Photographic Web site of the Webmaster


Another web site has made the connection with Nigeria and the oil soaked earth we are beginning to see everywhere.

Big Oil Makes War on the Earth 
The Gulf Coast Joins an Oil-Soiled Planet
 
By Ellen Cantarow

Amnesty International calls Nigerian government on human rights violations in regard to oil industry destruction.
The oil industry in the Niger Delta of Nigeria has brought impoverishment, conflict, human rights abuses and despair to the majority of the people in the oil-producing areas, according to a new Amnesty International report.

The reason I don't read much fiction these days-the current history of this planet wins hands down in the horrific nature of the story Patricia Cornwell could not find anything as torturously mind bending as this.

T &T style of government

Thugs & Thieves


Earlier in his career, Secretary Geithner worked for Kissinger Associates, Inc. Makes you go Hmm . . .

What’s Haunting Timothy Geithner?

Criticism has dogged the Treasury secretary for months. Now newly uncovered e-mails indicate how the New York Fed, under his tenure, directed AIG to keep quiet about its disbursement of $62 billion in bailout funds.

For a year, we've wondered why AIG has been reluctant to disclose details related to the $62 billion in bailout money it funneled to banks in the midst of the financial crisis. Now we know: because the Federal Reserve Bank of New York was telling it to keep quiet. The disclosure has turned into a yet another problem for Treasury Secretary Timothy Geithner, who critics say is becoming as toxic to the Obama adminis-tration's handling of the financial crisis as the bad securities that caused it.

Read more about the wonderful world of Kissinger In Chris Floyd’s web site for Tuesday, 06 July 2010

Richard Holbrooke was a managing director of Lehman Brothers from 1985 through 1993 Is the finandal sector running the country? He had a shakeup in first visitng the smaller Pakistan villages in 2009

His face tense and unsmiling, a young man from a village in Pakistan's western tribal areas tells his story, mixing English, Pashto and Urdu. He is the only male in his clan to get an education, but can't find a job, and blames a corrupt national government. Americans are bombing his neighbors, he says, tempting him to join the Islamist militants in his area. Across the room, another Pakistani turns toward his hosts at the U.S. Embassy and says, "You are hated."

 

May 2010 Archive 

June 2010 Archives Efforts to cover up the worst catastrophe to hit the planet are going on for a reason-we will never be able to recover from this; I have performed calculations, now in my archives, to show that every drop of water in the Oceans of the Earth could potentially be part of a toxic sink.
Financial mess;  My first attempt to understand the Byzantine like labyrinth of Wall Street operations melded on to the U. S. Treasury.
I later graduated to amateur Finance minister 101, 109, 239 and now consider myself quite an expert. Almost. An Expert?

Things That Go Nuclear In the Night reviews the dangers of low level radiation.

More on the inequlities that are part of the corporate structure

An interesting story about the garment factory system in the Dominican Repbulic. One owner there pays his workers three times above the area average. “We never had the opportunity to make wages like this before,” says Ms. Castillo, a soft-spoken woman who earns $500 a month. “I feel blessed.”

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Wednesday August 4, 2010

Monday, July 26, 2010

As I get ready to move the month of July into the archives, I am beginning to tire of all of the facts and all of the links. I was going to do a page on the use of Depleted Uranium and give some links here but I became very ill with stress about the subject. Fortify yourself, brace your bodily constitution and search out some links on Depleted Uranium, including all of the pictures of deformed children born under the Evil Eye of the Amercian occupation in Iraq. Please have a barf bag ready.
Seriously.
The tragic and horrendous story of the havoc this government wrecks around the world leaves me with one conclusion; I have to say yet again that I find it totally wrong to continue to support the government that is supposed to represent me. Please join with me in stating the only too obvious, this government is not worthy of our continued support.
This collection of foolish people known as a government is causing too much harm. This contraption we have as a constitution must be written again from scratch. We have to build a new house from the ground up and give up on the one we live in now. Our future home will be built on our visions of happiness, joy and hope.

If we cannot build a new system of governement with a new constituion then we may as well stop talking.

 

Wednesday, July 21, 2010

The most famous of liars is at it again stating there has been a victory when there has been none.

Obama Declares Victory in Financial Reform Fight

In yet another sweeping gesture that surely turned the stomachs of many of his opponents, President Barack Obama signed financial reform legislation on Wednesday, standing afterward with a similarly triumphant-looking Joe Biden and declaring, “These reforms represent the strongest consumer financial protections in history.” And just in case you didn’t catch that the first time, he went ahead and said it again: “In history.”

  I beleive that economic reform is the most important issue facing this country right now. I will just briefly say why and then give some references to expert opinions on financial reform.None of us can live with no money in our lives. To some extent, as we look at the spread of income from high to low, we might all think about where we are and where we might be. If we take a life position on less is more, moving towards the bottom half might seem like a good thing; if we thought we could get by. And more of us may be moving towards the bottom half of that income spread as the economy rapidly weakens. But everyone would agree that they want to stay some thousands of dollars per year up from the bottom. What's your lowest rung? Twenty, Thirty, Fifty, Eighty, One hundred thousand. Really? We all have our own standards and our own minimum. We all want to stay a good ways above poverty. We all need money.

Money. What is it? Is it just paper run off a press owned by the US Treasury Department? Because seeing that venerated department ship boatloads of money to the banks in the so called bailout, I would say that's all it is. But I know that's wrong, and the reference there will show briefly how money works as a medium of exhcnage. Again we all must have some money in our possession, yes that we own, so we may buy food, water, rent, heat, light, clothes, transportation, medicines, and even information. Oh, sure, one can hang out at the library, take mass transit, one can live with our Auntie Maude, shop at second hand stores, and visit the soup kitchens. But now,one is inside the poverty line and this is a very treachorous place to be, increasingly so in America. No need to go into why, believe me it's nowhere anyone wants to be. Again we all need money. To get the things we need; the bare necessities, the stilts to move our house above the flood, the boat to float our lives so we may move across the sea of material being we are all ensared in.

Now if we all need money, and so many folks seem to be have a short supply, why not just print more?

Something one expert had asked for did make it-rating agencies (the guys who said those warehouses filled with spoiled pot pie owned by the likes of Lehman Brothers were not really piles of rotten pot pies but just rekindled Hawaiin Luau tidbits-Dunn & Bradstreet, Standard & Poor's and Moody's) may no longer claim exemption from liability. They can now be taken to court for misleading other gamblers crooks, and thieves in the financial sector professional investors

Congress should eliminate the effective exemption of rating agencies from liability and make rating agencies more accountable by treating them the same as banks, accountants, and lawyers.

As financial gatekeepers with little incentive to “get it right,” credit rating agencies pose a systemic risk. Creating a rating agency oversight board and strengthening the accountability of rating agencies is thus consistent with the broader push by U.S. policymakers for greater systemic risk oversight. Over the long term, other measures for assessing credit risk may become more acceptable and accessible to regulators and investors. Meanwhile, a more powerful overseer and broader accountability would help reposition credit rating agencies as true information intermediaries.

Apparently Congress has now forced the hand of the Nationally Recognized Statistical Rating Organizations and they must be hopping mad as they are screaming about anyone useing their ratings. The NRSROs will no longer be able to call a pot pie anything other than what it is-except to rebrand it maybe as a Shepherd's pie.
Then we have my longish read for the day-but that's what you expect here, right? Pay attention; I am making a prediction-our banking and financial system will go belly up, roll over and die within the next twelve to eighteen months. The ceilings will hit the floors, the walls fall over, the furniture will blow out and the roof will hit that mess and the basement of our financial system will be filled with piles of smoking rubble. The excerpt is from part two of this excellent backgrounder from The Real News.

