Thursday March 19, 2009

Published on Wednesday, March 18, 2009 by The Guardian/UK

Leading Climate Scientist: 'Democratic Process Isn't Working'
by David Adam

Protest and direct action could be the only way to tackle soaring carbon emissions, a leading climate scientist has said.
Prof James Hansen urged Gordon Brown to refuse planning application to build new coal-fired units at the Kingsnorth plant in Hoo, Kent (photo: PA)
James Hansen, a climate modeller with Nasa, told the Guardian today that corporate lobbying has undermined democratic attempts to curb carbon pollution. "The democratic process doesn't quite seem to be working," he said.
Speaking on the eve of joining a protest against the headquarters of power firm E.ON in Coventry, Hansen said: "The first action that people should take is to use the democratic process. What is frustrating people, me included, is that democratic action affects elections but what we get then from political leaders is greenwash.
"The democratic process is supposed to be one person one vote, but it turns out that money is talking louder than the votes. So, I'm not surprised that people are getting frustrated. I think that peaceful demonstration is not out of order, because we're running out of time."
Hansen said he was taking part in the Coventry demonstration tomorrow because he wants a worldwide moratorium on new coal power stations. E.ON wants to build such a station at Kingsnorth in Kent, an application that energy and the climate change minister Ed Miliband recently delayed. "I think that peaceful actions that attempt to draw society's attention to the issue are not inappropriate," Hansen said.
He added that a scientific meeting in Copenhagen last week had made clear the "urgency of the science and the inaction taken by governments".
Officials will gather in Bonn later this month to continue talks on a new global climate treaty, which campaigners have called to be signed at a UN meeting in Copenhagen in December. Hansen warned that the new treaty is "guaranteed to fail" to bring down emissions.
Hansen said: "What's being talked about for Copenhagen is a strenghening of Kyoto [protocol] approach, a cap and trade with offsets and escape hatches which will be gauranteed to fail in terms of getting the required rapid reduction in emissions. They talk about goals which sound impressive, but when you see the actions are such that it will be impossible to reach those goals, then I can understand the informed public getting frustrated."
He said he was growing "concerned" over the stance taken by the new US adminstration on global warming. "It's not clear what their intentions are yet, but if they are going to support cap and trade then unfortunately i think that will be another case of greenwash. It's going to take stronger action than that."

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Published on Friday, March 20, 2009 by CommonDreams.org

Barack Obama and the Altar of Greed

by David Michael Green

Barack Obama is dumber than a bag of hammers.

I never thought I'd say that about the guy. I thought he would probably disappoint me with many of his policies. I thought he would probably fail to be bold enough for his times. I thought he might miss opportunities to do great things because of his seeming desire to be Mr.
Rogers, complete with cardigan. But I never expected him to be really dumb.

But if you're willing to risk the entirety of a potentially great presidency on making sure that a handful of already wealthy sociopaths who got rich destroying the global economy are not denied massive taxpayer-funded bonuses to keep them in jobs they've already completely mishandled, despite the fact that many of them took the money and left the job anyhow - if that's you, and you're the new president of the United States with a load of challenges and lots of public good will solidly behind you - well, then, you're dumber than a bag of hammers.

Like I said, I never thought I'd say that about Barack Obama. But then I never thought I'd witness such inane stupidity (or, worse - is it
venality?) from the man.

If you think that I'm exaggerating when I say that Obama may be betting his entire promising presidency by taking the wrong side in this AIG scandal, think again. His presidency rises and falls on essentially one
question: Is he doing everything he can to fix the economy? In order to fix the economy, given the astonishing mess he's inherited, he is going to continue to need unprecedented forbearance from the public and Congress so as to take unprecedented steps. People are already freaking out at what has been done and what has been spent, and we're only just starting the rescue, with all its enormous costs. The Republicans, who made this mess, are going to try to block Obama at every turn. The president needs to convince the public to trust him and follow him, if he is going to win the legislation necessary fix the economy.

But if people see that Obama is using their hard-earned tax money to reward the predatory parasites at AIG, even after they've wrecked everything in sight, how is he ever going to get public support for spending another trillion bucks to repair the economy? And if he can't get the tools necessary to do the job, how can he ever expect it to get fixed? And if it doesn't get fixed, how can he expect to have a successful presidency?

