Showing posts with label Monopoly Capitalism. Show all posts
Showing posts with label Monopoly Capitalism. Show all posts

10 March 2009

Barbara Ehrenreich & Bill Fletcher Jr. : Reimagining Socialism

Graphic from The Yellow Brick Road.

Rising to the Occasion: Reimagining Socialism
We see a tremendous opportunity in the bleak fact that millions of Americans have been rendered redundant by the capitalist economy and are free to dedicate their considerable talents to creating a more just and sustainable alternative.
By Barbara Ehrenreich and Bill Fletcher Jr.

[This article appears in the March 13, 2009, edition of The Nation. The editors of The Nation preface it as follows: "Socialism's all the rage. 'We Are All Socialists Now,' Newsweek declares. As the right wing tells it, we're already living in the U.S.S.A. But what do self-identified socialists... have to say about the global economic crisis?]

If you haven't heard socialists doing much crowing over the fall of capitalism, it isn't just because there aren't enough of us to make an audible crowing sound. We, as much as anyone on Wall Street in, say, 2006, appreciate the resilience of American capitalism--its ability to regroup and find fresh avenues for growth, as it did after the depressions of 1877, 1893 and the 1930s. In fact, The Communist Manifesto can be read not only as an indictment of capitalism but as a breathless paean to its dynamism. And we all know the joke about the Marxist economist who successfully predicted eleven out of the last three recessions.

But this time the patient may not get up from the table, no matter how many times the electroshock paddles of "stimulus" are applied. We seem to have entered the death spiral where rising unemployment leads to reduced consumption and hence to greater unemployment. Any schadenfreude we might be tempted to feel as executives lose their corporate jets and the erstwhile Masters of the Universe wipe egg from their faces is quickly dashed by the ever more vivid suffering around us. Food pantries and shelters can no longer keep up with the demand; millions face old age without pensions and with their savings gutted; we personally are consumed with anxiety about the future that awaits our children and grandchildren.

Besides, it wasn't supposed to happen this way. There was supposed to be a revolution, remember? The socialist idea, prediction, faith or whatever was that capitalism would fall when people got tired of trying to live on the crumbs that fall from the chins of the rich and rose up in some fashion--preferably inclusively, democratically and nonviolently--and seized the wealth for themselves. Such a seizure would have looked nothing like "nationalization" as currently discussed, in which public wealth flows into the private sector with little or no change in the elites that control it or in the way the control is exercised. Our expectation as socialists was that the huge amount of organizing required for revolutionary change would create an infrastructure for governance, built out of--among other puzzle pieces--unions, community organizations, advocacy groups and new organizations of the unemployed and nouveau poor.

It was also supposed to be a simple matter for the masses to take over or "seize" the physical infrastructure of industrial capitalism--the "means of production"--and start putting it to work for the common good. But much of the means of production has fled overseas--to China, for example, that bastion of authoritarian capitalism. When we look around our increasingly shuttered landscape and survey the ruins of finance capitalism, we see bank upon bank, realty and mortgage companies, title companies, insurance companies, credit-rating agencies and call centers, but not enough enterprises making anything we could actually use, like food or pharmaceuticals. In recent years, capitalism has become increasingly and almost mystically abstract. Outside manufacturing and the service sector, fewer and fewer people could explain to their children what they did for a living. The brightest students went into finance, not physics. The biggest urban buildings housed cubicles and computer screens, not assembly lines, laboratories, studios or classrooms. Even our flagship industry, manufacturing autos, would require major retooling to make something we could use--not more cars, let alone more SUVs, but more windmills, buses and trains.

What is most galling, from a socialist perspective, is the dawning notion that capitalism may be leaving us with less than it found on this planet, about 400 years ago, when the capitalist mode of production began to take off. Marx imagined that industrial capitalism had potentially solved the age-old problem of scarcity and that there was plenty to go around if only it was equitably distributed. But industrial capitalism--with some help from industrial communism--has brought about a level of environmental destruction that threatens our species along with countless others. The climate is warming, the oil supply is peaking, the deserts are advancing and the seas are rising and contain fewer and fewer fish for us to eat. You don't have to be a freaky doomster to see that extinction may be what's next on the agenda.

In this situation, with both long-term biological and day-to-day economic survival in doubt, the only relevant question is: do we have a plan, people? Can we see our way out of this and into a just, democratic, sustainable (add your own favorite adjectives) future?

Let's just put it right out on the table: we don't. At least we don't have some blueprint on how to organize society ready to whip out of our pockets. Lest this sound negligent on our part, we should explain that socialism was an idea about how to rearrange ownership and distribution and, to an extent, governance. It assumed that there was a lot worth owning and distributing; it did not imagine having to come up with an entirely new and environmentally sustainable way of life. Furthermore, the history of socialism has been disfigured by too many cadres who had a perfect plan, if only they could win the next debate, carry out a coup or get enough people to fall into line behind them.

But we do understand--and this is one of the things that make us "socialists"--that the absence of a plan, or at least some sort of deliberative process for figuring out what to do, is no longer an option. The great promise of capitalism, as first suggested by Adam Smith and recently enshrined in "market fundamentalism," was that we didn't have to figure anything out, because the market would take care of everything for us. Instead of promoting self-reliance, this version of free enterprise fostered passivity in the face of that inscrutable deity, the Market. Deregulate, let wages fall to their "natural" level, turn what remains of government into an endless source of bounty for contractors--whee! Well, that hasn't worked, and the core idea of socialism still stands: that people can get together and figure out how to solve their problems, or at least a lot of their problems, collectively. That we--not the market or the capitalists or some elite group of über-planners--have to control our own destiny.

We admit: we don't even have a plan for the deliberative process that we know has to replace the anarchic madness of capitalism. Yes, we have some notion of how it should work, based on our experiences with the civil rights movement, the women's movement and the labor movement, as well as with countless cooperative enterprises. This notion centers on what we still call "participatory democracy," in which all voices are heard and all people equally respected. But we have no precise models of participatory democracy on the scale that is currently called for, involving hundreds of millions, and potentially billions, of participants at a time.

What might this look like? There are some intriguing models to study, like the Brazilian Workers Party's famous experiments in developing a participatory budget in Porto Alegre. Z Magazine founder Michael Albert developed a detailed approach to mass-based planning that he calls participatory economics, or "parecon," and one of us (Fletcher, in his book Solidarity Divided, written with Fernando Gapasin) has proposed a locally based network of people's assemblies. But all this is experimental, and we realize that any system for mass democratic planning will be messy. It will stumble; it will be wrong sometimes; and there will be a lot of running back to the drawing board.

But as socialists we know the spirit in which this great project of collective salvation must be undertaken, and that spirit is solidarity. An antique notion until very recently, it flickered into life again in the symbolism and energy of the Obama campaign. The Yes We Can! chant was the slogan of the United Farm Workers movement and went on to be adopted by various unions and community-based organizations to emphasize what large numbers of people can accomplish through collective action. Even Obama's relatively anodyne calls for a new commitment to volunteerism and community service seem to have inspired a spirit of "giving back." If the idea of democratic planning, of controlling our destiny, is the intellectual content of socialism, then solidarity is its emotional energy source--the moral understanding and the searing conviction that, however overwhelming the challenges, we are in this together.

Solidarity, though, is an empty sentiment without organization--ways of thinking and working together, and of connecting the social movements that are battling injustice every day. We see a tremendous opportunity in the bleak fact that millions of Americans have been rendered redundant by the capitalist economy and are free to dedicate their considerable talents to creating a more just and sustainable alternative. But if we are serious about collective survival in the face of our multiple crises, we have to build organizations, including explicitly socialist ones, that can mobilize this talent, develop leadership and advance local struggles. And we have to be serious, because the capitalist elites who have run things so far have forfeited all trust or even respect, and we--progressives of all stripes--are now the only grown-ups around.

[Barbara Ehrenreich is the author, most recently, of This Land Is Their Land: Reports From a Divided Nation. Bill Fletcher Jr. originated the call for founding "Progressives for Obama." He is the executive editor of Black Commentator, and founder of the Center for Labor Renewal.]

Source / The Nation

Thanks to Dorinda Moreno / The Rag Blog

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30 October 2008

Exxon Mobil's Exxcellent Adventure : Biggest Profit in U.S. History


'The latest quarter's net income equaled $1,865.69 per second, nearly $400 a second more than the prior mark.'
By Aaron Smith / October 30, 2008

NEW YORK -- Exxon Mobil Corp. set a quarterly profit record for a U.S. company Thursday, surging past analyst estimates.

