Monday, November 15, 2010

China to play role in General Motors IPO

DETROIT (AP) — Among the banks helping General Motors with its initial public stock offering next week are two identified by initials only: ICBC and CICC.

Americans uncomfortable with U.S. government ownership of General Motors may want to hear more: One of those banks is the Industrial and Commercial Bank of China, one of China's four big central government banks. The other, China International Capital Corp., is a joint venture run primarily by Central Huijin Investment Ltd., an arm of the state, and Morgan Stanley.

This is the first time Chinese government banks have participated in a major U.S.-issued IPO, according to IPO tracking firm Dealogic. The banks are listed as co-managers in the offering, meaning they will sell a portion of the new shares.

Chinese automaker SAIC, GM's partner in China, is finalizing plans to buy a roughly 1 percent stake, worth about $500 million, in GM's IPO, the Wall Street Journal reported Friday. SAIC is owned by the Shanghai city government.

Other foreign investors that are interested include several sovereign wealth funds located in the Middle East and Asia. The Journal says those funds, which manage the finances of royal families and some nations, could invest $1 billion in GM's IPO.

There could be political backlash for President Barack Obama, who has spent the past week in Asia addressing economic issues, like currency exchange differences between the U.S. and China. Obama has argued that China artificially deflates its currency, the yuan, in an attempt to make its exports cheaper.

Many Americans were unhappy when the U.S. bailed out GM, calling the company "Government Motors."

GM 's Nov. 18 stock offering will reduce the U.S. Treasury's stake in the company from 61 percent to 43 percent, and will help payback the more than $50 billion that taxpayers invested in GM to keep it from collapsing. More stock offerings will happen in the next year or so, letting the government fully divest from the automaker.

"It's a very political topic, but what Americans need to remember is that General Motors is an international company," says Rebecca Lindland, an analyst with IHS Automotive. "If we want to get our money back, we need to understand that they have to do business on a global basis."

The U.S. Treasury has been clear that international investors are welcome to invest in GM, and many outside the U.S. are considering taking stakes in the company.

"We expect that a large and diverse group of institutional investors will be offered an opportunity to participate, with no single investor or group of investors receiving a disproportionate share or unusual treatment," the Treasury said in a recent statement.

The U.S. has become a popular haven for Chinese investors, second only to Australia in attracting Chinese stock investments, says Derek Scissors, a research fellow at conservative think-tank The Heritage Foundation. The first half of 2010 was a record year for China, Scissors says. China has sunk $45 billion into investments and engineering projects worldwide. About $1.6 billion of those investments came to the U.S.

In China, businesses operate with the funding and blessing of the government, says Tim Dunne, director of global automotive operations for J.D. Power and Associates. The government behaves like an interested shareholder, ensuring companies have competent management and ensuring the companies boost economic growth in their regions.

Many Chinese automakers are looking for a way into the U.S. market, he says. China is the largest car market in the world, but the U.S. is the most profitable, he says.

"The amount of money changing hands here is much greater," he says. The average selling price of a car in the U.S. is $27,500, compared with about $17,000 in China. "Multiply that over millions of vehicles, and it's quite a difference."

SAIC and GM already have a long-standing partnership in China -- GM could not sell cars in China without partnering with a local business -- and it's unclear what size stake SAIC may take in GM. The deal would need Chinese government approval.

Chris Theodore, president of consulting firm Theodore & Associates, says SAIC's investment in GM is likely an attempt to strengthen its ties with the automaker. Theodore, who was part of a group that tried to take over Volvo before it was sold to China's Geely group, says SAIC isn't the kind of company that can branch out into U.S. sales. Most of its models use GM technology and are essentially GM cars.

"They rely on GM for a lot of their profitability," Theodore says.

Michael Maduell, president of the Sovereign Wealth Fund Institute, a California-based group that watches sovereign wealth fund investments, says global investors are looking at the U.S. because they believe the overall market is undervalued. Other potential investors in GM include Abu Dhabi's Mubadala and Singapore's Temasek, which are both known for actively investing in companies, Maduell says.

Investors are "looking at emerging markets, like China and India, but all those assets are overvalued," Maduell says. "America still has a lot of fantastic investment opportunities in real estate and small- to mid-cap stocks."

Gary Shilling Sees `Significant' Stock Selloff Within 12 Months

Gary Shilling, who predicted the U.S. housing collapse, says the stock market is overvalued and foresees a “significant” selloff within a year as the Federal Reserve fails to stimulate economic growth.

The Standard & Poor’s 500 Index has climbed 17 percent since July 2 as investors anticipated the Fed’s plan to buy $600 billion in Treasuries to boost growth. The benchmark gauge for U.S. equity trades for 15 times profit from the past year, up from 13.7 in July, data compiled by Bloomberg show. Fed Chairman Ben Bernanke previewed his strategy of quantitative easing in an Aug. 27 speech in Jackson Hole, Wyoming.

“I don’t think it’s enough to make a great deal of difference,” Shilling, 73, president of the investment research firm A. Gary Shilling & Co. in Springfield, New Jersey, said in a telephone interview. “The earlier QE1 didn’t and I don’t think this will, either. The economy is weak and it doesn’t take very much of a shock to push it into negative territory. I don’t think that’s enough to justify where stocks are now.”

Shilling, who predicts real gross domestic product growth of 2 percent “and maybe less in the next couple of years,” said the government is out of options for fixing the economy.

No Magic Bullet

“There’s not much that can be done,” said Shilling. “There isn’t any magic bullet. There isn’t anything in my view that’s going to return us to the solid days of the 80s and 90s when consumers were spending freely. I don’t think that’s going to come back. The need to deleverage is just too great.”

The S&P 500 lost 1.2 percent to 1,199.21 as of 4 p.m. amid speculation China will lift interest rates. The index has fallen 2.2 percent since Nov. 5 for its first weekly decline in more than a month, data compiled by Bloomberg show.

Shilling’s past predictions had mixed results. The economist forecast the recession that began in December 2007 and warned investors a year earlier that residential real estate was in a bubble that would burst. The S&P 500 lost 57 percent between October 2007 and March 2009.

With the S&P 500 at a 12-year low that month, he said that higher unemployment would curb consumer spending, leading to “weaker stocks.” An investor following his advice would have missed the start of an 80 percent rally.

Deflation Board Game

Shilling, a long-time market skeptic who once created a board game to show the dangers of deflation, earned a doctorate degree in economics at Stanford University, according to his website. In his book “The Age of Deleveraging,” which was published this month, he theorizes that the global economy will struggle for years. Other books include “Deflation: How to Survive and Thrive in the Coming Wave of Deflation” in 2002 and, “After the Crash: Recession or Depression: Business and Investment Strategies for a Deflationary World” in 1988, according to Inc.’s website.

The U.S. economy, which grew at a 2 percent annual pace in the third quarter, may enter a recession in the next year or two, Shilling said. The U.S. gross domestic product will grow 2.7 percent this year and 2.4 percent in 2011 after 2009’s contraction, according to a Bloomberg survey of economists.

The S&P 500 posted its biggest September-October rally since 1998 as economic data showed the threat of a recession is abating. The gauge extended the rally into November after the Labor Department reported a bigger-than-forecast decrease in jobless claims and as orders placed with factories and production rose to a five-month high.

