Archive | July 13th, 2020

Racism and the Neoliberal Consensus


Photograph by Nathaniel St. Clair

A political line was drawn in 2016 when Hillary Clinton asked: ‘if we broke up the big banks tomorrow, would that end racism?’ With history erased, the question is a non sequitur. When it is considered, Wall Street was financier to the slave trade and money launderer for it. Leading up to the crisis of 2008, Wall Street securitized predatory loans made at high interest rates to blacks because of their historic exclusion from access to credit. When the housing bubble turned to bust, Wall Street disappeared a generation or more of black wealth through foreclosures organized by America’s first black President, Barack Obama.

In the midst of protests and the reinvigorated Black Lives Matter movement, race is once again being put forward as the social axis most in need of rectification. From the perspective of ‘racial capital,’ the ills of capitalism can’t be meaningfully addressed until white supremacy has been defeated. From a left perspective grounded in Marx and history, race is a product of capitalism, not its cause. The economic relationships of indentured servitude and slavery both preceded the concept of race. And the iterative view begins with economic relationships to claim that at some point race became a causal factor in itself.

With this laid out, the establishment political parties exist to subsume and subvert social movements that threaten the rule of capital. Considered this way, Ms. Clinton’s effort to separate Wall Street from the Democrat’s emotive theory of racism serves a political purpose. Her reference to it is as a moral failure, not the toxic social residual of policies she supported. Assertions that the parties are themselves, or represent, social movements are belied by declining party membership, an absence of actionable political programs, and serial disdain by voters for their designated candidates. Their actual constituency is wealthy campaign contributors whose interests correlate with legislation that is proposed and passed.

Source: Mass incarceration began its ascent shortly after Richard Nixon declared drugs to be public enemy number one. While most prisons in the U.S. are under local and state control, the Federal government sets broad policy through Federal initiatives like the militarization of the police and the war on drugs. Nixon imagined mass incarceration as political re-education camps for his political enemies. Bill Clinton and Joe Biden organized most of the modern infrastructure of mass incarceration.

To the extent that a political movement grows out of current protests, protesters are unlikely to get a sympathetic hearing from either Donald Trump or Joe Biden. While Mr. Trump is a known quantity, Democrats assume that they know Mr. Biden through his party affiliation and as Barack Obama’s Vice-President. While rank-and-file Democrats supported his ‘law and order’ programs in the past, times have changed, and protesters are unlikely to want a repeat of this history. Given its current trajectory, the economic backdrop in 2021 will more likely than not be one of ongoing decline. This adds to the likelihood of a Weimar moment whether or not Joe Biden prevails in 2020.

Following Mr. Biden’s anointment, the Democrat’s offer to the political left— with which some protesters share ideological predilections, was to help craft their 2020 Presidential Platform. For background, here is their 2008 Platform drafted to support Barack Obama’s candidacy. The Platform itself is a marketing device intended to incorporate the ideas of the losing primary candidates to entice their supporters to vote for the Democratic nominee. The 2008 Platform recalled the legacy of FDR, while Barack Obama cited Ronald Reagan as his ideological predecessor. The 2008 Platform bore no determinable relation to Mr. Obama’s political program.

Graph: The propensity to vote rises with family income. This has to be considered against the fact that there are far more poor people than there are rich. But fewer poor people vote, and they do so less often, than the rich. When tied to the role of campaign contributions made by the rich, American elections are by and for the rich. Four years of assertions that ‘deplorables’ elected Donald Trump redefine the term to mean the suburban Republicans that Democrats have spent three decades coveting. They elected Donald Trump. Source:

This point is made because there has been no left candidate in the general election for President in living memory. Protesters imagining that Democrats will be swayed by their numbers and political passion misunderstand their role. By placing themselves as the gatekeepers of legitimate politics, the establishment parties define its contours and work to de-legitimize political programs that emerge from outside of it. When confronted by economic crises in recent history, this has led to political incapacitation where the legitimate needs of the polity go unmet in favor of restoration of leading capitalist institutions. This is followed by reforms that are either toothless or are premised in more capitalism.

The near-heroic cynicism of the Democrat’s elevation of Joe Biden following four plus years of selling themselves as the antidote to racialized nationalism demonstrates first and foremost that their use of race is as a political lever, not a moral or political position. If militarization of the police and mass incarceration have a racial component, how does this leave their proponents like Biden in a position to posture as anti-racists? The lesson for protesters is that the Democratic half of the reactionary core of capitalism finds rhetorical anti-racism to be the more useful device for furthering the interests of capital than other social wedges.

Were it not for the merging of the anti-racist left with the FBI, CIA, NSA and neoliberal Democrats to place Donald Trump on one side of the racist divide and these other entities— most with substantial, inglorious histories supporting racial repression, wars for economic resources, right-wing death squads and economic warfare against defenseless peoples, then political positions could be treated more discretely. The point, of course, isn’t to elevate Donald Trump, but rather to suggest that the clear contrast put forward to distinguish these parties isn’t all that clear.

Protesters may want to take this idea of a reactionary core to heart regarding black support for Joe Biden. The truism that working and middle class blacks supported the 1994 Crime Bill, and the hard right-turn of the Democrats more generally, begs the question: why wouldn’t they? Only white liberals would imagine distinct political realms for working and middle class blacks and whites. If policies around ‘crime’ can be de-racialized in rhetoric, why can’t they in fact? In other words, why was there substance to Bill Clinton’s mea culpa regarding his Crime Bill?

The 13th Amendment to the U.S. Constitution reads:

Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

In the pseudo-scientific frame of criminology, ‘crime’ has no racial connotation. It is through the use of incarceration for purposes of economic exploitation that race was tied to it. The rationale wasn’t punishment for breaking the law, but to exploit and maintain a super-exploitable class of workers. Richard Nixon used drug laws to disrupt and detain his political enemies. Today a reasonable argument could be made that mass incarceration is warehousing a reserve army of the unemployed, although labor outsourcing has served this purpose quite effectively.

What Bill Clinton, and even more forcefully Joe Biden, said in 1994 was that they didn’t care about this history. Their de-historized view of crime and punishment fit the ever-present now of capitalist theory and criminology. Four hundred years of American history may have landed blacks where they were in 1994, but that was irrelevant through the lens of crime and punishment. Clinton and Biden didn’t target blacks because they were black, but because they had political motives for criminalizing the political economy they existed within.

This criminalization of poverty ties to neo-colonial strategies like hut taxes that were used to force peasants to seek employment in the cash economy, meaning working for capitalists for whatever wages they can get. What evidence is there for this claim? The Reaganite frame Clinton worked within had ‘contributing to society’ through capitalist employment as the motive for cutting social expenditures. When the informal economy is criminalized, those working in it either find ‘legitimate’ employment or they are sent to prison. Their entry drives down wages for existing workers. Policing and incarceration served enforcement roles for capital when they weren’t being used for direct economic exploitation.

As those who have experienced it know, violence is abhorrent. Had Messrs. Clinton and Biden criminalized violence, they would have been subject to arrest themselves for the almost daily bombing of Iraq that led up to George W. Bush’s wargasm in 2003. As advocates and facilitators of police violence against Americans, nationality held no sway over who they thought should be subjected to it. At the time, fresh evidence had it that the CIA was a major operator in the narcotics trade. In this context, the line between legitimate and illegitimate violence devolves to brute force. Rampant murders in the drug trade at the time mirrored the political ethos from above.

George Floyd was one of about 1,100 people killed by the police in the last twelve months. There is no way to know how the brutality of his murder compares to the others. More of those murdered were white than weren’t. Ending police violence and mass incarceration are worthy goals. But they (police violence and mass incarceration) fit into the wider social logic of capitalism. It isn’t incidental that the most capitalist nation in the world is also the most militaristic. If you know how to end racial animus, please, do so. I don’t. But I do have a few ideas for rethinking capitalism.

Posted in USAComments Off on Racism and the Neoliberal Consensus

The War That Time Forgot


Drone targeting footage, Afghanistan. Photo: USAF.

I hear it all the time. The most crucial decision of this century was the vote to go to war against Iraq. It’s meant to serve as a political line of demarcation, a sure-fire way to determine which politicians, celebrities and news personalities you can trust.

But there’s little question, to my mind at least, that the impulsive decision to invade Afghanistan was the more consequential and enduring tragedy, a political bloodletting that nearly every political leader, left and right, fell for, even putative peaceniks like Bernie Sanders and Ron Paul. This was the true moral test of our time and almost everyone failed, except Barbara Lee. She was the lone voice of conscience in the fall of 2001, a vote of dissent in a time of mass hysteria that has been vindicated time and again over the past 18 years.

Remember, the vote to go to war against Afghanistan, enacted only seven days after the 9/11 attacks, was actually a vote for an open-ended war waged against nebulous “terrorists” anywhere on the planet: Pakistan, Niger, Yemen, Somalia, Algeria. You name it. No questions asked. It was only Barbara Lee foresaw the consequences, how even a highflying critic of the rush to invade Iraq like Barack Obama could 14-years later use the hastily-written AUMF as a legal basis for launching airstrikes on ISIS forces inside Syria. Now, Donald Trump has claimed the same unilateral authority and used it to justify strikes against the Syrian regime of Bashar al-Assad and to justify the assassination of Qasem Suleimani. It’s the gift that keeps on killing.

What has the AUMF wrought? More than 18 years after the first US airstrikes hit Kabul, Kandahar and Jalalabad, the Taliban now control more of Afghanistan than they did on October 6, 2001, the day before a cruise missile strike destroyed Mullah Omar’s house. Last year was the deadliest year for US troops in Afghanistan since 2014 during Obama’s ill-fated surge. The Pentagon has long since stopped tracking the Afghan dead, but Neta Crawford, of Brown University’s Cost of War Project, estimated that by 2016 more than 111,000 Afghans had been killed in the war, at least 31,000 of them civilians.

Trump has repeatedly boasted about having secret plans in his desk draw to win the Afghanistan war in a week, but it would “kill 10 million people.” On April 13, 2017, US planes dropped a MOAB bomb on a suspected tunnel complex in Khorasan Province, the most destructive non-nuclear bomb in the Pentagon’s arsenal. Trump has since implied a willingness to consider using tactical nuclear weapons against Taliban, Al Qaeda and ISIS positions in Afghanistan.

Because of the Pentagon’s $1.7 trillion secret slush fund for “anti-terror” operations, it’s almost impossible to calculate the total cost of the Afghanistan war to date. At a minimum, the US is spending about $52 billion a year waging war in Afghanistan. But, even as Trump expresses a desire to pullout US troops before the fall elections, this number is likely to rise, as US combat missions and airstrikes in Afghanistan have increased steadily since 2017 with little public debate or justification.

As recently as December 2019, top US military brass have described the war as a “strategic stalemate.” But it’s hard to determine precisely what this means since under Trump the Pentagon is “no longer producing its district-level stability assessments of Afghan government and insurgent control and influence”–the only real metric for judging the progress of the war. These reports, known as the SIGAR assessments, had provided quarterly estimates of the amount of land area and population under Taliban control or influence.

