Posts Tagged ‘Jobs’

Banksters Saved, Jobs Lost

April 16, 2013

[Considering my preceding essay on bombing semantics, I was happy to hear Obama pontificating that: “Any time bombs are used to target innocent civilians, it is an act of terror!” Wow, what a change! Does that mean no more drone bombings on civilians? Apparently the White House mood of “targeted killings“, “untargeted killings” or “signature strikes” is getting discombobulated by what happened in Boston. More on this White House mystified soul searching, in the future.]



Readers who are not fascinated by economists’ debate about the Great Depression of the 1930s (GD30), and  lessons therein, can jump directly to the paragraph: “Banksterism Should Have Been Liquidated”. The plutocrats got their attack dogs, the professional economists and politicians, to blissfully conflate providing a financial system for the People, with sending to the richest of the rich ever more money. Here is the result, a collapse of jobs:

Epic Fail: Banksters Saved, Jobs Lost

Epic Fail: Banksters Saved, Jobs Lost

Basically, the real economy got starved of money. Notice the tremendous drop under great democrat Obama. All the great economists advising great democrats have to greatly explain this. Obama and his great adviser Larry Summers thoroughly approved the great Goldman Sachs plan to save the Goldman Sachs (and tax free big corporate USA) that had brought the crisis.

Then the banksters’ plan was pursued inexorably. After some hesitation, European parrots duplicated the plan. So here we are.

The red line in the graph above, the EMPLOYMENT RATE, the “Labor Force Participation Rate“, to give it its official title, is now as low as it was at the bottom of the deepest Volcker recession (the worst between GD30 and the present Greater Depression 2008). And we are plunging deeper. Much deeper, trust me.

Why much deeper? Because all those Very Serious People above trust in the great free market god, called Supply-Demand, to pull the economy through. But Supply-Demand is itself an artefact from mind control. So what needs to be controlled is mind control, and only regulations, and debate, democratically imposed, can do this.

Thus the employment situation, disastrous in Europe, is also disastrous in the USA (even though the USA is in full fracking boom, with its resulting, probably ephemeral, abundant oil and gas, that brings back to the USA lots of hydrocarbons dependent industries).

Thatcher and Reagan lowered the taxes of the rich. Now we have gone much further: the rich are outright financed by the poor. (To confuse the victims, that outrageous financing of the rich by the poor is nebulously called “Quantitative easing”, or “The Twist“, or simply “providing liquidity“.)

Far from allowing an exit of the system that caused the 2008 financial crisis, the present strategy, this Transfer of Assets to Rich People (TARP), has only made matters worse for the common economy, and for common people.

The latest twist being “austerity” programs, in Europe or the USA, supposedly to solve an alleged debt problem. But truly austerity makes it easier not to raise taxes on the hyper rich, be it only by changing the debate from the hyper-rich-are-not-taxed-enough to the poor-abuse-the-rich-with-their poverty (the latter was Thatcher’s line of personal business). 



A superficially seductive, but greatly erroneous, prescription to avoid another Great Depression was publicized by Milton Friedman, and officially embraced by many, including the present Fed Chairman, and its central bank.  Contrarily to what those worthies affect to believe, throwing money at the problem, or, more exactly, at the same exact banking system that caused the problem, is no panacea. Quite the opposite. A misreading of what happened in the 1930s presides to the present disaster. Basically, Friedman said one could run on one leg. He forgot about the other leg, the one that was on the ground before.

Friedman’s “explanation” of the Great Depression of the 1930s (GD30) is that the Central Bank of the USA (“Fed”) did not provide banks with enough “liquidity” (cash). So the banks went bankrupt by the thousands, people lost their savings, business lost access to money, and the economy of the USA faltered. That’s all entirely correct, as part of the picture. Yet:

One can tell lies, just by focusing exclusively on part of the truth.

Lying by ommission is what Milton Friedman did about GD30. His bit of truth is not an “explanation” but a sample of  observed facts. Clearly bankruptcies of the banks was a disaster. All he said above is true, but does not provide enough of a context for revealing the real truth in its full splendor.

In mathematics local minima do not have to be global minima. Same in the theory of theories: local maximal truth does not a global reality make.

Friedman’s quarter truth has come to be viewed by the economic theory in power in the USA as the be all, cure all (panacea).

A few years back, the head of the “Fed” turned to Friedman sitting in the first row and told him, flippantly, for the ages:”You are right, we did it!“. Bernanke meant that the Fed caused the Great Depression, by being too austere.  (Bernanke did his PhD on GD30, showing that some PhD are provided to reinforce the bankster managed banks.)

Let me quote from Friedman (since I quote Hitler occasionally, I may as well quote Friedman):

 “at the London School of Economics… the dominant view was that the depression was an inevitable result of the prior boom, that it was deepened by the attempts to prevent prices and wages from falling and firms from going bankrupt, that the monetary authorities had brought on the depression by inflationary policies before the crash and had prolonged it by “easy money” policies thereafter; that the only sound policy was to let the depression run its course, bring down money costs, and eliminate weak and unsound firms.”

Paul Krugman says that Friedman viewed starving the banks as evident nonsense, and advocated instead the (THEN) Chicago view that banks should have been rescued, government should have acted to reflate the economy, and moreover, that there was a strong case, as Friedman wrote: “for the use of large and continuous deficit budgets to combat the mass unemployment and deflation of the times.” I agree with all this… However…

However as many have noticed, the doctrine Friedman considered self-evident nonsense is now more or less the official doctrine of the Republican party, just as it was under republican president Hoover, and of the European Union, as it was under the French governments of the 1930s. Meanwhile the views Friedman advocated from Chicago are now, according to American conservatives, tyrannical socialism, and according to European leaders, not an option.

