Tuesday, January 20, 2015

Inflation the Media Doesn’t Report

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Government data reports are so funny. The blaring headlines today tells us that prices dropped in December. We are all saving billions from the drop in oil and gas. Hallelujah!!!
The corporate MSM never digs into the numbers to get the real truth. These reports and their distribution to the sheep are designed to keep you sedated and calm. Facts are not necessary. How this data pertains to your everyday life is not important to the .1% who control the flow of information.
Here is a link to the detailed inflation numbers by category. We already know they massage these numbers to achieve a happy ending, but even the massaged numbers tell an entirely different story than the one peddled to the masses by the government and corporate media.
Below are the annual price increases for items that might impact your life on a daily basis:
Food at home – 3.7%
Food away from home – 3.0%
Meat – 12.7%
Fish and seafood – 5.6%
Eggs – 10.7%
Milk – 5.2%
Fruits & vegetables – 4.1%
Coffee – 4.2%
Butter – 22.5%
Natural gas – 5.8%
Footwear – 2.8%
Prescription drugs – 6.4%
Newspapers & magazines – 4.8%
College textbooks – 5.0%
Cigarettes – 3.1%
Apartment rent – 3.4%
Owners equivalent rent – 2.6%
Hotels – 7.3%
Water & sewer – 5.6%
Medical care -2.4%
Hospital care – 4.9%
College tuition – 3.4%
Postage – 4.1%
Tax preparation – 6.1%
I don’t know about you, but the costs listed above account for a significant amount of my budget. Do those price increases jive with the message being spewed by the government controlled media?
The credibility of their numbers is highly questionable in that they say health insurance accounts for .75% of a person’s annual budget. They actually have the balls to say health insurance fell by 0.5% over the last year. I’d love to hear from anyone out there whose health insurance premiums fell in the last year. Mine went up by 20%.
Your government keepers will continue to drown you in propaganda and misinformation. But the average person should know they are being lied to. They see how much money they have left over at the end of every month. If any.

Russia Just Pulled Itself Out Of The Petrodollar

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Back in November, before most grasped just how serious the collapse in crude was (and would become, as well as its massive implications), we wrote "How The Petrodollar Quietly Died, And Nobody Noticed", because for the first time in almost two decades, energy-exporting countries would pull their "petrodollars" out of world markets in 2015. 
This empirical death of Petrodollar followed years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling.
We added that in 2014 "the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations."
The problem was compounded by its own positive feedback loop: as the last few weeks vividly demonstrated, plunging oil would lead to a further liquidation in foreign  reserves for the oil exporters who rushed to preserve their currencies, leading to even greater drops in oil as the viable producers rushed to pump out as much crude out of the ground as possible in a scramble to put the weakest producers out of business, and to crush marginal production. Call it Game Theory gone mad and on steroids.
Ironically, when the price of crude started its self-reinforcing plunge, such a death would happen whether the petrodollar participants wanted it, or, as the case may be, were dragged into the abattoir kicking and screaming.
It is the latter that seems to have taken place with the one country that many though initially would do everything in its power to have an amicable departure from the Petrodollar and yet whose divorce from the USD has quickly become a very messy affair, with lots of screaming and the occasional artillery shell.
As Bloomberg reports Russia "may unseal its $88 billion Reserve Fund and convert some of its foreign-currency holdings into rubles, the latest government effort to prop up an economy veering into its worst slump since 2009."
These are dollars which Russia would have otherwise recycled into US denominated assets. Instead, Russia will purchase even more Rubles and use the proceeds for FX and economic stabilization purposes. 
"Together with the central bank, we are selling a part of our foreign-currency reserves,” Finance Minister Anton Siluanov said in Moscow today. “We’ll get rubles and place them in deposits for banks, giving liquidity to the economy."
Call it less than amicable divorce, call it what you will: what it is, is Russia violently leaving the ranks of countries that exchange crude for US paper.
More:
Russia may convert as much as 500 billion rubles from one of the government’s two sovereign wealth funds to support the national currency, Siluanov said, calling the ruble “undervalued.” The Finance Ministry last month started selling foreign currency remaining on the Treasury’s accounts.

The entire 500 billion rubles or part of the amount will be converted in January-February through the central bank, according to Deputy Finance Minister Alexey Moiseev. The Bank of Russia will determine the timing and method of the operation.

