Sunday, October 12, 2008

Remember Your Self....,

Paul Levy at RealitySandwich;
Lucid dreaming is a perfect metaphor, expression, and vehicle for realizing the dreamlike nature of both our experience of ourselves and the world around us. Just like we can become lucid in our night dreams, we can wake up in our waking dream and see how we are all collaboratively "dreaming up" our world into materialization, a realization which empowers us to co-operatively change the collective dream we are having.

When we become lucid in a dream, we realize that who we've imagined we are, what is called the "dream ego," is not who we actually are, but is merely a model of who we are. To identify with the dream ego is to become bewitched, fixated on and absorbed into a particularized stance which ultimately is illusory in that it has no substantial existence. Entrancing ourselves into imagining we exist in a way in which we simply do not is simultaneously a cause and result of a self-generating, auto-hypnotic self-constriction in consciousness which, ultimately speaking, we are doing to ourselves. It is what I call ME disease, whose root is a mis-identification of who we imagine we are (please see my book, The Madness of George W. Bush: A Reflection of our Collective Psychosis).

When we become lucid in a dream, we realize that who we were imagining we are - the dream ego - is being dreamed by a deeper part of ourselves...what I call the "deeper, dreaming Self." Jung himself had this realization in a dream he had during the last years of his life. In the dream he entered a church, and much to his surprise saw a meditating yogi sitting in front of the church. Upon closer inspection, Jung saw that the yogi had his face, and Jung then realized that the yogi was not Jung's dream, but that he was the yogi's dream.

In full-blown lucidity, we have an expansion of identity. We discover our inseparability and co-extensiveness with all parts of the dream. This is not a realization that belongs to the egoic, separate self, which is moment by moment contracting against itself, continually trying to strategize and manipulate the dream so as to full-fill its imagined sense of lack. The egoic, separate self is itself the very seeming obscuration to our natural lucidity, so how can it possibly become lucid? Rather, lucidity is an expression that we've seen through our self-created illusion and recognized the true nature of our situation, of who we actually are.
Now that we're all going to have to cut back on the levels of our consumption and distraction, perhaps we can get about the infinitely more serious business of observing, studying, and remembering ourselves....,

Saturday, October 11, 2008

Why the Establishment Rejects McPalin

OCTOBER 8--Angered by a delay in the receipt of his voter registration card, a Louisiana man today threatened election officials, claiming that he urgently needed to cast a ballot to "keep the nigger out of office," according to police. Wade Williams, 75, was arrested this morning on a felony terrorizing charge after allegedly calling the Registrar of Voters and warning that he would come to the state office and empty his shotgun unless he got his registration card. Using profanity and racial slurs, Williams told a state official "about needing to vote to 'keep the nigger out of office," according to an Ouachita Parish Sheriff's Office affidavit, a copy of which you'll find here. Though the document does not name the candidate to which Williams is so violently opposed, it seems likely he was referring to Democratic presidential candidate Barack Obama. After being arrested at his Monroe home, Williams was booked into the Ouachita Correctional Center, where the below mug shot was snapped. En route to the jail, he "continued his 'tirade' about niggers and also stated that he had a shotgun, but had it hidden at his residence," reported Lt. Michael Judd. This surprising incident was brought to your attention by the ever-vigilant Submariner.

Leaders May Close World's Markets

Oct. 10 (Bloomberg) -- Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance.''

``The idea of suspending the markets for the time it takes to rewrite the rules is being discussed,'' Berlusconi said today after a Cabinet meeting in Naples, Italy. A solution to the financial crisis ``can't just be for one country, or even just for Europe, but global.''

The Dow Jones Industrial Average fell as much 8.1 percent in early trading and pared most of those losses after Berlusconi's remarks. The Dow was down 0.5 percent to 8540.52 at 10:10 in New York.

Group of Seven finance ministers and central bankers are meeting in Washington today, and will stay in town for the International Monetary Fund and World Bank meetings this weekend. European Union leaders may gather in Paris on Oct. 12, three days before a scheduled summit in Brussels, Berlusconi said today, while Group of Eight leaders may hold a meeting on the crisis ``in coming days,'' he said.

Berlusconi didn't give any details about what kind of rules leaders were looking to change, except to say that leaders are ``talking about a new Bretton Woods.''

The Bretton Woods Agreements were adopted to rebuild the international economic system after World War II in a hotel in Bretton Woods, New Hampshire. The aim of the agreements was to establish a monetary management system, initially by pegging currencies to gold. The IMF was set up later to help manage the international financial system.

Friday, October 10, 2008

The End Of American Capitalism?

Analysis in today's Washington Post; The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism.

Since the 1930s, U.S. banks were the flagships of American economic might, and emulation by other nations of the fiercely free-market financial system in the United States was expected and encouraged. But the market turmoil that is draining the nation's wealth and has upended Wall Street now threatens to put the banks at the heart of the U.S. financial system at least partly in the hands of the government.

The Bush administration is considering a partial nationalization of some banks, buying up a portion of their shares to shore them up and restore confidence as part of the $700 billion government bailout. The notion of government ownership in the financial sector, even as a minority stakeholder, goes against what market purists say they see as the foundation of the American system.

Yet the administration may feel it has no choice. Credit, the lifeblood of capitalism, ceased to flow. An economy based on the free market cannot function that way.

Intractable Paradox


Governance and banks are doing their utmost to restore confidence in the intangible monetary system to drive economic growth. The operation of the economy entails irreversibly drawing down irreplaceable, finite natural material resources. The people in charge are striving to speed up the unsustainable process driven by money. Do you want them to succeed, or not?

The Root of All Evil...,

Comes now Roubini - The world is at severe risk of a global systemic financial meltdown and a severe global depression;
At this point severe damage is done and one cannot rule out a systemic collapse and a global depression. It will take a significant change in leadership of economic policy and very radical, coordinated policy actions among all advanced and emerging market economies to avoid this economic and financial disaster. Urgent and immediate necessary actions that need to be done globally (with some variants across countries depending on the severity of the problem and the overall resources available to the sovereigns) include:

- another rapid round of policy rate cuts of the order of at least 150 basis points on average globally;

- a temporary blanket guarantee of all deposits while a triage between insolvent financial institutions that need to be shut down and distressed but solvent institutions that need to be partially nationalized with injections of public capital is made;

- a rapid reduction of the debt burden of insolvent households preceded by a temporary freeze on all foreclosures;

- massive and unlimited provision of liquidity to solvent financial institutions;

- public provision of credit to the solvent parts of the corporate sector to avoid a short-term debt refinancing crisis for solvent but illiquid corporations and small businesses;

- a massive direct government fiscal stimulus packages that includes public works, infrastructure spending, unemployment benefits, tax rebates to lower income households and provision of grants to strapped and crunched state and local government;

- a rapid resolution of the banking problems via triage, public recapitalization of financial institutions and reduction of the debt burden of distressed households and borrowers;

- an agreement between lender and creditor countries running current account surpluses and borrowing and debtor countries running current account deficits to maintain an orderly financing of deficits and a recycling of the surpluses of creditors to avoid a disorderly adjustment of such imbalances.

