carpe jugulum

04 Dec

Literally, “seize the throat”. Figuratively, “go for the jugular”.

Our elected officials no longer try to hide whose side they are on in the class divide in America. The newly elected Republicans and Teabaggers are slightly – but only just slightly – more open about this than the Democrats, who are joined with them at the hip but make the occasional (dismal, half-hearted) pretense of outrage at the Republican stance. The newly formed teabagger party in particular is presenting quite a study in the level of ignorance abounding in our society. They only give a nod to one sentence in the entire Constitution – that would be the second amendment about guns – which they interpret to read, “Fuck, yeah, we get guns!” The rest of it wafts through their brains without the slightest stirring of the air. But aside from the foreboding lack of intellect, one must be struck with how readily they adopted the corporate mindset of their backers; that all business is good and all business must be allowed to operate without regulatory constraint, no matter the cost to society. Yet they billed themselves as being “of the people” and “grassroots”. In Congress, we have the venal and the merely stupid. And the stupid will not even know they are being played by the venal.

We are a failed empire. We are ruled by an oligarchy comprised of the wealthiest families in the country and the largest corporations and financial houses in the world. Our Congress and President intend to shovel the last few scraps of the country’s wealth into the hands of this oligarchy by turning the other 90% of us into serfs begging to work any hours, for any pay, in a land bereft of opportunity and equality.

This is how the USSR collapsed; financial crisis, the imposition of austerity measures and privatization of the public sector enforced by the financial elites who now rule Russia as an open oligarchy while the citizens stand in bread lines. We know what happens in a country where the wealthiest private companies and individuals rule and grow ever more powerful without regulations to force them to consider the effects of their actions on the larger society around them. We know what a completely unfettered free market does to a country – and we don’t have to look at Russia or Chile as examples; we can refer to our own past. Consider the late 1800’s/early 1900’s, the age of the robber-barons. Slave wages, sweat-shops, child labor, extreme industrial pollution and ethnically divided inner-city ghettos were the fate of the common worker. Our government finally understood that private companies needed some constraint in order for society as a whole to flourish. This is perhaps the most important and abiding role of our government…to consider, take into account, and act for the benefit of the externalities that businesses refuse to acknowledge.

But this government now, the one we currently have in Washington, has decided to strengthen the markets of the wealthy at the expense of the people. It is inevitable that the country will collapse as a result, and with a population so divided politically (intentionally divided, I would contend, by the media and the politicians) and fearful for their own uncertain financial security, the resulting violent backlash will be that of neighbor against neighbor rather than being directed at the true culprits.

Never in our history has there been such an income gap between the rich and the poor. The richest 1% possess more wealth than the combined wealth of the bottom 90%. Corporate profits set records each quarter. Wall Street profits are higher than ever. The bonuses and pay of the CEO’s and management of the largest financial houses are setting new records a mere two years after nearly destroying the economy and being bailed out by taxpayers. The five largest banks are 20% larger than they were before the crisis. They control 8.6 trillion dollars in financial assets; that equals 60% of our nation’s GDP. But even this isn’t enough for them; Jamie Dimon, the “reasonable, nice guy” in the banking world, thinks JP Morgan should be bigger than it already is. []

The very infrastructure of our country is being sold off to foreign interests. While the federal government prefers to spend our money to wage wars around the globe, operate over 700 military bases around the world, purchase weapons, hire and pay almost a thousand companies to spy on America’s e-mails and eavesdrop on America’s phone calls, it can’t see its way clear to help cash-strapped states retain teachers or maintain public roads and schools. The individual states are now actually selling our infrastructure on long-term leases to foreign interests to raise money. []

The Wall St. banks have money, however. The derivatives market – that shadowy, inexplicable asset class which blew up the economy in ’08 – was valued at about 200 trillion then and is now estimated to be worth over 500 trillion today. These “assets”, of course, don’t really represent anything tangible, they are complete fabrications made up wholecloth by Wall St. Here’s how illusory these figures are. These “assets” are notionally based on US real estate. Yet all the real estate in the US is valued at about 20 trillion. The GDP of the entire world is roughly 58 trillion. How anyone can fail to grasp the implausibility of a mortgage-related derivatives market outstripping the entire valuation of all US real estate by a factor of twenty or so is difficult to fathom. Clearly the governments of the US and Europe should have let the financial institutes involved in this fraud fail and broken them up back in ’08. The restructuring and rebuilding of the various economies would have been tedious and would have required meticulous attention to detail, but in the end, it’s all really just paperwork. We should have done the work.

