Tuesday, December 6, 2011

If We End Corporate Personhood We Can Define the Terms of a New Economy

If We End Corporate Personhood We Can Define the Terms of a New Economy

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The prevalence of the corporation in America has led men of this generation to act, at times, as if the privilege of doing business in corporate form were inherent in the citizen; and has led them to accept the evils attendant upon the free and unrestricted use of the corporate mechanism as if these evils were the inescapable price of civilized life, and, hence, to be borne with resignation.

Throughout the greater part of our history a different view prevailed.

Although the value of this instrumentality in commerce and industry was fully recognized, incorporation for business was commonly denied long after it had been freely granted for religious, educational, and charitable purposes.

It was denied because of fear. Fear of encroachment upon the liberties and opportunities of the individual. Fear of the subjection of labor to capital. Fear of monopoly. Fear that the absorption of capital by corporations, and their perpetual life, might bring evils similar to those which attended mortmain [immortality]. There was a sense of some insidious menace inherent in large aggregations of capital, particularly when held by corporations.

— U.S. Supreme Court Justice Louis Brandeis, 19331

Although the increasingly unrestrained marketplace that Teddy Roosevelt and Louis Brandeis warn of makes it hard for many companies to emphasize community values, some still do. Others are recognizing the need to respond to human demands for a cleaner, safer, less toxic world.

Additionally, many people are fortunate enough to work in an industry they love, and the love of railroads or automobiles or flying or medicine has motivated the start-up and the ongoing operation of many of what are now the world’s best companies.

In my experience in business, it’s the people who care about their industry or area of expertise who are the most likely to be successful. And companies with mission statements and standards of behavior that let people ethically live out their passions can be wonderful places to work.

As people take back control of their governments and begin to again regulate how far businesses can go, the vast majority of ethical and appropriately run corporations can begin to operate in ways that are more long-term and more community oriented.

Revoking Corporate Charters Is Not at All New

The process of revoking corporate charters goes back to the very first years of the United States. Beginning in 1784 (four years before the U.S. Constitution was ratified), Pennsylvania demanded that corporations include a revocation clause in corporate charters.2

As the United States grew, laws were passed requiring revocation clauses in the corporate charters (permissions) of insurance companies in 1809 and banks in 1814. From the founding of America to the late 1800s, governments routinely revoked corporate charters, forcing the liquidation and the sale of assets. Banks were shut down for behaving in a "financially unsound" way in Ohio, Mississippi, and Pennsylvania. And when corporations that ran the turnpikes in New York and Massachusetts didn’t keep their roads in repair, those states gave the corporations the death sentence.

In 1825 Pennsylvania passed laws making it even easier for that state to "revoke, alter, or annul" corporate charters "whenever in their opinion [the operation of the corporation] may be injurious to citizens of the community," and by the 1870s nineteen states had gone through the long and tedious process of amending their state constitutions expressly to give legislators the power to terminate the existence of corporations that originated in those states.

Presidents have even run for public office and won on platforms that included the revocation of corporate charters. One of the largest issues of the election of 1832 was Andrew Jackson’s demand that the corporate charter of the Second Bank of the United States not be renewed.

Following his lead states across the nation began examining their banks and other corporations; and in just the year 1832 Pennsylvania pulled the charters of ten corporations, sentencing them to corporate death "for operating contrary to the public interest."

Oil corporations, match manufacturers, whiskey trusts, and sugar corporations all received the corporate death penalty in the late 1800s in Michigan, Ohio, Nebraska, and New York. And when, in 1894, the Central Labor Union of New York City campaigned for the New York State Supreme Court to revoke the charter of Standard Oil Trust of New York for "a pattern of abuses," the court agreed and dissolved the company.

It was the beginning of a bandwagon that ended only, for all practical purposes, with the election of President Warren G. Harding in 1921, with his promise to have "less government in business and more business in government."

Legislative Remedies

Whether the threat is one of economic penalty, regulation, or even dissolution, the fact is that laws do change corporate behavior. For example, literally millions of corporate decisions are made daily around the world in response to tax laws. In Germany, where a government-imposed energy tax causes oil and gasoline to cost more than twice what it does in the United States, industry is roughly twice as energy-efficient as American companies and with significantly lower toxic and atmosphere-destabilizing discharges as a result. When the three-martini lunch became no longer deductible under U.S. tax law, most American companies changed their guidelines for employee behaviors and reimbursements.

Thus, if humans were to again decide that they wanted corporations to behave in a way that protected the living environment that sustains all life forms (including humans), we could indeed pass laws making it unprofitable or dangerous for corporations to do otherwise. Taking it a step further, we could even pass laws that give corporations incentives to actively help the environment.

With the end of corporate personhood, it will be possible for the humans of the United States and every nation in the world to define the terms of a new economy. With natural persons once again in charge of government, we can redefine the rules of business so that corporations are profitable when their actions lead to sustainability and a clean environment, respond to values defined by local communities, and promote and develop renewable forms of energy. We can strip out the strings and the harnesses put into regulatory law by corporate lobbyists so that the government agencies charged with protecting us from malefactors and criminals can once again work.

Eliminating Corporate Personhood

Once corporate personhood is eliminated and corporations are again seen as they really are—the fictitious legal creatures of the states that authorized and created them—all this can change. The rightful representatives of humans— our governments—can then pass laws like the ones that were once part of this nation and its states, forbidding corporations from attempting to influence the laws and the regulatory agencies that oversee their activities.

As stated in the Wisconsin law that stood until it was finally noticed and struck down in 1953, No corporation doing business in this state shall pay or contribute, or offer, consent or agree to pay or contribute, directly or indirectly, any money, property, free service of its officers or employees or thing of value to any political party, organization, committee or individual for any political purpose whatsoever, or for the purpose of influencing legislation of any kind, or to promote or defeat the candidacy of any person for nomination, appointment or election to any political office.3

Returning Political Power to the People

When decisions are made locally, their full range of impacts, including all present and future costs, are more likely to be considered. If a community knows that extracting a mineral from its soil will produce environmental damage, it can require the mining corporation to pay for that damage in advance or as product is extracted—without worrying that, because some other community has chosen not to so tax the corporation, the community is trampling the "rights" of the corporation under the Fourteenth Amendment’s equal protection clause.

German historian and author Wolfgang Sachs noted in an interview with former California governor Jerry Brown, "Nature has only been minimally present in the market. The market thrives on the fact that nature doesn’t cost anything."4 Except it does cost something to the local communities, who must suffer with the effects of strip mining, toxic waste, loss of topsoil, and the destruction of their ecosystems.

When corporations are changed from natural-person to artificial-person status, the natural persons who live in these regions can begin to legislatively regulate the actions of any corporation that seeks to exploit their nature.

Once again in America, as Thomas Jefferson hoped would always be the case, "the people, being the only safe depository of power, should exercise in person every function which their qualifications enable them to exercise, consistently with the order and security of society."5

Democracy in the Global Marketplace

On January 20, 1949, President Harry S. Truman in his inaugural address committed the United States to helping lift much of the world out of poverty.6 It was the first time a national leader had used the word "development" to describe a national goal outside the United States, or "undeveloped" to describe what we now call the third world or the developing world. Truman was quite clear and specific about his vision:

We must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. More than half the people of the world are living in conditions approaching misery. Their food is inadequate. They are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas.

Pointing out that the United States had the resources and the knowledge to help lift people around the world out of poverty and misery, Truman demanded that corporations that had an eye to exploiting the developing world be restrained. He said, "The old imperialism—exploitation for foreign profit—has no place in our plans."

