greydog

Linda Ross aka greydog is a native Chicagoan who lives and works in Prague. greydog is the founder and editor of 99GetSmart.

Jan 112017
 

By Eric Toussaint, CADTM, 99GetSmart

arton14379-8baf0

The present study shows that the Greek crisis that broke out in 2010 originated in private banks, not in excessive public spending. The so-called bail-out was designed to serve the interests of private bankers and those of dominant countries in the Eurozone. Greece adopting the euro played a major role among the various factors that contributed to the crisis. The analysis developed here was first presented in Athens on 6 November 2016 during a meeting of the Truth Committee on Greek Public Debt.

At first sight, between 1996 and 2008, the development of Greece’s economy looked like a success story! The integration of Greece within the EU and from 2001 on within the Eurozone seemed successful. The rate of Greece’s economic growth was higher than that of the stronger economies in Europe.

This apparent success actually concealed a vicious flaw, just as had been the case in several other countries – not only Spain, Portugal, Ireland, Cyprus, the Baltic Republics and Slovenia, but also Belgium, the Netherlands, the United Kingdom, Austria…, countries that had been badly hit by the 2008 financial crisis. |1| Not forgetting Italy, which was caught up by the banking crisis a few years after the others.

In the early 2000s, the creation of the Eurozone generated significant volatile and often speculative financial flows |2| that went from economies of the Centre (Germany, France, the Benelux, Austria…) towards countries of the Periphery (Greece, Ireland, Portugal, Spain, Slovenia, etc.).

Major private banks and other financial institutions in economies of the Centre loaned huge sums to the public and private sectors in the economies of the Periphery for it was more profitable to invest in those countries than on the national markets of the economies of the Centre. A single currency (the euro) boosted those flows since it did away with the danger of the local currency being devaluated in case of crisis in countries of the Periphery.

This resulted in a private credit bubble mostly involving real estate (mortgages), but also consumer credit. The assets of banks in the Periphery increased significantly, albeit in terms of debt.

In Ireland, the crisis broke out in September 2008, when major banks went bankrupt in the wake of Lehman Brothers in the United States. In Spain, Greece and Portugal, the crisis started later, in 2009-2010. |3|

When the private credit bubble burst in 2009-2010 (in the context of international recession resulting from the US subprime crisis and its contamination of banks in the European economies of the Centre), private banks had to be massively bailed out.

These bail-outs led to a huge increase in public debt. Indeed the use of public money to bail out banks and other institutions turned out to be very costly.

It is now clear that banks should not have been bailed out, which meant socializing their losses. Banks should have used bail-in mechanisms: organize an orderly kind of bankruptcy and call upon major private shareholders and creditors to pay for sanitizing the situation. The opportunity should also have been seized to socialize the financial sector, i.e., to expropriate the private banking sector and turn it into a public service. |4|

However, there were strong ties, when not actual connivance, between Eurozone governments |5| and the private banking sector. Governments thus decided to use public money to bail out private bankers.

Since States in the Periphery could not afford the financial cost of bailing-out their banks so as to protect the French and German banks, governments of the Central economies (Germany, France, the Netherlands, Belgium, Luxembourg, Austria, etc.) and the European Commission (sometimes with the help of the IMF) implemented the notorious Memorandums of Understanding (MoUs). Thanks to those MoUs, major private banks and other private financial institutions in Germany, France, countries of the Benelux and Austria (i.e. the private financial sector of the Central economies) could reduce their exposition in economies of the Periphery. Governments and European institutions used this opportunity to reinforce the offensive of capital against labour as well as to reduce the possibility for people to actually use their democratic rights throughout Europe.

The way the Eurozone was constructed and the crisis of the capitalist system are accountable for the crisis that can be observed in countries of the Periphery since 2009-2010.

Steps that led to the 2010 Greek crisis 

From 1996, under the auspices of PM Kostas Simitis (PASOK), Greece has committed itself deeper and deeper to the neoliberal model that had first been implemented in 1985 when Andreas Papandreou, after a promising start, shifted away from left-wing positions two years after François Mitterrand. |6|

Between 1996 and 2004, during Kostas Simitis’ two terms as PM, an impressive programme of privatizations was implemented (which recalls Lionel Jospin’s Socialist government in France – 1997-2002 – also carrying out major privatizations which right-wing parties and employers had been dreaming of since the 1980s).

Greece went farther than most EU countries in reducing corporate taxes. Measures were adopted that directly undermined social conquests won between 1974 and 1985, notably in terms of labour conditions and stability. Similarly, the Socialist government favoured a deep-seated deregulation of the financial sector (which also occurred in other EU countries and in the US); this resulted in an increase in its importance in the economy.

Greek banks settled in the Balkans and Turkey, which reinforced a deceptive sense of achievement.

During this period, the rate at which the Greek GDP increased was higher than the average EU rate, GDP per capita was catching up on the average, and the Human Development Index was improving. Growth was significant in some cutting-edge sectors such as optical and electrical equipment and computers. Yet in fact as they further integrated Greece into the EU and the Eurozone, Greek leaders and private corporations increased the country’s dependence and reduced any actual possibility for economic and social development.

How banks developed and how the Greek economy was financialized before it entered the Eurozone

Until 1998, 70% of the Greek banking system was public. Loans handed out by banks amounted to about €80 billion while deposits amounted to €85 billion, which indicated a healthy economy (see below). That situation was to change radically. Between 1998 and 2000, public banks were sold at heavily-discounted prices to private capital and four major banks emerged, covering 65% of the banking market: |7| the National Bank of Greece, Alpha Bank, Eurobank and Piraeus Bank. Among those four banks only the National Bank of Greece was still under indirect public control.

During those same two years under socialist PM Kostas Simitis’ leadership, deregulation was thriving in the banking sector as indeed in other parts of the world. Let us remember that in 1999 Bill Clinton’s Democrat administration repealed the Glass-Steagall Act, which had been voted in by the Roosevelt administration to counter the 1933 US banking crisis. This meant the end of separating deposit banks from business banks and accelerated the deregulation process that led to the 2000-2001 and 2007-2008 crises. In Greece, the government supported private banks (which decreased return on deposits) through an aggressive communication campaign to prompt middle-class households, companies and pension funds to invest on the stock market; so the government did not tax capital gains. This casino-like kind of economy resulted in a stock-market bubble that burst in 2000, with tragic losses for many households, small and medium-sized companies and the pension scheme, which had invested heavily. |8| We also have to keep in mind that the stock-market bubble made it possible for rich investors to launder their dirty money.

Rise in Greek private and public debt from 2000-2001

Private debt increased hugely in the first decade of the new millennium. Lured by the very attractive conditions offered by banks and the whole private commercial sector (mass retail, the automobile and construction industries, etc.), households went massively into debt, as did the non-financial companies. Moreover the shift to the euro |9| had led to a significant increase in the cost of living in a country where buying basic food takes up about half of a family’s budget. This private debt was the driving force of the Greek economy as it was in Spain, Ireland, Portugal, Slovenia and other countries of the former Eastern bloc that joined the EU. Thanks to a strong euro, Greek banks (and Greek branches of foreign banks) could expand their international activities and cheaply finance their national activities. They took out loans with a vengeance. The graph below (Fig. 1) shows that Greece’s accession to the Eurozone in 2001 boosted an inflow of financial capital, in the form of loans or portfolio investments (Non-FDI in the chart, i.e. inflows which do not correspond to long-term investments) while long-term investments (FDI–Foreign Direct Investment) remained stagnant.

Figure 1 – Flow of financial capital into Greece (1999-2009)

greek-banks-01-dc22d

In $ million. Source: IMF |10|

With the vast amounts of liquidity made available by the central banks in 2007-2009, Western European banks (above all the German and French banks, but also the Belgian, Dutch, British, Luxembourg and Irish banks) as well as Swiss and US banks lent extensively to Greece (to the private sector and to the public authorities). One must also take into account that the accession of Greece to the euro bolstered the faith of Western European bankers, who thought that the big European countries would come to their aid in case of a problem. They did not worry about Greece’s ability to repay the capital they loaned and considered that they could take very high risks in Greece. History seems to have proved them right so far: the European Commission and, in particular, the French and German governments have given their unfailing support to the private banks of Western Europe. But in allowing the socialization of the banks’ losses, European governments have placed their own public finances in a critical position.

In the chart below (Fig. 2) we see that the countries of Western Europe first increased their loans to Greece between December 2005 and March 2007 (during this period, the volume of loans grew by 50%, from less than 80 billion to 120 billion dollars). After the subprime crisis started in the United States, loans increased dramatically once again (+33%) between June 2007 and the summer of 2008 (from 120 to 160 billion dollars). Then they stayed at a very high level (about 120 billion dollars). This means that the private banks of Western Europe used the money which was lent in vast quantities and at low cost by the European Central Bank and the US Federal Reserve in order to increase their own loans to countries such as Greece. |11| Over there, where the rates were higher, they could make juicy profits. Private banks are therefore largely responsible for Greece’s excessive debt.

Figure 2 – Evolution of Western European banks’ exposure to Greece (in billions of dollars)

greek-banks-02-13a0b

Source: BIS consolidated statistics, ultimate risk basis (from Costas Lapavitsas et al. The Eurozone Between Austerity and Default)

As shown in the following pie-chart (Fig. 3), Greek debts are overwhelmingly held by European banks, mostly French, German, Italian, Belgian, Dutch, Luxembourg and British.

Fi Figure 3– Foreign holders (almost exclusively foreign banks and other financial companies) of Greek debt securities (end of 2008 |12| )

greek-banks-03-750ae

Source: CPIS in Costas Lapavitsas et al. The Eurozone Between Austerity and Default

A survey conducted by Barclays on Greece’s external debt in the third term of 2009 shows that the distribution was approximately the same (note that the currency used below is the US dollar). |13| The next graph (Fig. 4) is particularly interesting in that it shows that large French insurance groups were highly exposed, as were Luxembourg-based hedge funds. |14|

Figure 4 – Creditors of the Greek debt

Greece’s public debt amounted to about $390 billion by the end of the third term of 2009. Close to three quarters of that debt is held by foreign institutions, the majority of them European.

Source: http://www.nytimes.com/2010/04/29/b…

greek-banks-04-53e6d-jpgIn a book published in 2016, Yanis Varoufakis describes what led German, French and other foreign private banks to make massive loans to Eurozone countries of the European Periphery, with their governments’ support. According to Varoufakis, once they felt sure countries of the Periphery would not leave the Eurozone, French and German bankers started treating all borrowing countries as presenting exactly the same level of risk, or of solvability, which was nonsense. Worse still, since they knew they would get their money back, they soon found out that “it was more lucrative to lend to persons, companies and banks of deficit member States than to German or Austrian customers” since in those countries people “displayed the deep-seated aversion to debt that recent memory of poverty engenders.” Indeed ideal customers (borrowers) are not yet indebted and have some personal property such as “a farmhouse or an apartment in Naples, Athens or Andalusia.”

Varoufakis relies on information gathered during a conversation he had in 2011 with a man called Franz, who worked for a German bank. Franz, he writes, “went to some lengths to impress upon me the suddenness and force with which his bank targeted the European Periphery. Its new business plan was straightforward: to secure a higher share of the Eurozone market than other banks, the French banks in particular, which were also on a lending spree.” Those countries with a significant trade imbalance offered bankers three major advantages: (1) there was room for a lot of lending; (2) exports to deficit countries “were now immune to devaluations of the defunct, weaker currencies”; (3) they could charge much higher interest rates in deficit countries since interest rates indicate the price of money, and money is cheaper in exporting countries such as Germany than in importing countries such as Greece. |15|

A private credit bubble caused by Greek and foreign banks with government complicity

The Greek banks pushed their customers to borrow massively to finance their consumption. As the graph in Fig. 4 shows, household loans increased fivefold between 2001 and 2008; whereas business loans increased two and a half fold. On the other hand, over the same period, Greek banks reduced their loans to public administrations.

Figure 5 – Credit to domestic residents by Greek banks (2001-2008)

greek-banks-05-72746

Source: Bank of Greece

The big increase in Greek household, business and financial company debt is visible in Fig. 6 where the graph shows how total Greek debt developed between 1997 and 2009 alongside the reduction of public debt from 70 to 42%.

Figure 6 – Greek debt by sector of issuer (% of total) 
NB pour la mise en ligne il faut aller prendre le graphique original dans l’étude de Lapavitsas afin que la légende dans le graph soit en anglais.

greek-banks-06-38ec4

Source: Bank of Greece, QEDS, IMF (from Costas Lapavitsas et al.The Eurozone Between Austerity and Default)

Table 1 clearly shows the big increase in bank lending to households and business.

Table 1. Bank lending tendencies to households and business between 12/1998 and 12/2010 (in millions of euros).

GREECE 1998 2000 2001 2008 2010
Events 1 June 1998: Creation of ECB 19 and 20 June 2000: The European Council praises Greece for its good management 1 January: Greece joins the Eurozone The impact of the 2007 crisis starts to be felt 1stMemorandum of May 2010
Home loans 7,007 11,164 15,516 77,386 80,155
Personal loans 3,035 5,511 7,852 36,412 35,061
Business loans 32,731 42,999 50,908 132,457 123,243
TOTAL 42,773 59,674 74,276 246,255 238,459

Source : Bank of Greece |16|

Table 2 shows that the increase in deposits was much inferior to the increase in credit shown in Table 1.

Table 2. Deposit and repurchase agreement tendencies of households and businesses in Greece between December 1998 and December 2010 (in million of Euros).

GREECE 1998 2000 2001 2008 2010
Household deposits 71,843 88,644 103,388 185,424 173,510
Corporate reserves 13,315 20,611 25,574 42,196 36,094
TOTAL 85,158 109,255 125,962 227,620 209,604

Source : Bank of Greece

In 1998, deposits on bank accounts were more than twice the amount of the loans that banks had granted to private-sector activities, an indication of a healthy situation. By 2008 the situation had seriously deteriorated: deposits were far less than the sums on loan. |17| The Greek Banks had taken advantage of the easy money supplied by French, German and other foreign banks.

Greek banks increased their borrowing from foreign banks six-and-a-half fold, from €12.3 billion to €78.6 billion, between 2002 and 2009. If we include other private external sources of financing (investment funds, money-market funds, insurance companies) the respective figures are €19 billion and €112 billion.

And that’s not all: the Greek banks were short-term borrowers on foreign interbank markets (what is more, most of the deposits in Greek banks were short-term and of course, as we have seen, they were also among the financial resources into which banks dipped) in order to finance medium- and long-term loans to their borrowers, especially for property purchase and development, or for durable goods (such as household equipment or cars), making them vulnerable to the tendencies of the financial markets and movements of deposit withdrawals.

However, this deterioration undermining banks’ balance sheets was not at all reflected by their profitability curves. In 2005, according to a study by the Greek Central Bank, banking profits had gone up by 198%, whilst their taxes decreased by 18.8%. The ROE |18| reached the extraordinary ratio of

26% while the European Union average was 17.4%.

This short-term profiteering attracted the attention of French banks, which took over Greek banks in order to facilitate and stimulate their investments in what they considered to be a new Eldorado. |19| In March 2004, Société Générale acquired a majority holding (50.01%) in the Banque Générale de Grèce, which was renamed Geniki Bank. In August 2006 Crédit Agricole S.A. took over Emporiki Bank S.A. In a press release at the time, Georges Pauget, CEO of Crédit Agricole S.A., justified the move by saying “…this acquisition […] gives us access to a growing market in a rapidly expanding region”. |20| René Carron, Chairman of Crédit Agricole S.A., declared: “I’m delighted with the success of the Emporiki offer and would like to express my thanks to the Greek government and other shareholders for showing their confidence and support for this offer. This transaction is a major step in our international strategy and will contribute to our objective to increase our net banking income on non-French operations”.

The announcement by the government, at the beginning of 2005, that construction resulting from building permits issued after 1st October 2006 would no longer be exempt from VAT, created a building boom accompanied by an explosion in the number of mortgage loans that overtook the whole country – even though housing demand was amply satisfied. According to the statistics office, ELSTAT, in 2001, the country had 11 million inhabitants for 5.4 million homes, 1.4 million of which were unoccupied. This contributed to the private-loan speculative bubble. |21| In 2011, there were 6.4 million homes, of which 2.5 million were unoccupied. |22|

The banks weakened during 2008-2009 because of the excessive risks they took and the credit bubble they caused

In September-October 2008, following the failure of Lehman Bros. in the US and the effects on Western European banks (failures in Belgium, Germany, Iceland, Ireland and the UK), mutual confidence between banks evaporated and interbank loans stopped completely – a phenomenon they called a “credit crunch” –, which put the highly dependent Greek banks into very hot water. Their shares plummeted during the second half of 2008 to levels 20% below their early 2007 quotations. At the same time the interest demanded for their borrowings increased by 500 base points – that is, 5%. |23|

The Greek banks only survived thanks to liquidities made available by the Bank of Greece under ECB rules that provide for massive cash-flow to all the Eurozone banks. (The same practice is followed by the Fed, the Bank of England and the Swiss central bank).

In the following graph (Fig. 7) the green line shows how the tendencies of the Greek banks to use this Eurosystem funding evolved. |24|

Figure 7 – Exposure of Greek banks to the government and liabilities to the BoG, in billions of Euros (2007-2010)greek-banks-07-c53f8

Source: Bank of Greece.

Nevertheless, changing the principal sources of funding is not particular to Greece – the same phenomenon has been noted in most Eurozone countries and beyond. Central banks became the favourite money supplier to private banks through 2008-2009.

In October 2008 the Greek banks were in crisis; the Karamanlis Government announced a €28 billion bail-out plan, of which €3.5 billion were used to recapitalize the banks and the remainder served as guarantees for further borrowing from the Central Bank. At the same time depositors were reassured in order to avoid a run on the banks (massive withdrawals that could cause banks to fail). These policies are not exceptional. As much in the US as in Europe, including Switzerland, governments have been providing massive capital and guarantees that have greatly increased public debt without durably improving the health of the banking sector.

Many Belgian, British, Dutch, French, German, Swiss and North American banks received substantial public aid through 2008-2009 and beyond. Between October 2008 and September 2012, total aid granted by the European Commission reached €5,059.9 billion – that is, 40.3% of EU GDP. According to an estimation by Professor James Felkerson, the US Fed granted aid to the tune of $29,614.4 billion to US and non-US banks.

In 2008, the Greek banks, along with their Cypriot, Portuguese and Spanish counter-parts, were not considered to be under threat, because unlike the banks in the US and the most developed European economies, they had not taken massive positions in the structured financial products that shook the US and Northern and Western European banking system to its foundations.

However, the banks in the peripheral Eurozone countries, too, were actually on the verge of defaulting and their governments did not have the resources needed to come to their rescue as effectively as the governments of the central economies and the United States had.

The particularities of the Greek banks

One of the particularities of the Greek banking situation is the combination of weak equity and an increase in credit repayment defaults.

In March 2009, the Greek banks’ equity totalled €28.9 billion – no more than 6.2% of their balance sheet, which totalled €473.1 billion. Loan loss reserves amounted to only €7.2 billion, much less than the amount necessary to cover the actual risk. In fact reserves amounted to only 3% of the €217.1 billion in loans granted, whereas the ratio of “Non-Performing Loans” (NPLs) was 6%. |25|

The insufficiency of assets was caused by paying oversized dividends to private shareholders between 2005 and 2008 (see above).

