better think twice

Gilad | I will make myself as simple, short and clear just to make sure that the Israelis and their allies around the world understand how futile their agenda is.

Islam is unbeatable and indestructible. The Israelis should remember their latest military blunders. In 2006 its army was humiliated by the Hezbula, a small Lebanese paramilitary organisation. In just a few weeks the heroic Hezbollah managed to bring Israel to its knees. In 2008-9 Israeli Army mounted a massive attack on Gaza, the initial objective was to dismantle the democratically elected Hamas. Israel murdered more than 1400 Palestinians but it achieved none of its military objectives. Hamas and Hezbollah won these battles without air force, navy or tanks. In fact resilience was enough to defeat the IDF.

But Israel is not alone, The English speaking Empire is also heavily beaten in Iraq and Afghanistan. Similarily, Iraqi insurgency and Taliban do not posses tanks, F 16s or submarines. In the age of Islamic resistance, tables of contents with numbers of tanks, vessels, and airplanes are obsolete. It is the spirit and the will rather than the tank that wins the battle. This spirit better be called The Islam Spring, and it is unbeatable indeed.

The message for Israelis is plainly clear. Israel and its supporting lobbies had better learn how to contain their inherent violent tendencies. Israel cannot win this battle. The sooner the Israelis encompass this obvious fact, the better it is for Israel and for world peace.

freedoms I wish the military was defending,,,

LewRockwell | "Freedom itself was attacked this morning by a faceless coward, and freedom will be defended." ~ George W. Bush, September 11, 2001

We have heard it repeated loudly and continuously since 9/11 – the troops are defending our freedoms. This claim is made so often and by so many different segments of society that it has become another meaningless national dictum – like "God Bless America" or "In God We Trust."

This cliché is actually quite insidious. It is used as a mantra to justify or excuse anything the U.S. military does.

U.S. troops are engaged in unconstitutional, undeclared wars – but the troops are defending our freedoms. U.S. drone strikes killed civilians in Pakistan – but the troops are defending our freedoms. U.S. bombs landed on a wedding party in Afghanistan – but the troops are defending our freedoms. U.S. soldiers murdered Afghan civilians and kept some of their body parts – but the troops are defending our freedoms. U.S. helicopter pilots gunned down Iraqi civilians – but the troops are defending our freedoms. U.S. soldiers killed civilians for sport – but the troops are defending our freedoms. U.S. troops carelessly killed civilians and then covered it up – but the troops are defending our freedoms.

But as I have pointed out many times in my articles on the military, and others like Jacob Hornberger of the Future of Freedom Foundation have been arguing for years (see here and here), the troops are doing everything but defending our freedoms. In fact, the more the troops defend our freedoms by bombing, invading, and occupying other countries, the more enemies they make of the United States and the more our freedoms get taken away in the name of "fighting terrorism" or "national security."

Not in any particular order, and in varying degrees of significance, here are some freedoms I wish the military were defending:

are jobs obsolete?

CNN | Jobs, as such, are a relatively new concept. People may have always worked, but until the advent of the corporation in the early Renaissance, most people just worked for themselves. They made shoes, plucked chickens, or created value in some way for other people, who then traded or paid for those goods and services. By the late Middle Ages, most of Europe was thriving under this arrangement.

The only ones losing wealth were the aristocracy, who depended on their titles to extract money from those who worked. And so they invented the chartered monopoly. By law, small businesses in most major industries were shut down and people had to work for officially sanctioned corporations instead. From then on, for most of us, working came to mean getting a "job."

The Industrial Age was largely about making those jobs as menial and unskilled as possible. Technologies such as the assembly line were less important for making production faster than for making it cheaper, and laborers more replaceable. Now that we're in the digital age, we're using technology the same way: to increase efficiency, lay off more people, and increase corporate profits.

While this is certainly bad for workers and unions, I have to wonder just how truly bad is it for people. Isn't this what all this technology was for in the first place? The question we have to begin to ask ourselves is not how do we employ all the people who are rendered obsolete by technology, but how can we organize a society around something other than employment? Might the spirit of enterprise we currently associate with "career" be shifted to something entirely more collaborative, purposeful, and even meaningful?

Instead, we are attempting to use the logic of a scarce marketplace to negotiate things that are actually in abundance. What we lack is not employment, but a way of fairly distributing the bounty we have generated through our technologies, and a way of creating meaning in a world that has already produced far too much stuff.

The communist answer to this question was just to distribute everything evenly. But that sapped motivation and never quite worked as advertised. The opposite, libertarian answer (and the way we seem to be going right now) would be to let those who can't capitalize on the bounty simply suffer. Cut social services along with their jobs, and hope they fade into the distance.

But there might still be another possibility -- something we couldn't really imagine for ourselves until the digital era. As a pioneer of virtual reality, Jaron Lanier, recently pointed out, we no longer need to make stuff in order to make money. We can instead exchange information-based products.

We start by accepting that food and shelter are basic human rights. The work we do -- the value we create -- is for the rest of what we want: the stuff that makes life fun, meaningful, and purposeful.

This sort of work isn't so much employment as it is creative activity. Unlike Industrial Age employment, digital production can be done from the home, independently, and even in a peer-to-peer fashion without going through big corporations. We can make games for each other, write books, solve problems, educate and inspire one another -- all through bits instead of stuff. And we can pay one another using the same money we use to buy real stuff.

For the time being, as we contend with what appears to be a global economic slowdown by destroying food and demolishing homes, we might want to stop thinking about jobs as the main aspect of our lives that we want to save. They may be a means, but they are not the ends.

privatizing profit and socializing externalities will be our doom...,

NYTimes | Why bother recycling or riding your bike to the store? Because we all want to do something, anything. Call it “action bias.” But, sadly, individual action does not work. It distracts us from the need for collective action, and it doesn’t add up to enough. Self-interest, not self-sacrifice, is what induces noticeable change. Only the right economic policies will enable us as individuals to be guided by self-interest and still do the right thing for the planet.

Every ton of carbon dioxide pollution causes around $20 of damage to economies, ecosystems and human health. That sum times 20 implies $400 worth of damage per American per year. That’s not damage you’re going to do in the distant future; that’s damage each of us is doing right now. Who pays for it?