The final SIGAR report, issued in January 2019 before Trump pulled the plug, showed that only 53.4 percent of Afghanistan was under government control or influence, the lowest amount since SIGAR began tracking the data in 2015. The clear message is that 18 years into a war that has killed and maimed hundreds of thousands of people, the US is losing, even as one administration after another lies about the reasons we are there and the consequences, political and moral, for staying.

The so-called Afghanistan Papers, an internal review of the conduct of the war by the Inspector General’s Office, reveals that the Pentagon knew the war was hopeless from the earliest days and went to extraordinary lengths to hide this reality from the public and from the politicians who hold the purse-strings. The fraudulent depictions of the war spread virulently across three administrations. As Bob Crowley, a counter-terrorism advisor to CENTCOM during the Obama surge said derisively: “Every data point was altered to present the best picture possible.”

When revealed in the Washington Post, the story made a splash for a couple of days and then, like every other revelation about the Afghan catastrophe, dissipated from the headlines and from the political debate. The tempo of US airstrikes once again increased. A suicide bomber blew himself up in Charikar at a rally for Afghan president Ashraf Ghani, killing 26 and wounding 42. Trump proclaimed negotiations with the Taliban “dead” and put a hold on reconstruction funds. US troops were ambushed by the Taliban. A CIA special ops plane was shot down. And the UN reported that US airstrikes had killed 579 civilians and wounded 306 in the last year, an increase of 35 percent over 2018.

Just another few weeks in the war that time forgot.

The Exquisite Corpse Will Drink the New Wine

Booked Up
What I’m listening to this week…

The Beginning or the End: How Hollywood―and America―Learned to Stop Worrying and Love the Bomb
Greg Mitchell
(The New Press)

The Button: The New Nuclear Arms Race and Presidential Power from Truman to Trump
William J. Perry and Tom Z. Collina
(BenBella Books)

The Bird Way: A New Look at How Birds Talk, Work, Play, Parent, and Think
Jennifer Ackerman
(Penguin Press)

Sound Grammar
What I’m listening to this week…


Four Questions
Arturo O’Farrill & the Afro Latin Jazz Orchestra

You Make Me Feel
Don Bryant
(Fat Possum)

Posted in USA, Afghanistan, C.I.A, PoliticsComments Off on The War That Time Forgot

An Economic Elephant in Canada’s Room.

Unprecedented Debt Crisis in the Making

By Michelle Rempel Garner and Mark Taliano

There are several economic elephants in Canada’s room. One of them is neoliberal economic orthodoxy.

Broadly speaking, neoliberalism can be defined in terms of a “trinity”: privatization, deregulation, the evisceration of the public sphere. It speaks to corporate power and public subservience.

More expansively, neoliberalism is emblematic of these characteristics, as described by Joyce Nelson in her book, Bypassing Dystopia (1)

Deregulation, open borders for capital, small government/big state, tax cuts for multinational corporations, austerity budgets, union-busting, privatization of public assets (recycling), corporate rights (“free trade”) deals, tax havens, no limits to growth (as defined by GDP), Central Bank “independence” (servitude to international banksterism ie BIS), and privatization of money-creation functions.

Neoliberalism (all of the above) eviscerates middle classes, increases poverty, enriches globalist ruling classes, and it is one of Canada’s economic elephants. The cure? We need to reject neoliberal orthodoxy.

All of Canada’s political parties are wedded to neoliberalism and globalism, as if there were no alternatives. If nothing else, the COVID Operation should teach us that this globalist, warmongering, impoverishing political orthodoxy needs to be identified, understood, and abolished for the abomination that it is.

Am important first step would be the Bank of Canada. Nelson explains that from 1938-1974 Canada borrowed from the Bank of Canada at near zero interest rates, for infrastructure and health spending. We did not enslave enslave ourselves to international banksters, and it was accomplished without creating inflationary problems. We could and should do this again, but it requires political will. It requires an enlightened and informed public. The bank belongs to Canadians for Canadians. It isn’t complicated, but reversing the social engineering and the globalist propaganda is a challenge.

Canada and Canadians have paid approximately $1.5 trillion in interest on borrowing since we shackled ourselves to international banksterism, including the Bank of International Settlements, in 1974.Canada Fuels Assault on Syria, but Syrians Are Resilient

We need to reject the Canadian Infrastructure Bank (CIB), widely regarded as a “privatization” bank, and instead embrace the Bank of Canada.

If we are to regain political or economic sovereignty anytime soon, this subservience to globalism would have to end.

When legislators miss the economic elephant in the room (see below), they are missing everything.


The Net Federal Debt will be above One Trillion Dollars.

Canada’s Credit Rating Downgrading.

Our Credit Rating is down the Toilet. There is no economic recovery plan.

He has shut down Parliament.

Posted in CanadaComments Off on An Economic Elephant in Canada’s Room.

The New “Water Barons”: Wall Street Mega-Banks are Buying up the World’s Water

By Jo-Shing Yang

Global Research,

This article was first published on December 21, 2012 by Market Oracle and Global Research 

A disturbing trend in the water sector is accelerating worldwide. The new “water barons” — the Wall Street banks and elitist multibillionaires — are buying up water all over the world at unprecedented pace.

Familiar mega-banks and investing powerhouses such as Goldman Sachs, JP Morgan Chase, Citigroup, UBS, Deutsche Bank, Credit Suisse, Macquarie Bank, Barclays Bank, the Blackstone Group, Allianz, and HSBC Bank, among others, are consolidating their control over water. Wealthy tycoons such as T. Boone Pickens, former President George H.W. Bush and his family, Hong Kong’s Li Ka-shing, Philippines’ Manuel V. Pangilinan and other Filipino billionaires, and others are also buying thousands of acres of land with aquifers, lakes, water rights, water utilities, and shares in water engineering and technology companies all over the world.

The second disturbing trend is that while the new water barons are buying up water all over the world, governments are moving fast to limit citizens’ ability to become water self-sufficient (as evidenced by the well-publicized Gary Harrington’s case in Oregon, in which the state criminalized the collection of rainwater in three ponds located on his private land, by convicting him on nine counts and sentencing him for 30 days in jail). Let’s put this criminalization in perspective:

Billionaire T. Boone Pickens owned more water rights than any other individuals in America, with rights over enough of the Ogallala Aquifer to drain approximately 200,000 acre-feet (or 65 billion gallons of water) a year. But ordinary citizen Gary Harrington cannot collect rainwater runoff on 170 acres of his private land.

It’s a strange New World Order in which multibillionaires and elitist banks can own aquifers and lakes, but ordinary citizens cannot even collect rainwater and snow runoff in their own backyards and private lands.

“Water is the oil of the 21st century.” Andrew Liveris, CEO of DOW Chemical Company (quoted in The Economist magazine, August 21, 2008)

In 2008, I wrote an article,

“Why Big Banks May Be Buying up Your Public Water System,” in which I detailed how both mainstream and alternative media coverage on water has tended to focus on individual corporations and super-investors seeking to control water by buying up water rights and water utilities. But paradoxically the hidden story is a far more complicated one. I argued that the real story of the global water sector is a convoluted one involving “interlocking globalized capital”: Wall Street and global investment firms, banks, and other elite private-equity firms — often transcending national boundaries to partner with each other, with banks and hedge funds, with technology corporations and insurance giants, with regional public-sector pension funds, and with sovereign wealth funds — are moving rapidly into the water sector to buy up not only water rights and water-treatment technologies, but also to privatize public water utilities and infrastructure.

Now, in 2012, we are seeing this trend of global consolidation of water by elite banks and tycoons accelerating. In a JP Morgan equity research document, it states clearly that “Wall Street appears well aware of the investment opportunities in water supply infrastructure, wastewater treatment, and demand management technologies.” Indeed, Wall Street is preparing to cash in on the global water grab in the coming decades. For example, Goldman Sachs has amassed more than $10 billion since 2006 for infrastructure investments, which include water. A 2008 New York Times article mentioned Goldman Sachs, Morgan Stanley, Credit Suisse, Kohlberg Kravis Roberts, and the Carlyle Group, to have “amassed an estimated an estimated $250 billion war chest — must of it raised in the last two years — to finance a tidal wave of infrastructure projects in the United States and overseas.”

By “water,” I mean that it includes water rights (i.e., the right to tap groundwater, aquifers, and rivers), land with bodies of water on it or under it (i.e., lakes, ponds, and natural springs on the surface, or groundwater underneath), desalination projects, water-purification and treatment technologies (e.g., desalination, treatment chemicals and equipment), irrigation and well-drilling technologies, water and sanitation services and utilities, water infrastructure maintenance and construction (from pipes and distribution to all scales of treatment plants for residential, commercial, industrial, and municipal uses), water engineering services (e.g., those involved in the design and construction of water-related facilities), and retail water sector (such as those involved in the production, operation, and sales of bottled water, water vending machines, bottled water subscription and delivery services, water trucks, and water tankers).

Update of My 2008 Article: Mega-Banks See Water as a Critical Commodity

Since 2008, many giant banks and super-investors are capturing more market share in the water sector and identifying water as a critical commodity, much hotter than petroleum.

Goldman Sachs: Water Is Still the Next Petroleum

In 2008, Goldman Sachs called water “the petroleum for the next century” and those investors who know how to play the infrastructure boom will reap huge rewards, during its annual “Top Five Risks” conference. Water is a U.S.$425 billion industry, and a calamitous water shortage could be a more serious threat to humanity in the 21st century than food and energy shortages, according to Goldman Sachs’s conference panel. Goldman Sachs has convened numerous conferences and also published lengthy, insightful analyses of water and other critical sectors (food, energy).

Goldman Sachs is positioning itself to gobble up water utilities, water engineering companies, and water resources worldwide. Since 2006, Goldman Sachs has become one of the largest infrastructure investment fund managers and has amassed a $10 billion capital for infrastructure, including water.

In March 2012, Goldman Sachs was eyeing Veolia’s UK water utility business, estimated at £1.2 billion, and in July it successfully bought Veolia Water, which serves 3.5 million people in southeastern England.

Previously, in September 2003, Goldman Sachs partnered with one of the world’s largest private-equity firm Blackstone Group and Apollo Management to acquire Ondeo Nalco (a leading company in providing water-treatment and process chemicals and services, with more than 10,000 employees and operations in 130 countries) from French water corporation Suez S.A. for U.S.$4.2 billion.

In October 2007, Goldman Sachs teamed up with Deutsche Bank and several partners to bid, unsuccessfully, for U.K.’s Southern Water. In November 2007, Goldman Sachs was also unsuccessful in bidding for U.K. water utility Kelda. But Goldman Sachs is still looking to buy other water utilities.

