Dismantle Civilisation

A few hours ago, the US House of Representatives voted down the proposed $700bn bailout package, sending the Stock Markets into freefall:

The Dow Jones index lost 770 points – 6.9% – its biggest one-day point drop yet as Congress surprised observers by not backing the rescue plan.

Meanwhile the Nasdaq index fell 9.1% and London’s key market lost 5.3%.

Confidence had already been smashed by the rescue of US bank Wachovia and Bradford and Bingley’s nationalisation.

The Dow Jones closed at 10,365.4 points after the bail-out result threw efforts to calm the US financial crisis into disarray. The tech-heavy Nasdaq ended down 200 points at 1,983.7.

Analysts said that until there was certainty over the future of the bail-out bill, there would be tremendous unease.

It is becoming steadily more likely that there could be a run on the dollar, pushing it into hyperinflation and causing a global economic collapse. And that’s even before mentioning the Derivatives bubble, which lies behind much of this chaos and the desperation for this bailout:

Until recently, most people had never even heard of derivatives; but in terms of money traded, these investments represent the biggest financial market in the world. Derivatives are financial instruments that have no intrinsic value but derive their value from something else. Basically, they are just bets. You can “hedge your bet” that something you own will go up by placing a side bet that it will go down. “Hedge funds” hedge bets in the derivatives market. Bets can be placed on anything, from the price of tea in China to the movements of specific markets.

“The point everyone misses,” wrote economist Robert Chapman a decade ago, “is that buying derivatives is not investing. It is gambling, insurance and high stakes bookmaking. Derivatives create nothing.”1 They not only create nothing, but they serve to enrich non-producers at the expense of the people who do create real goods and services. In congressional hearings in the early 1990s, derivatives trading was challenged as being an illegal form of gambling. But the practice was legitimized by Fed Chairman Alan Greenspan, who not only lent legal and regulatory support to the trade but actively promoted derivatives as a way to improve “risk management.” Partly, this was to boost the flagging profits of the banks; and at the larger banks and dealers, it worked. But the cost was an increase in risk to the financial system as a whole.2

Since then, derivative trades have grown exponentially, until now they are larger than the entire global economy. The Bank for International Settlements recently reported that total derivatives trades exceeded one quadrillion dollars – that’s 1,000 trillion dollars.3 How is that figure even possible? The gross domestic product of all the countries in the world is only about 60 trillion dollars. The answer is that gamblers can bet as much as they want. They can bet money they don’t have, and that is where the huge increase in risk comes in.

The whole rotten system is beginning to unravel, the whole economy of debt that has funded civilisation is imploding. As I said in a previous post, it is time to sieze back the economic system and base it again in local, zero-growth principles. But the scale of this upcoming collapse if the derivitives bubble does collapse is so large that I would also reccomend being as prepared as you can to survive some turbulent months – stock up on food, water purification systems, seeds etc. This could be pretty big when it goes off, and it’s our job to survive, adapt and thrive.

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Richard Heinberg at Post Carbon Institute.

Ever since Hank Paulson made his pitch for a $700 billion slush fund to prop up teetering Wall Street financial institutions, the wails from thousands of American advocacy groups have reached an ear-splitting fortissimo.

Most of these groups have spent decades working patiently to influence one or another line item in the Federal budget amounting to a few tens or hundreds of millions of dollars—money for education, environmental protection, public transportation, or health care. Many of these organizations are working to avert what they perceive to be a national calamity of one sort or another.

And now King Henry waltzes in, announces that the bankers have gotten themselves into a bit of a bind as a result of their own greed and stupidity, and insists that each American taxpayer immediately take out a loan for over $2,500 so that he can distribute the funds secretly, with no oversight, to a bunch of financial wizards who typically make several thousand a minute in salaries and bonuses–wizards who introduced us to the wonders of derivatives and adjustable-rate mortgages.

Sounds like a great plan to me. Why would anyone balk? Just think of the futility of spending a few billion of that treasure on things like building bridges or railroads, projects that might actually hire real workers, when we can instead buy up mountains of toxic debt from a bunch of bankrupt hucksters. Now that’s a real investment in our future!

Sorry for the sarcasm. It’s hard to resist. I’ll try to ratchet it down as I explain just what $700 billion means in terms of our nation’s energy infrastructure. America has about 130 million private homes, so that’s about $5,400 per home—not quite enough to put a one-kilowatt photovoltaic system on every roof. I use that as a standard, because that’s what my wife and I have on our own house, and it basically zeros out our electricity bill for the year.

