3 Jun 2011

Geithner and Goldman, Thick as Thieves

By Robert Scheer

What was Timothy Geithner thinking back in 2008 when, as president of the New York Fed, he decided to give Goldman Sachs a $30 billion interest-free loan as part of an $80 billion secret float to favored banks? The sordid details of that program were finally made public this week in response to a court order for a Freedom of Information Act release, thanks to a Bloomberg News lawsuit. Sorry, my bad: It wasn’t an interest-free loan; make that .01 percent that Goldman paid to borrow taxpayer money when ordinary folks who missed a few credit card payments in order to finance their mortgages were being slapped with interest rates of more than 25 percent.

AP / Charles Dharapak
Treasury Secretary-designate Timothy Geithner listens as then-President-elect Barack Obama speaks at a Chicago news conference in November 2008.

One wonders if Barack Obama was fully aware of Geithner’s deceitful performance at the New York Fed when he appointed him treasury secretary in the incoming administration. The president was probably ignorant of this particular giveaway, as were key members of Congress. “I wasn’t aware of this program until now,” Barney Frank, D-Mass., who at the time chaired the House Financial Services Committee, admitted in referring to Geithner’s “single-tranche open-market operations” program. And there was no language in the Dodd-Frank law supposedly reining in the banks that compelled the Fed to reveal the existence of this program.

It was merely one small part of that reckless policy of throwing mad money at the banks while ignoring the plight of homeowners whom the banks had swindled, a plan pursued by both the Bush and the Obama administrations that set the stage for the current slide into a double-dip recession. On Tuesday it was reported that home values have continued an eight-month decline back to their lowest point since the recession began. With housing in deep trouble there can be no rebound of consumer confidence or job creation, and the first-quarter growth rate was an anemic 1.8 percent even as Wall Street profits and bonuses flourished. Wages are stagnant, unemployment claims have recently risen and, as The Wall Street Journal headlined on Tuesday, “Economists Downgrade Prospects for Growth.” That same edition of the Journal reported that 44.6 million Americans now survive on food stamps, an 11 percent increase in that misery index over the past year, while Geithner’s friends at Goldman are doing quite well.

Actually, Goldman wasn’t even a bank and was therefore ineligible for those massive government handouts until Geithner helped gain approval for the instant conversion of Goldman from an investment house to a commercial bank. Goldman was granted that status, and with it access to the Fed’s lending, soon after the privilege had been denied to the fellow investment bank Lehman Brothers (the $30 billion mentioned above was in addition to the $43.5 billion Goldman borrowed from other Fed programs). Although Lehman was allowed to go belly up, Geithner engineered the massive bailout of AIG, a move that turned out to be a cover for passing money to AIG’s clients, including the aforementioned Goldman Sachs. The man’s intentions were clear, even if all the secret details were not, when Obama picked him to be his point man in salvaging an economy that Geithner had done much to wreck.

Geithner’s priorities were all too obvious from his days in the Clinton administration’s Treasury Department when he worked first under former Goldman honcho Robert Rubin and then Lawrence Summers, who took six-figure speaking fees from Goldman and other banks while he was an adviser to candidate Obama. It was the recommendation of Rubin and Summers that landed Geithner the job as president of the New York Fed, where he faithfully followed the policy lead of Goldman-CEO-turned-Treasury-Secretary Henry Paulson.

It was back then and is now accurate to speak, as a New York Times headline once put it, of U.S. politics dominated by “The Guys From ‘Government Sachs’ ”—but on an international scale. From the crisis in Greece, where Goldman manufactured toxic tax-based derivatives with abandon, to its betting against the success of the mortgage-based derivatives that Goldman designed and sold to others, the company was nothing short of a massive wrecking ball in the international economy.
 
Oh yes, what did Goldman do with that taxpayer money it borrowed back in 2008? It needed the money to cover the lousy bets of its Fixed Income, Currencies and Commodities trading unit, which had lost $320 million. Typical of the Goldman dealings in that arena was the $1.3 billion solicited from Col. Moammar Gadhafi’s Libya sovereign wealth fund, which according to a report in Tuesday’s Wall Street Journal lost 98 percent of its value and almost cost some Goldman executives doing business in Tripoli their lives.

But they survived, as the guys from Goldman always do. With the general “no banker left behind” program pursued by Geithner under both George W. Bush and Obama, the theory was that saving the banks would save the country. The first part worked out brilliantly, but the second act never occurred.

The Corporate State Wins Again

By Chris Hedges


When did our democracy die? When did it irrevocably transform itself into a lifeless farce and absurd political theater? When did the press, labor, universities and the Democratic Party—which once made piecemeal and incremental reform possible—wither and atrophy? When did reform through electoral politics become a form of magical thinking? When did the dead hand of the corporate state become unassailable?

The body politic was mortally wounded during the long, slow strangulation of ideas and priorities during the Red Scare and the Cold War. Its bastard child, the war on terror, inherited the iconography and language of permanent war and fear. The battle against internal and external enemies became the excuse to funnel trillions in taxpayer funds and government resources to the war industry, curtail civil liberties and abandon social welfare. Skeptics, critics and dissenters were ridiculed and ignored. The FBI, Homeland Security and the CIA enforced ideological conformity. Debate over the expansion of empire became taboo. Secrecy, the anointing of specialized elites to run our affairs and the steady intrusion of the state into the private lives of citizens conditioned us to totalitarian practices. Sheldon Wolin points out in “Democracy Incorporated” that this configuration of corporate power, which he calls “inverted totalitarianism,” is not like “Mein Kampf” or “The Communist Manifesto,” the result of a premeditated plot. It grew, Wolin writes, from “a set of effects produced by actions or practices undertaken in ignorance of their lasting consequences.”

Corporate capitalism—because it was trumpeted throughout the Cold War as a bulwark against communism—expanded with fewer and fewer government regulations and legal impediments. Capitalism was seen as an unalloyed good. It was not required to be socially responsible. Any impediment to its growth, whether in the form of trust-busting, union activity or regulation, was condemned as a step toward socialism and capitulation. Every corporation is a despotic fiefdom, a mini-dictatorship. And by the end Wal-Mart, Exxon Mobil and Goldman Sachs had grafted their totalitarian structures onto the state.

