Archive for July 12th, 2009


July 12, 2009


Abstract: Some background on the two deepest mistakes of the Obama administration, so far. By trying desperately to fix the unfixable, the Nixon-Reagan-Clinton-Bush civilizational model, which ought to be known as the plutocratic model, Obama is losing track of his own agenda. That Nixon-Reagan model has pushed the economy in the coffin corner: the greater what passes for an economic activity, the agitation of money, the more civilization loses support, and the more it gets cornered into an ever poorer outcome.

Increasing this wasting of hope and outcome is the fruitless agitation the military-industrial complex provides with in Afghanistan. Nobody seems to have noticed that the philosophical justification for the war there are now inexistent, due to Western self contradiction. Having been already philosophically annihilated, pretty much insures defeat in a war. That crushing defeat will be preceded by an enormous waste of life and treasure insuring further the descent of Obama’s dream down into the abyss.

Not to say that there are no ways out before the trap snaps shut. But how much more of a ride can Obama get on "we had incomplete information"?



Paul Krugman observes that: "…before Inauguration Day some of us worried that the stimulus plan would prove inadequate… The bad employment report for June made it clear that the stimulus was, indeed, too small. But it also damaged the credibility of the administration’s economic stewardship. There’s now a real risk that President Obama will find himself caught in a political-economic trap." (New York Times, July 9.)

This essay supports and extends Krugman’s critique. Some could object that Krugman, a few weeks ago, had ridiculed right wingers for not giving enough time to the stimulus, and that he has now flip-flopped. But, in truth, Krugman used his brain: meanwhile, the deterioration of the already dismal economy has appeared as a new factor. Just watch California’s IOUs.

It is not just a question of the stimulus being too small. One may wonder if that "stimulus plan", so far rather an anti-stimulus plan, was not just a fig leaf to hide the real thing, a giant gift to the few, the better, the richer, the private individuals who truly decide who gets what, the masters of the universe, the bankers.

Some will say I exaggerate. But they should get better informed: putting a few private individuals in charge of money creation and distribution is the essence of the fractional reserve money system. The recent crisis shows that it was a grotesque mistake: the government should regain what was one of its main functions, since civilization was created, and money became crucial to the market. That function is the control of the currency. It should not be left to Goldman Sachs.

Between outright gifts, various loans and guarantees, the amount provided by the government to the private bankers amounts to many trillion dollars (how much exactly depends upon what one looks at).

That banks should have kept on functioning, and that the government should have made sure of this is beyond question. That capital (= money) should have been given by the government was therefore necessary. But that the money should have been given, or lent, or guaranteed to the very people who caused the disaster, and the theft, is beyond the pale. It is turning the government into aiding and abetting organized crime (presumably to go along not prosecuting, and thus approving the theoreticians of torture, all the more since one of the justifiers of torture is no less than a Federal Judge).

It has been exactly as if, alerted of the Madoff Ponzi-pyramid scheme, the government, instead of arresting Madoff, had given, lent and guaranteed, enough money to him, and his associates, so they could go on with their organized crime business. But here we are.

Meanwhile, only 140 of the largest 500 companies are American, the lowest number ever; this shows that the plutocratic gang can’t even get economic imperialism right, so busy they are filling their own pockets.



A large class of American economists, politicians , thinkers, neoconservatives, entrepreneurs, journalists, pundits and other opinion makers and controllers in the USA have clearly not studied the classics and history with enough depth to realize that the USA ought to be attached to civilization, and to have a correct feeling about what civilization is made of. For short, and to be polite, we will call that happy ensemble the oligarchy.

Civilization is about cities: the New York Times was explaining today that the cities were getting less money from the stimulus than rural areas, relatively to their contribution to GDP, and taxes. So, just as the neoconservatives before, the Obama administration does not seem to understand where civilization occurs.

Civilization is about people living on top of each other, contributing skills and ideas to each other, factorially (in the sense of the n! function) contributing new thoughts and feelings to each other. The strength of cities is in the massive production of ideas, from inter-netting with each other’s minds.

Now all this is complicated: a city is like a gigantic beast, it has to be taken care of, fed, defended, cleaned, organized, its vivifying juices have to flow. And it needs a mind to organize all of this, and making it so. Part of that mind is called the government. Therein the essence of eco-nomy, house-management; it is about managing the city.

