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World Bank Insider Blows Whistle on Corruption, Federal Reserve

Wednesday, May 29th, 2013

Nothing to see here ... move along

- I don’t think this is new information.  Just a confirmation of what many of us have suspected for some time.  

- But, the gathering awareness doesn’t seem to be enough to change things.  

- We are all too apathetic and ‘they’ have got far too much control at this point for anything short of a revolution or a major breakdown of the world’s structures to shake them loose (visualize blood-sucking ticks, and you’ll have it).

- dennis

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A former insider at the World Bank, ex-Senior Counsel Karen Hudes, says the global financial system is dominated by a small group of corrupt, power-hungry figures centered around the privately owned U.S. Federal Reserve. The network has seized control of the media to cover up its crimes, too, she explained. In an interview withThe New American, Hudes said that when she tried to blow the whistle on multiple problems at the World Bank, she was fired for her efforts. Now, along with a network of fellow whistleblowers, Hudes is determined to expose and end the corruption. And she is confident of success.

Citing an explosive 2011 Swiss study published in the PLOS ONE journal on the “network of global corporate control,” Hudes pointed out that a small group of entities — mostly financial institutions and especially central banks — exert a massive amount of influence over the international economy from behind the scenes. “What is really going on is that the world’s resources are being dominated by this group,” she explained, adding that the “corrupt power grabbers” have managed to dominate the media as well. “They’re being allowed to do it.”

According to the peer-reviewed paper, which presented the first global investigation of ownership architecture in the international economy, transnational corporations form a “giant bow-tie structure.” A large portion of control, meanwhile, “flows to a small tightly-knit core of financial institutions.” The researchers described the core as an “economic ‘super-entity’” that raises important issues for policymakers and researchers. Of course, the implications are enormous for citizens as well.

Hudes, an attorney who spent some two decades working in the World Bank’s legal department, has observed the machinations of the network up close. “I realized we were now dealing with something known as state capture, which is where the institutions of government are co-opted by the group that’s corrupt,” she told The New American in a phone interview. “The pillars of the U.S. government — some of them — are dysfunctional because of state capture; this is a big story, this is a big cover up.”

At the heart of the network, Hudes said, are 147 financial institutions and central banks — especially the Federal Reserve, which was created by Congress but is owned by essentially a cartel of private banks. “This is a story about how the international financial system was secretly gamed, mostly by central banks — they’re the ones we are talking about,” she explained. “The central bankers have been gaming the system. I would say that this is a power grab.”

- More… :arrow:

- research thanks to Carol S.

Posted in Capitalism & Corporations, Corporate takeover of Government, Corruption, CrashBlogging, Financial melt-down, Human Rights, Social Breakdown, The Perfect Storm, Wealth Disparity | Comments Off

Hackers ‘raid US weapons’

Wednesday, May 29th, 2013

Cultural Revolution

- If China doesn’t implode from its own internal pressures (the failure of the Mandate of Heaven concept), then it is likely that we’re all going to be living in a Chinese dominated world.

- Most of the rest of us are living in debt ridden societies with few realistic ideas of how to break the debt cycles. (Oh, yeah, let’s have another WalMart or Warehouse store so we can buy really cheap shit – that’ll sort things out).

- So here, the Chinese, apparently, have stolen the heart of America’s weapon system designs. They’ve denied it?   Well, what would you expect them to say?

- Clearly, they are winning the game against the west and they’ve used our own Capitalistic Systems and greed against us, brilliantly.

- All we can hope for is that their own greed, corruption, and their failure to understand that they too are subject to the consequences of pollution, climate change and global overshoot, is going to pull their system apart before they can take over ours.  

- Then, at least, we can all live equally in a ruined world rather than having to be serfs in a ruined world that they dominate.

- Do you think after reading this that I am prejudiced against the Chinese?  

- No, I’m not.  I differentiate between the people and their culture.   I know and value a number of excellent friends among the Chinese.  

- But their culture is another thing.  These are, after all, the same people that gave the world the spectacle of The Cultural Revolution just a few decades ago.  These same folks drive the Shark Fin markets, the Bear Gall Bladder Markets, the Ivory Markets, and etc.  

- They don’t seem to mind poisoning each other, and other nationalities, in their pursuits of profit.  (Granted, we’ve not been much better).  And, like other cultures before them (and here I very much include ours), they think they are superior, that they are right and that it is their mandate to rule.

- In the end, I think I’d prefer our own assholes to theirs.

- dennis

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Some of America’s key defence items compromised but the culprits are not known.

Designs for some of America’s most important and sensitive weapons systems have been compromised by Chinese hackers, according to a confidential report.

More than two dozen key weapons systems had been affected, including missile defences, fighter jets, helicopters and navy vessels, the report said.

Among those listed are the advanced Patriot missile system, or PAC-3, the F/A-18 fighter jet, the Black Hawk helicopter and the V-22 Osprey, which is able to land and take off vertically.

It was not clear from the report, extracts of which were published by theWashington Post, when or how the designs had been compromised.

Its authors _ the Defence Science Board, an influential advisory body _ stopped short of accusing the Chinese Government of attempting to steal the information.

But senior military sources pointed the finger directly at Beijing, saying the security breaches were part of a “widening Chinese campaign of espionage against US defence contractors and government agencies”.

- More… :arrow:

- Thanks to Kierin M for the Mandate of Heaven concept.

