Thursday, December 30, 2010

Separating Terror from Terrorism

from STRATFOR

Separating Terror from Terrorism
December 30, 2010 | 0955 GMT
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Separating Terror from Terrorism

By Scott Stewart

On Dec. 15, the FBI and the Department of Homeland Security (DHS) sent a joint bulletin to state and local law enforcement agencies expressing their concern that terrorists may attack a large public gathering in a major U.S. metropolitan area during the 2010 holiday season. That concern was echoed by contacts at the FBI and elsewhere who told STRATFOR they were almost certain there was going to be a terrorist attack launched against the United States over Christmas.

Certainly, attacks during the December holiday season are not unusual. There is a history of such attacks, from the bombing of Pan Am Flight 103 on Dec. 21, 1988, and the thwarted millennium attacks in December 1999 and January 2000 to the post-9/11 airliner attacks by shoe bomber Richard Reid on Dec. 22, 2001, and by underwear bomber Umar Farouk Abdulmutallab on Dec. 25, 2009. Some of these plots have even stemmed from the grassroots. In December 2006, Derrick Shareef was arrested while planning an attack he hoped to launch against an Illinois shopping mall on Dec. 22.

Mass gatherings in large metropolitan areas have also been repeatedly targeted by jihadist groups and lone wolves. In addition to past attacks and plots directed against the subway systems in major cities such as Madrid, London, New York and Washington, 2010 saw failed attacks against the crowds in New York’s Times Square on May 1 and in Pioneer Courthouse Square in downtown Portland, Ore., on Nov. 26.

With this history, it is understandable that the FBI and the DHS would be concerned about such an attack this year and issue a warning to local and state law enforcement agencies in the United States. This American warning also comes on the heels of similar alerts in Europe, warnings punctuated by the Dec. 11 suicide attack in Stockholm.

So far, the 2010 holiday season has been free from terrorist attacks, but as evidenced by all the warnings and concern, this season has not been free from the fear of such attacks, the psychological impact known as “terror.” In light of these recent developments, it seems appropriate discuss the closely related phenomena of terrorism and terror.

Propaganda of the Deed

Nineteenth-century anarchists promoted what they called the “propaganda of the deed,” that is, the use of violence as a symbolic action to make a larger point, such as inspiring the masses to undertake revolutionary action. In the late 1960s and early 1970s, modern terrorist organizations began to conduct operations designed to serve as terrorist theater, an undertaking greatly aided by the advent and spread of broadcast media. Examples of attacks designed to grab international media attention are the September 1972 kidnapping and murder of Israeli athletes at the Munich Olympics and the December 1975 raid on OPEC headquarters in Vienna. Aircraft hijackings followed suit, changing from relatively brief endeavors to long, drawn-out and dramatic media events often spanning multiple continents.

Today, the proliferation of 24-hour television news networks and the Internet have allowed the media to broadcast such attacks live and in their entirety. This development allowed vast numbers of people to watch live as the World Trade Center towers collapsed on Sept. 11, 2001, and as teams of gunmen ran amok in Mumbai in November 2008.

This exposure not only allows people to be informed about unfolding events, it also permits them to become secondary victims of the violence they have watched unfold before them. As the word indicates, the intent of “terrorism” is to create terror in a targeted audience, and the media allow that audience to become far larger than just those in the immediate vicinity of a terrorist attack. I am not a psychologist, but even I can understand that on 9/11, watching the second aircraft strike the South Tower, seeing people leap to their deaths from the windows of the World Trade Center Towers in order to escape the ensuing fire and then watching the towers collapse live on television had a profound impact on many people. A large portion of the United State was, in effect, victimized, as were a large number of people living abroad, judging from the statements of foreign citizens and leaders in the wake of 9/11 that “We are all Americans.”

During that time, people across the globe became fearful, and almost everyone was certain that spectacular attacks beyond those involving the four aircraft hijacked that morning were inevitable — clearly, many people were shaken to their core by the attacks. A similar, though smaller, impact was seen in the wake of the Mumbai attacks. People across India were fearful of being attacked by teams of Lashkar-e-Taiba gunmen, and concern spread around the world about Mumbai-style terrorism. Indeed, this concern was so great that we felt compelled to write an analysis emphasizing that the tactics employed in Mumbai were not new and that, while such operations could kill people, the approach would be less successful in the United States and Europe than it was in Mumbai.

Terror Magnifiers

These theatrical attacks have a strange hold over the human imagination and can create a unique sense of terror that dwarfs the normal reaction to natural disasters that are many times greater in magnitude. For example, in the 2004 Asian tsunami, more than 227,000 people died, while fewer than 3,000 people died on 9/11. Yet the 9/11 attacks produced not only a sense of terror but also a geopolitical reaction that has exerted a profound and unparalleled impact upon world events over the past decade. Terrorism clearly can have a powerful impact on the human psyche — so much so that even the threat of a potential attack can cause fear and apprehension, as seen by the reaction to the recent spate of warnings about attacks occurring over the holidays.

As noted above, the media serve as a magnifier of this anxiety and terror. Television news, whether broadcast on the airwaves or over the Internet, allows people to remotely and vicariously experience a terrorist event, and this is reinforced by the print media. While part of this magnification is due merely to the nature of television as a medium and the 24-hour news cycle, bad reporting and misunderstanding can also help build hype and terror. For example, when Mexican drug cartels began placing small explosive devices in vehicles in Ciudad Juarez and Ciudad Victoria this past year, the media hysterically reported that the cartels were using car bombs. Clearly, the journalists failed to appreciate the significant tactical and operational differences between a small bomb placed in a car and the far larger and more deadly vehicle-borne explosive device.

The traditional news media are not alone in the role of terror magnifier. The Internet has also become an increasingly effective conduit for panic and alarm. From breathless (and false) claims in 2005 that al Qaeda had pre-positioned nuclear weapons in the United States and was preparing to attack nine U.S. cities and kill 4 million Americans in an operation called “American Hiroshima” to claims in 2010 that Mexican drug cartels were still smuggling nuclear weapons for Osama bin Laden, a great deal of fearmongering can spread over the Internet. Website operators who earn advertising revenue based on the number of unique visitors who read the stories featured on their sites have an obvious financial incentive for publishing outlandish and startling terrorism claims. The Internet also has produced a wide array of other startling revelations, including the oft-recycled e-mail chain stating that an Israeli counterterrorism expert has predicted al Qaeda will attack six, seven or eight U.S. cities simultaneously “within the next 90 days.” This e-mail was first circulated in 2005 and has been periodically re-circulated over the past five years. Although it is an old, false prediction, it still creates fear every time it is circulated.

Sometimes a government can act as a terror magnifier. Whether it is the American DHS raising the threat level to red or the head of the French internal intelligence service stating that the threat of terrorism in that country has never been higher, such warnings can produce widespread public concern. As we’ve noted elsewhere, there are a number of reasons for such warnings, from trying to pre-empt a terrorist attack when there is incomplete intelligence to a genuine concern for the safety of citizens in the face of a known threat to less altruistic motives such as political gain or bureaucratic maneuvering (when an agency wants to protect itself from blame in case there is an attack). As seen by the public reaction to the many warnings in the wake of 9/11, including recommendations that citizens purchase plastic sheeting and duct tape to protect themselves from chemical and biological attack, such warnings can produce immediate panic, although, over time, as threats and warnings prove to be unfounded, this panic can turn into threat fatigue.

Those seeking to terrorize can and do use these magnifiers to produce terror without having to go to the trouble of conducting attacks. The empty threats made by bin Laden and his inner circle that they were preparing an attack larger than 9/11 — threats propagated by the Internet, picked up by the media and then reacted to by governments — are prime historical examples of this.

In recent weeks, we saw a case where panic was caused by a similar confluence of events. In October, al Qaeda in the Arabian Peninsula (AQAP) issued the second edition of Inspire, its English-language magazine. As we discussed in our analysis of the magazine, its Open Source Jihad section pointed out a number of ways that attacks could be conducted by grassroots jihadists living in the West. In addition to the suggestion that an attacker could weld butcher knives onto the bumper of a pickup truck and drive it through a crowd, or use a gun as attackers did in Little Rock and at Fort Hood, another method briefly mentioned was that grassroots operatives could use ricin or cyanide in attacks. In response, the DHS decided to investigate further and even went to the trouble of briefing corporate security officers from the hotel and restaurant industries on the potential threat. CBS news picked up the story and ran an exclusive report compete with a scary poison logo superimposed over photos of a hotel, a dinner buffet and an American flag. The report made no mention of the fact that the AQAP article paid far less attention to the ricin and cyanide suggestion than it did to what it called the “ultimate mowing machine,” the pickup with butcher knives, or even the more practical — and far more likely — armed assault.

This was a prime example of terror magnifiers working with AQAP to produce fear.

Separation

Groups such as al Qaeda clearly recognize the difference between terrorist attacks and terror. This is seen not only in the use of empty threats to sow terror but also in the way terrorist groups claim success for failed attacks. For example, AQAP declared the failed Christmas Day 2009 “underwear” bombing to be a success due to the effect it had on the air-transportation system. In a special edition of Inspire magazine published in November following the failed attack against cargo aircraft, AQAP trumpeted the operation as a success, citing the fear, disruption and expense that resulted. AQAP claimed the cargo bomb plot and the Christmas Day plot were part of what it called “Operation Hemorrhage,” an effort to cause economic damage and fear and not necessarily kill large numbers of people.

As we’ve noted before, practitioners of terrorism lose a great deal of their ability to create terror if the people they are trying to terrorize adopt the proper mindset. A critical part of this mindset is placing terrorism in perspective. Terrorist attacks are going to continue to happen because there are a wide variety of militant groups and individuals who seek to use violence as a means of influencing a government — either their own or someone else’s.

