Monday, July 21, 2008

Inflation and the Specter of World Revolution

Inflation and the Specter of World Revolution

By James Petras

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“Inflation is here big time”, Charles Holliday CEO, Du Pont. June 24, 2008

“The sustained rise in the price of oil and commodities has hammered industries…and deepened fears of global inflationary spiral – which has already provoked riots across Asia – as producers pass on higher costs to manufacturers and consumers.” The Financial Times June 25, 2008. page 1

Inflation and all of its repercussions for wage and salaried workers, fixed income middle classes, as well as manufacturers and transport industries is splashed all over the financial pages of the major newspapers throughout the world. Inflation is the great solvent that dissolves paternalistic ties between employers and workers, landowners and peasants, clientele-patronage regimes and the urban poor and sets in motion violent protests against private property and previously popularly elected regimes. Historical religious, clan, party, ethnic, tribal, caste and other differences are temporarily suspended, as Hindus and Moslems in India, Communists and Christians in the Philippines, peasants and workers in China, industrial workers and public employees in Egypt, blacks and mulattos in Haiti…join together in sustained mass protests against inflation which profoundly and visibly erodes their living standards from week to week, in some cases from one day to another.

But the left, the Anglo-American left? Where and what do our most prominent public intellectuals, including those with booking agents charging five-digit lecture fees, have to say about this world-wide revolt? Nary a word is found in left, center-left magazines, web sites and blogs. During their lucrative lectures, they thunder against the immoralities of war and climate change. They hurl imprecations against rulers and exploiters and their immoralities, and the bellicose interests they represent (with special exemption of the ubiquitous Zionist Power configuration). Yet there is hardly a mention of the purveyors of the global cancer which is literally eating away the bread of everyday life of billions of people. They talk of a ‘peace movement’, (which has disappeared); of one or another dissident electoral candidate; and reminisce over youth revolts 50 years ago. But like the intellectuals who sipped their wine while the revolting masses headed for the Bastille, they are at best irrelevant, unblinking spectators to the greatest turmoil of the new millennium.

The targeted capitalists and their regimes and the downwardly mobile middle classes and the masses facing destitution are much more aware of the centrality of inflation to their profits, living standards and everyday life and the threats of popular upheavals. The Anglo-American left, in all of its variants, is destined once again to irrelevance in the face of world-historic challenges and opportunities. This contrasts with the intense preoccupation of the capitalist class with inflation. It is the central topic of weekly meeting of central bankers the world over. Empty resolutions are approved at the monthly conferences convoked by international financial institutions. Almost daily there are pronouncements by finance and economic ministers. Yet the complacent indifference of our intellectuals is striking.

To awaken from intellectual stupor and political irrelevance in the face of the mass revolt against inflation, it is necessary for the Anglo-American left to come to grips with the scope, depth and significance of accelerating inflation in our times. Inflation is pre-eminently a political phenomenon in every sense of the word: it is a product of public policies which deeply affect markets, supply and demand, consumers, producers and speculators. Inflation is the detonator of mass political action and offers historic opportunities for broad-based ‘regime transformation’ and even revolutions in a way similar to the way the destructive imperial wars have in the past. Like wars, inflation devastates vast sectors of society, puts them all in common deteriorating positions and projects their worst nightmare – a regression into the abyss of mass destitution.

The Centrality of Inflation

The most threatening challenge to contemporary imperial regimes and their client nations is out of control inflation and a raging rise in food prices. Writers on the Left who write of the end of empire and focus on the financial crises (in the US), or the energy crises (in Europe), or the grievance of mass peasant protests over corruption in China, have overlooked the one grievance which cuts across all regimes of the world (with greater or lesser intensity but everywhere growing more powerful) namely inflation, especially in vital necessities such as food and fuel costs.

For Marxists, their narrow focus is on the class struggle at the workplace and related issues of unemployment and deteriorating work conditions as the detonator of mass unrest and organized anti-capitalist action. For environmentalists, the point of mobilization is climate change, peak oil, environment degradation and the resultant deterioration of human existence. For anti-imperialists and related anti-war activists, it is the US, EU and Israeli wars in the Middle East which represent the great moral challenges of our times and the greatest danger to world peace.

While these progressive analyses and prognoses are righteous in intent and worthy causes to support, they overlook the fact that they are not the points of greatest conflict between imperial and client regime and the great majority of humanity today. The greatest concern and the issue, which has consistently mobilized hundreds of millions over the past year, is inflation, rising food and fuel prices, declining living standards, hunger and the everyday experience (and reality) that conditions are deteriorating with no end in sight. The point of greatest contention today is not the workplace (or point of production) but in the ‘market’, the place of consumption, where money earned from production purchases less and less of the necessities of life.

Inflation: Detonator of the First Sustained World Revolt

In Asia, particularly Pakistan, India, Indonesia, South Korea, Philippines, Nepal, Mongolia and China, hundreds of millions of workers, peasants, artisans and low-paid self employed workers, as well as house-wives and pensioners have engaged in sustained mass protests as they experience a decline in the quality and quantity of food purchases as prices skyrocket. In Africa, hunger stalks the land and major food riots have occurred from Egypt through Sub-Saharan Africa to South Africa. In the Caribbean, Central and South America, food riots have led to the overthrow of regimes, mass protests, road blockages from Argentina, Bolivia, through Colombia, Venezuela and Haiti.

Recognizing the revolutionary potential of ‘hunger politics’ induced by inflation, even right-wing, as well as center-left regimes have attempted to limit unrest through (1) food subsidies, (2) raising interest rates and cutting public expenditures to slow down the economy and lessen inflation (Brazil), (3) lowering food exports in order to supply local consumers (Vietnam, India, Indonesia), (4) enacting special laws against hoarders and speculators (Philippines) and (5) repressing mass protest (Haiti, Egypt). None of these short-term, local ameliorative measures have worked: Controls of exports have not lessened imported inflation and wholesalers/retailers have not complied with price controls and engaged in hoarding and black market activity. While agricultural production has increased, the growth of non-food products (ethanol for bio-gas) has grown even faster. The ineffectiveness of these ‘reforms’ reflects the failure of agricultural policies over the past half-century, which have focused on financing large-scale specialty export agricultural crops and urban-service-industrial complexes, while neglecting basic food production by family farmers for local consumption. Countries, as diverse as Cuba, Egypt, China and the Philippines, have divested from agriculture to service (tourism in Cuba), recreational facilities for the wealthy (golf courses), agro-exports (Brazil), real estate (China), technology centers and commercial shopping malls (Philippines and India). In the process they have displaced food producing small farmers, depriving them of credits, price incentives and infrastructure – not to mention confiscating rich agricultural lands from indebted farmers for conversion to golf courses, exclusive subdivisions and shopping malls.

