Tuesday, March 13, 2012

431 Russian Jewish Oligarchs - a Mirror for America?

Russian Jewish Oligarchs - a Mirror for America?

(1) Russian Jewish Oligarchs - a Mirror for America?
(2) George W. Bush & Tom Lantos host Yukos stock holders at White House (2005)
(3) Alison Weir distinguishes "Russian Jewish Oligarchs" from "American entrepreneurs" (2005)
(4) Uri Avnery: Oligarchs story applies to US as well as Russia. Berezovsky boasts that he caused Chechen war (2005)
(5) The Oligarchs' Escape Plan - Michael Hudson
(6) Joseph Stiglitz on the IMF Riot; he was sacked by the World Bank
(7) Jeffrey Sachs says Rich must pay more Tax; Obama admin is filled with Wall Street bankers

(1) Russian Jewish Oligarchs - a Mirror for America? Peter Myers, January 4, 2011
Alison Weir, in a 2005 article (item 3 below) about coverage of the Oligarchs story in the US media, noted the omission of Jewish & Israeli links, and argued that the Russian Jewish Oligarchs were wrongly depicted as American-style entrepreneurs - as if they were innocent small businessmen.

Yet Uri Avnery, whose article on "The Oligarchs" TV documentary she quoted, wrote "This is a TV series about Russia. But it could have been about Israel. Or about the United States" (item 4). Avnery implies a comonality between the Russian and American situations.

In item 5, Professor of Economics Michael Hudson likens the looting of the post-Soviet economies to the Bailout of the banks in the GFC, and to IMF "stabilization" plans imposed on Third World countries.

In his lexicon, the US itself is run by an Oligarchy, which imposes its will on much of the world through the IMF.

Joseph Stiglitz, former chief economist at the World Bank (which is 51% owned by the US Treasury), was sacked for revealing how the IMF destroys national economies, culminating in the "IMF Riot". His account (item 6) is similar to Hudson's.

What's different about the post-Soviet economies, is the sharp break between their public ownership and their subsequent private looting. The Mr Bigs strode into view, whereas in the US they usually stay in the shadows.

They shift US assets offshore, to tax havens, where they escape scrutiny, taxation, and public accountability. Hudson calls it a "capital strike".

He says that big companies have two sets of books. One set, which they show to Treasury, minimizes their profits - to keep their taxes low. The other set, for share-holders, shows the true profit - justifying high dividends. Hudson says that "Treasury knows" and turns a blind eye. As a result, Governments are deprived of the taxation they need to fund infrastructure, industry and jobs. The "sovereign debt" crisis is one result.

That the Russian oligarchs were mainly Jewish raises the question of the extent to which the US Oligarchy is Jewish too.

Inheritage and upbringing contribute to Jewish identity, but do not suffice; a subjective element is required too, usually the acceptance of some variant of Judaism. Apart from the usual theistic variant, the non-theistic variant articulated by Schopenhauer has been popular among Leftist Jews, eg David Ben-Gurion. Marxist Jews who mix mainly with other Jews and/or campaign against "Anti-Semitism" - like Trotsky and his followers - exhibit signs of lingering Jewish identity. But one can stop being Jewish; that's why there's a campaign against assimilation.

Joseph Stiglitz is of Jewish heritage, but is putting his talents to public service - specifically, campaigning against the financial Oligarchy. Those who break away from tribalism and devote their skills to the public good are welcome, whether they continue to see themselves as Jewish or not.

The last three heads of the Fed - Volcker, Greenspan and Bernancke - have all been Jewish. And the last three heads of the World Bank - Wolfensohn, Wolfowitz & Zoellick - have been Jewish too.

Volcker attended the Lutheran church, and Wikipedia makes no mention of his Jewishness <http://en.wikipedia.org/wiki/Paul_Volcker>.

But YnetNews (of Israel) names him as Jewish (and notes his link to J. Rothschild):

{start Ynet report}
Obama mulls naming Jewish economist secretary of treasury

Former Fed chair, who headed committee tasked with securing Swiss restitution funds for Holocaust survivors, shortlisted for two of new administration's top financial positions

Roni Sofer
Published: 11.09.08, 08:38 / Israel Money

http://www.ynet.co.il/english/articles/0,7340,L-3619625,00.html

Former Federal Reserve Chairman Paul Volcker is on the shortlist for the US secretary of the treasury position in the Obama administration, Ynet has learned.

Should Volcker, 82, be passed for the position, he is likely to be named head of the US Financial Council.

Volcker, who chaired the Federal Reserve for eight years, was appointed head of the committee which probed the liability of Swiss banks to holocaust victims, in 1995. The committee's effort yielded $1.5 billion in restitutions to Holocaust survivors.

While spearheaded by Volcker, the committee met once a moth, usually in Zurich. The committee was made up of five Swiss members, representing the banks, and five Jewish members - Avraham Burg, Ron Lauder, Israel Singer, Dr. Reuven Bracha and Attorney Zvi Barak. ...

Volcker headed the Federal Reserve between 1979 and 1987, under presidents Jimmy Carter and Ronald Reagan. After leaving the Fed, he went into private practice, becoming chairman of the prominent New York investment banking firm, J. Rothschild, Wolfensohn & Co.; but he was occasionally asked to head public committees – the most famous of all probed possible corruption in the Iraqi Oil for Food program, in 2004.

Born to a Jewish family in New Jersey in 1927, Volcker attended Princeton University, Harvard and the London School of Economics. In January of 2008, he endorsed Barack Obama's presidency bid and was his closest financial adviser.
{end Ynet report}

The current head of the World Bank, Robert B. Zoellick, succeeded James Wolfensohn & Paul Wolfowitz, both Jewish.

Wikipedia lists him as Christian.

But the San Diego Jewish World, of Wednesday Evening, May 30, 2007, says Zoellick is Jewish.

In the "Jews in the News" section, the Jewish names are highlighted. Zoellick is highlighted. So is Wolfowitz:
http://www.jewishsightseeing.com/2007-sdjw/2007-05%20sdjw/2007-05-30/2007_05_30.htm.

