Friday, September 19, 2008


Local residents in Chula Vista, California are up in arms over the construction project planned for the Chula Vista Power Plant in their backyard. This week they showed up at the front of the San Diego Country Club in Chula Vista to express that displeasure to their mayor.

The existing power plant lost its permission to operate in Chula Vista when it shut down for more than 12 months. It actually shut down for almost three years.

The proposed new power plant, like the one it is replacing, remains in a very poor location. Roughly 1300 ft. from an elementary school and only 350 ft. from the nearest residential neighborhood.

Does that sound like a good idea to you?

Me either.

You wouldn't think anyone would even propose such a thing.

However, if you knew that 81% of area residents are people of color and 16% are below the federal poverty level you might begin to figure out why it has happened.

An analysis by the Los Angeles Times found plants such as the proposed one in Chula Vista are disproportionately likely to be located near predominantly Latino neighborhoods.

“You have to ask, ‘Why are they doing it here?’ ” said Michael Meacham, a city official in Chula Vista who opposed the construction of a peaker plant there. “Is it because it’s a moderate- to low-income area? Is it because it’s a predominantly Hispanic area?”

In fact, they are doing it "there" over and over again. In Chula Vista and the neighboring Otay Mesa section of San Diego, where four new plants have been licensed within a five-mile area of scruffy hillsides and industrial flatlands that tumble up against the Mexican border. More than 80% of the people who live near the plants are Latino.

“I don’t think it’s just a coincidence,” Josie Lopez-Calderon, president of San Diego’s Mexican-American Business and Professional Assn. told the Times.

Also not a coincidence is the fact that no members of the California Legislature appeared at any of the hearings held to consider the four Otay Mesa and Chula Vista plants, nor did any other elected officials, with one exception: Bill Horn, chairman of the county Board of Supervisors, who appeared at one hearing to express the board’s unanimous support for the large Otay Mesa plant.

Some people have clout. Some people don't.

Anyway, lets get back to the specifics of this proposed project.

According to the neighbors the original plant project was never explained to them adequately (Big surprise that one). Only people within 900 feet were officially notified. Most people knew about it after it was built. The plant was placed practically in the Otay River, which is becoming a county regional park. It is an ugly grey building visible from Montgomery High School across the river and the bridge between Chula Vista and San Diego on Beyer Way. Montgomery High School is a year round school and we observed the heat waves from this peaker every day during the warm summer months.

The new owners of the plant want to tear down the existing building and move it further north on the site, which would be further from the river but closer to the residents.

These residents say the new, supposedly more efficient plant's total pollution per year would be greater then the lousy old because it would run more hours, and the total pollution per hour for four pollutants would be greater.

Regulators argue they are mitigating this extra pollution by giving the city money to convert some of its cars or install solar is adequate. The residents realize this may make a slight difference regionally but not protect their health at all.

The Environmental Health Coalition (EHC) is an intervener opposing this project in this location. They agree with the near-by residents that it must be sited much further away from residents and schools. There are a number of other locations in San Diego that would be further from homes and schools.

Despite all this and in the face of all the evidence last summer, behind closed doors, the Chula Vista City Council directed City staff to drop their objections to the MMC Energy, Inc. (MMC) Peaker plant expansion and support the MMC Project. That decision only became known with the release of a letter to the California Energy Commissioner (CEC)"explaining" the City's decision to drop their concerns and objections in return for an additional one time payment of $210,000.

The San Diego Union-Tribune reported that residents of southwestern Chula Vista attended an August 24 council City Council meeting to protest the city's move to support MMC's proposal to build a new and larger peaker plant. More than 120 concerned community members attended the meeting at City Hall and 29 people spoke in opposition to a new and larger plant.

Among other things residents told their supposed representatives their neighborhood is a medically underserved area and an increase in pollution which the plant will cause poses a public health risk for children and the elderly.

The council wasn't listening (except for Councilman Rudy Ramirez).

A leaflet from the Southwest Chula Vista Civic Association in opposition to the peaker lists a number of reasons why they oppose the peaker plan:

1. The location is unacceptable-20 feet from front door of new businesses, 350 feet from people’s homes, 1300 feet from Otay Elementary, 1200 feet from Otay Recreation, within one mile of 16 schools, a health clinic, a library, and two recreation centers.

2. A peaker should be, according to CV zoning ordinance, in a heavy industrial zone. This location is a light industrial zone. The existing peaker did not operate for more than 12 months, so it lost its conditional use permit, according to (CVMC:19.64.070). The Mitigated Negative Declaration for the existing peaker required a major overhaul of generator and pollution control equipment every two years. This apparently has never been done. THIS PEAKER SHOULD NOT BE OPERATING. Commonly in the city when a Cease and Desist Order is issued the owner is required to clear the lot to bare ground.

3. New peaker will have two 70-foot tall smoke stacks, visible above surrounding buildings.

4. New peaker will use between 4.4 and 28 million gallons of water a year.

5. There is a 12,000- gallon tank of ammonia on site. (18 deliveries per year are predicted.)

6. The new peaker would produce between 7 and 25% of the carbon monoxide in the entire city if approved, making reaching city’s carbon reduction goal more difficult.

7. There is very little connection with getting rid of Southbay Power Plant. (ISO wants a lot of things.) MMC has no contract with SDG&E and needs to install two cut-off breakers to ensure it won’t overload existing lines. Not needed in this location.

8. It would be an awful precedent, because new General Plan says no power plants or heavy industrial uses within 1,000 feet of sensitive receptors. What will we be stuck with next?

9. The area within 1,000 feet of the plant is over 90% people of color.

10. The hourly emission rates are higher for SOx, VOC, and PM10/PM2.5 for the proposed plant, as compared to the old plant, and it will run more hours. Particulate Matter (cause of asthma, heart and lung diseases) is particularly high. After 500 hours the net pollution will be greater.

Among the health risks for residents, especially children and seniors, are poor air-quality, pollution, asthma, and even cancer, states the EHC.

“The power plant is still over 100 percent larger and will increase pollution in the neighborhood, is too close to homes and schools, and is in direct violation of the City’s general plan. The terms of this new ‘agreement’ do not represent any improvements to the project,” stated Theresa Acerro, president of the Southwest Chula Vista Civic Association. “From all appearances, it looks as if the Council has sold out our community health for $210,000. Our health is not for sale.”

Apparently it actually is.

Diana Vera lives about 400 feet from the MMC peaker power plant near Main St. in southwest Chula Vista. The 57-year-old grandmother said she’s concerned that a proposed expansion of the power plant will dramatically increase the health risks her grandchildren will be exposed to.

“Historically, the city has dumped all the toxics to southwest Chula Vista because they’re always taking advantage of low-income families of color,” said Vera, who has lived in the area since she was 11 years old. “We’re finally raising our voice to say we will not tolerate this any longer. We want our children to live free of toxics. It is ironic that in the U.S. where we have freedom of choice and freedom of speech, we have to fight for our right to clean air.”

Headquartered in New York City, MMC Energy, Inc. is a North American energy acquisition company, which primarily acquires and operates deep value power generation and associated energy infrastructure assets.

The following is from La Prensa San Diego.

Community unites against peaker electric power plant
By Pablo Jaime Sáinz

Residents of southwest Chula Vista protested against a proposed peaker electric power plant in their community during a luncheon where Mayor Cheryl Cox was scheduled to receive a recognition.

There were about 40 protesters on Wednesday, September 17, in front of the San Diego Country Club in Chula Vista, including many children and seniors, most of which live within 350 feet of the proposed MMC Energy Plant, which would be built at the end of Albany St. to replace the current, smaller plant at the corner of Harvest and Otay Mesa Rd.

Protesters are against the Chula Vista City Council’s agreement with MMC where the company agrees to pay the city $210,000 in exchange for allowing it to expand the power plant.

The residents said their health is at risk with the proposed construction of the peaker electric power plant in the middle of the community.

“We want to make it clear that it is the City Council’s responsibility to protect its citizens,” said Theresa Acerro, president of the Southwest Chula Vista Civic Association, the group organizing the protest. “By allowing MMC to build this plant, the council is not doing its job. This is a civil rights injustice. Our City Council is failing all of these children. We’re outraged by this. It’s insulting.”

According to the Southwest Chula Vista Civic Association, the new power plant would be 350 feet from homes, 1,300 feet from Otay Elementary School, and 1,200 feet from Otay Recreational Center.

Among the health risks for residents especially children and seniors, are poor air-quality, pollution, asthma, and even cancer.

“Historically, the city has dumped all the toxics to southwest Chula Vista because they’re always taking advantage of low-income families of color,” said Diana Vera, who has lived in the area since she was 11 years old. “We’re finally raising our voice to say we will not tolerate this any longer. We want our children to live free of toxics. It is ironic that in the U.S. where we have freedom of choice and freedom of speech, we have to fight for our right to clean air.”