The wheel of opinion has turned completely… Why? How? Krugman says it’s because they are all idiots, they just don’t know the basics of macroeconomics. Yet, reality is more instructive.

The passage of Friedman above quoted was a quarter of the truth, the fourth quarter of the truth, what became the truth after Roosevelt closed all the banks. That there was excess, and it had to be wrung out of the system, prior to that, that was another quarter of the truth, the third quarter of the truth. Now conservatives are focusing on that third quarter of the truth, in the USA, and in the EU. 

What was the second quarter of the truth? International trade fighting with tariffs (started in September 1929-July1930, by the USA). The modern equivalent of this deleterious international fighting is competitive devaluations, what the honorable dear professor Paul Krugman always advocates. (And which Japan has recently borrowed from the USA, making Washington all yellow in the face.)

Oh, and what got everything launched? A drastic boom in the 1920s, engineered to drown British WWI debt. That led to inflation (real estate, Florida, say) and overproduction (cars). That was the first component of the Great Depression quartet. 

Before I explain the obvious, let me veer towards what’s wrong in the presently attempted method to get out of this unfolding Greater Depression.



Saving a bank and saving a bankster are two different things. Two completely opposed things. It’s like confusing saving a victim and saving who murdered the victim. The banksters leveraged the banks they headed, to the max, because the larger the profit, the more money they got. Some built international airports in the middle of nowhere in Spain.

Some made bets with each other, using the fake currency of financial derivatives.

The more they bet with tremendous leverage, the more leveraged the system got, ready to collapse at the smallest loss.

Meanwhile banksters had bought jets, yachts, mansions, islands (Example: Paulson, Bush’s Treasury Secretary, bought himself an island large enough for several villages).

When the banks collapsed the banksters’ properties were outside of the disaster zone. Politicians left them there. Taking care of their own providers.

Example: Lehman Brothers, a bank, an investment bank, was not saved, but its head banksters saved for themselves the billions they made, driving it into the ground. The three top guys, including CEO Fuld, retired with five billions among them.

Starting in 2008, the structures, ways and means of banks, including the derivatives and banksters leading them were saved (see Citigroup, JP Morgan, Goldman). Everything that had caused the disease was saved, thanks to the public (taxpayers, low lives, etc.)

Whereas in truth and full morality, all that should have been saved were the small deposits (as was done in Cyprus below $130K accounts). The entire businesses, the entire bank holding companies, which had failed, should have been left to fail (free market theory).

From the ruins, banks serving the real economy ought to have been founded. Instead,  the exact same holding companies that had failed were refounded, again, same as they were before, and generally around the same imaginary activities, with the same managers. Citigroup, Goldman Sachs, were saved modulo gifts exceeding 50 billion dollars;  JP Morgan got a giant gift (Bear Stern) and got in trouble because of its “London Whale” (highly leveraged government bond derivatives).

Providing liquidity, that is aid and comfort, to a thief, or a system that steals the real economy, does not provide with an optimal outcome, especially if one is poor, because one has already been robbed by the same thief or oppressive system. But such is the business model since 2008.

A financial system that caused such a crisis, should not just be provided with liquidity, but should have been liquidated as a self serving financial entity.



So what happened during the Great depression of the 1930s? Was the view that all the excess should have been liquidated, that the depression should have done its job, correct? (The view held first.) Or is the view that the banks should have been saved correct?

Well, both views were correct. What Friedman and Bernanke do not realize is that there was serious liquidation, for four years, before Roosevelt launched his recovery program. And Roosevelt launched recovery by closing all the banks, first, just as was done in Cyprus recently. Banks were then reopened, provided with liquidity, according to their viability.

So Roosevelt’s New Deal provided liquidity… after a tremendous liquidation. (In the preceding 4 years.)

Right now, there is obvious excess, that should be liquidated. All over the West. It spans the whole landscape of spending. From the picturesque but highly symbolic, to the vast and deep.

I will give examples of what needs to be liquidated in another essay. There is just plain too many dimensions of excess, from “poor” Greeks or Italians with secondary residences, driving expensive Porsches although they have no income, to our self glorifying leaders spending on themselves public money like crazy, while sleeping in plutocrats’ beds. and of course transnational corporations paying no taxes so that they can swallow all and any creature or business in their way. Yes, there is much to liquidate.


Patrice Ayme

Indebted To Lies

February 12, 2013

Abstract: Too many illusions governing, and a civilization dissolution guaranteed. A vast conspiracy extending from the financial right to the self conscious “liberal” elite, including the honorable conscientious liberal, Paul Krugman, claims that there is not that much of a debt problem in the USA.

Yet, a careful examination of the numbers and concepts involved shows that the esteemed pundits who howl urbi et orbi that there is no debt problem, coolly propose to steal Medicare and the Social Security Trust Fund.

This is pretty typical of the eerie manipulations that the powers that be engage in. Official progressives living in mansions end up in total solidarity with the plutocracy. One shudders at the possibilities.

Servicing Our Lords

Servicing Our Lords

Servicing too much debt is servicing plutocracy too much, and denial is its prophet.

Why did the presidency of Obama bring only change that we can’t see? Bush has been gone more than 4 years. Yet, the giant tax loopholes for the hyper rich are still in place (including “carry interest“!).

