By PAUL CRAIG ROBERTS - October 26, 2009
Evidence that the US is a failed state is piling up faster than I can record it.
One conclusive hallmark of a failed state is that the crooks are inside the government, using government to protect and to advance their private interests.
Another conclusive hallmark is rising income inequality as the insiders manipulate economic policy for their enrichment at the expense of everyone else.
Income inequality in the US is now the most extreme of all countries. The 2008 OECD report, “Income Distribution and Poverty in OECD Countries,” concludes that the US is the country with the highest inequality and poverty rate across the OECD and that since 2000 nowhere has there been such a stark rise in income inequality as in the US. The OECD finds that in the US the distribution of wealth is even more unequal than the distribution of income.
On October 21, 2009, Business Week highlighted a new report from the United Nations Development Program concluded that the US ranked third among states with the worst income inequality. As number one and number two, Hong Kong and Singapore, are both essentially city states, not countries, the US actually has the shame of being the country with the most inequality in the distribution of income.
The stark increase in US income inequality in the 21st century coincides with the offshoring of US jobs, which enriched executives with “performance bonuses” while impoverishing the middle class, and with the rapid rise of unregulated OTC derivatives, which enriched Wall Street and the financial sector at the expense of everyone else.
Millions of Americans have lost their homes and half of their retirement savings while being loaded up with government debt to bail out the banksters who created the derivative crisis.
Frontline’s October 21 broadcast, “The Warning,” documents how Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, Deputy Treasury Secretary Larry Summers, and Securities and Exchange Commission Chairman Arthur Levitt blocked Brooksley Born, head of the Commodity Futures Trading Commission, from performing her statutory duties and regulating OTC derivatives.
After the worst crisis in US financial history struck, just as Brooksley Born said it would, a disgraced Alan Greenspan was summoned out of retirement to explain to Congress his unequivocal assurances that no regulation of derivatives was necessary. Greenspan had even told Congress that regulation of derivatives would be harmful. A pathetic Greenspan had to admit that the free market ideology on which he had relied turned out to have a flaw.
Greenspan may have bet our country on his free market ideology, but does anyone believe that Rubin and Summers were doing anything other than protecting the enormous fraud-based profits that derivatives were bringing Wall Street? As Brooksley Born stressed, OTC derivatives are a “dark market.” There is no transparency. Regulators have no information on them and neither do purchasers.
Even after Long Term Capital Management blew up in 1998 and had to be bailed out, Greenspan, Rubin, and Summers stuck to their guns. Greenspan, Rubin and Summers, and a roped-in gullible Arthur Levitt who now regrets that he was the banksters’ dupe, succeeded in manipulating a totally ignorant Congress into blocking the CFTC from doing its mandated job. Brooksley Born, prevented by the public’s elected representatives from protecting the public, resigned. Wall Street money simply shoved facts and honest regulators aside, guaranteeing government inaction and the financial crisis that hit in 2008 and continues to plague our economy today.
The financial insiders running the Treasury, White House, and Federal Reserve shifted to taxpayers the cost of the catastrophe that they had created. When the crisis hit, Henry Paulson, appointed by President Bush as Rubin’s replacement as the Goldman Sachs representative running the US Treasury, hyped fear to obtain from “our” representatives in Congress with no questions asked hundreds of billions of taxpayers’ dollars (TARP money) to bail out Goldman Sachs and the other malefactors of unregulated derivatives.
When Goldman Sachs recently announced that it was paying massive six and seven figure bonuses to every employee, public outrage erupted. In defense of banksters, saved with the public’s money, paying themselves bonuses in excess of most people’s life-time earnings, Lord Griffiths, Vice Chairman of Goldman Sachs International, said that the public must learn to “tolerate the inequality as a way to achieve greater prosperity for all.”
In other words, “Let them eat cake.”
According to the UN report cited above, Great Britain has the 7th most unequal income distribution in the world. After the Goldman Sachs bonuses, the British will move up in distinction, perhaps rivaling Israel for the fourth spot in the hierarchy.
Despite the total insanity of unregulated derivatives, the high level of public anger, and Greenspan’s confession to Congress, still nothing has been done to regulate derivatives. One of Rubin’s Assistant Treasury Secretaries, Gary Gensler, has replaced Brooksley Born as head of the CFTC. Larry Summers is the head of President Obama’s National Economic Council. Former Federal Reserve official Timothy Geithner, a Paulson protege, runs the Obama Treasury. A Goldman Sachs vice president, Adam Storch, has been appointed the chief operating officer of the Securities and Exchange Commission. The Banksters are still in charge.
Is there another country in which in full public view so few so blatantly use government for the enrichment of private interests, with a coterie of “free market” economists available to justify plunder on the grounds that “the market knows best”? A narco-state is bad enough. The US surpasses this horror with its financo-state.
As Brooksley Born says, if nothing is done “it’ll happen again.”
But nothing can be done. The crooks have the government.
Note: The OECD report shows that despite the Reagan tax rate reduction, the rate of increase in US income inequality declined during the Reagan years. During the mid-1990s the Gini coefficient (the measure of income inequality) actually fell. Beginning in 2000 with the New Economy (essentially financial fraud and offshoring of US jobs), the Gini coefficient shot up sharply.
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions. He can be reached at: PaulCraigRoberts@yahoo.com
October 26, 2009
Thirteen detained after tent erected at settlement
October 26, 2009Bethlehem - Ma'an - Palestinians, supported by Israeli and international peace activists, on Friday erected a tent on Palestinian-owned land across from Hazon David, an illegal Israeli settlement outpost slated for evacuation, according to a local group.
The Christian Peacemaker Teams reported that 100 people chanted for an end to the occupation and evacuation of Israeli settlements, illegal under international law, and erected the tent structure and flew a Palestinian flag.