Beating Estimates

Earnings have topped estimates at 76 percent of the 433 companies in the S&P 500 that have announced results since Oct. 7, according to data compiled by Bloomberg. Net income has grown 29 percent for the group as sales increased 9.2 percent.

While estimates for U.S. corporate profit fell last quarter, they still indicate that S&P 500 companies will report record earnings in 2011. The equity benchmark is valued at about 12 times projected income for 2011, according to data compiled by Bloomberg. That’s the cheapest level since 1988, excluding the six months after New York-based Lehman Brothers Holdings Inc.’s filed for bankruptcy in September 2008, relative to reported profit from the past 12 months.

“Stock valuations remain attractive,” said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia, which oversees $105 billion. “The earnings prospects continue to be positive. We’ll likely get back to an economy which is expanding in the early part of 2011. The story is pretty good.”

Stock Returns

Shilling, who predicts that stocks will return 5 percent to 6 percent annually after inflation adjustments over the next decade, says that half of that will come from dividends and not from appreciation. The S&P 500’s dividend yield, currently at 1.92 percent, may rise to at least 3 percent, Shilling said, without specifying a time frame.

“You see a lot of companies being pressured to pay dividends,” he said. “Look at Microsoft. They borrowed money to pay dividends. It tells you that investors want dividends.”

In September, Microsoft Corp., the world’s largest software maker, sold $4.75 billion of bonds at the lowest coupons on record. A day earlier, the company raised its quarterly dividend by 23 percent to 16 cents and received approval from its board to sell as much as $6 billion in additional debt.

Shilling reiterated his view in an Oct. 4 interview with Bloomberg Radio that looming deflation means U.S. Treasuries are still attractive. He says the yield on the U.S. 30-year bond will drop to 3 percent within the next “couple of years” from about 4.3 percent. Shilling also said he doesn’t see a collapse of the U.S. dollar because of debt problems in Europe.

The euro slid to the lowest level in more than a month versus the dollar yesterday as concern that some European countries will have difficulty paying their debt and a drop in stocks curbed investors’ appetite for risk.

“The dollar is probably going to strengthen,” Shilling said. “We’re going to see increasing problems in Europe, led by Ireland. As a result, we’re seeing a rally in the dollar.”

To contact the reporter on this story: Rita Nazareth in New York at

To contact the editor responsible for this story: Nick Baker at

US asks China to raise yuan by January

Chinese government uged to hasten efforts toward reforming its currency exchange rate.
The United States has called on China to hasten its efforts toward reforming its currency exchange rate against the dollar by January of next year.

US President Barack Obama, who has repeatedly said the yuan's undervalued currency has hurt the US economy, urged Chinese officials to let the yuan rise against the dollar by the time Chinese President Hu Jintao visits Washington in January, Reuters reported on Saturday.

"President Hu Jintao's visit in January would be an important time to look at exactly what the quantum of progress has been on this," said United States' National Security Advisor Tom Donilan.

The United States “would like to see China proceed apace on these reforms, because it's important we think to China, but it's important to the world in terms of a stable economic path forward," Donilan added.

"The pacing of this is obviously a sovereign decision by them,” noted Donilan, who accompanies Obama at the Asia-Pacific Economic Cooperation summit in Yokohama.

The US claims that the yuan has been artificially undervalued, saying that such a low rating keeps exports relatively cheap and gives Chinese exporters an unfair advantage over their rivals.

But China has warned that any sudden rise in the value of the unit would pummel its businesses and trigger massive unemployment.

Meanwhile, the Chinese president assured US officials that the existing currency rate would not wreak havoc on the US economy.

“We will continue to steadily move forward the reform of the exchange rate regime in a self-initiated, controllable and gradual manner," Hu said.

Earlier in March, Governor of the People's Bank of China Zhou Xiaochuan said Beijing would eventually shift away from its special exchange rate policy.


Obama’s economic view is rejected on world stage

Free trade deal with South Korea eludes president

By Sewell Chan, Sheryl Gay Stolberg and David E. Sanger

SEOUL — President Obama’s hopes of emerging from his Asia trip with the twin victories of a free trade agreement with South Korea and a unified approach to spurring global economic growth ran into resistance on all fronts yesterday, putting Obama at odds with his key allies and largest trading partners.

The most concrete trophy expected to emerge from the trip eluded his grasp: a long-delayed free trade agreement with South Korea, first negotiated by the Bush administration and then reopened by Obama, to have greater protections for US workers.

And as officials frenetically tried to paper over differences among the Group of 20 members with a vaguely worded communiqué to be issued today, there was no way to avoid discussion of the fundamental differences of economic strategy. After five largely harmonious meetings in the past two years to deal with the most severe downturn since the Depression, major disputes broke out between Washington and China, Britain, Germany, and Brazil.

Each rejected core elements of Obama’s strategy of stimulating growth before focusing on deficit reduction. Several major nations continued to accuse the Federal Reserve of deliberately devaluing the dollar last week in an effort to put the costs of America’s competitive troubles on trading partners, rather than taking politically tough measures to rein in spending at home.

The result was that Obama repeatedly found himself on the defensive. He and the South Korean president, Lee Myung Bak, had vowed to complete the trade pact by the time they met here; while Obama insisted that it would be resolved “in a matter of weeks,’’ without the pressure of a summit meeting it was unclear how the hurdles on nontariff barriers to US cars and beef would be resolved.

Obama’s meeting with China’s president, Hu Jintao, appeared to do little to break down Chinese resistance to accepting even nonbinding numerical targets for limiting China’s trade surplus. While Lael Brainard, the undersecretary of the Treasury for international affairs, said that the United States and China “have gotten to a good place’’ on rebalancing their trade, Chinese officials later archly reminded the Americans that as the issuers of the dollar, the main global reserve currency, they should consider the interests of the “global economy’’ and their own “national circumstances.’’

The disputes were not limited to America’s foreign partners. Treasury Secretary Timothy F. Geithner got into a trans-Pacific argument with one of his former mentors, Alan Greenspan, the former chairman of the Federal Reserve, after Greenspan wrote that the United States was “pursuing a policy of currency weakening.’’ Geithner shot back on CNBC that while he had “enormous respect’’ for Greenspan, “that’s not an accurate description of either the Fed’s policies or our policies.’’

Much of the rest of the world seemed to share Greenspan’s assessment. Moreover, Obama seemed to be losing the broader debate over austerity. The president has insisted that at a moment of weak private demand, the best way to spur economic growth is to have the government prime the pump with cheap credit and government stimulus programs. He quickly found himself in an argument with Prime Minister David Cameron of Britain and Chancellor Angela Merkel of Germany.

“You do hear the argument made sometimes: If you have a deficit, put off the action to deal with it because taking money out of the economy will reduce your growth rate,’’ Cameron said at the meeting. “I simply don’t accept that.’’

Merkel, in a more traditional German view reflective of her country’s history of hyperinflation before World War II, was equally adamant.

“I am not one, and Germany is not one, who says growth and fiscal consolidation are contradictory,’’ she said during a lunchtime address in Seoul. “They can go together, and it is essential to return to a sustainable growth path.’’ She also suggested that it was the job of deficit countries — like the United States and Britain, although she diplomatically avoided citing them — to increase their competitiveness rather than put limits on countries that had figured out how to get the world to buy their goods.

Secret Walmart Survey Shows Inflation Already Here

There might not have been a second round of quantitative easing, if Federal Reserve Chairman Ben Bernanke shopped at Walmart.