Posted in Capitalism & Corporations, Climate Change, Conflict, Corruption, CrashBlogging, CyberChaos, Financial melt-down, Human Rights, Social Breakdown, The Perfect Storm, Wealth Disparity | Comments Off

TransPacific Partnership Will Undermine Democracy, Empower Transnational Corporations

Tuesday, May 21st, 2013

- I’ve written and displayed articles on this issue before.

- dennis

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Our country’s democratic values could be under threat if President Obama fast tracks the Trans-Pacific Partnership.

On critical issues, the massive Trans-Pacific Partnership (TPP) being negotiated in secret by the Obama administration willundermine democracy in the United States and around the world and further empower transnational corporations. It will circumvent protections for health care, wages, labor rights, consumers’ rights and the environment, and decrease regulation of big finance and risky investment practices.

The only way this treaty, which will be very unpopular with the American people once they are aware of it, can be approved is if the Obama administration avoids the democratic process by using an authority known as “Fast Track,” which limits the constitutional checks and balances of Congress.

If the TPP is approved, the sovereignty of the United States and other member nations will be dissipated by trade tribunals that favor corporate power and force national laws to be subservient to corporate interests.

Circumventing the Checks and Balances of US Democracy

President Nixon first developed the idea of “Fast Track” in 1973 as a way to secure Congressional approval of trade agreements, and it has been a key to passing many unpopular agreements such as the World Trade Organization (WTO) and NAFTA. As people have caught on to the offshoring of jobs and other detrimental consequences of these agreements, civil society now understands how important it is to not allow a president to circumvent the democratic role of Congress. Fast Track expired in 2007, so President Obama must have it re-instated in order to pass the TPP. His administration is moving to have Fast Track approved and hopes it will happen by this summer.

Under Fast Track, the president was allowed to negotiate and sign trade agreements with whatever countries the executive branch selected – all before Congress voted on the agreement. Fast Track meant that the Congressional committee processes were circumvented and the executive branch was empowered to write lengthy implementing legislation for each trade pact without Congress. These executive-only authored bills required US law to conform to the trade agreement. For example,Glass-Steagall had to be repealed under President Clinton to conform to the WTO. And, Fast Track empowered the president to submit the executive-branch written bill for a mandatory vote within a set number of days, with all amendments forbidden, normal Senate rules waived, and debate limited in both chambers of Congress. Fast Track clearly undermined democracy.

Indeed, Fast Track turned the US Constitution on its head. Under Article I Section 8, Congress has exclusive authority “to regulate commerce with foreign nations” and to “lay and collect taxes [and] duties.” Under the Constitution, the president is empowered to negotiate treaties, but Congress must vote to approve them. Thus, Fast Track took constitutional power from Congress and prevented the checks and balances needed to prevent an imperial presidency.

For most of the history of the United States, treaties and trade agreements went through the normal congressional process described in the Constitution. Fast Track is a relatively new concept that coincides with an era of increasing presidential power, which includes the power to declare war and to murder US citizens without warning or judicial oversight. If Congress had reviewed agreements such as the WTO and NAFTA beforehand and civil society had been able to participate in a democratic process, would the United States have made the mistake of passing these laws that have so injured our economy and others?

Fast Track is very unpopular, so now President Obama and others who advocate for it do not use the term. Instead they call it by the euphemism “Trade Promotion Authority.” But changing the name does not change what it is – a method of ceding the constitutional power of Congress and undermining the checks and balances built into the constitutional framework.

Congress needs to consider what agreements such as the TPP will do to jobs, trade balances and the environment. Since Nixon, Fast Track has been used by presidents to go way beyond trade and tariffs. These agreements have been used to change US law by establishing “rules related to domestic environmental, health, safety and essential-service regulations, including deregulation of financial services; establishment of immigration policies; creation of limits on local development and land-use policy; extension of domestic patent terms; establishment of new rights and greater protections for foreign investors operating within the United States that extend beyond US law; and even limitation of how domestic procurement dollars may be spent.” Thus, not only has the constitutional power of Congress to regulate commerce with foreign nations been undermined, but a whole host of domestic laws have been rewritten to satisfy international trade.

- More… :arrow:

 

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Posted in Capitalism & Corporations, Corporate takeover of Government, Corruption, CrashBlogging, Financial melt-down, Human Rights, Politics - The Wrong Way, Social Breakdown, The Perfect Storm, Wealth Disparity | Comments Off

Secret Files Expose Offshore’s Global Impact

Friday, April 12th, 2013

- This story is going to have legs for a long time, folks.  High net worth individuals and politicos all over the globe must be crapping themselves wondering what’s going to come out of this story.

- All us small folk are paying higher and higher taxes while the disparity between the rich and poor grows wider and wider and the folks on the top are clearly not paying their share.  They are, in fact, working very hard to pay little or nothing.

- Corporations and the rich are gaming the situation to push the tax burdens down on the middle classes and that’s one of the reasons why the middle classes are beginning to look like an endangered species.

- This can only go so far and there will be a backlash.   This, if carried far enough, is the stuff revolutions are made of.

- dennis

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Dozens of journalists sifted through millions of leaked records and thousands of names to produce ICIJ’s investigation into offshore secrecy ­

A cache of 2.5 million files has cracked open the secrets of more than 120,000 offshore companies and trusts, exposing hidden dealings of politicians, con men and the mega-rich the world over.

The secret records obtained by the International Consortium of Investigative Journalists lay bare the names behind covert companies and private trusts in the British Virgin Islands, the Cook Islands and other offshore hideaways.

They include American doctors and dentists and middle-class Greek villagers as well as families and associates of long-time despots, Wall Street swindlers, Eastern European and Indonesian billionaires, Russian corporate executives, international arms dealers and a sham-director-fronted company that the European Union has labeled as a cog in Iran’s nuclear-development program.