The result is the convergence of ongoing protests by dispossessed peasants and farmers, suffering from lack of access to land, irrigation and agricultural credits, and masses of poor urban consumers suffering from inflation of food prices. What is at fault is not merely the prices but the social relations of production. State priorities and the configuration of class power, which control the state and decree economic strategies, reorganized the economy at the expense of local low-cost and available food production. None of the ameliorative measures taken by contemporary regimes have even approached the structural roots of the inflation crisis and the rising cost of food.

Inflation and Structural Vulnerability

Inflation has had such a devastating effect today – even more than in the past – because of several profound shifts in the occupational and social organization of the economy. Worldwide class-based trade unions have declined in numbers and capacity to safeguard the interests of urban and rural wage labor. With this decline has come the abolition of wage indexes, sliding scales of wages, which allow workers wages to keep up with the rise of prices. Secondly the vast growth of informal and service sector workers are not organized to raise wages in response to increases in food prices. The growth of pensioners with fixed income has increased their vulnerability to inflationary prices, leading to sharp declines in purchasing power. The growth of contract labor, precarious labor contracts has undermined all possibilities of negotiating labor contracts which allow wage and salary workers to keep up with inflation.

Thirdly, the dominant ideology, promoted by all capitalist economists and accepted by many trade union officials, claims that wage increases, and wage indexing induces inflationary pressure. This leads to collusion between ‘labor and capital’ in creating a ‘lag’ between rising prices and wage adjustments, resulting in declining living standards. Fourthly this pernicious and erroneous doctrine deflects attention from the real causes of inflation -- declining capitalist investment in the productive economy, the vast increase of capital flowing in the paper economy, the huge increases in profits and the grotesque salaries, bonuses and payoffs to senior executives, totally unrelated to ‘performance’. As a result there is a decrease in the production and circulation of goods of mass consumption. The growth of a vast parasitical ‘service sector’ with money pursuing fewer actually available goods has led to higher prices. Most of the affluent classes (the upper 20%) can afford the higher prices, in part because they can pass on the added costs to the mass of working class and urban and rural poor. In other words, in the contemporary economy, inflation benefits the wealthy because they pay their workers in deflated currency, while they can take advantage of inflation to further jack up prices and then income. In other words the upper classes have fortified their economic positions to take account of inflation through their power over prices, income and other compensations in a way that wage workers and people on fixed income and other vulnerable sectors cannot. Bankers protect their loans via adjustable interest rates. Monopoly resource owners jack up prices to retain profits. Wholesalers mark up prices to compensate for higher commodity prices. Large-scale retailers squeeze final consumers – the great majority at the bottom of the production and distribution chain.

Inflation: The Targets of Revolt

The revolts of the mass of vulnerable consumers are directed at retailers, wholesalers and the government, which are held responsible for the higher prices. Governments are charged with deregulating the economy, subsidizing the profiteers, promoting profiteering, complicity with monopolies, imposing wages and salary constraints without commensurate control over prices and basic necessities. Where some subsidies or price controls are decreed they are not consistently implemented or enforced. Worse still, widespread evasion, hoarding and black-marketeering is rife because of official complicity and corruption. According to regime bureaucrats it is ‘easier’ to control wages than prices – hence the uneven and unjust enforcement. Moreover capitalist producers frequently dis-invest or withhold products especially necessities from the market as an effective weapon against price controls, forcing scarcity and inducing popular discontent with the incumbent regime. Reformist policies and regimes then are forced to choose between ‘lifting controls’ to increase profits and prices or maintaining controls and facing the wrath of masses confronting empty shelves. Few if any contemporary regimes are willing to make credible threats to intervene in economic sectors or even enterprises, withholding goods or investments. Even less likely are regimes willing to actually mobilize workers, farmers and consumers to take over strategic economic sectors vital to popular consumption.

Anti-Inflationary Revolts and Extra-Parliamentary Politics

Given the total dominance of unhindered and unregulated ‘free market’ ideology among all the leading political parties and within the executive, legislative and administrative branches of government, there are no institutional political vehicles through which the consumers can act to arrest their declining living standards, their decreasing capacity to meet basic needs and in many regions avoid growing malnutrition and hunger. Because of the all-pervasive and powerful stranglehold of free market capitalism among all national and international decision makers, all the meetings convoked by international organizations to deal with the ‘food crisis’ (narrowly defined as ‘hunger’ induced by scarcity and exorbitant food prices) have repeatedly failed to come up with practical and workable solutions. At best they simply pledge funds for temporary food aid, subsidies and proposals for technical or market assistance. No meeting challenges the power of corporate agriculture to raise prices, allocate investments to more profitable fuel use rather than food; no crisis managers suggest massive shifts of credits from agro-exporters to family farmers; no effort is made to end price gouging by wholesalers or retailers. In other words, the crisis managers are of the same class as the beneficiaries of high prices and scarce food producers – and therefore they operate within the same market rules, which perpetuate higher profits and declining living standards.

Given the failures of official policies and the lack of any institutional solutions of redress, the only outlet for downwardly mobile masses is extra-parliamentary opposition; the sacking of trains, stores and wholesale warehouses; the overthrow or voting out of office of incumbent regimes; the blocking of transport and seizure of government buildings; mass marches and demonstrations facing legislative and executive houses. Incumbent regimes everywhere fear mass repudiation in upcoming elections, even as their ‘populist’ opponents provide no systematic alternative. As yet the mass consumer protests, even as they draw heavily upon the families of workers, have yet to enlist the organized working class at its point of production. Only on rare occasions have organized workers engaged in ‘general strikes’ against price increases of basic foodstuffs. The process of linking producter and consumer sectors is however not far on the horizon as local joint actions are occurring and calling into question the reliance on unrestricted markets. Bourgeois journalists, some financial editorial writers and a few government advisers are aware of the growing danger of inflation, rising food prices and the profit/wage gap to the capitalist system and are calling for anti-inflationary policies and public regulation. Faced with the deepening financial crisis resulting from the speculative crash and the necessity of large-scale, long-term state intervention and bail-outs, sectors of the capitalist class are also calling for greater state supervision and tighter controls over covert (off the books) institutional swindles.

Popular perception of massive state bailouts of banks and proposals for new regulations to save the financial system has reinforced the idea that the state can equally (or with greater justice) interfere to regulate food and fuel prices and to prop up declining living standards.

Inflation and the Transition from Protest to Popular Uprisings

Inflation and high levels of engagement of the state in saving capitalism has raised mass discontent from a local protest against local price gougers and profiteers to a national political protest against a class biased state, which ignores deteriorating living standards and concerns itself only with the very rich.

