Wednesday, August 20, 2014

Overkill: How the Pentagon Militarized the US Police Force

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“Have no doubt, police in the United States are militarizing, and in many communities, particularly those of color, the message is being received loud and clear: ‘You are the enemy,’” writes Tom Nolan, who worked for 27 years in the Boston Police Department. “Many communities now look upon police as an occupying army, their streets more reminiscent of Baghdad or Kabul than a city in America.”
This is no coincidence; much of the equipment used by police forces on the streets of America today is in fact directly from the US military.
From a weaponization bonanza enabled by a little-known Pentagon program, to an escalation in SWAT team deployments, the militarization of the US police force poses an increasing threat to the American public, as recently exhibited in Ferguson, Missouri.
Behind this militarization is the Pentagon’s “1033 program,” created in the National Defense Authorization Act for 1997, which enables the Defense Department to provide surplus military equipment at a highly reduced cost to local police departments. The program was expanded after 9/11, and has led to the distribution of $4.2 billion in equipment. Police departments across the country now utilize some 500 military aircraft, 93,763 assault weapons and 432 Mine-Resistant Ambush Protected military vehicles – which cost around $700,000 new, and are being sold to police departments for as low as $2,800.
An example of the program cited by The Guardian pointed to a Richland County sheriff in South Carolina obtaining a tank with 360-degree rotating machine gun turrets. The tank was named “The Peacemaker.”
Such unnecessary equipment is being utilized in cities and small towns across the country without sufficient oversight, proper training, or public input.
Following the outcry over police violence in Ferguson, the Pentagon still maintains that the weapon-selling program is for the public good. As Pentagon spokesman John Kirby told Newsweek, “This is a useful program that allows for the reuse of military equipment that would otherwise be disposed of, that could be used by law enforcement agencies to serve their citizens.”
However, rather than serving citizens, this militarization of the police force has contributed to unnecessary violence, primarily against people of color and under the pretext of the so-called war on drugs.
In June of this year, the American Civil Liberties Union (ACLU) released a comprehensive report entitled “War Comes Home: The Excessive Militarization of American Policing,” which concludes that the US police force has become “excessively militarized through the use of weapons and tactics designed for the battlefield” and that this alarming trend “unfairly impacts people of color and undermines individual liberties, and it has been allowed to happen in the absence of any meaningful public discussion.”
While this escalation is ostensibly aimed at protecting the population from violent threats, the ACLU found that 62% of the SWAT raids examined were used to search for drugs, while only 7% were used for “for hostages, barricade, or active shooter scenarios.”
The use of SWAT teams has been skyrocketing over the past 45 years, according to Professor Peter Kraska of Eastern Kentucky University’s School of Justice Studies. In the 1970s, they were used only a few hundred times a year; now they’re deployed about 50,000 times annually, Kraska estimates. In some cases, they’ve even been used to break up illegal poker games, unlicensed barber shops and under-age drinking. In the case of Jesus Llovera, a suspected organizer of cockfights in Maricopa County Arizona, in 2011 a SWAT team took over the man’s living room, and drove a tank into his yard, killing his dog and over 100 of his chickens.
Highlighting the fact that this militarization is part of a wider assault of people of color in America, Alex Kane points out in Alternet that this violence is tied to the “war on undocumented immigrants.” Kane cites the ACLU’s report on Arizona’s infamously anti-immigrant sheriff Joe Arpaio, who, in addition to acquiring five armored vehicles and ten helicopters, has “a machine gun so powerful it could tear through buildings on multiple city blocks.”
One step in the right direction following police violence in Ferguson would be to demilitarize the US police force. As an unnamed Ferguson resident recently told the BBC about his city’s police officers: “It’s power. They have the power, they feel we don’t. That’s why they do the things that they do. What they did to young Michael Brown, that’s unnecessary. That’s overkill.”

What You're Not Being Told About The Mike Brown Shooting

TEPCO WANTS TO DUMP RADIOACTIVE WATER INTO THE PACIFIC

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Tokyo Electric Power Company (TEPCO), the embattled owner of Japan’s crippled nuclear reactors, has said it is running out of space to store water contaminated with radioactive materials and is proposing to treat the water and dump it in the Pacific Ocean.

Up until now, TEPCO has been storing radioactive water in giant storage tanks on the site of its Fukushima reactor. But groundwater continually flowing into the reactor site becomes contaminated as it does so. Containing and storing an ever-increasing volume of contaminated water is a bit like running on a treadmill – new groundwater becomes contaminated just as TEPCO succeeds in removing previously contaminated water. Meanwhile, the storage tanks multiply around the reactor complex.

In June, TEPCO began construction on what it hoped would be a more permanent solution – an “ice wall.” This is how it is supposed to work: TEPCO would insert 1,500 pipes into the ground around the damaged reactors. It would then flow liquid through the pipes at -30 degrees Celsius, which would freeze the soil. That way, as groundwater rushed downhill towards the complex, the ice wall would block the water from flowing underneath the plant.

Separately, TEPCO is trying to freeze the contaminated water that has leaked directly from the reactor buildings into underground trenches. In total, a staggering 11,000 metric tons of water containing substances like uranium and plutonium has accumulated. TEPCO has thus far failed to freeze the contaminated water, and had to resort to dumping ice onto the site in an effort to freeze the area.

