Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
by Patrice Ayme
Thu Apr 2nd, 2009 at 04:10:34 AM EST
[Note: Unfortunately this diary was deleted accidentally before being reinstated, losing at least 10 comments before I could read them; I apologize; PA].
WHEN PLUTOCRACY KILLS.
April 2, 2009 by Patrice Ayme
Abstract: President Obama has been getting the worst economic advice, from the architects of the disaster. Instead what he should be told is that the corsair capitalism that enriched the USA so much in the last century has no future. Global civilization will not tolerate it anymore. G20 leaders should inform Mr. Obama of this.
by Patrice Ayme
Tue Mar 31st, 2009 at 09:02:59 PM EST
Intro: There will be a bad society and a bad economy, as long as Obama is too friendly to the self described "best and brightest", the richest, most obscene and most lying, "three second away". The incapacity to see this, and of being outraged by it, is directly related to economic misperceptions, such as believing that the USA's politics towards its giant banks is different from Japan's erroneous one.
by Patrice Ayme
Wed Mar 25th, 2009 at 01:39:38 AM EST
March 25, 2009 by Patrice Ayme
ONLY IN THE USA: TREASURY SECRETARY SAYS THAT IT IS NOT ENOUGH TO GIVE MONEY TO THE RICH, IT SHOULD BE DONE RESPECTFULLY.
Abstract: Here is a bunch of entangled remarks and suggestions on the proposed Geithner plan. Why it has to be, why it is an outrageous give away to the plutocrats, why it will fail. And even why Obama is ready for its failure, and may even want it (if Obama is not Machiavellian, no one is!). I handle related issues, like Obama's dismal subtracting and dividing skills (what about taking some private math lessons?). On a positive note, I propose my own mitigation to the crisis. It is international in character, and can be implemented right away (G20). I will start with this, so that I would not be viewed simply as the disparager I am.
by Patrice Ayme
Wed Mar 18th, 2009 at 01:50:09 AM EST
DESPERATE AMERICAN PLUTOCRACY PROPOSES TO DISSOLVE EUROPE.
Abstract: The American plutocracy has had American public opinion wrapped around its little finger. This deal with the Devil has been going on for nearly a century. If I pointed at the most devastating examples of these abyssal depths, most American readers would consider I have lost all respectability, and would stop reading. (Examples are on Tyranosopher.com.)
The latest US propaganda has been aimed at preserving the bread and butter of the US plutocracy, a worldwide financial system greatly resting on lies, tax heavens and other hidden exploitation schemes. Although the American People has been compliant so far, the Europeans have had enough. The European Union has a social charter. The EU is not a plutocracy, but a democracy, by law. So the EU wants strong regulations for finance. The plutocracy of the USA knows this, and has started an intense propaganda campaign to prevent the EU to crack down. A smear campaign against the core of Europe is part of it. Top editorialists are apparently being recruited to howl an anti-European message.
by Patrice Ayme
Tue Mar 10th, 2009 at 07:29:11 PM EST
STIMULATE MORE OR PERISH SOON
March 10, 2009 by Patrice Ayme
OFFER WORLDWIDE REGULATION IN EXCHANGE FOR WORLDWIDE STIMULUS AT THE G20 TO AVOID CRUISING TO OBLIVION.
Abstract: The Obama administration shows every evidence to not have understood how catastrophic the situation is. It keeps on having a void for a bank policy. The exponential function, the most important function in mathematics, now masquerades as the unemployment number, and it's nothing that a lawyer can talk around. The existing stimulus, too little, too late, is impotent in face of this tsunami. On current trends, the worst numbers reached during the Great Depression will be seen again by September 2009, in seven months. After that, it's bad science fiction. A real, pure jobs stimulus package of a trillion dollars on top of the existing one is needed right away. A deal has to be made with the rest of the G20: worldwide financial regulations in exchange for stimulus and derivative forgiveness. I explain and suggest.
But, with several of the architects of the disaster providing leadership and advice on the American side, it is hard to be optimistic.
This is a complement to Paul Krugman's March 09, 2009, editorial in the New York Times, "Behind The Curve" (with which I agree wholeheartedly). My original (more compact) comment kindly published by the New York Times is on]
The fierce recession of 1982 has often been compared to the present slump. Up to a month ago most economists would evoke 1982 only to declare that 2009 was not as bad. That comparison was unhinged to start with. The recession of 1982 was the consequence of extremely high interest rates deliberately inflicted by Fed Chief Paul Volcker to break the back of inflation. The short term interest rates were brought above 23%. The recession of 1982 was an act of will. Volcker's will.
This recession is different. It is not an act of will by one man. It is structural, the result of a stupid, erroneous and arrogant philosophy of civilization, long sustained by the wealthy manipulators who profited from it. This recession is a civilizational failure. Thus, the causes of the present recession are much deeper than those of the Great Depression of the 1930s.
Indeed, the Great Depression of the 1930s was just a big bust after a big boom. The big boom was also an act of will, a misguided attempt to support the British (!) economy by friends in the US government, who also liked to see their class make a bundle.
The bust of 1929 got politically and financially mismanaged, and turned into a catastrophe as the US Senate tried to get out of it with a trade war onto the world. The world retaliated, and the USA, at the time the world's largest exporter, went down hard. Now the population of the USA is more than twice what it was in the 1930s, but the world's greatest exporter is Germany (this hints to the structural problem).
Thus the present recession is much more serious. It follows from decades of misallocations of economic efforts. It follows from Nixon making health into profit, and Reagan's voodoo economics. It follows from the decision by Clinton-Rubin-Summers-Geithner-Greenspan and republican cohorts to found the economy on hedge funds and private equity, leveraged out to the maximum by gigantic banking monopolies. To make all of this possible, that happy crowd repealed the Banking Act of 1933 (the so called Glass-Steagall Act). This allowed unregulated Credit Default Swaps and Structured Investment Vehicles, and allowed to take out various rules on short sales, etc. Summers is a fierce defender of that approach to the universe, and saved the Credit Default Swaps from regulation by the Commodity and Futures Trading board in 1998.
That dismantlement of the New Deal and anti-depressionary measures created enormous social and earning imbalances that made society dysfunctional. The immensely powerful plutocrats were free to escape legislation by sending all sorts of jobs overseas. Concurrently, and even more dangerously, the USA government developed a total disdain for an energy efficient economy by choosing to do the exact opposite of Europe. Instead of energy efficiency, the military budget was cranked up and oil rich nations invaded or threatened to be so. The median salary has been going down for 11 years, since Summers was in power in 1998, which means that this depression has seen already 11 summers.
By unit of GDP, the USA emits more than three times as much CO2 than France: as Rubin and Summers and Geithner were building giant monopolistic banks full of themselves and their friends, the real infrastructure of the USA was left to die. Meanwhile the countries of the EU forced energy prices way high inside Europe to force their economies to become ever more energy efficient. When the world economic boom brought energy prices too high, weakened by years of useless, Orwellian war, the completely inefficient USA broke down spectacularly. It turned out that the financial system was corrupt to the core.
Obama is facing an utter catastrophe. But, he keeps on sending taxpayer money to the flaming wrecks of the abominable bank holding companies and their hidden counterparts. In a New York Times interview on March 6, he informs us that he uses television to watch basketball. I guess it's more lively than the utter destruction out there.
Then Obama goes to see Summers, who orchestrated the Credit Default Swaps in 1998. Summers has got to be happy: everyday that goes by, more taxpayer money is sent to the counterparts of the few giant institutions who lent all the money to the hedge funds, private equity, etc. So the wealthy people Summers love are getting relatively richer everyday (while, and because most of the People become poorer). Tomorrow the world will be theirs even more than it was yesterday: the dream goes on.
These are not ranting charges; Obama did not reinstate various short sale rules that had been put in to stop the Great Depression of the 1930s. Thus his friends in the hedge funds make a killing destroying the stock market investments that constitute most of the retirements dozen of millions of US citizens have. The same friendly hedge fund managers enjoy their maximum 15% tax rate. Indeed, as Obama insists, he is "not socialist". is there an adjective for "hedge-fundist"?
Obama is facing catastrophe, but he does not look at the right indicators, or he cannot read them: the unemployment rate is a NON LINEAR curve. One can just look at it, and sees this: it's clearly a quadratic curve, or an exponential.
Obama does not understand what this means: he knows basketball and law. For science, he has advisers. For economics, he has the guys who caused the disaster in the first place. But he cannot look at the graph of unemployment and realize, as a mathematician does, what it is telling him. The exponential function has not been taught to him. He has probably never solved a differential equation in his life. This non linear graph, totally obviously means that the catastrophe is feeding on itself, that the rate of increase of the catastrophe is proportional to how big it already is. The real unemployment rate is already 15% (and even though most people in the USA need some sort of employment to get health care, so people will accept whatever job in the USA, differently from, say, France, where they get health care, no matter what).
At the present rate of augmentation, by September, the official, doctored unemployment rate should be above 13% (it's 8.1% now, but it jumped from 7.5%; multiply (.6%) by 7, and exponentiate a bit, to get above 13%). Now one should stop for a moment here. The 8.1% is the so called U3 unemployment measure. By counting officially "discouraged workers" it gets to 8.5%. U3 is not how unemployment was measured in the Great Depression of the 1930s (the unemployment then peaked at 24.75% in 1933, the year Hitler was elected).
Unemployment as measured in the Great Depression of the 1930s was more like U6, the broadest measure of unemployment in the USA today. U6 is now at 14.8%. The speed, and self feeding of the disaster is such that, by September, Obama maybe facing 25% real unemployment, exactly as in 1933. Probably many in Obama's entourage will scoff, reading this. But that is the catastrophe that they should try to avoid. It is also the exact catastrophe the graphs point to. It is also the catastrophe that the weakness of their stimulus made unavoidable (just 2% of GDP, once removed the non-stimulus spending in the stimulus).
