Tag Archives: Economy

Big Backers of Clinton Foundation Found in Leaked Swiss Bank Files: Report

Whether legal or not, Hillary Clinton’s deep connections with the planet’s financial elite may cast a shadow of her attempts to play the populist in the 2016 election

By Jon Queally
February 10, 2015
Common Dreams

 

Bill and Hillary Clinton on stage during an event sponsored by their family foundation. (Photo: AP)

 

Large financial backers of the Clinton Foundation charitable fund have been found among those named in the trove of leaked documents from a Swiss division of HSBC bank this week, raising questions about the integrity of such individuals and what it says about the relationships they have with the powerful Clinton family.

According to the Guardian newspaper, which broke the story, on Tuesday:

Leaked files from HSBC’s Swiss banking division reveal the identities of seven donors to the Bill, Hillary and Chelsea Clinton Foundation with accounts in Geneva.

 

They include Frank Giustra, a Canadian mining magnate and one of the foundation’s biggest financial backers, and Richard Caring, the British retail magnate who, the bank’s internal records show, used his tax-free Geneva account to transfer $1m into the New York-based foundation.

Hillary Clinton has expressed concern over growing economic inequality in the US and is expected to make the issue a cornerstone of her widely anticipated presidential campaign in 2016. However, political observers are increasingly asking whether the former secretary of state’s focus on wealth inequality sits uncomfortably with the close relationships she and her husband have nurtured with some of the world’s richest individuals.

The newspaper notes that it is perfectly legal for citizens from around the world—including those from the U.S. and Canada—to hold bank accounts in Geneva and reports there is “no evidence any of the Clinton donors with Geneva accounts evaded tax.”

However, with Hillary Clinton now considered the Democratic Party frontrunner for 2016, the revelations may once again cast a special shadow over such dealings.

As Reuters reported last September ahead of a high-profile event for the Clinton Global Initiative in New York City, “When Hillary Clinton rubs shoulders with financial executives and philanthropic giants… it will underscore the tension between her elite connections and populist image likely to feature in her expected 2016 presidential campaign.”

“If you look at her track record from the past, it is out of step with the current Democratic Party,” said Charles Chamberlain, executive director of liberal group Democracy For America, at the time. “Not on social issues, but definitely on economic issues, so we’re going to be watching very carefully.”

As Common Dreams reported last summer:

Clinton has been looked on with suspicion by progressives following high-paid speaking engagements with Goldman Sachs and other powerful Wall Street institutions since leaving her post at the State Department. And last month, Clinton put her weight behind the powerful biotech industry by speaking at their national conference, not only endorsing their business model but offering political advice on how to overcome public opposition to the use of genetically-modified seeds and industrial-scale, chemical-based agriculture.

Also this week, comments made by Clinton suggest her political strategy, if elected, would follow her husband’s well-worn tactic of “triangulation,” tacking to the political right as a way to curry favor with Republican and corporate interests, but doing so in a way that ameliorates the objections of progressives and liberals. Bill Clinton was famous for doing this when he passed “welfare reform” legislation and deregulated the financial industry in the nineties, both of which, according to many experts and analysts, say paved the way for the current economic crisis the country is now suffering.

Asked for comment by the Guardian about the foundation’s receipt of money from donors with Swiss bank accounts, a spokesperson for Clinton declined to comment.

“It is unclear whether the foundation has ever questioned the offshore status of supporters,” the newspaper reported, “although foundation officials stress they thoroughly vet contributors regardless of where the donation originated from.”

Greek Minister: Poison of Troika Austerity Fueling Rise of Nazi Party

After meeting in Berlin, Yannis Varoufakis says Syriza’s attempt to rectify economic conditions is all that’s keeping fascists from the door

By Jon Queally
February 6, 2015
Common Dreams

 

People gather for an anti-austerity demonstration outside the Greek parliament in Athens February 5, 2015. About 4,000 people gathered for an anti-austerity demonstration in Athens’ central Syntagma Square on Thursday but in sharp contrast with previous violent protests there were no barricades and barely any police. Thursday’s protest was called to support the new government’s tough stance with the EU, with whom it is seeking an end to the stringent budget rules. (Photo: Reuters/Yannis Behrakis)

 

Revealing the distance that still remains between the Greek and German governments when it comes to renegotiating terms of the bailout program, a meeting between the nation’s financial ministers in Berlin on Thursday was punctuated by the acknowledgement that the two could not, in fact, even “agree to disagree” and a warning from the new Syriza government that without a loosening of austerity, fascist forces will almost surely rise.

“We didn’t come to an agreement,” said Greek Finance Minister Yanis Varoufakis, recently appointed to the post after Syriza  swept into power during national elections last month. “We couldn’t even agree to disagree. We agreed to continue consultations as partners. Our solution will have Europe’s interest as a priority.”

He continued: “We did not reach agreement because it was never on the cards that we would… We didn’t discuss the debt, but we set the framework for discussions.”

For his part, German Finance Minister Wolfgang Schaeuble indicated that his nation would remain steadfast in its belief that Greece must adhere to the terms agreed to by the previous government, despite the fact that Syriza was elected on clear promises to renegotiate those terms. Without apology, Syriza has said the austerity measures attached to loans offered by the so-called Troika—the IMF, European Central Bank, and the EU—are crushing its economy and the Greek people and must be reversed.

“We have a common currency but different economic policies,” Schaeuble said of his meeting with Varoufakis. “There are commitments to the level of governments for their budgets and they need confirmation by the Greek Parliament, but it is important that agreed commitments and agreements must be respected.”

In his remarks, Varoufakis said that if the does not Troika bend and accept new terms, there is serious risk that the spiraling impacts of the economic Depression in his country will continue to fuel the rise of fascist, rightwing forces within his country.

“No one understands better than the people of this land how a severely depressed economy, combined with a ritual national humiliation and unending hopelessness, can hatch the serpent’s egg within its society. When I return home tonight, I will find a country where the third-largest party is not a neo-nazi party, but a nazi party,” he said, referring to the Golden Dawn party which currently, despite many of its members serving prison time for violence and corruption, holds the third-most seats in Greek Parliament. “We need the people of Germany on our side.”

Despite those risks and proving that members of the Troika are ready to play hardball with Syriza, the ECB on Wednesday applied market pressure on the new government by announcing it would no longer accept Greek-issued bonds. As explained by Mark Weisbrot, co-director of the Center for Economic and Policy Research, the move by the powerful institution “was a clear and deliberate attempt to undermine” the new leadership in Athens amid ongoing negotiations.

According to Weisbrot, “They are trying to force the government to abandon its promises to the Greek electorate, and to follow the IMF program that its predecessors signed on to.”

He concluded, “The ECB should be ashamed of its latest assault on Greek democracy. And they should not be able to get away with disguising it as anything less than that.”

Syriza, led by Prime Minister Alexis Tsipras, is expected to reveal its economic plan in the coming days.

As both Tsipras, Varoufakis and other ministers returned to Athens on Thursday night, they were greeted by a large public demonstration condemning the Troika’s austerity policy.

Thousands gathered in Syntagma Square  to cheer Syriza and protest the ECB’s move on Wednesday. According to the Greek daily Ekathimerini:

Responding to a call on social media, the crowd estimated by police at 5,000-strong stood in silence on Syntagma Square, the scene of violent protests at the height of the Greek economic crisis in 2012.

“It’s the first demonstration in favour of a Greek government. Finally we have a government which respects its campaign promises and defends the interests of our country,” Telemaque Papatheodorou, an engineer in his 30s, told AFP.

The protest was called following the decision by the European Central Bank late Wednesday to cut off a vital source of funds for Greece’s banks. […]

“The decision by the ECB demonstrates the pressure on Greece, but that’s nothing compared to the problems of people who are starving or suicidal,” said Dimitra Spyridopoulou, a lawyer.

Peoples’ Tribunals, Human Rights Abuses and the Actions of Canada’s Mining Industry in Latin America

By Binoy Kampmark
February 3, 2015
Global Research

 

mining“What Liberia is to shipping companies, Canada is for mining companies.” – Theresa Wolfwood, Director of the Barnard-Boecker Centre Foundation, Apr 12, 2013

In time when legal and regulatory institutions find themselves short when confronting the corporate fiends, it has fallen upon civil society to come up with a solution – of sorts.  The Peoples’ Tribunal is one such example, an experiment born in the activist’s drive to give judicial shape to ethical sentiments and indignant opposition.  The format has been deployed in attempts to adjudicate the legality of Israeli actions regarding Palestinians; the legality of the Iraqi War; and the acts of various junta regimes in Latin America through the 1970s, to name but a few examples.