The ruble, the world’s second-worst performing currency last year, weakened for a fourth day, losing 1.3 percent to 66.0775 against the dollar by 3:21 p.m. in Moscow. It trimmed a drop of as much as 2 percent after Siluanov’s comments. The ruble’s continued slump this year underscores the fragility of coordinated measures by Russia’s government and central bank that steered the ruble’s rebound from a record-low intraday level of 80.10 on Dec. 16. OAO Gazprom and four other state-controlled exporters were ordered last month to cut foreign-currency holdings by March 1 to levels no higher than they were on Oct. 1. The central bank sought to make it easier for banks to access dollars and euros while raising its key rate to 17 percent, the emergency level it introduced last month to arrest the ruble collapse.

Today’s announcement “looks ruble-supportive, as together with state-driven selling from exporters it would support FX supply on the market,” Dmitry Polevoy, chief economist for Russia and the Commonwealth of Independent States at ING Groep NV in Moscow, said by e-mail. “Also, it will be helpful for banks, while there might be some negative effects related to extra money supply and risks of using some of the money on the FX market for short-term speculations.
Bloomberg's dready summary of the US economy is generally spot on, and is to be expected when any nation finally leaves, voluntarily or otherwise, the stranglehold of a global reserve currency. What Bloomberg failed to account for is what happens to the remainder of the Petrodollar world. Here is what we said last time:
Outside from the domestic economic impact within EMs due to the downward oil price shock, we believe that the implications for financial market liquidity via the reduced recycling of petrodollars should not be underestimated. Because energy exporters do not fully invest their export receipts and effectively ‘save’ a considerable portion of their income, these surplus funds find their way back into bank deposits (fuelling the loan market) as well as into financial markets and other assets. This capital has helped fund debt among importers, helping to boost overall growth as well as other financial markets liquidity conditions.
...
[T]his year, we expect that incremental liquidity typically provided by such recycled flows will be markedly reduced, estimating that direct and other capital outflows from energy exporters will have declined by USD253bn YoY. Of course, these economies also receive inward capital, so on a net basis, the additional capital provided externally is much lower. This year, we expect that net capital flows will be negative for EM, representing the first net inflow of capital (USD8bn) for the first time in eighteen years. This compares with USD60bn last year, which itself was down from USD248bn in 2012. At its peak, recycled EM petro dollars amounted to USD511bn back in 2006. The declines seen since 2006 not only reflect the changed global environment, but also the propensity of underlying exporters to begin investing the money domestically rather than save. The implications for financial markets liquidity - not to mention related downward pressure on US Treasury yields – is negative.
Considering the wildly violent moves we have seen so far in the market confirming just how little liquidity is left in the market, and of course, the absolutely collapse in Treasury yields, with the 30 Year just hitting a record low, this prediction has been borne out precisely as expected.
And now, we await to see which other country will follow Russia out of the Petrodollar next, and what impact that will have not only on the world's reserve currency, on US Treasury rates, and on the most financialized commodity as this chart demonstrates...
... but on what is most important to developed world central planners everywhere: asset prices levels, and specifically what happens when the sellers emerge into what is rapidly shaping up as the most illiquid market in history.

40 Years of Economic Policy in One Chart

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Growth of Real Hourly Compensation for Production/Nonsupervisory Workers and Productivity, 1948–2011
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Is America in the throes of a class war?

Look at the chart and decide for yourself. It’s all there in black and white, and you don’t need to be an economist to figure it out.

But, please, take some time to study the chart, because there’s more here than meets the eye. This isn’t just about productivity and compensation. It’s a history lesson too. It pinpoints the precise moment in time when the country lost its way and began its agonizing descent into Police State USA. That’s what it really means.

It all began in the 1970s, that’s when everything started going down the plughole. Once wages detached from productivity, the rich progressively got richer. They used their wealth to reduce taxes on capital, role back critical regulations, break up the unions, install their own lapdog politicians, push through trade agreements that pitted US workers against low-paid labor in the developing world, and induce their shady Central Bank buddies to keep interest rates locked below the rate of inflation so they could cream hefty profits off gigantic asset bubbles. Now, 40 years later, they own the whole f*cking shooting match, lock, stock and barrel. And it’s all because management decided to take the lion’s share of productivity gains which threw the whole system off-kilter undermining the basic pillars of democratic government. Here’s how FDR summed it up:
“The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power.” (Franklin D. Roosevelt: “Message to Congress on Curbing Monopolies.,” April 29, 1938. Online by Gerhard Peters and John T. Woolley, The American Presidency Project.
Are we there yet?