A new pricing survey of products sold at the world’s largest retailer [WMT 54.27 0.14 (+0.26%) ] showed a 0.6 percent price increase in just the last two months, according to MKM Partners. At that rate, prices would be close to four percent higher a year from now, double the Fed’s mandate.

54.27 0.14 (+0.26%%)

The “inaugural price survey shows a small, but meaningful increase on an 86-item grocery basket,” said Patrick McKeever, MKM Partners analyst, in a note. Most of the items McKeever chose to track were every day items like food and detergent and made by national brands.

On November 3, the Fed announced its much-anticipated purchase of $600 billion in Treasury securities. An effort to keep market rates low since the central bank’s benchmark rate is already at zero. The Federal Open Market Committee’s statement said, “Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.”

But since that statement, interest rates have actually gone up, backfiring on a Fed chief who wants his quantitative easing to spark inflation of 2 percent annually. A moderate amount of inflation would be considered good for the economy. The problem is that inflation is already running well above a healthy level, investors said, Bernanke is just not looking in the right place, like a Walmart.

“I suspect that when the Chairman thinks about reflation he has a difficult time seeing any other asset besides real estate,” said Jim Iuorio of TJM Institutional Services. “Somehow the Fed thinks that if its not ‘wage driven’ inflation that it is somehow unimportant. It’s not unimportant to people who see everything they own (homes) going down in value and everything they need (food and energy) going up in price.”

Next week, the government is expected to say its official measure of inflation, the Consumer Price Index, increased at a 0.3 percent annual rate, according to economists’ consensus estimate. Core CPI, excluding food and energy, is expected to climb just 0.1 percent.

The biggest dollar increase in McKeever’s survey was on a jug of Tide Original laundry detergent, manufactured by Procter & Gamble [PG 64.79 0.46 (+0.72%) ]. Both P&G and Kimberly-Clark [KMB 62.26 0.24 (+0.39%) ] gave tentative forecasts for this quarter on concern they won’t be able to pass rising input costs on to the consumer. They may have no choice.

Prices of cotton, silver wheat, soybeans, corn are all up big this year. Cotton futures are up the most, climbing 90 percent so far in 2010. The price of silver is up 63 percent.

The purpose of McKeever’s note was actually not to be a commentary on Fed policy. The retail analyst is just trying to find out if Walmart is subtlety-increasing prices without decreasing foot traffic. A process he would deem bullish the stock.

“If the pricing dynamic is shifting, as our survey suggests, this would lend some upside bias to our sales and earnings expectations,” said McKeever.

Bernanke keeping interest rates artificially low is sparking outrage among central bank chiefs around the world, who feel the U.S. is essentially exporting inflation.

China’s CPI surged 4.4% in October, according to figures released Thursday, higher than economists’ expected and up from a 3.6 percent annual reading in the month prior.

Said Founder Tim Seymour, “Bernanke definitely must not shop at WalMart in China.”

For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC.


John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team.

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© 2010

Obama: 'Hard-won consensus' at G-20

Click to play
Obama: 'Global economy is growing again

For more on President Obama's tour of Asia, check out CNN's White House blog, The 1600 Report.

Seoul, South Korea (CNN) -- The G-20 summit wrapped up Friday in South Korea, with leaders of the world's top economies acknowledging that "risks remain," as some countries enjoy strong growth and others muddle along.

U.S. President Barack Obama touted a "hard-won consensus" on steps to monitor world trade and economic recovery, aimed at balancing growth globally.

"Uncoordinated policy actions will only lead to worse outcomes for all," the leaders said in a joint declaration.

At the summit, they agreed to steps that include moving toward more market-determined exchange rate systems and refraining from the competitive devaluation of currencies.

It remains to be seen how such steps play out, as countries struggle with their own political and economic priorities, however. They're aimed at limiting economic volatility around the world.

Obama highlighted summit priorities such as economic growth, deficit reduction and the need for economies to better balance imports and exports.

Obama's trip is part of a 10-day Asia tour that is aimed at strengthening the United States' trade and military ties with a region that has thrived economically.

During the summit, American and South Korean negotiators failed to reach an agreement on a new trade pact, creating new delays and obstacles for an accord that the White House has said could translate to an additional $10 billion in U.S. exports and 70,000 American jobs.

A long-running dispute over U.S. access to Korea's auto and beef markets was largely responsible for the failure, according to the White House.

South Korean President Lee Myung-bak has agreed to send a team to Washington to continue work on the trade pact.

Among the hurdles negotiators are trying to overcome: Korean conglomerates known as chaebols, which have kept a firm grasp on the union-strong country's marketplace, drawing complaints from foreign companies that have tried to do business there.

After the G-20, Obama was to head to Japan late Friday afternoon. He is to attend the APEC summit, which will be held in Yokohama on Saturday and Sunday.

Twenty-one countries form the Asia-Pacific Economic Cooperation, which focuses on economic coordination in the Asia Pacific region.

Grappling with a troubled U.S. economy, the Obama administration has highlighted the strengthening of economic and military ties during the president's Asia tour. Obama started his trip with a three-day stay in India, before heading to Indonesia and then to South Korea.

In India, Obama unveiled about $10 billion in contracts for U.S. exports to India. It is Asia's third-largest economy and one of the world's few growth markets.

In Indonesia, the president focused on the two countries' shared principles of unity and tolerance when he delivered a highly anticipated speech at the University of Indonesia. His visit was long-awaited Indonesia, where he spent four years as a child.

In South Korea, Obama met with a roster of world leaders such as Chinese President Hu Jintao and German Chancellor Angela Merkel. They represent economies that export much more than they consume.

Obama also paid tribute to American troops while he was in South Korea. He praised South Korean troops and Americans who fought during the 1950-53 Korean War.

In Japan, he'll attend the APEC summit, attend a leaders retreat and visit the Great Buddha of Kamakura.

The president will head back to the United States on Sunday.


Did you know that Thanksgiving was originally in the summer?

"The Holy God having by a long and Continual Series of his Afflictive dispensations in and by the present Warr with the Heathen Natives of this land, written and brought to pass bitter things against his own Covenant people in this wilderness, yet so that we evidently discern that in the midst of his judgements he hath remembered mercy, having remembered his Footstool in the day of his sore displeasure against us for our sins, with many singular Intimations of his Fatherly Compassion, and regard; reserving many of our Towns from Desolation Threatened, and attempted by the Enemy, and giving us especially of late with many of our Confederates many signal Advantages against them, without such Disadvantage to ourselves as formerly we have been sensible of, if it be the Lord's mercy that we are not consumed, It certainly bespeaks our positive Thankfulness, when our Enemies are in any measure disappointed or destroyed; and fearing the Lord should take notice under so many Intimations of his returning mercy, we should be found an Insensible people, as not standing before Him with Thanksgiving, as well as lading him with our Complaints in the time of pressing Afflictions:

The Council has thought meet to appoint and set apart the 29th day of this instant June, as a day of Solemn Thanksgiving and praise to God for such his Goodness and Favour, many Particulars of which mercy might be Instanced, but we doubt not those who are sensible of God's Afflictions, have been as diligent to espy him returning to us; and that the Lord may behold us as a People offering Praise and thereby glorifying Him; the Council doth commend it to the Respective Ministers, Elders and people of this Jurisdiction; Solemnly and seriously to keep the same Beseeching that being perswaded by the mercies of God we may all, even this whole people offer up our bodies and soulds as a living and acceptable Service unto God by Jesus Christ."

