Wednesday, July 14, 2010

Review: Sound Truth & Corporate Myth$ by Riki Ott

561 pp. Produced for Dragonfly Sisters Press by Lorenzo Press – Jan. 2005. $24.95.

At just before 10 p.m. on Tuesday, April 20, 2010, the Transocean Ltd.-owned and BP Plc.-operated floating oil rig Deepwater Horizon was boring an exploratory well in the Macondo Prospect—about 40 miles southeast of the Louisiana coast and nearly a mile underwater—when it exploded without warning following a well blowout. For more than a day the inferno raged without respite, killing 11 crew members and injuring 17 others, sending the rig's remains plunging to the bottom of the ocean and leaving the broken seafloor well to spew millions of gallons of crude oil a day into the Gulf of Mexico. BP has tried repeatedly to stop the flow, to no avail. (As of this writing on Tuesday evening, July 13, it remains to be seen whether the well cap installed last night, a Band-Aid pending completion of the long-awaited relief wells next month, will actually work.) The spill's magnitude has beggared description or belief. By mid-June it was four to eight times the size of Exxon Valdez and had earned the title of worst environmental disaster in U.S. history. By the beginning of the current month it held the record for biggest offshore spill in world history, according to high-end government estimates.*

And as dire as the Deepwater Horizon spill is already, its harm could be magnified still further by a bungled or ill-considered cleanup response. That's exactly what happened with Exxon Valdez, argues marine biologist and oil spill activist Riki Ott, who has been aptly called the Erin Brockovich of that earlier disaster. Ott has written two books showing how gross misconduct on the part of Exxon (now Exxon Mobil Corp.) in the wake of Valdez created a secondary disaster that was just as damaging as the first one. These books, titled Not One Drop and Sound Truth & Corporate Myth$, exhaustively document how Exxon's actions compounded the oil's harm and destroyed the health of thousands of cleanup workers, in many cases permanently. In the interest of helping current spill victims, both books have now been made available online for free as ebooks. Ott is presently in the Gulf Coast area, sharing her expertise and prior experience with Valdez to try to make sure that BP doesn't get away with the same shenanigans as Exxon did.**

Ott holds a Ph.D. in fisheries and marine toxicology, and even long before Valdez was a prominent public figure and salmon “fisherma’am” in the spill's epicenter of Cordova, Alaska. The Valdez spill was a calling for Ott. She decided to make it her life's work to expose the truth behind the corporate line that Exxon was toeing (and that most people still believe, she feels) regarding the spill and its aftereffects. To that end, she has conducted extensive scientific research, testified at hearings, drafted legislation aimed at preventing future spills—and incorporated all of this research and activism into her two books, which are nothing short of heroic. Written with as much feeling as rigor and investigative enterprise, these books are required reading for anyone affected by either Valdez or the current Gulf spill. I reviewed the more recent of the two, Not One Drop (Chelsea Green Publishing, 2008), last year for Energy Bulletin. Here I review the earlier but equally important Sound Truth, a pioneering piece of scholarship that forces us to rethink our notions about how toxic oil and the chemicals used to clean it up really are.

Oil is much more toxic than scientists used to think—that is Ott's consistent refrain throughout the book. According to the old understanding of oil toxicity, impacts from oil spills should be entirely short-term. Since for the most part oil is non-water-soluble, scientists reasoned that it must not be that harmful to aquatic life and that whatever harm it does cause happens early on as the oil is shedding its highly volatile compounds. Thus, the old thinking goes, any oil that doesn't weather away completely after a certain amount of time is harmless, even if it remains visible in the environment for years after a spill. But studies done in the years since Valdez have shown these notions to be sadly mistaken. Oil actually becomes more, not less, harmful the longer it remains in the environment, because the weathering process exposes increasingly toxic polycyclic aromatic hydrocarbons (PAHs)—which Ott says "may well be the DDT of the 21st century."

