Wednesday, August 27, 2008

Census report shows rising poverty in US

Census report shows rising poverty in US

By Barry Grey
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The Census Bureau reported Tuesday that the official poverty rate in the United States rose in 2007 to 12.5 percent, compared to 12.3 percent the previous year. According to the bureau’s American Community Survey, last year 37.3 million Americans were living below the income level, which, according to the government, signifies poverty.

This is an increase of 800,000, or 2 percent, over the official poverty level for 2006. As damning as the official figures are, the real scale of poverty in the US is much higher. The government set the poverty cut-off point for a family of four in 2007 at $21,203. Such an income means outright destitution. Millions more Americans live in conditions that by any objective standard amount to poverty.

The number of children living below the official poverty line increased much more sharply in 2007, rising to 13.3 million from 12.8 million in 2006, an increase of 3.9 percent. According to the government’s figures, 17.4 percent of American children were in poverty last year.

The poverty level for Latinos and foreign-born Americans also rose more sharply than the overall increase.

The official poverty rates for both adults and children are considerably higher than their low points in the 1990s. Between 2001 (when the official poverty rate was 11.3 percent) and 2007—a period of economic expansion marked by a massive accumulation of wealth at the very top of American society—the poverty rate rose by 10.6 percent. The rate for 2007 marked the biggest jump in poverty during an economic recovery in US history.

These figures constitute an indictment of American capitalism and both of its major political parties, which have carried out a ruthless policy of tax cuts for the rich, reductions in social programs, and deregulation of big business for the purpose of redistributing the national wealth from the working class to the financial elite and facilitating an orgy of corporate speculation and profiteering.

The result of these “free market” policies is the current financial crisis and recession, which are having a devastating impact on working class living standards. The Census Bureau report issued Tuesday does not take into account the collapse of the housing market and wave of home foreclosures, the sharp rise in inflation, and the jump in unemployment, all of which have gathered steam since the beginning of 2008.

“Things are a lot worse than these numbers show,” said Douglas Besharov, resident scholar at the American Enterprise Institute. “If you measured poverty today, it would probably be much higher than the report said.”

Detroit is the most impoverished large city in the United States, according to the Census Bureau report. Approximately one in three Detroiters lives below the official poverty level. Cleveland, Buffalo, El Paso, Memphis, Miami, Milwaukee, Newark, Philadelphia and Cincinnati round out the top 10 most impoverished cities with populations of 250,000 or more.

Income levels in Michigan give an indication of the immense growth of economic disparities, which has accelerated over the past decade. The township of West Bloomfield, a half-hour’s drive from Detroit, is on the list of places with populations of 65,000 to 250,000 that have the highest median household income at $99,000. The social devastation wrought by waves of auto plant closures is reflected in the median household income figure for Flint, once the center of the General Motors manufacturing empire. It hovers near the official poverty level for a family of five at $26,000.

According to the Census report, overall median household income in the US, adjusted for inflation, rose 1.3 percent in 2007 from the year before, to $50,233. However, inflation-adjusted income for working people has declined sharply since the beginning of the last economic expansion in 2001.

“For poverty and median income, this was the worst economic expansion on record,” said Robert Greenstein, executive director of the Center on Budget and Policy Priorities. “The gains from the expansion that started at the end of ‘01 were concentrated among higher-income Americans.”

According to Jared Bernstein, senior economist at the Economic Policy Institute, had workers continued to receive the income increases they obtained in the 1990s, they would have seen a jump in earnings of $2,600 between 2001 and 2007. Instead, income decreased by $300.

Moreover, the real income of American workers has dropped sharply this year. The most recent Bureau of Labor statistics report found that real average weekly earnings fell by 0.8 percent from June to July. Over the past year, weekly earnings fell by 3.1 percent. Thus, the average household now earns $1,500 less than it would if wages had kept pace with inflation over the past 12 months.

The Census report noted that the median income gap between women and men working full-time closed to its smallest level ever in 2007. Women averaged 78 percent of what men earned. But the Census found that a major reason the gap is shrinking is that men’s earnings have been flat.

On health insurance, the report showed a small decrease in the number of uninsured Americans from 2006 to 2007. The Census Bureau said some 45.7 million people, or 15.3 percent, had no coverage, down from 47 million, or 15.8 percent, in 2006. However, the number and rate of uninsured are higher today than they were at the outset of the Bush administration in 2001. That year, 39.8 million people, or 14.1 percent, were uninsured.

And the share of Americans with employer-based coverage fell for the seventh year in a row. It is now down to 59.3 percent, from 62.6 percent in 2001.

Other economic news reported this week points to a further growth of recession, promising to fuel a sharper increase in poverty. According to the S&P/Case-Shiller index, home prices continued to fall in June, declining 0.6 percent from May. In the second quarter of this, home prices plummeted by 15.4 percent. In 10 major metropolitan areas, they were down 17 percent in June from the year before.

Moreover, the banking crisis that is fueling the recession is assuming ever-larger dimensions. In its latest quarterly report on the banking industry, the Federal Deposit Insurance Corporation on Tuesday raised the number of banks on its list of “problem” lenders to 117, up from 90 at the end of March.

On Friday, state and federal regulators closed another regional bank, Columbian Bank and Trust of Topeka, Kansas, the ninth bank to fail so far this year and the fifth since mid-July.

FDIC may borrow money from Treasury: report

FDIC may borrow money from Treasury: report

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Federal Deposit Insurance Corp (FDIC) might have to borrow money from the Treasury Department to see it through an expected wave of bank failures, the Wall Street Journal reported.

The borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank, the paper said.

The borrowed money would be repaid once the assets of that failed bank are sold.

"I would not rule out the possibility that at some point we may need to tap into (short-term) lines of credit with the Treasury for working capital, not to cover our losses," Chairman Sheila Bair said in an interview with the paper.

Bair said such a scenario was unlikely in the "near term." With a rise in the number of troubled banks, the FDIC's Deposit Insurance Fund used to repay insured deposits at failed banks has been drained.

In a bid to replenish the $45.2 billion fund, Bair had said on Tuesday that the FDIC will consider a plan in October to raise the premium rates banks pay into the fund, a move that will further squeeze the industry.

The agency also plans to charge banks that engage in risky lending practices significantly higher premiums than other U.S. banks, Bair said.

The last time the FDIC had borrowed funds from the Treasury was at nearly the tail end of the savings-and-loan crisis in the early 1990s after thousands of banks were shuttered.

The fact that the agency is considering the option again, after the collapse of just nine banks this year, illustrates the concern among Washington regulators about the weakness of the U.S. banking system in the wake of the credit crisis, the Journal said.

Home prices drop by record amount in 2Q

Home prices drop by record amount in 2Q

Private housing index shows home prices tumbling by record amount nationwide in June

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A widely watched index released Tuesday showed home prices dropping by the sharpest rate ever in the second quarter, but the data for June suggest the severity of the housing slump may be waning.

The Standard & Poor's/Case-Shiller U.S. National Home Price Index tumbled a record 15.4 percent during the quarter from the same period a year ago.

The monthly indices also clocked in record declines. The 20-city index fell by 15.9 percent in June compared with a year ago, the largest drop since its inception in 2000. The 10-city index plunged 17 percent, its biggest decline in its 21-year history.

However, the rate of single-family home price declines slowed from May to June, a possible silver lining, the index creators said.

"While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation in price declines at the national level" said David M. Blitzer, chairman of the index committee at S&P.

Fourteen cities in the monthly index showed improvement from May to June, but nine recorded positive returns.

The index's glimmer of hope follows another surprisingly positive housing headline on Monday. Existing home sales rose in July, surpassing expectations, as buyers snatched up cheap distressed properties in the hardest hit housing markets.

Still, on a year-over-year basis, no city in the Case-Shiller 20-city index saw price gains in June, the third straight month that's happened.

Las Vegas led the largest annual declines, falling 28.6 percent followed by Miami at 28.3 percent and Phoenix at 27.9 percent.

Charlotte, N.C., the last city in the index to report depreciation during the current housing downturn, posted its largest drop since 1991 at 1 percent.

Backlog of US homes for sale is worst on record

Backlog of US homes for sale is worst on record

By Stephen Foley

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The number of unsold homes on the market in the United States is at levels not seen for at least 40 years, and prices are continuing to slide, according to a disheartening new survey.

With participants throughout the financial system saying that the credit crisis cannot end until the US housing market stabilises, the monthly data from the National Association of Realtors (NAR) failed to show any unequivocal improvement.

The July figures did show an increase in the number of buyers, lured by the prospect of getting a long-term bargain. However, two out of every five sales are now distressed sales – such as foreclosed homes put on the market by banks – and desperate sellers are continuing to drop their prices.