Interestingly the real stimulus in the USA is arguably of the same relative size as the French stimulus (although France just entered recession, and although France has mandated, very strong automatic economic stabilizers that kick in when the economy goes down, because of huge spending on social services; by the way, the unemployment rate in France is now significantly lower than in the USA; French U3 counts a lot of unemployed that the USA one does not count).
There are many things that Obama could have put in a real trillion dollars stimulus: rail is an example. Light and high speed: there is a huge need for both in their electric version (very efficient rail could save the car companies). Electric rail would provide for a huge number of jobs, and high quality jobs (the technology should imported from France and/or Germany). Car companies could be mobilized to build electric rail under license (making the rail industry "shovel ready").
Another huge need is to go to a closed nuclear cycle (like France, and now Japan, the UK, Germany). It's not a question of liking nuclear or not; the open nuclear cycle now used in the USA is an ecological monstrosity, and an enormous waste.
Solar thermal and big wind should be pushed too (this Obama does with the electric grid, to some extent; but his grid spending is less than the French-Swiss-Italian spend on just one of the three giant high speed rail tunnel through the Alps they are now building). In general "green" spending should work, but if and only if it is accompanied by TAXING CARBON (in partricular, fuel). Taxing carbon makes the green market profitable and will mitigate the deficits. All this is big industry, not gimmicky like the Internet (Obama does not find the Internet "reliable", as I pointed out in the preceding essay, so why does he push it? See "The Audacity of Dope").
Soon, the way he is presently going, Obama will have sent all the money to his hedge funds and private equity and foreign friends, the mysterious counterparts derivative contracts with the corrupt giant banks, and insurance. There will be no more money, and then what? What would have been achieved? Taxpayers will have tried to make whole some of the contracts that should have been declared unlawful to start with?
It would be better for the would be beneficiaries of said contracts to take their losses, so that the banks can start afresh. Many other countries do not want to see this financial non sense anymore, ever again. So they want to re-regulate the financial industry. Obama should let them have their way, in exchange for a larger stimulus on their part (one cannot over stimulate in the USA, and have other countries profit from the USA stimulus while saving their own creditworthiness).
If this deal is not cut, it's 1933-1941 all over again. Remember that the USA pulled out of that with the command economy of a world war in 1942. And that happened because the command economy of Roosevelt was too little, too late. That incrementalism of Roosevelt led to a prolonged slump that made the armed forces of the USA so weak, and the mind of the USA so confused, that the USA was unable to stand by France and Britain to stop Hitler in Munich. Instead, many very powerful rogue elements of the USA plutocracy helped Adolf Hitler. People with names such as Watson (IBM), Ford, Bush, Harriman, Texaco, Standard Oil, etc. Many got Hitler's highest decorationin 1938-39.
This sounds incredible today. But it is as incredible to use a void as a banking policy today. Roosevelt's incrementalism looks decisive in comparison: after all, FDR closed all the banks for four days, the day of his inauguration on March 5, allowing 1,000 banks to restart with a clean bill of health on March 10. Well, Obama is two months after his inauguration, and, instead of having taken desicive action like FDR, he makes a parody of what serious people have suggested to do about the banking problem (nationalize, fire managment, void the derivatives).
Of great times, great minds are made. High time for greatness!
Addenda: 1) My essay on a new method to better avoid catastrophes rolls over Descartes' "Cartesian method". It fully applies here: Obama ought to start from the worst possibility: 1933 in September 2009, and then he should do whatever needs to be done to avoid this very unhappy outcome. Making the four largest banks, or pieces there from, fully functional should be number one top priority and that can only go through declaring all derivatives null and void, since there is so much of them.
- As Paul Krugman says, if the situation deteriorated much further, as seems likely, by the time Obama comes for a real stimulus(instead of pushing, as he did, for his social agenda), nobody will be listening to him. Articles of impeachment may sound more appropriate by September (with the Dow below 1,000, say, and wars flaring around the world). This sounds ludicrous, but is it more ludicrous than Geithner's plan to wait six more months to see how the insolvent banks were doing? Of course, I espouse Obama's social agenda. But distant plans should not be the order of the day, when the house is on fire.
- Some people, cheaply making points by sounding reasonable have suggested that: "The President recognises that there are big uncertainties and that neither he nor those immediately around him have all the answers. Six weeks in to his term he is on the steepest of learning curves - chiding him (and his team) for being behind the curve does not make much sense." (as a certain Ed Randall from London put it to Krugman). Cute, elegant, intelligent sounding and definitively nastily dumb: Roosevelt was ready to act on day one, and he did act on day one, as described above. In Obama's team one finds some of the pyromaniacs that set up the fire, and so on. If it's all crazy, it's not my fault. Describing the insane as if they were reasonable may be pretty, but that is just as insane. Folly is always reasonable to the maniacs. It takes wisdom to denounce it.
This entire situation is not just about people getting poorer: the Great Depression was followed by the holocaust of about 3% of the world population (more than 70 million dead, including to up to 6 million Jews). To underestimate the gravity of the slump is a moral fault.
- I did not bother with the numbers of wealth destruction and production shortfall above (although I had them in mind). They are changing too fast. The official number of GDP shortfall is three trillion dollars (so, just to stand still, one would need three trillion dollars of stimulus). But soon it will be more. Wealth destruction is above 23 trillion worldwide.
- Regulating finance heavily looking forward is a no brainier, and it is hard to see how Obama, supposedly liberal, could resist it, when the right wing German Chancellor and French President propose it. The argument has been made that the UK and the USA would suffer most since they were the main dens of financial plotting. But regulations would make a lot of present day derivatives unlawful, thus it could be argued that those saddling the huge USA banks should be declared null and void. Now, some of the money from the derivative "contracts" is owed to Europe, so the Europeans would get their regulations (as they should), but would have to tighten their belts (a bit further). And USA banks would get a huge boost.
by Patrice Ayme
Sun Feb 22nd, 2009 at 02:57:02 PM EST
LAW WITHOUT RESPONSIBILITY RUINS CIVILIZATION.
SHIRKING RESPONSIBILITY BRINGS HOLOCAUSTS; SAYS THE FRENCH COUNCIL OF STATE. HISTORY CONFIRMS IT.
Motivation: It may seem strange to worry about the concept of responsibility in an historical context as the world economic system is imploding. But the relationships are direct, philosophically and historically. The present catastrophe has been pervasively caused by a lack of responsibility. Just like the Holocaust of the Jews, and many other holocausts before or since. Responsibility is about responding. Without a mental response, no law can be enacted, let alone made appropriate to the world we live in.
Abstract: The Romans, or more exactly a Roman empress ("Augusta"), proclaimed the notion of "State of Law". That meant a State where no one was above the law, neither the sovereign nor the most humble subject, as she pointed out. And ever since that notion has held up in Western Europe, most of the time. An extension of it is to avoid plutocracy, and any society where the elite's fate is disjoint from that of the common person. Nevertheless, this is not enough.
Bouts with irresponsible fascism in the twentieth century have shown that having a State of Law is not enough. Nor is it enough to have the elite share the fate of the commons. The Nazis respected the appearance of the law, but they navigated around it. In the end. They came down with their ship of state. What was absent in their universe was RESPONSIBILITY. Under Nazism, people became mentally inert. Without responsibility, intelligence itself is compromised. Absent enough intelligence, war is the only outcome.
To fully support civilization, in these increasingly delicate times, one needs a STATE OF RESPONSIBILITY. Although responsibility looks backwards, there are huge consequences, looking forward.
This essay logically hyperlinks wildly different concepts. It also uses very important true facts of history that are generally ignored. Such an ignorance of major facts falsifies historical analysis. Thus, the following essay may be found shocking, mystifying, and impenetrable. All the more since American plutocracy, the master mind of the present economic crisis, comes out of the following analysis, looking worse than ever. But this essay was meant to serve the truth, not the plutocracy.
Overview: How does one get a holocaust? There are two views on the subject, and they are both valid, and complement each other. One view, the deep view, first loudly proclaimed by the Romans, the Christians, and Sade (and to some extent Hugo and Nietzsche, among others), is that the nature of man is (in part) evil. The other view is not as fundamental, but it is of great practical importance. It explains how otherwise apparently decent people enact evil. Hannah Arendt, an upper class Prussian Jew, had to explain to herself why so many people she respected and loved, many of them Jews, and Jewish organizations, made the Nazi terror and holocaust possible, by collaborating with it (instead of vociferously opposing it). Arendt came out with the theory of the "banality of evil" (naturally, she was hated for it).
The way "banality of evil" works is this: by taking no responsibility, by acting real cool, by being very careful to not confront anybody, and being really very "bipartisan", and very much beyond partisanship, one is able to take no moral stance whatsoever. Under the Nazis, most Germans acted cool, uncontroversial, apolitical, and did what they were told to do, and thought what they were told to think, all of it, low key. It was the exact opposite of etymological responsibility.
Eichmann, the well known mass murderer, indeed insisted, unbelievably, that he was so cool about everything that he was bipartisan, both Nazi and Zionist (!). His guiding light was the infinitely boring and robotic Prussian philosopher, Kant. When he took Yiddish lessons from a Jewish girl, Eichmann paid her handsomely, and he intervened many times to save Jewish friends (OK, some of them were SS).
In 2009, the French Council of State decided to do something about all this moral murkiness by proclaiming the responsibility of the State, down to its smallest action. The Council basically said that there was nothing banal about collaborating with evil. Collaborating with evil is evil, down to the last spark of irresponsibility. There is no navigation around evil. One can proclaim a new notion, the of STATE OF RESPONSIBILITY. Whereas the Qur'an, or Kant, or Hitler, have it that superiors of apparent moral standards should be obeyed strictly, responsibility pays attention to the issues themselves.