In January 2008, Goldman Sachs led a team of funds (including Liberty Harbor Master Fund and the Pinnacle Fund) to buy U.S.$50 million of convertible notes in China Water and Drinks Inc., which supplies purified water to name-brand vendors like Coca-Cola and Taiwan’s top beverage company Uni-President. China Water and Drinks is also a leading producer and distributor of bottled water in China and also makes private-labeled bottled water (e.g., for Sands Casino, Macau). Since China has one of the worse water problems in Asia and a large emerging middle class, its bottled-water sector is the fastest-growing in the world and it’s seeing enormous profits. Additionally, China’s acute water shortages and serious pollution could “buoy demand for clean water for years to come, with China’s $14.2 billion water industry a long-term investment destination” (Reuters, January 28, 2008).

The City of Reno, Nevada, was approached by Goldman Sachs for “a long-term asset leasing that could potentially generate significant cash for the three TMWA [Truckee Meadows Water Authority] entities. The program would allow TMWA to lease its assets for 50 years and receive an up-front cash payment” (Reno News & Review, August 28, 2008). Essentially, Goldman Sachs wants to privatize Reno’s water utility for 50 years. Given Reno’s revenue shortfall, this proposal was financially attractive. But the water board eventually rejected the proposal due to strong public opposition and outcry.

Citigroup: The Water Market Will Soon Eclipse Oil, Agriculture, and Precious Metals

Citigroup’s top economist Willem Buitler said in 2011 that the water market will soon be hotter the oil market (for example, see this and this):

“Water as an asset class will, in my view, become eventually the single most important physical-commodity based asset class, dwarfing oil, copper, agricultural commodities and precious metals.”

In its recent 2012 Water Investment Conference, Citigroup has identified top 10 trends in the water sector, as follows:

1. Desalination systems
2. Water reuse technologies
3. Produced water / water utilities
4. Membranes for filtration
5. Ultraviolet (UV) disinfection
6. Ballast-water treatment technologies
7. Forward osmosis used in desalination
8. Water-efficiency technologies and products
9. Point-of-use treatment systems
10. Chinese competitors in water

Specifically, a lucrative opportunity in water is in hydraulic fracturing (or fracking), as it generates massive demand for water and water services. Each oil well developed requires 3 to 5 million gallons of water, and 80% of this water cannot be reused because it’s three to 10 times saltier than seawater. Citigroup recommends water-rights owners sell water to fracking companies instead of to farmers because water for fracking can be sold for as much as $3,000 per acre-foot instead of only $50 per acre/foot to farmers.

The ballast-water treatment sector, currently at $1.35 billion annually, is estimated to reach $30 to $50 billion soon. The water-filtration market is expected to outgrow the water-equipment market: Dow estimates it to be a $5 billion market annually instead of only $1 billion now.

Citigroup is aggressively raising funds for its war chest to participate in the coming tidal wave of infrastructure privatization: in 2007 it established a new unit called Citi Infrastructure Investors through its Citi Alternative Investments unit. According to Reuters, Citigroup “assembled some of the biggest names in the infrastructure business at the same time it is building a $3 billion fund, including $500 million of its own capital. The fund, according to a person familiar with the situation, will have only a handful of outside investors and will be focused on assets in developed markets” (May 16, 2007). Citigroup initially sought only U.S.$3 billion for its first infrastructure fund but was seeking U.S.$5 billion in April 2008 (Bloomberg, April 7, 2008).

Citigroup partnered with HSBC Bank, Prudential, and other minor partners to acquire U.K.’s water utility Kelda (Yorkshire Water) in November 2007. This week, Citigroup signed a 99-year lease with the City of Chicago for Chicago’s Midway Airport (it partnered with John Hancock Life Insurance Company and a Canadian private airport operator). Insiders said that Citigroup is among those bidding for the state-owned company Letiste Praha which operates the Prague Airport in the Czech Republic (Bloomberg, February 7, 2008).

As the five U.K. water utility deals illustrate, typically no one single investment bank or private-equity fund owns the entire infrastructure project — they partner with many others. The Citigroup is now entering India’s massive infrastructure market by partnering the Blackstone Group and two Indian private finance companies; they have launched a U.S.$5 billion fund in February 2007, with three entities (Citi, Blackstone, and IDFC) jointly investing U.S.$250 million. India requires about U.S.$320 billion in infrastructure investments in the next five years (The Financial Express, February 16, 2007).

UBS: Water Scarcity Is the Defining Crisis of the 21st Century

In 2006, UBS Investment Research, a division of Switzerland-based UBS AG, Europe’s largest bank by assets, entitled its 40-page research report, “Q-Series®:Water”—“Water scarcity: The defining crisis of the 21st century?” (October 10, 2006) In 2007, UBS, along with JP Morgan and Australia’s Challenger Fund, bought UK’s Southern Water for £4.2biillion.

Credit Suisse: Water Is the “Paramount Megatrend of Our Time”

Credit Suisse published its report about Credit Suisse Water Index (January 21, 2008) urged investors that “One way to take advantage of this trend is to invest in companies geared to water generation, preservation, infrastructure treatment and desalination. The Index enables investors to participate in the performance of the most attractive companies….” The trend in question, according to Credit Suisse, is the “depletion of freshwater reserves” attributable to “pollution, disappearance of glaciers (the main source of freshwater reserves), and population growth, water is likely to become a scarce resource.”

Credit Suisse recognizes water to be the “paramount megatrend of our time” because of a water-supply crisis might cause “severe societal risk” in the next 10 years and that two-thirds of the world’s population are likely to live under water-stressed conditions by 2025. To address water shortages, it has identified desalination and wastewater treatment as the two most important technologies. Three sectors for good investments include the following:

§ Membranes for desalination and wastewater treatment
§ Water infrastructure — corrosion resistance, pipes, valves, and pumps
§ Chemicals for water treatment

It also created the Credit Suisse Water Index which has the equally weighed index of 30 stocks out of 128 global water stocks. For investors, it offered “Credit Suisse PL100 World Water Trust (PL100 World Water),” launched in June 2007, with $112.9 million.

Credit Suisse partnered with General Electric (GE Infrastructure) in May 2006 to establish a U.S.$1 billion joint venture to profit from privatization and investments in global infrastructure assets. Each partner will commit U.S.$500 million to target electricity generation and transmission, gas storage and pipelines, water facilities, airports, air traffic control, ports, railroads, and toll roads worldwide. This joint venture has estimated that the developed market’s infrastructure opportunities are at U.S.$500 billion, and emerging world’s infrastructure market is U.S.$1 trillion in the next five years (Credit Suisse’s press release, May 31, 2006).

In October 2007, Credit Suisse partnered with Cleantech Group (a Michigan-based market-research, consulting, media, and executive-search firm that operates cleantech forums) and Consensus Business Group (a London-based equity firm owned by U.K. billionaire Vincent Tchenguiz) to invest in clean technologies worldwide. The technologies will also clean water technologies.

During its Asian Investment Conference, it said that “Water is a focus for those in the know about global strategic commodities. As with oil, the supply is finite but demand is growing by leaps and unlike oil there is no alternative.” (Credit Suisse, February 4, 2008). Credit Suisse sees the global water market with U.S.$190 billion in revenue in 2005 and was expected to grow to U.S.$342 billion by 2010. It sees most significant growth opportunities in China.

JPMorgan Chase: Build Infrastructure War Chests to Buy Water, Utilities, and Public Infrastructure Worldwide

One of the world’s largest banks, JPMorgan Chase has aggressively pursued water and infrastructure worldwide. In October 2007, it beat out rivals Morgan Stanley and Goldman Sachs to buy U.K.’s water utility Southern Water with partners Swiss-based UBS and Australia’s Challenger Infrastructure Fund. This banking empire is controlled by the Rockefeller family; the family patriarch David Rockefeller is a member of the elite and secretive Bilderberg Group, Council on Foreign Relations, and Trilateral Commission.

JPMorgan sees infrastructure finance as a global phenomenon, and it is joined by its global peers in investment and banking institution in their rush to cash in on water and infrastructure. JPMorgan’s own analysts estimate that the emerging markets’ infrastructure is approximately U.S.$21.7 trillion over the next decade.

JPMorgan created a U.S.$2 billion infrastructure fund to go after India’s infrastructure projects in October 2007. The targeted projects are transportation (roads, bridges, railroads) and utilities (gas, electricity, water). India’s finance minister has been estimated that India requires about U.S.$500 billion in infrastructure investments by 2012. In this regard, JPMorgan is joined by Citigroup, the Blackstone Group, 3i Group (Europe’s second-largest private-equity firm), and ICICI Bank (India’s second-largest bank) (International Herald Tribune, October 31, 2007). Its JPMorgan Asset Management has also established an Asian Infrastructure & Related Resources Opportunity Fund which held a first close on U.S.$500 million (€333 million) and will focus on China, India, and other Southern Asian countries, with the first two investments in China and India (Private Equity Online, August 11, 2008). The fund’s target is U.S.$1.5 billion.

JPMorgan’s Global Equity Research division also published a 60-page report called “Watch water: A guide to evaluating corporate risks in a thirsty world” (April 1, 2008).

In 2010, J.P. Morgan Asset Management and Water Asset Management led a $275 million buyout bid for SouthWest Water.

Allianz Group: Water Is Underpriced and Undervalued

Founded in 1890, Germany’s Allianz Group is one of the leading global services providers in insurance, banking, and asset management in about 70 countries. In April 2008, Allianz SE launched the Allianz RCM Global Water Fund which invests in equity securities of water-related companies worldwide, emphasizing long-term capital appreciation. Alliance launched its Global EcoTrends Fund in February 2007 (Business Wire, February 7, 2007).

Allianz SE’s Dresdner Bank AG told its investors that “Investments in water offer opportunities: Rising oil prices obscure our view of an even more serious scarcity: water. The global water economy is faced with a multi-billion dollar need for capital expenditure and modernization. Dresdner Bank sees this as offering attractive opportunities for returns for investors with a long-term investment horizon.” (Frankfurt, August 14, 2008)

Like Goldman Sachs, Allianz has the philosophy that water is underpriced. A co-manager of the Water Fund in Frankfurt, said, “A key issue of water is that the true value of water is not recognized. …Water tends to be undervalued around the world. …Perhaps that is one of the reasons why there are so many places with a lack of supply due to a lack of investment. With that in mind, it makes sense to invest in companies that are engaged in improving water quality and infrastructure.” Allianz sees two key investment drivers in water: (1) upgrading the aging infrastructure in the developed world; and (2) new urbanization and industrialization in developing countries such as China and India.

Barclays PLC: Water Index Funds and Exchange-Traded Funds

Barclays PLC is a U.K.-based major global financial services provider operating in all over the world with roots in London since 1690; it operates through its subsidiary Barclays Bank PLC and its investment bank called Barclays Capital.