Trade, of course is a necessity: the city lives off the land, and some of this land can be pretty far. Goods have to be brought over. And the city needs to entice those bringing the goods with something the city produce, thanks to its superior intelligence.

Archeology, for example in Peru, shows that the early cities earned their keep through trade, adding value through their skill sets to commodities from far away. So it was also during the rise of cities in the European middle ages. Thus the freer the trade, the better. As long as it is not a strategic threat, security being the prime directive: existence precedes essence.

Thus, an army could not be avoided, because the city was richer, and had to defend its trade routes it depended upon, and its agricultural areas that fed it, and the water it drank.



Where was money in all this? Money is not of primary importance. The gigantic Inca empire (Tawantinsuyu), did not use money. In Cuzco in 1589, Don Mancio Serra de Leguisamo — an original conqueror of Peru — wrote in his will:

"We found these kingdoms (Tawantinsuyu) in such good order, and the said Incas governed them in such wise [manner] that throughout them there was not a thief, nor a vicious man, nor an adulteress, nor was a bad woman admitted among them, nor were there immoral people. The men had honest and useful occupations. The lands, forests, mines, pastures, houses and all kinds of products were regulated and distributed in such sort that each one knew his property without any other person seizing it or occupying it, nor were there law suits respecting it… the motive which obliges me to make this statement is the discharge of my conscience, as I find myself guilty. For we have destroyed by our evil example, the people who had such a government as was enjoyed by these natives. They were so free from the committal of crimes or excesses, as well men as women, that the Indian who had 100,000 pesos worth of gold or silver in his house, left it open merely placing a small stick against the door, as a sign that its master was out. With that, according to their custom, no one could enter or take anything that was there. When they saw that we put locks and keys on our doors, they supposed that it was from fear of them, that they might not kill us, but not because they believed that anyone would steal the property of another. So that when they found that we had thieves among us, and men who sought to make their daughters commit sin, they despised us."

The Incas used commodities as currency though: salt, cacao, etc. Taxes were also paid in work due on myriad crop terraces, irrigation canals, temples, or fortresses, and an extremely extensive road network (which was how trade and armies could go around the 4,000 kilometers long empire). Rulers paid their laborers in clothing and food. The taxation system was similar to the one serfdom established in the European Middle Ages.

Indeed in Middle Age Europe, in order to compensate the local Lord’s protection and rendering of order and justice, European serfs owed strictly legislated work, and products of their work. By escaping their village and duties for, say, 30 days, they were rendered free of their obligations.

In light of the preceding, in the modern European states, money is basically used in two ways. One way is as currency of the free market system, about half of the economy. The other way, the other half of the economy, is government directed, and money is used as the accounting medium making the system as lean and honest as possible. Government indeed is a monopoly, and so are its instruments, so abuse is tempting, and strict accounting a must.

For example defense departments in large countries, starting with the USA, are monopolies. When Eisenhower wanted a freeway system covering the entire USA, he followed Hitler’s example. Eisenhower, just as Hitler, observed that a freeway network was a strategic asset, and thus established it by government fiat and spending.

France was less rushed, and used less governmental an approach. France established a Public-Private partnership model for freeways, and very high speed train lines. It has now been extended to the nuclear sector. France started this Public-Private model in 1924, when CFP (Compagnie Francaise des Petroles = French Oil Company) was founded by enlisting ninety banks and companies at the behest of Prime Minister Poincare’. That was to avoid the alternative of depending upon Royal Dutch Shell (now Shell is the world’s largest company by revenue, and Total CFP is the sixth).

American free marketers have reigned in Washington for decades, and they have veered away from the strategic approach of Roosevelt, Truman, Eisenhower or Kennedy.

The American oligarchy instead has insisted to make money the measure of all things, instead of making the city itself the measure of all things. Thus the oligarchy has supported only what it could measure with money.

As the years, and then the decades passed, that error was ever deepened. The GDP measures the agitation of money, not the plenitude of civilization. The more money is agitated, the more GDP grows: traffic jams in cities, and, in general, inefficiency in energy processing, are excellent for GDP. The more efficient France gets, the lower her GDP, the more inefficient the USA gets, the higher its GDP. Of such little ineptitudes glory is made, and hubris swells.

The model of ubiquitous money cannot work, because a lot of the economy cannot function from and by the profit motive. Thus entire crucial sectors of the economy get ignored, and the economy dies, because some of its vital organs are dying.

