pay interest and amortization on the rising overhead of personal, corporate and government debt. This shrinks current spending on goods and services. The result has been a downsizing of employment and a slash in government spending and social safety nets in the West as well as in Russia. Meanwhile, a rising share of government budgets is being paid as interest.
The entire world is experiencing a plague of debt, aggravated by a financial system that has become decoupled from the funding of new tangible investment. In the West, banks recycle about 70 percent of savings into the real estate market, while money market funds, mutual funds and retirement funds channel most of their savings inflows into the stock and bond markets. This pattern of recycling provides a rich field of speculative gains for global investors, but creates little new tangible capital. This phenomenon raises the question of whether Russia really wants to be like the West. Should it perhaps view the U.S., European, Asian and third world experience as an object lesson in what pitfalls to avoid? One is reminded of the popular joke that what the West warned about communism and its bureaucratic inefficiency is true, but what the communists said about capitalism and its inequities also turns out to have been true.
Ideally, a banking system’s objective should be to finance industrial modernization and employment. The government can support this aim by not taxing activities it wishes to promote. Instead of imposing income and sales taxes that fall on labor and capital – that is, instead of impeding tangible capital formation and a thriving consumer market for the products of national industry – Russia may tax the rental value of its land and natural resources. This option no longer is available to the West. Nearly all the net cash flow generated by its urban and rural real estate, mining and other resource extraction has been pledged as debt service on the loans that banks and other investors have attached to these assets. Russia’s land and natural resources remain free of such debt as banks have not lent money against these resources, thanks to the Duma’s resistance to Mr. Yeltsin’s proposed land privatization edicts. The rental cash flow of these resources amounts to 35 to 45 percent of national income, and as much as 90 percent of Russia’s foreign-exchange earning power. Public collection of this revenue would not impair the supply of these resources, for they are provided by nature. Their flow of rent exists regardless of whether it is taken by the banking system as interest, by the government as taxes, or is not collected at all (as often is the case in socialist economies). The government may free labor and industrial capital from the tax burden – and thereby promote their employment and upgrading – by basing its fiscal system on this rental value. Not to collect this rent would be to let it be taken in rising amounts by buyers and, at one remove, the creditors who lend these buyers the money to operate. The underlying fiscal question for Russia thus concerns who shall benefit from the enormous rent surplus capable of being generated by its land, mineral wealth land public utilities. Will the government collect their rental potential as taxes, thereby freeing industry and labor? Or will the revenue be turned over to foreigners and a domestic elite as interest and dividends?
MUCH MORE...A WORTHY READ! AND A GOOD LESSON FOR THE REST OF THE WESTERN WORLD
December 21, 2014
A dangerous new trend is the successful manipulation of the financial markets by the Federal Reserve, other central banks, private banks, and the US Treasury. The Federal Reserve reduced real interest rates on US government debt obligations first to zero and then pushed real interest rates into negative territory. Today the government charges you for the privilege of purchasing its bonds. People pay to park their money in the Treasury debt obligations, because they do not trust the banks and they know that the government can print the money to pay off the bonds. Today Treasury bond investors pay a fee in order to guarantee that they will receive the nominal face value of their investment in government bonds...Think about this for a minute. Allegedly the US is experiencing economic recovery. Normally with rising economic activity interest rates rise as consumers and investors bid for credit. But not in this “recovery.” Normally an economic recovery produces rising consumer spending, rising profits, and more investment. But what we experience is flat and declining consumer spending as jobs are offshored and retail stores close. Profits result from labor cost savings from employee layoffs.
The stock market is high because corporations are the biggest purchases of stock. Buying back their own stock supports or raises the share price, enabling executives and boards to sell their shares or cash in their options at a profitable price. The cash that Quantitative Easing has given to the mega-banks leaves ample room for speculating in stocks, thus pushing up the price despite the absence of fundamentals that would support a rising stock market.
In other words, in America today there are no free financial markets. The markets are rigged by the Federal Reserve’s Quantitative Easing, by gold price manipulation, by the Treasury’s Plunge Protection Team and Exchange Stabilization Fund, and by the big private banks.Allegedly, QE is over, but it is not. The Fed intends to roll over the interest and principle from its bloated $4.5 trillion bond portfolio into purchases of more bonds, and the banks intend to fill in the gaps by using the $2.6 trillion in their cash on deposit with the Fed to purchase bonds. QE has morphed, not ended. The money the Fed paid the banks for bonds will now be used by the banks to support the bond price by purchasing bonds.