The leaked files provide facts and figures — cash transfers, incorporation dates, links between companies and individuals — that illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy and the well-connected to dodge taxes and fueling corruption and economic woes in rich and poor nations alike.

The records detail the offshore holdings of people and companies in more than 170 countries and territories.

The hoard of documents represents the biggest stockpile of inside information about the offshore system ever obtained by a media organization. The total size of the files, measured in gigabytes, is more than 160 times larger than the leak of U.S. State Department documents by Wikileaks in 2010.

- More… :arrow:

 - Later breaking stories on this subject… :arrow:

Posted in Capitalism & Corporations, Corruption, CrashBlogging, Financial melt-down, Human Rights, Politics - The Wrong Way, Social Breakdown, The Perfect Storm, Wealth Disparity | Comments Off

Anonymous Hacks US Government Site, Threatens Supreme ‘Warheads’

Tuesday, February 12th, 2013

- This YouTube video makes for interesting viewing and it sets out a number of  grievances Anonymous has with the U.S. government’s escalating abuses of the rights of U.S. citizens.   It’s well worth a watch.

- Will it cause the U.S. government to change its ways?   I doubt it.  Most of the people involved on the U.S. government side are simple people doing their jobs who haven’t the courage or the imagination to see that the jobs they are increasingly doing are not in defense of the principles upon which the U.S. was founded but rather in defense of those powerful forces who are in the processing of capturing the U.S. system for their own gains.

- dennis

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The hacktivist group Anonymous hacked the U.S. federal sentencing website early Saturday, [January 26th, 2013] using the page to make a brazen and boisterous declaration of “war” on the U.S. government.

The group claims mysterious code-based “warheads,” named for each of the Supreme Court Justices, are about to be deployed.

As of midnight Pacific time, the front page of Ussc.gov — the Federal agency that establishes sentencing policies and practices for the Federal courts — is filled with a long screed in green on black, together with this YouTube video:  :arrow:

 - research thanks to Mashable

Posted in Capitalism & Corporations, Corporate takeover of Government, Corruption, CrashBlogging, CyberChaos, Human Rights, Politics - The Wrong Way, Social Breakdown, The Perfect Storm, Wealth Disparity | Comments Off

A Choice For Corporate America: Are You With America Or The Cayman Islands

Tuesday, February 12th, 2013

By Senator Bernie Sanders
February 9, 2013

When the greed, recklessness, and illegal behavior on Wall Street drove this country into the deepest recession since the 1930s, the largest financial institutions in the United States took every advantage of being American. They just loved their country – and the willingness of the American people to provide them with the largest bailout in world history. In 2008, Congress approved a $700 billion gift to Wall Street. Another $16 trillion in virtually zero interest loans and other financial assistance came from the Federal Reserve. America. What a great country.

But just two years later, as soon as these giant financial institutions started making record-breaking profits again, they suddenly lost their love for their native country. At a time when the nation was suffering from a huge deficit, largely created by the recession that Wall Street caused, the major financial institutions did everything they could to avoid paying American taxes by establishing shell corporations in the Cayman Islands and other tax havens.

In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis.

On and on it goes. Wall Street banks and large companies love America when they need corporate welfare. But when it comes to paying American taxes or American wages, they want nothing to do with this country. That has got to change.

Offshore tax abuse is not just limited to Wall Street. Each and every year corporations and the wealthy are avoiding more than $100 billion in U.S. taxes by sheltering their income offshore.

Pharmaceutical companies like Eli Lilly and Pfizer have fought to make it illegal for the American people to buy cheaper prescription drugs from Canada and Europe. But, during tax season, Eli Lilly and Pfizer shift drug patents and profits to the Netherlands and other offshore tax havens to avoid paying U.S. taxes.

Apple wants all of the advantages of being an American company, but it doesn’t want to pay American taxes or American wages. It creates the iPad, the iPhone, the iPod, and iTunes in the United States, but manufactures most of its products in China so it doesn’t have to pay American wages. Then it shifts most of its profits to Ireland, Luxembourg, the British Virgin Islands and other tax havens to avoid paying U.S. taxes. Without such maneuvers, Apple’s federal tax bill in the United States would have been $2.4 billion higher in 2011.

Offshore tax schemes have become so absurd that one five-story office building in the Cayman Islands is now the “home” to more than 18,000 corporations.

This tax avoidance does not just reduce the revenue that we need to pay for education, healthcare, roads, and environmental protection, it is also costing us millions of American jobs. Today, companies are using these same tax schemes to lower their tax bills by shipping American jobs and factories abroad. These tax breaks have contributed to the loss of more than 5 million U.S. manufacturing jobs and the closure of more than 56,000 factories since 2000. That also has got to change.

At a time when we have a $16.5 trillion national debt; at a time when roughly one-quarter of the largest corporations in America are paying no federal income taxes; and at a time when corporate profits are at an all-time high; it is past time for Wall Street and corporate America to pay their fair share.

That’s what the Corporate Tax Dodging Prevention Act (S.250) that I have introduced with Rep. Jan Schakowsky (D-Ill.) is all about.

This legislation will stop profitable Wall Street banks and corporations from sheltering profits in the Cayman Islands and other tax havens to avoid paying U.S. taxes. It will also stop rewarding companies that ship jobs and factories overseas with tax breaks. The Joint Committee on Taxation has estimated in the past that the provisions in this bill will raise more than $590 billion in revenue over the next decade.