Pretty close, I’d say. The only way to preserve democracy is by keeping one hand firmly clasped around the windpipe of every rich bastard in the country. If you can’t keep your tycoons in check, you’d might as well throw in the towel and accept a life of indentured servitude now, because that’s where you’re headed anyway. Here’s a short rundown of the changes that took place in the ’70s by economist Lawrence Mishel:
“Productivity in the economy grew by 80.4 percent between 1973 and 2011 but the growth of real hourly compensation of the median worker grew by far less, just 10.7 percent…. The pattern was very different from 1948 to 1973, when the hourly compensation of a typical worker grew in tandem with productivity. Reestablishing the link between productivity and pay of the typical worker is an essential component of any effort to provide shared prosperity and, in fact, may be necessary for obtaining robust growth without relying on asset bubbles and increased household debt.
It is hard to see how reestablishing a link between productivity and pay can occur without restoring decent and improved labor standards, restoring the minimum wage to a level corresponding to half the average wage (as it was in the late 1960s), and making real the ability of workers to obtain and practice collective bargaining.” (The wedges between productivity and median compensation growth, Lawrence Mishel, EPI)
When was the last time you heard Obama talk about “improving labor standards” or “collective bargaining”?

Don’t make me laugh. It’s not even on his radar. Did you know that inequality has actually gotten worse under Obama? Much worse.
It’s true. He might proclaim his determination to “tax millionaires” in one of his blustery orations, but it’s all just rhetorical fakery. The fact is, the 1 percenters have done better under Obama than they did under Bush. Check this out from Naked Capitalism:

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Yup, under Bush, the 1% captured a disproportionate share of the income gains from the Bush boom of 2002-2007. They got 65 cents of every dollar created in that boom, up 20 cents from when Clinton was President. Under Obama, the 1% got 93 cents of every dollar created in that boom. That’s not only more than under Bush, up 28 cents. In the transition from Bush to Obama, inequality got worse, faster, than under the transition from Clinton to Bush. Obama accelerated the growth of inequality.” (Growth of Income Inequality Is Worse Under Obama than Bush, Matt Stoller, Naked Capitalism)

93 cents of every buck has gone to the 1 percenters under Obama. And you wonder why Wall Street loves this guy? It’s because he’s bent over backwards to make them richer, that’s why. Just look:

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Graph (4) above: the blue line across the bottom of the graph represents the wealth of the bottom 90% of U.S. households. The red line represents the wealth of the richest 0.1%. Source: Emmanuel Saez (The Climate Crisis is Capitalism, Rob Urie, CounterPunch)

The rich are making money hand over fist, and it’s all due to President Twoface and his dodgy friends at the Federal Reserve. Of course, Obama would like everyone to think that he’s really rooting for the little guy, doing his best to boost wages, create more jobs and raise living standards for ordinary working people.
Right. Check out this speech he gave in 2013:
“The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American Dream, our way of life, and what we stand for around the globe. And it is not simply a moral claim that I’m making here. There are practical consequences to rising inequality and reduced mobility.”
Got that? Obama is all about closing the gap between the rich and the poor. Just don’t look at his record or you might notice a slight discrepancy between what he says and what he does.

The fact is, stocks have surged under Obama as have corporate profits which “have doubled since he took office in 2009″. At the same time, he’s overseen the slowest recovery in the postwar era, stood idle while middle class incomes were shaved by nearly $5,000 annually, and refused to intervene when over 700,000 public sector jobs were slashed in the early days of his administration. And we won’t even mention the health care debacle, the endless spying, the perennial warmongering, targeted assassinations or Gitmo.
 