At this point anything short of these radical and coordinated actions may lead to a market crash, a global systemic financial meltdown and to a global depression. At this stage central banks that are usually supposed to be the "lenders of last resort" need to become the "lenders of first and only resort" as, under conditions of panic and total loss of confidence, no one in the private sector is lending to anyone else since counterparty risk is extreme. And fiscal authorities that usually are spenders and insurers of last resort need to temporarily become the spenders and insurers of first resort. The fiscal costs of these actions will be large but the economic and fiscal costs of inaction would be of a much larger and severe magnitude. Thus, the time to act is now as all the policy officials of the world are meeting this weekend in Washington at the IMF and World Bank annual meetings.

Thursday midnite update: A few hours after I had written this note the market crash that I warned about is underway in Asia: the Nikkei index in Japan is down 11% and all other Asian markets are sharply down. This reinforces the urgency of credible and rapid policy actions by the G7 financial officials who are meeting in a few hours in Washington and the need to also involve in such global policy coordination the systemically important emergent market economies.

Thursday, October 09, 2008

Give Us This Day Our Daily Bread.....,

In the Financial Post - Grain shipments stalled in credit drought;
The meltdown in financial markets has resulted in a dramatic slowdown in maritime trade, with major ports in Canada and the United States preparing for sharply reduced activity after several of the busiest years on record.

Statistics from the Port of Vancouver have yet to officially register a drop but at Long Beach and Los Angeles, among the biggest U.S ports, imports have already declined 9% this year.

The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.

Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said.

"There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy."

So far the problem is mostly being felt in U.S. and South American ports, but observers say it is only a matter of time before it hits Canada.

"We've got a nightmare in front of us and a lot of people are concerned it's going to get a lot worse," said Anthony Temple, a grain marketing expert based in Vancouver.

Consequence Management Response Force

How time flies. It's been a few weeks since we related a story in the Army Times about the deployment of the infantry division's 1st Brigade here in the U.S. - comes now Amy Goodman with a more in-depth discussion of that development. Here are a couple of excerpts;

We welcome you both to Democracy Now! Why don’t we begin with Colonel Michael Boatner? Can you explain the significance, the first time, October 1st, deployment of the troops just back from Iraq?

COL. MICHAEL BOATNER: Yes, Amy. I’d be happy to. And again, there has been some concern and some misimpressions that I would like to correct. The primary purpose of this force is to provide help to people in need in the aftermath of a WMD-like event in the homeland. It’s something that figures very prominently in the national planning scenarios under the National Response Framework, and that’s how DoD provides support in the homeland to civil authority. This capability is tailored technical life-saving support and then further logistic support for that very specific scenario. So, we designed it for that purpose. [...]

AMY GOODMAN: Matt Rothschild, you’ve been writing about this in The Progressive magazine. What is your concern?

MATTHEW ROTHSCHILD: Well, I’m very concerned on a number of fronts about this, Amy. One, that NORTHCOM, the Northern Command, that came into being in October of 2002, when that came in, people like me were concerned that the Pentagon was going to use its forces here in the United States, and now it looks like, in fact, it is, even though on its website it says it doesn’t have units of its own. Now it’s getting a unit of its own.

And Colonel Boatner talked about this unit, what it’s trained for. Well, let’s look at what it’s trained for. This is the 3rd Infantry, 1st Brigade Combat unit that has spent three of the last five years in Iraq in counterinsurgency. It’s a war-fighting unit, was one of the first units to Baghdad. It was involved in the battle of Fallujah. And, you know, that’s what they’ve been trained to do. And now they’re bringing that training here?

On top of that, one of the commanders of this unit was boasting in the Army Times about this new package of non-lethal weapons that has been designed, and this unit itself is going be able to use, according to that original article. And in fact, the commander was saying he had even tasered himself and was boasting about tasering himself. So, why is a Pentagon unit that’s going to be possibly patrolling the streets of the United States involved in using tasers?

The End of Privacy.....,

In yesterday's Guardian, further thoughts on the Every Call and Every E-Mail project unfolding in the U.K. Plans for a vast central database of emails, phone calls and texts will see everyone monitored as a potential suspect. First, what the authorities want;
In the name of the fight against crime, and the fight against terror, we are all to be monitored as if we could be suspects. Computers will analyse our behaviour for signs of deviance. The minute we become of interest to anyone in authority - perhaps because we take part in a demonstration, have an argument with a security guard at an airport, spend too long on a website, or are witness to a crime - the police or the security services will be able to dip into our records and construct a near-complete pattern of our lives.

The shocking element to the new plan is that the authorities want their own database only because they find the current limitations frustrating. Under the Regulation of Investigatory Powers Act rules, the 700 or so bodies already licensed to watch us must make a certified request to phone or internet firms for individual records. More than 500,000 such requests were made last year. But the companies are reluctant to hang on to the data, and the security services would find a single, accessible database so much more convenient.
Then, a meditation on the possibilities which inhere to such a capability.

Stop and consider this for a moment. Think about how happy any of us would be to have our lives laid out to official view. All our weaknesses, our private fears and interests, would be exposed. Our web searches are guides to what is going on in our minds. A married man might spend a lot of time on porn websites; a successful manager might be researching depression; a businessman might be looking up bankruptcy law.

We all have a gulf between who we really are and the face we present to the world. Suddenly that barrier will be taken away. Would a protester at the Kingsnorth power station feel quite so confident in facing the police if she knew that the minute she was arrested, the police could find out that she'd just spent a week looking at abortion on the web? Would a rebel politician stand up against the prime minister if he knew security services had access to the 100 text messages a week he exchanged with a woman who wasn't his wife? It isn't just the certainty that such data would be used against people that is a deterrent, it's the fear. As the realisation of this power grew, we would gradually start living in the prison of our minds.

Wednesday, October 08, 2008

About that Greed, Incompetence and Fraud...,

There is No Plan B?

Comes now my man rembom with troubling questions about the "bailout" just now rushed through Congress by the Bush administration for the exclusive benefit of wealthy, incompetent, and quite possibly criminally fraudulent bankers...,
"Well, it looks like the Fed has discovered a Plan B. It turns out that the Fed can buy commercial paper directly from non-financial corporations needing credit to maintain operations. This will keep the credit markets working even if the zombie banks aren't up to the task. In other words, the threat of a complete meltdown in the absence of a bailout was nonsense and the media once again got taken for a ride by the Bush administration."Of course, relying on the central bank to dish out credit to corporations is not ideal, but neither is it ideal to overpay for $700 billion of junk assets on the books of troubled banks.

