Paul Craig Roberts: The War On Terror

The War On Terror

By Paul Craig Roberts article link article link article link article link

October 15, 2010 | Information Clearing House | Global Research | LewRockwell | OpEdNews

Does anyone remember the “cakewalk war” that would last six weeks, cost $50-$60 billion, and be paid for out of Iraqi oil revenues?

Does anyone remember that White House economist Lawrence Lindsey was fired by Dubya because Lindsey estimated that the Iraq war could cost as much as $200 billion?

Lindsey was fired for over-estimating the cost of a war that, according to Joseph Stiglitz and Linda Bilmes, has cost 15 times more than Lindsey estimated. And the US still has 50,000 troops in Iraq.

Does anyone remember that just prior to the US invasion of Iraq, the US government declared victory over the Taliban in Afghanistan?

Does anyone remember that the reason Dubya gave for invading Iraq was Saddam Hussein’s weapons of mass destruction, weapons that the US government knew did not exist?

Are Americans aware that the same neoconservarives who made these fantastic mistakes, or told these fabulous lies, are still in control of the government in Washington?

The “war on terror” is now in its tenth year. What is it really all about?

The bottom line answer is that the “war on terror” is about creating real terrorists. The US government desperately needs real terrorists in order to justify its expansion of its wars against Muslim countries and to keep the American people sufficiently fearful that they continue to accept the police state that provides “security from terrorists,” but not from the government that has discarded civil liberties.

The US government creates terrorists by invading Muslim countries, wrecking infrastructure and killing vast numbers of civilians. The US also creates terrorists by installing puppet governments to rule over Muslims and by using the puppet governments to murder and persecute citizens as is occurring on a vast scale in Pakistan today.

Neoconservatives used 9/11 to launch their plan for US world hegemony. Their plan fit with the interests of America’s ruling oligarchies. Wars are good for the profits of the military/security complex, about which President Eisenhower warned us in vain a half century ago. American hegemony is good for the oil industry’s control over resources and resource flows. The transformation of the Middle East into a vast American puppet state serves well the Israel Lobby’s Zionist aspirations for Israeli territorial expansion.

Most Americans cannot see what is happening because of their conditioning. Most Americans believe that their government is the best on earth, that it is morally motivated to help others and to do good, that it rushes aid to countries where there is famine and natural catastrophes. Most believe that their presidents tell the truth, except about their sexual affairs.

The persistence of these delusions is extraordinary in the face of daily headlines that report US government bullying of, and interference with, virtually every country on earth. The US policy is to buy off, overthrow, or make war on leaders of other countries who represent their peoples’ interests instead of American interests. A recent victim was the president of Honduras who had the wild idea that the Honduran government should serve the Honduran people.

The American government was able to have the Honduran president discarded, because the Honduran military is trained and supplied by the US military. It is the same case in Pakistan, where the US government has the Pakistani government making war on its own people by invading tribal areas that the Americans consider to be friendly to the Taliban, al Qaeda, “militants” and “terrorists.”

Earlier this year a deputy US Treasury secretary ordered Pakistan to raise taxes so that the Pakistani government could more effectively make war on its own citizens for the Americans. On October 14 US Secretary of State Hillary Clinton ordered Pakistan to again raise taxes or the US would withhold flood aid. Clinton pressured America’s European puppet states to do the same, expressing in the same breath that the US government was worried by British cuts in the military budget. God forbid that the hard-pressed British, still reeling from American financial fraud, don’t allocate enough money to fight America’s wars.

On Washington’s orders, the Pakistani government launched a military offensive against Pakistani citizens in the Swat Valley that killed large numbers of Pakistanis and drove millions of civilians from their homes. Last July the US instructed Pakistan to send its troops against the Pakistani residents of North Waziristan. On July 6 Jason Ditz reported on antiwar.com that “at America’s behest, Pakistan has launched offensives against [the Pakistani provinces of] Swat Valley, Bajaur, South Waziristan, Orakzai,and Khyber.”

A week later Israel’s US Senator Carl Levin (D,MI) called for escalating the Obama Administration’s policies of US airstrikes against Pakistan’s tribal areas. On September 30, the Pakistani newspaper, The Frontier Post, wrote that the American air strikes “are, plain and simple, a naked aggression against Pakistan.”

The US claims that its forces in Afghanistan have the right to cross into Pakistan in pursuit of “militants.” Recently US helicopter gunships killed three Pakistani soldiers who they mistook for Taliban. Pakistan closed the main US supply route to Afghanistan until the Americans apologized.

Pakistan warned Washington against future attacks. However, US military officials, under pressure from Obama to show progress in the endless Afghan war, responded to Pakistan’s warning by calling for expanding the Afghan war into Pakistan. On October 5 the Canadian journalist Eric Margolis wrote that “the US edges closer to invading Pakistan.”

In his book, Obama’s Wars, Bob Woodward reports that America’s puppet president of Pakistan, Asif Ali Zardari, believes that terrorist bombing attacks inside Pakistan for which the Taliban are blamed are in fact CIA operations designed to destabilize Pakistan and allow Washington to seize Pakistan’s nuclear weapons.

To keep Pakistan in line, the US government changed its position that the “Times Square Bombing” was the work of a “lone wolf.” Attorney General Eric Holder switched the blame to the “Pakistani Taliban,” and Secretary of State Clinton threatened Pakistan with “very serious consequences” for the unsuccessful Times Square bombing, which likely was a false flag operation aimed at Pakistan.

To further heighten tensions, on September 1 the eight members of a high-ranking Pakistani military delegation in route to a meeting in Tampa, Florida, with US Central Command, were rudely treated and detained as terrorist suspects at Washington DC’s Dulles Airport.

For decades the US government has enabled repeated Israeli military aggression against Lebanon and now appears to be getting into gear for another Israeli assault on the former American protectorate of Lebanon. On October 14 the US government expressed its “outrage” that the Lebanese government had permitted a visit by Iranian President Ahmadinejad, who is the focus of Washington’s intense demonization efforts. Israel’s representatives in the US Congress threatened to stop US military aid to Lebanon, forgetting that US Rep. Howard Berman (D,CA) has had aid to Lebanon blocked since last August to punish Lebanon for a border clash with Israel.

Perhaps the most telling headline of all is the October 14 report, “Somalia’s New American Prime Minister.” An American has been installed as the Prime Minister of Somalia, an American puppet government in Mogadishu backed up by thousands of Ugandan troops paid by Washington.

This barely scratches the surface of Washington’s benevolence toward other countries and respect for their rights, borders, and lives of their citizens.

Meanwhile, to silence Wikileaks and to prevent any more revelations of American war crimes, the “freedom and democracy” government in DC has closed down Wikileaks’ donations by placing the organization on its “watch list” and by having the Australian puppet government blacklist Wikileaks.

Wikileaks is now akin to a terrorist organization. The American government’s practice of silencing critics will spread across the Internet.

Remember, they hate us because we have freedom and democracy, First Amendment rights, habeas corpus, respect for human rights, and show justice and mercy to all.

Paul Craig Roberts, a former Assistant Secretary of the US Treasury and former associate editor of the Wall Street Journal, has been reporting shocking cases of prosecutorial abuse for two decades. A new edition of his book, The Tyranny of Good Intentions, co-authored with Lawrence Stratton, a documented account of how Americans lost the protection of law, has been released by Random House.

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Chris Hedges: How Radical Christian Conservatives May Succeed in Destroying Democracy

How Democracy Dies: Lessons From a Master

How Radical Christian Conservatives May Succeed in Destroying Democracy

By Chris Hedges article link article link

October 15, 2010 | Truthdig | AlterNet

The ancient Greek playwright Aristophanes spent his life battling the assault on democracy by tyrants. It is disheartening to be reminded that he lost. But he understood that the hardest struggle for humankind is often stating and understanding the obvious. Aristophanes, who had the temerity to portray the ruling Greek tyrant, Cleon, as a dog, is the perfect playwright to turn to in trying to grasp the danger posed to us by movements from the tea party to militias to the Christian right, as well as the bankrupt and corrupt power elite that no longer concerns itself with the needs of its citizens. He saw the same corruption 2,400 years ago. He feared correctly that it would extinguish Athenian democracy. And he struggled in vain to rouse Athenians from their slumber.

There is a yearning by tens of millions of Americans, lumped into a diffuse and fractious movement, to destroy the intellectual and scientific rigor of the Enlightenment. They seek out of ignorance and desperation to create a utopian society based on “biblical law.” They want to transform America’s secular state into a tyrannical theocracy. These radicals, rather than the terrorists who oppose us, are the gravest threat to our open society. They have, with the backing of hundreds of millions of dollars in corporate money, gained tremendous power. They peddle pseudoscience such as “Intelligent Design” in our schools. They keep us locked into endless and futile wars of imperialism. They mount bigoted crusades against gays, immigrants, liberals and Muslims. They turn our judiciary, in the name of conservative values, over to corporations. They have transformed our liberal class into hand puppets for corporate power. And we remain meek and supine.