The Cold War also bequeathed to us the species of the neoliberal. The neoliberal enthusiastically embraces “national security” as the highest good. The neoliberal—composed of the gullible and cynical careerists—parrots back the mantra of endless war and corporate capitalism as an inevitable form of human progress. Globalization, the neoliberal assures us, is the route to a worldwide utopia. Empire and war are vehicles for lofty human values. Greg Mortenson, the disgraced author of “Three Cups of Tea,” tapped into this formula. The deaths of hundreds of thousands of innocents in Iraq or Afghanistan are ignored or dismissed as the cost of progress. We are bringing democracy to Iraq, liberating the women of Afghanistan, defying the evil clerics in Iran, ridding the world of terrorists and protecting Israel. Those who oppose us do not have legitimate grievances. They need to be educated. It is a fantasy. But to name our own evil is to be banished.

We continue to talk about personalities—Ronald Reagan, Bill Clinton, George W. Bush and Barack Obama—although the heads of state or elected officials in Congress have become largely irrelevant. Lobbyists write the bills. Lobbyists get them passed. Lobbyists make sure you get the money to be elected. And lobbyists employ you when you get out of office. Those who hold actual power are the tiny elite who manage the corporations. Jacob S. Hacker and Paul Pierson, in their book “Winner-Take-All Politics,” point out that the share of national income of the top 0.1 percent of Americans since 1974 has grown from 2.7 to 12.3 percent. One in six American workers may be without a job. Some 40 million Americans may live in poverty, with tens of millions more living in a category called “near poverty.” Six million people may be forced from their homes because of foreclosures and bank repossessions. But while the masses suffer, Goldman Sachs, one of the financial firms most responsible for the evaporation of $17 trillion in wages, savings and wealth of small investors and shareholders, is giddily handing out $17.5 billion in compensation to its managers, including $12.6 million to its CEO, Lloyd Blankfein.

The massive redistribution of wealth, as Hacker and Pierson write, happened because lawmakers and public officials were, in essence, hired to permit it to happen. It was not a conspiracy. The process was transparent. It did not require the formation of a new political party or movement. It was the result of inertia by our political and intellectual class, which in the face of expanding corporate power found it personally profitable to facilitate it or look the other way. The armies of lobbyists, who write the legislation, bankroll political campaigns and disseminate propaganda, have been able to short-circuit the electorate. Hacker and Pierson pinpoint the administration of Jimmy Carter as the start of our descent, but I think it began long before with Woodrow Wilson, the ideology of permanent war and the capacity by public relations to manufacture consent. Empires die over such long stretches of time that the exact moment when terminal decline becomes irreversible is probably impossible to document. That we are at the end, however, is beyond dispute.
 
The rhetoric of the Democratic Party and the neoliberals sustains the illusion of participatory democracy. The Democrats and their liberal apologists offer minor palliatives and a feel-your-pain language to mask the cruelty and goals of the corporate state. The reconfiguration of American society into a form of neofeudalism will be cemented into place whether it is delivered by Democrats, who are pushing us there at 60 miles an hour, or Republicans, who are barreling toward it at 100 miles an hour. Wolin writes, “By fostering an illusion among the powerless classes” that it can make their interests a priority, the Democratic Party “pacifies and thereby defines the style of an opposition party in an inverted totalitarian system.” The Democrats are always able to offer up a least-worst alternative while, in fact, doing little or nothing to thwart the march toward corporate collectivism.

The systems of information, owned or dominated by corporations, keep the public entranced with celebrity meltdowns, gossip, trivia and entertainment. There are no national news or intellectual forums for genuine political discussion and debate. The talking heads on Fox or MSNBC or CNN spin and riff on the same inane statements by Sarah Palin or Donald Trump. They give us lavish updates on the foibles of a Mel Gibson or Charlie Sheen. And they provide venues for the powerful to speak directly to the masses. It is burlesque.

It is not that the public does not want a good health care system, programs that provide employment, quality public education or an end to Wall Street’s looting of the U.S. Treasury. Most polls suggest Americans do. But it has become impossible for most citizens to find out what is happening in the centers of power. Television news celebrities dutifully present two opposing sides to every issue, although each side is usually lying. The viewer can believe whatever he or she wants to believe. Nothing is actually elucidated or explained. The sound bites by Republicans or Democrats are accepted at face value. And once the television lights are turned off, the politicians go back to the business of serving business.

We live in a fragmented society. We are ignorant of what is being done to us. We are diverted by the absurd and political theater. We are afraid of terrorism, of losing our job and of carrying out acts of dissent. We are politically demobilized and paralyzed. We do not question the state religion of patriotic virtue, the war on terror or the military and security state. We are herded like sheep through airports by Homeland Security and, once we get through the metal detectors and body scanners, spontaneously applaud our men and women in uniform. As we become more insecure and afraid, we become more anxious. We are driven by fiercer and fiercer competition. We yearn for stability and protection. This is the genius of all systems of totalitarianism. The citizen’s highest hope finally becomes to be secure and left alone.

Human history, rather than a chronicle of freedom and democracy, is characterized by ruthless domination. Our elites have done what all elites do. They have found sophisticated mechanisms to thwart popular aspirations, disenfranchise the working and increasingly the middle class, keep us passive and make us serve their interests. The brief democratic opening in our society in the early 20th century, made possible by radical movements, unions and a vigorous press, has again been shut tight. We were mesmerized by political charades, cheap consumerism and virtual hallucinations as we were ruthlessly stripped of power.

The game is over. We lost. The corporate state will continue its inexorable advance until two-thirds of the nation is locked into a desperate, permanent underclass. Most Americans will struggle to make a living while the Blankfeins and our political elites wallow in the decadence and greed of the Forbidden City and Versailles. These elites do not have a vision. They know only one word—more. They will continue to exploit the nation, the global economy and the ecosystem. And they will use their money to hide in gated compounds when it all implodes. Do not expect them to take care of us when it starts to unravel. We will have to take care of ourselves. We will have to create small, monastic communities where we can sustain and feed ourselves. It will be up to us to keep alive the intellectual, moral and culture values the corporate state has attempted to snuff out. It is either that or become drones and serfs in a global, corporate dystopia. It is not much of a choice. But at least we still have one.


To read more of Chris Hedges’ writing on the themes from this column, check out his books “Death of the Liberal Class” and “The World As it Is: Dispatches on the Myth of Human Progress” here and here, respectively.

Keep up with Chris Hedges’ latest columns, interviews, tour dates and more at www.truthdig.com/chris_hedges.

2 Jun 2011

Hedge Fund Gamblers Earn the Same In One Hour As a Middle-Class Household Makes In Over 47 Years


31 May 2011

The Sky Really Is Falling

By Chris Hedges

The rapid and terrifying acceleration of global warming, which is disfiguring the ecosystem at a swifter pace than even the gloomiest scientific studies predicted a few years ago, has been confronted by the power elite with two kinds of self-delusion. There are those, many of whom hold elected office, who dismiss the science and empirical evidence as false. There are others who accept the science surrounding global warming but insist that the human species can adapt. Our only salvation—the rapid dismantling of the fossil fuel industry—is ignored by both groups. And we will be led, unless we build popular resistance movements and carry out sustained acts of civil disobedience, toward collective self-annihilation by dimwitted pied pipers and fools.

