Tuesday, June 30, 2015

Bank of International Settlements: The world is defenceless against the next financial crisis

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The world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises, the Bank of International Settlements has warned.
The so-called central bank of central banks launched a scatching critique of global monetary policy in its annual report. The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies.
These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates.
Claudio Borio, head of the organisation’s monetary and economic department, said: “Persistent exceptionally low rates reflect the central banks’ and market participants’ response to the unusually weak post-crisis recovery as they fumble in the dark in search of new certainties.”

G3 real interest rates have never been so low for so long

“Rather than just reflecting the current weakness, they may in part have contributed to it by fuelling costly financial booms and busts and delaying adjustment. The result is too much debt, too little growth and too low interest rates.
"In short, low rates beget lower rates."
The BIS warned that interest rates have now been so low for so long that central banks are unequipped to fight the next crises.
“In some jurisdictions, monetary policy is already testing its outer limits, to the point of stretching the boundaries of the unthinkable,” the BIS said.
Policymakers in the eurozone, Denmark, Sweden and Switzerland have taken their interest rates below zero in an attempt to support their economies, contributing to a decline in bond yields.

The decline of bond yields into negative territory is the "most unusual development" of the last year

Extraordinarily low interest rates are not a “new equilibrium” said Jaime Caruana, general manager of the BIS, rejecting the theory of so-called “secular stagnation” which some economists blame for the continued decline in global lending rates.
“True, there may be secular forces that put downward pressure on equilibrium interest rates … [but] we argue that the current configuration of very low rates is neither inevitable, nor does it represent a new equilibrium,” he said.
Mr Caruana said that interest rate hikes “should be welcomed”, as global economies have started to grow at close to their historical averages, and a slump in oil prices has provided the global economy with a boost.
The BIS report described the threat of a new bust in advanced economies as a “main risk”, with many reaching the top of the economic cycle.
The economies worst hit by the last crisis are now suffering the costs of persistent ultra-low rates, the organisation said, which could “inflict serious damage on the financial system”, sapping banks and weakening their balance sheets and their ability to lend.
And the continued misallocation of resources during busts prompted by central banks’s rock-bottom interest rates has also hammered productivity growth, the BIS said, as a prolonged reliance on debt had been used in its place.

Economic mismanagement has hampered productivity growth

This problem is compounded as the world’s populations continue to age, the organisation warned, making debt burdens harder to bear. Yet politicians have relied too much on temporary growth boosts by using debt, rather than making painful choices, said the BIS.
Mr Caruana said that during booms, workers and capital are shifted to slow-growing sectors, with a “long-lasting negative” impact on productivity growth. “Misallocated labour needs to move from these sectors to other parts of the economy,” he said.
The BIS said that the current turmoil in Greece typified the kind of “toxic mix” of private and public debt being used as a solution to economic problems, rather than making the proper commitment “to badly needed” structural reforms.
Mr Caruana said that policymakers must now focus on the supply side of the economy, introducing the right reforms, rather than continue to lean on debt which will inevitably undermine growth.