According to a memo in the European Parliament, bad debt risks had increased to 43.5% in Greece, in September 2015, and 50% in Cyprus.

greek-banks-08-b52e0

The amount of dubious debt in the Eurozone on 30 September 2015

The international crisis that badly hit the Greek economy in 2009 fragilized households and small businesses in particular to point where more and more fell into debt repayment arrears.

Bank deposits had become markedly inferior to outstanding loans, private cash-flow from banks and other financial institutions stopped, arrears increased, property prices slumped and capital fled (organized by, or at least with the complicity of, the banks), the Greek banks’ positions became inextricable. This was the consequence of the dangerous adventures that the Greek banks had entered upon with the complicity of the Greek government and under the laissez-faire attitude of the European regulatory authorities.

The reaction of the Greek banks to the crisis, which they had largely provoked themselves, and to the international recession affecting the Greek economy, aggravated the situation. Whereas the Central Bank made liquidities available to Greek banks under the pretext that they would be made available to households and businesses in order to stimulate the economy, the banks used these sums in entirely different ways, as the following graph, in Fig. 8, shows.

Figure 8. Greece, domestic credit growth, 2009 – 2015

greek-banks-09-4c200

Source: Bank of Greece

The Greek banks cut off lending to households and non-financial companies (made up mostly of the self-employed or of small- and average-size companies with no more than ten staff members |26|), who were in need of funds to finance their debt repayments, thus worsening their already dire difficulties. Of course, it must not be forgotten that the austerity policies imposed by the Troika and the Greek government from 2010 had already reduced household and small business incomes, pushing them further towards payment defaults.

The criminal practices of the Greek banks were even worse than those of the Northern and Western European banks. Here are a few noteworthy examples brought to light by Daniel Munevar:

In the case of the now-defunct Hellenic PostBank it is estimated that between 2006 and 2012 it lent around €500 million to prominent businessmen without securing any type of guarantee. |27| Eventually, once they became NPLs, the losses associated with them were directly passed on to the taxpayers. At the time, Alexis Tsipras denounced the bank scandal as a triangle of corruption involving leading companies, banks and political parties that exchange favours. |28| In the case of another defunct bank, the Agricultural Bank of Greece, it is now estimated that between 2000 and 2012 it extended 1,300 loans for a value close to €5 billion. |29| These loans were extended without any type of guarantee and were provided to government supporters in what amounted to a patron/client relationship.3 |30|

As scandalous as the above examples might be, probably the most iconic case of the corruption and excesses that characterized the Greek banking system before the crisis was that of the Marfin Popular Bank (MPB). In 2006, Marfin Investment Group (MIG), a Greek-based investment group led by Andreas Vgenepoulos, bought a minority stake at Laiki Bank in Cyprus. After this transaction was completed, Laiki was transformed into a new entity, MPB.

Vgenopolous then took the decision to undertake an IPO of MIG. To ensure the success of the initial offering, Vgenepoulos, who was a member of the boards of both companies, used more than €700 million in loans provided by MPB to support the initial price of the share offering of MIG in 2007. |31| By 2010, it is estimated that MPB had provided €1.8 billion in loans to entities related to MIG in Greece in what amounted to a clear conflict of interest. |32| Even though the BoG conducted an audit in 2009 that identified these problems and raised further questions regarding the management of the bank, the regulators did nothing to address these issues. By the time the Cypriot authorities took over the bank in 2011 it was estimated that MPB had a loan portfolio in Greece of 12 billion euros, most of it of dubious quality. |33| According to the Chairman appointed by the Cypriot authorities, Michael Sarris, the “single most important factor” dissuading investors from helping recapitalize the bank was not sovereign bonds but concern that further losses in the loan portfolio in Greece could materialize. |34|

Dramatizing public indebtedness and the deficit protects the interests of the private Greek and foreign banks who are responsible for the crisis

If we believe the rhetoric prevailing at the international level, the Memorandum of Understanding of 2010 constitutes the only possible response to Greece’s public-finance crisis. According to this deliberately misleading explanation, the Greek State supposedly gave Greeks the benefit of a generous system of social protection |35| in spite of the fact that they were paying no taxes (Christine Lagarde, remember, as Managing Director of the IMF, had stated that Greeks were paying almost no taxes – neglecting to point out that wage earners and retired persons in Greece have their taxes withheld at source3 |36|). For these facile moralizers, it was irresponsible public expenditure that supposedly led to a dramatic increase in public debt and the deficit. According to their narrative, the financial markets eventually became aware of the danger and refused to continue to finance Greece’s irresponsibility. Following that refusal, the narrative goes, the European governments, the ECB, the European Commission and the IMF decided, in a burst of generosity, to join together to come to the aid of the Greek people, even though they did not deserve such generosity, and at the same time defend the permanence of the Eurozone and the European Union.

In reality, as the Preliminary Report of the Truth Committee on the Greek Public Debt showed, the real cause of the crisis was the private banking sector, both domestic and foreign, and not public debt. Private debt was much larger than public debt.

Late in 2009, the Greek banks had to repay €78 billion in short-term debt to foreign banks, and if the other foreign financial entities (such as Money Market Funds |37| and investment funds) who had granted loans are taken into account, the amount to be repaid was in fact a total €112 billion. Remember that starting in September-October 2008, interbank lending had largely dried up. The Greek banks were able to continue to repay their external creditors at least in part thanks to the line of credit extended by the ECB and the Central Bank of Greece (see Figure 7 above – Exposure of Greek banks to the government and liabilities to the BoG, in billions of Euros (2007-2010)

Loans to the Greek banks from the ECB/Greek Central Bank varied between €40 and 55 billion. That represented between 6% and 8% of the line of credit extended by the ECB, whereas the Greek banks accounted for only 2% of assets in the Eurozone.

The directors of the ECB implied in Autumn 2009 that they planned to end that line of credit. |38| This caused a great deal of anxiety on the part of foreign creditors of the Greek banks and the Greek bankers themselves. Should the Greek banks not be able to continue repaying their debts to the foreign banks, a serious crisis could ensue. According to the major private foreign creditors of the Greek banks, the only solution that could avoid a failure of the Greek banks (and the losses that would have caused for the foreign banks) was for the State to recapitalize them and grant them guarantees for an amount well in excess of what was made available beginning in October 2008. That also implied that the ECB would maintain the line of credit it had extended them. George Papandreou, who had just handily won the legislative elections on 4 October 2009, realized that the Greek government alone would not have the resources to save the Greek bankers despite his good will towards (not to say complicity with) them. His opponents in New Democracy, who had just lost the elections, felt the same.

Instead of making those who were responsible, both in Greece and abroad (that is, the private shareholders, the board members of the banks, and the foreign banks and other financial entities who had contributed to generating the speculative bubble) bear the cost of the banking crisis, Papandreou dramatized the public debt and the deficit in order to justify an external intervention aimed at bringing in sufficient capital to face the situation the banks were in. The Papandreou government falsified the statistics on Greece’s debt – not in order to reduce it (as the prevailing narrative claims) but in fact to increase it (see the Box on Falsification). He wanted to spare the foreign (principally French and German) banks heavy losses and protect the private shareholders and top executives of the Greek banks.

He made the choice of resorting to “international aid” under the deceitful pretext of “solidarity” because he was sure he could never convince his electorate to make sacrifices in order to protect the big French and German banks… and Greek bankers.

Falsification of public deficit and public debt

After the Parliamentary Elections of 2009 (4/10/2009), the newly elected government of George Papandreou illegally revised and increased both the public deficit and debt for the period before the Memorandum of 2010. |39|

Hospital liabilities

The public deficit estimation of 2009 was increased through several revisions: the public deficit as a share of GDP increased from 11.9% in the first revision to 15.8% in the last.

One of the most shocking examples of falsification of the public deficit is related to the public hospitals’ liabilities.

In Greece, as in the rest of the EU, suppliers traditionally provide public hospitals with pharmaceuticals and medical equipment. Due to the required invoice validation procedures required by the Court of Audit, these items are paid after the date of delivery. In September 2009, a large number of non-validated hospital liabilities for the years 2005-2008 was identified, even though there was not a proper estimation of their value. On the 2nd of October 2009, within the usual Eurostat procedures, the National Statistical Service of Greece (NSSG) sent to Eurostat the deficit and debt notification tables. Based on the hospital survey traditionally carried out by the NSSG, these included an estimate of the outstanding hospital liabilities of €2.3 billion. On a 21stOctober notification, this amount was increased by €2.5 billion. Thus, total liabilities increased to €4.8 billion. The European authorities initially contested this new amount given the suspicious procedures under which it was compiled:

“In the 21st October notification, an amount of €2.5 billion was added to the government deficit of 2008 on top of the €2.3 billion. This was done according to the Greek authorities under a direct instruction from the Ministry of Finance, in spite of the fact that the real total amount of hospital liabilities is still unknown, that there was no justification to impute this amount only in 2008 and not in previous years as well, and that the NSSG had voiced its dissent on the issue to the GAO [General Account Office] and to the MOF [Ministry of Finance]. This is to be considered as a wrong methodological decision taken by the GAO.” |40|

However, in April 2010, based on the Greek government’s “Technical Report on the Revision of Hospital Liabilities” (3/2/2010), |41| Eurostat not only gave in to Greece’s new government demands about the contested amount of €2.5 billion, but also included an additional €1.8 billion. Thus, the initial amount of €2.3 billion, according to the Notification Table of the 2nd October 2009, was increased to €6.6 billion, despite the fact that the Court of Audit had only validated €1.2 billion out of the total. The remaining €5.4 billion of unproven hospital liabilities increased the public deficit of 2009 and that of previous years.

These statistical practices for the accounting of hospital liabilities clearly contravene European Regulations (see ESA95 par. 3.06, EC No. 2516/2000 Article 2, Commission Reg. EC No. 995/2001) and the European Statistics Code of Practice, especially regarding the principles of independence of statistical measurements, statistical objectivity and reliability.

It is important to highlight that a month and a half after the illegal increase of the public deficit, the Ministry of Finance called the suppliers and asked them to accept a 30% discount on the liabilities for the 2005-2008 period. Thus, a large part of hospital liabilities was never paid to pharmaceutical suppliers by the Greek government, while the discount was never reflected in official statistics. |42|

Public corporations

One of several falsification cases concerns 17 public corporations (DEKO). In 2010 ELSTAT |43| and Eurostat transferred the liabilities of the 17 DEKO from the Non-financial Corporations sector to the General Government sector. This increased public debt in 2009 by €18.2 billion.

This group of corporations had been classified as Non-Financial Corporations after Eurostat had verified and approved their inclusion in this category. It is important to emphasize that there were no changes in the ESA95 classificatory rules between 2000 and 2010.

The reclassification took place without carrying out the required studies; it also took place at night after the ELSTAT Board had left. In this way the president of ELSTAT was able to introduce the changes without questions from the Board members. Thus, the role of the national experts was completely ignored, in total contravention of ESA95 Regulations. Consequently, the institutionally established criteria for the reclassification of an economic unit under the General Government sector was infringed. |44|

Goldman Sachs swaps

Another case of unsubstantiated increase of public debt in 2009 is related to the statistical treatment of swaps with Goldman Sachs. The one-person ELSTAT leadership increased the public debt by €21 billion. This amount was distributed ad hoc over the four financial years from 2006 to 2009. This was a retroactive increase of Greece’s public debt and was done in contradiction of EC Regulations.

In total, it is estimated that as a result of these technically unsupported adjustments, the budget deficit for 2009 was increased by an estimated 6 to 8 percentage points of GDP. Likewise, public debt was increased by a total of €28 billion.

We consider the falsification of statistical data as directly related to the dramatization of the budget and public debt situation. This was done in order to convince public opinion in Greece and Europe to support the bail-out of the Greek economy in 2010 with all its catastrophic conditionalities for the Greek population. The European parliaments voted on the “rescue” of Greece based on falsified statistical data. The banking crisis was underestimated by an overestimation of the public sector’s economic problems.

As for European leaders like Angela Merkel and Nicolas Sarkozy, who had already implemented plans to bail out private banks in their respective countries in 2008, they agreed to launch a programme that was purportedly to “aid Greece” (and which was to be followed by programmes of the same type in Ireland, Portugal and Spain) and under which the private banks in their countries could be paid with public funds. Repayment of the bail-out of bankers, then, would be done on the backs of the Greek people (and the peoples of the peripheral countries who would get caught up in the same system). |45| All this on the pretext of aiding Greece out of solidarity. The “aiding Greece” narrative is nothing but a sordid and deceitful cover-story to hide what was in reality socialisation of the banks’ losses. The Truth Committee on the Greek Public Debt, in its Preliminary Report of June 2015, threw light on the mechanism that was put in place starting in 2010 (see in particular Chapters 2, 3 and 4).

Yanis Varoufakis denounces the swindle in his own words: “But this was not a bail-out. Greece was never bailed out. Nor were the rest of Europe’s swine—or PIIGS as Portugal, Ireland, Italy, Greece and Spain became collectively branded. Greece’s bail-out, then Ireland’s, then Portugal’s, then Spain’s were rescue packages for, primarily, French and German banks.” (…) “The problem here was that Chancellor Merkel and President Sarkozy could not imagine going back, once more, to their parliaments for more money for their banker chums. So they did the next best thing: they went to their parliaments invoking the cherished principle of solidarity with Greece, then Ireland, then Portugal and finally Spain.”4 |46|

Yet an alternative was possible, and necessary. Following their win in the 2009 elections thanks to a campaign during which they denounced the neoliberal policies of New Democracy, the Papandreou government, had it wanted to make good on its campaign promises, would have had to socialize the banking sector by organizing an orderly failure and protecting depositors. Several historical examples demonstrate that organizing such a failure and then starting up financial services again to operate in the interests of the population would have been quite possible. They should have taken the example of what had been done in Iceland since 2008 |47| and in Sweden and Norway in the 1990s. |48| Instead, Papandreou chose to follow the scandalous and catastrophic example of the Irish government, which bailed out the bankers in 2008 and in September 2010 agreed to a European aid plan that had dramatic consequences for Ireland’s people. When in fact what was needed was to go even farther than Iceland and Sweden and completely and permanently socialize the financial sector. The foreign banks and private Greek shareholders should have been made to bear the losses stemming from resolving the banking crisis and those responsible for the banking disaster should have been prosecuted. That would have allowed Greece to avoid the successive Memoranda that have subjected the Greek people to a dramatic humanitarian crisis and to humiliation, without any of it resulting in truly cleaning up the Greek banking system. The chart below shows the evolution of payment defaults on credits and throws light on why the situation of the Greek banks remains highly precarious, whereas their directors have faced no legal consequences and most of them have remained in their positions since the crisis began. In Iceland, remember, several bankers went to prison.

Figure 9 – Greece, evolution of NPLs as% of total loans, 2009 – 2015

greek-banks-10-49678

Source: IMF

NPLs increased greatly between 2010 and 2015 for three main reasons:

  1. Banks were not forced to recognize losses (which would have amounted to cancellation of the debts).
  2. The brutal austerity imposed by the Troika, by radically reducing the income of the majority of the population and causing the failure of hundreds of thousands of small and medium companies, made it impossible for a growing number of households and SMEs to continue repaying their debts.
  3. The banks’ decision to stop granting new loans or refinancing existing ones only encouraged households and companies to default on repayment.

Why private banks want to purchase public debt 

The fable according to which the weakness or crisis of private banks is brought about by too high a level of public debt and the risk of suspension of payment by States does not hold up against the facts.

Since the EU has been in existence, not a single member State has gone into payment default, despite the fact that the list of banking crises gets longer every day.

On the other hand, what the dominant media and governments don’t tell us is that for private banks, lending to a State is highly profitable and free of risk. Added to that is the fact that the more sovereign debt a bank holds, the easier it is for it to comply with the rules set by the regulatory authorities. That point requires a technical explanation.

To adhere to the rules that were in force in 2008-2009, the Greek banks, like all European banks, needed to prove that their equity amounted to 8% of their assets. But, as said earlier, in March 2009 their equity only totalled 6.2% of their assets. To reach the 8% required by the authorities, they began buying sovereign debt.

In calculating that ratio of 8%, the regulatory authorities allow banks to weight the assets they hold according to the risk they represent. Sovereign debt held by banks is considered less risky than debt with private individuals or companies. That being the case, banks have every interest in lending more to public authorities than to private individuals or companies, and especially SMEs, which are considered riskier than major corporations. Of course, they can decide to lend to private individuals and SMEs anyway, but when they do they’ll demand very high interest rates.

That’s why, beginning in late 2008 and 2009, the Greek banks continued to increase their lending to the Greek government while at the same time gradually cutting off new loans to households and SMEs. Between 31 December 2008 and 31 December 2010, the Greek banks increased loans to the Greek public authorities by 15%, which proves that they considered such loans more secure.

The next illustration shows why banks who wanted to prove their robustness had every interest in buying public securities rather than continuing to grant loans to households and private individuals.

01-17-39f9f

The illustration above represents the assets of a bank before and after weighting for risks. The column on the left represents the actual assets held by the bank – that is, the loans it has granted. In the example given, which corresponds to an observed average, for 4 units of equity (the capital), the bank lent 100 units to private individuals, companies, States, etc.

For each of these categories of assets, the bank will apply weighting for risk and rely on that weighting to determine its ratio between equity and the total assets on its books. For example, loans to private individuals are weighted at 75%, which means that out of 28 units lent, only 21 will be counted in the weighted balance sheet. As a general rule, loans to States (sovereign debt securities) are weighted at 0% – in other words, they count for 0 on the weighted balance sheet! In fact, only loans to SMEs and companies that are rated low by the rating agencies are accounted for in their entirety, and even for more than they actually represent (weighting is 150% for companies rated below BB-).

Since the regulatory authorities take a bank’s weighted assets as the basis for determining whether it is keeping to the rules, it is in the bank’s best interests to lend to States rather than companies. This enables it to “deflate” its adjusted balance without affecting the true amount of loans granted, which are how it makes part of its profit.

Thus a bank with equity of only 4% of its assets can declare that the ratio actually comes to 10%, if there are enough public debts on its books. This will earn it praise from the regulatory authorities. |49|

All this explains the trajectory of the blue line in the graph we’ve already used. (See Figure 7 – Exposure of Greek banks to the government and liabilities to the BoG, in billions of Euros (2007-2010) above).

A sharp increase in the amount of credit extended by Greek banks to the government can be seen after September 2008. Previously fluctuating between €30 and 40 billion, it suddenly rose to over €60 billion by March 2010.

Note that before the speculative attacks on Greece began, it was able to borrow at very low interest rates. Mainly banks, but other institutional investors (such as insurance companies and pension funds) too, were falling over each other to lend it money.