Instead, he added, the poorer people of the world must have the ability to determine their own fates and control for themselves the extent of our companies’ participation in their nations as well as the extent of their own development. "Democracy alone can supply the vitalizing force to stir the peoples of the world into triumphant action," Truman said, "not only against their human oppressors, but also against their ancient enemies—hunger, misery, and despair."

The role of government is to protect, defend, and represent the interests of its own people, he said. "Democracy maintains that government is established for the benefit of the individual, and is charged with the responsibility of protecting the rights of the individual and his freedom in the exercise of his abilities." Citing Locke’s concept of natural rights, he added, "Democracy is based on the conviction that man has the moral and intellectual capacity, as well as the inalienable right, to govern himself with reason and justice."

Truman’s vision was a challenge to corporate personhood, but NAFTA, GATT, WTO, and fast-track authority have sidetracked it. Ending corporate personhood would allow communities to correct this situation and empower them to enforce ethical and socially responsible corporate behavior.

Banks May Have Illegally Foreclosed on 5,000 Members of the Military

Banks May Have Illegally Foreclosed on 5,000 Members of the Military

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For months, major banks have been dealing with the fallout of the “robo-signing” scandal, following reports that the banks were improperly foreclosing on homeowners and, in many instances, falsifying paperwork that they were submitting to courts. Banks have been forced to go back and re-examine foreclosures to ensure that homeowners did not lose their homes unlawfully.

In the latest episode of this mess, the Office of the Comptroller of the Currency has found that banks — including Bank of America, Wells Fargo, and Citigroup — may have improperly foreclosed [4] on up to 5,000 active members of the military:

Ten leading US lenders may have unlawfully foreclosed on the mortgages of nearly 5,000 active-duty members of the US military in recent years, according to data released by a federal regulator. [...]

The data released by the OCC are based on estimates prepared by lenders and their consultants. BofA said it is reviewing 2,400 foreclosures involving active-duty military families to see if they were conducted properly. Wells Fargo is reviewing 870 foreclosures and Citigroup is looking at 700 cases.

Also under review are 575 foreclosures at OneWest, formerly known as IndyMac; 87 at HSBC; 80 at US Bancorp; 56 at Aurora, formerly known as Lehman Brothers Bank; 25 at MetLife; six at Sovereign; and three at EverBank.

Back in April, JPMorgan Chase, which was not one of the 10 banks that the OCC examined, agreed to a $56 million settlement [5] over allegations that it had overcharged members of the military on their mortgages. Chase Bank has even auctioned off the home [6] of a military member the very day that he returned from Iraq. Two other mortgage servicers [7] agreed in May to settle charges of improperly foreclosing on servicemembers.

Even without the banks illegally foreclosing, military members have been hard hit by the foreclosure crisis. Last year alone, 20,000 members of the military [8] faced foreclosure, a 32 percent increase [8] over 2008. The newly created Consumer Financial Protection Bureau is tasked with ensuring that military members are treated fairly by financial services companies — a job that is obviously necessary — but Republicans in Congress have, so far, refused to confirm a director for the agency, leaving it unable to fulfill all of its responsibilities.

22 Reasons Why We Could See An Economic Collapse In Europe In 2012

22 Reasons Why We Could See An Economic Collapse In Europe In 2012

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Will 2012 be the year that we see an economic collapse in Europe? Before you dismiss the title of this article as "alarmist", read the facts listed in the rest of this article first. Over the past several months, there has been an astonishing loss of confidence in the European financial system. Right now, virtually nobody wants to loan money to financially troubled nations in the EU and virtually nobody wants to lend money to major European banks. Remember, one of the primary reasons for the financial crisis of 2008 was a major credit crunch that happened here in the United States. This burgeoning credit crunch in Europe is just one element of a "perfect storm" that is rapidly coming together as we get ready to go into 2012. The signs of trouble are everywhere. All over Europe, governments are implementing austerity measures and dramatically cutting back on spending. European banks are substantially cutting back on lending as they seek to meet new capital requirements that are being imposed upon them. Meanwhile, bond yields are going through the roof all over Europe as investors lose confidence and demand much higher returns for investing in European debt. It has become clear that without a miracle happening, quite a few European nations and a significant number of European banks are not going to be able to get the funding that they need from the market in 2012. The only thing that is going to avert a complete and total financial meltdown in Europe is dramatic action, but right now European leaders are so busy squabbling with each other that a bold plan seems out of the question.

The following are 22 reasons why we could see an economic collapse in Europe in 2012....

#1 Germany could rescue the rest of Europe, but that would take an unprecedented financial commitment, and the German people do not have the stomach for that. It has been estimated that it would cost Germany 7 percent of GDP over several years in order to sufficiently bail out the other financially troubled EU nations. Such an amount would far surpass the incredibly oppressive reparations that Germany was forced to pay out in the aftermath of World War I.

A host of recent surveys has shown that the German people are steadfastly against bailing out the rest of Europe. For example, according to one recent poll 57 percent of the German people are against the creation of eurobonds.

At this point, German politicians are firmly opposed to any measure that would place an inordinate burden on German taxpayers, so unless this changes that means that Europe is not going to be saved from within.

#2 The United States could rescue Europe, but the Obama administration knows that it would be really tough to sell that to the American people during an election season. The following is what White House Press Secretary Jay Carney said today about the potential for a bailout of Europe by the United States....

"This is something they need to solve and they have the capacity to solve, both financial capacity and political will"

Carney also said that the Obama administration does not plan to commit any "additional resources" to rescuing Europe....

"We do not in any way believe that additional resources are required from the United States and from American taxpayers."

#3 Right now, banks all over Europe are in deleveraging mode as they attempt to meet new capital-adequacy requirements by next June.

According to renowned financial journalist Ambrose Evans-Pritchard, European banks need to reduce the amount of lending on their books by about 7 trillion dollars in order to get down to safe levels....

Europe’s banks face a $7 trillion lending contraction to bring their balance sheets in line with the US and Japan, threatening to trap the region in a credit crunch and chronic depression for a decade.

So what does that mean?

It means that European banks are going to be getting really, really stingy with loans.

That means that it is going to become really hard to buy a home or expand a business in Europe, and that means that the economy of Europe is going to slow down substantially.

#4 European banks are overloaded with "toxic assets" that they are desperate to get rid of. Just like we saw with U.S. banks back in 2008, major European banks are busy trying to unload mountains of worthless assets that have a book value of trillions of euros, but virtually nobody wants to buy them.

#5 Government austerity programs are now being implemented all over Europe. But government austerity programs can have very negative economic effects. For example, we have already seen what government austerity has done to Greece. 100,000 businesses have closed and a third of the population is now living in poverty.

But now governments all over Europe have decided that austerity is the way to go. The following comes from a recent article in the Economist....

France’s budget plans are close to being agreed on; further cuts are likely but will be delayed until after the elections in spring. Italy has yet to vote through a much-revised package of cuts. Spain’s incoming government has promised further spending cuts, especially in regional outlays, in order to meet deficit targets agreed with Brussels.

#6 The amount of debt owed by some of these European nations is so large that it is difficult to comprehend. For example, Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about 3 trillion euros combined.

So what will massive government austerity do to troubled nations such as Spain, Portugal, Ireland and Italy? Ambrose Evans-Pritchard is very concerned about what even more joblessness will mean for many of those countries....

Even today, the jobless rate for youth is near 10pc in Japan. It is already 46pc in Spain, 43pc in Greece, 32pc in Ireland, and 27pc in Italy. We will discover over time what yet more debt deleveraging will do to these societies.