Now the company has admitted that it can’t keep up. So it wants approval from the Nuclear Regulatory Authority to pump out the water, treat it, and begin dumping it into the Pacific.

“We know we have to get an agreement from the relevant government authorities, the prefecture and local fishing unions,” a TEPCO spokesman said recently.

But pushback from the public could present a problem. “We would never consider dumping the water into the ocean unless we received the consent of local residents,” the TEPCO official told Asahi Shimbun. “The water close to the plant buildings is already contaminated. Fishermen are sure to raise objections to the plan, so it will be difficult to gain their understanding.”

The Nuclear Regulatory Authority (NRA) has been critical of the company for not solely focusing on the contaminated trench water – which it says should be the highest priority – but spending resources on issues with lower priority.

“The biggest risk is the trench water. Until that matter is addressed, it will be difficult to proceed with other decommissioning work,” Shunichi Tanaka, NRA chairman said at a news conference, according to the Wall Street Journal. “It appears that they are getting off track.”

Controlling, treating, storing, and disposing of contaminated water is the most critical task in the near-term. Even if that can be resolved, the next step will actually decommissioning the destroyed reactors – a colossal engineering challenge expected to take 40 years and cost over $15 billion. Nothing like it has ever been done before; indeed, the task is so unprecedented, it will require robotics that haven’t been invented yet.

But first, TEPCO has to find a place for its toxic water.

Ferguson, Missouri: War comes home

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On Wednesday, the people of the United States and the world were shocked by the images coming out of Ferguson, Missouri.
In response to the eruption of anger over the police murder of 18-year-old Michael Brown, the suburb of St. Louis was transformed into a war zone. SWAT teams decked out in battle fatigues and goggles descended on the city, wielding high-power shotguns and automatic rifles and driving armored attack vehicles. Peaceful protesters and journalists were confronted at gunpoint and attacked with tear gas, rubber bullets, rifle-fired bean bags and flash-bang grenades. The police imposed arbitrary curfews and issued dispersal orders without any legal basis.
The forces involved may technically be local police, but what they are engaged in is essentially a military occupation. They look like the military, act like the military and have close ties to the military. Not only have police been armed with military equipment, they have been given a new set of rules. They are being trained to employ the methods used by the US and its allies in Afghanistan, Iraq, Gaza and Ukraine.
The turning of Ferguson into an armed camp is not just about Ferguson. It is about the character of social and political relations in the United States as a whole. The veneer of democracy has been ripped away. This is what martial law looks like.
The events in one relatively small suburb of St. Louis have suddenly exposed the reality of what has taken shape in the United States over the past 15 years. Following the stolen election of 2000, the ruling class used the September 11, 2001 attacks and the “war on terror” as a pretext to eviscerate every basic democratic right.
The president declares the right to detain and even assassinate US citizens without due process. US spy agencies, in cooperation with the FBI and local police forces, monitor the political and social relations of every American.
These measures have been accompanied by the establishment of the Department of Homeland Security and the US Northern Command. The latter was set up in 2002 as the first ever command overseeing military operations within the US.
Planning for military operations within the United States are far advanced. As noted on the World Socialist Web Site Thursday, Pentagon strategy briefs on urban warfare include case studies for intervention in New York City. The principal “driver of instability” cited by the military is “radical income disparity,” a trigger for class conflict. Behind closed doors, there have been many discussions about the forms and mechanisms for full-scale military rule.
The United States is presided over by a vast and unaccountable military-intelligence-police apparatus that functions as the guardian of the social and political interests of a new aristocracy. The official political institutions are hollowed out shells without any mass social base.
All of this is overseen by a president who serves as a front-man for powerful corporate and financial interests. Five days after the murder of Brown, Obama was brought forward to deliver perfunctory remarks from Martha’s Vineyard, where he is vacationing.
Declaring that “Now’s the time for peace and calm on the streets of Ferguson,” Obama equated protests over the execution-style killing of an unarmed youth with a wave of police repression that has already resulted in the arrest of scores of people.
With the limitless hypocrisy that defines his administration, Obama urged everyone to “remember that we’re all part of one American family.” He continued: “We are united in common values, and that includes belief in equality under the law, basic respect for public order and the right to peaceful public protest, a reverence for the dignity of every single man, woman and child among us, and the need for accountability when it comes to our government.”
The reality of American life exposed by the events in Ferguson cannot be covered over by Obama’s honeyed phrases. There is not “one American family,” but a society riven by class divisions. There is no “equality under the law,” but rather one law for the rich and another for the poor.
Obama’s pretense of reverence for “the right to peaceful public protest” is belied by his expansion of the Pentagon’s multi-billion-dollar programs to militarize local police forces, including those in the metropolitan St. Louis region. The Ferguson police department is a participant in a federal program called 1033 that distributed $450 million in equipment to local police forces in 2013 alone.
As for government “accountability,” Obama heads a government that has carried out countless illegal activities—from wars of aggression to domestic spying and torture. There is no accountability for these crimes, nor for the looting of the economy carried out by the banks and major corporations.
Obama’s comments betrayed a high level of nervousness over the state of social relations in America. Nevertheless, he did not make a single reference to the desperate economic conditions that underlie the anger in Ferguson and throughout the country. Neither he nor any other representative of the American ruling class has anything to propose to address the growth of poverty, hunger and economic insecurity—except more repression.
America is on a knife-edge. Social tensions, long repressed, are beginning to take open and explosive forms, and the ruling class has taken off its gloves.
When the city of Boston was placed under virtual martial law following the Boston Marathon bombings last year, the World Socialist Web Sitewarned that a historical threshold had been crossed. The lockdown of the city “laid bare the modus operandi for the establishment of dictatorial forms of rule in the US,” the WSWS wrote.
There were perhaps some who thought this evaluation was an overreaction. Had things really gone so far? What has been demonstrated on the streets of Ferguson is that yes, indeed, they have.