He can't, and he won't. And, thus, it is no exaggeration to say that this vibrant and well-liked president, who carries the hopes and aspirations of a nation on his shoulders with a robust foundation of good will to match, is potentially giving away everything in order to make sure that a band of corporate pirates keep their stolen taxpayer money. And doing that, ladies and gentlemen, is as dumb as... Well, you know.

Or maybe even a lot dumber still. Month after month of headlines detailing the latest scandal, many of them involving not just the theft of people's savings but crashing the global economy as well, and you begin to wonder if there's any bottom to the barrel of fiscal depravity and governmental enabling. Obama is now charting new paths in that direction. Just the concept that AIG executives who brought down the roof should get anything besides pink slips and orange jumpsuits is sickening, let alone that they should get bonuses.

But wait, it gets better. Then we're told that the bonuses are necessary because only these criminals can undo the mess they've created. So they're paid millions to stay. As if those who know how to wreck a global economy also know how to fix it. As if these are the only folks in the world who have these skills.

Okay, well, fine then. At least they have to earn these ‘retention bonuses', right? Nah. That would so responsible. Turns out that a bunch of them took the money supposedly provided as incentives for them to stay and then split anyhow. One guy grabbed $4.6 million in retention bonus cash from the taxpayers, funneled through AIG, then promptly unretained himself. More than fifty others did the same, eleven of whom took over a million bucks to stay. Except they didn't.

Then we have Team Obama telling us that these are legal contracts that cannot be violated. As knowledgeable legal commentators have pointed out, however, that seems highly unlikely for a whole slew of reasons.
There are all sorts of legitimate mechanisms recognized by the law through which contractual agreements can be bypassed in order to serve higher societal purposes.

But even apart from all that, let's remember that these are bonuses!
Isn't the very nature of a bonus - as opposed to salary - the idea of contingency on performance? Do the contracts say, "We'll reduce you bonus down to eight figures if you destroy the company, and a mere several million bucks if you take down the global economy"? If not, why weren't these people paid 23 cents in order to fulfill a legal obligation and told to go hide in Argentina or something? And count their blessings? Instead, over seventy employees of the AIG London-based unit that brought down the company and the rest of us to boot have become millionaires.

Why did Democrats in Congress creep in late at night and remove language from the bailout bill which would have prevented this noxious use of taxpayer money? Why did Obama sign such a bill? Is there really no depredation that greed cannot induce anymore? Is there really no politician in America who actually thinks these crimes are crimes anymore?

Of course, it's not exactly shocking news when Washington politicians are found to be in bed with the corrupt captains of American finance.
Indeed, if there's one thing that Democrats and Republicans can most readily agree upon, surely it's how cool it is to whore for Wall Street.
Still, I can't help being a little disappointed (some will no doubt say a lot naive) observing the degree to which Obama has joined this crowd.
Admittedly, I don't get invited to the smoke-filled rooms where political deals are cut between politicians and the people who buy them, so maybe I have no clue what I'm talking about. But it strikes me that Obama never had to be just another corporate Democrat, like Harry Reid or Chuck Schumer.

The Obama campaign was a political and, especially, a financial juggernaut, the likes of which we've never seen, from either party. He was practically printing campaign dollars. They were pouring in from so many ordinary contributors, in such a high volume, that he literally walked away from tens of millions of free federal funding he could have had simply by opting for government financing of his campaign. But he actually pulled in way more by foregoing the matching funds and just opening up the floodgates for a public anxious to throw money at Change They Could Believe In.

So why does a guy in that happy situation staff his economic team with Wall Street mercenaries like Tim Geithner and Larry Summers? Does he really believe that these people hold some sort of leverage over him and over the United States government? It's just astonishing to think so.

The reality is that the American overclass has just been on the most amazing feeding frenzy for three decades now, to the extent that they've simply lost any sense of proportion, whatsoever. The sense of predatory entitlement has become what water is to fish. It is so much a part of their world view that they no longer even have consciousness of it, or any alternative to it, any more than a tuna ever wonders what it might be like to walk on two legs and breathe air.