Exxon Mobil (XOM, Fortune 500), the leading U.S. oil company, said its third-quarter net profit was $14.83 billion, or $2.86 per share, up from $9.41 billion, or $1.70, a year earlier. That profit included $1.45 billion in special items.

The company's prior record was $11.68 billion in the second quarter of 2008.

The latest quarter's net income equaled $1,865.69 per second, nearly $400 a second more than the prior mark.

The company said its revenue totaled $137.7 billion in the third quarter.

Analysts had expected Exxon to report a 40% jump in earnings to $2.38 per share, or net income of $12.2 billion, and a 28% surge in revenue to $131.13 billion, according to a consensus of estimates compiled by Thomson Reuters.

Exxon's stock price slipped by nearly 2% in morning trading.

The company's earnings were buoyed by oil prices, which reached record highs in the quarter before declining. Oil prices were trading at $140.97 a barrel at the beginning of the third quarter, and had fallen to $100.64 at the end.

Compare that to 2007, when prices traded at $71.09 a barrel at the beginning of the third quarter, and rose to $81.66 by the end.

Exxon's special charges include the gain of $1.62 billion from the sale of a German natural gas company. It also includes the $170 million charge in interest related to punitive damages from the Valdez oil spill off the Alaskan coast in 1989.

The Irving, Texas-based company said it lost $50 million, before taxes, in oil revenue because of Hurricanes Gustav and Ike. The company expects damages related to these hurricanes to reduce fourth-quarter earnings by $500 million.

Despite the surge in profit, Exxon said oil production was down 8% in the third quarter, compared to the same period last year.

The company also said it is spending more money to locate new sources of oil. Exxon said it spent $6.9 billion on oil exploration in the third quarter, a jump of 26% from the same period last year.

Phil Weiss, analyst for Argus Research, said he doesn't expect Exxon to break any more profit records in future quarters.

"I don't expect the fourth quarter to be nearly as good as the third because of lower oil prices," said Weiss.

He also said that demand for gasoline is falling, which could impact Exxon and other oil companies.

Earlier Thursday, Europe's leading oil company, Royal Dutch Shell PLC (RDSA), reported a 22% gain in net profit for the third quarter, to $8.45 billion. The company said sales rose 45% to $132 billion.

Exxon is the second-largest company in the Fortune 500 in terms of annual sales, behind Wal-Mart Stores (WMT, Fortune 500).

Exxon's stock price has fallen about 20% so far this year, The S&P 500, of which it is a member, has fallen about 36%.

Source / CNNMoney.com

Thanks to Ramsey Wiggins / The Rag Blog

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29 October 2008

Surprise! : Banks to Use Bailout Bucks for Mergers

The Rag Blog reported yesterday, in a story titled Salary Bonuses Constitute 10% of the Bailout that pay and bonus deals for corporate bigwigs account for about ten percent of the government bailout package.

Here's more good news: Big banks appear poised to use bailout funds to gobble up smaller banks. Hey, that's not what they told us the money was for. I'm so confused...

Thorne Dreyer / The Rag Blog / October 30, 2008

'The banks, both privately and publicly, aren’t talking about helping the economy. They’re talking about helping themselves.'
By Paul Kiel / October 27, 2008

The Treasury Department’s capital injection program is well underway, with more than $150 billion total now promised to around 30 banks. So far, the evidence suggests many of those banks will use the cash to buy up weaker banks.

That’s not how the program was sold. Banks were going to use the money to lend, Treasury Secretary Hank Paulson announced earlier this month. “This increased lending will benefit the U.S. economy and the American people,” he said. The banks were supposed to “strengthen their efforts to help struggling homeowners who can afford their homes avoid foreclosure.”

But the banks, both privately and publicly, aren’t talking about helping the economy. They’re talking about helping themselves.

Joe Nocera writes in the New York Times that it’s the “dirty little secret of the banking industry” that the taxpayer money won’t be used to expand lending. And, listening in on an employee conference call at JP Morgan Chase, he heard an executive tell it straight:

“Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase… What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”

Translation: The weaker banks will use the money to plug their holes, while the stronger banks have the option of using the money to fund takeovers of weaker banks or simply holding on to the money as a cushion in tough times.

The government's investment in the banks, of course, comes with few strings attached and no requirement on how the money can be used.

About 20 regional banks have signed up for the bailout program, joining the eight big banks that signed up earlier this month. The government has reportedly decided not to name the latest round of banks, fearing that investors would quickly punish a bank that’s omitted. The banks themselves have been left to announce their participation. (We’re putting together a list of the bailed-out banks and will post that later in the day).

The Wall Street Journal reports this morning on a number of regional banks that have announced their participation. And judging from their announcements, they have a similar take as JP Morgan Chase on how they’ll be using the money:

Capital One spokesperson Tatiana Stead said the investment "puts us in a stronger position to take advantage of opportunities that may emerge from the current banking environment."

Other banks gave similar sentiments, with SunTrust Chairman and Chief Executive James M. Wells III saying the extra money will allow his company to expand, though the current climate calls for elevated capital levels even if expansion wasn't being eyed.

Capital One is getting $3.55 billion in taxpayer money. SunTrust is getting $3.5 billion.

There is one notable exception to the no-lending trend. The CEO of Ohio-based Huntington Bancshares ($1.4 billion in bailout bucks) says that the money will allow the company "to expand our lending efforts to both existing and new customers throughout our Midwest footprint."

One bank, PNC, has already used its government money to fund a takeover. Last Friday, PNC made two announcements: It was buying National City for $5.58 billion, and it was getting $7.7 billion as part of the capital injection program. The government clearly played a key role in the deal. National City, weakened by mortgage losses, was forced to find a seller, the Washington Post reports, after the government turned down its request to join the program.

Treasury officials first announced that “one purpose of this plan is to drive consolidation” last week. If that’s the case, it’s going forward with little public debate.

Source / ProPublica

Thanks to Jim Retherford / The Rag Blog

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15 October 2008

Remember, the Money Was There All Along


The God That Failed: The 30-Year Lie of the Market Cult
By Chris Floyd / October 11, 2008

Perhaps the most striking fact revealed by the global financial crash -- or rather, by the reaction to it -- is the staggering, astonishing, gargantuan amount of money that the governments of the world have at their command.

In just a matter of days, we have seen literally trillions of dollars offered to the financial services sector by national treasuries and central banks across the globe. Britain alone has put $1 trillion at the disposal of the bankers, traders, lenders and speculators; and this has been surpassed by the total package of public money that Washington is shoveling into the financial furnaces of Wall Street and the banks. These radical efforts are being replicated on a slightly smaller scale in France, Germany, Italy, Russia and many other countries.

The effectiveness of this unprecedented transfer of wealth from ordinary citizens to the top tiers of the business world remains to be seen. It will certainly insulate the very rich from the consequences of their own greed and folly and fraud; but it is not at all clear how much these measures will shield the vast majority of people from the catastrophe that has been visited upon them by the elite.

But putting aside for a moment the actual intent, details and results of the global bailout offers, it is their very extent that shocks, and shows -- in a stark, harsh, all-revealing light -- the brutal disdain with which the national governments of the world's "leading democracies" have treated their own citizens for decades.

Beginning with Margaret Thatcher's election in 1979, government after government -- and party after party -- fell to the onslaught of an extremist faith: the narrow, blinkered fundamentalism of the "Chicago School." Epitomized by its patron saint, Milton Friedman, the rigid doctrine held that an unregulated market would always "correct" itself, because its workings are based on entirely rational and quantifiable principles. This was of course an absurdly reductive and savagely ignorant view of history, money and human nature; but because it flattered the rich and powerful, offering an "intellectual" justification for rapacious greed and ever-widening economic and social inequality, it was adopted as holy writ by the elite and promulgated as public policy.

This radical cult -- a kind of Bolshevism from above -- took its strongest hold in the United States and Britain, and was then imposed on many weaker nations through the IMF-led "Washington Consensus" (more aptly named by Naomi Klein as the "Shock Doctrine"), with devastating and deadly results. (As in Yeltsin's Russia, for example, where life expectancy dropped precipitously and millions of people died premature deaths from poverty, illness, and despair.)

According to the cult, not only were markets to be freed from the constraints placed on them after the world-shattering effects of the Great Depression, but all public spending was to be slashed ruthlessly to the bone. (Although exceptions were always made for the Pentagon war machine.) After all, every dollar spent by a public entity on public services and amenities was a dollar taken away from the private wheeler-dealers who could more usefully employ it in increasing the wealth of the elite -- who would then allow some of their vast profits to "trickle down" to the lower orders.