There have been several waves of terrorism over the past century, but it has been a fairly constant phenomenon, especially over the past few decades. While the flavors of terror may vary from Marxist and nationalist strains to Shiite Islamist to jihadist, it is certain that even if al Qaeda and its jihadist spawn were somehow magically eradicated tomorrow, the problem of terrorism would persist.

Terrorist attacks are also relatively easy to conduct, especially if the assailant is not concerned about escaping after the attack. As AQAP has noted in its Inspire magazine, a determined person can conduct attacks using a variety of simple weapons, from a pickup to a knife, axe or gun. And while the authorities in the United States and elsewhere have been quite successful in foiling attacks over the past couple of years, there are a large number of vulnerable targets in the open societies of the West, and Western governments simply do not have the resources to protect everything — not even authoritarian police states can protect everything. This all means that some terrorist attacks will invariably succeed.

How the media, governments and populations respond to those successful strikes will shape the way that the attackers gauge their success. Obviously, the 9/11 attacks, which caused the United States to invade Afghanistan (and arguably Iraq) were far more successful than bin Laden and company could ever have hoped. The London bombings on July 7, 2005, where the British went back to work as usual the next day, were seen as less successful.

In the final analysis, the world is a dangerous place. Everyone is going to die, and some people are certain to die in a manner that is brutal or painful. In 2001, more than 42,000 people died from car crashes in the United States and hundreds of thousands of Americans died from heart disease and cancer. The 9/11 attacks were the bloodiest terrorist attacks in world history, and yet even those historic attacks resulted in the deaths of fewer than 3,000 people, a number that pales in comparison to deaths by other causes. This is in no way meant to trivialize those who died on 9/11, or the loss their families suffered, but merely to point out that lots of people die every day and that their families are affected, too.

If the public will take a cue from groups like AQAP, it too can separate terrorism from terror. Recognizing that terrorist attacks, like car crashes and cancer and natural disasters, are a part of the human condition permits individuals and families to practice situational awareness and take prudent measures to prepare for such contingencies without becoming vicarious victims. This separation will help deny the practitioners of terrorism and terror the ability to magnify their reach and power.


Read more: Separating Terror from Terrorism | STRATFOR

Ultimate Cost Of 0% Money

http://www.kitco.com/ind/willie/dec292010.html



Ultimate Cost Of 0% Money


By Jim Willie CB

Dec 29 2010 3:11PM
www.GoldenJackass.com


Since the early 1990 decade, the nation's maestros have promulgated the notion that cheap money is a beneficial factor for the sustenance of wealth, for economic development, for the standard of living, for the robust industries, in general for the American society. Nothing could be further from the truth, but even today the reckless US economists from the Keynesian Camp and their controllers from Wall Street have convinced the multitudes that cheap money is a good thing. Cheap money comes with a deadly ultimate cost. The inept professor occupying the US Federal Reserve Chairman post has gone on record claiming the US banking sector has a secret weapon in the Printing Pre$$ that it can use with zero cost, in its electronic form. Nothing could be further from the truth. The Clinton & Rubin team began the distortion of the Consumer Price Index, ostensibly to reduce Social Security and USGovt pension benefits in cost of living raises. They wanted to cause a massive USTreasury Bond bull market, and succeeded in doing so. They wished also to bring down the USTreasury Bond yields. The infamous Fed Valuation Model dictated that as rates rose, stocks fell. So the scheme to manipulate the bond market began with the venerable craftsmen of rigged markets, ruined engines, and mega-fraud schemes. They taught from their high priest pulpits that cheap money was good for the financial markets. Nothing could be further from the truth.

Many analysts have sought the underlying root cause for the systemic failure of the USEconomy, the US Banks, and the USFed itself. One can start in pursuit of answers by looking at the cause being a sequence of costly wars and the ensuing monetary inflation, followed by lost industry to globalization and price inflation. The Vietnam War had a powerful consequence of inducing Nixon to exit the Gold Standard, a linkage few if any economists or even gold analysts make. But the true singlemost cause of wreckage is the artificial low forced cost of money, the near zero cost of usury. The subtitle to that billboard is that CAPITAL IS TRASH. Imagine in a nation that developed, promoted, and exploited the fullest riches of capitalism, embarked upon a path to destroy capital without even the recognition by its best brain trusts. Their mental chambers have been totally corrupted by the justification that inflation is a positive force that must be managed. Nothing could be further from the truth. The consequences of artificially cheap money, the wrecked pricing of usury, ultimately is capital destruction and economic failure.

POX ON HUMANITY

My friend and colleague Rob Kirby calls the artificially low cost of money, the cost of usury, to be the pox on humanity. It is actually a pox on the entire economy, in which humanity resides. The Jackass calls it acidic paper mixed in the cauldron to dissolve capital. The points of this article expose the most glaring blind spots of USEconomic and USBanking, a mindboggling failure that has delivered the United States of America to the doorstep of the Third World. The sins committed are almost precisely what Banana Republics have done, and faced ruin. The annual $1.5 trillion USGovt deficits are proof positive of the failure. Those deficits are grossly under-stated when hidden costs of war are factored, and when hidden costs of nationalized acid pits like Fannie Mae and AIG are factored. Leave alone the costs of endless war and its seamy motives. Consider the many sides to free money, the forcibly low cost of usury.

The 0% usury cost has destroyed capital, with the recent destruction seen as in an accelerated phase. The 0% money encouraged asset speculation, not business investment. The steady stream of nonsensical labels to the USEconomy are comical. The Macro Economy ten years ago fizzled. The Asset Economy six years ago fizzled. The bylines of a Jobless Recovery offer insult to one's intelligence. Nothing could be further from the truth, since no such contraption exists. The 0% money even encouraged drainage of real assets, like gold. The Clinton-Rubin gang altered the gold lease rate toward 0% in an experiment. Almost the entire gold inventory was drained from the USTreasury and its secure storage facility at Fort Knox. It was essentially stolen from the front door using official trucks. In defiance, the USFed and USDept Treasury continue to refuse an independent audit. With artificially low rates come complete destruction of capital formation, as economic laws have all been commandeered. The outcome features a shortage of everything valuable and a climax of central planning to manage the destruction. Witness the stream of nationalized failures, whether financial firms or critical industrial firms. Now General Motors (Govt Motors) produces an electric car twice the price of Toyota, rotten fruit. Witness the Home Buyer Tax Credit which has ended. The USFed as central bank has a bloated ruined balance sheet. The last remaining question for the august USFed is whether they will declare bankruptcy and liquidate, since their net value is between minus $700 billion and $1.2 trillion, OR whether they will attempt to purchase the remaining few $trillion of home loans from Fannie Mae and take property title to 30% to 35% of American homes. That would serve as a Fascist Manifesto of collectivism in a sense.

The tragedy is that the USEconomy has chronically suffered from an absence of capital investment. Some analysts point to a prohibitive US corporate tax structure. With a recent Japanese decision going into effect, the USGovt takes the top spot with a 39.5% corporate tax rate. The European nations range between 24.0% and 30.2% by comparison. Rather, the Jackass submits, the more pressing and acute problem is the 0% usury rate. It is common between the US and European Union, which faces a fracture. The United States shipped most of its factories to China, in an abandonment of capital structures and their legitimate wealth engines. The US economists applauded the move, calling it a Low Cost Solution. It was in fact a ruinous movement, one that replaced wealth engines with debt burdens. The climax is coming, with a higher cost structure across the USEconomy, and shortages where prices are kept down artificially. US businesses see little prospect in capital investment, at least not within the United States. They sit on cash, and see little usage for it. So they speculate with it, a contradiction that capitalism exists in the US at all. In the next chapter, future price inflation will be called economic growth, the next travesty!!

Look for an increase in empty sections of supermarket shelves for food, and gasoline stations shut down. It will be an end symptom. Look for a collapse of Municipal Bonds, as the states and cities are in a late stage of implosion. The impact of the semi-permanent housing bear market has local impact. Even banks have far less money in ATMs, a signal of the supply chain being interrupted. That is as much a sign of a supply chain problem as a solvency problem for the big banks. The ultimate problems are the cost of money, control of governments, the coordination of central bank policy, and the control system that enables the entire fiat system to perpetuate and continue. The desperate response has been to throw 0% money into the system, primarily the big US banks, $trillions of worthless money, and expecting to produce a remedy. It is folly on the stage in global view. Rob Kirby summed it up, as he said "It is like taking 100 gallons of water into the desert and pouring it into the sand to promote growth. Nothing happens, nothing grows, and people die of thirst." It is the climax folly of the Keynesian attempts, something in fact that Keynes himself never advocated.

EXTREME BRUTE FORCE TO MAINTAIN

For the 0% cost of usury to be enforced, all connected financial structures must be attuned, distorted, and brought in line with the artificially priced markets. The enforced long-term rates are managed by means of Interest Rate Swap contracts. Their volume went in overdrive. The Interest Rate Swaps have inherent embedded USTBonds built inside them. The IRSwaps produce therefore huge USTBond demand, enough artificial demand to enable the finance of unlimited USGovt deficits. The maestros are not stupid, just corrupt. In fact, 84% of all credit derivatives have no end user, an exercise of pure bond market control. The portion of the credit derivatives with bonafide end users is negligible. Another $150 trillion in total credit derivatives from bank holding companies does not show up in the graph, which is from commercial banks. Recall Goldman Sachs changed their status to holding company, partly to conceal their credit derivative holdings, but also to qualify for USGovt slush funds in the TARP Fund program.

The group of big banks have total derivatives greater than the global GDP, which should offer a warning signal to economists, but instead they refer to it as providing stability in an unstable world. The USFed claims that the bond market determines long-term rates, but it does NOT. The Interest Rate Swap contract serves as a powerful mechanism to control long-term rates, using leverage from the more easily enforced short-term side of the USTreasury Bill market where the USFed exerts daily control with Fed Funds. Note the skyrocketing interest rate derivative tally, which is 84% of all credit derivative contracts. Note the miniscule volume of credit derivatives with actual end users, in the lower flatline. This is the smoking gun of ruined financial markets, in particular the bond market whose job it is to set the cost of usury!! Thanks to Rob Kirby for a fine graph.