Fine. I mean what a shock it is, eh?, to find that there are people in this world whose social conscience maxed out in kindergarten, where instead of coloring they instead cut business deals to trick the other kiddies out of their graham crackers. It's just a given that we have that sort of sicko running around. That's why we have jails, and that was once why we had the SEC.

Far less clear is why those who are supposed to represent the public's interests need adopt such mentalities - though, of course, many of them are readily and frequently bought off. But, again, it seems to me that Barack Obama had nothing to gain and everything to lose by carrying water for the mansion-on-every-continent set. Obama has an independent base of support - some of it quite emphatic - and a national crisis or six on his plate compelling even those who are skeptical about the guy in the direction of wishing him every success as president, since his will be theirs as well. So why is he turning his back on those hundreds of millions of supporters and instead looking out for the interests of what are the financial equivalent of serial rapists?

Is this a case of ideological osmosis? Of a complete failure of imagination? Have we simply reached the point where anyone who could plausibly be president in this country cannot fathom government existing for any other purpose than to enrich the already fabulously wealthy, any more than our friend the tuna could possibly dream of playing soccer?

Political analysts have long spoken of ‘regulatory capture', the process by which industries which are meant to be regulated instead capture control of the government agencies which are meant to be regulating them. A more contemporary version of this concept, and one more applicable perhaps to Obama than to his minions, is the arguably far more dangerous idea of ‘cognitive regulatory capture'. Under that scenario, you don't even need to infiltrate the agency, because you've already captured its mind and narrowed the range of what is thinkable therein. Just as in Orwell's "1984", the most powerful effect you can have on people is not by physically limiting their behavior, per se, but instead by getting them to limit themselves in terms of the concepts they are even capable of entertaining.

Has Barack Obama been the object of cognitive regulatory capture? It's hard to know. But it is astonishing that time after time he keeps deferring to the interests of not only the economic elites, but of the outrageously criminal economic elites. He puts Tim Geithner in his cabinet, not Bernie Sanders. And when somebody floats the idea of capping salaries at companies on the government dole, or of limiting bonuses, or of the government truly acting like the owner it actually has become of many of these bailed out firms, there's Geithner and Summers telling him (and, presumably, Robert Rubin telling them), "No, no, you can't do that". And, in fact, no, no, Obama doesn't.

Imagine that radical concept. Limit executives who have crashed their firms, and the global economy as well, from taking multi-million dollar bonuses out of taxpayer-funded bailout money? Sounds vaguely Marxist, doesn't it? After all, we can't have government intervention in the private sector. Don't forget your catechism. (And just ignore the seeming contradiction of government intervention in the form of bailouts. I mean, why bother with having a religion if you're not going to be hypocritical?)

When Bill Clinton did this stuff it was surprising, only because he was the first Democratic president since Roosevelt to sell out the public's interests as if he were a full-blown Republican. What makes it surprising in Obama's case is that he has so little need to do so, given the crisis we're in and the support and good will that it automatically provides him, not to mention the self-mutilation of the opposition party's credibility.

And what makes it really surprising is that Obama not only doesn't need to go down this path, but he is potentially destroying his presidency by doing so. There is a growing public anger out there, anger that is long overdue. People are finally beginning to wake up, however foggily, to who is the real enemy of America's interests and who is the real predator with its fingers rifling their pocketbooks. If this populist rage is properly directed, we could get some sort of healthy outcome, like a reprise of the New Deal social safety net and a badly needed robust regulatory apparatus. If it is not, it might instead be miraculously used to breathe political life back into the very corpses of those who brought this storm down on all of us.

Crawling into bed with Public Enemy Number One against the leading wedge of a populist revolt is about as stupid an idea as imaginable for the Obama administration. Why doesn't he offer another monotone denunciation while he's at it, this one of pedophiles? Perhaps adding a heartfelt expression of how disappointed he is that there just isn't more that can be done, darn it. Danged legal contracts! Hey, maybe he could also staff up his Justice Department with paroled sexual predators, too, precisely as he has done in the equivalent manner at Treasury.