Ireland's young flee abroad as economic meltdown looms

Many young people are seeking to emigrate rather than face a life of hardship as the republic lurches towards financial collapse

Homeless man Ireland
A homeless Irish teenager begs on Merrion row, just around the corner from government bulidings in Dublin, Ireland. Photograph: Kim Haughton for the guardian

Student Niamh Buffini works hard and plays hard. As Ireland's No 1 taekwondo martial arts practitioner – she is rated 12th in the world – her ambitions include winning Olympic gold for Ireland.

But by the end of this month her future will have been decided by forces not just beyond her control but seemingly those of her government also. Ireland is on the cusp of insolvency. Some economists argue that it already is.

Buffini will soon learn if her fees at the Institute of Technology in Tallaght, south Dublin, have climbed beyond her means. Her father is a self-employed builder, which has recently become a euphemism for "unemployed".

"My class size will have dropped by 50% by next year," Buffini said. "Even lecturers took part in the recent student protests over fees because society here is going to be left with very few educated people. My best friends have already left – they're doing bar work in Spain and Australia."

Last week was not a good week for Ireland. Speculation about a European Union-backed bailout pushed its borrowing costs to unprecedented heights.

At Buffini's college on Friday, the day began with a protest by construction workers who were supposed to have been working on a new wing. Their paymaster Michael McNamara – the country's premier construction firm – had been put into receivership under the weight of debts of €1.5bn (£1.27bn), leaving them jobless and out of pocket for work they had already completed.

So far the workers' demonstrations have remained largely peaceful. Indeed, many Tallaght students seemed shocked by the violence they witnessed in TV reports from London involving their British counterparts. But that may change.

Economists are sought-after celebrities in Ireland at the moment and none is more famous than Morgan Kelly. His doom-laden words are lapped up by a nation addicted to Celtic melancholy.

Kelly, of University College Dublin, was laughed at, scorned and even threatened when he correctly predicted, as long ago as 2007, that Ireland's property bubble was heading for a spectacular explosion.

Now he is forecasting mass mortgage defaults and an ugly popular uprising. The first stirrings are already visible, he says, with "anxiety giving way to the first upwellings of an inchoate rage and despair that will transform Irish politics along the lines of the Tea Party in America", giving rise to a new "hard-right, anti-Europe, anti-traveller party".

The fact that Kelly got it right last time means that his dire warnings are now being given serious consideration this time around, but so far there is no evidence that the Irish are turning into racist extremists.

Polish immigrants, whose arrival in Ireland less than a decade ago increased the workforce by an astonishing 20%, have left in orderly fashion and with no complaints about their treatment. More worrying is the trend for the young Irish to follow them abroad.

Mark Ward, president of Tallaght's student union, says that 1,250 students are leaving Ireland every month. One in five graduates is seeking work outside the country. The Union of Students in Ireland believes that 150,000 students will emigrate in the next five years.

Ward, a 26-year-old marketing graduate, said: "The government's to blame for bankrolling the banks who were lending to their property developer friends. They all thought the party would never end.

"Students shouldn't have to pay for the mistakes of the government and their developer pals. It's going to take years to sort this mess out and it won't be just my generation which will be blighted big time."

Is the social fabric of Ireland beginning to unravel? The Kingdom, one of the country's much-loved local papers, recently reported that nearly 200 Gaelic footballers and hurlers have left Kerry to play in Britain, Australia and the US in the first seven months of this year. The true figure is probably double that.

The charity Barnardo's said that children were asking it for food because there was not enough for them to eat at home. "Some of our services are being asked by children if they can take food home for later because there just isn't enough," said Carmel O'Donovan, a project co-ordinator with Barnardo's.

And it's not just the most vulnerable who are feeling the pinch. Greystones is a wealthy Wicklow seaside town whose most famous resident is Sean FitzPatrick, the former chairman of nationalised Anglo Irish Bank. Emer O'Brien, an interior designer, and her architect husband Killian are struggling to repay their mortgage.

"It is awful, a bit like waiting for a bomb to explode but simply not knowing when," she said. "I don't think anybody has any faith in any of the politicians to fix this problem. Over 70% of education and health spending goes on pay and pensions, so all the cuts in those departments are coming from front-line services.

"I hope I don't get sick in the coming months because there'll be nobody to tend to you in the hospitals. Of course, a lot of people would be heading across the Irish Sea or the Atlantic if only they could sell their houses, but we can't do that either. So basically we're stuck on the Titanic as it goes down."

Next month the government will deliver its latest austerity budget with the aim of slashing a further €15bn from public spending on top of the €14.5bn it has already been forced to cut. But Kelly has argued that the public sector cuts are "an exercise in futility" when compared with the €70bn bill for Ireland's bad banks. "What is the point of rearranging the spending deckchairs, when the iceberg of bank losses is going to sink us anyway?" he asked in the Irish Times last week.

Put at its starkest, for the next six to seven years, every cent of income tax paid by Irish citizens will go to cover the banks' losses.

At the Capuchin Friary in Smithfield sausage breakfasts are being served to Dublin's growing band of homeless and needy people. "There's new faces arriving every day. At first they're embarrassed to be here but we put them at their ease," one of the volunteers said.

Gerry Larkin, the drop-in centre's security manager, has noticed that occupants of the many neighbouring apartment blocks which were supposed to regenerate the city's down-at-heel north side are now taking their places in the queue for food parcels.

He said: "Some of them have got into trouble with their mortgages and they're asking me at the door: 'Any chance of coming in, can you give me even a bit of food for the kids?'

"We've gone from 150 breakfasts during the boom years to 450 now and another 700 coming in for lunch."

Five nights a week Niamh Buffini trains in her local martial arts club, nurturing her dream of winning gold for Ireland. "I'm always upbeat, but with my friends the chat about how bad things are is never ending.

"I'm an optimist by nature and I hope we can get out of this. The best I could say is I couldn't see it getting any worse."

The Economy Will Not Recover Until the Economic Criminals are Prosecuted, and There Are Real Investigations Into 9/11 and Other Government Failures

This essay will demonstrate that:
  1. Trust is essential for a stable economy;

  2. Trust is currently at an all-time low;

  3. Launching criminal prosecutions and real investigations is one of the main prerequisites for an economic recovery.
Trust in Government is Necessary for a Stable Economy

A 2005 letter in premier scientific journal Nature reviewed the research on trust and economics:

Trust ... plays a key role in economic exchange and politics. In the absence of trust among trading partners, market transactions break down. In the absence of trust in a country's institutions and leaders, political legitimacy breaks down. Much recent evidence indicates that trust contributes to economic, political and social success.

Forbes wrote an article in 2006 entitled "The Economics of Trust". The article summarizes the importance of trust in creating a healthy economy:

Imagine going to the corner store to buy a carton of milk, only to find that the refrigerator is locked. When you've persuaded the shopkeeper to retrieve the milk, you then end up arguing over whether you're going to hand the money over first, or whether he is going to hand over the milk. Finally you manage to arrange an elaborate simultaneous exchange. A little taste of life in a world without trust--now imagine trying to arrange a mortgage.

Being able to trust people might seem like a pleasant luxury, but economists are starting to believe that it's rather more important than that. Trust is about more than whether you can leave your house unlocked; it is responsible for the difference between the richest countries and the poorest.