In a recent interview, a fool on a financial network recommended JPMorgan as a stock investment, claiming the firm would benefit from rising interest rates. The level of ignorant recklessness is without bounds. As the 10-year USTreasury and the 30-year USTreasury yields have risen markedly in the last six weeks, the stress to JPMorgan has been so acute that some astute financial analysts like Jim Rickards have suggested that JPMorgan is burning money at an unprecedented clip, and at great risk. The enforcement of 0% money by IRSwaps has become extremely costly, as the leverage has backfired in JPMorgan's face. It is a reflection of the burned capital.

Take a walk down history. Clinton made a deal with the Wall Street devils. In the Clinton Admin, from January 1993 to January 1995, Robert Rubin set the stage, did the spade work, and made the necessary preparations. During that time, he served in the White House as Assistant to the President for Economic Policy. In that capacity, he directed the National Economic Council, a creation by Clinton after his coronation in the presidency. With his squire Lawrence Summers, they developed the Gibson Paradox at the USDept Treasury. That provided the high priest ideological dogma required to alter the cost of usury. Many recall Rubin as the Goldman Sachs superstar of currency trading desks. He was also head of their gold trading desk in London through the 1980 decade. He became Treasury Secretary in the Clinton Admin in January 1995, succeeding caretaker Lloyd Bentsen. From this important privileged post, he prepared to raid the national gold inventory for private Wall Street benefit. The volume of credit derivative growth accelerated in the Clinton-Rubin years, only to skyrocket since. The chart is proof. That unbridled growth occurred at the same time as the Tech-Telecom Boom & Bust, the Housing-Mortgage Boom & Bust, and the climax of ruin when the US banking sector died in September 2008. It will no more be revived than a dead man in a morgue will be revived from massive blood transfusions. The US banking sector has no pulse. Blood from large scale transfusions continues to collect in the form of Excess Bank Reserves held at the USFed, obscene bank executive bonuses, each a major eyesore never seen before in US history.

ALL MARKETS BADLY DISRTORTED

Speculation became the norm, not capital investment. The ugly response has been heavy asset speculation, not investment in capital intensive industry. A clear consequence of 0% usury cost is the massive distortion of all financial markets. The trend has been for US industry to leave the nation, and seek lower labor costs, less federal regulatory obstacles, to lands where capital is valued and industrial output is held in the highest regard. The steady stream of wrecked markets will be written about in US journals for a generation. Witness the mortgage bond market and its ruin. Its pathogenesis includes a particular Wall Street specialty with leveraged Collateralized Debt Obligations useful to hasten to vanishing act of capital. This was financial engineering at its finest. A typical CDO bond that lost 15% rendered the bond holder with a total wipeout, a complete loss. The housing market led the decline in mortgage bonds, as collateral was eliminated, as revenue stream was eliminated, as bank portfolios suddenly saw a climb in the REO bank owned properties taken in foreclosure. The homes clutter the bank balance sheets more with each passing month in a heap of fetid rot. The control mechanisms to maintain desired price ranges for bonds, stocks, energy, and currencies were available. However, the property market failed on the maestros since Fannie Mae & Freddie Mac were forced to show financials on their balance sheet. The Chinese were actually a key player in the housing & mortgage blowup, as they abandoned the GSE Bonds. In doing so, they forced the issue and urgently pressured the USGovt to indeed prove they backed the Fannie Mae Mortgage Bonds, the so-called USAgency Bonds.

The big US banks continue to speculate, and not lend much to businesses. The 0% usury cost is like a flesh eating disease. It causes gross negligence on asset management. It causes financial counselors to suggest speculative investment portfolios. All things become a grand carry trade game. The big US banks prefer to play the USTreasury carry trade, than to engage in business lending. Capital controls keep the money in the bank casinos. Even the stock market has been exposed as a fraudulent private game. The shock in May to the stock market exposed the role of Flash Trading. The culprits were not prosecuted for either market rigging or insider trading. They continue to ply their trade. The flash trading mechanisms control the stock market similarly, like Interest Rate Swaps do with bonds. In the aftermath, it was revealed that ten stocks can dominate half the daily trading volume. It was revealed that the average time held for stocks is minutes, not months, in a grand Round Robin of Wall Street firms buying and selling stocks to themselves, thus propping stock prices. It was revealed that over 80% of stock trading volume was from the empty chamber of Flash Trading. Another ruined market, verified by almost 30 consecutive weeks of outflows from US stock funds. The American public has wised up.

VEHICLES TO ACCELERATE THE DESTRUCTION

In the United States, the destruction of capital is so widespread, so universal, so perverse, that the maestros encouraged the development of vehicles extremely useful to accelerate the destruction. An addictive American mentality helped the process, fresh off the Me Generation. Recall in 2001 when USFed Chairman Greenspan showed open frustration with the bond market. Greenspan openly urged the long-term interest rates to come down, so that housing prices would rise and support the consumer society. He attempted (and succeeded for five years) to prevent the natural course of a major stock market plunge to be followed by a major housing market decline, as history would have dictated. He knew it would have been the end of the US financial structures, with big US banks going bust. That is whey he resigned in late 2005. He did not wish to preside over his handiwork disaster. He did not want to reap the harvest of the seeds of destruction he sewed. Greenspan essentially assured the USTreasury Bond market that the vigilantes would be killed off, and enlisted the aid of JPMorgan with Interest Rate Swap contracts. Notice the acceleration in the above graph after 2003.

The housing market boom ensued. It was unique. This time around, second mortgages were easy. Home equity lines of credit were easy. Origination fees (points as closing costs) were held down. Some people refinanced every 12 to 18 months. People without income had home loans approved. A street bum in St Petersburg Florida owned four properties bought with nothing down before he died. Income and asset verification became an annoying irrelevance. The end result was that the entire US housing market morphed into a gigantic ATM machine. Cheap money overbuilt the homes (MacMansions) and brought the 2nd and 3rd homes into play. From the year 2000 to 2007, the amount of mortgage equity removed from assets was astonishing. People ate capital in a veritable frenzy. The graph shown here is of equity withdrawal as a percentage of disposal income. From 2% to 8%, the trend was revealed as a quadruple. The trend was cheered by USFed Chairman Greenspan. With the home price declines came a new American phenomenon, negative home equity. The current figure is 23% of Americans owe more in their home loans than their homes are worth on the market. They are prisoners of capitalism gone awry. The ruin of the US homeowners is the symbol of the US systemic failure. So are food stamps and tent cities.

The trend turned to tragedy. Instead of investment in capital equipment, factories, and providing the fertile ground for robust job growth with legitimate income, the nation did the opposite. Investment instead was made in the $trillions on devices to drain capital, namely homes, shopping malls, and big box retail stores. The nation turned into a consumption engine whereby 70% of the US Gross Domestic Product was devoted to consumption. In a sense, the nation ate their homes and shopped until they croaked. Following the binge, came the current trend with mortgage defaults, home foreclosures, and bankruptcies. Lest one forget, the tent cities of homeless. To think that a collection of homes could supplant a collection of factories to drive economic progress and sustain a standard of living is the greatest folly in the history of the USEconomy. It is the last chapter of failed Keynesian policy. Remember well, it was blessed by Greenspan as good and wholesome and legitimate. He also blessed as sophisticated, legitimate, and robust the entire offload of debt risk with credit derivatives. THE GREENSPAN LEGACY IS OF RUIN, but in particular ruin from 0% usury cost as its root disease.

The perversity is so deep that home builders have often morphed into arbitrage outfits, who purchase wrecked development project homes and sell them to Fannie Mae. Even PIMCO has become a major buyer of wrecked housing portfolios with hopes to unload them onto Fannie Mae. Even big US banks have made the rules for home loan modification so twisted, that huge 25% profits can be snagged by merely forcing foreclosure, then sending the wreckage through the FDIC. The rules have been changed to favor the banks. Other arbitrage funds have sprung up to deal with mortgage backed bonds, as the vibrant funds have turned into processors of ruined capital. Regard these all as recyclers, no different than scrap metal, scrap paper, and scrap plastic processors that we are familiar with. The nation has not only created vehicles to drain and deplete capital, it has created recyling process plants to handle the wrecked capital. For the unrecoverable toxic waste paper, go to Fannie Mae. So the investment trend enabled accelerated depletion of capital, the shortage of factories, and the removal of legitimate wealth engines. It is like making bread without wheat.

FREE LICENSE FOR FRAUD

Few if any analysts make the connection that 0% usury costs and heavy speculation instead of capital investment go hand in hand with the fraud strewn about from the Fascist Business Model. Put aside the war machine, its missing $2.2 trillion in defense appropriations, its missing $50 billion from the Iraq Reconstruction Fund, its annual sacred defense budgets that surpass the entire world combined. Focus instead on the bank fraud, centered upon mortgage bond fraud, Municipal Bond fraud, Treasury Bond fraud, and the diverse counterfeit of same. See the packaging of quickly ruined mortgage bonds as unqualified buyers rendered the bonds worthless in double quick time. Then the ruined mortgage bonds as housing market declines rendered the bonds worthless (or badly impaired) despite the buyers having good credit. See the auction bond fraud for Muni Bonds across the land. See the naked shorting of USTreasury Bonds in order to supply operational funds that kept financial firms humming, made evident by Failures to Deliver. Not one prosecution has taken place against a Wall Street bank. The civil cases all result in a settlement that later proved to be bland. The license to fraud has become a mere cost of doing business for the large corporations, led by the big US banks.