It all began, however, with the Russell Tribunal sessions in 1967 on US involvement in the Vietnam War.  Despite being criticised for their one-sided slant (the jury panel did not see fit, it was argued, to assess Viet Cong crimes), the experiment prevailed.  The absence of government initiatives and prosecutorial action had created a void.

Beyond war and peering into the reaches of civil society, a People’s Tribunal has been used to make judgments on the World Bank in India, which made its findings on September 11, 2008.  The verdict of the Independent People’s Tribunal on the World Bank in India was not sympathetic to the body under examination.[1]  “The Tribunal attempted to expose the nature and degree of coordination between the World Bank Group and other IFIs (International Financial Institutions), as they often act in concert.”

The focus, amongst others, was on the impact of the bank on Indian sovereignty and democratic processes; the extent of its involvement in Indian policy making and legislation; the consequences of indebtedness and loan conditionalities on social sectors (food, water, health and education); and the Bank’s impacts on “vulnerable communities, including women, children, dalits, minorities, adivasis, workers, fisher folk, and farmers.”  In its statement of findings, the Tribunal noted a hinterland of exclusion and mistreatment – while the World Bank had a “self-proclaimed” agenda of poverty reduction, its actions “exclude the poor in the best of cases”.

A sector that has also received scrutiny in the form of a peoples’ tribunal is the mining industry.  The conduct of the mining industry in Canada is of particular importance in this regard.  A range of activist groups, notably those connected with a tribunal founded in 1979 by “socially-committed jurists” has busied itself with Canadian mining activities in Latin America.

The Permanent Peoples’ Tribunal Session on the Canadian mining industry sees every reason to focus on the companies that make it up, seeing as over 75 percent of all registered mining companies have their headquarters in Canada.  Mining executives, it has been repeatedly found, love doing business via Canadian channels – a 2008 survey cites 7 Canadian provinces amongst the top 10 globally in terms of policies sympathetic to the industry.[2]

Much of this is expounded upon by Quebec-based researchers Alain Deneault and William Sacher’s Imperial Inc. – Legal Haven of Choice for the World’s Mining Industries (2012), an exposition which ties in other rather well with such discussion of Canadian foreign policy as Yves Engler’s The Ugly Canadian (2012).  “The mining sector in Canada is totally out of control,” claims Deneault.  “We don’t have any way to make sure that, on the ethical level, these mining corporations registered in Canada behave properly abroad.”[3]

A large part of what “abroad” is has proven to be countries in Latin America.  In their verdict on December 10th last year, the bench of the PPT identified a range of “systematic human rights abuses perpetrated against communities affected by large-scale mining projects.”[4]  (The investigation, it should be noted, is an ongoing one till 2016.)

Mining giants have generally garnered bad press – that is, unless that press is being steered by the commodity sector, laced with a good deal of gagging and libel chill.  The McGill Research Group Investigating Canadian Mining in Latin America (MICLA) and the Observatorio des Conflictos Mineros de América Latina (OCMAL) have identified somewhere between 85 to 90 “social conflicts,” in the wording of the PPT ruling, “involving Canadian companies.”

The verdict identified an assortment of environmental assaults, of which Barrick Gold and Goldcorp proved “emblematic” offenders.  The right to life and a healthy environment were persistently breached by activities that saw deforestation, pollution, and the destruction of biodiversity. Goldcorp, operating in San Martin, Honduras, was found to have contaminated groundwater wells with cyanide and arsenic.  Barrick Gold, operating out of Pascua Lama, Chile-Argentina “has infringed on the right to water of indigenous and local peasant communities.”

This is only part of it.  Self-determination has been railroaded repeatedly.  Consultation with indigenous groups in a manner free, fair and informed, has been left wanting.  The other side of this renting of sovereignty is an impairment of citizenship, be it through targeting unions and keeping a lid on social protests.  “Numerous Latin American states have reformed their juridical framework in order to criminalize social protest.”

The local disturbances created by these mining industries is staggering, leading not merely to a change of laws on the books, but in some cases, to dislocations, conflict and the presence of refugees.

The combination between extractive industry on the one hand and compliant governments on the other is one that is repeatedly found in the mining sector.  Seen as beneficial agents of progress, the mistaken assumption is that allowing mining to take place with minimal restriction is somehow a local benefit. (It certainly benefits certain interests, though these tend to be limited.)  The results have been disastrous.

While the PPT adds much needed oxygen to the unconscionable conduct of Canada’s mining industry, legal actions in Canadian courts are also needed.  Juridical support, as one of the judicial members, Gianni Tognoni explained, is needed to bolster “political and social arguments so that it would be clear that the battle for international justice is absolutely the same as the battle for internal democracy” (Inter Press Service, Jan 30).[5]

An industry with all the makings of mercantilist imperialism can only be brought to book via a combined set of approaches.  A combination of legal sting and judicial ire will add more bite to what has merely been, to date, a snarl.

Dr. Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge.  He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com

Notes

Revolutions Start in the Streets!

Class War Furor

By Robert Hunziker
February 3, 2015
Counter Punch

 

Class war furor amplifies throughout Europe wherein “the trenches are the streets” of major cities that have suffered the most from neoliberal policies as promulgated by the world’s monetary authorities, like the EU-IMF.

Suddenly, the “Syriza Virus” is circulating throughout Europe. The “people” have had enough austerity crammed down their throats. They’re in the streets!

Headlines depict bitterness: “Austerity Anger Sweeps from Greece to Spain as Hundreds of Thousands March Through Madrid in Support of Fledgling Radical Leftist Party,” Daily Mail, January 31, 2015. The “March for Change” converged around Madrid’s Cibeles fountain. People are fed up, tossing their support to a pony-tailed jean-wearing charismatic leader named Pablo Iglesias, the Podemos Party candidate, a 36-year-old political science professor.

The anti-establishment party Podemos (“We Can”) in Spain, formed only one year ago, is already in the lead to win Spain’s general election later this year.

In Greece, the austerity program foisted on the country by world monetary authorities these past few years caused the economy to shrink by 25% and unemployment to rise to 26%. That’s a bailout? It looks more like a knock out punch!

Now, with Greece’s new leftist government Syriza in place, here’s what’s tantalizing for austerity-ridden citizenry around the world, according to The Guardian, within 48 hours of Syriza’s victory: “First the barricades came down outside the Greek parliament. Then it was announced that privatization schemes would be halted and pensions reinstated. And then came the news of the reintroduction of the €751 monthly minimum wage. And all before Greece’s new prime minister, the radical leftwinger Alexis Tsipras, had got his first cabinet meeting under way. After that, ministers announced more measures: the scrapping of fees for prescriptions and hospital visits, the restoration of collective work agreements, the rehiring of workers laid off in the public sector, the granting of citizenship to migrant children born and raised in Greece,” Alexis Tsipras, Greece’s New Young Radicals Sweep Away Age of Austerity, The Guardian, Jan. 28, 2015.

Is it little wonder the streets of Madrid filled with hundreds of thousands within days of Syriza’s success, as a grand exhalation spread across the continent?

It was only a couple of months ago, November 2014, when at least 100,000 workers took to the streets of Brussels to protest Belgian free-market reforms and austerity. The Belgian government claims businesses need more tax breaks to compete in the global market, so it proposes cuts in public services, freezing wages, and an increase in the pension age. So it goes, the people get cuts while businesses get raises.

In Italy, “People have taken to the street in Italy’s capital to protest against government austerity measures,” Global Research, November 2014. Street protestors carry signs stating, “Today is only the beginning.”

The target of this continent-wide discontent is neoliberalism’s self-serving paternalistic policies of privatization, reduced government, and dependence upon the “free market” as the arbiter of socio-economic justice but it’s turning sour because so few attain millions at the direst expense of way too many. Given enough time, people catch on.

Along those lines, neoliberalism has become an “occupying force” throughout the world, to wit: Neoliberalism’s motif consists of (1) assault on the state, in favor of the market, (2) on politics, in favor of economics, and (3) on political parties, in favor of corporations. Singularly, neoliberalism brings in its wake a hard-hearted “corporate state” sans nation/state allegiance, no grounding with the people.