Gaza, Ukraine and US preparations for urban warfare

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For more than a month, the world has watched in horror as the Israeli military has pounded the densely populated and impoverished territory of Gaza with bombs, missiles and shells, while deploying tens of thousands of troops against a trapped population. This sustained onslaught has killed nearly 2,000, wounded over 10,000 more and left nearly half a million people displaced by the massive destruction of homes and basic infrastructure.
While receiving far less media coverage, similar atrocities are unfolding in eastern Ukraine, where the US-backed Kiev regime has launched its military, with key support from autonomous fascist militias, in a savage siege of the major cities of Donetsk and Luhansk. The death toll there has doubled in the last two weeks, pegged by Wednesday’s exceedingly conservative United Nations estimate at 2,086, with at least 5,000 more confirmed wounded.
Here too hundreds of thousands have been forced to flee their homes in what is emerging as a deliberate campaign of ethnic cleansing by the right-wing nationalists in Kiev. And, as in Gaza, hospitals and schools have been shelled, killing patients and children.
Images from both Gaza and Ukraine of the lifeless and maimed bodies of children, of older men and women weeping beside the ruins of homes and apartment blocks, and of innocent men and women cut down by shrapnel while leaving their homes or going to find food or water for their families, have shocked and appalled working people all over the globe.
In other quarters, however, these events are being closely watched with dispassionate and professional interest.
This is the case in the offices of senior political and military figures in Berlin and other European capitals, which have backed the Kiev regime’s “anti-terrorist” campaign against the population of eastern Ukraine.
The governments of Europe have remained silent even as the media has been forced to admit that virtually the entire ground offensive in this war of repression is being carried out by far right and neo-Nazi militias. These include the Azov Battalion, which, as the Sunday Times of London notes “has as its symbol the wolf’s hook that was used by Nazi storm troopers and is now banned in Germany.”
By their own admission, these fascist militias have attracted neo-Nazi and white supremacist recruits from a number of other countries, including Sweden, Italy, France, Canada and Greece. While there has been a hue and cry about the alleged danger of European Islamists going to fight in Syria and then returning to Europe, no such concerns have been raised about those gaining combat experience in eastern Ukraine. Under conditions of rising social tensions on the continent, there is undoubtedly among some layers of Europe’s ruling elite a feeling that battle-hardened fascist thugs may prove useful in the not too distant future.
The closest attention to the events in Gaza and Ukraine, however, is being paid by the Pentagon, which is up to its elbows in blood in both of these wars. The US military has the closest relations with the Israel Defense Forces, which Washington funds to the tune of $3 billion annually.
The Pentagon recently asked Congress for another $19 million—on top of $23 million already allocated—to train and equip Ukrainian National Guard units. In the midst of the “anti-terror” offensive in the east of the country, the US military last month rushed a team of specialists in “strategy and policy” to Kiev to evaluate this bloody campaign.
Both of these conflicts provide real-life laboratories for what is increasingly a top priority of the Pentagon—the preparation of US forces for urban warfare.
As far as Israel goes, this is nothing new. In 2001, the US built an Urban Warfare Training facility for the IDF in the Negev desert at the cost of $266 million. The 7.4-square-mile simulated city is used for joint training exercises involving Israeli and US special forces units, who share techniques that they have learned, respectively, in Gaza, the West Bank and Lebanon, and in Afghanistan and Iraq.
In Donetsk and Luhansk, the Pentagon is overseeing something that it views with even greater interest—a full-scale siege of a modern city and a center of the industrial working class of over a million people.
Combat in large cities is central to the military doctrine that is being developed by the US armed forces. This is spelled out in a document entitled “Megacities and the United States Army: Preparing for a complex and uncertain future,” which was released in June by the Army’s Strategic Studies Group and endorsed by its chief of staff, Gen. Raymond Odierno.
Predicting that it is “highly likely that megacities [described as metropolitan areas with populations of more than 10 million] will be the strategic key terrain in any future crisis that requires U.S. military intervention,” the report reveals that the Pentagon has conducted “case studies” and “field work” in preparation for such interventions in: Dhaka, Bangladesh; Lagos, Nigeria; Bangkok, Thailand; Mexico City, Mexico, Rio de Janeiro and Sao Paulo, Brazil … and New York City.
Describing the conditions that it anticipates will require US military intervention, the report warns, “As inequality between rich and poor increases … Stagnation will coexist with unprecedented development, as slums and shanty towns rapidly expand alongside modern high-rises. This is the urban future.”
“Radical income disparity,” is further described as the foremost “driver of instability” in these far-flung urban areas.
In other words, the Pentagon brass is seeking to prepare the US military for directly counterrevolutionary interventions aimed at quelling popular revolts that it sees as the inevitable consequence of the unprecedented social inequality created by world capitalism in crisis.
The inclusion of New York City in its “case studies” serves to make explicit that these preparations are directed at revolutionary developments not only in Africa, Asia, the Middle East or Latin America, but most critically within the United States itself.
This goal of preparing the US military to suppress popular rebellion inside the US has also been pursued with a series of provocative “urban warfare training” exercises conducted in major US cities in recent years. There was also the opening earlier this year in Virginia of a US Army Asymmetric Warfare Group training center that consists of a mock American town, replete with office buildings, a church, a sports stadium, a subway stop and a train station. The Army said that the $96 million center is designed to realistically “replicate complex operational environments and develop solutions.”
The Pentagon’s preparations go hand-in-hand with the militarization of supposedly civilian police forces, which are almost universally outfitted with SWAT (Special Weapons and Tactics) squads armed to the teeth for modern warfare, like those deployed against St. Louis residents protesting the police murder of Michael Brown.
The slaughter in Gaza and Ukraine represents a warning to the working class in the US and all over the world. The same financial and corporate oligarchy that supports these wars is prepared to employ murderous violence to defend its system against a revolutionary challenge from the working class.
It is clear that the ruling classes and their military commands are getting ready for such an eventuality. The working class must prepare itself accordingly.