Previously apolitical or even conservative workers, peasants and households who experienced incremental and cumulative gains in living standards through long hours and multiple household workers are now seeing their livelihood decline. Their earnings are devalued. Their capacity to satisfy basic needs deteriorating. The sensation of ‘going backwards’ or losing control over their everyday lives and of downward mobility is fueling mass collective anger. The treadmill of added work without rewards, respect or recognition is reinforced daily by the added costs to everyday goods. Inflation destabilizes all calculations, not only for the future, but also of everyday life: What to buy or not buy. What to pay or what to pay off. Uncertainly about what is affordable today and unaffordable tomorrow. Uncertainty spreads from the poorest to the ‘stable workers’, from the ‘fixed income’ pensioners to the ‘secure public employees’. Inflation’s global spread undermines living standards in Europe and the Americas, Asia and Africa, and with it, discontent erodes party loyalties and confidence in electoral and/or regime legitimacy. Historically nothing undermines public confidence in the currency, the banks, politicians and the existing market ideology as much as daily creeping inflation. The greatest fear of all is the sense that a lifetime of effort will result in the ‘loss of everything’ – home, transport, health, and education – as prices rise faster than income. At some point, rampant inflation leads to absolute regression and with that a rupture with all previous loyalties and commitments.


Inflation, as it accelerates, in the past and today, is the great solvent of incremental everyday habits and politics: Today it undermines incumbent politicians; tomorrow it can call into question regimes and social orders.

In the past, inflationary disorders and desperation brought forth rightist demagogues who specialize in imposing order and stability. It ill behooves the left to once again ignore the destructive effects of inflation, the demands for order and stability and mass consumer discontent. Inflationary fears are as much entrenched as class and property issues. Combating inflation, especially basic price increases is central to any prospect for a social transformation, which claims to benefit the wage and salaried workers, urban or rural dwellers, the poor, minorities, consumers and producers.

Professor Petras’ forthcoming book is: Zionism, Militarism and the Decline of US Power (Clarity Press. Ste 469, 3277 Roswell Road, Atlanta, GA 30305).

Housing prices haven't hit bottom yet

Housing prices haven't hit bottom yet

Kevin G. Hall

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The Bush administration's pledge to rescue ailing housing finance giants Fannie Mae and Freddie Mac raises anew questions about just when the nation's dismal housing market will hit bottom.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson have suggested over the past year that an end is in sight. But with each prediction, things have grown worse. For many homeowners, the deep housing slump feels like a drop off a skyscraper. Every time another 15 floors have passed, there seems to be more room to fall.

"I don't think we get strengthening in the housing market until late 2011 or 2012," said Mark Vitner, senior economist for Wachovia, the nation's fourth largest bank and one that this month hired the number-two man from the Treasury Department as its new chief executive officer to shore up its own growing exposure to mortgage debt.

Before bottoming out, prices nationwide should fall 22 percent to 29 percent on average from their peak, according to a report that Wachovia released last Monday.

"I think we're somewhere between halfway and two-thirds of the way through the correction," said Vitner, who closely studies the trends in home prices and home sales nationwide.

Other analysts are only slightly more optimistic.

"My view is that we are two-thirds through the housing downturn, at least as measured by house price declines. The price declines began in late spring 2006 and will more or less come to an end in late spring 2009," said Mark Zandi, chief economist for Moody's, a forecaster in West Chester, Pa. "The Fannie-Freddie debacle may push this out into the summer or even fall of 2009."

Paulson announced a series of measures last Sunday that were designed to assure investors that the federal government would do whatever it took to ensure the solvency of Fannie and Freddie, the two government-chartered, shareholder-owned institutions that are vital to the nation's housing market.

By buying or guaranteeing mortgages from commercial lenders, Fannie Mae and Freddie Mac allow lenders to get the loans off their books, thus freeing up more money for lending to home buyers.

In theory, Fannie and Freddie back only the safest of loans. But investors have shown themselves to be increasingly worried that the housing market might sour so much that even those loans will go bad and Fannie Mae and Freddie Mac won't have enough cash in reserve to cover them. That's why the prices of Fannie and Freddie shares have dropped by more than 80 percent over the past year.

.Analysts say there's no evidence that so-called prime loans are in danger, despite the housing downturn.

"Prime loans are not the problem. They've actually held pretty stable considering how turbulent the market around them has been," said Rick Sharga, vice president of RealtyTrac, a large online foreclosure-listing service in Irvine, Calif., that publishes some of the most-cited nationwide foreclosure statistics.

Sharga thinks that even if prices continue to decline it's unlikely that prime loans will go the way of so-called sub-prime loans, which are defaulting at record rates.

"I don't think you are looking at a savings and loan (crisis scenario), where otherwise good-standing homeowners are losing their houses because they are worth considerably less than the mortgages," he said. "I don't see the market going that far down."

As unlikely as that scenario might be, it's not impossible, however.

If the economic slowdown deepens considerably and job losses mount beyond the 30,000 to 60,000 a month that now are being reported, "all bets are off," Sharga said.

"If the economy tanks, we could be looking at a whole different scenario," he said. "We could be having a much different conversation nine months from now, but this kind of depends on all things going wrong at once."

Zandi, of Moody's, said that restoring the health of the financial sector so that it could make mortgage loans once again was crucial. Without it, his forecast of housing price-declines bottoming out next year "will prove too bright."

How low can they go? Some economists think that a close approximation may be determined by comparing home prices with the nation's rate of per-person income, called per capita income.

In the report last Monday on home prices, Wachovia's Vitner noted that the median sales price for a home — the point where half of homes cost more and half cost less — historically is about 6.19 times the national per-person income.

At the peak of the housing boom, October 2005, this ratio leapt to an all-time high of 7.34. In May, the last month for which data were available, the ratio was down to 5.74, slightly above an all-time low.

That would suggest that the median home price, which lost about 11 percent between October 2005 and the most recent reading, is nearing its bottom. It was $203,643 in May, down from $228,733 in October 2005.

But Vitner thinks it still has a way to go. Because the boom price was much higher than income figures would have suggested, the bottom is likely to be much lower. That means that the bottom median price is likely to be around $189,000, he wrote.

And historical trends no longer may be a valid basis for judging a market that's undergoing an unprecedented decline.

Until the current downturn, median home prices had declined more than two months in a row only once, in 1990. But the decline now has lasted 22 straight months.