This is why the European Union has now 163 companies among the 500 companies with the largest revenues, and the USA only 140 (latest numbers, 2009). One would expect the USA to crush the EU in that particular dimension, since, after four decades of relentless submission to and celebration of, money and corporations, corporations with money made in the USA should dominate, worldwide. Instead, they are shrinking, and have not been so shrunk, ever.

Thus, not only does American plutocracy make for a bad society, it makes for increasingly uncompetitive capitalism. One of the reasons is well known: American companies are supposed to organize health care for their workers. OK: why not bed and breakfast, marriage and burial services too? Verily the health care plutocrats try to maximize their profits, and are ready to devour themselves to do so. So great is their obsession with money making, that they have forgotten that money making is the pretext for great products, not the other way around. For them, money is the ultimate product.

An example of this is the sorry state of Boeing. Boeing always made great planes. Maybe not always within budget or on time, but great planes nevertheless. Until now. The "Dreamliner", the 787, is turning into a flatliner nightmare. Major problems with engineering have surfaced, in a silly attempt to leap frog Airbus, by introducing Airbus style technologies that even Airbus thinks are going too far. (It looks like the 787, a plastic plane, will need seriously more titanium.)

Why is Boeing, the prime high tech company in the USA going down the drain? Because the money men invaded Boeing, just as they invaded GM, or the Silicon Valley. The result: mediocre products, all over.



A new model, the coffin corner model, explains that the more the agitation of money, the more the flow of money is detached from the house it is supposed to support, so the more civilization loses support, goes down, and crashes.

The efforts of the government of the USA have been mostly, so far, to bring back the agitation of money, in the hope that agitation means civilization. It does not. Instead it is an example of flying the coffin corner. The coffin corner explains, among other things, how mighty civilizations can lose their way, and the more they try to get out of their error the old fashion way, by doing more of the same more frantically, the more they contribute to it. The more they lose support and tumble to the ground.

For example the Mayas reacted to the abuse of their environment by abusing it some more. Instead of analyzing the problem, taking a time out, and enforcing new solutions, the Mayas did more of the same, just more agitated. In the end, they got so agitated they killed each other. (To be fair, let’s point out that there were victim of a stupendous, multi decade drought that their formidable irrigation systems, with its giant reservoirs and canals was unable to resist; but maybe a timely transformation into a hydraulic dictatorship, Middle Eastern style, would have saved the Maya civilization: instead, there were a lot of small and nasty states, soon at each others’ throats.)

The large European governments of the Middle Ages got out of the coffin corner the right way: they RESTRICTED the velocity of some economic activities (to save or reconstitute the forests), and they pushed advanced technology. The French government, with characteristic imperial decisiveness, "banned" people, all people, from some mountain areas, so that forests and soil could grow back. By the fourteenth century, intellectual debate in Paris had left the Greeks in the dust (see note).

The European governments also got two lucky breaks: the Black Plague and the war between Paris and London (which boosted individual wealth, while lowering that dreadful velocity/demand/ecological load). It’s no coincidence that both redeeming catastrophes started together (1337 and 1348 CE). (All the more since they were accompanied by famines and the early symptoms of the Little ice Age, just a few years before; the later struck a society victim of ecological overstretch, hence the rest.)



This Great Repression out there is much more serious than the Great Depression of the 1930s. The Great Depression of the 1930s was the result of a deliberate maximum growth policy in the UK and the USA, to get out of the economic shadow of World War One. It was an accident in the course of human events: a deliberate bubble, in the 1920s, got out of control, and efforts to control it turned out to have been misinformed, and inappropriate.

What we have now is different: these are the symptoms of a civilizational crash. Forces latent for centuries, if not millennia, are at work, and they are interfering with each other, causing rogue waves, threatening the Occidental ship of state, as never since the Huns and Nazis breathed down the neck of the Occident .

The mighty economic counselors of Obama have understood this strictly not. How could they? They set the fire! Biden saw the light, declaring: "we did not see this coming". But, Obama cooled that breezily with a soothing “there’s nothing we would have done differently”. Presumably, indeed, nothing could have been done differently to revive the monster that devoured civilization: the agitation of money directed by those private individuals who decide who gets what in the USA, since the government has abdicated its most major organizational role.