And while he's at it, he can complete the job he began by putting so many Republicans in the cabinet. The GOP has been busy committing suicide for years now, but has dramatically sped up the pace of late, trotting out clown-like figures the likes of which neither Barnum nor Bailey could ever have conceived, even on a particularly pungent acid trip. Jindal, Steele, Limbaugh, Palin, Palin's daughter. Wow. If there is a Hell, you can bet Barry Goldwater is down there right now furiously trying to change his party registration. Best of all, not only are these losers the face of the Republican Party, lately they've taken it a step yet further and have been bringing out the long knives to eviscerate each other. It's hard to imagine a better situation to be in for a Democratic president.

Which makes Obama's idiocy all the more astonishing. Probably no one on the planet could rescue the GOP right now, except for Barack Obama. So why on earth is he doing so? Why is he throwing a rope to a drowning disease? And then handing it a cudgel? Why is he breaking into the vault at the CDC in order to cut loose the smallpox virus once more? What could he be thinking? Or is the bag of hammers thinking at all?

Republicans, in their usual fashion, have been highly successful at marketing disastrously pernicious ideas. So, lately, they've been out there associating Obama's massively expensive economic rescue plan with wasteful government spending. In fact, it isn't that at all. In fact, it is the only hope remaining for reviving this horridly destructive economy that the greedy Wall Street sharks and their political minions created. There will be no monetary policy solution. Interest rates are close to zero, and there's nowhere left to drop. Demand from China is not going to rescue this economy. Consumer spending? Yeah, right. Rising property values as ATMs for homeowners? How very 2007. This is likely the whole enchilada. If wholesale Keynesianist countercyclical government spending doesn't rescue the economy, it's really hard to see what Plan B could possibly be.

But, of course, Republicans have never met a national interest they weren't anxious to steamroll on the way toward achieving their own narrow self-interests, and this situation is no different. If you're in the GOP and all you care about is winning elections (and, if you are in the GOP, that is all you care about), your only bad scenario looking ahead is for Obama to successfully rescue the economy. So you try to block him at every turn, and you lie about his program, calling a desperate last-ditch rescue effort straight out of the Macro Economics
101 textbook a porkbarrel exercise in wasteful government spending.

The public doesn't necessarily want to hear that right now, and certainly doesn't put a lot of trust in the source. But then there's old Brilliant Barack, staffing his economic team not only with Wall Street hacks, but tax-cheating, TARP-blowing, Wall Street hacks at that. And then these flunkies tell us there's just no way that public money can be stopped from being used as a reward for the scam artists who got us into this mess originally. And guess what? All of sudden, miraculously, the worst offenders in the Republican Party start to sound credible.

And if that happens, Obama's already sinking chances of passing massive rescue legislation sufficient to end this nightmare will diminish fast.

And if that happens his chances of fixing the economy will fall rapidly.
And if that happens his presidency will swirl down the toilet.

And if that happens it will be Jeb Bush in a walkaway in 2012.

David Michael Green is a professor of political science at Hofstra University in New York. He is delighted to receive readers' reactions to his articles (mailto:dmg@regressiveantidote.net [1]), but regrets that time constraints do not always allow him to respond. More of his work can be found at his website, www.regressiveantidote.net <http://www.regressiveantidote.net/>  [2].

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US Federal Reserve announces massive increase in government debt

 By Barry Grey

Global Research <http://www.globalresearch.ca> , March 20, 2009

World Socialist Web Site <http://wsws.org> 

The US Federal Reserve Board on Wednesday announced that it will massively expand its moves to pump liquidity into near-frozen credit markets, including a highly unusual plan to purchase up to $300 billion in longer-term Treasury securities over the next six months.

The plan also includes an additional $750 billion in Fed purchases of mortgage-backed securities guaranteed by the federally owned mortgage finance companies Fannie Mae and Freddie Mac and an additional $100 billion in Fed purchases of Fannie Mae and Freddie Mac debt. These measures came as a surprise to global financial markets and triggered a simultaneous rush to buy Treasury bonds and a sharp sell-off of US dollars on world currency markets.