The median price of a US home fell in July to $212,400, down 7.1 per cent on a year ago, according to the NAR. There was a 3.1 per cent increase in the seasonally adjusted number of sales last month compared with June, better than economists had predicted, but activity levels were 13.2 per cent lower than July 2007, and the number of homes coming on to the market also rose in July, meaning that it would take 11.2 months to clear the backlog at the current pace. That figure is the highest since the NAR began collecting data in 1968.

All the figures exclude newly built homes, of which there is a glut and whose latest monthly sales data is released today.

Sales activity has picked up in those parts of the country which were first into the downturn and which have suffered the biggest house price falls, particularly in the South-western US, where developers spent billions building new homes to meet demand from speculators.

Lawrence Yun, NAR's chief economist, said home prices could reach a bottom in these regions relatively soon, even if the rest of the country lags behind. "Sales have picked up significantly in several Florida and California markets. Home prices generally follow sales trends after a few months of lag time," he said. "Still, inventory remains high in many parts of the country and will require time to fully absorb."

Stock market investors declined to interpret the increased sales activity as green shoots of recovery. The Dow Jones Industrial Average closed down 242 – 2.1 per cent – at 11,386, potentially presaging a weak start for the FTSE 100 today when London traders return from the long weekend. John Lonski, chief executive at Moody's Investors Service, said the 3.1 per cent month-on-month increase in sales activity was "a step in the right direction". He said: "The question is whether more steps will be taken."

There were several reasons to be less than cheerful, including the rise in unemployment and weakening consumer confidence, together with the rise in mortgage rates and tighter borrowing conditions, which are pushing mortgages out of reach for more and more Americans, Mr Lonski said.

Trillions of dollars of debt was built atop the US housing market, as Wall Street used mortgages as the collateral for a vast array of derivatives, traded throughout the credit markets. As US borrowers have begun defaulting on their mortgages in record numbers, and as the value of their homes has tumbled, it has become impossible to properly assess the value of those trillions of dollars of debt. As a result, large parts of the credit markets have ground to a halt.

The rise in US mortgage rates is being exacerbated by fears over the future of Fannie Mae and Freddie Mac, the mortgage finance giants, who own or guarantee nearly half of all US home loans. Last night, JPMorgan Chase said it would have to write off a further $600m after its holdings of Fannie and Freddie preferred stock tumbled in value.

Beijing Swells Dollar Reserves Through Stealth

Beijing Swells Dollar Reserves Through Stealth

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Rule changes for commercial banks are acting as cover for exchange rate intervention, writes Ambrose Evans-Pritchard

China has resorted to stealth intervention in the currency markets to amass US dollars, using indirect means to hold down the yuan and ease the pain for its struggling exporters as the global slowdown engulfs the economy.

A study by HSBC's currency team in Asia has concluded that China's central bank is in effect forcing commercial banks to build up large dollar reserves, using them as arms-length proxies in a renewed campaign of exchange rate intervention.

Beijing has raised the reserve requirement for banks five times since March, quickening the pace with two half-point rises in late June.

This is having major spill-over effects into the currency markets because banks in China have been required over the last year to hold extra reserves in dollars rather than yuan. The latest moves have lifted the mandatory deposit from 15pc to 17.5pc of total lending since March.

"China has used the pretext of reserve requirement hikes to help slow yuan appreciation. We estimate that the PBOC [central bank] intervened by about $49.6bn in June," said Daniel Hui, the bank's Asia strategist.

Beijing has also slashed the amount of foreign debt banks operating in China can hold. The effect is to oblige the banks to become net buyers of dollars, halting the flow of foreign "hot money".

Nobel economists warn we are not out of the woods
Dollar surge is not all good news for America
Given the sheer scale of China's foreign reserves - now $1,800bn (£970bn) - any shift in its exchange policy now ripples around the globe. The covert buying may help to explain at least part of the explosive dollar rebound over recent weeks.

There is little doubt that the key driver behind the wild currency ructions this summer has been the blizzard of dire data from Britain, Europe, Japan and Australasia. The mounting danger of a full-fledged recession across the club of rich OECD nations appears to have caught the markets off guard.

The closely watched Dollar Index reached an all-time low in March. It crept up gradually in the early summer before smashing through resistance in July.

The world's currency system is swivelling on its axis. Central banks in Asia and Europe have stopped raising rates, and some have begun to cut aggressively. The Federal Reserve is no longer nakedly exposed. Indeed, investors are already starting to look ahead to the next round of Fed tightening.

The 18pc slide in oil prices from a peak of $147 a barrel in July has added juice to the dollar rally. Russia and the Middle East petro-powers tend to recycle a high proportion of their vast earnings from oil into the eurozone, either by purchasing European bonds or expensive imports.

A Bundesbank study found 40 cents of every dollar spent by eurozone countries on oil imports comes back again one way or another. The figure for the US is just 10 cents. This trade bias has given oil a new character as a sort of anti-dollar driving the currency markets.

Even so, the China effect is a key ingredient in the dollar comeback. Beijing's Politburo is clearly disturbed by the sudden downward turn in the economy as export markets freeze, and surging wage inflation in the country's manufacturing hubs eats away at profit margins.

"They are now more worried about growth than overheating, and you are seeing that play out in the currency markets. There has been a remarkable change of view," said Simon Derrick, exchange rate chief at the Bank of New York Mellon.

China's PMI purchasing managers index fell below 50 for the first time in July, signalling an outright contraction in manufacturing output. Hong Kong's economy contracted 1.4pc in the second quarter. The Politburo has rushed through special rebates for textile producers now caught in a ferocious downturn.

Much of the clothing, footwear and furniture industry has been hit, leading to mass plant closures in the Pearl River Delta.

"During the first half of this year, about 67,000 small and medium-sized companies went bankrupt throughout China, leaving more than 20m people out of work," said the National Development and Reform Commission. "Bankruptcies of textile and spinning companies have numbered more than 10,000. Two thirds are on the brink of bankruptcy."

Last week's rebound on the Shanghai stock market stalled on fading hopes of a fiscal stimulus package. "It is unrealistic to expect the government to rescue the market," said Li Ka-shing, chairman of Hutchison. "Speculators should be very cautious now. The worst is not over in the global credit crisis."

Lehman Brothers warns of a risk that a housing slump and the 55pc equity crash since October could combine with a global downturn to set off a "vicious cycle". House prices have already fallen 18pc in Guangzhou and 9pc in Beijing. Prices are now falling in cities that make up over half China's population.

350 immigrant workers arrested in raid on Mississippi factory

350 immigrant workers arrested in raid on Mississippi factory

By David Walsh
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On Monday, in the latest in a series of large-scale, brutal operations, US Immigration and Customs Enforcement (ICE) agents arrested some 350 immigrant workers employed by Howard Industries in Laurel, Mississippi. The company, which employs more than 3,000 people in Jones County, was forced to close its manufacturing facility for the day.

A raid was also conducted at the Howard Technology Park in nearby Ellisville, in southeast Mississippi. Howard, one of the world’s largest manufacturers of electrical transformers, produces dozens of commercial and industrial products.

Hundreds of heavily armed ICE agents, who arrived in unmarked cars and white vans, swarmed into the Laurel facility Monday morning, sealing it off and rounding up ‘suspect’ employees. ICE agents questioned the workers in mobile trailers.

Hispanic workers were segregated from the other plant employees; US citizens were provided blue armbands to separate them from the immigrants. The media reported that motorists traveling on roads in back of the plant were stopped by officers, wearing flak vests and driving unmarked vehicles, and told to leave the area.

Those detained, who include heads of households, are being held at an undisclosed location. On Tuesday, two of the arrested immigrants, Paula Gomez and Angel Rodriguez Flores, were charged in federal court in Hattiesburg with one count of aggravated identity theft. The penalty for using another person’s name and Social Security number is up to two years in prison and/or up to a $250,000 fine. As many as eight more of the detainees were expected to make initial appearances in court Tuesday afternoon.

The raids produced panic in the Hispanic community in Laurel, a town of 18,000 people. Rumors that federal agents would be making house-to-house searches prompted some families to seek refuge at Iglesia Cristiana Penial, a church with a largely Spanish-speaking congregation, according to the Associated Press. Pastor Roberto Valez told AP, “We gave them refuge because they were afraid to go back to their homes.”

Rodolfo Garcia explained to the wire service that his 22-year-old brother had been detained at the plant. “Everybody’s crying, worried about what’s going to happen to him,” he said in Spanish.

Valez commented that some of the women who agreed to leave the country were fitted with monitoring devices and allowed to go so they could take care of their children.

Catholic Social Services and other community organizations have accounted for more than 150 of the workers’ children, but dozens are reportedly still missing.