And it's clear that Exxon had much more of an inkling about oil's true toxicity than it was willing to admit, even long before the findings discussed above had come to light. Ott proves this using some of Exxon's own documents, serendipitously obtained when company lawyers weren't quick enough at the draw to have them barred from scrutiny. Ott's other sources include medical records, court depositions, unpublished government reviews, academic journal articles and workers' ledgers and travel logs. The portrait that emerges from this mosaic is sordid indeed. Ott shows how Exxon abused the legal system by exercising constitutional rights originally intended for people; covered up the devastation caused by its disaster with skewed scientific studies and a skillful propaganda campaign; and went ahead with a PR-driven cleanup that it knew was fouling the environment with additional toxins, eradicating beach life spared by the initial oiling and poisoning workers by exposing them to dangerous levels of hazardous chemicals. The phrase "corporate greed" may be a tired cliché, but it couldn't be more fitting than in this case—and so, trite and unscientific though it may be, Ott is entirely forgiven for using it herself.

To begin with the impacts on wildlife, Sound Truth documents the huge losses that fish, birds and marine mammals endured as a result of the spill. The populations of numerous species crashed precipitously, and some animals began having trouble producing viable offspring or evading predators in their own native habitat. And this harm was all occurring at far lower PAH concentrations than those that scientists had long deemed to be safe, and that were permissible under existing state and federal laws. One study found significant effects in young salmon exposed to PAH concentrations that were 60 times lower than those permitted by federal law. In light of this evidence, Ott concludes that current regulatory standards for PAHs in water "are grossly under-protective of aquatic life."

These findings couldn't have been more at odds with those reported by Exxon-funded scientists. Exxon's scientists detected far lower PAH levels and harm to wildlife than did government-funded scientists. A subsequent report by the National Institute for Occupational Safety and Health (NIOSH) concluded that this is because Exxon scientists used analytical procedures that were 10 to 100 times less likely to pick up PAHs than the procedures used by their government counterparts. Exxon's scientists also did studies purporting to assess the recovery of numerous animal species. Among the tricks that they used to make it look like beaches had recovered, Ott relates, was the use of inappropriate control beaches. Instead of choosing unoiled beaches that hosted a similar wildlife makeup to that of the oiled beaches, Exxon's scientists chose beaches that were naturally barren due to their harsh, glacial conditions. Compared to these glacial beaches, even heavily oiled beaches looked like they had fully recovered and were flourishing once more.

Indeed, Ott dissects in great detail many cases of Exxon scientists skewing their studies so that they "tuned out" inconvenient findings. In support of her assessment, she cites Darrell Huff's seminal book How to Lie with Statistics, as well as a journal article identifying 18 differences in study design between government-funded studies and Exxon-funded studies that dramatically biased the latter's results. And she laments that government scientists were unable to counter these boisterous claims by Exxon with findings of their own, due to a gag order imposed on account of pending litigation. Ott contends that by the time this gag order had expired and public-trust scientists could finally publicize their findings, it was too late: Exxon's version had become the popular understanding of the spill and its environmental effects.

Besides the discovery of crude oil's extreme, persistent toxicity, the other half of Exxon Valdez's legacy, believes Ott, is the terrible saga of thousands of people cut down in their primes by exposure to noxious cleaning agents that should not have been used. (The warnings on numerous chemicals stated that they shouldn't be permitted to drain into watercourses, which obviously meant that they shouldn't have been allowed to drain into Prince William Sound.) In an ominous omen for cleanup workers, Exxon's primary cleanup contractor had been cited by the Environmental Protection Agency (EPA) only a year earlier for failing to maintain proper records related to hazardous wastes or adequately train personnel working around these wastes. In another ominous omen, Exxon paid workers to sign a waiver stating that they would not sue the company for any health-related problems that they might subsequently develop. Further, several cleaning solutions used during the cleanup contained an organic solvent called 2-butoxyethanol, which was on the EPA's list of "janitorial products to avoid." Prolonged exposure to these chemicals along with oil mists led to 6,722 recorded cases of upper respiratory infection among spill response workers. Exxon's trick for not reporting these health claims to the government was to lump them under the heading of cold-and-flu-like "infections," which don't need to be reported, as opposed to occupational illnesses, which do.