Not to worry, say many of the self proclaimed liberals and progressives opinion makers. In their latest tactic, they claim that there is no debt problem in the USA. They observe contently that interest rates have never been so low, that the deficit has disappeared from places such as the state of California, and that Obama’s reforms have been the “f… big deal“, as the robust Biden said, and Krugman confirmed.

What that self satisfied elite omits is that interest rates are low because the economy is not recovering. In a self amplifying loop, total debt (also called “leverage”), so easy to acquire with low interest, so stifling to serve later, is obviously a factor.

Because debt is accompanied with interest, too much debt means too much interest paid. At the limit, the debtor owns nothing, the debtor pays interest all day long, and the debtor becomes a serf.

Servitude from debt did not just happen in the Middle Ages. And it does not just happen to individuals.

In 2011 and 2012 Italy’s real economy was doing rather well: a bigger industrial sector than Great Britain, and no PRIMARY deficit (the USA primary deficit is 7% of GDP). Yet, Italy was engulfed in a catastrophic debt crisis.

How come? International investors asked for unsustainable interest to renew Italian debt.
Why they got in that mood, pouncing on Italy instead of Britain, say, is very complicated; but one of the factors is the madness of crowds; another, of course, is that the plutocracy has had a multi-generational conflict with France, and the Eurozone, or even the EU, is viewed as a dangerously French amplification machine.

During that crisis, Italian deficit (that is how much debt is added each year) came to be caused entirely by added interest on very old debt. (Total Italian debt was 121% of GDP when the interest rates charged to that country exploded.)

Greece went through something similar, just way worse (some Hellenic interest rates went above 100%).
Long ago, I advocated that Greece should default. This is what was done, in the end, because there was no other choice (although the default involved most of the governmental debt, Greece still owes hundreds of billions of euros, something that will have to be reduced further).

The European debt crisis abated in the second part of 2012 thanks to three factors. The most important factor was that unambiguous signals were given that France and Germany would do whatever it took to preserve the European banking system.

Thus the European Central Bank (ECB) was given a green light to stretch its mandate, and resort to USA style “Quantitative Easing” (QE). (The Europeans use another term than “QE”, in the hope that one does not feel they are just Americans infeodated to private finance as the government of the USA is!) QE consisted into sending a trillion euros to private banks, in the hope that they will show a profit. In the USA, QE has given to the banks more than 8 trillion dollars (about half of the yearly GDP). (See note on liabilities.)

The other cause of the abatement of the European debt crisis has been a ferocious crack down on deficits. Italy has no primary deficit, Germany has no deficit whatsoever. Even France is breaking hard to try to bring her deficit around 3% in 2013. Spain’s unemployment, now at 26%, keeps climbing, but the government helps ever less (after years of a delirious construction binge).

As Europe imports much of its energy, the climb of the euro, a consequence of these healthier finances, is viewed positively (it forces European industry to excell, a ball Switzerland and Germany got rolling, to great success.)

Many countries are overdoing the austerity: Germany has no deficit, but it’s interior demand has long been very weak, as it rested on the likes of Greek and Iberian madness. Now the German economy is contracting. In Great Britain, savage cuts are proving self defeating: the deficit is still above 7%, the country is rolling again in recession, with long term GDP numbers worse than in the depression of the 1930s.

David Cameron, an extremely rich scion, Britain’s chief, thinks smart to duplicate the degeneracy that afflicts the USA, ever since Reagan imposed Voodoo economics. Thanks to Cameron, it can cost 10,000 euros to attend public university in the UK. Such cuts, should they stick, guarantee that the historical strength of the West, intellectual power, will sink in England, as surely as the Titanic.

California does not have a deficit, Paul Krugman boasted. Sure. Because of horrendous cuts, through the muscles, into the bones. Say in education: the, supposedly public, University of California charges California residents more than $12,000 in tuition, about a quarter of the median USA family income. Another sneaky deficit fighting measure is to let children enter primary school a year later. Meanwhile health costs considerably more to the public, thanks to genial Obamacare.

No more education, no more health, while Paul Krugman, self proclaimed “conscience of a liberal”, extols California as an example. The hyper rich have something to celebrate, many of the richest of the elite still pays no taxes, thanks to loopholes that the media never talks about (while the working stiff pays nearly as much tax as in France, without any of the free stuff there).

Paul Krugman, much of the New York Times and much of the official left, claim that there is no debt problem in the USA: the debt is only 73% of GDP (less than France or even Germany). This chorus has recently been joined by the Congress Budget Office (CBO) and the Wall Street Journal.

And yet… The debt ceiling has been broken through. The ceiling was at 16,4 TRILLION. Total debt is now crossing $16.5 trillion. The USA GDP is around 15 trillion. Thus the debt is 111% of GDP, as the IMF says, it’s not 73% as many democrats claim.

USA Debt/GDP Worse Than During WWII

USA Debt/GDP Worse Than During WWII

(The green line above depicts what would have happened if Reagan had balanced his budget instead of practicing the Voodoo Economics that debt did not matter.)

If one tried to point to that fact, the 111% debt, the New York Times censorship bureau was long in the habit to find such news unfit to print, and would censor them immediately. They did this to me, dozens of times. I amused myself seeing the liberally correct establishment crack down on this apparently anti-liberal notion. the real extent of the debt. Another trick was to publish unfavorable comments informing me that I “did not know what I was talking about”, and should “do [my] homework“.