We pay as a society. My cross-country flight adds fractions of a penny to everyone else’s cost. That knowledge leads some of us to voluntarily chip in a few bucks to “offset” our emissions. But none of these payments motivate anyone to fly less. It doesn’t lead airlines to switch to more fuel-efficient planes or routes. If anything, airlines by now use voluntary offsets as a marketing ploy to make green-conscious passengers feel better. The result is planetary socialism at its worst: we all pay the price because individuals don’t.

It won’t change until a regulatory system compels us to pay our fair share to limit pollution accordingly. Limit, of course, is code for “cap and trade,” the system that helped phase out lead in gasoline in the 1980s, slashed acid rain pollution in the 1990s and is now bringing entire fisheries back from the brink. “Cap and trade” for carbon is beginning to decrease carbon pollution in Europe, and similar models are slated to do the same from California to China.

Alas, this approach has been declared dead in Washington, ironically by self-styled free-marketers. Another solution, a carbon tax, is also off the table because, well, it’s a tax.

Never mind that markets are truly free only when everyone pays the full price for his or her actions. Anything else is socialism. The reality is that we cannot overcome the global threats posed by greenhouse gases without speaking the ultimate inconvenient truth: getting people excited about making individual environmental sacrifices is doomed to fail.

High school science tells us that global warming is real. And economics teaches us that humanity must have the right incentives if it is to stop this terrible trend.

Don’t stop recycling. Don’t stop buying local. But add mastering some basic economics to your to-do list. Our future will be largely determined by our ability to admit the need to end planetary socialism. That’s the most fundamental of economics lessons and one any serious environmentalist ought to heed.

bout to take that second dip into the greatest depression...,

NYTimes | If history is a guide, the odds that the American economy is falling into a double-dip recession have risen sharply in recent weeks and may even have reached 50 percent.

Economies have a strong self-reinforcing nature. When people are optimistic, they spend, which begets hiring and then more spending. When people are anxious, they pull back, which leads to a cycle of hiring freezes and further anxiety that often lasts for months.

The United States appears to have entered some version of the vicious cycle. Most ominously, job growth has slowed to a pace that typically signals the start of a recession.

Over the last 50 years, every time that job growth has been as meager as it has been over the last four months, the economy has been headed toward recession, in a recession or in the immediate aftermath of one. From early 2010 through this spring, by contrast, employment was growing fast enough to make the economy look as if it were in a recovery, albeit a modest one.

“The chances that we are in something that is going to feel like a recession are close to 100 percent,” said Joshua Shapiro of MFR Inc. in New York, who has diagnosed the economy more accurately than many other forecasters lately. “Whether we reach the technical definition” — which is determined by a committee of academic economists and based on gross domestic product, employment and other factors — “I think is probably close to 50-50.”

A double dip would present obvious political problems for President Obama, whose approval ratings have already fallen below 50 percent and who is scheduled to give a speech to Congress on Thursday outlining a new jobs plan. A weak economy also could threaten incumbents of both parties in Congress, whose approval rating has hovered around 15 percent in recent polls.

More immediately, the main significance of the recent slowdown is that the economy may not merely be going through a weak phase that will soon pass, as many policy makers hope. Instead, history seems to suggest that the situation will probably get worse before it gets better.

In a recent research paper, Jeremy J. Nalewaik, a Federal Reserve economist, described this concept as “stall speed”: once the economy slows markedly, it often continues to do so. (He did not make a forecast.) In the other two severe downturns of the last 80 years — in the 1930s and the early 1980s — the economy suffered just such a stall and fell into a second recession not long after the first.

Today, Europe’s troubles continue to weigh on banks and financial markets. Consumers remain indebted, and the housing market remains depressed. State and local governments continue to cut jobs, aggravating the problems in the private sector. Congress is unlikely to pass a major jobs bill.

The economy could, of course, defy history and turn around soon. Eventually, consumers will begin spending more on houses, cars, appliances and services, and employers will begin hiring in large numbers. A further decline in gas prices, which have generally been falling, would particularly help households.

But the latest indicators suggest that even if the economy does not continue to worsen, it appears to be too weak to add enough jobs each month — roughly 125,000 — even to keep pace with population growth. Anything less, and the share of the population that is employed will continue to fall.

families feel the sharp edge of state budget cuts

NYTimes | Stretched beyond their limits and searching for new corners of their budgets to find spending cuts, states are now trimming benefits for residents who are in grim financial shape themselves.

Some states, including Florida and Missouri, have decided to shrink the duration of state unemployment benefits paid to laid-off workers, while others, including Arizona and California, are creating new restrictions on cash aid for low-income residents.

Here in Michigan, more than 11,000 families received letters last week notifying them that in October they will lose the cash assistance they have been provided for years. Next year, people who lose their jobs here will receive fewer weeks of state unemployment benefits, and those making little enough to qualify for the state’s earned income tax credit will see a far smaller benefit from it.

Some political leaders see these sorts of cuts as unfortunate necessities to help bridge their state’s financial gaps. Others see them as overdue limits on out-of-control government handouts — some lawmakers here fumed, for example, that 30,000 college students, newly dropped from the state’s food stamp rolls, should never have been allowed to collect such benefits in the first place.

Whatever the motive, such policy changes come as the downturn has left a growing number of low-income families in worse financial trouble.

The percentage of children living in poverty rose during the last decade, particularly once the recession hit and unemployment soared.

By 2009, about 2.4 million more children’s families lived below the poverty line than in 2000, an increase of 18 percent, according to a recent analysis of Census Bureau data by the Annie E. Casey Foundation, a child advocacy group. In states like this, where Republicans took control of the capital this year, the new cuts have helped resolve Michigan’s expected budget gap, once estimated at $1.4 billion.

“Michigan can no longer afford to provide lifetime assistance,” said Sheryl Thompson, an official with the state Department of Human Services, which reported that of those being dropped from the state’s cash-assistance rolls, some 1,200 families had been receiving payments for 10 years, more than 700 others for a dozen years, and an additional 400 families had been getting payments for 14 years.

The pattern of new cuts around the nation leads some advocates to fear that the number of low-income families will only grow in the next few years if programs they can lean on shrink or vanish.