Iceland, which collapsed as a result of the crisis, refused to play the game as dictated by the banks. They nationalized their banks and are currently recovering. They are in the process of rewriting their constitution to protect themselves in the future. []

Europe, on the other hand, is falling into the trap set by the banks, one country after another, and forcing their people to undergo austerity measures for an economic crisis foisted on them by those very banks. We are next, although the austerity measures our Congress is proposing to inflict on us do not relate to the economic crisis in a clear way. In the case of the US, it seems that Congress has decided to derail any chance of recovery and impose harsh economic conditions on the poor and middle class without any real need to do so. They are preemptively punishing the people and tearing apart the protections our government has offered for generations to the sick, the out of work and the weakest members of our society, all in the name of some deficit reduction which they have not proved needs to be addressed. It seems we are going to let our leaders sanction us while excusing them the need to explain why. Note the comments from James Galbraith, one of our most respected economists, in this short article where he attacks the lack of evidence for deficit fear-mongering. []

I highly recommend this article on misplaced deficit hysteria, as well.

The administration and Congress have signaled what they intend to do and whose side they are on, although they are adept at obfuscating the reasons.

Despite the fact that the wealthy and the big businesses have enjoyed tremendous tax breaks for the past ten years with the Bush tax cuts and that these breaks have NOT resulted in jobs growth and have, in fact, added greatly to the deficit, Congress wants to extend the cuts to those same groups. The Obama administration says it wants to encourage small business growth, yet in practice, over 300 billion worth of federal contracts earmarked for small businesses are being deliberately diverted to some of our largest corporations. []

Small businesses account for 90% of our job market and new hiring. They are not getting the help they were promised, the banks are not lending out the money lavished on them in repeated bail-outs and backstops, and so we do not see any real growth in jobs. Unemployment rose to 9.8% in November – that is the “official” accounting of unemployment. Over 15 million Americans are unemployed, but that number does not include 1.3 million who have completely given up looking for work or those working part time but who want to work full time. 1 in 7 Americans live in poverty. 41 million Americans need to use food stamps to eat. Outsourcing of jobs continues unabated and the Business Roundtable admits that the outsourced jobs are not coming back to this country. However, the Obama administration has found a way to dispel the gloom; they have decided to simply stop counting the outsourced jobs. []

Congress wants to keep the Bush tax cuts for the wealthy as a trade-off for extending unemployment benefits. Unemployment benefits average $310/week. This money is poured directly back into the economy as consumer spending (70% of the nation’s economic activity is driven by consumer spending). If the benefits are not extended, the ramifications as expressed by the CBO would be: a drop in annual economic growth of 1/2 to 1%, hundreds of thousands more people falling into poverty, and another one million lost jobs. (Obviously jobs would be lost, since if people had less to spend, they would buy less. Companies would need to lay off workers because they didn’t have a market for as much of whatever they produced. ) This is offered as a “plan” by Congress – a “compromise”. It goes without saying that without the extension of unemployment benefits, more homes will be lost to foreclosure. This is another area where the Obama administration is showing its true colors. As foreclosures mount, an ever increasing array of problems with the paperwork is being exposed. Yet Obama has refused to call a halt to the foreclosures, saying it is a bank problem that the banks are best suited to sort out. These would be the same banks which conned people into faulty loans they couldn’t afford or who wrote deliberately bad loan papers, and who then chopped up the mortgages into tranches to be traded in the derivatives markets. The administration is only going to spend about 12 billion of the promised 50 billion to help homeowners avoid foreclosure, by the way. Obama also remarked that “foreclosuregate” is basically a states’ issue for the various state Attorneys General to solve. Yet the banks themselves formed the MERS bank, now revealing its improper and illegal handling of mortgage and foreclosure paperwork, specifically to avoid state oversight and regulation, apparently escaping the notice of the legal systems in each state to start with. Let the banks handle it? Yet this is what passes as Deep Thought and Reasoned Approach today.