The 0% usury cost is the business card to the national fascism umbilical cord to the USGovt from the banking sector. It enabled the development of the Syndicate, and its flourish. The economists have been reduced to carrying clipboards to track the fraud as they utter mindless drivel about the justification of Too Big To Fail. The slogans should be TOO BIG TO SAVE and SO BIG, SO CORRUPT. The extraordinary efforts and attempts to save the big US banks will be the precise policy that leads to systemic failure and the USTreasury Bond default, all in time. The corrupted financial markets are the province of the Syndicate in charge, which rules over the SEC, the CFTC, the FDIC, and the debt rating agencies. They also control the USCongress, painfully evident in the outcome of the Financial Regulatory Bill that enhanced their power. They rule from their exalted perch at the USDept Treasury, where Goldman Sachs has presided since 1995. They and the USFed have strangled the nation with a 0% usury noose.

LIGHT A FIRE UNDER GOLD & SILVER

The US economists and the US bank brain trust provide many lousy analysts. They are good propaganda artisans, a craft developed in the 1930 decade in a land not so far away. Their repeated lies are echoed by the obedient US press and financial networks. The current drivel they spew is that Gold is in a bubble. Nothing could be further from the truth, since the USTreasury Bond market is the global gigantic bubble. Gold cannot be in a bubble since gold is money. Money is never in a bubble, since, well, it is money. Gold might someday be subject to downdraft pressures, if and when the paper asset world is so incredibly depressed that the value of bonds goes below the cost of producing the embossed raised print colorful bond certificates. A precedent can be drawn from in the housing market, where in some areas the price of houses has gone 15% below construction costs. When USTBonds are valued less than their printing costs, let me know then and only then about a gold bubble. The US economists and the US bank brain trust are lousy analysts because they miss, overlook, and ignore the four primary driving forces behind the gold & silver bull markets:

1) When the price of money is well below the inflation rate, gold rises and silver soars
2) When government deficits go far beyond the ability of bond markets to finance, gold rises
3) The global monetary system has been exposed as faulty, supported by debt, so gold rises
4) No restructure or remedy is permitted, only gigantic bank welfare, so gold rises.

These are four principal foundations to the valuation of Gold within the fiat money system. The truth is that Gold is constant, and the USDollar and other paper instruments like assorted types of bonds vary in value relative to gold. The mindset of the US public and European also is so twisted that they believe Gold varies in price. It is fixed. The USDollar and various US$-based bonds are losing value so fast that Gold appears to be rising in a breakout in all major currencies (US$, Euro, Pound, Yen). The USDollar and USTreasurys are in a powerful bubble, at risk of puncture. That puncture is the USTreasury default, with the associated declaration that the USDollar is no longer valid legal tender to purchase imported products in the world market. Think of the USEconomy bidding up a currency in order to purchase crude oil. With each successive month, the USDollar would go lower in order to supply the crucial supply of oil to the USEconomy. The USDollar will someday not be legitimate to satisfy commercial trade contracts. That day will see the United States slide into the Third World. It is moving quickly in transition through the Second World with its tagline of Jobless Recovery.

The real price of money is somewhere around minus 7%. Calculate the price inflation as 8% by the Shadow Govt Statistics folks, up from a steady level a smidgeon lower for several months. The true CPI is rising. Subtract 8% from the cost of money at 1%, given generously, tied to the prevailing short-term USTBill yield. So the real price of money is big negative, like in the minus 7% range. Translated, it means generally that paper based financial assets (include housing) are losing 7% per year in value. Long ago, when mortgages dominated in the home valuation process, the home lost its status as a hard asset and became a financial asset adjunct perversion, a proxy. Translated, that means to borrow money and invest in hard assets, one should expect a positive 7% annual return, conservatively speaking. It pays to invest in Gold during such conditions. It always have been profitable to invest in Gold during such conditions. The US economists and the US bank brain trust consistently ignore this important point.

The spiraling USGovt deficits have become a regular fixture, with gaping shortfalls of $1.4 trillion each year. Remember in mid-2008 the nation was told that the $1.4 trillion deficit would be reduced to below $1 trillion easily in 2009. It was not, and repeated the $1.4 trillion. Remember in mid-2009 the nation was told that the previous two $1.4 trillion deficits would be reduced to below $1 trillion easily in 2010. It was not, and repeated the $1.4 trillion. Finally, the USGovt deficits in current projections are estimated to be well above $1 trillion, as reality has struck. The $1T deficits are a permanent fixture. Thus the Quantitative Easing #2 is in place, since the USTreasury does not want the shame from failed auctions to reflect badly on the USDollar or the other galaxy of US$-based paper assets. They masquerade as containing value, when they are largely trash items. They can no longer compete against Gold. If truth be known, Wall Street executives are trashing their corporations and buying gold in private accounts as counter-parties. They will someday dump their corporate losses on the USGovt and ride into the sunset zillionaires. Then comes the USTreasury default.

The global monetary system is crumbling, as all major currencies are mired in deep trouble, stuck in quicksand, pulled down with perennial deficits and extremely sluggish economies. The secret is out, the jig is up, that the major currencies are nothing more than denominated debt coupons. These arguments of a broken monetary system, the search for legitimate safe haven, the colossal aid packages for the banks that broke the system, the corruption within the big US banks (see mortgage bonds and home foreclosures), these factors have been thoroughly discussed in Jackass articles to date. But the topic of 0% usury cost is something that needs to be discussed more widely and fully. The 0% usury cost encourages a war of investment in tangibles led by gold & energy, of investment into tangibles and out of the bank-run financial centers. The fast rising price of gold & energy (silver too) are a vivid screaming report card of failure. Money in the form of gold represents money taken out of the corrupted banking system. Its value rises, or more accurately, the value of all else besides gold falls. Witness the climax of failure.

The fact that the big US banks are in no way even attempting to remedy, reform, and restructure the system is the additional jet assist to Gold & Silver. Any true restructure would begin with their liquidation as corporations, with fire sales of their nearly worthless assets rotting on their balance sheets. They would be forced to cede power and control of the USGovt and its Holy Grail, the USDollar Printing Pre$$. That event will come tragically only during a USTreasury default and assumption by the Receivership Tribunal, already formed. As more phony money is devoted to false fixes, more bank welfare, and wasted goony projects like Clunker Cars, Home Buyer Tax Credits, General Motors buyouts, Fannie Mae nationalization, FDIC home foreclosure processors, TARP Funds, and the many charades that make the USFed a virtual banking system, the Gold & Silver prices will seek their rightful value. Gold will move well past $2000 per ounce, and Silver will move well past $50 per ounce, before June 2012 as my forecast. Then they will double again when the USTreasury default goes face to face with a new global monetary system. The Boyz are soiling their pants with the runup in USTreasury Bond yields, a well-kept secret. So they are trying to paint the tape on the Gold price, trying to keep it down. It will not work. They cannot paint the Silver price tape at all, since it has great industrial demand. It is making new highs, trampling JPMorgan in the process, in a Silver Shetland Pony stampede. The Golden Stallion stampede comes soon enough.

THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.

From subscribers and readers:

At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

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December 29, 2010

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Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com. For personal questions about subscriptions, contact him at JimWillieCB@aol.com

Almost Everything Is A Crime In America Now: 14 Of The Most Ridiculous Things That Americans Are Being Arrested For

Almost Everything Is A Crime In America Now: 14 Of The Most Ridiculous Things That Americans Are Being Arrested For

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The Economic Collapse
December 28, 2010

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Either we have a massive crime problem or the “control grid” that our leaders have erected for us is wildly out of control.




Doesn’t it seem like almost everything is becoming a crime in America now? Americans are being arrested and charged with crimes for doing things like leaving dog poop on the ground, opening up Christmas presents early, not recycling properly, farting in class and having brown lawns. But is it healthy for our society for the police to be involved in such silly things? Every single day the United States inches closer to becoming a totalitarian society. While there are some that would welcome this shift, the truth is that throughout history the societies that have experienced the greatest economic prosperity have all had at least a certain level of freedom. Business thrives when people feel free to live and work. When a government tightens the grip too much many people just start shutting down. Just look at places like North Korea. Even though the rest of the world is sending them huge amounts of food starvation is still quite common in that totalitarian regime. That is why it is so disturbing that it seems like almost everything has become a crime in America now. As we continue to criminalize relatively normal behavior our slide toward becoming a totalitarian state will only accelerate.

We are throwing anyone and everyone in prison these days. It is getting absolutely ridiculous. Today, the United States leads the world in the number of prisoners and in the percentage of the population in prison. The United States has 5% of the world’s population, but approximately 25% of the world’s incarcerated population.

According to the U.S. Bureau of Justice Statistics, as of the end of 2009 a total of 7,225,800 people were either on probation, in prison or on parole in America.

That is a sign of a very, very sick society. Either we have a massive crime problem or the “control grid” that our leaders have erected for us is wildly out of control.

Or both.

But how in the world are we supposed to have a healthy economy if our entire nation is being turned into one gigantic prison?

Sadly, it is not just hardcore criminals that are being rounded up and abused by authorities these days. The following are 14 of the most ridiculous things that Americans are being arrested for….

#1 A Michigan man has been charged with a felony and could face up to 5 years in prison for reading his wife’s email.

#2 A 49-year-old Queens woman had bruises all over her body after she was handcuffed, arrested and brutally beaten by NYPD officers. So what was her offense? The officers thought that her little dog had left some poop that she didn’t clean up.

#3 A 56-year-old woman who was once a rape victim refused to let airport security officials feel her breasts so she was thrown to the floor, put in handcuffs and arrested.

#4 In Milwaukee, one man was recently fined $500 for swearing on a public bus.

#5 Several years ago a 12-year-old boy in South Carolina was actually arrested by police for opening up a Christmas present early against his family’s wishes.

#6 In some areas of the country, it is now a crime to not recycle properly. For example, the city of Cleveland has announced plans to sort through trash cans to ensure that people are actually recycling according to city guidelines.

#7 A 12-year-old girl from Queens was arrested earlier this year and taken out of her school in handcuffs for writing “Lex was here. 2/1/10″ and “I love my friends Abby and Faith” on her desk.

#8 Back in 2008, a 13-year-old boy in Florida was actually arrested by police for farting in class.