This is how it came about that on 13 October 2009 Greece issued three-month Treasury bonds (T-Bills) with a very low yield of 0.35%. On the same day it issued six-month bonds at a rate of 0.59%. Seven days later on 20 October 2009, Greece issued one-year bonds yielding 0.94% |50|. Not until less than six months before the Greek crisis broke out did the foreign banks turn off the credit tap. The credit-rating agencies attributed a good rating to Greece and the banks which were lending to it, left, right and centre. Ten months later, to issue six-month bonds it had to commit to a yield of 4.65%, that is, eight times higher than before. This was a fundamental change of circumstances. In September 2009, the Greek Treasury issued six-year bonds at 3.7%, a yield close to those of Belgium or France, and not very far from Germany’s. |51|

There is one highly significant indication of the banks’ responsibility. In 2009, they demanded a lower yield from Greece than in 2008. In June-July-August 2008, before the shock produced by Lehman Brothers’ bankruptcy, the rate was four times higher than in October 2009. In the fourth quarter of 2009, yields reached their lowest point when loans of less than one year fell to below 1%. |52| Why were banks demanding lower yields when they should have realized that the risks were accumulating and Greece’s situation deteriorating?

The graph below shows that Greek and German interest-rates were very close between 2007 and July 2008. After that date, the rate paid by Greece can be seen to increase during the fourth quarter of 2008, after the government had announced its first plan to rescue Greek banks. (The markets then considered that the risks on public debt were higher, seeing that the authorities were willing to increase public debt to bail out the Greek banks.) From that moment on, German and Greek rates followed completely opposite trajectories. It is extraordinary to see that the rate paid out by Greece fell between March and November 2009, when the real situation of Greek banks and the international economic crisis which hit Greece so hard from 2009 (i.e. later than for the stronger countries of the Eurozone) should have led international and Greek banks to demand risk premiums. It was only after November 2009, when Papandreou decided to dramatize the situation and to falsify the public debt statistics, that the rates rose dramatically.

Figure 10 – Germany and Greece, 10-yr government bond yields (2007-2010)

greek-banks-11-fee8e

Source: St Louis Fed.

This may seem irrational, as it is not normal for a private bank to lower interest rates at a time of major international crisis, and to a country like Greece that is getting rapidly indebted. However it is logical from the point of view of a banker seeking to maximize immediate profits and convinced that in case of difficulty, the government will bail out his bank. After Lehman Brothers failed, the governments of the USA and Europe made available enormous amounts of liquidities to bail out the banks and kick-start credit and economic activity. Bankers seized this manna of capital to lend it to EU countries like Greece, Portugal, Spain and Italy, certain that in case of trouble, the European Central Bank (ECB) and the European Commission (EC) would come to their aid. From their point of view, they were right.

There is no denying that banks literally threw capital at countries like Greece (including lowering the interest-rates that they demanded), so determined were they that the money they were getting in massive quantities from the public authorities should be placed as loans to Eurozone States.

To go back to the concrete example mentioned above: when on the 20th October 2009 the Greek government sold three-month T-Bills with a yield of 0.35%, it was trying to raise the sum of €1,500 million. Greek and foreign banks along with other investors proposed €7,040 million, or almost five times that amount. Finally, the government decided to borrow €2,400 million. It is thus no exaggeration to claim that the bankers sought to lend as much as possible to a country like Greece.

Now let us go back over the sequence of increases in loans from Western European bankers to Greece over the period 2005-2009 as presented at the beginning of this study. The banks of Western European countries increased their loans to Greece (both in the public and private sectors) for the first time between December 2005 and March 2007. During this period, the volume of loans increased by 50%, from just below 80 billion to 120 billion dollars. Even though the subprime crisis had broken out in the USA, loans saw another sharp increase (+33%) between June 2007 and the summer of 2008 (from 120 to 160 billion dollars), thereafter remaining at a very high level (of about 120 billion dollars). The debts called in from Greece by foreign and Greek banks as a consequence of such frankly adventurous policies are marked by illegitimacy. The banks should have been forced to assume the risks they had taken.

The rescue of foreign and Greek banks thanks to the 2010 Memorandum 

The work of the Truth Committee on Greek Public Debt made evident the true motives of the Troika at the time of the First Memorandum in May 2010. The hearing of Panagiotis Roumeliotis helped to set the record straight. Roumeliotis had been a close advisor to the former PASOK Prime Minister Papandreou, a former Greek negotiator with the IMF and a personal friend of Dominique Strauss-Kahn, former chairman of the IMF, whom he met when he was a student in Paris. A few days before the hearing, I had had a private interview with Roumeliotis where I had informed him that I was in possession of secret IMF documents, including notes of a meeting that had been declassified by the Speaker of Parliament. Because they were very compromising, they had been hidden by the former Speaker of the Greek Parliament when they should have been included in an enquiry by the former government into financial delinquency. The documents proved that the decision by the IMF on 9 May 2010 to lend €30 billion to Greece (32 times the sum normally available to the country) was, as clearly expressed by several executive directors, primarily aimed at getting French and German banks out of trouble. This was clearly denounced by the IMF representatives from Brazil and Switzerland! |53| In reply to these objections the representatives from France, Germany and the Netherlands conveyed to the Board the commitments of their countries’ banks to support Greece and broadly maintain their exposure. This is what the French executive said during the meeting: “There was a meeting earlier in the week between the major French banks and my Minister, Ms. Lagarde. |54| I would like to stress what was released at the end of this meeting, which is a statement in which these French banks commit to maintain their exposure to Greece over the lifetime of the programme”. The German executive director said: “(…) these [German] banks basically want to maintain a certain exposure to the Greek banks, which means that they will not sell Greek bonds and they will maintain credit lines to Greece. When these credit lines expire, they will at least in part be renewed”. The Dutch executive director also made promises: “The Dutch banks, in consultation with our Minister of Finance, have had discussions and have publicly announced they will play their part in supporting the Greek government and the Greek banks”. |55|

It has become clear that these three directors deliberately lied to their colleagues to get the loan granted. |56| The loan was not made with the intention of aiding the Greek economy or the Greek people. The money was used to repay French, German and Dutch banks that between them held more than 70% of Greek debt at the time the decision was made.

Then once they had been paid, the banks stopped lending to Greece and shed their Greek securities on the secondary market Secondary market The market where institutional investors resell and purchase financial assets. Thus the secondary market is the market where already existing financial assets are traded. . The ECB, directed by the Frenchman Trichet, helped by purchasing those securities. The banks did exactly the opposite of what had been promised at the IMF. It must be mentioned that during the same meeting several directors criticized the IMF for changing, in a state of panic, IMF loan conditions. |57| Previously, the IMF could not grant a loan to a country unless the conditions made the debt sustainable. As the IMF directors knew perfectly well that lending €30 billion to Greece would not ease the Greek situation, but on the contrary, probably make it even more unsustainable, the rules were changed. Other criteria were adopted without consultation: henceforth, the IMF lends in order to avoid international banking crises. This proves that the real threat was the failure of the three main French banks (BNP Paribas, Crédit Agricole and Société Générale) and some German banks (Hypo Ral Estate and Commerzbank) which, seeking big profits, had lent too much to both the private sector and the Greek government, without applying normal prudential restraint.

If the IMF and the ECB did not want a reduction of Greek public debt in 2010, it was because the governments of France, Germany, the Netherlands and some other Eurozone countries wanted to give these banks time enough to sell off the Greek securities that they had bought and to generally disengage from Greece. And indeed, the foreign banks did get rid of their securities on Greece between March 2010 and March 2012, the date on which debt reduction finally took place (see below). If the Greek government of the time, under George Papandreou, accepted that the Greek public debt not be reduced at the time of the 2010 Memorandum, it was because it too wanted to give time to the Greek banks to sell off a large portion of their Greek securities which were likely to be devalued later when the French and German banks would have had time to disengage (see below). In any case, Jean-Claude Trichet, the French banker who was president of the ECB at the time, threatened to reduce Greek banks’ access to liquidities if the Greek government asked for debt reduction. That was what Panagiotis Roumeliotis declared at his hearing. |58|

Another criticism of the measures imposed on Greece by the IMF came from the Argentine representative, present at the same meeting in May 2010, who explained that the policies the IMF imposes on Greece cannot work. Pablo Pereira made no bones about what he thought of past and present IMF policies. “Harsh lessons from our own past crises are hard to forget. In 2001, somewhat similar policies were proposed by the Fund in Argentina. The catastrophic consequences are well known. (…) There is an undisputable reality that cannot be contested: a debt that cannot be paid will not be paid without a strong process of sustainable growth. (…) We are also too familiar with the consequences of “structural reforms” or policy adjustments that end up thoroughly curtailing aggregate demand and, thus, prospects of economic recovery. (…) It is very likely that Greece might end up worse off after implementing this programme. The adjustment measures recommended by the Fund will reduce the welfare of its population and Greece’s true repayment capacity.” |59|

On 15 June 2015, Panagiotis Roumeliotis testified before the Committee on this entire affair during the quite exceptional public hearing that lasted eight hours. I questioned him, as did the President of the Hellenic Parliament, and he answered us. Then members of the Committee questioned him and he replied to them. Mr. Roumeliotis’s answers amply confirmed the analysis presented above. Like all other important events in the Hellenic Parliament, the hearing was broadcast live on the parliamentary television channel. Audience ratings shot up.

In my introductory speech to the presentation of the Committee’s work that took place on 17 June I summarized the analysis that we made of the underlying reasons why the First Memorandum was imposed on the Greek people as from May 2010. The speech is available here. It was very well received. I would change nothing in this declaration.

History repeats itself

In a study conducted in September 2015 two economists, Carmen Reinhart and Christoph Trebesch, analysed the debt crises that Greece has been through since the 1820s and independence, from the perspective of dependence on external financing |60|. The two authors, academics with a favourable attitude towards the capitalist system, emphasize how the debt crises that have repeatedly hit Greece are mainly the result of inflow of private foreign capital followed by cessation of the flow. They claim that the crisis affecting Greece and other peripheral countries is not a public-debt crisis, but rather a crisis of external debt (p. 1). They draw a parallel with the external debt crisis that affected Latin America in the 1980s, pointing out the symmetry of situation between debtor countries and creditor countries once a crisis has broken. While Greece was plunged into economic depression after 2010, Germany went through a period of growth. Similarly, the countries of Latin America went through deep depression between the time when the crisis struck in 1982 and the early 1990s, while the economy of the United States, as creditor of the Latin American countries, gradually improved (p. 2).

They note that the most prosperous period for the Greek economy was between 1950 and 2000, when financing was mainly based on the country’s internal resources and did not depend on foreigners (p. 2).

On the other hand, they show that at each crisis of external debt that Greece has known (they list four major ones), when the capital flow from external private creditors (that is, banks) has dried up, the governments of several European powers have got together to lend public money to Greece and rescue the foreign banks. The coalition of powers dictated policies to Greece that served their own interests and those of a few big private banks with which they colluded. Each time, the aim of the policies was to free up the fiscal (budgetary) resources required to repay the debt. This meant a reduction in social spending and public investments. Thus through a variety of ways and means, Greece and the Greek people have been denied the exercise of their sovereignty. This is how Greece as a country has been kept subordinate and peripheral. My own historical research on Greek debt since the 1820s |61| reaches conclusions that are not very different. Carmen Reinhart and Christoph Trebesch insist on the need for a very significant reduction of Greek debt and they reject solutions that consist of rescheduling debt repayments (p. 17). For my part, in the present study, I conclude that the debt claimed by the Troika (the IMF, ECB and the European Commission) must be cancelled.

Conclusion

The Greek crisis that broke out in 2010 was caused by bankers (foreign and Greek) and not by excessive public spending on the part of a State supposedly too generous in social terms. The crisis was produced when the private foreign banks turned off the credit tap, firstly in the private sector, then in the public sector. The so-called aid plan for Greece was designed to serve the interests of private bankers and the dominant countries of the Eurozone. The debts claimed from Greece since 2010 are odious, as they were accumulated in the pursuit of objectives that clearly go against the interests of the population. The creditors were fully aware of this and exploited the situation. These debts must be cancelled.

This research examines in depth and confirms what the Greek Debt Truth Committee showed in 2015, both in its preliminary report of June 2015 and its September 2015 report on the Third Memorandum.

The next study will examine the development of the banking crisis between 2010 and 2016, the restructuring of Greece’s debt in March-April 2012 and the recapitalization of the banks.

Acknowledgements 

The author would like to thank the following for reading through the text and making suggestions: Thanos Contargyris, Alexis Cukier, Marie-Laure Coulmin, Romaric Godin, Pierre Gottiniaux, Fotis Goutziomitros, Michel Husson, Nathan Legrand, Ion Papadopoulos, Anouk Renaud, Patrick Saurin, Adonis Zambelis. He also thanks Daniel Munevar, who assisted him in his research and provided a series of graphs.

The author accepts full and sole responsibility for any errors that may occur in this work.

English translation by Snake Arbusto, Vicki Briault, Mike Krolikowski and Christine Pagnoulle

Footnotes

|1| German banks also had to be bailed out with public money, but considering the size of its economy and the resources the government could call upon, Germany was less shattered than other economies.

|2| These financial flows were volatile and speculative in that they were not intended for investment in the productive system of the targeted countries but mainly for consumer credit, mortgages and financial securities.

|3| In Cyprus the crisis broke out in 2012 and led to a Memorandum of Understanding in March 2013.

|4| See http://www.cadtm.org/What-is-to-be-…

|5| Papandreou in Greece, Zapatero then Rajoy in Spain, the Irish government, as well as (of course) Merkel, Sarkozy (then Hollande), the governments of the Benelux countries…

|6| Christos Laskos & Euclid Tsakalotos, Crucible of Resistance: Greece, the Eurozone & the World Economic Crisis, Pluto Press, London, 2013, pp. 18-21.

|7| We will see farther on that due to connivance with the Eurozone authorities and successive governments, those four banks achieved control over 98% of the Greek banking market from 2014 onward.

|8| Let us remember that at about the same time in the US, speculation in the dotcom field resulted in the bursting of the Internet (or new technology) bubble from March 2000. In just two years (2000-2001), benefits the 4,300 Nasdaq companies had accumulated since 1995 ($145 billion) disappeared into thin air.

|9| Greece entered the Eurozone on 1 January 2002.

|10| Graph taken from C. Lapavitsas, A. Kaltenbrunner, G. Lambrinidis, D. Lindo, J. Meadway, J. Michell, J.P. Painceira, E. Pires, J. Powell, A. Stenfors, N. Teles: The Eurozone Between Austerity and Default, September 2010, http://www.researchonmoneyandfinanc…

|11| The same phenomenon was in evidence at the same time in Portugal, Spain, Ireland and the Central and Eastern European countries.

|12| As presented in the pie-chart, the main holders of Greek debt securities (i.e. the banks in the countries mentioned) are France, Germany, Italy, Belgium, the Netherlands, Luxembourg and the UK, while other holders are put together in “Rest of World”. The chart comes from Lapavitsas, op. cit., p. 10.

|13| From an article in the New York Times (29 April 2010): “Germany Already Carrying a Pile of Greek Debt”, http://www.nytimes.com/2010/04/29/b… accessed on 1 November 2016.

|14| In the case of Greece, Greek pension funds were highly exposed, which meant a drastic reduction of income for retired people and for the social security system when the Troika enforced a 50% haircut on Greek debt securities in 2012 (see below).

|15| Source: Yanis Varoufakis, And the Weak Suffer What They Must? Europe’s Crisis and America’s Economic Future, Nation Books, 2016, pp. 147-8.

|16| This table and the following are from: Patrick Saurin, “La ‘Crise grecque’, une crise provoquée par les banques” (The ‘Greek Crisis’ a Bank-provoked crisis), http://www.cadtm.org/La-Crise-grecq… (in French)

|17| The increase in deposits by households and businesses mainly originated not from their own savings but from money lent to them by the banks. In other words the increase in household and small-business deposits is partly a consequence of their higher level of indebtedness.

|18| ROE, Return on Equity, measures the profitability of the equity of a company. It is a ratio that compares the equity to the result.

|19| See: Patrick Saurin, “La ‘Crise grecque’, une crise provoquée par les banques (The “Greek Crisis” a Bank-provoked crisis)”, http://www.cadtm.org/La-Crise-grecq… (in French). Retrieved 3 November 2016.

|20http://www.credit-agricole.com/modu… Retrieved 3 November 2016

|21| Source: Les Grecs contre l’austérité – Il était une fois la crise de la dette (Greeks Against Austerity – Once Upon A Time There Was A Debt Crisis), collective work, Le Temps des Cerises, Paris, November 2015 (in French)

|22| See: http://www.statistics.gr/el/statist… (in French).

|23| IMF (2009) “Greece: 2009 Article IV Consultation”. IMF Country Report No. 09/244. Retrieved from https://www.imf.org/external/pubs/f…

|24| The Eurosystem, of which the European System of Central Banks (ESCB) is a part, is directed by ECB rules, regulations and decisions. To achieve the goals of the ESCB, the ECB and the national Central Banks may intervene on the capital markets, by purchasing or selling on the spot or futures markets, by holding or otherwise managing securities and negotiable bonds in European Community or non-European Community currencies and in precious metals, or they may make credit agreements with other market actors based on appropriate guarantees for credit.