[In an interview, Gerald Epstein is Co-director of the Political Economy Research Institute outlines Problems with the recently passed reform bill]
It relies so much on regulation rather than structural changes. And the regulators, there's going to be a battle, I suppose, over every single position, enormous lobbying taking place of who gets to regulate, and then what are the rules for regulation
Well, the coming war's either going to be a total bloodbath that is completely one-sided, with the banking lobby and their allies fighting against open doors and no opposition, or the reformers, our side, is going to be able to fight back against the bankers who are going to be writing these rules with regulators over the next ten years. We have a big problem.

One proposal that made it in, in modified form, is the Consumer Financial Protection Bureau, which was designed to help prevent the kind of abusive lending that is not only unfair but, in the case of subprime mortgages and so forth, helped lead to the crisis. That succeeded in modified form. Of course, instead of being independent and it's on its own, it's going to be lodged in the Federal Reserve. But Elizabeth Warren, who is the mother of this organization, this institution, believes that they're going to have enough independence to make a difference. So I think that clearly is a victory. Again, it's going to depend on who Obama names to head it. [ Ed. note: This is a key issue; the integrity of the administrator. Of course this is always a problem with government. ]

A second thing that we were fighting for, as I said, was limits on the size of banks. The Brown-Coffman amendment would have really limited the size of too-big-to-fail banks. That could have made a difference. Nothing like that made it in, except for one thing: the Kanjorski amendment made it in, which allows this council of regulators to break up banks if they prove to be systematically very dangerous. . . Another element is derivatives regulation made it in—in modified form, but the derivatives have not been regulated before, so that's a small victory. But there were things that were really important that we couldn't even get a vote on. So, for example, if you're going to have capital requirements to limit the risk, if you're going to have liquidity requirements to keep buffers of liquidity on hand so that the banks don't have to go running to the public, you need to have a good sense of what's happening on the balance sheets, you need to know how much risk is being hidden off the balance sheet, you need to know how much short-term borrowing there is. There's nothing in this reform bill that gives a clear picture of what the banks are actually doing, how much risk they're actually holding. Now, Senator Menendez from New Jersey had developed a bill with the help of people at SAFER and PERI to open up, make transparent these balance sheets, which really is essential for any reform of the banks, and they couldn't get it voted on. There are other examples like that as well. So, for example, regulating the shadow banking system, the hedge funds, private equity funds, and so forth, we need a much stronger oversight and regulation of those. We couldn't get anything through the bill, through the legislation on that. Regulating executive compensation in a very strict way so that bankers don't make millions and millions of dollars for taking excessive risks, again, we have legislation that we were working on. We really couldn't get any decent legislation

JAY: So, Gerry, let's say this scenario all happens again. If the legislation doesn't have the kind of teeth to prevent this too-big-to-fail and something happens in Europe or next time another bubble breaks, whether it's housing or something else, and we're back in the same situation of a freeze of credit and these banks in trouble and they want to get bailed out again, what's going to be the alternative that people should be fighting for? And what's a different scenario than playing the same piece of theater again?

EPSTEIN: I think the different scenario has to have two components. First of all, the scenario has to be: let's let more of the banks fail. But at the same time, to prevent that from dragging down the world economy, we have to develop alternative institutions that are publicly controlled, publicly owned, that actually serve the needs that finance is supposed to serve, that is, the needs of business, the needs of consumers, the needs of workers. We don't need this financial system the way it's structured. It doesn't need to be this big. It doesn't need to be doing what it's doing. It's engaging mostly in casino capitalism and not in real investment. So I think the next time around we shouldn't bail it out. But if we don't do anything else beside that, it will cause a catastrophe. So at the same time, we have to develop institutions that can come in and take over the role that these financial institutions are supposed to be playing. So we need cooperative banks. We need state-owned banks. We need cooperative insurance companies, state-owned insurance companies. We have to start building these alternative financial institutions so that next time around we can just let these other ones go.

Now on to the essay for today entitled Major institutions have failed and why we must pull ourselves off the grid. The money system however, is something we must all use and we cannot pull ourselves from it; we are forced to use it if we wish to survive. So too of the electrical power grid, the system of food distribution, the automobile system of transporting ourselves and the water and heat grids. In fact most aspects of our lives flow out of some system that is

  1. Massive and widespread
  2. Controlled by a very large corporation or a small number of coporations (three auto makers in the U. S. ? Really?)
  3. Is rife with crime, deception and fraud
  4. is not open to public scrutiny
  5. protestations to the contrary about transparancy by these major moguls should be viewed in light of #3.

Saturday, July 17, 2010

Upadated Saturday, July 24, 2010

The blowout that is still going on at the BP Macondo drill site-a.k.a. Deepwater Horizon-has its mirror in Nigeria. The news article below is a recent clip from a newspaper in Great Britain that keeps us more up to date than the counterparts in the U. S. of A. The Guardian can steer you wrong, but you will do better there than the NYT. Then, below that, in an excerpt from and inciteful book entitled Extractive Economies and Conflicts in the Global South, Kenneth Omeje describes what a country like Nigeria actually is in sociological terms, a Rentier state. But look at some of his major points and see if he does not also give us a mirror of our own economy and political situation.

Recent reviews of the Louisaian Bayou country show devestation on the scale of a Katrina sized hurricane; this will continue to escalate in scale as the oil seeps into the soil and land of the Bayou. Industrial development, facilitated by the Louisiana state government has caused a tremendous damage to the natural setting of sediment built islands and backwaters. These backwaters have been a source of huge wealth that has gradually been sucked into the deeper waters of the Gulf by the levy system.

With his black lab and bird retriever at his side, Captain Ryan Lambert eased his fishing skiff out of Joshua’s Marina, just across the road from his home and fishing lodge in Buras, LA, once a thriving fishing community that was nearly wiped off the map during Katrina. The veteran fisherman, hunter and trapper pointed out in the direction of the massive levy guiding the Mississippi River to its unnatural connection to the Gulf.

“The day they built that levy was the day we started dying,” he said in his soft Louisiana drawl. “That levy is the biggest reason we’ve lost all our wetlands here, and without the wetlands, we can’t survive.”

Similarities between extractive political economy of Nigeria and the United States

  1. Powers of sovereignty granted to larger corporations. Hmm, where I have seen that before?

    Recently, BP relaxed its lockdown on parts of Grand Isle. Although they still threaten felony charges and $40,000 fines for approaching their boats or booms, credentialed journalists now supposedly have greater access to cleanup sites. We continue to hear about police and Coast Guard running reporters off, explaining they're under BP orders, calling into question why BP's authority supercedes that of these towns' mayors and sheriffs.

  2. Extraction of resources—this is a stretch perhaps—but if Wall Steet is viewed as the capitol of a vast financial empire (which it is), then the rest of the country and the investors around the world, are living in the colonies of financial dependency. If organic products like oil, gold and diamonds are replaced with the flow of money then the analogy works. We live in an extractive economy with Golman Sachs as the rentier class of oppressors who do very little in the way of contributing real wealth but accumlate much personal gain for a small number of beneficiaries. The extraction of oil from the Gulf offers a direct comparison with the colonized nations of the South.
  3. Finally, the capstone of lawlessness that is such a becoming hallmark of American life at the very top echelon of grovernment and corporate society. The outstanding trait of this lawlessness is the unequal distribution of wealth in America where 0.5% of the population controls almost 20% of the wealth.

    An example of this uneaven distribution is income disparity-maybe the guy spends all he earns but Kevin T. Kabat, Chairman and Chief Executive Officer of FIFTH THIRD BANCORP (FITB) earns $5,215,692 in total compensation. By comparison, the average worker made $32,048 in 2009.; Kevin T. Kabat made 162 times the average worker's pay.

