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Inside the New Print Edition of Our Subscriber-Only Newsletter! The Cult of the Stranglers
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Inside the New Print Edition of Our Subscriber-Only Newsletter!
The Cult of the Stranglers
William Pinch writes a dazzling essay on criminal conspiracies and religious violence, and the state’s uses of “terror”, from the Indian “thugs” to 9/11. Andrew Cockburn describes Wall Street’s triumphant routing of financial reform. Serge Halimi on the deficit bogy, weapon of the rich. Get your new edition today by subscribing online or calling 1-800-840-3683 Contributions to CounterPunch are tax-deductible. Click here to make a donation. If you find our site useful please: Subscribe Now! CounterPunch books and t-shirts make great presents.
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Today's Stories December 21, 2009 Marjorie Cohn December 18-20, 2009 Alexander Cockburn Michael Colby Jeremy Scahill Stewart J. Lawrence Mike Whitney Andy Worthington James Ridgeway Saul Landau John Ross Danny Weil Rannie Amiri Franklin Lamb Steve Early Liaquat Ali Khan Fred Gardner D. K. Wilson Missy Beattie Jim Goodman George Wuerthner Charles R. Larson Lorenzo Wolff David Yearsley Ben Sonnenberg Lordura di Napoli: the Best DVDs of the Year Wajahat Ali Poets' Basement Website of the Weekend December 17, 2009 Steven Higgs Barbara Koeppel Dave Lindorff Ramzy Baroud Ron Jacobs Shamus Cooke Christopher Brauchli Binoy Kampmark Norm Kent Patrick Bond Website of the Day December 16, 2009 James Bovard Gregory V. Button Dan Schiller Gareth Porter Farrah Hassen Nicola Nasser Daniel C. Maguire Martha Rosenberg David Macaray Ellen Brown Robert Bryce Website of the Day December 15, 2009 Ellen Cantarow Chris Floyd Anthony DiMaggio Dean Baker Andy Worthington Mike Whitney Jayne Lyn Stahl Jeff Ballinger Raymond Lawrence David Rovics Website of the Day December 14, 2009 Daniel Wolff Bill Quigley Patrick Cockburn Michael Hudson Paul Craig Roberts Rob Stone, MD Dr. Susan Block Pervez Hoodbhoy Mike Whitney Shepherd Bliss Website of the Day
December 11-13, 2009 Alexander Cockburn Carl Ginsburg Joshua Frank / Franklin C. Spinney Anna Vigna Mike Whitney Bill Moyers / Julien Mercille Brian Cloughley Benjamin Dangl Conn Hallinan Christopher Brauchli Fred Gardner David Macaray Limone Tatatjavy Joseph Shansky Belén Fernández Ingmar Lee Ron Jacobs Brenda Norrell Farzana Versey Ramzi Kysia Missy Beattie Charles R. Larson David Yearsley Poets' Basement Website of the Weekend December 10, 2009 William Blum John Ross Björn Kumm Jonathan Cook Mike Whitney Jayne Lyn Stahl Gareth Porter Rannie Amiri Norman Solomon James Faris Website of the Day Kevin Alexander Gray Joe Bageant Stephen Soldz Anthony DiMaggio David Swanson Dave Zirin Thomas Power Martha Rosenberg Susie Day US Peace Groups Website of the Day December 8, 2009 Andrew Cockburn Mike Whitney Brendan Cooney Stephanie McMillian Ron Jacobs Benjamin Dangl Kevin Mink Dave Lindorff Helen Redmond David Macaray Franklin Lamb December 7, 2009 Margot Kidder Patrick Cockburn Gareth Porter Marshall Auerback Clancy Sigal Jeffrey Blankfort Jonathan Cook Brian McKenna Bouthaina Shaaban Charlotte Laws Harry Browne Website of the Day December 4-6, 2009 Alexander Cockburn Ishmael Reed Paul Craig Roberts Vijay Prashad Muhammad Idrees Ahmad Linn Washington, Jr. Eamonn McCann Rannie Amiri Lebanon: an End to Sectarian Politics? David Rosen Benjamin Dangl Dave Lindorff Dan Meek Geoff Berne Todd Alan Price Frank Green John Halle Brian Tokar Brian M. Downing Jim Goodman Bruce E. Levine Charles R. Larson Kim Nicolini David Yearsley Lorenzo Wolff Poets' Basement Website of the Weekend December 3, 2009 Jeff Ballinger Paul Fitzgerald / Elizabeth Gould Christopher Brauchli Laura Flanders Franklin Lamb Mark Weisbrot Gary Leupp Stephen Fleischman Bill Christison December 2, 2009 Paul Craig Roberts Gareth Porter Zoltan Grossman Mike Whitney Ron Jacobs M. Shahid Alam D.K. Wilson Fran Shor Susan Galleymore Jayne Lyn Stahl Website of the Day December 1, 2009 David Price Afshin Rattansi Carlos Benemann Dean Baker Bouthaina