It is prohibited for the ECB or national central banks to grant loans, credit or overdrafts to public institutions or bodies of the European Community, whether they be national administrations, regional or local authorities, other public authorities, other bodies or public companies of member States; it is also prohibited for the ECB or the national central banks to buy the instruments of their own debt from these same institutions. Nevertheless, since 2010-2011 through different programmes, the ECB has been massively purchasing certain such instruments from the private banks, which suits the latter very well. Since 2015, in the framework of ‘quantitative easing’ policies the ECB has again increased its purchases of sovereign debt from private banks.

|25http://www.europarl.europa.eu/RegDa…)574400_EN.pdf

|26| According to Christos Laskos and Euclide Tsakalotos, of the 879,318 companies recorded (all activities included), 844,917 or 96.1% employed between 1 and 4 individuals! Still, according to the same authors, in 2010, 58.7% of the Greek work force were employed in companies with nine or fewer employees, whereas the EU average is 41.1%. Source: Christos Laskos & Euclid Tsakalotos, Crucible of Resistance: Greece, the Eurozone & the World Economic Crisis, Pluto Press, London, 2013, p. 46.

|27| GreekReporter. (2015). “Hellenic Postbank Scandal will Cost Greek State About 500 mln Euros”. Retrieved February 1, 2016, from http://greece.greekreporter.com/201…

|28| DW. (2014). “Greek bankers embroiled in corruption scandal”. Retrieved February 1, 2016, from http://www.dw.com/en/greek-bankers-…

|29| Ekathimerini. (2015). “Minister says ATE bank scandal is biggest of its type”. Retrieved February 1, 2016, from http://www.ekathimerini.com/200923/…

|30Ibid.

|31| Reuters. (2012). “Special Report: How a Greek bank infected Cyprus”. Retrieved February 1, 2016, from http://uk.reuters.com/article/us-gr…

|32| ThePressProject. (2014). “George Provopoulos: the most powerful man in Greece a few months ago, now a suspect in a bank probe”. Retrieved February 1, 2016, from http://www.thepressproject.gr/detai…

|33Ibid.

|34Op. Cit. 17.

|35| On the Greek pension system, see: Michel Husson, “Pourquoi les réformes des retraites ne sont pas soutenables” (“Why the pension reforms are not sustainable”), published 28 November 2016, http://www.cadtm.org/Pourquoi-les-r… (in French)

|36Le Monde, “Les Grecs se disent ‘humiliés’ par les propos de Christine Lagarde” (Greeks feel ‘humiliated’ by Christine Lagarde’s statements), published 27 May 2012, http://www.lemonde.fr/europe/articl… (in French)

|37| Money Market Funds (MMF) are financial companies in the USA and Europe, subject to little or no control or regulation since they do not hold banking licences.

|38| Ultimately, under the Memorandum of May 2010, the ECB agreed to allow the Greek banks to continue depositing Greek securities (both treasury bills, with a term of less than one year, and sovereign bonds for more than one year) for credit they would then use to repay their private foreign creditors, which thus afforded the latter total protection. It should be stressed that this line of credit played a very important role. The financial press barely mentioned it.

|39| The text of this Box is drawn from the Preliminary Report of the Truth Committee on the Greek Public Debt, June 2015, Chapter 2, http://cadtm.org/Preliminary-Report…

|40| European Commission, 2010. Report On Greek Government Deficit And Debt Statistics. Available at: http://goo.gl/RxJ1eq [Accessed June 12, 2015].

|41| Greek Government, 2010. Technical Report on the Revision of Hospital Liabilities.

|42| Press Release. Ministry of Health and Social Solidarity, 2010.

|43| In March of 2010, the office in charge of official statistics, the National Statistical Service of Greece (NSSG), was renamed ELSTAT (Hellenic Statistics Authority).

|44| Among a plethora of breaches of European Law, the following violations are especially and briefly described: the criterion of the legal form and the type of state involvement; the criterion of 50%, especially the requirement of ESA95 (par. 3.47 and 3.48) about subsidies on products; this violation led to false characterization of revenue as production cost; the ESA95 (par. 6.04) about fixed capital consumption; the Regulations about Capital Injections; the ESA95 definition of government-owned trading businesses (often referred to as public corporations) as not belonging to the General Government sector; the ESA95 requirement of a long period of continuous deficits before and after the reclassification of an economic unit.

|45| According to the dominant narrative, the “bail-out of the Greeks” is financed by the taxpayers of the Eurozone or of one country or another, when in reality it is the Greek taxpayers (and more precisely, the ones at the bottom of the ladder, because proportionally it is they who pay the most taxes) who will pay for it. The taxpayers in the other countries are guarantors of part of the credits that were extended to Greece.

|46| Yanis Varoufakis, And the Weak Suffer What They Must?: Europe’s Crisis and America’s Economic Future, Nation Books, 2016

|47| Renaud Vivien, Eva Joly, “Iceland refuses its accused bankers ‘Out of Court’ settlements”, published 2 March 2016, http://www.cadtm.org/Iceland-refuse…

|48| Mayes, D. (2009). Banking crisis resolution policy – different country experiences. Central Bank of Norway. http://www.norges-bank.no/Upload/77…

|49| For more on this, see: Eric Toussaint, Bancocracy, Resistance Books, IIRE/ CADTM, 2015, chapters 8, 9 and 12. See also: Eric Toussaint, “Banks bluff in a completely legal way”, published in English on 4 July 2013, http://www.cadtm.org/Banks-bluff-in…

|50| Hellenic Republic Public Debt Bulletin, No. 56, December 2009.

|51| On 1 January 2010, before the Greek and the Eurozone crises broke out, Germany had to promise an interest rate of 3.4% on ten-year bonds while by 23 May 2012, the rate for the new issue of ten-year bonds had fallen to 1.4%.

|52| Bank of Greece, Economic Research Department – Secretariat, Statistics Department, Bulletin of Conjunctural Indicators, No. 124, October 2009. Available at www.bankofgreece.gr

|53| After the Committee had made public the most important of these confidential documents, the totality were made entirely public on line: Office memorandum – Subject: Board meeting on Greece’s request for an SBA – May 9, 2010. The verbatim: “Minutes of IMF Executive Board Meeting”, 9 May, 2010; the report and record of decisions: “Board meeting on Greece’s request for an SBA”, Office memorandum, May 10, 2010.

|54| At the time, Christine Lagarde was still Minister in France’s Sarkozy government. She became the CEO of the IMF in 2011 after Dominique Strauss-Kahn resigned.

|55http://adlib.imf.org/digital_assets… 2010/EBM/353745.PDF p.68

|56| See the Office Memorandum of the IMF direction meeting held on 10 May 2010, at the end of point 4 page 3, “The Dutch, French, and German chairs conveyed to the Board the commitments of their commercial banks to support Greece and broadly maintain their exposures.” http://gesd.free.fr/imfinter2010.pdf

|57| See in the Office Memorandum of the IMF direction meeting held on 10 May 2010, point 7 page 3, that quite clearly states that several IMF executives reproached the direction for having quietly changed the rules. http://gesd.free.fr/imfinter2010.pdf

|58| Moreover Trichet adopted exactly the same attitude towards Ireland six months later in November 2010.

|59| From “Minutes of IMF Executive Board Meeting”, May 9, 2010. See the excellent article by Michel Husson, http://www.cadtm.org/Grece-les-erre…. (Greece: the IMFs ‘Mistakes’) (in French or Spanish.)

|60| Carmen M. Reinhart and Christoph Trebesch, “The Pitfalls of External Dependence: Greece, 1829-2015”, Brookings Papers, 2015.

|61| Eric Toussaint, “Newly Independent Greece Had an Odious Debt Round Her Neck”, published in English 26 April 2016, http://www.cadtm.org/Newly-Independ… and “Greece: Continued Debt Slavery from the End of the 19th Century until the Second World War” published in English 17 May 2016, http://www.cadtm.org/Greece-Continu…

Jan 092017
 

By James Petras99GetSmart

10649679_10152450900272663_4019264144691251846_n

Introduction

The global growth and survival of ISIS, in the face of opposition by governments, armies, intelligence agencies and police forces from nearly a hundred countries, requires analysis. We understand ‘ISIS’ as the organized, militant, violent Salafist movement sometimes funded by the royal family of Saudi Arabia.

The Opposition

Those generally opposed to ISIS, in many cases, have pursued a dual and contradictory approach. For example, the United States has, at different times and places, opposed or supported ‘ISIS’.

For example, Washington supported ISIS against the pro-Soviet regime in Afghanistan; the secular nationalist government of Libya guided by Muammar Gaddafi; Moscow in Chechnya; the Baathist government of Saddam Hussein in Iraq and Bashar Assad in Syria; several Presidents of the Islamic Republic of Iran; Hezbollah in Lebanon; against the People’s Republic of China fighting Uighur terrorists in Xingjian; against the Houthi nationalists in Yemen.

At various times, and especially today, the US attacked ISIS when it moved against Washington’s allies and vassal regimes.

The US opposed ISIS attacks on its ‘clients and allies’ in Afghanistan, Saudi Arabia and the Gulf States, and when it launched terrorist attacked against the European Union, Australia and Canada. The US opposed ISIS attacks against US-backed regimes in Somalia, Libya, Tunisia and Iraq.

ISIS has also provoked armed responses from other major powers: Russia has attacked ISIS-liked terrorists in the Caucuses, Syria and in its own cities.

Iran has waged war against ISIS in Iraq, Syria, and Lebanon and within its own borders.

Turkey, Saudi Arabia and Israel, like the US, have pursued a dual approach to ISIS. On the one hand, they have financed and provided arms and medical treatment to ISIS as part of their ‘regime change’ strategy against President Assad in Syria, while waging war against ISIS when it threatened their own territorial or political ambitions in Syria.

Turkey found itself fighting ISIS when it sought to annex border regions of Syria in order to neutralize the national ambitions of the Kurds.

ISIS: A Global Power

ISIS, despite facing the world’s greatest powers and their allies, has managed to survive in a state of continuous warfare in five continents for nearly two decades. Despite lacking a single warplane or a navy, ISIS has threatened numerous regimes. ISIS attacks have forced NATO to spend tens of billions of dollars on security measures to protect its own citizens. ISIS brutality has contributed to the flood of hundreds of thousands of refugees into Europe, a major destabilizing factor for the European Union. In brief, ISIS has become a global power without a single airplane or submarine!

What Makes ISIS a Global Power?

Western analysts focus on ISIS terrorism, which is the tactical underpinnings of its power and global reach.

Terrorism is a major part of ISIS training, discipline and militant ideology. It is a system of political, economic, cultural and religious education which explains ISIS survival and expansion.

ISIS fuses a value system exalting ethno-religious supremacy with careful tactical regional alliances.

ISIS military leaders have forged alliances with an expansionist Turkey, trading oil for arms, financial resources and logistical support to further their advances in Iraq and Syria while fueling Ankara’s regional hegemonic ambitions. ISIS obtained extensive military and financial support from the Saudi monarchic dictatorship in exchange for ISIS waging terrorist wars against Riyadh’s regional rival Shia regimes.

ISIS pursued many forms of tactical alliance with the US, supporting Washington in its campaigns of ‘regime change’ in Afghanistan, Libya, Syria and Iraq, in exchange for arms, money and territory.

The tactical alliances have been transitory. In Iraq, ISIS switched from attacking Saddam Hussein to waging an unremitting terror campaign against the subsequent US vassals; from defeating Russians in Afghanistan to attacking the US and its local puppet regimes; from cooperating with the US and Turkey against President Bashar al-Assad in Damascus, to absorbing or exterminating the so-called ‘moderate’ mercenaries openly backed by Washington and Ankara.

Tactical alliances have been unstable forms of mutual manipulation. They were terminated when ISIS gained the upper hand in the initial alliances. The US counterattacked with its US-Kurdish-Iraqi Regime alliance forcing ISIS to retreat in Iraq. In Syria, the alliance among Damascus, Russia, Iran and Hezbollah decimated ISIS. In Afghanistan, the Taliban has routed ISIS.

The retreat of ISIS in the Middle East has been relative. It has retained its leadership and battle hardened cadre. ISIS expanded with a series of individual terrorist attacks in the heart of the EU, US and Turkey. ISIS has lost only portions of its financial and military supply lines and has not suffered a strategic defeat. ISIS strength resides in its ideology and the quality of its leaders and members and their political-military commitments.

ISIS ideology is based on its belief in the superiority and exceptionality of its value system. ISIS ideology is, therefore, the mirror image of Western Imperialist and Israeli beliefs, which justify military conquests over vast populations of subjugated and degraded people.

Western and Israeli elites stress the superiority of their value systems and indoctrinate true believers into committing atrocities against all ‘others’.

ISIS’s ideology is backed by its members’ deep commitment to its goals and tactics. ISIS political strength is measured by the quality and depth of its supporters’ willingness to kill and die for its strategic goals.

It is the ISIS belief system, and not any cult of the personality, that drives hundreds of ISIS fighters and activists to engage in suicide bombings aimed at strategic military or ‘soft’ civilian targets with high publicity value.

While NATO and Russian powers have superior air and maritime bombing capacity, ISIS has unrivaled human suicide bomber power. ISIS suicide bombers match the high tech bombers of the West in their capacity to terrorize peaceful civilians and create chaos.

Conclusion

ISIS has converted its former tactical alliances with the West and Turkey into strategic weapons against them. ISIS terror bombings in the West are detonated by overseas sympathizers, ‘self-radicalized’ supporters or returning fighters. Decentralized terror is derived from commitments to the centralized battlefields.

ISIS borrowed its overseas operations from the well-documented practices of Western secret services. They place bombs in airplanes and other public venues while arranging the assassination of overseas officials. While ISIS does not have the global resources and complex organizational reach of the multiple intelligence and military structures of the West, it excels with its cadre of followers willing and able to engage in suicide missions – something only a few of their Western terrorist counterparts have been willing to pursue.

The worldwide war between ISIS and the major powers is likely to continue far beyond territorial victories and losses. The only hope of defeating ISIS lies in Western civilians successfully forcing their governments, namely the US and NATO, to end their invasions, occupations and withdraw from the Middle East.

Without Western armies of occupation and detested client regimes, ISIS could no longer claim to defend national and Islamic ideology. ISIS, in essence a foreign ideology, would face popular liberation armies, which draw their strength from the people’s commitments and beliefs in their historic nations, including secular and religious defenders of democratic rights and socialist values.

James Petras is author of  The End of the Republic and the Delusion of EmpireExtractive Imperialism in the Americas: Capitalism’s New Frontier (with Henry Veltmeyer), and The Politics of Empire: The US, Israel and the Middle EastRead other articles by James, or visit James’s website.

Jan 062017
 

By James Petras99GetSmart

blackrock-is-the-biggest-investor-in-the-world-is-its-dominance-a-problem

The secret of great fortunes without apparent cause is a crime forgotten, for it was properly done.

— Honoré de Balzac, Le Père Goriot, 1835

Among the current crop of Wall Street financiers, Laurence “Larry” Fink has received the greatest number of awards and plaudits. He is the CEO and Chairman of BlackRock (BR), the world’s largest multinational investment management corporation. By 2016, BR had over $5 trillion dollars under management with over 12,000 employees in 70 offices in 30 countries serving clients in 100 countries.

Fink has dominated Wall Street. He holds more assets than his biggest established competitors, because he had the political power to direct the enormous Washington bailout of Wall Street in 2009. He helped shape Hillary Clinton’s emerging Treasury Department team and policies, anticipating her presidential victory. Under a President Hillary Clinton, Fink’s political control would have matched his global economic empire. According to the Economist, Aladdin, the BlackRock electronic subsidiary, monitors 7% of the world’s 225 trillion dollar financial assets.

In the mass media and among the economic elite, Fink is a genius, a self-made empire builder, who has succeeded because he picks the winners and dumps the losers. He is a life-long Democratic Party contributor, although he works with and through both parties and a variety of high ranking government officials and financial CEOs.

As head of the most influential financial institution in the world, with institutional investors comprising over 65% of its assets, Laurence Fink controls the economic lives of many millions of pensioners, workers, employees and managers. Having risen to the pinnacle of financial power, he wields enormous political influence in shaping fundamental economic decisions. Fink’s economic empire is well-known: the financial elite and business publications are awed by his successes.

There is another side of the Rise of Fink. He has consistently cost his employers and clients millions of dollars in losses while never losing his aura of success! His economic empire is less a result of his economic skills and competitiveness and more a result of his political connections and trillion-dollar state contracts. Fink’s most famous financial product, mortgage-based securities led to the biggest collapse in world financial markets since the Great Depression.

Larry Fink is the best example of how an investment loser can become a ‘double’ W (Wall Street – Washington) emperor. Early on Larry Fink demonstrated his flair for incompetence. During his first position with the First Boston Corporation, Fink lost $100 million by betting the wrong way on interest rates.

After a ‘gentleman’s departure’ Fink co-founded BlackRock (BR) in 1988. He proceeded to grow BR by acquiring or merging with lucrative rivals – but not by investing in factories and productive employment. In 2003 Fink merged with Merrill Lynch, doubling BR asset management. The ‘Genius’ Fink, invested $5.4 billion dollars to purchase Peter Cooper Village in Manhattan, the massive residential complex, built by Metropolitan Life in the 1940s. It was heralded as the largest real estate deal in US housing history. The project ended in default, BR clients lost their money, and the California Pension and Retirement system (CALPERS) was out $500 million dollars under Larry’s stewardship. Undaunted, BR continued to grow by merging with PNC Financial Services Group, Barclay’s Global Investors and numerous other financial specialists in speculative ‘products’.

But the big deal propelling Fink into the ‘thirteen digits’ (trillions) occurred in 2009 when newly elected Barack Obama awarded BlackRock with the Government contract to direct the ‘three-trillion dollar’ bailout of big financial companies and to manage the bankruptcy of others. Perhaps because of Fink’s deep ties with top senior officials, the contract was awarded without competitive bidding. Equally important, because of Fink’s ties with the biggest bankers, he facilitated the flow of Treasury trillions to the banks to be ‘bailed out’ while allowing other smaller banks and investment houses to go ‘belly up’ in a process dubbed ‘the cleanup after the meltdown’. BR would naturally buyout these assets at ‘fire sale’ prices. Millions and billions led to trillions on the BR ledgers. By 2010, Fink’s genius status grew and so did the number of wealthy pension funds and major institutional investors in his portfolio – despite his major losses in the recent past – (as Balzac would note, memories do not include ‘crimes properly done’).

Thus, Larry Fink became the most prominent former deadhead turned trillion-dollar speculator. Despite the influx of trillions, BR faces a new, bigger and more dangerous ‘mistaken’ decision. Fink has ploughed hundreds of billions in client funds in Exchange Traded Funds (ETF), which are likely to take a dive as they overvalue and are under pressure to deflate.

Conclusion

BlackRock has been extraordinarily profitable because of Fink’s unique political, social and ethnic ‘identity’ ties to the US Treasury Department. In May 2009, the Fink-Treasury connection resulted in BlackRock receiving the ‘contract’ to manage the cleanup of ‘toxic’ mortgage assets amounting to an astronomical trillion-dollar chunk of business. In other words, Fink’s company would analyze, unwind and assign value onto billions of dollars of assets owned by Bear Stearns, AIG, Freddie Mac, Morgan Stanley and other lucrative firms. Fink would ‘unwind’ the assets and rewind them into his mega fund; he could set prices favoring BR’s market position.

Fink’s history of mediocre market performance was no obstacle to his success because the political links more than compensated – they guaranteed a bonanza for BR.

The business press provided a veneer of technological and mathematical competence, which they cited as the basis for Fink’s/BR trillion dollar success story.

But the historic and contemporary reality of the political-economic success of the big financial houses depends on their political control over the US Treasury. Their ability to trade and get rich depends on a system of favorable state and federal rules (deregulation, taxes, etc.), which establish the necessary framework for the paper economy. This system is light years away from the ‘real’ economy of factories and stable, well-paying jobs for the citizenry.

Fink has turned BR into an empire by spending his time and energy in the politics of controlling and milking the US Treasury. Controlling this activity is more influential than the President of the United States or Pentagon in deciding who among the elite wins and who loses!

Once at the top, legions of journalists and academic courtesans will busily polish the stars in the financial firmament, covering up their failures and turning their political connections into hymns of praise for the ‘hard work and commitment’ of the self-made genius. This spectacle indeed will dazzle the eyes and judgment of lesser speculators. While the same pundits write extensively about the political leaders and lesser economic titans, the more the Larry Finks of Wall Street remain invisible to the citizenry, the greater their political control over the trillion dollar Treasury!

James Petras is author of  The End of the Republic and the Delusion of EmpireExtractive Imperialism in the Americas: Capitalism’s New Frontier (with Henry Veltmeyer), and The Politics of Empire: The US, Israel and the Middle EastRead other articles by James, or visit James’s website.

Dec 282016
 

By James Petras99GetSmart

151029092255-donald-trump-pout-full-169

Introduction

A coup has been underway to prevent President-Elect Donald Trump from taking office and fulfilling his campaign promise to improve US-Russia relations. This ‘palace coup’ is not a secret conspiracy, but an open, loud attack on the election. The coup involves important US elites, who openly intervene on many levels from the street to the current President, from sectors of the intelligence community, billionaire financiers out to the more marginal ‘leftist’ shills of the Democratic Party.

The build-up for the coup is gaining momentum, threatening to eliminate normal constitutional and democratic constraints. This essay describes the brazen, overt coup and the public operatives, mostly members of the outgoing Obama regime.