Those who concede that the planet is warming but insist we can learn to live with it are perhaps more dangerous than the buffoons who decide to shut their eyes. It is horrifying enough that the House of Representatives voted 240-184 this spring to defeat a resolution that said that “climate change is occurring, is caused largely by human activities, and poses significant risks for public health and welfare.” But it is not much of an alternative to trust those who insist we can cope with the effects while continuing to burn fossil fuels.

AP / Lori Mehmen
Global climate change has made for freak storms and more intense weather. Here, a tornado touches down in Iowa in 2008.

Horticulturalists are busy planting swamp oaks and sweet gum trees all over Chicago to prepare for weather that will soon resemble that of Baton Rouge. That would be fine if there was a limit to global warming in sight. But without plans to rapidly dismantle the fossil fuel industry, something no one in our corporate state is contemplating, the heat waves of Baton Rouge will be a starting point for a descent that will ultimately make cities like Chicago unlivable. The false promise of human adaptability to global warming is peddled by the polluters’ major front group, the U.S. Chamber of Commerce, which informed the Environmental Protection Agency that “populations can acclimatize to warmer climates via a range of behavioral, physiological, and technological adaptations.” This bizarre theory of adaptability has been embraced by the Obama administration as it prepares to exploit the natural resources in the Arctic. Secretary of State Hillary Clinton announced recently that melting of sea ice “will result in more shipping, fishing and tourism, and the possibility to develop newly accessible oil and gas reserves.” Now that’s something to look forward to.

“It is good that at least those guys are taking it seriously, far more seriously than the federal government is taking it,” said the author and environmental activist Bill McKibben of the efforts in cities such as Chicago to begin to adapt to warmer temperatures. “At least they understand that they have some kind of problem coming at them. But they are working off the science of five or six years ago, which is still kind of the official science that the International Climate Change negotiations are working off of. They haven’t begun to internalize the idea that the science has shifted sharply. We are no longer talking about a long, slow, gradual, linear warming, but something that is coming much more quickly and violently. Seven or eight years ago it made sense to talk about putting permeable concrete on the streets. Now what we are coming to realize is that the most important adaptation we can do is to stop putting carbon in the atmosphere. If we don’t, we are going to produce temperature rises so high that there is no adapting to them.”

The Earth has already begun to react to our hubris. Freak weather unleashed deadly tornados in Joplin, Mo., and Tuscaloosa, Ala. It has triggered wildfires that have engulfed large tracts in California, Oklahoma, New Mexico and Texas. It has brought severe droughts to the Southwest, parts of China and the Amazon. It has caused massive flooding along the Mississippi as well as in Australia, New Zealand, China and Pakistan. It is killing off the fish stocks in the oceans and obliterating the polar ice caps. Steadily rising sea levels will eventually submerge coastal cities, islands and some countries. These disturbing weather patterns presage a world where it will be harder and harder to sustain human life. Massive human migrations, which have already begun, will create chaos and violence. India is building a 4,000-kilometer fence along its border with Bangladesh to, in part, hold back the refugees who will flee if Bangladesh is submerged. There are mounting food shortages and sharp price increases in basic staples such as wheat as weather patterns disrupt crop production. The failed grain harvests in Russia, China and Australia, along with the death of the winter wheat crop in Texas, have, as McKibben points out, been exacerbated by the inability of Midwestern farmers to plant corn in water-logged fields. These portents of an angry Gaia are nothing compared to what will follow if we do not swiftly act.

“We are going to have to adapt a good deal,” said McKibben, with whom I spoke by phone from his home in Vermont. “It is going to be a century that calls for being resilient and durable. Most of that adaptation is going to take the form of economies getting smaller and lower to the ground, local food, local energy, things like that. But that alone won’t do it, because the scale of change we are now talking about is so great that no one can adapt to it. Temperatures have gone up one degree so far and that has been enough to melt the Arctic. If we let it go up three or four degrees, the rule of thumb the agronomists go by is every degree Celsius of temperature rise represents about a 10 percent reduction in grain yields. If we let it go up three or four degrees we are really not talking about a planet that can support a civilization anything like the one we’ve got.
 
“I have sympathy for those who are trying hard to figure out how to adapt, but they are behind the curve of the science by a good deal,” he said. “I have less sympathy for the companies that are brainwashing everyone along the line ‘We’re taking small steps here and there to improve.’ The problem, at this point, is not going to be dealt with by small steps. It is going to be dealt with by getting off fossil fuel in the next 10 or 20 years or not at all.
 
“The most appropriate thing going on in Chicago right now is that Greenpeace occupied [on Thursday] the coal-fired power plant in Chicago,” he said. “That’s been helpful. It reminded people what the real answers are. We’re going to see more civil disobedience. I hope we are. I am planning hard for some stuff this summer.

“The task that we are about is essentially political and symbolic,” McKibben admitted. “There is no actual way to shut down the fossil fuel system with our bodies. It is simply too big. It’s far too integrated in everything we do. The actions have to be symbolic, and the most important part of that symbolism is to make it clear to the onlookers that those of us doing this kind of thing are not radical in any way. We are conservatives. The real radicals in this scenario are people who are willing to fundamentally alter the composition of the atmosphere. I can’t think of a more radical thing that any human has ever thought of doing. If it wasn’t happening it would be like the plot from a Bond movie.

“The only way around this is to defeat the system, and the name of that system is the fossil fuel industry, which is the most profitable industry in the world by a large margin,” McKibben said. “Fighting it is extraordinarily difficult. Maybe you can’t do it. The only way to do it is to build a movement big enough to make a difference. And that is what we are trying desperately to do with 350.org. It is something we should have done 20 years ago, instead of figuring that we were going to fight climate change by convincing political elites that they should do something about this problem. It is a tactic that has not worked.

“One of our big targets this year is the U.S. Chamber of Commerce, which is the biggest front group for fossil fuel there is,” he said. “We are figuring out how to take them on. I don’t think they are worried about us yet. And maybe they are right not to be, because they’ve got so much money they’re invulnerable.
 