But as bad as Obama may be, the problem didn’t start with him. It goes back decades as the first chart indicates. The steady erosion of workers bargaining power, changes in the tax code favoring capital, anti-worker trade agreements, deregulation, loosey-goosy monetary policy and, of course, the “biggie”, financialization, have all contributed to the evisceration of the middle class which now appears to be hanging by a thread. Check out this clip from authors John Bellamy Foster and Fred Magdoff who researched the roots of financialization and wrote about it in an article in The Monthly Review titled “Financial Implosion and Stagnation”:
“It was the reality of economic stagnation beginning in the 1970s, as heterodox economists Riccardo Bellofiore and Joseph Halevi have recently emphasized, that led to the emergence of “the new financialized capitalist regime,” a kind of “paradoxical financial Keynesianism” whereby demand in the economy was stimulated primarily “thanks to asset-bubbles.” Moreover, it was the leading role of the United States in generating such bubbles—despite (and also because of) the weakening of capital accumulation proper—together with the dollar’s reserve currency status, that made U.S. monopoly-finance capital the “catalyst of world effective demand,” beginning in the 1980s. But such a financialized growth pattern was unable to produce rapid economic advance for any length of time, and was unsustainable, leading to bigger bubbles that periodically burst, bringing stagnation more and more to the surface.
A key element in explaining this whole dynamic is to be found in the falling ratio of wages and salaries as a percentage of national income in the United States.
Stagnation in the 1970s led capital to launch an accelerated class war against workers to raise profits by pushing labor costs down. The result was decades of increasing inequality.” (Financial Implosion and Stagnation, John Bellamy Foster and Fred Magdoff, Monthly Review)
Let me get this straight: Persistent stagnation paved the way for financial engineering and asset bubbles where investors could make beaucoup dough regardless of the (abysmal) condition of the underlying economy? Is that it?

Sounds a lot like today, doesn’t it; where corporations are minimizing their capital expenditures, laying off workers, and reducing revenues, but still making record profits by goosing stock prices with buybacks which add absolutely nothing to productivity. But, then again, why expand your business if you can make piles of moolah by just loading up on your own shares?

It’s madness, and it’s all the result of 6 years of zero rates and QE which has lured investors further and further out on the risk curve. The system is so deluged with liquidity that people are taking chances they never would have otherwise.

But where do we see “the falling ratio of wages and salaries as a percentage of national income in the United States” that the authors mention in their article? Is there any real proof of a class war or is it just more leftist folderol?

Graph: Compensation of Employees, Received: Wage and Salary Disbursements/Gross Domestic Product
Screen Shot 2015-01-14 at 7.45.48 PM

It sure looks like class war to me.

Foster and Magdoff make a pretty convincing case that the system has been rejiggered to overcome stagnation. Financial assets provide a place where the big wigs can grow their money during the periods when the economy is flatlining due to crappy wages, weak demand and slow growth. And that’s the name of the game, isn’t it; creating outlets for profitable investment even in the down-times?

You bet it is. That’s what QE is really all about, Bernanke even admitted as much in an op-ed in the Washington Post in 2010. He said:
“…higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”
There it is from the horse’s mouth. Bernanke wanted higher stock prices, and that’s what he got. But when does all that wealth start trickling down to the worker-bees like he promised? (At present, the economy is still growing just a touch above 2 percent, not at all what one would expect after $4 trillion in asset purchases.)

More important, who are the lucky ducks who own all those stocks and bonds that the Fed just inflated with 3 rounds of QE? It certainly isn’t Joe Sixpack who can barley scrape up enough dough to make the monthly payment on his ’99 Chevy Caprice.
Of course not. The only people who own stocks are the rich and the very, very rich Take a look:

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(The Great Economic Misdirection, Rob Urie, CounterPunch)

Just think about that for a minute: Bernanke admits that the purpose of QE is to inflate asset prices but, on closer examination, we see that those very assets are owned almost exclusively by a small group of very rich investors. Does that seem like an evenhanded policy to you, dear reader, or does it seem like the former Fed chair simply used QE to transfer trillions of dollars to his shifty constituents?

QE was never intended to boost inflation, (it doesn’t), spur more lending (it hasn’t) or lower long-term rates. (Long-term rates dropped after all 3 rounds of QE, and are currently lower than during the Great Depression!) The program’s real objective which was to funnel more money to Bernanke’s moocher friends via asset inflation. In that regard, it has succeeded beyond anyone’s wildest imagination. Just look:

Average income growth in US recoveries: top 10% versus the bottom 90%. (Graph: Pavlina Tcherneva)
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You can see from the chart above that the bottom 90 percent have gone from treading water to sinking like a stone. And, as we all know, a growing number of these same people are rapidly slipping through the cracks, loosing their spot in the middle class, and entering a terrifying new world of economic hardship and uncertainly.