As Congress debates deficit reduction, it is clear that we must raise significant new revenue. At 15.8 percent of GDP, federal revenue is at almost the lowest point in 60 years. Our Republican colleagues want to balance the budget on the backs of the elderly, the sick, the children, the veterans and the most vulnerable by making massive cuts. At a time when the middle class already is disappearing, that is not only a grossly immoral position, it is bad economics.

We have a much better idea. Wall Street and the largest corporations in the country must begin to pay their fair share of taxes. They must not be able to continue hiding their profits offshore and shipping American jobs overseas to avoid taxes.

Here’s the simple truth. You can’t be an American company only when you want a massive bailout from the American people. You have also got to be an American company, and pay your fair share of taxes, as we struggle with the deficit and adequate funding for the needs of the American people. If Wall Street and corporate America don’t agree, the next time they need a bailout let them go to the Cayman Islands, let them go to Bermuda, let them go to the Bahamas and let them ask those countries for corporate welfare.

 

Posted in Capitalism & Corporations, Corporate takeover of Government, Corruption, CrashBlogging, Financial melt-down, Human Rights, Politics - The Wrong Way, The Perfect Storm, Wealth Disparity | Comments Off

The greedy are everywhere…

Wednesday, July 4th, 2012

- In the U.S., in Europe, and even here in my beloved New Zealand.

- They put on suits, they carry a briefcase, they do ‘deals’ and it all looks brilliant and magical.

- But, sometimes, someone goes behind the scenes and traces some of this ‘business’ and finds that a lot of it is ‘funny business’.

- What would you think of an investment company that did big deals for the purpose of making profits for their investors and, when the dust had settled, the deals were done and all the contracts and the fine print were all read out and traced – you found out that the bankers and the company’s principals made far more profit from all of the money shuffling than any of their poor investors did?

- I think it stinks.   And yet I also think that many business types live and thrive in just this way and consider themselves brilliant,.  And that they consider the rest of us as just their sheep in need of a shearing and too dumb to know we’re being hard done by.

- This bit of fun happened here in New Zealand though the business itself reached around the globe to London as well.  

- No matter.  In fact, all the better.   The more abstract, the further afield, the less normal people can relate to the doings, the better.   Big money moving in the shadows.

- Here in New Zealand, the National Government, under John Key, a former Wall Street type, wants to sell public assets to raise money.   After reading this expose on the investment company, EPIC, I’ll be most curious to  ’follow the money’ when the Key government does begin to sell those assets.  

- Who will be doing the deals and who will be making enormous profits from the fees along they way?  Why do I suspect that they will be business types like Key?  Types who are telling themsleves all along the way that the fact that they are getting rich is only incidental to the good they are doing for the country.

- Yeah, right.

- Dennis

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The rather curious case of Epic’s fee payments

(this from stuff.co.nz an opinion piece by Tim Hunter)

OPINION: After years of study, there is growing acceptance that homo sapiens has evolved into two distinct branches. One comprises the vast bulk of humanity, the other comprises individuals known as bankers.

Although superficially alike, the latter can be distinguished by their skin, which is thicker than normal. It also has special properties giving unusual adhesion to most forms of money.

In tests using a drained swimming pool filled with Zimbabwean currency, bankers were found to emerge from the pool with up to 25 per cent more cash sticking to them than the non-banking control group.

Scientists initially hypothesised an epidermal layer of tiny hooks, like Velcro, to explain the effect, but now favour a theory of electro-magnetic attraction at the cellular level.

Edinburgh University’s department of parapsychology is also testing observations that bankers can detect the contents of a wallet within a range of about five metres, even through stud walls.

These attributes are an advantage in financial transactions, and Chalkie reckons there could be something like this going on in an investment structure called Equity Partners Infrastructure Company (Epic). Basically, Chalkie’s study of accounts and documents with small print suggests Epic has paid out millions more in fees to bankers and their ilk than it has to its investors.

- Definitely, you should read more here… :arrow:

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Posted in Capitalism & Corporations, CrashBlogging, Financial, Financial melt-down, New Zealand, Social Breakdown, The Perfect Storm, Wealth Disparity | 1 Comment »

End of an Era

Tuesday, June 26th, 2012

- Parents, it is time to think about where your children are going to be when the sh** hits the fan.  I don’t think we’re going to avoid this mess but you could shift them to a place where another generation or two might have reasonable lives.   If you think that might be in a big city in the U.S., I think you are missing the point.

- Dennis

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By George Monbiot, published in the Guardian 25th June 2012

It is, perhaps, the greatest failure of collective leadership since the first world war. The Earth’s living systems are collapsing, and the leaders of some of the most powerful nations – the US, the UK, Germany, Russia – could not even be bothered to turn up and discuss it. Those who did attend the Earth summit last week solemnly agreed to keep stoking the destructive fires: sixteen times in their text they pledged to pursue “sustained growth”, the primary cause of the biosphere’s losses(1).

The future

The efforts of governments are concentrated not on defending the living Earth from destruction, but on defending the machine that is destroying it. Whenever consumer capitalism becomes snarled up by its own contradictions, governments scramble to mend the machine, to ensure – though it consumes the conditions that sustain our lives – that it runs faster than ever before.

The thought that it might be the wrong machine, pursuing the wrong task, cannot even be voiced in mainstream politics. The machine greatly enriches the economic elite, while insulating the political elite from the mass movements it might otherwise confront. We have our bread; now we are wandering, in spellbound reverie, among the circuses.