    On the direct subject of lawlessness, recent actions of BP security forces show them to have no other interest than to “usurp and exercise state law for corporate or personal aggrandizement.” Read Omeje's book at Amazon.com or on Google books and do searches for key words -‘rentier’ and ‘state’ is what yielded the excerpt below. See if you don’t agree that we have essentially been colonized by the likes of BP, GE, Time Warner, Walt Disney and Goldman Sachs. A recent example of lawlessness turned up here. Apparently health care insurance legisitlation is not really about . . . health care insurance! ?

    ...the Health Care Bill mandates, according to Numismaster.com, Starting on January 1st in 2012, S federal law will require coin and bullion dealers to report to the Internal Revenue Service all gold and silver coin purchases and sales greater than $600.

  4. Fortune Magazine’s list of global 500 companies containes seven extractive (oil) companies in the top twenty.
  5. Finally, Omeje does much to exlpain why rentier economics drives away the incentive to inviest in infrastructure

    Most extant influential discourses of why many rentier economies of the global South have a marked proclivity to dysfunctional conflicts tend to anchor their explanations on the predatory nature of the rentier state. in particular, the ‘prebendal` machinations of the local hegemonic elites (top state officials and private middlemen) believed to be in collusion with exploitative agents of international capital (cf, Turner, 1978; Beblawi, 1987, 1990; Yates, 1996). Most rentier states are dominated by self-serving hegemonic elites, whose interests in rent-seeking and prebendal accumulation determine a range of state policies. statutes and institutional practices.
    The disposition and inclination of the state towards neo-patrimonial, rent- seeking or rent maximizing behavior play into the hands of TNCs [Trans National Corporations] and other international stakeholders in the rentier economies in different ways. For instance, the phenomenon leaves little room for investment in strengthening the institutional capacity of the state to regulate the activities of TNCs with regard to such crucial issues as environmental practices and degradation, corporate social responsibility, and payment of compensation with respect to land alienation for extraction of natural resources and environmental damage. Consequently, the phenomenon encourages collaboration in corrupt dealings (kickbacks, over-invoicing, inflation of contracts, imports and supplies; underreporting of export commodities and revenues, etc.) between the local state officials and agents of international capital. Overall, the interests of the ‘rentier elites’ (a generic name for the above predatory social classes) run counter to the survivalist needs, demands and aspirations of the subject classes. In particular, subalterns, proletariat, civil and ‘uncivil’ societies, and the imperatives of human and sustainable development. In this circumstance, argue most protagonists, counter—hegemonic discourses, agitations, protests and violent conflicts become inevitable.

  6. The government channels political movement and builds cultural structures that focus into larger Trans National Corporations (TNCs) which debilitates the political energies of the larger society.
  7. Just one more quote from the National Resources Defense Council:

    The people of the bayou are dealing with problems of epic proportions. They know the way forward will be hard, and it will be years before life will ever resemble what it once was. As the marshes continue to disappear, each acre lost is another blow to the food chain that sustains the Gulf. It's a slow-motion cancer to the livelihood of those who live here, and to the birds, fish and mammals that rely on it for their survival.
         What will we learn from this? Man and technology have done a good job of slowly destroying this essential life-nurturing area of the world. Maybe if we listen more to people like Captain Lambert we can preserve it. Because if we don’t change our environmentally destructive ways, we will have nothing left to preserve.

    We live in an extractive economy where the upper corporate echelon collect very high rents; the whole is kept together with a hodge-podge of forces that make Medieval Germany look like the epitome of bureaucratic efficiency. Please consider each line of the poem below very carefully and fully-in other words, read it real slow. Read it many times. We are slouching to perfidy.

    The Second Coming

    Turning and turning in the widening gyre
    The falcon cannot hear the falconer;
    Things fall apart; the centre cannot hold;
    Mere anarchy is loosed upon the world,
    The blood-dimmed tide is loosed, and everywhere
    The ceremony of innocence is drowned;
    The best lack all conviction, while the worst
    Are full of passionate intensity.

        Surely some revelation is at hand;
    Surely the Second Coming is at hand.
    The Second Coming! Hardly are those words out
    When a vast image out of Spiritus Mundi
    Troubles my sight: a waste of desert sand;
    A shape with lion body and the head of a man,
    A gaze blank and pitiless as the sun,
    Is moving its slow thighs, while all about it
    Wind shadows of the indignant desert birds.
    The darkness drops again but now I know
    That twenty centuries of stony sleep
    Were vexed to nightmare by a rocking cradle,
    And what rough beast, its hour come round at last,
    Slouches towards Bethlehem to be born?        William Butler Yeats

Nigeria's agony dwarfs the Gulf oil spill. The US and Europe ignore it

The Deepwater Horizon disaster caused headlines around the world, yet the people who live in the Niger delta have had to live with environmental catastrophes for decades

Burning pipeline, Lagos

A ruptured pipeline burns in a Lagos suburb after an explosion in 2008 which killed at least 100 people. Photograph: George Esiri/Reuters

We reached the edge of the oil spill near the Nigerian village of Otuegwe after a long hike through cassava plantations. Ahead of us lay swamp. We waded into the warm tropical water and began swimming, cameras and notebooks held above our heads. We could smell the oil long before we saw it – the stench of garage forecourts and rotting vegetation hanging thickly in the air.

The farther we travelled, the more nauseous it became. Soon we were swimming in pools of light Nigerian crude, the best-quality oil in the world. One of the many hundreds of 40-year-old pipelines that crisscross the Niger delta had corroded and spewed oil for several months.

Forest and farmland were now covered in a sheen of greasy oil. Drinking wells were polluted and people were distraught. No one knew how much oil had leaked. "We lost our nets, huts and fishing pots," said Chief Promise, village leader of Otuegwe and our guide. "This is where we fished and farmed. We have lost our forest. We told Shell of the spill within days, but they did nothing for six months."

That was the Niger delta a few years ago, where, according to Nigerian academics, writers and environment groups, oil companies have acted with such impunity and recklessness that much of the region has been devastated by leaks.

In fact, more oil is spilled from the delta's network of terminals, pipes, pumping stations and oil platforms every year than has been lost in the Gulf of Mexico, the site of a major ecological catastrophe caused by oil that has poured from a leak triggered by the explosion that wrecked BP's Deepwater Horizon rig last month.

That disaster, which claimed the lives of 11 rig workers, has made headlines round the world. By contrast, little information has emerged about the damage inflicted on the Niger delta. Yet the destruction there provides us with a far more accurate picture of the price we have to pay for drilling oil today.

On 1 May this year a ruptured ExxonMobil pipeline in the state of Akwa Ibom spilled more than a million gallons into the delta over seven days before the leak was stopped. Local people demonstrated against the company but say they were attacked by security guards. Community leaders are now demanding $1bn in compensation for the illness and loss of livelihood they suffered. Few expect they will succeed. In the meantime, thick balls of tar are being washed up along the coast.

Within days of the Ibeno spill, thousands of barrels of oil were spilled when the nearby Shell Trans Niger pipeline was attacked by rebels. A few days after that, a large oil slick was found floating on Lake Adibawa in Bayelsa state and another in Ogoniland. "We are faced with incessant oil spills from rusty pipes, some of which are 40 years old," said Bonny Otavie, a Bayelsa MP.

This point was backed by Williams Mkpa, a community leader in Ibeno: "Oil companies do not value our life; they want us to all die. In the past two years, we have experienced 10 oil spills and fishermen can no longer sustain their families. It is not tolerable."

With 606 oilfields, the Niger delta supplies 40% of all the crude the United States imports and is the world capital of oil pollution. Life expectancy in its rural communities, half of which have no access to clean water, has fallen to little more than 40 years over the past two generations. Locals blame the oil that pollutes their land and can scarcely believe the contrast with the steps taken by BP and the US government to try to stop the Gulf oil leak and to protect the Louisiana shoreline from pollution.