Israeli military, border police, regular police, and special forces entered the area and called for the group to disperse or face arrest, according to the group.
Several Israelis sat on the ground in front of the Palestinians, the organization said, while Israeli police detained 11 Israelis, taking seven to the nearby Kiryat Arba police station in Hebron. Police reportedly detained two Palestinians, one of whom was released about three hours later.
The Israeli military forcefully moved the participants from the field to the owner's property up the hill, throwing stun grenades to encourage people to move more quickly from the area, the group added.
What does China's ascendance mean for Palestine?
Sarah Irving, The Electronic Intifada, 26 October 2009
George Habash, the late leader of the Popular Front for the Liberation of Palestine (PFLP), called China Palestine's "best friend." Indeed, he was on an official PFLP visit to China when the conflict between Palestinian forces and the Hashemite Kingdom erupted in Jordan in 1970, the events later known as "Black September."
Habash had good reason to appreciate China's friendship at the time. According to Dr. Yukiko Miyagi of the UK-based Centre for the Advanced Study of the Arab World (CASAW), one characteristic of the People's Republic's policy toward the Arab states and political movements in the 1960s was high-profile support for the Palestinian liberation movement.
"It was a matter of both ideology and identity," says Dr. Miyagi. The newly-formed Communist People's Republic of China identified with the Palestinian guerrillas and provided them with military aid and training, seeing them as fellow victims of capitalism and imperialism, as well as hoping to steer the Palestinian resistance down a socialist path. China recognized the Palestinian people as a nation in 1964 and was the first state outside the Arab world to give diplomatic recognition to the Palestine Liberation Organization (PLO). It also refused to grant the same recognition to the State of Israel.
However, according to Dr. Miyagi, China's policy was not entirely altruistic. Even in the revolutionary heat of the 1960s and early 1970s, its support for Palestinian independence was also motivated by its desire to please other Arab countries, in the hope that they would recognize the People's Republic, rather than Taiwan, as the legitimate Chinese state. As Arab countries outnumbered Israel, they were considered more valuable as allies on the world stage.
Oil imports and peace processes
In the wake of the "Cultural Revolution" and the rapprochement with the US, China's political and economic strategies shifted in the 1970s. Its support for the Palestinian liberation movement also changed and it began to adopt a more "moderate" approach. Yet, it still refused to grant Israel diplomatic recognition, and in 1978 voted in favor of a United Nations resolution which classed Zionism as a form of racism. The Chinese leadership also criticized the UN's approach to Palestine, claiming that it unfairly equated the Israeli aggressor and the Palestinian victim. However, this didn't stop it from opening up informal and secretive contacts with Israel.
This rather ambivalent position has perhaps characterized China's attitude toward the Palestinian people's rights ever since. While China maintains support for Palestinian claims to self-determination it has also become a major trading partner with Israel. According to Dr. Miyagi, by the mid-1980s, Israel was the main supplier of high technology, including agricultural equipment and military technology, to China. In addition, China's geopolitical discourse also started to include positions like "Israel's right to security." Yet, at the same time, it called the 1982 massacres at Sabra and Shatila camps in Beirut "Hitlerism" and supplied both aid and arms to Palestinian forces in Lebanon. Two years later, China gave the PLO's delegation to the Beijing embassy status and recognized Yasser Arafat as President, rather than the more commonly used title of Chairman of the PLO.
China as a player in Middle East policy?
China's public support for the Palestinian cause hit a new low in the early 1990s. After the Tiananmen Square massacre in 1989 it became an international pariah in political terms, but it remained a major exporter of consumer goods and importer of oil from the Persian Gulf countries. It abstained from vetoing the UN-authorized and US-led first Gulf War. By 1992, Beijing established diplomatic ties with Israel, without Israel having met any of the preconditions which China had originally demanded. Official visits to and by Beijing were balanced between Palestine and Israel, and China abstained from, rather than supported, a UN motion similar to that of 1978 condemning Zionism as racism. Moreover, Israeli settlements in the West Bank and Gaza were criticized as "harmful to the peace process," but the PLO was told that it should "respect Israeli security."
Since the beginning of the second Palestinian intifada in 2000, and with China's growing international status, it has become more proactive on the issue of Palestine. The People's Republic's first Middle East peace envoy toured both Palestine and Israel in 2002, and Beijing has called for Israel to "unconditionally implement" UN resolutions for it to withdraw from occupied areas, describing settlements as "a violation of Israel's obligations under international law." In January 2009, China responded to Israel's winter invasion of Gaza with its "5 Points for an Immediate Ceasefire." It has expressed support for the Hamas government, and hosted Hamas' foreign minister in Beijing in June 2006. However, it also supported the Annapolis conference which excluded Hamas.
China's official press has also highlighted its aid to Palestine, with official press agencies calling its economic and humanitarian aid "an important expression of China's support for the Middle East peace process." Such statements, however, have often been disingenuous about the scale of China's donations. According to Dr. Miyagi, it gave just $11 million of the $7.4 billion pledged by the international community at the 2007 International Donors' Conference for Palestine.
To expect larger aid contributions -- or more action -- likely misinterprets China's intentions as a global power. Although China's increasing international stature has been the subject of considerable speculation, specialists on its foreign policy insist that it has few ambitions towards the kind of global interventionist role that the US has played as a superpower. While China has massive economic clout as a state, the everyday wealth of its people is still just a fraction of that of most Americans or Europeans. Rather, according to Dr. Miyagi, China's priority has become the maintenance of a stable world order which will supply it with uninterrupted raw materials and energy, and continue to buy its products.