"Responsibility" etymologically comes from offering chants and libations, in reply to something. Something happens, and one makes a show of noticing it, one addresses it in loud voice, even with chants, and by raising glasses and drinking in its honor. Thus RESPONSIBILITY IS THE OPPOSITE OF COOL, it's about loudly reacting with great demonstrations. Responsibility mobilizes the mind. Irresponsibility puts it to sleep. Sleep is easy, mobilization is hard.
In the first month of the Obama administration, the question of unlawfulness in the Bush administration came up. Obama replied that nobody was above the law. Good. That was cool. Meanwhile, American flying robots kept on flying over Pakistan, and bombed, and killed innocent people in Pakistan. Nothing to celebrate, nothing to make chants and libations about. In other words, it is irresponsible to rain death on Pakistan. (And it is morally indefensible, and thus a strategic contradiction, but that is another story.)
Should one accept the PRINCIPLE OF RESPONSIBILITY to guide civilization --the principle that issues should be loudly reacted to with great demonstrations-- immediate practical consequences will unfold. Even in the present financial crisis. Should one elude the severity and the imminence of the crisis' possible economic and diplomatic consequences, the US administration would be shirking its responsibility
THE HOLOCAUST HAPPENED BECAUSE NOBODY TOOK RESPONSIBILITY.
The Council of State, the ultimate recourse of French citizens against the French administration, was asked by a superior court about the responsibility of the French State during the Holocaust. The Council established that the "responsibility" of the "French State" is "engaged because of actions that, not resulting from a direct pressure of the occupying power, have allowed or facilitated the deportation from France of persons victim of anti-Semitic persecutions". The Council used the present tense. (See addendum for mistranslation and anti-French sentiment from Associated Press.)
This is remarkable, be it only because there was no constitutional French State during the occupation of France. Moreover, a lot of the victims were not French. So what is the French Council of State trying to teach? Well, a very important point about responsibility and civilization. The Council of State stood up and proclaimed that whatever the excuses, the French State was responsible for anti-Semitism in World War Two France "not resulting from a DIRECT pressure of the occupying power". The Council embraced a notion of collective responsibility, throughout the structure of the State, and throughout its history. It does not matter that it happened more than 56 years before. It does not matter that the French State was Hitler's one and foremost deliberate, determined enemy. It does not matter that France protected hundreds of thousand of foreign Jews. It does not matter if it happened under another administration. There was still the administrative structure of the defunct Third French republic that the Nazis had just destroyed. The State is responsible as an institution, forever, and has to recognize it, whenever and wherever.
The affirmation of responsibility of the State has philosophical and political consequences. But let's go back to history. France confronted Hitler in August 1939 about Poland. Hitler, in his cowardice, allied himself with... Stalin. The USSR promised oil to Hitler. But France was undeterred and dragged Britain into it. Hitler attacked Poland, and France and Britain declared war. The Nazis were not ready for war, and their rage was astronomical.
Meanwhile the good old USA was trying to get out of its Great Depression II by making an economic, plutocratic and de facto military alliance with Hitler. Cool, and irresponsible.
A QUICK RECAPITULATION OF HOW THE FALL OF FRANCE ALLOWED THE NAZIS TO MASSACRE JEWS:
So let me be blunt. In 1940, France had only one ally, unprepared Britain. The USA, the USSR, and the Nazis were all actively collaborating, against the French republic. Many American plutocrats positively hated France whose Popular Front led by the Jewish PM Blum, had introduced a lot socialist legislation (the 40-hour week, paid holidays for the workers, collective bargaining on wage claims and some nationalizations). France was a terrible example, that the American plutocrats did not want American workers to follow. Nothing would be nicer if their friends the fascists would invade France. And it is just what happened, thanks to huge technology and industrial transfer made by American plutocrats to the Nazis.
France held ten months, and then fell, well before Britain was ready. The Jews, among dozens of millions of others, died from that. Let me explain.
After Hitler came to power in 1933, the French republic prepared for war. The "minister of war" Maginot built at enormous cost his famous line of impregnable fortresses (unfortunately Belgium reneged on building its part in 1937, under USA influence, and that is where the Nazi army broke through). France also built three times as many tanks as the Nazis. France also launched a nuclear weapon program. And But at Munich, France lost her one and only prepared ally, Czechoslovakia, without firing a shot.
As the persecutions against Jews increased in central Europe, hundreds of thousands of Jews took refuge in France. Finally Hitler, buttressed by Wall Street, numerous US corporations and US plutocrats, plus Stalin and its Soviet Union, attacked Poland for oil. France (with an unprepared Great Britain in tow) declared war, and attacked with 45 divisions on a narrow front squeezed between Luxembourg and the Rhine, in the mountains, smacked in an impassable part of the fortified "Westwall", the Siegfried line.
The Nazis found the going hard: the obsolete Polish army resisted fiercely. US plutocrats sent crucial technical supplies so that Hitler's Air Force could keep on flying. Ten months later, during a very successful Franco-British offensive against the Nazis in Norway, a succession of astounding circumstances led to the unbelievable, sudden and very brutal fall of France. In 5 weeks of hard fighting, 185,000 soldiers died (and a great number of civilians, many strafed on the jammed roads). It was the hardest battle of the Western front in W.W.II.
THE CEASE FIRE OF JUNE 1940 BETWEEN FRANCE AND THE NAZIS:
In June 1940, the Nazi tanks were all the way down to Bordeaux. In an elaborated deception, the French nuclear program, its team and materials had escaped to Britain (the Nazis were led to believe that they had sunk it all, but the boats had been substituted). More than half of France had been overrun by the Nazi army, most of the French army in France had been destroyed, hundreds of thousands of people had been killed in a few weeks. Nevertheless, France had an empire spanning the planet, and quite a few forces in it. The French government could have fled to North Africa, then either French territory (Algeria) or under French protectorate (Morocco, Tunisia), and fight from there. It was feasible: the French and British navies could lock the Mediterranean. Although the French and British air forces had suffered enormous losses, France still had hundreds of modern planes, and Hitler's Air Force had lost 2,000 planes. Churchill had an even better idea: joint nationality with Britain.
The idiotic French Prime Minister, influenced by his anti-English mistress, instead agreed to a ceasefire with the Nazis. It was not peace: Germany was still the enemy, and millions of French soldiers were kept in captivity. But the armed forces stayed where they were, so half of metropolitan France was not occupied by the Nazis (it would be two years later).
The cease fire of France with Hitler would have been a grievous mistake if the USA had been on the side of Britain and France: then France could have easily held North Africa. But as it was, and quite to the contrary, the "USA", in its globality as a country and a plutocracy, was busy supporting Hitler's war effort.
But the French were dispirited from having to fight the USA, the USSR, and the Nazis. They had had enough. They did not feel like doing most of the fighting and dying once again as they had done in W.W.I, while others got all the fruits, and interfered with the peace process. So many Frenchmen were killed in W.W.I, that fewer soldiers were drafted than in 1914, the population being smaller. Moreover the USA, as a State and plutocracy, had played an ambiguous role after WWI. The USA seized German property in 1919, only to redistribute it to US plutocrats supporting the Nazis. Then, starting in 1934, the US government had been deliberately hostile to France. With gigantic direct investment in Hitler's Reich, the more extreme it got, the USA incited many nations (such as Mussolini's Italy) to turn hostile to France. The USA refused to accept Jewish refugees. At some point a trans oceanic liner full of German Jews was sent back directly to Hitler, after the USA connived to have it not accepted in Cuba or the Americas. So many foreign Jews were trapped in France.
THE DOUBLE FACED, UNCONSTITUTIONAL PSEUDO STATE OF VICHY:
In the city of Vichy, a few French officials formed what came to be known as the Vichy government, to give orders from above to the French administration (a Geneva convention obliged the occupying power, Nazi Germany, to preserve a French administration; the USA violated that Geneva convention during the early years of its occupation of Iraq, with catastrophic consequences). Vichy was unconstitutional. Other French officials constituted the "France Libre". Roosevelt and the USA, still unfriendly to France, recognized Vichy. Britain recognized Free France (June 1940).
The Nazis wanted to exterminate the Jews. France, however, did not discriminate on the basis of religion, and no religious census had been held since 1874. So the Nazis did not know where the Jews were. Craftily, the Nazis asked the Jews to come and make themselves known (German ordinance of 21 September 1940). 150,000 Jews did so in Paris alone. It was a case of asking the sheep to come register at the slaughterhouse, and 150,000 sheep volunteered.
The Nazis arrested 4,000 Jewish men here, a few thousands there. But they requested more. With hundreds of thousands of Nazi troops in France, the Parisian police was in no position to say no. The roundup was aimed at Jews from Germany, Austria, Poland, Czechoslovakia, Russia and those whose origins couldn't be determined, aged from 16 to 50. There were to be exceptions for women "in advanced state of pregnancy or who were breast-feeding", but "to save time, the sorting will be made not at home but at the first assembly center". The age of 16 supported the fiction that the Jews were rounded up because they were needed for work in the East. Children were supposed to be sent to Jewish foundations in France.
The Nazis expected to arrest at least 22,000 foreign Jews in Paris. At 4 am on 16 July 1942, 12,884 Jews were arrested: 4,051 children, 5,802 women and 3,031 men. Many thousands had been warned by the resistance, or the police let them go. (In July 1942, a study by the French resistance evaluated that no more than 5% of the French police supported fascism. Two-thirds supported the British, although Britain was conducting bombing raids over France.)
In the end, out of 76,000 Jews deported from France who died, 26,000 were French citizens, and the rest were foreigners (they should have been in the USA, not stuck in France!). According to Karsfeld, a Nazi hunter, 40% of those Jews were arrested by French police.
Many Vichy officials (including Bousquet and Mitterand) were both collaborating and resisting, and it was often not clear what they were mostly doing. For example, the top IBM official in France was ordered by the Nazis to find all the Jews in France, but in truth he was finding out all young men that could be drafted in a new French army, in metropolitan France and North Africa. When a new French army of a million men appeared out of Africa, while Jews had proven elusive, the Nazis finally understood. The double agent was arrested, tortured and executed.