San Diego Jewish World again lists Zoellick as Jewish, on June 26, 2007:
http://www.jewishsightseeing.com/2007-sdjw/2007-06-SDJW/2007-06-26/2007-06-26.htm

Zoellick, when vice-chairman of Goldman Sachs, made these passionate comments on Israel:

{start Zoellick comments}
http://shanghai.usconsulate.gov/oksenberg_lecture.html

"From the Shanghai Communiqué to Global Stakeholders"

Remarks by Robert B. Zoellick

Vice Chairman, International, Goldman Sachs Group

at the Barnett-Oksenberg Lecture on Sino-American Relations sponsored by The Shanghai Association of American Studies

The National Committee on U.S.-China Relations

Shanghai March 21, 2007

One also needs to consider what Israel might do. Iran supports terrorists who attack Israel. Iran’s President has spoken of wiping Israel off the map. He questions the reality of the Holocaust. The Chinese are proud of their sense of history; the Jewish people have a strong historical memory, too. It is burned in their soul that Jews once stood by as enemies threatened them with annihilation.

I hope this rendition of the stakes might lead China to cooperate more actively with the United States, the EU-3, Russia, and others to dissuade Iran from its course of uranium conversion and enrichment. The Russians have found cause to stop work on the Bushehr nuclear plant.  China could help through vigorous enforcement of sanctions on dual use technology and by urging full cooperation with the IAEA’s detailed demands, as called for by UN Security Council Resolution 1737. As long as Iran resists the cooperation called for by the UN Security Council, it should be subject to additional pressure, applied in gradations.
{end Zoellick comments}

Marranism in protestant America! The most famous Marrano in a protestant country is probably Leopold Amery, author of the final draft of the Balfour Declaration.

So, if the last three heads of the Fed have been Jewish, what does this mean? The appointments are made by the President - but from a short-list provided to him. The Fed is owned by a consortium of private banks; it's a reasonable bet that a high proportion of them are Jewish-run too.

As for three successive Jewish heads of the World Bank: it is 51% owned by the US Treasury, which has a special relationship with Goldman Sachs. Rubin and Paulson, from Goldman, became Treasury Secretaries. John Snow held millions of Goldman shares. Geithner is alleged to be close of Goldman.

That we have three successive Jewish heads of the Fed, and three of the World Bank, may not seem remarkable to Jewish owners & managers of the media. But if it were Moslems at the top, THEN they'd notice.

(2) George W. Bush & Tom Lantos host Yukos stock holders at White House (2005)

http://www.haaretz.com/news/white-house-hosts-2-israeli-russians-wanted-by-moscow-1.149169

White House hosts 2 Israeli-Russians wanted by Moscow

By Yossi Melman and Haaretz Correspondent

February 3, 2005

U.S. President George Bush on Thursday hosted two Israeli-Russian businessmen who are wanted by Moscow over alleged tax offenses.

The two are Mikhail Brudno and Vladimir Dubov, stock holders in the giant Russian oil enterprise Yukos. The two currently reside in Israel, along with a business partner Leonid Nevzelin, in Herzliya. They were invited to a White House breakfast as guests of Congressmen Tom Lantos and Christopher Cox.

Following a Russian request for their extradition, the two are wanted by the Interpol.

Brudno, Dubov and Nevzelin claim that their arrest warrants were issued at the order of the Russian president as part of a campaign of political intimidation against reformists. According to the three, former Yukos chairman Mikhail Khodorkovski, who has been sitting in a Moscow jail for the past 16 months, was arrested for the same reason.

Yukos and its major stockholders have supported centrist, democratic Russian political parties, and donated large sums of money. In recent years, Russian authorities began investigating the company, its managers and major stockholders, many of whom are of Jewish origin. The probes caused several of the managers to flee to Israel, and resulted in Khodorkovski's arrest and a Kremlin attack on Yukos. One of Yukos' largest divisions was recently sold.

(3) Alison Weir distinguishes "Russian Jewish Oligarchs" from "American entrepreneurs" (2005)

From: Alison Weir <alisonweir@ifamericansknew.org> Date: 01.01.2011 11:36 PM
Subject: Re: Khodorkovsky: New Yorker laments loss of Russia's Independent Judiciary

Russia, Israel and Media Omissions

Alison Weir

CounterPunch
Friday, February 17, 2005

http://ifamericansknew.org/media/russia.html
http://www.counterpunch.org/weir02172005.html

As is often the case with AP's coverage of news having to do with Israel, there's a serious omission in its reporting on the Russia-Israel connection even when it involves oil and the United States.

The day after the State of the Union Address, two Interpol fugitives attended the "National Prayer Breakfast" held in Washington DC. The day before that, these fugitives from the law were the guests of honor at an hour-long meeting of the International Relations Committee on Capitol Hill, invited by ranking Democrat Tom Lantos (Calif.)

You would think it would be hot news when wanted men being hunted by European police suddenly pop up in the US particularly on Capitol Hill and at events attended by the US president.

Yet, there was not a single AP story in the US on any of this. 1 Not a single national network television or radio news program even mentioned these facts. In fact, Google and LexisNexis searches four days after these events took place turned up only three newspaper articles on them anywhere in the entire country. 2

Who are these fugitives from the law, wanted by Interpol, who are meeting at the highest levels of the US government? And why didn't we learn of them?

Therein lies the story. These two men, it turns out, are just the tips of a colossal iceberg. And this iceberg doesn't just have 90 percent of its mass hidden under water; this iceberg is almost entirely submerged.

They are Mikhail Brudno and Vladimir Dubov, Israeli-Russian partners in the giant Russian oil company Yukos. They, along with a number of their cronies, are wanted by Interpol for allegedly bilking Russian citizens out of billions of dollars. To elude Russian prosecution, these men have taken up residence in Israel. 3

As the Israeli newspaper Ha'aretz explains: "In recent years Russian authorities began investigating [Yukos], its managers and major stockholders, many of whom are of Jewish origin. The probes caused several of the managers to flee to Israel, and resulted in Khodorkovski's [Yukos CEO] arrest and a Kremlin attack on Yukos."

The fact is that Israel is an important factor in the ongoing, nation-shaking power struggle now going on in Russia. Yet AP virtually never reports this connection. For example, a few months ago in a typical AP story on this power struggle, "Report: Russia again charges Berezovsky," 4 Moscow AP Bureau Chief Judith Ingram makes no mention anywhere that Berezovsky is an Israeli citizen, or of his many connections to Israel.

Such omissions by AP and large swaths of the American media leave Americans seriously disadvantaged in deciphering what is going on in Russia, and its profound significance for the world.

In order to make sense of this Russian power struggle, and to understand its importance to the rest of us, it is necessary to understand the usually omitted Israeli subtext. When this is understood, the friendship of such pro-Israel Congressional leaders as Rep. Lantos to fugitive Russian oil tycoons begins to make sense.