If there are actors hoping that China might offer an alternative to US hegemony and pushing the international community into a more just position on Palestine, it is not likely to happen soon -- if ever. As Dr. Miyagi points out, Palestine occupies a symbolic position for both China as a former revolutionary state and for China's Arab economic partners. However, Palestine itself has no oil and only a tiny consumer market to offer. While China may provide balance to the US's constant pro-Israel positions at the UN and other international arenas, the days of its unequivocal support for Palestinian rights are, it seems, long gone.
Sarah Irving is a freelance writer from Manchester, UK. She worked with the International Solidarity Movement in the West Bank in 2001-02 and with Olive Co-op, promoting fair trade Palestinian products and solidarity visits, in 2004-06. She now writes full-time on a range of issues, including Palestine and the wider Middle East.
 |
| It is not likely that China will offer an alternative to US hegemony regarding Palestine anytime soon. (MaanImages) |
George Habash, the late leader of the Popular Front for the Liberation of Palestine (PFLP), called China Palestine's "best friend." Indeed, he was on an official PFLP visit to China when the conflict between Palestinian forces and the Hashemite Kingdom erupted in Jordan in 1970, the events later known as "Black September."
Habash had good reason to appreciate China's friendship at the time. According to Dr. Yukiko Miyagi of the UK-based Centre for the Advanced Study of the Arab World (CASAW), one characteristic of the People's Republic's policy toward the Arab states and political movements in the 1960s was high-profile support for the Palestinian liberation movement.
"It was a matter of both ideology and identity," says Dr. Miyagi. The newly-formed Communist People's Republic of China identified with the Palestinian guerrillas and provided them with military aid and training, seeing them as fellow victims of capitalism and imperialism, as well as hoping to steer the Palestinian resistance down a socialist path. China recognized the Palestinian people as a nation in 1964 and was the first state outside the Arab world to give diplomatic recognition to the Palestine Liberation Organization (PLO). It also refused to grant the same recognition to the State of Israel.
However, according to Dr. Miyagi, China's policy was not entirely altruistic. Even in the revolutionary heat of the 1960s and early 1970s, its support for Palestinian independence was also motivated by its desire to please other Arab countries, in the hope that they would recognize the People's Republic, rather than Taiwan, as the legitimate Chinese state. As Arab countries outnumbered Israel, they were considered more valuable as allies on the world stage.
Oil imports and peace processes
In the wake of the "Cultural Revolution" and the rapprochement with the US, China's political and economic strategies shifted in the 1970s. Its support for the Palestinian liberation movement also changed and it began to adopt a more "moderate" approach. Yet, it still refused to grant Israel diplomatic recognition, and in 1978 voted in favor of a United Nations resolution which classed Zionism as a form of racism. The Chinese leadership also criticized the UN's approach to Palestine, claiming that it unfairly equated the Israeli aggressor and the Palestinian victim. However, this didn't stop it from opening up informal and secretive contacts with Israel.
This rather ambivalent position has perhaps characterized China's attitude toward the Palestinian people's rights ever since. While China maintains support for Palestinian claims to self-determination it has also become a major trading partner with Israel. According to Dr. Miyagi, by the mid-1980s, Israel was the main supplier of high technology, including agricultural equipment and military technology, to China. In addition, China's geopolitical discourse also started to include positions like "Israel's right to security." Yet, at the same time, it called the 1982 massacres at Sabra and Shatila camps in Beirut "Hitlerism" and supplied both aid and arms to Palestinian forces in Lebanon. Two years later, China gave the PLO's delegation to the Beijing embassy status and recognized Yasser Arafat as President, rather than the more commonly used title of Chairman of the PLO.
China as a player in Middle East policy?
China's public support for the Palestinian cause hit a new low in the early 1990s. After the Tiananmen Square massacre in 1989 it became an international pariah in political terms, but it remained a major exporter of consumer goods and importer of oil from the Persian Gulf countries. It abstained from vetoing the UN-authorized and US-led first Gulf War. By 1992, Beijing established diplomatic ties with Israel, without Israel having met any of the preconditions which China had originally demanded. Official visits to and by Beijing were balanced between Palestine and Israel, and China abstained from, rather than supported, a UN motion similar to that of 1978 condemning Zionism as racism. Moreover, Israeli settlements in the West Bank and Gaza were criticized as "harmful to the peace process," but the PLO was told that it should "respect Israeli security."
Since the beginning of the second Palestinian intifada in 2000, and with China's growing international status, it has become more proactive on the issue of Palestine. The People's Republic's first Middle East peace envoy toured both Palestine and Israel in 2002, and Beijing has called for Israel to "unconditionally implement" UN resolutions for it to withdraw from occupied areas, describing settlements as "a violation of Israel's obligations under international law." In January 2009, China responded to Israel's winter invasion of Gaza with its "5 Points for an Immediate Ceasefire." It has expressed support for the Hamas government, and hosted Hamas' foreign minister in Beijing in June 2006. However, it also supported the Annapolis conference which excluded Hamas.
China's official press has also highlighted its aid to Palestine, with official press agencies calling its economic and humanitarian aid "an important expression of China's support for the Middle East peace process." Such statements, however, have often been disingenuous about the scale of China's donations. According to Dr. Miyagi, it gave just $11 million of the $7.4 billion pledged by the international community at the 2007 International Donors' Conference for Palestine.
To expect larger aid contributions -- or more action -- likely misinterprets China's intentions as a global power. Although China's increasing international stature has been the subject of considerable speculation, specialists on its foreign policy insist that it has few ambitions towards the kind of global interventionist role that the US has played as a superpower. While China has massive economic clout as a state, the everyday wealth of its people is still just a fraction of that of most Americans or Europeans. Rather, according to Dr. Miyagi, China's priority has become the maintenance of a stable world order which will supply it with uninterrupted raw materials and energy, and continue to buy its products.