One has to understand that throughout the war, millions of French people were prisoner or deported to Germany. POWs, STO (Service du Travail Obligatoire, Obligatory Work Service). Hundreds of thousands suspected of resistance, or just grabbed in the streets were sent directly to concentration camps. The last train convoy of deported French left Paris on August 15, 1944. 2,200 men and 400 women, directly for the Buchenwald extermination camp. These were not happy times for France. Overall, the world spanning French empire lost nearly two million killed, most of them civilians.
In August 1944, the Paris police, Gendarmerie and resistance revolted. There was heavy fighting. Worried by the massacre going on in Warsaw (where the Nazis were systematically destroying the city with the Soviet army watching at a safe distance), the French Second Armored division of general Leclerc charged through Nazi defenses in a spectacular advance, suffering heavy losses. Officially 3,200 German soldiers were killed in action during this Parisian battle of the French against the Nazis.
So what to think of this pseudo-state of Vichy? One can compare with the Netherlands. There was no Dutch government in charge. The Netherlands was under direct occupation by the Nazis. The local IBM guys collaborated with the Nazis, and it was easy anyway, because all the Jews were registered in the Netherlands. Nearly 100% of the Dutch Jews living in the Netherlands were assassinated. Whereas most of the Jews in France survived, because they were able to hide.
The most amazing part of it all is that although French officials went to the USA to reveal the Holocaust of the Jews, and a few US newspaper talked about it (New York Times, Boston Globe). The Holocaust was mostly hidden by the Allies themselves. Secrecy, or rather, not talking about it, was the most important enabler of the Holocaust though. Put in front of its responsibility, the German people would have stopped supporting the Nazis.
WHO WAS ULTIMATELY RESPONSIBLE OF THE MASSACRE OF THE JEWS?
After Germany and Austria, the USA is probably the State that was the most responsible of the holocaust of the Jews. For example, although nearly all Jews died in the Netherlands, and the USA looked very far removed from that massacre, it was not so. Research using IBM electro-mechanical computers allowed the Nazis to find the Jews throughout Europe. Those machines needed continual delicate servicing managed from New York. So it was all over Europe, in all what the Nazis did, since Hitler had given IBM the monopoly of organizing and computing.
The USA, as a State, kept allowing many US plutocrats and corporations to collaborate with the Nazis, as a country, throughout 1940 and 1941 (courageously Roosevelt was fighting Hitler as much as he could, but he did not control Congress and Wall Street, which were stridently pro-Nazi). Many US corporations collaborated throughout the war, such as IBM. When Nazism fell, they stayed where the Nazis had installed them. Heads we send you to Auschwitz work for P. Bush, tails we liberate you, and you work for us.
Although the USA knew very well that France harbored hundreds of thousands of foreign, often illegal Jews, who were in extreme danger if France fell, it refused to help the French republic, which was in total war with the Nazis. Even after having being told in detail by the French, as early as December 1940, that the Nazis had already deliberately assassinated at least 700,000 Jews, the USA, as a State, refused to advertise this holocaust, and deliberately ignored it all the way through the war.
WHY WAS THE HOLOCAUST KEPT SECRET BY THE ALLIES?
Let's stop here for a moment. The USA and Britain should have joined in with the French, and loudly make it known that any person collaborating with the holocaust of the Jews would see the full power of the law bearing down on them upon liberation from the Nazi scourge. Why did this not happen?
It is strange that it did not happen. If the world had been told that the Nazis were deliberately killing entire populations, it would have helped the war effort tremendously. The German population would have been confronted to what the Nazis were really doing, it would have been confronted to its responsibilities. The Third Reich was a totalitarian, fascist state, but it was mostly policed willingly by the Germans themselves, by the fact the Germans were so cool, and so legally minded (typically people who engaged in civil disobedience. were not brought to trial, because the Nazis were afraid of the law). The Gestapo was very small in Germany itself, a few thousand men, all the more small since it was spread all over occupied Europe. As the war proceeded a lot of the German police found itself exerting terror in foreign countries. If the Germans, who worried about their own morality, had been told they were all complicit in massive mass murder, they would have reconsidered their enthusiasm for Nazism. Since Germany was mostly self policed, the Nazis would have been unable to keep on ruling. The coup against Hitler, "Valkyrie", would certainly have worked.
Well, nobody thought of accusing Germany of mass murder in a timely manner. Perhaps, the Jews were not as popular in the USA as they have become since. It advantaged a lot of the plutocrats, who had been pulling the strings of fascism all along, to see the war to its bitter end. As it was they were able to establish a better control for their own capitalist system after the war (they did not have to share with the diminished Europeans, that is).
The American and British governments decided to stay silent about the Holocaust of the Jews. They did nothing positive to prevent the extermination. They were busted by their own generals, who were disgusted by what they saw, when they liberated the concentration camps. Some American generals stood up, and, with great demonstrations, loudly exhibited the holocaust for all to see: that is the very definition of being responsible.
RESPONSIBILITY ACCEPTED: THE CASE OF GENERAL EDWIN ROMMEL:
W.W.II was a complicated mess. And a learning process. An example is the career of general Rommel. Although a general in the regular German army, the Wehrmacht, Rommel started as a dedicated Nazi and an admirer of Hitler. In May 1940, he and his superior, Guderian, played a crucial role in the defeat of France. Guderian lied to the German High Command: although he had been ordered to stay where he was, he threw all the ten tank divisions of the German army in a deep, concentrated and fast, crazy stab inside France. It came close to disaster when heavy French tanks, that the Germans could not destroy, came within a kilometer of Guderian's headquarters. But in six days of no sleep and continual attack, the German tank army cut France in two, and reached the sea. After 360,000 British and French troops escaped at Dunkirk, it was time to finish the job. The German army veered south. French resistance was fierce. The French army invented what has come to be known as the hedgehog defense, fortifying villages, and inflicting heavy losses on the enemy. That was clearly the last moment when the USA could have done the right thing --declare war to Hitler-- but it did not.
The Nazis got seriously exasperated, because the French would not quit. On the river Somme, Franco-Senegalese troops stopped Rommel's own Seventh Panzer division for three days, inflicting serious losses. The Franco-Senegalese surrendered when they were out of ammunitions. The Nazis executed them all, soldiers and officers, European and African, black and white alike. The first blatant criminal violation of the rules of war in W.W.II.
Two years later exactly, Rommel, now heading the Afrika Korps and the Italian army, had the British 8th army in a desperate retreat, in disarray after the fall of Tobruk. To kill it, Rommel devised a plan to sweep in the desert really fast, and cut it from behind. As the Afrika Korps executed that move, the leading Italian armored division, soon followed by the entire Afrika Korps, crashed in the desert into the Free French troops of general Koenig. Amazingly, the French brigade held two weeks, before getting the order of retreat from the Brits. That gave time to prepare the victory of El Alamein (had this not happened, the Afrika Korps was supposed to go all the way to Iraq). Hitler was very impressed, and told his cabinet: "See, gentlemen, the French are the best soldiers in the world after us, and that is why France needs to be completely eradicated." The ultimate backhanded compliment: you are very cute, so you need to be destroyed absolutely.
Later Rommel commanded all Nazi forces in France. By then his heart had changed. Too much France will do that, even to hard core Nazis. The SS Panzer division, Das Reich, rushed towards Normandy from southern France after the Allied landings. But it was slowed and suffered losses from French resistance attacks. Enraged, an officer of Das Reich ordered that all the inhabitants of a French village to be burned alive. More than 600 died. Rommel, though, found this intolerable, and ordered the arrest of the SS officer for war crimes (he died before his arrest). At the same time, Rommel ordered the Wehrmacht to lock up the SS throughout France, as part of the coup against Hitler. At that point Rommel stood up, and expressed his stand as loudly as possible, against Hitler. He had accepted his responsibility for the crimes of Nazism.
IF THERE IS NO RESPONSIBILITY, THERE IS NO CIVILIZATION:
Most European countries recognized the grave violations of civilization engineered by the Nazis and their collaborators. The Nazis tried to enact the worst of what they read in the Bible, with greater technological efficiency. If it was not going to be an ongoing temptation, it had to be struck down. The Waffen SS had been highly successful recruiting young Europeans all over Europe, hundreds of thousands of them (mimicking the method of transnational recruitment inaugurated by Napoleon). It was important to show to the youth that Nazism was not a happy outcome. The Netherlands' attitude was typical: the death penalty, which had been outlawed 140 years, was reestablished.
France was the original and fundamental enemy of Hitler. Hitler personally wanted to annihilate France, a passion many of his closest colleagues did not share. The ultimate irony is that as he groveled inside his burrow in Berlin, the Nazi dictator was defended by Waffen SS from the LVF (Legion des Volontaires Francais, the Legion of French Volunteers), helped by Scandinavians SS and the Hitler Jugend. Adult Germans had deserted him, in his hour of need and pain. Tellingly, a few months earlier, some of the fighting of the French LVF had been against German volunteers fighting the Nazis. So some French volunteers fighting for the Nazis fought some German troops fighting against the Nazis; this shows that here was a dimension to fascism that transcended nationalities (the German State would pay for the retirement of many Europeans foreigners that served the Nazis for 50 years)... If anything, all these intrinsic contradictions of fascism taught most Germans the futility to be on the wrong side of civilization. If anything the close call that France suffered in W.W.II, taught the reconstructed French republic that even greater zeal in the defense of civilization was called for. Two percent (2%) of the population had collaborated with the Nazis, but that was 2% too many.
There had been many thousands of rabid collaborators of the Nazis and French fascists during the war. France executed up to 40,000 French fascists, Nazis, or collaborators after the war, more than all other countries together (although Russia exterminated millions of Nazis and Germans, by using against the German population the Nazi method of deliberately massive collateral damage, these were not legal executions).