#7 Europe was able to bail out Greece and Ireland, but there is no way that Italy will be able to be rescued if they require a full-blown bailout.

Unfortunately, Italy is in the midst of a massive financial meltdown as you read this. The yield on two year Italian bonds is now about double what it was for most of the summer. There is no way that is sustainable.

It would be hard to overstate how much of a crisis Italy represents. The following is how former hedge fund manager Bruce Krasting recently described the current situation....

At this point there is zero possibility that Italy can refinance any portion of its $300b of 2012 maturing debt. If there is anyone at the table who still thinks that Italy can pull off a miracle, they are wrong. I’m certain that the finance guys at the ECB and Italian CB understand this. I repeat, there is a zero chance for a market solution for Italy.

Krasting believes that either Italy gets a gigantic mountain of cash from somewhere or they will default within six months and that will mean the start of a global depression....

I think the Italian story is make or break. Either this gets fixed or Italy defaults in less than six months. The default option is not really an option that policy makers would consider. If Italy can’t make it, then there will be a very big crashing sound. It would end up taking out most of the global lenders, a fair number of countries would follow into Italy’s vortex. In my opinion a default by Italy is certain to bring a global depression; one that would take many years to crawl out of.

#8 An Italian default may be closer than most people think. As the Telegraph recently reported, just to refinance existing debt, the Italian government must sell more than 30 billion euros worth of new bonds by the end of January....

Italy’s new government will have to sell more than EURO 30 billion of new bonds by the end of January to refinance its debts. Analysts say there is no guarantee that investors will buy all of those bonds, which could force Italy to default.

The Italian government yesterday said that in talks with German Chancellor Angela Merkel and French President Nicolas Sarkozy, Prime Minister Mario Monti had agreed that an Italian collapse “would inevitably be the end of the euro.”

#9 European nations other than just the "PIIGS" are getting into an increasing amount of trouble. For example, S&P recently slashed the credit rating of Belgium to AA.

#10 Credit downgrades are coming fast and furious all over Europe now. At this point it seems like we see a new downgrade almost every single week. Some nations have been downgraded several times. For instance, Fitch has downgraded the credit rating of Portugal again. At this point it is being projected that Portuguese GDP will shrink by about 3 percent in 2012.

#11 The financial collapse of Hungary didn't make many headlines in the United States, but it should have. Moody's has cut the credit rating of Hungarian debt to junk status, and Hungary has now submitted a formal request to the EU and the IMF for a bailout.

#12 Even faith in German debt seems to be wavering. Last week, Germany had "one of its worst bond auctions ever".

#13 German banks are also starting to show signs of weakness. The other day, Moody's downgraded the ratings of 10 major German banks.

#14 As the Telegraph recently reported, the British government is now making plans based on the assumption that a collapse of the euro is only "just a matter of time"....

As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.

Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.

The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.

A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.

#15 The EFSF was supposed to help bring some stability to the situation, but the truth is that the EFSF is already a bad joke. It has been reported that the EFSF has already been forced to buy up huge numbers of its own bonds.

#16 Unfortunately, it looks like a run on the banks has already begun in Europe. The following comes from a recent article in The Economist....

"We are starting to witness signs that corporates are withdrawing deposits from banks in Spain, Italy, France and Belgium," an analyst at Citi Group wrote in a recent report. "This is a worrying development."

#17 Confidence in European banks has been absolutely shattered and virtually nobody wants to lend them money right now.

The following is a short excerpt from a recent CNBC article....

Money-market funds in the United States have quite dramatically slammed shut their lending windows to European banks. According to the Economist, Fitch estimates U.S. money market funds have withdrawn 42 percent of their money from European banks in general.

And for France that number is even higher — 69 percent. European money-market funds are also getting in on the act.

#18 There are dozens of major European banks that are in danger of failing. The reality is that most major European banks are leveraged to the hilt and are massively exposed to sovereign debt. Before it fell in 2008, Lehman Brothers was leveraged 31 to 1. Today, major German banks are leveraged 32 to 1, and those banks are currently holding a massive amount of European sovereign debt.

#19 According to the New York Times, the economy of the EU is already projected to shrink slightly next year, and this doesn't even take into account what is going to happen in the event of a total financial collapse.

#20 There are already signs that the European economy is seriously slowing down. Industrial orders in the eurozone declined by 6.4 percent during September. That was the largest decline that we have seen since the midst of the financial crisis in 2008.

#21 Panic and fear are everywhere in Europe right now. The European Commission’s index of consumer confidence has declined for five months in a row.

#22 European leaders are really busy fighting with each other and a true consensus on how to solve the current problems seems way off at the moment. The following is how the Express recently described rising tensions between German and British leaders....

The German Chancellor rejected outright Mr Cameron’s opposition to a new EU-wide financial tax that would have a devastating impact on the City of London.

And she refused to be persuaded by his call for the European Central Bank to support the euro. Money markets took a dip after their failure to agree.

Are you starting to get the picture?

The European financial system is in a massive amount of trouble, and when it melts down the entire globe is going to be shaken.

But it isn't just me that is saying this. As I mentioned in a previous article, there are huge numbers of respected economists all over the globe that are now saying that Europe is on the verge of collapse.

For example, just check out what Credit Suisse is saying about the situation in Europe....

"We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks."

Many European leaders are promoting much deeper integration and a "European superstate" as the answer to these problems, but it would take years to implement changes that drastic, and Europe does not have that kind of time.

If Europe experiences a massive economic collapse and a prolonged depression, it may seem like "the end of the world" to some people, but things will eventually stabilize.

A lot of people out there seem to think that the global economy is going to go from its present state to "Mad Max" in a matter of weeks. Well, that is just not going to happen. The coming troubles in Europe will just be another "wave" in the ongoing economic collapse of the western world. There will be other "waves" after that.

Of course this current sovereign debt crisis could be entirely averted if the countries of the western world would just shut down their central banks and start issuing debt-free money.

The truth is that there is no reason why any sovereign nation on earth ever has to go a penny into debt to anyone. If a nation is truly sovereign, then the government has the right to issue all of the debt-free money that it wants. Yes, inflation would always be a potential danger in such a system (just as it is under central banking), but debt-free money would mean that government debt problems would be a thing of the past.

Unfortunately, most of the countries of the world operate under a system where more government debt is created when more currency is created. The inevitable result of such a system is what we are witnessing now. At this point, nearly the entire western world is drowning in debt.

There are alternatives to our current system. But nobody in the mainstream media ever talks about them.

So instead of focusing on truly creative ways to deal with our current problems, we are all going to experience the bitter pain of the coming economic collapse instead.

Things did not have to turn out this way.

How Zuccotti Park Became Zuccotti Prison: Creeping American Police State

How Zuccotti Park Became Zuccotti Prison: Creeping American Police State

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When I arrived at Zuccotti Prison one afternoon last week, the “park” was in its now-usual lockdown mode. No more tents. No library. No kitchen. No medical area. Just about 30 leftover protesters and perhaps 100 of New York’s finest as well as private-security types in neon-green vests in or around a dead space enclosed by more movable police fencing than you can imagine. To the once open plaza, there were now only two small entrances in the fencing on the side streets, and to pass through either you had to run a gauntlet of police and private security types.

The park itself was bare of anything whatsoever and, that day, parts of it had been cordoned off, theoretically for yet more cleaning, with the kind of yellow police tape that would normally surround a crime scene, which was exactly how it seemed. In fact, as I walked in, a young protestor was being arrested, evidently for the crime of lying down on a bench. (No sleeping, or even prospective sleeping, allowed -- except in jail!)

