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Trains Against Terrorism: The New Silk Road Crosses Afghanistan


pale blue horizWITNESSES TO HISTORY
CALEB MAUPIN

Train at Balkah Pro vince Afghanistan

Afgan Border Police inspect train at Balkh Station. !st Brigade Combat Team, Public Domain


[dropcap]R[/dropcap]ecent developments around the world concerning the seemingly unrelated topics of railways, heroin production, and international terrorism point toward emerging realities about the global economy.

On April 4, 2016, the 48th anniversary of the assassination of Dr. Martin Luther King Jr., an Amtrak Train derailed in western Pennsylvania. Two Amtrak workers were killed. Accidents on Amtrak and other systems of United States public transportation are becoming much more common. Just a few weeks before, the DC Metro, the second-largest subway system in the country, closed down for an entire day for urgent safety repairs. In January, someone died when a DC metro station filled up with smoke.

Every day, Amtrak train passengers in the United States are transported over a 106-year-old bridge in Hackensack, New Jersey. It’s widely acknowledged that the decaying railway bridge needs to be repaired, but the funds simply cannot be put together. The plan to replace the bridge was abandoned in 2014 when the funds raised for the project came up $900 million short.

As the US public transportation system decays, it is still highly useful to individuals who support themselves with a certain illicit profession — narcotics trafficking. According to City Lab, train and bus stops are the ideal spot for those transporting cocaine, crystal meth, or the drug which is causing an epidemic throughout the United States: heroin.

The Global Heroin Problem

International Drug Routes - CIA

International Drug Routes – CIA

Every day 78, people in the United States die from heroin overdoses. Heroin use gradually increased in the first decade of the 21st century. By 2012, the rate of heroin-related deaths was four times what it was in 2002. Between 2012 and 2013, the number of deaths skyrocketed by 39%. Heroin addiction is rising all across the United States, and poppy fields are sprouting up across Mexico to meet the demand.

Currently, just over fifty percent of US heroin originates in Mexico. The rest of the heroin can be traced to the country where 90% of the world’s heroin is produced: Afghanistan.

The first poppy fields intended for opium production sprouted in Afghanistan when it was under British economic domination during the 1870s. Heroin sprouted up in many different parts of the world — accompanying the slaughter of indigenous peoples, the singing of “God Save the Queen,” and the institution of public floggings — as a kind of trademark of British imperialism.

Heroin production was a very small factor in Afghanistan until 1979. Following the seizure of power by the pro-Soviet People’s Democratic Party, the US Central Intelligence Agency began cooperating with Gulbuddin Hekmatyar. Hekmatyar was the top drug lord in Afghanistan, and with the help of the CIA and the Saudi monarchy, poppy fields sprouted up everywhere. As Sunni takfiri extremists from around the world went to Afghanistan to fight against the People’s Democratic Party, the booming heroin industry of Afghanistan was utilized to fund the operations. The Pakistani secret police, cooperating with the CIA and the Saudis, escorted trucks full of heroin across the Afghan-Pakistan border.

The Taliban government that came to power in Afghanistan during the 1990s saw the drug as a violation of Islamic teachings and thus worked to wipe out heroin production. According to the United Nations, the crackdown on heroin in Afghanistan had decreased production “from 3,300 tons in 2000 to 185 tons in 2001.”

After the US invasion following the September 11 attacks, heroin production in Afghanistan dramatically increased. Since 2001, heroin production in Afghanistan has risen to astoundingly high levels. No country in history has ever produced as much heroin as Afghanistan currently does, accounting for 90% of all world production.

The “Trade and Transport” Plan

Heroin production has been key in strengthening another problem in Afghanistan — terrorism. Since 2001, US leaders have been fighting a “War on Terror.” The goal is to  wipe out “terrorism.” However, in each of the countries invaded by the United States since the “War on Terror” began, terrorist organizations have gotten stronger.

Sunni takfiri terrorist groups like ISIS and Al-Nusra had virtually no presence when the secular Baath Arab Socialist Party controlled Saddam Hussein’s Iraq. Now extremists, including ISIS and Al-Qaeda, are very prevalent in the country. ISIS has set up shop in Libya since the overthrow of Gaddafi. Years of drone strikes have clearly not created stability in Yemen.

In Afghanistan, heroin dealing has been a key factor in subsidizing a terrorist organization called “Jundallah” which conducts kidnappings, bombings, and other terrorist activities. Jundallah are Saudi-funded terrorists based in Afghanistan who seek to overthrow the Islamic Republic of Iran, whose clerics they deem to be “Shia Apostates.” They appear to have received assistance from the United States, Britain, and various pro-western regimes in the region.

While Iran has graciously hosted over 2 million refugees since 2001, Jundallah and other anti-Iranian terrorists based in Afghanistan have arranged for heroin to be routinely smuggled across the borders. Heroin addiction is currently a huge problem in Iranian society.

When addressing the United Nations Security Council about the problems of Afghanistan on June 22, 2015, Iranian deputy ambassador Hossein Deghani explained Iran’s plan to aid the country. He said: “In the view of the Iranian government, trade and transport are two main fields for expansion of Tehran-Kabul relations.” He highlighted the fact that Afghanistan is a landlocked country, and that this has limited its ability to export. He talked of the project for the construction of a railroad from China, through Central Asia and Afghanistan, to Iran.

On February 16, the first train to travel from China to Iran successfully arrived. The train was constructed utilizing the most recent innovations in transportation technology, and completed the journey of 5,900 miles in just 14 days. A sea voyage between the two countries takes 30 days longer, at minimum.