Acerro said that the Southwest Chula Vista Civic Association has more than 2,000 signatures of residents opposing the construction of the power plant.

During the protest, residents were chanting slogans such as “Recall Cox!” “Justice now!” and “Bruja Cox!” The signs they were carrying put an emphasis in protecting the health of the children. One of the signs used the initials of the MMC company to read: “Making Miserable Children.”

Letters issued in August to the California Energy Commission show the city droping objections to the MMC power plant expansion.

Letters acquired by La Prensa San Diego detail an agreement between MMC and the City of Chula Vista which includes payment of $210,000 by MMC to the city.

Harry Scarborough, vice-president of MMC Energy Inc, in a letter to the California Energy Commission states: “We believe that the City will find that the Project is in harmony with and therefore, consistent with the City’s General Plan.”

But Chula Vista Council-ember Rudy Ramirez addressed the crowd during an August protest in front of the City Council Chambers and told them he is against the expansion of the power plant because the proposal contradicts the General Plan, which states that energy facilities should hot be within 1,000 feet of sensitive receptors.

“The power plant is still over 100 percent larger and will increase pollution in the neighborhood, is too close to homes and schools, and is in direct violation of the City’s general plan. The terms of this new ‘agreement’ do not represent any improvements to the project,” Acerro said. “From all appearances, it looks as if the Council has sold out our community health for $210,000. Our health is not for sale.”

She said that the Southwest Chula Vista Association and other community and environmental groups will continue to oppose this project.

She encouraged Chula Vista residents to attend the California Energy Commission meeting on October 2 at 3 p.m. at the Chula Vista City Council Chambers, 4th & F, across from the library.

“Please tell the city council to oppose this,” she said. “Tell the State Energy Comission that this is blight on our neighborhood and way too close to homes.”


Clashes have already occurred in the center of the German city of Cologne as a conference of far right and fascists just begins what has been described as an “anti-Islamisation Conference”.

Pro-Köln supporters were met with whistles and paint bombs hurled by leftist activists, and there was an another incident between the right-wingers and activists in the city's Rodenkirchen district. But no one was injured, police reported.

According to an AP report protesters gathered outside city hall in Cologne's borough of Rodenkirchen to prevent two leaders of the Pro-Köln (For Cologne) movement from entering the building where they were to hold a news conference.

Police moved in to build a protective ring around the two men, amid shouts of "Shame on you!" and "Get lost!" from the angry crowd. The two fasicistis were turned away at the door by a city official on orders from the mayor.

The three-day racist gathering, which includes a rally at the site of a mosque under construction, is organised by the Pro-Köln or “Pro-Cologne” fascist like group and is expected to attract support from nationalists across Europe.

We refuse to let our continent become "Eurabia" or some multicultural Tower of Babel," Pro Koeln (Pro-Cologne), the organizer of the "Anti-Islamification Congress,"said in a pamphlet on its website.

"We want to preserve our homelands, our cities, our towns and villages, our civilization and our way of life."

Der Speigal reports more than 40,000 counterprotesters are also expected in the city, and police are describing it as one of their "most difficult assignments" ever. Cologne, after all, is home to 330,000 people with immigrant backgrounds -- among them 64,000 holding Turkish passports. Three-thousand police officers from all over the state of North Rhine-Westphalia will be deployed in the city. The magazine writes:

"A three-day battle between Germany's right- and left-wing scenes is expected as the conference opens, with players in both camps converging from all over Germany to attend protests surrounding the event. In the left-wing scene, some have already been trained in blockading techniques so that they can attempt to paralyze the conference this weekend."

Pro Cologne disputes the tag of fascists that some (like me) give it. Instead identifying itself as a moderate conservative catch-all group for those opposed to what it describes as the Islamization of German society.

And Hitler was just a guy with a funny mustache who was opposed to the "Judaization" of German society.

By the way it isn't just left wingers and anarchists who are opposed to the gathering. Trade unions, churches and other groups have also announced plans to protest against the conference. The anti-Muslim conference has drawn fire from German politicians and local residents as well.

Mayor Fritz Schramma called on Cologne residents to show the far-right "the cold shoulder."

“Populist right-wing rat catchers openly in favor of exclusion and who stir up fear are not welcome here,” the mayor stressed.

Juergen Ruettgers, the premier of the state of North Rhine-Westphalia said, "Those who abuse the cosmopolitan and democratic city of Cologne as a meeting place for right-wing radicals are against tolerance, against reconciliation, against humanity."

The Local (Germany) says those attending the conference may find it hard to get a glass of Cologne's famous Kölsch beer, with 150 of Cologne's bars putting up banners promising "No Kölsch for Nazis." Some 200,000 beer mats have also been printed with the same message.

The US Embassy issued a statement advising Americans to "defer non-essential travel to Cologne at this time."

For an earlier related Oread Daily article go to .

The following is from Deutsche Welle.

"Anti-Islamification" Congress in Cologne Sparks Clashes

Demonstrators and counter-protesters clashed Friday at the start of a controversial international "anti-Islamification congress" in the western German city of Cologne.

The two-day event has been organised by members of the far-right Pro-Koeln (For Cologne), who were met with whistles and paint bombs hurled by about 100 leftist activists.

Counter-demonstrators carried signs with slogans including "Stop the Nazi Congress -- Stop Pro Koeln" and a few scuffled with the right-wing organisers. One leftist protester was briefly detained by police, a spokesman said.

Some 3,000 police officers from North Rhine-Westphalia and neighboring states are being deployed in Cologne this weekend in the hope that they'll be able to maintain peace and security.

The organizers from Pro Koeln -- a self-described "civil movement" which has, however, been represented on the municipal council for four years now -- are among the most vocal opponents to a project to build a new mosque in Cologne.

The group used the recent green-lighting of the construction plans to rally together other far-right groups in Europe who share its view that German and Europe are increasingly becoming "Islamicized."

Government, experts label Pro-Koeln extremist

A spokeswoman for the German interior ministry criticised the event Friday, calling Pro-Koeln an "extremist" group that aimed to undermine good relations between Muslims and non-Muslims.

In chorus, a foreign affairs spokesperson for the federal government said: "In our country there is no place for radical right-wing groups who discriminate against minorities under the guise of a citizens’ movement."

Wolfgang Kapust, an expert on the far-right definitively labeled Pro-Koeln an extremist grouping.

"You can see it in the biographies of their leaders. They're members of the National Democratic Party, they're in the Republicans, and they established the very radical German League for People and Homeland. And all of these organizations and parties are characterized by far-right positions, racism, and a strong sense of nationalism."

No Koelsch for Nazis

A wide majority of Cologne residents are planning to clearly show that they want nothing to do with the congress. They've made hundreds of signs calling for passive resistance to the event. The city's barkeepers have declared that they will not be serving any of the local Cologne beer, Koelsch, to Nazis. And Muslim groups in this city where every eighth resident is Muslim have planned peaceful gatherings on the site of the planned mosque.

Some onlookers are wondering why the city hasn't banned the congress from taking place. But politician Ruprecht Polenz, head of a Christian-Muslim peace initiative, said that's not so easily done.

"They're clever," he said. "They're not going to show up sporting swastikas. Rather, they'll use slogans meant to pick up on any resentments. There are problems with integration. The question is, how do I handle it? Do I contribute to the problem by reacting aggressively, or do I try, with dialogue, to get to the bottom of things and get closer to a solution?"

Cologne residents to give the cold shoulder

Cologne's city government has also had mixed feelings about hosting the congress, and not because of the bill of more than a million euros the city will have to foot once it's all over. Officials are worried about the bad name that such an event could give a city that prides itself on being an exceptionally tolerant place to live.

Mayor Fritz Schramma has called on residents to show the far-right "the cold shoulder."

"Shut your windows and doors, lower your shutters," he said in a statement. "Make it clear to Pro Koeln and its camarilla: You are not welcome in Cologne."

The right-wing extremists have been denied permission to gather in front of the city's most famous landmark, the Cologne Cathedral. Instead, the event has been relegated to a city suburb.

Whether Pro Koeln's attempt to unify Europe's nationalists will succeed in Cologne remains to be seen. In the run-up to the event, the organizers boasted that big names on the far-right scene would be in attendance -- Jean Marie Le Pen, the head of France's National Front, for example, or the head of the Austria's Freedom Party.

Le Pen, for his part, has already let it be known that Pro-Koeln was lying. He said he had never had any plans to come to Cologne.

Wednesday, September 17, 2008


Two Afghan doctors working for the World Health Organization in an anti-polio program were killed in a suicide car bombing in southeastern Afghanistan Sunday that was claimed by the Taliban.