The Wachovia report:

More from McClatchy:

Bush administration moves to bolster mortgage system

2 Wall Street execs first to face charges for sub-prime chaos

Feds order new mortgage rules to end deceptive practices

To ask a question about this story or any economic question, go to McClatchy's economy Q&A:

Commercial bankruptcies soar, reflecting widening economic woes

Commercial bankruptcies soar, reflecting widening economic woes

Tony Pugh

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Driven by a sour economy and skittish consumers, U.S. business bankruptcies saw their sharpest quarterly rise in two years, jumping 17 percent in the second quarter of 2008, according to an analysis by McClatchy.

Commercial filings for the first half of 2008 are up 45 percent from last year, as the national climate for commerce continues to deteriorate amid rising energy and food costs, mounting job losses, tighter credit and a reticence among consumers to part with discretionary income.

From April through June, 15,471 U.S. businesses called it quits, according to data from Automated Access to Court Electronic Records, an Oklahoma City bankruptcy management and data company.

States that saw the biggest increase in filings were Delaware, Montana, Oregon, Maryland and Connecticut, suggesting that the economic gloom is spreading beyond large population centers.

It was the 10th straight quarter that business bankruptcy filings have increased. Nearly 29,000 companies filed in the first half of 2008.

Another 60,000 to 90,000 others probably have closed, because roughly two to three businesses fold for every one that files for bankruptcy, said Jack Williams, resident scholar at the American Bankruptcy Institute.

The vast majority of these failed companies are among the nation's 23 million small businesses, with fewer than 100 employees. Their fortunes have tumbled as the national economic downturn has deepened.

"The climate is turning desperate for small businesses," said George Cloutier, founder of American Management Services, a consulting firm that helps small companies increase profits. "They are in crisis, and, as these numbers show, it's getting worse and worse."

Larger enterprises typically have more capital to weather downturns, but many of them also are reeling from the sputtering economy.

"I've been doing this for 36 years, and this is clearly the worst I've ever seen," said Harding Dawahare, the president of the Lexington, Ky.-based Dawahare's clothing store chain, which employs more than 400 people.

It was 1907 when Dawahare's Syrian immigrant grandfather, Serur Dawahare, began packing his mules with bags of fabric and linens and peddling his goods door to door to coal miners in Eastern Kentucky.

From those modest beginnings, Dawahare's grew to a 32-store clothing chain with outlets throughout Kentucky and a few stores in Tennessee and West Virginia.

However, Harding Dawahare did the unthinkable recently and filed for bankruptcy after amassing more than $9 million in debts. He said his problems began after a tough year in 2006, but it was the 2007 holiday season that did him in.

"We had a great third quarter, but if you don't have a good fourth quarter, you're not gonna make it. And that's essentially what happened. The economy tanked in late November and it never came back, and we just couldn't overcome it."

More than 20 percent of the newly shuttered businesses were in California, which logged 3,141 bankruptcies in the second quarter.

Texas fielded the next highest number of bankruptcies with 1,168, followed by Michigan with 702 and Florida with 635. New York was next, with 618 petitions, and Colorado had 547.

Commercial bankruptcy filings reported by Automated Access to Court Electronic Records are typically higher than official government figures due to a more thorough reading of the petitions.

Robert Lawless, a law professor at the University of Illinois and a bankruptcy expert, has researched and written about the federal government's underreporting of business bankruptcies. He estimates that roughly one in seven people who file for consumer bankruptcy do so in connection with their businesses.

Tom Clements' pet shop in Tampa, Fla., started seeing steep declines in business in April of last year.

"We didn't know what it was at the time, so we were trying to work through it," Clements said.

But as sales stayed flat for the next 15 months, Clements, 62, realized that the economy was forcing customers to make tough choices. "Obviously a puppy isn't something that everybody has to have."

With listed assets of about $2,605, Clements filed for Chapter 7 bankruptcy in June, owing more than $260,000 for back taxes, a property lease, auto leases, unpaid inventory, dog food, phone service, advertising, pest control, waste removal and other services.

"I absolutely loved that business," Clements said wistfully. "It's the kind of business where people were happy. You come, get a puppy or a dog, you go home happy. Unfortunately, I'm not a philanthropist."

Clements said the lingering debt and the money he invested had jeopardized his and his wife's retirement.

"That's why I wouldn't ever consider going back into something like that again," he said.

Williams of the bankruptcy institute said that because bankruptcies were lagging economic indicators, they probably would "continue to increase at least for the next year to 18 months at the rate that we're seeing right now."

Cloutier wants the federal government to create a $10 billion emergency-loan fund to help struggling small businesses avoid bankruptcy. Williams is skeptical.

"I think most of the business problems are not simply market-driven, they're operational. So there's a mix. Throwing more money at a poor operation means you just spent more money, but the operation is still poor."

Jodi and Steven Carbaugh of Waynesboro, Pa., ended up in bankruptcy court after they tried to expand their Cupo' Joe coffee shop in Greencastle, Pa.

In 2006, the couple used their home as collateral to buy a nearby Amish-owned bakery. "Big mistake," Jodi Carbaugh said.

As their debt increased, the couple tried to juggle four business-related loans and their home mortgage as well as pay vendors, employees, utilities and insurance. At the same time, business at the coffee shop began to slow.

Some 70 miles outside Washington, the Cupo' Joe was a favorite morning launching pad for residents who drive to work in the nation's capital. But as gas prices increased, Jodi Carbaugh noticed that business began to wane, falling 40 percent since last year.

"People had to spend more money to buy gas to get to D.C. instead of buying lattes and specialty breads," Carbaugh said. At the same time, food prices spiked. A case of eggs tripled to $60 and a 50-pound bag of flour went from about $20 to more than $50.

"The price of goods increased so drastically that we couldn't ask folks to pay what it cost to make the products," Carbaugh said.

Their fortunes bottomed out in June, when they filed for Chapter 13 bankruptcy protection.

"We worked as hard as we could for as long as we could," Carbaugh said of their failed ventures. " . . . Some of life's lessons aren't so easily learned, but we learned our lesson."

Bank of China may hold huge US debt

Bank of China may hold huge US debt

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Bank of China Ltd may own about $20 billion of debt issued by Fannie Mae and Freddie Mac, representing two-thirds of total holdings among the six largest Chinese banks, according to CLSA Ltd.

The Freddie Mac and Fannie Mae investments would amount to about 2.6 percent of total assets at Bank of China, the nation's third-biggest, CLSA analysts said yesterday in a note to clients. That compares with 0.09 percent at larger Industrial and Commercial Bank of China Ltd (ICBC), they said.

ICBC may have $1 billion of securities linked to the two beleaguered US home loan companies, while China Construction Bank Corp, the second largest, may have $7 billion of such holdings, according to the report. China CITIC Bank Co may own $1.4 billion of agency debt, CLSA said.