Of course, that wouldn’t be the most practical energy use of the money: not every house is appropriate for solar. So throw in a few hundred wind turbines instead, along with a few billion dollars for research into energy storage technologies. One way or another, the country would be well on its way toward ending its dependence on fossil fuels.

Realistically, another few trillion would be needed to finish the job by rebuilding the grid (which desperately needs it) as well as the transport infrastructure. But most or all of that larger installment would come from industry, given the appropriate incentives and regulatory structures.

Everyone who understands energy, who grasps that oil is in its final days and that other fossil fuels are dribbling away too, who sees the vital necessity of ending carbon emissions given the climate cataclysm we face, or who worries about the ongoing geopolitical turmoil generated by competition for access to increasingly expensive oil and gas, agrees that the energy transition away from fossil fuels is the highest survival priority for our species at this moment in our history. But evidently there are those who see a greater need elsewhere.

Oh well, it’s only money.

Exactly our thoughts. At a time when society needs a complete redesign, away from carbon/globalisation/empire and towards sustainable and local. 700 billion dollars would help this alot, but its going to a load of old banksters!

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Carolyn Baker reprinted from Mohawk Nation News.

Who would have thought that artificial economies and their worthless paper currencies, based on theft of Indigenous resources, would come tumbling down? Greed and oppression can’t go on forever. These foreigners have been wheeling and dealing with goods stolen from us. Remember, they came here with nothing! Every inch of Onowaregeh, Turtle Island, they stand on is unsurrendered Indigenous territory. We are the caretakers. We will never give it up.

These colonial money grubbers never treated us right. They killed, hurt and weakened us and then took advantage of us. It looks like payback time. Nature is getting even. The natural order has to be restored. The people have to face up to what they’ve done or allowed to be done. The rape and pillaging of our mother earth has to stop. She has to be cared for.

Yes, it looks like we Indigenous will have to hang onto our hats and ride out the storm. We are still the trustees of everything over, on and beneath the land. We still have our lives. We still have our families. We still have the future generations to look out for. These rapacious thieves did not take care of mother earth as we did. They plundered her for instant pleasure and then moved on without thinking of the future. The colonists think they have to “conquer” nature and its caretakers, us. What are they afraid of?

The European throngs swarmed to our territory for deceptive ends. The so-called “conquest” of the “New World” was a European concoction. These pirates embezzled the “ownership” our property and forced people into slavery to work for them for next to nothing. Onowaregeh was occupied and ruined by a class of white European men who set up an individualistic capitalist exploitation system. Even when they charged over here for the “gold rush”, they had no concept of leaving anything for the future generations, or even of sharing with anybody.

The few elite made products with our resources, sold it and set up banking and monetary systems that were backed by the gun. Their highest ideals were racism, individualism, greed, grabbing other people’s property and accumulating more wealth than they needed. The driving feature is that the white race is superior and could enslave and kill Indigenous people. The lower order “settlers” were infected as well. They have a similar mentality of exploitation and victimization. Anyone who came here could grab our land and make a homestead. Today settler society is divided between the “parasites” and those who worked for them.

Developers have been putting up our unceded territories as collateral on the stock exchanges to raise billions of dollars from the public. This is fraud. The U.S. economic system is based on stolen Indigenous goods, lands and resources to prop up its ailing dollar. Countries worldwide accepted the U.S. dollar as the international currency. Now they have to work together to keep this whole fake economic engine going. If they bring it down it will bring chaos to them.

Their economic fantasy is that they think they can endlessly put value in the circulatory process they’ve created. They steal everything, create nothing and sell it to each other. The U.S. and Canadian production bases have been totally eroded. The reality is that you can’t consume what you don’t produce. The colonial entities have to take what they need through force, like oil from the Middle East. The dollar has to be back with armed force to steal other people’s resources.

It’s all inter-connected. The corporations sell ‘air’ at inflated prices, paid for with worthless paper money based on “faith”. Wall Street is based on greed, investing money and watching markets here and there. The U.S. government looks desperate. They fear their delusional bubble will burst. The oligarchs have made an exit plan to run away with suitcases of money. When the Russian Czar’s regime went down in the early 1900s, people fled with cash that was later worthless. The Wall Street oligarchs have an army to cover their tracks.