This is no accident nor is it the result of free market operations that unavoidably create winners and losers. The upward distribution of wealth is the natural corollary of decades of aggressive lobbying, government infiltration, and political arm-twisting. Ruling elites are a like-minded bunch who know what they want and will stop nothing until they get it. The system has been effectively restructured to serve their needs and those of their constituents. They alone control the levers of state power as well as the marionette politicians who do their bidding.

So, is America in the throes of a class war or not?

Indeed, it is. But only one side is fighting.

You Won’t Believe How Much Pesticide You’re Eating Every Day

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Bypassing the regular rhetoric proposed by GMO supporters that they are ‘substantially equivalent to non-GM crops,’ I’d like to offer another strain of inquiry. Putting the transgenic technology that has allowed most genetically modified crops to exist, aside, why don’t we look at something else that is perhaps even more alarming about continuing to plant genetically modified seed – like pesticides.
The fact is that over 99% of GMO acreage is engineered by chemicalcompanies to tolerate heavy herbicide (glyphosate) use and/or produce insecticide (Bt) in every cell of every plant over the entire growing season. This alone should cause any level-headed scientist or farmer to take note.
If then, more than 80% of the ‘staple’ crops in the US are planted with GM varieties of corn, soy, and cotton, then we can assume that we are all eating a big heaping helping of those herbicides and pesticides, right?
One doesn’t naturally follow the other, but a recent study titled, “Pesticide Use on Genetically Engineered Crops” and published by Dr. Ramon J. Seidler, Ph.D., former Senior Scientist at the Environmental Protection Agency, proves that this is in fact true.
The United States Department of Agriculture (USDA) writes in a report:
“Genetically engineered (GE) varieties with pest management traits became commercially available for major crops in 1996. More than 15 years later, adoption of these varieties by U.S. farmers is widespread and U.S. consumers eat many products derived from GE crops—including cornmeal, oils, and sugars—largely unaware that these products were derived from GE crops. [Emphasis Added] Despite the rapid increase in the adoption of corn, soybean, and cotton GE varieties by U.S. farmers, questions persist regarding their economic and environmental impacts, the evolution of weed resistance, and consumer acceptance.”
Whether one agrees if GM seed itself is safe, the use of systemic insecticides, which coat GMO corn and soy seeds and are incorporated and expressed inside the entire plant, has exploded in the last ten years. This includes:
  • Neonicotinoids
  • Dicamba
  • 2,4-D
  • DDT
  • Glyphosate and its family of products including Round Up
  • Many other pesticides that show up less frequently in the media
To wit – an alarming majority of pesticides used on U.S. farms do not show up on our food. And yet,
  • 93% of Americans tested by the CDC had metabolites ofchlorpyrifos — a nuerotoxic insecticide — in their urine. This chemical has been banned from home use because of its risks to children. Chlorpyrifos is part of a family of pesticides (organophosphates) linked to ADHD.

So How can GM Crops be Deemed ‘Safe?’

If we were to look at even ONE of these chemicals and its effects on the human body, let alone its ramifications for use long term in the environment, we are looking at a serious problem. Compound this level of devastation with the fact that we are using ever-more herbicides and pesticides (with the USDA and FDA rubber stamping new concoctions proposed by biotech almost bi-annually) and you can see that we are literally under weaponized chemical warfare as a nation.
“If you live or work within 500 feet (1,000 feet for aerial applications) of any outdoor area treated with pesticides (including businesses, homes, farms, forestland, institutions, and public spaces), you are entitled to receive information about pesticide applications, including what is being used and when.”
However, when did you get notice of Monsanto or Dow AgroSciene’s latest chemical application?
“Monsanto will have its own dicamba-containing products (DGA-salt, the same salt in Clarity) called Extendimax and Roundup Xtendthat includes “VaporGrip” technology, a special adjuvant to help reduce drift. Once approved, this system will likely be available by 2015 or 2016. An Environmental Impact Survey (EIS) is currently in effect for these soybeans.”
Where exactly are those surveys being conducted – in your backyard?
It seems obviously difficult to ignore studies showing the toxicity of these poisons in singularity. How can GMO-supporters argue that GM crops are safe now?