China’s 13th Five-Year Plan includes connecting Afghanistan with the emerging Central Asian Rail System. Trains would travel from China’s city of Kashgar to the Afghan city of Herat, and then connect to Iran after crossing Kyrgyzstan and Tajikistan. Access to Iran’s various seaports would ensure that Afghanistan could begin exporting at a much higher rate.

Currently, China’s government-controlled banks are funding railroad projects in 30 different countries. In 2013, China exported $3.23 billion in railroad equipment.

Afghanistan is not a wealthy country. The CIA World Factbook describes it as arguably the most impoverished country in the world. It has no oil deposits. The once-vast timber resources of Afghanistan were nearly eradicated by the British Empire, and the reforestation efforts of the 1980s were abandoned when the People’s Democratic Party was overthrown. Though Afghanistan has almost nothing to offer the People’s Republic of China, the central banks are willingly investing billions into putting a railroad through this deeply impoverished country. Chinese banks are funding the project, even as growth in the Chinese economy is notably slowing.

Stability for Central Asia: Why Invest in Afghanistan?

How is it possible that projects for building new, modern railroads in impoverished Afghanistan can be financed, while financing is unavailable to replace a 106-year-old railway bridge in the richest country on earth? Why do Chinese banks invest in the most impoverished, drug-infested, and war-torn country in the world — while US banks are unwilling to invest in highly developed and industrialized Hackensack, New Jersey?

The answer can be found in simplistic phrases used by Mao Zedong, the founder of the People’s Republic. US banks operate as capitalist institutions, where, as Mao put it, “profits are in command.” Banks in the United States lend money in order to make a return on their investment. With the huge rate of public debt amid the shrinking US economy, lending money to replace a dangerous bridge in New Jersey — or to the federal government to beef up the Amtrak system, or to the District of Columbia in order to fix up the DC Metro — is not a smart business move. As the wages of US workers go down, and tax revenue shrinks, “debt crises” are plaguing the western world. During the Great Depression of the 1930s, the US government’s slogan was “give a man a job.” During the depression of the 21st Century, the rallying cry is “austerity.” Government workers are being laid off and public services like food stamps, libraries, and fire departments are being cut. It is clearly not a good time to lend money to the US government.

It’s not a good time to lend money to the Afghan government either. The country is arguably worse off than it has ever been before, but the major banks in China operate under a different principal. The government-owned banks in China operate with “politics in command,” to use Mao’s phraseology.

The decision to build and improve railroads in Afghanistan, as well as Indonesia, Thailand, Africa, Eastern Europe, and elsewhere is not a financial decision for China’s banks. It is a political one. The trains that China is constructing all over the world are part of the “One Belt, One Road” policy, and fit into the overall global vision of Chinese President Xi Jinping. Xi has become well-loved throughout the impoverished countries for his plan to build a “New Silk Road.”

Xi Jinping argues that it is in China’s interest to see people around the world lifted out of poverty. According to Xi, one key to eliminating poverty is the construction of infrastructure. The rhetoric of the Chinese Communist Party on the global stage presents a vision of peace, where countries do not go to war with one another, because they are economically bound together.

In the case of Central Asia, China has a real self-interest in stabilization. The drug-dealing terrorists and extremists of Afghanistan, unleashed and empowered by the US invasion, have recently found their way into China. The recent wave of mass stabbings conducted by extremist groups among China’s Islamic Uyghur minority have not arisen spontaneously. Money from Saudi Arabia and training from the western-backed insurgents fighting against the Syrian government has been used to fund anticommunist takfiris in China’s Islamic regions. Many Chinese people fear that the horrors unleashed in places like Paris and Brussels could eventually happen in Chinese cities if conditions in Afghanistan are not improved.

Stability in Afghanistan means jobs, economic opportunities, and a means of survival beyond heroin trafficking and extremism for the impoverished Afghan people. Working in the interests of Chinese society, not the profits of a few capitalists, Chinese banks are funding infrastructure projects in Central Asia. These banks are not obeying stockholders. They are obeying the Communist Party, which has 86 million members who are trained in Marxist-Leninist ideology, Mao Zedong Thought, and Deng Xiaoping Theory.

The foreign policy goals of the Chinese government, under the leadership of Xi Jinping — who in the US press is widely decried as a “hardliner” and compared to Joseph Stalin — has been to stabilize the world by providing economic opportunity to imperiled regions. If people are not starving and desperate, the world will be a much safer place, not just for China, but for all countries.

Wall Street Bankers: The New Opium Warriors

Who gains from instability? What forces could possibly view as beneficial, economically or otherwise, the rise of terrorist groups like ISIS? Unfortunately, the answer is global monopoly capitalism, headquartered on Wall Street and the London Stock Exchange.

The regimes targeted and deposed by the US “War on Terror” have all been sources of stability and economic independence. The Taliban was wiping out the drug trade, and planning to build oil pipelines. Saddam Hussein’s Iraq had an independent, state-run oil company that was exporting petroleum on the world markets, as did Gaddafi’s Libya. Prior to western efforts to foment civil war, Syria was one of the most stable countries in the Middle East, with religious diversity and a high-quality healthcare and educational system.

Though people in western countries continue to live in fear of terrorist attacks, and a crisis of mass migration is causing political turmoil in Europe, the leaders of western government continue to foment chaos in Syria. Each day, as US leaders work to overthrow the Syrian Arab Republic, ISIS and Al-Qaeda get stronger. Iran and Russia, two countries who have made gigantic efforts to fight against ISIS in Syria, are targeted by economic sanctions from the United States.