16 Facts About The Tremendous Financial Devastation That We Are Seeing All Over The World

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As we enter the second half of 2015, financial panic has gripped most of the globe.  Stock prices are crashing in China, in Europe and in the United States.  Greece is on the verge of a historic default, and now Puerto Rico and Ukraine are both threatening to default on their debts if they do not receive concessions from their creditors.  Not since the financial crisis of 2008 has so much financial chaos been unleashed all at once.  Could it be possible that the great financial crisis of 2015 has begun?  The following are 16 facts about the tremendous financial devastation that is happening all over the world right now…
1. On Monday, the Dow fell by 350 points.  That was the biggest one day decline that we have seen in two years.
2. In Europe, stocks got absolutely smashed.  Germany’s DAX index dropped 3.6 percent, and France’s CAC 40 was down 3.7 percent.
3. After Greece, Italy is considered to be the most financially troubled nation in the eurozone, and on Monday Italian stocks were down more than 5 percent.
4. Greek stocks were down an astounding 18 percent on Monday.
5. As the week began, we witnessed the largest one day increase in European bond spreads that we have seen in seven years.
6. Chinese stocks have already met the official definition of being in a “bear market” – the Shanghai Composite is already down more than 20 percent from the high earlier this year.
7. Overall, this Chinese stock market crash is the worst that we have witnessed in 19 years.
8. On Monday, Standard & Poor’s slashed Greece’s credit rating once again and publicly stated that it believes that Greece now has a 50 percent chance of leaving the euro.
9. On Tuesday, Greece is scheduled to make a 1.6 billion euro loan repayment.  One Greek official has already stated that this is not going to happen.
10. Greek banks have been totally shut down, and a daily cash withdrawal limit of60 euros has been established.  Nobody knows when this limit will be lifted.
11. Yields on 10 year Greek government bonds have shot past 15 percent.
12. U.S. investors are far more exposed to Greece than most people realize.  The New York Times explains…
But the question of what happens when the markets do open is particularly acute for the hedge fund investors — including luminaries like David Einhorn and John Paulson — who have collectively poured more than 10 billion euros, or $11 billion, into Greek government bonds, bank stocks and a slew of other investments.
Through the weekend, Nicholas L. Papapolitis, a corporate lawyer here, was working round the clock comforting and cajoling his frantic hedge fund clients.
“People are freaking out,” said Mr. Papapolitis, 32, his eyes red and his voice hoarse. “They have made some really big bets on Greece.”
13. The Governor of Puerto Rico has announced that the debts that the small island has accumulated are “not payable“.
14. Overall, the government of Puerto Rico owes approximately 72 billion dollars to the rest of the world.  Without debt restructuring, it is inevitable that Puerto Rico will default.  In fact, CNN says that it could happen by the end of this summer.
15. Ukraine has just announced that it may “suspend debt payments” if their creditors do not agree to take a 40 percent “haircut”.
16. This week the Bank for International Settlements has just come out with a new report that says that central banks around the world are “defenseless” to stop the next major global financial crisis.
Without a doubt, we are overdue for another major financial crisis.  All over the planet, stocks are massively overvalued, and financial markets have become completely disconnected from economic reality.  And when the next crash happens, many believe that it will be even worse than what we experienced back in 2008.  For example, just consider the words of Jim Rogers
“In the United States, we have had economic slowdowns every four to seven years since the beginning of the Republic. It’s now been six or seven years since our last stock market problem. We’re overdue for another problem.”
In Rogers’ view, low interest rates caused stock prices to increase significantly. He believes many assets are priced beyond their fundamentals thanks to the ultra-easy monetary policies by the Federal Reserve. Fed supporters argue such measures are good for investors, but Rogers takes a different view.
The Fed might tell us we don’t have to worry and that a correction or crash will never happen again. That’s balderdash! When this artificial sea of liquidity ends, we’re going to pay a terrible price. When the next economic problem occurs, it will be much worse because the debt is so much higher.”
Of course Rogers is far from alone.  A recent article by Paul B. Farrell expressed similar sentiments…
America’s 95 million investors are at huge risk. Remember the $10 trillion losses in the crash and recession of 2007-2009? The $8 trillion lost after the dot-com technology crash and recession of 2000-2003? This is the third big recession of the century. Yes, America will lose trillions again.
Especially with dead-ahead predictions like Mark Cook’s 4,000-point Dow correction. And Jeremy Grantham’s warning of a 50% crash around election time, with negative stock returns through the first term of the next president, beyond 2020. Starting soon.
Why is America so vulnerable when the next recession hits? Simple: The Fed’s cheap-money giveaway is killing America. When the downturn, correction, crash hits, it will compare to the 2008 crash. The Economist warns: “the world will be in a rotten position to do much about it. Rarely have so many large economies been so ill-equipped to manage a recession,” whatever the trigger.
Things have been relatively quiet in the financial world for so long that many have been sucked into a false sense of security.
But the underlying imbalances were always there, and they have been getting worse over time.
I believe that we are heading into a global financial collapse that will make what happened in 2008 look like a Sunday picnic by the time it is all said and done.
Global debt levels are at all-time highs, big banks all over the planet have been behaving more recklessly than ever, and financial markets are absolutely primed for a huge crash.
Hopefully things will calm down a bit as the rest of this week unfolds, but I wouldn’t count on it.
We have entered uncharted territory, and what comes next is going to shock the world.