TO AVOID HOLOCAUSTS, NO RESPONSIBILITY IS SMALL ENOUGH. A STATE OF LAW IS NOT ENOUGH, A STATE OF RESPONSIBILITY IS NECESSARY:
Given that the Nazis existed, controlled Germany and Austria, and were persecuting the Jews, the ultimate responsibility for the Holocaust of the Jews fell on the United States of America. The French did what they could. But it backfired, to some extent. The USA has never admitted any responsibility in the Holocaust, or the Third Reich. But the bloody paws of American plutocrats were all over Nazified Europe, from the use of Texas oil by the fascists during their conquest of Spain (that used to make Hitler laugh), to IBM computers organizing all the details of the extermination machine, and roughly anything in between, thanks to massive technological transfers from US corporations to the Nazis (Ford and Watson (IBM) got the highest Nazi decorations, P. Bush was the most trusted collaborator and manager, etc...).
When holocausts happen, it is not just because of one man. For example King Saint Louis IX of France hated the Jews and wanted them and unbelievers killed, but he could not change either the law nor the national mood, and this desire of him stayed a holly wish (circa 1250 CE). The same happened again with Luther: Luther loathed the Jews, wrote about the pleasure it would give him to see them suffer, but he could not do anything about it, being just one hate monger. One had to wait for Hitler, a popular elected politician, carried by substantial national will, who was able to radically change the laws (those laws Hitler overturned, going back to the Carolingian empire of the Franks, were twelve centuries old). So holocausts happen because of a tribal, or national will and mindset. Even when emperor Justinian went out and killed millions of Christians so that he could better rule by dividing everybody against everybody, in the end it's the general abysmal state in which the Roman empire had fallen, its general state of irresponsibility and immorality, that made it possible (circa 650 CE).
The republican State is an immensely powerful structure, and its laws can be applied ferociously. That is why the symbol of the Roman and French republic is the fasces, and the motto of the USA, "E Pluribus Unum", which puts in words part of what the fasces depict (OK, it is not exactly the US motto, but we won't get into this arcane subject). This enormous power of the State needs to be applied very carefully. Now, more than ever. It is said that one Soviet captain prevented his superior, exasperated and rendered half mad by small American depth charges shaking his submarine, to answer with a nuclear torpedo to blow up the US fleet, during the Cuban missile crisis. (That would have launched W.W.III.)
There is a whole calculus of responsibility. So far it has been hidden in the shadows. It needs to be brought up in the open, to be taught, and so that everybody can learn it. If all officers, in any State, know that their State, and thus they themselves, will not be able to escape prosecution in the future, as long as a future there is, people are going to be much careful in what they do.
Should one accept this more demanding principle to guide civilization, it has immediate practical consequences. For example the Obama administration has not been responding swiftly to the catastrophic freezing of credit in the USA. Moreover, not only is the US State responsible of this, but of the preceding work of the Paulson-Geithner-Bush team. To be a ruling politician is to be responsible of what the State did before. Whatever happened before, the responsibility of the State is engaged. Instead of acting cool, to insist that it is business as usual, that our friends the plutocrats are outstanding geniuses that should stay in power for ever, the State should stand up and loudly address the monster in the room, and chant the battle cry.
NO RESPONSIBILITY, NO MIND:
The truth will always be more complicated than what is behind Quantum Mechanics, and that is everywhere, and nobody knows what it is. The law, like all behaviors of society, is about the truth. Looking for the law, either to make it or abide by it, cannot happen without responsibility. Without responsibility the truth, and the law, could never be addressed, they may as well be in another universe. (That is how the Nazis operated: not enough people call them on respecting the law; when people did, they were often successful, and if enough people had, Nazism would have grinded to a halt.)
The truth is that the situation of the planet, and humankind, has never been more fragile. The present financial and economic crisis is really nothing relative to what is brewing. The economy is of course the prime agent of that catastrophic brew. Not taking measures against the major threats is irresponsible. That ought to impose a change of the modus operandi, considering the alternatives.
Addenda: 1) The Associated Press, with a not so subtle anti-French slant reported, February 17, 2009, that: "France's role in Holocaust legally recognized: France's top judicial body formally recognized the nation's role in deporting Jews to Nazi death camps during the Holocaust... Jewish groups welcomed the ruling by the Council of State, the clearest legal acknowledgment to date of France's role in the Holocaust. Nearly 70 years ago, the Vichy government helped deport some 76,000 people - including 11,000 children - from Nazi-occupied France to concentration camps during the war. Fewer than 3,000 returned alive. The Council said that the French government of the time "allowed or facilitated the deportation from France of victims of anti-Semitic persecution... In an absolute rupture with the values and principles notably of the dignity of the human person ... these anti-Semitic persecutions provoked exceptional damage of extreme gravity," it said.
The statement legally formalized a historic gesture by then-President Jacques Chirac in 1995, when he became the first French leader to say the nation bore responsibility for the deportation of Jews in wartime France. Chirac broke with the official position that France's Vichy regime was not synonymous with the French state. Since Chirac's speech, deportees and their families have won special state pensions and other compensation for their suffering. Some $639 million has been paid out by a state commission established in 2000."
Actually the traduction is very incorrect in several ways, but will be helpful to anti-French plutocrats in the USA, who are legions. Indeed, they are afraid that the model of exploitation that they have imposed in the USA would be replaced by the more social, more equitable society in France.
So the Conseil d'Etat did not recognize the "nation" as responsible, but that the "responsibility" of the "French state" is "engaged". By doing this, it made the French State into something that still should be viewed as existing even when it is just an unconstitutional decapitated administration. This atemporal view means that responsibility cannot be escaped inside an administrative structure .
2) Adolf Eichmann identified himself as a Zionist in 1939 in a conversation with Anny Stern. "'Are you a Zionist?' Adolph Eichmann, Hitler's specialist on Jewish affairs, asked her. 'Jawohl,' she replied. 'Good,' he said, 'I am a Zionist, too. I want every Jew to leave for Palestine.'" (L. Dickstein, "Hell's Own Cookbook", The New York Times, Book Review Section, (17 November 1996), p. 7).
by Patrice Ayme
Sat Feb 7th, 2009 at 06:07:02 PM EST
The processus of decay the USA has engaged into has been seen before. A particularly clear case is that of the decline of the Greco-Roman empire. The Imperium Francorum got out of the Greco-Romano-Christian mess through a philosophical revolution backed up by force.
The same illness calls for the same remedies.
by Patrice Ayme
Wed Feb 4th, 2009 at 07:15:12 PM EST
SMALL STATE, GREAT DEPRESSION.
January 31, 2009 by Patrice Ayme
CIVILIZATION IS ABOUT THE PUBLIC THING DOMINATING THE PRIVATE URGE. OR WHY THE USA NEEDS TO GROW ITS CIVILIAN STATE. SUSTAINABLY.
Overview and the Roman analogy: President Johnson's attempt to impose and grow a "Great Society" while bombing the hell out of Vietnam, brought up an adverse reaction (from the same crowd that had fed the hysterical anti-intellectualism of McCarthyism before: Nixon was Joseph McCarthy's right hand man). That reaction became the essential folly of American politics, a systematic undermining of progress under the cover of a crafty propaganda. That essential folly has consisted in privatizing and profitizing everything, dismantling the state, while growing a malignant plutocracy on the quivering flesh of the dying public sector. The essential idea was that a better state is a smaller state, with a bigger plutocracy, while keeping an enormous worldwide military in charge of oil procurement and juicy deals. We have seen that show before: it was called Rome. (OK, Rome did not use exactly the same oil, but its trade in distant commodities was huge.)
We demolish that folly, with an arsenal of philosophical, geographical and historical considerations. Yes, Rome took five centuries to collapse, but Rome had no rivals, so it took a while for the vultures to gather. The US collapse, if left unchecked by imaginative measures, will be much faster. (Remember how fast the USSR went down? Partly as a consequence of its civilizing mission in Afghanistan? Although the USA would not explode in small pieces anymore than Russia did, quick impoverishment through a dollar collapse is entirely imaginable.)
To be against the State is, fundamentally, to be against civilization. Indeed, civilization is fundamentally a move of the private towards the public, a move from small groups towards the collective. Under the corrupting spell of the plutocracy, this aspect of philosophical economy has been neglected, precisely so that plutocracy would blossom beyond the reasonable. This analysis, supported by hard data, has a very practical political consequence for the Obama administration: the size of the State ought to grow in the USA, to improve both the economy and the civilizational level. To do so, consumption and energy taxes have to be allowed to assume their proper role of enforced savings and investment. This is what it will take to escape the plutocratic trap Rome fell into.
The Imperial Roman State shrank first, turning to ever greater fascism to keep on going, but, in the end, it was unable to provide basic services, and, finally, in spite, and because, of a huge military surge, it was unable to defend itself against its foreign enemies. Why did the whole process of decline of the State occur to start with? Because of the growth of tremendous plutocracy occurred at the detriment of the State. Simply put, the richest people found ways to pay much less taxes than needed to have the State keep on going (just like money manipulators in the present USA). The progeny of this rich class became an ingredient of the "feudal" class of the Middle Ages (in the USA they would be the present "CEO class" and "Wall Street").
Not only could not the State sustain itself on its reduced tax base, but the intellectual class got nearly exterminated. Superficially it looks as if Christianity was the cause, but it was not the ultimate source of that destruction of the mind. Indeed, there is nothing plutocracy distrusts more than the sort of wild, ferocious, uncensored thinking on which civilizational supremacy is founded. That is why great civilizations sink when plutocracy gets too powerful. Another example somewhat similar to Rome: long, Egypt was at the very forward edge of civilization (a lot of "Greek" mathematics seems to have originated in Egypt); Egypt, may have become too plutocratic, and too theocratic; it certainly became brain dead as Rome did to a great extent; so it was civilizationally left behind by the excited Greek City-states; after nearly a millennium of that intellectual rigidity, the Greeks took control.