The huge amount of taxpayer money doled out to Wall Street, investment banks, the oil and natural gas industry and the defense industry, along with the dismantling of our manufacturing sector, is why we are impoverished. It is why our houses are being foreclosed on. It is why some 45 million Americans are denied medical care. It is why our infrastructure, from public schools to bridges, is rotting. It is why many of us cannot find jobs. We are being fleeced. The flagrant theft of public funds and rise of an obscenely rich oligarchic class is masked by the tough talk of demagogues, themselves millionaires, who use fear and bombast to keep us afraid, confused and enslaved.

Aristophanes saw the same psychological and political manipulation undermine the democratic state in ancient Athens. He repeatedly warned Athenians in plays such as “The Clouds,” “The Wasps,” “The Birds,” “The Frogs” and “Lysistrata” that permitting political leaders who shout “I shall never betray the Athenian!” or “I shall keep up the fight in defense of the people forever!” to get their hands on state funds and power would end with the citizens enslaved.

“The truth is, they want you, you see, to be poor,” Aristophanes wrote in his play “The Wasps.” “If you don’t know the reason, I’ll tell you. It’s to train you to know who your tamer is. Then, whenever he gives you a whistle and sets you against an opponent of his, you jump out and tear them to pieces.”

Our democracy, through years of war, theft and corruption, is also being diminished. But the example Aristophanes offers is not a hopeful one. He held up the same corruption to his fellow Greeks. He repeatedly chided them for not rising up and fighting back. He warned, ominously, that by the time most citizens awoke it would be too late. And he was right. The appearance of normality lulls us into a false hope and submission. Those who shout most loudly in defense of the ideals of the founding fathers, the sacredness of Constitution and the values of the Christian religion are those who most actively seek to subvert the principles they claim to champion. They hold up the icons and language of traditional patriotism, the rule of law and Christian charity to demolish the belief systems that give them cultural and political legitimacy. And those who should defend these beliefs are cowed and silent.

“For a considerable length of time the normality of the normal world is the most efficient protection against disclosure of totalitarian mass crimes,” Hannah Arendt wrote in “The Origins of Totalitarianism.” “Normal men don’t know that everything is possible, refuse to believe their eyes and ears in the face of the monstrous. ... The reason why the totalitarian regimes can get so far toward realizing a fictitious, topsy-turvy world is that the outside non-totalitarian world, which always comprises a great part of the population of the totalitarian country itself, indulges in wishful thinking and shirks reality in the face of real insanity. ...”

All ideological, theological and political debates with the representatives of the corporate state, including the feckless and weak Barack Obama, are useless. They cannot be reached. They do not want a dialogue. They care nothing for real reform or participatory democracy. They use the tricks and mirages of public relations to mask a steadily growing assault on our civil liberties, our inability to make a living and the loss of basic services from education to health care. Our gutless liberal class placates the enemies of democracy, hoping desperately to remain part of the ruling elite, rather than resist. And, in many ways, liberals, because they serve as a cover for these corporate extremists, are our greatest traitors.

Aristophanes too lived in a time of endless war. He knew that war always empowered anti-democratic forces. He saw how war ate away at the insides of a democratic state until it was hollowed out. His play “Lysistrata,” written after Athens had spent 21 years consumed by the Peloponnesian War, is a satire in which the young women refuse to have sex with their men until the war ends and the older women seize the Acropolis, where the funds for war are stored. The play called on Athenians to consider radical acts of civil disobedience to halt a war that was ravaging the state. The play’s heroine, Lysistrata, whose name means “Disbander of Armies,” was the playwright’s mouthpiece for the folly and self-destructiveness of war. But Athens, which would lose the war, did not listen.

The tragedy is that liberals and secularists, like Obama, are not viewed as competitors by the corporate forces that hold power, but as contaminates that must be eliminated. They have sought to work with forces that will never be placated. They have abandoned the most basic values of the liberal class to play a game that in the end will mean their political and cultural extinction. There will be no swastikas this time but seas of red, white and blue flags and Christian crosses. There will be no stiff-armed salutes, but recitations of the Pledge of Allegiance. There will be no brown shirts but nocturnal visits from Homeland Security. The fear, rage and hatred of our dispossessed and confused working class are being channeled into currents that are undermining the last vestiges of the democratic state. These dangerous emotions, directed against a liberal class that as in ancient Athens betrayed the population, have a strong appeal. And unless we adopt the radicalism held by Aristophanes, unless we begin to hinder the functioning of the corporate state through acts of civil disobedience, we are finished.

Let us not stand at the open gates of the city meekly waiting for the barbarians. They are coming. They are slouching towards Bethlehem. Let us, if nothing else, like Aristophanes, begin to call our tyranny by its name.

Chris Hedges, a Pulitzer Prize-winning reporter, is a senior fellow at The Nation Institute. He writes a regular column for Truthdig every Monday. His latest book is Empire of Illusion: The End of Literacy and the Triumph of Spectacle.

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Timothy V. Gatto: What Are Our Alternatives To The Corporate Controlled Political Parties?

What Are Our Alternatives To The Corporate Controlled Political Parties?

By Timothy V. Gatto article link

October 14, 2010 | CounterCurrents

Who is Barack Obama and how is he any different than George W. Bush? Tell me, why do so-called “Progressives” continue to support this man and his fascist policies? It is becoming increasingly clear that this President will do nothing to impede the corporate agenda of control over the Federal government that will become the cornerstone of worker repression throughout the country.

1. The loss of public sector jobs was a blatant attempt to break the power of unions in this country. The largest percent of unionization is in the public sector. What is a so-called “progressive” doing, feeding the military on a scale much larger that the Bush Administration, while breaking the backs of the Unions in America? This just illuminates exactly what the Democrats have morphed into. The Republicans under eight years of power haven’t done as much damage to the worker’s movement than Obama has managed to do in the last two years!

One must turn to the public sector to see how Obama’s policies have resulted in the loss of thousands of teachers throughout the nation. Who is this man that proposes a longer school year in order for American students to “catch up” to the other nations across the globe while he presides over the firing of so many teachers? How can he justify 14 trillion dollars to bail out Wall Street while the people that are charged with educating our children are fired due to budget cuts? How can he justify spending 450 million dollars a day on foreign wars that do nothing for our general population while he has no clear objective or substantive reasoning except for the red-herring “War on Terrorism”?

2. Speaking about this “War on Terror”, we in the United States are being subjected to a campaign of terror from our own government! When the Defense Department puts “mini-nukes” in the hands of field commanders to use at their discretion as legitimate weapons of war, this sets the stage for a Third World War that will certainly bring this planet to extinction. As Fidel Castro wrote on Global Research:

“The Nuclear Winter theory has shown that "If such weapons did not exist, they could not be used. And at present, there is absolutely no rational argument for their use. If they cannot be used, they must be destroyed. By doing so we would protect ourselves from accidents, mistaken calculations or any bouts of insanity."

"...Any country that at present may be considering the nuclear option must acknowledge that by adopting such a decision, it would be endangering not only its own population but the entire world.

"... The use of nuclear weapons in the event of a total attack against an enemy would be suicidal due to the anomalous cold and darkness caused by the smoke from the fires generated by the bomb."

This is something that most people in the United States do not understand fully. The knowledge that the United States government has decided to put the use of nuclear weapons in the toolkit of regional commanders is something that many U.S. citizens know nothing about. I blame the corporate-government controlled mass media for this ignorance of the nuclear policies of the United States. To put it bluntly, the government does not want this to become general knowledge. Even the rogue state of North Korea signed a pledge that it will not be the first to use nuclear weapons. Unlike North Korea, the United States maintains a first use prerogative. Who is the terrorist state and why do Americans accept this?

These are but two issues that Democrats must consider when they go to the polls. I don’t know what the alternative to the two corporate parties is at the moment, but there must be an alternative sooner than later! We cannot exist as a country, or as a species, if the use of nuclear weapons becomes commonplace. You can thank your “Democratic” President for this new policy of first-use nuclear “strategy”.

Of course it is too late to change the dynamics of the political situation in this country prior to the next elections. Still, one must understand that most of the candidates presented, whether Republican or Democrats, are foisted upon us by their corporate benefactors. The everyday people have no real representation on the Federal level. This is a situation that must change, and change soon.

The United States is losing the war in Afghanistan, with 25,000 Taliban fighting 150,000 US and NATO troops to a standstill. This government in the United States must know that we have the third largest country by population in the World (as well as being the wealthiest country in the world) and most of us possess weapons. It is pure common-sense that if they can’t stop an insurgency in one of the poorest nations on Earth against 24,000 fighters, what makes them believe they can stop an insurgency here in America? I’m not proposing anything like that, but if unemployment continues to run rampant, and the bulk of our tax dollars continue to go to the military-industrial complex that gives the American people nothing, something has to give way.