How to Make War on Everything

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War on drugsWar on poverty. War in Afghanistan. War in Iraq. War on terror. The biggest mistake in American policy, foreign and domestic, is looking at everything as war. When a war mentality takes over, it chooses the weapons and tactics for you.  It limits the terms of debate before you even begin. It answers questions before they’re even asked.

When you define something as war, it dictates the use of the military (or militarized police forces, prisons, and other forms of coercion) as the primary instruments of policy.  Violence becomes the means of decision, total victory the goal.  Anyone who suggests otherwise is labeled a dreamer, an appeaser, or even a traitor. War, in short, is the great simplifier -- and it may even work when you’re fighting existential military threats (as in World War II).  But it doesn’t work when you define every problem as an existential one and then make war on complex societal problems (crime, poverty, drugs) or ideas and religious beliefs (radical Islam).

America’s Omnipresent War Ethos

Consider the Afghan War -- not the one in the 1980s when Washington funneled money and arms to the fundamentalist Mujahideen to inflict on the Soviet Union a Vietnam-style quagmire, but the more recent phase that began soon after 9/11.  Keep in mind that what launched it were those attacks by 19 hijackers (15 of whom were Saudi nationals) representing a modest-sized organization lacking the slightest resemblance to a nation, state, or government.  There was as well, of course, the fundamentalist Taliban movement that then controlled much of Afghanistan.  It had emerged from the rubble of our previous war there and had provided support and sanctuary, though somewhat grudgingly, to Osama bin Laden. 

With images of those collapsing towers in New York burned into America’s collective consciousness, the idea that the U.S. might respond with an international “policing” action aimed at taking criminals off the global streets was instantly banished from discussion.  What arose in the minds of the Bush administration’s top officials instead was vengeance via a full-scale, global, and generational “war on terror.”  Its thoroughly militarized goal was not just to eliminate al-Qaeda but any terror outfitsanywhere on Earth, even as the U.S. embarked on a full-fledged experiment in violent nation building in Afghanistan.  More than 13 dismal years later, that Afghan War-cum-experiment is ongoing at staggering expense and with the most disappointing of results.

While the mindset of global war was gaining traction, the Bush administration launched its invasion of Iraq.  The most technologically advanced military on Earth, one that the president termed “the greatest force for human liberation the world has ever known,” was set loose to bring “democracy” and a Pax Americana to the Middle East.  Washington had, of course, been in conflict with Iraq since Operation Desert Storm in 1990-1991, but what began as the equivalent of a military coup (aka a “decapitation” operation) by an outside power, an attempt to overthrow Saddam Hussein and eliminate his armed forces and party, soon morphed into a prolonged occupation and another political and social experiment in violent nation-building.  As with Afghanistan, the Iraq experiment with war is still ongoing at enormous expense and with even more disastrous results.

Radical Islam has drawn strength from these American-led “wars.”  Indeed, radical Islamists cite the intrusive and apparently permanent presence of American troops and bases in the Middle East and Central Asia as confirmation of their belief that U.S. forces are leading a crusade against them -- and by extension against Islam itself.  (And in a revealing slip of the tongue, President Bush did indeed once call his war on terror a “crusade.”)  Considered in these terms, such a war is by definition a losing effort because each “success” only strengthens the narrative of Washington’s enemies.  There’s simply no way to win such a war except by stopping it.  Yet that course of action is never on the proverbial “table” of options from which officials in Washington are said to choose their strategies.  To do so, in the context of war thinking, would mean to admit defeat (even though true defeat arrived the very instant the problem was first defined as war).

Our leaders persist in such violent folly at least in part because they fear the admission of defeat above all else.  After all, nothing is more pejorative in American politics or culture than to be labeled a loser in war, someone who “cuts and runs.”

In the 1960s, despite his own serious misgivings about the ongoing conflict in Vietnam, President Lyndon B. Johnson set the gold standard in his determination not to be the first American president to lose a war, especially in a “damn little pissant country” like Vietnam.  So he persisted -- and the conflict turned him into a loser anyway and destroyed his presidency.

