Saturday, March 1, 2014

WHERE IS OUR MONEY: $473 Million In Bitcoins Vaporized As Mt. Gox Exchange Files Bankruptcy

Due to inherent problems within the exchange mechanism used to trade the Bitcoin crypto-currency, the Mt. Gox exchange has closed up shop and filed for bankruptcy. Some $473,000,000 worth of BTC has simply vanished in what could be one of the largest digital heists in history. Investigators in Japan are inquiring into the unregulated exchange and the U.S. Federal government is also looking into it, but because of the nature of Bitcoin itself the money is, for all intents and purposes, gone. The operator of the exchange Mark Karpelès, who may or may not be involved in the disappearance of user funds has apologized for “causing trouble.”
If you don’t hold it in your hand, there is always the possibility of counter party risk, as is clearly the case with the Mt. Gox Bitcoin debacle.
Thus, we urge readers to take steps to, at the very least, diversify their personal portfolios into some form of physical goods, be it food, gold, productive real estate or other assets that will maintain some semblance of value in the midst of a crisis, lest you end up facing this:

The following report surrounding the collapse of Mt. Gox originally appeared at Zero Hedge
mt-gox-collapseFor a case study of a blistering rise and an absolutely epic fall of an exchange that i) was named after Magic: the Gathering and ii) transacted in a digital currency which many have speculated was conceived by the NSA nearly two decades ago and was used as a honeypot to trap the gullible, look no further than Mt.Gox which after halting withdrawals for the second (and final time) has finally done the honorable thing, and filed for bankruptcy. As the WSJ reports, “Bitcoin exchange Mt. Gox said Friday it was filing for bankruptcy protection after losing almost 750,000 of its customers’ bitcoins, marking the collapse of a marketplace that once dominated trading in the virtual currency. The company said it also lost around 100,000 of its own bitcoins. Together, the lost bitcoins would be worth approximately $473 million at market prices charted by the CoinDesk bitcoin index, although the price of Mt. Gox bitcoin had fallen well below that index after it stopped bitcoin withdrawals in early February.”
The punchline: speaking to reporters at Tokyo District Court Friday after the bankruptcy filing, Mt. Gox owner Mark Karpelès said technical issues had opened the way for fraudulent withdrawals, and he apologized to customers.  
“There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble”
So $473 million Bitcoins disappear just like that? But you heard the man – he is sorry. So all is well – and why not: it works for the TBTF banks every day.
What is amazing is that at the time of filing Mt. Gox had outstanding debt of about ¥6.5 billion ($63.6 million), and just as amazing is that it actually had assets worth ¥3.84 billion.
Elsewhere, prices on the CoinDesk index, which tracks the Bitstamp and BTC-e bitcoin exchanges, fell slightly after the announcement but appeared to stave off a larger drop.
Mr. Karpelès, wearing a gray suit and a blue tie, appeared calm while his lawyer did most of the talking, but he appeared to have difficulty finding words when reporters asked him to send a message to his investors, just repeating his apology.
Computer geeks who were hoping to ride the momentum train to riches, and apparently had never heard of gold, were unhappy:
“It is disappointing they hid so much for so long,” said Jonathan Waller, a 30-year-old game developer who said he had had 211 bitcoin in Mt. Gox. “I hope they manage to become a fully-functioning exchange again, but their reputation is so damaged it may not be possible,” he said.
Over the past month, customers from as far away as the U.K. and Australia had come to air their complaints outside the company’s Tokyo offices. One of them, Londoner Kolin Burges, figured in news photos around the world holding a sign saying, “MT GOX—WHERE IS OUR MONEY.”
William Banks, a website developer in Australia, said he lost about 100 bitcoins in Mt. Gox. He had been using the platform since the end of 2012, when he bought some bitcoins at $40 each. Recently, he bought more at about $800 a pop as he became more confident in the virtual currency. He said he has contacted a Japan-based lawyer to look into legal action.
About Mt. Gox’s loss of bitcoins, he said, “That seems impossible to me. It’s just such an astronomical amount of coins to lose.”
Only when redenominated in USD. Remember: BTC is its own currency so why fret? As for the collapse of this latest Ponzi scheme: if things appear too good to be true (wink wink S&P 500), they usually are.
This report originally appeared at Zero Hedge

Ukraine Bank Runs Could Soon Be Seen In EU And U.S.

Today’s AM fix was USD 1,327.75, EUR 961.65 and GBP 793.21 per ounce.
Yesterday’s AM fix was USD 1,331.00, EUR 974.81 and GBP 799.88 per ounce.
Gold climbed $1.50 or 0.11% yesterday to $1,330.50/oz. Silver rose $0.04 or 0.19% at $21.28/oz.
Gold in U.S. Dollars, 5 Days – (Bloomberg)
Gold headed for its first back to back monthly gain since August as concern that the U.S. recovery may be losing momentum, concerns about the Chinese economy and turmoil in emerging markets is leading to haven demand. Assets in gold exchange-traded products are set for the first monthly increase in 14 months. Gold ETF holdings climbed 0.4% this month through yesterday and are set for their first monthly gain since December 2012.
China’s economy may exert an important influence on markets again next week. A poor PMI number on Saturday could lead to a renewed bout of ‘risk off’ in markets next week.

Gold in U.S. Dollars, Year To Date – (Bloomberg)
A two-week slide in China’s yuan accelerated today when it had its biggest tumble since 2005 on speculation the the central bank is stepping up efforts to push it lower. A 0.9% drop against the U.S. dollar Friday brought the week’s losses to 1.2%, more than twice the 0.5% loss that spooked the market last week, coming as it did after years of steady gains.
The weakness in the yuan is likely to be temporary as longer term the yuan looks set to appreciate against major currencies – intervention or no manipulation by the PBOC. Were there to be further weakness in the yuan and a prolonged bout of weakness, currency wars will likely rear their ugly heads again as other nations seek to devalue their currencies in order to maintain export competitiveness.
Ukrainian Hryvnia in Gold, 5 Days – (Bloomberg)
The plunge in the Ukrainian hryvnia this week and the risk of bank runs, not to mention the risk of contagion for European banks exposed to Ukraine should support gold. The Ukrainian currency has collapsed 22% versus gold this week – from 11,684 hryvnia per ounce on Monday to 14,235 hryvnia per ounce at 11:30 GMT today.
Rising geopolitical tensions between Russia and the West over developments in the Ukraine should also be supportive. This morning Ukraine has accused Russia of invading Ukraine and is considering a state of emergency after masked gunmen occupied two Crimean airports.
Other geopolitical flash points include Thailand, Venezuela and the Middle East which continue to quietly simmer in the background. Tail-risks have increased and could lead to a renewed safety bid for gold in the coming weeks.
The increasing scrutiny by regulators and the media on the manipulation of the gold price should also support gold. The FT’s story regarding manipulation and the likelihood of lawsuits against banks engaged in manipulation was withdrawn from the internet earlier in the week and overnight Bloomberg has again covered the possible manipulation of gold at the London A.M. fix. This story has been bubbling under the surface for years and may blow up in the coming weeks leading to higher gold prices.
However, in the short term there are technical risks and a lower weekly close this week – below $1,324.35/oz – could lead to a quick and sharp retreat to support at $1,307/oz, $1,300/oz and $1,280/oz.
Gold in U.S. Dollars, 1 Year – (Bloomberg)
On balance, we are bullish for next week. However, a lower close today and for this week – could cause short term jitters and retracement. Gold analysts surveyed by Bloomberg are divided in their outlook for next week. Fourteen participants were bullish, sixteen were bearish and six were neutral.
Chinese Gold Imports Surge as Yuan Falls Most in Three Years
Chinese net gold imports surged in January and the 83,638 kilograms were more than the first two months of 2013 combined, when just 80,527 kg was imported. Strong Chinese demand may be fueled by concerns by the Chinese about their banking system, the value of the yuan and the risk of inflation.
Gold in Yuan, Yuan in USD and HK Net Gold Exports to China – (Bloomberg)
China’s gold imports from Hong Kong fell month on month in January from December as some jewelers and fabricators in the world’s largest consumer of the precious metal reduced purchases from the record levels of demand seen in December, and indeed in full year 2013.