The second section describes the Trump’s cabinet appointments and the political measures that the President-Elect has adopted to counter the coup. We conclude with an evaluation of the potential political consequences of the attempted coup and Trump’s moves to defend his electoral victory and legitimacy.

The Coup as ‘Process’

In the past few years Latin America has experienced several examples of the seizure of Presidential power by unconstitutional means, which may help illustrate some of the current moves underway in Washington. These are especially interesting since the Obama Administration served as the ‘midwife’ for these ‘regime changes’.

Brazil, Paraguay, Honduras and Haiti experienced coups, in which the elected Presidents were ousted through a series of political interventions orchestrated by economic elites and their political allies in Congress and the Judiciary.

President Obama and Secretary of State Clinton were deeply involved in these operations as part of their established foreign policy of ‘regime change’. Indeed, the ‘success’ of the Latin American coups has encouraged sectors of the US elite to attempt to prevent President-elect Trump from taking office in January.

While similarities abound, the on-going coup against Trump in the United States occurs within a very different power configuration of proponents and antagonists.

Firstly, this coup is not against a standing President, but targets an elected president set to take office on January 20, 2017. Secondly, the attempted coup has polarized leading sectors of the political and economic elite. It even exposes a seamy rivalry within the intelligence-security apparatus, with the political appointees heading the CIA involved in the coup and the FBI supporting the incoming President Trump and the constitutional process. Thirdly, the evolving coup is a sequential process, which will build momentum and then escalate very rapidly.

Coup-makers depend on the ‘Big Lie’ as their point of departure – accusing President-Elect Trump of 1) being a Kremlin stooge, attributing his electoral victory to Russian intervention against his Democratic Party opponent, Hillary Clinton and 2) blatant voter fraud in which the Republican Party prevented minority voters from casting their ballot for Secretary Clinton.

The first operatives to emerge in the early stages of the coup included the marginal-left Green Party Presidential candidate Dr. Jill Stein, who won less than 1% of the vote, as well as the mass media.

In the wake of her resounding defeat, Candidate Stein usurped authority from the national Green Party and rapidly raked in $8 million dollars in donations from Democratic Party operatives and George Soros-linked NGOs (many times the amount raised during her Presidential campaign). This dodgy money financed her demand for ballot recounts in selective states in order to challenge Trump’s victory. The recounts failed to change the outcome, but it was a ‘first shot across the bow’, to stop Trump. It became a propaganda focus for the neo-conservative mass media to mobilize several thousand Clintonite and liberal activists.

The purpose was to undermine the legitimacy of Trump’s electoral victory. However, Jill Stein’s $8 million dollar shilling for Secretary Clinton paled before the oncoming avalanche of mass media and NGO propaganda against Trump. Their main claim was that anonymous ‘Russian hackers’ and not the American voters had decided the US Presidential election of November 2016!

The Big Lie was repeated and embellished at every opportunity by the print and broadcast media. The ‘experts’ were trotted out voicing vitriolic accusations, but they never presented any facts and documentation of a ‘rigged election’. Everyday, every hour, the ‘Russian Plot’ was breathlessly described in the Washington Post, the New York Times, the Financial Times, CBS, NBC, ABC, CNN, BBC, NPR and their overseas followers in Europe, Asia, Latin America, Oceania and Africa. The great American Empire looked increasingly like a ‘banana republic’.

Like the billionaire Soros-funded Color Revolutions, from Ukraine, to Georgia and Yugoslavia, the ‘Rainbow Revolt’ against Trump, featured grass-roots NGO activists and ‘serious leftists’, like Jill Stein.

The more polished political operatives from the upscale media used their editorial pages to question Trump’s illegitimacy. This established the ground work for even higher level political intervention: The current US Administration, including President Obama, members of the US Congress from both parties, and current and former heads of the CIA jumped into the fray. As the vote recount ploy flopped, they all decided that ‘Vladimir Putin swung the US election!’ It wasn’t just lunatic neo-conservative warmongers who sought to oust Trump and impose Hillary Clinton on the American people, liberals and social democrats were screaming ‘Russian Plot!’ They demanded a formal Congressional investigation of the ‘Russian cyber hacking’ of Hillary’s personal e-mails (where she plotted to cheat her rival ‘Bernie Sanders’ in the primaries). They demanded even tighter economic sanctions against Russia and increased military provocations. The outgoing Democratic Senator and Minority Leader ‘Harry’ Reid wildly accused the FBI of acting as ‘Russian agents’ and hinted at a purge.

The coup intensified as Trump-Putin became synonymous for “betrayal” and “election fraud”.

As this approached a crescendo of media hysteria, President Barack Obama stepped in and called on the CIA to seize domestic control of the investigation of Russian manipulation of the US election – essentially accusing President-Elect Trump of conspiring with the Russian government. Obama refused to reveal any proof of such a broad plot, citing ‘national security’.

President Obama solemnly declared the Trump-Putin conspiracy was a grave threat to American democracy and Western security and freedom. He darkly promised to retaliate against Russia, “…at a time and place of our choosing”.

Obama also pledged to send more US troops to the Middle East and increase arms shipments to the jihadi terrorists in Syria, as well as the Gulf State and Saudi ‘allies’. Coincidentally, the Syrian Government and their Russian allies were poised to drive the US-backed terrorists out of Aleppo – and defeat Obama’s campaign of ‘regime change’ in Syria.

Trump Strikes Back: The Wall Street-Military Alliance

Meanwhile, President-Elect Donald Trump did not crumple under the Clintonite-coup in progress. He prepared a diverse counter-attack to defend his election, relying on elite allies and mass supporters.

Trump denounced the political elements in the CIA, pointing out their previous role in manufacturing the justifications (he used the term ‘lies’) for the invasion of Iraq in 2003. He appointed three retired generals to key Defense and Security positions – indicating a power struggle between the highly politicized CIA and the military. Active and retired members of the US Armed Forces have been key Trump supporters. He announced that he would bring his own security teams and integrate them with the Presidential Secret Service during his administration.

Although Clinton-Obama had the major mass media and a sector of the financial elite who supported the coup, Trump countered by appointing several key Wall Street and corporate billionaires into his cabinet who had their own allied business associations.

One propaganda line for the coup, which relied on certain Zionist organizations and leaders (ADL, George Soros et al), was the bizarre claim that Trump and his supporters were ‘anti-Semites’. This was were countered by Trump’s appointment of powerful Wall Street Zionists like Steven Mnuchin as Treasury Secretary and Gary Cohn (both of Goldman Sachs) to head the National Economic Council. Faced with the Obama-CIA plot to paint Trump as a Russian agent for Vladimir Putin, the President-Elect named security hardliners including past and present military leaders and FBI officials, to key security and intelligence positions.

The Coup: Can it succeed?

In early December, President Obama issued an order for the CIA to ‘complete its investigation’ on the Russian plot and manipulation of the US Presidential election in six weeks – right up to the very day of Trump’s inauguration on January 20, 2017! A concoction of pre-cooked ‘findings’ is already oozing out of secret clandestine CIA archives with the President’s approval. Obama’s last-ditch effort will not change the outcome of the election. Clearly this is designed to poison the diplomatic well and present Trump’s incoming administration as dangerous. Trump’s promise to improve relations with Russia will face enormous resistance in this frothy, breathless hysteria of Russophobia.

Ultimately, President Obama is desperate to secure his legacy, which has consisted of disastrous and criminal imperial wars and military confrontations. He wants to force a continuation of his grotesque policies onto the incoming Trump Administration. Will Trump succumb? The legitimacy of his election and his freedom to make policy will depend on overcoming the Clinton-Obama-neo-con-leftist coup with his own bloc of US military and the powerful Wall Street allies, as well as his mass support among the ‘angry’ American electorate. Trump’s success at thwarting the current ‘Russian ploy’ requires his forming counter alliances with Washington plutocrats, many of whom will oppose any diplomatic agreement with Putin. Trump’s appointment of hardline economic plutocrats who are deeply committed to shredding social programs (public education, Medicare, Social Security) could ignite the anger of his mass supporters by savaging their jobs, health care, pensions and their children’s future.

If Trump defeats the avalanching media, CIA and elite-instigated coup (which interestingly lack support from the military and judiciary), he will have to thank, not only his generals and billionaire-buddies, but also his downwardly mobile mass supporters (Hillary Clinton’s detested ‘basket of deplorables’). He embarked on a major series of ‘victory tours’ around the country to thank his supporters among the military, workers, women and small business people and call on them to defend his election to the presidency. He will have to fulfill some of his promises to the masses or face ‘the real fire’, not from Clintonite shills and war-mongers, but from the very people who voted for him.

James Petras is author of  The End of the Republic and the Delusion of EmpireExtractive Imperialism in the Americas: Capitalism’s New Frontier (with Henry Veltmeyer), and The Politics of Empire: The US, Israel and the Middle EastRead other articles by James, or visit James’s website.

Dec 212016
 

By James Petras, 99GetSmart

Introduction

There are deep flaws in the blogs, media reports, and official statements, which purport to describe world historic events and changes.

These so-called ‘up-to-date’ reports of major world events undergo repeated revisions in hours, days or weeks as the story is being ‘played out’. What might start out as a ‘scoop’ for the upwardly mobile journalist is transformed into a by-word for a ‘critical blogger’ rewriting mainstream reports by simply substituting negatives for pluses (or vice versa).

‘Immediacy’ trumps historical context and structural understanding. Protagonist or antagonists of the moment are demonized, slandered and scandalized, or lauded, praised and iconized.

The practice of deep falsification involves magnifying transient trivia and glossing over world-historic change. The false prophets substitute superficiality for deep understanding.

Soon after proclaiming a ‘major systemic transformation’, which fail to occur, a series of modifications or reversals take over, and the initial ‘great prophesy’ is forgotten – as if the readers of news were afflicted with an epidemic of dementia.

Most political parties, left, right and center, have their own unchanging warped world view to frame everyday minutiae.

For example, on the Left, it is the ‘imminent collapse of capitalism’ or the ‘perpetual stagnation of the capitalist state’, ‘the collapse of democracy’ or ‘the emergence of fascism’. In the absence of any real empirical or historical findings to support their hypotheses, they add escape clauses about ‘tendencies’.

The Center has its own historic narrative, which includes ‘threats from the Left and Right’, and the ‘dangers posed by populists to democratic values’. They cite the overwhelming responsibility to ‘defend Western values’ everywhere, from threats, past, present and future … and especially from independent nations, like Russia, China, Venezuela, Iran and other ‘emerging’ powers, as a pretext to escalate militarism and to bolster support for  vassal states.

The Center repeatedly point to the ‘resilience of Western liberal democratic institutions’ even as police state edicts are dictated to counter dissenting voices, while false prophets predict that China’s robust economy is on the verge of collapse; that democratic Russia is an unstable autocracy; and that the Ukraine is an emerging democracy – while its ‘Right Sector’ and ‘Azov Battalions’ runs amok amidst a kleptocratic, neo-fascist regime

The Right frames its world-historic ideology by stressing the need to (1) revive the Cold War to counter the US global decline; (2) confront the world-wide wave of ‘populism’ threatening ‘liberal’ democracies; (3) portray Brexit as a sign of the European Union’s collapse; (4) equate Trump’s victory with the rise of fascism in the US; (5) emphasize the ascent of bigotry, racism and anti-Semitism, based on the result of a single election; (6) denounce Leftists ‘conspiracy’ writers who ‘falsely’ blame rising class inequalities to free-market monopolies; and (7) explain that  cuts in social expenditures, tax cuts to big capital, increased work hours and decreased pensions are ultimately rewarding the masses.

These mega-narratives lead ‘prophetic academics’ to insist on their infallible insight into the future direction of the world economy, global politics and class relations.

False prophets maintain a veneer of authenticity, by presenting the future in unspecified, ambiguous, general and distant terms, to allow for any or all outcomes – like professional fortune tellers.

Academic and media prophets are enveloped in a mystique of expertise, which allows them to rehash yesterday’s news as deep strategic insights.

False Prophets: Trump

Contrary to the wailings of the Right, Center and Left, Donald Trump is not a fascist, or a nationalist or a populist. An objective assessment of his most recent policies and cabinet appointments show that he is a free-market politician with a propensity to appoint militarists to security positions.

Trump’s populist demagogy most closely resembles President Obama – although the appeal is to a different audience. Trump speaks to impoverished, displaced, skilled workers in the rust belt with campaign promises of a renaissance in manufacturing, upscale suburbanites, and downwardly mobile working women, while appointing billionaire bankers and global business executives to run the economy and set policy. Obama appealed to poor minorities, middle class urbanites and the same business elite.

Like Obama, Trump is an imperialist committed to protecting and projecting US global power. He differs from Obama in emphasis. Obama and his predecessors pursued a primarily military-driven imperialism while Trump will shift the emphasis to economic imperialism.

Trump’s ‘double discourse’, of talking to the masses during the campaign while working for the elite once in office, reflects a long-standing American Presidential tradition.

Editorial writers’ descriptions of Donald Trump lack historical and empirical depth.

Powerful systemic constraints define the rate and scope of any long-term, large-scale changes that Trump might propose. Trump can only introduce minor incremental changes in the behavior of the biggest banks and five hundred most powerful global multi-nationals. Trump might re-negotiate around the edges of some bilateral trade agreements, but he cannot convert the US into a closed self-sufficient economy.

Contrary to the ‘end of the world’ hysteria, promoted by the mass media, Trump has never made any pact with white racists and anti-Semites. There are no major Jewish organizations currently engaged in a struggle against Trump’s ‘fascist hordes’. The KKK is not preparing to burn Goldman Sachs. Since Trump’s election the stock market has jump over a thousand points. Like all of his predecessors from both parties, Trump appointed prominent Jews to key economic and policy positions, including Treasury Secretary. Many editorialists, who rely on selected excerpts of campaign rhetoric and gossip, have presented an unrealistic picture of the trajectory of the US state and economy.

False Prophets: China

The US prophets and self-described ‘experts’ describe China in inflated terms of either its impending doom or its relentless drive toward world supremacy. They rely on the minutiae of the moment or distorted extrapolations, uncertainties and contingent systemic changes. Rigorous analytical accounts are in short supply.

China, according to the free-market financial prophets of doom, suffers from a declining growth rate, shrinking work force, massive capital flight, deep-seated corruption and an impending intra-elite war. According to the prophets of doom, this sets the stage for an economic collapse and a military confrontation with the US empire.

Many of these pronouncements are easily dismissed. For the last 30 years, China’s economy has exceeded 6% and it is steadily developing its high technological work force and scientific innovations. China’s emphasis is on diversifying its production and consumption to domestic and overseas markets. The challenge of its aging work force is met by the increasing development of robotics and computerized productive systems.

China has applied capital controls and limits on capital flight. The national campaign against corruption and real estate speculation in real estate has led to the arrest of over 200,000 officials and executives for fraud, bribery and money laundering via overseas banks.

In other words, the false prophets, parading about as ‘China experts’, have consistently made nonsensical predictions of doom and collapse. Faced with factual refutations, they merely repeat and recycle their prophecies by projecting longer time frames, up to infinity, for the coming of the inevitable catastrophe.

On the other hand, some progressive writers peddle prophesies of China’s endless progress predicting its inevitable emergence as a supreme global power. They convert China’s 30-year pattern of economic growth into a formula guaranteeing ‘harmonious development’, which they claim is based on China’s correct handling of emerging challenges and contradictions. Their predictions of stable future growth assume ever-expanding markets while ignoring the threat of military confrontations with rival imperial powers.

China’s prophets of global power ignore contingencies: Skilled and innovative workers, who are necessary for economic growth, have their own vision of the social structure in which they play a leading role in advancing society.

While robots can substitute for human labor power, it is worker knowledge and initiative that design, produce and adjust the robotic manufacturing system.

Harmony, free markets and mutually beneficial trade alliances are relations that are always changing; only interests remain constant. As China moves from investing in commodities to manufacturing and technology, customers can turn into competitors.

As China emerges as a global power, the outflow of capital and arms and technology increases, and the risks of global rivalry and domestic instability, challenging the Chinese ruling class likewise increase.

Prophecies or predictions depend on (1) the stability of incremental changes in the structure of power; (2) the uncertainty of elite outcomes in world markets and (3) the volatility of domestic class relations.

False Prophets: Latin America

Latin America is almost universally regarded as unstable – a region, where revolutions and counter-revolutions alternate, and electoral regimes rise and fall among neo-liberal, populist and nationalist leaders.

The long-term reality is actually quite different. Latin America has been one of global capitalism’s most stable regions. With few exceptions, property-ownership has remained stable for decades, with entrenched oligarchical elite families enjoying wealth, multiple-luxury properties throughout the world and their own perpetuation.

Electoral regimes may frequently change but the underlying state structures endure for decades. Bureaucratic, military and financial institutions set the margins of change. Neo-liberal, post-neo-liberal and anti-neo-liberal policies come and go, but large-scale mining, export agricultural and banking structures ultimately set the conditions for the growth of economies and demise of governments.

There is a tendency for some academic prophets and writers to use metaphors from astronomy and geology to divide the world. They describe a ‘world-system’ composed of ‘a core, a semi-periphery and a periphery’. Adding and subtracting, multiplying and dividing quantities of productive resources, the false prophets solemnly predict how the entire world system will function ‘ad infinitum’.

While data, derived from observations in space, provide scientists with insights into the movements of distant galaxies and the fate of planets, extrapolation to socio-economic and political ‘bodies’ is risky.

On the real planet Earth, the so-called ‘periphery’ of the ‘world system’ subsumes countries, economies, social structures, states and inter-state relations with entirely distinct composition, behavior and histories. Cuba, a ‘peripheral state’, differs in every respect from Haiti, Guatemala and scores of other likewise categorized nations. And among the ‘core’ countries, the US invades, occupies and plunders dozens of countries every decade, while China engages in ‘trade’. Iran, among the ‘semi-peripherals’, has not invaded any neighbor for two centuries, while Israel, a fellow ‘semi-peripheral’, has ravaged a dozen countries in the past 50 years.

False Prophets: Russia

Western prophets on the right and left predicted that the break-up of the USSR would augur a period of harmony, democracy and widespread prosperity. The true believers claimed ‘anything was better than Stalinism’ while ignoring the fact that Stalin was dead for a half-century.

Soviet President Mikhail Gorbachev oversaw the transformation of the USSR’s allied nations into pillaged satellites of the Western imperial powers. He blindly accepted US Presidents Bush and Ronald Reagan’s promises that the US would not expand NATO and would not transform the newly emerging post-Soviet nations into military bases. What emerged was a crippled and encircled Russia, which had been converted into a Beggar-State of oligarchs and swindlers who seized over a trillion dollars of public property, wealth, land and resources in less than ten years. Gangsters murdered their way into public office through US-manipulated sham elections, celebrated by the Western press. Living standards for millions of post-Soviet citizens collapsed, resulting in the greatest decline of life expectancy, health, culture, science and education in peacetime history.

Contrary to the predictions of Western prophets Russia rebuilt its state and economy. The new political leadership, headed by Vladimir Putin, replaced the dipsomaniac puppet President and mobsters favored by Washington. Living and health standards have vastly improved; production, agriculture, exports, national security, science and culture have recovered.