Even as he waged war, as historian George Herring has noted, LBJ did not want to be known as a “war president.”  Two generations later, another Texan, George W. Bush, grasped the “war president” moniker with genuine enthusiasm.  He, too, vowed he would win his war when things started to go sour.  Staring down a growing insurgency in Iraq in the summer of 2003, Bush did not shy from the challenge.  “Bring ‘em on,” he said in what was supposed to be a Clint Eastwood/Dirty Harry-style moment.  Now, Washington is sending troops back into Iraq for the third time to engage an even more intractable insurgency, the Islamic State's radical version of Islam, a movement originally fed and bred partly inCamp Bucca, an American military prison in Iraq. 

And just to set the record straight, President Obama, too, accepted the preeminence of war in American policy in his 2009 Nobel Prize acceptance speech in Oslo.  There, he offered a stirring defense of America’s role and record as “the world’s sole military superpower”:

“Whatever mistakes we have made, the plain fact is this: the United States of America has helped underwrite global security for more than six decades with the blood of our citizens and the strength of our arms. The service and sacrifice of our men and women in uniform has promoted peace and prosperity from Germany to Korea, and enabled democracy to take hold in places like the Balkans. We have borne this burden not because we seek to impose our will. We have done so out of enlightened self-interest -- because we seek a better future for our children and grandchildren, and we believe that their lives will be better if other peoples' children and grandchildren can live in freedom and prosperity.”
It was a moment that defined the Obama presidency as being remarkably in tune with America’s already omnipresent war ethos.  It was the very negation of “hope” and “change” and the beginning of Obama’s transition, via the CIA’s drone assassination program, into the role of assassin-in-chief.   

Everything Is Jihad

Recent American leaders have something in common with their extremist Islamic counterparts: all of them define everything, implicitly or explicitly, as a jihad, a crusade, a holy war.  But the violent methods used in pursuit of various jihads, whether Islamic or secular, simply serve to perpetuate and often aggravate the struggle.

Think of America’s numerous so-called wars and consider if there’s been any measurable progress made in any of them.  Lyndon Johnson declared a “war on poverty” in 1964.  Fifty-one years later, there are still startling numbers of desperately poor people and, in this century, the gap between the poorest many and richest few has widened to a chasm.  (Since the days of President Ronald Reagan, in fact, one might speak of a war on the poor, not poverty.)  Drugs?  Forty-four years after President Richard Nixon proclaimed the war on drugs, there are still millions in jail, billions being spent, and drugs galore on the streets of American cities.  Terror?  Thirteen years and counting after that “war” was launched, terror groups, minor in numbers and reach in 2001, have proliferated wildly and there is now something like a “caliphate” -- once an Osama bin Laden fantasy -- in the Middle East: ISIS in power in parts of Iraq and Syria, al-Qaeda on the rise in Yemen, Libya destabilized and divvied up among ever more extreme outfits, innocents still dying in U.S. drone strikes Afghanistan?  The opium trade has rebounded big time, the Taliban is resurgent, and the region is being destabilized.  Iraq?  A cauldron of ethnic and religious rivalries and hatreds, with more U.S. weaponry on the way to fuel the killing, in a country that functionally no longer exists.  The only certainty in most of these American “wars” is their violent continuation, even when their original missions lie in tatters.

The very methods the U.S. employs and the mentality its leaders adopt ensure their perpetuation.  Why?  Because drug addiction and abuse can’t be conquered by waging a war.  Neither can poverty.  Neither can terror.  Neither can radical Islam be defeated through armed nation building.  Indeed, radical Islam thrives on the very war conditions that Washington helps to create.  By fighting in the now familiar fashion, you merely fan its flames and ensure its propagation.

It’s the mindset that matters.  In places like Iraq and Afghanistan, places that for most Americans exist only within a "war" matrix, the U.S. invades or attacks, gets stuck, throws resources at the problem indiscriminately, and "makes a desert and calls it 'peace'" (to quote the Roman historian Tacitus).  After which our leaders act surprised as hell when the problem only grows.