The Economist, apparently recognized that there was something good in this conspiracy to underestimate the debt. So it nebulously recognized that the debt was “actually 25%” higher than 73%. That is 100% of GDP.
But, as I said, the total USA debt is above 111% of GDP, and growing by 1% every two months. Not exactly a viable proposition. Those who deny this are, on the face of it, just sycophants of the present economic-financial system. As it is, the USA cannot apply to the European Union, on financial grounds alone. Ironical.

Debt is not computed in the same way in Europe and the USA. First, one has to distinguish “gross” public debt and net public debt. Net public debt subtracts fiscal assets (cash, bonds, shares) owned by the government.

When Europeans talk about the debt their states owe, they talk about the gross debt. That makes a huge difference due to the many assets owned by European states.

The French government could argue French debt is not that bad, because it owns shares in Renault, EADS, etc. The Greek government is busy selling various assets it owns to reduce its debt (countless islands, etc.).

But this is not the mentality ruling the bean counters in the USA. There those who want to under-estimate the debt of the government of the USA, far from being rigorous as the Europeans, go to the opposite extreme. They do NOT take into account the money borrowed FROM Medicare and the Social Security “Trust” Fund. Those who want to underestimate the debt of the USA do not count government bonds owned by the Social Security Fund since it is seen as one arm of government having a claim on another arm of the government.

This sleight of hand reduces the debt/GDP of the USA from 111% down to 73%. In other words, according to this subterfuge, the government general fund does not have to reimburse the five trillion dollars it owes to Medicare and Social Security. Paul Krugman and many at the New York Times and the CBO find this conscientious and liberal.

The debt situation shows that many of the many prominent American liberals are actually not liberal at all. They just play one on TV. Because the most important message they have about the Federal debt of the USA is that, the money owed to Medicare and the Social Security TRUST Fund is actually ZERO.

It’s cool with the New York Times, Krugman and company, if the government stole five trillion dollars to We The People. How conscientious and liberal is that?

But why should we be surprised? Did not the same crowd embrace Obamacare’ public subsidies to private healthcare plutocrats?

Some say that there is no danger. They assume that government bonds will stay as worthy in the future as they are now. Yet this will happen if, and only if the Greater Depression we are in extends indefinitely. If the economy happens to improve significantly, there is no way that the present bonds, with their extremely low returns, would interest investors. So the bonds would lose most of their value.

As the money those bonds used to represent would still be due to Medicare and Social Security, it could either be stolen outright, from The People, or it could be raised from taxing The People once again, for the same thing as they taxed for, before.

Hence ignoring the part of public debt held by the… public, through public institutions is sustainable, if, and only if, the economy keeps on sinking. How progressive.

So? Are the loud progressives dominating the media actually regressive? Would that be, by any chance, entangled with their membership in the plutocracy serving oligarchy?

By underestimating the debt problem, the problem of the present economy can keep on being underestimated. A huge deficit can insure that money can keep on been thrown at the People. And that the free riders will keep on riding for free.

Whereas what we The People need, to be fully satisfied, is jobs. Jobs don’t just bring money, but empowerment, pride, satisfy the instinct of utility, mental, and physical activity. A society where People work is fully human, a society where People don’t work, is not.

By realizing how severe the crisis is, jobs can be brought over to bear on the peoblem. Just to make sustainable energies work, millions of jobs have to be created.

Because those jobs would be profitable by definition, they are worth getting indebted for.

Take for example power lines. Power lines are needed because sustainable energy tends to jump around in space and time; lots somewhere sometimes, and then somewhere else, another time. Germany has wind in the north, sun in the south. Washington State has much hydro power in early summer, and not enough power lines to get it out. Much power line work is needed all over.

Windmills work. Especially the latest types, offshore. A problem, though, is that the wind does not blow all the time, or when needed. The same problem affects solar energy. Power lines cannot solve it all. But dams can remedy the rest.

In the case of offshore wind, the solution is obvious: artificial, multibillion dollars islands, to turbine up water in artificial reservoirs, when demand is slack. To build all these islands will surely be a lot of work.

Mandated weatherization of homes and buildings is another obvious target (that is done in some European countries such as France, but not in the USA, where the Obama administration just gave subsidies to weatherize one million homes; a completely different activity, as it redistribute taxpayer money, instead of leveraging private economic activity… without using any taxpayer money).

So here we are: face the debt problem. It’s enormous. Debt ought not to be used for everyday expense, but only for worthy investments, as used to be the case.

And if there is too much debt, the solution is not crushing taxes on salaried people (top tax margin in California is 52%, although the truly hyper rich still pays nought, as they are not salaried…) Nor is the solution savage cuts. Instead the tax system ought to be overhauled: make the richest individuals and corporations pay tax, and make the richest economic activity pay tax too (for example financial transactions ought to pay tax, like all other transactions do; 11 countries of the Eurozone have decided to do so.

Another obvious revenue generator is a worldwide carbon tax. If the USA cooperated with the European Union there, instead of opposing it ridiculously, the tax would become reality so fast it would have a positive economic effect right away. Verily the least carbon burners can do is to pay for the damage they are causing to the biosphere.

On the most macroscopic scale, debt services the most wealthy persons, those who have the capital. That’s OK, civilization needs capital. For worthy investments. It’s not OK, when it gets out of control, and debt becomes a way of life.

By insisting that Federal debt of the USA is only 73% of GDP, one lives in denial. One more denial in a web of illusions. Too many illusions governing, and a civilization dissolution guaranteed.