Shaaban Rejecting Westocentrism David Rosen Susan Galleymore David Macaray Miriam Pemberton Farzana Versey Website of the Day November 30, 2009 Gary Leupp Mara Ahmed / Mike Whitney Steven Higgs P. Sainath Jonathan Cook Norm Kent Dave Lindorff Normon Solomon David Michael Green How Dare You Clean Up Our Mess? Website of the Day November 27 - 29, 2009 Alexander Cockburn Carl Ginsburg Mike Whitney Franklin Spinney Joshua Frank Saul Landau Heather Gray John Ross David Macaray Franklin Lamb Shamus Cooke David Ker Thomson Martha Rosenberg Ramzy Baroud Ron Ridenour Amanda Mueller James Rothenberg Travis Kelly Don Monkerud Ron Jacobs Charles R. Larson David Yearsley Poets' Basement Website of the Weekend November 26, 2009 Vijay Prashad Greg Moses Jayne Lyn Stahl Jeff Cohen John Blair Ann Robertson / Farzana Versey Sam Husseini Tom Mountain Website of the Day November 25, 2009 Dave Lindorff Marjorie Cohn Belén Fernández Ralph Nader Rannie Amiri Missy Beattie Rob Stone, MD Health Care Delusions: Better Than Nothing? Norm Kent Binoy Kampmark Handing It to France: the Sporting Trial of Thierry Henry Ron Ridenour Website of the Day November 24, 2009 Mary Lynn Cramer Dean Baker George Ciccariello-Maher Eric Walberg Andy Thayer David Macaray Laura Carlsen Gary Leupp Adam Federman William S. Lind Mission Creep: Counter-Insurgency in Salinas? Website of the Day November 23, 2009 Paul Craig Roberts Jonathan Cook Edward S. Herman / David Peterson Bouthaina Shaaban Helen Redmond Rannie Amiri Dave Lindorff Rev. William E. Alberts Mike Whitney Mark Weisbrot David Michael Green November 20-22, 2009 Alexander Cockburn Gareth Porter Mike Whitney Fred Gardner James J. Brittain Jonathan Cook Alan Farago David Macaray Binoy Kampmark Ben Sonnenberg Ron Jacobs David Yearsley Brenda Norrell Ron Ridenour |
Brace Yourself for a Hard LandingBernanke Tightens the NooseBy MIKE WHITNEY Ben Bernanke has been a bigger disaster than Hurricane Katrina. But the senate is about to re-up him for another four-year term. What are they thinking? Bernanke helped Greenspan inflate the biggest speculative bubble of all time, and still maintains that he never saw it growing. Right. How can retail housing leap from $12 trillion to $21 trillion in 7 years (1999 to 2006) without popping up on the Fed's radar? Bernanke was also a staunch supporter of the low interest rate madness which led to the crash. Greenspan never believed that it was the Fed's job to deal with credit bubbles. "The free market will fix itself", he thought. He was the nation's chief regulator, but adamantly opposed to the idea of government regulation. It makes no sense at all. Here' a quote from Greenspan in 2002: “I do have an ideology. My judgment is that free, competitive markets are by far the unrivaled way to organize economies. We have tried regulation, none meaningfully worked.” Bernanke is no different than Greenspan; they're two peas in the same pod. Everyone could see what the Fed-duo was up to Now Bernanke is expected to carry on where his former boss left off, using all the tools at his disposal to offset the atrophy that's endemic to mature capitalist economies. "Stagnation", that the real enemy, which is why Bernanke supports this new galaxy of oddball debt-instruments and bizarre-sounding derivatives; because it creates a world where surplus capital can generate windfall profits despite chronic overcapacity. It's financial nirvana for the parasite class; the relentless transfer of wealth from workers to speculators via paper assets. Marx figured it out. And, now, so has Bernanke. Bernanke is just following Greenspan's basic blueprint. It's nothing new. Unregulated derivatives trading is just one of the many scams he's thrown his weight behind. The list goes on and on; one swindle after another. Just look what happened when Lehman Bros blew up. Just weeks earlier, Bernanke and Co. had worked out a deal with JP Morgan to buy Bear Stearns with the proviso that the government would guarantee $40 billion in Bear's toxic assets. Fair enough. The whole transaction went by without a hitch. Then Lehman starts teetering, and Bernanke and Treasury Secretary Henry Paulson