Despite the propaganda, the people are going to be alright. It can always get worse. The deprivation can go to a deep dark end. We need to resist their dire threats of medieval retrogression to torture chambers, burnings, hanging, drawing and quartering and impaling. It doesn’t have to happen.

Now the U.S. government is going to take money from the taxpayers and give it to the bankers who caused the problems in the first place. When the people go to the bank to borrow money they will be told, “There’s no money. We had to give it to our banker friends.” The U.S. visible and invisible government is trying to control all the land and housing.

Instead of charging them with criminal acts of treason and conspiracy, the buy-out is going to the head gangsters. The drafter of the buy-out is U.S. Secretary of the Treasury, Henry Paulsen, who worked for Goldman and Sachs on Wall Street for 35 years. According to the package, once he gets the money, he is not accountable. He is beyond all courts and legislation. This is a reversion to the “divine right of kings”. They want total control over society, a “coup d’etat”.

The “wrecking ball” scenario is based on fear, intimidation and blackmail.
The 3rd Infantry Division of the 1st Brigade Combat Team is being brought back to the U.S. from Iraq in case there’s a public “fall out”. John McCain suspended his election campaign. Next the constitution will be suspended. The election could be pulled. There will be no discussion or debate. An immediate decision on the package is being forced to serve the needs of the oligarchic ruling elite.

The U.S. is the leading imperialist. Presently with outsourcing, unemployment, housing foreclosures and economic and social problems the base for consumption is getting narrow. The industrial base is shrinking. Its main production is military weapons, armaments and surveillance equipment. Scientific and technological research is aimed at creating more lethal weapons to kill innocent unarmed people.

The second seller is high end luxury goods to a narrow elite market. The basic necessities of the majority is neglected more and more. The economy is being hallowed out through impoverishment and ruination of people. Other states are still tied to the U.S. monster. They are making new arrangements to separate themselves from this world crisis.

The public is crying out for major change to end the colonial racist greedy system. They have to look at Indigenous culture and harmonize their society with ours to survive. They need to renew all their arrangements with us to live, think and govern themselves so that the parasites are pushed aside. Sacrifices are necessary or humanity will destroy itself.

There is another world, a world of resistance. Our fate rests in our own humble hands. Indigenous people have survived. We kept our philosophy, our notions of governance, our duties to mother earth and our way of life which was terribly damaged. We have been able to resuscitate it and bring it back to a healthy life. We all have our strengths. We have an enormous evolved consciousness. People are beginning to see through this capitalist fraud.

Do U.S. President George Bush, Republican candidate John McCain and Democratic candidate Barack Obama want to really re-arrange the economy and society on a new basis? Do they want to dig up the roots of the colonial past and harmonize relations with the Indigenous people and mother earth?

Throughout, the colonists and their banker backers thought they could just ride rough shod over us while they devastated the planet. We are still here because we always resisted.

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Walden Bello, Foreign Policy in Focus.

Many on Wall Street and the rest of us are still digesting the momentous events of the last 10 days. Between one and three trillion dollars worth of financial assets have evaporated. Wall Street has been effectively nationalized. The Federal Reserve and the Treasury Department are making all the major strategic decisions in the financial sector and, with the rescue of the American International Group (AIG), the U.S. government now runs the world’s biggest insurance company. At $700 billion, the biggest bailout since the Great Depression is being desperately cobbled together to save the global financial system.

The usual explanations no longer suffice. Extraordinary events demand extraordinary explanations. But first…

Is the worst over?

No. If anything is clear from the contradictory moves of the last week — allowing Lehman Brothers to collapse while taking over AIG, and engineering Bank of America’s takeover of Merrill Lynch — there’s no strategy to deal with the crisis, just tactical responses. It’s like the fire department’s response to a conflagration.

The $700 billion buyout of banks’ bad mortgaged-backed securities is mainly a desperate effort to shore up confidence in the system, preventing the erosion of trust in the banks and other financial institutions and avoiding a massive bank run such as the one that triggered the Great Depression of 1929.

Did greed cause the collapse of global capitalism’s nerve center?

Good old-fashioned greed certainly played a part. This is what Klaus Schwab, the organizer of the World Economic Forum, the yearly global elite jamboree in the Swiss Alps, meant when he said in an interview earlier this year: “We have to pay for the sins of the past.”