The doctors killed Sunday were en route to a vaccination drive in the Spin Buldak district near Pakistan when their convoy, clearly marked with U.N. insignia, was hit. Polio is endemic along the Afghan-Pakistani frontier.

Kai Eide, the Secretary-General's Special Representative for Afghanistan and the head of UNAMA, and Peter Graaff, the WHO representative to the country, in a joint statement decried the bombing.

"This attack was on innocent civilians working only for the people of Afghanistan, and is beyond comprehension," they said.

Police said the driver of the doctor's vehicle was killed and another 16 people were wounded in the attack. The bombing occurred on a road in the town of Spin Boldak.

WHO says the campaign to eradicate polio in Afghanistan will continue despite the attack.

Polio has been eradicated from most of the world while four countries - Pakistan, Afghanistan, India and Nigeria - have still been reporting polio cases.

Providing humanitarian assistance in Afghanistan is an endeavor increasingly fraught with peril. At least two dozen foreign and Afghan aid workers have been killed this year, exceeding last year's total, and a group that tracks violence against humanitarian organizations says the number of such attacks has increased by 50%.

U.N. Human Rights Spokesman Rupert Colville says the U.N. Assistance Mission in Afghanistan recorded a total of 1,445 civilian casualties in the first eight months of 2008. This is a 39 percent increase over last year.

"August was a particularly bad month. Out of [with] 330 civilians killed. That is the highest number of civilian deaths to occur in a single month since the end of major hostilities and the ousting of the Taliban regime at the end of 2001," said Colville. "The Taliban are believed to be responsible for exactly 800 killings or 55 percent of the total number [referring to total number of deaths in the first 8 months of 2008: 1,445]. That is almost double the 462 deaths last year in the same period."

Colville says the Taliban also carried out more than 140 summary executions.

For good measure, suspected Taliban militants "punished" a schoolteacher the other day for working for the government by dragging him out of a mosque and cutting off his ears in Afghanistan.

Zabul provincial education chief Mohammad Nabi Khushal said the armed men barged into the mosque while worshippers were at a late night prayer, and took another dozen people and beat them up on similar chargers.

"They took him out of the mosque and cut off his ears. They said, 'Anyone working for the government will be punished like this'," he said.

So seven years after the overthrow of the Taliban many Afghans say life is no better and some say its worse.

A recent spate of civilian deaths caused by U.S.-led air strikes has added salt to their wounds.

"After the 9/11 attacks, when the U.S. and her allies overthrew the Taliban government, the U.S. promised the Afghan nation stability, safety and jobs," Haji Allah Dad, a 60-year-old trader in the southern town of Spin Boldak, told Reuters.

"But they have done nothing for us. They drop bombs on the civilian population and have killed thousands of Afghans in the last seven years, while the Taliban get stronger day by day."

"We feel no change in our lives," said Mohammad Usman, a 40-year-old shopkeeper from Spin Boldak.

"They (foreign forces) are not the enemy of the Taliban, they are the enemy of the Afghan people. The U.S. army calls us al Qaeda and kills us but we don't know what al-Qaeda is."

It's all just swell.

The following is from AFP.

WHO says Afghan polio campaign to go ahead despite killings

The World Health Organisation said Wednesday that a polio vaccination campaign in southern Afghanistan would go ahead despite the killing of two doctors in a suicide attack claimed by the Taliban.

"Today, the country and Kandahar team has finally decided to continue the campaign to take forward the mission of polio eradication for which our two colleagues sacrificed their lives," Kabul-based WHO official Tahir Mir said.

The WHO had said on Tuesday that the campaign targeting 1.2 million children under five in Afghanistan's southern regions, due to start on September 21, had been cancelled following the attack.

But Mir said on Wednesday that the WHO's staff in Afghanistan are "totally committed to this noble cause and do not feel defeated due to this recent sabotage activity."

The campaign "will be carried out in all the planned areas on the scheduled dates, September 21-23," he added.

Two Afghan doctors working for the WHO were killed in a suicide car bombing in southeastern Afghanistan Sunday that was claimed by the Taliban.

The WHO said earlier this week that a similar campaign in the eastern provinces of Nangarhar, Kunar and Laghman was still likely to go ahead, as were future campaigns in the south in October and November.


It is getting scary out there folks. The capitalist crisis currently underway has spread around the globe and few are immune.

The two capitalist candidates here in the USA can't offer anything much because they have to support a system - capitalism - which just ain't working.

I'm not going to tell you that capitalism will now collapse and that the socialist era has finally arrived.

That never seems to happen, so when it does (and sooner or later it will) I'll be as surprised as the next person.

So while McCain announces all is well (well sort of, maybe, or not quite or something) and Obama finds the time to pick up a cool 9 million bucks amidst the limousines and glamor of Hollywood stars and starlets, most of the rest of the American people grow more and more nervous about what the future holds for them.

I believe the image at the right is the work of John Breiner (at least, it comes from his web page). It is entitled "Things fall Apart."

The first article below is from Socialist The second is from Moscow News.

Capitalist crisis
Karl Marx was right

Editorial from The Socialist, paper of the the Socialist Party, Committee for a Workers' International in England and Wales

“It is a moment Karl Marx would have relished. From every angle financial capitalism is taking a battering” (The Guardian).

The economic witch-doctors and soothsayers of capitalism were wrong and the socialists and Marxists were right. This is what the collapse of Lehman Brothers – the fourth largest investment bank in the world – means.

The financial ‘bloody Sunday’ was followed by ‘meltdown Monday’ and the collapse of share prices worldwide. This has shattered the current ideological foundations – and much more besides – of capitalism.

Capitalism’s representatives argued that the collapse of Stalinism and, with it, the planned economies of Russia, Eastern Europe and elsewhere, left capitalism as the only effective vehicle for delivering goods and services to the peoples of the world. The future was one of endless rises in living standards.

We argued that the inherent contradictions within capitalism – a system based on production for profit and not need – remained, particularly the economic cycle of ‘boom and bust’. These, however, were masked for an historical period by the unprecedented ‘financialisation’ of the system through the massive extension of credit.

But like an elastic band stretched to breaking point, it was bound to snap at some stage. Lehman Brothers, for instance, was ‘leveraged’ – that is, borrowed – on a monumental scale of 35 times the value of its assets. It was 164 years old, had survived two world wars, the depression of the 1930s and a collapse and rescue in 1984 but has now been brought to its knees by this crisis. Yet its chief, Dick Fuld, known as the ‘gorilla’ for his aggressive manner, paid himself £22 million last year when the weaknesses of the bank were already obvious! He will not suffer – except from loss of face – but the 25,000 Lehman Brothers employees will.

The roots of the crisis are well known. They lie in the disintegration of the housing market in the US and particularly the subprime sector which lent to mostly poor people who had no prospects of repaying their inflated mortgages. However, there is not just one financial problem but now a chain of looming crises, unexploded bombs, which could yet ignite, with further huge slabs of masonry falling off the ‘financial architecture’ of US and world capitalism.

Why did the US Federal Reserve bail out Bear Stearns, and Freddie Mac and Fannie Mae, and not Lehman? The simple answer is that Hank Paulson, US Treasury Secretary, and the economic strategists of US capitalism believed that unless the former were rescued, a new financial crash like 1929 was possible. Nouriel Roubini, a capitalist economist who has consistently agreed with us Marxists on the seriousness and scale of this crisis, called Paulson’s action “socialism for the rich”.

Other threatened banks and industries therefore lined up with their begging bowls, asking for bail-outs from the state, which they previously maintained had ‘no role’ in the workings of so-called free market capitalism. If they were to be helped, what about the two million US workers who have already lost their homes – estimated to rise possibly to ten million by Roubini – who would demand equal treatment with the financial plutocrats? Failure to do so could undermine McCain, the right-wing Republican presidential candidate, who would be seen as openly on the side of the rich, who have been ‘saved’ by his friends in the Fed.

Therefore, Lehman Brothers has been allowed to die but an ‘unofficial’ rescue operation was undertaken to save Merrill Lynch. Another financial whale, American International Group (AIG), responsible for insuring against ‘risk’ in the huge derivatives market – and also the sponsor of Manchester United – is teetering on the brink. But Ken Lewis, the chief executive of Bank of America, said the failure of AIG would be a bigger shock to the system than the bankruptcy of Lehman. He urged the authorities to find a way to support the company. “I don’t know of a major bank that doesn’t have some significant exposure to AIG,” he said. “That would be a much bigger problem than most that we’ve looked at.”

Lehman was, it seems, not crucial for the US economy whereas Fannie, Freddie and even Bear Stearns are major players in US local government finance. Half of the 9,000 banks in the US could have collapsed if they were not rescued. But, the fall-out from the collapse of Lehman could still be very severe, with big international repercussions; debts to Japanese investors in Lehman are considerable, for instance.