decide to do a complete policy-flip and let Lehman default. Their reversal stunned the markets and triggered a frenzied run on the money markets that nearly collapsed the global financial system. Why?It was because Bernanke knew that the big banks were buried under a mountain of bad assets and needed emergency help from Congress. The faux-Lehman crisis was cooked up to extort the $700 billion from taxpayers via the TARP fund. Bernanke and Paulson pulled off the biggest heist in history and there's never even been an investigation. Bernanke was in the wheelhouse when the subprime bubble blew and carved $13 trillion from aggregate household wealth. Consumers are now so deeply underwater that personal credit is shrinking for the first time in 50 years while unemployment is hovering at 10 per cent. If Bernanke isn't responsible, than who is? Take a look at Bernanke's so-called lending facilities. They are all designed with one object in mind, to support financial markets at the expense of workers. The media praises the Troubled asset-backed security lending facility (TALF) as a way to restart the wholesale credit system (securitzation). But is it? Under the TALF, the government provides up to 92 per cent of the funding for investors willing to buy assets backed by auto, credit card, or student loans. In other words, the Fed is putting the taxpayer on the hook for another trillion dollars (without congressional authorization or oversight) to produce more of the same high-risk assets which investors still refuse to purchase two years after the two Bear Stearns hedge funds defaulted in July 2007. Fortunately, the TALF turned out to be another Fed boondoggle that fizzled on the launchpad. Taxpayers were lucky to dodge a bullet. Bernanke's latest stealth-ripoff is called quantitative easing (QE) which is being touted as a way to increase consumer lending by building up banks reserves. In fact, it doesn't do that at all and Bernanke knows it. As an "expert" on the Great Depression, he knows that stuffing the banks with reserves was tried in the 1930s, but it did nothing. Nor will it today. Here's how economist James Galbraith explains it: "The New Deal rebuilt America physically, providing a foundation from which the mobilization of World War II could be launched. But it also saved the country politically and morally, providing jobs, hope, and confidence that in the end democracy was worth preserving.... “What did not recover, under Roosevelt, was the private banking system. Borrowing and lending—mortgages and home construction—contributed far less to the growth of output in the 1930s and ’40s than they had in the 1920s or would come to do after the war. If they had savings at all, people stayed in Treasuries, and despite huge deficits interest rates for federal debt remained near zero. The liquidity trap wasn’t overcome until the war ended..... the relaunching of private finance took twenty years, and the war besides. “A brief reflection on this history and present circumstances drives a plain conclusion: the full restoration of private credit will take a long time. It will follow, not precede, the restoration of sound private household finances. There is no way the project of resurrecting the economy by stuffing the banks with cash will work. Effective policy can only work the other way around." ("No Return to Normal:Why the economic crisis, and its solution, are bigger than you think" James K. Galbraith, Washington Monthly) Bernanke QE is a joke. He's just creating a diversion so he can shovel more money into insolvent banks, pump-up the stock markets, and recycle Treasuries. Otherwise why would Obama's Chief Economic Advisor, Lawrence Summers say this: "In the current circumstances the case for fiscal stimulus... is stronger than ever before in my professional lifetime. Unemployment is almost certain to increase -- probably to the highest levels in a generation. Monetary policy has little scope to stimulate the economy given how low interest rates already are and the problems in the financial system. Global experience with economic downturns caused by financial distress suggests that while