Thanks to Mayor Bloomberg’s police assault on the park, OWS has largely decamped for spaces unknown and for the future. Left behind was a grim tableau of our distinctly up-armored, post-9/11 American world. To take an obvious example, the “police” who so notoriously pepper-sprayed non-violent, seated students at UC Davis were just campus cops, who in my college years, the 1960s, still generally wore civvies, carried no weapons, and were tasked with seeing whether students had broken curfew or locked themselves out of their rooms. Now, around the country, they are armed with chemical weapons, Tasers, tear gas, side arms, you name it. Meanwhile, some police departments, militarizing at a rapid rate, have tank-like vehicles, and the first police surveillance drones are taking to the air in field tests and capable of being weaponized.

And keep in mind, when it comes to that pepper-spraying incident, we’re talking about sleepy Davis, California, and a campus once renowned for its agronomy school. Al-Qaeda? I don’t think so.

Still, terror is what now makes our American world work, the trains run more or less on time, and the money flow in. So why should we be surprised that, having ripped Zuccotti Park apart, destroyed books, gotten a rep for pepper-spraying and roughing up protesters (and reporters, too), the NYPD should propitiously announce the arrest of yet another “lone wolf” terrorist. And can anyone be shocked that we’re talking about a disturbed, moneyless individual -- he couldn’t even pay his cell phone bill, no less rent a place to live -- under surveillance for two years, and palling around with an NYPD “informant” who smoked marijuana with him and may have given him not only a place to build a bomb but encouragement in doing so.

It was a police-developed terror case that evidently so reeked of coaching even the FBI refused to get involved. And yet this was Mayor Bloomberg’s shining moment of last week, as the NYPD declared his home a “frozen” zone, the equivalent of declaring martial law around his house. And who was endangering him? An OWS “drum circle.” In the United States, increasingly, those in power no longer observe the law. Instead, they make it up to suit their needs. In the process, the streets where you demonstrate, as (New York’s mayor keeps telling us) is our “right,” are regularly transformed into yet more fenced-in, heavily surveilled Zuccotti Prisons.

This may not be a traditional police state (yet), but it is an increasingly militarized policed state in which the blue coats, armed to the teeth, act with remarkable impunity -- and all in the name of our safety from a bunch of doofuses or unhinged individuals that its “informants” often seem to fund, put through basic terror courses, and encourage in every way until they are arrested as “terrorists.” This is essentially a scam on the basis of which rights are regularly abridged or tossed out the window.

In twenty-first-century America, “rights” are increasingly meant for those who behave themselves and don’t exercise them. And if you happen to be part of a government in which no criminal act of state -- torture, kidnapping, the assassination of U.S. citizens abroad, the launching of wars of aggression -- will ever bring a miscreant to court, only two crimes evidently exist: blowing a whistle or expressing your opinion. State Department official Peter Van Buren, whose new book about a disastrous year he spent in Iraq, We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People, learned that the hard way. So did former Guantanamo prosecutor Morris Davis when he got fired from his job at the Library of Congress for writing an op-ed. So may we all.

Meet 5 Big Lenders Profiting From the $1 Trillion Student Debt Bubble (Hint: You Know Some of Them Already)

Meet 5 Big Lenders Profiting From the $1 Trillion Student Debt Bubble

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Underneath the now-iconic red sculpture at Liberty Plaza, now cleared of tents and ringed by barricades plastic-cuffed together, several “students” stood draped in fake chains over their caps and gowns, brandishing debt bills instead of diplomas.

They might have been performing, as part of a press conference unveiling a national student debt refusal pledge, but the dramatization of what happens upon graduation to many of America's students was spot-on. Despite a few moves by the Obama administration in past years and even recent months to lessen the burden of student loans, many graduates are still saddled with more debt than they can conceivably pay back and have little hope of finding a good job in the current economy.

Monday saw protests against tuition hikes on either end of the country; at New York's Baruch College of the City University of New York, the Board of Trustees voted for another tuition hike and according to reports, a student kicked off the day's actions by burning his Sallie Mae student loan bill. UC Davis, responding to the brutal pepper-spraying of students last week, also kept their focus on economic issues, chanting "No cuts, no fees, education must be free," and reportedly shutting down the financial aid building.

The talk of debt refusal or debt strikes, as I reported just recently, has ratcheted up along with the momentum of the Occupy Wall Street movement, as the occupiers made the connection between Wall Street bankers and student debt--right down to the bailouts, as student lenders received a bailout of their own from the federal government, which handed over billions in taxpayer dollars to the banks and lenders in exchange for loans that could no longer be sold on the secondary market.

Recent grads with mountains of debt know that without their tax dollars, these big lenders wouldn't continue to exist. They want their loans forgiven or at least written down, and they think the lenders should pay. The principles laid out on the OccupyStudentDebtCampaign site call for free tuition at public universities, an end to interest on student loans, and for private and for-profit institutions to open their books so that students know how their money is being spent.

As of 2010, the government directly lends up to $31,000 to students for their undergraduate years. Yet that total isn't even a year's tuition at many schools, let alone enough to cover living expenses and textbooks for four full years. As the economic crisis continues to stifle the economy and strangle state budgets, even public universities are seeing tuition hikes—the students pepper-sprayed at UC Davis were protesting a proposed hike in their tuition a full 81% in four years. So many students turn to private lenders to fill the gap between what the government will provide and what they realistically need to pay for school. Though those private lenders no longer get direct government subsidies, many of them still have billions on the books in federally-subsidized debt, and even the private loans (often at variable interest rates, vulnerable to hikes when borrowers can least afford them) still have protections unlike almost any other type of debt, as student loans cannot be discharged in bankruptcy.

Jon Walker at FireDogLake described the now-defunct federally-subsidized private lending system thus:

"The Federal Family Education Loan Program (FFEL) was a classic lemon socialism program. It provided a nearly total government guarantee for 'private' student loans. If the loans did well, the large financial companies got the profit, if they didn’t preform, the government socialized the loses. These broken incentives spurred risky behavior from the companies."

“Student loans are among the most lucrative you can make because the borrower has no protections and the creditor is afforded extraordinary powers,” noted Andrew Ross, NYU professor and labor expert, at the student debt press conference. Ross spoke, too, of the need for professors to work in solidarity with the students on this issue since their salaries are paid through the debt of their students.

“Our public universities, once the democratic gold standard worldwide, are increasingly and ruinously dependent on debt financing from the people they are supposed to serve,” he said.

So just who are the lenders profiting from the massive student debt load?

You already know some of the names: JP Morgan Chase, U.S Bank, Citi, Bank of America. Others are non-bank student lenders. What all of them have in common, though, is that their practices are shrouded in secrecy. A recent release from the Consumer Financial Protection Bureau, the brainchild of now-Senate candidate Elizabeth Warren, called for an investigation into the industry:

"It has been operating in the shadows for too long," Raj Date, the Treasury Department adviser who is running the Consumer Financial Protection Bureau, said in a release. "Shedding light on this industry will benefit students, lenders, and the market as a whole."

Here, we take a look at five of the lenders raking in the cash off the backs of the U.S.'s students.

1. Sallie Mae

The SLM corporation, better known as Sallie Mae (and originally called the Student Loan Marketing Association), is the largest student lender in the United States. It was created in 1972 as a government-sponsored enterprise, but fully privatized in 2004. It also services loans provided by the federal government, and holds, services and collects loans made under the now-discontinued Federal Family Education Loan Program (FFELP), the federally-subsidized private lending program which was recently replaced with direct federal loans. These loans were, up until the end of the program, Sallie Mae's main source of income.