“There are huge decisive battles coming,” he said. “This year the Obama administration has to decide whether it will grant a permit or not for this giant pipeline to run from the tar sands of Alberta down to the refineries on the Gulf of Mexico. That is like a 1,500-mile fuse to the biggest carbon bomb on the planet. We have to figure out how to keep that from happening. The Obama administration, very sadly, a couple of months ago opened 750 million tons of western coal under federal land for mining. That was a disgrace. But they still have to figure out how to get it to port so they can ship it to China, which is where the market for it is. We are trying hard to keep that from happening. I’m on my way to Bellingham, Wash., next week because there is a plan for a deep-water port in Bellingham that would allow these giant freighters to show up and collect that coal.

“In moral terms, it’s all our personal responsibility and we should be doing those things,” McKibben said when I asked him about changing our own lifestyles to conserve energy. “But don’t confuse that with having much of an impact on the concentration of carbon in the atmosphere. You can’t make the math work one house or one campus at a time. We should do those things. I’ve got a little plaque for having built the most energy-efficient house in Vermont the year we built it. I’ve got solar panels everywhere. But I don’t confuse myself into thinking that that’s actually doing very much. This argument is a political argument. I spend much of my life on airplanes spewing carbon behind me as we try to build a global movement. Either we are going to break the power of the fossil fuel industry and put a price on carbon or the planet is going to heat past the point where we can deal with it.

“It goes far beyond party affiliation or ideology,” he said. “Fossil fuel undergirds every ideology we have. Breaking with it is going to be a traumatic and difficult task. The natural world is going to continue to provide us, unfortunately, with many reminders about why we have to do that. Sooner or later, we will wise up. The question is all about that sooner or later.

“I’d like people to go to climatedirectaction.org and sign up,” McKibben said. “We are going to be issuing calls for people to be involved in civil disobedience. I’d like people to join in this campaign against the U.S. Chamber of Commerce. It’s very easy to sign up. If you don’t own a little business yourself, you probably shop at 10 or 20 of them a week. It’s very easy to sign those guys up to say the U.S. Chamber doesn’t speak for me. We can’t take away their [the Chamber’s] money, but we can take away some of their respectability. I would like people to demonstrate their solidarity with people all around the world in this fight. The next big chance to do that will be Sept. 24, a huge global day of action that we’re calling ‘Moving Planet.’ It will be largely bicycle based, because the bicycle is one of the few tools that both rich and poor use and because it is part of the solution we need. On that day we will be delivering demands via bicycle to every capital and statehouse around the world.
 
“I wish there was some easy ‘end around,’ some backdoor through which we could go to get done what needs to be done,” he said. “But that’s not going to happen. That became clear at Copenhagen and last summer when the U.S. Senate refused to take a vote on the most mild, tepid climate legislation there could have been. We are going to have to build a movement that pushes the fossil fuel industry aside. I don’t know whether that’s possible. If you were to bet, you might well bet we will lose. We have been losing for two decades. But you are not allowed to make that bet. The only moral action, when the worst thing that ever happened in the world is happening, is to try and figure out how to change those odds.

“At least they knew they were going to win,” McKibben said of the civil rights movement. “They didn’t know when, but they knew they were going to win, that the tide of history was on their side. But the arch of the physical universe appears to be short and appears to bend towards heat. We’ve got to win quickly if we’re going to win. We’ve already passed the point where we’re going to stop global warming. It has already warmed a degree and there is another degree in the pipeline from carbon already emitted. The heat gets held in the ocean for a while, but it’s already there. We’ve already guaranteed ourselves a miserable century. The question is whether it’s going to be an impossible one.”


Chris Hedges is a weekly Truthdig columnist and a fellow at The Nation Institute. His latest book is “The World As It Is: Dispatches on the Myth of Human Progress.”

24 May 2011

Netanyahu’s Border War

by Shlomo Ben-Ami

TEL AVIV – Binyamin Netanyahu’s furious rejection of US President Barack Obama’s proposal to use the 1967 borders as the basis for a two-state solution to the Israeli-Palestinian dispute – frontiers that he called “utterly indefensible” – reflects not only the Israeli prime minister’s poor statesmanship, but also his antiquated military philosophy.

In an era of ballistic missiles and other weapons of mass destruction, and in which the planned Palestinian state is supposed to be demilitarized, why is it so vital for Israel to see its army “sit along the Jordan River”? If such a tripwire is really necessary, why shouldn’t a reliable international force carry out that task? And how can hundreds of isolated settlements spread amidst a hostile Palestinian population ever be considered a strategic asset?

Netanyahu should, perhaps, have studied the lessons of the 1973 Yom Kippur war on the Golan Heights before denouncing Obama’s idea. When the war started, the first thing the Israeli army command sought was the evacuation of the area’s settlements, which Israel’s generals knew would quickly become an impossible burden, and an obstacle to maneuver, for their troops. Indeed, the last war that Israel won “elegantly” – in the way that Netanyahu imagines that wars should be won – began from the supposedly “indefensible” 1967 lines.

That is no accident. Israel’s occupation of Arab lands in that war, and its subsequent deployment of military forces amidst the Arab population of the West Bank and close to the powerful military machines of Egypt in the south and Syria in the north, exposed it to Palestinian terrorism from the east. At the same time, occupation denied Israel’s army the advantage of a buffer – the demilitarized zones that were the key to the 1967 victory against both Egypt and Syria.

For borders to be defensible, they need first to be legitimate and internationally recognized. But Netanyahu does not really trust “the gentiles” to supply that type of international recognition of Israel’s borders, not even when America is behind him, and not even when Israel today has the most powerful military capabilities in the Middle East.

The son of a renowned historian who served as the personal secretary of Zeev Jabotinski, the founder of the Zionist right, Netanyahu absorbed from childhood his father’s interpretation of Jewish history as a series of tragedies. The lesson was simple: the gentiles cannot be relied upon, for Jewish history is one of betrayal and extermination at their hands. The only remedy to our fragile existence in the Diaspora lies in the return to the Biblical Land of Israel. Our Arab neighbors should never be trusted; hence, as Jabotinski preached, the new Israeli nation must erect an Iron Wall of Jewish power to deter its enemies forever.

To be fair, such an existential philosophy was not the right’s monopoly. The legendary General Moshe Dayan, who was born in a socialist Kibbutz on the shores of the Sea of Galilee, was no less a skeptic about the chances of coexisting with the Arabs. A gifted orator, this is how he put it in a eulogy to a fallen soldier in 1956:

“Let us not be deterred from seeing the loathing that is inflaming and filling the lives of the hundreds of thousands of Arabs who live around us. Let us not avert our eyes lest our arms weaken….This is the fate of our generation, this is our life choice, to be prepared and armed, strong and determined, lest the sword be stricken from our fist and our lives cut down….We are a generation of settlers, and, without the steel helmet and the cannon’s fire, we will not be able to plant a tree and build a home.”