This was the cult that captured the governments of the United States and Britain (among others), as well as the Republican and Democratic parties, and the Conservative and Labour parties as well. And for almost thirty years, its ruthless doctrines have been put into practice. Regulation and oversight of financial markets were systematically stripped away or rendered toothless. Essential public services were sold off, for chump change, to corporate interests. Public spending on anything other than making war, threatening war and profiting from war was pared back or eliminated. Such public spending that did remain was forever under threat and derided, like the remnants of some pagan faith surviving in isolated backwaters.

Year after year, the ordinary citizens were told by their governments: we have no money to spend on your needs, on your communities, on your infrastructure, on your health, on your children, on your environment, on your quality of life. We can't do those kinds of things any more.

Of course, when talking amongst themselves, or with the believers in the think tanks, boardrooms -- and editorial offices -- the cultists would speak more plainly: we don't do those things anymore because we shouldn't do them, we don't want to do them, they are wrong, they are evil, they are outside the faith. But for the hoi polloi, the line was usually something like this: Budgets are tight, we must balance them (for a "balanced budget" is a core doctrine of the cult), we just can't afford all these luxuries, sorry about that.

But now, as the emptiness and falsity of the Chicago cargo cult stands nakedly revealed, even to some of its most faithful and fanatical adherents, we can see that this 30-year mantra by our governments has been a deliberate and outright lie. The money was there -- billions and billions and billions of dollars of it, trillions of dollars of it. We can see it before our very eyes today -- being whisked away from our public treasuries and showered upon the banks and the brokerages.

Let's say it again: The money was there all along.

Money to build and generously equip thousands and thousands of new schools, with well-paid, exquisitely trained teachers, small teacher-pupil ratios, a full range of enriching and inspiring programs.

Money to revitalize the nation's crumbling inner cities, making them safe and vibrant places for businesses and families and communities to grow.

Money to provide decent, affordable and accessible health care to every citizen, to provide dignity and comfort to the elderly, and protection and humane treatment for the mentally ill.

Money to provide affordable higher education to everyone who wanted it and could qualify for it. Money to help establish and sustain local businesses and family farms, centered in and on the local community, driven by the needs and knowledge of the people in the area, and not by the dictates of distant corporations.

Money to strengthen crumbling infrastructure, to repair bridges, shore up levies, maintain roads and electric grids and sewage systems.

Money for affordable, workable public transport systems, for the pursuit of alternative sources of energy, for sustainable, sensible development, for environmental restoration.

Money to support free inquiry in science, technology, health and other areas -- research unfettered from the war machine and the drive for corporate profit, and instead devoted to the betterment of human life.

Money to support culture, learning, continuing education, libraries, theater, music and the endless manifestations of the human quest to gain more meaning, more understanding, more enlightenment, a deeper, spiritually richer life.

The money for all of this -- and much, much more -- was there, all along. When they said we couldn't have these things, they were lying -- or else allowing themselves to be profitably duped by the high priests of the market cult. When they wanted a trillion dollars -- or three trillion dollars -- to wage a war of aggression in Iraq, they found it. Now, when they want trillions of dollars to save the speculators, fraudsters and profiteers of greed in the global market, they suddenly have it.

Who then can believe that these governments could not have found the money for good schools, health care, and all the rest, that they could not have enhanced the well-being and livelihood of millions of ordinary citizens, and helped create a more just and equitable and stable world -- if they had wanted to?

This is one of the main facts that ordinary citizens around the world should take away from this crisis: the money to maintain, secure and improve the lives of their families and communities was always there -- but their governments, and their political parties, made a deliberate, unforced choice not to use it for the common good. Instead, they subjugated the well-being of the world to the dictates of an extremist cult. A cult of greed and privilege, that preached iron discipline to the poor and the middle-class, but released the rich and powerful from all restrictions, and all responsibility for their actions.

This should be a constant -- and galvanizing -- thought in the minds of the public in the months and years to come. Remember what you could have had, and how it was denied you by the lies and delusions of a powerful elite and their bought-off factotums in government. Remember the trillions of dollars that suddenly appeared when the wheeler-dealers needed money to cover their own greed and stupidity.

Let these thoughts guide you as you weigh the promises and actions of politicians and candidates, and as you assess the "expert analysis" on economic and domestic policy offered by the corporate media and the corporate-bankrolled think tanks and academics.

And above all, let these thoughts be foremost in your mind when you hear -- as you certainly will hear, when (and if) the markets are finally stabilized (at whatever gigantic cost in human suffering) -- the adherents of the market cult emerge once more and call for "deregulation" and "untying the hands of business" and all the other ritual incantations of their false and savage fundamentalist faith.

For although the market cult has suffered a cataclysmic defeat in the last few weeks, it is by no means dead. It has 30 years of entrenchment in power to fall back on. And the leader of every major political party in the West has spent their entire political career within the cult's confines. It has been the atmosphere they breathed, it has been the sole ladder by which they have climbed to prominence. They will be loath to abandon it, once the immediate crisis is past; most will not be able to.

So remember well the lessons of this new October crash: The money to make a better life, to serve the common good, has always been there. But it has been kept from you by deceit, by dogma, by greed, and by the ambition of those who have sold their souls, and betrayed their brothers and sisters, their fellow human creatures, for the sake of privilege and power.

Thanks to Erich Seifert / Source / Empire Burlesque

The Rag Blog

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Juan Cole: Abolish Puritanism in Government Policy


The Great Reagan Pyramid Scheme Comes Crashing Down
By Juan Cole / October 15, 2008

The Republican Party that Nixon invented melded the moneyed classes of the Northeast with the white evangelicals of the South. This odd couple went on to simultaneously steal from and oppress the rest of us. The moneyed classes were happy to let the New Puritans impose their stringent morality, since they could always just buy any licentiousness they wanted, regardless of the law. And the New Puritans were so consumed with cultural issues such as homosexuality, abortion, school prayer and (yes) fighting school desegregation that they were happy to let the northeastern Money Men waltz off with a lion's share of the country's resources, consigning most Americans to stagnant wages and increasing debt. The Reagan revolution consolidated this alliance and brought some conservative Catholic workers into it.

These domestic policies at home were complemented by wars and belligerence abroad, which further took the eye of the public off the epochal bank robbery being conducted by the American neo-Medicis, and which were a useful way of throwing billions in government tax revenue to the military-industrial complex, which in turn funded the think tanks and reelection campaigns of the right wing politicians. The Reagan fascination with private armies and funding anti-communist death squads contributed mightily to the creation of al-Qaeda, blowback from which fuelled even bigger Pentagon budgets, spiralling upward and feeding on itself. Terrorism is much better than Communism as a bogey man, since you can just intimate that there are a handful of dangerous people out there somewhere, and force the public to pay over $1 trillion to combat them. In fact, of course, less US interventionism abroad would create less blowback, and genuine threats are better addressed through good police work by multilingual FBI agents than by a $700 billion Pentagon budget.

As a result of the Second Gilded Age and its serf-like subservience to big capital, most corporations in the US don't pay any income taxes, despite doing $2.5 trillion annually in business.

The Reagan Revolution included the stupid idea that you can cut taxes, starve government, abolish regulation of securities, banks, & etc., and still grow the economy. The irony is that capitalist markets need to be regulated to avoid periodically becoming chaotic (as in 'chaos theory,') but the people who most benefit from regulation are most zealous in attempting to abolish or blunt it.

What those policies did was create the preconditions for a long-term bubble or set of bubbles that benefited (for a while) the wealthiest 3 million Americans and harmed everyone else.

The average wage of the average worker is lower now than in 1973 and has been lower or flat for the past 35 years. That's the condition of the 300 million or so Americans.

In the meantime, the top 1 percent has multiplied its wealth many times over and now takes home 20% of the national income, owning some 45 percent of the privately held wealth in the US.

The Right keeps promising us growth, but it turns out that "growth" is mainly for them, i.e. for the 3 million (and indeed mainly for about 100,000 within the 3 million).

Those 3 million are a new aristocracy, lords of the economy, who reward each other with tens of millions in bonuses for ceremonial reasons that have nothing to do with the jobs they actually perform. Bush has been trying to make them a hereditary aristocracy by getting rid of the estate tax.

That is why banks are refusing the government bailout if it restricts the salaries of the top officers -- you don't mess with the feudal lord's prerogatives.

The enormous wealth of a thin sliver or people at the top of US society allows them to buy members of congress and to write the legislation that regulates their industries.

Congress capitulates to this 'regulatory capture' because its members have to buy hugely expensive television ads to remain competitive in elections. So they fundraise from the rich, and the rich have expectations (as Keating did of McCain).