I could care less who is in Congress at the end of this election. The Republicans are no different than the Democrats. The Democrats have done nothing to restore our civil liberties by rescinding the invasive “Patriot Act” (the U.S. Enabling Laws similar to Nazi Germany) the Military Commissions Act or The John Warner Defense Bill that scrubbed the longstanding “Posse Comitatus” that refuted the use of Federal troops for law enforcement or end these imperialistic wars for resources. If the Republicans control Congress, nothing much will change except the rhetoric you will hear from the White House. The truth is that the Democrats have ceased to be the party of the people and like the Republicans are the party that represents the multi-national corporate world that have no interest except to turn a profit. Maybe it’s time to take a fresh look at Democratic Socialism, maybe the Unions should look to the Socialists and start to reevaluate their allegiance to the Democrats who have done nothing but ravage the Unions. Maybe it’s time we all started to look at political power in a whole new way before we find ourselves incinerated or facing a nuclear winter because of the belligerent policies of Washington. We can become serfs or control our own destiny, this is the challenge.

We still have choices. It is about time we started taking our choices seriously.

Former Chairman of the Liberal Party of America, Timothy Gatto is a retired Army Sergeant. He currently lives in South Carolina. He is the author of Kimchee Days or Stoned Cold Warriors and is currently at work on a new novel. Tim's political book, "From Complicity to Contempt" and "Kimchee Days" can be purchased at most online booksellers. The second book in the political series called "Contempt to Outrage" is due to come out Nov 15, 2010.

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Dave Lindorff: Getting Tough On Banker Crime

9 Million Stolen Homes

Getting Tough on Banker Crime

By Dave Lindorff article link

October 14, 2010 | CounterPunch

There are calls in this election season for establishing a moratorium of some sort on home foreclosures, and a number of large banks have even voluntarily stopped, at least until after Election Day, on foreclosing on houses. That’s fine as far as it goes, but what about the millions of homes that have already been lost or stolen over the past several years?

Behind the talk of a legal moratorium on foreclosures, and the voluntary pause announced by some banks, lies the reality that many if not most of the mortgages in question are legally dubious. The homeowner getting a foreclosure notice frequently has no idea who the actual holder or holders of a mortgage may be, and banks that are trying to foreclose often themselves have no idea who actually holds title to the papers. This is because with the securitization of mortgages, they have been traded and re-traded, and often have even been diced up into pieces of mortgage-backed securities, so that the paper trail of ownership has been lost, perhaps irrevocably.

In some cases and some jurisdictions, federal bankruptcy courts have been tossing out foreclosure cases, saying that the foreclosing bank has no proof of ownership of the mortgage and thus cannot claim the property. It’s a little like the person who is caught speeding and shows up in court to contest the charge only to have it tossed out because the ticketing officer didn’t show up in court to make her or his case.

The truth is that there is nothing particularly virtuous about the moratorium that Bank of America and some other national banks have announced on foreclosures. They are probably only holding off because they know that they are in trouble for fraudulently signing and processing foreclosure documents claiming title to properties that they actually cannot prove they have any claim to. (It has even been suggested that the banks are temporarily halting foreclosures because they are afraid that the glut of foreclosed homes will depress the value of other properties which are in their mortgage portfolios, hurting their own balance sheets.)

But the real question is, why is nobody mentioning the over 9 million homes that have been foreclosed on already, or that have been threatened with foreclosure, in this longest and deepest recession since the 1930s.

If it is the right thing to do to put a stop to foreclosures until banks can prove ownership, then it is equally right to reverse, or pay damages for all those foreclosures that already occurred--1.3 million in 2007, 2.3 million in 2008, 2.8 million in 2009 and 1.6 million in just the first six months of this year--where there was bank fraud in the signing of documents, or where there is simply no paper trail to prove the bank in question owns the mortgage. (A difficulty is that if a foreclosed property was later sold, reversing the transaction could mean displacing another family that made a good-faith purchase from the bank, meaning that a compensation payment to the wronged first owner would be a better option.)

If an individual committed the kind of fraud that the nation’s banks have been committing in order to steal someone’s assets, she or he would be convicted of fraud and locked up in jail, yet not one banker has been locked up yet for mortgage foreclosure fraud.

This wave of foreclosures is really Grand Theft Home on an unprecedented scale. The number of homes foreclosed in 2004 was 677,000, so if we take that number as being an average foreclosure rate for ordinary times, and subtract it from the figures for following years, and if we assume that the balance of foreclosures are the result of the bank-induced recession, we’re talking about six million homes that have been stolen by the banks. If each foreclosed home over the period 2005-July 2010 was worth an average of just $50,000--probably a very conservative figure--we’d be talking about the theft through fraud or economic malpractice of some $300 billion in the assets of ordinary citizen homeowners.

Actually, of course, the theft of assets from the public has been much greater, since every time a home is foreclosed in a neighborhood, the value of all the surrounding homes plunges, but that’s a story for another day.

Just in terms of outright bank fraud and home theft, we are talking about perhaps hundreds of billions of dollars worth of property that has been stolen through forged papers. We are also talking about the heartless destruction of millions of families, who have been torn from their homes.

So why are we only discussing foreclosure moratoriums now and going forward? Why are we not seeing aggressive federal action by the Justice Department seeking restoration of title or compensation to families who have already lost their homes through bank fraud? As reported yesterday in the Washington Post, 40 state attorneys general have joined together to file court challenges to the securitization of mortgages, but so far, this effort appears aimed primarily at requiring banks and mortgage companies, going forward, to comply with all legal requirements in foreclosing on properties, not at recovering stolen property. The focus of this effort is also not on prosecuting banks and bankers for perjury, though this would certainly be possible.)

Why is Congress not aggressively investigating this colossal theft?

It’s one thing to say that financial institutions like Bank of America, Wells Fargo, JP Morgan Chase and Citibank are too big to fail. It is another to say that even though they are criminal enterprises that have perpetrated an unprecedented fraud on the public, they are too big to prosecute and to punish. That sounds like the way the Italian government has generally treated the Cosa Nostra.

Enough pussyfooting around! It’s time to make the banks and the bankers pay for their crimes. If government is to have any purpose, it must be to protect the public against crime. Even libertarians agree with that concept. And we have been robbed blind by these banks.

The problem here is that we Americans have lost any sense of community. We don’t really care about the millions who have had their homes stolen by the banksters, as long as our own homes haven’t been stolen. We’re so self-involved that we don’t even recognize that it is in our own self-interest to protect others from foreclosure because if they lose their home, our neighborhood suffers. Even the people who are acting riled up--the Tea Party folks--are only concerned about their own taxes, not about their neighbors. There were stories during the 30s of people who rallied to block auctions abd save their neighbors’ homes and farms. No stories like that today. But at least we could demand political action from our so-called political leaders.

There’s an election coming up Nov. 2. If the US Department of Justice and the attorney general offices of the 50 states cannot or will not go after the banks to demand the restoration of stolen properties to their rightful owners, and will not act to put the criminal bankers who committed fraud behind bars the way they do to the poor schmucks who pass a bad check, and if the House and Senate won’t seriously investigate these crimes by the banks, they should all be thrown out of office, Republicans and Democrats alike, and to hell with the consequences.

We couldn’t end up with anything worse than a government that coddles criminals, which is what we have right now.

Dave Lindorff is an award-winning veteran investigative journalist, a 1975 graduate of the Columbia University Graduate School of Journalism, and is author of Killing Time: An Investigation into the Death Penalty Case of Mumia Abu-Jamal (Common Courage Press, 2003) and three other books. He is also a founding member of the online newspaper ThisCantBeHappening!

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"The Largest Financial Swindle in World History"

"Counterfeit" Mortgages "Laundered" by the Banks

by Washington's Blog article link

October 13, 2010 | Washington's Blog | Global Research

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Michael Hudson: Why the U.S. Has Launched a New Financial World War

"Who Needs an Army When You Can Obtain the Usual Objective (Monetary Wealth and Asset Appropriation) Simply by Financial Means?"

Why the U.S. Has Launched a New Financial World War -- and How the Rest of the World Will Fight Back

By Michael Hudson article link article link

October 12, 2010 | CounterPunch | AlterNet

“Coming events cast their shadows forward.” – Goethe

What is to stop U.S. banks and their customers from creating $1 trillion, $10 trillion or even $50 trillion on their computer keyboards to buy up all the bonds and stocks in the world, along with all the land and other assets for sale in the hope of making capital gains and pocketing the arbitrage spreads by debt leveraging at less than 1 per cent interest cost? This is the game that is being played today.

Finance is the new form of warfare - without the expense of a military overhead and an occupation against unwilling hosts. It is a competition in credit creation to buy foreign resources, real estate, public and privatized infrastructure, bonds and corporate stock ownership. Who needs an army when you can obtain the usual objective (monetary wealth and asset appropriation) simply by financial means? All that is required is for central banks to accept dollar credit of depreciating international value in payment for local assets. Victory promises to go to whatever economy's banking system can create the most credit, using an army of computer keyboards to appropriate the world's resources. The key is to persuade foreign central banks to accept this electronic credit.