Hong Kong Total Gold Net Exports to China - (Bloomberg)
Net imports totaled 83.6 metric tons last month, compared with 91.9 tons in December and 19.6 tons a year earlier, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department today. Exports to Hong Kong from China declined to 19 tons in January from 34.8 tons in December, the Statistics Department said in a separate statement. Mainland China doesn’t publish such data.
IMF Data Shows Turkey Joined Russia In Reducing Gold Reserves Marginally in JanuaryTurkey’s holdings dropped to 15.708 million ounces versus 16.71 million ounces in December, data on the IMF website shows.*Russia’s bullion reserves fall to 33.266M oz vs. 33.283M oz in Dec.: IMF*Mexico’s gold holdings decline to 3.955M oz vs. 3.958M oz in Dec.: IMF*Latvia also reduced bullion reserves in Dec.: IMF*Kazakhstan’s gold assets expand to 4.67M oz vs. 4.62M oz in Dec.: IMF
Given increasing geopolitical tensions and monetary risk, we would expect the Russian central bank to continue allocating foreign exchange reserves to gold bullion in the coming months and indeed this trend could accelerate.
Ukraine Bank Runs Could Soon Be Seen In EU and U.S.Bank runs in the Ukraine and Thailand today and Venezuela earlier this year, show the very fragile nature of our modern fractional reserve banking system. If just a small percentage of depositors withdraw some or all of their cash from the bank, there is not enough cash available.
The newly appointed governor of Ukraine’s central bank, Stepan Kubiv, said last Monday that as much as 7% of total bank deposits were withdrawn from February 18th to February 20th. The $2.9 billion (30 billion hryvnias) in cash was gobbled up by anxious depositors during a time of intense fighting between protesters and government forces in Kiev.
The plunge in the currency this week is likely to have exacerbated that trend and much more Ukrainian bank deposits were likely to have been withdrawn this week.
People line up to withdraw money from an ATM in the western Ukrainian city of Lviv, Feb. 20. (Yuriy Dyachyshn/AFP/Getty Images)
In a fractional reserve banking system, if too many depositors withdraw their cash, banks are forced to either shutdown or declare bankruptcy. Typically, they don’t have enough vault cash to pay their depositors. Ordinarily banks in Western countries have just 10% of deposits in cash, although figures in emerging markets may be higher.
But the modern version of a bank run often involves capital flight. Depositors aren’t only going for their cash, they are also wiring their savings out of the country in record numbers through electronic wire transfers. This is a form of silent or stealth bank run, as it is not visible in terms of angry depositors queuing up outside banks as was seen with Northern Rock in the UK and elsewhere in recent years.
On Wednesday evening, we interviewed the publisher of the Trends Journal, Mr. Gerald Celente.
Celente is a contrarian commentator whose opinions are sometimes controversial but always thought provoking. He has a great track record at predicting many of the key financial, economic and geopolitical events of the last 30 years.
In an interesting question and answer session Celente addressed concerns about terrorism, a World War, financial meltdown, the risks of bank runs and difficulties in accessing savings in Europe and the U.S. in the coming months.
He pointed out how Cypriot depositors lost savings in bail-ins and that in the Ukraine today “massive bank withdrawals are going on.”
Celente said that the 9/11 attack and subsequent restrictions on access to bank deposits in New York , when Wall Street was closed down for a few days, may be seen again. He warned of the risk that “ATM machines are not working anymore” and the authorities are “putting restrictions on what you can draw out.”
He advised owning physical gold and silver in your possession and said that the precious metals are like a “cash cow when you have the real deal”.
“If you have gold or silver, you are in a golden position,” Celente said.
Despite the many risks of today, Celente saw light at the end of the tunnel. He said that there are opportunities in “clean food”, breakthrough alternative energy, alternative medicine and in digital education and internet learning.
The video of the question and answer webinar with Gerald Celente can be watchedhere.

California Housing Bubble: Now Even Teachers Can No Longer Afford To Buy A Home

Teachers are the symbol of the American middle class: they’re educated, they’re crucial to society, they help mold the future of America. In California, the average salary of the 300,000 or so elementary, middle, and high school teachers was 123.7% of the national average for the 2011-12 school year, according to the National Education Association, in fifth place among all 50 states and Washington DC. They currently earn on average $69,300. Not exactly a pittance.
But it seems like a pittance if they’re trying to buy a home in California where the Fed has succeeded in blowing another fabulous housing bubble. This time, it wasn’t the middle class who live and work here who drove up prices, abetted by eager banks and mortgage brokers with their liar loans, but investors awash in nearly free money from the Fed – private equity firms, REITs, institutional investors, even individual investors – and the people in the tech scene that is awash in the same kind of limitless, no-questions-asked money.
Nationwide, home prices soared 13.4% in 2013, the biggest jump since the bubble days of 2005, based on the S&P/Case-Shiller index. Only the Fed can explain why that kind of jump was a bubble back then but isn’t a bubble now. So in California, a teacher with the average salary of $69,300 is facing a housing market where the median home, according to a study by electronic real-estate broker Redfin, lists for $485,000:
On an average annual salary of $69,300, a teacher should pay no more than about $1,600 a month. Given current interest rates, property taxes, home insurance, and home owners association expenses, a teacher can afford a $260,000 single family home or condo. Of the 50,559 for sale in California, just 17.4 percent are listed below $260,000.
And it’s not just teachers for whom homeownership has been pushed out of reach: 71% of Californians are earning less than $100,000 per year.
In the inland areas, teachers have more choices: in San Bernardino County in Southern California, 45% of the listings are within reach. In Riverside County, 28%. In the Central Valley, in San Joaquin County, 35% of the listings are within reach.
In coastal areas, it’s tough: in San Diego 6.4% of the listings are affordable for the average teacher salary; in Orange County, 9.0%; in Los Angeles 8.7%. In the Bay Area, it’s even tougher. In the counties of Alameda and Contra Costa across the Bay from San Francisco – which include two of the most dangerous cities in the country, Oakland and Richmond – 9.7% and 8.6% of the listed homes are within reach of the average teacher salary. But that drops to 2.5% in Monterey County; to 1.2% in the counties of Marin just north of the Golden Gate Bridge and San Mateo in Silicon Valley; to 0.3% in Santa Cruz County; and in my crazy and beloved San Francisco, to 0.0%!
If you’re teacher in San Francisco, forget homeownership. Redfin explains:
In San Francisco County, the average teacher earns $59,700 per year, and there are zero homes for sale that we have calculated as affordable on such a salary. By comparison, there are 139 listings with price tags over $1 million.
As a teacher, unless you’re married to a rich spouse, you’re out of luck trying to buy a home in San Francisco. You’re welcome to work here, but you can’t buy a home here.
In San Mateo County, where the average salary for teachers is $70,600, Redfin found seven homes for sale that would be within reach. Not exactly a mansion but a “0 bed, 1 bath, 490 sqft condo.” Raising a family in place like that is going to be tight. But there were 254 homes listed for more than $1 million.
That’s the granular detail of a housing bubble. But the Fed steadfastly refuses to acknowledge these bubbles. As they therefore don’t exist, the Fed continues with its easy-money policies, perhaps to stimulate its illusory “wealth effect” where the lucky ones feelricher and therefore might spend more. It never sees bubbles until after they implode. And then it awkwardly denies that anyone could have seen them beforehand. But teachers and middle-class working stiffs who are trying to buy a home in the coastal areas of California can explain this bubble to the Fed today. So if Fed Chair Janet Yellen has a minute, she should fly out here and look at what she and her colleagues have wrought before she promises more easy money.
Normally, first-time buyers, a powerful economic energy, create real demand and make the housing market grow. We’ve been praying for their arrival like we’ve been praying for rain in parched California. But the more we pray, the fewer there are. Read…. Without Them, The Housing ‘Recovery’ Remains A Sham

Gold Manipulation Goes Mainstream

Price Fixing – and Central Bank Number-Fudging – Stories Starting to Go Viral

Bloomberg reports today:
The London gold fix, the benchmark used by miners, jewelers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say.
Unusual trading patterns around 3 p.m. in London, when the so-called afternoon fix is set on a private conference call between five of the biggest gold dealers, are a sign of collusive behavior and should be investigated, New York University’s Stern School of Business Professor Rosa Abrantes-Metz and Albert Metz, a managing director at Moody’s Investors Service, wrote in a draft research paper.
“The structure of the benchmark is certainly conducive to collusion and manipulation, and the empirical data are consistent with price artificiality,” they say in the report, which hasn’t yet been submitted for publication. “It is likely that co-operation between participants may be occurring.”
Abrantes-Metz and Metz screened intraday trading in the spot gold market from 2001 to 2013 for sudden, unexplained moves that may indicate illegal behavior. From 2004, they observed frequent spikes in spot gold prices during the afternoon call. The moves weren’t replicated during the morning call and hadn’t happened before 2004, they found.
Large price moves during the afternoon call were also overwhelmingly in the same direction: down. On days when the authors identified large price moves during the fix, they were downwards at least two-thirds of the time in six different years between 2004 and 2013. In 2010, large moves during the fix were negative 92 percent of the time, the authors found.
The authors are heavy-weights:
Abrantes-Metz advises the European Union and the International Organization of Securities Commissions on financial benchmarks. Her 2008 paper “Libor Manipulation?” helped uncover the rigging of the London interbank offered rate, which has led financial firms including Barclays Plc and UBS AG to be fined about $6 billion in total. She is a paid expert witness to lawyers, providing economic analysis for litigation. Metz heads credit policy research at ratings company Moody’s.
For background, see thisthis, this and this.
Another – perhaps even bigger – gold scandal is also starting to go mainstream:  the Fed and other central banks don’t really have all of the gold which they claim to hold.

Martenson: Years Of Money Pumping Will End In Equity Rout

Our lead story: JP Morgan Chase, the largest bank in the US by assets is reducing its headcount for 2014. The bank announced the changes, saying that creating a business model that can deal with new regulation is cutting into the firm’s profits. JP Morgan said it expects its total headcount to fall by 5,000 to 260,000 people. But JP Morgan is confident that it can win in this new environment… by replacing humans with machines. Erin explains.Then we welcome Chris Martenson of to give his thoughts on the Federal Reserve and the weak fundamentals of the US economy. In the first segment, Martenson discusses the effect of the huge flood of liquidity created by the Fed on the market. He also explains why bond prices can go up as a result of the Fed’s quantitative easing. After the break, Martenson describes why quantitative easing has helped equity prices but hasn’t helped the underlying economy. He also talks about what is happening with inflation in the economy.For today’s Big Deal, Erin chats with Ed Harrison about Mt. Gox and the future of Bitcoin. On Monday Mt. Gox abruptly stopped trading and shut down its website. An unconfirmed document circulating the internet suggests that Mt. Gox has lost upwards of 744,000 Bitcoins as a result of theft. Erin asks what happened and if Bitcoin will survive.
Also check us out on Facebook — and feel free to ask us questions:

Bitcoin vs. The Federal Reserve – Andreas Antonopolous and Stefan Molyneux

Stefan Molyneux and Andreas Antonopolous discuss the fall of Mt. Gox, the greatly exaggerated death of Bitcoin, the joy of failure within the Bitcoin economy, the incredible opportunity Bitcoin provides those without access to the modern banking system, and the difference between Bitcoin and the Federal Reserve System and fiat currencies worldwide.Andreas Antonopoulos is the Chief Security Officer of, a host on Let’s Talk Bitcoin and an expert on Information Security and Cryptography.Want to Buy Bitcoins?
United States:

FT's Shocking Gold-Manipulation Glitch

Here Is The FT's Gold Price Manipulation Article That Was Removed ... Two days ago the FT released a clear, informative and fact-based article, titled simply enough "Gold price rigging fears put investors on alert" in which author Madison Marriage, citing a report by the Fideres consultancy, revealed that global gold prices may have been manipulated on 50 per cent of occasions between January 2010 and December 2013. – ZeroHedge
Dominant Social Theme: The markets are fair. They are unmanipulated. Reports to the contrary are conspiracy theories.
Free-Market Analysis: This is yet more evidence that the current system is breaking down. An article goes up on the website of a major newspaper and then is removed without explanation.
Combating the Internet Reformation means dying by a thousand cuts. Any one cut doesn't matter much. But over time the cumulative effect is significant.
We've argued that those involved with the world's creeping – galloping – globalism are not having a very good go of it. This is not the 20th century and almost every manipulation taking place and the implementation of every dominant social theme is tracked and commented on in the alternative media.
This ZeroHedge article is a perfect example. ZeroHedge is by no means the most aggressive debunker of elite memes but it is a solidly run website with a perceptive and wide audience.
To have this article posted to ZeroHedge is truly devastating to gold manipulation deniers. That FT would post such a controversial article and then remove it shows us clearly how far the command-and-control strategies of the power elite have deteriorated.
The Internet Reformation is inevitably degrading the application of fear-based memes that the power elite uses to extract wealth and power from the middle classes and then funnels toward internationalist institutions.
We noticed it when emails were released that showed quite clearly how the global warming theme was being propagated by a handful of individuals placed in important positions at certain information chokeholds.
The global warming movement never recovered from that and soon afterward, those behind the promotion made a startling shift in nomenclature and began to refer to the manipulative meme as "climate change."
Central banking has been thoroughly exposed by literally thousands of websites and the result has been the evolution of "public" monopoly banking designed to take the place of "private" monopoly banking. We've been in the forefront of denouncing this elite meme just as we exposed elites like George Soros behind Occupy Wall Street along with others in the alternative media.
The exposure of the NSA's wholesale spying around the world and subsequent revelations regarding "black-op" attacks on those who are fighting back via websites and protests have further exposed elite machinations.
And now there is this. Here's more:
To those who have been following the price action of gold in the past four years, gold manipulation is not only not surprising, but accepted and widely appreciated (because like the Chinese those who buy gold would rather do so at artificially low rather than artificially high fiat prices) and at this point, after every other product has been exposed to be blatantly and maliciously manipulated by the banking estate, it is taken for granted that the central banks' primary fiat alternative, and biggest threat to the monetary status quo, has not avoided a comparable fate.
... Since we can only assume the article has been lost to FT readers due to some server glitch, and not due to post-editorial censorship or certainly an angry phone call from the Bank of England or some comparable institution, we are happy to recreate it in its entirety.

ZeroHedge then presents the article, which has doubtless been posted by now in numerous places. From what we can tell, FT editors have not commented on the mysterious posting and takedown, which makes the debacle even more devastating.
For those who have not seen it yet, the title of the article was "Gold price rigging fears put investors on alert," and it was written by someone called Madison Marriage.
The article made the astounding claim that, "Global gold prices may have been manipulated on 50 percent of occasions between January 2010 and December 2013, according to analysis by Fideres, a consultancy."
This statement was accompanied by a reminder that the findings "come amid a probe by German and UK regulators into alleged manipulation of the gold price, which is set twice a day by Deutsche Bank, HSBC, Barclays, Bank of Nova Scotia and Société Générale in a process known as the 'London gold fixing.' "
Fideres's research, we learn, unearthed a pattern of price behavior that it called "collusive behavior."
"[This] is indicative of panel banks pushing the gold price upwards on the basis of a strategy that was likely predetermined before the start of the call in order to benefit their existing positions or pending orders," Fideres concluded.
The article went on to quote one Daniel Brockett, a partner at law firm Quinn Emanuel, who said, "It is fair to say that economic work suggests there are certain days when [the five banks] are not only tipping their clients off, but also colluding with one another."
There were other indications in the article that it was being written at least partially to support potential lawsuits or to alert those who were potentially damaged by the purported manipulation that there were individuals and firms that could now be contacted.
Gregory Asciolla, a partner at Labaton Sucharow, a US law firm, added: "There are certainly good reasons for investors to be concerned. They are paying close attention to this and if the investigations go somewhere, it would not surprise me if there were lawsuits filed around the world."
The article ends with information that the US commodities watchdog, the CFTC, may also be investigating gold manipulation, though of course officials at the CFTC would not comment.
We wouldn't expect them to. Gold manipulation is likely at the heart of the West's current monopoly fiat system. If the price of gold is not controlled, the larger system is in danger of toppling.
Now, we have long indicated that toppling the system may be what some have in mind, based on the idea that a worldwide central banking system is to be substituted for the current fragmented one.
But we surely cannot believe that such a system is intended to be implemented on the ruins of the reputations of the most senior firms and leaders in the Western world. Stranger things have happened perhaps, but for now we'll take this unfolding saga at face value.
Perhaps the article was rammed through by powerful legal interests or perhaps it was merely posted by mistake without proper vetting. Perhaps there is some other explanation that will come to the fore. But in any case, discipline is evidently and obviously breaking down. Even the smallest glitch, now, doesn't go unnoticed.

Finally Cuts to the Military, but not the Right Ones

The news services were buzzing today, 2/24/2014 about cuts in military spending.  I have been advocating this for years.  The U.S. spends five times more than any other nation on its military.  We all now know that much of it is in the form of waste and lack of oversight by the Pentagon regarding its defense industries.  However, these cuts are not the ones that the Pentagon should make.
The majority of the deductions will be from those who serve, and who have actually served in wars for our nation.  Benefits and pay cuts for soldiers simply emphasize the fact that they are only appreciated during the wars in which they served.  Once they come home, they become unimportant to our government, while many of them became wealthy because of defense industry investments.  (Just ask Vietnam veterans.)
I have been campaigning for years to close obsolete bases in dozens of countries.  Virtually none of them are critical to our national defense.  I featured the fact that we continue to maintain bases in such countries as the United Kingdom, Germany, France, and Japan.  Why?
Our military signs off on billions of dollars of waste.  I worked for a company in my twenties that was supported entirely by the military and space programs.  I remember the cost of many items in our warehouse.  It was not uncommon for a single screw to cost 38 dollars each.  And that was in 1965.  Imagine what our military pays for the same screw today.
The Department of Defense is lowering our military forces by 90,000.  That is understandable because modern wars will never be won on the ground.  However, cutting pay increases and benefits for our existing military is equal to cutting benefits for the Nation’s poorest and in need the most.  That’s what our government does.   Those who live comfortable lives, with no worry about maintaining a home, feeding their families, health care, and an opportunity to provide a good education for their children will continue to benefit from the proposed budget.  A soldier returning from one of our illegal wars with a debilitating injury, and expected his country to care for him and his family after his return, will find that “necessary funds have been cut from the budget.’
Lowering our military budget is the right thing to do.  But let’s do it correctly.  A complete audit of Pentagon spending would find hundreds if not thousands of areas that could be eliminated, saving hundreds of millions of dollars.  Our government should do the right thing at least once.
Forced to retire in 2008, I turned to my passion, writing. I published my first novel, “A Little Murder in the Biggest Little City” in October, 2012.