As this book poignantly reveals, the Valdez tragedy also shed light on a previously little-known disease called chemical sensitivity. People with this sickness are extremely sensitive to everyday chemicals that never used to give them problems in the past (for example, cosmetics or gas fumes) because of some past exposure to dangerous levels of hazardous chemicals. Chemically sensitive people can have life-threatening reactions to even trace levels of common chemicals. From court documents, personal journals and other sources, Ott pieces together the stories of some former Valdez cleanup workers who went on to develop chemical sensitivity. Because the illness was such a recently recognized phenomenon, many people faced tremendous challenges in trying to obtain diagnosis and treatment. To their immeasurable frustration, they often wound up being diagnosed as hypochondriacs or prescribed antidepressants because their doctors thought that it was all in their heads.

One of Sound Truth's greatest strengths is that it goes way beyond merely uncovering the scandal of Exxon's corporate myths. It also provides clear, well-informed suggestions aimed at reducing the likelihood of future spills and better handling the spills that still will inevitably occur. Ott recommends, among other things, the enactment of federal legislation requiring spillers to pay for their cleanups but prohibiting them from being in charge of cleanups. She points out that this policy of "federalizing" spill responses has been tried in other countries and has worked well. Because those in charge of such cleanups are beholden to the public interest rather than shareholders, they have no incentive to cut corners and merely sweep the problem under the rug while doing further environmental damage.

And that brings us back to BP and its spill in the Gulf. Some commentators have taken heart from BP's prompt admission of responsibility, its pledge to clean up the oil and its agreeing to set up a $20 billion damage claims fund. But stacked against these seemingly altruistic gestures are hints of Exxon-style negligence and secrecy, including security guards barring journalists from beaches, animal carcasses and other potential crime scene evidence mysteriously disappearing and spill response workers going without protective respirators.† Regardless of which reports reflect BP's true colors, there's one PR move on the part of BP chiefs that couldn't go wrong: putting a copy of Sound Truth into the hands of every cleanup worker, and taking care to read it long and hard themselves. It would be an honorable gesture, ensuring that workers are properly informed and outfitted—and giving us BP's word that it intends to succeed where Exxon failed on the social/environmental responsibility front. Fortunately, however, we don't have to wait for BP to disseminate this vital information. Anyone can access Ott's books online for free.