To explore this background it is often useful to turn to the Israeli press. In July a major Israeli publication, the Jerusalem Post, carried an article headlined: "Boris Berezovsky: Putin's Russia dangerous for Israel." Before describing what this contained, let us first go into a little of the background.

The Oligarchs

Boris Berezovsky is one of seven "oligarchs," as they are known both inside and outside Russia: massively rich, powerful manipulators who through violence, theft and corruption acquired a mammoth percentage (reports range from 70 to 85 percent) of Russia's resources, from its oil to the auto industry to mass media outlets.

At the same time, the group steadily gained control over much of the country's political apparatus. Using extraordinary financial resources and insider dealing, the oligarchs handpicked prime ministers and governmental leaders and barely even bothered to do this behind the scenes.

In 1997 Yukos founder Mikhail Khodorkovsky, one of the group and Russia's sometimes richest man (several of the oligarchs trade the top spot back and forth) told an interviewer before he was arrested and imprisoned by Putin last year:

"If we rank all the fields of man's activity by profitability, politics will be the most lucrative business. When we see a critical situation in the government, we draw lots in order to pick out a person from our milieu for work in power." 5

Almost all of these oligarchs, it turns out, have significant ties to Israel. In fact, Berezovsky himself has Israeli citizenship a fact that caused a scandal of Watergate proportions in Russia in 1996 when it was exposed by a Russian newspaper. 6

Do Berezovsky's dual loyalties really matter? Yes. In the realm of global dominance, Israel's interests and Russia's are considerably divergent. It is in Israel's interests to bring to power a regime in Russia friendly to Israel, rather than the current one under Putin, which Israeli leaders feel is supportive of its enemies. Not long ago, for example, Putin met with Syrian leaders an action highly disturbing to Israel.

Having an Israeli citizen at the highest levels of the Russian government is ideal, from Israel's point of view. In Berezovsky they had such a man. The Jerusalem Post article mentioned above is revealing. It describes Berezovsky as "the Godfather of the Oligarchs' and Kingmaker of Russia's Politics'" and reports Berezovsky's statement that "Putin's Russia is dangerous for Israel." Berezovsky goes on to assert that Putin "supports terror" in the Middle East through Russia's previous relations with Iraq and current relations with Iran. 7

While Israelis may have been delighted at Berezovsky's position in Russia, It is not surprising that Russian citizens were somewhat less so. Finding that a powerful leader and member of the Russian Security Council was an Israeli citizen was disconcerting, at best.

As a result of the media uproar over Berezovsky's Israeli citizenship and other events, the Oligarchs' connections to Israel are widely known in Russia and elsewhere. In Israel they are covered frequently, often with adulation, including a recent hit Israeli TV series called "The Oligarchs."

"Some of its episodes," according to Israeli writer Uri Avnery, "are simply unbelievable or would have been, if they had not come straight from the horses' mouths: the heroes of the story, who gleefully boast about their despicable exploits. The series was produced by Israeli immigrants from Russia."

Avnery writes that the oligarchs used "cheating, bribery and murder," as they "exploited the disintegration of the Soviet system to loot the treasures of the state and to amass plunder amounting to hundreds of billions of dollars. In order to safeguard the perpetuation of their business, they took control of the state. Six out of the seven are Jews." 8

According to a Washington Post story by David Hoffman, the group bought and controlled Russian governmental officials at the highest levels. After financing Yeltsin's election in 1996, Hoffman writes: "The tycoons met and decided to insert one of their own into government. They debated who and chose [Vladimir] Potanin, who became deputy prime minister. One reason they chose Potanin was that he is not Jewish, and most of the rest of them are, and feared a backlash against the Jewish bankers." 9

In Russia, the oligarchs are deeply loathed, considered villains who worked to bleed the country dry; during their reign many Russian citizens saw their life savings disappear overnight. A new term was coined for their dominance, "semibankirshchina" (the rule of the seven bankers), and they were widely known to have wielded small, murderous armies. There are rumors that Berezovsky, subject of the respectful AP article, was even responsible for the gunning down of an American journalist, Forbes Moscow editor Paul Klebnikov.

While no one has been charged with the murder of Klebnikov, who had written a book on Berezovsky, many suspect a Berezovsky connection. As a friend of Klebnikov wrote: "Experienced expatriates in Russia shared an essential rule: Don't cross these brutal billionaires, ever, or you're likely to go home in a box." 10

The Chechnya Connection

There is evidence that Berezovsky's responsibility for death and tragedy may be vastly greater.

"Berezovsky boasts that he caused the war in Chechnya," Avnery reports, "in which tens of thousands have been killed and a whole country devastated. He was interested in the mineral resources and a prospective pipeline there. In order to achieve this he put an end to the peace agreement that gave the country some kind of independence. The oligarchs dismissed and destroyed Alexander Lebed, the popular general who engineered the agreement, and the war has been going on since then.

"In the end," Avnery writes, "there was a reaction: Vladimir Putin, the taciturn and tough ex-KGB operative, assumed power, took control of the media, put one of the oligarchs (Mikhail Khodorkovsky) in prison, caused the others to flee (Berezovsky is in England, Vladimir Gusinsky is in Israel, another, Mikhail Chernoy, is assumed to be hiding here.)"

Yet, apart from the Washington Post, American media report on almost none of this. Instead, US coverage largely portrays Berezovsky and his crowd as American-style entrepreneurs who are being hounded by a Russian government whose actions are, to repeat the media's commonly used phrase, "politically motivated."

US news stories, even when they occasionally do hint at questionable practices, tend to use such phrases as "brash young capitalists" to describe the oligarchs. 11 For example, a long series co-produced by FRONTLINE and the New York Times referred to these men as "shrewd businessmen," and asked "what it's like to be young, Russian and newly affluent?" 12 Massive violence, dual loyalties, and control of resources are rarely, if ever, part of the picture.

When AP Moscow bureau chief Ingram was asked for this article about Berezovsky's Israeli citizenship, she claimed to know nothing about it, a curious contention for someone who has been an AP news editor in Moscow since 1999. When Ingram was queried further, she hung up the phone.

An examination of Ingram's reporting on the Berezovsky story cited above raises serious questions. Though she is located in Moscow, Ingram interviewed only two people for her news story: Berezovsky, who is in London, and Berezovsky associate Alex Goldfarb, in New York. One wonders why she interviewed none of the Russians residing around her.

Similarly, one wonders why not a single AP story has identified Berezovsky's considerable connection to Israel.