U.S. officials demonize foreign countries as aggressive "currency manipulators" keeping their currencies weak. But they simply are trying to protect their currencies from being pushed up against the dollar by arbitrageurs and speculators flooding their financial markets with dollars. Foreign central banks find them obliged to choose between passively letting dollar inflows push up their exchange rates - thereby pricing their exports out of global markets - or recycling these dollar inflows into U.S. Treasury bills yielding only 1% and whose exchange value is declining. (Longer-term bonds risk a domestic dollar-price decline if U.S interest rates should rise.)

"Quantitative easing" is a euphemism for flooding economies with credit, that is, debt on the other side of the balance sheet. The Fed is pumping liquidity and reserves into the domestic financial system to reduce interest rates, ostensibly to enable banks to "earn their way" out of negative equity resulting from the bad loans made during the real estate bubble. But why would banks lend more under conditions where a third of U.S. homes already are in negative equity and the economy is shrinking as a result of debt deflation?

The problem is that U.S. quantitative easing is driving the dollar downward and other currencies up, much to the applause of currency speculators enjoying a quick and easy free lunch. Yet it is to defend this system that U.S. diplomats are threatening to plunge the world economy into financial anarchy if other countries do not agree to a replay of the 1985 Plaza Accord "as a possible framework for engineering an orderly decline in the dollar and avoiding potentially destabilizing trade fights." The run-up to this weekend's IMF meetings saw the United States threaten to derail the international financial system, bringing monetary chaos if it does not get its way. This threat has succeeded for the past few generations.

The world is seeing a competition in credit creation to buy foreign resources, real estate, public and privatized infrastructure, bonds and corporate stock ownership. This financial grab is occurring without an army to seize the land or take over the government. Finance is the new form of warfare - without the expense of a military overhead and an occupation against unwilling hosts. Indeed, this "currency war" so far has been voluntary among individual buyers and the sellers who receive surplus dollars for their assets. It is foreign economies that lose, as their central banks recycle this tidal wave of dollar "keyboard credit" back into low-yielding U.S. Treasury securities of declining international value.

For thousands of years tribute was extracted by conquering land and looting silver and gold, as in the sacking of Constantinople in 1204, or Incan Peru and Aztec Mexico three centuries later. But who needs a military war when the same objective can be won financially? Today's preferred mode of warfare is financial. Victory in today's monetary warfare promises to go to whatever economy's banking system can create the most credit. Computer keyboards are today's army appropriating the world's resources.

The key to victory is to persuade foreign central banks to accept this electronic credit, bringing pressure to bear via the International Monetary Fund, meeting this last weekend. The aim is nothing as blatant as extracting overt tribute by military occupation. Who needs an army when you can obtain the usual objective (monetary wealth and asset appropriation) simply by financial means? All that is required is for central banks to accept dollar credit of depreciating international value in payment for local assets.

But the world has seen the Plaza Accord derail Japan's economy by obliging its currency to appreciate while lowering interest rates by flooding its economy with enough credit to inflate a real estate bubble. The alternative to a new currency war "getting completely out of control," the bank lobbyist suggested, is "to try and reach some broad understandings about where currencies should move." However, IMF managing director Dominique Strauss-Kahn, was more realistic. "I'm not sure the mood is to have a new Plaza or Louvre accord," he said at a press briefing. "We are in a different time today." On the eve of the Washington IMF meetings he added: "The idea that there is an absolute need in a globalised world to work together may lose some steam." (Alan Beattie Chris Giles and Michiyo Nakamoto, "Currency war fears dominate IMF talks," Financial Times, October 9, 2010, and Alex Frangos, "Easy Money Churns Emerging Markets," Wall Street Journal, October 8, 2010.)

Quite the contrary, he added: "We can understand that some element of capital controls [need to] be put in place."

The great question in global finance today is thus how long other nations will continue to succumb as the cumulative costs rise into the financial stratosphere? The world is being forced to choose between financial anarchy and subordination to a new U.S. economic nationalism. This is what is prompting nations to create an alternative financial system altogether.

The global financial system already has seen one long and unsuccessful experiment in quantitative easing in Japan's carry trade that sprouted in the wake of Japan's financial bubble bursting after 1990. Bank of Japan liquidity enabled the banks to lend yen credit to arbitrageurs at a low interest rate to buy higher-yielding securities. Iceland, for example, was paying 15 per cent. So Japanese yen were converted into foreign currencies, pushing down its exchange rate.

It was Japan that refined the "carry trade" in its present-day form. After its financial and property bubble burst in 1990, the Bank of Japan sought to enable its banks to "earn their way out of negative equity" by supplying them with low-interest credit for them to lend out. Japan's recession left little demand at home, so its banks developed the carry trade: lending at a low interest rate to arbitrageurs at home and abroad, to lend to countries offering the highest returns. Yen were borrowed to convert into dollars, euros, Icelandic kroner and Chinese renminbi to buy government bonds, private-sector bonds, stocks, currency options and other financial intermediation. This "carry trade" was capped by foreign arbitrage in bonds of countries such as Iceland, paying 15 per cent. Not much of this funding was used to finance new capital formation. It was purely financial in character - extractive, not productive.

By 2006 the United States and Europe were experiencing a Japan-style financial and real estate bubble. After it burst in 2008, they did what Japan's banks did after 1990. Seeking to help U.S. banks work their way out of negative equity, the Federal Reserve flooded the economy with credit. The aim was to provide banks with more liquidity, in the hope that they would lend more to domestic borrowers. The economy would "borrow its way out of debt," re-inflating asset prices real estate, stocks and bonds so as to deter home foreclosures and the ensuing wipeout of the collateral on bank balance sheets.

This is occurring today as U.S. liquidity spills over to foreign economies, increasing their exchange rates. Joseph Stiglitz recently explained that instead of helping the global recovery, the "flood of liquidity" from the Federal Reserve and the European Central Bank is causing "chaos" in foreign exchange markets. "The irony is that the Fed is creating all this liquidity with the hope that it will revive the American economy. … It's doing nothing for the American economy, but it's causing chaos over the rest of the world." (Walter Brandimarte, "Fed, ECB throwing world into chaos: Stiglitz," Reuters, Oct. 5, 2010, reporting on a talk by Prof. Stiglitz at Colombia University. )

Dirk Bezemer and Geoffrey Gardiner, in their paper "Quantitative Easing is Pushing on a String" , prepared for the Boeckler Conference, Berlin, October 29-30, 2010, make clear that "QE provides bank customers, not banks, with loanable funds. Central Banks can supply commercial banks with liquidity that facilitates interbank payments and payments by customers and banks to the government, but what banks lend is their own debt, not that of the central bank. Whether the funds are lent for useful purposes will depend, not on the adequacy of the supply of fund, but on whether the environment is encouraging to real investment."

Quantitative easing subsidizes U.S. capital flight, pushing up non-dollar currency exchange rates

Federal Reserve Chairman Ben Bernanke's quantitative easing may not have set out to disrupt the global trade and financial system or start a round of currency speculation that is forcing other countries to defend their economies by rejecting the dollar as a pariah currency. But that is the result of the Fed's decision in 2008 to keep unpayably high debts from defaulting by re-inflating U.S. real estate and financial markets. The aim is to pull home ownership out of negative equity, rescuing the banking system's balance sheets and thus saving the government from having to indulge in a Tarp II, which looks politically impossible given the mood of most Americans.

The announced objective is not materializing. The Fed's new credit creation is not increasing bank loans to real estate, consumers or businesses. Banks are not lending - at home, that is. They are collecting on past loans. This is why the U.S. savings rate is jumping. The "saving" that is reported (up from zero to 3 per cent of GDP) is taking the form of paying down debt, not building up liquid funds on which to draw. Just as hoarding diverts revenue away from being spent on goods and services, so debt repayment shrinks spendable income.

So Bernanke created $2 trillion in new Federal Reserve credit. And now (October 2010) the Fed is proposing to increase the Fed's money creation by another $1 trillion over the coming year. This is what has led gold prices to surge and investors to move out of weakening "paper currencies" since early September - and prompted other nations to protect their own economies accordingly.

It is hardly surprising that banks are not lending to an economy being shrunk by debt deflation. The entire quantitative easing has been sent abroad, mainly to the BRIC countries: Brazil, Russia, India and China. "Recent research at the International Monetary Fund has shown conclusively that G4 monetary easing has in the past transferred itself almost completely to the emerging economies since 1995, the stance of monetary policy in Asia has been almost entirely determined by the monetary stance of the G4 - the US, eurozone, Japan and China - led by the Fed." According to the IMF, "equity prices in Asia and Latin America generally rise when excess liquidity is transferred from the G4 to the emerging economies."

Borrowing unprecedented amounts from U.S., Japanese and British banks to buy bonds, stocks and currencies in the BRIC and Third World countries is a self-feeding expansion. Speculative inflows into these countries are pushing up their currencies as well as their asset prices, but. Their central banks settle these transactions in dollars, whose value falls as measured in their own local currencies.

U.S. officials say that this is all part of the free market. "It is not good for the world for the burden of solving this broader problem to rest on the shoulders of the United States," insisted Treasury Secretary Tim Geithner on Wednesday.