These problems could be fixed with a graduated income tax and a closing of tax loopholes (after we get out of the recession or crash or whatever this is); by legislation criminalizing regulatory capture; by requiring mass media to run political ads for free as a public service (the public owns the airwaves); and by much shortening the election season (please).

A lot of America's fiscal and educational problems were caused by congressionally mandated fixed sentences imposed on judges with regard to marijuana possession, as a sop to the New Puritans that make up 1/3 of the Republican Party. You have a lot of people serving 5 years in jail for having small amounts of pot. The states had to build new prisons to hold them all. They took the money out of the budget for higher education, abolishing the whole idea of state universities and causing tuitions to rise.

So you've got more ignorant people (because people can't afford even "state" college), and fewer high-tech firms are founded; and you're feeding and housing large numbers of harmless potheads with your tax dollars instead. The US maintains a vast gulag of nearly 2 million prisoners, putting us in the same league as Putin's Russia. No country in Western Europe incarcerates a similar proportion of its population.

Mexico's president wants to decriminalize the possession of small amounts of drugs such as marijuana, cocaine and heroin for personal use, though an arrest on possession charges would require entry into a program to kick addiction.

Decriminalizing possession of small amounts of drugs; decriminalizing marijuana altogether (and taxing the resulting industry); removing mandatory federal sentencing requirements; and letting states go back to educating their children instead of putting millions in jail; would solve another big batch of America's problems.

So there you have it. Abolish puritanism in government policy; go back to using the government to regulate industries and finance and provide services; and fight terrorism with better public diplomacy and better police work instead of with militarization-- and you might get out of this thing intact.

Source / Informed Comment

The Rag Blog

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24 September 2008

What's Wrong with This Picture?


Forbes publishes list of 400 wealthiest Americans
By Tom Eley / September 24, 2008

Even as the US careens into its greatest economic calamity since the Great Depression, the financial aristocracy whose parasitism and criminality has brought on the crisis has held its own—and then some.

The recently released Forbes 400 list of the richest Americans shows that the combined wealth of the aristocracy has increased 2 percent, even amidst the financial breakdown and recession of the economy. “In this, the 27th edition of the list,” Forbes glumly notes, “the assembled net worth of America’s wealthiest rose by $30 billion — only 2% — to $1.57 trillion.”

Readers will be forgiven for tripping over the word “only” in relationship to a $30 billion increase in wealth for 400 spectacularly wealthy individuals. This “modest” figure—the increase in wealth for the oligarchy in a bad year—is only slightly less than the federal government has budgeted for unemployment insurance for all of 2008.

The overall wealth of the 400 richest Americans is staggering. There are no multimillionaires on the list; a minimum of $1.3 billion being required to gain admittance, while the average net worth is $3.9 billion.

The combined wealth of the richest 400 individuals is $400 billion more than the entire discretionary spending budget for the federal government. It is more than $300 billion larger than the combined 2008 outlay for Social Security, Medicare, and Medicaid. It is more than 15 times the combined appropriations for education and highways and mass transit.

The personal wealth of the top 400 Americans is more than twice the combined annual GDP of all of sub-Saharan Africa, home to nearly 800 million people, the vast majority of whom live in dire conditions. It is also several hundred billion dollars larger than the GDP of the world’s eighth biggest economy, that of Spain.

The club’s richest member is Microsoft magnate Bill Gates, whose net worth, $57 billion, is greater than the annual GDP of about 120 of the world’s 180 nations.

The year’s biggest winner is New York City Mayor Michael Bloomberg, whose personal wealth increased by $8.5 billion to $20 billion, making Bloomberg the nation’s eighth richest individual.

On Tuesday, without a hint of irony—much less shame—Mayor Bloomberg proposed brutal across-the-board budget cuts for the city of New York. He is calling for cutbacks totaling $500 million for the current fiscal year, to be followed by much steeper cuts in the coming years. Meanwhile Bloomberg, in the course of just one year, pocketed 17 times what he is now demanding that millions of working people in New York City forfeit in terms of vital services and jobs. Only in America!

However, owing to the turbulence of the stock market, great fortunes were being both made and squandered even as Forbes published its list. “The Forbes 400 is a snapshot of estimated wealth on Aug. 29, 2008, the day we locked in prices of publicly traded stocks,” the magazine wrote. “Given how unsettled the stock market is, some of those on our list will become significantly richer or poorer within weeks—even days—of publication. Many, including AIG shareholders Eli Broad and Steven Udvar-Hazy, have lost hundreds of millions of dollars.”

Becoming poorer is of course a relative process; we can be certain that none of the demoted oligarchs faces hunger.

Among this year’s biggest “losers”—and there is a degree of poetic justice in this—are casino moguls. Kirk Kerkorian has managed to squander $6.8 billion of ill-gotten social wealth, while the fortune of his rival Sheldon Adelson “has fallen $13 billion in the past 12 months—$1.5 million per hour.” Adelson has managed to lose more in an hour than most US workers will earn in a lifetime.

That the nation’s financial aristocracy continues to gorge itself even as the economy stagnates demonstrates the increasing parasitism of the elite. The wealth of the super-rich is no longer bound up with the growth of the real economy, as it was in the days of Carnegie, Rockefeller, and Ford. Just the opposite is the case. The wealth of the aristocracy is based on the plundering and destruction of the real economy.

A perusal of the basis of the Forbes 400 members’ wealth illustrates the parasitic nature of US capitalism. The largest two categories on the list are “finance” with 65 members and “investments” with 51. Among the “sources” Forbes lists for these categories are “leveraged buyouts,” “investments,” “hedge funds,” “money management,” and “banking, insurance.”

The next largest category is “media/entertainment,” with 36 representatives among the Fortune 400, followed by the 35 members in the highly toxic “real estate” category. There are 30 members of the Fortune 400 who have reaped their fortunes from “technology,” almost all from Internet ventures or computer technology. Twenty-eight more are found in the “oil/gas” category.

Among the Fortune 400 there are 20 in the “retail” group, among them seven members of the Walton clan, owners of Wal-Mart, who collectively have assets of over $100 billion.

It has to be asked: Are there any members of the Forbes 400 actually associated with producing commodities or creating wealth of some sort?

There are only 19 members of the 400 in the category called “manufacturing.” However, upon inspection we see that this group is comprised of corporate raiders, oil refiners, inheritors, and controllers of holding companies. Only five members of this classification are actually associated with producing a commodity—and four of these produce light consumer goods.

Likewise, there are only 11 members of the financial aristocracy whose wealth has been associated with commodity production in the agricultural sector. But among these, nine are inheritors of the Cargill fortune. Of the other two, one has gained his fortune selling discount cigarettes; another by producing pesticides in Argentina.

There are nine members of the group in the “apparel” category, which is split between those whose wealth has come from retail sales, such as the owners of the Gap clothing stores, and those who have made windfalls by producing consumer goods in low-cost countries and selling the products for inflated prices in the US, such as Phil Knight of Nike.

There is only one member of the “construction/engineering” category, the 321st richest American, Alfred Clark, who has made his fortune by building sports stadiums. The “food” category, of which there are 21 members, is divided among retailers, inheritors, and the owners of single product lines, including the owner of the Slim-Fast empire. There are only three members of the “shipping/trucking/transport” category, and one member of “mining/lumber” (whose wealth came from overseas ventures).

In short, the incredible fortunes accumulated by the American elite have precious little to do with socially useful production. On the contrary, the financial aristocracy has reaped its obscene piles of wealth from the gutting of infrastructure, the shuttering of industrial production, and the impoverishment of working people, the broad mass of the population.

Copyright 1998-2008 World Socialist Web Site - All rights reserved

Source / World Socialist Web Site

The Rag Blog

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The Logical Conclusion to Deregulating the Markets


Has Deregulation Sired Fascism?
By Paul Craig Roberts / September 24, 2008

Remember the good old days when the economic threat was mere recession? The Federal Reserve would encourage the economy with low interest rates until the economy overheated. Prices would rise, and unions would strike for higher benefits. Then the Fed would put on the brakes by raising interest rates. Money supply growth would fall. Inventories would grow, and layoffs would result. When the economy cooled down, the cycle would start over.

The nice thing about 20th century recessions was that the jobs returned when the Federal Reserve lowered interest rates and consumer demand increased. In the 21st century, the jobs that have been moved offshore do not come back. More than three million U.S. manufacturing jobs have been lost while Bush was in the White House. Those jobs represent consumer income and career opportunities that America will never see again.

In the 21st century the US economy has produced net new jobs only in low paid domestic services, such as waitresses, bartenders, hospital orderlies, and retail clerks. The kind of jobs that provided ladders of upward mobility into the middle class are being exported abroad or filled by foreigners brought in on work visas. Today when you purchase an American name brand, you are supporting economic growth and consumer incomes in China and Indonesia, not in Detroit and Cincinnati.