And just like in the mortgage market, Sallie Mae has been accused of making “subprime” loans to borrowers who will be attending for-profit or trade schools that have low graduation rates, making the loans a bad risk. Stephen Burd at the New America Foundation's Higher Ed Watch wrote in 2008, “Still, Sallie Mae won't overtly admit fault and poor management. Instead, the company and its promoters on Wall Street have been testing another explanation for its difficulties. An analyst with CreditSights Inc., in New York, recently tried it out when he told Bloomberg.com that the loan giant had been 'blind-sided' by the rising default and delinquency rates on the subprime private loans it had made to low-income and working-class students attending trade school of dubious quality.”

The last year that the FFELP existed, Sallie Mae held a frightening $154.1 billion in FFELP loans.

Like all of the student lenders, in 2008, Sallie Mae got what amounted to a sizable government bailout from the Ensuring Continued Access to Student Loans Act (ECASLA), which the Campaign for America's Future described in a report [PDF] as one that “allowed lenders like Sallie Mae to sell loans back to the Department of Education through a number of loan-purchase programs.” On the strength of that government bailout, the company's profits surged to $324 million.

The CEO of Sallie Mae, Albert Lord, according to CAP “has reaped more than $225 million from the student loan business over the course of his career. In 2008, even as profits declined, Lord received $4.7 million in total compensation. He has used a portion of the proceeds to build himself a private golf course.”

Sallie Mae has spent millions lobbying against student loan reform, including lobbying the nonpartisan Congressional Budget Office, which made recommendations on the cost savings of the government's switch to direct lending. Over the last three campaign cycles (2012, 2010, and 2008) Sallie Mae's PAC has spent $1,583,557, favoring Democrats in '08 and '10 but so far this year favoring the GOP.

In 2010, when Citigroup decided to get out of the student loan business, Sallie Mae paid $1.2 billion for the rights to collect payments and service $28 billion in federally backed loans.

2. Wells Fargo

Wachovia and Wells Fargo were the third and fourth largest originators of federally-subsidized private loans under FFELP in 2009, with $5.54 billion and $5.14 billion respectively. After their merger, the resultant behemoth is the country's second-largest private student lender.

As we reported recently at AlterNet, Wells Fargo reported profits of $12.36 billion in 2010, and is number 23 on the Fortune 500, just above Procter & Gamble. Headquartered in California, the bank has $1.26 trillion in assets and $93 billion in revenues. And, of course, it got $25 billion in TARP funds from the government and borrowed another $300 billion through the Federal Reserve during the financial crisis, which it helped create—Wells Fargo is the country's largest consumer lender and is the only one of the nation's big banks that offers payday advance loans, which it calls “Direct Deposit Advance” and has direct financial connections to six of the top seven payday lenders.

The company has faced allegations of racial bias in its mortgage lending processes, though there's no information about similar allegations of its student lending. Salon reported:

“Wells Fargo has a history of targeting vulnerable communities for risky financial products. At the height of the subprime lending mania in 2006, the bank was more likely to loan subprime mortgages to Latinos and African-Americans than whites, according to a September 2009 report by the Center for American Progress, a process known as “reverse red-lining.” For financially stable borrowers, the targeting was even starker: Middle-class blacks were four times more likely than middle-class whites to get a dangerous mortgage. Middle-class Latinos were nearly three times more likely.”

Wells Fargo is now offering a new fixed-rate private student loan, which would allow borrowers to lock in one rate for the life of their loan; however, the rates can be high—up to 14 percent for those attending community colleges or trade schools, or in other words, for lower-income borrowers.

In Minnesota recently, a group of Occupy-affiliated activists “mic-checked” Wells Fargo CEO John Stumpf, calling him out for his bank's foreclosure and student debt policies.

3. Discover

After buying the remains of Citi's Student Loan Corporation, Discover Financial Services became the third-largest provider of private student loans. Best known for the Discover Card, of course, the company's website proclaims:

“The company operates the Discover card, America's cash rewards pioneer, and offers personal and student loans, online savings products, certificates of deposit and money market accounts through its Discover Bank subsidiary.”

According to Canadian Business magazine, of Discover's $52.51 billion in total loans (as of May 31, 2011) $4.57 billion was student loans, up from $820 million the previous year—which reflects the buyout of Citi's loans.

Harit Talwar, the company's Vice President for US Cards, said of student lending at a conference in May, "We really like this business. In the U.S., as you know, education costs are increasing much faster than income. And therefore, students need funding for tuition fees."

Discover's PAC has spent $2,221,136 over the last three election cycles on candidates, mostly to Republicans.

4. NelNet

Based in Lincoln, Nebraska, NelNet was founded in 1978 as the UNIPAC Loan Service Corporation and renamed NelNet in 1996. It reported net income of $165.5 million for three quarters of 2011, and has net student loan assets of $24.6 billion. Its press release states:

“In September 2009, Nelnet began servicing student loans for the Department of Education (Department) under a contract that will increase the company's fee-based revenue as the servicing volume increases. At September 30, 2011, the company was servicing $44.6 billion of loans for 3 million borrowers on behalf of the Department, compared with $21.8 billion of loans for 2.5 million borrowers on September 30, 2010. Revenue from this contract increased to $12.8 million for the third quarter of 2011, up from $8.7 million for the same period a year ago.”

That's $12.8 million in a quarter for servicing federal loans.

The lender has been riddled with controversy; in 2006, Inside Higher Ed reported that NelNet had overcharged the government about a billion dollars. (They settled in 2010 for $55 million to resolve a whistle-blower lawsuit—which also targeted Sallie Mae.) And Higher Ed Watch reported in 2007, in a piece called “NelNet's Friend with Benefits”:

“Amidst revelations this spring of industry wide kickbacks, improper inducements, and gifts from student loan providers to colleges and universities, Nelnet quickly shut down a Nebraska investigation into its activities by agreeing to provide $1 million to the state in support of a national financial aid awareness campaign.


As we reported two weeks ago, seeking higher office in Nebraska with Nelnet's support can be a lucrative endeavor. Democratic Sen. Ben Nelson received almost $65,000 in the 2005-2006 election cycle alone from Nelnet and Union Bank executives and officials. This June, Nelson co-sponsored an amendment that would have sent $4 billion in financial aid earmarked for students instead to for-profit student loan companies like Nelnet. Nelson's amendment lost 61-36.”

NelNet's PAC has spent $398,731 on campaign donations since 2008, and it's spent $2,780,000 on lobbying since 2007; its lobbyists have included Clark Lytle Gelduldig & Cranford, the firm recently outed by Chris Hayes on MSNBC as doing opposition research on the Occupy Wall Street movement.

JPMorgan Chase

JPMorgan this year became the country's largest bank by asset size, surpassing the troubled Bank of America, and its private student loan division came into shape when it purchased Collegiate Funding Services in 2006, creating Chase Student Loans.

In 2009, Chase held $11.1 billion in FFELP loans, not a huge amount when you consider its $2.29 trillion in current assets. Still, the giant has been accused of some shady lending practices.

Back in 2007, NPR reported:

“The House Education and Labor Committee says it has evidence that JPMorgan Chase paid five student aid officials to do work for the bank while they were still on their school's payroll. JPMorgan Chase confirmed it did pay school officials to do work related to student loans, but the bank says it doesn't do that kind of thing anymore.