The announcement came in the statement issued by the Fed's policy-making Federal Open Market Committee (FOMC) following its scheduled two-day meeting. As expected, the FOMC said it would continue to keep the Fed's benchmark federal funds rate—the interest charged by banks for overnight loans to one another—in a range of 0 to 0.25 percent, and would do so for the indefinite future.

But the announcement that the Fed would inject up to $1.15 trillion in additional funds into the US financial system—essentially printing that amount of additional dollars—was widely seen as something of a desperate gamble, motivated by concern over the deepening economic crisis as well as the mounting political crisis arising from public outrage over the
$165 million in bonuses awarded to executives and traders at the bailed-out insurance giant, AIG.

The gamble is that the Fed's emergency measures will drive down mortgage rates and yields on corporate as well as government bonds and kick-start lending without precipitating a run on the dollar. One of the motives behind the move is to encourage investors, in the face of lower Treasury yields, to buy higher-yielding private corporate bonds.

In recent weeks, interest rates on US government debt have risen as the massive deficits from bank bailouts and the stimulus program have required the Treasury to attract an ever larger inflow of capital from abroad. The flood of private and government funds into the US, freezing out many smaller and weaker economies in desperate need of capital, led to a rise in the dollar on world currency markets. The Fed's moves announced Wednesday could rapidly reverse the dollar's fortunes.

Last December, when the Fed cut the federal funds rate to its present level, effectively zero, it indicated that it was considering directly buying longer-term Treasuries, something that had not been done for 50 years. But in recent days Fed Chairman Ben Bernanke had indicated a reluctance to take such a drastic measure in the hope that existing government lending and bailout programs, combined with a new plan to allow banks to offload their "toxic assets" at taxpayer expense, would be sufficient to stabilize the financial system and stem the slide toward a full-scale depression.

However, soaring unemployment in the US and a rash of economic reports showing an accelerating slump in the US and internationally have compelled the Fed to abandon its previous projections of a recovery beginning later this year and accelerating in 2010. At the same time, the Fed and the Treasury have in recent weeks handed over tens of billions of additional taxpayer funds to AIG, Citigroup, Bank of America and other firms to avert bankruptcy, while the worsening slump has raised the prospect of a new wave of bank losses that could eclipse the losses from the collapsed subprime housing market.

In addition, the Obama administration's plan to use public funds to subsidize and virtually guarantee large profits to hedge funds and other investors who purchase unmarketable subprime-backed securities and other "toxic assets" weighing down the balance sheets of major banks, initially announced last month by Treasury Secretary Timothy Geithner, is now in doubt. It faces mounting opposition both from Congress, buffeted by public anger over the bailouts and corporate bonuses, and from Wall Street, which is increasingly balking at the minimal limits on executive pay imposed in return for government handouts.

The administration had said that Geither would announce the details of the new bank bailout program—expected to exceed the $700 billion Troubled Asset Relief Program (TARP) enacted under the Bush administration—sometime this week, but in the wake of the AIG furor the announcement has evidently been postponed.

The Fed's action had the character of a pre-emptive move aimed at averting a financial panic should the Obama administration fail to obtain Congressional approval for its bailout plan. The Fed has the legal power to take such action without recourse to Congress.

In its Wednesday statement, the FOMC painted a grim picture of the economic situation. It began: "Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract." It went on to note job losses, declining equity and housing wealth, tight credit, falling consumer sentiment and spending, declining business investment and shrinking exports resulting from the global contraction. Significantly, the statement omitted any reference to the economy recovering "later this year."

In addition to the purchase of Treasury securities and the increased purchase of mortgage-backed securities, the statement indicated that the Fed and the Treasury would widen the scope of their Term Asset-Backed Securities Loan Facility (TALF), which officially began on Thursday.
Under this plan, hedge funds and other investment firms can receive low-cost loans from the Fed to purchase new securities backed by auto loans, credit card debt and other consumer financing. The Fed and the Treasury plan to enlarge the class of asset-backed securities under TALF to include commercial real estate and other investments.

However, many hedge funds and other Wall Street firms have indicated a reluctance to participate in TALF because they object to having any strings imposed that would limit executive pay and bonuses and are wary of the public fallout should it become known that they are reaping huge profits from the government program.