If there are actors hoping that China might offer an alternative to US hegemony and pushing the international community into a more just position on Palestine, it is not likely to happen soon -- if ever. As Dr. Miyagi points out, Palestine occupies a symbolic position for both China as a former revolutionary state and for China's Arab economic partners. However, Palestine itself has no oil and only a tiny consumer market to offer. While China may provide balance to the US's constant pro-Israel positions at the UN and other international arenas, the days of its unequivocal support for Palestinian rights are, it seems, long gone.
Sarah Irving is a freelance writer from Manchester, UK. She worked with the International Solidarity Movement in the West Bank in 2001-02 and with Olive Co-op, promoting fair trade Palestinian products and solidarity visits, in 2004-06. She now writes full-time on a range of issues, including Palestine and the wider Middle East.
An exclusively Jewish Investment Boom
October 26, 2009Israel has been the best performing residential real estate property market in 2009. Exclusively Jewish developments have been fueled by Israeli government tax breaks and ultra-low interest rates set by the Bank of Israel.
The Jerusalem Post reports (emphasis mine):
Mortgage rates are about 2%, according to Mortgage Israel, the country's largest home-loan brokerage. The average rate for the past five years was about 5 percent. [...]New legislation passed by the Knesset may cause the pace of construction to accelerate, pushing down property prices, Construction and Housing Minister Ariel Attias said October 8. The Knesset on August 3 approved a law proposed by Prime Minister Binyamin Netanyahu to free up publicly owned land for private development and make it easier and cheaper to buy and build homes.
"A bubble began to emerge this year, fueled by the Bank of Israel," said Shlomo Maoz, chief economist at Excellence Investments. "The bank is now beginning to raise rates again to fight inflation."
Ayelet Nir, chief economist at IBI said "though mortgages became cheap, credit was never widely available in Israel." [...]Some neighborhoods in Jerusalem, Tel Aviv and Netanya are also shielded from a collapse by constant demand from Jews from the US, France and the UK, said Bernard Raskin, regional director of Re/Max Israel, the country's largest property broker.
Groups of private investors in Tel Aviv have replaced contractors and real-estate companies as the biggest purchasers of land in Israel this year, according to the Israel Lands Administration. The companies are given tax breaks by the government that allow them to pay more, inflating property prices, Maoz said.
A closer examination of the Israeli mortgage industry reveals Western financial industry connections. Shunpiking Magazine describes the process:
Political economy of recent Zionist colonisation and war
* The alternative compromise was to replace direct economic foreign aid with loan guarantees, enabling Israel to lower its borrowing costs by using the US guarantee to obtain a favourable rate of interest in the finance capital markets. For example, the Trans-Israel Highway [2] is a multinational consortium of consortia: in Canada - Derech Eretz Highways (1997) Ltd. comprises Canadian Highways International Corporation (CHIC), builder of the toll turnpikes in Ontario and Nova Scotia, control of which was acquired by the U.S. financial conglomerate CIT Group in 1999; in Israel - Africa Israel Investment Ltd. of Tel Aviv and 36 other firms; in France - Société Générale d'Entreprises of Paris; and in the United States - Hughes Transportation Management Systems and Raytheon Corp., the weapons manufacturer which supplied the billion-dollar, dysfunctional Patriot missile system to Israel. The para-military highway project itself was constructed from a US$3-billion contract, with 80 per cent of any potential losses guaranteed ...by the Israeli government. In a word: the mutual fleecing of each lesser predator by a bigger predator-partner goes 'round and around and it comes out here... in these long-term loan guarantees floated on international financial markets. For their part, business interests based in Israel acquire access to capital by means of free-trade agreements and most-favoured-nation status annexing their market to the financial houses of Wall Street [United States], London and Frankfurt [the European Union] and Bay Street [Canada].
* The first cries of pain in the business press of Israel after Hamas' election to office in the Palestine Legislative Council elections of 25 January 2006 were over the need to get the US to extend the loan guarantees ... even though only about half the facility had been used up [the data in the Ynet article below discloses that US$4.9 of US$9.0 billion has been used]. The electoral verdict created great anxiety in Tel Aviv among those sections of Israeli business and industry living off the avails of the loan guarantees. Hamas, the Islamic Resistance Movement, which won the majority and the democratic right to form the government, was not (and still is not) committed to recognising the Zionist colonies of the West Bank as Israeli territory. This non-recognition gravely jeopardises the entire house-of-cards just elaborated.
Summary:
a. Israel borrows in the money market at a highly preferred rate.
b. The Zionist magnates of the construction and real estate industry - a sector through which the Sharon family enriched itself, and intimately linked with the Jewish National Fund which holds virtually 100 per cent of the land "in trust" (and its parent, the World Zionist Council, composed of Anglo-American finance capitalists) - then borrow from the Israeli government at a slightly higher rate, but still below the mortgage market rate within Israel.
c. Finally, the numerous settlers borrow from the tiny handful of banks and-or fat-cat settlement developers at the prevailing mortgage market rate.
China Should Raise Euro, Yen Holdings, News Reports
Oct. 26 (Bloomberg) -- China should increase the representation of the yen and the euro in its foreign-exchange reserves, the Financial News, a newspaper affiliated with China’s central bank, reported today.
The U.S. dollar should retain the largest weighting in the reserves, albeit a smaller proportion than at present, according to an article by Zhou Hai carried by the Beijing-based paper. The holdings of euro and yen should be increased to reflect China’s growing trade with the European Union and Japan, the report said, without providing Zhou Hai’s job description.
The government is working to maintain an “appropriate” size of currency reserves to reduce pressure on inflation and the yuan’s appreciation, the author wrote in the article. China should improve the yuan’s exchange-rate mechanism and use monetary policy tools “reasonably” to lessen the need for “passive” purchases of foreign currencies, Zhou wrote.