The company says it has also stopped throwing lavish parties for university officials, like the $70,000 cruise in New York Harbor that student aid officers enjoyed in 2005.”

JPMorgan Chase spends lavishly on campaigns and lobbying as well, dropping $5.8 million in just the last year on lobbyists and having given $109,750 to Mitt Romney, $79,150 to Virginia Senator Mark Warner, $55,750 to Tennessee Senator Bob Corker, and $37,439 to Barack Obama.

And just recently, the bank was pushed to reinstate a deferment program for active duty military servicepeople, after NBC News reported on a family that “received a letter alerting them the bank decided to end the program and would no longer allow active-duty troops to delay paying their student loans, even if they were away at war.”

Time to Retake Politics From the One Percent in Both Political Parties

Time to Retake Politics From the One Percent in Both Political Parties

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The country is still celebrating the inability of the supercommittee to cut Social Security and Medicare, but it is important to move on from this victory to retake control of the political debate from the One Percent. As it stands, the One Percent are insisting that the country genuflect over the non-problem of the budget deficit, at a time when tens of millions of workers are unemployed or underemployed, millions of people are facing the loss of their homes and tens of millions of baby boomers are approaching retirement with little other than their Social Security to support them.

The deficit is the agenda of the One Percent. There is no reason that the rest of us should be concerned about budget deficits when the rest of the country is struggling with the economic disaster created by the greed and incompetence of the One Percent.

This is not a statement of morality; it is a statement based on economic reality. Budget deficits can be a problem when an economy is near full employment and the deficit can be pulling resources away from private investment, thereby slowing growth. However, it is not a problem with large numbers of unemployed workers and vast amounts of excess capacity.

This is what the financial markets are telling us every day as interest rates on long-term government bonds hover near 2.0 percent. If deficits were really crimping the economy, we would be seeing interest rates of 6 or 7 percent, or even higher. The deficit hawks do not have an economic case to support their argument, just money and influence.

In the longer term, the deficit hawks can point to projections of outsized deficits, which they invariably attribute to Social Security and Medicare. The first part of this story is completely untrue.

Under the law, Social Security is financed from its designated tax. It, therefore, cannot contribute to the deficit unless Congress changes the law. (The payroll tax credit in 2011, which was replaced with general revenue, is an exception to this rule.)

According to the most recent projections from the Congressional Budget Office, Social Security benefits will be fully funded through the year 2038. After that date, if Congress does nothing to increase revenue, then the program would pay a bit more than 80 percent of scheduled benefits. (This would still be about 10 percent more than current retirees receive since benefits are projected to rise by approximately 1 percent a year.)

The real story of the soaring long-term deficits is exploding Medicare costs, which are in turn driven by our broken health care system. We already pay more than twice as much per person for our health care as the average for other wealthy countries, with little to show in the way of outcomes. This gap is projected to continue to grow in the years ahead.

To anyone who looks at the facts, the obvious answer to our deficit problem is fixing the health care system. This is difficult to do given the enormous political power of the pharmaceutical industry, the insurance industry, highly paid medical specialists, and the other members of the One Percent who profit from the waste in the system as it exists now.

If we can't immediately change the system, then why not take advantage of the gains from trade [3]? If we change rules to make it possible for Medicare beneficiaries to buy into the health care systems in other countries or make it easier for patients to have medical procedures done at far lower cost elsewhere, it should be an enormous win-win, offering gains that could be in the trillions of dollars [4]. And what free-market fundamentalist can argue against the principle of giving people a choice?

In fact, conservatives and self-described free traders run screaming from the idea of opening medical care to trade. They want trade that will lower the wages of auto workers and textile workers by putting them in direct competition with low-paid workers in the developing world; they hate trade when it threatens to reduce the income of the pharmaceutical industry, the insurance industry, and others in the One Percent.

It's time to expose the lies for what they are. The One Percent have rigged the deck over the last three decades to accomplish the most massive upward redistribution in the history of the world [5]. These are not people who care about budget deficits or free trade or free markets. They care about making themselves richer at the expense of everyone else.

They have been fighting this class war for 30 years. It is long past time that the rest of us started fighting back.

Washington State Set to Slash Education and Health Care for the Poor

Washington State Set to Slash Education and Health Care for the Poor

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A premeditated crime is about to take place on November 28, 2011.

With police across the country obsessively focused on enforcing camping regulations on Occupy activists, dangerous criminals who perpetrate truly heinous crimes are being left to run free.

When a crime syndicate recently announced its intention to make another hit on the youth of Washington State, teachers began preparing to take up yet another unpaid task in their day to help enforce public safety.

This organized crime ring is made up of Washington State lawmakers from both parties, who are set to convene a special legislative session on November 28 to cut $2 billion from the state budget, largely from education and health care - a clear violation of a Washington State court ruling last February that found the state guilty of not fulfilling its Constitutional obligation to fund basic education.

As King County Superior Court Judge John Erlick ruled [3] in his February school-funding decision, "State funding is not ample, it is not stable, and it is not dependable." Washington's Constitution declares that education is the state's "paramount duty [4]" - making the proposed shortening of the K-12 school year by four days and cutting $152 million in levy-equalization payments to property-poor school districts in clear violation of the law.

Beyond breaking the state Constitution and Judge Erlick's recent ruling, these budget cuts are literally a matter of life and death. Should the cuts be ratified, it would result in the elimination of the state's basic health plan, ending a program that subsidizes health care for some 35,000 people living in poverty. Denying health care to the state's most vulnerable populations will undoubtedly lead to increased morbidity.

In a feeble attempt to defray these draconian budget cuts, Washington State Gov. Chris Gregoire has proposed a regressive sales tax [5] increase. Yet, in a state that gives away $6.5 billion through tax loopholes [5], mostly to big business, taxing already struggling Washingtonians is no solution. Washington-based Microsoft received $143 million last year in special tax breaks, and aircraft maker Boeing got $104 million. JPMorgan Chase, which took over Washington Mutual in 2008, continues to receive a $120 million tax break on interest collected on first-time mortgages. There are also loopholes for cosmetic surgery ($6.25 million this year) and private jet enthusiasts ($5 million this year). By some measures, Washington State has the most regressive tax system [6] in the entire nation, which has already led to 2.7 billion in cuts to K-12 education over the past three years. This means that even if the legislature passes a proposed sales-tax - a measure very likely to fail - they will still be in flagrant violation of the law.

On Monday, November 28, Occupiers will be attempting to turn the Olympia capitol building into a scene out of Wisconsin [7]. I will be taking the day off from school to teach a more vivid civics lesson than I ever could from within the four walls of my classroom by joining with scores of educators to help reclaim our state capitol building in Olympia. Members of the Social Equality Educators, a progressive network of Northwest teachers, will be issuing citizen arrest warrants to the state legislature for their failure to uphold their constitutional duty to fund education.

Today, I am going shopping - anyone know of a good "Black Friday" deal on a sturdy pair of handcuffs?

Below the Safety Net

Below the Safety Net

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Some of the nation’s most courageous people are those who work day and night in overcrowded urban emergency wards and trauma centers. Among the patients they serve are often-dangerous gang members brought there from their impoverished and violent neighborhoods, wounded, sometimes near death.

These health care workers bear the brunt of many terrible aspects of our political, criminal-justice and economic systems. A poorly funded and overtaxed health care system overcrowds the hospitals. A police, prosecutorial and court system oriented toward imprisonment builds up gangs, rather than reducing them. Schools often fail to give students the education they need to leave the dead-end gang life. High unemployment, with employers unwilling to hire ex-cons, is a constant. The frustrations from all this add to the tensions of big-city emergency rooms, trauma centers and intensive care wards. Welcome to this little-noted but reflective side of American society.