US capitalism – and particularly the financial sector – is therefore not yet out of the woods. The derivatives ‘industry’ is highly unstable, commercial property prices are declining and, crucially, ‘insurance’ institutions (as a safeguard against the financial collapse of firms) also could collapse. A financial domino effect threatens, which means that this crisis is no ‘five-minute wonder’.

It will extend – in fact, it already has done – into the ‘real economy’, both in Britain – which has entered a recession – and in the US. This has inevitably drawn in Europe, Japan, the rest of Asia and, ultimately, China. It will be the workers in the finance sector – and most of them are white-collar workers – who will be the first to suffer. Sixty-three thousand have already gone down the road, mostly in London and New York. A further 20,000 jobs in UK financial services could vanish in the next year or so.

Some 1.04 million people work in banking, finance and insurance in Britain. Some affected have posted heartbreaking messages on websites: “dh (slang for dear husband) lost job. No savings and likely not getting paid this week… How on earth will we manage? How long will the lenders give you if you can’t pay the mortgage?”

Spare a tear for these workers but not for the well-oiled, well-dressed ‘masters of the universe’ who, despite their crocodile tears, will not really suffer. Unemployment will now rise substantially, with an estimated half a million lost jobs adding to the dole queues in Britain. These events represent a massive indictment of neo-liberal capitalism, the untrammelled rule of the ‘market’, in which a handful of billionaires can ruin the lives of millions.

Moreover, they do not fully understand the workings of their own system. Alan Greenspan, former chairman of the US Fed, confessed with regards to the “new financial instruments” that “he didn’t get it”. Eddie George, former governor of the Bank of England, has also admitted that he did not understand them! What chance then for the rest of us understanding these devices which have become “financial weapons of mass destruction”?

The solution is not just the ‘de facto’ capitalist nationalisation of Bear Stearns or the more explicit example of the US government’s takeover of Fannie and Freddie. These failing banks should not only have been nationalised, but put under workers’ control and management, with compensation based on proven need and protection of small depositors. Moreover, it should be just the first step to them joining a socialist and democratic plan of production for the economy as a whole.

Great events either confirm or falsify ideas. Capitalism has failed in a period most favourable to this system.

If working people are not to be dragged into the abyss of unemployment and poverty, they should embrace the political weapons of socialism and Marxism.

Below are the comments of the economist Nouriel Roubini, Professor of economics, who has come to the same conclusions as the CWI regarding the crisis of the world economy from a capitalist standpoint. These were published in the London newspaper The Independent on 17 September, 2008

This will turn out to be the worst financial crisis since the Great Depression and the worst US recession in decades.

This is not just a sub-prime mortgage crisis, this is the crisis of an entire sub-prime financial system, and at the end of the day it will imply credit losses of at least $1trn (£561bn) and more likely $2trn.

As I predicted months ago, no independent broker-dealer will survive. In the credit default swaps market, $62trn of nominal protection sits on top an outstanding stock of only $6trn of bonds, and counter-party risk – and the collapse of many counterparties – will lead to a systemic collapse of this market.

Hundreds of small banks with massive exposure to real estate will go bust, and the Federal Deposit Insurance Corp will for sure run out of money. Hundreds of US municipalities will go bust. Equity prices in the US and abroad will go much deeper in to bear territory.

In a typical US recession, equity prices fall by an average 28 per cent relative to the peak, but this is not a typical US recession. Equity prices will fall 40 per cent relative to their peak, so we are only barely mid-way in the meltdown of US and global stock markets.

The rest of the world will not de-couple from the US recession. Already 12 major economies are on the way to a recessionary hard landing. All of the G7 economies are now entering recession, while the rest of the world will experience a severe growth slowdown. This financial crisis signals the beginning of the decline of the American empire.


Government Hesitance Worrying to Investors
18 September 2008
By Miriam Elder / Staff Writer

As Russian markets suffer their worst crash since the 1998 default crisis amid earth-shattering global turmoil, longtime investors in the country warned that it was time for the government to wake up.

"Officials are showing a remarkable degree of sang-froid — deer in the headlights is another way of putting it," said Eric Kraus, an adviser to brokerage Otkritie who has worked in Russia for more than a decade.

The lack of confidence-building statements is "not reassuring," said Kraus, who closed his own fund 12 months ago amid initial global liquidity jitters.

Russia's RTS Index has plummeted by 57 percent since mid-May, while the oil price has fallen 37 percent from its July 11 high of $147 per barrel. In the month since the war with Georgia, more than $20 billion of foreign capital is thought to have quit the country as tensions between Russia and the West worsened amid perceptions of political risk.

President Dmitry Medvedev said last week that the flood of capital from Russia was caused 75 percent by global turmoil, and 25 percent "is from our own investment problems, including the consequences of the war in the Caucasus."

While the Central Bank and Finance Ministry have pumped billions of dollars into the markets since last week, top government officials have appeared indifferent or even dismissive, a factor that has contributed to the lack of confidence in Russia's ailing exchanges, bankers said.

On Wednesday, the government offered $44 billion in loans to the country's three biggest banks, while state auctions saw banks taking up $19 billion in short-term cash, a day after they borrowed $20 billion.

As regulators closed Russia's markets for the second time in two days Wednesday, Medvedev and Prime Minister Vladimir Putin issued a series of statements that appeared aimed at boosting national self-esteem.

On Wednesday, Medvedev signed friendship treaties with the Georgian breakaway regions of South Ossetia and Abkhazia, formalizing Russia's military, diplomatic and economic cooperation with what it sees as independent states, and told his Security Council that it was time to draw up a law grabbing part of the disputed resource-rich Arctic.

In a televised meeting Tuesday, Putin said Russia had built up a "security cushion" to prevent it from economic shocks — before announcing that defense spending would rise 27 percent next year to nearly $100 billion.

Sitting on $574 billion of foreign currency reserves and $175 billion in two oil stabilization funds, the government is in a wholly different position than 1998, when the ruble collapsed and the country defaulted on its sovereign debt.

Yet then, as now, the country's top leadership appeared at a loss for how to react, several bankers said.

"The Central Bank and the monetary officials in Russia can inject extra liquidity, as they have before," said Hawk Sunshine, head of equities at Metropol. "For how long? It's a matter of confidence, a bit of a show game."

"The drain of liquidity is going to really hurt the mid-cap companies that are looking for financing," he said. "Russians don't lend money to other Russians cheaply, period."

Others said there was only so much the government could do.

"It's a complete crisis of confidence," said James Fenkner of Red Star Asset Management. "The investors don't trust the brokers, and the brokers don't trust the investors."

"No one knows who owes how much to whom," he said.

The market swirled with rumors Wednesday that several brokers were due to fail. KIT Finance was the first brokerage to stand on the brink, as it announced it was seeking strategic investors to save it from financial obligations it was unable to meet.

"What the market is saying is that it's heading for a complete and total collapse," Fenkner said. "Either that's true, or if they deal with this right, we'll look back and see it as a great buying opportunity."

"At this point, it's not about words," Fenkner said, adding that the government should instruct state-controlled banks such as Gazprombank and VTB to step in and lend, buy bonds and allow brokers wide margins.

"This is the classic crisis of capitalism, where you have everyone acting in their own self-interest, holding back on doing what would be good for the whole market — and that's when you need the government to step in," he said.

Miriam Elder is a staff writer for the Moscow News and has published articles in numerous newspapers around the world. These include the London Telegraph, the International Herald Tribune, the Los Angeles Times, and the Times of London to name a few.


Citizens in Medford, Oregon aren't all that interested in a new Wal-mart Supercenter being built and they are even less excited about the traffic gridlock it will create. And they absolutely don't want to have to spend their or their city's money to deal with it all.

Who blames them?

Medford Citizens for Responsible Development says the Site Plan and Architectural Commission and city staff improperly interpreted city code by allowing the plan to move forward without a comprehensive traffic impact analysis.

“Traffic in that area is already so bad that taxpayers are poised to spend $75 million on the new interchange. If Wal-Mart is allowed to build there, the additional traffic will overwhelm the planned south Medford interchange and we will have gridlock once again,” said Shareen Vogel, a spokesperson for the group.

Residents want Wal-Mart to fund street improvements to accommodate the additional traffic the store would attract.

Jennifer Spall, a Wal-Mart senior manager of public affairs in Bellevue, Washington taking a page from the old playbook says those causing the trouble are those famous, pesky outside agitators.

She told the Southern Oregon Mail Tribune, "The opponents are union groups and people who don't live in the city of Medford."

In fact, Medford Citizens for Responsible Development formed to organize opposition to the development, and is a grassroots organization of community residents and business owners which is simply working to ensure public involvement in the process.