China doesn’t need to include the Hong Kong dollar in its reserves owing to the latter’s peg to the U.S. currency, according to the report.
To contact Bloomberg News staff for this story: Belinda Cao in Beijing at +86-10-6535-2316 or lcao4@bloomberg.net
S&P 500 Overvalued by 40%, Set to Fall, Smithers Says
By Patrick Rial
Oct. 26 (Bloomberg) -- The U.S. Standard & Poor’s 500 Index is about 40 percent overvalued and headed for a drop as central banks pull back on securities purchases that pushed up asset prices, according to economist Andrew Smithers.
Declines are also likely because banks will need to sell more shares to raise capital and restore their financial health, the economist and president of research firm Smithers & Co. said in an Oct. 23 interview at Bloomberg’s Tokyo office. A 40 percent tumble from the S&P 500’s price at the end of last week of 1,079.60 would take the gauge to 647.76, below its March low.
“Markets are very vulnerable to an end of quantitative easing,” said Smithers, 72, who recommended avoiding stocks in 2000 just as the U.S. benchmark entered a two-year bear market. “Central banks, they’ve got to stop some time and if that happens everything will come down.”
Central banks from the Federal Reserve to the Bank of England last year embarked on unprecedented measures to flood credit markets with cash in order to rescue the global financial system from the worst crisis since the Great Depression.
Those purchases may be nearing an end. The Fed’s emergency liquidity programs including the Term Auction Facility and commercial paper purchases have shrunk as the central bank completes the scheduled purchases of housing debt and Treasuries. Bank of England policy makers voted unanimously at their latest meeting to leave the asset purchase program unchanged, rather than move to increase it, minutes showed.
Asset Prices
Asset purchases have doubled the size of the Fed’s balance sheet to $2.1 trillion since the start of the current financial crisis. The Bank of England has spent 175 billion pounds ($286 billion) over the last seven months to rescue the economy.
The boost to asset prices globally helped send the S&P 500 up by 60 percent from its 12-year low on March 9. Crude-oil prices have more than doubled from last year’s bottom in December, reaching as high as $82 a barrel. This month, a Hong Kong apartment sold for a record price-per-square foot.
“Quantitative easing has set off another sharp, and so far containable asset bubble,” Smithers said. “But if it gets too high and starts to come down then we’ll go straight back” into recession.
The economist said that he stopped buying equities in the 1990s because of expensive valuations and began purchasing them again only for a brief period during the lows of the current crisis.
Tobin’s Q Ratio
Smithers, along with fellow economist Stephen Wright, argued that U.S. equities were grossly overvalued in a March 2000 book the two co-authored entitled “Valuing Wall Street.” The S&P 500 Index plunged 49 percent over 2 1/2 years from a record high reached that month.
He based his prediction in the book on Tobin’s Q, an indicator of whether the market is overvaluing or undervaluing company assets compared with their replacement cost. He uses both the Q ratio, as well as a cyclically adjusted price-to- earnings ratio compiled by Yale University’s Robert Shiller, for his estimate that U.S. shares are 40 percent overvalued.
In his latest book published in July, “Wall Street Revalued,” Smithers argues central banks need to police asset prices such as equities, real estate and debt in order to prevent the bubble and crash cycle seen in recent years.
Imperfectly Efficient
In the book he proposes a successor to the efficient markets hypothesis, naming it the imperfectly efficient market hypothesis. Smithers, who worked for 27 years at S.G. Warburg & Co. where he ran the investment management business, contends that asset prices rotate around a fair value level that can be objectively measured, whereas efficient market theorists postulate assets are always valued at the correct price and therefore need no regulation by authorities.
Central bankers may be catching on. Federal Reserve Chairman Ben S. Bernanke said on Oct. 19 asset bubbles present a challenge that Asian governments will have to deal with in the future. That contrasts with his 2002 statement that monetary policy can’t be “directed finely enough to guide asset prices.”
Not all equity markets are as overpriced as the U.S., Smithers said. Japan may be the world’s cheapest major market though he doesn’t forecast short-term gains from betting on the nation’s stocks.
Cheap Japan?
Profit margins at Japanese companies are likely to improve as companies invest less, lowering depreciation costs, he said. Depreciation eats up about two-thirds of earnings in Japan, compared with less than half for U.S. corporations, according to Smithers. Firms plan to cut capital spending 10.8 percent this year, the Bank of Japan’s quarterly Tankan survey released this month showed.
“It’s quite likely that Japan is the only significant market in the world that is not seriously overvalued,” he said. “When investment comes down, depreciation comes down.”
The economist also said banks such as Goldman Sachs Group Inc. will likely break up when they become subject to sliding- scale capital requirements that penalize them for being too large. Rising profits at financial institutions has largely been the result of shrinking competition in market-making, which has in turn provided banks with inside information on trading patterns, Smithers said.
“Market-making has become a doomsday machine,” Smithers said. “People are arrogant and think they can do wonders and they’ll be all too happy to split off. And you should raise the capital requirements until they do split off.”
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
Leader: Foreigners behind regional terror attacks
Press TV - October 26, 2009 11:16:25 GMT
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Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei |
Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei says terrorist attacks in Muslim countries like Iran, Iraq and Pakistan are carried out by foreign agents.
"Bloody measures in some Muslim countries such as Iraq and Pakistan and certain parts of Iran are aimed at creating discord and difference among Shia and Sunni Muslims," said Ayatollah Khamenei in a meeting with Iranian officials in charge of organizing Hajj ceremonies on Monday.
"This is why Muslims should pay great attention to the issue of their unity," added the Leader.
"Perpetrators of terrorist and bloody moves are directly or indirectly linked to foreign agents," the Leader said.