So far the stimulus for the People has been about 50 billion dollars. The banks got trillions. But the Obama stimulus intends to direct 140 billion dollars towards the states as these intend to cut 166 billion dollars. So, overall, once Obama will have been done stimulating the states, it will not be a stimulus, but an ANTI STIMULUS. A new financial innovation, I guess.

The coffin corner model insists that economic activity should directed towards supporting the house ("eco"). To have money activity is not enough, and too much of it, especially when misdirected, is literally counterproductive.

Through AIG, Goldman Sachs (which placed advisers in the Obama administration, presumably to tell it where to send the money) was given 13 billion dollars from the taxpayers. Yes, given, not lent. This $13 billion gift is different from the money given to Goldman under the table by the Fed secretly (if any) and the money lent through the TARP to Golman. Goldman has announced twenty billion dollars, at least, will go to bonuses (hence two thirds of the outrageous bonuses will have been paid by taxpayers).

To make a long story short, the stimulus to the People is 50 billion dollars so far, and the stimulus to the private individuals called bankers, at least 2,500 billions, 50 times more.

By itself, the London unit of AIG got 180 billion dollars. And so on.

And what of the latest investment in the Forever War, the trillion dollar to be spent in Afghanistan to defend Afghanistan Islamist constitution, against, well, Islamists? Because that is what the Afghan war boils down to at this point: Al Qaeda is not in Afghanistan anymore. And the country is, officially, an Islamist republic, which means, in particular that women do not have the same rights as men (then Obama is indignant about that: but so, why does he sent his soldiers to enforce what outrages him?)

If this is a competition of crazy ideas, it’s hard to see which one will win, with so many strong contenders. Only two losers though: the planet, and the American People.

Replenishing the individuals who caused the economic disaster, those particular bankers and their class, by sending them trillions is incoherent: or is it that we, and Obama, want that disaster again? Replenishing the Islamist philosophy that caused 9/11 and Islamist dictatorships all over, by sending them trillions and the armies of democracy is also incoherent. Or do we want a Forever War?

This two incoherences are going to be devastating. For starters, the debt of the USA is jumping from 43% of GDP to 80% of GDP, and there is strictly nothing to show for it. It has jumped over the French national debt, but France has much infrastructure to show for her own debt.



"Tendance Lourde" is a picturesque new French expression: it means a heavy trend, not easy to change. So what of these forces at work on a millennial scale, these tendances lourdes, causing the present crisis, that I alluded to above?

I mentioned the fact that the USA is falling in the usual plutocratic trap, as so many societies and civilizations did before. The mentally feeble efforts of the USA to get out of it without understanding it are pushing it in the coffin corner. But there is more: the occident is victim of its own success. Western civilization has become planetary.

France just invited India as "Invite’ d’Honneur" for the Fourteenth of July "Fete Nationale". So the Indian army will go down the Champs Elysees. It may as well, because, philosophically, India has become like France. India is not like Nazi Germany (although it used to, or rather vice versa: this is why Hitler took up the Swastika, including the correct sense of rotation to express malevolence). India is not like the USSR. India is not like India used to be. India is not even going in the direction of the USA: India, led by a just reelected economist, Singh, has a real stimulus program, not an American style banker program stimulated by a fig leaf. No, India, a republic, has inherited the republican tradition elaborated by the Franks and their heirs (that includes Italy, Germany, Netherlands, Spain and Britain) in the last 16 centuries.

But one has to be careful, then. Be careful making the other strong.

After all, the Corsican traitor, that scientific genius of a bandit, Napoleon, took the French republican tradition, and dumped it, in its degenerated form, over Germany. So Germany found itself as a part of France, cut into departments, and unified. Germans and Poles came to constitute a lot, if not most of Napoleon’s Grand Army, which experienced the worst winter in decades, with catastrophic results. But Germany had been unified, and enjoyed much of the empire while it lasted. That spirit paved the way for Bismarck, W.W.I, and Hitler (the Nazis were obsessed with Napoleon, and claimed he would never have been defeated if he had had the telegraph; but, just as Napoleon, they had a winter which was the worse in 40 years, for which they were totally unprepared. Whereas the breath of Napoleon’s soldiers would crystallize, and float in the air, the shivering Nazis found their machinery frozen, while the army rushed from Siberia enjoyed the relative warmth.)

In a similar fashion, but on a more grandiose scale, the main force confronting Western civilization now is itself, amplified by globalization, reflected by success. Sometimes, civilization has nothing to fear, but success itself.