The angry  false prophets, then promoted a new pseudo-scientific assertion that the re-emergence of the Russian state and its recovering economy led inexorably to autocratic rule by a former KGB official, who violated ‘Western values’ by…. jailing swindler billionaires and self-made oil mobsters and re-appropriating vital national assets.

Western editorialists ceaselessly denounce the popularly elected President Putin for his crime … of refuting the bankruptcy of their prophecies.

Despite reams of reports by the ‘experts’, despite their wide circulation in the mass media and their citations by top Western officials, the Russian state and economy, just like the Chinese, are not on the verge of collapse nor are they declining or facing popular revolts.

False Prophets: The Left

The shallow, self-serving Left prophets of progressive governments in Latin America, as well as admirers of Putin’s Russia and Xi Jinping’s China, fail to recognize the structural, historical and class constraints that determine and limit policies.

First and foremost, they fail to recognize the socio-economic continuities within these states. In all three regions, elites and oligarchs continue to control the commanding heights of the economies, despite occasional expropriations and sporadic reforms.

Secondly, even the most ‘progressive’ regimes rely on Western markets and investors limiting their long-term growth.

Thirdly, the long-term dependence on extractive exports, global demand and fragile mono-culture economies weakens the long-term stability of Russia and Latin America.

The absence of a socialist democratic alternative to the brutal capitalist restoration in China undermines the optimistic perspective of progressive prophets.

Conclusion

The debate among experts, regarding the rise or decline of the Imperial West or the progressive forces in China, Russia and Latin America, fails to consider their ‘hidden resources and liabilities’. These include the untapped scientific discoveries, the failure to develop alternative resources and innovations, as well as the ongoing repression of skilled workers. The Western prophets underestimate how the reliance on the paper economy has squandered immense social and productive value.

The ongoing cultural deformations, perversions and falsifications of information and analysis at the behest of established power centers, has clouded any real understanding of everyday life and greatly reduced our chances for a future without barbaric wars and social exploitation.

Culture is an everyday phenomenon determining how economies and states, rulers and ruled see the world, exercise power or are forced to submit.

We have witnessed the spread of cultural squalor into language and life, with only an occasional respite, when people overcome their everyday stupor and create a momentary burst of creative political, economic, social and cultural energy, which can lead to transformations.

Humdrum incremental changes, left and right, and the reality of continuities, limit and ultimately reverse social reforms and corrupt language to serve the ruling powers. We must move forward against the flatulence of everyday life by rejecting the false prophets and by writing, speaking and acting against crackpot sages. Our progress toward a new order must be firmly rooted in our everyday struggles writ large.

Dec 192016
 

By Michael Nevradakis, 99GetSmart

Originally published at MintPressNews:

Russian President Vladimir Putin meets with then-Secretary of State Hillary Clinton in Vladivostok, Russia in 2012.

Russian President Vladimir Putin meets with then-Secretary of State Hillary Clinton in Vladivostok, Russia in 2012.

‘That’s not a democracy, when three two-bit punk judges who don’t amount to anything overrule the majority vote of the British people! … There are not any democracies in the West,’ Roberts tells Michael Nevradakis in this wide-ranging interview.

ATHENS, Greece — The post-election climate in the United States has been nothing short of bizarre. Recount efforts in several states are being championed by Green Party candidate Jill Stein, accusations have repeatedly been made that the “Russian menace” influenced the presidential elections and the victory of Donald Trump, and that Russia is also behind an online disinformation campaign which the mainstream media describes as “fake news.”

One of the websites accused of delivering “fake news” is that of former assistant secretary of the U.S. Treasury under President Ronald Reagan, Paul Craig Roberts. An author and analyst and former Wall Street Journal editor, Roberts has become a vocal critic of neoliberalism, austerity, and those who seek confrontation with Russia and China.

In this interview, originally aired on Dec. 8 on Dialogos Radio, Roberts discusses Trump’s electoral victory and Hillary Clinton’s defeat, what interests may be behind the electoral recount efforts, the “Brexit” vote and recent Italian referendum result, and the conflict in Syria. He also shares his reaction to the accusations of delivering “fake news.”

MintPress News (MPN): Why did Donald Trump win the election, and what does a Trump presidency mean for the United States and for the world?

Paul Craig Roberts (PCR): We don’t know yet what it will mean. We know what we hope it will mean. Trump won because he spoke directly to the people in a way that they haven’t experienced in my lifetime. He told them that the ruling oligarchy did not and would not have their interests in mind, that they had been sold out with the oligarchy moving their jobs offshore to where labor is cheaper while still expecting from the unemployed American workforce to buy the products that are brought in from China and Indonesia and India and elsewhere. This resonated with people, as they have been experiencing this now for roughly a quarter of a century. There’s been no growth in real median family income in decades. Young people can’t find jobs to support an independent existence. The value of a university education is collapsing because there is no employment for that type of an education, and people realize that the economic policy of the country has been captured by the oligarchs and serves only a very few interests. The consequence has been a massive change in the distribution of income inside the United States. The United States now has one of the worst income distributions in the world. In fact, it’s worse than income distributions in many Third World gangster states.

[Trump] spoke directly to these things. He also said that he would not see the point of conflict with Russia, which no one sees in an era of thermonuclear weapons, and he also said that he didn’t understand the function of NATO, 25 years after the Soviet collapse. This also resonated with the public, because they understand that all of these supposed threats are bleeding them in order to put hundreds of billions of dollars into armaments industries. That’s the reason why he won the election, and the reason we are hopeful is that we assume he is sincere about this. We assume he’s sincere because of the fierce opposition he has from the ruling oligarchy and from their media “presstitutes,” who did anything they could to demonize Trump, to turn him into a “Putin agent,” and so forth. But the public ignored them, or at least enough of the public ignored them for Trump to carry almost all of the states except for a few really large cities on the coast.

MPN: Do you believe President-elect Trump will keep his campaign promises, and what do you make of his Cabinet selections thus far?

PCR: We don’t know if he will be able to. The oligarchy’s candidate, Hillary Clinton, lost, so the oligarchy lost the election, but they did not lose it by such a great margin that they’ve given up. They’re still in the fight, they’re still there. Trump has a billion dollars but they have trillions. They’re well-established. They have many, many servants and think tanks and university faculty and the media [on their side], and of course, the neoconservatives, who have dominated American foreign policy since the Clinton regime. So they’re still there, and Trump is in combat with these people.

Trump’s appointments, we don’t know whether they will support what he wants to do or not. If they support him, they are the type of people he needs. They are well-to-do, they’re self-confident, they don’t need money from the oligarchs, they don’t have to worry about their careers when they leave government. So he does have the kind of person you’ve got to have if you’re president, to bring about any change. So the real question is, will they support him or will they go with the oligarchs? We don’t know. We’ll have to wait and see what happens. We can’t judge them based on their past associations. I don’t think any of them are actual representatives of an oligarch’s agenda. So there’s a chance they will support him and that they will be strong enough people that he’ll have the government that will actually do something. But you can’t take it for granted, because as I said, the oligarchs lost but they weren’t routed. They’re still there.

MPN: What would a Hillary Clinton victory have meant for the United States and the world, particularly in terms of foreign policy?

PCR: It would have meant war with Russia and China and the end of life on Earth. She’s an insane warmonger, she demonizes Russia and the president of Russia, calling him the “new Hitler.” She said that the South China Sea is an area of the United States’ national interest. You can’t be more provocative than this, and if you have a president who convinces Russia and China that they’re going to be attacked, they’re not going to sit there and wait. So we really have escaped Armageddon by the defeat of Hillary Clinton. This would have been the worst possible outcome imaginable. Of course, it would have been bad on the other score — jobs, I mean, she’s the agent of the big banks, they made her rich! She and her husband have a personal fortune of $120 million, given to them by the oligarchs, and their foundation has $1.6 billion, also given to them but not just by domestic oligarchs, but by oligarchs abroad. [The Clintons] sold influence for money.

MPN: What is your reaction to the recount effort being led by Jill Stein? Who do you believe is behind all of these efforts?

PCR: The oligarchs, obviously. I mean, Jill Stein couldn’t get any funding for her presidential campaign, but she instantly got something like five or six or seven times the amount of funding she got for her entire campaign, for the recount! Where did that money come from? Not her supporters. And what this is about … the oligarchs were positioned to steal the election for Hillary. But they got deceived by their own propaganda, that she was the shoo-in winner, The New York Times telling them that it was 94 percent certain that she would be elected. They didn’t bother to steal the election, because they didn’t think they needed to. And they were shocked, everyone was shocked — that is, not the people voting for him, but the media, the oligarchs, the established interests. They were shocked by the election results, and so they’ve used Jill Stein, who really has no standing in this issue, since it doesn’t involve her campaign, she has no chance of benefiting from a vote recount. So they’re using this corrupt woman, who sold out the Green Party, to try and throw a monkey wrench into the Electoral College. The only states being recounted are the three that he won which he wasn’t expected to win [Michigan, Pennsylvania and Wisconsin], and his margin in these three states is not very great. They’re not recounting votes in states that he lost by small margins, only where he won by small margins. This is an effort to steal the election from the working class who elected him, and Jill Stein is part of it.

MPN: One of the reactions of the mainstream media has been to attack online news outlets which they claim are delivering so-called “fake news.” Your website was included on this list of alleged “fake news sites.” What’s your response to these claims, and who do you believe are the true purveyors of fake news?

PCR: We know the true purveyors are the media, the press prostitutes. We call them “presstitutes.” The mainstream media throughout the West is totally corrupt and has no integrity. What you see happening is that the independent internet media is taking away the oligarchy’s control over the explanations that people receive. So everywhere you see the subscription rates of newspapers falling dramatically, the viewers of TV programs falling dramatically, and internet readership rising. And so this is an effort to try to discredit the people who actually tell the truth by identifying them with Russia. They are hoping that all the demonization of Russia during Obama’s second term has aroused fears that the “Russian menace” is back, and they’re hoping this fear is substantial and that by associating those of us who challenge their lies, with Russia, they will discredit us.

Who’s funding it? We don’t know, because the people who prepared this list, no one knows who they are. When the Washington Post gave it [the group PropOrNot] all that publicity, they very carefully did not say who these people are. It is a new internet site that didn’t exist before a couple of months ago. Who is funding it? I would say the National Endowment for Democracy, which is a U.S. State Department-funded [organization]. It could be the CIA. It could be George Soros. But it is an oligarch operation, which, of course, involves the military-security complex, because they are the greatest beneficiaries, in terms of money and power, of all the threats, all the wars. They want a Russian threat, for their budgets and for their police state powers. Those are the people who are most likely funding it, but it hasn’t worked! All it did was to provide people with 200 sites they could go to, to find out what the truth is!

I think it’s failed, but it shows the desperation of the oligarchs, and what they will do now is, they will use the people they still control, in the House and the Senate — the oligarchs will get some type of legislation passed that will put pressure on people who dissent from official lines of the oligarchy, that dissent from stories they plant in the “presstitute” media. And so it’s going to be perhaps harder to express dissent or tell the truth in the United States, but we’ll just have to see what they do to Trump. Some people say that he was always a fake, but that doesn’t make sense to me because the oligarchs didn’t need him when they had Hillary. And they clearly didn’t want Trump in the election. They tried to deny him the Republican nomination, and then they used the media against him in very vicious ways during the presidential campaign. Trump said once that he believes in revenge, and I hope he does. I hope he exacts revenge on the oligarchs.

MPN: What has been the aftermath of the Brexit vote for Britain, and have the doom-and-gloom scenarios regarding the impact on the British economy come to fruition?

PCR: No, of course not. The opposite! What’s happened with Brexit is, I think it’s been overturned. The United States is not going to permit Brexit, Washington won’t permit it. Now, this may change with Trump, but under Obama, you may remember he traveled to London to tell the British prime minister to forget all about leaving the EU. The EU is a creation of the CIA. It was created so that the United States could more easily maintain control of Europe. It’s easier to control the EU Commission than to control 20-something different governments. What has happened is, the United States government used three corrupt British judges that decided, “Well, the people may have voted, but you did not really have to pay attention to them, it’s all up to Parliament and Parliament can decide that we’re not [leaving].” And, of course, Washington is now lobbying the Parliament very hard, with promises and money and, no doubt, threats.

So I don’t think Brexit will happen, it’s being overturned. The notion that it would take two years to get out — when that came out, instantly I said, “They’ll never get out.” Two years is all Washington needs to overturn it. I think it’s already overturned with that court ruling. So we had three two-bit punk judges overruling the majority vote of the British people, and they call it democracy! What kind of democracy is it? That’s not a democracy, when three two-bit punk judges who don’t amount to anything overrule the majority vote of the British people! And they call it democracy, oh boy! What a joke! There are not any democracies in the West. Europe is a collection of American vassals. It’s been that way since World War II.

MPN: Italian voters recently voted no in a referendum on amendments to the nation’s constitution. What does this vote, in your estimation, mean for Italy and for Europe?

PCR: It’ll end up being overturned, like the Brexit vote. Just like they are trying to overturn Trump’s election! I mean, that’s what this vote recount is about. It’s the oligarchy trying to overturn the people’s will, just like the three judges in Britain, like what happened in Greece [in the July 2015 referendum]. The vote, in itself, doesn’t mean it’s going to happen. Brexit hasn’t happened, I don’t think it ever will. We don’t even know if Trump is going to be president. But that’s the whole purpose of the vote recount, to block it. They wouldn’t be doing it otherwise. They’ve got all kinds of agents to use, all kinds of things to do.

One of our best journalists, Chris Hedges, who has had to go independent because the prostitute media no longer will publish his work … he’s concluded that elections can’t change anything, only revolution can change things. I think that’s what the oligarchy is proving. They are proving that you can’t change things with elections, because it’s really not a democracy, it’s a facade, and when the people vote, in come the oligarchs and they overturn it one way or the other. How will they overturn the vote in Italy? I don’t know, but they’ll overturn it, or they’ll ignore it, or some judge will rule that Italian law is subject to EU law, that EU law is supreme. They can do all kinds of things.

MPN: Do you believe that we are heading toward that revolution that Chris Hedges spoke of?

PCR: I don’t know. It depends on the people. They don’t seem to be nearly as feisty as they used to be. In previous times in the United States, when we reached this kind of situation, the government was scared of the people and had to make concessions. I don’t see the government afraid of the people today. They’ve got a police state established, they’ve got internment camps built, they’ve militarized the police, the police are as well armed as the military, the police routinely shoot people down the streets. I just don’t know how hard the people have to be pressed. Maybe they just simply will cease to have any gain in their living standards and some slight declines over time but won’t actually be facing starvation and homelessness, as they have in the past. So who knows? I don’t know. But I don’t think they will succeed in changing anything with elections. Possibly, Trump being the kind of very strong-willed, determined, ego-type person that he is, that’s the kind of person you need for a leader if things are going to be changed. You can’t have some conciliatory, shrinking violet who wants to get along with everybody. You can’t get change out of that.

It could well be that Trump is already rich, he doesn’t need any more money, he has a big ego, and he wants to go down in history as the man who saved America, “Trump the Great.” So if he has that kind of a goal, then the oligarchs are up against a real formidable president. If he can find other people to back him, we can get some change. But it remains to be seen. We can’t know that in advance. That’s the hope. What the result is, we don’t know, but that’s the hope. The hope is … Trump has a huge ego, wants to be “Trump the Great,” wants to save America, and that that’s more important than having a few more billion dollars, that he doesn’t care about all these people, these oligarchs, they haven’t supported him. So maybe something will happen, we’ll just have to see. Maybe they’ll prove Chris Hedges wrong. But it’s hard to bet one way or another.

MPN: What’s your take on recent developments in Syria, including the attempted invasion of Syria by Turkish troops, and what do you believe we’ll see in Syria going forward in light of a Trump presidency?

PCR: As far as I can tell, the Russians and Syrians have won that war. They’ve defeated the Washington-supported ISIS. The Obama regime sent ISIS to Syria to overthrow [Syrian President Bashar] Assad when the Russians prevented our involvement. So that way we can pretend we don’t have anything to do with it. But I think the Russians, as I said, defeated ISIS. I think it could have happened much sooner, but [Russian President Vladimir] Putin kept pulling out, kept trying to appease the Europeans, hoping they would see they didn’t need to be American puppet states, but he seems now to have finished the job, more or less. I don’t think the Turks would be permitted to invade Syria, the Russians would just tell them no. And, I don’t think the Turks think they are a match for Russia or that the Turks are stupid enough to think Europe and the United States are going to come to their aid if they get in a war with Russia.

These nuclear weapons are very, very powerful. Russia can wipe out all of Europe in a few minutes. For these itty-bitty European politicians to be running around fomenting trouble with Russia, they’ve got to be insane. There’s no way Europe can come out of this. The same with the United States. Here we are demonizing Russia and China. These are powerful nuclear powers. We can’t possibly survive a conflict with them, no one can. It’s all insanity, it’s nonsense. Europe is unable to produce leadership that’s intelligent. Putin, he’s intelligent. For some reason the Chinese can produce intelligent leadership. Who in Europe has intelligent leadership? Nobody. Maybe we finally have it with Trump, we don’t know yet. But there’s not any intelligent leadership, none in Europe.

Dec 152016
 

By 99GetSmart

Emek Movie Theatre (Photo: Nazım Serhat Fırat)

Emek Movie Theatre (Photo: Nazım Serhat Fırat)

The 8th edition of Istanbul’s Which Human Rights Film Festival (WHRFF) was launched on December 9th, on the eve of the International Human Rights Day. The opening ceremony was a tribute to the city’s iconic Emek Movie Theatre, demolished in 2013 to make place for a shopping mall.

Three years after the unsuccessful attempt to defend the heart of the city’s cinema scene, which also paved the way to the Gezi resistance movement, hundreds of viewers gathered at Şişli Urban Cultural Centre for the premiere of the documentary Audience Emancipated: The Struggle for the Emek Movie Theater.

The premiere coincided with the opening of a cinema multiplex under the name of “Emek Hall” at the Grand Pera shopping mall that was constructed on the original site. 

The Cinema

The original Emek Movie Theatre was as old as Turkish cinema itself. Located in the historical building of Cercle d’Orient (built 1884) the cinema opened its doors to public in 1924. It was originally called Melek Sineması or Angel Cinema as a reference to the Art Nouveau angel sculptures at the entrance of the former structure, and was the oldest cinema hall in Republican Turkey. 

The building was originally constructed for purposes other than film screenings. Among others, it used to serve as a theatre hall and as the gathering place for Istanbul’s cultural life. Its giant hall and the lounge, which could welcome hundreds, was ultimately found suitable for film festivals. 

Located on Istiklal, one of the most crowded avenues in Europe, the hall had been the home of Istanbul Film Festival for decades and the most popular cinema hall in the country for almost a century. It had left a deep mark in the social memory of the city.

Emek Movie Theatre (Photo: Nazım Serhat Fırat)

Emek Movie Theatre (Photo: Nazım Serhat Fırat)

Writing about a cinema-goer, Yusuf Atılgan, an early republican Turkish novelist, argues of the importance of being able to walk out into the city after watching a film and to be part of the society in order to digest what she or he had just watched.

Yeşilçam (Green Pine) Street, at which Emek’s entrance was located, gave the name to Turkish Cinematosphere. For Turkey, Green Pine is what Hollywood is for the US.