Sounds like a bunch of radicals to me.

By the way before they approved the plan the City Council last year rejected plans for the 207,000 square-foot Wal-Mart Super Center at Miles Field along Highway 99 at Center Drive.

Flip flopper, flip flopper, flip flopper!

Bruce Bauer of Citizens for Responsible Development and other speakers have also told their local "leaders" about studies indicating that Wal-Mart stores tend to reduce the average retail salaries in the area and drive out small businesses.

“What is this going to do to our downtown?” Bauer asked at one council meeting. “It’s going to kill it.”

Beverly DeLeondis speaking of the small, local businesses told the council last summer, "They've been good neighbors good friends some of them like Sherms (Food 4 Less) have been giving back to the community why put them out of business for a Wal-mart that has never been part of our community?"

The council said they couldn't really take that sort of thing into consideration.

They call it local government, don't they? But they can't take local folks into consideration?


The following is from Rogue Valley IMC.


7 PM, Thursday, Sept. 18, 2008
Medford City Council Chambers
Medford City Hall (next to Post Office)

Medford Citizens for Responsible Development (MCRD) will present its case before the Medford City Council this Thursday evening, Sept 18, 2008, arguing the city must require Walmart to conduct an in-depth traffic analysis (TIA) prior to approving its application to construct a retail supercenter at the old Miles Field baseball park off South Pacific Highway near Stewart Avenue in South Medford.

MCRD is appealing the August 2008 decision of the city's Site Plan and Architecture Commission which approved the application based upon a traffic analysis conducted 17 years ago when Miles Field was hosting the Medford "A"s baseball team on the county-owned parkland. The city argues that this fact is irrelevant, it has met the letter of the law, if not the intent. MCRD believes that city code requires the TIA be developed at such time as a commercial developer can make necessary improvements to prevent traffic gridlock.

MCRD also believes that an in-depth TIA (which would require projections of future traffic levels generated by the retail supercenter) would likely indicate an increase of 7000 - 9000 vehicle trips per day - which could create traffic gridlock, and necessitate major improvements in nearby intersections - or even re-routing of traffic in the area.

"If traffic gridlock could result from the construction of the Walmart Supercenter at Miles Field," asks MCRD spokesperson Ivend Holen, "who should pay for the possible millions of dollars in construction costs to remedy such a mess?"

"Isn't it reasonable for the Medford City Council to ask the city to prepare a TIA to determine the likely results of adding so much traffic to this area? If the analysis indicates no problem, then fine.

"But if millions of dollars will be needed to cure a projected traffic problem, why should Medford taxpayers have to pay for it instead of the largest retail corporation in the world?" he asks.

Tuesday, September 16, 2008


In New Zealand thousands of claims were filed by Maori prior to recent deadline imposed by the government for historic claims under what is known as the Treaty of Waitangi (pictured here is one of the original documents).

In fact, Treaty tribunal director Darrin Sykes said this year over 2000 claims had been received - 98 per cent in August. "It's been pretty huge," he said. "They came through in truckloads and we still had faxes and emails coming through right up to 11.59."

Maori Land Court Chief Judge Joe Williams, who chairs the tribunal, has said he was pleased by the big lift in claims.

Judge Williams said several landmark treaty settlements had been made in recent months, and this suggested the Government's aim to have settlements completed by 2020 was achievable.

However, Maori Party spokesman Te Ururoa Flavell said he was worried that some small iwi had insufficient resources to meet the deadline.

Many Māori have been concerned that the level of redress provided was too low, and that the settlement process was subject to too much Crown control.

Peter Adds, a negotiator and Head of Maori Studies at Victoria University, believes the cut-off will deny some Maori a chance to make a claim and that in turn breaches the Treaty.

"Undoubtedly there will be Maori that miss out it's an inevitable part of this process anyway one of the thing this process creates in the haves and the have-nots," Adds told New Zealand's 3News.

"At the end of the day we have been on a long journey in relation to treaty settlements and there's been a rush in the last few weeks and I'm quite clear if we want to move on to get Maori to that better space then we have to move on," says Maori Affairs Minister Parekura Horomia.

But 'moving on' could still take some time. The Treaty of Waitangi Amendment Act states that any claim made before today's deadline can still be altered in any way...

"I think there is a public perception out there that Maori people have got too much already and that there does need to be some finality to the process," says Adds. "I'm not sure that a particularly well informed opinion but that's certainly the opinion that's out there and the one the government's reacting to."

"I'm clear as a whole lot of my colleagues are that maori want to move on," says Horomia. "They want to settle their claims, they want to get cracking they recognise any settled society like our, there times come, and our has come now."

Four northern Maori leaders scoffed at the English translation of the Treaty of Waitangi and are seeking the restoration of rights guaranteed by Te Tiriti, the Maori language pact with the Crown signed by their ancestors.

The four - Sonny Tau, Hone Sadler and Patu Hohepa, all of Ngapuhi, and Erima Henare, of Ngati Hine - just beat the Waitangi Tribunal's midnight Monday deadline on historical claims by filing only hours earlier.

The four claimants say the Crown deliberately used the English translation of Te Tiriti to take action and make laws subordinating the people of Ngapuhi-nui-tonu, which extends from Auckland to Cape Reinga and includes all the northern tribes.

"The Crown promoted the Treaty of Waitangi and its principles as mechanics of deprivation and as a programme to transfer the political and economic power of the iwi to itself," the claim says.

"Nearly two centuries of forced subjugation has placed Ngapuhi-nui-tonu into a position of reliance and dependency on Pakeha ideas and aspirations. This has led directly to poor housing, lowly paid jobs, poor health, high suicide incidences and other disproportionate poverty-based indicators.

"This is a direct result of diminishing rangatiratanga (sovereignty) and the associated lack of ability to provide for your own."

The claim asserts legal, economic and political authority over Ngapuhi-nui-tonu lands, assets and people are the sole domain of the iwi.

"Te Tiriti affirms that understanding and guarantees the full exclusive and undisturbed authority, rangatiratanga and possession of our tikanga (customs) and lands, forests, fisheries and other taonga."

Rangatira who signed Te Tiriti had expected the Crown to honour the Tiriti obligations. They had agreed the Crown should exercise kawanatanga (government) over Pakeha, subject to Ngapuhi protection.

The claim asks the tribunal to look into breaches of Te Tiriti affecting Ngapuhi-nui-tonu and make recommendations to restore Ngapuhi-nui-tonu's rangatiratanga and full customary entitlements.

Ngapuhi leader Sonny Tau told the Northern Advocate back in April, "Te Tiriti o Waitangi was drafted and discussed in depth by our ancestors and translated into what is now known as the Treaty of Waitangi, by a Pakeha for Hobson's sake.

"There are huge differences about issues such as sovereignty, tino rangatiratanga and other wording of the translation. We want to have Ngapuhi's story told and we need an audience. New Zealanders have never been told the truth about Te Tiriti o Waitangi from direct descendants of Maori signatories to te tiriti."

In December 2006, the Treaty of Waitangi Amendment Act set a deadline of 1 September 2008 for the submission of all new historical claims to the Waitangi Tribunal. The Tribunal will not be able to register or inquire into any new historical claims submitted after that date.

New Zealand History on line says The Treaty is a broad statement of principles on which the British and Maori made a political compact to found a nation state and build a government in New Zealand. The Treaty has three articles. In the English version, these are that Maori ceded the sovereignty of New Zealand to Britain; Maori gave the Crown an exclusive right to buy lands they wished to sell, and, in return, they were guaranteed full rights of ownership of their lands, forests, fisheries and other possessions; and that Maori would have the rights and privileges of British subjects.

The Treaty in Maori was deemed to convey the meaning of the English version, but there are important differences. Most significantly, in the Maori version the word 'sovereignty' was translated as 'kawanatanga' (governance). Some Maori believed they gave up the government over their lands but retained the right to manage their own affairs. The English version guaranteed 'undisturbed possession' of all their 'properties', but the Maori version guaranteed 'tino rangatiratanga' (full authority) over 'taonga' (treasures, not necessarily those that are tangible). Maori understanding was at odds with the understanding of those negotiating the Treaty for the Crown, and as Maori society valued the spoken word, explanations at the time were probably as important as the document.

Different understandings of the Treaty have long been the subject of debate. From the 1970s especially, many Maori have called for the terms of the Treaty to be honored. Some have protested – in marches on Parliament and by land occupation. There have been studies of the Treaty and a growing awareness of its meaning in modern New Zealand.

The following is from the New Zealand Herald.

Far North protesters win fight for tribal land
By Yvonne Tahana

A Far North iwi which occupied a Landcorp farm to block its sale before a Treaty of Waitangi claim was heard is on the verge of getting the land back.