"If this Gulf accident had happened in Nigeria, neither the government nor the company would have paid much attention," said the writer Ben Ikari, a member of the Ogoni people. "This kind of spill happens all the time in the delta."

"The oil companies just ignore it. The lawmakers do not care and people must live with pollution daily. The situation is now worse than it was 30 years ago. Nothing is changing. When I see the efforts that are being made in the US I feel a great sense of sadness at the double standards. What they do in the US or in Europe is very different."

"We see frantic efforts being made to stop the spill in the US," said Nnimo Bassey, Nigerian head of Friends of the Earth International. "But in Nigeria, oil companies largely ignore their spills, cover them up and destroy people's livelihood and environments. The Gulf spill can be seen as a metaphor for what is happening daily in the oilfields of Nigeria and other parts of Africa.

"This has gone on for 50 years in Nigeria. People depend completely on the environment for their drinking water and farming and fishing. They are amazed that the president of the US can be making speeches daily, because in Nigeria people there would not hear a whimper," he said.

It is impossible to know how much oil is spilled in the Niger delta each year because the companies and the government keep that secret. However, two major independent investigations over the past four years suggest that as much is spilled at sea, in the swamps and on land every year as has been lost in the Gulf of Mexico so far.

One report, compiled by WWF UK, the World Conservation Union and representatives from the Nigerian federal government and the Nigerian Conservation Foundation, calculated in 2006 that up to 1.5m tons of oil – 50 times the pollution unleashed in the Exxon Valdez tanker disaster in Alaska – has been spilled in the delta over the past half century. Last year Amnesty calculated that the equivalent of at least 9m barrels of oil was spilled and accused the oil companies of a human rights outrage.

According to Nigerian federal government figures, there were more than 7,000 spills between 1970 and 2000, and there are 2,000 official major spillages sites, many going back decades, with thousands of smaller ones still waiting to be cleared up. More than 1,000 spill cases have been filed against Shell alone.

Last month Shell admitted to spilling 14,000 tonnes of oil in 2009. The majority, said the company, was lost through two incidents – one in which the company claims that thieves damaged a wellhead at its Odidi field and another where militants bombed the Trans Escravos pipeline.

Shell, which works in partnership with the Nigerian government in the delta, says that 98% of all its oil spills are caused by vandalism, theft or sabotage by militants and only a minimal amount by deteriorating infrastructure. "We had 132 spills last year, as against 175 on average. Safety valves were vandalised; one pipe had 300 illegal taps. We found five explosive devices on one. Sometimes communities do not give us access to clean up the pollution because they can make more money from compensation," said a spokesman.

"We have a full-time oil spill response team. Last year we replaced 197 miles of pipeline and are using every known way to clean up pollution, including microbes. We are committed to cleaning up any spill as fast as possible as soon as and for whatever reason they occur."

These claims are hotly disputed by communities and environmental watchdog groups. They mostly blame the companies' vast network of rusting pipes and storage tanks, corroding pipelines, semi-derelict pumping stations and old wellheads, as well as tankers and vessels cleaning out tanks.

The scale of the pollution is mind-boggling. The government's national oil spill detection and response agency (Nosdra) says that between 1976 and 1996 alone, more than 2.4m barrels contaminated the environment. "Oil spills and the dumping of oil into waterways has been extensive, often poisoning drinking water and destroying vegetation. These incidents have become common due to the lack of laws and enforcement measures within the existing political regime," said a spokesman for Nosdra.

The sense of outrage is widespread. "There are more than 300 spills, major and minor, a year," said Bassey. "It happens all the year round. The whole environment is devastated. The latest revelations highlight the massive difference in the response to oil spills. In Nigeria, both companies and government have come to treat an extraordinary level of oil spills as the norm."

A spokesman for the Stakeholder Democracy Network in Lagos, which works to empower those in communities affected by the oil companies' activities, said: "The response to the spill in the United States should serve as a stiff reminder as to how far spill management in Nigeria has drifted from standards across the world."

Other voices of protest point out that the world has overlooked the scale of the environmental impact. Activist Ben Amunwa, of the London-based oil watch group Platform, said: "Deepwater Horizon may have exceed Exxon Valdez, but within a few years in Nigeria offshore spills from four locations dwarfed the scale of the Exxon Valdez disaster many times over. Estimates put spill volumes in the Niger delta among the worst on the planet, but they do not include the crude oil from waste water and gas flares. Companies such as Shell continue to avoid independent monitoring and keep key data secret."

Worse may be to come. One industry insider, who asked not to be named, said: "Major spills are likely to increase in the coming years as the industry strives to extract oil from increasingly remote and difficult terrains. Future supplies will be offshore, deeper and harder to work. When things go wrong, it will be harder to respond."

Judith Kimerling, a professor of law and policy at the City University of New York and author of Amazon Crude, a book about oil development in Ecuador, said: "Spills, leaks and deliberate discharges are happening in oilfields all over the world and very few people seem to care."

There is an overwhelming sense that the big oil companies act as if they are beyond the law. Bassey said: "What we conclude from the Gulf of Mexico pollution incident is that the oil companies are out of control.

"It is clear that BP has been blocking progressive legislation, both in the US and here. In Nigeria, they have been living above the law. They are now clearly a danger to the planet. The dangers of this happening again and again are high. They must be taken to the international court of justice."

 

Extractive Economies and Conflicts 1n the Global South:
Re-Engaging Rentier Theory and Politics

Kenneth Omeje
Contextualization and Historicity

This book primarily explores the anatomy of rentier politics in extractive economies and how the phenomenon relates to conflict processes — conflict formation, aggravation, prosecution, and escalation. as well as opportunities for resolution or transformation — in the global South. The global South comprises the post-colonial and predominantly poor countries of Africa. Caribbean- Pacific. Latin America and Asia — countries that despite their abundant natural resource endowments are associated with the greatest political and developmental setbacks and challenges in modern history: dictatorships and instability, weak institutional structures, corruption and misgovernance, human rights deficits, hunger and starvation, environmental degradation, refugeeism and forced migration, widespread disease including HIWAIDS pandemic, as well as high and low intensity conflicts. It is noteworthy that the regions described in this volume as the global South is often depicted with such others terms as ‘Third World’, transitional societies, developing countries, less developed countries, underdeveloped countries, and so forth. Some of these terms, in particular, ‘Third World’ and ‘underdeveloped countries’, have a marked derogatory or pejorative slant. The concept of global South is often used in contradistinction with the global North or developed and industrialized countries, which is not strictly a geographical category but a political economy characterization.

Paradoxically, many extractive economies of the global South are amongst the world’s poorest and low-income countries, perennially beset with significant challenges in meeting their development objectives, including the United Nations General Assembly’s Millennium Development Goals (M DGs) and the Human Development Index (HDI). A number of recent studies have analyzed the paradox of poverty and wars amidst bountiful natural resource endowment- ‘the resource curse’ — that has blighted many developing countries (see Auty. l993). Different theories, with varied explanatory powers and contextual relevance, have also tried to explain the paradox and analyze the key drivers of conflict (see. for example, Terry, l997: Collier and Hoeflier, 2000). Some influential structuralist discourses, such as the neo-Marxist dependency mode, environmental scarcity theory, and greed versus grievance theory, have all tended to establish some degree of positive correlation between the structure of extractive economies dependent on primary commodity export, on the one hand, and patrimonial corruption, inter-group struggles for resources and dysfunctional conflicts, on the other. Another dimension of conflict amongst extractive economics is the conflict associated with the consequences of natural resource extraction for human livelihood, human settlement and the sustainability of the planetary ecosystem. Ecological conflict, as it is often branded does not, however, stand in isolation but is intrinsically related to structural conflict of groups and factional struggle for resources, including the mobilization of state power by privileged parties to advance the struggle. An apparent gap in most studies of note is a trans-historical multi-regional anatomy of rentier politics in extractive economies that rigorously explores the accumulation devices and tendencies of key stakeholders in their interplay with the structures of domestic and international political economy. It is this largely unexplored or overlooked aspect of politics in extractive economies that seems to have the most decisive implications for dysfunctional conflict (or lack of it) in different countries and regions of the global South.