Sadly, the song remains monotonously the same in America: more wars, made worse by impatience for results driven by each new election cycle.  It’s a formula in which the country is eternally fated to lose.

Two Curious Features of America’s New Wars

Historically, when a nation declares war, it does so to mobilize national will, as the U.S. clearly did in World War II.  Accompanying our wars of recent decades, however, has been an urge not to mobilize the people, but demobilize them -- even as the "experts" are empowered to fight and taxpayer funds pour into the national security state and the military-industrial complex to keep the conflicts going. 

Recent wars, whether on drugs or in the Greater Middle East, are never presented as a challenge we the people can address and solve together, but as something only those who allegedly possess the expertise and credentials -- and the weapons -- can figure out or fight.  George W. Bush summed up this mindset in classic fashion after 9/11 when he urged Americans to go shopping and visit Disney World and leave the fighting to the pros. War, in short, has become yet another form of social control.  Have a gun or a badge of some sort and you can speak forcefully and be listened to; otherwise, you have no say.

In addition, what makes America’s new wars unique to our moment is that they never have a discernible endpoint.  For what constitutes “victory” over drugs or terror?  Once started, these wars by definition are hard to stop.   

Cynics may claim there’s nothing new here.  Hasn’t America always been at war?  Haven’t we always been a violent people?  There’s truth in this.  But at least Americans of my grandfather’s and father’s generation didn’t define themselves by war. 

What America needs right now is a 12-step program to break the urge to feed further our national addiction to war.  The starting point for Washington -- and Americans more generally -- would obviously have to be taking that first step and confessing that we have a problem we alone can’t solve.  "Hi, I’m Uncle Sam and I’m a war-oholic.  Yes, I’m addicted to war.  I know it’s destructive to myself and others.  But I can’t stop -- not without your help."

True change often begins with confession.  With humility.  With an admission that not everything is within one’s control, no matter how violently one rages; indeed, that violent rage only aggravates the problem.  America needs to make such a confession.  Only then can we begin to wean ourselves off war.