A Message From the Dispossessed

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The terrorist attack in France that took place at the satirical newspaper Charlie Hebdo was not about free speech. It was not about radical Islam. It did not illustrate the fictitious clash of civilizations. It was a harbinger of an emerging dystopia where the wretched of the earth, deprived of resources to survive, devoid of hope, brutally controlled, belittled and mocked by the privileged who live in the splendor and indolence of the industrial West, lash out in nihilistic fury.
We have engineered the rage of the dispossessed. The evil of predatory global capitalism and empire has spawned the evil of terrorism. And rather than understand the roots of that rage and attempt to ameliorate it, we have built sophisticated mechanisms of security and surveillance, passed laws that permit the targeted assassinations and torture of the weak, and amassed modern armies and the machines of industrial warfare to dominate the world by force. This is not about justice. It is not about the war on terror. It is not about liberty or democracy. It is not about the freedom of expression. It is about the mad scramble by the privileged to survive at the expense of the poor. And the poor know it.

If you spend time as I have in Gaza, Iraq, Yemen, Algeria, Egypt and Sudan, as well as the depressing, segregated housing projects known as banlieues that ring French cities such as Paris and Lyon, warehousing impoverished North African immigrants, you begin to understand the brothers Cherif Kouachi and Said Kouachi, who were killed Friday in a gun battle with French police. There is little employment in these pockets of squalor. Racism is overt. Despair is rampant, especially for the men, who feel they have no purpose. Harassment of immigrants, usually done by police during identity checks, is almost constant. Police once pulled a North African immigrant, for no apparent reason, off a Paris Metro subway car I was riding in and mercilessly beat him on the platform. French Muslims make up 60 to 70 percent of the prison population in France. Drugs and alcohol beckon like sirens to blunt the pain of poor Muslim communities.

The 5 million North Africans in France are not considered French by the French. And when they go back to Algiers, Tangier or Tunis, where perhaps they were born and briefly lived, they are treated as alien outcasts. Caught between two worlds, they drift, as the two brothers did, into aimlessness, petty crime and drugs.

Becoming a holy warrior, a jihadist, a champion of an absolute and pure ideal, is an intoxicating conversion, a kind of rebirth that brings a sense of power and importance. It is as familiar to an Islamic jihadist as it was to a member of the Red Brigades or the old fascist and communist parties. Converts to any absolute ideal that promises to usher in a utopia adopt a Manichaean view of history rife with bizarre conspiracy theories. Opposing and even benign forces are endowed with hidden malevolence. The converts believe they live in a binary universe divided between good and evil, the pure and the impure. As champions of the good and the pure they sanctify their own victimhood and demonize all nonbelievers. They believe they are anointed to change history. And they embrace a hypermasculine violence that is viewed as a cleansing agent for the world’s contaminants, including those people who belong to other belief systems, races and cultures. This is why France’s far right, organized around Marine Le Pen, the leader of the anti-immigrant Front National, has so much in common with the jihadists whom Le Pen says she wants to annihilate.

When you sink to despair, when you live trapped in Gaza, Israel’s vast open-air prison, sleeping 10 to a floor in a concrete hovel, walking every morning through the muddy streets of your refugee camp to get a bottle of water because the water that flows from your tap is toxic, lining up at a U.N. office to get a little food because there is no work and your family is hungry, suffering the periodic aerial bombardments by Israel that leaves hundreds of dead, your religion is all you have left. Muslim prayer, held five times a day, gives you your only sense of structure and meaning, and, most importantly, self-worth. And when the privileged of the world ridicule the one thing that provides you with dignity, you react with inchoate fury. This fury is exacerbated when you and nearly everyone around you feel powerless to respond.