Extractive economies are ‘terminal economies` dependent on non-renewable and the seasonally renewing but exhaustible bounty of the planet’s biosystems (see Berry, 1999). The globalization of production and trade in the late nineteenth century in the aftermath of the industrial revolution in Western Europe was the key factor in the emergence of dependent extractive economies in the global South. A great deal of historical studies exist on how European colonial rule and imperial governance created outposts of` dependencies in the global South for the primary purpose of exploiting economic resources (mostly minerals and agricultural produce) as means to provide the crucial raw materials necessary to advance capitalist production and industrialization in the metropolitan West. To consign a greater part of the global South to dependencies for extraction of vital natural resources during colonial rule, Western imperial powers supplanted the autonomy anti sovereignty of the peoples, communities and states they colonized and instituted a regime of impunity conducive to unaccountable exploitation and primitive accumulation. Forced labor, compulsory cash crop production and delegation of sovereign powers to transnational trading com panics and individuals were all part of the regime of impunity widespread in the colonies. The colonizers equipped and supported many transnational companies with commercial and mining privileges and with the sovereign rights allowing them to raise taxes and maintain an armed force (Mbembe, 2001). Most of the colonial trading and mining companies recruited and maintained salaried armies for many years. The emergence of transnational business corporations that worked in tandem with the colonial state, oftentimes preceding the state as an agency of imperial governance, but at other times, backstopped and fronted by the state, was a crucial element in the historical transition of many economies of the global South from relatively sell`-sufficient ‘organic economies (Berry, 1999) to extractive economies.

Europe‘s commercial interests in extractive resources from externally subdued territories predated formal colonial rule by between 150 to 300 years in various regions of the global South. The pre-colonial phase of European exploitation of the global South comprised the extraction of natural resources like gold, ivory, tobacco, sugar. salt and pepper; and the exportation of able-bodied men, women and children (mostly from Africa) as slaves to the Americas and Europe. It is a well established historical fact that the wealth and capital accumulated by European merchants and institutions through pre-colonial and colonial exploitation of the global South accelerated technological innovation and development in the global North, and by converse, dialectically produced and spread underdevelopment in the South (cf Eze, 1997. p. 5; Ankle, 1997), Sub—Saharan Africa was evidently the worst hit with respect to underdevelopment because of the unprecedented scale and devastating consequences of trans-Atlantic slave trade (Rodney, 1972).

Two significant features of the regime of impunity in the colonial era carried forward to the post-colonial period as features that contributed to fundamentally shaping the political economy of extraction were the preponderant corporatization of public law and the instrumental value of lawlessness at the top echelon of the state. In virtually all the colonial states, a montage of imperial edicts and laws informed by the corporate interests of the transnational mining and trading companies were systematically promulgated and ruthlessly enforced. These colonial laws, for instance. conceded on a platter a monopoly of exploration and mining rights over specific mineral resources in a colonial territory (eg. gold, diamond. coal. oil. iron ore, bauxite, copper, etc.) to some privileged companies, mostly those founded or owned by powerful imperial families and networks of the colonizing states. Additional laws that, among other benefits, guaranteed unhindered access to land through compulsory expropriation, conscription of cheap labor, docility of exploited labor and generous lax incentives were put in place in various colonies to support the operation of the early transnational corporations. The full paraphernalia of the colonial state machinery was mobilized to extensively serve the interests of leading transnational companies. In fact. during the early stages of colonialism. there were convergence of interest and modus- operandi between the lead transnational companies and the colonial state in many colonies of the global South: in other words, the transnational corporation was the state and the state was a mercantile company chartered by the metropolitan government. Some examples of the lead transnational companies more or less synonymous with the state in early colonial history include the Royal Niger Company and the Royal Dutch Shell Group in Nigeria. the British East Indian Company in India, the Dutch East Indian Company in East Asia and the Indian Ocean Islands. the Companhia de Moҫambique in the Portuguese colony of Mozambique, British South African Company in Northern and Southern Rhodesia (present day Zambia and Zimbabwe), French West India Company and Company of the American Islands in the French colonies in the West Indies and the Americas, British North Borneo Company in Malaysia, and the German East Africa Company in the pre-World War I German colonies of Tanganyika, Rwanda and Burundi.  

It is imperative to note that the preponderant corporatization of public law to serve the interest of capitalist accumulation by big businesses and mercantile companies at the expense of the underprivileged social groups and classes in society was not originated in the Western colonies of the global South, it was a phenomenon that already existed in varied proportions within most metropolitan states in the aftermath of the capitalist revolution in Europe. However, in the case of Europe, the phenomenon was devoid of the grotesque conflation of corporate power and state power. Colonialism created the necessary opportunity to drive this mercantilist tendency to its most pernicious conclusion.

Regarding the instrumental value of lawlessness at the top echelon of the state, it is noteworthy that colonial transnational companies acting independently as agents of the sovereign or sometimes in collusion with local colonial officers could at will usurp and exercise state law for corporate or personal aggrandizement. Colonialism was in fact characterized by a profusion of obnoxious laws and gross abuse of law by colonial officials and agencies, including the big mining and trading companies. The ‘self-serving’ tendencies in rule making and rule application, coupled with the apparent confusion between public and private spheres provided colonial officials and their corporate collaborators a vital opportunity for accumulation of spoils. From fiscal stewardship, legal justice and human rights perspectives, colonial agencies presided over a regime of lawlessness, hypocrisy and unaccountable rule. The tendency to usurp the powers of the state for ‘prebendal’ purposes, Mbembe (2001) observed, was miniaturized and ubiquitous; it tended to occur in various guises and everywhere. According to Mbembe, both the colonizers and their local aides (catechists, interpreters, court clerks, office clerks, uniformed guards. butlers, etc.) were culprits of this phenomenon. The regime of impunity widespread in the colonies was a departure from the common law, individual rights and principles of legal justice that were already emerging in the metropole (Mbembe, 2001). The miniaturization of impunity and abuse of public office for prebendal gain resonates with the patrimonial tradition of politics in many pre-colonial societies in which social relations is essentially patron-clientelistic with its characteristic blurring of the modernist distinction between the public and private, the secular and sacred (see Omeje. 2006; Joseph, 1937, l996). Both prebendal and (neo) patrimonial patients of accumulation remain rife in many post-colonial states given their roots in traditional social structures and, more significantly, their institutionalization as acceptable modes of accumulation under the colonial state structures

It is the foregoing political economy of extraction. with its anomalies of unaccountable political superstructure, perverted political culture and a strategic corporate mining sector, that has vestiges of state figure. personality and mentality that most post-colonial states inherited at independence As a matter of fact, many of the lead transnational mining and trading corporations, some of which have metamorphosed into global business conglomerates under different operational names, continued to preponderantly retain their colonial privileges well into the post-independence dispensation and even in contemporary history. Under the prevailing circumstance, perpetuating the inherited culture of usurping state power for prebendal accumulation becomes a convenient political capital for the hegemonic post-colonial elites while taming and regulating the all-powerful transnational mining corporations becomes, for many states, a strategic dilemma in which diverse options are contemplated, weighed and explored. Confrontation and collaboration, nationalization and liberalization, co-investment and production sharing partnership, displacement and replacement of firms, to mention a few, are some of the strategic options that have been historically explored with mixed results.