Further, nowhere does Ingram's article convey the ruthlessness of the oligarchs' actions, or the significance of their holdings, including control of its media. Unnoted in Ingram's report is the fact that her subject and fellow oligarch Vladimir Gusinsky have been two of Russia's most powerful media tycoons.

Before Putin's crackdown, according to the Washington Post, oligarchs had succeeded in seizing "the reins of Russia's print and broadcast media, vital to the evolution of the country's fledgling democracy and growth of its nascent civil society." Berezovsky crony Gusinsky, who is close friends with Rupert Murdoch and was about the launch a satellite network, fled to Israel when it appeared he would be arrested." 13

Somehow, AP's bureau chief seems to have missed all this.

Does this matter to Americans?

AP is the major news source for the thousands of news outlets around the country who cannot afford to have their own foreign correspondents. When AP chooses not to cover something, its omission is felt throughout the nation. When national news networks and others leave out the same facts, the cover-up is almost total.

Russia, despite its current turmoil, contains enormous power. Its natural resources are gargantuan: it possesses the world's largest natural gas reserves, the second largest coal reserves, and the eighth largest oil reserves. It is the world's largest exporter of natural gas, the second largest oil exporter, and the third largest energy consumer.14 Russia's significance on the world stage now, as in the past, is immense.

Similarly, the United States is currently the most powerful nation on earth. It is therefore essential that its citizens be accurately informed on issues of significance. Israeli citizens, Russian citizens, and citizens of nations throughout the world know the information detailed above. It is critical that American citizens be no less well informed.

For years, the neocons' push for war against Iraq was largely uncovered by the US media. For even longer, the neocons' close connections to Israel have gone largely unmentioned in mainstream American news reports. As a result, very few Americans know to what degree many of those responsible for the tragic US invasion and occupation of Iraq have been motivated by Israeli concerns.

The omission in coverage of Iraq has been profoundly disastrous, both for the Middle East and for Americans. In fact, it is quite likely that only history will show the true extent of this disaster. It is deeply troubling to see the same kind of omission occurring on Russia.

End Notes

1.Interestingly, an AP report sent out only on its Worldstream wire (i.e. to Europe; Britain; Scandinavia; Middle East; Africa; India; Asia; England, but not to US papers) contained information on this at the end of the report.

2.Washington Post: "Prayer Breakfast Includes Russian Fugitives" (overall, the Post has been an exception to the general blackout on this subject); the Seattle Times, which ran the Post story, and the New York Times, in a short story on page 12 on Sunday, three days after the event. Interestingly, the NY Times story was filed from Moscow (not Washington) and quotes a "spokesman" for the two men, Charles Krause, who has worked as a correspondent in Israel for the News Hour with Jim Lehrer. In the Times story Russian attempts to prosecute these men are described as "politically motivated."

3.This is a wise move, since Israel is known for never extraditing Jewish citizens, no matter what their crime. Even requests for such cooperation by the US, which gives Israel over $10 million per day, go unheeded by the Israeli government. Private citizens wanted for committing murder in the US, for example, are not returned for trial.

4.Associated Press, Sept. 22, 2004

5."Tycoons Take the Reins in Russia," By David Hoffman, Washington Post Foreign Service, Friday, August 28, 1998; Page A01

6."Media and Politics in Transition: Three Models," Post-Soviet Media Law & Policy Newsletter, Issue 35, Benjamin N. Cardozo School of Law, Feb. 27, 1997

7."Boris Berezovsky: Putin's Russia dangerous for Israel.', Bret Stephens, The Jerusalem Post, July 5, 2005

8."The Oligarchs", Uri Avnery, CounterPunch, Aug. 3, 2004

9."Tycoons Take the Reins in Russia," By David Hoffman, Washington Post Foreign Service, Friday, August 28, 1998; Page A01,

10."Same Old Ruthless Russia," by Michael R. Caputo, Washingtonpost.com

11.Washington Post, Aug 28, 1998

12.October 2003, Sabrina Tavernise,

13."Powerful Few Rule Russian Mass Media," David Hoffman, Washington Post, March 31, 1997; Page A01

14.Russia Country Analysis Brief

(4) Uri Avnery: Oligarchs story applies to US as well as Russia. Berezovsky boasts that he caused Chechen war (2005)

http://lists.econ.utah.edu/pipermail/rad-green/2004-August/015266.html

Oligarchs gleefully boast about their despicable exploits

August 3, 2004
Counter Punch

The Oligarchs

Or How the Virgin Became a Whore

By Uri Avnery

http://www.counterpunch.org/Avnery08032004.html

This is a TV series about Russia. But it could have been about Israel. Or about the United States. It is entitled "The Oligarchs" and is now being screened on Israeli television.

Some of its episodes are simply unbelievable--or would have been, if they had not come straight from the horses' mouths: the heroes of the story, who gleefully boast about their despicable exploits. The series was produced by Israeli immigrants from Russia.

The "oligarchs" are a tiny group of entrepreneurs who exploited the disintegration of the Soviet system to loot the treasures of the state and to amass plunder amounting to hundreds of billions of dollars. In order to safeguard the perpetuation of their business, they took control of the state. Six out of the seven are Jews.

In popular parlance they are called "oligarchs"--from the Greek word meaning "rule of the few".

In the first years of post-Soviet Russian capitalism they were the bold and nimble ones who knew how to exploit the economic anarchy in order to acquire enormous possessions for a hundredth or a thousandth of their value: oil, natural gas, nickel and other minerals. They used every possible trick, including cheating, bribery and murder. Every one of them had a small private army. In the course of the series they are proud to tell in great detail how they did it.

But the most intriguing part of the series recounts the way they took control of the political apparatus. After a period of fighting each other, they decided that it would be more profitable for them to cooperate in order to take over the state.

At the time, President Boris Yeltsin was in a steep decline. On the eve of the new elections for the presidency, his rating in public opinion polls stood at 4%. He was an alcoholic with a severe heart disease, working about two hours a day. The state was, in practice, ruled by his bodyguard and his daughter; corruption was the order of the day.

The oligarchs decided to take power through him. They had almost unlimited funds, control of all TV channels and most of the other media. They put all these at the disposal of Yeltsin's reelection campaign, denying his opponents even one minute of TV time and pouring huge sums of money into the effort. (The series omits an interesting detail: they secretly brought over the most outstanding American election experts and copywriters, who applied methods previously unknown in Russia.)