Was this a case of Wall Street outsmarting itself?

Definitely. Financial speculators outsmarted themselves by creating more and more complex financial contracts like derivatives that would securitize and make money from all forms of risk — including such exotic futures instruments as “credit default swaps” that enable investors to bet on the odds that the banks’ own corporate borrowers would not be able to pay their debts! This is the unregulated multi-trillion dollar trade that brought down AIG.

On December 17, 2005, when International Financing Review (IFR) announced its 2005 Annual Awards — one of the securities industry’s most prestigious awards programs — it had this to say: “[Lehman Brothers] not only maintained its overall market presence, but also led the charge into the preferred space by…developing new products and tailoring transactions to fit borrowers’ needs…Lehman Brothers is the most innovative in the preferred space, just doing things you won’t see elsewhere.”

No comment.

Was it lack of regulation?

Yes. Everyone acknowledges by now that Wall Street’s capacity to innovate and turn out more and more sophisticated financial instruments had run far ahead of government’s regulatory capability. This wasn’t because the government was incapable of regulating but because the dominant neoliberal, laissez-faire attitude prevented government from devising effective regulatory mechanisms.

But isn’t there something more that is happening?

We’re seeing the intensification of one of the central crises or contradictions of global capitalism: the crisis of overproduction, also known as overaccumulation or overcapacity.

In other words, capitalism has a tendency to build up tremendous productive capacity that outruns the population’s capacity to consume owing to social inequalities that limit popular purchasing power, thus eroding profitability.

But what does the crisis of overproduction have to do with recent events?

Plenty. But to understand the connections, we must go back in time to the so-called Golden Age of Contemporary Capitalism, the period from 1945 to 1975.

This was a time of rapid growth both in the center economies and in the underdeveloped economies — one that was partly triggered by the massive reconstruction of Europe and East Asia after the devastation of World War II, and partly by the new socio-economic arrangements institutionalized under the new Keynesian state. Key among the latter were strong state controls over market activity, aggressive use of fiscal and monetary policy to minimize inflation and recession, and a regime of relatively high wages to stimulate and maintain demand.

So what went wrong?

This period of high growth came to an end in the mid-1970s, when the center economies were seized by stagflation, meaning the coexistence of low growth with high inflation, which wasn’t supposed to happen under neoclassical economics.

Stagflation, however, was but a symptom of a deeper cause: the reconstruction of Germany and Japan and the rapid growth of industrializing economies like Brazil, Taiwan, and South Korea added tremendous new productive capacity and increased global competition. Meanwhile social inequality within countries and between countries globally limited the growth of purchasing power and demand, thus eroding profitability. The massive increase in the price of oil aggravated this trend in the 1970s.

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By J. R. Nyquist at FinancialSense.com

ur wretched economy of false valuations cannot continue much longer. It is the domestic counterpart of President Bush’s past friendship with Vladimir Putin. It is the fantasy world of an everlasting bull market and “successful” government bailouts. The political leadership in America has demonstrated that it doesn’t understand economics. They cannot solve the present crisis unless they go back to school and consult the wisdom they have so long neglected. They have built their post- Cold War world on a false boom, on false “partnerships” with enemies. They have pe rmitted a policy of credit expansion without end.

“Credit expansion,” wrote the Austrian economist Ludwig von Mises, “is the governments’ foremost tool in their struggle against the market economy. In their hands it is the magic wand designed to conjure away the scarcity of capital goods … and to make everybody prosperous.” But everyone cannot be prosperous. The boom created by credit expansion cannot last. This is what the leaders of the United States have missed. “The inescapable consequences of credit expansion,” wrote Mises, “are shown by the theory of the trade cycle. Even those economists who still refuse to acknowledge the correctness of the … credit theory of the cyclical fluctuations of business have never dared to question the conclusiveness and irrefutability of what this theory asserts with regard to the necessary effects of credit expansion.”

And what are these effects?

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By Tara Lohan, on Alternet.

Can anyone really own water? That was the questions that got French filmmaker Irena Salina inspired to take on a mammoth project — chronicling the global water crisis and solutions — from privatization to politics to pollution.