Economic development does not only mean alleviating poverty and reducing terrorism. It also means eliminating the monopoly of the west. If countries can remain impoverished and war-torn, Wall Street and London can remain at the center of the world economy, and everyone will be forced to purchase from them. Economic development around the world means western corporations will face new competitors.

In two infamous “Opium Wars,” the British Empire forced China to accept the domination of foreign corporations. The official reason for the war was objections to Chinese tariffs and protection of domestic businesses. The wars were known as the “Opium Wars” because they ensured that Britain could import narcotics, which were key in impoverishing China.

The first time the US military intervened in China was to put down the Boxer Rebellion. In 1899, Chinese nationalists called “Boxers” began to attack symbols of Christianity, which they saw as a foreign religion imposed on the country by western capitalism. They also confiscated opium pipes and lynched drug dealers. The United States Marine Corps was dispatched in order to ensure that the Boxer Nationalist Movement was not successful, and that China remained “the sick man of Asia” as it was widely known at the time.

However, China is no longer the “sick man of Asia.” In 1949, it had a revolution and the Communist Party came to power. China soon seized control of its own natural resources, and began to develop its industries with a planned economy. Prior to 1949, China had no steel industry. Today, more than 50% of the world’s steel is produced in China’s government-owned steel industry. The standard of living inside China has risen drastically in what the Communist Party describes as the “Great Revival” of China to its role as a global superpower.

The New Silk Road Vision and the “One Belt, One Road” policy applies the lessons China learned over the course of the 20th century. China’s billions of people have learned that the hope for reducing poverty, drug addiction and other societal ills is with central planning, infrastructure, and public control over the economy.

The United States at this time could serve as a case study in the tragic results of “profits in command.” Crime rises, civil liberties are stripped away, and police routinely kill innocent civilians as corporations make money from “prisons for profit.” The US military is all over the world functioning as part of a “military industrial complex” that stimulates Wall Street. Culture is in decline as Hollywood and television drop to vulgarly low levels. Reality TV shows and superhero action films, pornography and other guaranteed money-makers are everywhere as enlightened artistic expression is rare. Homelessness rises as millions of houses sit empty. Hunger rises amid agricultural surplus. The irrationality of a profit-run economy is on full display as the entire society spirals into a low-wage police state. The fact that media circus clown Donald Trump espouses racism and promotes violence doesn’t prevent him from being a serious contender in the presidential election.

With our transit systems in decay and heroin addiction rising, perhaps it is time for the United States to start learning from China’s alternative vision.

Originally published at New Eastern Outlook

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Caleb Maupin
Screen Shot 2016-02-04 at 9.46.00 AMIs an American journalist and political analyst. Tasnim News Agency described him as "a native of Ohio who has campaigned against war and the U.S. financial system." His political activism began while attending Baldwin-Wallace College in Ohio. In 2010, he video recorded a confrontation between Collinwood High School students who walked out to protest teacher layoffs and the police. His video footage resulted in one of the students being acquitted in juvenile court. He was a figure within the Occupy Wall Street protests in New York City. Maupin writes on American foreign policy and other social issues. Maupin is featured as a Distinguished Collaborator with The Greanville Post. 

READ MORE ABOUT CALEB MAUPIN HERE.

 


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Europe’s Left: Triumph or Trap?


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The promise of Podemos in Spain has been as flase as Greece's Syriza

The promise of Podemos in Spain has been as illusory as Greece’s Syriza

Over the past year, left and center-left parties have

taken control of two European countries and hold the balance of power in a third. Elections in Greece, Portugal and Spain saw rightwing parties take a beating and tens of millions of voters reject the economic austerity policies of the European Union (EU).

But what can these left parties accomplish? Can they really roll back regressive taxes and restore funding for education, health and social services? Can they bypass austerity programs to jump start economies weighted down by staggering jobless numbers? Or are they trapped in a game with loaded dice and marked cards?

And, for that matter, who is the left? Socialist and social democratic parties in France and Germany have not lifted a finger to support left led anti-austerity campaigns in Greece, Spain, Ireland, or Portugal, and many of them helped institute—or went along with—neoliberal policies they now say they oppose. Established socialist parties all over Europe tend to campaign from the left, but govern from the center.

Last year’s electoral earthquakes were triggered not by the traditional socialist parties—those parties did poorly in Greece, Spain and Portugal—but by activist left parties, like Syriza in Greece, Podemos in Spain, and the Left Bloc in Portugal.

With the exception of Ireland’s Sinn Fein, all of these parties were either birthed by, or became prominent during, the financial meltdown of 2008 that plunged Europe into economic crisis. Podemos came directly out of the massive plaza demonstrations by the “Indignados” [the “Indignant Ones”] in Spain’s major cities in 2011.

Syriza and the Left Bloc predated the 2011 uprising, but they were politically marginal until the EU instituted a draconian austerity program that generated massive unemployment, homelessness, poverty, and economic inequality.

Resistance to the austerity policies of the “Troika”—the European Commission, the European Central bank, and the International Monetary Fund—vaulted these left parties from the periphery to the center. Syriza became the largest party in Greece and assumed power in 2015. Podemos was the only left party that gained votes in the recent Spanish election, and it holds the balance of power in the formation of a new government. And the Left Bloc, along with the Communist/Green Alliance, has formed a coalition government with Portugal’s Socialist Workers Party.

But with success has come headaches.