Too bad that the media didn't spend more time focusing on the options available, instead of selling President Bush's bailout package."
From Beat The Press blog, Oct. 7, 2008, by Dean Baker

Intellectual Cleansing - Part II

Most ambitious journalists start out on a daily local newspaper (I would soon end up on one), owned by one of a handful of large media groups. There, as I would learn, one quickly feels all sorts of institutional constraints on ones reporting. As a young journalist, if you know no better, you simply come to accept that journalism is done in a certain kind of way, that certain stories are suitable and others unsuitable, that arbitrary rules have to be followed. These seem like laws of nature, unquestionable and self-evident to your more experienced colleagues. Being a better journalist requires that these work practices become second nature.

These rules were constantly reinforced:

Promotion meant moving on from the lowly beat reporter, covering community issues, to other posts: the city or county council correspondent, who depended on council officials and councillors for information; the court reporter, who loyally regurgitated court proceedings; the business staff, who tried to liven up advertisers press releases; and the crime correspondent, who spent all day hanging out with policemen.

In other words, success at the newspaper was gauged in terms of obedience to figures of authority, and the ability not to alienate powerful groups within the community. Ambitious journalists learnt to whom they must turn for a comment or a quote, and where suitable stories could be found. It was a skill that presumably stayed with them for the rest of their careers.

Those who struggled to cope with these strictures were soon found out. They either failed their probationary periods and were forced to move on, or stayed on in the lowliest positions where they could do little harm.

Entire article archived here;

Fall of the Wall.....,

Naomi Klein on Democracy Now: Wall St. Crisis Should Be for Neoliberalism What Fall of Berlin Wall Was for Communism;
So I think we can see a couple of scenarios for the future. One, McCain wins, and it’s economic shock therapy. You know, the thesis of The Shock Doctrine is that we’ve been sold a fairy tale about how these radical policies have swept the globe, that they haven’t swept the globe on the backs of freedom and democracy, but they have needed shocks, they have needed crises, they have needed states of emergencies. It doesn’t necessarily have to be an outright military coup, which are the conditions in which this ideology had its first laboratories. It can just be a bad-enough economic crisis, a bad-enough hyperinflation crisis, in an electoral democracy that allows politicians to say, “Sorry about everything we said during the campaign. Sorry about the usual ways in which we make decisions, debate discussion. We’re going to have to haul up, form an emergency economic team and impose shock therapy,” usually with the help of the International Monetary Fund and the World Bank.

Milton Friedman understood the utility of crisis. And this is a quote—you know, I use it a lot, but I’ll use it now again, because I think it’s important—which he has at the beginning of the 1982 edition of Capitalism and Freedom: "Only a crisis, actual or perceived, produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.”

Now, because I’ve been studying the utility of crisis for this free market project, which I consider to be very anti-democratic, it’s really attuned me to looking for the ideas that are lying around. And I’ve been paying really close attention to people like Grover Norquist, Newt Gingrich, the Republican Study Committee, these past few weeks. And I have an “ideas lying around” file, which are the ideas that they are floating right now in the midst of this economic crisis. And a lot of them are familiar, but the point is is that they’re being repackaged now as the way out of this economic crisis. So, it’s suspending the capital gains tax, getting rid of the post-Enron regulations, getting rid of mark-to-market accounting. In other words, more deregulation and less money in the public coffers. And it is interesting that the way in which this bill—the way the senators were trying to get the bailout bill through the Senate, after it had failed to go through Congress, was by adding tax cuts, a package of $118 billion worth of tax cuts. Some of them are good, some of them are not. But it’s a deepening of this crisis.

So, we know that the crisis is coming, and the question is, how are we going to respond? I think there needs to be better ideas lying around. I think the Milton Friedman Institute is about keeping the same old ideas that have been recycled so many times, that actually make these public crises worse, making sure that they are the ones that are ready and available whenever the next crisis hits. I think that is what—at its core, that’s what so many of the right-wing think tanks are for, and that’s what the Institute is for. And I think that is a waste of the fine minds at this university. I think it is a waste of your minds, your creativity, because all of these crises—climate change, the casino that is contemporary capitalism—all of these crises do demand answers, do demand actions. They are messages, telling us that the system is broken. And instead of actual solutions, we’re throwing ideology, very profitable ideology, at these problems. So we need better ideas lying around.

Tuesday, October 07, 2008

Faith. Belief. Trust. An Orthodoxy Built on Superstition

Madeleine Bunting quietly devastates in the Guardian;

We are now learning what countries across the developing world have experienced over three decades: unstable and inequitable neoliberal economics leads to unacceptable levels of social disruption and hardship that can only be contained by brutal repression. Add that to the two other central charges against deregulated capitalism: first, it may create wealth but it does not distribute it effectively; and second, that it takes no account of what it cannot commodify - neither the social relationships of family and community nor the environment, which are vital to human wellbeing, and indeed to the functioning of the market itself. Ultimately, neoliberal capitalism is self-destructive.

We are now witnessing the collapse of this absurd economic orthodoxy that has dominated politics for nearly 30 years. Its triumphalist arrogance, its insistence on orthodoxy, has been comparable to Soviet communism in its scale. For two decades, we've been told "Tina" - "There is no alternative".

Economists talk of trust, belief, faith; we now understand that all along neoliberal capitalism was a form of mythology. That's why the triumphalism was necessary - you could not afford to have anyone challenge the system or we might all realise we were gawping at the emperor's nakedness.

Every Call and E-mail

In the UK Times Online;

Ministers are considering spending up to £12 billion on a database to monitor and store the internet browsing habits, e-mail and telephone records of everyone in Britain.

GCHQ, the government’s eavesdropping centre, has already been given up to £1 billion to finance the first stage of the project.

Hundreds of clandestine probes will be installed to monitor customers live on two of the country’s biggest internet and mobile phone providers - thought to be BT and Vodafone. BT has nearly 5m internet customers.

Ministers are braced for a backlash similar to the one caused by their ID cards programme. Dominic Grieve, the shadow home secretary, said: “Any suggestion of the government using existing powers to intercept communications data without public discussion is going to sound extremely sinister.”

MI5 currently conducts limited e-mail and website intercepts which are approved under specific warrants by the home secretary.

Further details of the new plan will be unveiled next month in the Queen’s speech.

The Home Office stressed no formal decision had been taken but sources said officials had made clear that ministers had agreed “in principle” to the programme.

Officials claim live monitoring is necessary to fight terrorism and crime. However, critics question whether such a vast system can be kept secure. A total of 57 billion text messages were sent in the UK last year - 1,800 every second.