"If you take a broad enough definition of trust, then it would explain basically all the difference between the per capita income of the United States and Somalia," ventures Steve Knack, a senior economist at the World Bank who has been studying the economics of trust for over a decade. That suggests that trust is worth $12.4 trillion dollars a year to the U.S., which, in case you are wondering, is 99.5% of this country's income. ***

Above all, trust enables people to do business with each other. Doing business is what creates wealth. ***

Economists distinguish between the personal, informal trust that comes from being friendly with your neighbors and the impersonal, institutionalized trust that lets you give your credit card number out over the Internet.

Similarly, market psychologists Richard L. Peterson M.D. and Frank Murtha, PhD noted:
Trust is the oil in the engine of capitalism, without it, the engine seizes up.

Confidence is like the gasoline, without it the machine won't move.

Trust is gone: there is no longer trust between counterparties in the financial system. Furthermore, confidence is at a low. Investors have lost their confidence in the ability of shares to provide decent returns (since they haven't).
Two professors of finance pointed out:

The drop in trust, we believe, is a major factor behind the deteriorating economic conditions. To demonstrate its importance, we launched the Chicago Booth/Kellogg School Financial Trust Index. Our first set of data—based on interviews conducted at the end of December 2008—shows that between September and December, 52 percent of Americans lost trust in the banks. Similarly, 65 percent lost trust in the stock market. A BBB/Gallup poll that surveyed a similar sample of Americans last April confirms this dramatic drop. At that time, 42 percent of Americans trusted financial institutions, versus 34 percent in our survey today, while 53 percent said they trusted U.S. companies, versus just 12 percent today.

As trust declines, so does Americans’ willingness to invest their money in the financial system. Our data show that trust in the stock market affects people’s intention to buy stocks, even after accounting for expectations of future stock-market performance. Similarly, a person’s trust in banks predicts the likelihood that he will make a run on his bank in a moment of crisis: 25 percent of those who don’t trust banks withdrew their deposits and stored them as cash last fall, compared with only 3 percent of those who said they still trusted the banks. Thus, trust in financial institutions is a key factor for the smooth functioning of capital markets and, by extension, the economy. Changes in trust matter.

They quote a Nobel laureate economist on the subject:
“Virtually every commercial transaction has within itself an element of trust,” writes economist Kenneth Arrow, a Nobel laureate. When we deposit money in a bank, we trust that it’s safe. When a company orders goods, it trusts its counterpart to deliver them in good faith. Trust facilitates transactions because it saves the costs of monitoring and screening; it is an essential lubricant that greases the wheels of the economic system.
And a distinguished international group of economists (Giancarlo Corsetti, Michael P. Devereux, Luigi Guiso, John Hassler, Gilles Saint-Paul, Hans-Werner Sinn, Jan-Egbert Sturm and Xavier Vives) wrote:
Public distrust of bankers and financial markets has risen dramatically with the financial crisis. This column argues that this loss of trust in the financial system played a critical role in the collapse of economic activity that followed. To undo the damage, financial regulation needs to focus on restoring that trust.
They noted:
Trust is crucial in many transactions and certainly in those involving financial exchanges. The massive drop in trust associated with this crisis will therefore have important implications for the future of financial markets. Data show that in the late 1970s, the percentage of people who reported having full trust in banks, brokers, mutual funds or the stock market was around 40%; it had sunk to around 30% just before the crisis hit, and collapsed to barely 5% afterwards. It is now even lower than the trust people have in other people (randomly selected of course).

Time Magazine pointed out:

Traditionally, gold has been a store of value when citizens do not trust their government politically or economically.
In other words, the government's political actions affect investments, such as gold, and thus the broader economy.

Trust Is At An All-Time Low

Unfortunately, the public's trust in government as a whole (and see this and this), the justice system, bankers, and the corporate media are at all-time lows.


Partly because the government has been repeatedly caught lying.

The government repeatedly said about the subprime crisis, banking crisis, debt crisis, mortgage crisis, and other economic crises:
  • "It's contained"
  • "We've got it under control"
  • "We're going to fix it"
It wasn't, and they didn't ... and so people have lost trust in the government.

But it's not just the economy. The government also got caught making false claims that:
  • That the government doesn't spy on Americans (it did even before 9/11), Americans don't torture, etc.
It is basic human nature that - if you catch someone lying about one topic - you will tend to doubt the truth of what he is saying in other areas as well.

So Americans' loss of trust in the government's political actions have also undermined their trust in the government's statements and actions in the economic field.

But there's another important reason for Americans' lack of trust in our government and our economy: the failure to prosecute the criminals.

Prosecuting the Criminals and Launching REAL Investigations Is Necessary to Restore Trust

One of the leading business schools in America - the Wharton School of Business - has written an essay on the psychological causes and solutions to the economic crisis. Wharton points out that restoring trust is the key to recovery, and that trust cannot be restored until wrongdoers are held accountable:

According to David M. Sachs, a training and supervision analyst at the Psychoanalytic Center of Philadelphia, the crisis today is not one of confidence, but one of trust. "Abusive financial practices were unchecked by personal moral controls that prohibit individual criminal behavior, as in the case of [Bernard] Madoff, and by complex financial manipulations, as in the case of AIG." The public, expecting to be protected from such abuse, has suffered a trauma of loss similar to that after 9/11. "Normal expectations of what is safe and dependable were abruptly shattered," Sachs noted. "As is typical of post-traumatic states, planning for the future could not be based on old assumptions about what is safe and what is dangerous. A radical reversal of how to be gratified occurred."

People now feel more gratified saving money than spending it, Sachs suggested. They have trouble trusting promises from the government because they feel the government has let them down.

He framed his argument with a fictional patient named Betty Q. Public, a librarian with two teenage children and a husband, John, who had recently lost his job. "She felt betrayed because she and her husband had invested conservatively and were double-crossed by dishonest, greedy businessmen, and now she distrusted the government that had failed to protect them from corporate dishonesty. Not only that, but she had little trust in things turning around soon enough to enable her and her husband to accomplish their previous goals.

"By no means a sophisticated economist, she knew ... that some people had become fantastically wealthy by misusing other people's money -- hers included," Sachs said. "In short, John and Betty had done everything right and were being punished, while the dishonest people were going unpunished."

Helping an individual recover from a traumatic experience provides a useful analogy for understanding how to help the economy recover from its own traumatic experience, Sachs pointed out. The public will need to "hold the perpetrators of the economic disaster responsible and take what actions they can to prevent them from harming the economy again." In addition, the public will have to see proof that government and business leaders can behave responsibly before they will trust them again, he argued.

Note that Sachs urges "hold[ing] the perpetrators of the economic disaster responsible." In other words, just "looking forward" and promising to do things differently isn't enough.

Economists such as William Black and James Galbraith and Nobel prize winning economists Joseph Stiglitz and George Akerlof agree.

Indeed, polls show that:

  • Americans want those who committed financial fraud to be prosecuted
Remember, distrust in the political actions of government officials undermines the economy as well. Therefore, the economy will not recover until the economic criminals are prosecuted, and there are real investigations into 9/11 (even the 9/11 Commissioners themselves think there should be more investigation: see this and this), the Iraq war, torture, spying on Americans and other government failures.

Reality check in less than seven minutes

I don't know what I can add to this other than to say that this whole video is less than seven minutes long.