Congress continually talks about “deficit” and “shared sacrifice”, while at the same time rewarding the richest among us. The suggestions coming out of Washington ensure the continuation and intensification of the national debt while asking sacrifice from the poorest. Obama’s deficit commission may not have had its suggestions brought to the floor for a vote (yet – they’ll come up with some new ideas to proffer – give ’em a week/coupladays), but it served its purpose nonetheless. Which was to get people used to the idea that they will pay more and receive less while the financial elite and big businesses continue unaffected as before. The ideas put forth by the commission included lowering the taxes for the wealthiest, more tax breaks for mega-businesses, taking away the Earned Income Credit, reductions to medicare and medicaid, lowered benefits in social security distributions (although SS cannot legally affect the deficit), a 15 cent per gallon tax hike on gasoline, less money for the food stamp program, taking away the deduction businesses now receive for providing health insurance for their employees…these are explicit signals of what is in store. This is obvious class re-alignment and Congress is siding with the rich. Our legislators are starting the discussions at pointless, stupid and regressive. They will not improve the final legislation as they “negotiate” and “compromise” in a “bipartisan fashion”. Improvement is just not what they do. The people of America, as in “we, the people”, are not Congress’ constituency any longer. They work for those that can afford to bribe them. We, the people, can’t.

If Congress truly wanted to fix some of our financial problems they would consider these ideas: get rid of Goldman, Sachs, JP Morgan, and Citigroup. Get out of Afghanistan and Iraq. Pull out of foreign military bases and cut the Pentagon budget by half. Raise taxes on the rich. Force the insurance companies to return to the non-profit models they started with. Allow drug re-importation from Canada and limit the profits allowed to pharmaceutical companies – a significant portion of drug research and development is generated through government subsidized grants – why should the pharmas be allowed to make huge profits on drugs the tax-payers funded in the first place? Strongly re-regulate big business and banks. Stop printing digital money a la QE2. Avoid privatization of the public sector. Rewrite the tax laws so that businesses and the wealthiest aren’t incentivized to hide money overseas or to outsource jobs. Invest in infrastructure in a WPA-style program. Quit giving subsidies to companies like Exxon for research into green projects. (Exxon pays 0 dollars in taxes and yet has the largest profits of any company in the history of the world. Surely, it will fund its own research – and can certainly afford to – as oil supplies dwindle, in order to stay in the energy game.)

What this administration has done instead, using just the energy sector as an example, is to give stimulus money for supposed green or clean energy projects to corporations which are then being given exceptions from the most basic environmental oversight. []

Government has a role to play. Now, however, they are playing the wrong part. They are sending us back to the feudal times of lords and peasants. The country is collapsing and the lines are drawn. Not because there is some big conspiracy, but because the greed of all the involved parties seems to have found opportune alignment at this moment in our history. As we serfs become more restive (and we will), we are gradually being trained to be obedient. We grow more accustomed to the security state we are living in and less alarmed by being scanned, spied upon, put on terror watch lists for joining a peace group or reading certain websites, having our bodies and possessions searched without warrant, and being shocked with electricity for not obeying the authorities quickly enough. Should we get too uppity and insistent on living decent lives, the government and the military/industrial complex have been working on plans to take care of that, too. []

We are living through the denouement of America. The lines are clearly drawn for all to see. The wealthiest, the biggest corporate cartels, and the MIC against the rest of us – and they are going for the jugular. Carpe jugulum.


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