Crisis Effects Russian Economy

From the Washington Post foreign service;
Russia's leading stock markets crashed again Monday, suffering another record one-day loss and hitting three-year lows. The benchmark MICEX and RTS indexes plunged 19 percent as regulators repeatedly suspended trading in an attempt to slow the free fall. The markets are down nearly two-thirds from their highs in May.

Meanwhile, the Russian banking system is enduring a severe liquidity crisis triggered by a flight of capital and foreign loans.

Prime Minister Vladimir Putin has responded by tapping the government's immense cash reserves, built up during the long oil boom, and injecting as much as $100 billion into the financial system.

The crisis has not been felt by much of Russian society. Only a fraction of the public invests in the stock markets, and the Kremlin's moves to support the banks have prevented any run on deposits. But there are hints of trouble. Inflation is rising, industrial production is shrinking and several firms have said they are cutting bonuses or laying off staff.

The impact of the crisis is clearest in real estate construction, one of the fastest-growing segments of the economy over the past few years but also one of the most heavily dependent on bank loans. With credit disappearing, other developers have joined Polonsky in announcing plans to halt construction.

Monday, October 06, 2008

Naomi Wolf - Give Me Liberty

The following is excerpted from the introduction to Naomi Wolf's new book, Give Me Liberty: A Handbook for American Revolutionaries
...historians are also now documenting the stories of how in the pre-Revolutionary years, ordinary people -- farmers, free and enslaved Africans, washer-women, butchers, printers, apprentices, carpenters, penniless soldiers, artisans, wheelwrights, teachers, indentured servants -- were rising up against the king's representatives, debating the nature of liberty, fighting the war and following the warriors to support them, insisting on expanding the franchise, demanding the right to vote, compelling the more aristocratic leaders of the community to include them in deliberations about the nature of the state constitutions, and requiring transparency and accountability in the legislative process. Even enslaved Africans, those Americans most silenced by history, were not only debating in their own communities the implications or the ideas of God-given liberty that the white colonists were debating; they were also taking up arms against George III's men in hopes that the new republic would emancipate them. Some were petitioning state legislatures for their freedom; and others were even successfully bringing lawsuits against their owners, arguing in court for their inalienable rights as human beings. This is the revolutionary spirit that we must claim again for ourselves -- fast -- if we are to save the country.

Will the Crisis Bring Down the Global Financial System?

Adrian Salbuchi spins a fascinating yarn at Global Research setting up the timeline and the players involved in getting us to the current state, and then laying out possible what next scenarios;

Plausible Scenarios
The crisis affecting the global financial system based on parasitic speculation and usury is a terminal crisis. It can no longer be solved through purely financial and monetary mechanisms and measures. If US authorities only concentrate on this type of measure, then a truly serious collapse is imminent and unavoidable.

A more pragmatic view of the global and US power structures, however, indicates that the US will not just stand by whilst this occurs, allowing the demise of the US as a global superpower. The US will not just turn-off the lights, and go home as the Soviet Nomenklatura did in the early nineties. No sir. They're gonna put up a hell of fight!! And that is a problem for all the peoples of the world, as well as for the people of the United States themselves. In this sense, we envision several scenarios out of which we have singled out three clearly defined scenarios which must no doubt have their respective alternative action plans to address this growing crises:

Plan A (i.e., addressing a relatively low intensity crisis through basically financial measures) - This envisions continuing on-going negotiations between the FED, Treasury Dept., Congress, major bankers, European and Asian central bankers seeking further measures to stop further black-holes and bank failures, lobbying for further u$s 700 billion bail-out plans to be wrenched out of Congress and elsewhere. This will serve to control the crisis in the days and weeks to come by helping banks in trouble, including medium-sized banks anf foreign banks operating in the US (e.g. your HSBC's, Barclays', Deutsche Bank's and others), and most important, the remaining major Mega-banks like Goldman Sachs, Morgan Stanley, JPMorgan Chase and CitiGroup. The immediate effect of this will be that there will be drastic and far-reaching crisis management through financial and monetary measures. At the same time, new rules of the game will be dealt in Wall Street and Washington. The practical result will be massive transference of wealth away from small investors, pension funds, small stockholders, etc., and into the hands of the usual cabal of bankers, institutional investors, speculators and financial parasites.

Plan B (i.e., addressing a medium intensity crisis through financial and monetary measures) - If Congress does not approve the bail-out plan, or significantly limits it, or even if Congress does approves it, it were to prove insufficient in the days and weeks to come with a further spate of major banking and insurance company failures, then the US Government - i.e., the Fed and Treasury Dept. - might very well declare a "National Economic Emergency" and introduce a totally new currency.

No, not the "Amero" which is a smoke-screen rumour, but rather something far more straight to the point: a "New Dollar" which, contrary to the present devalued dollar, would be Gold-backed, however not by just any gold: it will be 9999 proof gold bullion, with some sort of 100% fool-proof security factor - e.g., either an embedded chip or hologram that will transform it into "Global Reserve Gold", or financially "sacred" gold - that will have a value maybe ten times higher than normal "profane" Gold. At the same time, an extended banking holiday will be declared in order to implement the change of currency (just as happened in Argentina several times in recent history, notably when former president Alfonsín introduced the "Austral" to replace the highly devalued peso).

Transition to the new currency will be at terms highly beneficial for those banks, companies, citizens, allies and other "preferred allies and friends" of the US who will get One New Dollar for each "old" dollar. Then, certain powerful holders of dollar-denominated instruments - cash, US Treasury Bills and Bonds, and the like - will be given some preferential treatment based on specific US geopolitical and geoeconomic interests such as, for example, the governments and interests of the European Union, Japan, maybe China, and specific institutions and global corporations who will be able to change their old dollars for New Dollars at acceptable rates of exchange, say 2, 3 or 4 old dollars for every New Dollar.

For the rest of dollar-holders - i.e., vast numbers of private investors in all parts of the world in countries in Latin America, Central Europe, the Muslim World, Africa, etc. - the US Government will simply say that their respective local markets will need to determine how many old dollars will buy a New Dollar, and that this will be governed by the market forces of supply and demand. We will then see currency traders of all shapes and sizes offering One New Dollar for every 8, 10, or 20 old dollars in the hands of desperate masses of people trying to get rid of those creased green-backed bits of paper of falling value.(5)

The immediate effect of this would be to further spread the socializing of US banking losses into emerging markets and weaker economies outside of the United States (i.e., New Dollar would allow the bankers to selectively export the US currency's inflationary erosion towards specific regions and segments of the world).