Yet the same Dayan, who in 1970 said that “the only peace negotiations are those where we settle the land and we build, and we settle, and from time to time we go to war,” was forced by cruel reality to admit that the best security to which Israel can aspire is that based on peace with its neighbors. Eventually, he became the architect of a historic peace with Egypt. His book Are We Truly Condemned to Live by the Sword to Eternity? marked the transformation of the soldier into a statesman.

If Netanyahu is ever to lead a historic reconciliation with the Palestinian people, he should start by endorsing a courageous, almost post-Zionist insight reflected in Dayan’s 1956 eulogy. Fully aware of the bitter legacy of Palestinian disinheritance following the 1948 war, Dayan refused to blame the murderers. On the contrary, he understood their “burning hatred.”

Unfortunately, Israel today has a prime minister with the mentality of a platoon commander who nonetheless likes to cast himself as a latter day Churchill fighting the forces of evil bent on destroying the Third Jewish Temple. Of course, a great leader must always have a sense of history. But, as the French philosopher Paul Valéry put it, history, “the science of things which are not repeated,” is also “the most dangerous product which the chemistry of the intellect has ever evolved,” especially when manipulated by politicians.

Menachem Begin, a hawkish predecessor of Netanyahu as prime minister, once had the insolence to say to the great historian Yaakov Talmon that, “when it comes to the twentieth century, I am more an expert than you are.”

Talmon responded with “The Fatherland is Imperiled,” a pivotal article whose conclusions are as relevant today as they were in 1981. Not until occupation ends, Israel lives within internationally recognized borders, and the Palestinians recover their dignity as a nation will the Jewish state’s existence be finally secured.


Shlomo Ben Ami, a former Israeli foreign minister who serves as Vice-President of the Toledo international Center for Peace, is the author of Scars of War, Wounds of Peace: the Israeli-Arab Tragedy.

Copyright: Project Syndicate, 2011.
http://www.project-syndicate.org/

23 May 2011

When Did America Completely Jettison the Rule of Law?

In societies that profess some respect for law, suspects are apprehended and brought to fair trial.


by Noam Chomsky for Alternet
May 22, 2011
 
After the assassination of bin Laden I received such a deluge of requests for comment that I was unable to respond individually, and on May 4 and later I sent an unedited form response instead, not intending for it to be posted, and expecting to write it up more fully and carefully later on. But it was posted, then circulated.
 
That was followed but a deluge of reactions from all over the world. It is far from a scientific sample of course, but nevertheless, the tendencies may be of some interest. Overwhelmingly, those from the “third world” were on the order of “thanks for saying what we think.” There were similar ones from the US, but many others were infuriated, often virtually hysterical, with almost no relation to the actual content of the posted form letter. That was true in particular of the posted or published responses brought to my attention. I have received a few requests to comment on several of these. Frankly, it seems to me superfluous. If there is any interest, I’ll nevertheless find some time to do so.

The original letter ends with the comment that “There is much more to say, but even the most obvious and elementary facts should provide us with a good deal to think about.” Here I will fill in some of the gaps, leaving the original otherwise unchanged in all essentials.

* * * *

On May 1, 2011, Osama bin Laden was killed in his virtually unprotected compound by a raiding mission of 79 Navy Seals, who entered Pakistan by helicopter. After many lurid stories were provided by the government and withdrawn, official reports made it increasingly clear that the operation was a planned assassination, multiply violating elementary norms of international law, beginning with the invasion itself.

There appears to have been no attempt to apprehend the unarmed victim, as presumably could have been done by 79 commandos facing no opposition - except, they report, from his wife, also unarmed, who they shot in self-defense when she “lunged” at them (according to the White House).

A plausible reconstruction of the events is provided by veteran Middle East correspondent Yochi Dreazen and colleagues in the Atlantic. Dreazen, formerly the military correspondent for the Wall Street Journal, is senior correspondent for the National Journal Group covering military affairs and national security. According to their investigation, White House planning appears not to have considered the option of capturing OBL alive: “The administration had made clear to the military's clandestine Joint Special Operations Command that it wanted bin Laden dead, according to a senior U.S. official with knowledge of the discussions. A high-ranking military officer briefed on the assault said the SEALs knew their mission was not to take him alive.”

The authors add: “For many at the Pentagon and the Central Intelligence Agency who had spent nearly a decade hunting bin Laden, killing the militant was a necessary and justified act of vengeance.” Furthermore, “Capturing bin Laden alive would have also presented the administration with an array of nettlesome legal and political challenges.” Better, then, to assassinate him, dumping his body into the sea without the autopsy considered essential after a killing, whether considered justified or not – an act that predictably provoked both anger and skepticism in much of the Muslim world.

As the Atlantic inquiry observes, “The decision to kill bin Laden outright was the clearest illustration to date of a little-noticed aspect of the Obama administration's counterterror policy. The Bush administration captured thousands of suspected militants and sent them to detention camps in Afghanistan, Iraq, and Guantanamo Bay. The Obama administration, by contrast, has focused on eliminating individual terrorists rather than attempting to take them alive.” That is one significant difference between Bush and Obama. The authors quote former West German Chancellor Helmut Schmidt, who “told German TV that the U.S. raid was ‘quite clearly a violation of international law’ and that bin Laden should have been detained and put on trial,” contrasting Schmidt with US Attorney General Eric Holder, who “defended the decision to kill bin Laden although he didn't pose an immediate threat to the Navy SEALs, telling a House panel on Tuesday that the assault had been ‘lawful, legitimate and appropriate in every way’.”

The disposal of the body without autopsy was also criticized by allies. The highly regarded British barrister Geoffrey Robertson, who supported the intervention and opposed the execution largely on pragmatic grounds, nevertheless described Obama’s claim that “justice was done” as an “absurdity” that should have been obvious to a former professor of constitutional law. Pakistan law “requires a colonial inquest on violent death, and international human rights law insists that the ‘right to life’ mandates an inquiry whenever violent death occurs from government or police action. The U.S. is therefore under a duty to hold an inquiry that will satisfy the world as to the true circumstances of this killing.” Robertson adds that “The law permits criminals to be shot in self-defense if they (or their accomplices) resist arrest in ways that endanger those striving to apprehend them. They should, if possible, be given the opportunity to surrender, but even if they do not come out with their hands up, they must be taken alive if that can be achieved without risk. Exactly how bin Laden came to be ‘shot in the head’ (especially if it was the back of his head, execution-style) therefore requires explanation. Why a hasty ‘burial at sea’ without a post mortem, as the law requires?”