#9 The feds recently raided an Amish farmer at 5 AM in the morning because they claimed that he was was engaged in the interstate sale of raw milk in violation of federal law.

#10 A few years ago a 10-year-old girl was arrested and charged with a felonyfor bringing a small steak knife to school. It turns out that all she wanted to do was to cut up her lunch so that she could eat it.

#11 On June 18th, two Christians decided that they would peacefully pass out copies of the gospel of John on a public sidewalk outside a public Islamic festival in Dearborn, Michigan and within three minutes 8 policemen surrounded them and placed them under arrest.

#12 A U.S. District Court judge slapped a 5oo dollar fine on Massachusetts fisherman Robert J. Eldridge for untangling a giant whale from his nets and setting it free. So what was his crime? Well, according to the court, Eldridge was supposed to call state authorities and wait for them do it.

#13 Once upon a time, a food fight in the cafeteria may have gotten you a detention. Now it may get you locked up. About a year ago, 25 students between the ages of 11 and 15 at a school in Chicagowere taken into custody by police for being involved in a huge food fight in the school cafeteria.

#14 A few years ago a 70 year old grandmother was actually put in handcuffs and hauled off to jailfor having a brown lawn.

Why in the world would anyone approve of the police arresting ordinary Americans for such things?

It seems like ever since 9/11 the whole country has gotten “security fever”.

Suddenly we need to “get tough” on everyone.

Yes, crime is making a comeback, but once upon a time the police in this country were able to handle crime quite well and be courteous and helpful to ordinary citizens at the same time.

But today it seems like nearly every single encounter with police ends up being negative.

It does not have to be that way.

The rest of the world sees what is going on in this country and many of them are deciding that they simply do not want to spend their tourist dollars here anymore. That is not a good thing for our economy.

As the government continues to get even bigger and exerts even more control over our lives, many of our own people are getting sick of it and are moving abroad.

America used to be the land of the free and the home of the brave.

That is no longer true.

Now we get thrown to the floor, handcuffed, beaten and arrested for things that we did not even know were crimes.

If America continues to move in this direction it is going to ruin our economy, our reputation in the world and our national spirit.

Unfortunately, history has shown us that once a free nation starts to lose that freedom it is hard to reverse that slide. Perhaps we will be different. Perhaps the American people will stand up and demand that we restore the principles of liberty and freedom that this country was founded on.

15 Dirty Big Pharma Tricks That Rip You Off and Risk Your Health for Profit

AlterNet
15 Dirty Big Pharma Tricks That Rip You Off and Risk Your Health for Profit
By Martha Rosenberg, AlterNet
Posted on December 22, 2010
http://www.alternet.org/story/149282/

Even during a two-year recession with people losing their homes and jobs, pharma is still the nation's third most profitable sector. How does it do that? In part by cheating the government, misrepresenting science, bribing doctors, patients and pharmacies, and squeezing the FDA. Other than that, the industry plays completely fair. Pharma has often been criticized for lack of creativity in developing new drugs. But these dirty tricks show its creativity is alive and well when it comes to putting the public at risk just to turn a profit.

1. Astroturf Patients?

Pharma promotes fake patient advocacy groups to lobby for its interests.

These front groups often push the FDA to approve an expensive drug that has acceptable, cheaper alternatives. Or, they'll try to prevent Medicaid from switching to the less pricey drug. One of the largest faux groups, the "grassroots" National Alliance on Mental Illness (NAMI), was investigated by Sen. Charles Grassley for undisclosed pharma links. He found the 10 top NAMI state chapters received $3.84 million from pharma in less than five years, the biggest largesse from Eli Lilly, AstraZeneca and Bristol-Myers Squibb.

How else can you tell an astroturf group? Their Web sites look just like the pharma companies that fund them.

2. Cheating the Government

Pharma is now a top defrauder of the federal government. “Desperate to maintain their high margin of profit in the face of a dwindling number of important new drugs,” pharma illegally promotes unapproved uses of drugs and deliberately overcharges Medicare and Medicaid, says Dr. Sidney Wolfe, director of Public Citizen’s Health Research Group. Pharmaceutical companies have been hit with $14.8 billion in wrongdoing settlements in the last five years. But that's still cheaper for Big Pharma than going about things the old-fashioned, legal way. So the fraud continues.

3. Trials and Fibulations

Presiding over clinical trials can make a doctor thousands per patient. But they wouldn't compromise patient safety just to make a buck, would they? Medical College of Georgia psychiatrist Richard Borison and his colleague Bruce Diamond did 13 years ago when they tested Zyprexa, Risperdal and 20 other drugs and ended up in jail. So did Baystate Medical Center's Scott Reuben, who went to prison earlier this year for fraudulent Celebrex, Neurontin and Lyrica trials. And a Tucson facility testing asthma drugs Symbicort, Advair and Singulair doctored data and risked patients' health to net as much as $10,000 per patient, according to a whistleblower and government and court documents. How many other drugs were tested for such fiscal outcomes? Not counting recalled ones, of course.

4. More Trials and Fibulations

Even without fraud, pharma-sponsored studies can deceive. Trials that only determine that a drug is "not worse" than another one or impute safety before real data are available -- as in the case of Vioxx and Avandia's threat of heart attacks -- can skew results. And some research is not meant to be accurate to begin with. The Johnson & Johnson Center for Pediatric Psychopathology Research at Massachusetts General Hospital was founded to "move forward the commercial goals of J.& J." according to unsealed court documents. Its head, Harvard's Joseph Biederman, promised J.& J. a proposed drug trial "will support the safety and effectiveness of risperidone [Risperdal] in this age group," before it was ever conducted. Why leave things up to science?

5. Overseas Adventurism

As pharma increasingly eyes poorer countries for new markets and cheaper manufacturing it also eyes them for cheaper clinical trials. In 1996, 11 Nigerian children died in trials testing Pfizer's not-yet-approved antibiotic Trovan. While Pfizer paid the Nigerian government and state of Kano millions in a settlement, documents released by Wikileaks show that Pfizer tried to extort Nigeria's former attorney general to drop the lawsuits. Trovan was withdrawn from U.S. markets in 2001 for liver toxicity, though "safety signals" may have appeared sooner.

6. Clueless Institutional Review Boards

Institutional review boards, charged with overseeing clinical trials, should catch the unsafe drugs and shady trials. But a Congress and General Accountability Office sting conducted last year on a Colorado review board raises serious doubts. When asked to oversee a study of Adhesiabloc, a product designed to reduce scar tissue after surgery, Coast Independent Review Board said...when do we start? Even though the product did not exist -- nor did its developer or lead researcher!

7. 'Previous Government Experience Desirable'

In the fight against medical fraud, the Justice Department is beginning to file criminal, not just civil, charges against pharma. More employees also are turning whistleblower thanks to provisions that entitle whistleblowers to 15 and even 30 percent of fraud settlements, in some cases. But the other side has a big advantage. As long as politicians like former Louisiana Rep. Billy Tauzin, who left government to head the industry trade group PhRMA, and former CDC director Julie Gerberding, now head of Merck vaccines, are willing to commit a career's worth of knowledge, judgment and relationships to sell product, the government is fighting itself.

8. Double Dealing at the Pharmacy

The best thing that ever happened to pharma (after direct-to-consumer advertising) is Pharmacy Benefit Managers (PBMs). Their job is to negotiate the best drugs for their clients, which are heath and pension plans. But they seem far more adept at taking money to push pharma’s top branded drugs, regardless of the cost.

Recently CVS' pharmacy benefit manager, AdvancePCS, sent letters to doctors extolling the benefits of the expensive drug Zyprexa on behalf of drug giant Eli Lilly. Had a generic drug been prescribed over Zyprexa, savings would have been huge.

9. FDA Foreplay

A sneaky way pharma tries to get FDA to approve a drug -- even when the science isn’t there -- is to float the drug to the public. That's where directed marketing comes in. When “patients” (these are often astroturf groups), really want a drug approved, it puts huge pressure on the FDA to be sensitive to the public’s wishes. This tactic famously flopped for Boehringer-Ingelheim this year when it tried to sell a medication for "hypoactive sexual desire disorder" (HSDD) in women (first it had to sell the disease itself). Even though BI debuted its pink Viagra at a medical conference last year and rolled out its elaborate "Sex Brain Body: Make the Connection" Web site with TV personality Lisa Rinna soon after, FDA said no. Seems even though Boehringer-Ingelheim was effective in "raising awareness" about female sexual dysfunction, something else wasn't effective: the drug. And when it came to foreplay, the FDA had a headache.

10. Pharma Service Announcements

Public service announcements are messages for your own good, like, "Do You Know the Seven Warning Signs of Cancer?" But a lot of the awareness messages and warning signs you hear now are not from the government or medical groups, but pharma.

“Voices of Meningitis” ads on mom sites and online TV, for example, look like they are raising awareness of meningitis, but they were actually funded by maker Sanofi Pasteur, which makes a meningitis vaccine.

"Unbranded" advertising appears to have legit origins, like the National Association of School Nurses, which sponsors the Sanofi Pasteur’s meningitis ads. But when TV, radio and web messages push "awareness" of diseases like ADHD, irritable bowel syndrome (IBS), restless legs syndrome (RLS) or excessive sleepiness (ES), be suspicious. Real diseases aren't given initials for quick recall and easy reference. Nor do they come with snappy self-quizzes and pretty patient models. Unbranded messages also pimp the PSA (public service announcement) money that media outlets have for actual public issues.

11. National 'Interests' of Health

The National Institutes of Health are supposed to fund research for the public health with the public's tax dollars. But recently, a researcher who was stripped of his own NIH grant because of his huge financial links to pharma, is ruling on other researchers' grants on NIH committees, reports the Chronicle of Higher Education. The researcher, psychiatrist Charles Nemeroff, was also allowed to keep NIH funds when he moved to the University of Miami after being disqualified from them at Emory University. Clearly, when it comes to conflicts of interest at the top of level of government research, the fox is guarding the henhouse (or pork house).