As follows, people take to the streets. They flock to the streets by the hundreds of thousands. It is the French Revolution redux but without the pitchforks, stones, and sticks. King Louis XVI’s head was sacrificed in 1793 in the name of liberté, égalité, fraternité, but, nowadays, liberty, equality, fraternity devolve into “restraint, preferentiality, division.” Without doubt, Jean-Jacques Rousseau, (The Social Contract, 1762) “only the people, who are sovereign, have that all-powerful right,” must be turning over in his grave.

Today, the “corporate state” is King Louis XVI. The aristocracy resides in, and travels along the free market’s Yellow Brick Road to the Emerald City to meet the Wizard along side Rich Uncle Pennybags of Monopoly fame, and “monopoly is their game.”

He/she who controls the most property wins. As it happens, free market neoliberalism is all about control, controlling the people, exporting wages to the lowest overseas bidders, moving facilities offshore to avoid governmental regulations, diminishing unions, privatizing state assets, cutting social programs, austerity, austerity, and more austerity whilst privatizing everything in sight. The upshot is lame economic performance as sector after sector of workers are cutback, reduced to rubble. What’s to spend?

For example, in Dublin, new water fees serve as a lightning rod for all of the accumulated anger and discontent of six years of austerity as tens of thousands hit the streets, December 2014, protesting the new water fees, one more example of the raw sensitivity by citizens to neoliberal austerity measures that punish workers, like tinder to fire, large groups of people protest at the slightest signal of new austerity measures.

As well, in Ukraine, November 2014 news photos show long lines of heavily armed police holding up heavy metal medieval-like shields, surrounding and protecting the parliament building as thousands press against the phalanx. The protestors demand the premier stop cutting social benefits, subsidies and price controls on utility rates. Ten percent of public workers will lose jobs and educational spending is to be cut by twenty percent as tuition fees increase, cut the spending but charge the students more.

This class war furor is like a virus that knows no antidote because cuts, cuts, and more cuts, death by a thousand cuts, irritate, exasperate, and enrage workers from Dublin to Athens, all across the continent. In turn, medieval style police forces wearing armor, carrying thick metal shields, wearing bulletproof facemasks and overly armed to the hilt confront their “own.” Yes, they confront their “own.” This tragedy speaks for itself, similar to a Shakespearean tragedy, guaranteed to end, fatally.

Neoliberal socio-politico-economics devastates so many, enriches so few, like a reversion to feudalism, accompanied by armed forces in hand-to-hand combat in the fields, in the streets, nose-to-nose, the most primitive of warfare, and indeed, it is warfare when people in the streets face off against their “own.” Whether bullets are fired or not, it is the simple act of angry masses of people confronting medieval armored police that invokes images of class war furor, even if silent, even if static, like the images captured by news photos for the eons, contorted faces, everyday dress, outstretched arms, individuals pressing against individuals versus phalanxes of identical suits of armor, bereft of the differentiating individualism of their “own.” It’s nightmarish and bone chilling.

These battles in the streets are symptomatic of a maddening desperation to retain that which a few cherish. But, throughout history, bad things happen when the “few” stomp on the necks of their “own.”

World history is replete with the horrendous brutality of battle scenarios whenever the “few” extort, badger, and coerce their “own,” like the American Revolution of 1765-83, the French Revolution of 1789-99, the Revolutions of 1830 aka: the Romantic Nationalist Revolutions, the Revolutions of 1848 aka: the Spring of Nations, and the Arab Spring of 2010, and on it goes, but wherever and whenever, barbarous armed conflict is the final arbiter of gross oppression, partiality, and nepotism, as, and when, politics fail.

Revolutions start in the streets!

Robert Hunziker lives in Los Angeles and can be reached at roberthunziker@icloud.com

 

Launching ‘New Era of Political Change,’ Tens of Thousands March in Madrid

Fueled by Syriza’s victory in Greece, tens of thousands of Spaniards joined rising Podemos party in ‘March for Change’

By Lauren McCauley
February 1, 2015
Common Dreams, January 31, 2015

 

Tens of thousands crowded Madrid's Puerta del Sol. (Photo: Alejandro Ruesga/ El Pais)

Tens of thousands crowded Madrid’s Puerta del Sol. (Photo: Alejandro Ruesga/ El Pais)

 

Fed up with conservative economics and fueled by Syriza’s recent victory in Greece, tens of thousands of Spaniards flooded the streets of Madrid on Saturday to say: “No to Austerity and Yes to Change!”

The march, dubbed the “March for Change,” is the first mass demonstration in support of the country’s new leftist party, Podemos, which is Spanish for “We Can.”

According to reports, demonstrators chanted “yes we can” and “tic tac tic tac” suggesting the clock was ticking for the country’s two main political parties. Many waved Greek and republican flags and banners reading “The change is now.”

“This is not about asking for anything from the government or protesting. It’s to say that in 2015 there will be a government of the people,” said party leader Pablo Iglesias when the march was first announced.

“We want a historic mobilization. We want people to be able to tell their children and grandchildren: ‘I was at the march on January 31 that launched a new era of political change in Spain,'” Iglesias said.

“People are fed up with the political class,” Antonia Fernandez, a 69-year-old pensioner from Madrid, told reporters at the demonstration. Fernandez explained that she previously supported the country’s socialist party but reportedly lost faith in it because of its handling of the economic crisis and its austerity policies.

“If we want to have a future, we need jobs,” she added.

Since its inception last year, Podemos’s popularity has surged. Caputuring the momentum of the populist wave currently sweeping Europe, the party surprised many when it won five seats in the European Parliament in the May 2014 elections and a poll published earlier this month found that nearly half of Spain’s population would support Iglesias if he ran for Prime Minister.

Iglesias, a 36-year-old political science academic, is frequently compared to Syriza leader Alexis Tsipras. Like Syriza in Greece, Podemos has captured the country’s attention by running on a slogan that politicians should “serve the people, not private interests,” and promising to write off a portion of Spain’s debt, which has caused soaring unemployment.

AFP reports:

The party has struck a chord with Spaniards enraged by a string of corruption scandals, as well as public spending cuts imposed by the conservative ruling party and previously by the Socialists after the economic crisis erupted in 2008.

Born out of the “Indignant” protest movement that occupied squares across Spain at the height of the economic crisis, Podemos has overtaken the mainstream opposition Socialist Party in several opinion polls, and in some has topped the list ahead of the conservative ruling People’s Party (PP).

Looks Like I’ll Be Able to Retire Comfortably at Age 91

By Charles Hugh Smith
February 1, 2015
Washington’s Blog

 

My advice is to focus not on retiring comfortably, but on working comfortably.

You’ve probably seen articles and adverts discussing how much money you’ll need to “retire comfortably.” The trick of course is the definition of comfortable. The general idea of comfortable (as I understand it) appears to be an income which enables the retiree to enjoy leisurely vacations on cruise ships, own a well-appointed RV for tooling around the countryside, and spend as much time on the golf links as he/she might want.

Needless to say, Social Security isn’t going to fund a comfortable retirement, unless the definition is watching TV with an box of kibble to snack on.

By this definition of retiring comfortably, I reckon I should be able to retire at age 91–assuming I can work another 30 years and the creek don’t rise.

Since I earned my first real Corporate America paycheck at 16 in 1970 (summer job for Dole Pineapple), I’ve logged 45 years of work. Now if I’d been smart and worked for the government, I could have retired 10 years ago with generous pension and healthcare benefits for life.

But alas, I wasn’t smart, so here I am, a self-employed numbskull.

The articles and adverts usually suggest piling up a hefty nestegg to fund that comfortable retirement. As near as I can make out, the nestegg should be around $2.6 million–or maybe it’s $26 million. Let’s just say it’s a lot.

This presents retirees without generous government pensions two basic problems. One is making enough money to pay the bills of survival and set aside the two million or whatever the number is to retire comfortably.

The average full-time earned income in the U.S. is around $50,000, depending on how the statistics are massaged. At this income, the worker would need to to save every dime for 40 years to assemble the nestegg. Needless to say, this isn’t practical (unless you inherit a trust fund, in which case you don’t even have to bother with earned income.)