In the 20th century, economic growth resulted from improved technologies, new investment, and increases in labor productivity, which raised consumers’ incomes and purchasing power. In contrast, in the 21st century, economic growth has resulted from debt expansion.

Most Americans have experienced little, if any, income growth in the 21st century. Instead, consumers have kept the economy going by maxing out their credit cards and refinancing their mortgages in order to consume the equity in their homes.

The income gains of the 21st century have gone to corporate chief executives, shareholders of offshoring corporations, and financial corporations.

By replacing $20 an hour U.S. labor with $1 an hour Chinese labor, the profits of U.S. offshoring corporations have boomed, thus driving up share prices and “performance” bonuses for corporate CEOs. With Bush/Cheney, the Republicans have resurrected their policy of favoring the rich over the poor. John McCain captured today’s high income class with his quip that you are middle class if you have an annual income less than $5 million.

Financial companies have made enormous profits by securitizing income flows from unknown risks and selling asset backed securities to pension funds and investors at home and abroad.

Today recession is only a small part of the threat that we face. Financial deregulation, Alan Greenspan’s low interest rates, and the belief that the market was the best regulator of risks, have created a highly leveraged pyramid of risk without adequate capital or collateral to back the risk. Consequently, a wide variety of financial institutions are threatened with insolvency, threatening a collapse comparable to the bank failures that shrank the supply of money and credit and produced the Great Depression.

Washington has been slow to recognize the current problem. A millstone around the neck of every financial institution is the mark-to-market rule, an ill-advised “reform” from a previous crisis that was blamed on fraudulent accounting that over-valued assets on the books. As a result, today institutions have to value their assets at current market value.

In the current crisis the rule has turned out to be a curse. Asset backed securities, such as collateralized mortgage obligations, faced their first market pricing in panicked circumstances. The owner of a bond backed by 1,000 mortgages doesn’t know how many of the mortgages are good and how many are bad. The uncertainty erodes the value of the bond.

If significant amounts of such untested securities are on the balance sheet, insolvency rears its ugly head. The bonds get dumped in order to realize some part of their value. Merrill Lynch sold its asset backed securities for twenty cents on the dollar, although it is unlikely that 80 percent of the instruments were worthless.

The mark to market rule, together with the suspect values of the asset backed securities and collateral debt obligations and swaps, allowed short sellers to make fortunes by driving down the share prices of the investment banks, thus worsening the crisis. With their capitalization shrinking, the investment banks could no longer borrow. The authorities took their time in halting short-selling, and short-selling is set to resume on October 3 or thereabout.

If the mark to market rule had been suspended and short-selling prohibited, the crisis would have been mitigated. Instead, the crisis intensified, provoking the US Treasury to propose to take responsibility for $700 billion more in troubled financial instruments in addition to the Fannie Mae, Freddie Mac, and AIG bailouts. Treasury guarantees are also apparently being extended to money market funds.

All of this makes sense at a certain level. But what if the $700 billion doesn’t stem the tide and another $700 billion is needed? At what point does the Treasury’s assumption of liabilities erode its own credit standing?

This crisis comes at the worst possible time. Gratuitous wars and military spending in pursuit of US world hegemony have inflated the federal budget deficit, which recession is further enlarging. Massive trade deficits, magnified by the offshoring of goods and services, cannot be eliminated by US export capability.

These large deficits are financed by foreigners, and foreign unease has resulted in a decline in the US dollar’s value compared to other tradable currencies, precious metals, and oil.

The US Treasury does not have $700 billion on hand with which to buy the troubled assets from the troubled institutions. The Treasury will have to borrow the $700 billion from abroad.

The dependency of Treasury Secretary Paulson’s bailout scheme on foreign willingness to absorb more Treasury paper in order that the Treasury has the money to bail out the troubled institutions is heavy proof that the US is in a financially dependent position that is inconsistent with that of America’s “superpower” status.

The US is not a superpower. The US is a financially dependent country that foreign lenders can close down at will.

Washington still hasn’t learned this. American hubris can lead the administration and Congress into a bailout solution that the rest of the world, which has to finance it, might not accept.

Currently, the fight between the administration and Congress over the bailout is whether the bailout will include the Democrats’ poor constituencies as well as the Republicans’ rich ones. The Republicans, for the most part, and their media shills are doing their best to exclude the ordinary American from the rescue plan.

A less appreciated feature of Paulson’s bailout plan is his demand for freedom from accountability. Congress balked at Paulson’s demand that the executive branch’s conduct of the bailout be non-reviewable by Congress or the courts: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion.” However, Congress substituted for its own authority a “board” that possibly will consist of the bailed out parties, by which I mean Republican and Democratic constituencies. The control over the financial system that the bailout would give to the executive branch would mean, in effect, state capitalism or fascism.

If we add state capitalism to the Bush administration’s success in eroding both the US Constitution and the power of Congress, we may be witnessing the final death of accountable constitutional government.

The US might also be on the verge of a decision by foreign lenders to cease financing a country that claims to be a hegemonic power with the right and the virtue to impose its will on the rest of the world. The US is able to be at war in Iraq and Afghanistan and is able to pick fights with Iran, Pakistan and Russia, because the Chinese, the Japanese and the sovereign wealth funds of the oil kingdoms finance America’s wars and military budgets. Aside from nuclear weapons, which are also in the hands of other countries, the US has no assets of its own with which to pursue its control over the world.

The US cannot be a hegemonic power without foreign financing. All indications are that the rest of the world is tiring of US arrogance.

If the US Treasury’s assumption of bailout responsibilities becomes excessive, the US dollar will lose its reserve currency role. The minute that occurs, foreign financing of America’s twin deficits will cease, as will the bailout. The US government would have to turn to the printing of paper money as did Weimar Germany.

For now this pending problem is hidden from view, because in times of panic, the tradition is to flee into “safety,” that is, into US Treasury debt obligations. The safety of Treasuries will be revealed by the extent of the bailout.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions. He can be reached at: PaulCraigRoberts@yahoo.com.

Source / Information Clearing House

The Rag Blog

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17 September 2008

The Day the Neoconservatives Nationalized AIG


The AIG Rescue
By Jon Taplin / September 16, 2008

A few months ago, neoconservatives were screaming bloody murder when Hugo Chavez nationalized the phone company. Today a neoconservative U.S. Government nationalized AIG, the largest insurance company in the world, because the collective banks of the world refused to make a bridge loan to the insurer of most of the bonds they hold.

AIG was the linch pin to the shadow banking system – the $50 trillion of Credit Default Swaps – that I have be writing about for a long time. By insuring toxic bonds made up of sub prime mortgages, AIG allowed the banks to sell them to pension funds as AAA credits. It was a scam which AIG helped the banks to pull off. And then the whole house of cards collapsed and AIG was left holding the bag, potentially to pay insurance out on $ billions of defaulted bonds. So the banks that needed this insurance to load the crap into pension funds and other fiduciaries, now refuse to keep their insurer alive and win the game of chicken with the Fed.

We have been talking about the Great Deleveraging and how it puts downward pressure on the prices of all assets except government bonds. A failure of AIG would have accelerated that process into a true crash of 1929 proportions. However, AIG was the enabler for the big banks all over the world. Paulson should lay off the 2 year $85 billion note to a consortium of banks, keep 20% of the warrants in the Treasury for the rescue and attach the rest of the warrants to the loans as part of the sale to a bank consortium.

This was a big bankers game. The US taxpayers should not be left holding the bag.

Source / Jon Taplin

Thanks to Diane Stirling-Stevens / The Rag Blog

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08 August 2008

When Medicine Meets Capitalism - Crony Politics













Peter Pitts (left) and Robert Goldberg

The FDA Guerillas of Wonky DrugWonks
by Evelyn Pringle / August 8, 2008

Former Bush Administration officials have formed a pharmaceutical industry guerilla group called the Center for Medicine in the Public Interest, described on its website as “a non-partisan, non-profit educational charity,” and a “new vital force in health care policy.”

However, for all intents and purposes, the mission of CMPI front group is to promote back-door efforts at tort reform, including pushing complete drug maker immunity through federal preemption, to pump out rapid-response propaganda on the internet to deflate scandals involving the pharmaceutical industry and the FDA, and to discredit anyone who would dares to criticize the industry or the FDA.

Former FDA associate commissioner, Peter Pitts, is the president. He is also the Senior Vice President of Global Health Affairs at Manning Selvage and Lee, a Public Relations firm described as “a top five healthcare communications practice with a 50-year history,” representing, “major pharmaceutical, biotech and medical device companies.”