“We’re O.K. unless something — anything at all — goes wrong,” said Rachel Haifley, who lives here in Lansing and said she works part-time making a little less than $9 an hour and receives child support for her two young sons, 1 and 3.

Ms. Haifley said she has become an expert at seeking out giveaways, thrift shops and bargains — for clothes, portable cribs, toys for the boys. “All I want is for them to feel like everyone else,” she said. “I don’t want them to grow up and ask me why they’re poor.”

In Dearborn Heights, Celia Kane-Fecay, another mother of two, said she has given up on the job hunt for now and returned to college — with help from $597 a month in cash assistance, Medicaid and any other aid she can track down with what she has come to describe unhappily as her daily list of begging phone calls. “You don’t ever want to be here,” she said.

Signs of new poverty are already evident. A project by the Annie E. Casey Foundation Kids Count Data Book found that by 2010, nearly 11 percent of the nation’s children, or 7.8 million children, had at least one parent who was unemployed, when only about half as many were in such circumstances in 2007. And since four years ago, the study found, at least 5.3 million children have been affected by home foreclosures.

texas cut fire department funding by 75 percent this year

Video - Rick Perry ducking questions about shortsighted dumb-assery on his watch.

rawstory | Under Gov. Rick Perry (R) this year, Texas slashed state funding for the volunteer fire departments that protect most of the state from wildfires like the ones that have recently destroyed more than 700 homes.

Volunteer departments that were already facing financial strain were slated to have their funding cut from $30 million to $7 million, according to KVUE.

The majority of Texas is protected by volunteer fire departments. There are 879 volunteer fire departments in Texas and only 114 paid fire departments. Another 187 departments are a combination of volunteer and paid.

For that reason, aid from the Federal Emergency Management Agency (FEMA) could be more important than ever to the state where wildfires have recently been raging.

At a press conference Monday, Perry promised to seek federal disaster relief and said that FEMA would be in the state by Wednesday.

While the Texas governor has been highly critical of FEMA in the past, he told CBS’ Erica Hill Tuesday that now was not the time to worry about reforming the agency.

“The issue is taking care of these people right now,” Perry insisted. “We can work our way through any conversations about how to make agencies more efficient, how to make Department of Defense equipment, for instance, more available. There are a lot of issues we can talk about, but the fact of the matter is now is not the time to be trying to work out the details of how to make these agencies more efficient. Let’s get people out of harm’s way.”

do the kochs want to end public education?

Video - Why do the Kochs want to end public education.

audio - inside the koch bros. secret seminar

MotherJones | "We have Saddam Hussein," declared billionaire industrialist Charles Koch, apparently referring to President Barack Obama as he welcomed hundreds of wealthy guests to the latest of the secret fundraising and strategy seminars he and his brother host twice a year. The 2012 elections, he warned, will be "the mother of all wars."

Charles Koch would probably not publicly compare the president of the United States to a murderous dictator. (As a general rule, he and his brother don't do much politicking or speechifying in public at all.) But Mother Jones has obtained exclusive audio recordings from the Koch seminar, a private event that took place in June at a resort near Vail, Colorado.

These unprecedented recordings provide a behind-the-scenes look at how the Koch brothers and their comrades talk when they gather. They include a pair of keynote speeches and remarks by brothers Charles and David Koch, who spell out their political aims and name some of the "great partners" who have contributed millions of dollars to their causes. (The audio was provided by a source who approached the author after the event was over and was not seeking compensation.)

the real unemployment rate is ~22%

Shadowstats | The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.

the radical implications of a zero growth economy

Video - Maurice Strong Interview (BBC, 1972)

RWER | For 50 years literature has been accumulating pointing out the contradiction between the pursuit of economic growth and ecological sustainability, although this has had negligible impact on economic theory or practice. A few, notably Herman Daly (2008), have continued to attempt to get the notion of a steady-state economy onto the agenda but it has only been in the last few years that discussion has begun to gain momentum. Jackson’s Prosperity Without Growth(200) has been widely recognised, there is now a substantial European ”De-growth” movement (Latouche, 2007), and CASSE (2010) has emerged.

The argument in this paper is that the implications of a steady-state economy have not been understood at all well, especially by its advocates. Most proceed as if we can and should eliminate the growth element of the present economy while leaving the rest more or less as it is. It will be argued firstly that this is not possible, because this is not an economy which has growth; it is a growth-economy, a system in which most of the core structures and processes involve growth. If growth is eliminated then radically different ways of carrying out many fundamental processes will have to be found. Secondly, the critics of growth typically proceed as if it is the only or the primary or the sufficient thing that has to be fixed, but it will be argued that the major global problems facing us cannot be solved unless several fundamental systems and structures within consumer-capitalist society are radically remade. What is required is much greater social change than Western society has undergone in several hundred years.

Before offering support for these claims it is important to sketch the general “limits to growth” situation confronting us. The magnitude and seriousness of the global resource and environmental problem is not generally appreciated. Only when this is grasped is it possible to understand that the social changes required must be huge, radical and far reaching. The initial claim being argued here (and detailed in Trainer 2010b) is that consumer-capitalist society cannot be reformed or fixed; it has to be largely scrapped and remade along quite different lines.

The “limits to growth” case: An outline

The planet is now racing into many massive problems, any one of which could bring about the collapse of civilization before long. The most serious are the destruction of the environment, the deprivation of the Third World, resource depletion, conflict and war, and the breakdown of social cohesion. The main cause of all these problems is over-production and over-consumption – people are trying to live at levels of affluence that are far too high to be sustained or for all to share.

Our society is grossly unsustainable – the levels of consumption, resource use and ecological impact we have in rich countries like Australia are far beyond levels that could be kept up for long or extended to all people. Yet almost everyone’s supreme goal is to increase material living standards and the GDP and production and consumption, investment, trade, etc., as fast as possible and without any limit in sight. There is no element in our suicidal condition that is more important than this mindless obsession with accelerating the main factor causing the condition.