Barclays Bank’s unit Barclays Global Investors manages an exchange-traded fund (ETF) called iShares S&P Global Water, which is listed on the London Stock Exchanges and can be purchased like any ordinary share through a broker. Touting the iShares S&P Global Water as offering “a broad based exposure to shares of the world’s largest water companies, including water utilities and water equipment stocks” of water companies around the world, this fund as of March 31, 2007 was valued at U.S.$33.8 million.

Barclays also have a climate index fund: launched on January 16, 2008, SAM Indexes GmbH licensed its Dow Jones Sustainability Index to Barclays Capital for investors in Germany and Switzerland. Many other banks also have a climate index or sustainability index.

In October 2007, Barclays Capital also partnered with Protected Distribution Limited (PDL) to launch a new water investment fund (with expected annual returns of 9% to 11%) called Protected Water Fund. This new fund, listed in the Isle of Man, requires a minimum of £10,000 and is structured as a 10-year investment with Barclays Bank providing 100% of capital protection until maturity on October 11, 2017. The Protected Water Fund will be invested in some of the world’s largest water companies; its investment decisions will be made based on an index created by Barclays Capital, the Barclays World Water Strategy, which charts the performance of some of the world’s largest water-related stocks (Investment Week and Reuters, October 11, 2007; Business Week, October 15, 2007).

Deutsche Bank’s €2 Billion Investment in European Infrastructure: “Megatrend” in Water, Climate, Infrastructure, and Agribusiness Investments

Deutsche Bank is one of the major players in the water sector worldwide. Its Deutsche Bank Advisors have identified water as a part of the climate investment strategies. In its presentation, “Global Warming: Implications for Investors,” they have identified the four following major areas for water investment:

§ Distribution and management: (1) Supply and recycling, (2) water distribution and sewage, (3) water management and engineering.
§ Water purification: (1) Sewage purification, (2) disinfection, (3) desalination, (4) monitoring.
§ Water efficiency (demand): (1) Home installation, (2) gray-water recycling, (3) water meters.
§ Water and nutrition: (1) Irrigation, (2) bottled water.

In addition to water, the other two new resources identified were agribusiness (e.g., pesticides, genetically modified seeds, mineral fertilizers, agricultural machinery) and renewable energies (e.g., solar, wind, hydrothermal, biomass, hydroelectricity).

The Deutsche Bank has established an investment fund of up to €2 billion in European infrastructure assets using its Structured Capital Markets Group (SCM), part of the bank’s Global Markets division. The bank already has several “highly attractive infrastructure assets,” including East Surrey Holdings, the owner of U.K.’s water utility Sutton & East Surrey Water (Deutsche Bank press release, September 22, 2006).

Moreover, Deutsche Bank has channeled €6 billion (U.S.$8.55 billion) into climate change funds, which will target companies with products that cut greenhouse gases or help people adapt to a warmer world, in sectors from agriculture to power and construction (Reuters, October 18, 2007).

In addition to SCM, Deutsche Bank also has the RREEF Infrastructure, part of RREEF Alternative Investments, headquartered in New York with main hubs in Sydney, Singapore, and London. RREEF Infrastructure has more than €6.7 billion in assets under management. One of its main targets is utilities, including electricity networks, water-treatment or distribution operations, and natural-gas networks. In October 2007, RREEF partnered with Goldman Sachs, GE, Prudential, and Babcok & Brown Ltd. to bid unsuccessfully for U.K.’s water utility Southern Water.

§ Crediting the boom in European infrastructure investment, the RREEF fund by August 2007 had raised €2 billion (U.S.$2.8 billion); Europe’s infrastructure market is valued at between U.S.$4 trillion to U.S.$6 trillion (DowJones Financial News Online, August 7, 2007).

§ Bulgaria — Deutsche Bank Bulgaria is planning to participate in large infrastructure projects, including public-private partnership projects in water and sewage worth up to €1 billion (Sofia Echo Media, February 26, 2008).

§ Middle East — Along with Ithmaar Bank B.S.C. (an private-equity investment bank in Bahrain), Deutsche Bank co-managed a U.S.$2 billion Shari’a-compliant Infrastructure and Growth Capital Fund and plans to target U.S.$630 billion in regional infrastructure.

Deutsche Bank AG is co-owner of Aqueduct Capital (UK) Limited which in 2006 offered to buy U.K.’s sixth-largest water utility Sutton and East Surrey Water plc from British tycoon Guy Hand. According to an OFWAT consultation paper (May 2007), Deutsche Bank formed this new entity, Aqueduct Capital (short for ACUK), in October 2005, with two public pension funds in Canada, Singapore’s life insurance giant, and a Canadian province’s investment fund, among others. This case, again, is an illustration of the complex nature of ownership of water utilities today, with various types of institutions crossing national boundaries to partner with each other to hold a stake in the water sector. With its impressive war chest dedicated to water, food, and infrastructure, Deutsche Bank is expected to become a major player in the global water sector.

Other Mega-Banks Eyeing Water as Hot Investment

Merrill Lynch (before being bought by Bank of America) issued a 24-page research report titled “Water scarcity; a bigger problem than assumed” (December 6, 2007). ML said that water scarcity is “not limited to arid climates.”

Morgan Stanley in its publication, “Emerging Markets Infrastructure: Just Getting Started” (April 2008) recommends three areas of investment opportunities in water: water utilities, global operators (such as Veolia Environment), and technology companies (such as those that manufacture membranes and chemicals used in water treatment to the water industry).

Mutual Funds and Hedge Funds Join the Action in Water

Water investment funds are on the rise, such as these four well-known water-focused mutual funds:

1. Calvert Global Water Fund (CFWAX) — $42 million in assets as of 2010, which holds 30% of its assets in water utilities, 40% in infrastructure companies, and 30% in water technologies. Also between 65% to 70% of the water stocks derived more than 50% of their revenue from water-related activities.
2. Allianz RCM Global Water Fund (AWTAX) — $54 million assets as of 2010, most of it invested in water utilities.
3. PFW Water Fund (PFWAX) — $17 million in assets as of 2010, with a minimum investment of $2,500, with 80% invested in water-related companies….
4. Kinetics Water Infrastructure Advantaged Fund (KWIAX) — $26 million in assets as of 2010, with a minimum investment of $2,500.

This is a brief list of water-centered hedge funds:

§ Master Water Equity Fund — Summit Global AM (United States)
§ Water Partners Fund — Aqua Terra AM (United States)
§ The Water Fund — Terrapin AM (United States)
§ The Reservoir Fund — Water AM (United States)
§ The Oasis Fund — Perella Weinberg AM (United States)
§ Signina Water Fund — Signina Capital AG (Switzerland)
§ MFS Water Fund of Funds — MFS Aqua AM (Australia)
§ Triton Water Fund of Funds — FourWinds CM (United States)
§ Water Edge Fund of Funds — Parker Global Strategies LLC (United States)

Other banks have launched water-targeted investment funds. Several well-known specialized water funds include Pictet Water Fund, SAM Sustainable Water Fund, Sarasin Sustainable Water Fund, Swisscanto Equity Fund Water, and Tareno Waterfund. Several structured water products offered by major investment banks include ABN Amro Water Stocks Index Certificate, BKB Water Basket, ZKB Sustainable Basket Water, Wagelin Water Shares Certificate, UBS Water Strategy Certificate, and Certificate on Vontobel Water Index. There are also several water indexes and index funds, as follows:

Credit Suisse Water Index
HSBC Water, Waste, and Pollution Control Index
Merrill Lynch China Water Index
S&P Global Water Index
First Trust ISE Water Index Fund (FIW)
International Securities Exchange’s ISE-B&S Water Index

The following is a small sample of other water funds and certificates (not exhaustive of the current range of diverse water products available):

Allianz RCM Global EcoTrends Fund
Allianz RCM Global Water Fund
UBS Water Strategy Certificate—it has a managed basket of 25 international stocks
Summit Water Equity Fund
Maxxwater Global Water Fund
Claymore S&P Global Water ETF (CGW)
Barclays Global Investors’ iShares S&P Global Water
Barclays and PDL’s Protected Water Fund based on Barclays World Water Strategy
Invesco’s PowerShares Water Resources Portfolio ETF (PHO)
Invesco’s PowerShares Global Water (PIO)
Pictet Asset Management’s Pictet Water Fund and Pictet Water Opportunities Fund
Canadian Imperial Bank of Commerce’s Water Growth Deposit Notes
Criterion Investments Limited’s Criterion Water Infrastructure Fund

One often-heard reason for the investment banks’ rush to control of water is that “Utilities are viewed as relatively safe assets in an economic downturn so [they] are more isolated than most from the global credit crunch, initially sparked by concerns over U.S. subprime mortgages” (Reuters, October 9, 2007). A London-based analyst at HSBC Securities told Bloomberg News that water is a good investment because “You’re buying something that’s inflation proof and there’s no threat to earnings really. It’s very stable and you can sell it any time you want” (Bloomberg, October 8, 2007).

More Pension Funds Investing in Water

Many pension funds have entered the water sector as a relatively safe sector for investment. For example, BT Pension Scheme (of British Telecom plc) has bought stakes in Thames Water in 2012, while Canadian pension funds CDPQ (Caisse de dépôt et placement du Québec, which manages public pension funds in Québec) and CPPIB (Canada Pension Plan Investment Board) have acquired England’s South East Water and Anglian Water, respectively, as reported by Reuters this year.

Sovereign Wealth Investment Funds Jumping into Water

In January 2012, China Investment Corporation has bought 8.68% stakes in Thames Water, the largest water utility in England, which serves parts of the Greater London area, Thames Valley, and Surrey, among other areas.

In November 2012, One of the world’s largest sovereign wealth funds, the Abu Dhabi Investment Authority (ADIA), also purchased 9.9% stake in Thames Water.

Billionaires Sucking up Water Globally: George H.W. Bush and Family, Li Ka-shing, the Filipino Billionaires, and Others

Not only are the mega-banks investing heavily in water, the multibillionaire tycoons are also buying water.

Update on Hong Kong Multibillionaire Li Ka-shing’s Water Acquisition

In summer 2011, the Hong Kong multibillionaire tycoon Li Ka-shing who owns Cheung Kong Infrastructure (CKI), bought Northumbrian Water, which serves 2.6 million people in northeastern England, for $3.9 billion (see this and this).

CKI also sold Cambridge Water for £74 million to HSBC in 2011. Not satisfied with controlling the water sector, in 2010, CKI with a consortium bought EDF’s power networks in UK for £5.8 billion.

Li is now also collaborating with Samsung on investing in water treatment.

Warren Buffet Buys Nalco, a Chemical Maker and Water Process Technology Company

Through his Berkshire Hathaway, Warren Buffet is the largest institutional investor of Nalco Holding Co. (NLC), a subsidiary of Ecolab, with 9 million shares. Nalco was named 2012 Water Technology Company of the Year. Nalco manufactures treatment chemicals and water treatment process technologies.