Syriza won the Greek elections on a platform of resisting the Troika’s austerity policies, only to have to swallow more of them. In Portugal the Left Bloc and Communist/Green Alliance are unhappy with the Socialist Party’s commitment to re-pay Portugal’s quite unpayable debt. Podemos proposed a united front with the Socialist Party, only to find there are some in that organization who would rather bed down with Spain’s rightwing Popular Party than break bread with Podemos.

Lessons learned?

It is still too early to draw any firm conclusions about what the 2015 earthquake accomplished—and Ireland’s election has yet to happen—but there are some obvious lessons.

First, austerity is unpopular. As Italy’s prime minister, Matteo Renzi, put it after the Spanish election, “Governments which apply rigid austerity measures are destined to lose their majorities.”

Second, if you are a small economy taking the power of capital head on is likely to get you trampled. The Troika did not just force Syriza to institute more austerity, it made it more onerous, a not very subtle message to voters in Portugal and Spain. But people in both countries didn’t buy it, in large part because after four years of misery their economies are still not back to where they were in 2008.

The Troika can crush Greece—Portugal as well—but Spain is another matter. It is the 14th largest economy in the world and the fifth largest in the EU. And now Italy—the fourth largest economy in the EU—is growing increasingly restive with the tight budget policies of the EU that have kept the jobless rate high.

But can these anti-austerity coalitions force the Troika to back off?

A major part of the problem is the EU itself, and in particular, the eurozone, the 19 countries that use the euro as a common currency. The euro is controlled by the European Central Bank, which, in practice, means Germany. In an economic crisis most countries manipulate their currencies—the U.S., Britain, and China come to mind—as part of a strategy to pay down debt and re-start their economies. The members of the eurozone do not have that power.

Germany pursues policies that favor its industrial, export-driven economy, but that model is nothing like the economies of Greece, Portugal, Spain, or even Italy. Nor are any of those countries likely to reproduce the German model, because they do not have the resources (or history) to do so.

Complicating matters are political divisions among the Troika’s left opponents. For instance, Syriza is under attack from its left flank for not exiting the eurozone. Former Syriza chief economic advisor Jannis Milios charges that Syriza has abandoned its activist roots and become simply a political party more interested in power than principles. There are similar tensions in Spain and Portugal.

But the choices of what to do are not obvious,

Withdrawing from the eurozone can be perilous. In Greece’s case, the European Central Bank threatened to shut off the country’s money supply, making it almost impossible for Athens to pay for food, medical and energy imports, or finance its own exports. In short, economic collapse and possible social chaos.

But following the policies of the Troika sentences countries to permanent debt, rising poverty rates, and a growing wealth gap. Portugal has one of the highest inequality rates in Europe, and Spain’s national unemployment rate is 21 percent, and double that among the young. Greece’s figures are far higher.

The left coalitions are far from powerless, however. Portugal’s coalition government just introduced a budget that will lift the minimum wage, reverse public sector wage cuts, rollback many tax increases, halt privatization of education and transport, and put more money into schools and medical care. Which doesn’t mean everything is smooth sailing. The coalition has already fallen out over a bank bailout, and it disagrees on the debt, but so far the parties are still working together. Jeremy Corbyn, the newly elected left leader of the British Labour Party, hails the Portugal alliance as the beginning of an “anti-austerity coalition” across the continent.

There are also interesting developments going on in Spain that address the tensions between street activism and political parties.Emily Achtenberg, a long-time housing expert from Boston and a reporter/analyst for NACLA, has studied Barcelona’s “Platform of People Affected by Mortgages” (PAH). PAH came out of Spain’s catastrophic housing crisis brought on by the financial meltdown of 2008. Some 650,000 homes are in foreclosure, and 400,000 families have been evicted.

With the help of Podemos, progressive activists won control of the big cities of Madrid, Barcelona, Cadiz, and Zaragoza. Ada Colau, the mayor of Barcelona, is a founder of PAH

In Spain, homeowners are responsible for debts even after declaring bankruptcy, debts that can block them from renting an apartment, buying a home or purchasing a car.

At the same time, according to the 2013 census, 34 million homes and apartments—14 percent of the country’s housing stock—are vacant, most owned by banks. And since the city has become one of Europe’s tourist magnets, “tens of thousands of once-affordable apartments are marketed to tourists through on-line platforms like Airbnb,” says Achtenberg, exacerbating the situation. But PAH and its allies on the city council have slowed down the evictions, cracked down on unlicensed Airbnb owners, and leaned on the banks to free vacant homes and apartments.

PAH now has some 200 chapters all over the country and is planning to press the national parliament to end the “debt for life” law. While allied with Podemos, PAH has maintained its political independence, working both sides of the street: sit-ins and protests, and running for office.

“A perennial question,” says Achtenberg, “is whether the impetus for progressive change comes from inside the institution, or from the streets. In Barcelona today, it seems that both strategies are needed, and are working.” As Colau says, for progressive movements “both are indispensible. For real democracy to exist, there should always be an organized citizenry keeping an eye on government—no matter who is in charge.”

Putting people in apartments and raising minimum wages does not overthrow capitalism, but many activists argue that such victories are essential for convincing people that change is possible and that the Troika is not all-powerful. They also play to the left’s strong suit: building a humanistic society.

Finding that fine line between change and co-optation is not easy, and one formula does not fit all circumstances. Spain has more breathing room than Portugal and Greece simply because it is bigger. The Portuguese may find their path a bit easier simply because they have allies in the eurozone. As Greek Prime Minister Alexis Tsipras says, “I think it is not so easy to change Europe when you are alone.”

In the end the path may be like that old peace song: “If two and two and 50 make a million, we’ll see that day come ‘round.”