The following points drive home the magnitude of the overshoot.

how economic theory came to ignore the role of debt

Video - Economist Michael Hudson Explains Bank and Bankers Are Parasites And Not Part Of The Real Economy

RWER | Starting from David Ricardo in 1817, the historian of economic thought searches in vain through the theorizing of financial-sector spokesmen for an acknowledgement of how debt charges (1) add a non-production cost to prices, (2) deflate markets of purchasing power that otherwise would be spent on goods and services, (3) discourage capital investment and employment to supply these markets, and hence (4) put downward pressure on wages.

What needs to be explained is why government, academia, industry and labor have not taken the lead in analyzing these problems. Why have the corrosive dynamics of debt been all but ignored?

I suppose one would not expect the tobacco industry to promote studies of the unhealthy consequences of smoking, any more than the oil and automobile industries would encourage research into environmental pollution or the linkage between carbon dioxide emissions and global warming. So it should come as little surprise that the adverse effects of debt are sidestepped by advocates of the idea that financial institutions rather than government planners should manage society’s development. Claiming that good public planning and effective regulation of markets is impossible, monetarists have been silent with regard to how financial interests shape the economy to favor debt proliferation.

The problem is that governments throughout the world leave monetary policy to the Central Bank and Treasury, whose administrators are drawn from the ranks of bankers and money managers. Backed by the IMF with its doctrinaireChicagoSchooladvocacy of financial austerity, these planners oppose full-employment policies and rising living standards as being inflationary. The fear is that rising wages will increase prices, reducing the volume of labor and output that a given flow of debt service is able to command.

Inasmuch as monetary and credit policy is made by the central bank rather than by the Dept. of Labor, governments chose to squeeze out more debt service rather than to promote employment and direct investment. The public domain is sold off to pay bondholders, even as governments cut taxes that cause budget deficits financed by running up yet more debt. Most of this new debt is bought by the financial sector (including global institutions) with money from the tax cuts they receive from governments ever more beholden to them. As finance, real estate and other interest-paying sectors are un-taxed, the fiscal burden is shifted onto labor.

The more economically powerful theFIREsector (Finance, Insurance and Real Estate) becomes, the more it is able to translate this power into political influence. The most direct way has been for its members and industry lobbies to become major campaign contributors, especially in theUnited States, which dominates the IMF and World Bank to set the rules of globalization and debt proliferation in today’s world. Influence over the government bureaucracies provides a mantel of prestige in the world’s leading business schools, which are endowed largely byFIRE-sector institutions, as are the most influential policy think tanks. This academic lobbying steers students, corporate managers and policy makers to see the world from a financial vantage point.

Finance and banking courses are taught from the perspective of how to obtain interest and asset-price gains through credit creation or by using other peoples’ money, not how an economy may best steer savings and credit to achieve the best long-term development. Existing rules and practices are taken for granted as “givens” rather than asking whether economies benefit or suffer as a whole from a rising proportion of income being paid to carry the debt overhead (including mortgage debt for housing being bid up by the supply of such credit). It is not debated, for instance, whether it really is desirable to finance Social Security by holding back wages as forced savings, as opposed to the government monetizing its social-spending deficits by free credit creation.

The finance and real estate sectors have taken the lead in funding policy institutes to advocate tax laws and other public policies that benefit themselves. After an introductory rhetorical flourish about how these policies are in the public interest, most such policy studies turn to the theme of how to channel the economy’s resources into the hands of their own constituencies.

One would think that the perspective from which debt and credit creation are viewed would be determined not merely by the topic itself but whether one is a creditor or a debtor, an investor, government bureaucrat or economic planner writing from the vantage point of labor or industry. But despite the variety of interest groups affected by debt and financial structures, one point of view has emerged almost uniquely, as if it were objective technocratic expertise rather than the financial sector’s own self-interested spin. Increasingly, the discussion of finance and debt has been limited to monetarists with an anti-government ax to grind and vested interests to defend and indeed, promote with regard to financial deregulation.

This monetarist perspective has become more pronounced as industrial firms have been turned into essentially financial entities since the 1980s. Their objective is less and less to produce goods and services, except as a way to generate revenue that can be pledged as interest to obtain more credit from bankers and bond investors. These borrowings can be used to take over companies (“mergers and acquisitions”), or to defend against such raids by loading themselves down with debt (taking “poison pills”). Other firms indulge in “wealth creation” simply by buying back their own shares on the stock exchange rather than undertaking new direct investment, research or development. (IBMhas spent about $10 billion annually in recent years to support its stock price in this way.) As these kinds of financial maneuvering take precedence over industrial engineering, the idea of “wealth creation” has come to refer to raising the price of stocks and bonds that represent claims on wealth (“indirect investment”) rather than investment in capital spending, research and development to increase production.

Labor for its part no longer voices an independent perspective on such issues. Early reformers shared the impression that money and finance simply mirror economic activity rather than acting as an independent and autonomous force. Even Marx believed that the financial system was evolving in a way that reflected the needs of industrial capital formation.

Today’s popular press writes as if production and business conditions take the lead, not finance. It is as if stock and bond prices, and interest rates, reflect the economy rather than influencing it. There is no hint that financial interests may intrude into the “real” economy in ways that are systematically antithetical to nationwide prosperity. Yet it is well known that central bank officials claim that full employment and new investment may be inflationary and hence bad for the stock and bond markets. This policy is why governments raise interest rates to dampen the rise in employment and wages. This holds back the advance of living standards and markets for consumer goods, reducing new investment and putting downward pressure on wages and commodity prices. As tax revenue falls, government debt increases. Businesses and consumers also are driven more deeply into debt.

The antagonism between finance and labor is globalized as workers in debtor countries are paid in currencies whose exchange rate is chronically depressed. Debt service paid to global creditors and capital flight lead more local currency to be converted into creditor-nation currency. The terms of trade shift against debtor countries, throwing their labor into competition with that in the creditor nations.