The Roman depression was first intellectual and ethical. Then all the rest of society got corrupted (a striking milepost of corruption was reached under Marcus Aurelius). The present depression in the USA is quite similar. Now it is crowned by an economic depression (Rome had a complicated mix of civil wars, plagues, depressions, spectacular victories, economic expansions, etc... The irreversible destruction of the State was a the hands
The fundamental reason is that when the State gets too small, the public sector cannot support the private sector anymore, and the later collapses too. Thus not only is there an optimal size for the State, but there is a LOWER BOUND FOR SURVIVAL.
Indeed, whereas many civilizations have thrived superbly without much private sector [Incas, Constantinople, Stalin, etc.], if the State gets too small, a vicious circle is engaged, of ever diminishing returns and one ends down the drain of civil war and collapse [like Easter Island, or the Mayas, or Rome, not too speak of various Muslim states]. Under President Lincoln, the weakening of the American State was refused, and war was accepted instead. Hence a horrible, very violent civil war that made the French revolution look reasonable in comparison. That helped the USA not follow down the same road as the Mayas. (Europe is building itself as a super State, but using only the law and forever talking; this is an approach whose time has come, since war was tried ever since the Carolingians, and did not work.)
This is exactly what is happening in the USA. The way out is to grow the State, from the bottom up (and not the other way, from the top down, by reorganizing the plutocracy, as Rome did many times, starting with Sulla and Augustus, the plutocratic friendly method that Thatcher-Reagan imitated). Bottom up construction is exactly what Barack Obama is doing, with its "recovery and reinvestment plan". In this first stage, it's actually more of a People salvage plan.
CIVILIZATION IS THE PUBLIC THING:
By the very origin of the word "civilization", civilization has to do with the concept of city [townsman = civis in Latin]. Civilization is not about anything below ("sub") a city ("urbs" for Rome, "civitas" for other cities), thus civilization is fundamentally not about suburbia. Hence, when, in the last few decades, US society abandoned the cities, and fled to suburbia, it made a move away from civilization. Of course it did not help that this flight was motivated by (legal) tax evasion, racism, and aversion to the poor (since it cost to move out, the poor were left behind, the fundamental idea). It was also an aversion to public life, to public debate. What else in a country where an "argument" is semantically equated to assault? The concept of a city is a human grouping, where economies of scale, but also richness of scale, wealth of ideas and debate, are achieved. And only there (OK, now we have the internet).
CIVILIZATION REQUIRES PUBLIC SERVICE, because it is about living in public, precisely because one is served by the public, hence it is, by reciprocity, about serving the public (since one is here to be served by the public to start with!). These basic truths should be basic ingredients in economic thinking, but they have been overlooked. All too much economics has become all about equations that mean nothing human, or even real.
Those truths have been overlooked for the obvious reason that flaunting them does not help the plutocracy, which is financing most people who think about the economy in the USA. Those economists (not Marx!), roll out the profit motive, and little else besides. And by "profit" they mean money (hence power onto others, which is all what money is). One thing those worthies forgot, though, is that there is profit simply by living in public. There are NON FINANCIAL PROFITS to living in public. But these non financial profits are important, because they led to the creation of cities. Not every profit is financial, indeed. Fundamentally, humans are animals, and animals find a lot of activities profitable, that have nothing to do with financial profit (for the good, simple, and amusing reason that animals do not have finance; well, OK, the way things are going, Americans do not have finances either.).
Because of the public nature of the city, intrinsic to its attraction, civilization employs a mix of the public economic activity and the private economic activity. To understand the nature of a civilization, one has to think here in depth about a few entangled concept, among them: private, public, job, compensation, profit. A job is fundamentally a service one gives to other(s), in exchange of what, one gets compensated by reciprocated services (not necessarily the same, and often in the form of money, the universal exchanger for services). If, of course, what one provides is not viewed as a service, one is not compensated. So jobs vary in diverse societies. Tanzania just outlawed (2009) traditional faith healing. That involved chopping albino people into pieces and preparing drinks with special properties with those (40 were butchered this way since mid 2007).
Thus, although many societies reward their thinkers, including many societies of "savages", others, typically of the plutocratic type, do not. But then no civilization can survive without thinkers, Athens, and even Rome, had top philosophers as advisers to the political leaders. The USA has a "national science advisor", but no official "national philosophical advisor". Still the USA is confronted to serious philosophical riddles, some very practical. Scientific problems should not be so problematic, because, after all, science is about what is known for sure.
THE PRIVATE ECONOMY IS SUBORDINATED TO THE PUBLIC ONE:
Under the influence of the Neo-Cons puppet masters and their Thatcher-Reagans, many influential people, and not just in the West, got persuaded to go along a program of PRIVATIZATION OF EVERYTHING. One could say: financialization of everything, an ugly word to go with an ugly concept. The plutocracy rewarded them well, for this stroke of genius, which ignored most of human neurology. In Russia, the application of that concept, pushed by American economists, brought the country in a decade from "communism" to plutocracy.
(Actually the plutocrats pushed their insolence to invent their own word for one of their techniques, securitization, where they bundled together the properties of the public, so that they could buy and sell them). For quite a while, this privatization worked well, just as when a plane cuts off the engines, it keeps on flying. In this case, the engines were dropped off, so the plane, much lighter, flew higher, and captains Thatcher and Reagan, and their admirers, proclaimed victory on gravity.
Private is what functions best with the free market, motivated first by financial profit, public what functions best according to law, regulation, monopoly power, and plain and simple power-. For example when the State does not have the monopoly on the military, one gets a civil war. This happened at the end of the Roman republic, when, in practice, a few of the richest people each owned a part of the Roman army. Four centuries later, the Roman empire collapsed when the rich disconnected from the rest of society, with so much riches grabbed by, and for themselves, that the Roman army left outside was too small to defend the empire.
The private sector is less important than the public sector: Stalin fought Hitler with monstrous efficiency, and no private sector. Hitler mostly worked with a greedy private sector, with the result that he found himself with hundreds of half completed weapons projects at the end of the war. None of this non sense in the USA: Roosevelt installed a command economy run by a young Canadian, with very few weapon systems, and a total monopolization of the socioeconomy.
Now of course, the entire idea of plutocracy is to subordinate the public to the private. That is exactly what happened as the plutocracy hypnotized the entire US economy, and that was the program of the Neo-Cons, who, in the end, were just employees of the richest.
QUANTITATIVE AND QUALITATIVE ARGUMENT FOR A BIGGER AMERICAN STATE:
So if the idea of the State cannot be dissociated from the idea of civilization, the next question, that no serious American economist seems to have considered, is this: IS THE US STATE BIG ENOUGH TO INSURE THE CONTINUATION OF CIVILIZATION? The answer is, clearly, NO. Everything indicates that the State should be grown massively in the USA (not in Europe). (When Barack Obama broached the subject, he felt obliged to express his automatic desire to not grow the State, according to the general standards of what passes for reasonable in the USA. Recently he has become more subtle: if it's a bad program, it shall be cut, if it is a good program it shall be expanded.)
The total size of the US government is 36% of US GDP (Federal State plus regional states), but the USA spends at least 5% of that on the military (more than half of the World's military expenditures). So we are left, in the USA, with a civilian State sector that is about 31% of GDP. That is two-third of the relative size of the States in large European countries. Those have government that are 45% of GDP. Two of these, France and Germany, are resisting better to the recession than the third one, Britain, mostly because they are more industrial and technological [Germany is the world number one exporter]. France and Germany have top notch industries, because their governments made them so. Trust the French and Germans to know where real power comes from.
There is plenty of evidence that the US State is too small to provide the country with the infrastructure it needs for its private civilian economy. The best example is health care: private US companies are supposed to provide it, a subject of endless hilarity around the planet. In general US health care does only one thing really better: make a few of the rich richer. US health care costs twice more, and does less well, than its European comparisons.
Another example is the US schooling system: at this rate of descent into illiteracy, an acculturation, one will soon have to import Indians to teach English and logic to Americans. Also US science, for decades the best financed in the world, now is not so [European are running many basic experiments that the USA does not plan to, but the reciprocal is not true].
Trains are the most basic part of transportation (even in the USA, their GDP transport contribution is the highest). But, whereas the subsidy for roads is above 110 billions, that for trains is one billion (1%). France is presently building four high speed train lines [for 250 mph. 400 kilometers per hour trains], and is in the diverse stage of elaborating and planning several others. Such lines are immensely expensive. The USA does not seem to have the money for them. The first French high speed train line was publicly financed, twenty-five years ago, the others have been self financed with private capital. It's the same picture around Europe, even in Russia (equipping itself with French and German trains, with technology and industrial transfers built in the deal).
GIANT US MILITARY SPENDING IN PEACETIME IS NOT IN THE BEST STRATEGIC INTEREST OF THE USA:
Now to the suggestion that the USA needs a modern civilian economy, rather than a giant military, the Neo-Cons usually reply that they defend the free world, so the USA has a huge military budget, that the Europeans do not have, but profit from hypocritically.
There is some truth in this, but not much (besides France and Britain and their German sidekick have enough of a military punch to defend Europe as long as Russia or the USA don't go completely crazy with their 10,000 rather unlawful nuclear warheads). But the research and development budgets for some defense systems (such as nuclear weapons) are absolutely gigantic, and undermine technological investment capability elsewhere.
Rather than piling the weapons high, it would be much more cost effective to negotiate effective disarmament treaties. Those can work.
An example: before W.W.I, there was an arms race between Britain, Germany and France (between the UK and Germany on the seas, between France and Germany on the land, although the later two nearly got in a sea battle earlier in Morocco). Effective disarmament treaties would have weakened the fascist Prussian army, simply by shrinking it. The huge "Prussian General Staff" (or more exactly the top six generals) was the direct cause of the First World War [the Sarajevo assassination was just a spark in a powder magazine, where most of the power was the Prussian military mind: it would not have exploded into a world war if the combustible material of giant military structures and build-ups had been removed prior to said spark].