For Services Rendered? Wall Street’s Big Paydays For Trade Negotiators

If you take the king’s shilling, says the old saying, then you do the king’s bidding. So what happens when you take 100 million of them?
Here’s one possible answer: You negotiate trade deals like NAFTA and the Trans-Pacific Partnership (TPP), the new pact that the administration is currently trying to ram through Congress.  A recent report confirms that some of the officials crafting this latest agreement were paid handsomely by the Wall Street institutions that stand to benefit from it.
As the United States trade representative, Michael Froman has primary responsibility for the TPP. A new investigation from Republic Report reveals that Froman received more than $4 million in payouts from his then-employer Citigroup as he was leaving to join the Obama administration.
Citigroup, as an ever-decreasing number of Americans seems to recall, is the mega-institution created through the largesse of the Clinton administration, working with Republicans on the Hill. It later required a massive bailout, after its corrupt mismanagement inflicted widespread damage on the economy.
Is it any surprise to learn that Citigroup, like many other Wall Street institutions, pays large bonuses to encourage its executives to take high-level government positions? Without friends in high places, after all, Citigroup would have never come into being – and would never have continued to exist after the 2008 crisis.
Many observers agree that Citigroup should have been broken up after 2008, which only goes to show: it’s not what you know, it’s who you know.
The New York Times reports that Froman also had a half-million dollars in a Cayman Island account managed by Citigroup, which used the infamous Ugland House tax dodge. This modest building houses more than 18,000 legal entities. Republican Sen. Charles Grassley (R-Iowa) called Ugland House “the biggest tax scam in the world.”
Froman also reportedly invested in funds that took advantage of the “carried interest” loophole. It’s a political embarrassment for an administration appointee to profit from tax deals that the White House opposes. Perhaps that’s why Citigroup also paid him a multimillion-dollar bonus to cash out of these funds.
Consider the sequence of events. First, the taxpayers created Citigroup, then it shafted the taxpayers. And meanwhile, its CEO has been trying to convince Americans that their government can’t afford to pay Social Security benefits or pay for other important programs, through his membership in the Wall Street front group known as “Fix the Debt.”
We’re going to need a new word for “chutzpah.”
How did the United States Senate feel about nominating a former Citigroup executive to negotiate trade deals that could benefit the financial industry, and that have in the past? Froman was confirmed by a vote of 93 to 4.
Who says Republicans and Democrats can’t agree on anything?
Republic Report also notes that “Stefan Selig, a Bank of America investment banker nominated to become the Under Secretary for International Trade at the Department of Commerce, received more than $9 million in bonus pay as he was nominated to join the administration in November.”
Bank of America was arguably the worst offender – a title for which there was extremely stiff competition – in the foreclosure fraud scandal. America’s megabanks robbed Americans to the tune of hundreds of billions of dollars or more.
What does it mean when a banker accepts a multimillion-dollar payout just before he takes a government job – or, as they used to say in a more innocent time, “enters public service”? One pictures a police detective sitting face-to-face with a local crime boss in some small-town restaurant. An envelope is slipped across the table. And when it’s picked up, an understanding is reached.
There are those who will argue that this is an unfair analogy. After all, criminal and the detective are engaged in an illegal exchange. A bonus for “government service” is perfectly legal. But don’t we know what the money’s for? These treaties can forcefully promote Wall Street’s interests by ensuring that private finance flows easily across international borders.
What’s more, the parties in question are frequently the people who decide what’s legal and what isn’t. That’s certainly true of the Trans Pacific Partnership, which would create an “investor-state dispute resolution system” allowing corporations to bring sovereign governments before business-friendly “courts” when they feel they’ve been wronged by that government’s actions.
Under these circumstances it’s hard to see these payouts as anything other than a transaction between two equally cynical parties, under the indifferent eye of elected officials from both parties.
But who are these people? How do they justify their own actions? Theirs is an insular world, known only to a privileged few. In their world, none of this is particularly immoral or unethical. It’s just the way things are done. (We’ve sometimes described it as the “147 people” problem.)
A kind of bonding phenomenon may also take place when there is a sharing of secrets. The public may or may not ever know about the payments, but the parties in question do. The “envelope” binds them in a silent covenant.
Sociologist Erving Goffman helped develop the concept of “total institutions,” places like prisons or sanitariums where individuals are grouped together for every aspect of their lives. Their work, their leisure, and their activities of daily living are all guided by a central authority from whom they have no secrets.
Wall Street may be the most privileged “total institution” on the planet. But it is nevertheless, in Goffman’s words, “a forcing house for changing persons … a natural experiment on what can be done to the self.” Success on the Street depends on conformity to strict and unusually aggressive social rules – about how to treat competitors, colleagues, and your own clients. (“I ripped his face off!” Morgan Stanley’s traders reportedly used to boast after selling their clients inferior but lucrative financial products.)
That’s the mentality that these individuals bring to public service. That – and some very big payouts.
There’s a lot of money in being a former trade representative, too. Mickey Kantor, who had the job during the Clinton administration, is now a partner at the Mayer Brown law firm and a senior advisor to Morgan Stanley Dean Witter Discover & Co. His list of board positions and clients reads like a Who’s Who of firms (pharmaceutical and otherwise) that have benefited from these international trade deals.
Each of these people probably considers himself an ethical human being. But the perception of ethics becomes warped when one is absorbed into the “total institution” of the banking-government complex, that world of marble vaults and revolving doors.  What is spoken, what is left silent, and what is the reflection of something Disraeli called a “conspiracy of shared values”? We may never know for sure. Here’s what we do know: Stefan Selig’s nomination has yet to be acted upon.
The Wall Street Journal fretted that Selig’s $165,000 government salary, should he be confirmed, is “hardly a princely sum by Wall Street standards.” It should know better. If history is any guide, Selig will be handsomely rewarded on both ends of his government service.
The Senate could send a strong message to Wall Street, Washington and the nation by rejecting his nomination – and telling the world that U.S. trade policy is no longer for sale.
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.
Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology. Richard has consulting experience in the US and over 20 countries.

The end of private banking: Why the federal government should own all banks

I have suggested that private banking in the United States should end, and all banking operations should be taken over by the federal government. I recognize that may be anathema to those who believe the government is too big and too powerful, and that private control always is better than public control.
Yes, "socialism" has become a popular pejorative. Yet, many aspects of our life are controlled by the federal and local governments, and we are better served for this control: The military. Road, bridge and dam building. Food and drug inspection. The courts.
Private ownership can be better, but not always. Sometimes public ownership provides better service.
I live near Chicago. The previous mayor sold Chicago's parking meters and an important toll road to private industry. Parking costs and tolls immediately rose stratospherically, with zero improvement in service. The new meters are harder to use, and the road still needs work. Clearly, the people of Chicago were not well served by the transition from public to private ownership.
The private sector works on the profit motive, which often does not provide protections or service to the public.
Read the following excerpts, and see what you think about public ownership of the banking industry.

Global Economic Intersection :
Dallas Fed: Break Up the TBTF
March 30th, 2012
The Federal Reserve Bank of Dallas and its president Richard Fisher are generally known as conservative, hard money proponents. Often conservative economic thinkers are strong laissez-faire proponents. That is why the 2011 annual report of the Dallas Fed, released this month, has been such a surprise. A focal point of the report is very interventionist, calling for direct government action to force the break-up of the nation's largest banks, the so-called TBTF (too big to fail) institutions.
The focus of the report is an essay by Harvey Rosenblum, Executive Vice President and Director of Research. Key points by Rosenblum include:
[Dodd-Frank] may not prevent the biggest financial institutions from taking excessive risk or growing ever bigger.
TBTF institutions were at the center of the financial crisis and the sluggish recovery that followed. If allowed to remain unchecked, these entities will continue posing a clear and present danger to the U.S. economy.
When competition declines, incentives often turn perverse, and self-interest can turn malevolent. That's what happened in the years before the financial crisis.
The term TBTF disguised the fact that commercial banks holding roughly one-third of the assets in the banking system did essentially fail, surviving only with extraordinary government assistance.
A bailout is a failure, just with a different label.
The machinery of monetary policy hasn't worked well in the current recovery. The primary reason: TBTF financial institutions. Many of the biggest banks have sputtered, their balance sheets still clogged with toxic assets accumulated in the boom years.
TBTF undermines equal treatment, reinforcing the perception of a system tilted in favor of the rich and powerful.
" virtually nobody has been punished or held accountable for their roles in the financial crisis.
" zero interest rates are taxing savers to pay for the recapitalization of the TBTF banks whose dire problems brought about the calamity that created the original need for the zero interest rate policy.
A financial system composed of more banks--numerous enough to ensure competition but none of them big enough to put the overall economy in jeopardy--will give the United States a better chance of navigating through future financial potholes, restoring our nation's faith in market capitalism.

Taking apart the big banks isn't costless. But it is the least costly alternative, and it trumps the status quo.
The road to prosperity requires recapitalizing the financial system as quickly as possible. Achieving an economy relatively free from financial crises requires us to have the fortitude to break up the giant banks.
Moving back to the Dallas Fed President's letter, Fisher has not suddenly sprung this position of forced break-up of the largest banks out of thin air. He has been speaking out on that subject, as documented by Bloomberg last November:
"I believe that too-big-to-fail banks are too-dangerous-to-permit," Fisher said in the text of remarks given in New York today. "Downsizing the behemoths over time into institutions that can be prudently managed and regulated across borders is the appropriate policy response. Then, creative destruction can work its wonders in the financial sector, just as it does elsewhere in our economy."
From carrying banker float
carrying banker float
(image by OccupyFightsForeclosures)
The reason to break up the TBTF banks is simple: They cannot be trusted to work in the best interests of the public. Breaking them up presumably would make them easier to control (regulate), and less likely to do damage. Why can't banks be trusted? Their motive is profits, not service to the public. Their misdeeds have caused the recession, damage to the economy and the growing gap between those people with high income (1%) and the rest (99%). Congressional conservatives will not supervise the bank's insatiable thirst for profits, which motivates all bank activities. Damage control by the federal government has become an increasing need.
All bank problems boil down to the profit motive. Rather than breaking up the TBTF banks into smaller, (hopefully) more controllable pieces, we should eliminate their fundamental problem, the profit motive. And, what better way to eliminate the profit motive, than to put banks under total government control, i.e. ownership?

The War on Democracy: Art Pope and the Rich Bullies

Out here on the Left Coast, we’re not opposed to capitalism.  But we believe it needs constraints.  You’ll hear two arguments for curbing capitalism.  One focuses on poor kids and the other on rich bullies, such as North Carolina’s Art Pope.
Americans share the myth of the “rugged individual” who pulls him, or herself, up by their bootstraps and becomes a success.  What undergirds this myth is the notion of the level playing field; belief that all American children start with the same resources and, therefore, whether they succeed depends upon their character.
Sadly, most of recognize that poor children are not offered a level playing field.  For a variety of reasons they have inadequate nutrition, housing, education, and health care.  While there are stories of poor children becoming very successful, most do not.  In my life I’ve seen that poor kids have a different experience with the police and the court system than rich kids do; if you’re a poor kid caught with a joint, you’re much more likely to go to jail than a rich kid.  If you are a poor kid, you’re much more likely to grow up in a home where no one reads and there is no one to encourage you to do your schoolwork.
As important as the plight of poor kids is, the problem of rich bullies has become more disturbing.  Of course, there have always been wealthy folks in America.  Thomas Jefferson was rich, as was Franklin Delano Roosevelt and John F. Kennedy.  Most Americans would like to be wealthy, but don’t actually know any rich people.  Nowadays, most member of the one percent live segregated secluded lives.
There have always been a few rich Americans who used their wealth in an attempt to subvert democracy.  We saw this with the 19 th century robber barons and in the 1930′s with the ”liberty league.”  Each generation has had to deal with these bullies.  In the modern era, they are the Koch brothers and their wealthy allies, including North Carolina’s Art Pope.
Spending millions of dollars, America‘s 21 st century bullies have reshaped the Republican Party and are threatening representative democracy.  The Koch brothers and their allies have four objectives: replace all elected officials with those amenable to their program (the “Tea Party”); shrink the size of government; reduce taxes and regulations; and, advocate the conservative Christian agenda de jour.
Behind each of their objectives is an ideological and a personal rationale.  The capitalist bullies want to replace Democrats and moderate Republicans with politicians that will support their agenda; in 2012, radical Texas Republican, Ted Cruz, supplanted moderate Republican senator, Kay Bailey Hutchison.  Since 2010, in North Carolina, conservative businessman Art Pope has spent millions moving the state government to the right.  Now, for the first time since reconstruction, Republicans control the governorship and the legislature.  One observer noted, “Democrats running for office in North Carolina are running against Art Pope.”
In order to increase the power of conservative Republicans, Pope-sponsored groups led the movement to gerrymander North Carolina congressional districts and suppress Democratic turnout by limiting early voting and requiring display of government-issued voter ids.
Pope and the other capitalist bullies want to dramatically reduce the size of government.  Their lobbyist, Grover Norquist, famously quipped, “We want to shrink government to the size where we can drown it in the bathtub.”  (Typically, however, they don’t want to diminish the military or the national security establishment.)  Ultra-conservative Republicans seek to eliminate Federal domestic agencies and the social safety net.  In North Carolina, Art Pope has led the push to lower taxes and to reduce funds for public education — particularly higher education, which he regards as a “boondoggle.”
Less government inevitably means fewer regulations and looser enforcement of existing laws.  The Koch brothers want less government oversight of Koch Industries because that would increase the profitability of their fossil fuel and chemical companies.  Art Pope’s family business, Variety Wholesalers, is a discount retail chain with thin profit margins; therefore Pope is opposed to measures such as the Affordable Care Act and an increase in the minimum wage.
While capitalist bullies are not necessarily conservative Christians, they embrace them as allies and, therefore, support their radical agenda including homophobia (opposition to gay marriage), misogyny (opposition to women’s rights), and racial segregation (voting rights restrictions and opposition to school integration).
Since 2010, the Koch brothers and their rich allies, such as Art Pope, have waged a stealth war on American democracy. Through a variety of channels, they’ve used their millions to alter the government of state after state.  In Washington DC, they’ve tilted the House of Representatives far to the right.  In 2014, they’re spending more millions to seize control of the Senate.  In North Carolina, Art Pope and friends have already spent more than $7 million to defeat centrist Democratic Senator Kay Hagan.
Where’s the outrage?  When are Americans going to wake up to the capitalist bullies’ war on democracy?
Bob Burnett is a Berkeley writer. In a previous life he was one of the executive founders of Cisco Systems.