12. Big Pharma Sends Schools Doctors

Continuing Medical Education (CME) are courses that doctors are required to take to keep their state licenses and stay up-to-date with current practice and treatment guidelines. But many are created by pharma, which covers the cost of the course for the doctor in exchange for unvarnished sales pitches. Worse, many are embarrassingly dumbed down.

A recent "course" offered by Medscape was titled "Quadrivalent HPV Vaccine May Be Effective in Women 24 to 45 Years Old." Participants were told that after taking the course, they would be able to "specify the currently recommended age range" for the vaccine (especially if they could read the title!). Another course manipulates participants to "lobby your legislators" for pharma-related Medicare funding. Congress recently investigated the billion-dollar continuing education industry for illegal marketing -- too bad Congress couldn’t investigate for stupidity.

13. Ghostwriting

Ghostwriting -- papers written by medical marketing writers, with doctors only posing as the authors -- was rampant until 2008 Congressional investigations. But even though it's now prohibited, few journals have retracted ghostwritten articles that sold Vioxx, Fen Phen, Prempro and probably Avandia. Asked about the papers ghostwritten "by" Lila Nachtigall, a professor in the Department of Obstetrics and Gynecology, Deborah Bohren, vice president for public affairs at New York University's Langone Medical Center said, "If we had received a complaint, we would have investigated."

A Congressional investigation doesn't qualify as a complaint?

14. Crooked Books and Slanted Messages

Pharma is often accused of ghostwriting articles that end up in medical journals under doctors' names who had nothing to do with the writing or research. But this month an entire textbook was accused of being funded and approved by pharma. The 1999 textbook, written to help primary care doctors diagnose psychiatric conditions, was funded entirely by GlaxoSmithKline (GSK) -- which makes pills for... psychiatric conditions! Nor were its authors, two prominent psychiatrists, strangers to GSK. Alan Schatzberg is on GSK's speakers bureau and Charles Nemeroff was investigated by Congress for undeclared GSK income. Did the authors write the book themselves or was it ghostwritten by pharma or its marketing company? Does it matter?

15. May I Take Your Order?

Have you ever waited in a doctor's office with a 102-degree fever, only to have pharma reps swinging Vytorin totes see the doctor first, just because they brought free samples or lunch and are dressed for a music video (pharma tends to employ attractive people to hawk their wares)? Until Congressional investigations brought about the Physician Payments Sunshine Act, some doctors in medical centers say they never paid for a meal. Nor did pharma largesse end there. One doctor told AlterNet her entire group was jetted to a Caribbean island courtesy of her Paxil rep. Even medical students were schmoozed until the 62,000-member American Medical Student Association (AMSA) sought to end the pharma practice of gifts and free meals. Now pharma must report what it spends on doctors.

Martha Rosenberg frequently writes about the impact of the pharmaceutical, food and gun industries on public health. Her work has appeared in the Boston Globe, San Francisco Chronicle, Chicago Tribune and other outlets.


© 2010 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/149282/
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Wednesday, December 29, 2010

GORDON DUFF: IRAN-KOREA NUCLEAR LIES, ORDERS FROM TEL AVIV

http://www.veteranstoday.com:80/2010/11/25/gordon-duff-iran-korea-nuclear-lies-orders-from-tel-aviv/

GORDON DUFF: IRAN-KOREA NUCLEAR LIES, ORDERS FROM TEL AVIV

November 25, 2010 posted by Gordon Duff · 166 Comments

CAN VANUNU TIE ISRAEL TO ROGUE NUKES?
TWO IMAGINARY NUCLEAR PROGRAMS, ONE CRIMINAL CONSPIRACY

By Gordon Duff STAFF WRITER/Senior Editor

Former President George W. Bush planned to invade Iran in 2007, even though America’s military was exhausted and overstretched by two unsuccessful wars. His own popularity, at a real 8%, was the reason, and the economic collapse that he was trying to push back until he left office. He believed a war would have saved his presidency, buried the $3 trillion dollars stolen by his friends and given him a legacy to be proud of, even if every family in America suffered.

Bush brazenly admits pretty much exactly these things in his ghost written autobiography, an incoherent rant, that rambles between blithering and megalomaniac delusion . The only thing that stopped this disaster was the National Intelligence Assessment, (NIE) that proved categorically, that Iran had no nuclear weapons program whatsoever. Even then, Bush tried to hide this report and demanded that falsified intelligence be created as he had done for 9/11, Afghanistan and Iraq. However, as a lame duck and failed president, nobody listened.

Integrity won out over insanity, greed and corruption this time. It wouldn’t last.

THREE YEARS LATER, NEW PRESIDENT, MORE OF THE SAME

Talk of war helps everyone: It takes focus off the fact that both Russia and China dropped the dollar as a trade currency today. Pushing that out of the news is important as it is real news. Real news points fingers at real problems. Instead, everyone is having fun with North Korea and Iran but 90% of the abuse isn’t toward the countries themselves. No, its against the English language.

Joseph Schuman of “AOL News” call the centrifuges in North Korea “ultra-modern.” Do they have fins? Are the deco? Is there a post impressionist aspect about them? We also read the glowing description, “astonishingly modern.” Did Picasso design them? Is there a touch of Matisse?

GAZA WALL, PALESTINIAN GHETTO OR "NUKE BARRIER?"

More words are bandied about, “potential” and vague reference to, perhaps another facility, with even more “ultra-modern” or, perhaps “spectacular” or even “fabulous” centrifuges. Schuman even describes them in the most fearful terminology of all, as resembling those from “Iran.”

All of the talk about uranium enrichment and “weapons grade” is purposefully vague. The most dangerous possible materials either nation is capable of producing would be unable to duplicate the nuclear carnage America has wrought on Iraq and Afghanistan. Oh, you don’t know that, someone told you that DU, Depleted Uranium, another abuse of language, is harmless?

Worse yet, Depleted Uranium, which is “partially” depleted like being “partially” dead or “partially” pregnant, is one of dozens of radioactive compounds used in every American weapon system from penetrator rounds for the ancient M-2 .50 cal. machinegun to the bombs we drop every hour, many carrying “potentially” lethal doses of “murderous” uranium oxide.

In reality, there is no real danger from Iran using its “depleted uranium” as it has promised to turn over all its dangerous waste to Brazil. Radiation is a death-dealing problem unless, of course, you are at an American airport or living in Fallujah, where radiation levels from “harmless” American weapons are now 38 times those of Hiroshima after the 1945 nuclear attack.

Isn’t language fun?

THE STRANGE CASE OF NORTH KOREA

North Korea is backward and dirt-poor. South Korea has an economy 300 times larger, if you don’t get that number correctly, picture one car in a restaurant parking lot and 300 cars in another. One lot says long lines and great food, the other….food poisoning and no staff.

That’s North Korea, “food poisoning and no staff.” We could carve a more dangerous “evildoer” out of a banana.

They also have no money, no exports, no foreign currency, no economy, no technology to export, no money to buy technology but they have missiles, fancy new German built submarines and, supposedly have exploded two nuclear weapons so far, two vastly different weapons, two extremely strange weapons but certainly not two “ultra-modern” nuclear weapons. If you hadn’t wondered where North Korea “found” two nuclear weapons, perhaps it’s time for you to start.

Back in 2006, North Korea created a nuclear “fizzler.” This is an explosion that has a nuclear signature but no fission or fusion reaction has occurred, no “chain reaction” like with a nuclear weapon. Even stranger, the explosion itself, actually thousands of tons of ammonium nitrate fertilizer, enough to stimulate food production in North Korea and end their eternal famine. Instead, North Korea put a plutonium “pit” from an unserviced and aged hydrogen bomb on a ship load of fertilizer and blew the whole thing up.

The United States had “misplaced” 3 or more hydrogen bombs back in 1991 off the coast of Somalia, weapons that were recovered by arms dealers that were part of a South African, Rhodesian, Israeli nexus that helped fuel, not only “Iran/Contra” but armed both sides of the Iraq/Iran war. Anyone worried about “suitcase nukes” needn’t bother. These weren’t 40 ton mini-nukes but rather 200,000 ton two stage thermonuclear weapons. The B-52 that crashed attempting an emergency landing at Diego Garcia had at least 3 of these and maybe 8.

Attempts to find these weapons sent American troops into Somalia and across East Africa. These operations were top secret, some were under cover of counter-terrorism tied to Al Qaeda, in fact, Al Qaeda was very likely invented for this reason.

For those of you who don’t know, a hydrogen bomb has a Plutonium “pit,” small in size that is stimulated by a Uranium 235 “sparkplug,” essentially two separate weapons that, when used together, produce a fusion reaction, many times larger than that of a simply atomic bomb. Oh, I forgot, there is a canister of tritium gas that helps fuel the reaction, an extremely rare gas that needs to be replaced often. Old hydrogen bombs don’t work.

Thus, someone who bought such a weapon somewhere would need to have it serviced by a super-power or buy a “trigger.” During the 1990s, the CIA led by Valerie Plame, and aided by Pakistan’s A.Q. Khan, offered such “triggers” for sale in order to locate and recover these missing weapons.

You now know a big secret. You also know that, if one of these weapons harms someone, former Vice President Dick Cheney, the man who undermined this vital CIA mission, is responsible, not “Scooter” Libby, the “fall guy.” With all the leaks around, you might wonder how all this was kept out of the papers? Who owns “the papers?” Who owns the news?

The signature of the Plutonium was odd. The cover story is that North Korea got Plutonium, not by producing it, but “found” it inside centrifuges they bought from Pakistan. This is the roughly equivalent of finding enough spare change under the cushions of your couch to buy a new Ferrari.

North Korea does not have the technology to create, mold or machine Plutonium, almost no one has. Breeder reactors create Plutonium but it is impossible to machine or mold without using special alloys which, of course, are traceable during any nuclear explosion. North Korea has had two “nuclear” explosions and both have been traced.