* Background on Deepwater Horizon gathered from the following sources: "New Oil Estimates Show Spill Rate Much Higher," Morning Edition, NPR, Jun. 11, 2010, http://www.npr.org/templates/story/story.php?storyId=127760703 (accessed Jun. 27, 2010); Ken Hoffman, “Despite spill, a few birds get a chance to live,” Houston Chronicle, Jul. 4, 2010, http://www.chron.com/disp/story.mpl/business/deepwaterhorizon/7093979.ht... (accessed Jul. 5, 2010); "What do we know about the Deepwater Horizon disaster?, BBC News, Jun. 22, 2010, http://news.bbc.co.uk/2/hi/world/us_and_canada/10370479.stm (accessed Jun. 27, 2010); NPR Staff and Wires, "Transocean Seeks To Limit Liability For Oil Rig Blast," NPR, May 13, 2010, http://www.npr.org/templates/story/story.php?storyId=127760703 (accessed Jun. 21, 2010); “Anadarko Refuses to Pay Costs of Deepwater Horizon Oil Spill,” Environment News Service, Jun. 18, 2010, http://www.ens-newswire.com/ens/jun2010/2010-06-18-091.html (accessed Jun. 21, 2010); Tommy Dickey, “A Brief Introduction to Ocean Oil Spills,” University of California, Santa Barbara, http://www.opl.ucsb.edu/tommy/pubs/Oil_Spill_2010_vers6.pdf (accessed Jul. 12, 2010); Associated Press and Miami Herald, "BP spill hits a somber record as Gulf's biggest," Seattle Times, Jul. 1, 2010, http://seattletimes.nwsource.com/html/nationworld/2012259363_oil02.html (accessed Jul. 13, 2010).
** The Erin Brockovich comparison comes from: “Chelsea Green Bookstore: Nature & Environment: Not One Drop,” Chelsea Green, http://www.chelseagreen.com/bookstore/item/not_one_drop:paperback/praise... (accessed Jun. 28, 2010). Not One Drop's release as a free ebook was reported in: "Chelsea Green Partners with Scribd on Oil Spill Book," Publishers Weekly, May 18, 2010, http://www.publishersweekly.com/pw/by-topic/industry-news/publisher-news... (accessed Jun. 21, 2010). Sound Truth's free ecopy is at: http://www.rikiott.com/pdf/Sound%20Truth.pdf.
† Riki Ott, interview with Keith Olbermann, "Countdown," MSNBC, New York, Jun. 14, 2010, http://www.msnbc.msn.com/id/3036677/vp/37697092#37697092 (accessed Jun. 21, 2010); "Has BP been attempting to erase evidence? Shocking video of security guard confrontation," World News Network, Jun. 16, 2010, http://article.wn.com/view/2010/06/16/Has_BP_been_attempting_to_erase_ev... (accessed Jun. 21, 2010).

~~~~~~~~~~~~~~~ Editorial Notes ~~~~~~~~~~~~~~~~~~~

Links to ecopies of Sound Truth and Not One Drop.

Frank Kaminski is a member of Seattle Peak Oil Awareness (SPOA), a connoisseur of post-oil novels and a regular book reviewer for Energy Bulletin. He can be reached at frank.kaminski AT gmail.com.

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Original article available here

Who repealed the Glass-Steagall Act?

Click this link ..... http://www.youtube.com/watch?v=x0k2PmF-o5Q&NR=1

It's Done: Oakland Fires 80 Police Officers...

Because of budget problems.

Below are the list of "small" crimes the police will now officially not respond to in person. Victims will instead be asked to fill out forms over the internet. The crimes include:

  • burglary
  • theft
  • embezzlement
  • grand theft
  • grand theft:dog
  • identity theft
  • false information to peace officer
  • required to register as sex or arson offender
  • dump waste or offensive matter
  • discard appliance with lock
  • loud music
  • possess forged notes
  • pass fictitious check
  • obtain money by false voucher
  • fraudulent use of access cards
  • stolen license plate
  • embezzlement by an employee (over $ 400)
  • extortion
  • attempted extortion
  • false personification of other
  • injure telephone/ power line
  • interfere with power line
  • unauthorized cable tv connection
  • vandalism
  • administer/expose poison to another's

Obviously, it's time protection be privatized away from government.

Tarpley: 'Obama, the Wall St. puppet'

Click this link ..... http://www.youtube.com/watch?v=0ZObHXWbWlk&feature=channel

Chinese rating agency strips Western nations of AAA status


China's leading credit rating agency has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favour of the West.

By Ambrose Evans-Pritchard, International Business Editor
Published: 9:17PM BST 12 Jul 2010

Dagong Global Credit Rating Co used its first foray into sovereign debt to paint a revolutionary picture of creditworthiness around the world, giving much greater weight to "wealth creating capacity" and foreign reserves than Fitch, Standard & Poor's, or Moody's.

The US falls to AA, while Britain and France slither down to AA-. Belgium, Spain, Italy are ranked at A- along with Malaysia.

Meanwhile, China rises to AA+ with Germany, the Netherlands and Canada, reflecting its €2.4 trillion (£2 trillion) reserves and a blistering growth rate of 8pc to 10pc a year.

Dominique Strauss-Kahn, chief of the International Monetary Fund, agreed on Monday that the rising East is a transforming global force. "Asia's time has come," he said.

The IMF expects Asia to grow by 7.7pc in 2010, vastly outpacing the eurozone at 1pc and the US at 3.3pc. Emerging nations hold 75pc of the world's $8.4 trillion (£5.6 trillion) of reserves.

Dagong rates Norway, Denmark, Switzerland, and Singapore at AAA, along with the commodity twins Australia and New Zealand.