So other countries are solving the problem on their own. Japan is trying to hold down its exchange rate by selling yen and buying U.S. Treasury bonds in the face of its carry trade being unwound as arbitrageurs are paying back the yen that they earlier borrowed to buy higher-yielding but increasingly risky sovereign debt from countries such as Greece. Paying back these arbitrage loans has pushed up the yen's exchange rate by 12 per cent against the dollar so far during 2010. On Tuesday, October 5, Bank of Japan governor Masaaki Shirakawa announced that Japan had "no choice" but to "spend 5 trillion yen ($60 billion) to buy government bonds, corporate IOUs, real-estate investment trust funds and exchange-traded funds - the latter two a departure from past practice."

This "sterilization" of unwanted financial speculation is precisely what the United States has criticized China for doing. China has tried more "normal" ways to recycle its trade surplus, by seeking out U.S. companies to buy. But Congress would not let CNOOC buy into U.S. oil refinery capacity a few years ago, and the Canadian government is now being urged to block China's attempt to purchase its potash resources. This leaves little option for China and other countries but to hold their currencies stable by purchasing U.S. and European government bonds.

This has become the problem for all countries today. As presently structured, the international financial system rewards speculation and makes it difficult for central banks to maintain stability without forced loans to the U.S. Government that has long enjoyed a near monopoly in providing central bank reserves. As noted earlier, arbitrageurs obtain a twofold gain: the arbitrage margin between Brazil's nearly 12 per cent yield on its long-term government bonds and the cost of U.S. credit (1 per cent), plus the foreign-exchange gain resulting from the fact that the outflow from dollars into reals has pushed up the real's exchange rate some 30 per cent - from R$2.50 at the start of 2009 to $1.75 last week. Taking into account the ability to leverage $1 million of one's own equity investment to buy $100 million of foreign securities, the rate of return is 3000 per cent since January 2009.

Brazil has been more a victim than a beneficiary of what is euphemized as a "capital inflow." The inflow of foreign money has pushed up the real by 4 per cent in just over a month (from September 1 through early October). The past year's run-up has eroded the competitiveness of Brazilian exports, prompting the government to impose 4 per cent tax on foreign purchases of its bonds on October 4 to deter the currency's rise. "It's not only a currency war," Finance Minister Guido Mantega said on Monday. "It tends to become a trade war and this is our concern." And Thailand's central bank director Wongwatoo Potirat warned that his country was considering similar taxes and currency trade restrictions to stem the baht's rise, and Subir Gokarn, deputy governor of the Reserve Bank of India announced that his country also was reviewing defenses against the "potential threat" of inward capital flows."

Such inflows do not provide capital for tangible investment. They are predatory, and cause currency fluctuation that disrupts trade patterns while creating enormous trading profits for large financial institutions and their customers. Yet most discussions of exchange rate treat the balance of payments and exchange rates as if they were determined purely by commodity trade and "purchasing power parity," not by the financial flows and military spending that actually dominate the balance of payments. The reality is that today's financial interregnum - anarchic "free" markets prior to countries hurriedly putting up their own monetary defenses - provides the arbitrage opportunity of the century. This is what bank lobbyists have been pressing for. It has little to do with the welfare of workers.

The potentially largest speculative prize of all promises to be an upward revaluation of China's renminbi. The House Ways and Means Committee is backing this gamble, by demanding that China raise its exchange rate by the 20 per cent that the Treasury and Federal Reserve are suggesting. A revaluation of this magnitude would enable speculators to put down 1 per cent equity - say, $1 million to borrow $99 million and buy Chinese renminbi forward. The revaluation being demanded would produce a 2000 per cent profit of $20 million by turning the $100 million bet (and just $1 million "serious money") into $120 million. Banks can trade on much larger, nearly infinitely leveraged margins, much like drawing up CDO swaps and other derivative plays.

This kind of money already has been made by speculating on Brazilian, Indian and Chinese securities and those of other countries whose exchange rates have been forced up by credit-flight out of the dollar, which has fallen by 7 per cent against a basket of currencies since early September when the Federal Reserve floated the prospect of quantitative easing. During the week leading up to the IMF meetings in Washington, the Thai baht and Indian rupee soared in anticipation that the United States and Britain would block any attempts by foreign countries to change the financial system and curb disruptive currency gambling.

This capital outflow from the United States has indeed helped domestic banks rebuild their balance sheets, as the Fed intended. But in the process the international financial system has been victimized as collateral damage. This prompted Chinese officials to counter U.S. attempts to blame it for running a trade surplus by retorting that U.S. financial aggression "risked bringing mutual destruction upon the great economic powers.

From the gold-exchange standard to the Treasury-bill standard to "free credit" anarchy

Indeed, the standoff between the United States and other countries at the IMF meetings in Washington this weekend threatens to cause the most serious rupture since the breakdown of the London Monetary Conference in 1933. The global financial system threatens once again to break apart, deranging the world's trade and investment relationships - or to take a new form that will leave the United States isolated in the face of its structural long-term balance-of-payments deficit.

This crisis provides an opportunity - indeed, a need - to step back and review the longue duree of international financial evolution to see where past trends are leading and what paths need to be re-tracked. For many centuries prior to 1971, nations settled their balance of payments in gold or silver. This "money of the world," as Sir James Steuart called gold in 1767, formed the basis of domestic currency as well. Until 1971 each U.S. Federal Reserve note was backed 25 per cent by gold, valued at $35 an ounce. Countries had to obtain gold by running trade and payments surpluses in order to increase their money supply to facilitate general economic expansion. And when they ran trade deficits or undertook military campaigns, central banks restricted the supply of domestic credit to raise interest rates and attract foreign financial inflows.

As long as this behavioral condition remained in place, the international financial system operated fairly smoothly under checks and balances, albeit under "stop-go" policies when business expansions led to trade and payments deficits. Countries running such deficits raised their interest rates to attract foreign capital, while slashing government spending, raising taxes on consumers and slowing the domestic economy so as to reduce the purchase of imports.

What destabilized this system was war spending. War-related transactions spanning World Wars I and II enabled the United States to accumulate some 80 per cent of the world's monetary gold by 1950. This made the dollar a virtual proxy for gold. But after the Korean War broke out, U.S. overseas military spending accounted for the entire payments deficit during the 1950s and '60s and early '70s. Private-sector trade and investment was exactly in balance.

By August 1971, war spending in Vietnam and other foreign countries forced the United States to suspend gold convertibility of the dollar through sales via the London Gold Pool. But largely by inertia, central banks continued to settle their payments balances in U.S. Treasury securities. After all, there was no other asset in sufficient supply to form the basis for central bank monetary reserves. But replacing gold - a pure asset - with dollar-denominated U.S. Treasury debt transformed the global financial system. It became debt-based, not asset-based. And geopolitically, the Treasury-bill standard made the United States immune from the traditional balance-of-payments and financial constraints, enabling its capital markets to become more highly debt-leveraged and "innovative." It also enabled the U.S. Government to wage foreign policy and military campaigns without much regard for the balance of payments.

The problem is that the supply of dollar credit has become potentially infinite. The "dollar glut" has grown in proportion to the U.S. payments deficit. Growth in central bank reserves and sovereign-country funds has taken the form of recycling of dollar inflows into new purchases of U.S. Treasury securities - thereby making foreign central banks (and taxpayers) responsible for financing most of the U.S. federal budget deficit. The fact that this deficit is largely military in nature - for purposes that many foreign voters oppose - makes this lock-in particularly galling. So it hardly is surprising that foreign countries are seeking an alternative.

Contrary to most public media posturing, the U.S. payments deficit - and hence, other countries' payments surpluses - is not primarily a trade deficit. Foreign military spending has accelerated despite the Cold War ending with dissolution of the Soviet Union in 1991. Even more important has been rising capital outflows from the United States. Banks lent to foreign governments from Third World countries, to other deficit countries to cover their national payments deficits, to private borrowers to buy the foreign infrastructure being privatized, foreign stocks and bonds, and to arbitrageurs to borrow at a low interest rate to buy higher-yielding securities abroad.

The corollary is that other countries' balance-of-payments surpluses do not stem primarily from trade relations, but from financial speculation and a spillover of U.S. global military spending. Under these conditions the maneuvering for quick returns by banks and their arbitrage customers is distorting exchange rates for international trade. U.S. "quantitative easing" is coming to be perceived as a euphemism for a predatory financial attack on the rest of the world. Trade and currency stability are part of the "collateral damage" being caused by the Federal Reserve and Treasury flooding the economy with liquidity in their attempt to re-inflate U.S. asset prices. Faced with U.S. quantitative easing flooding the economy with reserves to "save the banks" from negative equity, all countries are obliged to act as "currency manipulators." So much money is made by purely financial speculation that "real" economies are being destroyed.

The coming capital controls

The global financial system is being broken up as U.S. monetary officials change the rules they laid down nearly half a century ago. Prior to the United States going off gold in 1971, nobody dreamed that an economy - especially the United States - would create unlimited credit on computer keyboards and not see its currency plunge. But that is what happens under the Treasury-bill standard of international finance. Under this condition, foreign countries can prevent their currencies from rising against the dollar (thereby pricing their labor and exports out of foreign markets) only by (1) recycling dollar inflows into U.S. Treasury securities, (2) by imposing capital controls, or (3) by avoiding use of the dollar or other currencies used by financial speculators in economies promoting "quantitative easing."