But the company Nalco is not just a membrane manufacturer; it also produced the infamous toxic chemical dispersant Corexit which was used to disperse crude oil in the aftermath of BP’s oil spill in the Gulf of Mexico in 2010. Before being sold to Ecolab, Nalco’s parent company was Blackstone……

Former President George H.W. Bush’s Family Bought 300,000 Acres on South America’s and World’s Largest Aquifer, Acuifero Guaraní

In my 2008 article, I overlooked the astonishingly large land purchases (298,840 acres, to be exact) by the Bush family in 2005 and 2006. In 2006, while on a trip to Paraguay for the United Nation’s children’s group UNICEF, Jenna Bush (daughter of former President George W. Bush and granddaughter of former President George H.W. Bush) reportedly bought 98,840 acres of land in Chaco, Paraguay, near the Triple Frontier (Bolivia, Brazil, and Paraguay). This land is said to be near the 200,000 acres purchased by her grandfather, George H.W. Bush, in 2005.

The lands purchased by the Bush family sit over not only South America’s largest aquifer — but the world’s as well — Acuifero Guaraní, which runs beneath Argentina, Brazil, Paraguay, and Uruguay. This aquifer is larger than Texas and California combined.

Online political magazine Counterpunch quoted Argentinean pacifist Adolfo Perez Esquivel, the winner of 1981 Nobel Peace Prize, who “warned that the real war will be fought not for oil, but for water, and recalled that Acuifero Guaraní is one of the largest underground water reserves in South America….”

According to Wikipedia, this aquifer covers 1,200,000 km², with a volume of about 40,000 km³, a thickness of between 50 m and 800 m and a maximum depth of about 1,800 m. It is estimated to contain about 37,000 km³ of water (arguably the largest single body of groundwater in the world, although the overall volume of the constituent parts of the Great Artesian Basin is much larger), with a total recharge rate of about 166 km³/year from precipitation. It is said that this vast underground reservoir could supply fresh drinking water to the world for 200 years.

Filipino Tycoon Manuel V. Pangilinan and Others Buy Water Services in Vietnam

In October 2012, Filipino businessman Manuel V. Pangilinan went to Vietnam to scout for investment opportunities, particularly on toll road and water services. Mr. Pangilinan and other Filipino billionaires, such as the owners of the Ayala Corp. and subsidiary Manila Water Co. earlier announced a deal to buy a 10-per cent stake in Ho Chi Minh City Infrastructure Investment Joint Stock Co. (CII) and a 49-per cent stake in Kenh Dong Water Supply Joint Stock Co. (Kenh Dong).

The Ayala group has also entered the Vietnamese market by buying significant minority interest in a leading infrastructure company and a bulk water supply company both based in Ho Chi Minh City.

Water Grabbing Is Unstoppable

Unfortunately, the global water and infrastructure-privatization fever is unstoppable: many local and state governments are suffering from revenue shortfalls and are under financial and budgetary strains. These local and state governments can longer shoulder the responsibilities of maintaining and upgrading their own utilities. Facing offers of millions of cash from Goldman Sachs, JPMorgan Chase, Citigroup, UBS, and other elite banks for their utilities and other infrastructure and municipal services, cities and states will find it extremely difficult to refuse these privatization offers.

The elite multinational and Wall Street banks and investment banks have been preparing and waiting for this golden moment for years. Over the past few years, they have amassed war chests of infrastructure funds to privatize water, municipal services, and utilities all over the world. It will be extremely difficult to reverse this privatization trend in water.

References for Several Articles Mentioned

“Goldman Sachs eyes bid for Veolia Water,” by Anousha Sakoui and Daniel Schäfer, Financial Times, March 13, 2012.

“Hong Kong tycoon to buy Northumbrian Water,” by Mark Wembridge, Financial Times, August 2, 2011.

“Why Big Banks May Be Buying up Your Public Water System: In uncertain economic and environmental times, big banks and financial groups are buying up public water systems as safe investments,” by Jo-Shing Yang, AlterNet, October 31, 2008.

“Barclays Capital Backs Water Fund,” by Dylan Lobo, October 11, 2007. Reuters.

“Investors Gush Over SouthWest Water Buyout,” March 3, 2010, Forbes.

“Hideout or Water Raid? Bush’s Paraguay Land Grab,” by CP News Wire, Counterpunch, October 22-26, 2006.

“Paraguay in a spin about Bush’s alleged 100,000 acre hideaway,” by Tom Phillips, The Guardian, October 22, 2006.

“Cities Debate Privatizing Public Infrastructure,” by Jenny Anderson, August 26, 2008, The New York Times.

“Philippine tycoon eyes investments in Vietnam,” by Doris C. Dunlao in Manila, Philippine Daily Inquirer, October 18, 2012.

“Goldman Sachs eyes bid for Veolia Water,” by Anousha Sakoui and Daniel Schäfer, Financial Times, March 13, 2012.

“Hong Kong tycoon to buy Northumbrian Water,” by Mark Wembridge, Financial Times, August 2, 2011.

“Why Big Banks May Be Buying up Your Public Water System: In uncertain economic and environmental times, big banks and financial groups are buying up public water systems as safe investments,” by Jo-Shing Yang, AlterNet, October 31, 2008.

“Barclays Capital Backs Water Fund,” by Dylan Lobo, October 11, 2007. Reuters.

“Investors Gush Over SouthWest Water Buyout,” March 3, 2010, Forbes.

“Hideout or Water Raid? Bush’s Paraguay Land Grab,” by CP News Wire, Counterpunch, October 22-26, 2006.

“Paraguay in a spin about Bush’s alleged 100,000 acre hideaway,” by Tom Phillips, The Guardian, October 22, 2006.

“Cities Debate Privatizing Public Infrastructure,” by Jenny Anderson, August 26, 2008, The New York Times.

“Philippine tycoon eyes investments in Vietnam,” by Doris C. Dunlao in Manila, Philippine Daily Inquirer, October 18, 2012.

Posted in Health, PoliticsComments Off on The New “Water Barons”: Wall Street Mega-Banks are Buying up the World’s Water

“Tsunami of Job Losses”: U.S. Economy Hasn’t Experienced Anything Like This Since the 1930s Great Depression

By Michael Snyder

The recession of 2008 and 2009 was bad, but it was nothing like this.  Even though this new economic downturn is only a few months old, we are already seeing numbers that we haven’t seen since the worst parts of the Great Depression of the 1930s. 

More than 48 million Americans have filed new claims for unemployment benefits over the past 15 weeks, well over 100,000 businesses have permanently closed their doors, and civil unrest has turned quite a few of our major cities into war zones

But not all areas of the country are being affected equally.  For example, there are rural areas that haven’t really seen a lot of COVID-19 cases where life seems to have changed very little from six months ago.  On the other hand, some urban areas that have been hit really hard by COVID-19 have been absolutely devastated economically.  For example, the New York Times is reporting that a million jobs have been lost in New York City, and the unemployment rate for NYC “is hovering near 20 percent”

The city is staggering toward reopening with some workers back at their desks or behind cash registers, and on Monday, it began a new phase, allowing personal-care services like nail salons and some outdoor recreation to resume. Even so, the city’s unemployment rate is hovering near 20 percent — a figure not seen since the Great Depression.

We are going to be using the phrase “since the Great Depression” a lot in the coming months.

Fear of COVID-19 is going to paralyze our economy for the foreseeable future, and all of this fear is hitting some companies more severely than others.  On Tuesday, Levi Strauss announced that sales were down a whopping 62 percent during the second quarter

The denim maker Levi Strauss & Co.’s sales fell 62% during its fiscal second quarter, the company announced Tuesday, as its online sales weren’t enough to make up for its stores being temporarily shut for roughly 10 weeks during the Covid-19 crisis.

If Levi Strauss expected this to be just a temporary setback, they would probably try to keep all of their employees on board.

But instead, they apparently believe that hard times are here to stay and they have just decided to eliminate “about 700 jobs”

Levi’s also announced it will be slashing about 15% of its global corporate workforce, impacting about 700 jobs, in a bid to cut costs during the coronavirus pandemic. It said the move should generate annualized savings for Levi’s of $100 million.

Of course a whole lot of other companies are laying off workers right now too.  Another 1.427 million Americans filed new claims for unemployment benefits last week, and that is an absolutely catastrophic number.  Prior to 2020, the worst week in all of U.S. history for new unemployment claims was in 1982 when 695,000 unemployed workers filed in a single week.  So what we are witnessing right now is nothing short of a “tsunami of job losses”, and even CNN is admitting that millions of the jobs that have been lost “are never coming back”…

The American economy’s unprecedented jobs rebound masks a difficult truth: For millions of people, the jobs they lost are never coming back.

“It’s clear that the pandemic is doing some fundamental damage to the job market,” said Mark Zandi, chief economist for Moody’s Analytics. “A lot of the jobs lost aren’t coming back any time soon. The idea that the economy is going to snap back to where it was before the pandemic is clearly not going to happen.”

I couldn’t have said it better myself.

Since most Americans were living paycheck to paycheck before this pandemic erupted, millions of unemployed workers have found themselves in desperate need very suddenly.  I have written numerous articles about the massive lines that we have been witnessing at food banks around the nation, and we just witnessed another two mile long line at a food bank in Florida

More than 700 cars were seen waiting in a two-mile long food bank line in Florida as the US grapples with nearly half of Americans being unemployed amid a spike in new coronavirus cases that has sparked fears of more shut downs and lay-offs.

Sunrise Assistant Leisure Services Director Maria Little, who was put in charge of food distribution for the city when the coronavirus hit the US in March, said her group served about 720 cars in Miami on Wednesday.

This is not what a “recovery” looks like.

In fact, for certain sectors of the economy the numbers are rapidly getting a lot worse.  For instance, just check out what CNBC is reporting

Delinquencies in commercial mortgage-backed securities last month had their largest one-month surge since Fitch Ratings began tracking the metric nearly 16 years ago.

The delinquency rate hit 3.59% in June, an increase from 1.46% in May. New delinquencies totaled $10.8 billion in June, raising the total delinquent pool to $17.2 billion.

And Fitch Ratings is warning that these numbers are going to get far worse in the months ahead.

And this is just the beginning. Fitch analysts are projecting that the impact from the coronavirus pandemic will drive the delinquency rate to between 8.25% and 8.75% by the end of the third quarter of this year.

I have said this before, and I will say it again.

We are on the verge of the biggest commercial mortgage meltdown in the history of the United States.

Countless restaurants and retailers are getting way behind on their rent payments, and as a result many owners of commercial property are finding it increasingly difficult to make their mortgage payments.

The dominoes are starting to fall, and this is going to get really, really messy as we head into 2021 and beyond.

Of course the same thing could be said for the U.S. economy as a whole.

I know that I haven’t been posting quite as often the last couple of weeks, and that is because I have been finishing my new book.  It is not too far from being completed, and it is going to be the most important thing that I have written so far.

We are right on the precipice of the most chaotic chapter in all of American history, and a collapsing economy is just going to be one element of “the perfect storm” that we are facing.