Meanwhile, the entire output of the mainstream news media - thousands and thousands of hours - fails to illustrate these facts.

Here's the situation:

The Fed working in conjunction with a handful of banks has been systematically looted the people of the United States for year (decades really.)

Recent hits include the Internet stock bubble, almost entirely a creation of the Fed and a few criminally minded investment banks.

They (the Fed and banks like Goldman Sachs) were allowed to get away with it, so they did it again with the so-called "Sub-Prime" fiasco which in fact was premeditated and carefully organized fraud on a massive scale - and it appears they are going to get away with that too.

Now the Fed is "easing" trillions of dollars from away you to the banks again and, now, after you've been ripped off to the tune of trillions of dollars, you will pay every penny for "the cure" in increased taxes and reduced services and benefits.

Native Blood: The Myth of Thanksgiving

The Puritan colonists of Massachusetts embraced a line from Psalms 2:8.
"Ask of me, and I shall give thee, the heathen for thine inheritance, and the uttermost parts of the earth for thy possession."
* * * * * *

It is a deep thing that people still celebrate the survival of the early colonists at Plymouth — by giving thanks to the Christian God who supposedly protected and championed the European invasion. The real meaning of all that, then and now, needs to be continually excavated. The myths and lies that surround the past are constantly draped over the horrors and tortures of our present.

Every schoolchild in the U.S. has been taught that the Pilgrims of the Plymouth Colony invited the local Indians to a major harvest feast after surviving their first bitter year in New England. But the real history of Thanksgiving is a story of the murder of indigenous people and the theft of their land by European colonialists–and of the ruthless ways of capitalism.
This piece is intended to be shared at this holiday time. Pass it on. Serve a little truth with the usual stuffing.
* * * * *
In mid-winter 1620 the English ship Mayflower landed on the North American coast, delivering 102 exiles. The original Native people of this stretch of shoreline had already been killed off. In 1614 a British expedition had landed there. When they left they took 24 Indians as slaves and left smallpox behind. Three years of plague wiped out between 90 and 96 percent of the inhabitants of the coast, destroying most villages completely.

After the first colonies were establshed -- the Pequod war
The Europeans landed and built their colony called "the Plymouth Plantation" near the deserted ruins of the Indian village of Pawtuxet. They ate from abandoned cornfields grown wild. Only one Pawtuxet named Squanto had survived–he had spent the last years as a slave to the English and Spanish in Europe. Squanto spoke the colonists’ language and taught them how to plant corn and how to catch fish until the first harvest. Squanto also helped the colonists negotiate a peace treaty with the nearby Wampanoag tribe, led by the chief Massasoit.
These were very lucky breaks for the colonists. The first Virginia settlement had been wiped out before they could establish themselves. Thanks to the good will of the Wampanoag, the settlers not only survived their first year but had an alliance with the Wampanoags that would give them almost two decades of peace.

John Winthrop, a founder of the Massahusetts Bay colony considered this wave of illness and death to be a divine miracle. He wrote to a friend in England, "But for the natives in these parts, God hath so pursued them, as for 300 miles space the greatest part of them are swept away by smallpox which still continues among them. So as God hath thereby cleared our title to this place, those who remain in these parts, being in all not 50, have put themselves under our protection."

The deadly impact of European diseases and the good will of the Wampanoag allowed the settlers to survive their first year.
In celebration of their good fortune, the colony’s governor, William Bradford, declared a three-day feast of thanksgiving after that first harvest of 1621.
How the Puritans Stole the Land

Original inhabitants -- before the European invasion
But the peace that produced the Thanksgiving Feast of 1621 meant that the Puritans would have 15 years to establish a firm foothold on the coast. Until 1629 there were no more than 300 settlers in New England, scattered in small and isolated settlements. But their survival inspired a wave of Puritan invasion that soon established growing Massachusetts towns north of Plymouth: Boston and Salem. For 10 years, boatloads of new settlers came.
And as the number of Europeans increased, they proved not nearly so generous as the Wampanoags.
On arrival, the Puritans and other religious sects discussed "who legally owns all this land." They had to decide this, not just because of Anglo-Saxon traditions, but because their particular way of farming was based on individual–not communal or tribal–ownership. This debate over land ownership reveals that bourgeois "rule of law" does not mean "protect the rights of the masses of people."
Some settlers argued that the land belonged to the Indians. These forces were excommunicated and expelled. Massachusetts Governor Winthrop declared the Indians had not "subdued" the land, and therefore all uncultivated lands should, according to English Common Law, be considered "public domain." This meant they belonged to the king. In short, the colonists decided they did not need to consult the Indians when they seized new lands, they only had to consult the representative of the crown (meaning the local governor).

Training of the Massachusetts militia, 1637. The means of genocide and theft.
The colonists embraced a line from Psalms 2:8.
"Ask of me, and I shall give thee, the heathen for thine inheritance, and the uttermost parts of the earth for thy possession."
Since then, European settler states have similarly declared god their real estate agent: from the Boers seizing South Africa to the Zionists seizing Palestine.
The European immigrants took land and enslaved Indians to help them farm it. By 1637 there were about 2,000 British settlers. They pushed out from the coast and decided to remove the inhabitants.
The Shining City on the Hill
Where did the Plymouth and Massachusetts colonies of Puritan and "separatist" pilgrims come from and what were they really all about?

A self-serving historical lie -- The myth of coexistance and love promoted by Thanksgiving
Governor Winthrop, a founder of the Massachusetts colony, said, "We shall be as a City upon a Hill, the eyes of all people are upon us." The Mayflower Puritans had been driven out of England as subversives. The Puritans saw this religious colony as a model of a social and political order that they believed all of Europe should adopt.

The Puritan movement was part of a sweeping revolt within English society against the ruling feudal order of wealthy lords. Only a few decades after the establishment of Plymouth, the Puritan Revolution came to power in England. They killed the king, won a civil war, set up a short-lived republic, and brutally conquered the neighboring people of Ireland to create a larger national market.
The famous Puritan intolerance was part of a determined attempt to challenge the decadence and wastefulness of the rich aristocratic landlords of England. The Puritans wanted to use the power of state punishment to uproot old and still dominant ways of thinking and behaving.
The new ideas of the Puritans served the needs of merchant capitalist accumulation. The extreme discipline, thrift and modesty the Puritans demanded of each other corresponded to a new and emerging form of ownership and production. Their so-called "Protestant Ethic" was an early form of the capitalist ethic. From the beginning, the Puritan colonies intended to grow through capitalist trade–trading fish and fur with England while they traded pots, knives, axes, alcohol and other English goods with the Indians.
Armed settlers arrive with priestly blessings
The New England were ruled by a government in which only the male heads of families had a voice. Women, Indians, slaves, servants, youth were neither heard nor represented. In the Puritan schoolbooks, the old law "honor thy father and thy mother" was interpreted to mean honoring "All our Superiors, whether in Family, School, Church, and Commonwealth." And, the real truth was that the colonies were fundamentally controlled by the most powerful merchants.
The Puritan fathers believed they were the Chosen People of an infinite god and that this justified anything they did. They were Calvinists who believed that the vast majority of humanity was predestined to damnation. This meant that while they were firm in fighting for their own capitalist right to accumulate and prosper, they were quick to oppress the masses of people in Ireland, Scotland and North America, once they seized the power to set up their new bourgeois order. Those who rejected the narrow religious rules of the colonies were often simply expelled "out into the wilderness."