Malaysia successfully used capital controls during the 1997 Asian Crisis to prevent short-sellers from covering their bets. This confronted speculators with a short squeeze that George Soros says made him lose money on the attempted raid. Other countries are now reviewing how to impose capital controls to protect themselves from the tsunami of credit from flowing into their currencies and buying up their assets - along with gold and other commodities that are turning into vehicles for speculation rather than actual use in production. Brazil took a modest step along this path by using tax policy rather than outright capital controls when it taxed foreign buyers of its bonds last week.

If other nations take this route, it will reverse the policy of open and unprotected capital markets adopted after World War II. This trend threatens to lead to the kind of international monetary practice found from the 1930s into the '50s: dual exchange rates, one for financial movements and another for trade. It probably would mean replacing the IMF, World Bank and WTO with a new set of institutions, isolating U.S., British and Eurozone representation.

To defend itself, the IMF is proposing to act as a "central bank" creating what was called "paper gold" in the late 1960s - artificial credit in the form of Special Drawing Rights (SDRs). However, other countries already have complained that voting control remains dominated by the major promoters of arbitrage speculation - the United States, Britain and Eurozone. And the IMF's Articles of Agreement prevent countries from protecting themselves, characterizing this as "interfering" with "open capital markets." So the impasse reached this weekend appears to be permanent. As one report summarized matters: "'There is only one obstacle, which is the agreement of the members,' said a frustrated Kahn ."

Paul Martin, the former Canadian prime minister who helped create the G20 after the 1997-1998 Asian financial crisis, said "said the big powers were largely immune to being named andshamed." And in a Financial Times interview Mohamed El Erian, a former senior IMF official and now chief executive of Pimco said, "You have a burst pipe behind the wall and the water is coming out. You have to fix the pipe, not just patch the wall."

The BRIC countries are simply creating their own parallel system. In September, China supported a Russian proposal to start direct trading between the yuan and the ruble. It has brokered a similar deal with Brazil. And on the eve of the IMF meetings in Washington on Friday, October 8, Chinese Premier Wen stopped off in Istanbul to reach agreement with Turkish Prime Minister Erdogan to use their own currencies in tripling Turkish-Chinese trade to $50 billion over the next five years, effectively excluding the U.S. dollar. "We are forming an economic strategic partnership In all of our relations, we have agreed to use the lira and yuan," Mr. Erdogan said.

On the deepest economic lane, the present global financial breakdown is part of the price to be paid for the Federal Reserve and U.S. Treasury refusing to accept a prime axiom of banking: Debts that cannot be paid, won't be. They tried to "save" the banking system from debt write-downs in 2008 by keeping the debt overhead in place. The resulting repayment burden continues to shrink the U.S. economy, while the Fed's way to help the banks "earn their way out of negative equity" has been to fuel a flood of international financial speculation. Faced with normalizing world trade or providing opportunities for predatory finance, the U.S. and Britain have thrown their weigh behind the latter. Targeted economies understandably seeking alternative arrangements.

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) and Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy. He can be reached via his website, mh@michael-hudson.com

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Maude Barlow: Our Commons Future Is Already Here

A stirring call to unite the environmental and global justice movement from Maude Barlow

Our Commons Future Is Already Here

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Maude Barlow gave this stirring plenary speech, full of hope even in the face of ecological disasters, to the Environmental Grantmakers Association annual retreat in Pacific Grove, California. Barlow, a former UN Senior Water Advisor, is National Chairperson of the Council of Canadians and founder of the Blue Planet Project.

“Every now and then in history, the human race takes a collective step forward in its evolution. Such a time is upon us now.”

We all know that the earth and all upon it face a growing crisis. Global climate change is rapidly advancing, melting glaciers, eroding soil, causing freak and increasingly wild storms, and displacing untold millions from rural communities to live in desperate poverty in peri-urban slums. Almost every human victim lives in the global South, in communities not responsible for greenhouse gas emissions. The atmosphere has already warmed up almost a full degree in the last several decades and a new Canadian study reports that we may be on course to add another 6 degrees Celsius (10.8 degrees Fahrenheit) by 2100.

Half the tropical forests in the world – the lungs of our ecosystems – are gone; by 2030, at the current rate of harvest, only 10% will be left standing. Ninety percent of the big fish in the sea are gone, victim to wanton predatory fishing practices. Says a prominent scientist studying their demise “there is no blue frontier left.” Half the world’s wetlands – the kidneys of our ecosystems – were destroyed in the 20th century. Species extinction is taking place at a rate one thousand times greater than before humans existed. According to a Smithsonian scientist, we are headed toward a “biodiversity deficit” in which species and ecosystems will be destroyed at a rate faster than Nature can create new ones.

We are polluting our lakes, rivers and streams to death. Every day, 2 million tons of sewage and industrial and agricultural waste are discharged into the world’s water, the equivalent of the weight of the entire human population of 6.8 billion people. The amount of wastewater produced annually is about six times more water than exists in all the rivers of the world. A comprehensive new global study recently reported that 80% of the world’s rivers are now in peril, affecting 5 billion people on the planet. We are also mining our groundwater far faster than nature can replenish it, sucking it up to grow water-guzzling chemical-fed crops in deserts or to water thirsty cities that dump an astounding 200 trillion gallons of land-based water as waste in the oceans every year. The global mining industry sucks up another 200 trillion gallons, which it leaves behind as poison. Fully one third of global water withdrawals are now used to produce biofuels, enough water to feed the world. A recent global survey of groundwater found that the rate of depletion more than doubled in the last half century. If water was drained as rapidly from the Great Lakes, they would be bone dry in 80 years.

The global water crisis is the greatest ecological and human threat humanity has ever faced. As Vast areas of the planet are becoming desert as we suck the remaining waters out of living ecosystems and drain remaining aquifers in India, China, Australia, most of Africa, all of the Middle East, Mexico, Southern Europe, US Southwest and other places. Dirty water is the biggest killer of children; every day more children die of water borne disease than HIV/AIDS, malaria and war together. In the global South, dirty water kills a child every three and a half seconds. And it is getting worse, fast. By 2030, global demand for water will exceed supply by 40%— an astounding figure foretelling of terrible suffering.

Knowing there will not be enough food and water for all in the near future, wealthy countries and global investment, pension and hedge funds are buying up land and water, fields and forests in the global South, creating a new wave of invasive colonialism that will have huge geo-political ramifications. Rich investors have already bought up an amount of land double the size of the United Kingdom in Africa alone.

We Simply Cannot Continue on the Present Path

I do not think it possible to exaggerate the threat to our earth and every living thing upon it. Quite simply we cannot continue on the path that brought us here. Einstein said that problems cannot be solved by the same level of thinking that created them. While mouthing platitudes about caring for the earth, most of our governments are deepening the crisis with new plans for expanded resource exploitation, unregulated free trade deals, more invasive investment, the privatization of absolutely everything and unlimited growth. This model of development is literally killing the planet.

Unlimited growth assumes unlimited resources, and this is the genesis of the crisis. Quite simply, to feed the increasing demands of our consumer based system, humans have seen nature as a great resource for our personal convenience and profit, not as a living ecosystem from which all life springs. So we have built our economic and development policies based on a human-centric model and assumed either that nature would never fail to provide or that, where it does fail, technology will save the day.

Two Problems that Hinder the Environmental Movement

From the perspective of the environmental movement, I see two problems that hinder us in our work to stop this carnage. The first is that, with notable exceptions, most environmental groups either have bought into the dominant model of development or feel incapable of changing it. The main form of environmental protection in industrialized countries is based on the regulatory system, legalizing the discharge of large amounts of toxics into the environment. Environmentalists work to minimize the damage from these systems, essentially fighting for inadequate laws based on curbing the worst practices, but leaving intact the system of economic globalization at the heart of the problem. Trapped inside this paradigm, many environmentalists essentially prop up a deeply flawed system, not imagining they are capable of creating another.

Hence, the support of false solutions such as carbon markets, which, in effect, privatize the atmosphere by creating a new form of property rights over natural resources. Carbon markets are predicated less on reducing emissions than on the desire to make carbon cuts as cheap as possible for large corporations.

Another false solution is the move to turn water into private property, which can then be hoarded, bought and sold on the open market. The latest proposals are for a water pollution market, similar to carbon markets, where companies and countries will buy and sell the right to pollute water. With this kind of privatization comes a loss of public oversight to manage and protect watersheds. Commodifying water renders an earth-centred vision for watersheds and ecosystems unattainable.