 

Conn Hallinan can be read at dispatchesfromtheedgeblog.wordpress.com 


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The Global Plutocrats Meet in Davos: The Disease Pretending to Cure Itself

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[su_shadow][su_panel color=”#172501″ radius=”1″]BELOW WE PRESENT TWO EXAMINATIONS OF THIS OBNOXIOUS EVENT. THE GATHERING OF VULTURES, COURTIERS AND SYCOPHANTS IN A POSH SPOT SUPPOSEDLY TO DEBATE “HOW TO FACE THE WORLD’s MOUNTING CRISES”[/su_panel][/su_shadow]

REPORTS BLOOMBERG: IMF Managing Director Christine Lagarde plans to meet with Greek Prime Minister Alexis Tsipras next week to discuss the nation’s bailout package, according to a person familiar with the matter.

REPORTS BLOOMBERG: IMF Managing Director Christine Lagarde—a glorified servant of the master class— plans to meet with Greek Prime Minister Alexis Tsipras to discuss the nation’s bailout package, according to a person familiar with the matter.  


 

TAKE ONE: by Stephen Lendman
Unprecedented Global Wealth Disparity 

Ahead of wealthy and powerful financial and political elites meeting at the World Economic Forum in Davos, Switzerland, Oxfam released a report, titled “An Economy for the 1%,” highlighting global inequality “reaching new extremes.”

“The richest 1% now have more wealth than the rest of the world combined. Power and privilege is being used to skew the economic system to increase the gap between the richest and the rest,” it said. 

“A global network of tax havens further enables the richest individuals to hide $7.6 trillion. The fight against poverty will not be won until the inequality crisis is tackled.”

In 2015, 62 billionaires had more wealth than half the world’s population – compared to 388 in 2010.

The wealth of 62 richest people increased 44% since 2010 to $1.76 trillion. In contrast, resources of humanity’s bottom half fell over $1 trillion, a 41% decline.

Half of all newly created new millennium wealth went to the top 1% – at the expense of the world’s least advantaged.

“The average annual income of the poorest 10% of people in the world has risen by less than $3 each year in almost a quarter of a century. Their daily income has risen by less than a single cent every year,” said Oxfam.

Financial inequality is unprecedented – “sucked upward at an alarming rate,” trillions of dollars hidden in tax havens.

Former US Supreme Court Justice Louis Brandeis once said “(w)e can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we cannot have both.”

Runaway global inequality is greater than ever, the gap between extreme wealth and poverty widening annually.

Oxfam chief executive Mark Goldring called it “unacceptable that the poorest half of the world population owns no more than a small group of the global super-rich – so few, you could fit them all on a single coach.”

“World leaders’ concern about the escalating inequality crisis has so far not translated into concrete action to ensure that those at the bottom get their fair share of economic growth.” 

“In a world where one in nine people go to bed hungry every night, we cannot afford to carry on giving the richest an ever bigger slice of the cake.”

“We need to end the era of tax havens which has allowed rich individuals and multinational companies to avoid their responsibilities to society by hiding ever increasing amounts of money offshore.” 

“Tackling the veil of secrecy surrounding the UK’s network of tax havens would be a big step towards ending extreme inequality.” 

“Three years after he made his promise to make tax dodgers ‘wake up and smell the coffee’, it is time for David Cameron to deliver.”

Oxfam predicted that by 2016 the richest 1 percent of the world’s population would control more wealth than the bottom 99 percent. But, to the charity’s own surprise, this transition occurred a year earlier than it had expected.

90% of World Economic Forum corporate partners have enormous wealth hidden in tax havens – the amount quadrupled from 2000 to 2014, showing governments complicit in tax avoidance, making ordinary people bear an inordinate burden.

Cameron broke his earlier promise to crack down on corporate tax avoidance, supporting what he claims to oppose.

A key trend exacerbating inequality is “the falling share of national income going to workers in almost all developed and most developing countries,” said Oxfam – along with the widening disparity between rich and poor.


Women are especially harmed, comprising the majority of low-paid workers globally.

Goldring stressed it’s “no longer (acceptable) for the richest to pretend their wealth benefits” others when it clearly comes at the expense of the world’s least advantaged.


Stephen Lendman lives in Chicago. He can be reached at lendmanstephen@sbcglobal.net.  His new book as editor and contributor is titled “Flashpoint in Ukraine: US Drive for Hegemony Risks WW III.”

http://www.claritypress.com/LendmanIII.html  Visit his blog site at sjlendman.blogspot.com


TAKE TWO: By Andre Damon (WSWS.ORG)
The ruling class meets at Davos

On Wednesday, some 2,500 corporate executives, celebrities and government officials will converge at the World Economic Forum in Davos, Switzerland to discuss “improving the state of the world” between skiing the alpine slopes and $1,000-a-plate gala dinners.

The heads of Goldman Sachs, JPMorgan Chase and virtually every other major bank and hedge fund will rub shoulders with the government officials nominally in charge of regulating them, including US Treasury Secretary Jacob Lew, Commerce Secretary Penny Pritzker and European Central Bank President Mario Draghi.

Other guests will include US Vice President Joseph Biden and Secretary of State John Kerry, Bill Gates, the world’s richest man, as well as the chief executives of GM, Google, Alibaba, Microsoft and the Chief Operating Officer of Facebook. Greek Prime Minister Alexis Tsipras, having last year imposed sweeping austerity measures on the Greek population, will no doubt be warmly received.

The pathetic Tsipras will be rubbing elbows with his masters.

The pathetic Tsipras will be rubbing elbows with his masters.