Robertson attributes the murder to “America’s obsessive belief in capital punishment—alone among advanced nations—[which] is reflected in its rejoicing at the manner of bin Laden’s demise.” For example, Nation columnist Eric Alterman writes that “The killing of Osama bin Laden was a just and necessary undertaking.”

Robertson usefully reminds us that “It was not always thus. When the time came to consider the fate of men much more steeped in wickedness than Osama bin Laden -- namely the Nazi leadership -- the British government wanted them hanged within six hours of capture. President Truman demurred, citing the conclusion of Justice Robert Jackson that summary execution ‘would not sit easily on the American conscience or be remembered by our children with pride…the only course is to determine the innocence or guilt of the accused after a hearing as dispassionate as the times will permit and upon a record that will leave our reasons and motives clear’."

The editors of the Daily Beast comment that “The joy is understandable, but to many outsiders, unattractive. It endorses what looks increasingly like a cold-blooded assassination as the White House is now forced to admit that Osama bin Laden was unarmed when he was shot twice in the head.”

In societies that profess some respect for law, suspects are apprehended and brought to fair trial. I stress “suspects.” In June 2002, FBI head Robert Mueller, in what the Washington Post described as “among his most detailed public comments on the origins of the attacks,” could say only that “investigators believe the idea of the Sept. 11 attacks on the World Trade Center and Pentagon came from al Qaeda leaders in Afghanistan, the actual plotting was done in Germany, and the financing came through the United Arab Emirates from sources in Afghanistan…. We think the masterminds of it were in Afghanistan, high in the al Qaeda leadership.” What the FBI believed and thought in June 2002 they didn’t know eight months earlier, when Washington dismissed tentative offers by the Taliban (how serious, we do not know) to extradite bin Laden if they were presented with evidence. Thus it is not true, as the President claimed in his White House statement, that “We quickly learned that the 9/11 attacks were carried out by al Qaeda.”

There has never been any reason to doubt what the FBI believed in mid-2002, but that leaves us far from the proof of guilt required in civilized societies – and whatever the evidence might be, it does not warrant murdering a suspect who could, it seems, have been easily apprehended and brought to trial. Much the same is true of evidence provided since. Thus the 9/11 Commission provided extensive circumstantial evidence of bin Laden’s role in 9/11, based primarily on what it had been told about confessions by prisoners in Guantanamo. It is doubtful that much of that would hold up in an independent court, considering the ways confessions were elicited. But in any event, the conclusions of a congressionally authorized investigation, however convincing one finds them, plainly fall short of a sentence by a credible court, which is what shifts the category of the accused from suspect to convicted. There is much talk of bin Laden's “confession,” but that was a boast, not a confession, with as much credibility as my “confession” that I won the Boston marathon. The boast tells us a lot about his character, but nothing about his responsibility for what he regarded as a great achievement, for which he wanted to take credit.

Again, all of this is, transparently, quite independent of one’s judgments about his responsibility, which seemed clear immediately, even before the FBI inquiry, and still does.

It is worth adding that bin Laden’s responsibility was recognized in much of the Muslim world, and condemned. One significant example is the distinguished Lebanese cleric Sheikh Fadlallah, greatly respected by Hizbollah and Shia groups generally, outside Lebanon as well. He too had been targeted for assassination: by a truck bomb outside a mosque, in a CIA-organized operation in 1985. He escaped, but 80 others were killed, mostly women and girls, as they left the mosque – one of those innumerable crimes that do not enter the annals of terror because of the fallacy of “wrong agency.” Sheikh Fadlallah sharply condemned the 9/11 attacks, as did many other leading figures in the Muslim world, within the Jihadi movement as well. Among others, the head of Hizbollah, Sayyid Hassan Nasrallah, sharply condemned bin Laden and Jihadi ideology.

One of the leading specialists on the Jihadi movement, Fawaz Gerges, suggests that the movement might have been split at that time had the US exploited the opportunity instead of mobilizing the movement, particularly by the attack on Iraq, a great boon to bin Laden, which led to a sharp increase in terror, as intelligence agencies had anticipated. That conclusion was confirmed by the former head of Britain’s domestic intelligence agency MI5 at the Chilcot hearings investigating the background for the war. Confirming other analyses, she testified that both British and US intelligence were aware that Saddam posed no serious threat and that the invasion was likely to increase terror; and that the invasions of Iraq and Afghanistan had radicalized parts of a generation of Muslims who saw the military actions as an “attack on Islam.” As is often the case, security was not a high priority for state action.

It might be instructive to ask ourselves how we would be reacting if Iraqi commandos landed at George W. Bush's compound, assassinated him, and dumped his body in the Atlantic (after proper burial rites, of course). Uncontroversially, he is not a “suspect” but the “decider” who gave the orders to invade Iraq -- that is, to commit the “supreme international crime differing only from other war crimes in that it contains within itself the accumulated evil of the whole” (quoting the Nuremberg Tribunal) for which Nazi criminals were hanged: in Iraq, the hundreds of thousands of deaths, millions of refugees, destruction of much of the country and the national heritage, and the murderous sectarian conflict that has now spread to the rest of the region. Equally uncontroversially, these crimes vastly exceed anything attributed to bin Laden.

To say that all of this is uncontroversial, as it is, is not to imply that it is not denied. The existence of flat earthers does not change the fact that, uncontroversially, the earth is not flat. Similarly, it is uncontroversial that Stalin and Hitler were responsible for horrendous crimes, though loyalists deny it. All of this should, again, be too obvious for comment, and would be, except in an atmosphere of hysteria so extreme that it blocks rational thought.

Similarly, it is uncontroversial that Bush and associates did commit the “supreme international crime,” the crime of aggression, at least if we take the Nuremberg Tribunal seriously. The crime of aggression was defined clearly enough by Justice Robert Jackson, Chief of Counsel for the United States at Nuremberg, reiterated in an authoritative General Assembly resolution. An “aggressor,” Jackson proposed to the Tribunal in his opening statement, is a state that is the first to commit such actions as “Invasion of its armed forces, with or without a declaration of war, of the territory of another State….” No one, even the most extreme supporter of the aggression, denies that Bush and associates did just that.

We might also do well to recall Jackson’s eloquent words at Nuremberg on the principle of universality: “If certain acts of violation of treaties are crimes, they are crimes whether the United States does them or whether Germany does them, and we are not prepared to lay down a rule of criminal conduct against others which we would not be willing to have invoked against us.” And elsewhere: “We must never forget that the record on which we judge these defendants is the record on which history will judge us tomorrow. To pass these defendants a poisoned chalice is to put it to our own lips as well.”