London Gold Fix study suggests decade of bank manipulation

The London gold fix, the benchmark used by miners, jewellers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say.
Unusual trading patterns around 3 p.m. in London, when the so-called afternoon fix is set on a private conference call between five of the biggest gold dealers, are a sign of collusive behavior and should be investigated, New York University’s Stern School of Business Professor Rosa Abrantes-Metz and Albert Metz, a managing director at Moody’s Investors Service, wrote in a draft research paper.
“The structure of the benchmark is certainly conducive to collusion and manipulation, and the empirical data are consistent with price artificiality,” they say in the report, which hasn’t yet been submitted for publication. “It is likely that co-operation between participants may be occurring.”
The paper is the first to raise the possibility that the five banks overseeing the century-old rate —Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA — may have been actively working together to manipulate the benchmark. It also adds to pressure on the firms to overhaul the way the rate is calculated. Authorities around the world, already investigating the manipulation of benchmarks from interest rates to foreign exchange, are examining the $20 trillion gold market for signs of wrongdoing.
Union Jacks
Officials at London Gold Market Fixing Ltd., the company owned by the banks that administer the rate, referred requests for comment to Societe Generale, which holds the rotating chairmanship of the group. Officials at Barclays, Deutsche Bank, HSBC and Societe Generale declined to comment on the report and the future of the benchmark. Joe Konecny, a spokesman for Bank of Nova Scotia, didn’t respond to requests for comment.
Abrantes-Metz advises the European Union and the International Organization of Securities Commissions on financial benchmarks. Her 2008 paper “Libor Manipulation?” helped uncover the rigging of the London interbank offered rate, which has led financial firms including Barclays Plc and UBS AG to be fined about $6 billion in total. She is a paid expert witness to lawyers, providing economic analysis for litigation.
Metz heads credit policy research at ratings company Moody’s, but a spokesperson said the academic paper was not a Moody’s research report. Metz was “writing independent of his position at Moody’s and representing his own research findings and viewpoint,” the spokesperson said.
The rate-setting ritual dates back to 1919. Dealers in the early years met in a wood-paneled room in Rothschild’s office in the City of London and raised little Union Jacks to indicate interest. Now the fix is calculated twice a day on telephone conferences at 10:30 a.m. and 3 p.m. London time. The calls usually last 10 minutes, though they can run more than an hour.

Firms declare how many bars of gold they want to buy or sell at the current spot price, based on orders from clients and themselves. The price is increased or reduced until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other, at which point the fix is set.
Traders relay shifts in supply and demand to clients during the call and take fresh orders to buy or sell as the price changes, according to the website of London Gold Market Fixing, where the results are published. At 3 p.m. Thursday, the price was $1,332.25 an ounce. The process is unregulated and the five banks can trade gold and its derivatives throughout the call.
Bloomberg News reported in November concerns among traders and economists that the fixing banks and their clients had an unfair advantage because information gleaned from the calls provided an insight into the future direction of prices and banks can bet on spot and derivatives markets during the call.
All Down
Abrantes-Metz and Metz screened intraday trading in the spot gold market from 2001 to 2013 for sudden, unexplained moves that may indicate illegal behavior. From 2004, they observed frequent spikes in spot gold prices during the afternoon call. The moves weren’t replicated during the morning call and hadn’t happened before 2004, they found.
Large price moves during the afternoon call were also overwhelmingly in the same direction: down. On days when the authors identified large price moves during the fix, they were downwards at least two-thirds of the time in six different years between 2004 and 2013. In 2010, large moves during the fix were negative 92 percent of the time, the authors found.
There’s no obvious explanation as to why the patterns began in 2004, why they were more prevalent in the afternoon fixing, and why price moves tended to be downwards, Abrantes-Metz said in a telephone interview this week.
“This is a first attempt to uncover potentially manipulative behavior and the results are concerning,” she said. “It’s down to regulators to establish why there are such striking patterns but banks have the means, motive and opportunity to manipulate the fixing. The results are consistent with the possibility of collusion.”
Bafin, FCA
Deutsche Bank, Germany’s largest lender, said in January that it will withdraw from the panels setting the gold and silver fixings. German financial markets regulator Bafin interviewed the Frankfurt-based bank’s employees as part of a probe into the potential manipulation of gold and silver prices.
“In general, research that finds certain price patterns does not as such constitute evidence of manipulation,” said Thorsten Polleit, chief economist at Frankfurt-based precious-metals broker Degussa Goldhandel GmbH and a former Barclays economist. “However, it might encourage interest in finding out more about the sources of these price patterns.”
‘Appropriate Oversight’
The five banks that oversee the fixing set up a steering committee and will appoint external advisors to consider reforms before EU legislation on financial benchmarks’ regulation and oversight comes into force, Bloomberg reported last month.
Britain’s Financial Conduct Authority is also scrutinizing how prices are calculated. The regulator published a report this week outlining its remit for regulating commodities including gold, saying that while it’s responsible for commodities derivatives, it doesn’t regulate physical commodities.
“Abusive behavior can occur in the physical commodity markets which in turn can have an impact on, or be directly linked with, financial market activity and prices,” the FCA said in the report. “The regulatory regime — both in the U.K. and internationally — needs to be adapted to ensure robust and appropriate oversight.”