The government-sponsored companies tumbled on Tuesday in New York Stock Exchange composite trading as investors lost confidence in Treasury Secretary Henry Paulson's plan to shore up their finances. Moody's Investors Service reduced the lenders' financial strength ratings, saying credit losses may jeopardize dividend payments on preferred shares.

As most Chinese banks classify the holdings as available-for-sale or held-to-maturity, they are unlikely to book a loss on their income statements, and declines in bond prices in July won't affect first-half earnings, CLSA said.

Regional US banks in fears of cash calls

Regional US banks in fears of cash calls

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US regional banks will draw scrutiny during earnings season this week amid fears that losses on home equity and residential construction loans may force some to raise fresh capital or put themselves up for sale in turbulent markets.

Shares of regional lenders have come under heavy pressure on fears about the ability of smaller institutions to ride out the turmoil in the banking sector.

Such fears were thrown into stark relief last week after US banking regulators took over California-based IndyMac, making it the second-largest banking failure in US history, and leading to queues of anxious depositors outside branches.

After mixed earnings reports from regional lenders thus far, a flurry of banks with large portfolios of real-estate loans will report their second-quarter results on Tuesday, including SunTrust, Regions Financial, Fifth Third and KeyCorp, while National City will follow on Thursday.

Last week, Pittsburgh-based PNC and Ohio-based Huntington BancShares were the only two banks to report higher profits in the second quarter.

While financial services ended last week as the second-biggest boosters of the S&P 500, regional banks were one of the heaviest drags. The S&P regional banks index ended Friday's session down 0.8 per cent.

Keith Horowitz, banking analyst at Citigroup, said that as losses from portfolios of home equity and residential construction loans mount, "a number of banks will be forced to come to seek their first, or in some cases second or third rounds of capital, and as time progresses it will be increasingly difficult and more costly to raise".

However, investors fear that many regional lenders, particularly banks with smaller deposit bases or less strategic attraction for private equity funds, could struggle to raise new capital.

Many larger banks with stronger brands have already tapped investors for fresh funds and the value of those investments has deteriorated amid the recent slide in bank stocks.

Analysts say consolidation in the sector – the traditional escape hatch for pressurised regional banks – may also be less realistic in the current crisis.

David Hendler, analyst at CreditSights, a research provider, said: "Even relatively healthier banks are for the most part now saddled with their own credit problems and/or merger integrations ... they are therefore less likely to rescue banks which may need a saviour."

New accounting rules that force an acquirer to value a target's portfolio at current market prices may also stand in the way of consolidation for troubled regional banks, as potential buyers may be deterred until there is evidence that credit deterioration has slowed or access to fresh capital is more readily available.

US airlines escalate attacks on workers as losses mount

US airlines escalate attacks on workers as losses mount

By Shannon Jones

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The US airline industry, which recorded huge losses in the second quarter of 2008 due to soaring fuel prices, is stepping up its job-cutting and cost-cutting in an effort to resolve its crisis at the expense of workers.

Both AMR, the parent of American Airlines, and Delta Airlines reported second-quarter losses in excess of $1 billion. American, the largest US air carrier, posted a loss of $1.45 billion and Delta recorded a $1.04 billion deficit. Both airlines cited huge increases in the cost of jet fuel. Delta said it paid an extra $1 billion for jet fuel in the quarter compared to the same period last year. It is predicted that all US airlines will pay an additional $20 billion this year for fuel, a nearly 50 percent jump.

Continental Airlines reported a $3 million loss in the quarter, compared to a profit of $228 million in the same period one year ago. United Airlines, the second largest US carrier, says it expects to post a loss when it reports second quarter results on Tuesday.

The losses come despite revenue gains from raising ticket prices and imposing extra fees for checking baggage and seat selections. Airlines are also cutting back the number of flights and trying to pack more passengers on each plane.

Inevitably, the collapse in airline profits is translating into attacks on workers throughout the industry by eliminating flights and slashing payrolls. American plans to cut as much as 8 percent of its 85,000 workforce, or about 6,800 jobs. This will involve cutting 1,500 maintenance workers, including 1,200 mechanics. Delta meanwhile says it will cut 4,000 jobs this year. Northwest Airlines, which is set to merge with Delta, earlier announced 2,500 job cuts.

Continental Airlines says it will reduce domestic flights and cut 3,000 jobs starting in September. It predicts a 10 percent reduction in US capacity by the end of the year.

Milwaukee, Wisconsin-based carrier Midwest Airlines plans to cut 40 percent of its workforce, or 1,200 jobs. It is also calling on the Airline Pilots Association (APA) and the Association of Flight Attendants to grant concessions. In a letter to employees, Midwest CEO Timothy Hoeksema called the airline’s situation “critical.” He warned that bankruptcy could follow if the unions did not help to reduce the company’s cost structure.

United Airlines began layoffs of 385 salaried workers in Illinois and California. The airline had previously announced plans to lay off 950 pilots, 15 percent of its total. United has offered early retirement to 600 flight attendants. Comair, meanwhile, said it is laying off 106 workers in Orlando, Florida, beginning in September.

A series of smaller airlines, including Aloha AirGroup, Skybus Airlines, ATA Airlines, Maxjet and Eos Airlines, have gone out of business this year. Frontier Airlines, with 6,000 employees, filed for bankruptcy protection in April. It recently announced 456 job cuts, including pilots and flight attendants.

An analyst for Calyon securities quoted in the Washington Post July 17 warned of further drastic downsizing in the airlines. “We’re going to have less airlines one way or another—either we will have a consolidation at some point or certain airlines will go out of business. At these high oil prices, we cannot support the size of the industry we have now. We have too many airlines with too many seats and too many hubs.”

An analyst quoted by Forbes saw a 15 percent reduction in airline capacity by the end of 2008. Another analyst warned: “The third quarter ought to make the Red Sea look dry. It will be awful,” referring to mounting losses.

Despite their huge losses, stocks of both American and Delta rose this week, a response to the draconian cost-cutting measures they are implementing.

Airline safety

Accompanying these cutbacks by the airlines are worrying indications that they are posing a threat to air safety. Eight pilots have filed a complaint against US Airways with the Federal Aviation Administration (FAA) alleging the carrier put pressure on them to fly with less fuel than they felt was safe.

They said the airline called them in for “fuel conservation training” because they carried 10 to 15 minutes more fuel than the FAA minimum standard. The more fuel a plane carries the more it burns because of the added weight. The APA took out a full-page ad in USA Today to publicize the case.