Globalization is, in a way, the immense victory of the Occidental civilization ("occidental" as in occidentalis, the western part of the Roman empire, to be differentiated from the eastern part, which succeeded its fascism very well, so well that it had to be intellectually rescued by Persian force, before they got both so weak that they could easily devoured by desert savages rendered righteously mad by Judeo-Christianism).

Globalization means that India has given up its class system for the slave-less social model of the Franks. So now, we are facing potentially more than one billion free and clever Indians, instead of a billion lower caste creepy crawlies.

Globalization means that China has put Confucius’ dusty bureaucratic and adoring of order and the powerful philosophy in a museum. It also means that China is going out of the fascist model of the Chinese emperors to embrace democracy (free market capitalism is an aspect of freedom). Instead China has embraced the social technological model of the Franks, as India did.



Globalization means that most of the people on earth are learning what the white man learnt, and want to share their place on earth equally. Imagine Gandhi coming back to haunt you, without his idiosyncratic short sighted tribal primitivism, but with a big check, Mital Steel style

This surge of tribes or nations with pigmented skins, of course, is what happened in the later stages of colonization. India and Africa proved most useful to Britain and France, when they fought the German fascists and their Nazi paroxysm.

When the choice came between honoring their obligations, and defaulting selfishly on them, the colonialists defaulted. De Gaulle explained that the colonialists would default out of "egoisme" (= selfishness). In truth, the imperial pressure of the USA and the USSR became a good reason to move out, while the imbecilitic leftist public opinion, understanding rigorously nothing, provided the convenient fig leaf of human rights the conservative, nearly racist leaders needed to leave the primitives to their own governmental devices (the conservatives immediately came back with the exploitations schemes they could not use when they were the government, but that they could use once they had put some king like locals in nominal charge) .

But now we are back to square one: the colonizers are being colonized, and it is also known as the left’s so far incomprehensible nightmare .



Clearly, Obama should stop listening to the architects and accomplices of the disaster, such as Summers, who spent years under Clinton demolishing Roosevelt great financial and economic architecture. Instead Obama should listen to people who have at least enough mastery of history to know who Henri Pirenne was. (This is an allusion to Krugman; there are Pirenne-like theories in my writings, but with even more bite…)

Oh, why does the oligarchy want so much to destroy the State? Well, because it still incarnates (some of) the power of the People (which is what demo-cracy means). Plutocracy wants to be free. This has happened again and again throughout history, as the historian Polybius explained in details in 130 BCE, more than 21 centuries ago, as he saw it happening to the mighty Roman republic.

And what next? Well, even if Obama understands all this, for the better, and wants to act accordingly, he has to deal with representatives and media types who are mostly plutocratic devices. Enlightenment can come only from realizing how bad the coffin corner is going to be, how hard it’s going to be to extract the USA, and the entire planet, from it.


Patrice Ayme


P/S: Some will say: why to pick on Obama? Did not Bush start it all?

No, if anybody got it started, it was Nixon (he helped create the private HMOs with public money). Of course Bush went nuts: he invaded Iraq, and spewed contempt on those who worried about greenhouse heating. But Clinton was also doing Iraq, with a lethal embargo, and did nothing against heating. Now Obama is doubling up on the Afghans, while going upside down on fighting CO2 (instituting a green grocery for the traders instead of just slapping taxes on carbon to augment efficiency).

Errare humanum est, perseverare diabolicum. Right now, be it with banks, or Afghanistan, even maybe Iraq, and certainly with closing his eyes on torture and winking to the plutocratic thieves, Obama is persevering along the Bush methodology in the facts of what he does (forget the lofty discourses). Obama is persevering, and that, should it persist to be the case, could not be viewed as an error from incomplete information. It would be diabolical persistance.

Note:  The mental superiority reached during the European Middle Ages has been hidden by successful Christian church propaganda later. Just an example: The adviser to kings, Buridan, head of the University of Paris, physicist, mathematician and philosopher, had thrown down Aristotle’s physics and proposed the heliocentric system (thanks to so called Newton’s First law, that Anglo-Saxon believe that later genius invented 350 years later). Alarmed, the theocratic fascists cracked down later, during the so called Rennaissance, which was mostly a brawl between theocrats (the mightiest of them being Philipe II, emperor of Spain, son of a Bourguignon), and progressives.