The Strategy of Global Corporate Imperialism

Once upon a time, national entities and cultures aspired to build empires. The impulse was the erroneous assumption of being a superior civilization. It was about exporting an extensive set of aspirations, a culture, and a value system. Romans thought that bringing water through aqueducts and paved roads to the “savages” of the north were the selfless gift of a superior civilization. Much more recently, France’s empire built its colonial towns, such as Saigon and Algier, following exactly the architectural model of French towns of the XIX century. In what could be an indication that history is on an accelerated course, the life span of empires is getting shorter. For example, the Egyptian empire lasted more than 3,000 years; the Mayan empire survived 2,900; the Chinese empire more than 1,600; the Roman empire itself, as a united empire, remained for 500 years while the Eastern Roman empire or Byzantine empire lasted an extra 1,000 after the split from the Western Roman empire.
Empire strategy: destroy, rebuild, occupy and exploit Closer to the modern era, and following the progress of technology in weapons and transport, Great Britain or France, during the rule of Napoleon, and even more recently Nazi Germany and its Japanese ally, had the lofty borderline-psychotic goal of complete world domination. In the ruins of World War II emerged the two winning empires, the United States and the Union of the Soviet Socialist Republics (USSR). To the winners belong the spoils of war, and in 1945 the world was de facto split in two. The two parts of Germany were rebuilt from complete wreckage in the image of their new respective masters; the US Marshall plan was the remedy prescribed to deal with West Germany’s ruins. In Japan, General MacArthur took charge of the mass murder, demolition and later reconstruction for the US empire. Germany and Japan were not rebuilt as free national entities but occupied vassals on a short leash. Almost 70 years after the end of World War II, US military boots are still on the ground in both countries. According to data from the US Department of Defense (DoD), more than 50,000 US troops were still in Germany and almost 40,000 were still occupying Japan in 2011. Overall, according to the DoD, the US military has troops stationed in almost 150 countries.
Global Corporate Empire: Sovereign Nations are the Only Obstacle
Imperialism has long been a collective disease for humanity. In its current perverse capitalist incarnation, imperialism’s methods have become even more brutal and ruthless. If the physical destruction of a country’s infrastucture is still in the foreground, this is used in conjunction with the creation or revival of civil wars, ethnic or bloody sectarian conflicts in previously stable national entities. Corporate imperialism aims to break the national spirit. The few remaining sovereign nations are the final obstacles to the looming threat of a global transnational corporate empire. Corporate imperialism’s only concern is the bottom line: it is on a permanent quest to maximize profit. It is not about bringing the supposed gift of civilization to savages anymore, unlike the old-fashioned  imperialist adventures. In this context, why bother to rebuild the shattered countries when the only goal is to plunder resources, either natural or human? Public resources are allocated to reconstruction, but these resources usually disappear in black holes of corporate war profiteers such as Halliburton in the US. Wrecked countries are never rebuilt because they are easier to exploit while they are in a shambles.
Why bother with regime-change policy when failed states are so convenient? The model for transnational corporate imperialism was set up in Iraq, then applied to Libya. This global imperialist strategy is in the works in Syria, the Ukraine, Mali, Central African Republic, and Venezuela. The North Atlantic Treaty Organization (NATO) usually acts as the armed fist for this process, but sponsored proxy agents such as Jihadists in Syria or fascist factions in the Ukraine and Venezuela are also used to destabilize governments. In Venezuela on February 7, 2014, before the not so spontaneous protests started, Japanese car giant Toyota abruptly announced it was closing a plant employing 1,700 people. Is this pure coincidence or part of an overall ploy to crash Venezuela’s economy?  There is a saying in Lebanon, that the country is “always five minutes  away from civil war.” This  tragic Lebanese reality has spread to the entire Middle East, Africa and is gaining ground in Eastern Europe. The old imperialist adage “divide and rule” is obsolete, the new motto seems to be “divide and steal from those divided.” The new strategy is to fuel ethnic or sectarian conflicts as much and as long as possible, and ideally maintain a permanent state of low-intensity civil war. In the Central African Republic, the clashes between the majority Christian population and the 15 percent Muslims gave France the perfect opportunity to send 2,000 troops. French troops are still in Mali to protect mining interests. In Iraq, the low-level sectarian warfare is a disaster for Iraqis but has worked well for corporate interests. The oil is flowing, and of course, just like in Syria, weapons dealers, mercenaries, and “reconstruction” contractors are making a killing.
Corporate Imperialism’s Legal Framework
In the disastrous case that they would be ratified, the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) would provide the legal framework for the global corporate empire. When top elected officials travel abroad, they are supposed to represent and defend the national interests of their people; however, they function mostly as sale representatives of mega-corporations. For example, French President Francois Hollande travelled to Qatar, Saudi Arabia or Brazil to sell the fighter jets “Rafale.” One of the main goal of his recent trip to the US was to indicate to top technology executives from Google, Twitter and Facebook that, despite the misleading socialist label and such, France’s best friends are corporations, not people.
Opponents of the TPP have rightly called the agreement NAFTA on steroids, but they rarely talk of its Atlantic counterpart, the TTIP. If the agreements ever see the light of day, most people would end up working for slave wages. Like the wealth of ancient empires that was built on slavery, the fortunes of today’s masters of transnational corporations are being made principally by breaking the backs of people who work for slave wages. The princes of Qatar are building their world cup stadiums with slave labor from Nepal. Global corporate imperialism does not only aim to dismantle the few sovereign nations left, but also to cripple regions and towns. A microcosm of this is Detroit, Michigan. The Motor City is in ruins, a failed town, and a symbol of what corporatism can do. With the TPP and the TTIP in place, we will have hundreds of Detroits. Large sections of Detroit have become ghost towns. In 1984, the independent non-aligned nation of Yugoslavia was able to organize Olympic games in Sarajevo. Thirty years later, and after the dismantlement of Yugoslavia by Clinton and his Western vassals in the mid 1990s, Bosnia has more than 40 percent of its people unemployed.
Putin: Standing for National Sovereignty
At the peak of the Syrian crisis in 2013, Russian president Vladimir Putin stood his ground and got NATO to back off from attacking Bashar al-Assad. Many awful things have been said about the former KGB Colonel, but nobody can claim that he is not the man at the helm of Russia. One might like it or not, but Putin is clearly in charge of his country, which, if nothing else, at least gives people a sense of clarity. Unlike the so-called “leader of the free world,” there are no puppet masters behind Putin. Fidel Castro was the same, although he ruled a smaller island state. Putin also understood, that in order to maintain Russia’s national sovereignty against the United States and the European Union, he had to forge strategic and economic alliances, especially with China; BRICS was created in this context and for this reason.
But the BRICS nations and Putin must remain ever vigilant. The engineering of a failed state in the Ukraine cannot be allowed to happen. Likewise, BRICS’ member Brazil must also closely monitor the situation in Venezuela. President Nicolas Maduro is less charismatic than his predecessor, the late Hugo Chavez, and what global corporate imperialism abhor the most is “resource nationalism,” i.e. the nationalization of prime resources such as oil by sovereign states, as is currently the case in Venezuela. National sovereignty is not about nationalism; it is instead an expression of  different cultural identities. National and cultural specificity are getting in the way of the end game of corporate imperialism. We must, as diverse people, unite and fight to stop this abomination. The United Nations is a failed institution at best, but it could be worse if it should ever become the United Corporations.
Gilbert Mercier writes for the News Junkie, where this essay originally appeared.

Meet the Powerful Billionaire Family Hell Bent on Imposing Their Right-Wing Agenda and Defunding the Left

They beat the labor movement in its own backyard. Next up: your state?

The following article first appeared in Mother Jones.  For more great content, subscribe here. 
In the predawn twilight of December 4, 2012, Randy Richardville, the Republican majority leader of the Michigan Senate, called an old friend to deliver some grim news. Richardville's two-hour commute to the state capitol in Lansing gave him plenty of time to check in with friends, staff, and colleagues, who were accustomed to his early morning calls. None more so than Mike Jackson.
Jackson and Richardville had grown up in the auto town of Monroe, 40 miles south of Detroit. Jackson now headed Michigan's 14,000-member carpenters and millwrights' union, which had endorsed Richardville, a moderate Republican, for 10 of the 12 years he'd served in the state Legislature.
"Guess where I was last night," Richardville said.
Jackson wasn't in a guessing mood—and it wasn't just the early hour. Since the election a few weeks earlier, Republicans had been aiming to use the current lame-duck session to ram through a controversial piece of legislation known as right-to-work. Such laws, already on the books in 23 states, outlawed contracts requiring all employees in a unionized workplace to pay dues for union representation. Jackson and other labor leaders were scrambling to head off the bill, widely regarded as a disaster for unions. Richardville, who had once told a hotel conference room filled with union members that right-to-work would pass "over my dead body," was one of the votes they'd counted on.
Richardville said he'd spent the previous evening at a fundraiser in western Michigan. At one point during the event, he was escorted into a private room where a dozen wealthy business moguls were waiting for him. Some he recognized as heavy hitters in Michigan politics; others had flown in from out of state.
One of the men in the room glared at Richardville. "You gotta grow a set and move this legislation," the man said, referring to right-to-work. Had he ever run for office? Richardville asked. The man said no. "Well, when you grow a set and give that a try," Richardville snapped, "then you can talk about the size of my testicles."
Jackson was wide awake now. "Good for you," he said. "How'd it end?"
"Mike, you're fucked," Richardville said. "They've got all the money they need, they're going up on the air, and they're going to push this freedom-to-work thing."
Wasn't there some way to head off the bill? Jackson asked. "They've got my caucus," Richardville replied. "You can't imagine the pressure I'm under."
The pressure came largely from one man present at that fundraiser: Richard "Dick" DeVos Jr. The 58-year-old scion of the Amway Corporation, DeVos had arm-twisted Richardville repeatedly to support right-to-work. After six years of biding their time, DeVos and his allies believed the 2012 lame duck was the time to strike. They had formulated a single, all-encompassing strategy: They had a fusillade of TV, radio, and internet ads in the works. They'd crafted 15 pages of talking points to circulate to Republican lawmakers. They had even reserved the lawn around the state capitol for a month to keep protesters at bay.
A week after Richardville's early morning call to Jackson, it was all over. With a stroke of his pen on December 11, Gov. Rick Snyder—who'd previously said right-to-work was not a priority of his—now made Michigan the 24th state to enact it. The governor marked the occasion by reciting, nearly verbatim, talking points that DeVos and his allies had distributed. "Freedom-to-work," he said, is "pro-worker and pro-Michigan."

The DeVoses sit alongside the Kochs, the Bradleys, and the Coorses as founding families of the modern conservative movement. Since 1970, DeVos family members have invested at least $200 million in a host of right-wing causes—think tanks, media outlets, political committees, evangelical outfits, and a string of advocacy groups. They have helped fund nearly every prominent Republican running for national office and underwritten a laundry list of conservative campaigns on issues ranging from charter schools and vouchers to anti-gay-marriage and anti-tax ballot measures. "There's not a Republican president or presidential candidate in the last 50 years who hasn't known the DeVoses," says Saul Anuzis, a former chairman of the Michigan Republican Party.
Nowhere has the family made its presence felt as it has in Michigan, where it has given more than $44 million to the state party, GOP legislative committees, and Republican candidates since 1997. "It's been a generational commitment," Anuzis notes. "I can't start to even think of who would've filled the void without the DeVoses there."
The family fortune flows from 87-year-old Richard DeVos Sr. The son of poor Dutch immigrants, he cofounded the multilevel-marketing giant Amway with Jay Van Andel, a high school pal, in 1959. Five decades later, the company now sells $11 billion a year worth of cosmetics, vitamin supplements, kitchenware, air fresheners, and other household products. Amway has earned DeVos Sr. at least $6 billion; in 1991, he expanded his empire by buying the NBA's Orlando Magic. The Koch brothers can usually expect Richard and his wife, Helen, to attend theirbiannual donor meetings. He is a lifelong Christian conservative and crusader for free markets and small government, values he passed down to his four children.
Today, his eldest son, Dick, is the face of the DeVos political dynasty. Like his father, Dick sees organized labor as an enemy of freedom and union leaders as violent thugs who have "an almost pathological obsession with power." But while DeVos Sr. simply inveighed against unions, Dick took the fight to them directly, orchestrating a major defeat for the unions in the cradle of the modern labor movement.
Passing right-to-work in Michigan was more than a policy victory. It was a major score for Republicans who have long sought to weaken the Democratic Party by attacking its sources of funding and organizing muscle. "Michigan big labor literally controls one of the major political parties," Dick DeVos said last January. "I'm not suggesting they have influence; I'm saying they hold total dominance, command, and control." So DeVos and his allies hit labor—and the Democratic Party—where it hurt: their bank accounts. By attacking their opponents' revenue stream, they could help put Michigan into play for the GOP heading into the 2016 presidential race—as it was more than three decades earlier, when the state's Reagan Democrats were key to winning the White House.
More broadly, the Michigan fight has given hope—and a road map—to conservatives across the country working to cripple organized labor and defund the left. Whereas party activists had for years viewed right-to-work as a pipe dream, a determined and very wealthy family, putting in place all the elements of a classic political campaign, was able to move the needle in a matter of months. "Michigan is Stalingrad, man," one prominent conservative activist told me. "It's where the battle will be won or lost."