Shuya Ohno, a spokesman for the Mississippi Immigrants Rights Alliance (MIRA), told the New York Times, “It’s horrific what ICE is doing to these families and these communities. It’s just hard to imagine that this is the United States of America.”

Bill Chandler, executive director of MIRA, commented that the raid was “a real affront to our values. They’re creating their own terrorism by going after workers.”

Chandler told a Jackson, Mississippi television station, “We have a very serious situation with families being split and real terror being inflicted on the families and children in Laurel.” MIRA representatives pointed out that the raid had created a major humanitarian crisis. “There’s children that won’t have anyone there when they get home from school because their parents have been arrested,” commented Chandler.

The executive director of the US Human Rights Network, Amaju Baraka, said in a statement, “The raids in Mississippi have a significance that go well beyond the borders of that state. These raids violate international human rights standards and are designed to evoke fear in migrant communities across the country. [Right-wing commentator] Lou Dobbs and the [anti-immigrant] Minutemen should not be setting US immigration policy.”

The Mississippi state legislature recently passed a vicious anti-immigrant measure, which mandates that employers conduct verification checks of all employees and, according to the US Human Rights Network, “subjects undocumented employees as well as employers who do not comply to harsh sanctions. The arrested workers now face not only deportation but the real possibility of criminal prosecution.”

The new law turns working in Mississippi while undocumented into a felony and calls for “imprisonment in the custody of the Department of Corrections for not less than one (1) year nor more than five (5) years, a fine of not less than one thousand dollars ($1,000) nor more than ten thousand dollars ($10,000) or both. Anyone charged with the crime of working without papers will not be eligible for bail.” Mississippi Gov. Haley Barbour, former chairman of the Republican National Committee, signed the bill, which goes into effect January 1.

The descent on Howard Industries is the third major ICE raid in Mississippi in the past year-and-a-half. Seventy-seven people were arrested in Jackson in March 2007 at Tarrasco Steel and 26 immigrants were detained in Pascagoula at Northrup Grumman Shipyard in June 2007.

In May of this year, ICE agents carried out one of its largest operations, raiding a meatpacking plant in Postville, Iowa and detaining nearly 400 immigrant workers. Many of those detained were imprisoned for months on charges of using false documents. Mass hearings were held on the grounds of the National Cattle Congress in Waterloo, Iowa. An interpreter present said later that many of the immigrants did not understand the charges against them.

ICE has increased the pace of workplace raids; arrests of workers that resulted in deportation jumped from 445 in 2003 to 4,077 last year.

Recent arrests of immigrant workers include:

* 42 workers at Dulles International Airport in Virginia

* 58 at a chain of Mexican restaurants in Ohio

* 18 at a Colorado concrete plant

* 43 at an agricultural business in Hawaii.

In a statement issued to the press, Howard Industries claimed the company “runs every check allowed to ascertain the immigration status of all applicants for its jobs.

“It is company policy that it hires only US citizens and legal immigrants.”

The firm was founded in 1968. Howard is the largest employer in the region and one of the largest in Mississippi, among the poorest states in the US.

The median household income in Laurel in 2000 was $25,988, with some 29 percent of the population and 21.4 percent of families living below the official poverty line; 37.5 percent of those under the age of 18 were beneath the poverty line.

Howard, with four main divisions, is a privately-held company, worth nearly $1 billion. It has a reputation for paying low wages and treating employees badly.

AP notes that in 2002, then-Gov. Ronnie Musgrove convened a special session of the legislature in which lawmakers approved a $31.5 million taxpayer-backed incentive plan aimed at helping Howard expand its operations. The state required the company to create 2,000 new jobs, 700 by 2007 and another 1,300 by 2012.

William Howard, Jr. is a major figure in the Mississippi Republican party and has been a contributor to the George W. Bush and John McCain campaigns.

In June 2008, the Occupational Safety & Health Administration (OSHA) proposed $193,000 in fines against Howard Industries for 54 violations of federal safety rules at the two facilities in Laurel. Thirty-six serious violations were cited at its Pendorf Road plant and 15 additional serious violations at its Eastview plant.

Clyde Payne, director of OSHA’s Jackson Area Office commented, “It is unconscionable for an employer to tolerate serious injuries, including amputations, as just a cost of doing business, rather than get out into the production areas and fix these numerous problems before employees get injured.”

Police repress protesters at Democratic National Convention

Police repress protesters at Democratic National Convention

By Tom Eley
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On Monday, police in riot gear used pepper spray, truncheons and rubber bullets on a peaceful demonstration of about 300 protesters about one mile from the Democratic National Convention in Denver. Around 100 demonstrators were arrested, charged with resisting a lawful order to disperse and obstruction of streets or public passageways.

At about 7 p.m. Monday, riot police fired pepper spray and pepper balls, which are delivered by guns, against the protesters, who had attempted to carry out a protest outside of the police-designated “free speech zone.” The free speech zone is a small area in a parking lot near the Pepsi Center, surrounded by two layers of steel fence and concrete barriers and topped by razor wire.

The confrontation began on a sidewalk near Denver’s Civic Center. SWAT police forced protesters backward, where a second phalanx of police was waiting, blocking their retreat. The police then completely surrounded the protesters, while reinforcements, including two armored vehicles, arrived. The protesters were held in this position for 90 minutes.

Twenty-one year old Joey Kenzie, a recent community college graduate, was among those surrounded by the riot police. “I’m a little in shock,” she told the Denver Post. “At one point we didn’t know what we were going to do, we were going to get arrested or maced. I haven’t been able to vote for a president yet, but this was an epiphany. My freedom of speech was suppressed.”

From among those pinned by the police, a protester was heard shouting, “This is not America. This is what a police state looks like. You’re worried about Beijing? This is repression.”

The Denver Police Department claims that the “crowd that had gathered near Civic Center Park refused requests to disperse and suddenly rushed a police safety line about 7:15 p.m.,” and that protesters were “carrying rocks and other items that could be used to threaten public safety.”

A legal observer for the People’s Law Project and the National Lawyers Guild disputed the police account. He observed no rocks or other projectiles in the hands of the protesters, and noted that they were complying with police orders to “move back” when the police fired pepper spray into the crowd. No order to disperse was given, and when protesters attempted to leave of their own accord, the police blocked their route.

Footage of the protest and the police intervention can be viewed on YouTube.

Police interned the arrested protesters at a makeshift prison composed of wire cages reminiscent of the US detention facility at Guantánamo Bay, Cuba.

Denver has set up special “DNC” kangaroo courts to process the arrested protesters. However, it was not until nearly midnight on Monday that the first five protesters were arraigned—without attorneys—at the court dubbed “DNC 2.” Four of the five protesters were brought into the court tied together in twos, and they were compelled to enter pleas before the judge, Doris Burd, still linked together. The judge offered the prisoners the choice of entering a plea agreement with the city attorney, or pleading either guilty or innocent on the spot. Burd levied a $500 bond on the two protesters who pleaded not guilty.

Two men who had been arraigned and pleaded guilty—one of whom claimed to have been only a bystander—were interviewed in the courtroom by a reporter for the Rocky Mountain News. However, when the reporter tried to write their names down, a sheriff’s deputy ripped the reporter’s notebook out of his hands, removing the page with his notes, and threatened to remove him from the court. “You are never to speak to prisoners,” the deputy said.

The arrested protesters have been effectively denied legal representation. On Monday, attorneys for the People’s Law Project received requests for legal representation, but they did not know where the prisoners were located or when they would appear in court.

The police and security build-up in the lead-up to the DNC vividly demonstrates the precarious state of basic democratic rights in the US. Because the Department of Homeland Security has declared the nominating conventions “national security events”—a hazy legal status created by executive order under President Bill Clinton—the police of Denver have been transformed into a de facto military force and placed under the direction of the executive branch of the federal government.

The size of this police force has been doubled by the infusion of cops from surrounding areas, while numerous federal and state agencies have been mobilized to assist with security, including the Secret Service, which directs security operations, the National Guard, the Coast Guard, the US Customs and Border Protection agency, the Transportation Security Administration, the North American Aerospace Defense Command and the Pentagon’s Northern Command.

The level of security would suggest that DNC was a colonial administration meeting in hostile territory, rather then the nominating convention of a mass political party in a functioning democracy.

Moreover, the magnitude and ferocity of the security operation is completely out of proportion to the size and nature of the protests, which have been rather small and self-consciously peaceful. Sunday’s protest included about 3,000 people, while the protest attacked by police on Monday included no more than 300.