It is also clear that alleged intentions are irrelevant. Japanese fascists apparently did believe that by ravaging China they were laboring to turn it into an “earthly paradise.” We don’t know whether Hitler believed that he was defending Germany from the “wild terror” of the Poles, or was taking over Czechoslovakia to protect its population from ethnic conflict and provide them with the benefits of a superior culture, or was saving the glories of the civilization of the Greeks from barbarians of East and West, as his acolytes claimed (Martin Heidegger). And it’s even conceivable that Bush and company believed that they were protecting the world from destruction by Saddam’s nuclear weapons. All irrelevant, though ardent loyalists on all sides may try to convince themselves otherwise.

We are left with two choices: either Bush and associates are guilty of the “supreme international crime” including all the evils that follow, crimes that go vastly beyond anything attributed to bin Laden; or else we declare that the Nuremberg proceedings were a farce and that the allies were guilty of judicial murder. Again, that is entirely independent of the question of the guilt of those charged: established by the Nuremberg Tribunal in the case of the Nazi criminals, plausibly surmised from the outset in the case of bin Laden.

A few days before the bin Laden assassination, Orlando Bosch died peacefully in Florida, where he resided along with his terrorist accomplice Luis Posada Carilles, and many others. After he was accused of dozens of terrorist crimes by the FBI, Bosch was granted a presidential pardon by Bush I over the objections of the Justice Department, which found the conclusion “inescapable that it would be prejudicial to the public interest for the United States to provide a safe haven for Bosch. ”The coincidence of deaths at once calls to mind the Bush II doctrine, which has “already become a de facto rule of international relations,” according to the noted Harvard international relations specialist Graham Allison. The doctrine revokes “the sovereignty of states that provide sanctuary to terrorists,” Allison writes, referring to the pronouncement of Bush II that “those who harbor terrorists are as guilty as the terrorists themselves,” directed to the Taliban. Such states, therefore, have lost their sovereignty and are fit targets for bombing and terror; for example, the state that harbored Bosch and his associate -- not to mention some rather more significant candidates. When Bush issued this new “de facto rule of international relations,” no one seemed to notice that he was calling for invasion and destruction of the US and murder of its criminal presidents.

None of this is problematic, of course, if we reject Justice Jackson’s principle of universality, and adopt instead the principle that the US is self-immunized against international law and conventions -- as, in fact, the government has frequently made very clear, an important fact, much too little understood.

It is also worth thinking about the name given to the operation: Operation Geronimo. The imperial mentality is so profound that few seem able to perceive that the White House is glorifying bin Laden by calling him “Geronimo” -- the leader of courageous resistance to the invaders who sought to consign his people to the fate of “that hapless race of native Americans, which we are exterminating with such merciless and perfidious cruelty, among the heinous sins of this nation, for which I believe God will one day bring [it] to judgement,” in the words of the great grand strategist John Quincy Adams, the intellectual architect of manifest destiny, long after his own contributions to these sins had passed. Some did comprehend, not surprisingly. The remnants of that hapless race protested vigorously. Choice of the name is reminiscent of the ease with which we name our murder weapons after victims of our crimes: Apache, Blackhawk. Tomahawk,… We might react differently if the Luftwaffe were to call its fighter planes "Jew" and "Gypsy".

The examples mentioned would fall under the category “American exceptionalism,” were it not for the fact that easy suppression of one’s own crimes is virtually ubiquitous among powerful states, at least those that are not defeated and forced to acknowledge reality. Other current illustrations are too numerous to mention. To take just one, of great current significance, consider Obama’s terror weapons (drones) in Pakistan. Suppose that during the 1980s, when they were occupying Afghanistan, the Russians had carried out targeted assassinations in Pakistan aimed at those who were financing, arming and training the insurgents – quite proudly and openly. For example, targeting the CIA station chief in Islamabad, who explained that he “loved” the “noble goal” of his mission: to “kill Soviet Soldiers…not to liberate Afghanistan.” There is no need to imagine the reaction, but there is a crucial distinction: that was them, this is us.

What are the likely consequences of the killing of bin Laden? For the Arab world, it will probably mean little. He had long been a fading presence, and in the past few months was eclipsed by the Arab Spring. His significance in the Arab world is captured by the headline in the New York Times for an op-ed by Middle East/al Qaeda specialist Gilles Kepel; “Bin Laden was Dead Already.” Kepel writes that few in the Arab world are likely to care. That headline might have been dated far earlier, had the US not mobilized the Jihadi movement by the attacks on Afghanistan and Iraq, as suggested by the intelligence agencies and scholarship. As for the Jihadi movement, within it bin Laden was doubtless a venerated symbol, but apparently did not play much more of a role for this “network of networks,” as analysts call it, which undertake mostly independent operations.

The most immediate and significant consequences are likely to be in Pakistan. There is much discussion of Washington's anger that Pakistan didn't turn over bin Laden. Less is said about the fury in Pakistan that the US invaded their territory to carry out a political assassination. Anti-American fervor had already reached a very high peak in Pakistan, and these events are likely to exacerbate it.

Pakistan is the most dangerous country on earth, also the world’s fastest growing nuclear power, with a huge arsenal. It is held together by one stable institution, the military. One of the leading specialists on Pakistan and its military, Anatol Lieven, writes that “if the US ever put Pakistani soldiers in a position where they felt that honour and patriotism required them to fight America, many would be very glad to do so.” And if Pakistan collapsed, an “absolutely inevitable result would be the flow of large numbers of highly trained ex-soldiers, including explosive experts and engineers, to extremist groups.” That is the primary threat he sees of leakage of fissile materials to Jihadi hands, a horrendous eventuality.

The Pakistani military have already been pushed to the edge by US attacks on Pakistani sovereignty. One factor is the drone attacks in Pakistan that Obama escalated immediately after the killing of bin Laden, rubbing salt in the wounds. But there is much more, including the demand that the Pakistani military cooperate in the US war against the Afghan Taliban, whom the overwhelming majority of Pakistanis, the military included, see as fighting a just war of resistance against an invading army, according to Lieven.

The bin Laden operation could have been the spark that set off a conflagration, with dire consequences, particularly if the invading force had been compelled to fight its way out, as was anticipated. Perhaps the assassination was perceived as an “act of vengeance,” as Robertson concludes. Whatever the motive was, it could hardly have been security. As in the case of the “supreme international crime” in Iraq, the bin Laden assassination illustrates that security is often not a high priority for state action, contrary to received doctrine.