So please use the summer months to get prepared for what is ahead, because even though things are bad right now, the truth is that we have only experienced the leading edge of “the perfect storm” so far.

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Lawlessness in Trump’s Fascist State: Bill Barr and the Ghost of Fascism


Photograph by Nathaniel St. Clair

Theodor W. Adorno argued in “The Meaning of Working Through the Past” that “the past that one would like to evade is still very much alive.” [1] This is particularly evident in the debilitating pronouncements of William Barr, Trump’s Attorney General, regarding his defense of unchecked executive authority, which he believes should be unburdened by any sense of political and moral accountability. Tamsin Shaw is right in suggesting that Barr bears a close resemblance to Carl Schmitt, “the notorious…‘crown jurist’ of the Third Reich.” [2] Barr places the President above the law, defining him as a kind of unitary sovereign. In addition, he appears to relish in his role as a craven defender of Trump, all the while justifying a notion of blind executive authority in the face of Trump’s endless lies, racist policies, and lawlessness that echo the dark era of the 1920s and 30s. His attack on the FBI, the Justice Department’s Inspector General, and his threat to remove police protection from Black communities who are not loyal to Trump are at odds with any viable notion of defending the truth and “the most basic tenets of equality and justice.”[3] James Risen claims that Barr “has turned the Justice Department into a law firm with one client: Donald Trump [and that] under Barr, the Department of Justice has two objectives: to suppress any investigation of President Trump and his associates, and to aggressively pursue investigations of his political rivals.”[4]

Joan Walsh writing in The Nation rightly states that “Barr’s decline into blatant but ineffectual lawlessness is proof that Trumpism is a degenerative disease.” To prove her point, she writes:

…as Barr has gotten more brazen in his attempts to subvert the law, he’s gotten sloppier. His four-page memo of lies about the Mueller report last year fooled too much of the media, at least temporarily. There’s been more skepticism about his shocking interventions to reduce his department’s own sentencing request for Roger Stone, and to drop perjury charges against former national security adviser Michael Flynn (though Flynn admitted the crime). Both moves resulted in career attorneys resigning and widespread criticism from the legal establishment and the media.[5]

Shamelessly, Barr issued a directive to National Guard soldiers and police to attack individuals peacefully protesting the police killing of George Floyd in Lafayette Square in order to clear a path for Trump’s walk to St. John’s Episcopal Church for a photo op. In the photo op, Trump stood before the church awkwardly holding a bible in his hand, echoing a history one associates with the Ku Klux Klan and iconographic images right out of D. W. Griffith’s 1915 racist film, The Birth of a Nation.

On Barr’s order “National Guard soldiers and police proceeded to club peaceful protesters with batons and fire tear gas canisters into crowds as Trump delivered a speech on the nationwide uprising sparked by the killing of George Floyd.”[6] One pastor, Michael Wilker, one of the leaders of the Washington Interfaith Network called Trump’s actions an “abomination,” placing Trump’s actions in the context of an earlier fascist history. According to Wilker,

During Nazi Germany, Adolf Hitler used the symbols of the Lutheran church—our own church—as a way to divide Christians from one another, and especially to deny the humanity of Jews in Germany. It’s the same thing Trump is doing here: he is using the symbols of the church as a way to divide the church from one another and to divert our attention from the actual suffering and killing that’s going on.[It was] a demonic act.[7]

Wilker’s comments indict both Trump, Barr, and the other ignominious luminaries that stood with Trump in front of St. John’s church. In addition, Barr’s support for Trump’s silly Bible photo op cannot be separated from the speech Trump gave in the Rose Garden before the police and National Guard attacked the peaceful protesters. In that speech, Trump appointed himself as the “president of law and order” and came close to declaring war on the American people. As Kristen Clarke put it on Democracy Now:

Here, Trump single-handedly seeks to deploy the military to states all across our country over the objections of state officials and with the sole and singular purpose of silencing Americans. In many ways, this is the death of democracy, because people who are out right now have one singular goal: to ensure that at this moment we not turn our backs on the long-overdue work that’s necessary to rid our nation of the scourge of police violence that has resulted in innumerous deaths of unarmed African Americans.[8]

In spite of the overwhelming evidence of a police culture in the U.S. rooted in racism, Barr has stated publicly that “he did not believe racism was a systemic problem in policing, echoing other top administration officials’ defense of an important part of President Trump’s base as protests against police killings of unarmed black people continued across the nation.”[9] Barr along with Trump’s acolytes are not simply the victims of bad judgment, they lack a moral compass, embrace the banner of white supremacy, willingly support what appears to be racial anxieties about the decline of “white civilization,” and have emerged as a menace to the American people and to democracy itself. A strong believer in an imperial presidency, Barr has relinquished the role of the justice department as an independent agency and has repeatedly attempted to subvert the law he should be upholding.

In light of such actions and the refusal of the Republican members of Congress to speak out against such activities, it is not surprising for conservative journalist George Will to declare that Barr and Trump’s congressional enablers “gambol around [Trump’s] ankles with a canine hunger for petting.”[10] This criticism is not unfounded given Barr’s legal and ideological cover for Trump’s dangerous lackeys, such as Senate Majority Leader Mitch McConnell and Senator Lindsay Graham, both of whom shamed themselves again during the impeachment hearings. For example, McConnell’s Vichyite propensity for collaboration with the White House was on full display when he publicly denounced the impeachment process and as an unabashed defender of Trump stated that he would work hand in hand with the Trump administration on the impeachment process to make sure Trump would not be removed from office.

In addition, Senator Lindsay Graham stated that he had already made up his mind about Trump committing a criminal conspiracy, which he dismissed, and that he would do everything he could to make impeachment “die quickly” in the Senate.[11] As was well noted in the mainstream press, Republican senators decided not to hear evidence, never took seriously the charge of impeachment, and in doing so shamed themselves by refusing to “use the opportunity to rid the country of a president whose operative value system—built around corruption, nascent authoritarianism, self-regard, and his family’s business interests—runs counter to everything that most of them claim to believe in.”[12] Such blind and dangerous support for Trump the vulgarian warrants Will’s claim that Trump is a “malignant buffoon” and that those who support him should be removed from office.[13]

There appears to be no limits to Barr’s defense of the indefensible, particularly as a way of placating Trump’s vindictive and vengeful actions towards those he believes have wronged him or his close associates. In June of 2020, Barr convinced Trump to fire, Geoffrey S. Berman, the United States attorney in Manhattan. Berman had pursued a number of cases on members of Trump’s inner circle that irked Trump. The latter include the arrest and prosecution in 2018 of Michael D. Cohen, Trump’s longtime lawyer and fixer, an investigation into the wrongdoings of a Turkish state-owned bank (an investigation Trump had promised Turkish president, Recep Tayyip Erdogan, he would end), and more recently Berman’s office had started an inquiry into Rudolph W. Giuliani, Trump’s close supporter and personal lawyer. Speaking on CNN, Rep. Adam Schiff (D-CA), Chairman of the House Permanent Select Committee on Intelligence, stated that Barr “is the second most dangerous man in the country.”[14]

Since Trump’s impeachment, he has fired 6 inspector generals, weakening the power of the federal government’s internal watch dogs to conduct oversight of their various agencies. Not by coincidence, Steve Linick, an inspector general at the State Department was investigating Mike Pompeo. Barr’s use of the Department of Justice as a tool to implement the president’s personal and political demands was on full display when a justice department official recounted to Congress that Barr had intervened in a sentencing recommendation “because of politics.” Aaron S. J. Zelinsky, a prosecutor, stated that Bar overrode the decisions of career prosecutors to “seek a more lenient prison sentence for Mr. Trump’s longtime friend Roger J. Stone Jr.”[15] This is not merely about corruption and incompetence, but lawlessness, which is the essence of fascist politics. As Hannah Arendt noted in her work on totalitarianism: “If lawfulness is the essence of non-tyrannical government and lawlessness is the essence of tyranny, then terror is the essence of totalitarian.”[16]

Some influential commentators such as Cass Sunstein have argued that America’s system of checks and balances protects the U.S. against the threat of a full-blown authoritarianism. Bill Barr has made it clear that the law is just as susceptible to the reactionary forces of political power as is any other institution and can succumb to the depths of depravity and even worse. A criminal state is not contained by the law; in fact, it corrupts it as has been made clear by the rebellions taking place across the globe in the aftermath of the murder of George Floyd by police who believe they are above any just notion of the law. Trump and Barr are apostles of white supremacy, avatars of racial cleansing, and their lawlessness is a testimony to their belief in a politics of disposability. Nazi Germany proved with frightening clarity that the rule of law and its institutions can be easily transformed and implemented into agents of state violence, if not domestic terrorism. What Trump and Barr have proven with utmost audacity and little regret is that no institution is immune from the reach and power of a fascist politics. As William Robinson points out, one of the first elements of a fascist politics is the emergence of the state as a reactionary and repressive political power. In addition, the state is reconfigured to meet the needs of the financial and corporate elite, and on the cultural front the emergence and mobilization of fascist wannabe groups such as nativist movements, neo-Nazis, right-wing militia groups, and corporate controlled right-wing media apparatus.[17] Trump and Barr support all of these elements, and wear their commitment to lawlessness and state violence like a badge. The thousands marching in the streets and the Black Lives Matter movement have forcefully maintained that lawlessness is not about the transgressions of a few bad cops, however egregious, or a few corrupt politicians such as Trump and Barr, or even a Republican Party dominated by white supremacists and Vichy apologists. They have made it clear that the struggle is about dismantling a system that has made violence its organizing principle and echoes a past in which horrors of that past must not be either normalized nor repeated.


1 Adorno, Theodor W., “The Meaning of Working Through the Past,” Guild and Defense, trans. Henry W. Pickford, (Cambridge: Harvard University Press, 2010), p. 213. 