Plan C (i.e., addressing a high intensity crisis through geopolitical and miitary measures) - If the US authorities cannot resolve the crisis with financial, monetary and economic measures, and increasing internal social violence and political insecurity were to affect the US and its key allies, then the crisis will go into geopolitical and military mode. If an extended banking holiday is forced upon the Bush administration, freezing banking accounts, deposits, ATM machines (just like the "Corralito" - i.e., the "baby play pen" - that Argentina suffered starting 1st December 2001 generating unimaginable hardship to our country), this may later lead to trying to resolve the problem on a the international geopolitical stage by "kicking the chessboard".

This means escalating the overall conflict to political, diplomatic and military planes, fueling a generalized global war which New World Order planners seem to believe will allow them to use vast resources for war, placing the focus away from the on-going financial crisis. This will lead to imposing strict limitations on all civil liberties in the US and elsewhere, and even suspending the Constitution (We Argentines certainly know a lot about that too!).

"National Security" will be the blanket excuse at a time of grave internal emergency, and will be used to justify unilateral invasions of countries and regions in different parts of the world. In short, mobilizing the country and its allies in its material resources, whilst the collective psyche is coaxed on the need to "defend" the country against some elusive "enemy" (new or old terrorist organization suitably demonized). One of the results that would be sought would be to re-stabilize the economiy and financial system gearing it on a re-intensified military-industrial complex where the US has an unmatched position - foreign wars are always good to steer attention away from domestic troubles.

American Identity Under Siege...,

Car dealers are like canaries in a coalmine;
Hundreds of thousands of new cars and trucks that would have quickly made their way to people's driveways a year ago are now stacking up on dealer lots across the country, with potential buyers worried about whether they'll keep their jobs, be able to pay for gas, or qualify for a car loan.

For auto dealers already suffering under the worst U.S. sales downturn in 15 years, the increasing cost of the credit they use to keep inventory in their showrooms means every Ford Focus and Jeep Grand Cherokee with a sale sticker in the window is chipping away at dealers' razor-thin profit margins every day and threatening to send more of them out of business.

Like the banks that have been collapsing under the weight of the credit crunch, auto dealers are highly leveraged, making them some of its first victims, said Sheldon Sandler, founder of Bel Air Partners, a New Jersey-based firm that helps car dealers find options when they want out of the business.
But then we already knew that this hazard was around the signpost up ahead - though perhaps we expected to see its manifestations a few years down the line.
the story of the classless society is exemplified by the concept of a middle class — something Americans have proudly espoused — which he points out is held together by the common denominator of everyone owning a car. That's right, not education, not equal opportunity, or equal rights but the one-ton behemoth that we must have to get around the wasteful geography created by suburbia.

We know about this waste from the film The End of Suburbia and James Kunstler's Geography of Nowhere and all the other peak oil fellows, but Orlov points out that because we are so identified with owning a car as part of this American middle class identity we will be hard put to let it go. And when we are forced to (due to diminishing and increasingly expensive gasoline supplies) so will go the myth of the middle class.
Like every other aspect of this slow-motion collapse, except for those who it directly and immediately impacts, folks will watch this specific one without a clue about what it means and what it portends...,

Sunday, October 05, 2008

Bad Boys Bad Boys, What You Gonna Do?

In the Guardian, Pankaj Mishra asks whether a new president will change the crazy logic of American militarism?

[excerpts]
The Arab Mind, originally published in 1973, was the bible of neocon commentators in Washington and New York cheerleading the Bush administration's audacious venture: what Condoleezza Rice in the new book by Bob Woodward, The War Within: A Secret White House History 2006-2008 (Simon & Schuster), describes as shifting the "epicentre of American power" from Europe, where it had rested since the second world war, to the Middle East. Widely read in the US military, The Arab Mind later inspired the modus operandi of the jailers of Abu Ghraib.

Richard Armitage, assistant secretary of state and a relative moderate among the Bush administration's hawks, told Pakistani diplomats that the US would bomb their country "back to the stone age" if it did not withdraw its support for the Taliban.

The idea that the natives would recognise superior firepower when they saw it seemed to be validated by Pakistani acquiescence, followed by the Taliban's swift capitulation.

The habitual deceivers are often, in the end, the most deceived. According to Rashid, Pervez Musharraf's regime in Pakistan may have pulled off one of the biggest swindles in recent history by persuading the Bush administration to part with $10bn in exchange for mostly empty promises of support for its "war on terror". Most Pakistanis feel a mix of contempt and distrust for the US, which abandoned their country after enlisting it in a proxy war against the Soviet Union in Afghanistan. Confronted with a choice between regressing to the stone age and meeting crazy Uncle Sam's demands, Musharraf's regime adopted a policy of dissembling that the then foreign minister outlined as "First say yes, and later say but". Since 9/11, the Inter-Services Intelligence (ISI), Pakistan's rogue spy agency, which has long considered Afghanistan as its backyard, has continued to provide sanctuary and military support for the Taliban while occasionally arresting some al-Qaida militants to appease Washington. Mullah Omar and the original Afghan Taliban Shura, Rashid claims, are serenely resident in Pakistan's borderlands, along with "a plethora of Asian and Arab terrorist groups who are now expanding their reach into Europe and the United States".

Obscured by the American economy's slow-motion train wreck, the war on terror has already stumbled into its most treacherous phase with the invasion of fiercely nationalistic and nuclear-armed Pakistan.

Could smashing up Iran or invading Pakistan become the face-saving formula for the exponents of "shock and awe"? Certainly, they see US force impressing the Persian and the Pakistani mind as it apparently has the Arab mind. And such is the crazy logic of a wounded militarism that, notwithstanding its battered economy, the US may soon be embattled on many more fronts in what is already its most damaging war.

The Arab Mind

From Wikipedia;

The Arab Mind is a non-fiction cultural psychology book by Raphael Patai, who also wrote The Jewish Mind. It was first published in 1973, and later revised in 1983. An update (Patai has since died) is planned for 2007.

The book advocates a tribal group survival explanation for the driving factors behind Arab culture.

Criticism
According to Emram Qureshi, the book's methodology is "based on a fatally flawed set of assumptions -- most importantly, that there is one entirely homogenous Arab culture, derived from nomadic Bedouin culture. This ignores both the diversity and history of a people and civilization that extends across dozens of countries, from the Indian Ocean to the Atlantic, and the deeply rooted Arab culture of cities and agricultural communities."[1]

In his view the book is "emblematic of a bygone era of scholarship focused on the notion of a 'national character,' or personality archetype". According to Qureshi, Sondra Hale, a professor of anthropology and chair of the women's studies program at UCLA, sent him an e-mail in which she stated it can "no longer be taken seriously".