The campaign bore fruit: Yeltsin was indeed reelected. On the very same day he had another heart attack and spent the rest of his term in hospital. In practice, the oligarchs ruled Russia. One of them, Boris Berezovsky, appointed himself Prime Minister. There was a minor scandal when it became known that he (like most of the oligarchs) had acquired Israeli citizenship, but he gave up his Israeli passport and everything was in order again.

By the way, Berezovsky boasts that he caused the war in Chechnya, in which tens of thousands have been killed and a whole country devastated. He was interested in the mineral resources and a prospective pipeline there. In order to achieve this he put an end to the peace agreement that gave the country some kind of independence. The oligarchs dismissed and destroyed Alexander Lebed, the popular general who engineered the agreement, and the war has been going on since then.

In the end, there was a reaction: Vladimir Putin, the taciturn and tough ex-KGB operative, assumed power, took control of the media, put one of the oligarchs (Mikhail Khodorkovsky) in prison, caused the others to flee (Berezovsky is in England, Vladimir Gusinsky is in Israel, another, Mikhail Chernoy, is assumed to be hiding here.)

Since all the exploits of the oligarchs occurred in public, there is a danger that the affair might cause an increase in anti-Semitism in Russia. Indeed, the anti-Semites argue that these doings confirm the "Protocols of the Elders of Zion", a document fabricated by the Russian secret police a century ago, purporting to reveal a Jewish conspiracy to control the world. ...

(5) The Oligarchs' Escape Plan - Michael Hudson

http://www.counterpunch.org/hudson02172009.html

February 17, 2009

Finance Capitalism Hits a Wall

The Oligarchs' Escape Plan

By MICHAEL HUDSON

The financial "wealth creation" game is over. Economies emerged from World War II relatively free of debt, but the 60-year global run-up has run its course. Finance capitalism is in a state of collapse, and marginal palliatives cannot revive it. The U.S. economy cannot "inflate its way out of debt," because this would collapse the dollar and end its dreams of global empire by forcing foreign countries to go their own way. There is too little manufacturing to make the economy more "competitive," given its high housing costs, transportation, debt and tax overhead. A quarter to a third of U.S. real estate has fallen into negative equity, so no banks will lend to them. The economy has hit a debt wall and is falling into negative equity, where it may remain for as far as the eye can see until there is a debt write-down.

Mr. Obama's "recovery" plan, based on infrastructure spending, will make real estate fortunes for well-situated properties along the new public transport routes, but there is no sign of cities levying a windfall property tax to save their finances. Their mayors would rather keep the cities broke than to tax real estate and finance. The aim is to re-inflate property markets to enable owners to pay the banks, not to help the public sector break even. So state and local pension plans will remain underfunded while more corporate pension plans go broke.

One would think that politicians would be willing to do the math and realize that debts that can't be paid, won't be. But the debts are being kept on the books, continuing to extract interest to pay the creditors that have made the bad loans. The resulting debt deflation threatens to keep the economy in depression until a radical shift in policy occurs – a shift to save the "real" economy, not just the financial sector and the wealthiest 10 per cent of American families.

There is no sign that Mr. Obama's economic advisors, Treasury officials and heads of the relevant Congressional committees recognize the need for a write-down. After all, they have been placed in their positions precisely because they do not understand that debt leveraging is a form of economic overhead, not real "wealth creation." But their tunnel vision is what makes them "reliable" to Wall Street, which doesn't like surprises. And the entire character of today's financial crisis continues to be labeled "surprising" and "unexpected" by the press as each new surprisingly pessimistic statistic hits the news. It's safe to be surprised; suspicious to have expected bad news and being a "premature doomsayer." One must have faith in the system above all. And the system was the Greenspan Bubble. That is why "Ayn Rand Alan" was put in charge in the first place, after all.

So the government tries to recover the happy Bubble Economy years by getting debt growing again, hoping to re-inflate real estate and stock market prices. That was, after all, the Golden Age of finance capital's world of using debt leverage to bid up the book-price of fictitious capital assets. Everyone loved it as long as it lasted. Voters thought they had a chance to become millionaires, and approved happily. And at least it made Wall Street richer than ever before – while almost doubling the share of wealth held by the wealthiest 1 per cent of America's families. For Washington policy makers, they are synonymous with "the economy" – at least the economy for which national economic policy is being formulated these days.

The Obama-Geithner plan to restart the Bubble Economy's debt growth so as to inflate asset prices by enough to pay off the debt overhang out of new "capital gains" cannot possibly work. But that is the only trick these ponies know. We have entered an era of asset-price deflation, not inflation. Economic data charts throughout the world have hit a wall and every trend has been plunging vertically downward since last autumn. U.S. consumer prices experienced their fastest plunge since the Great Depression of the 1930s, along with consumer "confidence," international shipping, real estate and stock market prices, oil and the exchange rate for British sterling. The global economy is falling into depression, and cannot recover until debts are written down.

Instead of doing this, the government is doing just the opposite. It is proposing to take bad debts onto the public-sector balance sheet, printing new Treasury bonds give the banks – bonds whose interest charges will have to be paid by taxing labor and industry.

The Oligarchy's plans for a bailout (at least of its own financial position)

In periods of looming collapse, wealthy elites protect their funds. In times past they bought gold when currencies started to weaken. (Patriotism never has been a characteristic of cosmopolitan finance capital.) Since the 1950s the International Monetary Fund has made loans to support Third World exchange rates long enough to subsidize capital flight. In the United States over the past half-year, bankers and Wall Street investors have tapped the Treasury and Federal Reserve to support prices of their bad loans and financial gambles, buying out or guaranteeing $12 trillion of these junk debts. Protection for the U.S. financial elite thus takes the form of domestic public debt, not foreign currency.

It is all in vain as far as the real economy is concerned. When the Treasury gives banks newly printed government bonds in "cash for trash" swaps, it leaves today's unpayably high private-sector debt in place. All that happens is that this debt is now owed to (or guaranteed by) the government, which will have to impose taxes to pay the interest charges.

The new twist is a variant on the IMF "stabilization" plans that lend money to central banks to support their currencies – for long enough to enable local Oligarchs and foreign investors to move their savings and investments offshore at a good exchange rate. The currency then is permitted to collapse, enabling currency speculators to rake in enough gains to empty out the central bank's reserves. Speculators view these central bank holdings as a target to be raided – the larger the better. The IMF will lend a central bank, say, $10 billion to "support the currency." Domestic holders will flee the currency at a high exchange rate. Then, when the loan proceeds are depleted, the currency plunges. Wages are squeezed in the usual IMF austerity program, and the economy is forced to earn enough foreign exchange to pay back the IMF.