The militarization of Denver and the police repression of basic civil rights, which no leading Democratic Party politician has denounced, is the hysterical response of a political system that can allow no political expression outside of the narrowest official channels. It is meant to serve as a warning to those who would attempt to challenge the status quo, and also as a trial run for the sort of repression the ruling elite intends to mete out to the working class in the coming period.

Money and Politics in America

Money and Politics in America

Democrats at Denver Should Read the American Monetary Act

By Richard C. Cook

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Democrats in Denver Should Skip One of Their Parties and Read the American Monetary Act

How are things going at the Democratic Party National Convention in Denver this week?

Are they talking about the fact that the Western world is run by an international financial elite headquartered in London, the financial capitals of mainland Europe (such as Frankfurt, Hamburg, Amsterdam, Paris, and Milan), and, of course, New York City?

Are they mentioning at their cocktail parties that the financial elite exert control over the world’s population through the cartels that make up the world’s producing economies and through the civilian and military bureaucracies who work for the governments that kow-tow to them?

Of course they know that the most important cartels are those which control energy resources. And that of these, the commodity of central importance is oil. But is any of this helping them draw conclusions regarding the doubling of oil prices during the last year or about the largest oil company profits in history?

Also, they should be drawing the right conclusions from the fact that every private and pubic enterprise operates on the basis of a money economy, though it would be more accurate to call it a credit economy. This means that whoever controls the issuance of money and credit controls the world. And the world’s monetary systems function on the basis of money and credit being introduced into circulation through loans from the banking system, loans for which interest is charged. So what should that tell them?

In fact, they should be pointing out to each other and their TV viewers that the charging of interest for the use of money is a chain around the neck of everyone on earth. Further, that these cumulative interest charges are built into the price of every product that is manufactured or consumed. And that growth of debt means price increases too.

They should be honest in making it clear that the world is a master-slave society, that the slaves are those who borrow and pay interest, that the masters are those who collect the interest, and that this unjust system has existed in one form or another for thousands of years.

The candidates and delegates are talking about the aspirations of the American people and how everyone should have an opportunity to achieve their dreams. But if the United States were a free nation, they would also be talking about a financial system that destroys people’s dreams.

Unfortunately, the highest rung the candidates and delegates have been able to reach on the ladder of modern-day slavery is the need for more jobs—but they fail to note that jobs are not only the means by which people live, but also the instruments for them to pay the heavy burden of interest the masters of finance require.

What they won’t say is that the world economy is based on usury, something religions used to consider a crime (and which Islam still does). Usury is the charging of interest for the use of money. As the religions backed off from their prohibitions of interest, usury became just excess interest. But that’s not what the word really means.

So what have over two centuries of usury done to the United States ?

The best answer ever given to that question was contained in a paper entitled “Revisiting U.S. Public and Private Debt” published in January 2005 by Dr. Bob Blain, Emeritus Professor of Sociology at Southern Illinois University. The paper updated an earlier study by Dr. Blain published for the United Nations Educational, Scientific, and Cultural Organization (UNESCO) in the International Social Science Journal, November, 1987, Paris , pages 577-591.

In his paper, Dr. Blain examined the growth of total public and private debt in the U.S. Total debt includes “the debts of governments (federal, state, and local), corporations, farmers, home mortgages, and consumer, commercial, and financial debts.”

In his analysis, Dr. Blain began with data from the Bureau of Economic Analyses of the United States Department of Commerce which covered the years 1916-1976. After that year the Bureau stopped publishing the data.

The figures showed that from 1916-1976, total U.S. debt grew from $82 billion to $3,800 billion ($3.8 trillion). But most of that growth was during the last 21 years, from 1955-1976, when it began to grow exponentially. Dr. Blain wrote, “The consistency of the pattern suggests that some imperative is at work, something that requires debt to increase.”

Dr. Blain found the answer by researching American history. He wrote: “Then I read G.R. Taylor’s 1950 book, Hamilton and the National Debt, which described the debate over Alexander Hamilton’s plan to fund the new economy with borrowed money.” He continued:

“The most revealing account was a speech by the first congressman from Georgia, James Jackson, on February 9, 1790, in which he predicted that adoption of Hamilton ’s funding plan would lead to the explosive growth of debt. Jackson said, ‘Though our present debt be but a few millions, in the course of a single century it may be multiplied to an extent we dare not think of.’” (Annals of Congress, Vol. I, February 1790, pp. 1141-2)

From the very beginning, the U.S. had a monetary system based on borrowing and debt. First came the thousands of state chartered banks that began operating late in the Revolutionary War period and continued in one form or another until today. Then there were the two early central banks: the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836). Today’s national banking system began during the Civil War with the National Banking Acts of 1863-64. Then there is the system we are living under today, the Federal Reserve, chartered by Congress in 1913. Even during the times when the government has sold its debt directly to the public, as with war bonds, savings bonds, and Treasury notes and bills, that too has been money borrowed at interest.

Although there have been times in history when money entered into circulation other than through debt, such as with coinage and the Civil War greenbacks, those were exceptions and today are of little importance.

Dr. Blain estimated that from the time Alexander Hamilton placed the U.S. under a debt-based monetary system until today, the debt has compounded at 5.8 percent annually. The big problem with this system, he said, was “that no money was created to pay interest.” He continued:

“Loans created only the principal. Interest had to be paid out of principal. So payment of interest reduced the money supply and slowed economic activity. Recovery could come only when new loans were taken out at least equal to interest paid.”

Dr. Blain concluded, “As long as the money supply of a nation is created as debt costing interest, debt must grow by compound interest.” From a longer-range view, it’s a system that is constantly collapsing and that must constantly be bailed out.

Dr. Blain next sought to update his figures past the 1976 data from the Bureau of Economic Analyses. Turning to the Federal Reserve’s series on “Total Credit Market Debt Outstanding,” he found remarkably similar indicators.

He found that adding data from the Federal Reserve from 1945 to 2003 showed the “debt explosion” continuing. In 1945 total debt was $463.4 billion. In 2003 it was $44,967.7 billion ($45.0 trillion). When he projected the debt level for 2010, he arrived at a figure of $74.9 trillion. By this time the debt curve was climbing so steeply there would be almost a doubling of the amount of total debt in only nine years.

It might be argued that these figures do not take into account inflation. This is because lending at interest is the cause of inflation. The dollars still have to be repaid with interest. The problem occurs when economic growth, measured by GDP, does not keep up.

Looking at the growth of GDP from 1945 to 2003, the increase was from $223.1 billion to $10,987.9 billion, a factor of 49. But the debt ($463.4 billion vs. $44,967.7 billion) grew by a factor of 97, almost twice the rate of GDP growth. Thus the total debt burden on the economy has doubled from a ratio of 2:1 to more than 4:1 (though it was much less than that during the early days of the nation).

But with continued compound growth of debt and a slow- or no-growth state of the economy as we head into a recession, we are starting to see what Dr. Blain called an “acceleration to meltdown.” He wrote:

“We are buying more and more in the same amount of time. Witness the efforts of people to get rid of their excess through yard sales, storage units, and big trash pickup days, and the massive size of what are euphemistically called landfills. While two billion people in the world lack basics such as clean water, food, and shelter, Americans throw away their microwave ovens, televisions, computers, refrigerators, furniture, and cars. Meanwhile, acceleration is applauded as increasing productivity. It’s like arguing that cancer is good because it grows.”

These are the things the Democrats in Denver should be talking about, instead of going to so many parties. They should be making note that the U.S. , to quote economists close to the Federal Reserve, is “functionally bankrupt.”

In fact, the debt this nation owes to the banks, to foreign creditors, and to each other can never be paid off. Further, one big reason for all of our fruitless military endeavors overseas may simply be to escape unpleasant economic realities at home. But this is pointless. Nothing creates more debt than war, as the bankers have always known.

The only solution is to adopt a monetary system that is not based on debt. Dr. Blain makes a couple of specific recommendations: 1) “Stop using percentage rates to calculate charges for the use of money”; and 2) “Congress must supply the economy with a money base that is debt-free and interest-free.”

The second point is a call for a new monetary system, not one based solely on lending by the banks or on government borrowing. One organization that has developed a blueprint for such a system is the American Monetary Institute (AMI), headquartered in Chicago . The director of the AMI is Stephen Zarlenga, author of a massive, groundbreaking work: The Lost Science of Money (AMI, 2002). Zarlenga’s assistant is Jamie Walton, a monetary reformer from New Zealand .

AMI will be holding its fourth annual conference in Chicago on September 25-28. Expected as keynote speaker is Congressman Dennis Kucinich, whose wife Elizabeth once worked as an intern at AMI. Dr. Bob Blain will be a featured speaker.

On the AMI website at is a remarkable document, the American Monetary Act. The product of several years of work by Zarlenga and his network, which now includes a number of local chapters around the country, the American Monetary Act would replace today’s debt-based monetary system with one where the government spends or loans money directly into circulation.