Patai is criticized in passing at several points in Edward Said's book Orientalism. Philip S. Golub calls it “a compendium of racist stereotypes and Eurocentric generalizations” which “has become the bible of the Bush administration’s leading neoconservative lights and ‘the most popular and widely read book on the Arabs in the U.S. military.’” The book is described as simplistic, reductionist, stereotyping, generic, essentialist, outdated, superseded, flawed, unscientific and even intellectually dishonest by other scholars.

Command for Africa Is Established by Pentagon

In February, we briefly attended to the establishment of Africom. At the time, no clear indication was given concerning the mission of this new U.S. military command, and, there was no African base or point of presence for the new command. It appears that nothing has changed in the intervening 8 months..., though for some reason, the NYTimes is carrying another story about the Pentagon's establishment of the command.
Last week, in a small Pentagon conference hall, Defense Secretary Robert M. Gates and Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, inaugurated the newest regional headquarters, Africa Command, which is responsible for coordinating American military affairs on the continent.

There are barely 2,000 American combat troops and combat support personnel based in Africa, and the new top officer, Gen. William E. Ward of the Army, pledges that Africa Command has no designs on creating vast, permanent concentrations of forces on the continent.

“Bases? Garrisons? It’s not about that,” General Ward said in an interview. “We are trying to prevent conflict, as opposed to having to react to a conflict.”

Already, though, analysts at policy advocacy organizations and research institutes are warning of a militarization of American foreign policy across Africa.
General Ward doesn't exactly clear up the confusion concerning his command's mission with the following mushy statement; “If we can bring a capability that can be an assist to one of our interagency partners, then I think we ought to do that,” General Ward said. “But I draw a distinction between leading that effort and supporting that effort. We don’t create policy. This is not the job of a unified command. We implement those aspects of policy that have military implications. And we support others.”

Dubai Feels Effects of Global Crisis

....as recession looms in the West, cracks are appearing in the oil-fueled boom that has made Dubai, with its futuristic skyscrapers on the turquoise waters of the Persian Gulf, a global byword for unfettered growth.

Banks are reining in lending, casting a pall over corporate finance and building plans. Oil prices have been dropping. Stock markets across the region have been falling since June. After insisting for days that the oil-rich Persian Gulf region was fully “insulated” from financial troubles abroad, the Emirates’ Central Bank made about $13.6 billion available on Sept. 22 to ease credit problems, in an echo of bailout measures in the United States. Already, some bankers are saying it is not enough.

Some of Dubai’s more extravagant building projects — the ever-bigger malls, islands and indoor ski slopes — are likely to be dropped if they do not already have financing lined up, bankers say. The credit crisis could also reduce demand from buyers, who will have a harder time getting mortgages.
More in this morning's NYTimes. Which, while making it clear that Dubai remains in an entirely enviable position vis-a-vis the resources at its disposal - also delineates how global economic interdependency spares no one.

Saturday, October 04, 2008

Day and Night and the Devil

AP Exclusive - U.S. won't put diplomats in Iran;

The Bush administration has shelved plans to set up a diplomatic outpost in Iran, in part over fears it could affect the U.S. presidential race or be interpreted as political meddling, The Associated Press has learned.

The proposal to send U.S. diplomats to Tehran for the first time in three decades attracted great attention when it was first floated seriously over the summer but has now been placed on indefinite hold as November's election nears and Iran continues to defy demands to halt suspect nuclear activities, officials told the AP.

Two administration officials familiar with the matter spoke on condition of anonymity to discuss internal administration deliberations on the sensitive subject.

The officials said a decision had been made to leave the decision to the next U.S. president because it could be seen as a reward for Iran's nuclear intransigence, especially when Iran policy has become a key part of the heated campaign between Democrat Barack Obama and Republican John McCain.

Obama has called for unconditional direct talks with the leaders of so-called rogue regimes like Iran and North Korea, assuming that groundwork laid by lower-level officials indicated that the top-level talks would be fruitful.

McCain has ridiculed the suggestion as naive.

Christ the Magician?

In Discovery News - Earliest Reference Describes Christ as 'Magician'

'By Christ the Magician' A bowl, dating to between the late 2nd century B.C. and the early 1st century A.D., is engraved with what may be the world's first known reference to Christ. The engraving reads, "DIA CHRSTOU O GOISTAIS," which has been interpreted to mean either, "by Christ the magician" or, "the magician by Christ." While not discounting the Jesus Christ interpretation, other researchers have offered different possible interpretations for the engraving, which was made on the thin-walled ceramic bowl after it was fired, since slip was removed during the process.

Bert Smith, a professor of classical archaeology and art at Oxford University, suggests the engraving might be a dedication, or present, made by a certain "Chrestos" belonging to a possible religious association called Ogoistais.

Klaus Hallof, director of the Institute of Greek inscriptions at the Berlin-Brandenburg Academy, added that if Smith's interpretation proves valid, the word "Ogoistais" could then be connected to known religious groups that worshipped early Greek and Egyptian gods and goddesses, such as Hermes, Athena and Isis.

Hallof additionally pointed out that historians working at around, or just after, the time of the bowl, such as Strabon and Pausanias, refer to the god "Osogo" or "Ogoa," so a variation of this might be what's on the bowl. It is even possible that the bowl refers to both Jesus Christ and Osogo.

Fabre concluded, "It should be remembered that in Alexandria, paganism, Judaism and Christianity never evolved in isolation. All of these forms of religion (evolved) magical practices that seduced both the humble members of the population and the most well-off classes."

"It was in Alexandria where new religious constructions were made to propose solutions to the problem of man, of God's world," he added. "Cults of Isis, mysteries of Mithra, and early Christianity bear witness to this."

Friday, October 03, 2008

The Devil We Know

CW: So what we see in Iraq now is America vs. Iran?

RB: See, I don’t think the Americans—including the press—are going to admit to themselves what’s happened in Iraq. When I mention things like the Iranians and that the Iraqis are building a pipeline that goes from Basra to Abadan, they look at me like where did you get that obscure fact? You can get that on the Internet. There are press statements. Or the fact that a lot of families of Shia members of parliament live in Iran. It’s sort of like relations with Canada. The Canadians are not going to let a group hostile to the United States set up in Ottawa or somewhere like that. It doesn’t mean [you] occupy Iran. It’s not worth it to Canada. We’re tied to the hip when it comes to national security. Canada’s not going to go to Vietnam and fight, or to Iraq, but that doesn’t mean that there’s not an enormous amount of influence from the United States over Canada, and Mexico. At the very least, that’s the kind of influence that Iran will insist on exercising over Iraq, and that’s to have a say of what goes on inside Iraqi borders, as well as economically.

CW: Wasn’t it understood before the war that the majority, that a lot of the politicians who were going to come to power in Iraq would be Shia, because America was going to insist on elections, and the Shia have a majority....