While the official topic of the discussion will be “Mastering the Fourth Industrial Revolution,” there can be little doubt that the topics of discussion will be more tangible and immediate. A conference document outlining the “global risks of highest concern” begins with the following items: “Unemployment or underemployment, Energy price shock, Fiscal crises, Failure of national governance, profound social instability, Failure of financial mechanism or institution, Asset bubble” and “interstate conflict.”

These fears are thoroughly justified. This year’s meeting takes place against the backdrop of the threat of a global stock sell-off, a collapse in commodity prices, deepening divisions within the European Union, as well as growing tensions in the Middle East, Eastern Europe and the Pacific.

The gathering of global billionaires at Davos embodies the very social crisis its participants will be discussing. The summit is scheduled to begin just two days after the publication on Monday of a report by the global charity Oxfam showing that social inequality soared last year. Oxfam wrote, “In 2015, just 62 individuals had the same wealth as 3.6 billion people – the bottom half of humanity. This figure is down from 388 individuals as recently as 2010.”

The wealth of these 62 individuals, most of whom will likely fly to Switzerland this week, has increased by 44 percent since 2010, while that of the bottom half of the world’s population fell by 41 percent over the same period. The report noted: “In 2015 the world’s wealthiest 80 billionaires had collective wealth of more than $2 trillion. Meanwhile, the wealth of the bottom half of the planet has fallen by approximately $1 trillion in the past five years.”

Since the 2008 crisis, every economic metric, from output to productive investment and the growth of wages, has consistently fallen behind the predictions of economists. But the global economy has proven exceedingly capable of doing one thing: creating and enriching billionaires.

Last year, Oxfam predicted that by 2016 the richest 1 percent of the world’s population would control more wealth than the bottom 99 percent. But, to the charity’s own surprise, this transition occurred a year earlier than it had expected.

Behind closed doors, in exclusive private galas and dinners, the billionaires and multi-millionaires no doubt take a degree of satisfaction in their personal enrichment. But there should be no doubt that, at least in the more serious circles, anyone who draws too much carefree optimism from the size of his own stock portfolio at Davos will quickly be told that he is a fool. This year’s World Economic Forum takes place under a shadow of crisis unlike any since 2009, and the masters of the world have much to worry about.

The Chinese stock market, which caused that country to lead the world in the creation of paper millionaires in 2014, is once again collapsing, despite vast exertions on the part of China’s government, and has entered a bear market. The US stock market, after posting its worst start-of-year performance in history, has entered a correction, with many analysts predicting it too will follow China into a bear market, if not an outright panic on the scale of 2008-2009.

But behind the most recent sell-off lies a deeper set of concerns. The global economy is slowing, causing a destabilization in currency regimes, a sell-off in commodities and a chaotic unwinding of the debt of developing countries. Meanwhile, a whole series of longer-term underlying trends has caused analysts to forecast a dramatic fall in global profitability.

Equally troubling to the financial elite are indications that the working class, heretofore either under the thumb of the pro-business trade unions in the United States and Europe, or atomized and divided in developing countries, is not only increasingly angry and discontented, but inclined to take workplace actions.

Strikes in China spiked last year, and concessions contracts for the big three automakers were barely pushed through by the United Auto Workers in the face of mounting opposition. In Detroit, whose bankruptcy proceeding was among the greatest coups for the global ruling class in recent years, teachers have launched a sick-out, while protests against the poisoning of working-class households in Flint, Michigan has emerged as a major national issue in the United States.

The global financial elite managed to weather the 2008 crash with their fortunes not only intact, but vastly expanded. For more than seven years, they have managed to impose sweeping austerity measures on the world’s population, from Greece to Detroit, and inflict dictatorship on the masses of the Middle East. At the same time, they vastly expanded their own wealth through a record-setting binge of mergers and acquisitions and share buy-backs, financed by free cash from global central banks, and premised on mass layoffs, wage cuts and the destruction of the productive forces.

Now, the financial oligarchy looks on with grave concern as the edifice of parasitism propping up their wealth teeters and sways. It is the ruling class’s terror of any opposition by the working class that is behind the growing turn to dictatorship all over the world, including in France, which has been placed under a state of emergency, with the right of assembly and freedom of speech curtailed; in Germany, where sweeping attacks on democratic rights are being implemented amid demands for a “strong state;” and in the United States, where the government is demanding that private companies give it access to encrypted communications.

In addition to dictatorship, the billionaires in every country see a way out of the crisis in war. If profits are inadequate at home, there is the recourse to military adventure to secure raw materials, markets and labor at the expense of their global competitors. To that end, even the nations that forswore militarism in the wake of the last world war, Germany and Japan, are rearming and sending forces abroad, seeking to vie with the vast American military apparatus, bigger than the eight largest armies in the world.

The aim of the billionaires and politicians gathered at Davos will be the formulation of a class response to the deepening crisis gripping world capitalism, that of making the working class bear the weight of the crisis, just like after 2008.

This reality makes it all the more imperative for the working class to formulate its own independent strategic response to the global crisis; that is, the building of a socialist political party of the working class aimed at reorganizing society on a socialist basis.


Andre Damon is a senior editorial writer with wsws.org.


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The Chart That Explains Everything

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Blowing Bubbles

=By= Mike Whitney

Why is the economy barely growing after seven years of zero rates and easy money? Why are wages and incomes sagging when stock and bond prices have gone through the roof? Why are stocks experiencing such extreme volatility when the Fed increased rates by a mere quarter of a percent?