The magic solution is unearned income, i.e. dividends, interest, capital gains on investments, etc. If the worker aiming for that comfortable retirement socks his/her retirement nestegg in high-yielding investments, the nestegg will grow over time to the sky (i.e. the $2 million needed to retire comfortably.)

This raises the second problem: identifying those magical high-yielding investments that won’t suddenly turn to dust when the long-awaited retirement approaches.

In the good old days, plain old savings earned 5.25% annually by federal law. Buying a house was not a way to get rich quick, it was more like a forced savings plan, as over time real estate earned about 1% above the core inflation rate.

But all the safe ways of gaining earned income have been eradicated by the Federal Reserve. As I described in The Fed’s Solution to Income Stagnation: Make Everyone a Speculator (January 24, 2014), the status quo “fix” for economic stagnation was to financialize the U.S. economy. What this means on the ground is eliminate safe returns and make everyone a speculator in high-risk, high-yield financial games.

The essence of financialization is turning debt into a tradeable security that can be leveraged into speculative pyramids. If I loan you $100,000 to buy a house, that loan is called a mortgage. The collateral for the mortgage is the property. In the pre-financialization era, I held the mortgage to maturity (30 years) and collected the interest and principal. This trickle of earnings from interest was the entire yield on the loan.

In the securitized economy, I divide the loan into tranches that are sold to investors like stocks and bonds. I can “cash out” my entire gain in the present, and then sell derivatives on the securitized debt as a form of “portfolio insurance” to other buyers.

Clever financiers can pyramid security on security and debt on debt, all collateralized by debt on one property.

This enables the generation of vast profits not from producing goods and services but from financial churning. The more debt I underwrite, the more I can securitize and the more debt instruments I can conjure out of thin air.

The key dynamic of speculative financialization is that pyramiding credit expansions lead to bubbles which eventually pop, wiping out the phantom wealth created by the bubble.

In effect, the central bank/state’s policies of low interest rates, easy money and limitless liquidity sought to compensate for the decline of real income by generating speculative income on a vast scale.

The problem is that speculative financialization only benefits speculators with access to nearly free money and the securitization markets–Wall Street financiers, corporate raiders, hedge funds and other financial Elites. These Elites pocketed immense fortunes but very little of this wealth trickled down to households for the simple reason that there is no mechanism for such a transfer except taxes–and this mechanism is controlled by the central state, which is easily influenced by wealth (campaign contributions, lobbying, etc.)

The Federal Reserve’s solution to stagnating household income was to make every homeowner into a speculator. The Great Housing Bubble of the 2000s was the perfection of this strategy: as every home in the nation was floating higher in valuation as the result of an enormous credit/financialization bubble, homeowners were granted a form of “free income” via home equity lines of credit (HELOCs) and second mortgages.

That this increase in home equity was a form of phantom wealth that would necessarily vanish was not advertised as being an intrinsic feature of the solution.

In the wake of the implosion of the housing bubble, the Fed sought to repeat the exact same strategy of inflating speculative bubbles in widely held assets: stocks, bonds and real estate.

So anyone assembling a nestegg for retirement is gambling that the bubbles don’t all pop before he/she cashes out. If the bubbles keep inflating steadily for another decade, making assets ever-more richly valued and unaffordable to anyone who isn’t using leverage to buy them, then maybe I could retire after only 55 years of work at age 71.

But what are the chances that monumental bubbles in stocks, bonds and real estate will continue inflating for another decade? Most gigantic asset bubbles pop after five years of expansion. The current bubbles are in Year 6 of their speculative expansion, and it seems highly unlikely that they will be the only bubbles in the history of humanity to never pop.

If the current bubbles follow the pattern of all other speculative credit-driven bubbles, they will pop, without much warning and with devastating consequences for all those who believed the bubbles couldn’t possibly pop. In that case, it looks like I’ll need to work another 30 years, logging 75 years of labor before I can retire comfortably at 91.

My advice is to focus not on retiring comfortably, but on working comfortably. Line up work you enjoy that can be performed in old age. That’s a much safer bet than counting on the serial bubble-blowing machinery of the Fed to keep inflating speculative bubbles that magically never pop.

Target CEO’s “golden parachute” exceeds total severance for 17,600 Canadian workers

By Carl Bronski
January 31, 2015
World Socialist Web Site

 

https://i0.wp.com/www.sott.net/image/s4/85779/full/golden_parachute.jpg

© Sack/Star Tribune

In the wake of one of the largest single layoffs in Canadian history, it has been revealed that the 2014 separation package for Target department store CEO Gregg Steinhafel exceeds the severance payments for all of the 17,600 employees who have lost their jobs as a result of the January 2015 Target Canada bankruptcy.

Earlier this month, Target announced that it will close all of its 133 retail outlets in the country. The laid-off employees will receive up to 16 weeks compensation in wages and benefits. The amount set aside roughly meets the minimum requirement for severance packages as set out by labour law. To cover the payments to its employees, Target has earmarked $56 million (US).

In contrast, as the company bled red ink, CEO Steinhafel cashed in with a spectacular “golden parachute” last May totaling $61 million (US) in monies and deferred stock options after he was forced by the Board of Directors to resign his position. Steinhafel had spearheaded the expansion of Target stores into Canada in 2013 which quickly turned into an epic fiasco. Seven billion dollars were invested in the Canadian expansion. In only 681 days of operation, the company recorded losses of at least half of that.

Canadian customers, reeling from stagnating wages and high unemployment rates that have been endemic in Canada since 2008, had steered away from the department store in droves due to uncompetitive price points and poor selection. In its request for Steinhafel’s resignation, the board also cited fallout from the massive January 2014 data breach of credit card information for its US-based customers that occurred during his tenure. Neither occurrence, however, was enough to diminish the CEO’s lavish payday. Indeed, after his resignation, Steinhafel was kept on for several months by the board in an advisory capacity.

Due to draconian cuts to unemployment eligibility by the Conservative government of Prime Minister Stephen Harper and the increasing use of part-time workers by retailers, many of the Target workers will not have earned enough hours to claim unemployment insurance payments after their meagre severance payments run out.

The obscene discrepancies between the earnings of workers and those at the top of the corporate ladder will come as no surprise to working people. A new study has shown that Canada’s top 100 CEOs received compensation increases double the rate of average wage-earners from 2008 to 2013. In 2013 alone, CEO pay increased by 11 percent.In that year the country’s top executives raked in an average of $9.2 million.

In Canada, the top CEOs now receive 206 times more in annual compensation than the average Canadian worker. In the United States, where Steinhafel resides, CEOs earn 354 times as much as the average worker at their companies. Steinhafel managed to outpace even this outrageous gap. His 2013 pay was 597 times greater than those of the average Target worker, second only to Walmart CEO Michael Duke, who received 1,034 times more in compensation than workers in his company.

Overall, average wages for workers in Canada have continued to stagnate with earnings rises falling behind the annual inflation rate over the past eight years. The average Canadian income in 2013 stood at $47,358. In Ontario, the heart of the Canadian manufacturing sector, the median income has fallen by 3.2 percent since 2006. In Windsor, an ever-diminishing hub of Canadian auto manufacturing, the median income has collapsed by almost 14 percent. In Toronto, the financial centre of the country, wages have fallen by 3.2 percent over that same time period.

The pervasive and ever-increasing growth of social inequality is the most fundamental characteristic of contemporary social and political life, not just in Canada and the US, but internationally. It is rooted in the very nature of the capitalist system. In every country, corporate chiefs unashamedly enrich themselves while overseeing the wholesale destruction of jobs, wages and working conditions of ordinary working people, and demanding governments further slash essential social programs to fund tax cuts and boondoggles for the wealthy few.

The obscene levels of wealth at the top of society and growing economic distress among the broad masses is a product of the underlying capitalist economic system.

The ‘Empire of Chaos’ in the House of Saud

By Pepe Escobar
January 30, 2015
RT

 

U.S. President Barack Obama meets with Saudi Arabia's King Salman (R) at Erga Palace in Riyadh, January 27, 2015 (Reuters / Jim Bourg)

U.S. President Barack Obama meets with Saudi Arabia’s King Salman (R) at Erga Palace in Riyadh, January 27, 2015 (Reuters / Jim Bourg)

 

No one in Western corporate media will tell you why US President Barack Obama is hitting Riyadh with a high-powered delegation to “pay his respects” to the new House of Saud potentate, King Salman.