Step off the jet bridge at the Gerald R. Ford International Airport in Grand Rapids, and the DeVos imprimatur is everywhere. Leaving the airport you pass the West Michigan Aviation Academy, a charter school founded by Dick DeVos in 2010. In Grand Rapids itself, there's the DeVos Place convention center, the DeVos Performance Hall, the DeVos Graduate School of Management, the Helen DeVos Children's Hospital, the Richard and Helen DeVos Center for Arts and Worship, the DeVos Communication Center at Calvin College, and the DeVos parking lot at Grand Valley State University.
I grew up not far from Grand Rapids, and the DeVos name was never far from mind. I heard it on the radio and at the dinner table—my parents are both teachers, and the DeVoses' education reform efforts were a topic of discussion. In western Michigan, the DeVoses were the closest thing we had to Carnegies or Rockefellers.
Populated by the descendants of devout Dutch immigrants, Grand Rapids is a deeply Christian enclave that locals call "GRusalem." Once a city of furniture makers, Grand Rapids began to prosper in the 1970s and 1980s, thanks largely to Amway. Launched in an abandoned gas station, the company grew into an empire by enlisting an army of "independent business owners," or IBOs, to peddle Amway's wares, eventually expanding to more than 100 countries and territories. The company formulated the business model now used by the likes of Mary Kay, Avon, and Herbalife, in which salespeople earn money by recruiting others into the business. In 1975, the Federal Trade Commission accused Amway of operating a pyramid scheme, but after a years-long investigation the agency rescinded the charge.
From the start, DeVos and Van Andel infused Amway—short for "American Way"—with their Christian beliefs and free-market principles. The Institute for Free Enterprise, a think tank run out of Amway's headquarters, organized workshops nationwide to help teachers incorporate free-market economics into their lesson plans. During the 1970s, Amway bought ads in major newspapers that railed against taxation and regulation. Together, DeVos and Van Andel also helped to launch the now-defunct Citizen's Choice, a conservative counterweight to the good-government group Common Cause. A smattering of headlines in the centerfold of Amway's 1980 corporate magazine captures the company's institutional philosophy: "Entrepreneur DeVos Preaches Self-Help: GOVERNMENT MEDDLING ASSAILED." "Taxes and Government Rules Destroying Free Enterprise—Van Andel."
Amway's success and its conservative ethos catapulted both the elder DeVos and Van Andel into the highest reaches of Republican politics. Van Andel, who died in 2004, chaired the US Chamber of Commerce in 1979 and 1980, and he gave millions to Republican and conservative organizations in his lifetime. DeVos, meanwhile, was an early member and funder of the Council for National Policy, a secretive network of hardline conservative leaders founded by Left Behindauthor Tim LaHaye. Ahead of the 1980 elections, Ronald Reagan personally asked DeVos to lead the GOP's national fundraising efforts. Short on cash and reeling from Jimmy Carter's election and the aftershocks of the Watergate scandal, the party needed all the help it could get. As the Republican National Committee's finance chairman, DeVos raised $46.5 million ($132 million in today's dollars).
He fit the part of GOP rainmaker-in-chief, wearing a diamond pinkie ring and Gucci loafers, driving a Rolls-Royce, and frequently commuting to his nearby office by helicopter. He once docked Amway's $5 million yacht on the Potomac River in Washington to hold court with Michigan's congressional delegation, RNC staffers, and personnel from 12 embassies representing countries where Amway did business. DeVos was also a strident voice within the party: In an era when Republicans still courted labor, he urged the GOP to ignore union members. "If they want to be represented by somebody else," he once said, "good for them." At a party meeting in 1982, he called the recession that was spiking inflation and unemployment "beneficial" and "a cleansing tonic" for society.
The RNC canned him soon after, but that didn't stop DeVos and his clan from steering hundreds of thousands of dollars into Reagan's 1984 reelection effort and George H.W. Bush's 1988 campaign. On the eve of the 1994 elections, Amway made a $2.5 million soft money contribution to the Republican Party; it was the largest corporate donation ever recorded. Amway also galvanized its 500,000-plus sales force into a massive political network, drumming up hundreds of thousands of dollars in contributions for favored candidates like Rep. Sue Myrick(R-N.C.), a former Amway saleswoman and the first female chair of the ultraconservative Republican Study Committee.
In late 1992, Dick succeeded his father as the president and CEO of Amway, aggressively expanding the company into Asian markets like China and Korea, which produce much of Amway's profits today. His wife, Betsy, an heiress to a Michigan auto parts fortune, hailed from a conservative dynasty of her own; her father, Edgar Prince, was a founder of the Family Research Council. (Betsy's brother is Erik Prince, the ex-Navy SEAL who founded the infamous private security company Blackwater.) Together, Dick and Betsy formed Michigan's new Republican power couple.
Betsy, who is 56, is the political junkie in the relationship. She got her start in politics as a "scatter-blitzer" for Gerald Ford's 1976 presidential campaign, which bused eager young volunteers to various cities so they could blanket them with campaign flyers. In the '80s and '90s, Betsy climbed the party ranks to become a Republican National Committeewoman, chair numerous US House and Senate campaigns in Michigan, lead statewide party fundraising, and serve two terms as chair of the Michigan Republican Party. In 2003, she returned at the request of the Bush White House to dig the party out of $1.2 million in debt. A major proponent of education reform, Betsy serves on the boards of the American Federation for Children, a leading advocate of school vouchers, and Jeb Bush's Foundation for Excellence in Education, which supports online schools.
Through the '70s and '80s Dick worked his way up at Amway and, like his father, rose to prominence within GOP circles thanks to his prodigious fundraising, generous political contributions, and his perch atop the family's multibillion-dollar company. In 1998, he launched a PAC called Restoring the American Dream, which then-House Majority Leader (and former Amway salesman) Tom DeLay credited with playing "an essential role" in preserving GOP control of the House in 1998 and 2000. DeLay, Myrick, and three other House Republicans who had been Amway salespeople created an informal "Amway caucus."
The DeVos name carried plenty of weight in Washington, but the clan loomed especially large in Michigan, and had opportunities to exert its influence in ways big and small. Once, Betsy complained to her hometown newspaper, theGrand Rapids Press, after an April 2004 story reported that she had blamed "high wages" for Michigan's economic woes—a comment that touched off a statewide controversy. As unhappy as she was, there wasn't much chance she'd been misquoted: The reporter had taken the language out of an official Michigan GOP press release and had even given Betsy a chance to respond to her own words. Mike Lloyd, then thePress' editor, says that while he doesn't recall the details of DeVos' grievance, it's likely he heard her out. Ultimately, the paper ran an unusual mea culpa saying the article had "oversimplified" the remarks while "distorting her original meaning." (In general, Lloyd denies the family ever used its "economic muscle…to attempt to influence or change" the paper's coverage.)
Mike Pumford knows what it's like to be on the wrong side of the DeVoses. A former high school teacher and public school administrator, he was elected to the state House in 1998 as a moderate Republican, and he publicly opposed Dick and Betsy's push to expand charter schools and introduce school vouchers. (In 2000, Dick and Betsy helped underwrite a ballot initiative to expand the use of vouchers and lost badly.)
When Pumford ran for reelection in 2002, a DeVos-funded group called the Great Lakes Education Project blanketed his rural district with glossy flyers calling him a puppet of theMichigan Education Association and a "tax-and-spend Republican" for backing an increase in cigarette taxes. "They just kicked my ass in that election," he says. And though he eked out a victory, the DeVoses got the final word. When Pumford asked for the chairmanship of the subcommittee overseeing public education funding, he says, then-House Speaker Rick Johnson told him there was "no way in hell we can give it to you." Why? It would piss off the DeVoses. (Johnson did not respond to requests for comment.)
In 2004, Pumford quit politics in disgust. "I spent a lot of time fighting bullies," he told me. "Kids tend to bully with their mouths and fists. Billionaires tend to bully with their pocketbooks."