The cartoons of the Prophet in the Paris-based satirical weekly Charlie Hebdo are offensive and juvenile. None of them are funny. And they expose a grotesque double standard when it comes to Muslims. In France a Holocaust denier, or someone who denies the Armenian genocide, can be imprisoned for a year and forced to pay a $60,000 fine. It is a criminal act in France to mock the Holocaust the way Charlie Hebdo mocked Islam. French high school students must be taught about the Nazi persecution of the Jews, but these same students read almost nothing in their textbooks about the widespread French atrocities, including a death toll among Algerians that some sources set at more than 1 million, in the Algerian war for independence against colonial France. French law bans the public wearing of the burqa, a body covering for women that includes a mesh over the face, as well as the niqab, a full veil that has a small slit for the eyes. Women who wear these in public can be arrested, fined the equivalent of about $200 and forced to carry out community service. France banned rallies in support of the Palestinians last summer when Israel was carrying out daily airstrikes in Gaza that resulted in hundreds of civilian deaths. The message to Muslims is clear: Your traditions, history and suffering do not matter. Your story will not be heard. Joe Sacco had the courage to make this point in panels he drew for the Guardian newspaper. And as Sacco pointed out, if we cannot hear these stories we will endlessly trade state terror for terror.

“It is a sad state of affairs when Liberty means the freedom to insult, demean and mock people’s most sacred concepts,” the Islamic scholar Hamza Yusuf, an American who lives in California, told me in an email. “In some Latin countries people are acquitted for murders where the defendant’s mother was slandered by the one he murdered. I saw this in Spain many years ago. It’s no excuse for murder, but it explains things in terms of honor, which no longer means anything in the West. Ireland is a western country that still retains some of that, and it was the Irish dueling laws that were used in Kentucky, the last State in the Union to make dueling outlawed. Dueling was once very prominent in the West when honor meant something deep in the soul of men. Now we are not allowed to feel insulted by anything other than a racial slur, which means less to a deeply religious person than an attack on his or her religion. Muslim countries are still governed, as you well know, by shame and honor codes. Religion is the big one. I was saddened by the ‘I’m Charlie’ tweets and posters, because while I’m definitely not in sympathy with those misguided fools [the gunmen who invaded the newspaper], I have no feeling of solidarity with mockers.”
Charlie Hebdo, despite its insistence that it targets all equally, fired an artist and writer in 2008 for an article it deemed to be anti-Semitic.

Shortly after the attacks of 9/11, while living in Paris and working as a reporter for The New York Times, I went to La Cité des 4,000, a gray housing project where North African immigrants lived in apartments with bricked-up windows. Trash littered the stairwells. Spray-painted slogans denounced the French government as fascist. Members of the three major gangs sold cocaine and hashish in the parking lots amid the burned-out hulks of several cars. A few young men threw stones at me. They chanted “Fuck the United States! Fuck the United States! Fuck the United States!” and “Osama bin Laden! Osama bin Laden! Osama bin Laden!” By the door of an elderly Jewish woman’s apartment someone had spray-painted “Death to the Jews,” which she had whitewashed out.

In the banlieues Osama bin Laden was a hero. When news of the 9/11 attacks reached La Cité des 4,000—so named because it had 4,000 public housing apartments at the time of its construction—young men poured out of their apartments to cheer and chant in Arabic, “God is great!” France a couple of weeks earlier had held the first soccer match between a French and an Algerian team since Algeria’s war of independence ended in 1962. The North Africans in the stadium hooted and whistled during the French national anthem. They chanted, “Bin Laden! Bin Laden! Bin Laden!” Two French ministers, both women, were pelted with bottles. As the French team neared victory, the Algerian fans, to stop the game, flooded onto the field.

“You want us to weep for the Americans when they bomb and kill Palestinians and Iraqis every day?” Mohaam Abak, a Moroccan immigrant sitting with two friends on a bench told me during my 2001 visit to La Cité des 4,000. “We want more Americans to die so they can begin to see what it feels like.”

“America declared war on Muslims a long time ago,” said Laala Teula, an Algerian immigrant who worked for many years as a railroad mechanic. “This is just the response.”

It is dangerous to ignore this rage. But it is even more dangerous to refuse to examine and understand its origins. It did not arise from the Quran or Islam. It arose from mass despair, from palpable conditions of poverty, along with the West’s imperial violence, capitalist exploitation and hubris. As the resources of the world diminish, especially with the onslaught of climate change, the message we send to the unfortunate of the earth is stark and unequivocal: We have everything and if you try to take anything away from us we will kill you. The message the dispossessed send back is also stark and unequivocal. It was delivered in Paris.