At this point, we can emulate the immense Khmer empire around 1300 CE. We can refuse to change so long, that we cannot change when we are forced to. With one million inhabitants, the capital, Angkor, was perhaps the world’s largest city, larger than China’s Hangzhou. However, the Khmer devastated their ecology, precisely by doing as we do now: using up all the carbon around. That deforestation caused a massive drought, combined with intense floods, and the combination killed the capital of Angkor.

Maybe the Khmer were paralyzed by the debt they were servicing, and, certainly, they were paralyzed by the plutocracy that they were servicing.
What they needed to do was to repair the giant reservoirs they depended upon, that were fillong up by debris from the floods. And stop the deforestation. And they needed to do this in timely manner, when they still had the power. They waited too long, weakened, and were invaded.

The Maya also waited too long in a huge ecological crisis they contributed to, along the same lines. So it was with Sumer: deforestation, drought, salination, biblical (literally!) flood…

Rome went through something similar, long enough to debate the problem. However, the plutocracy barred the way to go further than that.

It’s always the same pattern: not working hard on the ecological problems, when they could still be solved, because one is paralyzed by a self obsessed plutocracy.

Why underestimate the debt difficulties of the USA, while maximizing bad rhetoric about those of Europe? Is there a pro-American cult out there? Not really. It is more a cult of capital, and underestimating the debt one owes to capital is part of it.
Patrice Ayme

Note on liabilities: Liabilities are more general than debt. Although this is too arcane to deal with here, QE extends the liabilities of the central banks, and one can view it as augmenting considerably, maybe 50%, German or French debt… But of this no one never talks. For example although USA debt is nearly $17 trillion, all the liabilities of the government of the USA go beyond $62 trillion…

Stimulating Out Of Encroaching Nothingness

October 9, 2010


Abstract: I am presently reading "Obama’s Wars", the troubling description of the Obama’s White House by Bob Woodward, of Watergate’s fame (Woodward forced Nixon’s resignation).. As Woodward puts it on the book’s jacket:"…Verbatim quotes from secret debates and White House strategy sessions… reveal a government in conflict, often consumed with nasty infighting and fundamental disputes."

I assert that the cracked fundaments go all across the USA, including through Obama’s mind. How can one simultaneously venerate Reagan’s world view, and generate a change one can believe in?

It is as if the captain of the Titanic longed to move back to the past, when his boat is already half under water, and celebrated how good it used to feel, including scrapping along the iceberg. Well celebrating scrapping along the ice, is false, pointless, and a dissipation of motivation: Reagan’s spirit helped hit the iceberg, it was a disaster to scrape along, wake up! No wonder it’s getting nasty out there.

The on-going economic disaster wrecking the West has been caused by the plutocratic model, stealthily launched by Nixon as he funded the private HMO system, using tax dollars. The idea was to replace the primary motive of making a good job in health care, by the primary motive of making a good buck. It was a change of motivation. The economy, and then the society was forced to follow.

Things got really crazy under Reagan, a culturally deficient puppet, animated by brain envy. However, Reagan is widely, and wildly admired by his supporters for… having reformed, or more exactly destroyed, the USSR, which is indicative of their mentally exalted state.

So here comes Obama, having called Reagan "transformative". Obama is a "bipartisan", which may mean that he is Reagan, half of the time. In any case, as half Reagan, Obama’s stimulus followed the advice of Reagan’s ex-adviser, Lawrence Summers. The stimulus was made into something to persevere with the status quo ante. The part for jobs, the infrastructure stimulus, was purely symbolic: 25 billion dollars, per year. Over two years.

To soothe those who elected him, Obama claimed, using smoke, mirrors, and reading what Mondale called "IDIOT BOARDS" that the stimulus was 765 billion dollars or so.

Politically that allowed the neoconservatives to claim that an enormous stimulus was used, and did not help the economy to create jobs. And that entrapped Obama.

Obama compounded the situation with his health care "reform". In truth it was not a reform, but, once again, more of the same. As usual, the USA is unique. It uses a health care system based on employment, which makes no sense.

Obama could have started to change away from that, by pushing "MEDICARE FOR ALL". But he did not. Instead he spread obscurely new costs incurring to businesses over the next several years, as Obamacare deploys. Unsurprisingly, businesses hold close to their wallet, not knowing what’s next.

But let’s not forget Obama is bipartisan; next year, with his republican congress, Obama will see the parts of his "historic health care bill" not friendly to the health care plutocracy go to the birds. One does not know if he was clever enough to anticipate this, as he spent forever negotiating in the backroom with the rich boys.

Obama, and the USA, need to be ready for the worst, and not just in economy. After 65 years of an alliance with Muslim Fundamentalists, and equipping them with hundreds of thermonuclear weapons (!), this means that nuclear war is close at hand. The institutions of the West, and its democracies, need to be ready. And that starts with the minds, and intellectual curiosity, what Ronald Reagan could neither muster, nor appreciate.




The USA is in a strange time warp. It is, along with two or three dictatorships, the country which has not ratified the rights of children. It is the only country in the world which still uses the confusing unit system of the Roman empire. Both points, and countless similar ones, are overlooked by average Americans, and their intelligentsia. However they are symptoms of civilizational senility: even when an advantage is obvious, and everybody else does it, the USA cannot come on board. Even the advantage of infrastructure seems to have escaped the USA. All the infrastructure seems to be about the military, and its bases all around the world.