Normally when massive amounts of debt and money are created the currency collapses, but the dollar has been strengthening. The dollar gains strength from the rigging of the gold price in the futures market. The Federal Reserve’s agents, the bullion banks, print paper futures contracts representing many tonnes of gold and dump them them into the market during periods of light or nonexistent trading. This drives down the gold price despite rising demand for the physical metal. This manipulation is done in order to counteract the effect of the expansion of money and debt on the dollar’s exchange value. A declining dollar price of gold makes the dollar look strong...The dollar also gains the appearance of strength from debt monetization by the Bank of Japan and the European Central Bank. The Bank of Japan’s Quantitative Easing program is even larger than the Fed’s. Even Switzerland is rigging the price of the Swiss franc. Since all currencies are inflating, the dollar does not decline in exchange value. As Japan is Washington’s vassal, it is conceivable that some of the money being printed by the Bank of Japan will be used to purchase US Treasuries, thus taking the place along with purchases by the large US banks of the Fed’s QE.
The large private US and UK banks are also manipulating markets hand over fist. Remember the scandal over the banks fixing the LIBOR rate (the London Interbank Borrowing Rate) and the opening gold price on the London exchange? Now the banks have been caught rigging currency markets with algorithms developed to manipulate foreign exchange markets. When the banks get caught in felonies, they avoid prosecution by paying a fine. You try doing that.
The government even manipulates economic statistics in order to paint a rosy economic picture that sustains economic confidence. GDP growth is exaggerated by understating inflation. High unemployment is swept under the table by not counting discouraged workers as unemployed. We are told we are enjoying economic recovery and have an improving housing market. Yet the facts are that almost half of 25 year old Americans have been forced to return to live with their parents, and 30% of 30 year olds are back with their parents. Since 2006 the home ownership rate of 30 year old Americans has collapsed.
The repeal of the Glass-Steagall Act during the Clinton regime allowed the big banks to gamble with their depositors’ money. The Dodd-Frank Act tried to stop some of this by requiring the banks-turned-gambling-casinos to carry on their gambling in subsidiaries with no access to deposits in the depository institution. If the banks gamble with depositors money, the banks’ losses are covered by FDIC, and in the case of bank failure, bail-in provisions could give the banks access to depositors’ funds. With the banks still protected by being “too big to fail,” whether Dodd-Frank would succeed in protecting depositors when a subsidiary’s failure pulls down the entire bank is unclear...The sharp practices in which banks engage today are risky. Why gamble with their own money if they can gamble with depositors’ money. The banks led by Citigroup have lobbied hard to overturn the provision in Dodd-Frank that puts depositors’ money out of their reach as backup for certain types of troubled financial instruments, with apparently only Senator Elizabeth Warren and a few others opposing them. Senator Warren is outgunned as Citigroup controls the US Treasury and the Federal Reserve...The falling oil price has brought concern that oil derivatives are in jeopardy. Citigroup has a provision in the omnibus appropriations bill that shifts the liability for Citigroup’s credit default swaps to depositors and taxpayers. It was only six years ago that Citigroup was bailed out to the tune of a half trillion dollars. Already Citigroup is back for more while nothing whatsoever is done to bail the American people out of their hardships caused by Citigroup and the other financial gangsters.
What we are experiencing is not a repeat of the past. The ability or, rather, the audacity of the US government itself to manipulate the major financial markets is new. Can this new trend continue? The government is supposed to be the enforcer of laws against market manipulation but is itself manipulating the markets. Governments and economists take their hats off to free markets. Yet, the markets are rigged, not free. How long can stocks stay up in a lackluster or declining economy? How long can bonds pay negative real interest rates when debt and money are rising. How long can bullion prices be manipulated down when the world’s demand for gold exceeds the annual production? For as long as governments and banks can rig the markets. The manipulations are dangerous. Manipulations blow a bigger bubble economy, and manipulations are now being used by Washington as an act of war by driving down the exchange value of the Russian ruble. If every time the stock market tries to correct and adjust to the real economic situation, the plunge protection team or some government “stabilization” entity stops the correction by purchasing S&P futures, unrealistic values are perpetuated.
The price of gold is not determined in the physical market but in the futures market where contracts are settled in cash. If every time the demand for gold pushes up the price, the Federal Reserve or its bullion bank agents dump massive amounts of uncovered futures contracts in the futures market and drive down the price of gold, the result is to subsidize the gold purchases of Russia, China, and India. The artificially low gold price also artificially inflates the value of the US dollar.
The Federal Reserve’s manipulation of the bond market has driven bond prices so high that purchasers receive a zero or negative return on their investment. At the present time fear of the safety of bank deposits makes people willing to pay a fee in order to have the protection of the government’s ability to print money in order to redeem its bonds. A number of events could end the tolerance of zero or negative real interest rates. The Federal Reserve’s policy has the bond market positioned for collapse.