Chinese president Hu Jintao said in April that the world needs "an objective, fair, and reasonable standard" for rating sovereign debt. Dagong appears to have stepped into the role, saying its objective was to assess countries using methods that would "not be affected by ideology".

"The reason for the global financial crisis and debt crisis in Europe is that the current international credit rating system does not correctly reveal the debtor's repayment ability," said Guan Jianzhong, Dagong's chairman.

The agency, known in China for rating companies, said its goal is to "correct the defects" of the existing system and offer a counter-weight to Western agencies.

Dagong appears to base growth potential on past performance but this can be misleading, especially in states enjoying technology catch-up. Japan was a high-flyer in 1970s and 1980s before stalling when the Nikkei bubble burst. It has been trapped in near perma-slump ever since.

China may start to face some of Japan's demographic problems by the middle of this decade when the working age population peaks.

The Western rating agencies put a high value on a long-established rule of law and government institutions that have proved resilient over many decades, or even centuries. China's political system may appear strong – as did the Soviet Union's – but only time will tell whether its foundations are brittle. The violent upheavals of the Cultural Revolution are still a very fresh memory.

source http://www.telegraph.co.uk/finance/china-business/7886077/Chinese-rating-agency-strips-Western-nations-of-AAA-status.html

How Brokers Became Bookies: The Insidious Transformation of Markets Into Casinos

"You all are the house, you're the bookie. [Your clients] are booking their bets with you. I don't know why we need to dress it up. It's a bet." - Sen. Claire McCaskill, Senate Subcommittee investigating Goldman Sachs (Washington Post, April 27, 2010)

Ever since December 2008, the Federal Reserve has held short-term interest rates near zero. This was not only to try to stimulate the housing and credit markets, but also to allow the federal government to increase its debt levels without increasing the interest tab picked up by the taxpayers. The total public US debt increased by nearly 50 percent from 2006 to the end of 2009 (from about $8.5 trillion to $12.3 trillion), but the interest bill on the debt actually dropped (from $406 billion to $383 billion), because of this reduction in interest rates.

One of the dire unintended consequences of that maneuver, however, was that municipal governments across the country have been saddled with very costly bad derivatives bets. They were persuaded by their Wall Street advisers to buy credit default swaps to protect their loans against interest rates shooting up. Instead, rates proceeded to drop through the floor, a wholly unforeseeable and unnatural market condition caused by rate manipulations by the Fed. Instead of the banks bearing the losses in return for premiums paid by municipal governments, the governments have had to pay massive sums to the banks - to the point of pushing at least one county to the brink of bankruptcy (Jefferson County, Alabama).

Another unintended consequence of the plunge in interest rates has been that "savers" have been forced to become "speculators" or gamblers. When interest rates on safe corporate bonds were around 8 percent, a couple could aim for saving half a million dollars in their working careers and count on reaping $40,000 yearly in investment income, a sum that, along with Social Security, could make for a comfortable retirement. But very low interest rates on bonds have forced these once-prudent savers into the riskier and less predictable stock market, and the collapse of the stock market has forced them into even more speculative ventures in the form of derivatives, a glorified form of gambling. Pension funds, which have binding pension contracts entered into when interest was at much higher levels, need an 8 percent investment return to meet their commitments. In today's market, they cannot make that sort of return without taking on higher risk, which means taking major losses when the risks materialize.

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Derivatives are basically just bets. Like at a racetrack, you don't need to own the thing you're betting on in order to play. Derivative casinos have opened up on virtually anything that can go up or down or have a variable future outcome. You can bet on the price of tea in China, the success or failure of a movie, whether a country will default on its debt, or whether a particular piece of legislation will pass. The global market in derivative trades is now well over a quadrillion dollars - that's a thousand trillion - and it is eating up resources that were at one time invested in productive enterprises. Why risk lending money to a corporation or buying its stock, when you can reap a better return betting on whether the stock will rise or fall?

The shift from investing to gambling means that not only are investors making very little of their money available to companies to produce goods and services, but the parties on one side of every speculative trade now have an interest in seeing the object of the bet fail, whether a company, a movie, a politician or a country. Worse, high-speed program traders can actually manipulate the market so that the thing bet on is more likely to fail. Not only has the market become a casino, but the casino is rigged.