RB: No, I think they really truly thought there would be some sort of turnaround. Because it was Saddam that was forcing these ideas of nationalism, or pro-Palestinian [ideas], it was inconceivable that the average Iraqi would [actually] care about Palestine—fellow Arabs, fellow Sunni Arabs, at that. But once we got Saddam then everybody would turn around and say, yeah, alright, we want our iPods and we want to move into the 21st century in lockstep with the United States. And no, we’re not going to mind that the Americans are going to put permanent bases in Iraq. And start production-sharing agreements which have been rejected by everyone in the world. Basically the U.S. can’t understand that the Iraqis didn’t want to turn back the clock and accept a colonial relationship. It came truly as a surprise to Democrats and Republicans alike.

CW: Were you surprised?

RB: No! Why would you want to be occupied? Who wants to be occupied?

Excerpted from an enhanced interview with Robert Baer at The Walrus

Tremendous 38 minute interview of Baer on yesterday's Fresh Air.

Dynamics of Alliance Formation and the Egalitarian Revolution

Abstract/Full Article - Background
Arguably the most influential force in human history is the formation of social coalitions and alliances (i.e., long-lasting coalitions) and their impact on individual power. Understanding the dynamics of alliance formation and its consequences for biological, social, and cultural evolution is a formidable theoretical challenge. In most great ape species, coalitions occur at individual and group levels and among both kin and non-kin. Nonetheless, ape societies remain essentially hierarchical, and coalitions rarely weaken social inequality. In contrast, human hunter-gatherers show a remarkable tendency to egalitarianism, and human coalitions and alliances occur not only among individuals and groups, but also among groups of groups. These observations suggest that the evolutionary dynamics of human coalitions can only be understood in the context of social networks and cognitive evolution.

Methodology/Principal Findings
Here, we develop a stochastic model describing the emergence of networks of allies resulting from within-group competition for status or mates between individuals utilizing dyadic information. The model shows that alliances often emerge in a phase transition-like fashion if the group size, awareness, aggressiveness, and persuasiveness of individuals are large and the decay rate of individual affinities is small. With cultural inheritance of social networks, a single leveling alliance including all group members can emerge in several generations.

Conclusions/Significance
We propose a simple and flexible theoretical approach for studying the dynamics of alliance emergence applicable where game-theoretic methods are not practical. Our approach is both scalable and expandable. It is scalable in that it can be generalized to larger groups, or groups of groups. It is expandable in that it allows for inclusion of additional factors such as behavioral, genetic, social, and cultural features. Our results suggest that a rapid transition from a hierarchical society of great apes to an egalitarian society of hunter-gatherers (often referred to as “egalitarian revolution”) could indeed follow an increase in human cognitive abilities. The establishment of stable group-wide egalitarian alliances creates conditions promoting the origin of cultural norms favoring the group interests over those of individuals.

Intellectual Cleansing - Part I

Medialens - Keeping the Media safe for Big Business;

The professional, “is an obedient thinker, an intellectual property whom employers can trust to experiment, theorize, innovate and create safely within the confines of an assigned ideology. The political and intellectual timidity of today’s most highly educated employees is no accident.” (Jeff Schmidt, Disciplined Minds, Rowman & Littlefield Publishers, 2000, p.16)
In 1996, Noam Chomsky attempted to explain to an equally bemused Andrew Marr (then of the Independent):

Marr: “This is what I don’t get, because it suggests - I mean, I’m a journalist - people like me are ‘self-censoring’...”

Chomsky: “No - not self-censoring. There’s a filtering system that starts in kindergarten and goes all the way through and - it doesn’t work a hundred percent, but it’s pretty effective - it selects for obedience and subordination, and especially...”

Marr: “So, stroppy people won’t make it to positions of influence...”

Chomsky: “There’ll be ‘behaviour problems’ or... if you read applications to a graduate school, you see that people will tell you ‘he doesn’t get along too well with his colleagues’ - you know how to interpret those things.”

Chomsky’s key point:

“I’m sure you believe everything you’re saying. But what I’m saying is, if you believed something different you wouldn’t be sitting where you’re sitting.” The Big Idea, BBC2, February 14, 1996
The question of trust is crucial - employers must be able to rely on their human property to play by the rules....,

Thursday, October 02, 2008

The mortgage crisis and disease

Our world is interconnected in surprising and often hazardous ways. Birds, mosquitoes, viruses, cultural artifacts (swimming pools), climate (drought), urban landscape, adjustable rate mortgages, government regulation. What a tangled web we weave.

Consider the current mortgage crisis in the US:
Foreclosures are increasing West Nile virus dangers because of stagnant swimming pools behind abandoned homes.

The foul pools are breeding grounds for mosquitoes, which can pass West Nile to humans and horses. The spike in mosquitoes comes earlier than the usual summertime appearance of the pest.

The Greater Los Angeles County Vector Control District got 288 service requests last month, nearly double the 145 in May 2007. Agency spokeswoman Truc Dever says "all of the evidence is pointing to a very active West Nile season." (AP)
Adjustable rate mortgages and West Nile Virus infection
By examining service requests and using aerial surveys researchers from University of California - Davis and in the Kern County Vector Control District (KCVCD) discovered an extensive number of green or neglected pools that were producing mosquitoes:

The likely reasons for neglected pools are the adjustable rate mortgage and associated housing crises in Kern County and throughout California, which have led to increased house sales, notices of delinquency of payment, declarations of bankruptcy and home abandonment. Kern County was especially affected, with a 300% increase in notice of delinquency than in the spring quarters of 2006-2007. Associated with home abandonment was the expanding number of neglected swimming pools, Jacuzzis (hot tubs), and ornamental ponds. As chemicals deteriorated, invasive algal blooms created green swimming pools that were exploited rapidly by urban mosquitoes, thereby establishing a myriad of larval habitats within suburban neighborhoods that were difficult to locate from the ground.
As the crash progresses, you can anticipate malaria and other diseases that formerly plagued Americans to recur with increased frequency.

Not One Dime!

For nearly a year, we have been asking ourselves why the investors and foreign banks that bought up hundreds of billions of dollars of worthless mortgage-backed securities (MBS) from US investment banks have not taken legal action against these same banks or initiated a boycott of US financial products to prevent more people from getting ripped off?

Now we know the answer. It's because, behind the scenes, Henry Paulson and Co. were working out a deal to dump the whole trillion dollar mess on the US taxpayer. That's what this whole $700 billion boondoggle is all about; wiping out the massive debts that were generated in the biggest incident of fraud in history. Rep Brad Sherman explained it like this last night to Larry Kudlow:

"It (The bill) provides hundreds of billions of dollars of bailouts to foreign investors. It provides no real control of Paulson's power. There is a critique board but not really a board that can step in and change what he does. It's a $700 billion program run by a part-time temporary employee and there is no limit on million dollar a month salaries....... It's very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn't owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can't buy it. It was rejected.