As a condition for getting this kind of IMF "support," governments are told to run a budget surplus, cut back social spending, lower wages and raise taxes on labor so as to squeeze out enough exports to repay the IMF loans. But inasmuch as this kind "stabilization plan" cripples their domestic economy, they are obliged to sell off public infrastructure at distress prices – to foreign buyers who themselves borrow the money. The effect is to make such countries even more dependent on less "neoliberalized" economies.

Latvia is a poster child for this kind of disaster. Its recent agreement with Europe is a case in point. To help the Swedish banks withdraw their funds from the sinking ship, EU support is conditional on Latvia's government agreeing to cut salaries in the private sector – and not to raise property taxes (currently almost zero).

The problem is that Latvia, like other post-Soviet economies, has scant domestic output to export. Industry throughout the former Soviet Union was torn up and scrapped in the 1990s. (Welcome to victorious finance capitalism, Western-style.) What they had was real estate and public infrastructure free of debt – and hence, available to be pledged as collateral for loans to finance their imports. Ever since its independence from Russia in 1991, Latvia has paid for its imported consumer goods and other purchases by borrowing mortgage credit in foreign currency from Scandinavian and other banks. The effect has been one of the world's biggest property bubbles – in an economy with no means of breaking even except by loading down its real estate with more and more debt. In practice the loans took the form of mortgage borrowing from foreign banks to finance a real estate bubble – and their import dependency on foreign suppliers.

So instead of helping it and other post-Soviet nations develop self-reliant economies, the West has viewed them as economic oysters to be broken up to indebt them in order to extract interest charges and capital gains, leaving them empty shells. This policy crested on January 26, 2009, when Joaquin Almunia of the European Commission wrote a letter to Latvia's Prime Minister spelling out the terms on which Europe will bail out the Swedish and other foreign banks operating in Latvia – at Latvia's own expense:

Extended assistance is to be used to avoid a balance of payments crisis, which requires … restoring confidence in the banking sector [now entirely foreign owned], and bolstering the foreign reserves of the Bank of Latvia. This implies financing … outstanding government debt repayments (domestic and external). And if the banking sector were to experience adverse events, part of the assistance would be used for targeted capital infusions or appropriate short-term liquidity support. However, financial assistance is not meant to be used to originate new loans to businesses and households. …

… it is important not to raise ungrounded expectations among the general public and the social partners, and, equally, to counter misunderstandings that may arise in this respect. Worryingly, we have witnessed some recent evidence in Latvian public debate of calls for part of the financial assistance to be used inter alia for promoting export industries or to stimulate the economy through increased spending at large. It is important actively to stem these misperceptions.

Riots broke out last week, and protesters stormed the Latvian Treasury. Hardly surprising! There is no attempt to help Latvia develop the export capacity to cover its imports. After the domestic kleptocrats, foreign banks and investors have removed their funds from the economy, the Latvian lat will be permitted to depreciate. Foreign buyers then can come in and pick up local assets on the cheap once again.

The practice of European banks riding the crest of the post-Soviet real estate bubble is backfiring to wreck the European economies that have engaged in this predatory lending to neighboring economies as well. As one reporter has summarized:

In Poland 60 percent of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not. Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks.

This was the West's alternative to Stalinism. It did not help these countries emulate how Britain and America got rich by protectionist policies and publicly nurtured industrialization and infrastructure spending. Rather, the financial rape and industrial dismantling of the former Soviet economies was the most recent exercise in Western colonialism. At least U.S. investors were smart enough to stand clear and merely ride the stock market run-up before jumping ship.

But now, the government's plan to "save" the economy is to "save the banks," along similar lines to the West trying to save its banks from their adventure in the post-Soviet economies. This is the basic neoliberal economic plan, after all. The U.S. economy is about to be "post-Sovietized."

The U.S. giveaway to banks, masquerading as "help for troubled homeowners"

The Obama bank bailout is arranged much like an IMF loan to support the exchange rate of foreign currency, but with the Treasury supporting financial asset prices for U.S. banks and other financial institutions. Instead of banks and Oligarchs abandoning the dollar, the aim is to enable them to dump their bad mortgages and CDOs and get domestic Treasury bonds. Private-sector debt will be moved onto the U.S. Government balance sheet, where "taxpayers" will bear losses – mainly labor not Wall Street, inasmuch as the financial sector has been freed of income-tax liability by the "small print" in last fall's Paulson-Bush bailout package. But at least the U.S. Government is handling the situation entirely in domestic dollars.

As in Third World austerity programs, the effect of keeping the debts in place at the "real" economy's expense will be to shrink the domestic U.S. market – while providing opportunities for hedge funds to pick up depreciated assets cheaply as the federal government, states and cities sell them off. This is called letting the banks "earn their way out of debt." It's strangling the "real" economy, because not a dollar of the government's response has been devoted to reducing the overall debt volume. ...

U.S./Post-Soviet Convergence?

It may be time to look once again at what Larry Summers and his Rubinomics gang did in Russia in the mid-1990s and to Third World countries during his tenure as World Bank economist to see what kind of future is being planned for the U.S. economy over the next few years. Throughout the Soviet Union the neoliberal model established "equilibrium" in a way that involved demographic collapse: shortening life spans, lower birth rates, alcoholism and drug abuse, psychological depression, suicides, bad health, unemployment and homelessness for the elderly (the neoliberal mode of Social Security reform).

Back in the 1970s, people speculated whether the US and Soviet economies were converging. Throughout the 20th century, of course, everyone expected government regulation, infrastructure investment and planning to increase. It looked like the spread of democratically elected governments would go hand in hand with people voting in their own economic interest to raise living standards, thereby closing the inequality gap.

This is not the kind of convergence that has occurred since 1991. Government power is being dismantled, living standards have stagnated and wealth is concentrating at the top of the economic pyramid. Economic planning and resource allocation has passed into the hands of Wall Street, whose alternative to Hayek's "road to serfdom" is debt peonage for the economy at large. There does need to be a strong state, to be sure, to keep the financial and real estate rentier power in place. But the West's alternative to the old Soviet bureaucracy is a financial planning. In place of a political overhead, we have a financial and real estate overhead.