The New Global Finance Capital Elite

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A practice and loophole that emerged around 2008, US corporate tax ‘inversions’—the latest version in a long list of US transnational corporation tax scams—have taken off in 2014. A tax inversion is set in motion when a US based corporation buys another company offshore and then manipulates the tax codes of both countries to extract the greatest net tax reduction. The United Kingdom, Ireland, Switzerland and others are favorite locales for ‘inversions’ of late.  And US corporations and industries at the forefront of this new wave are typically pharmaceutical, technology, cable tv, entertainment, medical equipment, finance, and related retail companies—with many others waiting in the wings as well.
Briefly, here’s how it works: After purchasing an offshore company, the US company then designates its global headquarters as located in the new country of its purchase. With its headquarters now outside the US, the company can now transfer profits made in the USA, via various ‘intra-company price transfer’ tricks, to the foreign based headquarters and country where effective tax rates are lower and where various US tax code offshore loopholes are available to US transnational corporations.  The US purchasing company can also transfer its offshore debt from the purchased company to its US operations in turn. The higher debt and resulting higher interest payments on that debt are deductible from US corporate taxes, according to US tax law. The ‘inversion’ deal thus provides a double tax cut advantage to the US corporation. But that’s only the beginning.
The gains to be realized are not only from US tax code manipulation by the purchasing non-financial corporation. Shadow bankers and their financial speculators (i.e. hedge funds, private equity firms, investment banks, insurance companies, etc.) are also big beneficiaries of the Merger & Acquisition process at the heart of what appears on the surface, in the case of the tax inversion, as ‘just’ another transnational US corporate tax scam.
Lower taxes for the US corporation from the inversion means more retained corporate cash on hand, and the prospect of more future earnings as well, all of which in turn drives up the company’s stock price. That makes the company even more attractive to investors like hedge funds and equity firms, which buy up big blocks of both the purchasing and purchased companies’ stock. Banks and shadow bankers that jump into the process at the outset, buying up company stock in the process, also provide original funding for the company’s purchase. Others jump into the stock as the acquisition deal proceeds. Once concluded, early and latecomers both then reap a nice capital gain from the eventual stock price appreciation that almost always follows the deal.
So the profits gained are not just from tax reduction for the US purchasing company, but are financial and related to asset price speculation associated with the ‘tax inversion’ process and acquisition itself.
The practice of inversions gained public attention earlier this year with the US drug giant, Pfizer, attempting to purchase the UK drug firm, Astrazeneca. Pfizer offered more than $69 billion to purchase Astrazeneca, but was rebuffed by the latter’s shareholders, who wanted even more.
The key role of hedge funds and shadow bankers in the Pfizer-Astrazeneca deal was clearly evident from the start, since Pfizer did not put up the lion’s share of its $69 billion offer for Astrazeneca from its own retained cash. The big block of financing was to come from its hedge funds and other shadow banker partners and outside investors.
In many cases hedge funds (aka Vulture Funds) and other shadow bankers are the initiators and instigators behind the acquisition. They are at the forefront, prodding US corporation managements to ‘invert’.  A good example is the recent case of Walgreen, the US drug retailer.  Its major investor, the hedge fund, Jana Partners LLC, pushed hard for Walgreen to move its headquarters to Switzerland or the UK. This kind of pressure from funds like Jana Partners makes it difficult for corporate CEOs to resist, since the hedge fund can always turn to the company’s stockholders and have them put pressure on the management to do the deal, if they don’t want to deal with a stockholder ‘revolt’ and want to keep their corporate jobs.  Major stockholders see the opportunity for significant capital gains from stock appreciation in tax inversion deals, and together with the Hedge Funds demand that management undertake the corporate purchase and headquarters relocation.
In other words, while it appears that corporations gain at the public taxpayer expense through corporate tax reduction—which they clearly do—even greater gains come from financial speculation that benefit investors, big shareholders, and senior management of the purchasing company as well.
In the Walgreen case, last week it was announced that Walgreen was backing off the purchase—for now. The timing was not right, apparently, coming just before a midterm election in the US for a company dependent on US government subsidies to its customers with which to buy its drugs. But the hesitation by Walgreen is probably temporary, to resume after the November elections when the ‘tax inversion’ loophole gets addressed in comprehensive US corporate tax revision legislation that US corporations have been demanding of the Obama administration and Congress for several years now.