US, NATO powers intensify preparations for nuclear war

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The NATO military alliance is preparing to implement a more aggressive nuclear weapons strategy in response to alleged “Russian aggression,” according to NATO sources cited by the Guardian Wednesday evening.
Proposed changes include provisions for greater involvement of nuclear forces in ongoing NATO military exercises along Russia’s borders and new guidelines for nuclear escalation against Russia, according to the NATO officials.
The alliance’s nuclear doctrine has been the subject of quiet, informal discussions “on the sidelines” of the ongoing NATO summit. The new policies will be confirmed at an upcoming conference of the alliance’s Nuclear Planning Group, which was rescheduled for an earlier date this week as word got around about the secretive planning.
“There is very real concern about the way in which Russia publicly bandies around nuclear stuff. So there are quite a lot of deliberations in the alliance about nuclear weapons,” an unnamed NATO diplomat told the Guardian.
The claim that discussion about a revision of nuclear weapons policy is in response to Russian aggression turns reality on its head. In the aftermath of the US and NATO-backed coup in Ukraine last year, the major imperialist powers have engaged in a relentless militarization of Eastern Europe, including the establishment of a rapid reaction force of 40,000 troops.
This week, US Defense Secretary Ashton Carter announced that the US would permanently deploy tanks, military vehicles and other equipment to countries bordering Russia. There are also ongoing discussions about directly arming Ukraine, beyond the extensive assistance the right-wing government already receives.
NATO is now planning to respond to any attempt by Russia to maintain or counter US imperialism’s aggressive moves in Eastern Europe with even more massive military response, including nuclear weapons.
An indication of the thinking of NATO strategists was provided by a report in the Financial Times. In the event of a conflict involving one of the Baltic countries, “Russia might…accuse the alliance of escalating the conflict and threaten to use intermediate range nuclear weapons.” The Times quotes Elbridge Colby, of the Center for a New American Security (CNAS): “NATO does not need a total nuclear rethink. But it needs to be realistic about how it would respond and willing to show Putin that he would not get away with it.”
This scenario builds on allegations from the US that Russia has violated the Intermediate Range Nuclear Forces Treaty (INF), allegations that the Russian government has denied. US officials have stated that the Pentagon is preparing to launch preemptive attacks against missiles or other targets in Russia, including with nuclear weapons, in response to Moscow’s alleged violation of the treaty.
The announcement of major revisions to NATO’s nuclear strategy came just days after the publication of an extensive report, “Project Atom: Defining US Nuclear Strategy and Posture for 2025-2050,” by the Center for Strategic and International Studies (CSIS). The main portions of the report were authored by a career US government strategist and senior CSIS analyst, Clark Murdock, a man who previously worked in high-level strategy jobs at the Central Intelligence Agency (CIA), the Department of Defense (DOD), the US Air Force and the National War College. The report included contributions from a large team of researchers and experts, including panels from the CNAS and the National Institution for Public Policy (NIPP).
The thrust of the CSIS analysis is that the US must make its nuclear arsenal easier to use in a war with Russia, China or some other power. The military must adopt “a US nuclear strategy designed for twenty-first century realities,” based on new generations of tactical warheads and delivery systems.
More advanced tactical nuclear weapons will enable Washington to threaten and launch small nuclear wars, without being “self-deterred” by concerns that its actions would lead to a nuclear holocaust, the CSIS report argues.
“The United States needs to develop and deploy more employable nuclear weapons,” the CSIS wrote, including “low collateral damage, enhanced radiation, earth penetration, electromagnetic pulse, and others as technology advances.”
Such advances, the report argues, are the only way to counter the erosion of American technological superiority by the growth of the Chinese and Russian nuclear arsenals, together with the addition of as many as nine new governments to the “nuclear club.”
Under the “Measured Response” theory advocated by the CSIS and Murdock, these types of highly mobile nuclear strike forces could engage in “controlled nuclear operations,” firing “low yield, accurate, special effects” nukes against enemy targets without leading to a full-scale nuclear war.
By “forward deploying a robust set of discriminate nuclear response options,” the US could launch tactical nuclear strikes “at all rungs of the nuclear escalation ladder,” Murdock wrote.
Such “small-scale” nuclear conflicts would inevitably claim tens, if not hundreds of millions of lives, even assuming they did not escalate into a global nuclear war.
The continental US, according to this theory, would be protected from the consequences of regional-scale nuclear warfare by the deterrent effect of Washington’s huge arsenal of high-yield strategic weapons. Any “controlled” nuclear conflicts started by the US government, moreover, would not involve nuclear operations targeting or launched from North America.
“The US homeland would not be engaged in the US response to a nuclear attack on a regional ally,” the CSIS wrote.
In barely veiled language, CSIS is suggesting that the US should utilize allied and client governments as staging areas and arenas for “controlled” atomic warfare.
As the product of collaboration between an extensive network of ruling-class policy theorists, such proposals are extremely ominous and represent a grave warning to the international working class.
There have been other calls for a significant expansion of US nuclear weapons capacity. In comments to the Atlantic Council earlier this week, US Congressman Mac Thornberry, the chairman of the House Armed Services Committee, called for a “national conversation about building new nuclear weapons.”
“That’s something we haven’t been able to even have a conversation about for a while, but I think we’re going to have to,” Thornberry declared.
Late last year, the Obama administration announced plans for a $1 trillion, three-decades-long upgrade of nuclear weapons capability.
In the writings of the CSIS and the other discussions within the state apparatus, there is a degree of insanity. The strategists of American imperialism are coldly calculating the best tactics for waging and winning nuclear war. Yet this insanity flows from the logic of American imperialism and the drive by the financial aristocracy to control—ever more directly through the use of military force—the entire world.

Thursday, June 25, 2015

Protest Is the New Terror: How U.S. Law Enforcement Is Working to Criminalize Dissent

While the recent NSA reform bill passed in Congress represents a victory for civil liberties and privacy advocates, there's still a ways to go. Because while the right to dissent remains a fundamental American freedom, the fear of terrorism is being openly exploited by law enforcement.