If today’s economy were the first in history to be distorted by such strains, economists would have some excuse for not being prepared to analyze how the debt burden increases the cost of doing business and diverts income to pay interest to creditors. What is remarkable is how much more clearly the dynamics of debt were recognized some centuries ago, before financial special-interest lobbying gained momentum. Already in Adam Smith’s day it had become a common perception that public debts had to be funded by tax levies that increased labor’s living costs, impairing the economy’s competitive position by raising the price of doing business. The logical inference was that private-sector debt had a similar effect.

the financial sector and the real economy

RWER | The uncertainty precipitated by the lingering fallout from the financial, economic, and debt crises increases daily. Meanwhile, leading mainstream economists are being criticized for their divided positions on the correct diagnosis of and viable solutions for these crises. Classical economic growth theories were unable to predict these dilemmas, as they did not adequately take into account factors such as the macroeconomic impact of outsized financial sector developments. Classical economic models are still considered by many economists to be the correct tools for dealing with the consequences of the 2008-2011 credit crisis (“crisis”). Meanwhile, others view crisis as stemming from the global imbalances precipitated by the application of these classic macro models. This contradiction seems irreconcilable. A new approach is therefore necessary. In this review, we present an alternative growth model. Specifically, one which helps to analyze the interdependence between the financial and the real economy and which also yields analytical statements about the causes of crises.

Introduction
Sufficient capital is the basic prerequisite for enabling economic processes. Innovation is impossible without the availability of adequate capital. Mainstream economic growth models assume that categorical positive relationship exists between the two. However, as the recent financial and economic crises revealed, there is a fundamental interaction between the financial sector and the gross domestic product (GDP) of an economy. The relationship between the two is, however far away from being linear. This is demonstrated in chart 1 forGermany.

In the case ofGermany, financial assets – measured by total bank assets – grew significantly faster than the gross domestic product (see chart 1). Interestingly, a tendency for stagnating and (in 2009) even falling growth rates forGDPcan be ascertained. Allow us a brief historic synopsis. At the end of the 80s there was a surge inGDPdue to the integration of the East German economy. At the same time, nominal assets increased due to the conversion of Ost-Marks into Deutsch-Marks. Afterwards,GDPgrew only linearly, while financial assets experienced massive exponential growth. As of the 90s, growth rates in the real economy fell by such a degree that capital could no longer earn the high returns of the past. As a result, capital increasingly gravitated to the higher return potential of the financial markets (equities, private equities, hedge funds etc.). This caused the so-called “savings glut,” a situation wherein too much capital is chasing too few investment opportunities. It is in this context that the term “financialization” is often used by economists. Financialization describes the process by which increasingly more corporate earnings and personal income result from financial transactions and not from real economic growth, i.e., increased production and related growth in employment.

mathematics and real-world knowledge

RWER | Several articles on the misuse of mathematics in economics have already appeared in this journal. They all denounce this excess and list numerous weaknesses of liberal economics and theoretical economics that are due to, or at least related to, too much math.

This subject is worthy of further comment because it seems to me that these articles have mostly described symptoms, albeit a great many symptoms, but have barely begun to diagnose the causes and have given no hint of the kind of knowledge that would enable us to escape this no-man’s-land of using a little math but not too much.

The most recent contribution, by Michael Hudson (RWER No. 54), focuses on the important issues that escape mathematical models, such as the structural and historical evolution of societies, prevention of crises, psychological phenomena, long-term thinking. It emphasizes the normative nature of marginal analysis and equilibrium models, and denounces rough quantifications such as GNP and the staggering increase in debt. He acknowledges Marx’s openness to the big issues in society that are currently excluded from political debate by an economic philosophy that tries to impress its opponents with sophisticated mathematics. These questions are analyzed thoroughly. On several occasions, however, one feels that the criticism is that the math is being misused and should be developed in some other direction (e.g. a statistical analysis of the financial tendencies that polarize wealth and income, or a study of the positive feedback mechanisms, etc.). This leaves a certain dissatisfaction — on a philosophical level — a feeling that the problem of excess math has not been addressed in all its aspects.

My thesis is that economics adds its own particular difficulties to these issues (because of its status as “conseiller du prince”, and because through teaching it gives useful professional skills, etc.) and that things become clearer when we step back and frame the question in terms of knowledge in general. As the reader will see, this enables us to trace, with great epistemological force, the direction of a different type of knowledge. This allows us to escape from the addiction of mathematization while building a better quality knowledge.

We will take in a number of examples in economics and finance, but the fact remains that economics has many distinctive characteristics, as several authors have noted, which tend to prevent a reasoned consideration of its social function. Consequently there remain several points that will need to be developed further.

u.s. solar company bankruptcies a boon for china

NYTimes | The bankruptcies of three American solar power companies in the last month, including Solyndra of California on Wednesday, have left China’s industry with a dominant sales position — almost three-fifths of the world’s production capacity — and rapidly declining costs.

Some American, Japanese and European solar companies still have a technological edge over Chinese rivals, but seldom a cost advantage, according to industry analysts.

Loans at very low rates from state-owned banks in Beijing, cheap or free land from local and provincial governments across China, huge economies of scale and other cost advantages have transformed China from a minor player in the solar power industry just a few years ago into the main producer of an increasingly competitive source of electricity.

“The top-tier Chinese firms are kind of the benchmark now,” said Shayle Kann, a managing director of solar power studies at GTM Research, a renewable energy market analysis firm based in Boston. Pricing of solar equipment is determined by the Chinese industry, he said, “and everyone else prices at a premium or discount to them.”

Besides Solyndra, the other two American manufacturers that filed for bankruptcy in August were Evergreen Solar, of Massachusetts, and SpectraWatt, a New York company. Another company, BP Solar, halted manufacturing at its complex in Frederick, Md., last spring.

Those bankruptcies and closings represent almost one-fifth of the solar panel manufacturing capacity in the United States, according to GTM Research.

Solyndra and Evergreen in particular suffered because they pursued unusual technologies whose competitiveness depended on their using less polysilicon, the main material for solar panels. That has become less important because polysilicon prices have tumbled more than 80 percent in the last three years as output has caught up with demand.

Analysts say that two American companies remain strongly placed. One is First Solar, the largest American manufacturer, which uses a different technology but has its biggest factory in Malaysia. The other, SunPower, is much smaller but is an industry leader in the efficiency with which its panels convert sunlight into electricity, so that they sell at a premium to Chinese panels.

um..., I don't use'em for a dayyum thing anymore

Video - USPS fails and shuts down this winter.

FoxNews | The head of the U.S. Postal Service said in an interview that the organization will default -- perhaps as early as this winter -- unless Congress intervenes.