Under the Act, the Federal Reserve would be retained as a national financial clearinghouse but would no longer be a bank of issue. The system would be overseen by a Monetary Control Board within the U.S. Treasury Department. The Act also includes a provision for a citizens’ dividend, similar in some respects to the Alaska Permanent Fund, which would inject desperately needed purchasing power into the economy without additional government debt or taxation.

Also promoting a citizens’ dividend, by the way, is Stephen Shafarman in his important new book, Peaceful, Positive Revolution. (Tendril Press, 2008)

It’s the American Monetary Act the candidates and delegates in Denver should skip one of their parties to read, because it’s the only way any of their hopes for America can ever be realized. Says AMI’s Jamie Walton:

“This is a crucial time. Things are happening. We have got some key media people talking and writing about our kind of reforms. The inertia is starting to yield. Things are starting to roll. The worsening conditions in 2009 will give us a once-in-a-lifetime chance to be heard above the propaganda.”

Dennis Kucinich Rocks DNC: 'Wake Up America!'

Dennis Kucinich Rocks DNC: 'Wake Up America!'

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It's Election Day 2008. We Democrats are giving America a wake-up call. Wake up, America. In 2001, the oil companies, the war contractors and the neo-con artists seized the economy and have added 4 trillion dollars of unproductive spending to the national debt. We now pay four times more for defense, three times more for gasoline and home heating oil and twice what we paid for health care.

Millions of Americans have lost their jobs, their homes, their health care, their pensions. Trillions of dollars for an unnecessary war paid with borrowed money. Tens of billions of dollars in cash and weapons disappeared into thin air, at the cost of the lives of our troops and innocent Iraqis, while all the president's oilmen are maneuvering to grab Iraq's oil.

Borrowed money to bomb bridges in Iraq, Afghanistan and Pakistan. No money to rebuild bridges in America. Money to start a hot war with Iran. Now we have another cold war with Russia, while the American economy has become a game of Russian roulette.

If there was an Olympics for misleading, mismanaging and misappropriating, this administration would take the gold. World records for violations of national and international laws. They want another four-year term to continue to alienate our allies, spend our children's inheritance and hollow out our economy.

We can't afford another Republican administration. Wake up, America. The insurance companies took over health care. Wake up, America. The pharmaceutical companies took over drug pricing.

Wake up, America. The speculators took over Wall Street. Wake up, America. They want to take your Social Security. Wake up, America. Multinational corporations took over our trade policies, factories are closing, good paying jobs lost.

Wake up, America. We went into Iraq for oil. The oil companies want more. War against Iran will mean $10-a-gallon gasoline. The oil administration wants to drill more, into your wallet. Wake up, America. Weapons contractors want more. An Iran war will cost 5 to 10 trillion dollars.

This administration can tap our phones. They can't tap our creative spirit. They can open our mail. They can't open economic opportunities. They can track our every move. They lost track of the economy while the cost of food, gasoline and electricity skyrockets. They skillfully played our post-9/11 fears and allowed the few to profit at the expense of the many. Every day we get the color orange, while the oil companies, the insurance companies, the speculators, the war contractors get the color green.

Wake up, America. This is not a call for you to take a new direction from right to left. This is a call for you to go from down to up. Up with the rights of workers. Up with wages. Up with fair trade. Up with creating millions of good paying jobs, rebuilding our bridges, ports and water systems. Up with creating millions of sustainable energy jobs to lower the cost of energy, lower carbon emissions and protect the environment.

Up with health care for all. Up with education for all. Up with home ownership. Up with guaranteed retirement benefits. Up with peace. Up with prosperity. Up with the Democratic Party. Up with Obama-Biden.

Wake up, America. Wake up, America. Wake up, America.

Double Standards on Russia-Kosovo

Double Standards on Russia-Kosovo

By J. Victor Marshall

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Editor’s Note: On Tuesday, after Russia recognized the independence of breakaway Georgian provinces, South Ossetia and Abkhazia, President George W. Bush denounced the move as “irresponsible” -- and most of the U.S. news media followed with similar outrage.

In much of that U.S. coverage, however, there was little or no reference to the recent parallel case -- when Bush hailed Kosovo’s declaration of independence from Serbia, a long-time Russian ally. In this guest essay, J. Victor Marshall of the Independent Institute examines this double standard:

In Russia even more than in America, “Kosovo” rhymes with “I told you so.”

Many Americans don’t realize that the former Serbian province of Kosovo, which broke away in 1999 after US-led NATO forces bombed Serbia for 78 days, helped set the stage for the recent conflict between Russia and neighboring Georgia.

But Russian leaders, who like most leaders care intensely about what happens at their borders (Georgia) and to their longtime allies (Serbia), warned earlier this year that support for Kosovo’s independence would set a precedent that could trigger separatist conflicts in places like Georgia.

It was a warning that Washington and several of its European allies foolishly, even recklessly, failed to heed.

In negotiations over the final status of Kosovo, which had been under United Nations jurisdiction since 1999, Serbia promised the province autonomy but not independence.

While many observers questioned Kosovo’s readiness for independence, given corruption in its civil administration and the murderous campaign of ethnic cleansing waged by Albanian nationalists against Serbs in their midst, Kosovo unilaterally declared its independence on Feb. 17, 2008.

Although Kosovo’s move arguably violated UN Security Council Resolution 1244, which recognized Serbia’s ultimate sovereignty, many NATO countries including the United States sided with Kosovo.

“The Kosovars are now independent,” declared President Bush.

Humiliated by NATO’s military intervention in 1999, Russia now chafed at the political intervention of NATO countries in favor of Kosovo’s secession, which Russian President Vladimir Putin condemned as “immoral and illegal.”

Russian leaders warned that unilateral recognition of Kosovo’s independence would open a “Pandora’s box” by appearing to support similar claims by other separatist movements in some 200 regions of the world.

The Russian Foreign Ministry declared, “Those who are considering supporting separatism should understand what dangerous consequences their actions threaten to have for world order, international stability and the authority of the U.N. Security Council's decisions that took decades to build.”

Outside of NATO, many countries sided with Russia’s statement of principles. Surprisingly, one of the most outspoken was Russia’s hostile southern neighbor, Georgia. And the reason wasn’t hard for experts to fathom.

As Richard Weitz at the Hudson Institute noted at the time, Russia could seize upon Kosovo as a precedent for fomenting separatist movements in the former Soviet republics, including South Ossetia’s drive for independence from Georgia in the Caucasus.

Jonathan Eyal, director of international security studies at the Royal United Services Institute, warned similarly, “if the Kosovo precedent is used, the Russians can also recognise ethnic Russian enclaves in places such as Georgia or Moldova. What's good for Kosovo is good for other places as well.”

Their unheeded warnings have just come to pass, at the expense of thousands of dead and wounded.

Just as NATO justified its intervention in 1999 as a humanitarian defense of Kosovo’s ethnic Albanians against Serbian atrocities, so Russia said it came to the defense of South Ossetia, which suffered terrible atrocities at Georgian hands in the early 1990s, after Georgian troops shelled its capital earlier this month.

In addition to Kosovo, Russia can justify its intervention on behalf of South Ossetia by pointing to any number of other precedents set by the United States: the Bush administration’s doctrine of preemption, its invasions of Iraq and Afghanistan, its silence in the face of Israel’s invasion of Lebanon, and many more.

What difference do all these precedents and broken principles make?

By selectively turning principles into propagandist slogans for scoring points, the United States no longer occupies the political high ground. Washington’s lectures sound like hectoring, not sincere admonitions that could sway international public opinion and restrain Russian actions.

In short, by squandering its moral authority, the United States has unilaterally disarmed itself of “soft power” that was once one of our greatest weapons. And Kosovo was one of the fields upon which the United States laid down its moral arms.

Rich Countries Once Used Gunboats to Seize Food. Now They Use Trade Deals

Rich Countries Once Used Gunboats to Seize Food. Now They Use Trade Deals

The world's hungriest are the losers as an old colonialism returns to govern relations between wealthy and poor nations

By George Monbiot

n his book Late Victorian Holocausts, Mike Davis tells the story of the famines that sucked the guts out of India in the 1870s. The hunger began when a drought, caused by El Niño, killed the crops on the Deccan plateau. As starvation bit, the viceroy, Lord Lytton, oversaw the export to England of a record 6.4m hundredweight of wheat. While Lytton lived in imperial splendour and commissioned, among other extravagances, "the most colossal and expensive meal in world history", between 12 million and 29 million people died. Only Stalin manufactured a comparable hunger.