Emek cinema was not just any other movie theatre screening expensive international productions with profit-oriented mentality but a social space, which allowed young directors and independent films to find a screen and flourish.

The Film

At the opening of the WHRFF, the Cultural Center was filled with activists, architects, directors, researchers, students, labourers, former managers of Emek and many other people. They arrived well ahead of the screening to be united around the memory of the lost movie theatre and the ongoing struggles for presence in the city. 

The famous banner of Emek was placed in the hall, reading “Emek is Ours, Istanbul is Ours”. Many old friends met once again under this banner, the excitement was palpable.

“Emek is ours, Istanbul is ours” (Photo: Gürkan Özturan)

“Emek is ours, Istanbul is ours” (Photo: Gürkan Özturan)

Audience Emancipated captures the activism for the right to the city in Istanbul, such as the Emek is Ours Platform and their years-long struggle against demolition or neglect of cultural spaces, low-income residential neighbourhoods and parks. 

The 48-minute-long documentary summarizes the stages of demolition and resistance against it, stating the significance of this building for the cultural life of the city and the lure of profits for the investors, despite the court decisions marking the structure for preservation and other court decisions dictating a halt on demolition/construction works. 

However, experts, architects, the judiciary and even internationally renowned directors, such as Costa Gavras, stated opinions against demolition of the structure. And even though there were given many official decisions by courts to stop demolition, none of these were heard by the government, municipality, investors and construction companies went ahead with their plans. 

Now, a shopping mall enchants the luxurious consumers of Istanbul in the increasingly de-cultured and profiteering atmosphere of Istiklal Avenue. 

In the film, the mayor and construction company experts explain to the media how the Emek Hall will be preserved, not at the street level on ground floor but, thanks to the “modern preservation technique called ‘moving’, it will be dragged to the eight floor of the new shopping mall, exactly as it is.” This statement caused an uproar of laughter during the screening. 

After the screening, there was a period of discussion, quite emotional moments as the two former operators of Emek cinema came up on the stage. They had avoided the construction site in order not to see the demolition three years ago; and they had seen it for the first time, on screen. Their hands were shaking as they held onto the microphone and spoke about the times when they thought they’d be running Emek for their whole lives.

Photo: Nazım Serhat Fırat

Photo: Nazım Serhat Fırat

Right after them, Master Architect Mucella Yapıcı, the general secretary of the Turkish Union of Architecture and Engineering Chambers, Istanbul Metropolitan Branch, took the stage and emphasized the significance of reclaiming the city and social memory. She drew attention to the destructive populism wave of demolishing urban spaces and living areas for humans and animals, as well as trees in the city. As a final remark she reiterated the importance of not giving in and losing morality in the face of this expanding threat. “We must continue putting things on top of each other, building up culture and future,” she added. 

In the discussion after the screening, there was a consensus to boycott the shopping malls and unsocial profit spaces that destroy and demolish the memory of the city without even asking the people suffering the consequences or living there. 

The trailer of Audience Emancipated:

Dec 142016
 

By James Petras99GetSmart

abdrones

Introduction

In recent times, and probably since the establishment of universal voting, presidents-elect have systematically violated or broken their promises to their supporters.

This essay begins with the campaign promises of the outgoing President Barack Obama and the President-Elect Donald Trump. We will then examine the reasons why rhetorical populist, peaceful and democratic promises always accompany campaigns and are immediately followed by the victor appointing cabinet members who are committed to elite-driven, militarist and authoritarian policies – so far from the expectations of the voters.

Obama: Style and Substance

Barack Obama, like all demagogues, promised American voters that he would end the US military occupation of Iraq, close the Guantanamo Bay concentration camp, end torture and secrecy, defend civil liberties, protect mortgage holders swindled by Wall Street bankers, introduce a real health care reform and develop a path to citizenship for undocumented migrant workers and their families.

Above all, Obama promoted the notion that he was ‘the historic African-American President’ tasked with fulfilling the promises of the civil rights revolution. Obama spoke to civil and human rights activists, promising an end to racial violence and inequality. He promised to end state intrusion and violation of individual freedoms.

The ‘Historic Black President’: Unprecedented Number of Broken Promises

All Presidents, to a greater or lesser degree, have broken electoral pledges. But, far and away, President Barack Obama broke more and bigger promises over his two terms than any of his predecessors. His administration was one of making and then immediately revising and reversing promises to his supporters. Every one of his promises for social reform, health care and foreign policy based on diplomacy and respect merely served as a prelude to imposing new and more regressive policies and launching more wars.

The record is clear: Over the eight years of his presidency, Obama degraded the expectations of every popular constituency that he courted and won during the campaigns. Black Americans voted for Obama 10 to 1 during both campaigns! Despite the overwhelming support form African Americans, income inequalities between white and black workers increased, deadly police violence against Afro-Americans increased, and white vigilante assaults, including the torching of Afro-American churches, multiplied. Non-violent African-American drug offenders (dealers and users) were incarcerated at a rate far exceeding their white counterparts, while the giant pharmaceutical corporate elites and the doctors prescribing highly addictive narcotics and fueling the opioid addiction epidemic counted their mushrooming profits with total impunity.

Obama pursued seven wars and scores of violent covert operations, exceeding his predecessor, President George Bush, Jr. His wars led to the greatest combined numbers of dispossessed, wounded and murdered Africans, Arabs, South Asians and Eastern Europeans in world history.

Obama transferred $2 trillion dollars from the US Treasury to bail two dozen Wall Street banks, which then continued to foreclose on the homes of 3 million working class households – contrary to his campaign rhetoric.

Leading multi-national corporations successfully hid over $2 trillion dollars of profits in overseas tax havens. The President occasionally mouthed some ‘lollipop rhetorical criticism’ against the big corporate tax evaders while continuing to tax the over-worked working people – whose living standards steadily declined.

Militarists infected the entire Obama administration to an extent not seen since the warmongers Harry Truman and Winston Churchill cynically launched the Cold War.

Obama pursued a policy of encircling Russia with US and NATO military bases stationed from the new US’ Baltic satellites to the Balkans, from the Mediterranean to the Caucuses.

The Obama regime financed the violent putsches and bloody attempts at ‘regime change’ in Ukraine, Syria, Somalia, Libya, Honduras and Yemen – with devastating result to millions of displaced and destitute people. No other warlord, past or present, can match the Obama regime in sowing misery and mayhem.

Obama: Speaks in Tongues

Obama, ever the chameleon, spoke in different accents and cadences to different audiences: To the young, he jived with rappers, hoopsters, baseball stars and stage and screen celebrities. To black church ladies, this Honolulu-born and bred graduate of the elite Punahou academy and Harvard Law School, would adopt a southern Baptist drawl – completely foreign to the speech of his mother and grandmother. When he turned to his sophisticated white Chicago groomers and supporters in the finance sector, he reverted to speaking with a deep well-modulated gravitas.

His language was full of euphemisms: the famous ‘pivot to Asia’ meant an aggressive and dangerous maritime and aerial encirclement of China, with the aim of crippling Asia’s greatest economy.

While he spoke of ‘environmental protections and workers’ rights’, he pushed for a Trans-Pacific Trade Agreement giving multi-national corporations the power to gut labor rights and environmental regulations.

The Obama regime had loudly promised to protect Native-American access to their traditional water and land, as well as cultural, community and religious sites. In practice, he protected the big oil and gas pipelines projects infringing on native lands with brutal militarized police and private mercenary guards, beating and jailing social justice activists and threatening journalists.

Obama has strengthened the enforcement of existing police state surveillance operations despite their violations of constitutional freedoms and he imposed an extension of police state rule, especially against ‘whistle-blowers’. With one of the most secretive administrations in history, Obama has prosecuted, destroyed and imprisoned more heroic public servants – for the ‘crime’ of exposing state crimes to the citizenry. He actively flaunted Federal laws guaranteeing the protection of ‘whistle-blowers’ and has sent a chill throughout the public sector – demoralizing the best of our public servants.

Donald Trump: Electoral Promises and Post-Election Betrayals

Intent on surpassing the broken promises of President Obama, President-Elect Trump quickly reversed his rhetorical campaign promise to ‘drain the swamp’ of Washington and embraced his ‘sworn enemies’ with the fervor of a veteran courtesan. Traditional Republican politicians, business people and Wall Streeters, initially opposed to ‘The Donald’, have all jumped on the bandwagon and into Trump’s open arms.

Trump broke his main campaign promises to the electorate. Announcing he would not ‘jail’ Hillary Clinton for her activities concerning the Clinton Foundation while in office, Trump instead praised her courage and integrity. Upon his election, Trump even pandered to the former President Bill ‘Oval Office sex scandal’ Clinton. While Trump may have a change of heart regarding the sleaze and crimes of the Clintons, his mass supporters have not.

Trump openly praised Hillary Clinton in exchange for her initial decision not to challenge his election victory and ‘transition’. However her use of surrogate Green Party candidate Jill Stein to challenge the election count and the CIA/Democratic Party’s accusations of Russian-Trump-FBI collusion in influencing the campaign may force him to review his decision as the makings of a palace coup-d’etat seem to emerge from ‘the swamp’.

His ongoing private business dealings, which he promised to renounce, have continued – to the consternation of his loyal activist base.

Trump has sent mixed signals with his choices for senior cabinet officials: He broke his promises on economic, diplomatic and foreign policy by appointing or considering several mainstream Republicans for major positions, including a vocal critic for UN Representative. Mainstream Republicans were contemptuous of Trumps mass electoral support base. Nevertheless, Trump has appointed business CEO’s who were more market-oriented and less militaristic than the typical Republican and Democratic establishment politicians.

He also kept his his campaign promise to protect US commerce and industry, by favoring a trade-oriented policy with Russia. He wants to negotiate more advantageous trade agreements with the Chinese president. He has announced his appointment of Exxon CEO Rex Tillerson as Secretary of State, a very concrete move toward ending the sanctions against Russia, which have shut American businesses and energy giants out of that huge market.

Trump has appealed directly to the ‘Israel-Firster’ crowd, vowing to ‘tear up’ the nuclear agreement with Iran, which was so unpopular with militant American and Israeli Jews. Despite calling it the ‘worst agreement in US history’, he appears to have given ‘the nod’ to the big oil and gas interests who are happily signing multi-billion dollar deals with Tehran and to the aerospace giant Boeing to sell a new fleet of passenger jets to Iran.

Electoral demagoguery is not just an Obama affliction. Broken promises are ‘stock and trade’ for all Democratic and Republican Presidents. Deceit and phony populist language are standard fare because these are what capitalist democracy demands of its political representatives.

The Structural Basis of Capitalist Democracy

Under capitalist democracies, Presidents put on the appearance of ‘talking to real folks’ while skillfully working for the biggest capitalists and bankers.

When ‘capitalist democracy’ is under threat and discredited, the search for populist demagogues kicks in. While activists for peace and social justice were organizing huge masses of demonstrators against the banks during the ‘Occupy Wall Street Movement’, the Wall Streeters trotted out America’s “First Black President” to divert the anger of bankrupted mortgage holders, con the white students, fool Latino voters, charm the Black church-ladies and lead them all into the corrupt embrace of the Democratic Party.

When the economy forced millions of people into low-paying dead-end jobs and declining living standards, when globalization impoverished local small and middle business people and shop keepers, a loud mouth billionaire casino king appears on the scene to bark phony populist rhetoric denouncing Madame Secretary Hillary Clinton for her most carnal ties with Wall Street. And he gets elected President of the United States!.

In other words, when capitalism is in crisis the demagogues ‘come out of the woodwork’.

Flamboyant capitalist demagogues replace the normal deceitful standard bearers of corrupt electoral politics. Obama and Trump’s demagoguery won-out over Hillary Clinton’s and Mitt Romney’s boring speech-makers. No matter how outlandish their lies, Hillary and Mitt could not grab the voters’ imagination.

Capitalist democracies have become more fragile as economic crises become entrenched and recoveries are brief and weak. The frequent rise of presidential demagogues, from Obama to Trump, reflects the capitalist elites’ refusal to share any productivity gains with the workers or to pay taxes on overseas/imperial profits and thus lessen the tax burden on wage-earners, or to invest in a productive economy employing well-paid workers rather than engaging in speculation.

‘Capitalist democracy’ can no long deceive the voters. Half of eligible voters abstain from a process that does not reflect their interests. And half of the actual voters reject traditional politicians. To retain any veneer of electoral legitimacy and enable the capitalists to continue their rule, demagogues have to replace the ‘damaged goods’ politicians who have prostituted themselves too openly and too often.

Over eighty percent of voters know that their votes have no impact on political decisions regarding war and peace, domestic inequalities and income distribution – real issues.

Capitalism can no longer reproduce itself through a faux electoral machine. Were it not for the predictable emergence of novelties, like ‘America’s First Black’ Obama or the ‘Shock-Jock’ celebrity Trump to occupy the White House on waves of mass protest votes, tens of millions of absentee and discontented voters might fill the streets, boot out the phony union bosses who ‘speak for’ only 7% of wage earners, and reject the two political parties united ‘at the hip’ in their service to the elite one percent.

Conclusion

Let us imagine that the capitalist demagogues finally lose their mass appeal in the face of repeated broken promises. Let us assume there will be a temporary return to bland, reliable, everyday political hucksters, as this so-called cycle of ‘outsiders’ gets played out. The mass discontent will not go away. As the economic crisis and inequalities grow, extra-parliamentary public outbursts will are inevitable. With them, fear and uncertainty among bankers, speculators and billionaire electronic gadget makers will set in. The much ballyhooed ‘silicon architecture’ will crumble like sandcastles. The capitalist class may have to turn from ballots to bullets. At that point, can they entrust their wealth and status in the hands of thousands of soldiers and police ordered to gun down and round up millions of their fellow American workers? Or are they dreaming of robots…?

James Petras is author of  The End of the Republic and the Delusion of EmpireExtractive Imperialism in the Americas: Capitalism’s New Frontier (with Henry Veltmeyer), and The Politics of Empire: The US, Israel and the Middle EastRead other articles by James, or visit James’s website.

Dec 062016
 

By James Petras, 99GetSmart

usa-empire-400x249

Introduction

With a few notable exceptions, political leaders are chosen by political leaders, and not by electorates or community-based organizations or popular assemblies. Popular media figures and the so-called ‘pundits’, including academics and self-declared experts and ‘think-tank’ analysts reinforce and propagate these choices.

A collection of terms and pseudo concepts are essential in validating what is really an oligarchical process. These concepts are tagged onto whoever is chosen by the elite for electoral candidates or for the seizure of political power. With this framework in mind, we have to critically analyze the symbols and signs used by popular opinion-makers as they promote political elites. We will conclude by posing an alternative to the ‘propaganda of choice’, which has so far resulted in broken pre-election promises and political debacles.

Language and Pseudo-Concepts: Subterfuges for Manipulated Choices

The usual suspects in the business of mass-manipulation describe their political leaders in the same folksy or pseudo-serious terms that they attribute to themselves: Experts/ intuitive improvisers/ trial and error ‘muddlers’. The ‘experts’ often mean wrong-headed policymakers and advisers whose decisions usually reflect the demands of their current paymasters. Their stated or unstated assumptions are rarely questioned and almost never placed in the context of the contemporary power structures. The experts determine the future trajectory for their political choices. In this way, the views expressed by ‘experts’ are primarily ideological and not some disembodied scholarly entity floating in an indeterminate space and time.

Pundits often promote ‘experience’ in describing the ‘experienced’ leader, adviser or cabinet member. They denigrate the opposition candidate adversary as ‘lacking experience’. The obvious questions to this platitude should be: ‘What kind of experience? What were the political results of this experience? Who did this experience serve?

We know that Secretaries of Defense William Gates and Donald Rumsfeld and their leading assistants, Paul Wolfowitz and Douglas Feith were appointed to their high positions and praised for their ‘experience’. This ‘experience’ drove the country into repeated disastrous military engagements, political debacles and unending wars. It would be better to reject officials who are highly ‘experienced’ in creating disasters and appoint those officials experienced in conciliation and reconciliation. Unfortunately the ‘experts’ never discuss these matters in any historical context.

Many political choices are adorned with ‘titles’, such as ‘successful entrepreneur’ and/or ‘prize winning journalist’. This ignores the fact that those ‘bestowing titles’ come from a narrow band of inbred organizations with financial, military or ideological interests looking for near-future rewards from their now titled, prize winning political choice.

Highly certified candidates, we are told, are those eminently qualified to lead, whether they are university academics with prestigious degrees, or doctors, lawyers, or investors who work for leading groups. The most highly vetted officials coming from Harvard University have implemented economic policies leading to the worst crises in the shortest time in world history.

Lawrence Summers, PhD and Harvard University President-turned Treasury Secretary participated in the pillage of Russia in the 1990s and then brought his talent for sowing international chaos home by joining Federal Reserve Chairman Alan Greenspan. These two ‘experts’ promoted enormous financial swindles, which led to the worst economic crash in the US in seven decades.

Money laundering by the big banks flourished under Princeton Summa Cum Laude and US Treasury ‘Under-Secretary for Terrorism and Financial Intelligence’, Stuart Levey. Levey concentrated on implementing brutal economic sanctions against Iran shutting US businesses out of multi-billion-dollar oil deals with Tehran, promoting a huge annual $4 billion-dollar giveaway to Israel and a granting a uniquely privileged trade status for the Jewish state – which cost the US taxpayers additional billions.

Receiving ‘prestigious awards’ does not predict a successful policymaker in contemporary US politics. The underlying ideological commitments and political allegiances determine the appointment of these ‘prize-winning’ leaders. From an objective perspective, any obscure college economics graduate, eager to increase high tech US exports and sign profitable trade agreements with Iran, would have been far more successful political choice as Secretary of Treasury.

Frequently ‘identity’ colors the choice of appointees, especially favoring an ‘oppressed’ minority, even if their field of competence and their political allegiances run counter to the real interests and political needs of the vast majority of American citizens. Some ‘ethnic’ groups wear their identity on their shirt sleeves as a point of entry into lucrative or influential appointments: “Hello, I’m a Jewish graduate of Yale Law school, which makes me the best choice for an appointment to the Supreme Court … where there are already three Jews out of the ten Justices… and only an anti-Semite would consider a fourth to be an ‘over-representation’ of our tiny national minority… whereas the total absence of any WASPs (white Anglo-Protestants) on ‘The Court’ only confirms their historical degeneracy…” Who could object to that?

‘Identity’ appointees are not reluctant to employ scare tactics, including citing old historical grievances and claiming special suffering unique to their heritage, to justify their appointment to privileged, lucrative positions. Their identity also seems to insulate them from any fall-out from their policy catastrophes such as disastrous wars and economic crises, as well as providing impunity for their personal involvement in financial mega-swindles.

Race and claims of victimization often serves as a justification for being a political ‘chosen one’. We are told repeatedly that some appointee, even with a tangential link to skin color, must have suffered past indignities and is therefore uniquely qualified to represent the aspirations of an entire group, promising to eliminate all inequality, right injustices and promote peace and prosperity. Racial identity never prevented three of the worst Caribbean tyrants from robbing and torturing their people: The two Haitian dictators, ‘Papa Doc’ and ‘Baby Doc’ Duvalier murdered tens of thousands Haitians, especially among mixed race educated elites. Cuban dictator Fulgencio Batista had to slaughter hundreds of Afro-Caribbean sugar workers in Santiago de Cuba before he could enter the exclusive ‘whites only’ Havana Golf and Country Club.