Rents, the Rentier State and Rentierism in Contemporary Extractive Economies

‘Rents' and ‘the rentier state’ are familiar concepts in International Political Economy (IPE). Rents are generally defined as exports earned or income derived from a gift of nature (Beblawi. 1990, p. 85). They are said to be external to the economy because they are not derived from the productive sections of the domestic economy but thrive by courtesy of international capital. The rentier state, on the other hand, is one that, based on the nature of its political economy, is largely dependent on extractive resource rents, taxes and royalties paid by transnational companies (TNCs), and on profits from its equity stakes in TNCs’ investments (cf. Forrest, l993, p. l42: Karl. 1997). Rentier states are significantly shaped by a combination of colonial legacy in the state structure and the luxury of natural resource revenues otherwise called the ‘rentier largesse’ (Omeje. 2006, p. 11). These revenues are generated and controlled by the governing elites who mainly expend it to their benefit rather than the welfare of society in general. Because a great deal of the debate on the rentier state has hitherto focused on the Middle Eastern oil-rich states — thanks to the path-breaking works of Beblawi et al. — commentators have often been categorized into two different but sometimes conflated viewpoints, namely: (a) those that suggest oil wealth makes states less democratic; and (b) those that suggest oil wealth causes governments to do a poorer job of promoting economic development (see Ross, 1999. p. 330). The debate on the implications of the rentier state for democracy and development has raged for over two decades. Significantly, this book aims to contribute to the debate by adopting a broader conception of rent and the rentier state to go beyond the canvas of oil. A rentier state generally lacks a productive outlook in the sense that revenues from natural resources contribute a significant proportion of the gross domestic products and dominate national income distribution. usually at the expense of the real productive sectors of the economy. Many pundits regard the rentier state as a subset of the rentier economy, but there are others that treat the rentier state as epiphenomenal of the rentier economy (cf Beblawi and Lucianai, l987; Beblawi, 1990; Yates, 1996, p. 13). For obvious historical reasons of international dependency, ‘rentierism’ (i.e. the condition or syndrome of rent accumulation and rent dependency) is a phenomenon mostly associated with the extractive economics of the global South and one that severally precipitates a nexus of dysfunctional conflicts. A major feature of rentierism, and one that is often problematic, lies in its the tendency to develop a self-propelling energy capable of reconfiguring the structures of the political economy of a state, peripheralizing and displacing non-rentier productive forces. and generating a convoluted culture of accumulation and politics that conforms to the imperatives of ‘rents speak`. Beblawi (1990) called the latter ‘rentier behavior’ (or mentality) which he argued was acquiring an inexorable transnational pan-regional current in the Persian Gulf and infecting both oil and (to a lesser extent) non-oil states alike because of the osmotic effects of oil rents.
Evidently, in many rentier states there is a marked disconnect between rentierism and the well established developmental function of the state. a disconnect essentially informed and aggravated by the predatory machinations of the hegemonic elites and their external collaborators. This tendency provokes substantial deprivation, peonage and disillusionment among the underprivileged populations. Being in most cases heterogeneous transitional societies, the situation is often compounded by perceptions. feelings and sometimes experiences of marginalization. exclusion and repression based on some primordial identities among certain ethno-cultural and/or religious communities. Mobilization of the disgruntled for violence against the state and any community perceived as dominating and manipulating the state for all the wrong reasons is not far-fetched at this point. It is this structure of counter-hegemonic violence prevalent in many rentier states that diminishes the capacity of the state to maintain the Weberian monopoly of coercive authority in all areas within its territorial jurisdiction and. conversely, further compelling the state to increasingly rely on the use of military force to reproduce its authority to govern. The structure of the counter hegemonic violence and the state’s brutal response to it inadvertently leaves the political union to degenerativcly crack and fragment into what Nikolas Rose (1999. p. 31) calls ‘governable spaces’ but which in reality are tinderbox outposts and fiefdoms of misgovernance. in which “ identity. territory and rule are in contradictory· play” (Watts. 2005. p. I06 my emphasis). Depending on the specific configuration and balance of power among the belligerent stakeholders, in some cases, generational forces (youth in particular) could be predominant: in others the clan, the kingdom (chieftainship), or the ethnic minority (indigenous peoples); subnational governments or radical (sometimes secessionist) insurgent movements can also provide the setting in which new political communities are incubated (Watts. 2005. p. l06). Based on a variety of contemporary specimens, conflicts associated with ‘rentierism’ have not only been complex and dysfunctional but also protracted and seemingly intractable — this is captured by the idiom of ‘resource wars’. This observed tendency has ignited a great debate in IPE on the curse of extractive economies and the `tragedy of conflict goods` oil, rubber, diamond, natural gas, and timber, to mention but a few notable conflict commodities. Nigeria, Congo DR, Colombia, Bolivia,.Liberia., Sierra Leone, Angola, Turkmenistan and Sudan are some of the contemporary illustrations of the countries where abundant natural resource endowments have not enhanced sustainable development, security and peace, but instead aggravated the frontiers and scale of dysfunctional conflicts. Why is this the case?

On the other hand, there are rentier economies where the patterns of conflict have been comparatively less virulent and more manageable; essentially because  by courtesy of the huge rentier revenues, the state responsively undertakes extensive distributive and developmental functions for the benefits of the citizenry (Vandewalle. 1998). Libya, United Arab Emirates, Oman, Qatar, Kuwait, and increasingly Venezuela are some of the apparent examples. In other words, the governing rentier elites makes conscientious efforts to bridge the disconnect between rentierism and developmentalism with the object of improving the well-being of the underprivileged classes. While this neo·Gramscian tendency may not permanently obliterate the structures of dysfunctional conflicts, it apparently helps to ensure a broad measure of consensus necessary to reproduce the legitimizing ideology and hegemony of the governing elites. Why has rentierism proved more humane and manageable in some extractive developing economies relative to others? What best practices (if any) are to be learned from the states where ‘rentierism’ has not degenerated into or is able to transcend disruptive conflicts and how can such states be prevented front gravitating into the ruins of states marked by virulent conflicts?

But beyond the conflicts associated with internal structures and contradictions in domestic political economies, rentierism is further linked to some wider geopolitical conflicts that have profound regional and international resonance. This category of conflicts is mostly connected with the interventionist roles of powerful external players itt the global North that define or perceive certain extractive resources in the global South as part of their strategic national interests. and as such are determined to enforce their unimpeded access to, or control of these resources using all possible means. Dating from the early years of post-colonial history throughout the (post-)Cold War period. external interests in extractive rentier resources in the global South have led to involvement of different external actors or patrons in the politics of many rentier states through mechanisms such as:
a) propping up of unpopular. repressive and corrupt clientelist regimes;
b) complicity in reactionary coups d’etat and assassination of key anti-imperialist or nationalist leaders;
c) strategic defense partnership and provision of military aid to strengthen the coercive capacity of clientelist regimes;
d) mobilization of diplomatic support for clientelist regimes facing justifiable international opprobrium for wrongdoing and. conversely. international sanctions against defiant rentier regimes;
e) outright military invasion. occupation and regime change to pave way for uninterrupted access to strategic resources.