Postmaster General Patrick Donahoe's comments reflect a well-known reality that the Postal Service is in dire financial straits. The rise of email and online bill-paying has steadily eroded its profits over the years while labor costs soar. Donahoe is calling for a host of changes, including the elimination of Saturday delivery, to close a deficit projected to top $9 billion this year.

But he said Congress needs to step in to help keep the service alive.

"Our situation is extremely serious," he told The New York Times. "If Congress doesn't act, we will default."

According to The New York Times, the service will be unable to make a $5.5 billion retiree health care payment later this month and is expected to run out of money to pay workers and other expenses early next year. This could force a shutdown in delivery.

Averting that outcome doesn't necessarily mean a bailout. One thing the service wants from Congress is a law to effectively nullify a contract prohibition on layoffs -- part of Donahoe's plan involves laying off 120,000 workers, but he needs Congress' help.

Some in Congress are also looking at letting the organization recover billions in supposedly overpaid pension payments.

nato institutes a racialized eurafrican union

Video - Gaddafi was a stalwart against the eurafrican union

newamericanmedia | Rushing into the center of Tripoli, jubilant Libyan rebels shouted: "We've got kinky head!" The slur was directed at Seif Al-Islam, the dark-complexioned son of strongman Muammar Gaddafi, who as it turns out had evaded capture. Since the start of the rebellion in February, the Arab militants of the Benghazi-headquartered National Transitional Council (NTC) have repeatedly perpetrated overt acts of racial violence, including mob lynching and physical mutilation of unarmed black Libyans, indigenous Berbers and Tuareg nomads among them.

The NATO-led multinational intervention force, known as Operation Unified Protector, has tolerated heinous race crimes that would be severely prosecuted and punished if they had occurred in Paris, London, Washington D.C. and Ottawa. The unwillingness of NATO to stop or even acknowledge the racist terror tactics puts into question the underlying strategic objective behind the intervention - a geopolitical project known as the Mediterranean Union (MU).

The hate crimes bring an uneasy and practically unspeakable issue to the world's attention - Arab racism. It is simplistic and historically incorrect to attribute this variant of racism to Arab slave trading, even though most of the raiding groups who captured African villagers for colonial plantations in the Americas were comprised of Arabs. Europeans and white Americans were also enslaved by North African pirates, a practice that provoked the United States to wage the two Barbary Wars in the early 1800s. In contrast to the race-conscious European and American plantation owners, the Arab world then perceived bondage as simply a category of human capital, irregardless of the captives’ race.

At the level of household and community, intermarriage with persons of African ancestry has not been a major problem throughout most of the Arab world, so long as the spouse belongs to the Islamic faith and follows the customary rites and habits. Sharply contrasting with America's discriminatory segregation policy during his lifetime, this is the Islamic multi-racialism that Malcolm X observed in Mecca.

The Race Card

Arab racial attitudes, therefore, cannot be simplistically reduced to skin tone but are more an issue related to culture, especially the residual beliefs and customs of so-called "kaffir" or pagans. Ever since the Umayyad invasion that swept across North Africa in the 7th century, the Arabs encountered, subdued and incorporated an array of tribes in the Saharan region, or Magreb. Black Africans who adopted the totality of Arabic cultural behavior integrated with relative ease into the dominant society, many ascending to high rank. Those who stubbornly held to their "superstitious" beliefs in native deities and matriarchal customs, including many Berbers and the majority of the Tuareg, were deemed Africans and not Arabs.

These ill-defined racial divisions helped European colonizers promote institutional discrimination during the 19th and early 20th centuries. The biases of French, Italian and British colonial administrators were imposed on the Semitic peoples - Arabs and Jews of North Africa and the Levant. The stress on skin tone - white standing for civilization and black for savagery - was already well-established in Europe and North America. Color-based images were deeply ingrained, for example, in a long-haired Nordic Jesus of Nazareth, as opposed to the "kinky head" that he was likelier to have been, versus swarthy despots and tanned Saracen pirates. European scholars, writers and artists recast the history of North Africa into racial stereotypes, portraying light-skinned pharaohs when, in fact, most ancient statues reveal African facial and physical features.

Skin tone affected a Semitic individual’s chances of employment and career promotion under European colonialism. The lingering sense of insecurity is still reflected, for instance, when some - not all - of my Arab friends try to pass themselves off as whites inside posh lounges in Berlin or even Dubai, an understandable guise in our present context of the war on terrorism. Prejudices of the master are adopted by the servants, and "second-class whites" can often be more vicious and vulgar in their racism. Extreme examples can be seen in the propaganda posters of the Maronite Christian militias of Lebanon, presenting themselves as lily-white crusaders against the dark hordes.

Son of Africa

More than any other leader in the region, Colonel Muammar Gaddafi challenged this deplorable legacy of European colonialism and Arab conquest. Proudly adopting sub-Saharan- style robes and turbans and embracing the indigenous cultures of the continent of his birth, he declared Libya to be an inseparable part of Africa. The Libyan leader took the identity issue a giant step further, financing and arming Africans to fight European supremacy and, in Nimery's Sudan, against domination by the Gulf states.

If there is one thing that the second-tier "white" of Arab or Israeli descent disdains more than a black African it is, of course, the "kaffir lover," a charge often leveled against Gaddafi. The race hatred is so intense that even American diplomats have had to warn the Benghazi rebels against committing massacres. The warning is being scoffed at by the gathered clan of special-forces commandos, warships and air forces from 19 European, North American and Mideast nations, which are launching indiscriminate attacks on Libyan cities.

nato just destroyed africa's most developed country

Video - Watching NATO crimes against humanity

InformationClearinghouse | Some years ago, in the Indian site www.bharat-rakshak.com, this columnist had written of the NATO militaries as resembling an army of simians. Such a force - if let loose within a confined space – can create immense damage, but are unable to clean up the resultant mess. This is precisely what the world has witnessed in Iraq. Despite more than a decade of sanctions that directly resulted in nearly a million extra deaths during that period ( because of shortages created by the UN-approved measures), the regime of Saddam Hussein was able to provide food, energy and housing to the people of Iraq, whereas eight years after “liberation” by key NATO members, the country and its population are worse off than before the 2003 invasion that led to the execution of Saddam Hussein. As for Afghanistan, after a decade of the world’s most modern military force fighting against a ragtag band of insurgents, more than a third of the country is back in the hands of the Taliban, while a fifth of the rest is on the brink of a similar fate. As a consequence of its failure to subdue this force, NATO is desperately clutching at plans for engaging the “moderate Taliban”, an oxymoron if ever one was created.