In the United States, it was a ‘man of color’, General Colin Powell, Secretary of State under President George W. Bush, who bombed and invaded black African Somalia and implemented the policy of invading and destroying Iraq and Afghanistan. The carefully groomed ‘First Black President-To-Be’ Barack Obama, was the protégé of a Chicago-based millionaire lobby led by the fanatical ‘Israel-First’ mob, to bring ‘identity’ to its highest level. This charade culminated in the ‘First Black President’ and promoter of seven devastating wars against the poorest people of the world receiving the Nobel Peace Prize from the he Chairman of the Norwegian Nobel Committee in the presence of the King of Norway and a committee composed of five members appointed by the Storting (Norwegian Parliament). Such is the power of identity. It was of little comfort to the hundreds of thousands of Libyans and South Sahara Africans murdered, pillaged, raped and forced to flee in rotting boats to Europe, that the NATO bombs destroying their country had been sent by the ‘Historic Black US President and Nobel Peace Prize Winner’. When the wounded, captive President of Libya, Muammar Gadaffi, the greatest proponent of Pan-African integration, was brutalized and slaughtered, was he aware that his tormentors were armed and supported by ‘America’s First Black President’? A video of Gadaffi’s gruesome end became a source of gleeful entertainment for the ‘Feminist’ US Secretary of State, Hillary Clinton, who would go on to cite her ‘victory’ over the Libyan President in her bid to become ‘The First Female President of the US”.

The question is not about one’s race or identity, but whose interests are served by the Afro-American leader in question. US President Barack Obama served Wall Street and the Pentagon, whereas Malcolm X and Martin Luther King had a long and arduous history of leading peoples’ movements. MLK joined the striking Afro-American garbage workers in Memphis and the autoworkers in Detroit. Malcolm X organized and spoke for the Harlem community – while inspiring millions.

Gender labels covered the fact that a politically chosen woman ruled on behalf of a family-led tyranny, as in the case of Indira Gandhi in India. The financial lords of the City of London financiers, and the mining and factory bosses in Great Britain chose the very female Prime Minister Margaret Thatcher, who launched multiple wars abroad and smashed trade unions at home. Madame Secretary of State, Hillary Clinton, who promoted seven wars resulting in the deaths, injuries, displacement and rape of 5 million African and Middle Eastern women and destruction of their families, had the unconditional support of the top 20 Wall Street banks when she ran to become the ‘First Woman President of the United States’.

In other words, political appointments chosen for their ‘gender identity’ bring no special qualities or experience that would recommend them as progressive. When political and business elites choose a female for a high political office, they do so because it serves their interests to put a progressive political gloss on their reactionary policies. The ‘gender emphasis’ is most effective on liberals and the advocates of ‘identity over class politics’. In reality it is a vacuous symbol rather than real power and highlights elite upward mobility.

Often media moguls, publicists and corporate leaders laud the ‘social background’ of a candidate. They use such criteria to groom and co-opt upwardly mobile workers, trade union officials and community militants. ‘Chosen leaders’ from minority or oppressed backgrounds are put in charge of discipline, work-place speed-ups and lay-offs. They sometimes adopt ‘workers’ language, splicing rough anti-establishment curses with their abuses as they fire workers and cut wages. One’s past social background is a far less useful criterion than current social commitments. As Karl Marx long ago noted, the ruling class is not a closed caste: It is always open to co-opting bright and influential new members among upwardly mobile labor leaders and activists.

Labor leaders receive ‘special favors’, including invitations to political inaugurations and corporate meetings with all the travel and luxury accommodations paid. Elites frequently transform past militant leaders into corporate policemen, ready to identify, exclude and expel any genuine emerging local and shop floor militants. Public and private labor relations experts frequently describe a labor militant’s ascent to the elite as an ‘up by his own bootstraps operation’ – putting a virtuous gloss on the ‘self-made worker’ ready to serve the interests of the corporate elite! The primary feature that characterizes these ‘boot-strappers’ is how their sense of ‘solidarity’ turns upward and forward toward the bosses, and not backward and downward toward the working masses, as they transform into ‘boot-lickers’.

Many examples of these ‘upward and forward’-looking political choices are found among entertainment celebrities, sports heroes, media figures and pop musicians. Rap singers become ghetto millionaires. And ‘working-class hero’ rock musicians, the well-wrinkled as well as the young, charge hundreds of dollars a seat for their rasping and grasping performances while refusing to play on behalf of striking workers.

The popular music, promoted by the elite, contain country and working class lyrics, sung with phony regional twangs to entertain mass audiences even as the successful performers flaunt their Presidential awards, luxury mansions and limos. The political and corporate elite frequently choose phony working class or ethnic identity celebrities to endorse their products, as the gullible public is encouraged to purchase useless commodities, electronic gadgets and gimmicks, and to support reactionary politicians and politics. There are a few celebrities who protest or maintain real mass solidarity but they are blacklisted, ostracized or past their peak earning power. Most celebrities prefer to shake their backsides, mouth raunchy language, snort or smoke dope and slum a bit with their bodyguards, but the political elite have chosen them to distract and depoliticize the young and discontented. They are paid well for their services.

Conclusion

The concepts, symbols and signs of the ruling class determine who will be the political ‘choices’ for leaders and officials. Political elites co-opt upwardly mobile ‘identities’, among minorities and workers, carefully assessing which of their qualities will contribute to the desired elite outcomes. This is how working class and community-based electorates are seduced into voting against their real class, national, community, gender and racial economic interests.

Renegades, demagogues, soothsayers and other charlatans of many races, ethnicities, genders and proclivities run for office and win on that basis.

The elite pay a relatively small fee for procuring the services of prestigious, certified, titled and diversified candidates to elect or appoint as leaders.

Elite power only partially depends on the mass media, money and power. It also needs the services of the concept and language masters, identity promoters and propagandists of the embellished deed.

Stripping away the phony veneer of the ‘chosen’ politicians requires a forceful critique of the signs and symbols that cloak the real identity of the makers and breakers of these leaders. And it requires that they be exposed for their proven failures and disasters, especially their role in leading America into an unending series of political, military and economic debacles.

James Petras is author of  The End of the Republic and the Delusion of EmpireExtractive Imperialism in the Americas: Capitalism’s New Frontier (with Henry Veltmeyer), and The Politics of Empire: The US, Israel and the Middle EastRead other articles by James, or visit James’s website.

Dec 022016
 

By William Blum, 99GetSmart

1019309274

What can go wrong?

That he may not be “qualified” is unimportant.

That he’s never held a government or elected position is unimportant.

That on a personal level he may be a shmuck is unimportant.

What counts to me mainly at this early stage is that he – as opposed to dear Hillary – is unlikely to start a war against Russia. His questioning of the absolute sacredness of NATO, calling it “obsolete”, and his meeting with Democratic Congresswoman Tulsi Gabbard, an outspoken critic of US regime-change policy, specifically Syria, are encouraging signs.

Even more so is his appointment of General Michael Flynn as National Security Adviser. Flynn dined last year in Moscow with Vladimir Putin at a gala celebrating RT (Russia Today), the Russian state’s English-language, leftist-leaning TV channel. Flynn now carries the stigma in the American media as an individual who does not see Russia or Putin as the devil. It is truly remarkable how nonchalantly American journalists can look upon the possibility of a war with Russia, even a nuclear war.

(I can now expect a barrage of emails from my excessively politically-correct readers about Flynn’s alleged anti-Islam side. But that, even if true, is irrelevant to this discussion of avoiding a war with Russia.)

I think American influence under Trump could also inspire a solution to the bloody Russia-Ukraine crisis, which is the result of the US overthrow of the democratically-elected Ukrainian government in 2014 to further advance the US/NATO surrounding of Russia; after which he could end the US-imposed sanctions against Russia, which hardly anyone in Europe benefits from or wants; and then – finally! – an end to the embargo against Cuba. What a day for celebration that will be! Too bad that Fidel won’t be around to enjoy it.

We may have other days of celebration if Trump pardons or in some other manner frees Chelsea Manning, Julian Assange, and/or Edward Snowden. Neither Barack Obama nor Hillary Clinton would do this, but I think there’s at least a chance with the Donald. And those three heroes may now enjoy feeling at least a modicum of hope. Picture a meeting of them all together on some future marvelous day with you watching it on a video.

Trump will also probably not hold back on military actions against radical Islam because of any fear of being called anti-Islam. He’s repulsed enough by ISIS to want to destroy them, something that can’t always be said about Mr. Obama.

International trade deals, written by corporate lawyers for the benefit of their bosses, with little concern about the rest of us, may have rougher sailing in the Trump White House than is usually the case with such deals.

The mainstream critics of Trump foreign policy should be embarrassed, even humbled, by what they supported in Afghanistan, Iraq, Libya, and Syria. Instead, what bothers them about the president-elect is his lack of desire to make the rest of the world in America’s image. He appears rather to be more concerned with the world not making America in its image.

In the latest chapter of Alice in Trumpland he now says that he does not plan to prosecute Hillary Clinton, that he has an “open mind” about a climate-change accord from which he had vowed to withdraw the United States, and that he’s no longer certain that torturing terrorism suspects is a good idea. So whatever fears you may have about certain of his expressed weird policies … just wait … they may fall by the wayside just as easily; although I still think that on a personal level he’s a [two-syllable word: first syllable is a synonym for a donkey; second syllable means “an opening”]

Trump’s apparently deep-seated need for approval may continue to succumb poorly to widespread criticism and protests. Poor little Donald … so powerful … yet so vulnerable.

The Trump dilemma, as well as the whole Hillary Clinton mess, could have probably been avoided if Bernie Sanders had been nominated. That large historical “if” is almost on a par with the Democrats choosing Harry Truman to replace Henry Wallace in 1944 as the ailing Roosevelt’s vice-president. Truman brought us a charming little thing called the Cold War, which in turn gave us McCarthyism. But Wallace, like Sanders, was just a little too damn leftist for the refined Democratic Party bosses.

State-owned media: The good, the bad, and the ugly

On November 16, at a State Department press briefing, department spokesperson John Kirby was having one of his frequent adversarial dialogues with Gayane Chichakyan, a reporter for RT (Russia Today); this time concerning US charges of Russia bombing hospitals in Syria and blocking the UN from delivering aid to the trapped population. When Chichakyan asked for some detail about these charges, Kirby replied: “Why don’t you ask your defense ministry?”

GK: Do you – can you give any specific information on when Russia or the Syrian Government blocked the UN from delivering aid? Just any specific information.

KIRBY: There hasn’t been any aid delivered in the last month.

GK: And you believe it was blocked exclusively by Russia and the Syrian Government?

KIRBY: There’s no question in our mind that the obstruction is coming from the regime and from Russia. No question at all.

MATTHEW LEE (Associated Press): Let me –- hold on, just let me say: Please be careful about saying “your defense minister” and things like that. I mean, she’s a journalist just like the rest of us are, so it’s -– she’s asking pointed questions, but they’re not –

KIRBY: From a state-owned -– from a state-owned –

LEE: But they’re not –

KIRBY: From a state-owned outlet, Matt.

LEE: But they’re not –

KIRBY: From a state-owned outlet that’s not independent.

LEE: The questions that she’s asking are not out of line.

KIRBY: I didn’t say the questions were out of line.

……

KIRBY: I’m sorry, but I’m not going to put Russia Today on the same level with the rest of you who are representing independent media outlets.

One has to wonder if State Department spokesperson Kirby knows that in 2011 Secretary of State Hillary Clinton, speaking about RT, declared: “The Russians have opened an English-language network. I’ve seen it in a few countries, and it is quite instructive.”

I also wonder how Mr. Kirby deals with reporters from the BBC, a STATE-OWNED television and radio entity in the UK, broadcasting in the US and all around the world.

Or the state-owned Australian Broadcasting Corporation, described by Wikipedia as follows: “The corporation provides television, radio, online and mobile services throughout metropolitan and regional Australia, as well as overseas … and is well regarded for quality and reliability as well as for offering educational and cultural programming that the commercial sector would be unlikely to supply on its own.”

There’s also Radio Free Europe, Radio Free Asia, Radio Liberty (Central/Eastern Europe), and Radio Marti (Cuba); all (US) state-owned, none “independent”, but all deemed worthy enough by the United States to feed to the world.

And let’s not forget what Americans have at home: PBS (Public Broadcasting Service) and NPR (National Public Radio), which would have a near-impossible time surviving without large federal government grants. How independent does this leave them? Has either broadcaster ever unequivocally opposed a modern American war? There’s good reason NPR has long been known as National Pentagon Radio. But it’s part of American media’s ideology to pretend that it doesn’t have any ideology.

As to the non-state American media … There are about 1400 daily newspapers in the United States. Can you name a single paper, or a single TV network, that was unequivocally opposed to the American wars carried out against Libya, Iraq, Afghanistan, Yugoslavia, Panama, Grenada, and Vietnam while they were happening, or shortly thereafter? Or even opposed to any two of these seven wars? How about one? In 1968, six years into the Vietnam war, the Boston Globe (February 18, 1968) surveyed the editorial positions of 39 leading US papers concerning the war and found that “none advocated a pull-out”. Has the phrase “invasion of Vietnam” ever appeared in the US mainstream media?

In 2003, leading cable station MSNBC took the much-admired Phil Donahue off the air because of his opposition to the calls for war in Iraq. Mr. Kirby would undoubtedly call MSNBC “independent”.

If the American mainstream media were officially state-controlled, would they look or sound significantly different when it comes to US foreign policy?

Soviet observation: “The only difference between your propaganda and our propaganda is that you believe yours.”

On November 25, the Washington Post ran an article entitled: “Research ties ‘fake news’ to Russia.” It’s all about how sources in Russia are flooding American media and the Internet with phoney stories designed as “part of a broadly effective strategy of sowing distrust in U.S. democracy and its leaders”.

“The sophistication of the Russian tactics,” the article says, “may complicate efforts by Facebook and Google to crack down on ‘fake news’.”

The Post states that the Russian tactics included “penetrating the computers of election officials in several states and releasing troves of hacked emails that embarrassed Clinton in the final months of her campaign.” (Heretofore this had been credited to Wikileaks.)

The story is simply bursting with anti-Russian references:

  • An online magazine header – “Trolling for Trump: How Russia Is Trying to Destroy Our Democracy.”
  • “the startling reach and effectiveness of Russian propaganda campaigns.”
  • “more than 200 websites as routine peddlers of Russian propaganda during the election season.”
  • “stories planted or promoted by the disinformation campaign were viewed more than 213 million times.”
  • “The Russian campaign during this election season … worked by harnessing the online world’s fascination with ‘buzzy’ content that is surprising and emotionally potent, and tracks with popular conspiracy theories about how secret forces dictate world events.”
  • “Russian-backed phony news to outcompete traditional news organizations for audience”
  • “They use our technologies and values against us to sow doubt. It’s starting to undermine our democratic system.”
  • “Russian propaganda operations also worked to promote the ‘Brexit’ departure of Britain from the European Union.”
  • “Some of these stories originated with RT and Sputnik, state-funded Russian information services that mimic the style and tone of independent news organizations yet sometimes include false and misleading stories in their reports.”
  • “a variety of other false stories — fake reports of a coup launched at Incirlik Air Base in Turkey and stories about how the United States was going to conduct a military attack and blame it on Russia”

A former US ambassador to Russia, Michael McFaul, is quoted saying he was “struck by the overt support that Sputnik expressed for Trump during the campaign, even using the #CrookedHillary hashtag pushed by the candidate.” McFaul said Russian propaganda typically is aimed at weakening opponents and critics. “They don’t try to win the argument. It’s to make everything seem relative. It’s kind of an appeal to cynicism.” [Cynicism? Heavens! What will those Moscow fascists/communists think of next?]

The Post did, however, include the following: “RT disputed the findings of the researchers in an e-mail on Friday, saying it played no role in producing or amplifying any fake news stories related to the U.S. election.” RT was quoted: “It is the height of irony that an article about ‘fake news’ is built on false, unsubstantiated claims. RT adamantly rejects any and all claims and insinuations that the network has originated even a single ‘fake story’ related to the US election.”

It must be noted that the Washington Post article fails to provide a single example showing how the actual facts of a specific news event were rewritten or distorted by a Russian agency to produce a news event with a contrary political message. What then lies behind such blatant anti-Russian propaganda? In the new Cold War such a question requires no answer. The new Cold War by definition exists to discredit Russia simply because it stands in the way of American world domination. In the new Cold War the political spectrum in the mainstream media runs the gamut from A to B.

Cuba, Fidel, Socialism … Hasta la victoria siempre!

The most frequent comment I’ve read in the mainstream media concerning Fidel Castro’s death is that he was a “dictator”; almost every heading bore that word. Since the 1959 revolution, the American mainstream media has routinely referred to Cuba as a dictatorship. But just what does Cuba do or lack that makes it a dictatorship?

No “free press”? Apart from the question of how free Western media is (see the preceding essays), if that’s to be the standard, what would happen if Cuba announced that from now on anyone in the country could own any kind of media? How long would it be before CIA money – secret and unlimited CIA money financing all kinds of fronts in Cuba – would own or control almost all the media worth owning or controlling?

Is it “free elections” that Cuba lacks? They regularly have elections at municipal, regional and national levels. They do not have direct election of the president, but neither do Germany or the United Kingdom and many other countries. The Cuban president is chosen by the parliament, The National Assembly of People’s Power. Money plays virtually no role in these elections; neither does party politics, including the Communist Party, since all candidates run as individuals. Again, what is the standard by which Cuban elections are to be judged? Is it that they don’t have private corporations to pour in a billion dollars? Most Americans, if they gave it any thought, might find it difficult to even imagine what a free and democratic election, without great concentrations of corporate money, would look like, or how it would operate. Would Ralph Nader finally be able to get on all 50 state ballots, take part in national television debates, and be able to match the two monopoly parties in media advertising? If that were the case, I think he’d probably win; which is why it’s not the case.

Or perhaps what Cuba lacks is our marvelous “electoral college” system, where the presidential candidate with the most votes is not necessarily the winner. Did we need the latest example of this travesty of democracy to convince us to finally get rid of it? If we really think this system is a good example of democracy why don’t we use it for local and state elections as well?

Is Cuba a dictatorship because it arrests dissidents? Many thousands of anti-war and other protesters have been arrested in the United States in recent years, as in every period in American history. During the Occupy Movement of five years ago more than 7,000 people were arrested, many beaten by police and mistreated while in custody. And remember: The United States is to the Cuban government like al Qaeda is to Washington, only much more powerful and much closer; virtually without exception, Cuban dissidents have been financed by and aided in other ways by the United States.

Would Washington ignore a group of Americans receiving funds from al Qaeda and engaging in repeated meetings with known members of that organization? In recent years the United States has arrested a great many people in the US and abroad solely on the basis of alleged ties to al Qaeda, with a lot less evidence to go by than Cuba has had with its dissidents’ ties to the United States. Virtually all of Cuba’s “political prisoners” are such dissidents. While others may call Cuba’s security policies dictatorship, I call it self-defense.