High frequency traders - a field led by Goldman Sachs - use computer algorithms to automatically bet huge sums of money on minor shifts in price. These bets send signals to the market that can themselves cause the price of assets to shoot up or tumble down. By placing high-volume trades, the largest speculative traders can, thus, intentionally "fix" prices in any direction they want.

"Prediction" Markets

Casinos for betting on what something will do in the future have been elevated to the status of "prediction" markets, and they can cover a broad range of issues. MIT's Technology Review launched a futures market for technological innovations, in order to bet on upcoming developments. The NewsFutures and TradeSports Exchanges enable people to wager on matters such as whether Tiger Woods will take another lover, or whether bin Laden will be found in Afghanistan.

A 2008 conference of sports leaders in Auckland, New Zealand, featured Mark Davies, head of a sport betting exchange called Betfair. Davies observed that these betting exchanges, while clearly gambling forums, are little different from the trading done by financial firms such as JPMorgan. He said:

"I used to trade bonds at JPMorgan, and I can tell you that what our customers do is exactly the same as what I used to do in my previous life, with the single exception that where I had to pour over balance sheets and income statements, they pour over form and team-sheets."

The online news outlet Slate monitors various prediction markets to provide readers with up-to-date information on the potential outcomes of political races. Two of the markets covered are the Iowa Electronic Markets and Intrade. Slate claims that these political casinos are consistently better at forecasting winners than pre-election polls. Participants bet real money 24 hours a day on the outcomes of a range of issues, including political races. Newsfutures and Casualobserver are similar, smaller exchanges.

Besides shifting the emphasis to gambling ("Why Vote When You Can Bet?" says Slate's "Guide to All Political Markets"), prediction markets, like the stock market, can be rigged so that they actually affect outcomes. This became evident, for example, in 2008, when the John McCain campaign used the Intrade market to shift perception of his chances of winning. A supporter was able to single-handedly manipulate the price of McCain's contract, causing it to move up in the market and prompting some mainstream media to report it as evidence that McCain was gaining in popularity.

Betting on Terrorism

The destructive potential of prediction markets became particularly apparent in one sponsored by the Pentagon, called the "policy analysis market" (PAM) or "terror futures market." PAM was an attempt to use the predictive power of markets to forecast political events tied to the Middle East, including terrorist attacks. According to The New York Times, the PAM would have allowed trading of futures on political developments including terrorist attacks, coups d'état and assassinations. The exchange was shut down a day after it launched, after commentators pointed out that the system made it far too easy to make money with terror attacks.

At a July 28, 2003, press conference, Sens. Byron L. Dorgan (D-North Dakota) and Ron Wyden (D-Oregon) spoke out against the exchange. Wyden stated, "The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it's grotesque," while Dorgan called it "useless, offensive and unbelievably stupid."

"This appears to encourage terrorists to participate, either to profit from their terrorist activities or to bet against them in order to mislead US intelligence authorities," they said in a letter to Adm. John Poindexter, the director of the Terrorism Information Awareness Office, which developed the idea. A week after the exchange closed, Poindexter offered his resignation.

Carbon Credit Trading

A massive new derivatives market that could be highly destructive economically is the trading platform called Carbon Credit Trading, which is on its way to dwarfing world oil trade. The program would allow trading in "carbon allowances" (permitting companies to emit greenhouse gases) and in "carbon offsets" (allowing companies to emit beyond their allowance if they invest in emission-reducing projects elsewhere). It would also allow trading in carbon derivatives, for example, futures contracts to deliver a certain number of allowances at an agreed price and time.

Robert Shapiro, former undersecretary of commerce in the Clinton administration and a co-founder of the US Climate Task Force, has warned, "We are on the verge of creating a new trillion-dollar market in financial assets that will be securitized, derivatized, and speculated by Wall Street like the mortgage-backed securities market."

Eoin O'Carroll cautioned in The Christian Science Monitor:

"Many critics are pointing out that this new market for carbon derivatives could, without effective oversight, usher in another Wall Street free-for-all just like the one that precipitated the implosion of the global economy.... Just as the inability of homeowners to make good on their subprime mortgages ended up pulling the rug out from under the credit market, carbon offsets that are based on shaky greenhouse-gas mitigation projects could cause the carbon market to tank, with implications for the broader economy."

The proposed form of cap and trade has not yet been passed in the US, but a new market in which traders can speculate on the future of allowances and offsets has already been launched. The largest players in the carbon credit trading market include firms such as Morgan Stanley, Barclays Capital, Fortis, Deutsche Bank, Rabobank, BNP Paribas, Sumitomo, Kommunalkredit, Credit Suisse, Merrill Lynch and Cantor Fitzgerald. Last year, the financial services industry had 130 lobbyists working on climate issues, compared to almost none in 2003. The lobbyists represented companies such as Goldman Sachs and JPMorgan Chase.

Billionaire financier George Soros says cap and trade will be easy for speculators to rig. "The system can be gamed," he said last July at a London School of Economics seminar. "That's why financial types like me like it - because there are financial opportunities."

Time to Board Up the Casinos and Rethink Our Social Safety Net?

Our forebears considered gambling to be immoral and made it a crime. As the Industrial Revolution and the ascendance of capital changed religious mores, gambling gradually gained acceptance, but even within that permissive paradigm, derivative trading was originally considered an illegal form of gambling. Perhaps, it is time to reinstate the gambling laws, board up the derivatives casinos and return the stock market to what it was designed to be: a means of funneling the capital of investors into productive businesses.

Short of banning derivatives altogether, the derivatives business could be slowed up considerably by imposing a Tobin tax, a small tax on every financial trade. "Financial products" are virtually the only products left on the planet that are not currently subject to a sales tax; and at over a quadrillion dollars in trades annually, the market is huge.

A larger issue is how to ensure adequate retirement income for the population without forcing people into gambling with their life savings to supplement their meager Social Security checks. It may be time to rethink not only our banking and financial structure, but the entire social umbrella that our founding fathers called the Common Wealth. The genius of Social Security was its recognition of the basic economic truth that real "security" rests on the ability of a society to provide for and take care of those who, because of age, health or economic conditions, cannot take care of themselves.

Deficit hawks cry that we cannot afford more spending; but according to Richard Cook, a former US Treasury Department official, the government could print and spend several trillion new dollars into the money supply without causing price inflation. Writing in Global Research in April 2007, he noted that the US gross domestic product in 2006 came to $12.98 trillion, while the total national income came to only $10.23 trillion; and at least 10 percent of that income was reinvested rather than spent on goods and services. Total available purchasing power was, thus, only about $9.21 trillion, or $3.77 trillion less than the collective price of goods and services sold. Where did consumers get the extra $3.77 trillion? They had to borrow it, and they borrowed it from banks that created it with accounting entries on their books. If the government had replaced this bank-created money with debt-free government-created money, the total money supply would have remained unchanged. That means a whopping $3.77 trillion in new government-issued money could have been fed into the economy in 2006 without inflating prices. Different proposals have been made concerning how this money should be distributed, but at least some of it could be used to provide adequate Social Security checks, relieving the pressure to gamble with our savings.

The Federal Reserve has funneled $4.6 trillion to Wall Street in bailout money, most of it generated via "quantitative easing" (in effect, printing money); yet, hyperinflation has not resulted. To the contrary, what we have today is Depression-style deflation. The M3 money supply shrank in the last year by 5.5 percent, and the rate at which it is shrinking is accelerating. The explanation for this anomaly is that the Fed's $4.6 trillion added by quantitative easing fell far short of the estimated $10 trillion needed to "reflate" the money supply after the "shadow lenders" disappeared. When these investors discovered that the "triple-A" mortgage-backed securities they had been purchasing from Wall Street were actually very risky investments, they exited the market, credit dried up and the money supply (which today consists almost entirely of credit or debt) collapsed.

The only viable way to reflate a collapsed money supply is to put more money into it; and creating the national money supply is the sovereign right of governments, not of banks. If the government wants to remain sovereign, it needs to reassert that right.

Niko Kyriakou contributed to this article.

Empty Store Shelves Coming to America

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