Corporate managers as well as hedge fund speculators benefit nicely from tax inversions. They are typically offered a ‘sweet incentive’ by their hedge fund investors and other big shareholders to do an inversion deal. So it’s not just the possible threat of a stockholder revolt, instigated by the company’s in house big fund investors, that incentivizes more corporate managers to jump on the tax inversion bandwagon. Senior managers stand to gain greatly as well from stock price appreciation in the wake of the deals.  Often their personal income tax bill from selling their own personal stock holdings after the company’s stock price rises from the deal is covered by their companies. Their own personal capital gains from the deals is often ‘grossed up’ by their company (i.e. paid for out of the company’s earnings) as part of the deal.
So all levels of financial speculators benefit from these ‘inversion’ deals—shadow bank investors, hedge fund managers, big stockholders, and top corporate managers with significant stock holdings and compensation—all realize big capital gains from stock price manipulation that is at the core of tax inversion deals. Again, it is not just about tax avoidance; it is about stock price manipulation and huge capital gains. Long term the benefits for the company may be from corporate tax reduction; but short term the big speculative profits rip-off is from engineering stock speculation and other forms of financial manipulation.
In the past year there has emerged a veritable ‘wave’ of corporate inversion deals erupting.  And the potential loss to US corporate tax revenue, should the trend continue, is considered significant by many estimates.  The Obama administration this past summer raised the possibility it may support legislation to curb the practice.  But the political outlook of such before the midterm elections in November 2014 is practically nil, so far as passage of legislation to check the trend is concerned.  While bills have been introduced earlier this year by a few liberal Senators, the Obama administration so far has been mostly just talking about supporting such legislation, or offering proposals tweaking the requirements for allowing inversions, not actually preventing them.  What’s going on politically in the administration and Congress is therefore just ‘grandstanding’ to make it appear they are concerned. Nothing will happen before the November midterm elections.
Political elements of both parties in the USA are eyeing the period after the election, during which the US tax code and general corporate tax revisions and cuts will be taken up.  An institutionalizing of rules governing corporate tax inversions going forward will undoubtedly be part of that comprehensive corporate tax revision. Tax inversions are not going away; they have only just begun.
The ‘inversion’ trend is another example of the growing dominance of the global finance capitalist elite, who are deeply entrenched in the USA and UK in particular, but worldwide growing in terms of numbers and absolute wealth as well.
This elite is deepening its control of nonfinancial companies and are increasingly directing those companies increasingly toward profits growth from financial manipulation as the primary corporate activity—in this case ‘inversions’ and corporate mergers and acquisitions activity.
Instead of making profits by making real things that require real investment and the employ real people, the focus of global capitalism is increasingly toward more financial asset investment—i.e. investment that produces even quicker, more lucrative profits growth than old fashioned ‘real’ investment that makes things that creates jobs and income for people to buy the things.
Global capitalism is growing progressively less interested in making things for profit than it is in generating forms of money capital as profit. Those engaged in financial asset investment (i.e. financial elite) are therefore accruing an ever larger share of global income and wealth for themselves, while those who were once participating in investment producing goods are finding their share of income in steady relative decline.
Global shadow banks now control more than $70 trillion in investible assets, according to such ‘radical’ sources as the Financial Times global periodical. And very high net worth investors, about 200,000 individuals worldwide with annual income flows of $30 million or more from existing assets—i.e. the new global finance capital elite—now own close to half of that $70 trillion in investible assets. And their assets are projected to rise another $10 trillion by 2017.
Inversions’ and related M&A activity are but one example of a growing emphasis of global capitalism on financial forms of speculative ‘investment’ in the 21st century. Inversions are but the latest example of this global relative shift toward financial speculative investing.
The growing shift by non-financial corporations toward ‘portfolio’ investing; the growing trend toward speculating in M&A, derivatives, old and new forms of bonds, dark pools of stocks, and other proliferating forms of securitized financial securities; the explosive growth of shadow banking institutions worldwide; the spread of liquid financial markets in which to speculate; and the accelerating ranks and assets of very high net worth investors worldwide—two third of whom are located in the US and Europe—are all examples of the new trends in 21st century global capitalism as it shifts toward greater reliance on financial profit making.
US politicians will not only fail to stop inversions, but following the November 2014 midterm elections, watch for both wings of the US Corporate Party in the USA to come together and legislate a new comprehensive corporate tax cut.  Included in that new code will be new terms governing future global corporate tax inversions—as well as a likely major reduction in the official US corporate tax rate to 28% or less that has been promised by both Obama and the Republicans for the past two years but has been postponed until the coming November midterm elections.