Not one ounce of “North Korean” material was ever involved.

The 2006 explosion did have a nuclear signature, a North Korean explosion but an American nuclear signature. That there wasn’t something worse, an implosion-based explosion or, worse, a thermonuclear device demonstrates a partially successful CIA operation with Pakistan’s A.Q. Khan and Valerie Plame to thank, heroes the Bush administration tried to hound to death. Why?

THEN A REAL NUKE WENT OFF IN NORTH KOREA, DID THEY FORGET THE RECIPE?

Then it happened, or did it? North Korea built a nuclear weapon and exploded it, an 18.2 kiloton “Hiroshima” type “gun” weapon they built themselves? This was May 25, 2009 when a country incapable of enriching uranium to “weapons grade” exploded the impossible nuke, or did they?

Yes, there was an explosion, North Korea theoretically became a nuclear state but, funny thing, the world never treated them as such. Why is that? What was the secret? Why was this so quickly forgotten?

The answer is simple, North Korea bought a nuclear weapon, one identical to one exploded in 1979 by Israel and South Africa, one with a history. Identifying the weapon was easy, the size and design said “Arms Core” and “Pelandaba.” The technology was American, the designers and builders Israeli but the uranium signature was South African.

South Africa built 10, no, not the 6 spoken of, but 10 nuclear weapons. The rogue regime in South Africa was aided by Israel in building nuclear weapons, an arrangement that begun in 1975, one violating every international law, perhaps the single most serious crime of its type in our century. South Africa had used germ warfare in Africa, chemical weapons, spread anthrax, plague, small pox and now, with the help of Israel, had nuclear weapons.

But, South Africa was collapsing and was going to be forced to release Nelson Mandela from prison and turn the government over to him. They weren’t going to give Mandela 10 nuclear weapons, though. Britain and the United Nations were approached to dismantle the program in 1990. Specialized equipment was designed to hold the weapons in 20 foot containers and the 9 remaining weapons, after one was tested on September 22, 1979, were to be shipped to the United States to be dismantled. 6 came to America. 3 were sidetracked by Margaret Thatcher in 1991, purchased for 55 million pounds and shipped to Oman to be kept as “blackmail” to frighten Saddam, or so it was explained. In reality, Britain hired the same arms dealers that were responsible for Iran/Contra to move the weapons.

Dr. David Kelly, once considered a suicide, now known to be a murder victim, oversaw the project. The bombs were stolen, Kelly knew and kept his mouth shut, for awhile at least, and then threatened to go public, not just about the bombs but about a 17. million-pound “kickback” (backhander) paid by the bomb thieves to certain prominent British politicians. Kelly was murdered, “they” tried to cover it up and now someone in Britain is going to jail over it, probably a “patsy.”

One of these weapons exploded in North Korea, an Israeli-built nuclear weapon. It passed through the hands of South African and Saudi arms merchants, one notorious Rhodesian and, we are told, into the open arms of those who built the weapons originally, the bomb designers from Dimona. Two of these bombs remain, “out there.”

The scary part, of course, is that these weapons are “unattributed.” Whoever controls them, and that is Israel according to reliable sources, is now capable of much “evil doing” with these weapons:

* One could be sold to a nation such as Iran or, as we have learned, North Korea, in order to foster international instability and peddle arms to both sides. Today, Israel is one of America’s largest arms suppliers and the not-so-secret supplier for all armaments North Korea currently has in its arsenal, from American cluster bombs to German-built submarines. Israel’s primary business has always been selling weapons to rogue nations and North Korea is now customer #1.
* With “secret” missing nuclear weapons, Israeli intelligence can tell America:

1. Saddam has them and is “prepared to use them in 45 minutes” or ship them to Syria “by ambulance.” Israel told the Bush administration both stories. They believed the “Saddam” story but rejected the “ambulance” tale. 5000 Americans died learning that Israel lied.
2. Iran has them and has put them in shipping containers for a false-flag attack on the United States. Israel has informed the United States of exactly this.
3. These weapons were shipped to Syria then to Lebanon where they were kept in a hospital X-ray room and that Hizbollah is planning to move them to Gaza where they can be smuggled by tunnels into Israel and used against the port of Haifa. America would be forced to send in the Army Corps of Engineers to build a wall around Gaza and to support Israeli military incursions as being justified as searches for these weapons that Israel has had all along, one of which Israel sold to North Korea.

* One of these weapons could mysteriously explode in an American city unless Israel, not only received the cash payoffs it normally gets but billions of dollars of munitions, shipped to Israel by the Pentagon, which Israel is allowed to sell, according to a highly illegal secret protocol, to, well, North Korea or anyone else. These shipments are made regularly and if the weapons stores were actually kept as the public is told, Israel would be a bomb warehouse from one end to the other.

CLEANING HOUSE

America is now, officially, two camps. Fox News viewers, America’s most conservative and typically, most volatile “news junkies” are now being told that the 9/11 investigation was a coverup and the Building 7 demolition is proof of a massive conspiracy. For America’s #1 news source to go this far, not on one show but two of their top-rated journalists, Judge Napolitano and Geraldo Rivera, has been a serious blow for all those who supported the Bush administration and believed in the “war on terror.”

No other network, no newspaper is touching this story, this “third rail” which debunks two wars, debunks “Osama bin Laden” and makes the case for America being a nation of dupes. It doesn’t just stop at America. Most of the world got “sucked in” on 9/11, buying in on and even that now has gone from historical milestone as a disaster to the greatest scam in world history.

Bush admissions, though it is doubtful he understands the nature of such admissions and the criminal implications, over Iran and his willingness to send Americans to a hopeless war for his personal aggrandizement are only part of a pattern of which 9/11 itself was a part. If, as Fox News claims, Building 7 was a controlled demolition, then all of 9/11 was staged. Any other assumption is insane. The only questions are whether to leap to blaming Israel as so many are willing or to see Bush himself as a prime mover. Neither choice is likely to be promoted by either a government in bed with the Israel lobby, AIPAC, or still led by those who are likely to be prosecuted.

THE NUCLEAR SHAM

The media has started in, on Iran and North Korea. Again, Iran is “5 minutes away from being a nuclear power” and North Korea is ready to invade the South, armies on the move, donkeys fueled up, starving troops armed to the teeth.

Both nations, friendless, easy targets for American military technology, easy targets for the carefully orchestrated world press, serve one real purpose, to deflect attention from the thieves, the torturers, the drug barons, the ethnic cleansing in Gaza, from a dozen stories, especially from the ticking time bomb of 9/11.

With the world coming down around America, Afghanistan a hopeless quagmire, even by “Vietnam” standards, the dollar in free fall, AIPAC spying openly revealed in civil proceedings and Americans, by the millions, abandoning traditional news media, the “nuclear option,” an attack on an American city by, well, Americans themselves, with or without Israel, becomes more likely.

The mechanisms are there, spy organizations, controlled press, a quick and dirty “whitewash” investigation such as with 9/11 “in the can.”

“Black ops” and intelligence groups, now little more than criminal fronts, psychopaths, misfits and degenerates of every kind, exist by the dozen, funded with billions in taxpayer revenue, defense, intelligence and, of course, the flood of drug money pouring in from Afghanistan.

What is believed by those Americans that other Americans should revile and fear? It is believed that the only way of “moving forward” is the extreme path, totalitarianism, more government, fewer rights, gun seizures and, perhaps even those FEMA camps that “internet nutcases” and “conspiracy theory” types talk about.

The remainder of the Bush/Cheney gang are slowly becoming hunted animals. They see it even if many Americans don’t. Hunted animals are capable of anything.

Gordon Duff
Gordon Duff is a Marine Vietnam veteran, and Senior Editor at Veterans Today. His career has included extensive experience in international banking along with such diverse areas as consulting on counter insurgency, defense technologies or acting as diplomatic officer of UN humanitarian groups. Gordon Duff's articles are published around the world and translated into a number of languages. He is regularly on TV and radio, a popular and sometimes controversial guest. Read Full

War and the Global Economic Crisis: Blame America's War Economy rather than China

War and the Global Economic Crisis: Blame America's War Economy rather than China

By Paul Kellogg

Global Research, December 23, 2010
Socialist Project

There is a growing chorus of voices in the media and the academy singling out the actions of the Chinese state as central to the dilemmas of the world economy. This focus finds its most articulate presentations, not in the xenophobia of the right, but in the polite analysis of many left-liberals.

Nobel Laureate economist Paul Krugman, for instance, writing in the run-up to November's G20 summit in South Korea, praised the United States' approach of creating money out of nothing (“quantitative easing”) as being helpful to the world economy, and criticized the Chinese state's attempts to keep its currency weak as being harmful. “The policies of these two nations are not at all equivalent,” he argues, adding his influential voice to the chorus which is increasingly targeting China for the world's woes.[1] Krugman's, however, is a simplistic analysis which overlooks the role of the U.S. over decades in creating huge imbalances in the world economy, and has the dangerous effect of scapegoating one of the poorest nations of the world (China) for the problems created by the world's richest.

Krugman's argument proceeds through a sleight of hand. He objects to the attempts by the Chinese state to keep down the value of its currency – the yuan – as a series of policies whose “overall effect...on foreign economies is clearly negative.” This is a common theme – China's “weak-yuan” currency being good for China (making its exports cheaper in world markets) and bad for the rest of the world.
Intents and Effects

But there is a problem. By Krugman's own admission, the U.S. policy of creating money out of nothing will result in a “weaker American dollar.” What he doesn't say, but what is implicit in his analysis, is that this U.S. policy is identical to China's – a “weak-yuan” policy in the latter, matched by a weak-dollar policy in the former. Krugman nonetheless lets the U.S. off the hook because, he argues, even though the U.S. dollar is certain to fall in value as a result of the new trillions being created, “that is not the ultimate goal.”