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It’s well established that the FBI surveilled civil rights and other activists from Martin Luther King Jr. to leaders of the National Lawyers Guild as part of its wide ranging COINTELPRO (counter intelligence program) during the 1960s and early 70s. The use of planted news stories, faked communications to create dissension within activist groups, informants to make dubious cases and even assassinations was revealed by a group of activists called the Citizens’ Commission to Investigate the FBI, who broke into a bureau office in Media, Pennsylvania, in 1971 and found ample evidence of the agency’s misdeeds. This is generally seen as an era of terrible government overreach in the name of fighting “communism.”
The problem is that the use of similar tactics has been discovered again and again in the years since. Following the anti-globalization protests of 1999, the 9/11 attacks, and the Occupy protests of 2011, similar strategies, enhanced by modern technology, have been ratcheted up and deployed against an ever-increasing number of activists and political groups of all ideological stripes as part of the even more dubious “wars” on drugs and terrorism.
Part of this is due to the fact that there simply aren’t enough real threats of terrorism to justify all the money and toys that have been given to U.S. law enforcement. Add to this the fact that police at all levels seem eager to see potential terrorism in even the mildest forms of dissent and you have a recipe for disaster. In one of the most recent instances, it was revealed that the FBI has been coordinating with local law enforcement to target the Black Lives Matter movement.
Another story, unrelated to current anti-racist organizing, is a bizarre case out of Minneapolis in the lead up to the Republican national convention in 2008. According to the City Pages, a Univ. of Minnesota police officer who was the department’s only officer on the local Joint Counter Terrorism Task Force worked with an FBI Special Agent to recruit college students who acted as paid informants at “vegan potlucks” hoping they’d discover activist plans to disrupt the city’s upcoming convention.
Extending the Long Arm of the Law
Joint Terrorism Task Forces (JTTFs), of which there are currently 104 located in cities and towns across the United States, were created in the 1980s and greatly expanded in the aftermath of 9/11. They were set up to coordinate between diverse federal agencies and local law enforcement, and often work in tandem with “Fusion Centers” that are supposed to collect and analyze data related to potential terrorism.
To see how these task forces can overstep their bounds, take the case of Eric Linsker, who police tried to arrest for allegedly trying to throw a trash can over the side of a walkway on the Brooklyn Bridge during the large, mostly peaceful protests that erupted in New York City following the failure to indict the officer whose choke-hold led to the death of Eric Garner. Other protesters intervened to stop the arrest but Linkser left his bag behind which, according to authorities, contained “his passport, three hammers, and a small amount of marijuana.”
While police may have been well within their rights to track down Linsker and charge him if the vandalism allegations were true, it’s who did the arresting that is problematic: rather than the NYPD, it was the New York JTTF that brought Linkser in, perhaps believing that the hammers were potential instruments of terror. This should be a cause for worry, since it means either law enforcement’s definition of terrorism has become far too broad, or they are targeting more than just terrorism.