The US and Belgian-led intervention in the Congo in the early 1960’s, and the US/UK—led invasion of Iraq in the second Gulf War are amongst the most striking examples of how external intervention in rentier economies could exacerbate internal state presure and jeopardise regional and international security. Whereas the intervention in Congo in the early l960s complicated the emerging ideological division of the newly independent African states along the cold war trajectories, the invasion of Iraq has certainly aggravated intra-civilizational discord between  between  the moderates and theocratic conservatives in the Arab World. and inter—civilizational friction between the Islamic world and the West- a confirmation of Huntington’s (1993) thesis [see also O`Hagan, 1995). Similarly, the increasing volatility of the Gulf region, aggravated by the post-9/1 l US—led wars in Afghanistan and Iraq, has compelled the international oil economy to intensify the search for alternative sources of energy supply to the major oil and gas importing economies. For obvious reasons, the US is in the lead of this search, which has culminated in intensive exploration activities and expanded oil and natural gas discoveries and production in many parts of the world. especially in the Gulf of Guinea in the West-Central Africa region and the Gulf of Mexico in the Central American region. Oil and gas exploration and production activities in these two regions have doubled in the past decade (see Romero, 2004; Omeje, 2006, p. 119). This has far-reaching economic and political implications for many of the oil and gas producing rentier economies of the regions, in particular countries like Equatorial Guinea, Sao Tome, Cameroun, Gabon, Chad, Mexico, Bolivia and Venezuela. One of such implications is the changing dynamics of natural resource mining and ecological management, resource struggles and conflicts within the various states. Specifically, how could conflicts associated with new or expanded oil and gas rents be managed and also prevented from feeding into. and complicating, old conflicts about identity, citizenship, leadership and governance in some of these countries?

Most extant influential discourses of why many rentier economies of the global South have a marked proclivity to dysfunctional conflicts tend to anchor their explanations on the predatory nature of the rentier state. in particular, the ‘prebendal` machinations of the local hegemonic elites (top state officials and private middlemen) believed to be in collusion with exploitative agents of international capital (cf, Turner, 197*8; Beblawi, 1987, 1990; Yates, 1996). Most rentier states are dominated by self-serving hegemonic elites, whose interests in rent-seeking and prebendal accumulation determine a range of state policies. statutes and institutional practices.

The disposition and inclination of the state towards neo-patrimonial, rent-seeking or rent maximizing behavior play into the hands of TNCs and other international stakeholders in the rentier economies in different ways. For instance, the phenomenon leaves little room for investment in strengthening the institutional capacity of the state to regulate the activities of TNCs with regard to such crucial issues as environmental practices and degradation, corporate social responsibility, and payment of compensation with respect to land alienation for extraction of natural resources and environmental damage. Consequently, the phenomenon encourages collaboration in corrupt dealings (kickbacks, over-invoicing, inflation of contracts, imports and supplies; underreporting of export commodities and revenues, etc.) between the local state officials and agents of international capital. Overall, the interests of the ‘rentier elites’ (a generic name for the above predatory social classes) run counter to the survivalist needs, demands and aspirations of the subject classes, in particular, subalterns, proletariat, civil and ‘uncivil’ societies, and the imperatives of human and sustainable development.

 

Thursday, July 15, 2010

Why I keep this page going

Back in 2005 when the housing bubble was blowing up, when housing values were supposedly reaching new heights, warnings about the false nature of increasing values were being issued.

BY DEAN BAKER
The Housing Bubble Fact Sheet
ISSUE BRIEF July 2005
1. The unprecedented rise in house prices has dangerous implications for the economy.
The generalized bubble in housing prices is comparable to the bubble in stock prices in the late 1990s. The eventual collapse of the housing bubble will have an even larger impact than the collapse of the stock bubble, since housing wealth is far more evenly distributed than stock wealth.

2. The housing bubble has created more than $5 trillion inbubble wealth, the equivalent of $70,000 per average family of four.

  Through the post-war period 1950 to 1995, house prices grew at approximately the same rate as the prices of other goods and services, like cars, gas, and healthcare. Since 1996, however, house prices have risen by more than 45 percent after adjusting for inflation. This unprecedented run-up in house prices has generated more than $5 trillion in housing bubble wealth, which is the difference between the current market value of housing and the value if house prices had followed their historic trend and kept pace with inflation.

Milton Friedman's principles were supposedly being applied here by one Alan Greenspan, but it turns out he was actually helping Wall Street, that well known gambling Casino run by tricksters, to fleece working people out of their pay, to set up artificial wealth. Recently the shenanigans have continued.

Monday, July 12, 2010

“Innovation” and the Social Purpose of Financial Services

 

http://www.nakedcapitalism.com/2010/07/innovation-and-the-social-purpose-of-financial-services.html

 

We’ve pointed out from time to time that the financial services industry has lost sight of its role. While helping companies borrow and raise money, providing investment and saving vehicles and payment services are all useful activities, the cost of financial intermediation is ultimately a tax on commerce. Perversely, some businessmen complain bitterly about how big a role lawyers play in the economy (their real beef is usually tort lawyers), when bankers simultaneously extract much more, yet have also been much more successful in co-opting their customers than lawyers have been. Analysts and financiers not only tell businessmen how to run their affairs, the now-notorious short-termism of American companies says they listen and comply.

But most important, Wall Street no longer serves the interests of broader society.

Now before you say, “Well that is just how markets are,” the markets in which major capital markets firms operate are hardly natural constructs. The modern securities industry grew out of the heavily regulated US equity markets; all the leading firms today either were long-established players or bank aspirants who drew on securities industry know-how. Firms are regulated and subject to licensing requirements. Even the rating agency business has restricted entry and capital requirements. So these were always regulated businesses precisely because financial services was understood to serve public ends. Yet the industry managed to persuade government officials and the public that it could be trusted to operate its businesses responsibly and everyone would benefit from more “innovation”. As we noted in ECONNED:

Institution after institution was bled dry. Yet economists and central bankers applauded the wondrous innovations, seeing increased liquidity and more efficient loan intermedation, ignoring the unhealthy condition of the industry.

The firms that had been silently drained of capital and tied together in shadowy counterparty links teetered, fell, and looked certain to perish. There was one last capital reserve to tap, U.S. taxpayers, to revive the financial system and make the innovators whole. Widespread anger turned into sullen resignation as the public realized its opposition to the looting was futile.

The authorities now claim they will find ways to solve the problems of opacity, leverage, and moral hazard.

But opacity, leverage, and moral hazard are not accidental byproducts of otherwise salutary innovations; they are the direct intent of the innovations. No one at the major capital markets firms was celebrated for creating markets to connect borrowers and savers transparently and with low risk. After all, efficient markets produce minimal profits. They were instead rewarded for making sure no one, the regulators, the press, the community at large, could see and understand what they were doing.

Nearly two years after the worst phase of the crisis the bogus premise of what passes for innovation in banking is largely unchallenged. Entire swathes of the industry that were once thought to live and die on their merits are now government backstopped (“living wills” and resolution authorities are public-placating headfakes, even though some members of the officialdom may be so naive as to believe they will work on globe-spanning megafirms). So both the scale of damage done and the recognition that capital markets activities and payment functions are now government supported means the case for regulating major financial players like utilities is even strong than ever, but instead, we are more or less back to status quo ante.

In the UK, some members of the media are questioning this sorry state of affairs. John Plender notes in the Financial Times:

First, Lord Turner, head of the UK’s Financial Services Authority, put the cat among the pigeons by questioning the social utility of much financial innovation. Then Paul Volcker declared that the only financial innovation that had impressed him over the past 20 years was the automated teller machine. Yet, despite these reservations the world remains remarkably tolerant of anti-social behaviour in the markets and in the wider business environment.

Exhibit A is high-frequency trading. This type of computerised dealing exploits the millisecond gaps between news events and their impact on the markets. With the regulators sitting on their hands, such trading has expanded rapidly to the point where, on some estimates, it accounts for 60-70 per cent of the trading volume in US equities. Much of this volume is conducted by a very small number of companies.