Ngati Kahu will today sign an agreement in principle with the Government under which it will eventually own the 3700ha Rangiputa Station.

Last year, when Landcorp, which farms the property for the Government, decided to sell 9ha of prime coastal land iwi members responded by occupying the station.

The land was loaned to missionaries on the understanding it would return to Ngati Kahu, but it was never returned.

The situation of state assets being sold in contested areas came to light last year when Landcorp also tried to sell land on the Coromandel Peninsula at Whenuakite.

Protest action by senior Hauraki kaumatua resulted in the Government setting new policy on what state-owned land could and could not be sold.

The Herald understands the agreement includes $14 million, but the deal is structured so that the iwi will have to use the money to buy back 8000ha of Crown land. Land which has been classified as "cultural" - 4000ha of it - will be given back for free.

Although the Government had valued Rangiputa Station at $40.2 million, the Herald understands that valuation has dropped to about $4 million.

Tribal sources said there would be no separate cash compensation outside of the $14 million but that wasn't such a high priority.

"We've focused on land, land, land stubbornly.

"In the end we've had to play this stupid game where they give us the money, so we give it back to them, so they can give us the land.

"But it's a way to move on."

A tribal leader said if Rangiputa and Whenuakite hadn't been occupied by iwi, the land which was lost to Maori once would have been lost forever because of the demand for coastal property.

"We have so little left that we will tend to fight.

"Once land is developed that's it. It's very hard to see a situation where it will be given back to Maori. So this is very significant for us."

The signing takes place at Kareponia Marae today but not everyone in the tribe is happy with the deal.

Tribal sources say they are expecting protests but they will be "managed" and the ceremony will go ahead.

The dispute:

Ngati Kahu loaned land to missionaries on the understanding it would be returned.

The land ended up with Landcorp, which runs farms for the Government, as Rangiputa Station.

Last year Landcorp tried to sell off 9ha of prime coastal land on the station.

Members of Ngati Kahu occupied the land, forcing the Government to change its policy on state-owned land sales.

The iwi will today receive a settlement, which gives them money to buy back the land.


I was sitting around talking to Karl Marx this morning and he said, "I told you so!" So he did. I'd love to print a really good Marxist analysis of what's going on these days but I haven't run into one and although no doubt I personally could write the definitive account, I just haven't the time (and Karl just keeps saying, "Read my book". So what to do? I give you an attempt at a Marxian look at things from the World Socialist web site. And to be fair and balanced I also am posting here a couple of musings by some folks who aren't reds at all, but write like their smart guys.

The first commentary below is from The World Socialist Web Site. The second is from BIG PICTURE WORLD BLOG. The third is from INFORMATION CLEARING HOUSE.

The Wall Street crisis and the failure of American capitalism
By Barry Grey
16 September 2008

The end of Lehman Brothers and Merrill Lynch, two of the largest Wall Street investment banks, one week after the government takeover of the mortgage finance giants Fannie Mae and Freddie Mac, marks a new stage in the convulsive crisis of American capitalism.

On Monday, global markets fell sharply in a sign of mounting panic and doubt over the stability of the entire US banking system. Throughout Europe stock markets plunged by as much as 4 percent.

The fall on Wall Street was even steeper, with the Dow Jones Industrial Average losing 504 points, or 4.42 percent. There is every indication that the sell-off will intensify, with the full implications of the collapse of the two Wall Street banks as yet far from clear.

The immediate concern is the fate of American International Group (AIG), the world’s largest insurance company, and Washington Mutual, the largest savings and loan bank in the US, both of which are teetering on bankruptcy.

The sudden demise of Lehman Brothers and Merrill Lynch has removed a huge amount of liquidity from the economy, as paper values built up over decades of speculation come crashing down. This is capital that is needed to finance business operations, and its elimination will inevitably depress economic activity, fueling unemployment and recession, further undermining home prices and consumer spending, and further weakening the balance sheets of already financially shaken banks.

A sea change is unfolding in the US and world economy that portends a catastrophe of dimensions not seen since the Great Depression of the 1930s.

The fall of icons of American capitalism such as 158-year-old Lehman Brothers and 94-year-old Merrill Lynch can only lead to the further discrediting of the “free market” ideology of the US ruling elite, as well as its political and economic system. The spectacle of giants of capitalism drowning in debt piled up over decades of reckless speculation must inevitably discredit the social class—the American capitalist class—which is responsible for the debacle.

The bromides that have been uttered by the official spokesmen for the government, the media, Wall Street and the political parties over the past year of mounting financial crisis have lost all credibility. The assurances that the latest government bailout will stabilize the situation, that the US banking system is “fundamentally sound,” that the housing and credit markets are about to “turn the corner,” etc., reassure no one.

On Monday, President Bush mouthed such phrases in a brief White House appearance. Treasury Secretary Henry Paulson at a White House press conference evaded questions about who was responsible for the financial disaster and instead declared that he was “focused on the future.”

The presidential candidates, Republican John McCain and Democrat Barack Obama, made perfunctory statements that were remarkable only for their brevity and vacuity. What is widely acknowledged, even in ruling class circles, as the greatest financial crisis since the Great Depression is unfolding in the midst of a presidential election. But it barely rates a mention by either the Republican or Democratic candidate.

Both parties and their candidates tip toe around a financial scandal of world historic proportions because they are equally implicated. They are both bound hand and foot to Wall Street and single-mindedly dedicated to the defense of American capitalism.

McCain issued a statement demanding “reform” in Washington and on Wall Street and pledging to bring “accountability” to Wall Street. This from a multi-millionaire whose campaign is being run by a bevy of lobbyists for Wall Street and other sections of big business.

His Democratic counterpart, Barack Obama, issued a predictably mealy-mouthed statement complaining that “too many folks in Washington and on Wall Street weren’t minding the store.” While attempting to pin the blame for the crisis entirely on the Bush administration—ignoring the “free market,” deregulatory policies of Democrats Jimmy Carter and Bill Clinton—he offered a mutual amnesty between himself and McCain, saying, “I certainly don’t fault Senator McCain for these problems...”

These events are signposts in the historic failure of American and world capitalism. For the working class, they mean a rapid growth of unemployment, poverty, homelessness and social misery. The government, Wall Street and both political parties will seek to place the burden for the consequences of their own greed and incompetence squarely on the backs of working people.

The collapse is devastating ever wider layers of the population, including those who have worked on Wall Street and received some of the financial benefits of the speculative boom. Some 26,000 Lehman employees are not only out of a job, with few prospects of finding similar employment elsewhere, but as owners of 25 percent of the company’s stock they have lost a combined $10 billion, wiping out their savings and retirement funds.

Tens of thousands of employees at Merrill Lynch and Bank of America will lose their jobs in the merger of the two firms, adding to the 110,000 jobs slashed in the US financial services industry over the past year.

The broader implications of the mounting financial crisis were signaled by Hewlett-Packard’s announcement Monday that it was cutting 25,000 jobs.

Many of those who precipitated this economic disaster, on the other hand, will profit handsomely from the debris they have left behind. Hedge funds and other short-sellers, who bet on the collapse of corporations, are even now speculating furiously on the demise of the remaining Wall Street firms, Morgan Stanley and Goldman Sachs, as well as big commercial banks such as Bank of America.

William Gross of the nation’s largest bond fund, Pimco, took in $1.7 billion last week by betting on—and publicly agitating for—a government takeover of Fannie Mae and Freddie Mac.

The emergency talks over the weekend, involving the heads of the major commercial and investment banks and led by Treasury Secretary Paulson and top Federal Reserve officials, centered on rescuing Merrill Lynch and orchestrating an orderly liquidation of Lehman. Under pressure from Paulson and the Fed, Merrill agreed to sell itself to Bank of America, the largest consumer commercial bank in the US.

At the same time, there were frantic negotiations over the fate of AIG, which faces bankruptcy unless it can raise tens of billions of dollars in capital. When US markets opened Monday, AIG was asking for emergency loans from the Fed to stave off collapse.

A failure of AIG threatens to bring down the entire credit system both in the US and internationally, because the company holds a large stake in the multi-trillion-dollar, unregulated market in so-called “credit default swaps.” AIG has sold CDS contracts to banks, hedge funds and big investors all over the world, under which it guarantees the mortgage-backed debt of a wide range of companies in the event that they default. If AIG should go under, the value of the debt which it insures would fall to an unknown level, destabilizing the credit markets and threatening a chain reaction of defaults and bankruptcies.

The events of the past two weeks demonstrate that the American financial aristocracy is plunging the entire country into bankruptcy. These events are themselves climatic moments in a protracted process.