2 Tamsin Shaw, “William Barr: The Carl Schmitt of Our Time,” New York Review of Books (January 15, 2020). Online: 

3 Eric H. Holder, “William Barr is unfit to be attorney general,” Washington Post (December 11, 2019). Online: 

4 James Risen, “William Barr Has Turned the Justice Department Into a Law Firm With One Client: Donald Trump,” The Intercept (June 22, 2020). Online: 

5 Joan Walsh, “As Bill Barr Flails, Trump Is Losing His Roy Cohn,” The Nation (June 22, 2020). Online: 

6 Jake Johnson, “’He Must Resign’: Attorney General Barr Personally Ordered Police Assault on Peaceful DC Protesters, Report Says,” Common Dreams (June 2, 2020). Online: 

7 Cited in Susan B. Glasser, “#BunkerBoy’s Photo-Op War,” The New Yorker (June 3, 2020). Online: 

8 Amy Goodman, “‘A Declaration of War Against Americans’: Trump Threatens to Deploy Military to Quell Protests,” Democracy Now (June 2, 2020). Online: 

9 Katie Benner, “Barr Says There Is No Systemic Racism in Policing,” New York Times (June 7, 2020). Online: 

10 George Will, “Trump must be removed. So must his congressional enablers,” The Washington Post (June 1, 2020). Online: 

11 Peter Wade, “Trump Sycophant Lindsey Graham: ‘I Will Do Everything I Can to Make Impeachment Die Quickly’ in the Senate,” Rolling Stone (December 14, 2019). Online: 

12 Anne Applebaum, “History Will Judge the Complicit: Why have Republican leaders abandoned their principles in support of an immoral and dangerous president?,” The Atlantic (July/August 2020). Online: 

13 Ibid. 

14 Rachel Frazin, “Schiff calls Barr ‘the second-most dangerous man in the country’,” The Hill (June 25, 2020). Online: 

15 Nicholas Fandos, “Justice Dept. Officials Outline Claims of Politicization Under Barr,” New York Times (June 24, 2020). Online: 

16 Hannah Arendt, The Origins of Totalitarianism (New York: Harvest Book, 1973), p. 464. 

17 William Robinson, “How Capitalism’s Structural and Ideological Crisis Gives Rise to Neo-Fascism,” The Real News, [February 5, 2020]. Online 

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“Thank You for Calling” Documentary: Unspoken Health Impacts of the Worldwide Mobile Phone Industry

By Electromagnetic Sense Ireland

Mobile telephony has quickly established itself worldwide as an irreplaceable communication technology. Similar to smoking, however, possible fatal consequences can only become apparent after decades of constantly increased exposure to radiation.

The documentary THANK YOU FOR CALLING by Klaus Scheidsteger takes the viewer behind the scenes of international research, industrial lobbying and current lawsuits for damages in the USA, which are largely ignored by the media. The film traces obfuscation tactics of the mobile phone industry and accompanies the struggle of some scientists who have been researching in this field for years but have only recently begun to be heard.

The aim of this documentary thriller is to enable the more than five billion mobile phone users worldwide to form their own objective picture of the current research situation that is not coloured by the industry.

THANK YOU FOR CALLING not only investigates serious indications of possible health risks, but above all the question of why this research has so far barely reached public awareness. Using facts, insiders and exciting protagonists, the film reconstructs a large-scale strategy of the mobile phone industry. As the example of the car industry has shown once again, large industries are not interested in bringing objective measurement results to the public’s attention. This is always tolerated politically where billions in turnover and many tens of thousands of jobs are at stake. But the investigations of renowned radiation researchers show Mobile phone radiation can, under certain circumstances, lead to cell death and genetic damage in certain people.The Frightening Science and Politics of Cell Phone Safety. Electromagnetic Waves and the Health Impacts of Wireless Devices

In the USA, several claims for damages are currently pending against the mobile phone industry, which have been combined into the so called „Brain-Tumor-Cases“ at the Washington D.C. Superior Court. Brain tumor patients want to prove that the radiation effect of cell phone use is partly responsible for their illness. Documentary filmmaker Klaus Scheidsteger is embarking on an extensive research trip, in which he lets viewers participate in a mixture of TV archive material, re-enacted scenes and original encounters.

A document passed on to him is explosive: In the so-called “War Game Memo”, prepared by a US lobbying agency, the mobile phone industry was already given instructions in 1994 on how to deal with critical science worldwide. It contains a strategy to gloss over the current state of research and to trivialize findings.

Scheidsteger meets one of his most important protagonists in Washington D.C.: Dr. George Carlo, who, from 1993 to 1999, directed the worlds largest research program on cell-phone safety to date.

Dr. Carlo’s industry-financed Wireless Technology Research project (WTR) received 28,5 million dollars to run a major research project that was to provide final proof of the health safety of mobile phone use. His customer: The powerful CTIA (Cellular Technology Industry Association). However, Carlo and his team did not find the desired results, but rather worrying effects: cellular responses that could lead to cancer. Dr. Carlo wanted to go public with his findings. As a result, he himself became a victim of the “War Game Memo” and an unprecedented smear campaign against his scientific integrity. Today, he advises the law firms involved in the lawsuits against the CTIA.

Dr. Carlo assembled a representative group of scientists from Vienna, Athens and Bratislava who identified potential health risks. The use of mobile phones is by no means as proven risk-free as the industry would have us believe.

However, the scientists are also looking for solutions and preventive approaches for consumers, as the technology has undoubtedly become difficult to replace today. But in a way, they all suffer a similar fate: because industry cannot admit to a problem, it defends itself with all its might against critical science. And so people remain part of a global field trial.

Watch the trailer below.

Posted in Health, PoliticsComments Off on “Thank You for Calling” Documentary: Unspoken Health Impacts of the Worldwide Mobile Phone Industry

India Should Not Participate in Washington-led Anti-China Coalition

By Lucas Leiroz de Almeida

For years, the US, Japan and India have maintained Malabar military exercises on an annual basis. As the US and Japan are absolutely aligned countries and India is a Washington regional strategic partner, the common objective of the three participants is to face the Chinese advance and to strengthen a coalition against Beijing and its presence in the Indian Ocean. Now, with the increasing of tensions between China and the United States for naval supremacy and between China and India for territorial reasons, Malabar exercises take on a new dimension, being the moment of greatest risk of war in the region in recent years.

Since 2017, Australia has asked to join Malabar naval exercises. The US and Japan have already voted in favor of the Australian participation, but India has not allowed it – the US, Japan and India are the permanent members of the tests and the adherence of a new country depends on a unanimous vote. There was a logistical disagreement between India and Australia, which prevented them from reaching a consensus on the execution of the exercises. In June, both countries signed a mutual logistical support agreement, thus removing the obstacle to Australian participation. Now, as the impasse with China increases, India can change its vote and finally approve Australian participation. The result would be an even stronger coalition scenario against China, which would certainly respond accordingly.

Beijing will not allow its oceanic region to be the target of powerful military exercises by enemy powers without offering high-level war tests in return. China has recently reached an advanced stage of naval military power, practically equaling American power by crossing the International Date Line. In addition, China has significantly increased its military campaign in the South China Sea and has built a large fleet for the Arctic. It is this adversary that the Malabar coalition is facing when promoting a siege in the Indian Ocean. So, what will happen if China invests even more in naval power, modernizing its Navy and devoting itself to a military strategy focused on maritime defense?Is India Now a US Ally? Aligned against Russia and China?

On the other hand, Beijing’s reaction may be different and even more effective: investing in Sino-Pakistani military cooperation to affect India. If China and Pakistan start joint naval exercises in the Indian Ocean, a coalition dispute will form, in which both groups will begin a series of regular tests and demonstrations of strength, seeking to intimidate each other.

In all scenarios, a central point is inevitable: the increase of tensions and violence in the Indian Ocean. Perhaps this is, in fact, the American desire in the region, taking into account that the increase in the crisis will inevitably forge the strengthening of the anti-China coalition and its ties with Washington, in addition to encouraging regional reactions from the Chinese Navy and delaying Beijing’s global projections – like the Chinese presence in the Arctic, for example. Having been Japan and Australia subjected to the American naval umbrella for decades, their participation is predictable and not surprising that Tokyo and Canberra support aggressive operations against China in the Indian Ocean. However, the same cannot be said about India.

India should not be part of a Washington-led coalition against China. The rivalry between India and China is different from the dispute between the US and China, and the mere fact that Beijing looks like a “common enemy” does not justify a coalition. China and India have a historic dispute of a territorial nature – a regional conflict over a physical, continental space. This is different from the American quest for global hegemony – to which China poses a threat today. China and India have much more in common than opposites: both are emerging Asian nations, with enormous growth potential and which aim to increase their degree of participation in the international scenario, at the economic and geopolitical level. Washington, in this sense, is against both – because it seeks to preserve unipolarity and the American global dominance. Beijing and New Delhi can reach a common agreement sovereignly, with regional negotiations and bilateral diplomacy, as, in fact, they have been doing recently, resulting in the reduction of the border violence and the evacuation of troops.

By maintaining its participation in the exercises and encouraging the growth of the coalition, India will be making a big mistake – both in its relations with China and in its relations with Pakistan. Japan and Australia are nations willing to collaborate with American hegemony – India is not. The best path to be taken by the Indians is the abdication from the Malabar exercises, or, if it is not possible, at least, to prevent the Australian entry again, avoiding the strengthening of the anti-China alliance.

Posted in USA, China, IndiaComments Off on India Should Not Participate in Washington-led Anti-China Coalition

Boris Johnson Accused of ‘Power Grab’ over Scotland’s Post-Brexit Powers

By Johanna Ross

The First Minister of Scotland, Nicola Sturgeon, has lambasted the British government over reports that it may control rights over ‘state aid’ after Brexit. ‘State aid’,  which allows a government to subsidise companies, is currently controlled by the EU, but Holyrood had assumed that it would gain control of this area of legislation post-Brexit. Not if Westminster has anything to do with it, it seems. In what already being termed a ‘power grab’ by the SNP’s Ian Blackford, London may try to seize control of this and other responsibilities, according to a report in the Financial Times. In response to the article, Nicola Sturgeon said such a move would be a ‘full-scale assault on devolution’ and that it would only further ‘boost support for independence’. The newspaper has since published another article warning of the threat to the UK of such actions, stating ‘the union’s future is at stake’.

This is no exaggeration. To date, the pandemic has driven a wedge between the devolved nations, with Nicola Sturgeon forging her own path out of lockdown. Scotland may have stood united with England at the beginning of the coronavirus crisis, but as time went on, and more doubt was cast upon Westminster’s handling of the pandemic, Sturgeon began to diverge from London’s policy making. Providing her own daily press conferences, the Scottish leader made it clear that she wasn’t prepared to lay responsibility for the crisis at Boris Johnson’s door. When Boris changed the messaging from ‘Stay At Home’ to ‘Stay Alert’, Sturgeon didn’t. When he lifted lockdown and sent kids back to school before the summer break, Sturgeon didn’t. And now, despite the wearing of face masks being compulsory in Scotland, Johnson has not followed suit. In the competition of who has handled the pandemic better, Nicola Sturgeon is winning.

The Financial Times is critical of Johnson’s ‘top-down approach’ which risks England being seen as the ‘bullying big brother’. It acknowledges the fact that the SNP is set to win next May’s elections by a landslide and that support for independence is at the highest level ever. Without a doubt Sturgeon’s performance during the pandemic has boosted the nationalist cause and this latest issue of state aid will only attract more followers. The newspaper calls on Boris Johnson to negotiate with the other devolved nations or risk the break-up of the United Kingdom.Scotland Could Place English in Quarantine as Independence Debate Heats Up

But does Boris really care? Nothing the Prime Minister has said or done to date indicates that Scottish independence bothers him. During his last official visit to Scotland, long before coronavirus took hold, Johnson was coined ‘back-door Boris’ after leaving Nicola Sturgeon’s residence via the back exit as if to avoid confronting protestors outside. He’s not liked north of the border and the feeling is quite possibly mutual. Whilst editor of the Spectator magazine, for example, Johnson published several articles which derided Scots, comparing the job of Scottish MP to having a “political disability” and stating that former PM Gordon Brown should not become Prime Minister” not just because he is a gloomadon-popping, interfering, high-taxing complicator of life, but mainly because he is a Scot, and government by a Scot is just not conceivable in the current constitutional context.” The SNP in the past have said that Johnson showed ‘absolute contempt for Scotland’, a label which to date the Eton and Oxbridge educated Prime MInister has done nothing to refute.