Talk about a who’s who – including CIA head John Brennan; General Lloyd Austin, head of US Centcom; Secretary of State John Kerry; leading House Democrat Nancy Pelosi; and even senile Senator John “Bomb Iran” McCain.

It must have been heart wrenching for most in this crowd to skip a visit to the Taj Mahal in India so they would be part of the last-minute, “unscheduled” stop in Riyadh.

This is how the astonishing mediocrity that doubles as US Deputy National Security Adviser Ben Rhodes, spun it; “Principally, I think this is to mark this transition in leadership and to pay respects to the family and to the people of Saudi Arabia, but I’m sure that while we’re there they’ll touch on some of the leading issues where we cooperate very closely with Saudi Arabia.”

The White House and the Pentagon did not bother to “pay their respects” in person to the people of France after the Charlie Hebdo massacre. The House of Saud – “our” top bastards in the Persian Gulf – is of course much more valuable.

And yet, Air Force One, we got a problem. High-level US financial sources assure this correspondent the trip is all about Obama shoring up the new King’s support for their financial/economic war on Russia as the House of Saud is starting to have second thoughts. The Saudi role in this war has been to come up with the oil price shock – which is hurting not only Russia but also Iran and Venezuela, among others. Besides, the US puppet theoretically in charge in Ukraine, Petro Poroshenko, has just visited Saudi Arabia.

Russia is not Iran – with all due respect to Iran. If the House of Saud really believes they are talking to the head of a superpower rather than a ventriloquist’s puppet – which is Obama’s role – they are effectively doomed. Nothing Obama says means a thing. The real ‘Masters of the Universe’ who run the ‘Empire of Chaos’ want the House of Saud to do most of their dirty work against Russia; and in a later stage they will take care of the “towel heads” – as the saying goes in Washington – over their development of nuclear missiles with Pakistan. And especially because the Saudi-launched oil price war is bound to destroy the US oil industry – against US national interests.

The House of Saud has absolutely nothing to gain from this undeclared financial/economic war on Russia. The Saudis have already “lost” Yemen and Iraq. Bahrain is held by mercenary troops containing the alienation of the Shia majority. They are freaking out with the possibility of ultimate “enemy” Iran reaching a nuclear deal with His Master’s Voice. They are desperate that “Assad won’t go”. They want every Muslim Brotherhood in sight – or the vicinity – jailed or beheaded. They fear any Arab Spring-style stirrings as worse than the plague. And then there’s the fake Caliphate of ISIS/ISIL/Daesh threatening to go all the way to Mecca and Medina. The House of Saud is effectively surrounded.

U.S. President Barack Obama receives members of the Saudi Royal family, government officials and guests as first lady Michelle Obama and Saudi Arabia's King Salman (R) look on at Erga Palace in Riyadh, January 27, 2015 (Reuters / Jim Bourg)

U.S. President Barack Obama receives members of the Saudi Royal family, government officials and guests as first lady Michelle Obama and Saudi Arabia’s King Salman (R) look on at Erga Palace in Riyadh, January 27, 2015 (Reuters / Jim Bourg)

The suicide roadmap

Meanwhile, as the tempest approaches, all is smiles – amid a silent family bloodbath. The powerful Sudairi clan has exacted their “revenge” as King Abdullah’s corpse was still warm. King Salman, almost 80, and with Alzheimer’s about to turn him into mush, took no time to appoint his nephew Mohammed bin Naif as deputy crown prince. And just in case nepotism was not evident enough, he also appointed his son Prince Mohammed bin Salman as defense minister. Mohammed bin Naif is a Pentagon/CIA darling; the House of Saud’s head of counterterrorism.

So yes, this is a desert version of Giuseppe di Lampedusa’s classic The Leopard; Se vogliamo che tutto rimanga com’è bisogna che tutto cambi (“things must change, in order that they can stay the same”.) But the juicier bit is that this seems to apply much more to the House of Saud nowadays than to the ‘Empire of Chaos’.

Apparently, the game of thrones at “our” bastard’s abode leads to everything staying the same; they remain “our” privileged bastard. The Pentagon even came up with the lovely idea of having the Chairman of the Joint Chiefs of Staff sponsor an essay competition to honor late King Abdullah.

So shell out your essays lavishing the King for the no holds barred repression of the Shia minority in oil-rich eastern Saudi Arabia. Praise him for the sentencing of Sheikh Nimr Baqir al-Nimr – a popular Shia cleric and outspoken political dissident; he should be beheaded, Daesh-style, just because he led a non-violent movement committed to promoting Shia rights, women’s rights, and democratic reform in Saudi Arabia (even Human Rights Watch has admitted that Saudi Arabian Shias “face systematic discrimination in religion, education, justice, and employment.”)

Honor the late King for the thousands of political prisoners; “terrorism” charges against women who dare to drive; the 25 percent of the population living under the poverty line; and last but not least, for facilitating the expansion of al-Qaeda in Iraq, who turned into ISIS. The Pentagon will love you for that.

All that desert storm of Saudi cash spent on global Wahhabi proselytizing and indoctrinating – and I’ve seen this from the Maghreb to Java – has been such a powerful legacy; a medieval, toxic “religion” (nothing to do with legitimate Islam) that will keep destroying lives and communities and breeding fanatics till Kingdom Come. Hail the King for that – on behalf of the Pentagon. And forget about reading any of this on Arab corporate media – which is totally controlled by the House of Saud.

The House of Saud “reforming”? Away from that nefarious, barbarian Salafi religious establishment? That’s the joke of the millennium. Everything will stay the same.

But playing the ‘Empire of Chaos’ game – financial/economic war on Russia – is a game-changer, as in playing with fire. US/EU sanctions, attacks on the oil price and the ruble by giant derivative players as agents, are something way above the Saudi pay grade. The House of Saud swore that they didn’t change their production quota during 2014. But there was an excess supply – and it was brought into the market to help cause the oil price crash, alongside the manipulation by derivatives speculators.

Scores of oil analysts still can’t figure out why the House of Saud went after Russia; all reasons are political, not economical (Russian support for Syria and Iran, the Americans agreeing with the strategy, etc.). The fact is Moscow did perceive it as a declaration of economic war by Saudi Arabia. Petroleum Intelligence Weekly, cautiously, has already hinted it may get much worse, as in “potential for disruption in Mideast Gulf monarchies.”

Beware of an Emperor bearing gifts – or mourning a late King. The ‘Empire of Chaos’ is essentially asking the House of Saud to keep going kamikaze all the way against Russia. Sooner or later someone in Riyadh will realize this is the roadmap to House suicide.

Pepe Escobar’s latest book is Empire of Chaos. Follow him on Facebook.

Pepe Escobar is the roving correspondent for Asia Times/Hong Kong, an analyst for RT and TomDispatch, and a frequent contributor to websites and radio shows ranging from the US to East Asia

As The Middle Class Evaporates, Global Oligarchs Plan Their Escape Form The Impoverished Pleb Masses

By WashingtonsBlog
January 27, 2015
Washington’s Blog

 

By Adam Zyglis, Cagle Cartoons, The Buffalo News

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

The middle class has shrunk consistently over the past half-century. Until 2000, the reason was primarily because more Americans moved up the income ladder. But since then, the reason has shifted: There is a greater share of households on the lower rungs of the economic ladder.

– From yesterday’s New York Times article: Middle Class Shrinks Further as More Fall Out Instead of Climbing Up

At a packed session in Davos, former hedge fund director Robert Johnson revealed that worried hedge fund managers were already planning their escapes. “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway,” he said.

– From the Guardian’s article: As Inequality Soars, the Nervous Super Rich are Already Planning Their Escapes

So the other day, President Barack Obama once again demonstrated his contempt for the American public by using his State of the Union address to pejoratively blurt out meaningless phrases such as “but tonight, we turn the page” and: “The verdict is clear. Middle-class economics works. Expanding opportunity works. And these policies will continue to work, as long as politics don’t get in the way.”

Sorry, but why are “we turning the page” tonight? Weren’t you elected over six years ago? Why didn’t you turn the page in 2009?

Meanwhile, I’m astounded by the phrase “middle-class economics works.” Perhaps it does, but how would anyone know? The only thing I’ve seen from his administration is a laser focused determination to consolidate all American wealth and power into the hands of a tiny group of oligarchs and their lapdogs.