We have used our unprecedented freedoms, secured at such cost by our forebears, not to agitate for justice, for redistribution, for the defence of our common interests, but to pursue the dopamine hits triggered by the purchase of products we do not need. The world’s most inventive minds are deployed not to improve the lot of humankind but to devise ever more effective means of stimulation, to counteract the diminishing satisfactions of consumption. The mutual dependencies of consumer capitalism ensure that we all unwittingly conspire in the trashing of what may be the only living planet. The failure at Rio de Janeiro belongs to us all.

- More… :arrow:

Posted in Biodiversity Loss, Capitalism & Corporations, Climate Change, CrashBlogging, CyberChaos, Deforestation, Desertification, Extinctions, Financial melt-down, Food Shortages, Fundamentalism, Human Rights, Immigration Stress, Methane, Nuclear Waste, Ocean Acidification, Ocean Dead Zones, Pandemics, Peak Oil, Politics - The Wrong Way, Pollution, Rising Ocean Levels, Social Breakdown, Terrorism, The Perfect Storm, Water Shortages, Wealth Disparity, Weather deterioration, Women's Rights | Comments Off

NZ Asset Sales Policy Began On Wall Street

Saturday, June 23rd, 2012

 

- I love my new country but I do believe that New Zealanders can be naive.   Perhaps it is because of their long isolation.   But the stuff John Key, our current conservative PM, is trying to implement here is the same stuff that the Chicago Boys have tried around the world with repeatedly disastrous consequences.   

- And I’m reading that it will likely pass 61 to 60.   Isn’t it utterly amazing that not one of those 61 people will change their vote when the majority of New Zealanders clearly do NOT want asset sales.   One can only hope that the voters remember the transgressions of the 61 later at the polls.

- Read this analysis – it will curl your hair.

- Dennis

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The Key government’s asset sales agenda is derived from the Washington Consensus – a set of Wall Street-driven policies that were pronounced dead after the global financial meltdown in 2008.[1] The New Zealand government, however, remains loyal to this failed ideology.

Why? The obvious link is Prime Minister John Key – a former investment banker for Merrill Lynch, the world’s largest brokerage failure.

In most other countries, state asset sales have become a last resort on the road to poverty and ruin, but for the Key government, asset sales are “business as usual.” [2]

So what’s really behind asset sales?
All wealth extraction is facilitated by international and national economic policies, coupled with the private banking system, which together deliver benefits to the financial elite by transferring wealth upward within and between nations.

 The state asset sales policy is just one of several reforms under the Washington Consensus, a set of monetary and economic policies designed to allow: the privatization of public resources and utilities, the removal of barriers to foreign investment and ownership, the sale of state assets, trade liberalization, deregulation, the lowering of business taxes, and cuts to public services.[3]

These “free market” reforms are collectively termed neoliberalism.[4] Simply, they provide big business with improved legal access to markets and assets worldwide.

The Key government’s asset sales agenda fits obediently into this ideology ? the same ideology that ushered in financial deregulation, record bank bailouts, and the Second Great Depression.[5]

Governments in New Zealand have succumbed to the neoliberal movement since 1987, when the first round of asset sales began, as a Reagan-Thatcher-Douglas experiment.

Under these policies since the 1980s, New Zealanders have experienced almost the greatest increase in income inequality in the OECD.[6]

The deep roots of neoliberalism 
Modern liberalism dates back to the end of World War II, when the Bretton Woods agreement formed the IMF and the World Bank, establishing the US dollar as a de facto world reserve currency, and installing policies aimed at stabilizing the world monetary system. Free private capital flows between countries were restricted because it was believed that international financiers had caused the Great Depression.[7]

For the next three decades, Western governments were characterized by liberal, socially democratic policies that sought to safeguard national economies by keeping trade in balance. The world achieved exceptional economic prosperity during this era known as “The Glorious Thirty” years.[8]

But by the 1970s, corporations began to exhaust the spending power of the “consumer society” as total debt increased under the mathematical bias of fractional reserve banking, exacerbated by the Vietnam War.

Policymakers were faced with a choice between more intervention to protect local economies and social justice, or a more liberal business agenda – neo (new) liberalism. Wall Street interests mobilized to advance a host of “business first” policies that became the Washington Consensus, and the euphoria for deregulation ultimately placed Wall Street beyond the reach of democratic public accountability.

Rising poverty and debt for the majority
Multinational corporations proliferated and expanded, outsourcing cheap foreign labour, extracting oil and other mineral wealth, leveraging weaker economies and favourable exchange rates to monopolise global markets, often assisted by IMF and World Bank development loans.

Globalization is defended as a strategy to boost Gross National Product (GDP) and therefore investment in jobs. But in reality, free trade strengthens capital bargaining relative to labour, so that people who derive most of their income from returns on capital (the rich) gain, while people who earn most of their income from labour (the majority) lose.[9]

The outcomes of neoliberal policies have been similar everywhere in the world. Deregulated markets have benefitted the local educated elite who work with the corporations, while the majority of people have experienced a decline in living standards, with a permanent widening of the gap between the rich and poor.[10] [11]

Neoliberalism has been catastrophic. It has accelerated sovereign debt, collapsed the financial sector, and it has caused the highest ever level of global unemployment, described recently by the International Labour Organization as a worldwide crisis.[12]

Meanwhile, the corporations and the international banking aristocracy have amassed enormous unproductive wealth via their trickle-up incomes.

“Free trade” unlocks foreign assets
The post-World War II version of free trade promoted “fair trade” and often achieved a healthy balance of payments. But the Washington Consensus threw caution to the wind, allowing big business to dominate government policy, making deficits routine.