The Massachusetts colony (north of Plymouth) was founded when Puritan stockholders had gotten control of an English trading company. The king had given this company the right to govern its own internal affairs, and in 1629 the stockholders simply voted to transfer the company to North American shores–making this colony literally a self-governing company of stockholders!

In U.S. schools, students are taught that the Mayflower compact of Plymouth contained the seeds of "modern democracy" and "rule of law." But by looking at the actual history of the Puritans, we can see that this so-called "modern democracy" was (and still is) a capitalist democracy based on all kinds of oppression and serving the class interests of the ruling capitalists.

The reality of colonial massacre and enslavement
In short, the Puritan movement developed as an early revolutionary challenge to the old feudal order in England. They were the soul of primitive capitalist accumulation. And transferred to the shores of North America, they immediately revealed how heartless and oppressive that capitalist soul is.

The Birth of "The American Way of War"

In the Connecticut Valley, the powerful Pequot tribe had not entered an alliance with the British (as had the Narragansett, the Wampanoag, and the Massachusetts peoples). At first they were far from the centers of colonization. Then, in 1633, the British stole the land where the city of Hartford now sits–land which the Pequot had recently conquered from another tribe. That same year two British slave raiders were killed. The colonists demanded that the Indians who killed the slavers be turned over. The Pequot refused.
The Puritan preachers said, from Romans 13:2, "Whosoever therefore resisteth the power, resisteth the ordinance of God: and they that resist shall receive to themselves damnation." The colonial governments gathered an armed force of 240 under the command of John Mason. They were joined by a thousand Narragansett warriors. The historian Francis Jennings writes: "Mason proposed to avoid attacking Pequot warriors which would have overtaxed his unseasoned, unreliable troops. Battle, as such, was not his purpose. Battle is only one of the ways to destroy an enemy’s will to fight. Massacre can accomplish the same end with less risk, and Mason had determined that massacre would be his objective."
The colonist army surrounded a fortified Pequot village on the Mystic River. At sunrise, as the inhabitants slept, the Puritan soldiers set the village on fire.
William Bradford, Governor of Plymouth, wrote: "Those that escaped the fire were slain with the sword; some hewed to pieces, others run through with their rapiers, so that they were quickly dispatched and very few escaped. It was conceived they thus destroyed about 400 at this time. It was a fearful sight to see them thus frying in the fire…horrible was the stink and scent thereof, but the victory seemed a sweet sacrifice, and they gave the prayers thereof to God, who had wrought so wonderfully for them."
European colonists attack the Pequot villageMason himself wrote: "It may be demanded…Should not Christians have more mercy and compassion? But…sometimes the Scripture declareth women and children must perish with their parents…. We had sufficient light from the word of God for our proceedings."

Three hundred and fifty years later the Puritan phrase "a shining city on the hill" became a favorite quote of conservative speechwriters.
Discovering the Profits of Slavery
This so-called "Pequot war" was a one-sided murder and slaving expedition. Over 180 captives were taken. After consulting the bible again, in Leviticus 24:44, the colonial authorities found justification to kill most of the Pequot men and enslave the captured women and their children. Only 500 Pequot remained alive and free. In 1975 the official number of Pequot living in Connecticut was 21.
Some of the war captives were given to the Narragansett and Massachusetts allies of the British. Even before the arrival of Europeans, Native peoples of North America had widely practiced taking war captives from other tribes as hostages and slaves.

The remaining captives were sold to British plantation colonies in the West Indies to be worked to death in a new form of slavery that served the emerging capitalist world market. And with that, the merchants of Boston made a historic discovery: the profits they made from the sale of human beings virtually paid for the cost of seizing them.
One account says that enslaving Indians quickly became a "mania with speculators." These early merchant capitalists of Massachusetts started to make genocide pay for itself. The slave trade, first in captured Indians and soon in kidnapped Africans, quickly became a backbone of New England merchant capitalism.

Thanksgiving in the Manhattan Colony

In 1641 the Dutch governor Kieft of Manhattan offered the first "scalp bounty"–his government paid money for the scalp of each Indian brought to them. A couple years later, Kieft ordered the massacre of the Wappingers, a friendly tribe. Eighty were killed and their severed heads were kicked like soccer balls down the streets of Manhattan. One captive was castrated, skinned alive and forced to eat his own flesh while the Dutch governor watched and laughed. Then Kieft hired the notorious Underhill who had commanded in the Pequot war to carry out a similar massacre near Stamford, Connecticut. The village was set fire, and 500 Indian residents were put to the sword.

A day of thanksgiving was proclaimed in the churches of Manhattan. As we will see, the European colonists declared Thanksgiving Days to celebrate mass murder more often than they did for harvest and friendship.
The Conquest of New England
By the 1670s there were about 30,000 to 40,000 white inhabitants in the United New England Colonies–6,000 to 8,000 able to bear arms. With the Pequot destroyed, the Massachusetts and Plymouth colonists turned on the Wampanoag, the tribe that had saved them in 1620 and probably joined them for the original Thanksgiving Day.
In 1675 a Christian Wampanoag was killed while spying for the Puritans. The Plymouth authorities arrested and executed three Wampanoag without consulting the tribal chief, King Philip.

As Mao Tsetung says: "Where there is oppression there is resistance." The Wampanoag went to war.
The Indians applied some military lessons they had learned: they waged a guerrilla war which overran isolated European settlements and were often able to inflict casualties on the Puritan soldiers. The colonists again attacked and massacred the main Indian populations.
When this war ended, 600 European men, one-eleventh of the adult men of the New England Colonies, had been killed in battle. Hundreds of homes and 13 settlements had been wiped out. But the colonists won.
In their victory, the settlers launched an all-out genocide against the remaining Native people. The Massachusetts government offered 20 shillings bounty for every Indian scalp, and 40 shillings for every prisoner who could be sold into slavery. Soldiers were allowed to enslave any Indian woman or child under 14 they could capture. The "Praying Indians" who had converted to Christianity and fought on the side of the European troops were accused of shooting into the treetops during battles with "hostiles." They were enslaved or killed. Other "peaceful" Indians of Dartmouth and Dover were invited to negotiate or seek refuge at trading posts–and were sold onto slave ships.

It is not known how many Indians were sold into slavery, but in this campaign, 500 enslaved Indians were shipped from Plymouth alone. Of the 12,000 Indians in the surrounding tribes, probably about half died from battle, massacre and starvation.
After King Philip’s War, there were almost no Indians left free in the northern British colonies. A colonist wrote from Manhattan’s New York colony: "There is now but few Indians upon the island and those few no ways hurtful. It is to be admired how strangely they have decreased by the hand of God, since the English first settled in these parts."
In Massachusetts, the colonists declared a "day of public thanksgiving" in 1676, saying, "there now scarce remains a name or family of them [the Indians] but are either slain, captivated or fled."
Fifty-five years after the original Thanksgiving Day, the Puritans had destroyed the generous Wampanoag and all other neighboring tribes. The Wampanoag chief King Philip was beheaded. His head was stuck on a pole in Plymouth, where the skull still hung on display 24 years later.
The descendants of these Native peoples are found wherever the Puritan merchant capitalists found markets for slaves: the West Indies, the Azures, Algiers, Spain and England. The grandson of Massasoit, the Pilgrim’s original protector, was sold into slavery in Bermuda.