Wednesday, August 13, 2014

The De-industrialization of America

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On January 6, 2004, Paul Craig Roberts and US Senator Charles Schumer published a jointly written article on the op-ed page of the New York Times titled “Second Thoughts on Free Trade. [1]” The article pointed out that the US had entered a new economic era in which American workers face “direct global competition at almost every job level–from the machinist to the software engineer to the Wall Street analyst. Any worker whose job does not require daily face-to-face interaction is now in jeopardy of being replaced by a lower-paid equally skilled worker thousands of miles away. American jobs are being lost not to competition from foreign companies, but to multinational corporations that are cutting costs by shifting operations to low-wage countries.” Roberts and Schumer challenged the correctness of economists’ views that jobs off-shoring was merely the operation of mutually beneficial free trade, about which no concerns were warranted.

The challenge to what was regarded as “free trade globalism” from the unusual combination of a Reagan Assistant Treasury Secretary and a liberal Democrat New York Senator caused a sensation. The liberal think-tank in Washington, the Brookings Institution, organized a Washington conference for Roberts and Schumer to explain, or perhaps it was to defend, their heretical position. The conference was televised live by C-Span, which rebroadcast the conference on a number of occasions.

Roberts and Schumer dominated the conference, and when it dawned on the audience of Washington policymakers and economists that something might actually be wrong with the off-shoring policy, in response to a question about the consequences for the US of jobs off-shoring, Roberts said: “In 20 years the US will be a Third World country.”

It looks like Roberts was optimistic that the US economy would last another 20 years. It has only been 10 years and the US already looks more and more like a Third World country. America’s great cities, such as Detroit, Cleveland, St. Louis have lost between one-fifth and one-quarter of their populations. Real median family income has been declining for years, an indication that the ladders of upward mobility that made America the “opportunity society” have been dismantled. Last April, the National Employment Law Project reported that real median household income fell 10% between 2007 and 2012.

Republicans have a tendency to blame the victims. Before one asks, “what’s the problem? America is the richest country on earth; even the American poor have TV sets, and they can buy a used car for $2,000,” consider the recently released report [2] from the Federal Reserve that two-thirds of American households are unable to raise $400 cash without selling possessions or borrowing from family and friends.

Although you would never know it from the reports from the US financial press, the poor job prospects that Americans face now rival those of India 30 years ago. American university graduates are employed, if they are employed, not as software engineers and managers but as waitresses and bartenders. They do not make enough to have an independent existence and live at home with their parents. Half of those with student loans cannot service them. Eighteen percent are either in collection or behind in their payments. Another 34% have student loans in deferment or forbearance. Clearly, education was not the answer.

Jobs off-shoring, by lowering labor costs and increasing corporate profits, has enriched corporate executives and large shareholders, but the loss of millions of well-paying jobs has made millions of Americans downwardly mobile. In addition, jobs off-shoring has destroyed the growth in consumer demand on which the US economy depends with the result that the economy cannot create enough jobs to keep up with the growth of the labor force.

Between October 2008 and July 2014 the working age population grew by 13.4 million persons, but the US labor force grew by only 1.1 million. In other words, the unemployment rate among the increase in the working age population during the past six years is 91.8%.

Since the year 2000, the lack of jobs has caused the labor force participation rate to fall, and since quantitative easing began in 2008, the decline in the labor force participation rate has accelerated.

Clearly there is no economic recovery when participation in the labor force collapses.

Right-wing ideologues will say that the labor force participation rate is down because abundant welfare makes it possible for people not to work. This is nonsensical. During this period food stamps have twice been reduced, unemployed benefits were cut back as were a variety of social services. Being on welfare in America today is an extreme hardship. Moreover, there are no jobs going begging.

The graph shows the collapse in the labor force participation rate. The few small peaks above the 65% participation rate line show the few periods when the economy produced enough jobs to keep up with the working age population. The massive peaks below the line indicate the periods in which the dearth of jobs resulted in Americans giving up looking for non-existent jobs and thus ceased being counted in the labor force. The 6.2% US unemployment rate is misleading as it excludes discouraged workers who have given up and left the labor force because there are no jobs to be found.

Labor force part rate since Jan 2000.002

John Williams of Shadowstats.com calculates the true US unemployment rate to be 23.2%, a number consistent with the collapse of the US labor force participation rate.

In the ten years since Roberts and Schumer sounded the alarm, the US has become a country in which the norm for new jobs has become lowly paid part-time employment in domestic non-tradable services. Two-thirds of the population is living on the edge unable to raise $400 cash. The savings of the population are being drawn down to support life. Corporations are borrowing money not to invest for the future but to buy back their own stocks, thus pushing up share prices, CEO bonuses, and corporate debt. The growth in the income and wealth of the one percent comes from looting, not from productive economic activity.

This is the profile of a Third World country.

[1] Second Thoughts on Free Trade.: http://www.nytimes.com/2004/01/06/opinion/second-thoughts-on-free-trade.html
[2] recently released report: http://www.globalresearch.ca/disastrous-financial-state-of-american-households-result-of-unemployment-low-wages/5395370

$16 Trillion Federal Reserve Lie is Nothing Compared to Gold and Silver Market Manipulation

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Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks – many other benchmarks – are legit areas of inquiry." ~ CFTC Commissioner Bart Chilton
The July 2011 audit by the Government Accountability Office of the Federal Reserve exposed one of the biggest lies the US has ever been told – that the Fed had secretly given out $16,000,000,000,000.00 to US banks, corporations and foreign financial institutions everywhere from France to Scotland, but this incredible exposed deceit is nothing compared to what is coming out now about the manipulation of gold and precious metal markets.