Free trade agreements, such as the North American Free Trade Agreement (NAFTA), have virtually destroyed US-based manufacturing, leaving Main Street America with a service sector economy.[13]

The Trans Pacific Partnership Agreement (TPPA) signals yet another secretive free trade deal intended to free-up access to foreign assets. The TPPA could render New Zealand government decisions subject to rulings by international tribunals, in the defence of investors from the negotiating countries of Singapore, Chile, Brunei, Australia, Peru, Vietnam and the United States. This is how “free trade” agreements pave the way for the extraction of wealth ? by the erosion of economic sovereignty.

The Key government’s privatisation agenda is well advanced, with various private public partnerships (PPPs) already being developed. This neoliberal doctrine includes the privatization of prisons, schools, water resources, and all infrastructure.

Ultimately on offer is $5-20 trillion[14] in Crown mineral wealth, including gold, coal, lignite, phosphate, iron sand, oil, natural gas, and more, all under the fourth lowest royalty and taxation regime in the world[15] – a paltry 1% of the production value.[16]

“Mixed ownership model” is destined to fail
The Key government plans to sell 49% of four state owned energy companies – Mighty River Power, Meridian, Genesis, and Solid Energy, and a further 23% of Air New Zealand. It is claimed that $5–7 billion can be “freed up” to reduce debt.[17]

What really betrays these asset sales as an ideologically-based policy is the maths. Financial analyst Brent Sheather has calculated that the assets are earning a higher income than the cost of borrowing.

Currently, the cost of borrowing is 4% for ten years, so the cost of $6 billion would be $240 million. The forecast dividends of the four SOE energy companies average $449 million over the next five years, 49% of which is $220 million. Add $20 million for selling 23% of Air New Zealand and the lost dividends average $240 million a year.[18]

Now, add the sales related costs estimated at 3% or $180 million, plus the expected improved performance from substantial recent capital investment, and there is no way for New Zealand taxpayers to come out ahead.

As the Green’s co-leader Russel Norman has said:
“We have seen this before. Like our energy SOEs, Telecom had invested significant amounts of capital in building a modern telecommunications network in the years before privatisation. In the years following Telecom’s privatisation, dividend streams for its new private owners doubled, then tripled within six years. History now seems to be repeating itself with our energy SOEs. National has allowed the taxpayer to build up the asset, only to then on-sell it to the benefit of others.” [19]

The initial public offerings (IPOs) will be snapped up and passed on to larger offshore players, who with only a combined holding of 25% will enjoy foreign-owned status under the Overseas Investment Act (2005),[20] with ample influence at 49% to sway policy. So expect higher power prices.

Over the longer term, asset inflation will provide a mega windfall for shareholders.

In 1999, the NZ Herald reported that: ‘Over the past 12 years 40 state-owned commercial assets have been sold, realising $19.1 billion. As at August 31, 1999 these assets had an estimated value of $35.7 billion, $16.6 billion above their original sale price. … The privatisation programme has been a huge windfall for overseas investors. Just over 79 per cent, or $13.1 billion, of the increase in value has gone to offshore interests.’ [21] [22]

No political party can beat debt under our monetary system
New Zealand’s government debt is presently modest compared to private debt. In the short-term, tax reforms that enable a fairer redistribution of income would slow the deepening tide of all New Zealand debt ? if only the Key government would allow this.

But in our post-peak oil world, without cheap oil to fuel high productivity, sovereign debt in New Zealand ? as elsewhere, will inevitably force austerity measures consistent with the Washington Consensus. The past failure of these policies will be ignored, because ultimately there is simply no other option under the debt-based system.

Under fractional reserve banking the rate of growth of debt must be higher than the rate of growth of income to avoid collapse. In aggregate, debt grows exponentially until it cannot be repaid. [23] [24]The world is literally attempting to engage productive overdrive in a hopeless struggle to satisfy unproductive debt servicing.

Almost half of the average earned income is already siphoned off via direct or indirect hidden interest, and in government debt taxes.[25] In sum, almost half of humanity’s productive effort is to serve useless debt, instead of solve the world’s problems.

The pressure to leverage fiscal advantage from assets, of all kinds, comes directly from the ruling power – the international banking elite. No political party can entirely avoid asset extraction under the fractional reserve system. Governments can adjust the debt hand-brake, but the foreign bankers are in the driving seat.

The world is sliding toward zero and eventually negative growth. Sovereign debt can only speed up. New Zealand will join the economic train-wreck down the track.

The only escape route is a public medium of exchange that is debt-free.[26] Every sovereign nation can issue its own currency without debt or interest, but nearly all governments align with the international bankers to extort the “common wealth.”

The Reserve Bank of New Zealand issues less than 2% of the nation’s money debt-free,[27] serving the global central banking cartel, not ordinary Kiwis.

Selling public assets amounts to economic suicide
The European Central Bank (ECB) is clearly demonstrating how economic sovereignty can be wrested from countries through debt peonage.

The world on its present course cannot avoid fuel shortages, debt-deflation, fiscal austerity, increasing poverty, political and environmental conflicts over energy and essential commodities, unprecedented global protests against Wall Street financial injustice, political and legal challenges for full reserve monetary reform, climate and humanitarian disasters, further revolution and war.

We are facing the perfect economic storm, in which sacrificing long-term high performing income would guarantee poverty for the majority. Selling public assets amounts to economic suicide.

Most New Zealanders don’t realize that their country, and their future, is being sold.