© 2011 Noam Chomsky


Noam Chomsky is Institute Professor (retired) at MIT. He is the author of many books and articles on international affairs and social-political issues, and a long-time participant in activist movements. His most recent books include: Failed States, What We Say Goes (with David Barsamian), Hegemony or Survival, and the Essential Chomsky.

22 May 2011

The Real IMF Assault

By Nomi Prins

As newly resigned International Monetary Fund head Dominique Strauss-Kahn (aka DSK) hunkers down in his jail cell, IMF news has fallen into two categories. The first involves salacious details of his alleged attempted rape, and the second, questions about whether his absence will keep the IMF from its main focus of constructing pro-bank bailout packages for Greece, Portugal and other struggling European countries. Both categories miss the devastation the IMF causes, regardless of who heads it.

AP / Shannon Stapleton, pool
Focus on DSK: Dominique Strauss-Kahn, former head of the International Monetary Fund, is seen through a video camera viewfinder at his arraignment Monday in Manhattan Criminal Court.

Meanwhile, the global economic assault caused by the misguided IMF and EU notion that public spending cuts and national infrastructure fire sales should be enacted to make up for bank rampages marches on. Rather than clamping down on banks and working on debt reduction strategies, bailout loans remain designed to keep banks solvent, investors shielded from loss, and outside buyers interested.

Though he had designs on leading France—from the socialist side, no less—DSK is nothing more than a proponent of very nonsocialist measures when it comes to other countries. His actions at the IMF speak louder than any words to the contrary.

It doesn’t matter whether DSK or anyone else from the euro power contingent heads the IMF; its practices will remain the same. Weaker countries get economically bullied in order to benefit stronger ones through bailouts rife with measures to pound people and aid banks and international firms. For, to the IMF and European Union elite, the “confidence” of free-flowing, unencumbered capital trumps the financial security of local citizens.

That same idea is central to the big bank bailout and subsidization strategy of the U.S. Federal Reserve, Treasury Department, current and prior administrations and most of Congress. The threat in 2008? A worse crisis will occur if the financial system isn’t saved. The related threat surrounding the debt cap debate today? A worse crisis will occur if we default on the debt we created to save the financial system. As for jobs … yeah, we’ll get back to you on that.

When the pre-2008 global bank pillage hit a brick wall, governments and central banks rushed to reward banks with trillions of dollars of subsidies, using the excuse of avoiding larger catastrophe. To the powers that be, it might take time to increase employment, but no time could be wasted propping up the global financial system. In their minds, pensions and teachers cause budget failures, not debt created for banks.
 
Here in the U.S., the lie is that boosting banks will lead to a trickling-down economic prosperity for the greater population, despite all evidence to the contrary. In Europe, the lie is slightly different, because economic security of the population runs a distant second place to preservation of the euro as an overriding currency, meaning the repayment of debts by outer European to core European countries.

Yet, neither the IMF nor the Fed and Treasury Department strategies even attempt to target problems like raging unemployment, or renegotiating personal or small business debt from the ground up. Instead, they deign to extract more from the citizens that had nothing to do with causing the financial collapse. Austerity measures, in any form, are a cruel weapon against a public forced to be economic collateral damage to unaccountable banking systems given cheap solvency.

As here, unemployment rates in Europe have risen substantially since the global banking debacle, and ongoing protests have followed. Today, the Greek unemployment rate stands at 14.2 percent. One out of three people under 24 years old can’t find a job. In Ireland (the recipient of a harsh $133 billion bailout package that required $23 billion in pension payment cuts), the jobless rate is 14.7 percent, and, similarly, the youth unemployment rate has tripled since 2008 to more than 33 percent. Spain has the euro zone’s highest jobless rate, 20.7 percent, with youth unemployment over 40 percent. These figures are only worsening under the burden of austerity.

On Monday, the IMF and EU approved a 78 billion euro bailout for Portugal (two-thirds of it will come from public program cuts). Portugal’s jobless rate jumped to 12.4 percent. Blame for Portugal’s weak economy has been cast on a Socialist government that didn’t embrace spending cuts quickly enough. But what’s more telling than this unsubstantiated claim is that private Portuguese banks tapped their bailout government guarantees to raise cash before the ink on the bailout agreement dried.

In echoes of our own bailout, the EU and IMF were concerned that not providing banks a way to raise more money would hurt the Portuguese economy further, since banks would lend less. Yet the bailout agreement contained no requirement for banks to lend locally, instead requiring severe public spending cuts, tax hikes (on people, not international companies) and more aggressive privatization programs.

Meanwhile, thousands of people are again striking in Greece, as the IMF and EU discuss more austerity measures, and thousands more are protesting in Spain fearing the same. People don’t need cuts in social programs and wages, they need jobs. They don’t need their countries racking up more debt to sustain flailing banks or the favor of global capital markets through fire-selling their infrastructure.

Last November, at the European Banking Congress and Central Bank Conference in Frankfurt, Germany, it was DSK (in a pot-calling-kettle-black sort of way) who pointed out the dangers of our own debt being so high and the necessity that the Fed bolster the dollar. That didn’t exactly endear him to Fed Chairman Ben Bernanke, who spent his speech defending QE2 and blaming dollar problems on a slowly recovering global economy, while avoiding mention of the debt-bank connection.
 
Avoidance, it turns out, is a useful strategy. Last week, Bernanke urged Congress to approve another debt cap increase. The Fed has amassed $2.5 trillion of debt on its books (including $1.5 trillion in treasurys shell-gamed from the Treasury Department and nearly $1 trillion of mortgage-related securities it won’t sell for fear of hurting the values of similar securities on the banks’ books). It’s being used for nothing helpful to the general economy. A simple transfer of any of it would solve the debt cap problem in a nanosecond. Going a step further, an exchange of any of the $1.4 trillion of excess bank reserves receiving interest from the Fed would do the same.

Our public debt ballooned under Timothy Geithner by more than $4 trillion. But rather than even considering taking some back from the Fed’s balance sheet, Treasury Secretary Geithner threatened to halt civil service retirement and disability payments to free up borrowing capacity, repeating almost verbatim similar threats made by John Snow, George W. Bush’s treasury secretary at the end of 2004.

This is exactly the kind of thing going on in Europe, with a mild twist. If we can’t raise enough debt for banks, we’ll take it from citizens. Even though creating debt (massive debt) for this reason has not helped the general economy, nor will it.

Meanwhile, the global “remedy” for depressed economies and debt-bloated banking sectors remains to do more of the same and pretend it will lead to a different outcome. Sadly, there is no way this strategy will result in more stable economies. What we can expect instead is a further slide into global economic depression.