Ayatollah Khamenei said that the Hajj pilgrims cannot remain indifferent to events happening in the Muslim world particularly in Iraq, Afghanistan, Palestine and parts of Pakistan.
"During Hajj ceremonies, [the pilgrims] should be sensitive about moves against the Islamic unity or efforts which aim to offense the flag of the Muslim world which has been hoisted in Iran," added the Leader.
The Leader's remarks came after at least 41 people, including seven senior commanders of the Islamic Revolution Guards Corps (IRGC), were killed in a bombing on October 18 during a unity gathering of Shia and Sunni tribal leaders in the town of Pishin on the Iran-Pakistan border.
The Pakistan-based Jundallah, closely affiliated with the notorious al-Qaeda [CIA] organization, accepted responsibility for the deadly attack.
The Jundallah terrorist group, led by Abdolmalek Rigi, has staged a torrent of terrorist attacks in Iran.
In a recent interview with Press TV, Rigi's brother, Abdulhamid, confirmed that the Jundallah leader had established links with US agents.
Abdulhamid said that at just one of his meetings with the US operatives, Rigi had received $100,000 to foment sectarian strife in Iran.
Meanwhile, synchronized car bombings in Baghdad on Sunday killed more than 160 people and injured over 700 others.
The bombings, detonated within a minute of each other, also damaged the Justice Ministry and Provincial Council complexes.
"Bloody measures in some Muslim countries such as Iraq and Pakistan and certain parts of Iran are aimed at creating discord and difference among Shia and Sunni Muslims," said Ayatollah Khamenei in a meeting with Iranian officials in charge of organizing Hajj ceremonies on Monday.
"This is why Muslims should pay great attention to the issue of their unity," added the Leader.
"Perpetrators of terrorist and bloody moves are directly or indirectly linked to foreign agents," the Leader said.
Ayatollah Khamenei said that the Hajj pilgrims cannot remain indifferent to events happening in the Muslim world particularly in Iraq, Afghanistan, Palestine and parts of Pakistan.
"During Hajj ceremonies, [the pilgrims] should be sensitive about moves against the Islamic unity or efforts which aim to offense the flag of the Muslim world which has been hoisted in Iran," added the Leader.
The Leader's remarks came after at least 41 people, including seven senior commanders of the Islamic Revolution Guards Corps (IRGC), were killed in a bombing on October 18 during a unity gathering of Shia and Sunni tribal leaders in the town of Pishin on the Iran-Pakistan border.
The Pakistan-based Jundallah, closely affiliated with the notorious al-Qaeda [CIA] organization, accepted responsibility for the deadly attack.
The Jundallah terrorist group, led by Abdolmalek Rigi, has staged a torrent of terrorist attacks in Iran.
In a recent interview with Press TV, Rigi's brother, Abdulhamid, confirmed that the Jundallah leader had established links with US agents.
Abdulhamid said that at just one of his meetings with the US operatives, Rigi had received $100,000 to foment sectarian strife in Iran.
Meanwhile, synchronized car bombings in Baghdad on Sunday killed more than 160 people and injured over 700 others.
The bombings, detonated within a minute of each other, also damaged the Justice Ministry and Provincial Council complexes.
October 25, 2009
Police in £9m scheme to log 'domestic extremists'
Thousands of activists monitored on network of overlapping databases
By Paul Lewis, Rob Evans and Matthew Taylor
The Guardian
October 25, 2009
By Paul Lewis, Rob Evans and Matthew Taylor
The Guardian
October 25, 2009
Detailed information about the political activities of campaigners is being stored on IT systems.Photograph: Fiona Hanson/PA
Police are gathering the personal details of thousands of activists who attend political meetings and protests, and storing their data on a network of nationwide intelligence databases.
The hidden apparatus has been constructed to monitor "domestic extremists", the Guardian can reveal in the first of a three-day series into the policing of protests. Detailed information about the political activities of campaigners is being stored on a number of overlapping IT systems, even if they have not committed a crime.
Senior officers say domestic extremism, a term coined by police that has no legal basis, can include activists suspected of minor public order offences such as peaceful direct action and civil disobedience.
Three national police units responsible for combating domestic extremism are run by the "terrorism and allied matters" committee of the Association of Chief Police Officers (Acpo). In total, it receives £9m in public funding, from police forces and the Home Office, and employs a staff of 100.
An investigation by the Guardian can reveal:
• The main unit, the National Public Order Intelligence Unit (NPOIU), runs a central database which lists thousands of so-called domestic extremists. It filters intelligence supplied by police forces across England and Wales, which routinely deploy surveillance teams at protests, rallies and public meetings. The NPOIU contains detailed files on individual protesters who are searchable by name.
• Vehicles associated with protesters are being tracked via a nationwide system of automatic number plate recognition (ANPR) cameras. One man, who has no criminal record, was stopped more than 25 times in less than three years after a "protest" marker was placed against his car after he attended a small protest against duck and pheasant shooting. ANPR "interceptor teams" are being deployed on roads leading to protests to monitor attendance.
• Police surveillance units, known as Forward Intelligence Teams (FIT) and Evidence Gatherers, record footage and take photographs of campaigners as they enter and leave openly advertised public meetings. These images are entered on force-wide databases so that police can chronicle the campaigners' political activities. The information is added to the central NPOIU.
• Surveillance officers are provided with "spotter cards" used to identify the faces of target individuals who police believe are at risk of becoming involved in domestic extremism. Targets include high-profile activists regularly seen taking part in protests. One spotter card, produced by the Met to monitor campaigners against an arms fair, includes a mugshot of the comedian Mark Thomas.
• NPOIU works in tandem with two other little-known Acpo branches, the National Extremism Tactical Coordination Unit (Netcu), which advises thousands of companies on how to manage political campaigns, and the National Domestic Extremism Team, which pools intelligence gathered by investigations into protesters across the country.