All over the world, most of the serious infrastructure was the result of government programs, and so it has been, for millennia. In the USA, the banking system, the canal system, railroads, dams, the freeway system, and access to water were allowed only under government fiat, by giving the appropriate "eminent domain".

The railroad network was a public-private partnership, with the government massively investing, and legislating, in a way that private industry could never have replaced.

Nowadays, somewhat similar programs are used with private security firms, as the imperial machine of the USA attempts to take a greater control of the Middle East. For example the withdrawal of combat troops planned by Bush and implemented by Obama uses 7,000 taxpayers paid private mercenaries protecting the state Department operations in Iraq alone. At least that is what the government of the USA reveals. The truth may well be worse.

In the 1980s, American politics got tuned on its head by Reagan. The reason to talk about Reagan is that Obama called Reagan "transformative", a qualificative he did not use for any other president of the USA.

Reagan, an uneducated actor was all too happy with himself for starting the destruction of the California University system, at the time the best in the world (in relative quality and quantity).

Once elected governor, Mr. Reagan set the educational and intellectual tone for his administration, and the USA, for the next three decades, by:

a. calling for ending free tuition for California college and university students,

b. demanding a 20% across-the-board cuts in higher education funding,[1]

c. repeatedly slashing construction funds for state campuses

d. engineering the firing of Clark Kerr, the popular President of the University of California, and

e. declaring that the state "should not subsidize intellectual curiosity."[2]

Nowadays UNSUSTAINABLE tuitions are imposed to students in the public university system, and very few Californians can access the University of California and the State University of California. Let alone that those admitted are guaranteed financial ruin as their future income could never pay for the incurred debts.

The universities turn in great part from foreign students who come to study, and go back where they come from, enlightened and wiser. So the USA has, on top of everything else, an increasing wisdom and knowledge deficit… Once again, having greatly originated during Reagan’s reign.

Since the USA, as the rest of the West, will only be able to come out of its deep crisis through more, higher level education and research, Reagan’s vengeance against education, and the intellect, condemns the USA to increasing mediocrity, and an increased economic and social crisis.

Reagan also more than tripled the national debt of the USA incurred in the first two centuries of that country.

Reagan later developed Alzheimer. Confronted to his unconstitutional conspiracy with Iran’s theocracy, he claimed that "he could not recall". It is now known that Alzheimer develops years, even decades before it becomes obvious. Thus the question: was the USA set up on its present course by a mentally deficient patient?



Sorry, I hope Obama is not going to start crying. Reagan was a would be cow-boy, confronting a time when the USA was running out of gas from the lift it had got from the "American Century" after World War Two. Tricks work, but not forever.

Nowadays, there are more European corporations in the top 50 than American corporations (differently from, say, 1960, when there were none). European corporations work according to a strongly attenuated plutocratic model (for example, German corporations have union representatives on the boards, by law; French corporate executives, as all Europeans executives, are paid a small fraction of their American colleagues, and are a small fraction of their physical size, too).

Reagan made the mistake French economy and finance minister Colbert had warned against as self obviously deeply erroneous, three centuries before. Colbert had started his career as inspector general of the armies, so he was fully aware of the military threats, especially after France successfully concluded 150 years of quasi continuous war with the Spanish and Habsburg empires (a war that saved England, and gave birth to the Netherlands, besides breaking the Catholic Inquisition’s attempt at world domination).

Reagan was used to free money in the sport commenting and movies industry (he got a huge ranch for co-acting with a young chimpanzee). He really had no idea how the world worked. Predecessors such as Carter, Nixon, LBJ, Kennedy, Eisenhower, let alone the Roosevelts, or even Hoover, had varied, but firm and deep experiences of the world. All of Reagan’s experience, as a governor, was in DECONSTRUCTION.

Reagan was indeed "transformative", as Obama called him while professing his admiration. He transformed the political-economic system of the USA from construction, to destruction. A pause from his able successor, George Bush, who had condemned Reagan’s economics as "Voodoo economics", was not enough to stop the slide.



Except Reagan knew, from the movies, that the military was important to project the power of the USA. So he spent a lot militarily. And pursued the usual plots with the Salafists, the Muslim Fundamentalists: he engaged the war in Afghanistan into high gear, by giving to the Salafists advanced weapons, reorganizing their armies, and sending over a Wahhabist expeditionary corps headed by Osama bin Laden. In Iran, Reagan renewed secretly the alliance with the Salafists headed by Ayatollah Khomeiny.

You want to see Obama’s stimulus? Look at AFGHANISTAN. That is where Obama is stimulating, at the rate of several billion dollars, a WEEK. Even G. W. Bush saw the trap, and was not that dumb as to fall into it. I am reading "Obama’s wars" thoroughly, in the hope of finding what he thought he set himself up to accomplish there. Besides taking himself for Alexander the Great. But Alexander conquered Afghanistan in his twenties.

However, extending the war in Afghanistan is in the big Reagan tradition: expand the empire militarily. Do whatever; feed bin Laden, train him, make him meaner, more efficient. That’s what Reagan did. Meanwhile give Khomeiny, secretly, the weapons and replacement parts to fight Hussein (while supporting the latter’s war). That’s what Reagan did.

When Reagan started to dismantle the deep structures of the USA, the USA was at the peak of its powers. But Reagan’s actions made the USA, literally, crazy. Reagan had closed mental hospitals in California and then he reduced the Federal mental health budget. In the end, mental patients ended in the streets, and represent a danger to this day.