Stalinist Russia and Maoist China achieved high technology without land-rent, monopoly rent and interest overhead. This purging of rentier income was the historical task of classical political economy, and it became that of socialism. The aim was to create a Clean Slate financially, bringing prices in line with technologically necessary costs of production. The aim was to provide everyone with the fruits of their labor rather than letting banks and landlords siphon off the economic surplus.

Ideas of economic efficiency and "wealth creation" today are an utterly different kind of liberalism and "free markets." Commercial banks lend money not to increase production but to inflate asset prices. Some 70 per cent of bank loans are mortgage loans for real estate, and most of the rest is for corporate takeovers and raids, to finance stock buy-backs or simply to pay dividends. Asset-price inflation obliges people to go deeper into debt than ever before to obtain access to housing, education and medical care. The economy is being "financialized," not industrialized. This has been the plan as much for the post-Soviet states as for North America, Western Europe and the Third World. ...

Today it is easier to see that the Western economies cannot go on the way they have been. They have reached the point where the debts exceed the ability to pay. Instead of recognizing this fact and scaling debts back into line with the ability to pay, the Obama-Geithner plan is to bail out the big banks and hedge funds, keeping the volume of debt in place and indeed, growing once again through the "magic of compound interest." The result can only be an increasingly extractive economy, until households, real estate and industrial companies, states and cities, and the national government itself is driven into debt peonage.

The alternative is a century and a half old, and emerged out of the ideals of the classical economic doctrines of Adam Smith, David Ricardo, John Stuart Mill, and the last great classical economist, Marx. Their common denominator was to view rent and interest are extractive, not productive. Classical political economy and its successor Progressive Era socialism sought to nationalize the land (or at least to fully tax its rent as the fiscal base). Governments were to create their own credit, not leave this function to wealthy elites via a bank monopoly on credit creation. So today's neoliberalism paints a false picture of what the classical economists envisioned as free markets. They were markets free of economic rent and interest (and taxes to support an aristocracy or Oligarchy). Socialism was to free economies from these overhead charges. Today's Obama-Geithner rescue plan is just the reverse.

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be reached via his website, mh@michael-hudson.com

(6) Joseph Stiglitz on the IMF Riot; he was sacked by the World Bank

The Globalizer Who Came In From The Cold

by Gregory Palast

September 3, 2001

http://www.twf.org/News/Y2001/0903-Economist.html

"It has condemned people to death," the former apparatchik told me. It was like a scene out of Le Carre. The brilliant old agent comes in from the cold, crosses to our side and in hours of debriefing, empties his memory of horrors committed in the name of a political ideology he now realizes has gone rotten.

But this was a far bigger catch than some used Cold War spy. Joseph Stiglitz was Chief Economist of the World Bank. To a great extent, the new world economic order was his theory come to life.

He is in Washington for this week's Spring Ministerial [1], the big confab of the World Bank and the International Monetary Fund. But instead of chairing the meetings of ministers and central bankers, Stiglitz was kept outside the blue police cordons the same as the nuns carrying a large wooden cross, the Bolivian union leaders, the parents of AIDS victims and the other 'anti-globalization' protesters.

Two years ago, the World Bank fired Stiglitz. He was not allowed quiet retirement; the US Treasury Secretary demanded a public excommunication for Stiglitz' having expressed his first mild dissent from globalization World Bank style.

Here in Washington we completed the last of several hours of exclusive interviews with Stiglitz for The Observer and BBC TV's Newsnight about the real, inside workings of the IMF, World Bank, and the bank's 51% owner, the US Treasury.

And here, from sources unnamable (not Stiglitz), we obtained a cache of documents marked, "confidential," "restricted," and "not otherwise (to be) disclosed without World Bank authorization."

Stiglitz helped translate one from bureaucratise, a "Country Assistance Strategy." There's an Assistance Strategy for every poorer nation, designed, says the World Bank, after careful in-country investigation. But according to insider Stiglitz, the Bank's staff 'investigation' consists of close inspection of a nation's 5-star hotels. It concludes with the Bank staff meeting a begging, busted finance minister who is handed a 'restructuring agreement' pre-drafted for his 'voluntary' signature.

Each nation's economy is individually analyzed, then, says Stiglitz, the Bank hands every minister the same exact four-step program.

Step One is Privatisation - which Stiglitz said could more accurately be called, 'Briberisation.'

Rather than object to the sell-offs of state industries, he said national leaders - using the World Bank's demands to silence local critics - happily flogged their electricity and water companies. "You could see their eyes widen" at the prospect of 10% commissions paid to Swiss bank accounts for simply shaving a few billion off the sale price of national assets.

And the US government knew it, charges Stiglitz, at least in the case of the biggest 'briberization' of all, the 1995 Russian sell-off. "The US Treasury view was THIS WAS GREAT as we wanted Yeltsin re-elected. We DON'T CARE if it's a corrupt election. We WANT the money to go to Yeltzin" via kick-backs for his campaign.

Stiglitz is no conspiracy nutter ranting about Black Helicopters. The man was INSIDE the game, at that time a member of Bill Clinton's cabinet as Chairman of the President's council of economic advisors.

Most ill-making for Stiglitz is that the US-backed oligarchs stripped Russia's industrial assets, with the effect that the corruption scheme cut national output nearly in half.

After briberisation, Step Two of the IMF/World Bank one-size-fits-all rescue-your-economy plan is 'Capital Market Liberalization.' In theory, capital market deregulation allows investment capital to flow in and out.

Unfortunately, as in Indonesia and Brazil, the money simply flowed out and out. Stiglitz calls this the "Hot Money" cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation's reserves can drain in days, hours. And when that happens, to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%.

"The result was predictable," said Stiglitz of the Hot Money tidal waves in Asia and Latin America. Higher interest rates demolished property values, savaged industrial production and drained national treasuries. At this point, the IMF drags the gasping nation to Step Three: Market-Based Pricing, a fancy term for raising prices on food, water and cooking gas. This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls, 'The IMF riot.'

The IMF riot is painfully predictable. When a nation is, "down and out, [the IMF] takes advantage and squeezes the last pound of blood out of them. They turn up the heat until,finally, the whole cauldrin blows up," as when the IMF eliminated food and fuel subsidies for the poor in Indonesia in 1998.

Indonesia exploded into riots, but there are other examples - the Bolivian riots over water prices last year and this February, the riots in Ecuador over the rise in cooking gas prices imposed by the World Bank. You'd almost get the impression that the riot is written into the plan.