For three decades, the “free market” has been elevated to the status of a secular religion in the US, with the capitalist market as its god and socialism as its devil. This period, under both Republican and Democratic administrations, has seen the wholesale dismantling of the productive base of the US economy, at the cost of millions of jobs and the living standards of the American working class.

In the name of the supposed infallibility of the market, the operations of big business have been deregulated, removing all legal restraints on corporate profit-making and fueling the accumulation of ever more obscene levels of wealth in the hands of a financial oligarchy. A vast process of social plunder has occurred, in which the wealth of the country has been redistributed from the bottom to the very top.

The scrapping of huge sections of industry and the immense growth of social inequality are the hallmarks of the historic decline of American capitalism. At the heart of this decay is the separation of the process of personal enrichment of the ruling elite from the material process of production.

The United States has become the world leader not in manufacturing technology or industrial power, but in financial speculation and parasitism. As Floyd Norris, the economics columnist of the New York Times, put it on Friday, “During recent years, Lehman—along with many competitors—went on a borrowing binge to buy assets with as little money down as possible.”

By its very nature, the parasitism of American capitalism has generated corruption and criminality on an unprecedented scale. Wall Street CEOs have awarded themselves tens of millions and even billions in compensation, in an utterly irrational and socially destructive squandering of social resources for the benefit of private greed.

At the end of 2007, for example, the Lehman board awarded CEO Richard S. Fuld a compensation package worth more than $40 million. According to Reda Associates, he can expect to collect $63.3 million if he is terminated. In 2004, he paid $13.75 million for an ocean-front home in Jupiter Island, Florida, adding to his other properties, including a home in Sun Valley, Idaho.

Joe Gregory, a former president of Lehman, used to travel to work in a helicopter. He recently put his 9,500-square-foot ocean-front home in Bridgehampton, New York on the market for $32.5 million.

The Financial Times recently reported that compensation for major executives of the seven largest US banks totaled $95 billion over the past three years, even as the banks recorded $500 billion in losses.

The question of precisely who and what is to blame for the greatest economic disaster in more than three quarters of a century is something that will not and cannot be raised by any section of the political or media establishment.

Since the eruption of the current crisis, there have no been serious congressional hearings, no public investigations, no attempt to hold anyone accountable. Massive government interventions into the supposedly sacrosanct precincts of the “free market,” for the purpose of bailing out giant Wall Street firms, including the biggest government takeover of corporate entities in US history, have been carried out without any public debate or significant opposition from either political party. This, while millions of Americans are losing their homes and their jobs as a result of predatory corporate practices!

Certain conclusions must be drawn from the crisis of the American economic and political system. There is no solution within the framework of the profit system. What is needed is a socialist program that places the needs of the people before the profits and personal fortunes of the ruling elite.

The entire financial system must be taken out of private hands and nationalized in the form of a public utility under the democratic control of the working class, with provisions taken to safeguard the holdings of small depositors and share-holders. It must be subordinated to the social needs of the people and dedicated to developing and expanding the productive forces in order to eliminate poverty and unemployment and vastly improve the living standards and cultural level of the entire population.

Those who are responsible for the economic catastrophe must be called to account. Criminal investigations should be undertaken with appropriate sanctions for those who have plundered the social wealth. A full public accounting should be made of the hundreds of billions that have been diverted to private bank accounts through fraud and criminality. Such gains should be seized and used for the public good.

The only social force that can carry this out is the working class. It requires a clean break with the Democratic Party and the two-party system and the mobilization of the immense social power of the working class in its own party, on the basis of a revolutionary socialist program.

This is the program fought for by the Socialist Equality Party.

Barry Grey is a regular contributor to the World Socialist Web Site. Outside of that, I don't know who he is.


The U.S. Financial System in Serious Trouble
by Rodrigue Tremblay

“… a bailout of GSE (Fannie and Freddie) bondholders would be perhaps the greatest taxpayer rip-off in American history. It is bad economics and you can be sure it is terrible politics.”

Matt Kibbe, President of Freedom Works

"The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists."

Ernest Hemingway (1899-1961), (September 1932)

[After the Bear Stearns bailout] "As more firms lost access to funding, the vicious circle of forced selling, increased volatility, ... and margin calls that was already well advanced at the time would likely have intensified. The broader economy could hardly have remained immune from such severe financial disruptions."

Ben Bernanke, Fed Chairman (March 2008)

In August 2007, at the very beginning of the subprime financial crisis in the U.S., and referring to the alchemy-like practice of creating artificial financial instruments, such as mortgage-backed securities (MBSs), here is what I wrote:

“Like all 'Ponzi schemes', such pyramidings of debts with no liquid assets behind them are bound to implode sooner or later.” I also wrote about the Fed's intervention in such cases, that “it alleviates the 'liquidity crisis', for sure, but this does nothing to cure the underlying 'solvency crisis' of institutions holding large chunks of non-performing mortgage-based assets. Sooner or later, such low-valued derivatives will have to be written off, and this will necessarily lead to an erosion of these institutions' capital base. Bankruptcies of the most leveraged and imprudent institutions are to be expected.”

In fact, such bankruptcies of over-leveraged financial institutions become unavoidable. For a while, forced mergers between banks, initiated by the Fed or the Treasury, can soften the blow. But after a while, outright bankruptcies cannot be avoided and balance sheets have to be balanced.

What is the cause of this financial mess?

Last month, I provided a short answer:

“At the center of current financial problems is the failure to adapt standard financial regulation to new financial institutions, such as broker-investment banks, off-shore based hedge funds and large derivatives markets that remain, for the most part, outside of the traditional authority of regulators. However, when things go wrong, as they did with Bear Stearns last March, their demise threatens to destabilize the entire financial system and handy government bailouts are quickly called in.”

Today I say that this major crisis has to be placed at the very feet of the Washington establishment. This is a politico-financial establishment that has pushed to the limits its ideology of deregulation of financial markets and stretched the working of unregulated corporate market capitalism to the breaking point. Now, the system is imploding under our very eyes and financial institutions are falling like dominos. As I wrote last August, and repeated in April of this year, the U.S. financial problem is not one of liquidity, (there is plenty of liquidity provided by the Fed when banks and brokers can borrow at will newly printed dollars from the Fed’s discount window) but one of solvency, weak balance sheets, risky assets and debt liquidation. That's a horse of a different color.

Over the last twenty-five years, beginning with the Reagan administration and culminating with the current Bush-Cheney administration, the Washington establishment dismantled piece by piece the system of protection that had been built since the 1930's economic depression and removed nearly all government regulations that could stand in the way of greed and gouging on the part of unscrupulous market operators.

And that's where the rubber hits the road. Short of bankruptcies is the nationalization of the over-leveraged banks by the government. And the Bush-Cheney administration took a big step in that direction when it came to the rescue of the two largest mortgage financing institutions, Fannie Mae (Federal National Mortgage Association: FNM) and Freddie Mac, (Federal Home Loan Mortgage Corporation: FRE) which were close to being insolvent. This step was initiated after foreign central banks (in China, Japan, Europe, the Middle East and Russia) threatened to stop buying U.S. bonds and debentures issued by the two shaky financial institutions.

But the Bush-Cheney administration, while providing public money to keep the two lenders in operation, stopped short of nationalizing them. Indeed, the U.S. government committed to invest as much as $200 billion in preferred stock and extend credit through 2009, to keep the two mortgage lenders solvent and operating.

But instead of taking them over by placing them into administrative receivership, in order to change their business model, as they should have done since the government is now guaranteeing their outstanding debts, (more than $5 trillion US) the U.S. government chose rather to keep the appearance that these were still two privately run banks and only appointed a legal conservator for Fannie Mae and Freddie Mac. Even when they bail out what can be called two Government sponsored enterprises (GSEs), their market ideology prevents them from doing the right thing.

After years of irresponsible public deregulation and private mismanagement and irresponsible, pyramiding risk taking, the American financial system is now in serious trouble, and it may draw the U.S. economy further down with it in the months and years to come.

In the coming weeks, however, as other American financial institutions teeter on the brink of bankruptcy, the U.S. government will have to consider creating a Bank Resolution Trust under the model of the 1989 Resolution Trust Corp. which took over the savings and loans banks that were then in financial difficulties. For example, as recently as February 16 of this year, the British government did not hesitate to nationalize the Northern Rock bank and rescued this large British bank with about £55 billion ($107 billion) in public loans and guarantees. Sooner or later, the American government will have to do the same, in order to stabilize the financial system, because the financial problems in the U.S. are systemic and much more serious than elsewhere.

By the same token, maybe the U.S. government should correct an anomaly of the 20th Century, that is the semi-private status of its central bank. Indeed, the American Federal Reserve, is a semi-public and semi-private central bank organization that is as much responsible to large private banks as it is to the U.S. government and the population. This creates an unhealthy conflict of interests that is not fair to the American public. Indeed, the American practice of privatizing profits and socializing losses would be considered unacceptable in most other democracies.