Indeed, the following articles published in the last two days by the New York Times and the Guardian show the true results of Obama’s oligarch-coddling legacy. The Obama years have been nothing short of an oligarch crime scene.

First, from the New York Times:

The middle class that President Obama identified in his State of the Union speech last week as the foundation of the American economy has been shrinking for almost half a century.

In the late 1960s, more than half of the households in the United States were squarely in the middle, earning, in today’s dollars, $35,000 to $100,000 a year. Few people noticed or cared as the size of that group began to fall, because the shift was primarily caused by more Americans climbing the economic ladder into upper-income brackets.

But since 2000, the middle-class share of households has continued to narrow, the main reason being that more people have fallen to the bottom. At the same time, fewer of those in this group fit the traditional image of a married couple with children at home, a gap increasingly filled by the elderly.

Remember, middle-class economics works. If the goal is its total destruction.

These charts from the New York Times do not tell the tale of a thriving economy:

Screen Shot 2015-01-26 at 10.17.50 AM

Even as the American middle class has shrunk, it has gone through a transformation. The 53 million households that remain in the middle class — about 43 percent of all households — look considerably different from their middle-class predecessors of a previous generation, according to a New York Times analysis of census data.

In recent years, the fastest-growing component of the new middle class has been households headed by people 65 and older. Today’s seniors have better retirement benefits than previous generations. Also, older Americans are increasingly working past traditional retirement age. More than eight million, or 19 percent, were in the labor force in 2013, nearly twice as many as in 2000.

According to a New York Times poll in December, 60 percent of people who call themselves middle class think that if they work hard they will get rich. But the evidence suggests that goal is increasingly out of reach. When middle class people look up, they see the rich getting richer while they spin their wheels.

One of the main reasons we have seen such a low level of resistance to this historic oligarch theft, is due to the successful brainwashing of the American public. Despite clear evidence to the contrary, 60% of what is left of the middle-class still think they are going to get rich. They have no idea that they are really just a bunch of deluded plebs unable to see how systematically and catastrophically they are being played.

Meanwhile, the Guardian describes how many global oligarchs are already planning their escape. These people know full well they are being enriched criminally. Their response is to take as much money as possible and flee before the pitchforks emerge (see: The Pitchforks are Coming…– A Dire Warning from a Member of the 0.01%).

With growing inequality and the civil unrest from Ferguson and the Occupy protests fresh in people’s mind, the world’s super rich are already preparing for the consequences. At a packed session in Davos, former hedge fund director Robert Johnson revealed that worried hedge fund managers were already planning their escapes. “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway,” he said.

But as former New Zealand prime minister and now UN development head Helen Clark explained, rather than being a game changer, recent examples suggest the Ferguson movement may soon be forgotten. “We saw Occupy flare up and then fade like many others like it,” Clark said. “The problem movements like these have is stickability. The challenge is for them to build structures that are ongoing; to sustain these new voices.”

Clarke said: “Solutions are there. What’s been lacking is political will. Politicians do not respond to those who don’t have a voice In the end this is all about redistributing income and power.”

She added: “Seventy five percent of people in developing countries live in places that are less equal than they were in 1990.”

Welcome to the recovery suckers.

African American Liberation and the Struggle for Socialism

National oppression and class exploitation are at the root of racist state violence

By Abayomi Azikiwe
January 25, 2015
Global Research

 

Michael Brown FergusonA tremendous series of mass demonstrations across the United States, Canada and the world since last summer against racist violence and police brutality has shaken the corridors of the ruling class. Hundreds of thousands have taken to the streets from Missouri and California to Boston, Toronto, London and New York City.

The U.S. government and ruling class has persistently refused to respond to the demands for justice for Eric Garner, Michael Brown, Tamir Rice, Aiyana Stanley Jones and the hundreds of other African Americans who have fallen victim to police violence over the last several years. Where are the editorials denouncing law-enforcement use of lethal force against the nationally oppressed and the judicial impunity of the legal apparatus of the state?

In the State of the Union address (SOTU) delivered by President Barack Obama on Jan. 20, he only mentioned the plight of African American youth facing police terrorism in passing. Obama said rightly that the parents of African American youth are often worried when their children face scrutiny by the law-enforcement agents across the country. In the next breathe he said that the families of cops are also concerned about the safety of personnel who work in police departments.

This is of course comes down on the side of the state. How can one say that the dangers facing the oppressed are somehow equal to those who act as surrogates of the ruling class? What this means is that the African American people are on their own as far as defending themselves against state violence.

Information was leaked later in the week indicating that the U.S. Justice Department would not file criminal charges against Darren Wilson, the white police officer in Ferguson, Missouri who killed 18-year-old unarmed Michael Brown on Aug. 9 of last year. Despite numerous eyewitness accounts, videotapes of the immediate aftermath of the shooting, the months-long outrage expressed by the African American people and their allies, there will unlikely be any legal actions taken against the cop responsible for this crime.

There was some discussion about an ongoing investigation into the police department in Ferguson. However, we should not place any real faith in such investigations because in most cases they result in the exoneration of the police and the further criminalization of the victims.

No Indictment For Officer In Eric Garner Chokehold Death

This was the case with Eric Garner in Staten Island, New York, where he was accused by the media of selling cigarettes on the streets. Nonetheless, they never mentioned whether any cigarettes were found on his person after his killing.

Whether there were any or not is irrelevant since when does possession of cigarettes, which are legal in the U.S., warrant a death sentence by agents of the state? Tamir Rice was a 12-year-old child playing in a public park in Cleveland and was gunned down because someone called 9-1-1 indicating that people were frightening by a youngster playing with a toy gun.

Tamir Rice, 12, was fatally shot by police in Cleveland

By the time the call had been relayed by the police dispatcher to a squad car it was “a Black man with a gun in the park.” When the officer emerged from the police cruiser it took less than two seconds for him to fire into the body of Rice. Since this vicious killing no charges have been filed against the police and they remain free while a child has been buried.

What Obama did talk about was the attempts to have Congress provide further public resources to escalate the renewed war in Iraq and Syria, ostensibly against the so-called Islamic State. As a spokesperson for the Pentagon he wants the working people of this country to fund yet another “Iraqi army and rebel army in Syria.” Nevertheless, he never mentions what happened to the previous surrogate Iraqi army and rebels in Syria.

It was the U.S. and its allies which created the conditions for the emergence of the Islamic State. A proxy war against Syria since 2011 has caused tremendous dislocation and damage not only to Syria but other regional states. The U.S. through successive administrations during this century has slaughtered millions throughout the Middle East, Central Asia and Africa.

These foreign policies have been total disasters for the oppressed nations in these regions as well as people around the world. Inside the U.S., we have seen the impact of runaway Pentagon budgets on the cities like Detroit.

Obama in the SOTU address said in essence that “America was back.” The question is: back to what? We know that wages have actually gone backwards over the last three-and-a-half decades. The prison industrial complex has grown by at least 500 percent. More African Americans are in prison than in colleges and universities. Moreover, there are no programs or even policy discussions on how to alleviate these social problems, which have profound political implications.

Detroit: A Lesson in the Ravages of Modern-day Capitalism

What does the brutal police repression of African American and Latinos communities have to do with the economic devastation caused by the banks in the city of Detroit? If we look at the history of Detroit we see clearly that the use of law-enforcement’s brutal tyranny has been a hallmark of the oppressive apparatus of the state.

Since the existence of the African community in Detroit the police have been used to suppress the people. The first popularly-known rebellion among African Americans in Detroit in 1833 arose out of the efforts of white slave catchers who wanted to kidnap and re-enslave people who had taken refuge in the city from Kentucky.

Later in 1943, police operated alongside white mobs to terrorize the African American community during World War II. In 1967, a police raid on a business establishment on 12th Street sparked the largest urban rebellion up until that time.

In the aftermath of the 1967 rebellion, police violence escalated. In 1971, the Stop the Robberies Enjoy Safe Streets (STRESS) units went on to the streets killing 33 people over a two year period, with 31 of them being African American. The rise of the Coleman Young administration grew out of the anti-police brutality struggle in Detroit during 1971-73.