Denis O'Connor, the chief inspector of constabulary, will next month release the findings of his national review of policing of protests. He has already signalled he anticipates wide scale change. His inspectors, who were asked to review tactics in the wake of the Metropolitan police's controversial handling of the G20 protests, are considering a complete overhaul of the three Acpo units, which they have been told lack statutory accountability.
Acpo's national infrastructure for dealing with domestic extremism was set up with the backing of the Home Office in an attempt to combat animal rights activists who were committing serious crimes. Senior officers concede the criminal activity associated with these groups has receded, but the units dealing with domestic extremism have expanded their remit to incorporate campaign groups across the political spectrum, including anti-war and environmental groups that have only ever engaged in peaceful direct action.
All three units divide their work into four categories of domestic extremism: animal rights campaigns; far-right groups such as the English Defence League; "extreme leftwing" protest groups, including anti-war campaigners; and "environmental extremism" such as Climate Camp and Plane Stupid campaigns.
Anton Setchell, who is in overall command of Acpo's domestic extremism remit, said people who find themselves on the databases "should not worry at all". But he refused to disclose how many names were on the NPOIU's national database, claiming it was "not easy" to count. He estimated they had files on thousands of people. As well as photographs, he said FIT surveillance officers noted down what he claimed was harmless information about people's attendance at demonstrations and this information was fed into the national database.
He said he could understand that peaceful activists objected to being monitored at open meetings when they had done nothing wrong. "What I would say where the police are doing that there would need to be the proper justifications," he said.
Is equality a ‘nightmare’ for liberal Zionists?
Ali Abunimah responds to Jeffrey Goldberg’s interview with Jeremy Ben-Ami:
Here, Jeremy Ben-Ami describes a one-state solution as a "nightmare":
JG: But they’re by no means Zionists. Helena Cobban, who is going to be speaking on this blogger panel, is close to a one-stater, as far as I can tell.
JB: J Street officially will not use the term "One-State Solution." That is an oxymoron because it is a one-state nightmare. That is the thing we are most opposed to — moving in a one-state direction.
JG: A nightmare for practical reasons or a nightmare for moral reasons?
JB: A nightmare for the Jewish people. There would be no more Israel. One state is not a solution, one state is a dissolution.
Look at his words, it’s really amazing. He could be a white supremacist in the south contemplating the end of Jim Crow, or an Afrikaner talking about the end of apartheid. All this is apparently so unremarkable however when it comes to Zionists contemplating the end of Jewish supremacy. This, as well as J Street’s other recent actions, convince me more than ever that this organization will not be part of the solution. It is at best Kadima to AIPAC’s Likud/Yisrael Beitenu. Which means in effect no difference at all. I think there are some sincere people who may have been attracted to J Street, but ultimately there’s no Zionist solution to the Zionist problem, just like there’s no racist solution to the problem of racism.
Another 147 people dead in Baghdad, cui bono?
October 25, 2009 by Notsilvia NightOnce again, in one of the bloodiest attacks ever, two bombings killed and injured over 800 people. (update:In the first reports those were called suicide bombings, now we hear about car-bombs of cars parked in a parking garage.) Nearly a whole street was flattened. This surely is not the kind of destruction which can be caused by a home-made bomb, put together in some basement.
The people behind the attacks, we are told, are supposedly former supporters of the late Saddam Hussein or maybe members of AlQaida or other Sunni radical groups, supported by Syria (What interest would Syria have in destabilizing Iraq, while Syria´s ally Iran is supporting the Shiite dominated government?).
While the attacks were supposedly directed at government buildings, the people killed or maimed were mainly civilians on the street.
What kind of support could Saddam´s supporters possibly gain from the civilian population with this kind of brutal attacks against them. Do they actually think that anyone would vote for them after having lost family or friends in such an attack or being afraid the next attack might kill a loved one?
Saddam Hussein was mainly a secular politician, who opposed the Shiite religious opposition for political, not for religious reasons (the Shiite authorities were close to Iran, while Saddam on the behest of his US-supporters was fighting Iran)
During the early years of the American occupation, while some of the Shiite establishment allied themselves with the Americans, the more radical leaders of both Sunnis and Shiites called for resistance and at the same time national unity across sectarian borders.
It made no sense that Iraqis of either side would attack the civilian population of the other side while they saw the Americans still as their main enemy.
It made no sense at all that a short time into the American occupation supposedly religiously motivated attacks against mosques and public places started.
Iraqi blogger Riverbend wrote:
“Iraqis have intermarried and mixed as Sunnis and Shia for centuries. Many of the larger Iraqi tribes are a complex and intricate weave of Sunnis and Shia. We don’t sit around pointing fingers at each other and trying to prove who is a Muslim and who isn’t and who deserves compassion and who deserves brutalization.”
But they were suicide attacks, were are told, they must be real.
Really?
Here is an article by SOTT Focus on the issue:
Suicide Bombings – A Favourite US Counter-Insurgency Tactic
Roger Trinquier, an immensely influential French counter-insurgency expert, suggested in his book Modern Warfare: A French View of Counterinsurgency (1961) (Available online here) three simple principles of Counter Insurgency:
1. separate the guerrilla from the population that supports him;
2. occupy the zones that the guerrillas previously operated from, making them dangerous for him and turning the people against the guerrilla movement;
3. coordinate actions over a wide area and for a long enough time that the guerrilla is denied access to the population centres that could support him.Remote controlled bombings masquerading as “suicide bombings” that are carried out by the US, British and Israeli occupation forces fit these principles very neatly. By detonating bombs on a daily basis across Iraq and Afghanistan and via the propaganda organs touting them as being the work of Iraqi/Afghani “suicide bombers” belonging to the insurgency, the occupying military hopes to achieve several goals:
-cut off the widespread support base that the insurgency have amongst the Iraqis
-create tensions between religious lines, especially by ascribing the faked “suicide attacks” to either Shias or Sunnis.