The reality is that Westminster is currently being led by an elite that feels accountable to no-one. Throughout the pandemic there has been one rule for them and another for the masses. The Prime Minister’s right-hand man, Dominic Cummings has still not been reprimanded for violating the lockdown restrictions his very government imposed. Boris Johnson’s own father was caught recently visiting his villa in Greece, once again contradicting government guidelines. By contrast, Nicola Sturgeon sacked the Scottish Chief Medical Officer, Catherine Calderwood, when she was caught miles away from her permanent residence during lockdown. Some may question the significance of such actions, but it’s the little things that count.

And all these small, seemingly insignificant differences in the way Scotland has handled the pandemic are already having an impact. Sturgeon’s cautious approach to the lifting of lockdown has resulted in far fewer deaths to coronavirus – recently Scotland went 5 consecutive days without any fatalities to the disease – whereas England continues to see hundreds of deaths per day. The northern nation has been praised for its approach by leading epidemiologists, as it has been recognised that the border with England could in fact be a threat to it maintaining a Covid-free environment.

All this will be taken into account by voters in any future referendum on independence. Fear is a strong driving force, and any nation which emerges from this pandemic will think very carefully about any alliance which puts its population at risk of contracting such a virus again.

Posted in Politics, UKComments Off on Boris Johnson Accused of ‘Power Grab’ over Scotland’s Post-Brexit Powers

The Fiscal Deficit, Modern Monetary Theory and Progressive Economic Policy

By Andrew Jackson

Modern Monetary Theory or MMT has crept in from the academic margins to become an influential doctrine in progressive policy circles in the United States. Both Elizabeth Warren and Bernie Sanders drew on the ideas of MMT to shape their ambitious public spending platforms. MMT has been cited as one way to fund a Green New Deal, in combination with progressive tax reform.

It is safe to say that most Canadian progressives are not debating the finer points of monetary and fiscal policy. However it is useful to critically consider some of the most important pros and cons of MMT, based on the new book by a leading US advocate, Stephanie Kelton. (The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy. New York: Public Affairs, 2020.) In a nutshell, MMT puts forward a powerful critique of mainstream macro-economic policy but discounts the need for truly radical change if the economy is to be regulated and managed for the public good.

MMT is something of a misnomer. Far from being “modern,” it draws heavily on monetary theories developed in the 1930s by John Maynard Keynes, and since that time, by left Keynesian economists rejecting orthodox finance and the view that government budgets should (almost) always be balanced, that deficits crowd out private investment which should be driving the economy, that monetary policy (changes in interest rates) as opposed to fiscal policies (changes in public spending) should be the key policy tool for managing fluctuations in the economy, and that private investment is much more productive than government spending.

The Government and MMT

The central proposition of MMT is that a state controlling its own currency can readily finance fiscal deficits (resulting from spending increases or tax cuts) at low or no cost through money creation and direct funding of government spending by the central bank. Unlike households or businesses, governments with their own currency and their own central bank can never go broke because they can always create money to fund deficits or to pay off debts. The only real constraint on public spending for countries with monetary sovereignty is real productive capacity. Too much additional deficit financing of public spending or tax cuts in an economy with full employment will push up inflation.

Many countries in fact do not have monetary sovereignty because they do not have their own currency (e.g., individual countries in the Euro zone) or because they carry high levels of debt denominated in a foreign currency such as US dollars (e.g., Argentina). Until the 1970s, the gold standard also constrained the ability of central banks to create new money.

Today, we in Canada and many other countries do have “fiat” money that can be created by central banks “at the stroke of a pen.” Central banks can and do expand the monetary base. Yes, Virginia, Santa has a printing press and it can indeed be used to give money to all the children.

However it should be noted that, in normal times, the great majority of new money is created by the private banking system as loans rather than directly by the central bank to finance the government’s operations. Indeed, in neoliberal times, the state’s capacity to create money has been rolled back and kept out of view. Many mainstream economists accept that government and the central bank can adopt MMT-type policies but argue that it is unwise to use the lever except under extraordinary circumstances.

MMT says central banks can also set interest rates from the short term to the long term through a variety of techniques. Again, many economists would broadly agree.

MMT rightly challenges the orthodox idea that government budgets should be balanced and that deficits should be incurred only to fight deep depressions when low interest rates no longer work. As argued by Keynes in the 1930s, deficits will not crowd out savings and private investment if the economy is operating below capacity. Indeed, public investment financed by deficits can “crowd in” private investment. And public investments financed through deficits and debt can create a more robust economy and infrastructure, leaving future generations with greater wealth and opportunities. Keynes, unlike the “bastard Keynesian” wing of mainstream economics, looked forward to the day when the economy would be driven by productive public investment with no need for the state to borrow from the rentiers living off interest income.

In short, the key ideas of MMT are not so much modern as a return to the radical Keynes and the left Keynesian tradition. Both hold that conventional policy results in economies running well below capacity much of the time, and both reject the mainstream view that the macro-economy should be primarily managed through monetary rather than fiscal policy.

Today’s Extraordinary Circumstances

Today – amid the extraordinary circumstances of the pandemic – the Bank of Canada is printing billions of dollars to buy government bonds in order to lower interest rates. For the first time they have moved beyond “quantitative easing” – buying up government bonds in the secondary market to lower interest rates – to direct purchases of government bonds. They are supporting massive federal and provincial government deficit spending. The Bank may not loudly endorse MMT, per se, but they are acting on that basis and demonstrating that the state can indeed always pay for what must be done. Similarly, all kinds of orthodox economists and policy makers have temporarily accepted that a massive increase in public spending can and should be undertaken without raising taxes and almost irrespective of the deficit and debt.

So far, so good. The key question is how long this can go on. Stephanie Kelton calls for much higher levels of public investment and spending to deal with a wide range of social ills, funded directly by the central bank, on a continuing rather than one-time emergency basis. This has understandably appealed to progressives.

So long as we have low inflation and a very depressed economy, the Bank of Canada is unlikely to change course and will backstop massive government spending to deal with the crisis. They will give fiscal policy the latitude to drive recovery in full recognition of the fact that even near-zero interest rates are not enough to deal with the slump. But, as things stand, they still basically control monetary policy.

MMT is rather silent on this, just saying that governments can set the interest rate. It begs the question of who actually controls interest rates, and in whose interests. Dating back to at least the 1970s, the Bank of Canada, which is largely independent of the government, has generally chosen to accept some slack in the economy so as to discipline labour and to maintain low and stable inflation. The federal government and the Bank have consistently argued that the sole objective of the central bank should be to hit the formally agreed 1% -3% inflation target, without a parallel mandate to achieve full employment as called for by progressive economists. It would be a big political change, to say the least, for the government to tell the Bank to promote full employment, let alone to direct it to fund government operations on a non-emergency basis. The whole point of current arrangements has been to isolate the Bank of Canada from democratic political pressures.

Conventional thinking has emphasized setting low interest rates in an economy operating below capacity, as has been the case in the slow recovery from the global financial crisis. But this, as Kelton argues, has starved public spending, while fuelling the destructive and unsustainable growth of household and corporate debt, and fuelling the asset price inflation that has greatly increased inequality of income and wealth. Loose monetary has singularly failed to boost real wages for most workers, and has also manifestly failed to revive private business investment. Indeed, corporations have borrowed at low rates to ramp up unproductive activities such as share buy backs and increases in dividends.

MMT rightly emphasizes that priority should be given to fiscal policy over monetary policy, while taking no single position on what governments should spend on. Proponents such as Stephanie Kelton generally support big increases in public investment – the green economy, education, infrastructure, etc., as well as a federal job guarantee. They also argue that if and when inflation becomes a problem, it could be tackled through selective tax increases on households and business, as opposed to an increase in interest rates which would limit government investment and drive up the carrying costs of the public debt.

Kelton argues that support for MMT should exist across the political spectrum, but she neglects the role of real interests. The banks want to retain their central role in money creation. Orthodox fiscal and monetary policy that is focused on low inflation and balanced budgets is strongly supported by corporate and financial interests. They do not really believe in the need for balanced budgets, as shown by the support of most US corporations for the Trump tax cuts, which have created huge deficits. But they do want small government and lower taxes, and they want to ensure the economy is driven by private investment – which means government deference to the wishes and needs of capital – rather than by public investment.

MMT also tends to minimize real structural constraints on government macro-economic policy in the context of global capital flows. As noted, MMT says that governments can control the interest rate through the central bank. This is true in the first instance but highly problematic in a world of capital mobility if investors fear too much inflation or currency devaluation. The Bank of Canada can maintain low interest rates, but they face the possibility of capital flight on the part of both domestic and foreign capital, which would bring down the exchange rate and fuel inflation. This point is discounted by MMT proponents, who are mainly talking about the US which controls the global reserve currency and is thus in a unique situation.

Many foreign central banks of surplus countries such as China and Japan own huge reserves of US bonds that they would be reluctant to sell quickly since this would raise their own exchange rate, result in large paper asset losses, and cause a major disruption to the global financial system. But fears that the US was making too much use of the printing press could still cause capital flight from the US dollar on the part of private bond holders, and help fuel US inflation.

The ability of the bond markets to punish smaller countries with high levels of public debt and incipient inflation cannot be dismissed. Keynes argued that countries could only control interest rates if currencies were managed and if there were controls on international flows of capital. Dismantling of the post-War Bretton Woods arrangements was intended to set the stage for a shift from nationally controlled economies to a world of international capital flows that constrain governments.

MMT is right to argue that so long as the economy is operating below potential, we can and should run large deficits to fill the gap and to address public policy priorities such as the need for affordable housing, expanded public healthcare and building a green economy. These deficits will have most impact in both social and economic terms if used to finance well-chosen public investments, as opposed to tax cuts. Inflation is not likely to be a problem.

But MMT tends to hide in a technical argument that does not address real political constraints that need to be seriously confronted. We can run large fiscal deficits now, but not indefinitely, without major changes in fiscal and monetary policy and in political direction. In the longer run, we cannot have everything we want just by printing money.

If we want permanently higher public spending, we also need to raise taxes. If we want much more public investment, we will also have to give less priority to private consumption, especially the luxury consumption of the rich. If we want greater control of our economy, we must confront the power of private financial interests.

In short, MMT, based on the theoretical legacy of left Keynesian economics, offers us a way forward, but it does not free us from the very real constraints of capitalism.

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