________________________________________

[1] Anthony Painter. (2009, April 10). The Washington Consensus Is Dead. The Guardian., Kings Place, 90 York Way, London N1 9GU, UK.
http://www.guardian.co.uk/commentisfree/cifamerica/2009/apr/09/obama-g20-nato-foreign-policy

[2] Mixed Ownership Monitoring Unit. (2011, December 15). Mixed Owner Model For Crown Companies. Crown Ownership Monitoring Unit , 1 The Terrace, Wellington 6011, New Zealand.
http://www.comu.govt.nz/publications/information-releases/mixed-ownership-model/

[3] John Williamson. (2004, September 24-25). A Short History of the Washington Consensus.
http://www.iie.com/publications/papers/williamson0904-2.pdf

[4] Neoliberalism. Wikipedia.
http://en.wikipedia.org/wiki/Neoliberalism

[5] Steve Keen. (2011, December 3). We’re Already In The Second Great Depression, We Just Don’t Realize It Yet.
http://articles.businessinsider.com/2011-12-03/markets/30471134_1_second-great-depression-hope-new-jobs

[6] OCED. (2011, December 5). Governments must tackle record gap between rich and poor, says OECD.
http://www.oecd.org/document/40/0,3746,en_21571361_44315115_49166760_1_1_1_1,00.html
‘The gap between rich and poor in OECD countries has reached its highest level for over 30 years, and governments must act quickly to tackle inequality, according to a new OECD report. “Divided We Stand: Why Inequality Keeps Rising” finds that the average income of the richest 10% is now about nine times that of the poorest 10 % across the OECD.’

[7] Jan A. Kregal. (2003, April). The Perils of Globalization: Structural, Cyclical and Systemic Causes of Unemployment
http://www.cfeps.org/pubs/sp-pdf/SP13-Jan.pdf
‘In the view of US Secretary of the Treasury Morganthau the creation of the Bretton Woods institutions was to keep the control of the international financial system out of the hands of international financiers who were considered to have caused the Great Depression. Keynes agreed that free private international capital flows were incompatible with a stable international financial system and this similarity of views produced a post-war system in which it was presumed that there would be virtually no private international capital flows.’

[8] Embedded Liberalism. The Glorious Thirty years. Wikipedia.
http://en.wikipedia.org/wiki/Neoliberalism
‘The period of government interventionism in the 1950s and 1960s was characterized by exceptional economic prosperity, as economic growth was generally high, was contained, and economic distribution was comparatively equalized. This era is known as les Trente Glorieuses (“The Glorious Thirty [years]“) or “Golden Age”, a reference to many countries having experienced particularly high levels of prosperity between (roughly) World War II and 1973.’

[9] Ian Fletcher. (2011). Free Trade Doesn’t Work, Why the Theory of Comparative Advantage is Wrong.
http://www.worldfinancialreview.com/?p=866
‘As a result, people who draw most of their income from returns on capital (the rich) gain, while people who get most of their income from labor (the rest) lose.’

[10] Richard C. Cook. (2007, June 2). Monetary Causes of the Immigration Crisis. The “Washington Consensus” has wrecked their economies. Global Research.
http://www.globalresearch.ca/PrintArticle.php?articleId=5862
‘The conditions also include a shift of indigenous economies to the production of export commodities, away from local self-sustaining agriculture and small business. This typically results in a mass exodus from rural areas to urban slums and causes poverty, unemployment, and crime. These financial programs benefit the local educated elite who work with the Western agencies and global corporations but cause a deep and permanent stratification among social classes.’

[11] OCED. (2011, December 5). Governments must tackle record gap between rich and poor, says OECD.
http://www.oecd.org/document/40/0,3746,en_21571361_44315115_49166760_1_1_1_1,00.html

[12] ILO. (2011). Global Employment Trends 2011. International Labour Office, CH-1211 Geneva 22, Switzerland.
http://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/@publ/documents/publication/wcms_150440.pdf

[13] Robert E. Scott. (2011, May 3). Heading South: US-Mexico Trade And Job Displacement After NAFTA. Economic Policy Institute, 1333 H Street NW, Suite 300 East Tower, Washington DC 20005, USA, www epi.org.
http://www.epi.org/page/-/BriefingPaper308.pdf

[14] Dr. Don Elder. (2010, September 21). CEO, Solid Energy. Day 2 presentation at the 2010 New Zealand Petroleum Conference, Skycity Convention Centre, Auckland, during which Dr Elder has been quoted as stating that New Zealand has NZ$ 5-20 trillion in Crown minerals.
http://www.nzpam.govt.nz/cms/pdf-library/petroleum-conferences-1/2010-nzpc-speaker-presentations/Don%20Elder.pdf
[15] IPENZ, authorship withheld. (2011, December). Realizing Our Hidden Treasure: Responsible Mineral and Petroleum Extraction. The Institution of Professional Engineers New Zealand Inc., PO Box 12 241, Wellington 6144, New Zealand.
http://www.ipenz.org.nz/ipenz/media_comm/documents/IPENZMineralsandPetroleumFinalDec2011.pdf

[16] Taxation & Royalties for Mining Companies. New Zealand Mineral Industry Association. PO Box 24315, Wellington 6142, New Zealand.
http://www.minerals.co.nz/html/main_topics/overview/taxation_royalties.html
‘The Ministry of Commerce has recently imposed a royalty on minerals owned by the Crown. The royalty is the greater of 1% ad valorem (value of production) or 5% of accounting profits.’