The best defense for the USA and the West would be better treaties. So the bottom line is that the USA is doing its giant military thing, its giant military build-up, not for defense, but for other reason(s).
The later Roman empire also did the giant military thing: the Roman army was way bigger, by a factor of at least two, in the Fourth century than under Augustus (four centuries earlier). But it was also much less effective: troops deployed in battle against Barbarians kept on shrinking, because most troops were always somewhere else. Rome presented an early case of military-industrial complex gone nuts.
At least one thing is "positive" so far this time: the US army has kept a technological edge (which Rome did not keep; although higher tech saved both the Franks and Constantinople against Islam). Nevertheless, the fact remains that the Late Roman empire was economically weakened by its giant military, and the same argument can be made for the USA today. Closer to us, that was exactly the main problem of the Soviet Union, and that was so obvious that even the otherwise clueless Carter-Reagan crowd played that card very well, first by using Muslim Fundamentalists to fight the socialists and then Soviets in Afghanistan, and engaging an arms race, until the Soviet Union was spent to death. In their befuddled brains, the notion that the same could happen to the USA, on an even larger scale, has not blossomed yet. In their opinion, imperial overstretch happens only to others. Now the overstretch is measured with the quotient of military spending over civilian spending getting too high, that is, too militarized a public sector, or, equivalently, and neurophilosophically speaking, the quotient of intellectual fascism over general intelligence getting too high.
ECONOMIC STABILIZERS IN EUROPE, THANKS TO BIG STATES, BUT FEW OF THEM IN THE USA:
Now that a severe recession has become obvious for all too see (it's actually 10 years old for the middle class), the absence of economic stabilizers is going to compound the crisis in the USA. In more socialized, populist Europe, government social programs kick in and ENFORCE ECONOMIC ACTIVITY. OK, these are not activities that are motivated by financial profit, but they are economic activities nevertheless, and, it turns out that these activities that cannot, that do not need the profit motive are the most important ones: financial profit is the cherry on the cake, it's not the cake of life.
Thus, the most vital sectors of economic activity are legally mandated ones in Europe, and, as the profit economy collapses, this mandatory, legislated economic activity kicks in to compensate (they involve State mandated food distribution, at home for the old, etc.).
As Paul Krugman puts it for the case of health care: "The whole world is in recession. But the United States is the only wealthy country in which the economic catastrophe will also be a health care catastrophe - in which millions of people will lose their health insurance along with their jobs, and therefore lose access to essential care."(NYT, IHT, January 30, 2009.)
Obama's so called "Recovery and Reinvestment Plan" seems in part a desperate attempt to throw in emergency spending to stabilize the disaster. Indeed the governors of the States have cut down their spending as their revenues collapse, so they are making a bad situation worse. The State of California (one of the world's largest economies), has "furloughed" its workers two days a month. This means that State workers will not show up at work for 10% of their monthly employment, and will get a proportional income cut of 10%. Europe has economic stabilizers, the USA has economic destabilizers.
LOSING CIVILIZATIONAL LEADERSHIP:
Cities, from the start, were at the forefront of technology and civilization (in the usual sense). Technology and psychological progress and knowledge made them possible. Cities were created mostly for cultural reasons, be it only that of growing a better economy. Conversely, as the Greco-Roman empire went down, its cities went down first [for various reasons, military devastation being prominent]. Cities have only be made possible by keeping technologically ahead of their competition. The same is true for any state, any civilization.
Let me explain. The Roman republic rose, like the Greeks before, as the Phoenicians or the Cretans before that, and Sumer or Egypt even earlier on, or the Indus civilization, because it was more technologically advanced. Technological supremacy then allowed those civilizations to persist for a while. Conversely these civilizations went down when the technological competition caught up with them [with the exception of Sumer and Crete that were mainly destroyed naturally]. Egypt dominated in science and technology for three millennia. When it lost that supremacy to the Greeks, the Greeks naturally came in, and led a dying Egyptian civilization.
When the Roman legions persistently out maneuvered and destroyed the Macedonian phalanx, because they used superior military technology, Macedonia was crushed, and the Hellenistic world became Rome's possession. Reciprocally, when, four centuries later, Roman armor was unable to arrest enough superpowerful Central Asian arrows, the Sassanids (Persians) could be held back only at what proved to be unbearable cost [and that cost was not just financial and economic; it included further militarization and fascization of Rome]. That loss of the military technological edge the Romans had occurred also with the Germans: at the same time that a Roman emperor was captured by the Persians, to be made into a living stool, for months, before being tortured to death, the Franks became the crack soldiers of the Roman empire, because of their astounding mastery of their amazing weaponry.
Thus the decline and fall of Rome was fundamentally a loss of technological leadership that came from a loss of civilizational leadership (the great emperor Julian, the fighting philosopher, saw this, as he tried to reverse the Christian superstition, but the penetration of a lance put an early end to that).
The propensity to lose civilizational leadership occurred probably way early, when the Roman republic, little intellectually inclined, and already under the spell of its arrogant plutocracy, crushed the Greek cities, and even its military allies, such as Athens (circa 146 BCE). This led Rome to lose any hope for sustaining the technological and civilizational capability that the best of Greece had retained. Greece had been submitted, with lots of difficulty, to various Macedonian, or post Macedonian, "Hellenistic" fascist regimes, ever since Alexander and his father; this had lasted two centuries, but the perfidious, hyper materialistic violence of Rome made the loss of the best of Greece irreversible.
The best course for Rome would have been to set Greece completely free, especially Athens and Corinth, and learn from them with humility. Instead Roman plutocracy crushed them (in an obvious class struggle). After the plutocracy had disposed of the Greek intellectuals, making them into stools thereafter, it remained to starve the Roman State. Although gold, bread and games were showered on the People, it was to put them to sleep (the same has happened in the USA). In truth, Roman plutocracy was so interested by its own profits, that it was ready to risk the empire rather than paying enough taxes. When German tribes threatened to invade the core of the empire at the apogee of its powers, in the Second century (circa 160 CE) , emperor Marcus Aurelius had to sell the imperial palace's cutlery to rise funds for the Roman army (!). By then the plutocracy had eaten away the Roman republic ethical substance for three centuries, and it showed with a total loss of ethical control, even in the direst straights.
So, to survive, the USA needs to NOT do like Rome. The USA needs to keep on being a leader in civilization and technology. This will start with schools, to make American children into first class intellects (right now Finland and Korea are leading): the US States have been busy saving money by cutting school budgets. The US Federal education budget is tiny, and Obama has moved in to replace the collapsing State budgets. Good. Now, when Obama will have finished throwing a few trillions to stop the devastation, he will have to regain technological leadership, and that will mean financing serious, state of the art heavy industry.
Conclusion: IF YOU WANT TO GROW CIVILIZATION, GROW THE STATE, AND ENFORCE EFFICIENCY WITH ALL ENCOMPASSING WASTE TAXES: To finance green, sustainable, energy, Obama will need sustainable money. Massive borrowing can go only that far. No sustainable money, no sustainable green. Lots of money, lots of green. A reasoning even US capitalists can empathize with. So Obama will needs an energy users' taxes. Namely a tax on carbon, as in Europe. Yes, that will grow the government. So what? What's wrong with growing civilization? Especially when it is the only way out of a death spiral?
Civilization is more than the ability to bomb people on the other side of the earth. Enough of that already. The USA needs to grow its civilian economy massively, and the public sector first of all, these areas were the profit motive, and private capital, or private initiative are not enough, or can't wait long enough, to be the prime motivators. Immense public works need to be done, the hour is late, thinking has not been damaged so much, yet, that there is no coming back. That sorry state of affair is what happened to Rome at some point.
Notes: 1) If, as I claimed, civilization is essentially the Thing-Public (in Latin: Res-publica, republic), am I saying that regimes that are not republics are not civilized? Well, yes. It is no accident that Plato named his major work in political philosophy, "The Republic". His republic was rather fascist, but still it was a republic.
This perception of civilization as the republic has been strong in the West, for two millennia. The Roman empire maintained the fiction for many centuries, that the republic was still going on. Italian history shows that the idea and practice of the republic never died; the Roman Senate went on until the Seventh century (it went on until the 1300s in Constantinople), and soon the Venetian republic was a march state of the Imperium Francorum. The Franks themselves maintained forever the myth that their kings were elected, until the arrogant French absolute monarchy of Louis XIII, and XIV, rose in all its horror (soon to collapse, within two generations into the French revolution). By the Tenth century a serious effort was made to reinstate the Roman Senate. The Holly German Emperors (namely the German speaking Eastern Francs) were elected throughout, and so on, and so forth. Thus, in the West, monarchy was never really legitimate (Britain is a republic disguised in a pseudo monarchy) Constitution).
2) One can grow the State by borrowing for profitable investments. But one cannot borrow money for chronic expenses for everyday spending. So it is OK to borrow for building power lines, high speed trains or solar plants, but it's not OK to use borrowed money to pay for health care, or schools. A lot of the present "recovery and reinvestment plan" of Obama presently does just that, though: borrowing for recurring expenses. France got addicted to that hopeless technique under some loose (socialist and conservative) governments in recent decades. So State borrowing was used to pay for the general budget of the French State. The result was a dearth of valuable investment, and the fact that the entire tax on income is now used to serve the interest on the debt. (Still, under Euro guidelines, the total debt of France was limited around 66% of GDP, whereas the reasonable prediction for 2009 US debt is above 90% of GDP, absent new taxes (this is with an expected stimulus + TARP of 2 US$ trillion)).