What we are witnessing these days in the U.S. is a massive wealth transfer from taxpayers, savers and retirees to banks, their creditors and their managers. On the one hand, the Fed has pushed real interest rates deep into negative territory to help troubled banks, and, on the other hand, the American taxpayers have foot the bill for bailing out very large financial institutions.

I wonder what the two presidential camps, the Obama and the McCain camps, have to say about that! They both want to increase the federal deficit and add significantly to the already high national debt.

RODRIGUE TREMBLAY is a prominent Canadian-born economist with a Ph.D. from Stanford University. He is a former Woodrow Wilson fellow and a Ford International Fellow. He is now professor emeritus at the University of Montreal, after having occupied the positions of full professor of economics at the University of Montreal, president of the North American Economics and Finance Association, president of the Canadian Economics Society, and advisor to numerous organizations. From 1976 to 1979, he was minister of Industry and Commerce in the Quebec government. He is presently vice-president of the International Association of French-speaking Economists.

Professor Tremblay has written 25 books dealing with economics and finance, some also tackling moral and political issues. Dr. Tremblay has traveled extensively in Europe, in the Middle-East, in North Africa and in sub-Sahara Africa.


The Crash of Western Capitalist Civilization?
By Richard_C_Cook

15/09/08 "ICH" -- - “Train-wreck” doesn't even begin to describe what is starting to happen to the U.S. today with the financial crisis, an onrushing depression, and the failure of George W. Bush's war policy as he is faced down by Iran and the Russian bear.

But in an even broader sense, the West, as a civilization, after a century of world war and the utter failure of global finance capitalism, may have reached its limits.

Those with a vested interest in the status quo dismiss any suggestion that something is wrong. This includes Donald Luskin, author of an article in the Washington Post on Sunday, September 14, titled: “A Nation of Exaggerators: Quit Doling Out That Bad Economy Line.”

Luskin writes, “The relentless drumbeat of pessimism in the media and on the campaign trail” is “a virus.”

He continues: “Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about Wall Street firm Lehman Brothers, amply demonstrate. And unemployment figures are up a bit, too. None of this, however, is cause for depression -- or exaggerated Depression comparisons.”

Continue reading, and you find out who Luskin is: a campaign adviser to John McCain.

We know that “where you stand depends on where you sit”—and who pays you for advice. So is a catastrophic meltdown coming?

If so, probably a majority of the people in the world are thinking: “Serves them right.” For the last 500 years, the West has been striding across the globe, armed to the teeth with firearms, warships, bombers, and—more recently—depleted uranium, enforcing the “white man's burden” by enslaving nations and peoples and confiscating everything of value—ranging from art objects to gold to oil—that can be carried away.

The financiers behind it all have also used the diabolically clever practice of creating money “out of thin air” to put the natives everywhere into debt, and, when that has proven insufficient, of doing the same to their own populations.

All this is rationalized by various brands of racism, cultural superiority, social Darwinism, historical determinism, “dominion of the Elect,” “God's chosen people,” etc. Or, simply, “might makes right.”

Some call it “The New World Order.”

So today, we Americans, denizens of the “land of the free and the home of the brave,” victors in two world wars, bearers of “democracy” to Afghanistan and Iraq, allies of the brave Israelis who hold high the banner of Judeo-Christian values among the ungrateful Palestinians—well, we Americans owe our own bankers almost $70 trillion at most recent count. With the government takeover of Fannie Mae and Freddie Mac, we owe holders of bad housing loans, including the governments of China, Korea, and Japan, another few trillion.

The bluster of Kissinger, Brzezinski, the Kristols, the Christian fundamentalists, and their paid-off politicians and media millionaires notwithstanding, America—indeed, the entire West—has been found out, perhaps even checkmated on the world stage.

The Bush/Cheney wars in Afghanistan and Iraq have blackened America's name forever. Iran has called our bluff. In Israel the gap between rich and poor is increasing as much as in the U.S. According to an article by Ian S. Lustick, the Palestinians have stood up to the Israelis to the point where more Jews are emigrating from that country than are moving in, and where those who remain are increasingly huddling around Tel Aviv as a safe haven. (Ian S. Lustick, “Abandoning the Iron Wall: ‘Israel and the Middle Eastern Muck',” Middle East Policy , Vo. XV, No. 3, Fall 2008.)

In the 1990s, the European bankers used U.S. and NATO forces to dismember Yugoslavia so George Soros and the Rothschilds could gobble up Balkan resources. But that strategy is failing in the Caucasus, where the Russians fought back against the genocidal attack by Dick Cheney's poodle, Mikheil Saakashvili, the New York-trained attorney the CIA got elected as the president of Georgia.

And now the people of Ukraine, the “Little Russians,” realizing what the West has in store for them, are rushing back into the Slavic fold and may be only a year or so away from reuniting with their “Great Russian” cousins across the border.

What is telling is to watch the Western financier press, chiefly the Washington Post and the New York Times , fume about Russian prime minister Vladimir Putin and his “authoritarian” manner. An example is the article by Times correspondent Ellen Barry on Putin's September 11 press conference in Moscow. She wrote, “In three-and-a-half hours, in tones that were alternatively pugilistic and needy, Vladimir V. Putin tried to explain himself.”

I'm sorry, Ms. Barry. You and your editors may think your writing is cute, but Vladimir Putin is the foremost figure on the world stage today. He will remain so after George W. Bush leaves the White House disgraced.

Putin is heir to an epochal movement of patriots who began in the 1970s to take back Russia from within. It started with a base of operations within the KGB and the Orthodox Church, led to Gorbachev's glasnost in the 1980s, and culminated in the Second Russian Revolution of 1991. At that point, the Western financiers gleefully rushed in to support an assault from the Russian “oligarchs” who were looting Russia of everything it owned.

The oligarchs were the shock troops of a financier assault that had already begun to overlap in the West with the Russian Mafia. Cheered on by the Washington Post and aided by academic advisors from places like Harvard, this international syndicate nearly destroyed Russia during the 1990s. But when Putin was appointed interim president by Boris Yelstin in 1999, and after winning the presidential election of 2000 in his own right, he began to fight back.

From the mid-1970s to today, thousands of Russian gangsters, along with many hard-line Bolsheviks/Stalinists, were allowed to emigrate. Many settled in the U.S. and are here today, and many more settled in Israel. In fact, one reason the price of condos in New York, Miami, Tel Aviv, and elsewhere has inflated so much reportedly is the flood of cash from racketeering.

The crooks have allied themselves with the Colombian drug cartels and have heavily infiltrated the world's financial systems, even setting up their own banks for laundering money and speculating in the commodities markets.

Today, Putin is cleaning out the remaining gangster class. His efforts reached a milestone in January with the arrest in Moscow of Semion Mogilevich, called “the world's most dangerous man.”

Putin has declared that the world will not be governed in a “unipolar” manner; i.e. by the U.S. military as the police force for the global financiers. This does not mean Russia has to be our enemy. In fact the world would be much better off, and much safer, if we joined with Russia as allies in keeping the peace.

But to do that our system would have to change, because finance capitalism is far too unstable to coexist with other nations as equals. It must either grow or die, because it always needs new victims to pay the interest on its usury practices and to finance its speculative balloons. As a last resort, it needs the kind of financial institution bailouts being engineered by Secretary of the Treasury Henry Paulson, where the only remaining stopgap is borrowing from public funds and adding to the national debt.

Once economic growth stops, as has now happened, and all the bubbles to restart it have blown up, as has also happened, the end really is nigh. Especially if the host—the U.S.—is bankrupt.

What is coming at us today isn't just another downturn. If people like McCain adviser Donald Luskin doubt it, maybe, instead of writing campaign propaganda, they should ask the fired CEOs of Fannie Mae and Freddie Mac, the stockholders of Lehman Brothers, whose shares have dropped ninety percent in less than a year, and the millions who are losing their homes.

Presidential candidates Barack Obama and John McCain are calling for “change.” Well, if I were standing on a beach with a 100-foot tsunami roaring in my direction, I would call for change too. Except I would not be standing around arguing about the meaning of the words “lipstick on a pig.”

Copyright 2008 by Richard C. Cook

Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared on numerous websites. His book on monetary reform entitled We Hold These Truths: The Hope of Monetary Reform will be published soon by Tendril Press. He is also the author of Challenger Revealed: An Insider's Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age , called by one reviewer, “the most important spaceflight book of the last twenty years . ” His Challenger website is at . A new economics website at is upcoming with partner/author Susan Boskey. To get on his mailing list, for questions and comments, or to pre-purchase copies of his new book, please write .