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Friday, April 20, 2012

U.S. Extractive Elites and Macro-Corruption

Ron Unz, publisher of The American Conservative sounds the alarm on an America that is being looted by high level thieves. Our parasitic governing elites, like the Federal Reserve, Congress, the Wall Street banksters, and the military industrial complex are engaged in wholesale macro-corruption in this country.

Ron Unz / The American Conservative:
China’s Rise, America’s Fall -- Which superpower is more threatened by its “extractive elites”? ...
Decay of Constitutional Democracy
The central theme of Why Nations Fail is that political institutions and the behavior of ruling elites largely determine the economic success or failure of countries. If most Americans have experienced virtually no economic gains for decades, perhaps we should cast our gaze at these factors in our own society...

Our Extractive Elites 
When parasitic elites govern a society along “extractive” lines, a central feature is the massive upward flow of extracted wealth, regardless of any contrary laws or regulations. Certainly America has experienced an enormous growth of officially tolerated corruption as our political system has increasingly consolidated into a one-party state controlled by a unified media-plutocracy...

How corrupt is the American society fashioned by our current ruling elites? ...

Unlike the situation in many Third World countries, American teachers and tax inspectors very rarely solicit bribes, and there is little overlap in personnel between our local police and the criminals whom they pursue. Most ordinary Americans are generally honest. So by these basic measures of day-to-day corruption, America is quite clean, not too different from Germany or Japan...

However, although American micro-corruption is rare, we seem to suffer from appalling levels of macro-corruption, situations in which our various ruling elites squander or misappropriate tens or even hundreds of billions of dollars of our national wealth, sometimes doing so just barely on one side of technical legality and sometimes on the other.

Sweden is among the cleanest societies in Europe, while Sicily is perhaps the most corrupt. But suppose a large clan of ruthless Sicilian Mafiosi moved to Sweden and somehow managed to gain control of its government. On a day-to-day basis, little would change, with Swedish traffic policemen and building inspectors performing their duties with the same sort of incorruptible efficiency as before, and I suspect that Sweden’s Transparency International rankings would scarcely decline. But meanwhile, a large fraction of Sweden’s accumulated national wealth might gradually be stolen and transferred to secret Cayman Islands bank accounts, or invested in Latin American drug cartels, and eventually the entire plundered economy would collapse.

Ordinary Americans who work hard and seek to earn an honest living for themselves and their families appear to be suffering the ill effects of exactly this same sort of elite-driven economic pillage. The roots of our national decline will be found at the very top of our society, among the One Percent, or more likely the 0.1 percent...
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related: 
Ron Unz / The American Conservative:
Chinese Melamine and American Vioxx: A Comparison --
In contrasting China and America, pundits often cite our free and independent media as one of our greatest strengths, together with the tremendous importance which our society places upon individual American lives. For us, a single wrongful death can sometimes provoke weeks of massive media coverage and galvanize the nation into corrective action, while life remains cheap in China, a far poorer land of over a billion people, ruled by a ruthless Communist Party eager to bury its mistakes. But an examination of two of the greatest public-health scandals of the last few years casts serious doubt on this widespread belief...
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discussion:
Paul Craig Roberts / PaulCraigRoberts.org:
Unplugging Americans From The Matrix --
China is often a country about which Washington’s moralists get on their high horse.

However, China’s “authoritarian” government is actually more responsive to its people than America’s “elected democratic” government. Moreover, however incomplete on paper the civil liberties of China’s people, the Chinese government has not declared that it can violate with impunity whatever rights Chinese citizens have. And it is not China that is running torture prisons all over the globe...

Americans associate lawlessness with unaccountable governments and view China’s government as unaccountable. However, Unz points out that it is the Bush/Obama Regime that has declared itself to be unaccountable to both US and international law.

The demise of the War Powers Act and the Geneva Conventions, and the asserted power of the executive to imprison without trial or charges or to assassinate any American whom the executive thinks might be a “national-security threat” are indicative of a total police state masquerading as an accountable democracy...