they are of uncertain depth, they are almost always of long duration." ("A Bailout Is Just a Start", Lawrence Summers, Washington Post) QE is monetary policy writ large and--by Summers’ own admission--it won't work. It won't reduce unemployment or spark a credit expansion. That's why total consumer spending is falling, retail sales are flat, and wages are beginning to tank. Everywhere businesses are trimming hours and cutting salaries. Bernanke's $1 trillion in excess bank reserves has had no material effect on lending, credit expansion or jobs. It's been a dead loss. Here's Damian Paletta of the Wall Street Journal:
Bernanke, Summers, Geithner and Obama have all misrepresented quantitative easing (QE) so they can improve the liquidity position of the banks without the public knowing what's going on. The fact is, the banks are not "capital constrained" by lack of reserves. Therefore, extra reserves won't lead to increased lending. Billy Blog clarifies how the banking system really works and how that relates to QE: "Does quantitative easing work? The mainstream belief is that quantitative easing will stimulate the economy sufficiently to put a brake on the downward spiral of lost production and the increasing unemployment. It is based on the erroneous belief that the banks need reserves before they can lend and that quantitative easing provides those reserves. That is a major misrepresentation of the way the banking system actually operates. But the mainstream position asserts (wrongly) that banks only lend if they have prior reserves. The illusion is that a bank is an institution that accepts deposits to build up reserves and then on-lends them at a margin to make money. The conceptualization suggests that if it doesn’t have adequate reserves then it cannot lend. So the presupposition is that by adding to bank reserves, quantitative easing will help lending. But this is a completely incorrect depiction of how banks operate. Bank lending is not “reserve constrained”. Banks lend to any credit worthy customer they can find and then worry about their reserve positions afterwards.” So, if bank lending is not constrained by lack of reserves, then what does QE actually do? Not much, apparently. All quantitative easing does is exchange one type of financial asset (long-term bonds) with another (reserve balances). "The net financial assets in the private sector are in fact unchanged although the portfolio composition of those assets is altered (maturity substitution) which changes yields and returns." (Bill Mitchell) The net result of Bernanke's meddling is just this: Quantitative easing and the lending facilities have kept the price of financial assets artificially high, which has minimized financial sector deleveraging. (Financial sector debt is currently $16.4 trillion, nearly the same as it was a year ago. $16.3 trillion) In contrast, households have lost $13 trillion which has thrust the middle class into an ongoing depression. The soaring unemployment and viscous credit contraction are the result of the Fed's policies, not economics. Tightening the Noose The Fed is engaged in various covert-strategies to recapitalize the banking system. At the same time, Bernanke, Summers, Geithner, and Obama have stated repeatedly, that they're committed to slashing the long-term deficits. This means that they plan to reduce liquidity and push the economy back into recession so they can launch a surprise attack on Medicaid, Medicare, and Social Security. Last Thursday, Bernanke announced that he will begin to tighten the noose as early as March 31 2010, when the Fed ends its $1.65 trillion purchases of agency debt, mortgage-backed securities, and US Treasuries. That's why stock market volatility has picked up since the Fed released its December 16 statement. Here's a clip:
Indeed. Brace yourself for a hard landing. Mike Whitney lives in Washoington state. He can be reached at fergiewhitney@msn.com
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Now Available from CounterPunch Books! Yellowstone Drift:
"Powerful and shocking ..
Waiting for
Lightning
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