In recent days, major banks such as JPMorgan Chase and Bank of America have declared their intention to pay back the billions they received under the TARP bailout as early as possible in order to remove themselves from the modest government restrictions that accompany the government cash.

Stunned economic commentators and analysts referred to the Fed's announcement as a "shocking" admission that its previous efforts had failed to stabilize the banking system. The Financial Times carried a commentary under the headline "Fed's Shock and Awe," which began: "The Federal Reserve is on a war footing and is using the Powell doctrine— only go to war as a last resort, and do so with overwhelming force.

"The stunning news that it would buy $300 billion in Treasury bonds (and spend a lot more on many other fixed-interest securities) also used another classic military strategy. It had the element of surprise..."

The article noted that the Fed's move "provoked a drastic market response. Ten-year Treasury yields dropped half a percentage point in minutes. The dollar dropped more than 3 percent against the euro."

The plunge in Treasury yields was the steepest one-day drop since the
1987 stock market crash. Thirty-year, fixed rate mortgages, which are pegged to the yields on ten-year Treasury notes, fell below 5 percent.

Deutsche Bank economist Peter Hooper said, "This is effective life support... keeping things from getting a lot worse."

Nick Kalivas, an analyst at MF Global, wrote, "The effectiveness of the Fed's panic move of Treasury and mortgage-backed buy-back is an open question. The aggressive move by the Fed is stoking inflation expectations and there is a belief that a lot of money could flow into commodities or other inflation hedges."

There are indications that this is already occurring. The dollar fell sharply on Wednesday, as the euro staged its biggest one-day percentage gain since it was launched 10 years ago. The dollar fell 4.5 percent against the euro between Wednesday and Thursday. The US currency also fell against sharply against many other currencies.

Thursday morning the British pound advanced to a four-week high of $1.4593. The pound has gained about 7.5 US cents from its intraday low Wednesday to its Thursday high. The dollar fell to its lowest levels against the Japanese yen in a month.

Commodity prices have surged. Gold futures, down before the Fed announcement, jumped 5.7 percent during after-hours electronic trading on Wednesday. Gold prices rose $26.60 an ounce, hitting $942, a sign of declining confidence in the dollar.

Oil prices rose sharply on Thursday to reach their highest levels this year.

US stock markets, which rose Wednesday in response to the Fed's announcement, gave up most of their gains on Thursday, as the longer-term implications of the massive increase in Fed lending and doubts about the Obama administration's bank bailout plan took hold.
Bank stocks, which had led Wednesday's rally, drove the downward move on Thursday.

The Fed is taking advantage of the privileged and unique position of the United States due to the role of the dollar as the world's reserve and trading currency. That status gives the US a degree of leeway to print money to paper over its debts far beyond that of any other nation. In taking the actions announced Wednesday, the US is, in effect, offloading the brunt of its crisis onto its international creditors.

However, there are limits to this license. Since last September, the Fed's lending programs have doubled the size of its balance sheet, to about $1.8 trillion from $900 billion. The actions announced Wednesday are likely to expand that to well over $3 trillion over the next year.

Such an immense expansion of US debt inevitably calls into question the value of the dollar and the credit-worthiness of the US government itself. Already last week the Chinese premier, Wen Jiabao, warned that China was losing confidence in the value of its more than $1 trillion in US debt holdings.

A United Nations panel of experts is looking at creating a new "accounting unit" or basket of currencies to replace the dollar as the world's central currency. Reuters reported that Russia is anxious to begin a discussion of such a move at the Group of 20 summit of leading economic nations in early April.

The Fed's extraordinary measures highlight the impossibility of resolving the economic crisis within the framework of capitalism without a massive destruction of living standards and a growth of economic nationalism and militarism. The more the failure of the profit system has become evident, the more emphatically President Barack Obama has declared his support for the capitalist market.

The essence of all of the measures taken in response to the crisis—from the bank bailouts to the stimulus program to the housing plan—is an effort to rescue the system and protect the wealth and power of the financial elite at the expense of the broad masses of the population.