Americans have lost control of the government, and governments that are not controlled by the people are not democracies. In America today, Social Security, Medicare, food stamps, and the entire social safety net are threatened by the vociferous desire for war profits by armament plutocrats and by financial institutions determined that ordinary citizens bear the cost of the banksters incompetence and fraud...
Asymptosis:
The American Conservative: “Extractive Elites” and “Macro-Corruption” --
I would highly recommend this piece to those seeking to understand and explicate the problems plaguing this country. “Extractive elites” and “macro-corruption” encapsulate it pretty perfectly. It’s also essential reading for those like me who can’t seem to look away from the decades-long train wreck of contorted, self-contradictory conservative “thinking.”
* Irresistible aside: I heard an NPR interview years back with a businessman from a South American country saying that his country is far more democratic than ours. In his country, anyone can bribe officials. In America, only the rich get to make bribes.

Thursday, April 12, 2012

Federal Reserve Mission: Robbing the Poor to Fatten the Rich

Ben Bernanke and his cabal of Federal Reserve Banksters are robbing the poor to fatten the rich. Call them the anti Robin Hood, and that is what Mohamed El-Erian, CEO of the world's largest bond fund, PIMCO, does in a speech given yesterday.

Bloomberg:
Fed May Have Aggravated Income Inequality, El-Erian Says --
The Federal Reserve and other central banks may have increased income inequality with policies that boosted prices of stocks and other assets without having a commensurate effect on the economy, said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co.

In a lecture prepared for delivery at the Fed Bank of St. Louis today, El-Erian said central banks may be nearing the limits of their ability to spur growth and suggested that the “collateral damage” their policies are having on the economy and financial markets may soon outweigh the benefits.

“The unusual activism of central banks may, at the margin, have worsened further wealth distribution,” said El-Erian, whose company is manager of the world’s largest bond fund. “To the extent that such policy activism succeeds in bolstering asset values, but not the real economy, the rich benefit disproportionately.”

President Barack Obama highlighted income inequality this week as he campaigned for higher taxes on top U.S. earners and criticized Republicans for opposing them. Tax fairness will be a central theme in the president’s re-election bid, Obama campaign manager Jim Messina told reporters on April 9.

While the Fed and other major central banks did forestall a global depression, they have had less success in promoting a full-fledged recovery, El-Erian said...
----
related:
Mohamed El-Erian / PIMCO:
Evolution, Impact and Limitations of Unusual Central Bank Policy Activism -- [full speech]

Tuesday, April 10, 2012

Federal Reserve Gorges on U.S. Debt

So the left hand of government, the Federal Reserve, buys most of the debt issued by the right hand of government, the Treasury. Why bother with this charade? Why doesn't the government just monetize the debt outright? Or just have the Treasury mint some of those trillion dollar platinum coins and buy up the debt with them.

This article by Lawrence Goodman is wrong. The Federal Reserve can keep buying up US debt for a very long time and there will always be demand for it.

Lawrence Goodman / Wall Street Journal:
Demand for U.S. Debt Is Not Limitless -- In 2011, the Fed purchased a stunning 61% of Treasury issuance. That can't last.
The conventional wisdom that nearly infinite demand exists for U.S. Treasury debt is flawed and especially dangerous at a time of record U.S. sovereign debt issuance.

The recently released Federal Reserve Flow of Funds report for all of 2011 reveals that Federal Reserve purchases of Treasury debt mask reduced demand for U.S. sovereign obligations. Last year the Fed purchased a stunning 61% of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis. This not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits.

Still, the outdated notion of never-ending buyers for U.S. debt is perpetuated by many. For instance, in recent testimony before the Senate Budget Committee, former Federal Reserve Board Vice Chairman Alan Blinder said, "If you look at the markets, they're practically falling over themselves to lend money to the federal government." Sadly, that's no longer accurate...

The Fed is in effect subsidizing U.S. government spending and borrowing via expansion of its balance sheet and massive purchases of Treasury bonds. This keeps Treasury interest rates abnormally low, camouflaging the true size of the budget deficit. Similarly, the Fed is providing preferential credit to the U.S. government and covering a rapidly widening gap between Treasury's need to borrow and a more limited willingness among market participants to supply Treasury with credit...

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