The prevarications of cabalistic bankers and their puppeteers are like the teeth of a viperfish. Though the creature looks pretty horrific, they only grow to about 12 inches long, and they like to stay deep in murky waters to avoid detection. Sure, those prehistoric-looking jaws are scary, but only as long as you stay ill-informed. However, if you were hoping to ride unscathed through the supposed looming Global Currency Reset or Revaluation (GCR), by purchasing gold and silver, think again.

Though the Feds called the secret $16-trillion-dollar bank bailout an ‘all-inclusive loan program’ it was nothing more than a heist. The same as the gold, silver, platinum, and other precious metal market tinkering happening right under our noses, today. These markets are manipulated in order to line the pockets of big financial institutions – who were already bailed out by Cabal money. It’s the continuation of legacy of giving ‘the entitled’ more entitlement.

This manipulation is evidenced in a number of ways. During the nearly 5,000 years in which humanity has been mining/refining gold and silver; the gold/silver price ratio has averaged roughly 15:1. Yet currently (and through all the recent decades of silver manipulation) this ratio has been depressed to 50:1 (or lower).

Christopher Pia, a hedge-fund trader with Moore Capital has just been fined $1 million in a market manipulation of precious metals settlement but his previous fines loomed larger. He paid a $25 million fine to settle separate CFTC claims of attempted manipulation and supervisory violations in April 2010 without admitting or denying the allegations. He is just a small shark in the big ocean, too. If these were just his fines settled out of court, you can imagine the total dollar value of the markets he machinated.

Additionally, China’s Chief Auditor has identified $15.2 billion in loans backed by falsified gold, according to the National Audit Office’s website.  It has been estimated that upwards of $80 Billion was advanced in gold backed loans alone, according to Goldman Sachs, as quoted in a Bloomberg article today.

Furthermore, Financial Times removed an article from its site recently that exposed gold market manipulation because it was too ‘sensitive.’ You can see a preserved copy of the article here. The article attests that gold prices were manipulated 50% of the time between 2010 and 2013.

“The findings come amid a probe by German and UK regulators into alleged manipulation of the gold price, which is set twice a day by Deutsche Bank, HSBC [a New York based corporate bank], Barclays, Bank of Nova Scotia, and Societe Generalein a process known as the London gold fixing.”

Let me back up and give just a little history about the players in the ‘investigation’ of market manipulation. The cabal is divided into smaller groups, but they all work together, until their piece of the pie is threatened. The Four Horsemen of Banking include the Bank of America, JP Morgan Chase, Citigroup and Wells Fargo who own the Four Horsemen of Oil: Exxon Mobil, Royal Dutch/Shell, BP Amoco and Chevron Texaco; in tandem with Deutsche Bank, BNP, Barclays and other European old money behemoths. But their monopoly over the global economy does not end at the edge of the oil patch.

According to company 10K filings to the SEC, the Four Horsemen of Banking are among the top ten stock holders of virtually every Fortune 500 corporation.

Many mainstream publications try to minimize investor worries about gold and silver price-fixing by saying that there is no evidence that gold prices are rigged, but you’d have to be a pretty dull knife to buy that fabrication.

As the Financial Times article clearly outlined in their retracted article:

“Research found the gold price frequently climbs (or falls) once a twice-daily conference call between the five banks begins, peaks (or troughs) almost exactly as the call ends and then experiences a sharp reversal, a pattern it alleged may be evidence of “collusive behaviour”.

[This] is indicative of panel banks pushing the gold price upwards on the basis of a strategy that was likely predetermined before the start of the call in order to benefit their existing positions or pending orders.

The behaviour of the gold price is very suspicious in 50 per cent of cases. This is not something you would expect to see if you take into account normal market factors.”

In fact, Britain’s Barclay’s bank was recently slapped with a $44 million dollar fine for gold price fixing ( a mere slap on the hand), and as Rolling Stone writer Matt Taibi has said, “The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There's no price the big banks can't fix.”

So whether its interest rate swaping, libor fixing, or the manipulation of gold and silver, its all fair game to the Four Horsemen. So are we to believe these goons, represented by some ‘anonymous party’ when they say that they want to change the process of how they value metals?

The proposal is for an independent chairman and third-party administrator, said the people, who asked not to be identified because the information is private. Deutsche Bank AG’s exit from the process this year as it scales back its commodities business left Societe Generale SA, Bank of Nova Scotia, HSBC Holdings Plc and Barclays Plc to set the fixing price twice a day by phone.”

This, as the World Gold Council (WGC) hosted a meeting on July 7 attended by 34 delegates including producers, refiners, central banks and exchanges, and who discussed the gold benchmark. They unanimously want an independent party to administer the rate as well as improve transparency.

Good luck with that, WGC, it’s like asking for the Easter Bunny to prove that Santa Clause exists. As long as the cabal is allowed to continue its machinations, no trading is sacred.