The US government, perhaps surprised at the ease at which all financial markets can be rigged, is now rigging, or permitting large hedge funds and perhaps George Soros, to drive down the exchange value of the Russian ruble by massive short-selling in the currency market. On December 15 the ruble was driven down 19%.
Just as there is no economic reason for the price of gold to decline in the futures market when the demand for physical gold is rising, there is no economic reason for the ruble to suddenly loose much of its exchange value. Unlike the US, which has a massive trade deficit, Russia has a trade surplus. Unlike the US economy, the Russian economy has not been offshored. Russia has just completed large energy and trade deals with China, Turkey, and India. If economic forces were determining outcomes, it would be the dollar that is losing exchange value, not the ruble. The illegal economic sanctions that Washington has decreed on Russia appear to be doing more harm to Europe and US energy companies than to Russia. The impact on Russia of the American attack on the ruble is unclear, as the suppression of the ruble’s value is artificial.
There is a difference between economic factors causing foreign investors to withdraw their capital from a country, thereby causing the currency to lose value, and manipulation of a currency’s value by heavy short-selling in the currency market. The latter can cause the former also to occur. But the outcome for Russia can be positive.
No country dependent on foreign capital is sovereign. A country dependent on foreign capital, especially from enemies seeking to subvert the economy, is subject to destabilizing currency and economic swings. Russia should self-finance. If Russia needs foreign capital, Russia should turn to its ally China. China has a stake in Russia’s strength as part of China’s protection from US aggression, whether economic or military.
The American attack on the ruble is also teaching sovereign governments that are not US vassals the extreme cost of allowing their currencies to trade in currency markets dominated by the US. China should think twice before it allows full convertibility of its currency. Of course, the Chinese have a lot of dollar assets with which to defend their currency from attack, and the sale of the assets and use of the dollar proceeds to support the yuan could knock down the dollar’s exchange value and US bond prices and cause US interest rates and inflation to rise. Still, considering the gangster nature of financial markets in which the US is the heavy player, a country that permits free trading of its currency sets itself up for trouble.
The greatest harm that is being done to the Russian economy is not due to sanctions and the US attack on the ruble. The greatest harm is being done by Russia’s neoliberal economists. Neoliberal economics is not merely incorrect. It is an ideology that fosters US economic imperialism. By following neoliberal prescriptions, Russian economists are helping Washington’s attack on the Russian economy. Apparently, Putin has been sold, along with his internal enemies the Atlanticist integrationists, on “free trade globalism.” Globalism destroys the sovereignty of every country except the world reserve currency country that controls the system. As Michael Hudson has shown, neoliberal economics is “junk economics.” But it is also a tool of American financial imperialism, and this makes neoliberal Russian economists tools of American imperialism.
The remaining sovereign countries are slowly learning that Western economic institutions are deceptive and that placing trust in them is a threat to national sovereignty. Washington intends to subvert Russia and to turn Russia into a vassal state like Germany, France, Japan, Canada, Australia, the UK and Ukraine. If Russia is to survive, Putin must protect Russia from Western economic institutions and Western trained economists.
It is too risky for the US to take on Russia militarily. Instead, Washington is using its unique symbiotic relationship with Western financial institutions to attack an incautious Russia that foolishly opened itself to Western financial predation.
Paul Craig Roberts is a former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal. His latest book The Failure of Laissez-Faire Capitalism. Roberts’ How the Economy Was Lost is now available from CounterPunch in electronic format.
Financial Market Manipulation Is New Trend: Can It Continue Rigging the Market by PAUL CRAIG ROBERTS
http://www.counterpunch.org/2014/12/18/rigging-the-market/A dangerous new trend is the successful manipulation of the financial markets by the Federal Reserve, other central banks, private banks, and the US Treasury. The Federal Reserve reduced real interest rates on US government debt obligations first to zero and then pushed real interest rates into negative territory. Today the government charges you for the privilege of purchasing its bonds. People pay to park their money in the Treasury debt obligations, because they do not trust the banks and they know that the government can print the money to pay off the bonds. Today Treasury bond investors pay a fee in order to guarantee that they will receive the nominal face value of their investment in government bonds...Think about this for a minute. Allegedly the US is experiencing economic recovery. Normally with rising economic activity interest rates rise as consumers and investors bid for credit. But not in this “recovery.” Normally an economic recovery produces rising consumer spending, rising profits, and more investment. But what we experience is flat and declining consumer spending as jobs are offshored and retail stores close. Profits result from labor cost savings from employee layoffs.