Judging a policy on its intent rather than its effect is disingenuous. Brian Burke's intent as general manager of the Toronto Maple Leafs has been to deliver a Stanley Cup to Toronto. Hockey fans are unlikely to forgive him, though, for the fact that his policies see the Leafs sitting, again, near the basement of their conference.

However, let's take Krugman at face value. Why does he see the U.S. policy as good for the world? Because, he argues, “basically, the United States is pursuing a policy that increases overall world demand” and China “is pursuing a contractionary domestic monetary policy, reducing overall world demand.”
Let's begin with some of the key facts. At the peak of the economic crisis, the United States, Canada and the European Union had to borrow hundreds of billions of dollars from the rest of the world to finance stimulus programs to stabilize their economies. China also engaged in serious fiscal stimulus (relative to GDP, virtually on the same scale as the United States)[2], but unlike the North American and European powers, it was able to do so without borrowing a penny from the rest of the world.[3]

Chart 1: Deficit/surplus, U.S. Central government (billions).

One of the reasons the U.S. had to resort to large-scale foreign borrowing, was because of years of high levels of central government deficit spending. The first chart here shows the last twenty years of central government spending, a story of only momentary surpluses and a “norm” of deficits in the hundreds of billions of dollars – in 2009 and 2010 in the wake of the financial crisis, passing the one trillion dollar mark.[4]

Because the United States central government had been running very large deficits for years, borrowing on a large scale was inevitable to do the very necessary work of trying to “stimulate” the economy at the peak of the crisis in 2009. But with these deficits pushing debt levels very high very quickly, there has been increasing nervousness about both deficits and debts getting out of hand. Enter “quantitative easing.” As an alternative to creating more government debt, the world's most powerful economy can, for the moment, simply “create more money,” push it into the economy and hope that this has the desired stimulus effect.

Krugman assesses the merits of these actions solely on their effect on world demand. But is this a sufficient criteria? There are all sorts of policies pursued by the U.S. over generations which have increased overall world demand. One in particular comes to mind. The U.S. central government has for a long time been the center of military expenditure in the world, and its role as such is accelerating. In 1990, its military expenditures represented 36.19 per cent of the military expenditures in the entire world. By 2009, its military expenditures had grown to fully 44.13 per cent of world military expenditures. In other words, almost half of the money spent on war in the world is spent by the U.S. state.

This huge infrastructure of planes, missiles, bases, tanks, guns, ammunition and personnel has a powerful effect on demand in the world economy. For instance, “the U.S. military is the single largest consumer of energy in the world.”[5] This might be bad in terms of global warming. Nonetheless, gobbling up millions of barrels of oil certainly helps stimulate world demand for petroleum. The trillions spent on war and militarism do meet Krugman's criterion in that they “stimulate world demand.” But they do so in perverse ways. In particular, they are the principal reason for the desperate fiscal weakness of the U.S. central government, documented above, fiscal weakness which is driving the move to quantitative easing.
Three Deficit Scenarios

Let's try on three different scenarios to examine the relationship between military expenditures and U.S. deficits. Begin with one aspect of arms spending: the “war on terror.” Launched in 2001, it has had three components – Operation Enduring Freedom (the war in Afghanistan), Operation Iraqi Freedom (the war in Iraq) and Operation Noble Eagle (beefing up U.S. military bases and homeland security). The official bill to-date for this "war on terror" is almost identical to the amount of money created in the first round of quantitative easing – $1.1-trillion.[6]
Scenario 1

Scenario 1: Deficit/surplus, U.S. Central government (billions), less cost of Iraq and Afghanistan.

This is probably an understatement, perhaps a gross understatement. Joseph Stiglitz and Linda Bilmes estimate that the true cost of the war in Iraq alone will be in excess of $3-trillion.[7] However, for argument's sake, we will take the official figures. If those official figures are removed from the books (Scenario 1) – that is, if we see what the picture would be like had the “war on terror” not been launched – then a change begins to take place in the picture of U.S. deficit spending. It doesn't eliminate the deficit problem. But it does lessen it, to the extent that as late as 2007 – the year the financial crisis first revealed itself – the U.S. central government would have actually run a modest surplus.

But the “war on terror” is just the tip of the iceberg. The United States, as documented above, spends money on the military at a rate far greater than any country in the world. In 2010, for instance, the War on Terror costs of $130-billion were dwarfed by the $534-billion spent on other aspects of the military. Since 2006, the total “defense” budget of the U.S. has been over half a trillion dollars. By 2011, it is projected to be closing in on three quarters of a trillion dollars.

Now imagine a pacifistic instead of a militaristic United States. In other words, see what the picture would be like without sustaining this massive war machine. When this military spending is removed (Scenario 2), the picture of the U.S. central government budget is completely different.
Scenario 2

Scenario 2: Deficit/surplus, U.S. Central government (billions), less defence spending.

In 2009 and 2010, there are, of course, quite large deficits. This is the normal “Keynesian” turn to deficit spending that occurs in any economic downturn. What is remarkable however, is the fact that in terms of non-military spending, before 2009 and 2010, there would have been no deficit whatsoever. In fact, in many years, there would have been surpluses, twice (in 2000 and 2007) touching half a trillion dollars.

With a budget history for the last 20 years resembling this graph, a pacifistic U.S. government could have spent billions on its stimulus package, without borrowing a dime. Stimulus could have been completely financed out of accumulated surpluses from the last 20 years.

And in fact, this understates the situation. Many of the costs of the U.S. bloated war budget are hidden. It would take a team of forensic accountants with unlimited time and unlimited funds to sort through government finances and corporate balance sheets to tease out the actual costs of sustaining the world's biggest military, and the world's only truly global empire.

But there are two “non-defense” line items that we can say with certainty are directly related to the U.S. military. Veterans Affairs spending is extremely high in the U.S. precisely because so many young people have come back maimed and broken through U.S. military adventures abroad. And the space program is a barely disguised excuse to develop and test the rocket technology that is the backbone of the U.S. nuclear arsenal. When these two are factored in (Scenario 3), the picture is breathtakingly clear.
Scenario 3

Scenario 3: Deficit/surplus, U.S. Central government (billions), less total costs of war and militarism.

The U.S. central government deficit problem has one source – addiction to war and empire. That addiction has led to borrowing on an unprecedented scale, making it impossible for the U.S. to stimulate its economy through accumulated savings and making it increasingly nervous about the accelerating practice of borrowing on a mass scale. The quantitative easing approach – creating money out of nothing – has been made inevitable by the massive deficits used to sustain empire abroad.
What Kind of Stimulus?

Return, then, to Krugman's argument. If we only have one criterion by which to assess this – the creation of demand in the world economy – then there is no problem here. Massive levels of arms spending create demand. Years and years of arms-related U.S. budget deficits do “stimulate” the world economy. But downing two or three pots of coffee in one setting will similarly “stimulate” a person's metabolism. That doesn't mean it is a recommended method by which to obtain our nutrition.

Obviously “the creation of demand” is not the only criteria we should use. When trillions are spent, it is useful to us ordinary folk when these trillions are spent in productive ways – on homes for the homeless, on child care, on health care, on education, on infrastructure, on subways, on clean energy, on water purification in the Global South – the list is endless.

But when the trillions are wasted on grenades, nuclear weapons, M-16 rifles, nuclear submarines, aircraft carriers and all the other paraphernalia of the U.S. killing machine – this is ultimately the equivalent of taking those trillions and flushing them down the toilet. It is “investment” which leaves nothing behind – except nuclear waste that future generations will have to dispose of, deadly munitions that will exist for generations to maim and kill peasants in the field, and broken bodies and minds chewed up in endless wars. The creation of “demand” is not the only criteria. It matters – and it matters desperately – exactly what kind of “demand” we are feeding.
And think this through. This creation of money from nothing will systematically drive the U.S. dollar lower relative to other currencies. For those holding billions (and in some cases trillions) of U.S. dollar-denominated debt, the devaluation of the U.S. dollar means a devaluation of the worth of their holdings. In effect, the United States through quantitative easing is forcing the rest of the world to pay for its empire – to pay for the costs it has incurred through sustaining a bloated permanent arms economy.

It is irresponsible to assess the value of the policies of the U.S. and Chinese governments by narrowly focusing in on momentary decisions related to their currencies, and by pretending that these policies happen in a vacuum. There is a history to the current predicament of the United States, a predicament of its own making. When put in this bigger context, the message that must be sent to Krugman and others making similar arguments is quite clear: blame the wars, not China. •

Paul Kellogg maintains a blog at PolEconAnalys.org where this article was originally published.

Endnotes

1. Paul Krugman, “When China Exports, Everyone Pays,” Truthout, November 4, 2010.

2. Eswar Prasad, “Assessing the G-20 Stimulus Plans: A Deeper Look,” Brookings, December 2, 2010.

3. Joseph Trevisani, “While Many Countries Must Borrow, China and Japan Can Fund Their Own Stimulus,” Seeking Alpha, January 28, 2009.

4. Figures for this and the next three charts (Scenarios 1-3) are primarily derived from "Budget of the United States Government: Historical Tables Fiscal Year 2011: Table 4.1 – Outlays by Agency, 1962-2015." For the years 2001 to 2010, the charts are based on figures in Office of the Under Secretary of Defense (Comptroller) / CFO, United States Department of Defense Fiscal Year 2011 Budget Request: Overview, February 2010: 1-1. The latter differ slightly from the former, but have the advantage of explicitly incorporating the military portion of the “war on terror,” euphemistically referred to as “Overseas Contingency Operations.”

5. Sohbet Karbuz, “U.S. Military Energy Consumption – Facts and Figures,” Sohbet Karbuz, May 20, 2007.

6. Amy Belasco, “The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11,” Congressional Research Service, September 2, 2010: 1 and 3.

7. Joseph E. Stiglitz and Linda J. Bilmes, “The true cost of the Iraq war: $3-trillion and beyond,” Washington Post, September 5, 2010.