It’s the policy, stupid. And here’s the chart that explains exactly what the policy is.

monetary relations chart

 

What the chart shows is that the vast increase in the monetary base didn’t impact lending or trigger the credit expansion the Fed had predicted. In other words, the Fed’s madcap pump-priming experiment (aka– QE) failed to stimulate growth or put the economy back on the path to recovery. For all practical purposes, the policy was a flop.

QE did, however, touch off an unprecedented 6-year bull market rally that pushed stocks into the stratosphere while the real economy continued to languish in a long-term slump. And the numbers are pretty impressive too. For example, the Dow Jones Industrial Average, which bottomed at 6,507 on March 9, 2009, soared to an eye-popping 18,312 points by May 19, 2015, an 11,805 point-surge in just five years. And the S&P did even better. From its March 9, 2009 bottom of 676 points, the index skyrocketed to a record-high 2,130 points on May 21, 2015, tripling its value at the fastest pace in history.

What the chart shows is that the Fed knew from 2010-on that stuffing the banks with excess reserves was neither lowering unemployment or revving up the economy. The liquidity was merely driving stocks higher.

It’s worth noting, that the Fed knows that credit does not flow into the economy without a transmission mechanism, that is, unless creditworthy borrowers are willing to to take out loans. Absent additional lending, the liquidity remains stuck in the financial system where it eventually creates asset bubbles. And that’s exactly what’s happened. Instead of trickling down into the economy where it would do some good, the Fed’s monetary stimulus has cleared the way for another catastrophic meltdown.

The chart suggests that the Fed’s primary objective was to reflate stock and bond prices to help the banks grow their way out of insolvency and avoid government takeover. Former Treasury Secretary Timothy Geithner alluded to this in an interview with CNBC in 2009 when he said: “We have a financial system that is run by private shareholders, managed by private institutions, and we’re going to do our best to preserve that system.” Unfortunately, the banking system was insolvent at that point in time, a fact that was confirmed in sworn testimony before the Financial Crisis Inquiry Commission by Fed chairman Ben Bernanke. Here’s what he said:

[spoiler]“As a scholar of the Great Depression, I honestly believe that September and October of 2008 was the worst financial crisis in global history, including the Great Depression. If you look at the firms that came under pressure in that period. . . only one . . . was not at serious risk of failure. So out of maybe the 13 of the most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two.”[/spoiler]

Think about that for a minute. Not only was the US banking system hopelessly underwater, but also the world’s most lucrative and powerful industry was about to be removed from private hands and “nationalized”. Shareholders would be wiped out, bondholders would take severe haircuts, management would be replaced, and credit production would be returned to the representatives of the American people, US government officials.

Do you think the prospect of nationalization might have scared the hell out of Wall Street? Do you think the banksters might have concocted some crazy plan along with Bernanke and Treasury Secretary Henry Paulson to precipitate a crisis by euthanizing Lehman Brothers so they could extort $700 billion from Congress (TARP) before launching round after round of money printing under the deliberately-opaque moniker, Quantitative Easing?

Of course, they would. These are the same guys who had already stolen trillions of dollars from credulous investors in a fraudulent mortgage laundering scam that crashed the economy and brought the financial system to the brink of ruin. Does anyone seriously think that they’d wince at the prospect of dinging the public a second time by shifting their toxic assets onto the Fed’s balance sheet or by accessing free liquidity to fuel their illicit derivatives trades or their other pernicious high-risk activities?

Keep in mind, the Fed never could have carried off this massive looting operation without the help of both the Congress and the president. This simple fact seems to escape even the most vehement critic of the Fed, that is, that the Fed needed policymakers to strangle the economy while it implemented its plan or it would have had to abandon its reflation strategy.

Why??

Well, because if the economy was allowed to rebound, then higher employment would push up wages and raw material costs which in turn would boost inflation. Higher inflation would force the Fed to raise short-term interest rates which would put the kibosh on the cheap money Wall Street needed to buy-back its own shares or engage in other risky speculation. So the real economy had to be sacrificed for Wall Street. Hence, “austerity”.

The fact that Obama’s economics team, led by Lawrence Summers, was trying to lift the economy out of recession without creating conditions for a strong recovery was evident from the very beginning. We know now that chief White House economist Christy Romer wanted a much bigger fiscal stimulus package than the $800 bil that was eventually approved. Here’s the story from the New Republic:

“Romer calculated that it would take an eye-popping $1.7-to-$1.8 trillion to fill the entire hole in the economy—the “output gap,” in economist-speak. “An ambitious goal would be to eliminate the output gap by 2011–Q1 [the first quarter of 2011], returning the economy to full employment by that date,” she wrote. “To achieve that magnitude of effective stimulus using a feasible combination of spending, taxes and transfers to states and localities would require package costing about $1.8 trillion over two years.”
(EXCLUSIVE: The Memo that Larry Summers Didn’t Want Obama to See, New Republic)

Regrettably, Romer’s recommendations “never made it into the memo the president saw.” Obama was not given the option of providing the stimulus the economy needed for a strong recovery because Summers didn’t want a strong recovery. Summers wanted the economy to sputter-along at an abysmal 2 percent GDP like it is today. That would keep a lid on inflation and allow the Fed to pump as much money into the financial markets as it pleased.

Obama has played a big role in this austerity fiasco too. For example, did you know that more government workers lost their jobs under Obama than any other president in history?

It’s true. Since Obama took office in 2008, nearly 500,000 public sector workers have gotten their pink slips. According to economist Joseph Stiglitz, if the economy had experienced a normal expansion, “there would have two million more.”