US home ownership rate hits lowest level in two decades

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The economic recession that began with the collapse of the housing market in 2007 officially came to an end in June 2009—more than six years ago. But by most indications, American households are significantly worse off than they were at the depth of the downturn. Despite the drop in the official unemployment rate, household incomes have fallen, wages have stagnated and student loan debt has soared.
A study by Harvard University’s Joint Center For Housing Studies released on Wednesday points to another sign of the widespread economic distress affecting broad sections of the US population: the persistent fall in the share of households who are able to achieve the “American Dream” of homeownership.
According to “The State of the Nation’s Housing 2015,” the share of American households who owned their own home fell to 64.5 percent last year, the lowest level in two decades, based US Census data. This was down from a homeownership rate of over 69 percent in 2004, and was unchanged from the homeownership rate in 1985, three decades ago.
The fall in homeownership was prevalent in all age groups, but younger households were among the most affected. The ownership rate for 35-44 year-olds was down 5.4 percentage points from 1993, and has hit a level not seen since the 1960s. Only slightly more than one-third of households headed by those aged 25-35 owned their own homes.
The report attributed the continuous decline in homeownership to falling incomes, persistent long-term unemployment and a significant tightening of credit.
As the report notes, “Despite steady job growth since 2010 and a drop in unemployment to less than 6 percent, the labor market recovery has yet to generate meaningful income gains. At last measure in 2013, median household income was $51,900—still 8 percent below the 2007 level in real terms and equivalent to 1995 levels.”
In fact, the “steady job growth” is largely fictional, with the official drop in unemployment due mainly to the departure of hundreds of thousands of people from the labor force. This is itself a significant factor in the persistence of low wages and the decline in household income.
Even as household incomes have been eroded, banks have severely tightened credit, particularly to those households who need it most. One survey covering the period between 2001 and 2013 found a 37 percent drop in home loans issued to borrowers with poor credit scores, compared with a 9 percent decrease among borrowers with higher scores.
Lenders’ current tight-fisted lending practices are the polar opposite of their policies in the run-up to the 2008 financial crash. Between 2000 and 2008, Wall Street banks made billions of dollars suckering families into taking on mortgages for homes they could not afford, then selling off the worthless mortgages in the form of mortgage-backed securities. When this Ponzi scheme collapsed, the federal government handed the banks hundreds of billions in bailout funds.
For working families, there was no bailout, and after more than 10 million foreclosures, about 13 percent of homes remain “underwater,” with owners paying mortgages for more than their homes are presently worth.
The growing inability of families to afford their own homes had led to soaring demand for rental properties, and a corresponding increase in prices. Last year, rents rose at twice the pace of overall inflation.
This has led to a growing share of households who expend a large portion of their monthly incomes simply on paying rent. The report noted that over the past 10 years, the share of young renters who spent one-third or more of their incomes on housing increased from 40 percent to 46 percent, while those paying more than half of their incomes on housing rose from 19 percent to 23 percent.
Growing housing costs add to the litany of other financial pressures facing younger households. The report notes, “The share of renters aged 25–34 with student loan debt jumped from 30 percent in 2004 to 41 percent in 2013, with the average amount of debt up 50 percent, to $30,700.”
“Much to their detriment, cost-burdened households are forced to cut back on food, health care, and other critical expenses,” notes the Harvard report. “Affordable housing thus means a dramatic improvement in quality of life for households able to obtain it, but federal assistance lags far behind need.”
This is, to put it mildly, a significant understatement. Even as the need for housing assistance has soared, housing assistance funding has been slashed at every level of government. Hundreds of thousands of families have lost federal housing assistance as a result of the “sequester” budget cuts that began in 2013, while cities throughout the country have cut back on housing programs.
Last month New York City Mayor Bill De Blasio—promoted as a “progressive” Democrat—announced a plan to jack up fees for low-income residents in the city’s public housing projects, while moving to sell off sections of public housing to private developers.
Meanwhile, at the top of society, there is money to burn. The Wall Street Journal noted in a report published Wednesday that CEOs at top US corporations saw their median pay increase by 13.5 percent this year, to an average of about $13.6 million. Billionaire shareholders did even better, with the values of their shares, combined with dividend payments, appreciating 16.6 percent over the past year.
Amid historically low rates of homeownership, particularly among lower-income buyers, homebuilders are adjusting to a market in which buyers are increasingly wealthy. The median size of a new single-family home has increased by 12 percent between 2009 and 2013, while the median size of multi-family homes intended for the rental market shrank.
Real estate companies are scrambling to build extravagant housing for the super-rich. In New York City, developers have been hard at work constructing “vertical mansions” in the areas surrounding Central Park.
One of these buildings, 520 Park Ave, features 31 apartments sprawling to at least 4,600 square feet and listing at $27 million or more. A penthouse in the building is currently selling for $130 million, while at nearby 220 Central Park South, one Qatari billionaire is combining several apartments into a $250 million “mega-penthouse.”
The oligarchs who inhabit these buildings, located in a section of Manhattan known as “billionaires’ row,” are each likely to own several more similarly-priced properties. As one recent report noted, “The average billionaire owns four homes, with each one worth nearly US$20 million….dotted around the globe.”
After six years of the Obama “recovery” it is clear that there has been no improvement in the living conditions of the great majority of the US population. The so-called recovery has been for the corporate and financial aristocracy, whose wealth has soared amid a surging stock market fueled by virtually unlimited free money from the US Federal Reserve.