(more)

Wednesday, October 01, 2008

InterBank Trust Subsystem

The liquidity shutdown is due to banks not knowing both the exposure and the real value of assets such as mortgage backed securities on other bank's books.

In effect, Bank A. doesn't know if Bank B. can pay back a loan, thus A. won't lend to B. and interbank lending is at a standstill. This imperils credit flow through the entire economy.

This is why there is now a credit crisis.

To solve this, one need only establish a transparent market in the securities (such as mortgage backed securities) whose real value is currently unknown - and - to specify how many such securities are held by each bank.


This can be done by rebundling them into standard classes and requiring them to be reported transparently on a bank's balance sheets, and then setting up a transparent PUBLIC market in these securities.

When this is done the market will quickly determine the actual value of these securities and in so doing the actual value of every bank's assets will become known. This will enable banks to know who they can and can't lend to, at what rates, and on that basis banks can begin lending to other banks freely again.

When this happens a few banks will fail, most will take write downs but every bank's financial position will become clear as investors will buy and sell these assets at their actual market values. There is more than enough capital (most sitting on the sidelines now) willing to invest in mortgage backed securities at their actual market prices. Most mortgage backed securities are not worthless, just worth somewhat less than their original value. After all most are not in default and the houses that back them all still exist and have value, a value that could eventually increase again if the situation is proactively and intelligently managed.

The InterBank Trust Subsystem would get credit flowing through the entire economy again and the current crisis would be resolved. Very obviously, this simple solution will not be implemented because there is a tremendous degree of institutional dishonesty and concommitant institutional secrecy.

Frosting the Turds.....,

The new bailout pitch:
The Bush administration is searching for a new way to sell its financial rescue plan after acknowledging some blunders and missteps in presenting it the first time around. One big key: Insist it's not a Wall Street "bailout."

Now it's not about financial institutions. The focus has switched to everyday Americans. And it's not an expenditure of taxpayer money, it's an "investment."

This was clearly evident in Bush's grim warnings on Tuesday of "economic hardship for millions" if the plan can't be revived. He declared, "For the financial security of every American, Congress must act."

This emphasis was echoed on the presidential campaign trail.

"Let's not call it a bailout. Let's call it a rescue," said Republican John McCain.

Democratic rival Barack Obama said, "This is no longer just a Wall Street crisis — it's an American crisis, and it's the American economy that needs this rescue plan."

House Speaker Nancy Pelosi's take: Its not a bailout but "a buy in, so that we can turn our economy around."

Bush, McCain, Obama and top congressional leaders agree the plan — which would nationalize large numbers of bad mortgages and securities tied to them — is needed to unclog the nation's financial arteries.

But it proved extremely unpopular across the country and was rejected on Monday in the House, a stunning setback to the administration that led to a dizzying 778-point plunge in the Dow Jones industrials. The Dow bounced back 485 on Tuesday amid word of efforts to salvage the plan.

Language seemed to matter.
You know we're in trouble when a fresh set of "turd frosting" talking points goes into broad circulation. At the end of the day, no matter how heavily its frosted, it'll never be good, or good for you...,

Trojan Horses in the Bailout Proposal

Pam Martens delineates some of the malicious code embedded in the proposal;
But the most duplicitous and frightening aspect of the plan, as always, was to found, buried in the back of the document, located there in the hopes everyone would have fallen asleep from the legalese before they made it that far. There’s the innocuous sounding Section 128, which was in both the original and amended versions, and says simply:

“Section 203 of the Financial Services Regulatory Relief Act of 2006 (12 U.S.C. 461 note) is amended by striking ‘October 1, 2011’ and inserting ‘October 1, 2008.’”

What would this effectively do? It was intended to speed up the enactment of this section of the law from 2011 to this week.

And what is the impact of the change in this law? (Take a moment to let this sink in.) This wonderful bipartisan bailout proposal, negotiated into the wee hours of the morning by sleep-deprived members of Congress was designed to come with a furtive Trojan Horse embedded by Wall Street lawyers. Banks already in trouble for lack of capital would get to hold as little as “zero” capital for transactions.

But it does solve one giant mystery. All of Wall Street has been attempting to understand why firms like Goldman Sachs and Morgan Stanley, who have concentrated on mergers, acquisitions, stock and bond underwriting for more a cumulative 212 years, decided in a heartbeat to enter the bean counter world of retail banking and transform into bank holding companies. (That’s like asking General Motors to retool overnight for washing machines.) Now we know. Effective this week, if this bailout proposal would have passed in its current form, these firms would have had a new best friend at the Fed that was going to let them hold zero reserves for transactions. No wonder the stock of both firms sold off yesterday when Congress rejected the plan: Goldman closed down 12 per cent; Morgan down 15 per cent.

The Trojan Horse in the bailout plan also solves the mystery of how loss-riddled, serially corrupt Citigroup, now run by the former head of a hedge fund, was allowed by the FDIC yesterday to buy $400 Billion in deposits from Wachovia, giving this crippled global tyrant 30 per cent of insured bank deposits in America.

People not Banks

At Time.com - Let Risk-Taking Financial Institutions Fail - The Administration and Congress have felt compelled to do something about the "financial meltdown," so an inefficient and inequitable "bailout plan" has been rushed through the legislature despite harsh criticism from the right and left. That's unfortunate. Both presidential candidates were stalling by qualifying the plan. Whichever candidate had had the courage to reject outright this proposal would have had the better claim to be President.

Do not be fooled. The $700 billion (ultimately $1 trillion or more) bailout is not predominantly for mortgages and homeowners. Instead, the bailout is for mortgage-backed securities. In fact, some versions of these instruments are imaginary derivatives. These claims overlap on the same types of mortgages. Many financial institutions wrote claims over the same mortgages, and these are the majority of claims that have "gone bad."

At this point, such claims have no bearing on the mortgage or housing crisis; they have bearing only on the holders of these securities themselves. These are ridiculously risky claims with little value for society. It is as if many financial institutions sold "earthquake insurance" on the same house: when the quake hits, all these claims become close to worthless — but the claims are simply bets disconnected from reality.

Follow the money. Average Joes and Janes are not the holders of the other side of complicated, over-the-counter derivatives contracts. Rather, hedge funds are the main holders. The bailout will involve a transfer of wealth — from the American people to financial institutions engaging in reckless speculation — that will be the greatest in history.

Rescuing financial institutions is not the best solution. Yes, banks are needed to provide capital to businesses. But it is not necessary to spend $1 trillion to maintain liquidity. If the government is to intervene, it should pick and choose which claims to purchase; claims that are directly tied to mortgages would be a good start.