Her creation, the award-winning film “FLOW: For Love of Water,” was a Sundance hit and now is making its theatrical debut in theaters across the country. Her film includes interviews with some of the world’s leading activists, scientists and policy makers. But it also looks at how everyday people are affected around the world — from the United States to South Africa to India and the growing network of grassroots activists that are coming together.

While the film is alarming, it is also empowering.

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Sharon Astyk peels the onion to ask ‘what are the real problems?’

I’m going to suggest that if you peel off the layers of the financial crisis, we’re going to find some pretty basic things. And one of the basic things is, well, food. It seems sort of anti-climactic, I think, if you are a pundit, to talk about the cost of rice and soybean oil as part of the root problem of such a massive financial crisis, but I suspect we’ll find it there. And underneath the food, I think we’ll find oil.

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Some thoughts by Paul Chefurka

Introduction

One of the more contentious bun fights among environmental and ecological activists is over the role of overpopulation in the anthropogenic deterioration of the natural world. The debate coalesces loosely into two opposing camps: the overpopulation camp and the overconsumption camp.

The former insists that raw human numbers play a decisive role in the growing ecological damage. As evidence, the adherents point to the parallel curves of energy consumption, waste generation, resource depletion and population growth. They argue that aggregate human activity is responsible for much of the damage, and that a reduction in population would automatically result in both less ongoing damage and a greater opportunity for the Earth’s systems to heal themselves.

On the other side of the coin are those who locate the problem in our consumption habits. They point to the relative consumption patterns of industrialized and developing nations (where an American consumes 30 times as much of the world’s resources as a Bangladeshi), and argue that restraint in consumption trumps restraint in population growth.

Those who argue that overconsumption is more damaging have an easier time making their case. The evidence is intuitively obvious from the amount of resource use and waste generation in rich, industrialized countries. Even when these countries have very low (or even negative) rates of population growth, their overall consumption and waste production tends to grow. This situation supports the vehement insistence of low-consumption countries with higher levels of population growth that the rich nations must address their own consumption before insisting on population curbs.

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The Insanity of the $700 Billion Giveaway

By MICHAEL HUDSON

The banksters’ plan now is for icing on the cake – to take Mr. Paulson’s $700 billion and run. It’s not a “bailout of the financial system.” It’s as giveaway – to insiders, to sell out all their bad bets. Companies across the board will get rid of their bad mortgages, and also their bad car loans, furniture time payments, credit-card loans, student loans – all the debts that any competent actuary could have told them never could have been paid in the first place.

This is not what Treasury Secretary Paulson is acknowledging, and shame on him for it. Last Friday, Sept., he was joined by Fed Chairman Ben Bernanke singing in unison an advertising jingle for America’s new kleptocracy that rings so false that Congress and the American public must hear the off-notes. London’s Financial Times, as well as a host of Europeans realize it. That is what has been driving the dollar’s exchange rate this week. It seems easier for foreigners to recognize the threat to turn American democracy into a rapacious kleptocracy.

This change always is sudden, arranged under emergency conditions. Those with a 12-year memory will see George Bush as playing the role of Boris Yeltsin in Russia in 1996, paying off his campaign contributors by giving them all the economic surplus that the government could expropriate in the notorious “loans for shares” plan applauded and supported by Clinton Treasury Secretary (and current Obama advisor) Robert Rubin. (The moral: do we have a Putin in our near future to lock in the anti-democratic coup?)

Who really won the cold war?

How ironic all this is! Back in the 1970s there was theorizing that the Russian and American economies were converging. The idea was that both were moving toward more centralized state control, state financing, state subsidy, and a military-industrial complex. Nobody expected the convergence to occur Yeltsin-style in government giveaways to insiders to create a new group of financial billionaires – the “seven bankers” under Yeltsin in 1996, and Mr. Paulson’s Crony Capitalist gang today.

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Charles Hugh Smith at his blog, Of Two Minds

Not so fast. Betrayal of trust is a most serious offense; once our trust has been violated, most of us can never ever trust that person/institution again; and the rehabilitation process, if rehabilitation is even possible, takes many years, or even decades.

Hey, forgive and forget. Let’s move on, people, and start trusting the very banks and institutions which created, aided and abetted a debt and credit bubble of astounding, unprecedented size and reach.

Have you ever been betrayed? Were you ready to trust the person who betrayed you a week later? The world can no longer trust the U.S. financial sector, and with good reason–and neither can U.S. citizens.

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