Friday, August 8, 2014

Washington Plans For World War

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A remarkable document published July 31 on US military planning calls for the Pentagon to prepare to wage as many as half a dozen wars at the same time, including wars in which the antagonist possesses nuclear weapons.
The document, titled “Ensuring a Strong Defense for the Future,” was drafted by the National Defense Panel, a group of former top civilian and military officials, commissioned by Congress to provide a critical review of the official Pentagon planning document released early this year, the 2014 Quadrennial Defense Review.
The National Defense Panel is co-chaired by William Perry, defense secretary in the Clinton administration, and General John Abizaid, former head of the US Central command. Its members include four other retired generals, as well as Michele Flournoy, former deputy defense secretary under Obama, and Eric Edelman, a leading neo-conservative and defense undersecretary in the George W. Bush administration.
The group is thus bipartisan, representing the entire spectrum of the security establishment in official Washington. Its report was issued under the auspices of a federally funded agency devoted to the study of war, whose name, with impeccable Orwellian logic, is the US Institute of Peace.
The document warns of the dangers facing the United States, listing in first place the growing power of China and Russia, followed by North Korea, Iran, Iraq, Syria, the Middle East as a whole, then Africa. China and Russia have thus been moved to the top of the list of potential targets for US military action, ahead of the three countries singled out by George W. Bush in his notorious “Axis of Evil” speech in 2002.
The document notes that for the past two decades, since the collapse of the Soviet Union in 1991, US defense doctrine has called for being able to wage two major wars at the same time. It then calls for a radical change in this doctrine:
“Given the worsening threat environment, we believe a more expansive force sizing construct—one that is different from the two-war construct, but no less strong—is appropriate.”
Later this is spelled out in more detail:
“We believe … a global war-fighting capability to be the sine qua non of a superpower and thus essential to the credibility of America’s overall national security strategy. In the current threat environment, the United States could plausibly be called upon to deter or fight in several regions in overlapping time frames: on the Korean peninsula, in the East or South China Sea, in the Middle East, South Asia, and quite possibly in Europe. The United States also faces the prospect of having to face nuclear-armed adversaries. Additionally, the spread of al Qaeda and its spin offs to new areas in Africa and the Middle East means that the U.S. military must be able to sustain global counterterrorism operations and defend the American homeland even when engaged in regional conflict overseas.” [emphasis added]
This list suggests that the United States be prepared to fight five or six major wars simultaneously. This is nothing less than the demand that US imperialism begin preparing to wage a world war, which would threaten the extinction of humanity.
The elevation of China and Russia as likely targets of US military action has the most ominous implications, since these two countries have the second and third-largest nuclear arsenals on the planet, following that of the United States itself.
The report backs the Obama administration’s posture of “rebalancing” US military forces to confront China, describing this strategic initiative as an effort to reassert “the primacy of the Asia-Pacific region among US security interests.”
As for the likelihood of such a war breaking out, it should be pointed out that the National Defense Panel discusses the possible triggers for a major conflagration, especially in the Far East. The language may be jargon-filled, but the perspective is nonetheless chilling:
“The proliferation of unmanned and increasingly autonomous systems in the Asia-Pacific as well as the Middle East, for example, will have a detrimental impact on the ability to maintain stability during a crisis, or to manage escalation if conflict erupts. These systems, combined with the proliferation of offensive and defense cyberspace and counter-space capabilities, will greatly affect the relationship between offensive and defensive military capability in key regions, increasing the risk that a crisis erupts rapidly into conflict before policymakers and military commanders have adequate time to react.”
To put it plainly, a major war can erupt through the interaction of drone weapons and automated response systems on both sides, even without any human intervention.
The report does not openly question the all-volunteer military force, but it focuses on its rising cost, and calls for “sensible and cost-effective pay and benefits reforms” to make it more affordable. The logic of the combined pressures of rising costs and expanded military deployments is inexorable, however: it means, sooner rather than later, that the US ruling class must move towards some form of conscription, even beyond the current economic draft in which poorer sections of the working class are disproportionately enrolled in the “volunteer” military.
The defense report expresses concern that the financial constraints on American imperialism, and in particular such self-imposed limitations as the “sequester” of selected military spending imposed under the Budget Control Act of 2011, cut across the Pentagon’s war preparations.
The authors repeatedly complain of the limitation on US military spending because of the burden of domestic social programs, pointing to “the large and growing gap between the amount collected to support entitlement programs, principally Social Security and major health programs, and the amount being spent on those programs.”
They declare, “America must get her fiscal house in order while simultaneously funding robust military spending. Aggressive health care cost containment should certainly be pursued both within the Department [i.e., for the soldiers and their families] and more broadly across all government programs.”
To reiterate again: this is a bipartisan report. Democrats as well as Republicans, liberals and conservatives, endorsed its demand that the social programs upon which working people depend should be slashed to ensure that trillions are available for the insatiable maw of the American military machine.
This bipartisan character of this document testifies to the unity of all sections of the American ruling class on the use of unprecedented violence to safeguard its wealth and its domination of vast sections of the globe. It confirms that the struggle against imperialist war can only be waged by the working class breaking free of the existing political system in the United States, and building an independent mass political movement based on a revolutionary socialist and internationalist program.