Although police violence against the people seemed to decline during the Young administration, the murder of Malice Green on Nov. 5, 1992, pointed to an ongoing problem. This came in the aftermath of the Rodney King Rebellions in Los Angeles and other cities across North America.

The second “black administration” under Dennis Archer set out to repudiate the legacy of the Detroit struggle since the pre-Civil War era. Police violence against the people escalated and it became the undoing of the Archer administration. Some of the gains of the Civil Rights and Black Power movements were reversed by the racist state government, with the destruction of Recorder’s Court, the abolition of municipal residency requirements, the changing of property tax foreclosure laws and the imposition of the casinos and new stadia which were championed as the salvation of the city.

We know today that these initiatives fostered by the corporate community, the banks and their puppets in city government failed miserably. The once-championed casino tax revenue wound up as a major source of contention during the bankruptcy hearings. Mike Ilitch and his billionaire empire came right back to the poor and working people of Detroit during 2014 to extort millions more to construct yet another massive prestige project that is now destroying the old Cass Corridor and creeping into the University Cultural District, now dubbed as “Midtown.”

With the corporate media serving as cheerleaders for the rich, it is important that we escalate the distribution of our newspaper, Workers World, in Detroit. Someone has to get an alternative revolutionary analysis out among the people that uncovers the lies, ruling class propaganda and psychological warfare being waged against the people every single day through the daily press and television news stations.

They say that the bankruptcy worked, but for who? Tens of thousands of City of Detroit retirees and their families have been robbed of their healthcare programs and billions in their pension funds. The reputed “shedding of seven billion in debt” is taken directly from the pensioners in contravention to the Michigan state constitution which the federal bankruptcy Judge Steven Rhodes arbitrarily “impaired.” This all was a plot by the banks and corporations to set the workers back decades and to provide even more money to the rich.

No challenge was made by the Duggan administration or the City Council to “clawback” the $177 million in putative “consultancy fees” for the illegal and contrived bankruptcy. All of these entities work at the pleasure of the ruling class. They deliberately allow the workers and oppressed to be expropriated of their meagre wealth consisting of jobs, pensions, homes and communities. The false “comeback” of Detroit is a fraudulent swindle that must be exposed and opposed by people.

Flickr Photo / Ed Yourdon

Moreover, we must illustrate how none of this is working for the people. Just recently, in the post-election period of 2014, the State of Michigan, it is now said, is facing a $325 million deficit derived from over $500 million in shortfalls due to the policy of not taxing corporations. I believe the situation is much deeper than this and what was revealed in the Detroit News and Free Press recently is just the tip of the iceberg.

According to the Detroit News on Jan. 16,

“An unidentified business cashed in two state tax credits worth $224 million last month — helping plunge the state’s general fund budget into a deficit and setting off alarm bells inside Gov. Rick Snyder’s administration. Just two weeks into his second term, Snyder is facing a $325 million midyear shortfall that his budget director says will result in reduced government services and potential layoffs.”

This article continues noting

“The cost of employer-luring tax credits — handed out largely under the prior administration of Democrat Jennifer Granholm — is coming into focus this year as Snyder prepares a 2016 fiscal year budget with $532 million less revenue than was expected eight months ago. It is also casting a shadow over his Tuesday State of the State speech. Next year’s revenue decline is due in large part to $351 million in additional tax credit refunds to businesses for which the Snyder administration is budgeting.”

Even larger figures were revealed by

“The nonpartisan Senate Fiscal Agency’s analysis showing that an additional $1.6 billion in unredeemed tax credits has been awarded to businesses since Snyder took office in 2011. Tax credits expected to be used total $4.9 billion, a figure that has grown $3.2 billion since 2011, according to the Senate Fiscal Agency.”

One legislative politician was quoted as saying “I find it convenient that two months after the election that we now found out … there’s this explosion in tax credits that are beyond those of the last administration,” according to Rep. Sam Singh, D-East Lansing…..

“For the current fiscal year, business tax credits are expected to deplete the state’s general fund by $681 million, $252 million more than state budget officials estimated last May, according to the Treasury Department. In December, a single firm redeemed two tax credits worth $224 million, said Terry Stanton, Treasury Department spokesman. By law, state officials cannot disclose the name of the taxpayer.”

The most outrageous aspect of this report is that the corporate media is not filing Freedom of Information Requests (FOIA) demanding to know who these firms are. After these initial reports, the bank-directed press has been silent on this issue.

Furthermore, the Detroit Free Press reported also on Jan. 16 that “Michigan residents can expect unspecified cuts in services as the state tries to address a projected deficit of about $325 million in the state’s general fund for 2015,’ Budget Director John Roberts said Friday. ‘There are going to be real reductions in services,’ Roberts told reporters after officials reached a consensus on revenue estimates. ‘I can’t sit here and say yes or no to layoffs’ of state employees, he said, and it hasn’t been determined what specific services or departments will be affected.”

In this same report it is saying that “Friday’s (Jan. 16) revised estimates also pose a problem for the 2015-16 budget Gov. Rick Snyder is to unveil Feb. 11. Net general fund revenues for the 2016 fiscal year are now projected to come in $532 million lower than officials estimated when they last held a revenue conference, in May. Snyder will address budget fixes for both fiscal years on Feb. 11, Roberts said.”

Nevertheless, there are no intentions to hold these corporations and their benefactors in the state legislature and gubernatorial offices accountable for the decision to turn over billions of dollars to the rich while cutting meager social benefits, education, pensions, jobs and municipal services. In Detroit all areas of the public services and educational sector have been eviscerated.

The public transportation system in Detroit and throughout region is abysmal with irregular service, crowded buses, which pose a health and safety danger. The People Mover derails downtown during the auto show with barely a whimper from the lickspittle corporate media.

The Detroit Free Press stresses that “Snyder also signed into law a controversial bill that limits the ability of the Treasury Department to hold corporate officers personally liable for the unpaid taxes of corporations. That law is expected to reduce state revenues by about $295 million over the next three years, of which about $165 million will impact the general fund, the state’s main checking account. Snyder said Thursday (Jan. 15) he has no misgivings about any of those cuts. He said the MBT tax credits ‘would be a problem whether we had a different tax system or not.’ Sen. Dave Hildenbrand, R-Lowell, chairman of the Senate Appropriations Committee, said he’s not overly concerned about the projected deficits. All departments can likely make some cuts to help the state balance its 2015 budget, said Hildenbrand, who also wouldn’t rule out using surpluses in the School Aid Fund to ease the picture by re-allocating some general fund dollars that currently go toward school-related expenses. ‘I don’t get into finger-pointing,’ Hildenbrand said. ‘I’m more about finding a solution.’”

Well we know what those “solutions” will be. They will be what they always are: that is more austerity and repression for the working class and the oppressed.

We must demand that these corporations and politicians be forced to answer for their theft of billions in public funds from the working people of Michigan. The false notion of three percent growth in the state economy and the reduction in the unemployment rate is a ruse to conceal the actual rate of increasing profits for the corporations who pay little taxes at the expense of the majority of people in the state.

The Water and Housing Questions is a Manifestation of Capitalism 

Why is the corporate-oriented city administration and governor ordering the shut-offs of tens of thousands of household water services and forcing hundreds of thousands more out of their homes due to unnecessary tax foreclosures?

These attacks on water services which reached its apex last summer were an integral part of the restructuring as said by an aide to former emergency manager Kevyn Orr. There was no reason to engage in such actions only to terrorize and drive even more people out of the city. The corporate clients such as the billionaire Illitch and their ilk owed hundreds of thousands in arrears yet they were not terminated.

The whole process was designed also to create the conditions for the regionalization of the system and its eventual privatization. With the presence of Veolia Corporation is a clear indication that there is much more to this effort. It was reported in the Detroit Free Press that water rates could increase by 14 percent for those living in the suburbs.

If the notion that regionalization would benefit the majority white suburbs at the expense of the city residents, this myth is crashing into a contrasting realization. It also illustrates that by not addressing the major question of the interest rate swaps that have ripped $537 million out of the DWSD system over the last two years is a disastrous policy that will blow up in the faces of Duggan and his cohorts.

The contradiction is that the water shut-offs exposed the real agenda behind emergency management, bankruptcy and the imposition of the Duggan administration. This struggle continues with the filing of an appeal by the legal team to continue to challenge these human rights violations in the courts. However, the movement must also take on a political character by challenging Duggan and his bosses who are promoting the fabricated narrative that Detroit is coming back. Detroit is not coming back for its majority.