Reagan effectively opposed additional funding for basic education. This led to painful increases in local taxes and the deterioration of California’s public schools. That, in turn led to a stratospheric increase in property taxes, and, this, in turn, to a blocking of these by proposition 13, which in turn became a way for (plutocratically owned) corporations to pay neglectable taxes (by arranging transfers without sales, which homeowners cannot do).

Mr. Reagan’s actions had political appeal to his core voters constituency. These so called "conservatives" ought to have been called the terminators. Their dream was the plutocratic USA towards which they have been marching ever since, with the determination of mastodons ambling into bitumen swamps…



Only infrastructure spending creates real jobs that private industry can leverage in massive economic activity.

France has arguably the world’s best infrastructure, and the recession was much less there than, say, Germany, or the USA. However the French state spent 50 billion dollars on infrastructure projects in 2009 alone. Some was for repairing cathedrals, but some was for engineering work on high speed train lines. France had by far the shallowest recession of the big industrial developed countries. Oh, yes, in case you asked, the People Republic of China embarked on a four dimensional astronomically massive stimulus, and China’s growth barely slowed down for a moment from its double digit clip.

Some of Obama’s stimulus was the AMT exemption, which happens every year, since ever. That was about 10% of Obama’s so called stimulus, and was nothing of the sort, since it would have happened anyway, as it always does. About 50% of Obama’s stimulus was to compensate for the collapse in state spending (many states are forbidden, by law, to run deficit). So it was a stimulus in the sense that CPR is a stimulus.

And so on. In other words, the Obama administration lied. The real stimulus, the money spent to create jobs, was only 50 billions, what Obama spends in 5 months in Afghanistan. Moreover it was spread over 2 years. So, basically, in a country with a terrible and collapsing infrastructure, Obama spent, per year, about 10% of what the French right wing conservative president spent.

The overall imperial military budget of the USA is about a TRILLION dollar. As much as the Federal budget a few years ago. The USA is losing its mind.



What is the idea behind spending so much on military adventures? Reagan’s admirers misread history by believing that they brought the USSR down. In truth, it is the self contradictions of the "communist" dictatorships which brought them down. But the psychological affect on the neoconservatives is that they believe that Reagan running up the deficit to serve the hyper rich and the military industrial complex had a spectacularly positive effect.

The plot engineered by Roosevelt in 1945, was beautifully simple and efficient: the USA would ally itself with the Salafists throughout North Africa, Arabia, the Middle east and South Asia. In exchange for oil and empire. It was an alliance of obsolete Islamist with Washington against European secularism. It worked like a charm: the USA got oil and empire (neofascists love to claim that it is not so because, they point out disingenuously that the oil goes mostly to Europe. But oil is fungible, and Europeans are forced to buy it through American owned companies).

Something that worked well for 65 years is hard to quit. So the USA perseveres diabolically with that crafty (albeit immoral) path pioneered by president Roosevelt.

The reason why Roosevelt’s cheap and dirty trick is not working anymore is that it profited the USA, and the USA alone…plus a smattering of its agents. More and more leaders and people understand this. Ex-American mercenaries, such as bin Laden or the Pakistani ISI, Saddam Hussein, or Iran’s Shiites, not only understand this, and the role they played, but they see that the USA is running out of military, economic and imperial overstretch, and they watch the wind turn. And as it turns, they turn. Against the USA. So the price of empire is increasing, it seems, exponentially.

Such giant spending to lose a war is a sign, and a reason, to lose everything. Actually Obama alludes to precisely that in the book "Obama’s war".

Now Obama is proposing to double his infrastructure spending, by spending a further 50 billion dollar on it. It is also too little, too late, as I said many times in the past. With more than 1.2 million construction workers unemployed or sub-employed, it is a no brainer that it should be done.



All this is peanuts. 50 billion dollars over 2 years is nothing in a 15,000 billion dollar economy.

Obama saved the banksters using taxpayers’ money, and the health of the entire American economy, spending nearly 4 TRILLION dollars doing so. Then the banksters turned around, and stimulated themselves with 150 billion dollars in BONUSES, just for the year 2009. Where is the screaming about that?



Even some very intelligent people understand nothing of this. I was reading in the blog of Terence Tao, a world famous young mathematician who got the Fields Medal four years ago. Many people view Tao as the world’s most intelligent person. However Tao haughty naivety declared that:

"A dramatic contrast between worst-case scenario costs and actual costs: the infamous Troubled Assets Relief Program (TARP) from 2008-2010, popularly viewed as a $700 billion bailout to banks, begins winding down this week (with no further outlays permitted), and is now projected to actually have a net cost about $50 billion; when compared against the stabilisation effect it had on the national and world economy, it may in fact end up being one of the most cost-effective of such programs ever…. in the best case scenario, TARP even turns a modest profit.

For comparison, the Savings and Loans bailouts in the late 1980s had a net cost to the US government of about $124 billion (or about $200 billion on today’s dollars). … Even if the program does end up not actually costing taxpayers a penny, it is still likely to be remembered, however inaccurately, as a massive handout to the banks."

When one sees someone as smart as Mr. Tao falls straight into the mammoth trap of the grossest propaganda set up by the financial plutocracy, with colossal credulity, one can only feel sorry for Obama. It has got to be pretty lonely at the White House.

I replied this, in the hope of educating Mr. Tao (an icy silence forever followed):

The claimed slight cost of the bank management rescue is sheer propaganda. Like all good lies, it can be claimed to be the truth, in the sense that the funds labeled TARP are indeed evolving as described.