Former FDA chief counsel, Daniel Troy, the Godfather of preemption, sits on an advisory board for CMPI. His bio brags that he “played a principal role in FDA’s generally successful assertion of preemption in selected product liability cases.” He represented drug companies before he was chief counsel and returned to the same role when he left.

In the March 8, 2008, Mother Jones magazine, Stephanie Mencimer points out that Mr Troy’s “career is an illustration of how the Bush administration’s revolving door has allowed industry lawyers to radically reshape regulatory agencies to benefit the big businesses they once represented and then profit from those changes when they return to the private sector.”

Robert Goldberg is vice president of CMPI. He was previously the Director of the Manhattan Institute’s Center for Medical Progress and Chairman of its 21st Century FDA Task Force, according to his bio.

On the CMPI website, Mr Pitts and Mr Goldberg set up the internet blog, DrugWonks, supposedly to provide a forum that offers “rigorous and compelling research on the most critical issues affecting current drug policy.”

But in truth, DrugWonks serves as a defacto media outlet to provide services offered by MS&L to pharmaceutical clients and to counteract damaging information as it comes out in the media with rapid responses on the internet.

“Media is the lifeblood of MS&L and our healthcare practice,” the firm explains on its website. “Our experts immerse themselves in the needs and changes occurring within the media,” it says.

MS&L services include: “Developing communications strategies to support or thwart issues, including outreach to key agenda-setters, coalition-building, e-fluencer campaigns and media outreach”.

Under the leadership of Mr Pitts in the Global Affairs unit, “MS&L helps clients understand and influence government thinking on key health policy issues,” according to the website. “Monitoring emerging health issues to protect clients, particularly legislative and regulatory activities,” is a service offered.

To that end, whenever the “monitoring” spots a potential problem for an industry client involving the FDA or legislation pending or investigations in Congress, Mr Pitts and Mr Goldberg automatically shift into overdrive to either deflate, deflect or defend with information released on the internet through DrugWonks.

In 2006, tax records show, CMPI spent $210,000, to influence the media through a large conference, DrugWonks, editorials in published in major newspapers, and multimedia programs and podcasts, according to Slate Magazine.

In the line of fire

DrugWonks is also used to pump out unsubstantiated, vicious and unprofessional comments aimed at destroying the reputations and credibility of anyone who dares to speak out against the pharmaceutical industry or the FDA, including doctors, researchers, lawmakers and even journalists.

Attorneys are regularly attacked, but only those who defend the little guy against the drug giants. Those who represent industry clients receive the highest praise. The same goes for expert witnesses. An medial expert who consults with attorneys for a plaintiff is referred to as “a gun for hire.” Those on the other side have only the best of intentions.

Mr Pitts and Mr Goldberg demonstrate a special “fondness” for all consumer advocacy groups and public health activists who criticize the FDA or pharmaceutical industry. They are referred to collectively with titles like “whack jobs,” or “conflict of interest capos,” or “Luddites,” whatever that means.

They attacked four medical journals in one whack in a December 10, 2005, blog on DrugWonks. “Too many people are now not taking important medicines for pain, depression and other illnesses because the NEJM, JAMA, The Lancet and the British Medical Journal have allowed their political love fest with the leftists in the media and their hatred of drug companies to pollute their ability to remain objective,” the blog said.

In June 2008, Mr Pitts and Mr Goldberg double-teamed Senator Charles Grassley (R Iowa), and reporter, Gardiner Harris, for three days when the New York Times reported on the investigation by the Senate Finance Committee into the nondisclosure of millions of dollars received by Harvard academics Joseph Biederman, Timothy Wilens and Thomas Spencer from drug companies.

Mr Pitts was especially incensed over the Mr Harris’ acknowledgment of Dr Biederman as: “A world-renowned Harvard child psychiatrist whose work has helped fuel an explosion in the use of powerful antipsychotic medicines in children.”

“How did a phrase like “fuel an explosion” make it past an editor?” he demanded to know in a June 9, 2008 blog. “This is journalism?” he asked.

“The McCarthyite Mugging of Joe Biederman,” was the June 8, 2008 headline on DrugWonks, where Mr Goldberg refers to the investigation as the, “Grassley witch-hunt,” and credits the Times’ story in large part to, “Charles Grassley’s McCarthyite machine.”

There are other agendas at play here, Mr Pitts claimed on June 9, 2008. “When it comes to Conflicts of Interest,” he says, “its COI polloi.”

“The not-so-hidden agenda,” he explains, “is that anyone who supports the use of psychiatric pharmaceuticals for any reason needs to be humiliated and destroyed.”
Mr Goldberg says the non-disclosures amount to nothing more than “bad bookkeeping” or a “bookkeeping problem.” His theory might hold water if not for the fact that the problem continued for 7 years before Senator Grassley caught the glitch. The investigation of money paid to academic included about 30 psychiatrists at 20 universities, at last count.

Conflicted DrugWonker exposed

Its seems Mr Pitts himself does always disclose that he’s sleeping with the devil. However, bloggers on Pharmalot, and other popular websites, made his bed partners widely known after a conflict of interest scandal erupted over his appearance on the radio show, Prozac Nation: Revisited, aired on The Infinite Mind, and broadcast by National Public Radio on March 26, 2008.

CMPI board member, Dr Fred Goodman, hosted the show and told the audience: “There is no credible scientific evidence linking antidepressants to suicide or violence.”

On May 6, 2008, Ed Silverman’s Pharmalot headline read: “NPR: On The Air, But Not In The Open,” for a report on “Stealth Marketers,” by Shannon Brownlee and Jeanne Lenzer, in Slate Magazine with the byline: “Are doctors shilling for drug companies on public radio?” In describing the SSRI discussion on “Prozac Nation,” the authors noted:
The segment featured four prestigious medical experts discussing the controversial link between antidepressants and suicide. In their considered opinions, all four said that worries about the drugs have been overblown.

Not mentioned, Slate says, was the fact that all four experts had financial ties to the antidepressant makers. Mr Pitts was identified only as “a former FDA official.” “Also unmentioned were the ‘unrestricted grants’ that The Infinite Mind has received from drug makers, including Eli Lilly, the manufacturer of the antidepressant Prozac,” Slate wrote.

Infinite Mind spoke to Mr Pitts on the show as “a former FDA associate commissioner who was involved in the FDA’s 2004 “black box” labeling of antidepressants as carrying a risk of suicidal thoughts and behavior, and who was at the time the “go-to” guy for the FDA on that issue,” according to Bill Lichtenstein, Senior Executive Producer of Infinite Mind, in a May 9, 2008 written response to “Stealth Marketers,” posted on Pharmalot.

“What we didn’t know, because he didn’t disclose it to us,” Mr Lichtenstein says, “was that Pitts is currently working for a public relations firm whose clients include major pharmaceutical companies.”

The MS&L website shows Mr Pitts’ many drug company clients include Lilly, Pfizer and GlaxoSmithKline, the marketers of the SSRI antidepressants Prozac, Zoloft and Paxil.

Mr Pitts also failed to mention his PR job when he appeared on NPR’s Talk of the Nation and News Hour with Jim Lehrer, according to Mr Lichtenstein. He posted a link to “Prozac Nation,” on DrugWonks in April, 2008 without disclosing the conflicts of interests when describing the experts as well.

In their article, Ms Brownlee and Ms Lenzer noted the undisclosed affiliations of Mr Pitts and Dr Goodman with CMPI, which they described as “an industry-funded front, or “Astroturf” group, which receives a majority of its funding from drug companies.”

In a blog defending himself, Mr Pitts wrote: “I think it’s important to note that, per full disclosure, I was never asked. I would like to assume that when I am called for interviews that the producers have done their due diligence.”

“I also want to be clear that on the other programs mentioned,” he said, “I was asked by the producers about my various affiliations. I answered fully and honestly — and the decision was made not to mention it on the air.”

“When you go to http://www.cmpi.org/, one click on my name tells you everything,” Mr Pitts pointed out. Which begs the question of how would listeners to a radio program know to look for a link on this website when his association with CMPI is not even mentioned?

When the story broke, blogger, Lisa Van S, kicked off the internet slugfest on Pharmalot on May 6, 2008, by writing: “Peter Pitts, Have you no shame!!… Does anyone have the DSMIV diagnosis for habitual Lieing [sic -- ed.].”

Over at DrugWonks on May 6, Mr Goldberg began a “destroy the messenger” campaign against Ms Lenzer, in a blog titled, “I Dream of Jeannie … Retracting,” and the comment, “Talk about tight Jeannes!” with a January 17, 2005, New York Times article titled, “Dispute Puts a Medical Journal Under Fire,” pasted in the blog.