In other words divide and conquer.
Here is a collection of some of the reports of fake attempted “suicide attacks” coming out of Iraq:
In May 2005, former Iraqi exile Imad Khadduri, reported how a driver whose license had been confiscated in Baghdad was questioned for half an hour at an American military camp, informed that there were no charges against him, and then directed to the al-Khadimiya police station to retrieve his license.
“The driver did leave in a hurry, but was soon alarmed with a feeling that his car was…carrying a heavy load, and he also became suspicious of a low flying helicopter that kept hovering overhead, as if trailing him. He stopped the car and … found nearly 100 kilograms of explosives hidden in the back seat…the only feasible explanation for this incident is that the car was indeed booby trapped by the Americans and intended for the al-Khadimiya Shiite district of Baghdad. The helicopter was monitoring his movement and witnessing the anticipated ‘hideous attack by foreign elements’”.(According to Khadurri, the scenario was repeated again in Mosul, when a driver’s car broke down on the way to the police station where he was sent to reclaim his license. The mechanic he then turned to discovered the spare tire to be laden with explosives.)
In the same month, 64-year-old farmer Haj Haidar, who was taking his tomato load from Hilla to Baghdad, was stopped at an American checkpoint and had his pick-up thoroughly searched. Allowed to go on his way, his 11 year-old grandson then told him he saw one of the American soldiers placing a gray melon-sized object amidst the tomato containers. Realizing the vehicle was his only means of work, Haidar fought his initial impulse to run and removed the object from his truck, placing it in a nearby ditch. He later learned that it had in fact exploded, killing part of a passing shepherd’s flock of sheep.
At this point, legendary Iraqi blogger ‘Riverbend’ reported that many of the supposed suicide bombings were in fact remotely detonated car bombs or time bombs. She related how a man was arrested for allegedly having shot at a National Guardsman after huge blasts struck in west Baghdad. But according the man’s neighbours, far from having shot anyone, he had seen “an American patrol passing through the area and pausing at the bomb site minutes before the explosion. Soon after they drove away, the bomb went off and chaos ensued. He ran out of his house screaming to the neighbors and bystanders that the Americans had either planted the bomb or seen the bomb and done nothing about it. He was promptly taken away.”
In Basra on September 19th 2005, suspicious Iraqi police stopped undercover British soldiers in a Toyota Cressida. The two men then opened fire, killing one policeman and wounding another. Eventually captured, they were identified by the BBC as members of the SAS elite special forces. The soldiers were in wigs and dressed as Arabs and their car was packed with explosives and towing equipment.
Fattah al-Shaykh, a member of the Iraqi National Assembly, told Al-Jazeera TV that the car was meant to explode in the centre of Basra’s popular market. Before his thesis could be confirmed, however, the British army’s tanks flattened the local prison cell and freed their sinister operatives.
In 2005 American and British troops were still very much engaged in fighting the Iraqi insurgency. British and American military planners probably saw it in their interest to make the resistance look bad in the eyes of the Iraqi people.
Today, however, a divided and chaotic Iraq would no longer be in the American interest, since America is busy fighting In Afghanistan and Pakistan two other endless wars.
So in who´s interest would it be?
The “militants”, we are told by Reuters about the bomb attacks on July 31, 2009 against five Shiite mosques,
al Qaeda and other Sunni insurgent groups, most active in ethnically mixed areas north of Baghdad, are trying to reignite the sectarian conflict that brought Iraq to the brink of all-out civil war in 2006 and 2007
Ask yourself who would gain from such a civil war and a divided Iraq?
Who has written policy papers proposing the need for an Iraq divided in 3 parts?
In February 1982 the Israeli policy planner and intellectual Oded Yinon wrote:
A Strategy for Israel in the Nineteen Eighties
The late human rights activist Israel Shahak, who translated this policy-paper, commented:
The following essay represents, in my opinion, the accurate and detailed plan of the present Zionist regime (of Sharon and Eitan) for the Middle East which is based on the division of the whole area into small states, and the dissolution of all the existing Arab states. I will comment on the military aspect of this plan in a concluding note. Here I want to draw the attention of the readers to several important points:
1. The idea that all the Arab states should be broken down, by Israel, into small units, occurs again and again in Israeli strategic thinking. For example, Ze’ev Schiff, the military correspondent of Ha’aretz (and probably the most knowledgeable in Israel, on this topic) writes about the “best” that can happen for Israeli interests in Iraq: “The dissolution of Iraq into a Shi’ite state, a Sunni state and the separation of the Kurdish part” (Ha’aretz 6/2/1982). Actually, this aspect of the plan is very old.
2. The strong connection with Neo-Conservative thought in the USA is very prominent, especially in the author’s notes. But, while lip service is paid to the idea of the “defense of the West” from Soviet power, the real aim of the author, and of the present Israeli establishment is clear: To make an Imperial Israel into a world power. In other words, the aim of Sharon is to deceive the Americans after he has deceived all the rest.
Some of the above mentioned American Neo-Conservatives then wrote another just as revealing policy-paper for the Israeli Netanyahu government in 1996
“A Clean Break: A New Strategy for Securing the Realm”
5 years before 9/11, this report is calling for an invasion of Iraq.
With contributions from: Richard Perle, Douglas Feith, and David Wurmser all members of the “Study Group on a New Israeli Strategy,” and all key Iraq-war players in Bush administration.
The paper b.t.w. also calls for “engaging” Hizbollah (the tactical defense force of southern Lebanon) as well as Syria and Iran militarily.
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