Morgan Durrant, a spokesman for the airline, justified the airline’s policy and in the process virtually admitted that the carrier faced pressure to shortchange safety in the interest of cutting costs. “With the high price of oil, it is a balance between having enough to travel safely and also flying efficiently,” he declared.

In April 2008, an investigative report published by MSNBC cited pressure by airlines on pilots to skimp on fuel to the detriment of safety. It said it had compiled a database of complaints filed by pilots with the FAA that “reveal wide-ranging concern among pilots that airlines are compelling them to fly with too little fuel.”

The report cited a bulletin issued by Continental Airlines last year that declared, “Adding fuel indiscriminately without critical thinking ultimately reduces profit sharing and possibly pension funding.”

It quoted one pilot who, after a bad flight, filed a long report that complained, “We’ve taken just about every facet of what we once had as a safety net and reduced it to saving 50 cents where we can.

“I am absolutely confident that if this is the way this company is going to play the game we will soon be on CNN, and not in a good way.”

A major scandal erupted last year when it was revealed that FAA inspectors allowed Southwest Airlines planes to evade years’ worth of critical inspections without penalty. FAA inspectors reported threats by higher-ups for reporting violations.

The global economy is at the point of maximum danger

The global economy is at the point of maximum danger

By Ambrose Evans- Pritchard

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It feels like the summer of 1931. The world's two biggest financial institutions have had a heart attack. The global currency system is breaking down. The policy doctrines that got us into this mess are bankrupt. No world leader seems able to discern the problem, let alone forge a solution.

The International Monetary Fund has abdicated into schizophrenia. It has upgraded its 2008 world forecast from 3.7pc to 4.1pc growth, whilst warning of a "chance of a global recession". Plainly, the IMF cannot or will not offer any useful insights.

Its "mean-reversion" model misses the entire point of this crisis, which is that central banks have pushed debt to fatal levels by holding interest too low for a generation, and now the chickens have come home to roost. True "mean-reversion" would imply debt deflation on such a scale that would, if abrupt, threaten democracy.

The risk is that these same central banks will commit a fresh error, this time overreacting to the oil spike. The European Central Bank has raised rates, warning of a 1970s wage-price spiral. Fixated on the rear-view mirror, it is not looking through the windscreen.

The eurozone is falling into recession before the US itself. Its level of credit stress is worse, if measured by Euribor or the iTraxx bond indexes. Core inflation has fallen over the last year from 1.9pc to 1.8pc.

The US may soon tip into a second leg of this crisis as the fiscal package runs out and Americans lose jobs in earnest. US bank credit has contracted for three months. Real US wages fell at almost 10pc (annualised) over May and June. This is a ferocious squeeze for an economy already in the grip of the property and debt crunch.

No doubt the rescue of Fannie Mae and Freddie Mac - $5.3 trillion pillars of America's mortgage market - stinks of moral hazard. The Treasury is to buy shares: the Fed has opened its window yet wider. Risks have been socialised. Any rewards will go to capitalists.

Alas, no Scandinavian discipline for Wall Street. When Norway's banks fell below critical capital levels in the early 1990s, the Storting authorised seizure. Shareholders were stiffed.

But Nordic purism in the vast universe of US credit would court fate. The Californian lender IndyMac was indeed seized after depositors panicked on the streets of Encino. The police had to restore order. This was America's Northern Rock moment.

IndyMac will deplete a tenth of the $53bn reserve of the Federal Deposit Insurance Corporation. The FDIC has some 90 "troubled" lenders on watch. IndyMac was not one of them.

The awful reality is that Washington has its back to the wall. Fed chief Ben Bernanke thought the US could always get out of trouble by monetary stimulus "à l'outrance", and letting the dollar slide. He has learned that the world is a more complicated place.

Oil has queered the pitch. So has America's fatal reliance on foreign debt. The Fannie/Freddie rescue, incidentally, has just lifted the US national debt from German 'AAA' levels to Italian 'AA-' levels.

China, Russia, petro-powers and other foreign states own $985bn of US agency debt, besides holdings of US Treasuries. Purchases of Fannie/Freddie debt covered a third of the US current account deficit of $700bn over the last year. Alex Patelis from Merrill Lynch says America faces the risk of a "financing crisis" within months. Foreigners have a veto over US policy.

Japan did not have this problem during its Lost Decade. As the world's supplier of credit, it could let the yen slide. It also had a savings rate of 15pc. Albert Edwards from Société Générale says this has fallen to 3pc today. It has cushioned the slump. Americans are under water before they start.

My view is that a dollar crash will be averted as it becomes clearer that contagion has spread worldwide. But we are now at the point of maximum danger. Britain, Japan, and the Antipodes are stalling. Denmark is in recession. Germany contracted in the second quarter. May industrial output fell 6pc in Holland and 5.5pc in Sweden.

The coalitions in Belgium and Austria have just collapsed. Germany's left-right team is fraying. One German banker told me that the doctrines of "left Nazism" (Otto Strasser's group, purged by Hitler) had captured the rising Die Linke party. The Social Democrats are picking up its themes to protect their flank.

This is the healthy part of Europe. Further south, we are not far away from civic protest. BNP Paribas has just issued a hurricane alert for Spain.

Finance minister Pedro Solbes said Spain is facing the "most complex" economic crisis in its history. Actually, it is very simple. The country was lulled into a trap by giveaway interest rates of 2pc under EMU, leading to a current account deficit of 10pc of GDP.

A manic property bubble was funded by foreigners buying covered bonds and securities. This market has dried up. Monetary policy is now being tightened into the crunch by the ECB, hence the bankruptcy last week of Martinsa-Fadesa (€5.1bn). With Franco-era labour markets (70pc of wages are inflation-linked), the adjustment will occur through closure of the job marts.

China, India, East Europe and emerging Asia have all stolen growth from the future by condoning credit excess. To varying degrees, they are now being forced to pay back their own "inter-temporal overdrafts".

If we are lucky, America will start to stabilise before Asia goes down. Should our leaders mismanage affairs, almost every part of the global system will go down together. Then we are in trouble.

Bernanke, Paulson Pressed to Seek Big-Government Bank Bailout

Bernanke, Paulson Pressed to Seek Big-Government Bank Bailout

By Rich Miller

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Ben S. Bernanke and Henry Paulson are under pressure to embrace the big-government policies of America in the 1930s, or Sweden in the 1990s, to contain the conflagration engulfing the U.S. housing and financial markets.

Among the ideas: Using taxpayer money to shore up the capital of loss-ridden Fannie Mae and Freddie Mac, setting up new agencies to buy and refinance mortgages in default, even taking over failing financial institutions.