The “Dispute” refers to an article by Ms Lenzer in the January 2005 BMJ, which reported that the FDA was to review confidential Eli Lilly documents that had been sent to the BMJ by an anonymous source and that these documents had gone “missing” during a 1994 product liability suit filed against Lilly. After Lilly complained, the BMJ investigated the matter and issued a retraction of the “missing” statement and explained:
The BMJ did not intend to suggest that Eli Lilly caused these documents to go missing. As a result of the investigation, it is clear that these documents did not go missing.

The BMJ accepts that Eli Lilly acted properly in relation to the disclosure of these documents in these claims. The BMJ is happy to set the record straight and to apologise to Eli Lilly for this statement, which we now retract, but which we published in good faith.

Out of Ms Lenzer’s whole article, one single statement was retracted, but on DrugWonks, Mr Goldberg wrote: “BMJ was forced to retract one of her articles.”

Later in the same blog he wrote: “Here is the BMJ retraction AND apology as it pertains to Lenzer’s unethical and sleazy behavior,” and pasted a copy of the retraction which shows that only one statement was corrected.

The Lenzer distraction idea was obviously chosen as the main talking point early because Mr Pitts pasted the exact same articles on Pharmalot. But on May 7, blogger pg, responded with a January 17, 2005 article that said the Associated Press reported that BMJ editor, Kamran Abbasi, said the apology was limited to the issue of whether the documents were missing from the court case. On May 13, Professor Jonathan Leo, a well-recognized SSRI expert, posted comments on the Slate website and quoted an e-mail to CNN from Kamram Abbasi, which stated:
The London-based BMJ, formerly called the British Medical Journal, did not retract its contention that the documents show the antidepressant is linked to increased risk of suicide or violence. All we have retracted is the statement that these documents went missing.

Pharmalot’s pg, posted quotes from Lilly documents in a May 9, blog, from exhibits in a Prozac trial presented to the jury in a timeline to show that Lilly knew Prozac caused patients to become violent or suicidal long before the drug was approved in 1988. For example, a May 1984 document states: “During the treatment with the preparation (Prozac) 16 suicide attempts were made, 2 of these with success. As patients with a risk of suicide were excluded from the studies, it is probable that this high proportion can be attributed to an action of the preparation (Prozac) …”

In a May 7, Pharmalot blog, Mr Pitts complained that the Slate article did not mention issues he raised about media coverage of the SSRI debate during an interview with one of the journalists. “A robust debate on the SSRI issue is very important,” he wrote. “Trying to stifle debate by personal attacks just shows a lack of intellectual rigor — and cowardice,” he said.

Pharmalot’s pg, responded to this charge by writing, “Personal Attacks - a Few Examples?” with links to 5 blogs on DrugWonks. In a May 8 blog, pg, posted this example: “…Where will Healy, David Graham and the rest go to wash the blood off their hands? And will the FDA do the right thing and stop handing black boxes out to protect themselves from Senator Grassley and the press?”

Attacks of this kind are posted all over DrugWonks, as part of a PR campaign to restart the mass sale of SSRIs to children obviously. The claim is that the black box suicide warning is causing all these kids to kill themselves because doctors are afraid to prescribe the drugs to depressed kids, and the persons who fought to add the warning are responsible for the deaths.

After reading the blogs written by Mr Pitts and Mr Goldberg, Pharmalot’s Eskimo wrote: “Mr. Pitts, looking at all those posts on drugwonks.com, I couldn’t tell who was making the personal attacks, the ‘kooks’ and the ‘document stealers’ or the site’s authors who label them that way.”

On May 8, in a blog with the DrugWonks headline, “Slate ‘n Slime,” Mr Goldberg wrote: “Shannon Brownlee and Jeanne Lenzer did a smear job on Peter and Dr. Fred Goodwin in Slate.” He also stated:
Drugwonks rarely expects other bloggers to focus on substance . Rather, we are flogged for the source of our contributions as if others uncovered a corrupt connection instead of the truth, which is that we proactively provided information.

In the same blog, Mr Goldberg later wrote: “we will do what ever it takes, including legal action, when facts are deliberately omitted, misrepresented and distorted and then willfully repeated to set the records straight.”

“We are aware that our critics don’t have the intellectual bandwidth or the maturity to actually engage on the issues or respectfully disagree or debate,” he said. “Still we expect accuracy and for others to provide some context even as they take their shots as they are entitled to in a free society.”

The next day in a Pharmalot blog, Jane reported that: “drugwonks changed their article - it orginally was titled “Slime-alot, Slime a lttile then ignore the real issues” and threatened to sue Ed.” That would be the Ed Silverman who runs Pharmalot.

In response to DrugWonks blogs accusing critics of lacking intellectual bandwidth and being immature, several Pharmalot bloggers simply pasted more links to more blogs written by Mr Goldberg and Mr Pitts on DrugWonks. But a May 9 blog from pg stated: “Woah Mr Pitts. What a shame you sold YOUR intellectual bandwidth (and your integrity) out to the pharmaceutical industry.”

In the end, the war ignited by “Prozac Nation” would rage on for weeks. Finally, on May 27, 2008, under a heading, “Disturbing Behavior,” Mr Goldberg claimed that he and Mr Pitts had gotten a taste of what others were subjected to on a regular basis, described as:
abuse from out-of-control and obsessive hatemongers who receive succor and support — or at the very least — uncritical coverage by the media as the fail to engage on the substance of issues and instead attack motives and indulge in misleading and distorted use of selective reporting.

“Our willingness to challenge those who have been responsible for scaring people from using antidepressants have diverted attention away from the consequences of a decrease in use with blind fury,” he said, “moving from antidepressants to antipsychotics without regard to the original argument or point, harping instead on funding sources with an obsession that reveals a lack of intellectual bandwidth and genuine hatred that borders on the personal.”

“The blogs that have allowed these posting — unfiltered — know better and bear a responsibility for allowing the attacks and vitriol to become so unhinged and personal,” Mr Goldberg wrote, and specifically mentioned Pharmalot.

“These are sad, hateful people,” he said, “The problem is they often reflect and influence the thinking of people like Brownlee and Lenzer who are considered mainstream.”

“We at CMPI are simply trying to insure that people get the right medicine at the right time,” he says. “No more, no less.”

Major story gone missing

Mr Pitts never misses a change to promote preemption on DrugWonks by publishing new stories about CMPI advisory board member, and former FDA chief counsel, Daniel Troy, who kicked-off the preemption campaign by filing the first FDA brief in support of a drug maker in an SSRI suicide case while serving as chief counsel. However, notably missing in the month of July, is a story on DrugWonks bragging about Mr Troy’s new job at Glaxo. But Ed Silverman reported the news on Pharmalot on July 22, 2008, writing:
The preemption prince is joining the big drugmaker as senior vice president and general counsel on September 2. This is a coup for Glaxo, because Troy is widely known - some might say notorious - for being supportive of the pharmaceutical industry.

He also laid the groundwork for the current legal battle over preemption, which says FDA approval supercedes state law claims challenging safety, efficacy, or labeling. Drugmakers and the FDA argue preemption exists by maintaining agency actions are the final word on safety and effectiveness.

In response to the news, Pharmalot blogger, Laurie, wrote: “Wow.. GSK takes on the one person who has been the poster boy for all that’s bad with pharma and the FDA…way to help your public relations.”

The fact is, Glaxo hired the “poster boy” while facing mounting legal problems due to concealing Paxil’s suicide risk for decades. With the kinds of insider information he could bring to the table, Mr Troy was already the best man for the job. But also important was likely the fact that he knew people were dying from Paxil for years and never cared.

Glaxo has been under investigation by the Department of Justice since 2004 over Paxil. In June 2008, the Wall Street Journal reported a widening of that investigation. In February 2008, Senator Grassley started a new investigation by the Finance Committee, after an expert witness report in a Paxil-suicide case was unsealed by a court that showed Glaxo knew back 1989, that Paxil patients in clinical trials were 8 times more likely to attempt or commit suicide than patients taking a placebo.

The Committee’s investigation of the money paid to academics also includes Paxil researcher, Dr Martin Keller at Brown University, who oversaw the Glaxo-funded trials on children, and was the lead author on the fraudulent papers used to promote the off-label sale of Paxil to children with false claims that it worked and did not cause suicide.

On June 23, 2008, Mr Pitts made a feeble attempt to throw out some sort of defense for his MS&L client with the DrugWonks headline: “What’s Behind the Paxil Investigation?”