Of course, Obama never made any attempt to rehire these workers because rehiring them would have put more money in the pockets of people who would spend it which would boost GDP. Typically, economists think that’s a good thing. It’s only a bad thing when the Fed is working at cross-purposes and trying to keep a damper on inflation so it can bail out its crooked Wall Street buddies.

For more on Obama’s belt-tightening crusade, just look at his efforts to cut the budget deficits. Here’s a clip from MSNBC:

“Strong growth in individual tax collection drove the U.S. budget deficit to a fresh Obama-era low in fiscal 2015, the Treasury Department said Thursday…. The deficit is the smallest of Barack Obama’s presidency and the lowest since 2007 in both dollar terms and as a percentage of gross domestic product. (During) the Obama era, the deficit has shrunk by $1 trillion. That’s ‘trillion,’ with a ‘t.’” (MSNBC)

Why would Obama want to cut government spending when the economy was already in distress, capital investment was flagging, and households were still trying to pay down their debts?

Basic economic theory suggests that when private sector can’t spend, then the government must spend to offset deflationary pressures and prevent a major slump. Cutting the deficits removes vital fiscal stimulus from the economy. It’s like applying leeches to a patient with flu symptoms thinking that the blood-loss will hasten his recovery. It’s madness, and yet this is what Obama and the Congress have been doing for the last six years. They’ve kept their hands wrapped firmly around the economy’s neck trying to make sure the patient stays in a permanent state of narcosis.

That’s the goal, to suffocate the economy in order to reward the thieving vipers on Wall Street. And Obama and the Congress are every bit as guilty as the Fed.


Mike Whitney is a freelance writer living in Washington state.

Source
Article: OpEdNews
Lead Graphic:  Nomura research based on US Department of Commerce data. Chart source.

 

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Fed Official Confesses Fed Rigged Stock Market — Crash Certain

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The Cat’s Out of the Bag

=By= David Haggith

Richard Fischer

The Federal Reserve “front ran” the market.

IIn a dynamite interview, Richard Fisher, former president and CEO of the Federal Reserve Bank of Dallas, gave what may be the biggest confession you’ll ever see and hear from a Federal Reserve insider: the Federal Reserve knowingly “front ran” the US stock market recovery (i.e., manipulated the market) and created a huge asset bubble. Fisher expresses certainty that the “juiced” stock market will come down and is coming down now that the Fed has taken its foot off the accelerator … and that it has a long way yet to go.

While that is no news to readers here whose eyes are wide open, a “market put” has been denied by the Fed and by many market advisors. That the market was an overinflated bubble created by the Fed has been denied, too; but Fisher clearly and gleefully admits the Fed created a bubble that will have to deflate now that the Federal Reserve’s stimulus is off.

As one of the members of the Federal Reserve’s FOMC (the Federal Open Market Committee, which sets US monetary policy), Richard Fisher participated in and voted on all of the Fed’s policies of zero interest and quantitative easing, so he has inside knowledge of all the discussions behind the scenes at the Fed.

Here are the significant quotes from Richard Fisher on CNBC’s video:

What the Fed did — and I was part of that group — is we front-loaded a tremendous market rally, starting in 2009.

It’s sort of what I call the “reverse Whimpy factor” — give me two hamburgers today for one tomorrow.

I’m not surprised that almost every index you can look at … was down significantly. [Referring to the results in the stock market after the Fed raised rates in December.]

Basically, we had a tremendous rally, and I think there’s a great digestive period that is likely to take place now, and it may continue.

We front-loaded at the Federal Reserve an enormous rally in order to accomplish a wealth effect.

I wouldn’t blame [what is happening in the market’s now] on China. We’re always looking for excuses.

I wasn’t surprised at last year. And I wouldn’t be surprised at a rather fallow performance this year as well.

A lot of people are building cash positions…. Those [investors] that are taking a longer term view are being extremely cautious here, are raising their cash levels, are nervous about the valuations that are in the market.

The values are very richly priced here, so I could see significant downside.

 

Asked if saw a big unwind from the Fed’s 6.5-year policy and what it would look like on the way down, Fisher responded,

I was warning my colleagues, “Don’t go wobbly if we have a 10-20% correction at some point…. Everybody you talk to … has been warning that these markets are heavily priced.

 

Elsewhere Fisher said:

The Federal Reserve is a giant weapon that has no ammunition left.

You have to be careful here and frank about what drove the markets…. It was, the Fed, the Fed, the Fed, the European Central Bank, the Japanese Central bank … all quantitatively driven by central bank activity. That’s not the way markets should be working…. They were juiced up by central banks, including the Federal Reserve…. So, I think you have to acknowledge reality.

It’s about time for breaking the economic denial. Acknowledging reality is what many in the mainstream media, at the Fed, and among economists and stock analysts refused to do.

Now that the US stock market appears to be crashing, is Richard Fisher’s confession to cover his own hind end, by saying, “I warned the guys about this, and I voted against QE3 because I knew it went too far?” Is he just the first rat to flee the sinking ship, or is he just the most honest of Fed officials who is no longer on the board so feels freer to talk?

Your thoughts? (And please pass the confession along so that it gets lots of play time because you don’t get a confession like this about the inner arguments of the Fed very often. I imagine Yellen is doin’ a little yellin’ right now.)

 


David Haggith is a freelance writer who has focused on the recession of 2008 and its ongoing ramifications in the economy. He writes The Great Recession Blog.

Source
Article: The Great Recession Blog
Lead Graphic: Federal Reserve Chair from the Fed Reserve Bank of Dallas.


 

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