“I have seen so many homies die in ICU,” said Mike Garcia, a former gang member who works at White Memorial Medical Center, a nonprofit hospital in Los Angeles’ Boyle Heights section, to prevent violence by gang members. There are 65 gangs in the area. “Some of [the members] are 15 years old. They haven’t even graduated. They are in and out [of consciousness in the emergency care unit], tubes in their mouths. I have sat with mothers for hours, not even saying anything. Sometimes that’s their only son, their only kid. If that kid dies, they don’t have anyone in the house. They invite me to the wake, just because I sat there.”

I met Garcia while reporting on the Advancement Project, which is trying to reduce violence in gang-ridden neighborhoods. “I grew up in Boyle Heights and belonged to a gang there,” he told me. He quit when he was 40. “My sons started going to prison,” he said. “I realized that I was a bad example, so I decided to change my life and do something with the remaining years I have, something positive.”

He became part of the White Memorial staff, assigned the difficult job of defusing situations familiar to emergency room workers in gang-heavy neighborhoods across the country. When a wounded gang member arrives at a hospital, family members and fellow gangsters, all highly emotional and sometimes armed, often accompany him. At times, the victim’s enemy comes to the hospital to finish the job.

On a recent day, Garcia was teaching a class at the Advancement Project’s Urban Peace Academy. There, ex-gang members, including some who have done long stretches in state prison, are trained to intervene between violent and feuding gangs in the Los Angeles area’s poor neighborhoods. About 20 men and women listened to Garcia explain what he does.

He recalled when he was wounded, treated with disrespect by doctors, nurses and other personnel because he was a gang member. “I remember how I was mistreated when I went into the hospital,” he said. “My goal is to show the doctors and nurses that gang members are human, and there is someone there who cares about them.” He also shows the medical personnel ways of defusing explosive situations.

He is on call 24 hours a day, seven days a week. He keeps an eye on the hospital parking lot and waiting room for gang members ready to continue a battle inside. He watches for family and friends ready to take out their anger on nurses and doctors. He roams the streets, fishing for information on gang and neighborhood tensions. He looks for signs that hospital visitors are packing guns or knives.

“And if [the gang members] need some kind of help getting back into school, getting a job, talking to their parents, I’m there for them,” Garcia said. “And if they are not ready to change, I tell them I’ll be here when you are.”

I asked if he was successful in getting gang members to turn their lives around. “Not as much as I would like,” he said. “They have to go back to that same neighborhood.”

Even when they are successful, programs such as this can do only so much.

More is required than a deadlocked government and indifferent business communities will provide. First of all, we need more money for schools. In California, the schools serving kindergarten through 12th grade are so short of funds that some of them are threatening to reduce the school year. At the state universities, tuition is rising sharply, touching off student demonstrations. The curse of the 1978 tax-limiting Proposition 13 continues.

Aside from more money for education, we need a reversal of arrest and sentencing policies, reducing the number of drug—especially marijuana—arrests. These arrests load up the prisons. And finally, we need Congress, President Barack Obama and business leaders to create jobs that can be filled by those who have the least job skills.

That’s asking for the unlikely or impossible. While we’re waiting, we’ll have to be satisfied with the brave efforts of health workers and people like Mike Garcia in the trenches who deal with society’s failures without much help.

US Census: One third of US population poor or near poor

US Census: One third of US population poor or near-poor

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One hundred million US residents—one third of the US population—live in households with perilously low incomes, according to a recent report from the US Census Bureau. The shocking figures were derived from the Supplemental Poverty Measure (SPM), an alternate measure of poverty and income that was released in November.

The SPM has been under development by the Census Bureau, working with the National Academy of Sciences, since the mid-1990s. This is the first year it has been formally released. By law, it is not allowed to replace the official poverty level in determining funding levels for existing social programs.

Under the alternative measure the portion of the US population that is poor or near-poor rises to 33 percent, up from 25 percent under the Census Bureau’s official measure.

In a comment to the New York Times, Trudi J. Renwick, the bureau’s chief poverty statistician, said, “These numbers are higher than we anticipated. There are more people struggling than the official numbers show.”

The term “near-poor” designates those with incomes above 100 percent but below 150 percent of the poverty level. A comparison released in September of the official poverty measure and the November SPM report showed the count of poor in America rise from 15.2 percent to 16 percent of the population. But the measure of near-poor rose much more substantially using the more scientifically based measure, from 10 percent under the official poverty statistics to nearly 17 percent with the supplemental measure.

Under the alternate measure, the portion of the population making up the near-poor was 51.4 million, or 16.8 percent of the population. This more than doubles the estimate of families in distress when added to the 16 percent considered living in poverty under the SPM data analysis released earlier.

Other disturbing statistics relating to poverty measures had already emerged over the past few months as the Census Bureau released poverty reports. Some 20.5 million people in the US, or 6.7 percent of the population, survive at 50 percent or less of the official poverty line. The number of destitute is the highest in the 35 years the Census Bureau has been keeping such records, surpassing the previous highs in 2009 and 1993.

With the SPM, the percentage of those in such “extreme” or “deep” poverty fell slightly, to 5.4 percent of households. But total poverty increased because large numbers considered near-poor under the official measure dropped into poverty with the SPM.

The official poverty threshold is itself below a baseline income that would allow meaningful participation in society. It is a derisory amount, based on a 50-year-old calculation that estimates the poverty threshold at three times the cost of a minimum food diet in 1963. According to discussion from the Census Bureau relating to the SPM, “The current poverty thresholds do not adjust for rising levels and standards of living that have occurred since 1965.”

A few obvious examples demonstrate the inadequacy of relying on such dated methodology. Without access to the Internet or a cell phone, finding a job in America today is virtually impossible, not even taking into account the dismal job market. These everyday electronic necessities—which entail considerable initial and ongoing costs—were not even invented in the 1960s and thus beyond the consideration of a household budget a half century ago.

Further, growing inequality has considerably reduced the relative position of the poverty thresholds. According to Kathleen Short, who penned the Census Bureau comments explaining the 2011 SPM release, “The official thresholds were approximately equal to half of median income in 1963–64. By 1992, one half median income had increased to more than 120 percent of the official threshold.”

While both the official and the supplemental surveys use data from the Census’s Current Population Survey, the way the alternative measure is computed differs from the official poverty measure in three significant ways. It counts more income sources, including tax credits and non-cash benefits such as food stamps (now called the Supplemental Nutrition Assistance Program, or SNAP.)

In addition, it subtracts certain expenses that reduce income, including income and payroll taxes and out-of-pocket medical expenditures (called MOOP) and work expenses such as childcare. It employs a modestly revised poverty line that is set at $24,267 for a two-adult, two-child family in an average-cost community.

That poverty measure also takes into account local housing costs and family composition, according to a recent report from the Center for Budget and Policy Priorities (CBPP), a liberal Washington think tank.

In early November, CBPP Researcher Arloc Sherman explained the differences between the two Census Bureau poverty measures. He published research that adds credence to the evidence that fully one-third of the US population is in precarious financial straits, facing as never before the impact from the loss of critical income support from social programs that have been or are being slashed.

Using the SPM data he concluded, “If the government safety net as a whole (existing policies, as well as the temporary Recovery Act policies enacted earlier) had not existed in 2010, the poverty rate would have been 28.6 percent, nearly twice the actual 15.5 percent.” Even without the temporary increases (that are now expiring) just two major federal social programs, SNAP and unemployment insurance benefits, kept more than 3 million and 1 million people out of poverty in 2010, respectively.