Then there is PES, or Payment for Ecological Services, which puts a price tag on ecological goods – clean air, water, soil etc, – and the services such as water purification, crop pollination and carbon sequestration that sustain them. A market model of PES is an agreement between the “holder” and the “consumer” of an ecosystem service, turning that service into an environmental property right. Clearly this system privatizes nature, be it a wetland, lake, forest plot or mountain, and sets the stage for private accumulation of nature by those wealthy enough to be able to buy, hoard sell and trade it. Already, northern hemisphere governments and private corporations are studying public/private /partnerships to set up lucrative PES projects in the global South. Says Friends of the Earth International, “Governments need to acknowledge that market-based mechanisms and the commodification of biodiversity have failed both biodiversity conservation and poverty alleviation.”

The second problem with our movement is one of silos. For too long environmentalists have toiled in isolation from those communities and groups working for human and social justice and for fundamental change to the system. On one hand are the scientists, scholars, and environmentalists warning of a looming ecological crisis and monitoring the decline of the world’s freshwater stocks, energy sources and biodiversity. On the other are the development experts, anti-poverty advocates, and NGOs working to address the inequitable access to food, water and health care and campaigning for these services, particularly in the global South. The assumption is that these are two different sets of problems, one needing a scientific and ecological solution, the other needing a financial solution based on pulling money from wealthy countries, institutions and organizations to find new resources for the poor.

The clearest example I have is in the area I know best, the freshwater crisis. It is finally becoming clear to even the most intransigent silo separatists that the ecological and human water crises are intricately linked, and that to deal effectively with either means dealing with both. The notion that inequitable access can be dealt with by finding more money to pump more groundwater is based on a misunderstanding that assumes unlimited supply, when in fact humans everywhere are overpumping groundwater supplies. Similarly, the hope that communities will cooperate in the restoration of their water systems when they are desperately poor and have no way of conserving or cleaning the limited sources they use is a cruel fantasy. The ecological health of the planet is intricately tied to the need for a just system of water distribution.

The global water justice movement (of which I have the honour of being deeply involved) is, I believe, successfully incorporating concerns about the growing ecological water crisis with the promotion of just economic, food and trade policies to ensure water for all. We strongly believe that fighting for equitable water in a world running out means taking better care of the water we have, not just finding supposedly endless new sources. Through countless gatherings where we took the time to really hear one another – especially grassroots groups and tribal peoples closest to the struggle – we developed a set of guiding principles and a vision for an alternative future that are universally accepted in our movement and have served us well in times of stress. We are also deeply critical of the trade and development policies of the World Trade Organization, the World Bank and the World Water Council (whom I call the “Lords of water”), and we openly challenge their model and authority.

Similarly, a fresh and exciting new movement exploded onto the scene in Copenhagen and set all the traditional players on their heads. The climate justice movement whose motto is Change the System, Not the Climate, arrived to challenge not only the stalemate of the government negotiators but the stale state of too cosy alliances between major environmental groups, international institutions and big business – the traditional “players” on the climate scene. Those climate justice warriors went on to gather at another meeting in Cochabamba, Bolivia, producing a powerful alternative declaration to the weak statement that came out of Copenhagen. The new document forged in Bolivia put the world on notice that business as usual is not on the climate agenda.

How the Commons Fits In

I deeply believe it is time for us to extend these powerful new movements, which fuse the analysis and hard work of the environmental community with the vision and commitment of the justice community, into a whole new form of governance that not only challenges the current model of unlimited growth and economic globalization but promotes an alternative that will allow us and the Earth to survive. Quite simply, human-centred governance systems are not working and we need new economic, development, and environmental policies as well as new laws that articulate an entirely different point of view from that which underpins most governance systems today. At the centre of this new paradigm is the need to protect natural ecosystems and to ensure the equitable and just sharing of their bounty. It also means the recovery of an old concept called the Commons.

The Commons is based on the notion that just by being members of the human family, we all have rights to certain common heritages, be they the atmosphere and oceans, freshwater and genetic diversity, or culture, language and wisdom. In most traditional societies, it was assumed that what belonged to one belonged to all. Many indigenous societies to this day cannot conceive of denying a person or a family basic access to food, air, land, water and livelihood. Many modern societies extended the same concept of universal access to the notion of a social Commons, creating education, health care and social security for all members of the community. Since adopting the Universal Declaration of Human Rights in 1948, governments are obliged to protect the human rights, cultural diversity and food security of their citizens.

A central characteristic of the Commons is the need for careful collaborative management of shared resources by those who use them and allocation of access based on a set of priorities. A Commons is not a free-for-all. We are not talking about a return to the notion that nature’s capacity to sustain our ways is unlimited and anyone can use whatever they want, however they want, whenever they want. It is rooted rather in a sober and realistic assessment of the true damage that has already been unleashed on the world’s biological heritage as well as the knowledge that our ecosystems must be managed and shared in a way that protects them now and for all time.

Also to be recovered and expanded is the notion of the Public Trust Doctrine, a longstanding legal principle which holds that certain natural resources, particularly air, water and the oceans, are central to our very existence and therefore must be protected for the common good and not allowed to be appropriated for private gain. Under the Public Trust Doctrine, governments exercise their fiduciary responsibilities to sustain the essence of these resources for the long-term use and enjoyment of the entire populace, not just the privileged who can buy inequitable access.

The Public Trust Doctrine was first codified in 529 A.D. by Emperor Justinius who declared: “By the laws of nature, these things are common to all mankind: the air, running water, the sea and consequently the shores of the sea.” U.S. courts have referred to the Public Trust Doctrine as a “high, solemn and perpetual duty” and held that the states hold title to the lands under navigable waters “in trust for the people of the State.” Recently, Vermont used the Public Trust Doctrine to protect its groundwater from rampant exploitation, declaring that no one owns this resource but rather, it belongs to the people of Vermont and future generations. The new law also places a priority for this water in times of shortages: water for daily human use, sustainable food production and ecosystem protection takes precedence over water for industrial and commercial use.

An exciting new network of Canadian, American and First Nations communities around the Great Lakes is determined to have these lakes names a Commons, a public trust and a protected bioregion.

Equitable access to natural resources is another key character of the Commons. These resources are not there for the taking by private interests who can then deny them to anyone without means. The human right to land, food, water, health care and biodiversity are being codified as we speak from nation-state constitutions to the United Nations. Ellen Dorsey and colleagues have recently called for a human rights approach to development, where the most vulnerable and marginalized communities take priority in law and practice. They suggest renaming the United Nation’s Millennium Development Goals the Millennium Development Rights and putting the voices of the poor at the centre.

This would require the meaningful involvement of those affected communities, especially Indigenous groups, in designing and implementing development strategies. Community-based governance is another basic tenet of the Commons.

Inspiring Successes Around the Globe

Another crucial tenet of the new paradigm is the need to put the natural world back into the centre of our existence. If we listen, nature will teach us how to live. Again, using the issue I know best, we know exactly what to do to create a secure water future: protection and restoration of watersheds; conservation; source protection; rainwater and storm water harvesting; local, sustainable food production; and meaningful laws to halt pollution. Martin Luther King Jr. said legislation may not change the heart but it will restrain the heartless.

Life and livelihoods have been returned to communities in Rajasthan, India, through a system of rainwater harvesting that has made desertified land bloom and rivers run again thanks to the collective action of villagers. The city of Salisbury South Australia, has become an international wonder for greening desertified land in the wake of historic low flows of the Murray River. It captures every drop of rain that falls from the sky and collects storm and wastewater and funnels it all through a series of wetlands, which clean it, to underground natural aquifers, which store it, until it is needed.

In a “debt for nature” swap, Canada, the U.S. and The Netherlands cancelled the debt owed to them by Colombia in exchange for the money being used for watershed restoration. The most exciting project is the restoration of 16 large wetland areas of the Bogotá River, which is badly contaminated, to pristine condition. Eventually the plan is to clean up the entire river. True to principles of the Commons, the indigenous peoples living on the sites were not removed, but rather, have become caretakers of these protected and sacred places.

The natural world also needs its own legal framework, what South African environmental lawyer Cormac Culllinen calls “wild law.” The quest is a body of law that recognizes the inherent rights of the environment, other species and water itself outside of their usefulness to humans. A wild law is a law to regulate human behaviour in order to protect the integrity of the earth and all species on it. It requires a change in the human relationship with the natural world from one of exploitation to one of democracy with other beings. If we are members of the earth’s community, then our rights must be balanced against those of plants, animals, rivers and ecosystems. In a world governed by wild law, the destructive, human-centred exploitation of the natural world would be unlawful. Humans would be prohibited from deliberately destroying functioning ecosystems or driving other species to extinction.

This kind of legal framework is already being established. The Indian Supreme Court has ruled that protection of natural lakes and ponds is akin to honouring the right to life – the most fundamental right of all according to the Court. Wild law was the inspiration behind an ordinance in Tamaqua Borough, Pennsylvania that recognized natural ecosystems and natural communities within the borough as “legal persons” for the purposes of stopping the dumping of sewage sludge on wild land. It has been used throughout New England in a series of local ordinances to prevent bottled water companies from setting up shop in the area. Residents of Mount Shasta California have put a wild law ordinance on the November 2010 ballot to prevent cloud seeding and bulk water extraction within city limits.