A big reason for concern is that exchanges appear to have joined in an unholy alliance with this small group, which is allowed to see orders before the public. In effect, these people are privileged insiders who are profiting at the expense of those who are innocently saving for retirement and what have you.

Worse, the exchanges, which have a business interest in high volume, encourage co-location whereby traders can route their orders to servers in the same location as the exchanges’ computer matching systems. Reducing geographical distance in this way cuts milliseconds off the time it takes for buy or sell messages to be sent into or back from an exchange.

This is all a form of front-running, even if the trading is not taking place in front of a client order. Proponents argue that anyone can co-locate, but genuine private investors cannot engage in this with an entry price measured in thousands of dollars. The supposed benefit is greater market liquidity. But the resulting market liquidity is far more than is needed for genuine investment. Why should a difference in the milliseconds be relevant to meeting pension liabilities with a 20-, 30- or 40-year duration? And, as the “flash crash” of May 6 showed, the activity can be highly disruptive.

Now that the regulators are taking an interest, they will probably focus on making the playing field more level. Far better would be to recognise that this competitive technological battle reduces social welfare in a similar way to an arms race. The fact that a handful of traders are creaming off big profits at the expense of genuine investors undermines the integrity of the market. A more draconian regulatory response would be appropriate.

Yves here. We haven’t said much about HFT because, in all honesty, as offensive as it is from a fairness and integrity of markets perspective, the damage done by it pales in comparison to the devastation wrought by abuses in the credit markets, where we normally focus. And truth be told, equity investors are a vocal lot, and many commentators had taken up the attack on HFT.

So it is remarkable that a highly visible abuse, one that unlike the bad practices in the credit markets, can be addressed readily, in isolation, without widespread ramifications, still persists. And as Plender points out, the planned remedies look certain to be inadequate.

This says that critics need to keep hammering on the observation that financial services is only a support function to commerce, that when it is too big and profitable, that means it has become parasitic and extractive. The public understands that intuitively; it’s time the media and government officials have the nerve to state the obvious.

 

Sunday, July 4, 2010 — Celebrate!

1491: New Revelations of the Americas Before Columbus

What defeated the American Indians was disease and slavery. We live on the despoiled hunting grounds and stolen burial lands of those vanquished peoples.
Did you celebrate that with fireworks?

American Insurgents, American Patriots: The Revolution of the People by T. H. Breen

“Breen presents a provocative reinterpretation of the American Revolution as more of a grassroots movement of ordinary persons than is often presented.”
Did you celebrate these common folks with a tip of the keg, hot dogs and potato salad?

Death By Drone: CIA's Hitlist is Murder NEW YORK  - As the Barack Obama administration continues to roll out justifications for its policy of targeting U.S. citizens and others thought to be attacking U.S. troops, legal and national security experts are pondering a central question: What if there's a mistake and the wrong person gets killed?
Did you extol the fact across the smoking barbecue to you neighbors that the Obama Administration is greatly more oppressive than King George III and all his Hessians ever were or ever could have been?

Income disparity has never been greater and contributes to the failuresof economic growth in significant ways.
Lots to light up the sky here also. Maybe spell out the numbers-83:1-top 1% to bottom 20%

Did sparklers go off when you read that our Congress is about to spend $33 billion on the continuation of war in Afghanistan? 1 $33 billion that could have easily been spent on housing the homeless, feeding the hungry and clothing the naked.

Barack Obama is a member of Chicago's Trinity United Church of Christ. Its minister, and Obama's spiritual adviser, is the Rev. Jeremiah A. Wright Jr.

Hey, Rev, better crank up the cognitive dissonance in your brand name parishioner. Try the text in 1John3:17: But if someone who is supposed to be a Christian has money enough to live well, and sees a brother in need, and won't help him--how can God's love be within him ? Or perhaps Mat. 25:42

For I was hungry and you wouldn't feed me; thirsty, and you wouldn't give me anything to drink; a stranger, and you refused me hospitality; naked, and you wouldn't clothe me; sick, and in prison, and you didn't visit me. Then they will reply, ‘Lord, when did we ever see you hungry or thirsty or a stranger or naked or sick or in prison, and not help you?’ And I will answer, ‘When you refused to help the least of these my brothers, you were refusing help to me.’

Truth be told, when the campaign was roiling in 2008 there was much political hay to be made about brand Obama attending church; back then, basking in the light of an outspoken spiritual advisor was an asset. Now, in building political realities of maintaining the Pentagon’s great lobbying power in the inner realms of our government, our Mr. Barack does not find spiritual advice very becoming, intellectually speaking. Or so it would seem. Perhaps our current resident of the barracks at 1600 Pennsylvania Avenue never found spirtual advice very useful and that seems to part of the reality also.

We have a President who is great on making stirring speeches filled with laudable glittering platitudes but is very short on transforming those sparkling speeches into reality. 2 In his most memorable speech, Mr. Obama spoke of the greatness that is America. Yet he has consciously made a choice to continue the CIA program of maintaining secret prisons where prisoners are tortured. 3 This nefarious program is a sign of great weakness and was begun by another weak man, George W. Bush. A Great Nation, whose Greatness was quickly and readily perceived by many, would not be run sheerly on the basis of instilling fear in others. The current administration is keeping civil liberty groups like the Center for Constitutional Rights very busy. This government is relying more often on so-called counter-terrorist measures that are really thinly disguised acts of terrorism in themselves and serve no usefule purpose in making us stronger.

That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

This government, spanning Administrations from Truman to Obama, has become destructive of these ends, Life, Lirbety, Pursuit of Happiness, equal opportunity, ecomonic, social and environmental justice. The time has come to put an end to these shenanigans of the worshipers of the gods of oppression.


1. Afghan War Funding
2. OUT OF MANY, ONE by Barack Obama Keynote Speech Democratic National Convention in Boston, Mass. July 27, 2004
3.President Bush signed a directive authorizing the CIA to set up and run secret prisons outside the United States, On September 17, 2001, six days after the terrorist attacks in New York and Washington, DC.
    Secret prisons are illegal. Every nation on earth must acknowledge its prisons, account for its prisoners, and allow those it is holding to communicate that they've been imprisoned. All prisoners must have some access to legal process. The International Committee of the Red Cross must be permitted to visit them and monitor the conditions of their imprisonment.
     Seizing someone and delivering him to a secret facility where he is held incommunicado and unacknowledged is “enforced disappearance,” a gross human rights violation associated with infamous, brutal regimes. The laws against it are as absolute as those banning torture and cruel, inhuman, and degrading treatment, and the two crimes are closely linked. Invisible prisoners are abused prisoners, as a rule. But it is more than that: the uncertainty and fear disappearance engenders, not just in those who are disappeared but also in their families and communities, is itself considered a form of cruelty. Supposedly, the Obama adminsitration has ended this program but then brought it back up again after announcing it was ended. The Obama Administration today [February 09, 2009] announced that it would keep the same position as the Bush Administration in the lawsuit Mohamed et al v Jeppesen Dataplan, Inc. The case involves five men who claim to have been victims of extraordinary rendition -- including current Guantanamo detainee Binyam Mohamed, another plaintiff in jail in Egypt, one in jail in Morocco, and two now free. They sued a San Jose Boeing subsidiary, Jeppesen Dataplan, accusing the flight-planning company of aiding the CIA in flying them to other countries and secret CIA camps where they were tortured.‘Pay no attention to that man behind the curtain.’

From the ACLU ‘ The Obama administration has now fully embraced the Bush administration’s shameful effort to immunize torturers and their enablers from any legal consequences for their actions. The CIA’s rendition and torture program is not a ’state secret;’ it’s an international scandal. If the Obama administration has its way, no torture victim will ever have his day in court, and future administrations will be free to pursue torture policies without any fear of liability.’