Hence France lost most of her public sector investing capability (and ran her infrastructure growth mostly on the private sector, an unusual situation for France). Thus French growth slowed down enormously. The same would quickly happen to the USA, if it persisted to use borrowing for everyday expenses. Now, in the case of Rome, a combination of welfare and high unemployment plus tax evasion by the rich, demolished the economy while weakening the State. Ultimately, most of Italy fell out of the economy of the empire. It would have been much better to tax everybody, while giving work to everybody (but that was not the agenda of the Roman plutocracy, which was not unhappy that so many people had no work, hence no power, thus making them unable to come back to democracy). Indirect, unavoidable taxes are best to tax everybody. With indirect taxes, there would have been no need for those horrible Roman income tax collectors (they would throw tax evaders, and their relatives and children into slavery). Nowadays, it is very easy to rise indirect taxes (two dollars a gallon on gas, or .1% on financial transaction, or 15% AVT are easy to set up). It was hard to raise indirect taxes in Rome (especially after the currency economy collapsed, and the Roman State reverted to bartering in commodities to feed its army!).
3) Another side of the conspiracy against the State: Nixon invented HMOs, and financed those private companies with public money. That started the massive shrinkage of the State. Now Nixon fully connected with the plutocracy. Nixon was the right hand man of McCarthy, and became the VP of Eisenhower. The later seemed often to be president in name only. The Dulles brothers were in charge (one at the CIA, one at State). This puts in a different light the complaints of Eisenhower about the military-industrial complex (as he was leaving office). Now the Dulles were lawyers to the Nazis (before the war), and employers of many of them after. While the Dulles had been major employees of the Bush crowd, which had supported Hitler with so much enthusiasm. All in all, this constitutes the major conspiracy of the Twentieth century, and so it is no wonder that the "height of irresponsibility" (of giving themselves more than 18 billion dollars of bonuses with taxpayer money to celebrate huge losses to the taxpayers of the order of several trillions) that Barack Obama talked about is, in the light of such mighty tradition, very small potato. The sort of power that is used to set up drug trading over entire countries to finance black ops (that was done in Bolivia, Pakistan, Afghanistan, etc.), or set up world plots with the Nazis, let alone Stalin or Ibn Saud or Iranian Shiites, finds this sort of nice little bonuses, well, quaint... That is why, once again, if Barack Obama wants change one can believe in, he will authorize an inquest about what really happened during the Bush years. I claim it was just a chapter in a much larger book. Let the truth roll...
4) Maybe it's time to think about what to do to get out of deflation...
The USA got out of deflation with a command economy in 1942. Roosevelt and Galbraith decided what people would be working on, and work they did.
The Great depression in the late nineteenth century was much longer (although it also ended with a sort of world war, the Spanish-American war). Maybe because no huge command economy was put in place.
Notice that the European economic stabilizers of the social programs should act like a command economy... If things get worse.
by Patrice Ayme
Sun Jan 25th, 2009 at 08:12:31 PM EST
TARP: TRANSFERRING ASSETS TO RICH PEOPLE.
January 25, 2009 by Patrice Ayme REFLECTIONS ON OBAMA'S FIRST FEW DAYS...
Obama made an excellent start, including taking a second Constitutional oath without any superstitious fetishism as a prop. In a subtle way, in his inaugural speech, Obama celebrated "truth" as the foundations of the greatest values. Those values which are "old" and "true". He also professed to honor "non believers", not just fetishists.
In foreign policy Obama named some serious heavy weights to help along. Foremost is the Middle East crisis, and it is severe, squeezed as it is getting between increasingly fanatical, hateful religious theories. The crisis can be resolved, with a lot of imagination, but it ties up to bigger issues. There should be two pillars to solving the Middle East:
- The first pillar should be WORLD nuclear disarmament [to remove the Pakistani nuclear fangs, and that will happen only if India cooperates, by disarming too, and that in turn will happen only if China goes along, because the USA and Russia are getting on with their part of the nuclear holocaust disarmament program; contemplating this perspective, Iran may be held back, because Israel too may deign to agree to dismantle its own nuclear weapons arsenal].
- After suppressing the nuclear arms race, it will remain to make real peace and justice. The second pillar for solving the Middle East crisis should be the Mediterranean Union. That would transform Israel from a thorn planted into the region, to the blossom everyone needs. The Mediterranean Union would be the southern and eastern reconstitution of the old Greco-Roman-Phoenician polity, and would make fighting among nationalities obsolete, it's the only long term solution. Israel will never tolerate a Palestinian state with a defense force, 10 kilometers from the Tel Aviv airport, so the "Two State" solution cannot work. The Mediterranean Union will make the present set-up obsolete. Its erection would allow to enforce a strong secularization of the region. In that matter, Obama will find a strong ally in Sarkozy. The French president actually suggested the Mediterranean Union (probably just for the reason advanced here). Thanks to a strong input from the German Chancellor, the new Union is open to all European Union members (so Sweden belongs to it). This only makes sense, because incorporating the Middle East into the European peace system is basic to the security of Europe, America, and the entire planet.
Western Europe escaped Caesaro-Papism, the disease invented by the Roman emperors Diocletian and Constantine, that infected the Roman empire, and survived in its "Pars Orientalis", the Orient, as the Orthodox and Muslim confusion of church and state. The European Union is now spreading as a giant machine imposing secular law and humanistic civilization, the Mediterranean Union will be its natural southern extension, mowing down all bloody superstitiously grounded fanaticisms in its liberating path.
The economic crisis is rolling on. Obama seems to be aware of its severity, but he also seems pretty much the only one. Congress, and especially many republicans, are still in dreamland, and work from the Reagan conceptual framework that caused the economic decay in the first place. Economic decay went on for a long time, but has now reached the point of loss of control. The USA is tumbling along, threatening to bring down the entire planetary economy.
What the USA is facing is a Great Depression. This is not a business-as-usual recession. It is similar to the long and shallow Great Depression of the late nineteenth century.
OK, some will say that the unemployment and bad employment rate is not as high as in 1982 yet, so we do not have a recession as bad as 1982, so how come am I so stupid as not to see that? (1982 was the worst recession since the Great Depression of the 1930s.)
The rate of unemployment and very bad sub employment peaked at 16% in 1982. Now it is "only" 13% [but it is climbing extremely fast; the official unemployment rate is only 7.2%, but does not count discouraged workers, and involuntary part timers]. Actually the situation is already way worse than in 1982, because the median US income has been falling for ten years already [it had been going up by 2% before 1982; besides health care was not as dysfunctional then. Notice in passing that this shows that the present phase of the crisis did not start with Bush, but under Clinton.]
The financial system is broke, because it invested in derivatives. It cannot be fixed by just injecting a few trillion dollars into it. Yes, trillion, with a t. Thousands of billions will not be enough. Why? The total worth of the world is around 100 trillion dollars, the total "worth" of derivatives is around six times that, an obvious absurdity. This means that the financial system invested real money in something that does not exist. Where did the real money go? Into amazing corruption. It was not just converted in mansions all over the planet and yachts, and private jets, but into enormous influence, making the rich more powerful than ever. That allowed them to do many great things such as organizing a rescue plan to free them from the threat that the recession presented for their ever increasing incomes. That transfer of money from the poor to the rich is called TARP (Troubled Asset Recovery Plan, officially speaking, but we discovered its true meaning). For example three or four billions of dollars of taxpayer money were distributed, as bonuses, just in December, for top brass at Merrill Lynch [OK, the money came from Bank of America, which got it from taxpayers, sorry about my lack of subtlety].
How broke is the financial system? Well, the parts that invested in derivatives, that means, typically the biggest banks, are insolvent (some small banks are OK, having avoided derivatives). The Royal Bank of Scotland announced this week that the biggest British banks are all insolvent. The banks in the USA cannot be far behind, since they actually invented the derivative craze. In any case, this makes it obvious at a glance that what the USA is facing is a massive nationalization of the top banks, for several trillion dollars. TARP, which is not a nationalization, but a give away, a lot of money for nothing at all, should be renamed TRANSFERRING ASSETS TO RICH PEOPLE. TARP is just a waste of time and capital, and meanwhile the real economy is being devastated.
This is the worst criticism that can be addressed to Obama in his first week: he could not make Congress understand that this is what TARP is all about, and why it's time to get on with the nationalization of the entire top part of the financial system. Now, of course, very few economists understand the simple math above; the simple truth is too enormous, too shattering, and their income and reputation depend upon not understanding it. Nobody wants to admit that they made a spelling mistake, and that the discrepancy was not about a few hundred millions, or a few hundred billions, but about a few hundred trillions. Yes, with a t.
When the physicist and astronomer Galileo allowed his friends the top cardinals to look through his telescope, so they could see the mountains on the moon, with their own eyes, and thus realize that the moon was just a big round rock, and not a heavenly substance emanating from God, the cardinals, very intelligently, could not see the mountains or their moving shadows, however hard they tried. Why? Because their aura, in its full glory, depended upon not seeing them. It's not any different with many American economists. Nationalization is the new n-word, and the rich are next to God, so give to the rich and forget nationalization, that's TARP.
Nationalizing the entire sinking ship before it reaches the bottom of the ocean is not enough. One has to dispose of the derivatives, decide they are worthless, otherwise the transfer of assets from poor to rich will keep on going. Even many years of US GDP will not make a dent in the derivative black hole.
The fundamental problem with the USA, beyond excesses of materialism and superficiality, is a lack of critical analysis capability, and even lacking a taste for engaging in it. Making arguments is the pinnacle of billions of years of biological evolution, the crown of creation. It should not be a pejorative concept [as it has become in the USA, where young children are taught not to "argue"; thus now the adult People of the USA cannot argue with their crooked banksters, lest they feel they commit some sin by talking back].
The USA will pick itself up when it starts to employ arguments, and exert judgment, on serious matters, otherwise the unemployment rate will rise to the stars and history's sentence will be heavy.
Fortunately, Obama seem capable of understanding all this, and to teach it too.
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