However, the real cost so far, in the USA alone is more like 4 trillion dollars (says the government TARP general inspector, Neil Barofsky ). But, for example, when the government lends to banks short, at close to zero percent, and then allows the banks to borrow long, at around 4%, thus making arbitrarily large profits, that is not viewed as TARP. But it is direct cost to society nevertheless.

There are several other similar programs supporting banks at enormous cost, which involve the central bank ("Fed") buying assets from banks at outrageous prices, and do not come under the TARP label.

This on-going enormous support undermines the economy of the USA, by directing funds which would be otherwise available for more constructive pursuits. For example the real stimulus program of the USA in 2009 and 2010 was only 50 billion dollars, roughly a third of the bonuses paid by banks, thanks to the aforesaid support programs, in 2009, alone.

Although the payment systems of the banks ought to have been saved, and nationalized, the bank holding companies ought to have been dismantled, and their management, prosecuted. Nationalization would have had several benefits, similar to those of the 1990s Scandinavian banking crisis, and would have allowed to restart lending.

Another point that is not just a detail: we are in Great Depression III. Just look at the median real income. In the USA, it has gone down now for thirty years (and we are just warming up). The short and brutal Great Depression II, in the 1930s, did not affect that measure to the same extent.

Plutocracy is nasty, and it is crafty. Or at least crafty enough for even intelligent people to be misled by it.



The governor of New Jersey decided to stop the construction of a needed tunnel to Manhattan. After Krugman wrote an appropriate article, yesterday, he rescinded that decision. That is how well some of these clowns take their decisions: as if it were not an obviously stupid decision, and Mr. Chris Christie had not considered the most basic facts, before Krugman pointed them out to him. But we are still waiting for Obama spending money to accelerate the train from Washington to Boston. True, he and his family fly around above the peons.

In Europe, Russia, China, massive High Speed Rail networks are built. They are fast, secure, ultra efficient, and produce very little pollution and CO2. Moreover, they can run on nuclear and, or, renewable energy. An important point as the price of fossil fuels will skyrocket in the proximal future. Existing, already commercially deployed technology would allow to cross the USA in 10 hours, on steel wheels (BTW, maglev is a useless gimmick, technological pointless, dangerous, and commercially impossible; it cannot compete with steel wheels).

So the USA could do this. High Speed Lines are immensely expensive and high tech. The cost of the short line from Marseilles to Nice is evaluated around 23 billion Euros (30 billion dollars). The work is launched, to be completed in a decade, and involves engineering to study exactly the trajectory through mountains, valleys, and cities with 5 miles (= 8 kilometers) radius for the turns at 250 mph = 400 km/h, trajectories, bridges, tunnels, sunk sections, and the attending claims of eminent domains have all to be carefully determined!

There are many other massive works to be engaged to make the USA more efficient. The USA metro areas used to be crisscrossed by very efficient electric railways and tramways systems. Automobile based plutocracy bought them, and destroyed them, to force people into cars. Many of these ought to be rebuilt. because, once again, the price of fossils will skyrocket.

Besides the tunnel the republican neoconservative want to stop, there is a lot to do around most metro area of the USA (Silicon Valley does not have a subway yet, for example, although the commute there is miserable). Here are most of the major works around New York City:

PATH Tunnel Opened 1909
Holland Tunnel 1927
North River Tunnel 1910
Lincoln Tunnel 1937
GW Bridge 1931

Notice the dates: Imperial fascist Japan made a big mistake to attack the USA, when it was a nation of engineers. Now the USA is led by banksters and fast money operators, spending about 5 billion dollars a year, buying their obsequious servants in politics.



Now what of the big picture? What of nuclear armed Pakistan? Well, that’s the baby from the policy of making friends with the Salafists. It’s not Obama’s fault (for once!). But Obama ought to explain to the American people the mess, and the threat. So that no one gets too surprised if some Salafists got lucky, and nuclear bombed the West.

Obama told Woodward something all Americans, and all of those attached to democracy, worldwide, ought to meditate: "We can absorb a terrorist attack. We will do everything we can to prevent it, but even a 9/11, even the biggest attack ever… we absorbed it and we are stronger… A potential GAME CHANGER would be a nuclear weapon in the hands of terrorists, blowing up a major American city."

What a cool guy.

“Game Changer”? Oh, sorry, I did not know it was all a game. And, after the game has changed, then what? What does Obama exactly mean? That, after a nuclear strike, not even the appearance of democracy will survive? That the game will change, and fascism will be absolute? Obama should learn to explain to people what is on his mind, instead of just reading what ex-Vice President Walter Mondale called his "IDIOT BOARDS". Some of the people writing some of the stuff Obama is reading like a smile machine are not even 30 year old, with little background and culture, but for plotting and blahblahbing around, and it shows.

In case of nuclear strike, and one is likely, my deeply considered recommendation is this: TOTAL WAR. Do what was done with Nazism, and do it faster. No regime does total war better than total democracy. So no need to allude to a the instauration of fascism. If national defense is what one really wants, democracy is best.

Now, of course, if one really wanted to impose a fascist plutocracy, to start with, a nuclear strike would be indeed an excellent pretext for a change of game. Maybe Obama should explain himself more…


Patrice Ayme


The French republic announced, a few years ago, that, in case of a massive terrorist attack, it may retaliate with a nuclear strike. Intriguingly, Pakistan protested, as if it knew all too well who France was talking to, and then promptly arrested and deported to France a Pakistani national accused of the murder of a French woman.