Serbia has yet to recover from its brief burst of battle with NATO, and now Libya has joined the lengthening list of countries devastated by the attentions of NATO. Clearly, the top brass in a military alliance designed to do battle in Europe against the USSR were reluctant to close shop. They have therefore redesigned NATO as a military instrument with multiple uses, especially against “asymmetric threats”, a term which refers to countries that have ramshackle militaries. Both Saddam Hussein and Moammar Gaddafy followed the dictates of the NATO powers in surrendering whatever WMD was in their possession, unlike Syria and North Korea, two countries that have been left undisturbed by NATO as a consequence. Clearly, military planners within the alliance are ready for action only against those rivals that have had their conventional capabilities degraded to the point at which they do not represent any significant risk against the alliance. Had George W Bush and Tony Blair truly believed their own rhetoric about Saddam Hussein having WMD, they would never have sent their armies into Iraq the way they did.

As mentioned in these columns, Gaddafy’s fate got sealed when he accepted the advice of his Europe-dazzled sons to disarm and place the survival of his regime in the hands of NATO. Since 2003, Muammar Gaddafy dismantled his WMD program, synchronised his intelligence services with that of NATO and generally accepted each of the prescriptions handed over to him. Had NATO been an alliance that respects reciprocity, all this ought to have made NATO turn as blind an eye to his battle with sections of the population as we have seen in the case of Bahrain, where the ruling family has been given a free hand to sort out the situation. Instead, the situation changed when Nicholas Sarkozy was informed by French banks that Colonel Gaddafy may withdraw the immense bank deposits of Libya from them to institutions in China, and when he learnt that several contracts that French enterprises were expecting to come to them would vanish because Gaddafy wanted to spend less on French military and other toys and more on social services. Libya had to be made an example of, lest other Arab governments think of shifting their money elsewhere than within the NATO bloc as a consequence of the loss of $1.3 trillion by the GCC and its people alone because of the financial fraud perpetrated in 2008 by banks and other financial entities headquartered within the NATO bloc.

These days, companies based within NATO are finding it difficult to retain the monopoly position they have enjoyed, sometimes for generations. In particular, Chinese companies are challenging them in numerous markets, as are companies based elsewhere in Asia, including within South Korea and India. As a consequence, they now rely on military force to retain their privileges. This has been illustrated with commendable transparency in the case of Iraq and Libya. In the latter case, even though the fumes of battle have not ceased (and are unlikely to), oil companies such as ENI and Total are hard at work figuring out the assets they can seize because of the local victories of the Sarkozy-appointed “National Transitional Council”. Interestingly, even though the NTC is a creation of Paris, the UN has accepted it as the legitimate government of Iraq. Indeed,in the 21st century the UN seems to have regressed into the period between 1919 and 1939,when the League of Nations awarded “mandates” to dominant countries that permitted them to rule weaker ones. In the past decade, similar mandates have been proferred in the case of Iraq, Kosovo and Afghanistan. In the case of Libya, President Sarkozy’s takeover of the Libyan state via the creation of the NTC has been similarly legitimized by the UN in an astonishing abdication of principle.

However, just as in other locations, facts on the ground may not follow the script favoured by NATO. In the case of Libya, this columnist has warned for five months that the NATO intervention would only result in civil war and in the steady destruction of the infrastructure that made Libya one of the more prosperous countries in the region. All this is at risk today, as chaos descends in the form of armed gangs set loose by NATO across the country. Not that there is ever any chance of those responsible for such a catastrophe being held accountable by so-called “international” bodies, most of which are now firmly in the control of the NATO powers in a way that their own economies are not. Over the past decade, tens of thousands of civilian deaths have resulted from NATO operations, without even a mild protest from the International Court or the Human Rights Council. Such inaction is leading to the same loss of respect for the UN system as took place in the past with the League of Nations, which became seen as being controlled by a small group for their own purposes.

Whether it is Libya or any other country, each has the right to develop its societal dynamic in its own way. Unless a country poses a threat to others, the way Talban-controlled Afghanistan did, it is not legitimate target for international action. In the case of Libya, since 2003 Colonel Gaddafy disarmed his military of WMD and fully cooperated with the US-led War on Terror. His fate has become a lesson to others who may have been tempted to follow in his path of conciliation with NATO. Small wonder that the other regimes in the sights of NATO - Syria and Iran in particular - are in no hurry to follow the Libyan example. Rather than seek to finish off a leader who buried the hatchet publicly and fully the way Gaddafy did, NATO would have been better advised to show its magnanimity and its willingness to keep agreements in good faith. That would have acted as an incentive for Syria, Iran and even North Korea to follow suit, thereby making the globe a safer place. Today, all three states - understandably – have zero faith in the bona fides of the NATO powers, and as a consequence are each going their own way. Combine this with the economic desolation seen within NATO ( much of which has been caused by the huge spike in military spending caused by foreign adventures), and overall even the medium-term prognosis for NATO is dim, despite the smiles of congratulation at the advance of NATO proxies into Tripoli.