The stock market is high because corporations are the biggest purchases of stock. Buying back their own stock supports or raises the share price, enabling executives and boards to sell their shares or cash in their options at a profitable price. The cash that Quantitative Easing has given to the mega-banks leaves ample room for speculating in stocks, thus pushing up the price despite the absence of fundamentals that would support a rising stock market.
In other words, in America today there are no free financial markets. The markets are rigged by the Federal Reserve’s Quantitative Easing, by gold price manipulation, by the Treasury’s Plunge Protection Team and Exchange Stabilization Fund, and by the big private banks.Allegedly, QE is over, but it is not. The Fed intends to roll over the interest and principle from its bloated $4.5 trillion bond portfolio into purchases of more bonds, and the banks intend to fill in the gaps by using the $2.6 trillion in their cash on deposit with the Fed to purchase bonds. QE has morphed, not ended. The money the Fed paid the banks for bonds will now be used by the banks to support the bond price by purchasing bonds.
Normally when massive amounts of debt and money are created the currency collapses, but the dollar has been strengthening. The dollar gains strength from the rigging of the gold price in the futures market. The Federal Reserve’s agents, the bullion banks, print paper futures contracts representing many tonnes of gold and dump them them into the market during periods of light or nonexistent trading. This drives down the gold price despite rising demand for the physical metal. This manipulation is done in order to counteract the effect of the expansion of money and debt on the dollar’s exchange value. A declining dollar price of gold makes the dollar look strong...The dollar also gains the appearance of strength from debt monetization by the Bank of Japan and the European Central Bank. The Bank of Japan’s Quantitative Easing program is even larger than the Fed’s. Even Switzerland is rigging the price of the Swiss franc. Since all currencies are inflating, the dollar does not decline in exchange value. As Japan is Washington’s vassal, it is conceivable that some of the money being printed by the Bank of Japan will be used to purchase US Treasuries, thus taking the place along with purchases by the large US banks of the Fed’s QE.
The large private US and UK banks are also manipulating markets hand over fist. Remember the scandal over the banks fixing the LIBOR rate (the London Interbank Borrowing Rate) and the opening gold price on the London exchange? Now the banks have been caught rigging currency markets with algorithms developed to manipulate foreign exchange markets. When the banks get caught in felonies, they avoid prosecution by paying a fine. You try doing that.
The government even manipulates economic statistics in order to paint a rosy economic picture that sustains economic confidence. GDP growth is exaggerated by understating inflation. High unemployment is swept under the table by not counting discouraged workers as unemployed. We are told we are enjoying economic recovery and have an improving housing market. Yet the facts are that almost half of 25 year old Americans have been forced to return to live with their parents, and 30% of 30 year olds are back with their parents. Since 2006 the home ownership rate of 30 year old Americans has collapsed.
The repeal of the Glass-Steagall Act during the Clinton regime allowed the big banks to gamble with their depositors’ money. The Dodd-Frank Act tried to stop some of this by requiring the banks-turned-gambling-casinos to carry on their gambling in subsidiaries with no access to deposits in the depository institution. If the banks gamble with depositors money, the banks’ losses are covered by FDIC, and in the case of bank failure, bail-in provisions could give the banks access to depositors’ funds. With the banks still protected by being “too big to fail,” whether Dodd-Frank would succeed in protecting depositors when a subsidiary’s failure pulls down the entire bank is unclear...The sharp practices in which banks engage today are risky. Why gamble with their own money if they can gamble with depositors’ money. The banks led by Citigroup have lobbied hard to overturn the provision in Dodd-Frank that puts depositors’ money out of their reach as backup for certain types of troubled financial instruments, with apparently only Senator Elizabeth Warren and a few others opposing them. Senator Warren is outgunned as Citigroup controls the US Treasury and the Federal Reserve...The falling oil price has brought concern that oil derivatives are in jeopardy. Citigroup has a provision in the omnibus appropriations bill that shifts the liability for Citigroup’s credit default swaps to depositors and taxpayers. It was only six years ago that Citigroup was bailed out to the tune of a half trillion dollars. Already Citigroup is back for more while nothing whatsoever is done to bail the American people out of their hardships caused by Citigroup and the other financial gangsters.
What we are experiencing is not a repeat of the past. The ability or, rather, the audacity of the US government itself to manipulate the major financial markets is new. Can this new trend continue? The government is supposed to be the enforcer of laws against market manipulation but is itself manipulating the markets. Governments and economists take their hats off to free markets. Yet, the markets are rigged, not free. How long can stocks stay up in a lackluster or declining economy? How long can bonds pay negative real interest rates when debt and money are rising. How long can bullion prices be manipulated down when the world’s demand for gold exceeds the annual production? For as long as governments and banks can rig the markets. The manipulations are dangerous. Manipulations blow a bigger bubble economy, and manipulations are now being used by Washington as an act of war by driving down the exchange value of the Russian ruble. If every time the stock market tries to correct and adjust to the real economic situation, the plunge protection team or some government “stabilization” entity stops the correction by purchasing S&P futures, unrealistic values are perpetuated.