The government's current ‘‘fire-brigade approach to dealing with the fallout from the extremely weak domestic economy is eroding general confidence in the U.S. financial system,'' says Brian Bethune, chief U.S. financial economist at Lexington, Massachusetts-based Global Insight. ‘‘Bold, creative, aggressive policy action is needed.''

Trying to envision what steps Washington might have to take, economists hearken back to the last time the country faced a nationwide decline in house prices, during the Great Depression. In response to those travails -- which were far worse than today's -- President Franklin D. Roosevelt adopted a radical, multipronged approach with a much bigger government role than anyone is proposing now.

‘‘You need a change in mindset,'' says Mohamed El-Erian, co-chief executive officer of Pacific Investment Management Co.

‘‘So far, the hope has been the private sector would provide'' the money, says El-Erian, whose Newport Beach, California-based firm manages about $800 billion for investors. ‘‘Now the focus is on Washington.''

Taxpayer Money

Treasury Secretary Paulson took a step toward committing taxpayer money when he asked Congress last week to give Treasury the power to invest in Fannie Mae and Freddie Mac if necessary to keep the largest U.S. mortgage-finance companies operating.

Like Federal Reserve Chairman Bernanke's rescue of Bear Stearns Cos. in March, Paulson's plan hasn't convinced investors that other institutions won't fail. Nor have recession alarms been silenced by the Fed's interest-rate cuts or President George W. Bush's $168-billion stimulus package.

Some experts say the government needs to set up new agencies to foster a recovery in the housing industry, the financial markets and the economy.

Alan Blinder, a former Fed vice chairman who is now a professor at Princeton University in New Jersey, calls for the return of what he's dubbed ‘‘The Incredible HOLC'' -- the Home Owners Loan Corp. Set up in 1933, the HOLC acquired defaulted residential mortgages from lenders and investors and then refinanced the loans on more favorable terms for the borrowers.

Treasury's Investment

The Treasury invested $200 million in HOLC stock, the equivalent of about $20 billion today after taking account of the growth of the economy, according to Alex Pollock of the American Enterprise Institute in Washington. The company then was able to borrow an additional $2 billion through bond issues.

The HOLC made more than a million loans and by 1937 owned about 14 percent of outstanding mortgages. That's equivalent to about 10 million loans worth some $1.4 trillion now, or approximately the total of IND' ))">subprime mortgages, Pollock reckons. The company was liquidated in 1951 after returning an accumulated surplus of $14 million to the Treasury.

The current Congress borrowed some of the principles that governed the HOLC for its proposed expansion of the Federal Housing Administration's role in mortgage finance, though on a much smaller scale. Under legislation the lawmakers are considering, the FHA would gain the ability to refinance up to $300 billion worth of loans at an estimated cost to the government of $3 billion.

Expanded Program

Blinder says he expects the program to pass this year and predicts it ‘‘will be expanded in 2009.''

The former Fed policy maker also suggests the formation of a public-private partnership that would buy up mortgage-backed securities and other collateralized debt obligations at bargain- basement prices. The aim would be to get illiquid fixed-income markets working again.

Some experts have touted another Depression-era agency for revival: the Reconstruction Finance Corp.

Joseph Mason, a former bank regulator who's now a professor at Louisiana State University in Baton Rouge, says the RFC took a three-step approach to tackling the financial crisis: It closed the weakest banks, recapitalized the others through investment in preferred stock and then tried to return them quickly to health by throwing out management and halting dividend payments.

Swedish Model

Sweden followed some of the same principles in dealing with its banking crisis in the early 1990s. The government was forced to take over several failing financial institutions and ended up owning about 22 percent of the country's banking-system assets.

The cost to taxpayers was close to 4 percent of Sweden's gross domestic product, according to Nicola Mai of JPMorgan Chase & Co. in London. In the U.S., that would be equivalent to more than $400 billion today.

Hans Soderstrom, a professor at the Stockholm School of Economics, isn't convinced the U.S. needs to go that far. ‘‘Our whole banking system was collapsing,'' he says. ‘‘I don't think the U.S. banking system is. It's best, then, to let the private sector take the losses.''

U.S. policy makers have shied away from dramatic actions in hopes that the housing market and the financial-services industry would right themselves and the economy would recover. Those hopes have so far proven misplaced.

Credibility Undermined

‘‘Their repeated attempts to talk up the market during a fundamental crisis have undermined their credibility with legislators, business people and the public,'' Mason says.

Confidence among homebuilders has fallen to record lows as prices and sales continue to decline. The Standard & Poor's 500 Banks IndexRichard Berner of 22 stocks is down 39 percent this year, even after a rally at the end of last week. And economists such as Morgan Stanley's see the economy slipping into a recession in the fourth quarter.

Tom Gallagher, a managing director in Washington for money- management and research firm ISI Group, says significant government action to shore up the housing market and the financial-services industry may have to wait until next year, after a new president takes office.

‘‘Every time something happens, they plug a hole and two new holes open up,'' says Nouriel Roubini, a former Treasury official who is chairman of Roubini Global Economics in New York. ‘‘What they need is a systematic plan on how to approach this mess.''

Think Tank Calls For Bush to Be Dictator For Life

Think Tank Calls For Bush to Be Dictator For Life

Lee Rogers

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Family Security Matters a neo-conservative based think tank has published an article advocating that George W. Bush should be a dictator for life. The organization has since taken the article down, but is still viewable via this cached link.

Conquering the Drawbacks of Democracy: By Philip Atkinson

The article written by Philip Atkinson states that Bush would fail his country by becoming an ex-President or can achieve greatness by becoming President-for-Life Bush in order to bring sense to Congress and sanity to the Supreme Court. Atkinson is bluntly advocating that Bush should become dictator for life with these outrageously anti-American statements.

From the article:

President Bush can fail in his duty to himself, his country, and his God, by becoming “ex-president” Bush or he can become “President-for-Life” Bush: the conqueror of Iraq, who brings sense to the Congress and sanity to the Supreme Court. Then who would be able to stop Bush from emulating Augustus Caesar and becoming ruler of the world? For only an America united under one ruler has the power to save humanity from the threat of a new Dark Age wrought by terrorists armed with nuclear weapons.

Atkinson also advocates that Bush should get rid of everyone in Iraq through military force and repopulate the country with Americans.

From the article:

If President Bush copied Julius Caesar by ordering his army to empty Iraq of Arabs and repopulate the country with Americans, he would achieve immediate results: popularity with his military; enrichment of America by converting an Arabian Iraq into an American Iraq (therefore turning it from a liability to an asset); and boost American prestiege while terrifying American enemies.