Unlike during the Vietnam war, when the Pentagon extensively sourced its procurement from Asia, the Bush-Cheney team sought to give US entities a monopoly over the supply of the items needed, even items as militarily inconsequential as toothpaste. The result of such an autarchic policy has been a big increase in spending, with the US alone spending more than a trillion dollars in its wars with Iraq and Afghanistan. Indeed, we have seen this use of the state machinery to block competition across several sectors. The EU, for example, has banned Indian pharmaceuticals from its market, despite the low cost and high quality of medicines produced in India. Just now, the EU has banned Samsung hi-tech products. A time will come when Asia bans German cars and French defense equipment in retaliation for the frequent bans on Asian products on specious grounds. The US and the EU cannot protect their way out of economic trouble. They need to give their citizens access to the benefits of a global market, rather than break every canon that they have been preaching for decades. As for NATO, it will soon become clear that while it may be possible to defeat a ramshackle force with the massive use of airpower, that may not translate into monopoly privileges over Libyan oil reserves. Should China or India come up with better terms than Italian or French companies, the people of Libya will ensure that their government act in a way that protects their interests, rather than only those of NATO. The use of military power for commercial advantage ought to have vanished when the 19th century did. Its reappearance in Iraq and Libya is a worrisome sign that NATO has not learnt the lessons of history.

the decade's biggest scam

commondreams | The Los Angeles Times examines the staggering sums of money expended on patently absurd domestic "homeland security" projects: $75 billion per year for things such as a Zodiac boat with side-scan sonar to respond to a potential attack on a lake in tiny Keith County, Nebraska, and hundreds of "9-ton BearCat armored vehicles, complete with turret" to guard against things like an attack on DreamWorks in Los Angeles. All of that -- which is independent of the exponentially greater sums spent on foreign wars, occupations, bombings, and the vast array of weaponry and private contractors to support it all -- is in response to this mammoth, existential, the-single-greatest-challenge-of-our-generation threat: ["The key to sustaining this Security State bonanza," writes Greenwald, "is keeping fear levels among the citizenry as high as possible... and that is accomplished by fixating even on minor and failed attacks, each one of which is immediately seized upon to justify greater expenditures, expansion of security measures, and a further erosion of rights." (Wikipedia)] "The key to sustaining this Security State bonanza," writes Greenwald, "is keeping fear levels among the citizenry as high as possible... and that is accomplished by fixating even on minor and failed attacks, each one of which is immediately seized upon to justify greater expenditures, expansion of security measures, and a further erosion of rights." (Wikipedia)

"The number of people worldwide who are killed by Muslim-type terrorists, Al Qaeda wannabes, is maybe a few hundred outside of war zones. It's basically the same number of people who die drowning in the bathtub each year," said John Mueller, an Ohio State University professor who has written extensively about the balance between threat and expenditures in fighting terrorism.

Last year, McClatchy characterized this threat in similar terms: "undoubtedly more American citizens died overseas from traffic accidents or intestinal illnesses than from terrorism." The March, 2011, Harper's Index expressed the point this way: "Number of American civilians who died worldwide in terrorist attacks last year: 8 -- Minimum number who died after being struck by lightning: 29." That's the threat in the name of which a vast domestic Security State is constructed, wars and other attacks are and continue to be launched, and trillions of dollars are transferred to the private security and defense contracting industry at exactly the time that Americans -- even as they face massive wealth inequality -- are told that they must sacrifice basic economic security because of budgetary constraints.

colonial libyan carve-up council met in paris...,

uruknet | The "Friends of Libya" conference held in Paris Thursday signaled the beginning of the imperialist carve-up of the oil-rich North African country.

Jointly chaired by French President Nicolas Sarkozy and British Prime Minister David Cameron, the conference included participation by those countries which provided the fire-power under the umbrella of NATO and using a United Nations resolution as a cover to bring down the government of Colonel Muammar Gaddafi in a six-month war for "regime change." These include the US, France, Britain, Italy and Qatar. All of them are jockeying to reap the greatest possible return on their "investment" of bombs and missiles that have claimed thousands of lives and left much of Libya’s infrastructure in ruins.

Also attending will be Germany, Russia, China, India and Brazil, which abstained on the UN Security Council resolution utilized as a legal fig leaf for the colonial-style war. These countries all fear that their significant investments and deals in Libya will be lost to the intervening Western powers.

In all, the conference included 31 heads of state, 11 foreign ministers and the leaders of the United Nations, NATO and the Arab League, along with the chief figures in the NTC, Justafa Abdul-Jalil, who until February was Gaddafi’s justice minister, and Mahmoud Jibril, a free-market economist who was the Gaddafi regime’s point man on attracting foreign investment.

On the eve of the conference, President Sarkozy cast the meeting in lofty terms, telling a gathering of French ambassadors in Paris that it would "turn the page on dictatorship and combat to open a new era of cooperation with a democratic Libya."

As Sarkozy spoke, however, combat was very much continuing in Libya, with NATO warplanes carrying out fresh bombardments of the coastal city of Sirte, a stronghold of Gaddafi loyalists, and Bani Walid, a desert town to the west, which is also under control of forces supporting the ousted regime. As the NATO-led rebels continued their siege of the two cities, the NTC extended until September 10 the deadline for its ultimatum for the residents of Sirte to surrender or face an all-out military assault. NATO’s strategy may be to starve the city into submission.

Meanwhile, reports of massacres and atrocities carried out by the guardians of the new "democratic Libya" continue to mount, many of them directed against the large numbers of sub-Saharan African migrant workers who have been killed, abused and detained solely on the basis of the color of their skin.

The "friends" came to Paris not to discuss aid to Libya, but rather the lifting of economic sanctions imposed under the Gaddafi regime and the unfreezing of Libyan assets in foreign banks, measures designed to get money and resources flowing out of the North African country

On the day of the summit, the French daily Liberation published the copy of a letter written in Arabic, purportedly from a representative of the Benghazi-based National Transitional Council, promising to cede to France 35 percent of its oil in return for its support. The Sarkozy government played the leading role in securing the UN resolution last March and got the jump on its NATO allies by ordering French air strikes before the Western alliance as a whole began bombarding the country.

The letter, dated April 3, states: "With regard to the oil agreement struck with France as a token of this Council’s gratitude, at the London summit, we, in our capacity as legitimate representative of Libya, have delegated to brother Mahmud [Shammam, the NTC’s media minister] the power to sign this agreement allocating 35 percent of total crude oil to the French in exchange for its total, permanent backing for our Council."

The letter, which also asked for France to expedite arms deliveries, was addressed to the emir of Qatar, the Persian Gulf sheikdom that has acted as a liaison between the NTC and the Western powers, with a copy to Amr Moussa, the Arab League secretary general.

Quoting an earlier statement of Sarkozy insisting that France was acting in accordance with a "universal conscience" simply to "protect the civilian population," Liberation comments: "Be that as it may, the French oil corporations might benefit amply from the military campaign."