Now a new Lord Lytton is seeking to engineer another brutal food grab. As Tony Blair's favoured courtier, Peter Mandelson often created the impression that he would do anything to please his master. Today he is the European trade commissioner. From his sumptuous offices in Brussels and Strasbourg, he hopes to impose a treaty that will permit Europe to snatch food from the mouths of some of the world's poorest people.

Seventy per cent of the protein eaten by the people of Senegal comes from fish. Traditionally cheaper than other animal products, it sustains a population that ranks close to the bottom of the human development index. One in six of the working population is employed in the fishing industry; about two-thirds of these workers are women. Over the past three decades, their means of subsistence has started to collapse as other nations have plundered Senegal's stocks.

The EU has two big fish problems. One is that, partly as a result of its failure to manage them properly, its own fisheries can no longer meet European demand. The other is that its governments won't confront their fishing lobbies and decommission all the surplus boats. The EU has tried to solve both problems by sending its fishermen to west Africa. Since 1979 it has struck agreements with the government of Senegal, granting our fleets access to its waters. As a result, Senegal's marine ecosystem has started to go the same way as ours. Between 1994 and 2005, the weight of fish taken from the country's waters fell from 95,000 tonnes to 45,000 tonnes. Muscled out by European trawlers, the indigenous fishery is crumpling: the number of boats run by local people has fallen by 48% since 1997.

In a recent report on this pillage, ActionAid shows that fishing families that once ate three times a day are now eating only once or twice. As the price of fish rises, their customers also go hungry. The same thing has happened in all the west African countries with which the EU has maintained fisheries agreements. In return for wretched amounts of foreign exchange, their primary source of protein has been looted.

The government of Senegal knows this, and in 2006 it refused to renew its fishing agreement with the EU. But European fishermen - mostly from Spain and France - have found ways round the ban. They have been registering their boats as Senegalese, buying up quotas from local fishermen and transferring catches at sea from local boats. These practices mean that they can continue to take the country's fish, and have no obligation to land them in Senegal. Their profits are kept on ice until the catch arrives in Europe.

Mandelson's office is trying to negotiate economic partnership agreements with African countries. They were supposed to have been concluded by the end of last year, but many countries, including Senegal, have refused to sign. The agreements insist that European companies have the right both to establish themselves freely on African soil, and to receive national treatment. This means that the host country is not allowed to discriminate between its own businesses and European companies. Senegal would be forbidden to ensure that its fish are used to sustain its own industry and to feed its own people. The dodges used by European trawlers would be legalised.

The UN's Economic Commission for Africa has described the EU's negotiations as "not sufficiently inclusive". They suffer from a "lack of transparency" and from the African countries' lack of capacity to handle the legal complexities. ActionAid shows that Mandelson's office has ignored these problems, raised the pressure on reluctant countries and "moved ahead in the negotiations at a pace much faster than the [African nations] could handle". If these agreements are forced on west Africa, Lord Mandelson will be responsible for another imperial famine.

This is one instance of the food colonialism that is again coming to govern the relations between rich and poor counties. As global food supplies tighten, rich consumers are pushed into competition with the hungry. Last week the environmental group WWF published a report on the UK's indirect consumption of water, purchased in the form of food. We buy much of our rice and cotton, for example, from the Indus valley, which contains most of Pakistan's best farmland. To meet the demand for exports, the valley's aquifers are being pumped out faster than they can be recharged. At the same time, rain and snow in the Himalayan headwaters have decreased, probably as a result of climate change. In some places, salt and other crop poisons are being drawn through the diminishing water table, knocking out farmland for good. The crops we buy are, for the most part, freely traded, but the unaccounted costs all accrue to Pakistan.

Now we learn that Middle Eastern countries, led by Saudi Arabia, are securing their future food supplies by trying to buy land in poorer nations. The Financial Times reports that Saudi Arabia wants to set up a series of farms abroad, each of which could exceed 100,000 hectares. Their produce would not be traded: it would be shipped directly to the owners. The FT, which usually agitates for the sale of everything, frets over "the nightmare scenario of crops being transported out of fortified farms as hungry locals look on". Through "secretive bilateral agreements", the paper reports, "the investors hope to be able to bypass any potential trade restriction that the host country might impose during a crisis".

Both Ethiopia and Sudan have offered the oil states hundreds of thousands of hectares. This is easy for the corrupt governments of these countries: in Ethiopia the state claims to own most of the land; in Sudan an envelope passed across the right desk magically transforms other people's property into foreign exchange. But 5.6 million Sudanese and 10 million Ethiopians are currently in need of food aid. The deals their governments propose can only exacerbate such famines.

None of this is to suggest that the poor nations should not sell food to the rich. To escape from famine, countries must enhance their purchasing power. This often means selling farm products, and increasing their value by processing them locally. But there is nothing fair about the deals I have described. Where once they used gunboats and sepoys, the rich nations now use chequebooks and lawyers to seize food from the hungry. The scramble for resources has begun, but - in the short term, at any rate - we will hardly notice. The rich world's governments will protect themselves from the political cost of shortages, even if it means that other people must starve.

Fascism Anyone?

Fascism Anyone?

Fascism's principles are wafting in the air today, surreptitiously masquerading as something else, challenging everything we stand for.

By Laurence W. Britt

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The cliché that people and nations learn from history is not only overused, but also overestimated; often we fail to learn from history, or draw the wrong conclusions. Sadly, historical amnesia is the norm.

We are two-and-a-half generations removed from the horrors of Nazi Germany, although constant reminders jog the consciousness. German and Italian fascism form the historical models that define this twisted political worldview. Although they no longer exist, this worldview and the characteristics of these models have been imitated by protofascist1 regimes at various times in the twentieth century. Both the original German and Italian models and the later protofascist regimes show remarkably similar characteristics. Although many scholars question any direct connection among these regimes, few can dispute their visual similarities.

Beyond the visual, even a cursory study of these fascist and protofascist regimes reveals the absolutely striking convergence of their modus operandi. This, of course, is not a revelation to the informed political observer, but it is sometimes useful in the interests of perspective to restate obvious facts and in so doing shed needed light on current circumstances.

For the purpose of this perspective, I will consider the following regimes: Nazi Germany, Fascist Italy, Franco's Spain, Salazar's Portugal, Papadopoulos's Greece, Pinochet's Chile, and Suharto's Indonesia. To be sure, they constitute a mixed bag of national identities, cultures, developmental levels, and history. But they all followed the fascist or protofascist model in obtaining, expanding, and maintaining power. Further, all these regimes have been overthrown, so a more or less complete picture of their basic characteristics and abuses is possible.

Analysis of these seven regimes reveals fourteen common threads that link them in recognizable patterns of national behavior and abuse of power. These basic characteristics are more prevalent and intense in some regimes than in others, but they all share at least some level of similarity.

1. Powerful and continuing expressions of nationalism. From the prominent displays of flags and bunting to the ubiquitous lapel pins, the fervor to show patriotic nationalism, both on the part of the regime itself and of citizens caught up in its frenzy, was always obvious. Catchy slogans, pride in the military, and demands for unity were common themes in expressing this nationalism. It was usually coupled with a suspicion of things foreign that often bordered on xenophobia.

2. Disdain for the importance of human rights. The regimes themselves viewed human rights as of little value and a hindrance to realizing the objectives of the ruling elite. Through clever use of propaganda, the population was brought to accept these human rights abuses by marginalizing, even demonizing, those being targeted. When abuse was egregious, the tactic was to use secrecy, denial, and disinformation.

3. Identification of enemies/scapegoats as a unifying cause. The most significant common thread among these regimes was the use of scapegoating as a means to divert the people's attention from other problems, to shift blame forfailures, and to channel frustration in controlled directions. The methods of choice—relentless propaganda and disinformation—were usually effective. Often the regimes would incite "spontaneous" acts against the target scapegoats, usually communists, socialists, liberals, Jews, ethnic and racial minorities, traditional national enemies, members of other religions, secularists, homosexuals, and"terrorists." Active opponents of these regimes were inevitably labeled as terrorists and dealt with accordingly.

4. The supremacy of the military/avid militarism. Ruling elites always identified closely with the military and the industrial infrastructure that supported it. A disproportionate share of national resources was allocated to the military, even when domestic needs were acute. The military was seen as an expression of nationalism, and was used whenever possible to assert national goals, intimidate other nations, and increase the power and prestige of the ruling elite.

5. Rampant sexism. Beyond the simple fact that the political elite and the national culture were male-dominated, these regimes inevitably viewed women as second-class citizens. They were adamantly anti-abortion and also homophobic. These attitudes were usually codified in Draconian laws that enjoyed strong support by the orthodox religion of the country, thus lending the regime cover for its abuses.