Sherman estimated that six Recovery Act initiatives that have either expired or are reduced and set to expire over the next two years kept 6.9 million people above the poverty line in 2010.

The Making Work Pay tax credit, which expired at the end of 2010, kept another 1.5 million people out of poverty. Expansions in the duration and level of unemployment insurance benefits kept 3.4 million people out of poverty. Expansions in SNAP benefits (that have been or will be eliminated in steps by 2013) kept 1 million people out of poverty.

When the official measure was devised in 1963, legislation was being debated that would provide new federally funded relief to low-income families. In what then-President Lyndon Johnson was to label the War on Poverty, limited reforms were a response to the Civil Rights struggle, mass labor unrest, and the antiwar movement.

Now those vital social programs, including the vast entitlement programs Medicare, Medicaid, and SNAP, are under relentless attack in Washington. The failure of the bipartisan Joint Select Committee on Deficit Reduction, or “supercommittee,” tasked with making $1.2 trillion in spending cuts over the next 10 years, has only led to calls for further attacks on the most vulnerable layers of the population.

A final Democratic counteroffer included spending cuts of nearly $900 billion, including $225 billion from Medicare, mainly from elderly beneficiaries, $50 billion from Medicaid, and $100 billion from other social programs.

Medicare is the SNP income factor that affects the elderly the most, but one that consumers have little personal ability to control. Changing Medicare from fee for service to premium support would constitute a blow to the elderly not unlike the widespread shift from defined benefit pensions to defined contribution pensions over the past several decades.

Medical out-of-pocket costs (MOOP) have the biggest sole impact by far of the 11 factors identified under the recommended adjustments to income considered by the Census Bureau and the National Academy of Sciences.

MOOP impose staggering burdens on the general population, especially for those over 65, even though the current fee-for-service federal Medicare insurance program covers the latter.

The Census Bureau reported in November that SPM calculations of poverty (using 2009 data) went from 12 to 15.3 percent if out-of-pocket medical expenses were added into income calculations, along with the other 10 factors. The change is three times greater than the impact of factoring in Social Security and Medicare taxes deducted from workers’ paychecks.

For the elderly, out-of-pocket medical expenses accounted for increasing the poverty rate from 8.5 to 15.5 percent of over 65-year-olds, according to the analysis of the SNP data. This 7 percent adjustment to the poverty level for seniors has fully 10 times the effect of any other factor on seniors’ incomes.

Scientist Weaponizes Flu Strain in Bioterrorism Experiment

'Anthrax isn't scary at all compared to this': Man-made flu virus with potential to wipe out many millions if it ever escaped is created in research lab

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  • Scientist responsible is bracing himself for a media storm
  • Just five tweaks to H5N1 makes it more contagious
  • Contagious version of bird flu could cause pandemic
  • Scientists divided over whether findings can be released
A group of scientists is pushing to publish research about how they created a man-made flu virus that could potentially wipe out civilisation.

The deadly virus is a genetically tweaked version of the H5N1 bird flu strain, but is far more infectious and could pass easily between millions of people at a time.

The research has caused a storm of controversy and divided scientists, with some saying it should never have been carried out.

Deadly: The new strain could wipe out millions of people at a time

Deadly: The new strain of bird flu could wipe out millions of people at a time

The current strain of H5N1 has only killed 500 people and is not contagious enough to cause a global pandemic.

But their are fears the modified virus is so dangerous it could be used for bio-warfare, if it falls into the wrong hands.

Virologist Ron Fouchier of the Erasmus Medical Centre in the Netherlands lead a team of scientists who discovered that a mere five mutations to the avian virus was sufficient to make it spread far more easily.

He conducted his tests on ferrets as the animals have become a model of choice for influenza and have similar respiratory tracts to humans.

Fouchier is so prepared for a media storm that he has hired an advisor to help him work on a communication strategy.

The research done was part of an international drive to understand H5N1 more fully.

Fouchier admitted the strain is 'one of the most dangerous viruses you can make' but is still adamant he wants to publish a paper describing how it was done.

The study is one of two which has caused serious debate about scientific freedom and about regulating research which might have potential public health benefits but at the same time could also be useful for bio-terrorism.

The other paper, also on H5N1, was done by a joint team at the University of Wisconsin and the University of Tokyo.

It is understood to have had comparable results to the study done by Fouchier.

Dangerous: It is feared if new details of the avian flu is published, it could be used for bioterrorism

Dangerous: It is feared if new details of the avian flu is published, it could be used for bioterrorism

Both papers are now being reviewed by the U.S National Science Advisory Board for Biosecurity (NSABB).

NSABB does not have the power to prevent the publication but it could ask journals not to publish.

Paul Keim, chairman of NSABB, said: 'I can't think of another pathogenic organism that is as scary as this one. I don't think anthrax is scary at all compared to this.'

Traditionally scientific research has always been open so that fellow scientists can review the work of others and repeat their methods to try and learn from them.

But numerous scientists have said they believe research on the avian flu should be suppressed.

However bio-defense and flu expert Michael Osterholm, who is director of the Center for Infectious Disease Research and Policy at the University of innesota, said the work carried out was important medically.

He added he could not discuss the papers because he was a member of NSABB but said if they were published certain information could be withheld and made available to those who really need to know.

'We don't want to give bad guys a road map on how to make bad bugs really bad,' he said.

Internet Has Become Surveillance Machine

Internet has become 'surveillance machine': Julian Assange

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The Internet itself had become "the most significant surveillance machine that we have ever seen," Assange said in reference to the amount of information people give about themselves online.

Photograph by: Andrew Winning, Reuters

WikiLeaks founder Julian Assange blasted the mainstream media, Washington, banks and the Internet itself as he addressed journalists in Hong Kong on Monday via videolink from house arrest in England.

Fresh from accepting a top award for journalism from the prestigious Walkley Foundation in his native Australia on Sunday, Assange spoke to the News World Summit in Hong Kong before keeping a regular appointment with the police.

He defended his right to call himself a journalist and said WikiLeaks' next "battle" would be to ensure that the Internet does not turn into a vast surveillance tool for governments and corporations.

"Of course I'm a goddamn journalist," he responded with affected frustration when a moderator of the conference asked if he was a member of the profession.

He said his written record spoke for itself and argued that the only reason people kept asking him if he was a journalist was because the United States' government wanted to silence him.

"The United States government does not want legal protection for us," he said, referring to a US Justice Department investigation into his whistle-blower website for releasing secret diplomatic and military documents.

The former hacker criticised journalists and the mainstream media for becoming too cosy with the powerful and secretive organisations they were supposed to be holding to account.

In a 40-minute address, he also accused credit card companies such as Visa and Mastercard of illegally cutting WikiLeaks off from funding under a secret deal with the White House.

"Issues that should be decided in open court are being decided in back rooms in Washington," he said.

The Internet itself had become "the most significant surveillance machine that we have ever seen," Assange said in reference to the amount of information people give about themselves online.

"It's not an age of transparency at all ... the amount of secret information is more than ever before," he said, adding that information flows in but is not flowing out of governments and other powerful organisations.

"I see that really is our big battle. The technology gives and the technology takes away," he added.

The anti-secrecy activist then help up a handwritten sign from an aide telling him to "stop" talking or he would be late for a mandatory appointment with police.

Assange, 40, is under house arrest in England pending the outcome of a Swedish extradition request over claims of rape and sexual assault made by two women. He says he is the victim of a smear campaign.