Overall conditions are worsening while small businesses are still closing as people face lay-offs in both the private and public sectors. The schools will suffer even further when the impact of the tax revenue transferals to the rich is rationalized by the state government and local municipalities.

On the housing front our demand for a general moratorium on foreclosures and evictions is just as relevant today as it was eight years ago. The banks that are responsible for the 75,000 foreclosures in the first decade of the 21st century have not been held responsible for the havoc they created.

The federal government through the Congress and the Justice Department has acknowledged the role of the banks by reaching consent judgments, levying fines and the limited prosecutions of some executives. However, overall these financial institutions were in fact rewarded for their transgressions through multi-trillion dollar bail-outs since 2008. The federal government in Detroit endorsed the emergency management and bankruptcy of the city in contravention of Civil Rights laws supposedly guaranteeing the right to due process and equal protection. The Voting Act was blatantly disregarded when voters in Michigan in Nov. 2012 struck down emergency management only to have it re-instituted by the dictatorial state government.

Today we are facing 62,000 tax foreclosures in Detroit. This is taking place despite the hundreds of millions sitting in Lansing for the “Hardest Hit” program that is instead being used to drive even more people from their homes and communities. We must demand that these funds are released and all of the foreclosures be immediately halted.

What have foreclosures done for the city? All we need to do is drive or walk around most neighborhoods in Detroit. The housing stock has been destroyed due to the role of the banks, utility companies, the water department and errant politicians.

Last year amid much public hype, Mike Duggan accompanied by City Council President Brenda Jones appeared before media outlets saying they were launching a program to auction abandoned homes beginning in the area surrounding Marygrove College on the northwest side. These efforts are backed up by the illegal quasi-governmental agency known as the Detroit Land Bank Authority (DLBA). This agency works with the Detroit Blight Removal Task Force headed by Dan Gilbert who hired a mapping firm and a team of investigators to target every single home in the city for evaluation.

Yet this auction program was doomed to be dead in the water. An initial project to transfer over 6,200 so-called abandoned homes to a private developer collapsed due to problems associated with the ownership of these structures being in supposed public hands.

Even the few hundreds homes that have been auctions have not been rehabilitated due to the ongoing predatory character of the banking institutions. The new homeowners are not able to get financing for the refurbishing of the structures.

In an article published in the Detroit News on Jan. 5, it states that “A home auction program launched amid great fanfare in May has hit some snags as buyers struggle with financing in what’s been a dismal housing market in the city. Detroit Mayor Mike Duggan set out with the goal of auctioning around 400 abandoned homes by the end of 2014 and met it, with a final tally of 394 on Dec. 31.”

However, this article continues “seven months into the program, figures show that sales had closed on just over a third of the properties, 37 others were delayed, and several dozen had fallen through, according to the Detroit Land Bank Authority. Of the properties auctioned, 295 had bidders who made legal disclosures and signed purchase agreements. Buyers had closed on only 138 properties.”

Mind you these are figures supplied by the DLBA and the corporate media who are no friends of the people in Detroit. The mere paucity of these numbers in relationship to the over 80,000 abandoned and vacant structures in the city indicates that these initiatives are designed merely for public relations purposes.

The same report says

“Circumstances vary, but the vast majority of non-closings are attributed to financing issues, and in some cases, buyer’s remorse, says Craig Fahle, a spokesman for the land bank. Some sales remain delayed, but are intended to go through, he added. The auction process, Fahle says, is intended to be an economic driver, not a long-term strategy for Detroit.”

“It’s important that people recognize that the auctions are one tool in a big tool kit to help stabilize neighborhoods and rebuild the value there. It takes that kind of a kick-start when the market is as dysfunctional as Detroit has become,” the former local NPR-affiliate news announcer told the paper.

Continuing the Detroit News notes that

“The figures come as the City Council is expected to take up a resolution as early as next month to authorize Detroit’s Planning and Development Department to transfer 30,000 vacant residential properties to the land bank, which would bring its inventory up to more than 70,000 for its various programs…. Part of the problem rests with the appraisal process, since comparisons are being based on homes sold nearby, often times at values that are disproportionate. That, Fahle said, is the primary reason that some deals have fallen through. To address it, the land bank is working closely with lenders and independent appraisers. It also stepped up efforts to educate prospective buyers on financing and mortgage options and to encourage responsible bidding.”

We all know that this is complete rubbish. The housing stock in Detroit has been rendered worthless as a result of the banks and to go back to these same institutions to seek financing for rehabilitation is counter-intuitive.

Later in the Detroit News article it attempts to clean up this fiasco by suggesting that the program is only in its infancy and has to correct these problems. The reality is that this program is doomed to failure like other such projects because it relies on the same capitalist methods of operation that drove the city into ruin.

This failed program of seizure, demolition and auctioning should be condemned outright by housing activists. The initiatives must be stopped immediately and a more rationalize plan for reconstruction be discussed and developed.

The collapse of this auctioning system combined with the tens of thousands of tax foreclosures connotes further doom for the people of Detroit. The Duggan-Snyder-Gilbert so-called “recovery and rebuilding” program for the city will inevitably, if not halted, drive hundreds of thousands more African Americans and others from the city of Detroit.

Why the “Plan of Adjustment” Is Failing 

How can the ruling class backed up by the courts justify the attacks on retirees and the wholesale theft of public assets, while the public sector is being privatized with billions of dollars being turned over to banks and corporations under the guise of an illegal bankruptcy that has further institutionalized national oppression and economic inequality in majority African American cities in Michigan?

The answer to this question lies within the exigencies of the capitalist system in its present phase. Objectively the wealthiest corporations have reaped profits at the expense of an expanding majority including the nationally oppressed and the working class as a whole.

An illegal implementation of austerity provides no solution to the crisis impacting the people of Detroit and the state of Michigan. Gov. Snyder’s state of the union address on Jan. 20 did not address the real problems facing people throughout the state including workers, youth, retirees, women and the oppressed nations.

His outright misrepresentations of the economic situation in the state will not shield public and private sector workers from further lay-offs and impoverishment. As the bogus “plan of adjustment” imposed by the federal courts in Detroit continues to implode, the ruling class interests and their surrogates in government will have no other choice than to cut salaries, resources and services.

The theft of retiree pensions and public assets may not be complete. What will stop the politicians and courts from coming back to steal even more of the deferred wages and municipal wealth from the people? The only force that can stop them is an organized, mobilized and militant movement pointing to the source of the problem and determined to challenge the ruling class for control of the future of the city and the state.

This movement must link up with other municipalities throughout the country that are facing similar difficulties. The escalation in repressive violence by the police is clearly connected with the overall economic crisis.

In Ferguson, African Americans face massive unemployment, poverty that is reinforced by law-enforcement use of lethal force along with judicial impunity. On average, Ferguson households have two outstanding warrants making the majority of people in the St. Louis suburb subjected to arrest, excessive fines and detention.

The only solution to these problems is the adoption of an anti-capitalist program that guides the mass movement. There is no solution found within the capitalist system that breeds racism, national oppression and social dislocation.

Whether the narrative is coming from the White House and the Congress or the state and local governments, none of it makes any sense to the growing majority in U.S. society. The wealth generated by the working class must be taken in order to ensure the survival and prosperity of the people.

We cannot allow the forces responsible for the crisis to dictate the terms under which the problems should be solved. The capitalist have no solution to the crisis of the working class and the oppressed.

Reading any editorial page or news story from the corporate media gives one clear indications that these problems of joblessness, underemployment, poverty and homelessness are not even being addressed. The same failed policies of “trickledown economics” are still being advanced, a holdover from the Reagan-era of the 1980s.

What we have seen are more false promises and failed initiatives. Building new sports arenas, restaurants, hotels and bars, provide no prospects for salvation among the working class and nationally oppressed. As Dr. King said in 1967-68, once you tear down the segregated facilities, where does the money come from to visit these non-segregated businesses?

Dr. King worked during the last year of his life to end poverty and imperialist war. We must continue his efforts for a society and world where people come before profits and the masses control their destiny based upon the needs of the majority.

Note: The following address was delivered at a public meeting on Jan. 24, 2015 in Detroit. The forum was sponsored by Workers World Party Detroit branch.