Phi Beta Iota: The existence of double sets of books is now coming to light. As best we can tell from various public discussions, the operating budgets are deliberately in the red and used to borrow money, at the same time that out-sourced services and “asset rents” are in the black. We honestly do not know what the true situation is, but we do know that the amount of falsehood and fraud in the “system” is deep.
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Overdrawn American cities could face financial collapse in 2011, defaulting on hundreds of billions of dollars of borrowings and derailing the US economic recovery. Nor are European cities safe – Florence, Barcelona, Madrid, Venice: all are in trouble
Elena Moya, guardian.co.uk, Monday 20 December 2010
More than 100 American cities could go bust next year as the debt crisis that has taken down banks and countries threatens next to spark a municipal meltdown, a leading analyst has warned.
By Simon Johnson, co-author of 13 Bankers (out in paperback on Monday)
Baseline Scenario, 9 January 2011
Highlighted extracts:
The Bill Daley Problem is completely bipartisan – it shows us the White House fails to understand that, at the heart of our economy, we have a huge time bomb.
…largest U.S. banks – have far too little equity and far too much debt relative to that thin level of equity…
Today’s most dangerous government sponsored enterprises are the largest six bank holding companies: JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley.
No one can show significant social benefits from the increase in bank size, leverage, and overall riskiness over the past 15 years. The social costs of these banks – and their complete capture of the regulatory apparatus – are apparent in the worst recession and slowest recovery since the 1930s.
Paul Volcker gets it; no wonder he has resigned. Mervyn King, governor of the Bank of England, gets it. Tom Hoenig, president of the Kansas City Fed, gets it. Elizabeth Warren, the tireless champion of consumer rights, gets it. Gene Fama, father of the efficient financial markets view, gets it better than anyone.
Phi Beta Iota: Our generous and well-intentioned philanthropists appear to be unaware that the Federal Reserve, Morgan Chase, and Citi-Bank have pulled a Bernie Maddoff on them–they think they are being “taken care of” at the very moment when everything they have worked so hard for is most vulnerable to a massive melt-down. The control of the President's mind and time is the ultimate victory for anyone seeking to control the White House. It is “checkmate” against We the People. None of the bureaucracies in the Executive–and certainly not the so-called “intelligence community”– are capable of rescuing the President–he is a happy captive.
EXTRACT: With the Citizens United Supreme Court decision (certainly one of the ten most consequential rulings in the court's history), all pretense of restraint is gone. The reader can see just how unrestrained in the January 1 edition of the Washington Post. The article recounts the adventures of one Gena Bell, a declassé Ohioan of modest intellectual gifts balanced by an unbounded anger over a sense of entitlement slipping through her fingers. Otherwise a very unremarkable individual, made remarkable only by the fact that the Koch brothers, through the front group Americans for Prosperity, paid for her to demonstrate against the United Nations climate change summit in Cancun, Mexico.
Pakistan: An elite police commando from the provincial police force who was assigned as a bodyguard for the governor of Punjab Province murdered the governor today in Islamabad. The commando dropped his weapon and surrendered to the police, bragging that he was proud he killed a blasphemer. With that, Pakistan's political crisis deepened.
In downtown Detroit, the streets are lined with abandoned hotels and swimming pools, ruined movie houses and schools, all evidence of the motor city's painful decline. The photographs of Yves Marchand and Romain Meffre capture what remains of a once-great city – and hint at the wider story of post-industrial America
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Cumulatively, the photographs are a powerful and disturbing testament to the glory and the destructive cost of American capitalism: the centre of a once-thriving metropolis in the most powerful nation on earth has become a ghost town of decaying buildings and streets. There is a formal beauty here too, though, reminiscent of Robert Polidori's images of post-hurricane Katrina New Orleans. “It seems like Detroit has just been left to die,” says Marchand, “Many times we would enter huge art deco buildings with once-beautiful chandeliers, ornate columns and extraordinary frescoes, and everything was crumbling and covered in dust, and the sense that you had entered a lost world was almost overwhelming. In a very real way, Detroit is a lost world – or at least a lost city where the magnificence of its past is everywhere evident.”
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The Ruins of Detroit tells the city's story so far in one starkly beautiful photograph after another, all of which add up to nothing less than an end-of-empire narrative. Or as Sugrue puts it: “The abandoned factories, the eerily vacant schools, the rotting houses, and gutted skyscrapers that Yves Marchand and Romain Meffre chronicle are the artefacts of Detroit's astonishing rise as a global capital of capitalism and its even more extraordinary descent into ruin, a place where the boundaries between the American dream and the American nightmare, between prosperity and poverty, between the permanent and the ephemeral are powerfully and painfully visible. No place epitomises the creative and destructive forces of modernity more than Detroit, past and present.”
Two years into the Obama presidency and the economic data is still looking grim. Don’t be fooled by the gyrations of the stock market, where optimism is mostly a reflection of the ability of financial corporations—thanks to massive government largesse—to survive the mess they created. The basics are dismal: Unemployment is unacceptably high, the December consumer confidence index is down and housing prices have fallen for four months in a row. The number of Americans living in poverty has never been higher, and a majority in a Washington Post poll said they were worried about making their next mortgage or rent payment.
In a parallel universe lives Peter Orszag, President Barack Obama’s former budget director and key adviser, who even faster than his mentor, Robert Rubin, has passed through that revolving platinum door linking the White House with Wall Street. The goal is to use your government position to advance the interests of your future employer, and Orszag and Rubin’s actions in the government and then at Citigroup provide stunning examples of the synergy between big government and high finance.
The two greatest visions of a future dystopia were George Orwell’s “1984” and Aldous Huxley’s “Brave New World.” The debate, between those who watched our descent towards corporate totalitarianism, was who was right. Would we be, as Orwell wrote, dominated by a repressive surveillance and security state that used crude and violent forms of control? Or would we be, as Huxley envisioned, entranced by entertainment and spectacle, captivated by technology and seduced by profligate consumption to embrace our own oppression? It turns out Orwell and Huxley were both right. Huxley saw the first stage of our enslavement. Orwell saw the second.
We have been gradually disempowered by a corporate state that, as Huxley foresaw, seduced and manipulated us through sensual gratification, cheap mass-produced goods, boundless credit, political theater and amusement. While we were entertained, the regulations that once kept predatory corporate power in check were dismantled, the laws that once protected us were rewritten and we were impoverished. Now that credit is drying up, good jobs for the working class are gone forever and mass-produced goods are unaffordable, we find ourselves transported from “Brave New World” to “1984.” The state, crippled by massive deficits, endless war and corporate malfeasance, is sliding toward bankruptcy. It is time for Big Brother to take over from Huxley’s feelies, the orgy-porgy and the centrifugal bumble-puppy. We are moving from a society where we are skillfully manipulated by lies and illusions to one where we are overtly controlled.
Orwell warned of a world where books were banned. Huxley warned of a world where no one wanted to read books. Orwell warned of a state of permanent war and fear. Huxley warned of a culture diverted by mindless pleasure. Orwell warned of a state where every conversation and thought was monitored and dissent was brutally punished. Huxley warned of a state where a population, preoccupied by trivia and gossip, no longer cared about truth or information. Orwell saw us frightened into submission. Huxley saw us seduced into submission. But Huxley, we are discovering, was merely the prelude to Orwell. Huxley understood the process by which we would be complicit in our own enslavement. Orwell understood the enslavement. Now that the corporate coup is over, we stand naked and defenseless. We are beginning to understand, as Karl Marx knew, that unfettered and unregulated capitalism is a brutal and revolutionary force that exploits human beings and the natural world until exhaustion or collapse.