[17] Mixed Ownership Monitoring Unit. (2011, December 15). Mixed Owner Model For Crown Companies. Crown Ownership Monitoring Unit,1 The Terrace, Wellington 6011, New Zealand.
http://www.comu.govt.nz/publications/information-releases/mixed-ownership-model/

[18] Gordon Campbell. (2011, November 24). Gordon Campbell: financial analysts jump ship on asset sales.
http://www.scoop.co.nz/stories/HL1111/S00215/gordon-campbell-financial-analysts-jump-ship-on-asset-sales.htm

[19] Dr Russel Norman. (2011, November 23). National Set To Repeat Telecom Privatisation Mistake.
http://www.voxy.co.nz/politics/national-set-repeat-telecom-privatisation-mistake/5/108571

[20] Overseas Investment Act (2005). Section 7 (1). ‘…or they are 25% (or more) owned or controlled by an overseas person or persons.’ Parliamentary Counsel Office., PO Box 18070, Wellington 6160, New Zealand.
http://www.legislation.govt.nz/act/public/2005/0082/latest/DLM356881.html

[21] Bryan Gaynor, NZ Herald. (1999, October 2). Analysis: Filling Foreigner’s Pockets. The New Zealand Herald, PO Box 32, Auckland, New Zealand.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=15142

[22] The Treasury. (1999, September 30). Income from State Asset Sales. Historical information on the sale price and background to New Zealand Government asset sales as at 30 September 1999. The Treasury, Level 5 (Reception), 1 The Terrace, Wellington 6011, NEW ZEALAND.
http://www.treasury.govt.nz/government/assets/saleshistory

[23] Michael Hudson. (2004, January 24). The Mathematical Economics of Compound Rates of Interest: A Four-Thousand Year Overview Part I.
http://michael-hudson.com/2004/01/the-mathematical-economics-of-compound-rates-of-interest-a-four-thousand-year-overview-part-i/
‘Orthodox academic models rarely acknowledge the problems posed by the exponential growth of debt overhead. Such models typically make government policies appear unnecessary to cope with this problem, by focusing on the kind of world that might exist if the financial overgrowth of savings and debts did not double every decade or so, having multiplied again and again over the past century. It thus has been left mainly to non-mainstream writers to address the structural problems created by an accumulation of interest-bearing debt.’

[24] Debt Grows Exponentially. (2010, October 30). The Elephant In The Room: Debt Grows Exponentially, While Economies Only Grow In An S-Curve. Washington’s Blog.
The Elephant In The Room: Debt Grows Exponentially, While Economies Only Grow In An S-Curve
‘Hudson says that – in every country and throughout history – debt always grows exponentially, while the economy always grows as an S-curve. Moreover, Hudson says that the ancient Sumerians and Babylonians knew that debts had to be periodically forgiven, because the amount of debts will always surpass the size of the real economy. … One thing is for sure. The exponential growth of debt is a structural problem which – unless directly addressed – will swallow all economies which try to ignore it.’

[25] Margrit Kennedy. (1995). Interest and Inflation Free Money. Creating an exchange medium that works for everybody and protects the earth. Published by Seva International, ISBN 0-9643025-0-0.
http://kennedy-bibliothek.info/data/bibo/media/GeldbuchEnglisch.pdf
‘On an average we pay about 50% capital costs in the prices of our goods and services. Therefore, if we could abolish interest and replace it with another mechanism to keep money in circulation, most of us could either be twice as rich or work half of the time to keep the same standard of living we have now.’ (Other estimates are 40-45%.)

[26] Positive Money NZ. A campaign for Full Reserve Banking, based on similar campaigns in the UK and USA.
http://www.positivemoney.org.nz/

[27] Deirdre Kent. (2011, November). Money For Nothing. New Zealand Investor.
http://most0010122.e-xpert.co.nz/includes/download.aspx?ID=118572

 

- To the original article… :arrow:

- Research thanks to Kierin  M.

 

Posted in Capitalism & Corporations, CrashBlogging, Financial melt-down, Mental Irrationality, Politics - The Wrong Way, The Perfect Storm, Wealth Disparity | Comments Off

We’ve been brainwashed

Friday, June 15th, 2012

It’s no accident that Americans widely underestimate inequality. The rich prefer it that way.

How, in a democracy supposedly based on one person one vote, could the 1 percent could have been so victorious in shaping policies in its interests? It is part of a process of disempowerment, disillusionment, and disenfranchisement that produces low voter turnout, a system in which electoral success requires heavy investments, and in which those with money have made political investments that have reaped large rewards — often greater than the returns they have reaped on their other investments.

There is another way for moneyed interests to get what they want out of government: convince the 99 percent that they have shared interests. This strategy requires an impressive sleight of hand; in many respects the interests of the 1 percent and the 99 percent differ markedly.

The fact that the 1 percent has so successfully shaped public perception testifies to the malleability of beliefs. When others engage in it, we call it “brainwashing” and “propaganda.” We look askance at these attempts to shape public views, because they are often seen as unbalanced and manipulative, without realizing that there is something akin going on in democracies, too. What is different today is that we have far greater understanding of how to shape perceptions and beliefs — thanks to the advances in research in the social sciences.

It is clear that many, if not most, Americans possess a limited understanding of the nature of the inequality in our society: They believe that there is less inequality than there is, they underestimate its adverse economic effects, they underestimate the ability of government to do anything about it, and they overestimate the costs of taking action. They even fail to understand what the government is doing — many who value highly government programs like Medicare don’t realize that they are in the public sector.

- More …   :arrow:

 

Posted in Capitalism & Corporations, CrashBlogging, Financial melt-down, Human Rights, Social Breakdown, The Perfect Storm, Wealth Disparity | Comments Off

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