For Dick DeVos, the fight over right-to-work started with a humbling defeat. In 2006, he ran for governor of Michigan, spending $35 million of family money—the most ever spent on a gubernatorial campaign in the state—only to be routed by incumbent Jennifer Granholm. His timing was terrible: Thanks to Iraq War weariness and a series of GOP scandals, not one Republican beat an incumbent Democrat in a congressional or gubernatorial race anywhere in America that year. Postelection, DeVos turned down offers to run the state party and ducked out of the political limelight to ponder his next move.
The following year, he and a close ally, Ron Weiser, whose prolific fundraising had earned him the US ambassadorship to Slovakia under George W. Bush, hired Republican pollster Bill McInturff to gauge Michiganders' views on a range of issues. According to Weiser, McInturff came back with a surprising result—his polls showed nearly 70 percent support for right-to-work. DeVos and Weiser shared their findings with donors and operatives statewide, quietly brainstorming about how to capitalize on those numbers.
Despite declining membership, nearly 20 percent of Michigan's workforce belonged to unions and, as in other union-heavy states, right-to-work had long been a right-wing fantasy. For decades, the lone voice on the issue was the Mackinac Center for Public Policy, a state-level think tank founded in 1987 to spread free-market ideas and antagonize the unions. (In a June 2011 email obtained byProgress Michigan, a Mackinac Center staffer told a state lawmaker: "Our goal is [to] outlaw government collective bargaining in Michigan, which in practical terms means no more MEA.") The DeVoses are among the center's biggest financial backers, and Dick served on its board of directors. Still, despite a flurry of policy briefs and op-eds produced by the Mackinac Center, the issue remained a nonstarter. "We never had the sense that the votes were there to get it done," John Engler, the former governor, told the National Review in 2012. "A lot of Republicans weren't ready to deal with the issue. Labor was too strong."
Studying McInturff's polling numbers, DeVos and Weiser saw a shift in the political winds. Early in 2008, they dined in Washington, DC, with former Oklahoma Gov. Frank Keating, who in 2001 became the first governor in nearly a decade to sign a right-to-work bill into law. He knew just how fierce the fight could be. Keating advised DeVos and Weiser to hold off on right-to-work until they'd elected a Republican governor and, ideally, taken full control of the Legislature. (Democrats controlled the state House at the time.) "That resonated hugely with Dick," says one friend. "He said, 'I'm for this, but until we have a governor who's going to champion it, we need to bide our time.' So it went on the shelf."
In 2009, with DeVos' help, Weiser was elected as the state GOP chair, and he led the party to a landslide in 2010, winning every state-level race. But the new Republican governor, Rick Snyder, resisted right-to-work, saying repeatedly it was "not on my agenda." Watching his fellow Class of '10 governors—especially Scott Walker in neighboring Wisconsin—clash with organized labor dampened Snyder's enthusiasm for the "very divisive" issue.
But some of the Legislature's Republican members wanted this fight. A small but vocal group of them had campaigned on right-to-work and agitated for the issue as soon as the 2011-12 session convened. "It was kind of like the kid on the way to Disney World saying, 'Are we there yet? Are we there yet?'" recalled Republican state Sen. Patrick Colbeck.
As the chorus grew louder, the unions decided to launch a preemptive strike. In July 2012, they got an amendment on the ballot that would enshrine collective bargaining rights in the state constitution. Known as Proposition 2, the ballot measure sent labor's enemies into overdrive. "The minute that thing got on the ballot, we knew we needed to mobilize quickly," says Greg McNeilly, Dick and Betsy's longtime political adviser.
That summer, a group of GOP lawmakers and business leaders—McNeilly won't say who—asked DeVos and Weiser (who served as finance chairman for the Republican National Committee in 2012) to lead the charge to defeat Proposition 2. They gladly took on the job—DeVos called Prop. 2 "a head-shot at Michigan's recovery"—but they had bigger things in mind: With McNeilly, who managed the anti-Prop. 2 campaign, DeVos and Weiser sketched out a strategy to defeat the measure, then use the political momentum to pass right-to-work immediately afterward. They also strategized about every other possible obstacle: defending the law from a possible legal challenge, beating a constitutional amendment to repeal it, and protecting Republican lawmakers from recall elections.
They began the anti-Prop. 2 effort in September. Polls showed that 60 percent of voters supported the measure, but DeVos and Weiser tapped their national donor networks, hauling in millions from Las Vegas gambling tycoon Sheldon Adelson, Texas investor Harold Simmons, and a slew of Michigan business groups. Ten DeVos family members pitched in with a combined $2 million. The DeVos-backed campaign ran hundreds of ads in the two months before the vote, claiming the measure would give unions far too much power, cost the state more than $1.6 billion, and imperil student safety by making it impossible to fire negligent teachers.
By Election Day, the two sides had spent a total of $47 million, making it the most expensive ballot measure in Michigan history. Voters defeated Prop. 2 by a 15-point margin. DeVos and Weiser wasted no time moving to the next phase of their plan.

DESPITE THE DEFEAT of Prop. 2, the unions believed all was not lost. Most Republican lawmakers seemed to have no stomach for another battle with organized labor. Days after the November elections, Mike Jackson, the carpenters' union head, dined in Lansing with a handful of Republican state senators who assured him they didn't support right-to-work. Other Republicans worried that a right-to-work push could lead to recalls. "At the time, I thought it was the dumbest thing we could've done politically," says one GOP legislative aide.
In public, Snyder insisted that right-to-work was still not on his agenda. Privately, his aides met with labor and suggested that concessions on other issues would keep the bill off the table. All the while, though, DeVos and his team were furiously whipping the vote. In the weeks before the start of the lame-duck session, DeVos personally called dozens of state lawmakers, pledging his support if the unions threatened recalls or primary challenges.
A week before the lame duck began, on November 20, 2012, DeVos and Weiser met with members of the Republican leadership, business bigwigs, and the top legislative aide to Gov. Snyder to pitch their plan. Snyder and the GOP leadership were still queasy, fearing a Wisconsin-style revolt; where the protesters in Madison had ultimately failed, in Michigan, a labor stronghold, they just might prevail. "There was all this hemming and hawing," says one attendee.
"What do you guys need to hear?" DeVos asked. "What can we do to help?"
A plan, came the reply. A plan showing that they wouldn't be committing political suicide.
McNeilly, DeVos' political adviser, took the floor. He had recently formed a nonprofit group called the Michigan Freedom Fund. It planned to raise millions from the DeVos family and other donors. McNeilly's pollster was testing DeVos' "freedom-to-work" message statewide. And the group was plotting a statewide ad blitz to give air cover to Republican lawmakers. By the time McNeilly finished talking, the mood in the room had shifted from apprehensive to optimistic. "Sitting around that table we felt like a rag-tag grouping of Davids, in the historic Biblical story," DeVos told me in an email. "But we left the table committed to doing our best to change Michigan's future for the better."
By now it was down to a few Republicans on the fence, and the heavy artillery came in. According to labor lobbyists and House and Senate Republican staffers, several undecided GOP lawmakers received threats of primary challenges from Team DeVos if they opposed right-to-work. One House Republican told me that Weiser called him up to suggest he'd have difficulties in the future if he voted no. The message, according to another wavering lawmaker's aide, was clear: "We will run you out of town."
In early December, the Michigan Freedom Fund unleashed itsfreedom-to-work ad campaign. The group also enlisted GOP pollster and communications guru Frank Luntz to help craft a message "bible" that was distributed to every Republican state lawmaker for use during the right-to-work push; it included prepackaged answers to potential questions from constituents and reporters. ("Q. Isn't this really just about trying to break unions? A. Freedom-to-work is about restoring workplace fairness and equality, not curtailing unions.") The Freedom Fund even brought Luntz to Lansing to rally lawmakers. This is your chance to make history, Luntz exhorted them. It's now or never.
On December 6, Snyder shocked the state by announcing that lawmakers would vote on right-to-work that day and that he would sign the legislation when it got to his desk. DeVos worked the phones all the way to the end, even calling several lawmakers on their cellphones as they prepared to cast their votes.
The state legislators who led the right-to-work fight say it was the strategy crafted by DeVos and his allies that convinced hesitant Republicans, not least of them the governor himself, to pull off what DeVos called "the largest shift in public policy in Michigan in a generation."
"[Snyder] needed to see the win plan," recalled Rep. Mike Shirkey—it was what swayed him from "'not on my agenda right now' to 'it just moved to the agenda.'"

IN LATE SEPTEMBER 2013, hundreds of Republican lawmakers, political operatives, and activists gathered at picturesque Mackinac Island in northern Michigan for the state party'sbiannual leadership conference. The gathering is always held at the Grand Hotel, an extravagant, 126-year-old landmark with sweeping views of Lake Huron. The 2013 guest list was packed with prominent names and 2016 hopefuls: Sen. Rand Paul (R-Ky.), Louisiana Gov. Bobby Jindal, Wisconsin Gov. Scott Walker, and Karl Rove all had keynote speaking slots.
One of the main attractions was a Saturday morning panel on the right-to-work victory. The panelists included DeVos adviser Greg McNeilly and two Republican lawmakers who were instrumental in the bill's passage. Dick and Betsy DeVos watched from the front row.
State Sen. Patrick Colbeck told the crowd that he'd spoken with allies in Illinois, Missouri, and New Hampshire who were interested in passing right-to-work bills of their own. But, he added, conservatives in those states were waiting to see if Michigan Republicans could hold on to their law—and their majority—in 2014. "If we demonstrate that we can defend the high ground, just like Gov. Scott Walker did in Wisconsin, you give courage pills to every state legislator and every state legislature across the country."
"This is the election that seals the deal," said McNeilly. With a GOP victory, "freedom-to-work becomes the new norm."
DeVos and his allies had long since started working toward that goal. Their Michigan Freedom Fund is now a conglomerate of political vehicles, including a charitable foundation, a 501(c)(4) advocacy group, and a 527 political committee. "We're not the Chamber of Commerce; we're not the Republican Party," he says. The groups, McNeilly notes, will steer clear of social issues like abortion and gay rights, and instead promote a "freedom agenda" of lowering taxes, slashing regulations, and privatizing public education. The fund will recruit and groom candidates and campaign to send those politicians to Lansing.
The ambitious project is more than a state-level power play: DeVos is part of a wave of superwealthy political activists—think the Koch brothers on the right, the billionaire environmentalist Tom Steyer on the left—who are operating outside the traditional party system. They are financing their own political infrastructure and setting their own agenda.
And it seems to be working. By pulling off the unthinkable, DeVos and his allies have emboldened conservatives around the country to go on the offensive. Following the passage of right-to-work, DeVos has opened his playbook to lawmakers, activists, and donors nationwide who are interested in following Michigan's lead. "As is often the case in politics generally, timing is critical," DeVos told me. "So the lesson to others is: Be prepared. Invest in the infrastructure necessary to leverage an opportunity when it presents itself." He says other conservatives "are hoping for an opportunity to bring freedom-to-work to their home states" and "have voiced their appreciation for the example Michigan provided." As he told an audience at the annual conference of the conservative State Policy Network in September, "If we can do it in Michigan, you can do it anywhere."
Andy Kroll, an associate editor at TomDispatch, is a reporter for Mother Jones magazine. He lives in Washington, D.C.