6. A controlled mass media. Under some of the regimes, the mass media were under strict direct control and could be relied upon never to stray from the party line. Other regimes exercised more subtle power to ensure media orthodoxy. Methods included the control of licensing and access to resources, economic pressure, appeals to patriotism, and implied threats. The leaders of the mass media were often politically compatible with the power elite. The result was usually success in keeping the general public unaware of the regimes' excesses.

7. Obsession with national security. Inevitably, a national security apparatus was under direct control of the ruling elite. It was usually an instrument of oppression, operating in secret and beyond any constraints. Its actions were justified under the rubric of protecting "national security," and questioning its activities was portrayed as unpatriotic or even treasonous.

8. Religion and ruling elite tied together. Unlike communist regimes, the fascist and protofascist regimes were never proclaimed as godless by their opponents. In fact, most of the regimes attached themselves to the predominant religion of the country and chose to portray themselves as militant defenders of that religion. The fact that the ruling elite's behavior was incompatible with the precepts of the religion was generally swept under the rug. Propaganda kept up the illusion that the ruling elites were defenders of the faith and opponents of the "godless." A perception was manufactured that opposing the power elite was tantamount to an attack on religion.

9. Power of corporations protected. Although the personal life of ordinary citizens was under strict control, the ability of large corporations to operate in relative freedom was not compromised. The ruling elite saw the corporate structure as a way to not only ensure military production (in developed states), but also as an additional means of social control. Members of the economic elite were often pampered by the political elite to ensure a continued mutuality of interests, especially in the repression of "have-not" citizens.

10. Power of labor suppressed or eliminated. Since organized labor was seen as the one power center that could challenge the political hegemony of the ruling elite and its corporate allies, it was inevitably crushed or made powerless. The poor formed an underclass, viewed with suspicion or outright contempt. Under some regimes, being poor was considered akin to a vice.

11. Disdain and suppression of intellectuals and the arts. Intellectuals and the inherent freedom of ideas and expression associated with them were anathema to these regimes. Intellectual and academic freedom were considered subversive to national security and the patriotic ideal. Universities were tightly controlled; politically unreliable faculty harassed or eliminated. Unorthodox ideas or expressions of dissent were strongly attacked, silenced, or crushed. To these regimes, art and literature should serve the national interest or they had no right to exist.

12. Obsession with crime and punishment. Most of these regimes maintained Draconian systems of criminal justice with huge prison populations. The police were often glorified and had almost unchecked power, leading to rampant abuse. "Normal" and political crime were often merged into trumped-up criminal charges and sometimes used against political opponents of the regime. Fear, and hatred, of criminals or "traitors" was often promoted among the population as an excuse for more police power.

13. Rampant cronyism and corruption. Those in business circles and close to the power elite often used their position to enrich themselves. This corruption worked both ways; the power elite would receive financial gifts and property from the economic elite, who in turn would gain the benefit of government favoritism. Members of the power elite were in a position to obtain vast wealth from other sources as well: for example, by stealing national resources. With the national security apparatus under control and the media muzzled, this corruption was largely unconstrained and not well understood by the general population.

14. Fraudulent elections. Elections in the form of plebiscites or public opinion polls were usually bogus. When actual elections with candidates were held, they would usually be perverted by the power elite to get the desired result. Common methods included maintaining control of the election machinery, intimidating an disenfranchising opposition voters, destroying or disallowing legal votes, and, as a last resort, turning to a judiciary beholden to the power elite.

Does any of this ring alarm bells? Of course not. After all, this is America, officially a democracy with the rule of law, a constitution, a free press, honest elections, and a well-informed public constantly being put on guard against evils. Historical comparisons like these are just exercises in verbal gymnastics. Maybe, maybe not.

"When facism comes to America, it will be wrapped in the American flag." - Huey Long


1. Defined as a "political movement or regime tending toward or imitating Fascism"—Webster's Unabridged Dictionary.


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Chabod, Frederico. A History of Italian Fascism. London: Weidenfeld, 1963.

Cooper, Marc. Pinochet and Me. New York: Verso, 2001.

Cornwell, John. Hitler as Pope. New York: Viking, 1999.

de Figuerio, Antonio. Portugal—Fifty Years of Dictatorship. New York:Holmes& Meier, 1976.

Eatwell, Roger. Fascism, A History. New York: Penguin, 1995.

Fest, Joachim C. The Face of the Third Reich. New York: Pantheon, 1970.

Gallo, Max. Mussolini's Italy. New York: MacMillan, 1973.

Kershaw, Ian. Hitler (two volumes). New York: Norton, 1999.

Laqueur, Walter. Fascism, Past, Present, and Future. New York: Oxford, 1996.

Papandreau, Andreas. Democracy at Gunpoint. New York: Penguin Books, 1971.

Phillips, Peter. Censored 2001: 25 Years of Censored News. New York: Seven Stories. 2001.

Sharp, M.E. Indonesia Beyond Suharto. Armonk, 1999.

Verdugo, Patricia. Chile, Pinochet, and the Caravan of Death. Coral Gables, Florida: North-South Center Press, 2001.

Yglesias, Jose. The Franco Years. Indianapolis: Bobbs-Merrill, 1977.

Army, Flag, and Cross; Reverie on a Ribbon

Army, Flag, and Cross

Reverie on a Ribbon

By Stephen J. Gallagher

When Fascism arrives it will be wrapped in a Flag and carrying a Bible.
—Sinclair Lewis

Go To Original

Brilliant. It was the first word that came to mind when I saw the bumper sticker. The vehicle ahead ground slowly through rush-hour traffic. I had time to study it, to think about what the thing meant.

It was yet another variant on the ubiquitous American “yellow ribbon.” Across the front, on a field of yellow, were the words “Support Our Troops.” The ribbon looped back and showed a field of white stars on a blue background, evoking the American flag. The cleverest part of the ribbon was the last section, hanging below the “Support Our Troops” slogan. It was red-and-white striped, intended to carry forward the American flag theme. But a subtle suggestion of a white sunburst joined with the vertical white stripe and overlaid it with a faint horizontal white stripe. It didn’t take me more than a few seconds to realize that this was intended to be a subtle evocation of the Christian cross.

There it was encapsulated, complete, uncut, pure: the symbolic essence of an America that has drifted far from civilization, an America that has grown very, very strange. The America that bumper sticker symbolizes has left behind the world of rational nation-states and slipped off into a sentimental realm of Romanticism.

Romanticism is a worldview that privileges strong emotions such as pride, horror, and awe. (The ominous, drum-beating music that opens American news broadcasts today screams “War! Terror! Fear! Pride! Revenge!,” striving to derange the viewer’s senses and conflate these primitive emotions with a feeling of patriotism.) Additionally, Romanticism privileges the individual imagination as the single, unshakable source of truth, which stems from the American insistence on a “personal relationship with God” rather than traditional hierarchical religious practices. When speaking of Roman­ticism, as Baudelaire pointed out, it is not the truth of the thing in question that is important but rather the overwhelming personal emotions that the thing inspires.

Such is very much the case with America’s fetishistic Romanticism. At the political level, Romantic nationalism takes as its starting point the “white man’s burden” and America’s unique world-historical mission to “bring” democracy to the benighted peoples of the world.
We need to look closely at that ribbon, understand its symbolism, and above all understand how its dangerous Romantic sentimentalism plays out in the real world.

America has always been besotted with religion. The Puritans abandoned Europe because their religious lunacy put them beyond the pale of acceptable behavior. Considering that during these years Europe was knee-deep in blood from its many religious wars and witches were being routinely hanged and burned for consorting with the Devil, the idea that this group was too extreme speaks volumes.
While Europeans are more secular, Americans remain a people for whom the Devil is real. Our nation’s history bristles with Romantic religious enthusiasms, revivals, and fundamentalist upsurges. The forward march of civilization has done nothing to dampen this.

One is often left speechless after reading the public pronouncements of high-ranking military personnel—pronouncements more suitable to Europe at the time of the Crusades than to a developed country in the opening years of the new millennium. For example, we have the infamous “Christian Soldier,” General William G. Boykin, strutting in full dress uniform and thumping his chest as he proclaims to gatherings of hard-Right religious groups: “We, in the Army of God, in the Kingdom of God, have been raised for such a time as this!” General Peter Pace, seemingly a sensible and levelheaded Marine who rose to head the Joint Chiefs of Staff, once defended the leadership of former Defense Secretary Donald Rumsfeld by stating, “He leads in a way that the good Lord tells him is best for our country.” This increasingly brazen willingness of our top military leaders to publicly “witness for faith” is alarming, to say the least.