“There’s money in it, maybe for the plaintiffs attorneys,” he wrote. “But there is also the Holy Grail of overturing FDA pre-emption,” he added.

The main problem with this theory is that Mr Pitt’s buddy, Dan Troy, seems to be the only attorney moving up the pay ladder.

In Stealth Marketers, Ms Lenzer and Ms Brownlee report that CMPI took in more than $1.4 million from the pharmaceutical industry in 2006. Mr Pitts was asked to identify the companies and apparently decided against it. “I don’t want to go into that,” he told Slate.

With all that drug money rolling in, CMPI could surely afford to hire an editor to clean up the blogs of the media expert and his side kick on DrugWonks. Although allowances for errors in typing, grammar and spelling are commonly extended to internet bloggers, the daily ramblings of Mr Pitts and Mr Goldberg appear on the official CMPI website and should, at least, be legible.

Evelyn Pringle is an investigative journalist focused on exposing corruption in government and corporate America. She can be reached at: evelyn-pringle@sbcglobal.net.

Source / Dissident Voice

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03 August 2008

Another Piece of What Iraq Was Really About


Iraq arms sales request worth over nine billion dollars: Pentagon
August 1, 2008

WASHINGTON -- The Pentagon said Friday it has notified Congress of proposed military sales to Iraq valued at more than nine billion dollars, including helicopters, tanks and armored vehicles.

The biggest proposed sale was for 392 Light Armored Vehicles, radios and anti-tank weapons at an estimated cost of three billion dollars, the Defense Security and Cooperation Agency said.

Congress also was notified of a possible sale of 140 upgraded M1A1 Abrams tanks as well as armored Humvees, tracked logistics vehicles, armored ambulances, vehicles to carry shelters and command posts, and trucks to transport heavy equipment.

It was valued at 2.16 billion dollars.

A separate 2.4 billion dollar helicopter deal would provide the Iraqi government with 24 Bell Armed 407 helicopters or 24 Boeing AH-6 helicopters, along with engines, missiles, mortars, machineguns, and rocket launchers.

Another proposed sale involved technical assistance in the construction of garrisons, training areas and operational facilities for the Iraqi security forces.

"The total value, if all options are exercised, could be as high as 1.6 billion dollars," the DSCA said.

On Monday, the DSCA announced a possible contract to sell Iraq six C-130J aircraft, with engines and other equipment, which it said was worth 1.5 billion dollars if all options were exercised.

Source / Yahoo News

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09 July 2008

Assurances Economists Gave Made No Sense


A Work Force Betrayed: Watching Greed Murder the Economy
By Paul Craig Roberts / July 9, 2008

The collapse of world socialism, the rise of the high speed Internet, a bought-and-paid-for US government, and a million dollar cap on executive pay that is not performance related are permitting greedy and disloyal corporate executives, Wall Street, and large retailers to dismantle the ladders of upward mobility that made America an “opportunity society.” In the 21st century the US economy has been able to create net new jobs only in nontradable domestic services, such as waitresses, bartenders, government workers, hospital orderlies, and retail clerks. (Nontradable services are “hands on” services that cannot be sold as exports, such as haircuts, waiting a table, fixing a drink.)

Corporations can boost their bottom lines, shareholder returns, and executive performance bonuses by arbitraging labor across national boundaries. High value- added jobs in manufacturing and in tradable services can be relocated from developed countries to developing countries where wages and salaries are much lower. In the United States, the high value-added jobs that remain are increasingly filled by lower paid foreigners brought in on work visas.

When manufacturing jobs began leaving the US, no-think economists gave their assurances that this was a good thing. Grimy jobs that required little education would be replaced with new high tech service jobs requiring university degrees. The American work force would be elevated. The US would do the innovating, design, engineering, financing and marketing, and poor countries such as China would manufacture the goods that Americans invented. High-tech services were touted as the new source of value-added that would keep the American economy preeminent in the world.

The assurances that economists gave made no sense. If it pays corporations to ship out high value-added manufacturing jobs, it pays them to ship out high value-added service jobs. And that is exactly what US corporations have done.

Automobile magazine (August 2008) reports that last March Chrysler closed its Pacifica Advance Product Design Center in Southern California. Pacifica’s demise followed closings and downsizings of Southern California design studios by Italdesign, ASC, Porsche, Nissan, and Volvo. Only three of GM’s eleven design studios remain in the US.

According to Eric Noble, president of The Car Lab, an automotive consultancy, “Advanced studios want to be where the new frontier is. So in China, studios are popping up like rabbits.”

The idea is nonsensical that the US can remain the font of research, innovation, design, and engineering while the country ceases to make things. Research and product development invariably follow manufacturing. Now even business schools that were cheerleaders for offshoring of US jobs are beginning to wise up. In a recent report, “Next Generation Offshoring: The Globalization of Innovation,” Duke University’s Fuqua School of Business finds that product development is moving to China to support the manufacturing operations that have located there.

The study, reported in Manufacturing & Technology News, acknowledges that “labor arbitrage strategies continue to be key drivers of offshoring,” a conclusion that I reached a number of years ago. Moreover, the study concludes, jobs offshoring is no longer mainly associated with locating IT services and call centers in low wage countries. Jobs offshoring has reached maturity, “and now the growth is centered around product and process innovation.”

According to the Fuqua School of Business report, in just one year, from 2005 to 2006, offshoring of product development jobs increased from an already significant base by 40 to 50 percent. Over the next one and one-half to three years, “growth in offshoring of product development projects is forecast to increase by 65 percent for R&D and by more than 80 percent for engineering services and product design-projects.”

More than half of US companies are now engaged in jobs offshoring, and the practice is no longer confined to large corporations. Small companies have discovered that “offshoring of innovation projects can significantly leverage limited investment dollars.”

It turns out that product development, which was to be America’s replacement for manufacturing jobs, is the second largest business function that is offshored.

According to the report, the offshoring of finance, accounting, and human resource jobs is increasing at a 35 percent annual rate. The study observes that “the high growth rates for the offshoring of core functions of value creation is a remarkable development.”

In brief, the United States is losing its economy. However, a business school cannot go so far as to admit that, because its financing is dependent on outside sources that engage in offshoring. Instead, the study claims, absurdly, that the massive movement of jobs abroad that the study reports are causing no job loss in the US: “Contrary to various claims, fears about loss of high-skill jobs in engineering and science are unfounded.” The study then contradicts this claim by reporting that as more scientists and engineers are hired abroad, “fewer jobs are being eliminated onshore.” Since 2005, the study reports, there has been a 48 percent drop in the onshore jobs losses caused by offshore projects.

One wonders at the competence of the Fuqua School of Business. If a 40-50 percent increase in offshored product development jobs, a 65 percent increase in offshored R&D jobs, and a more than 80 percent increase in offshored engineering services and product design-projects jobs do not constitute US job loss, what does?

Academia’s lack of independent financing means that its researchers can only tell the facts by denying them.

The study adds more cover for corporate America’s rear end by repeating the false assertion that US firms are moving jobs offshore because of a shortage of scientists and engineers in America. A correct statement would be that the offshoring of science, engineering and professional service jobs is causing fewer American students to pursue these occupations, which formerly comprised broad ladders of upward mobility. The Bureau of Labor Statistics’ nonfarm payroll jobs statistics show no sign of job growth in these careers. The best that can be surmised is that there are replacement jobs as people retire.

The offshoring of the US economy is destroying the dollar’s role as reserve currency, a role that is the source of American power and influence. The US trade deficit resulting from offshored US goods and services is too massive to be sustainable. Already the once all-mighty dollar has lost enormous purchasing power against oil, gold, and other currencies. In the 21st century, the American people have been placed on a path that can only end in a substantial reduction in US living standards for every American except the corporate elite, who earn tens of millions of dollars in bonuses by excluding Americans from the production of the goods and services that they consume.

What can be done? The US economy has been seriously undermined by offshoring. The damage might not be reparable. Possibly, the American market and living standards could be rescued by tariffs that offset the lower labor and compliance costs abroad.

Another alternative, suggested by Ralph Gomory, would be to tax US corporations on the basis of the percentage of their value added that occurs in the US. The greater the value added to a company’s product in America, the lower the tax rate on the profits.

These sensible suggestions will be demonized by ideological “free market” economists and opposed by the offshoring corporations, whose swollen profits allow them to hire “free market” economists as shills and to elect representatives to serve their interests.

The current recession with its layoffs will mask the continuing deterioration in employment and career outlooks for American university graduates. The highly skilled US work force is being gradually transformed into the domestic service workforce characteristic of third world economies.

Source / Information Clearing House

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