In 2008, Ecuador’s citizens voted two thirds in support of a new constitution, which says, “Natural communities and ecosystems possess the unalienable right to exist, flourish and evolve within Ecuador. Those rights shall be self-executing, and it shall be the duty and right of all Ecuadorian governments, communities, and individuals to enforce those rights.” Bolivia has recently amended its constitution to enshrine the philosophy of “living well” as a means of expressing concern with the current model of development and signifying affinity with nature and the need for humans to recognize inherent rights of the earth and other living beings. The government of Argentina recently moved to protect its glaciers by banning mining and oil drilling in ice zones. The law sets standards for protecting glaciers and surrounding ecosystems and creates penalties just for harming the country’s fresh water heritage.

The most far-reaching proposal for the protection of nature itself is the Universal Declaration on the Rights of Mother Earth that was drafted at the April 2010 World People’s Conference on Climate Change in Cochabamba, Bolivia and endorsed by the 35,000 participants there. We are writing a book setting out our case for this Declaration to the United Nations and the world. The intent is for it to become a companion document to the 1948 Universal Declaration of Human Rights. Every now and then in history, the human race takes a collective step forward in its evolution. Such a time is upon us now as we begin to understand the urgent need to protect the earth and its ecosystems from which all life comes. The Universal Declaration on the Rights of Mother Earth must become a history-altering covenant toward a just and sustainable future for all.

What Can We Do Right Now?

What might this mean for funders and other who share these values? Well, let me be clear: the hard work of those fighting environmental destruction and injustice must continue. I am not suggesting for one moment that his work is not important or that the funding for this work is not needed. I do think however, that there are ways to move the agenda I have outlined here forward if we put our minds to it.

Anything that helps bridge the solitudes and silos is pure gold. Bringing together environmentalists and justice activists to understand one another’s work and perspective is crucial. Both sides have to dream into being – together – the world they know is possible and not settle for small improvements to the one we have. This means working for a whole different economic, trade and development model even while fighting the abuses existing in the current one. Given a choice between funding an environmental organization that basically supports the status quo with minor changes and one that promotes a justice agenda as well, I would argue for the latter.

Support that increases capacity at the base is also very important, as is funding that connects domestic to international struggle, always related even when not apparent. Funding for those projects and groups fighting to abolish or fundamentally change global trade and banking institutions that maintain corporate dominance and promote unlimited and unregulated growth is still essential.

How Clean Water Became a Human Right

We all, as well, have to find ways to thank and protect those groups and governments going out on a limb to promote an agenda for true change. A very good example is President Evo Morales of Bolivia, who brought the climate justice movement together in Cochabamba last April and is leading the campaign at the UN to promote the Rights of Mother Earth.

It was this small, poor, largely indigenous landlocked country, and its former coca-farmer president, that introduced a resolution to recognize the human right to water and sanitation this past June to the UN General Assembly, taking the whole UN community by surprise. The Bolivian UN Ambassador, Pablo Solon, decided he was fed up with the “commissions” and “further studies” and “expert consultations” that have managed to put off the question of the right to water for at least a decade at the UN and that it was time to put an “up or down” question to every country: do you or do you not support the human right to drinking water and sanitation?

A mad scramble ensued as a group of Anglo-Western countries, all promoting to some extent the notion of water as a private commodity, tried to derail the process and put off the vote. The U.S., Canada, the UK, Australia and New Zealand even cooked up a “consensus” resolution that was so bland everyone would likely have handily voted for it at an earlier date. But sitting beside the real thing, it looked like what it was – an attempt, yet again, to put off any meaningful commitment at the UN to the billions suffering from lack of clean water. When that didn’t work, they toiled behind the scenes to weaken the wording of the Bolivian resolution but to no avail. On July 28, 2010, the UN General Assembly overwhelmingly voted to adopt a resolution recognizing the human right to water and sanitation. One hundred and twenty two countries voted for the resolution; 41 abstained; not one had the courage to vote against.

I share this story with you not only because my team and I were deeply involved in the lead up to this historic vote and there for it the day it was presented, but because it was the culmination of work done by a movement operating on the principles I have outlined above.

We took the time to establish the common principles that water is a Commons that belongs to the earth, all species, and the future, and is a fundamental human right not to be appropriated for profit. We advocate for the Public Trust Doctrine in law at every level of government. We set out to build a movement that listens first and most to the poorest among us, especially indigenous and tribal voices. We work with communities and groups in other movements, especially those working on climate justice and trade justice. We understand the need for careful collaborative cooperation to restore the functioning of watersheds and we have come to revere the water that gives life to all things upon the Earth. While we clearly have much left to do, these water warriors inspire me and give me hope. They get me out of bed every morning to fight another day.

I believe I am in a room full of stewards and want, then to leave you with these words from Lord of the Rings. This is Gandalf speaking the night before he faces a terrible force that threatens all living beings. His words are for you.

_“The rule of no realm is mine, but all worthy things that are in peril, as the world now stand, those are my care. And for my part, I shall not wholly fail in my task if anything passes through this night that can still grow fair, or bear fruit, and flower again in the days to come.

For I too am a steward, did you not know?” _ —J.R.R. Tolkien

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Tom Turnipseed: Money Talks: Corporations Become Humans and Curse Their Creator

Money Talks: Corporations Become Humans and Curse Their Creator

by Tom Turnipseed article link

October 13, 2010 | CommonDreams

The Supreme Court's recent decision in Citizens United v. Federal Election Commission, gave corporations, unions and individuals First Amendment rights to donate unlimited amounts of money to buy political ads for candidates without disclosure. Meanwhile, corporate fat-cats, whose corporations are created by government, rant and rave against government and condemn government creation of public sector jobs programs for the poor and unemployed.

In Citizens United the five conservative justices composing the majority said, "... this court now concludes that independent expenditures, including those made by corporations, do not give rise to corruption or to the appearance of corruption. That speakers may have influence over or access to elected officials does not mean those officials are corrupt. And the appearance of influence or access will not cause the electorate to lose faith in this democracy." Can we keep faith in a government whose highest court makes such an absurd comment about big bucks being spent by "speakers" sponsored by the US Chamber of Commerce and other special interests who lobby government for corporate and big moneyed interests? The Chamber's lobbyists led the defeat of the Disclose Act to close the loopholes created by the Citizens United decision.

Foreign corporations contribute money that goes into a Chamber of Commerce fund used to pay for political ads to defeat candidates who do not tow the line for their profits over people agenda. Playing key roles in the effort are Karl Rove who was George W. Bush's political hatchet man and the late Lee Atwater's protégé, and Ed Gillespie, former Republican National Committee Chairman and another Bush advisor. They are involved with a group called Crossroads GPS and its associated organization, American Crossroads. The groups are running ads in key Senate and Congressional races and are trying to raise $52 million for ads in the November elections

The Court's conservative majority of justices were appointed by conservative politicians in the White House and confirmed by conservative US Senators who owed much of their political success to wealthy contributors and corporate interests. The history of corporate influence and control of our government is depressing.

In the 1886 case of Santa Clara County v. Southern Pacific Railroad Company the U.S. Supreme Court "ruled" that corporations are "persons" and have the same rights as human beings based on the 14th Amendment, which was intended to protect the rights of former slaves. However, in the decision itself the Supreme Court never ruled on personhood, but a former railroad president named J.C. Bancroft Davis who was the court reporter put the "ruling" in the decision's headnote:

"The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does."

Headnotes are not law but subsequent cases dealing with the issue accepted the headnote as precedent to give corporations rights under the Fourteenth Amendment like natural persons. Justice William O. Douglas's later lamented that, "corporations were now armed with constitutional prerogatives."

The Buckley v. Valeo decision in 1976 said donations could be restricted as potentially corrupting, but there should be no ceiling on expenditures since that could be like limiting speech itself (money equals speech). The McCain-Feingold law in 2002 closed a loophole that allowed companies to spend money "independently" just before elections designed to defeat targeted candidates, but that loophole was re-opened with Citizens United. The Court struck down the provision of the McCain-Feingold Act that prohibited all corporations, both for-profit and not-for-profit, and unions from broadcasting "electioneering communications" that mentioned a candidate within 60 days of a general election.

Ironically, government initiatives that would put people to work rebuilding our infrastructure are condemned as socialism by the plutocrats of corporate America. In an Orwellian twist the money magnates would have us forget that corporations are created by government statutes. Government limits their personal liability for acts perpetrated by them under the auspices of their corporations.

Corporations would not exist if government statutes did not allow them to make profits and shield shareholders from liability if the corporation is caught stealing, or otherwise damaging people. Corporate employees, including CEOs and other officers of a failing corporation can lose their jobs but are not personally liable to the corporation's creditors for their mismanagement. Corporations control the system that creates them by making campaign contributions to our elected officials, and by lobbying and influence peddling. Hiring relatives and staff of members of Congress also helps the big money interests to manipulate our government. Such tactics have enabled them to water down attempts to regulate their out-of-control greed that caused the worst economic recession since the great depression.

Democracy dies when corporations are given the rights of human beings and corporate bribery becomes free speech.

Tom Turnipseed is an attorney, writer and peace activist in Columbia, SC.

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