The price of gold is not determined in the physical market but in the futures market where contracts are settled in cash. If every time the demand for gold pushes up the price, the Federal Reserve or its bullion bank agents dump massive amounts of uncovered futures contracts in the futures market and drive down the price of gold, the result is to subsidize the gold purchases of Russia, China, and India. The artificially low gold price also artificially inflates the value of the US dollar.
The Federal Reserve’s manipulation of the bond market has driven bond prices so high that purchasers receive a zero or negative return on their investment. At the present time fear of the safety of bank deposits makes people willing to pay a fee in order to have the protection of the government’s ability to print money in order to redeem its bonds. A number of events could end the tolerance of zero or negative real interest rates. The Federal Reserve’s policy has the bond market positioned for collapse.
The US government, perhaps surprised at the ease at which all financial markets can be rigged, is now rigging, or permitting large hedge funds and perhaps George Soros, to drive down the exchange value of the Russian ruble by massive short-selling in the currency market. On December 15 the ruble was driven down 19%.
Just as there is no economic reason for the price of gold to decline in the futures market when the demand for physical gold is rising, there is no economic reason for the ruble to suddenly loose much of its exchange value. Unlike the US, which has a massive trade deficit, Russia has a trade surplus. Unlike the US economy, the Russian economy has not been offshored. Russia has just completed large energy and trade deals with China, Turkey, and India. If economic forces were determining outcomes, it would be the dollar that is losing exchange value, not the ruble. The illegal economic sanctions that Washington has decreed on Russia appear to be doing more harm to Europe and US energy companies than to Russia. The impact on Russia of the American attack on the ruble is unclear, as the suppression of the ruble’s value is artificial.
There is a difference between economic factors causing foreign investors to withdraw their capital from a country, thereby causing the currency to lose value, and manipulation of a currency’s value by heavy short-selling in the currency market. The latter can cause the former also to occur. But the outcome for Russia can be positive.
No country dependent on foreign capital is sovereign. A country dependent on foreign capital, especially from enemies seeking to subvert the economy, is subject to destabilizing currency and economic swings. Russia should self-finance. If Russia needs foreign capital, Russia should turn to its ally China. China has a stake in Russia’s strength as part of China’s protection from US aggression, whether economic or military.
The American attack on the ruble is also teaching sovereign governments that are not US vassals the extreme cost of allowing their currencies to trade in currency markets dominated by the US. China should think twice before it allows full convertibility of its currency. Of course, the Chinese have a lot of dollar assets with which to defend their currency from attack, and the sale of the assets and use of the dollar proceeds to support the yuan could knock down the dollar’s exchange value and US bond prices and cause US interest rates and inflation to rise. Still, considering the gangster nature of financial markets in which the US is the heavy player, a country that permits free trading of its currency sets itself up for trouble.
The greatest harm that is being done to the Russian economy is not due to sanctions and the US attack on the ruble. The greatest harm is being done by Russia’s neoliberal economists. Neoliberal economics is not merely incorrect. It is an ideology that fosters US economic imperialism. By following neoliberal prescriptions, Russian economists are helping Washington’s attack on the Russian economy. Apparently, Putin has been sold, along with his internal enemies the Atlanticist integrationists, on “free trade globalism.” Globalism destroys the sovereignty of every country except the world reserve currency country that controls the system. As Michael Hudson has shown, neoliberal economics is “junk economics.” But it is also a tool of American financial imperialism, and this makes neoliberal Russian economists tools of American imperialism.
The remaining sovereign countries are slowly learning that Western economic institutions are deceptive and that placing trust in them is a threat to national sovereignty. Washington intends to subvert Russia and to turn Russia into a vassal state like Germany, France, Japan, Canada, Australia, the UK and Ukraine. If Russia is to survive, Putin must protect Russia from Western economic institutions and Western trained economists.
It is too risky for the US to take on Russia militarily. Instead, Washington is using its unique symbiotic relationship with Western financial institutions to attack an incautious Russia that foolishly opened itself to Western financial predation.
Paul Craig Roberts is a former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal. His latest book The Failure of Laissez-Faire Capitalism. Roberts’ How the Economy Was Lost is now available from CounterPunch in electronic format.
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