Although these statements by Atkinson are completely insane and entirely anti-American, the author also shows complete ignorance as to the type of government the United States is supposed to be. The author states that Bush is a victim of Democracy when in fact the United States is not a Democracy.

From the article:

Yet in 2007 he is generally despised, with many citizens of Western civilization expressing contempt for his person and his policies, sentiments which now abound on the Internet. This rage at President Bush is an inevitable result of the system of government demanded by the people, which is Democracy.

The inadequacy of Democracy, rule by the majority, is undeniable – for it demands adopting ideas because they are popular, rather than because they are wise. This means that any man chosen to act as an agent of the people is placed in an invidious position: if he commits folly because it is popular, then he will be held responsible for the inevitable result. If he refuses to commit folly, then he will be detested by most citizens because he is frustrating their demands.

Although I do agree that Democracy is a horrible form of government, Atkinson's argument holds no water since we do not have a Democracy in this country. The United States is in fact a Constitutional Republic, so it is not possible for Bush to be a victim of Democracy.

Unfortunately, Atkinson might get his wish of a Bush dictatorship. The HSPD-20/NSPD-51 directives issued by Bush states that the President is to have complete control over all three branches of government during a catastrophic emergency. In addition, the Department of Homeland Security plans for continuity of government operations have been kept secret from Congress.

Either way, Atkinson the author of this article is clearly an insane individual who hates America. From advocating the colonization of Iraq with Americans as well as a Bush dictatorship, it is clear this individual needs some serious help. It also leaves questions as to the judgment of this Family Security Matters organization considering they openly published this anti-American trash. An investigation by Free Market News Network, found that Family Security Matters is actually a front group for the Center for Security Policy a group that Vice President Dick Cheney is a known associate of. Removing the article was clearly a means of damage control and it shows how rabid and insane the neo-conservative base has become. This article shows that today's neo-conservative is nothing more than the 21st century equivalent of a Nazi in pre World War II Germany.

Death of Free Internet is Imminent

Death of Free Internet is Imminent

Canada Will Become Test Case

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In the last 15 years or so, as a society we have had access to more information than ever before in modern history because of the Internet. There are approximately 1 billion Internet users in the world B and any one of these users can theoretically communicate in real time with any other on the planet. The Internet has been the greatest technological achievement of the 20th century by far, and has been recognized as such by the global community.

The free transfer of information, uncensored, unlimited and untainted, still seems to be a dream when you think about it. Whatever field that is mentioned- education, commerce, government, news, entertainment, politics and countless other areas- have been radically affected by the introduction of the Internet. And mostly, it's good news, except when poor judgements are made and people are taken advantage of. Scrutiny and oversight are needed, especially where children are involved.

However, when there are potential profits open to a corporation, the needs of society don't count. Take the recent case in Canada with the behemoths, Telus and Rogers rolling out a charge for text messaging without any warning to the public. It was an arrogant and risky move for the telecommunications giants because it backfired. People actually used Internet technology to deliver a loud and clear message to these companies and that was to scrap the extra charge. The people used the power of the Internet against the big boys and the little guys won.

However, the issue of text messaging is just a tiny blip on the radar screens of Telus and another company, Bell Canada, the two largest Internet Service Providers (ISP'S) in Canada. Our country is being used as a test case to drastically change the delivery of Internet service forever. The change will be so radical that it has the potential to send us back to the horse and buggy days of information sharing and access.

In the upcoming weeks watch for a report in Time Magazine that will attempt to smooth over the rough edges of a diabolical plot by Bell Canada and Telus, to begin charging per site fees on most Internet sites. The plan is to convert the Internet into a cable-like system, where customers sign up for specific web sites, and then pay to visit sites beyond a cutoff point.

From my browsing (on the currently free Internet) I have discovered that the 'demise' of the free Internet is slated for 2010 in Canada, and two years later around the world. Canada is seen a good choice to implement such shameful and sinister changes, since Canadians are viewed as being laissez fair, politically uninformed and an easy target. The corporate marauders will iron out the wrinkles in Canada and then spring the new, castrated version of the Internet on the rest of the world, probably with little fanfare, except for some dire warnings about the 'evil' of the Internet (free) and the CEO's spouting about 'safety and security'. These buzzwords usually work pretty well.

What will the Internet look like in Canada in 2010? I suspect that the ISP's will provide a "package" program as companies like Cogeco currently do. Customers will pay for a series of websites as they do now for their television stations. Television stations will be available on-line as part of these packages, which will make the networks happy since they have lost much of the younger market which are surfing and chatting on their computers in the evening. However, as is the case with cable television now, if you choose something that is not part of the package, you know what happens. You pay extra.

And this is where the Internet (free) as we know it will suffer almost immediate, economic strangulation. Thousands and thousands of Internet sites will not be part of the package so users will have to pay extra to visit those sites! In just an hour or two it is possible to easily visit 20-30 sites or more while looking for information. Just imagine how high these costs will be.

At present, the world condemns China because that country restricts certain websites. "They are undemocratic; they are removing people's freedom; they don't respect individual rights; they are censoring information," are some of the comments we hear. But what Bell Canada and Telus have planned for Canadians is much worse than that. They are planning the death of the Internet (free) as we know it, and I expect they'll be hardly a whimper from Canadians. It's all part of the corporate plan for a New World Order and virtually a masterstroke that will lead to the creation of billions and billions of dollars of corporate profit at the expense of the working and middle classes.

There are so many other implications as a result of these changes, far too many to elaborate on here. Be aware that we will all lose our privacy because all websites will be tracked as part of the billing procedure, and we will be literally cut off from 90% of the information that we can access today. The little guys on the Net will fall likes flies; Bloggers and small website operators will die a quick death because people will not pay to go to their sites and read their pages.

Ironically, the only medium that can save us is the one we are trying to save- the Internet (free). This article will be posted on my Blog, and I encourage people and groups to learn more about this issue. Canadians can keep the Internet free just as they kept text messaging free. Don't wait for the federal politicians. They will do nothing to help us.

I would welcome a letter to the editor of the Standard Freeholder from a spokesperson from Bell Canada or Telus telling me that I am absolutely wrong in what I have written, and that no such changes to the Internet are being planned, and that access to Internet sites will remain FREE in the years to come. In the meantime, I encourage all of you to write to the media, ask questions, phone the radio station, phone a friend, or think of something else to prevent what appears to me to be inevitable.

Maintaining Internet (free) access is the only way we have a chance at combatting the global corporate takeover, the North American Union, and a long list of other deadly deeds that the elite in society have planned for us. Yesterday was too late in trying to protect our rights and freedoms. We must now redouble our efforts in order to give our children and grandchildren a fighting chance in the future.

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