Yet more alarming is the well-organized, brilliantly executed strategy of “breeding up” the next generation of religious-lunatic military personnel, starting as early as the preteen years. America is experiencing an explosion of organizations that resemble the “youth on the march” organizations so often seen in totalitarian nations during the last century.

The Christian youth movement Battle Cry holds massive gatherings in stadiums and other large public venues all over America. The rallies are high-energy, high-concept, and driven by the frenetic musical beat of a shoot-em-up video game. Live “action figures” of Navy SEALs and other military paragons charge onstage, screaming to the crowd that they are proud “Christian warriors” and acting out scenes from “the war against Islamic Fascism” while they brief the stadium full of kids on their heroic future as part of the “battle plan for Jesus.” These disturbing antics are followed by the reading of an endorsement of Battle Cry by George W. Bush, a moment that sends the thousands of overwrought young people into paroxysms of testifying, swooning, weeping, and general adolescent hysteria. This combination of testosterone-laden posturing paired with military and Christian symbolism is a brilliant recruiting tool for the apocalyptic “long war” that so many on the religious Right crave. One hopes those kids will wake up the next day feeling the way kids do after a night of binge-drinking and slam-dancing: beat-up, sheepish, and resolved never to engage in that particular form of idiocy again. One suspects not; most of these kids have never felt such overwhelming emotional and physical excitement in their entire lives, and they are going to want more.

Coupled with the resurgence of a broad-shouldered, muscular Christianity is a fetishistic new obsession with the Stars and Stripes as a quasi-religious object. There has always been a certain sentimental attachment to the flag in American culture (phrases like “Old Glory” and songs like “She’s a Grand Old Flag” are not recent inventions), but since the events of September 11, 2001, the irrational defense of the flag as a physical object has become increasingly strident. Everywhere one turns in America, the iconography of The Flag is thrust into one’s face in a way that I have never before seen in my lifetime. The most disturbing aspect may be the premise that the flag itself may not be burned or otherwise “desecrated.” Perhaps alone among the nations of the world, America has decided that the actual, physical flag—rather than the ideas it represents—must be kept physically pure and protected from the ravages of the unworthy.

Flag worship in America has revealed a deep well of Romantic, fetishistic thinking, imbuing an object in the physical world with some sort of ineffable mojo. Such behavior is a form of emotional voodoo. Flags are not to be worshipped in a free and democratic state.

Free democracies also do not worship their armies. When they think about them at all, they regard them as necessary evils. For over two hundred years, America kept faith with George Washington’s caution that “overgrown military establishments are under any form of government inauspicious to liberty.” Even at the height of the Cold War, the military was never glamorized as it is now. It is impossible to find anything like the current Army worship anywhere in American history; indeed, to find any equivalent in the twentieth century, one must turn to such totalitarian societies as Nazi Germany, the USSR, North Korea, or Saddam’s Iraq. The title of a 2007 “ultimate fighting” television program—Warrior Nation—sums up the new order of things. Modern America sees itself as the new Sparta. And in the new Sparta, the imperative to worship the warrior class is one of the few taboos that must never be violated.

Unlike other Western countries whose citizens have come (through centuries of bleeding) to view war as a horrible aberration—a failure of rational solidarity—America’s Romantic nationalists embrace the prospect of spending years, decades, and even centuries in the righteous work of fighting the long war to “rid the world of evil.” The “warrior” is fetishized and lifted to a place beyond any possibility of criticism. Implicit in the mantra “Support the Troops” is a hissed addendum: Or else!

Review the images in your mind: Grainy newsreel footage of Hitler “blessing the colors.” The massive, militarized May Day love fests in Red Square. The manic triumphalism of military parades staged by every tin-pot dictator ever to reign in the Third World. And realize that now it is America’s turn.

America has begun to worship the professional military class and, more ominously, to glorify military ideals. The unspoken demand is that the civilian population must now embrace these same values and glorify these same things. Woe betide anyone foolish enough to challenge this new national religion.

One important facet of this Army worship reveals it for the sentimental and Romantic thing that it is: Americans love their military, but in great numbers they refuse to serve in it and refuse to let their kids get lured into serving in it. Yet these “latté liberal” suburban parents who work so hard to make sure little Melissa and Cody don’t get any crazy ideas about joining up are the first to chant the tribal mantra: “Condemn the war but not the warrior.” How very problematic this new mantra is—as if one could actually decouple the policy from those who voluntarily implement it.
At what point in our history did blind obedience to bad orders become a virtue? Does it make sense to lionize people for doing something that our rational minds tell us is an extremely bad idea? If one opposes the war, how can one support the troops and still claim to be thinking rationally? Doing so has the stench of bad faith. If the people at the top giving the orders are complicit, the people who pull the triggers share in that complicity. No one is innocent; we all own our own decisions.

The evasions Americans prefer in order to give “the warriors” an easy out tend to fall into two categories: “Blame the decision-makers, not the warriors,” and “They only enlisted for economic reasons.” These rationales are alibis and clumsy ones at that.
The first alibi is easily disposed of. Principle I of the Nuremberg Tribunal (to which the United States was a signatory) states that “any person who commits an act which constitutes a crime under international law is responsible therefore and liable to punishment.” Lest anyone complain this is too vague, Principle IV gives us all the clarification we need: “The fact that a person acted pursuant to order of his Government or of a superior does not relieve him from responsibility under international law, provided a moral choice was in fact possible to him.” And let us be clear: one always has to make clear moral choices. There are moments, as Camus reminds us, “when everything becomes clear, when every action constitutes a commitment, when every choice has a price.” This is one of those moments, and to pretend that the people pulling the trigger are not in a very real sense decision-makers is both naïve and absurd. Even at the lowest rungs of the ladder of command, refusal to say “no” is tantamount to complicity.

The second alibi is popular among many Americans, including leftists. In November 2006, The New York Times analyzed the demographic patterns of military recruits and discovered that in fact they are slightly better off in terms of education, neighborhood, family income, and job prospects than the population as a whole. Are some American soldiers in Iraq there for economic reasons? Sure, but not very many. Did some sign up for the chance to go over and blow away some “rag-heads”? Of course; armies throughout history have always attracted their share of sociopaths. But after removing these two small groups from the list, we are left with the vast majority who went voluntarily and for their own reasons. They made a moral decision. They made a choice. Having made their free choice, are they somehow magically immune from all blame?

They are immune because they are granted immunity from blame by the sentiment of the American people. They are given the alibi of the “pure warrior” because the donning of the uniform has become equivalent to the donning of priestly vestments in an earlier age. The “warrior” is immediately sanctified, justified, raised up beyond all criticism from us lesser mortals who lack the moral fiber to wear the vestments. The American people, living in the midst of this enormous superstructure of myth and alibi, are incapable of understanding that they have armored themselves against evil by manufacturing not the new Sparta, but rather a dystopian and sentimental dreamland.

In America, it appears that the more pathological the coupling between army, flag and cross, the greater need there is to honor “the warrior.” We should be clear on the fact that this is not necessarily something new. This way of thinking was never more clearly expressed than by Secretary of War Elihu Root, who in 1899 declared, “The American soldier is different from all other soldiers of all other countries since the world began. He is the advance guard of liberty and justice, of law and order, and of peace and happiness.”

As these words were being written, American soldiers in the Philippines were in the early stages of a near-genocidal rampage that would kill more than six hundred thousand Filipinos. Not new, this warrior-love, but rampant now and metastasizing.

The American mythos today is saturated with the Holy Trinity of God, the flag, and the armed forces. All are glorified and sanctified in a manner that is overtly sentimental, Romantic, and irrational. These three pillars of American society support an invigorated sense of Manifest Destiny, a wonderful feeling of exceptional purpose that was lost after the collapse of Soviet communism. Americans are excited again: standing tall, feeling the pride, and above all, “on the march.” This toxic mix of army worship, flag worship, and God worship has erupted in a nation where every hope and fear can be rendered down to a slogan on one of the many variations on the yellow ribbon. The irony of it all is that the yellow ribbon was originally a symbol of the grinding, endless sense of victimhood that Americans felt during the Iran hostage crisis. Americans everywhere showed the yellow ribbon because there was quite literally nothing else they could do about the situation except sit there and take it. For those of us who live in America—and for the rest of the world as well—an understanding of this dangerous liaison between rampant militarism and the sanctified yellow fetish of the angry victim is critically important. This yellow shroud—and make no mistake, it is a shroud and possibly even a death shroud—is a voodoo fetish designed to buck up the courage of a people who have, in a few short years, devolved into a nation of frantic, ribbon-worshipping victims.

Stephen J. Gallagher is a scholar and writer who lives in North Carolina. A frequent contributor to Free Inquiry, Gallagher’s work has also appeared in the Peace Review, the Monthly Review, and the Journal of Contemporary Thought.