Runaways and Rebels

But even the destruction of Indian tribal life and the enslavement of survivors brought no peace. Indians continued to resist in every available way. Their oppressors lived in terror of a revolt. And they searched for ways to end the resistance. The historian MacLeod writes: "The first `reservations’ were designed for the `wild’ Irish of Ulster in 1609. And the first Indian reservation agent in America, Gookin of Massachusetts, like many other American immigrants had seen service in Ireland under Cromwell."

Let's see the reality of Thanksgiving -- and the founding of the United States in slavery and genocide

The enslaved Indians refused to work and ran away. The Massachusetts government tried to control runaways by marking enslaved Indians: brands were burnt into their skin, and symbols were tattooed into their foreheads and cheeks.
A Massachusetts law of 1695 gave colonists permission to kill Indians at will, declaring it was "lawful for any person, whether English or Indian, that shall find any Indians traveling or skulking in any of the towns or roads (within specified limits), to command them under their guard and examination, or to kill them as they may or can."
The northern colonists enacted more and more laws for controlling the people. A law in Albany forbade any African or Indian slave from driving a cart within the city. Curfews were set up; Africans and Indians were forbidden to have evening get-togethers. On Block Island, Indians were given 10 lashes for being out after nine o’clock. In 1692 Massachusetts made it a serious crime for any white person to marry an African, an Indian or a mulatto. In 1706 they tried to stop the importation of Indian slaves from other colonies, fearing a slave revolt.
Looking at this history raises a question: Why should anyone celebrate the survival of the earliest Puritans with a Thanksgiving Day? Certainly the Native peoples of those times had no reason to celebrate.
The ruling powers of the United States organized people to celebrate Thanksgiving Day because it is in their interest. That’s why they created it. The first national celebration of Thanksgiving was called for by George Washington. And the celebration was made a regular legal holiday later by Abraham Lincoln during the civil war (right as he sent troops to suppress the Sioux of Minnesota).

Washington and Lincoln were two presidents deeply involved in trying to forge a unified bourgeois nation-state out of the European settlers in the United States. And the Thanksgiving story was a useful myth in their efforts at U.S. nation-building. It celebrates the "bounty of the American way of life," while covering up the brutal nature of this society.
Available online at Send comments to: m1keely (at)

2010 Asian Games Opening Ceremony

Earlier today, in Guangzhou, China, the Opening Ceremony for the 16th Asian Games took place, with lavish stagecraft, costumes, fireworks and performers welcoming participants. Some 14,000 athletes from 45 countries and territories will compete in 42 sporting disciplines until November 27. Collected here are colorful scenes from Guangzhou, China. (29 photos total)

Dancers perform during the Opening Ceremony for the 16th Asian Games Guangzhou 2010 at Haixinsha Square on November 12, 2010 in Guangzhou, China. (Jamie McDonald/Getty Images)

The sun sets behind Haixinsha Stadium shortly before the start of the opening ceremony of the 16th Asian Games in Guangzhou on November 12, 2010. (TORSTEN BLACKWOOD/AFP/Getty Images) #

Fireworks explode at the opening ceremony of the 16th Asian Games in Guangzhou on November 12, 2010. (MIKE CLARKE/AFP/Getty Images) #

Boats sail up the Pearl River during the opening ceremony of the 16th Asian Games on November 12, 2010. (MIKE CLARKE/AFP/Getty Images) #

Athletes wave their flags during the Opening Ceremony for the Asian Games Guangzhou 2010 on November 12, 2010 in Guangzhou, China. (Feng Li/Getty Images) #

Illuminated performers take part in the opening ceremony of the 16th Asian Games on November 12, 2010. (REUTERS/Mick Tsikas) #

Dancers in traditional Chinese dress perform during the Opening Ceremony for the 16th Asian Games Guangzhou 2010 on November 12, 2010 in Guangzhou, China. (Jamie McDonald/Getty Images) #

Performers are suspended in the air during the opening ceremony for the 16th Asian Games in Guangzhou, China on Friday, Nov. 12, 2010. (AP Photo/Ng Han Guan) #

Performers dance on a submerged stage during the opening ceremony of the 16th Asian Games on November 12, 2010. (REUTERS/Carlos Barria (CHINA) #

Artists perform aboard a ship in the opening ceremony of the 16th Asian Games on November 12, 2010. (LIU JIN/AFP/Getty Images) #

Chinese soldiers carry their national flag to the flag raising ceremony during the opening of the 16th Asian Games on Nov. 12, 2010. (AP Photo/Ng Han Guan) #

A performer drums during the Opening Ceremony at Haixinsha Square on November 12, 2010 in Guangzhou, China. (Jamie McDonald/Getty Images) #

Illuminated dancers perform in the opening ceremony of the 16th Asian Games on November 12, 2010. (NICOLAS ASFOURI/AFP/Getty Images) #

Dancers perform suspended in front of a big screen during the Opening Ceremony of the 16th Asian Games Guangzhou 2010 on November 12, 2010. (Richard Heathcote/Getty Images) #

Performers hold lanterns in the opening ceremony of the 16th Asian Games in Guangzhou, China. (REUTERS/Carlos Barria) #

Drummers perform on the stage during the opening ceremony of the 16th Asian Games on November 12, 2010. (PETER PARKS/AFP/Getty Images) #

A boy performs, suspended above the stage, during the Opening Ceremony of the 16th Asian Games Guangzhou 2010 on November 12, 2010. (Jamie McDonald/Getty Images) #

Performers take part in the opening ceremony of the 16th Asian Games on November 12, 2010. (PHILIPPE LOPEZ/AFP/Getty Images) #

Dancers in native costume perform during the opening ceremony of the 16th Asian Games in Guangzhou on November 12, 2010. (PETER PARKS/AFP/Getty Images) #

Dancers perform suspended before a big screen during the Opening Ceremony for the 16th Asian Games. (Richard Heathcote/Getty Images) #

Swimming performers take part in the opening ceremony of the 16th Asian Games in Guangzhou, Guangdong province on November 12, 2010. (REUTERS/Carlos Barria) #

Spinning performers take part in the opening ceremony of the 16th Asian Gameson November 12, 2010. (REUTERS/Mick Tsikas) #

Drummers raise their arms during the Opening Ceremony at Haixinsha Square on November 12, 2010 in Guangzhou, China. (Hannah Johnston/Getty Images) #

A dancer performs during the Opening Ceremony for the 16th Asian Games on November 12, 2010. (Jamie McDonald/Getty Images) #

The flag-bearer of Afghanistan leads the delegation during the opening ceremony of the 16th Asian Games on November 12, 2010. (REUTERS/Carlos Barria) #

Spectators hold up lanterns as they wait for the start of the opening ceremony for the 16th Asian Games in Guangzhou, China, Friday, Nov. 12, 2010. (AP Photo/Eugene Hoshiko) #

The fire for the 16th Asian Games is lit during the opening ceremony on November 12, 2010. (REUTERS/Donald Chan) #

The flag bearer for China leads the delegation during the opening ceremony in Guangzhou,China on November 12, 2010. (REUTERS/Carlos Barria) #

Performers dance ona submerged stage during the opening ceremony of the 16th Asian Games in Guangzhou on November 12, 2010. (PHILIPPE LOPEZ/AFP/Getty Images) #