And it is. What Stiglitz did not know is that, while in the States, Newsnight obtained several documents from inside the World Bank, stamped over with those pesky warnings, "confidential," "restricted," "not to be disclosed." In one, last year's Interim Country Assistance Strategy for Ecuador, the Bank several times refers - with cold accuracy - that the plans could be expected to spark, "social unrest," to use their bureaucratic term for a nation in flames.

That's not surprising. The secret report notes that the plan to make the US dollar Ecuador's currency has pushed 51% of the population below the poverty line. The World Bank "Assistance" plan simply calls for facing down civil strife and suffering with, "political resolve" - and still higher prices.

The IMF riots (and by riots I mean peaceful demonstrations dispersed by bullets, tanks and teargas) cause new panicked flights of capital and government bankruptcies. This economic arson has it's bright side - for foreigners, who can then pick off remaining assets, such as the odd mining concession or port, at fire sale prices.

Stiglitz notes that the IMF and World Bank are not heartless adherents to market economics. While stopping Indonesia from subsidizing food purchases, "when the banks need a bail-out, intervention (in the market) is welcome."

The IMF scrounged up nearly $100 Billion to save Indonesia's financiers and, by extension, the US and European banks from which they had borrowed.

A pattern emerges. There are lots of losers in this system but one clear winner: the Western banks and US Treasury, making the big bucks off this crazy new international capital churn. Stiglitz told me about his unhappy meeting, early in his World Bank tenure, with Ethopia's new democratic president. The World Bank and IMF had ordered Ethiopia to divert aid money to its reserve account at the US Treasury, which pays a pitiful 4% return, while the nation borrowed US dollars at 12% to feed it's population.

Now we arrive at Step Four of what the IMF and World Bank call their "poverty reduction strategy": Free Trade. This is free trade by the rules of the World Trade Organization and World Bank, which Stiglitz the insider likens to the Opium Wars. "That too was about opening markets," he said.

As in the 19th century, Europeans and Americans today are kicking down the barriers to sales in Asia, Latin American and Africa, while barricading our own markets against Third World agriculture.

In the Opium Wars, the West used military blockades to force open markets for unbalanced trade. Today, the World Bank can order a financial blockade which is just as effective and sometimes just as deadly.

Stiglitz is particularly emotional over the WTO's intellectual property rights treaty which goes by the acronym TRIPS. It is here, says the economist, that the new global order has "condemned people to death" by imposing impossible tariffs and tributes to pay to pharmaceutical companies for branded medicines. By the way, don't be confused by the mix of the IMF, World Bank and WTO.

They are interchangeable masks of a single governance system. They have locked themselves together by what are unpleasantly called, "triggers."

Taking a World Bank loan for a school 'triggers' a requirement to accept every 'conditionality' - they average 111 per nation - laid down by both the World Bank and IMF, including trade policies more punitive than WTO.

Stiglitz greatest concern is that World Bank plans, devised in secrecy and driven by an absolutist ideology, are never open for discourse or dissent. Despite the West's push for elections throughout the developing world, the so-called Poverty Reduction Programs "undermine democracy."

And they don't work. Black Africa's productivity under the guiding hand of IMF structural "assistance" has gone to hell in a handbag, the continent's income dropping 23 percent in the past two decades.

Did any nation avoid this fate? Yes, said Stiglitz, identifying Botswana. Their trick? "They told the IMF to go packing." So then I turned on Stiglitz. OK, Mr Smart-Guy Professor, how would YOU help developing nations? Stiglitz proposed radical land reform, an attack at the heart of "landlordism," on the usurious rents charged by the propertied oligarchies worldwide, typically 50% of a tenant's crops. So I had to ask the professor: as you were top economist at the World Bank, why didn't the Bank follow your advice?

"If you challenge [land ownership], that would be a change in the power of the elites. That's not high on their agenda." Apparently not.

Ultimately, what drove him to put his job on the line was the failure of the banks and US Treasury to change course when confronted with the crises -failures and suffering perpetrated by their four-step monetarist mambo.

Every time their free market solutions failed, the IMF simply demanded more free market policies.

"It's a little like the Middle Ages," the insider told me, "When the patient died they would say, 'well, he stopped the bloodletting too soon, he still had a little blood in him.'"

So the solution to world poverty and crisis, then, is simple: remove the bloodsuckers.

---
1. First published in The Observer, April 29, 2001.

Kim Murphy, "Perle and U.S. pushing for status quo with Jewish oligarchs in Russia," Los Angeles Times, July 23, 2003

[They are Mikhail Brudno and Vladimir Dubov, Israeli-Russian partners in the giant Russian oil company Yukos. They, along with a number of their cronies, are wanted by Interpol for allegedly bilking Russian citizens out of billions of dollars. To elude Russian prosecution, these men have taken up residence in Israel.

As the Israeli newspaper Ha'aretz explains: "In recent years Russian authorities began investigating [Yukos], its managers and major stockholders, many of whom are of Jewish origin. The probes caused several of the managers to flee to Israel, and resulted in Khodorkovski's [Yukos CEO] arrest and a Kremlin attack on Yukos."

The fact is that Israel is an important factor in the ongoing, nation-shaking power struggle now going on in Russia. Yet AP virtually never reports this connection. For example, a few months ago in a typical AP story on this power struggle, "Report: Russia again charges Berezovsky," Moscow AP Bureau Chief Judith Ingram makes no mention anywhere that Berezovsky is an Israeli citizen, or of his many connections to Israel.--Alison Weir, "Russia, Israel and Media Omissions," CounterPunch, February 17, 2005]

Copyright © 2001 Gregory Palast -- Gregory Palast is an investigative reporter for London's Sunday paper, The Observer, and BBC TV's Newsnight. Read, view or subscribe to his column at www.GregPalast.com.

(7) Jeffrey Sachs says Rich must pay more Tax; Obama admin is filled with Wall Street bankers

Sachs & Soros seem to have changed sides since they introduced "shock therapy" - privatization, deregulation & free trade - to East Bloc countries around 1990.

http://www.project-syndicate.org/commentary/sachs173/English

America's Political Class Struggle

Jeffrey D. Sachs

2010-12-27

NEW YORK – America is on a collision course with itself. This month's deal between President Barack Obama and the Republicans in Congress to extend the tax cuts initiated a decade ago by President George W. Bush is being hailed as the start of a new bipartisan consensus. I believe, instead, that it is a false truce in what will become a pitched battle for the soul of American politics.

As in many countries, conflicts over public morality and national strategy come down to questions of money. In the United States, this is truer than ever. The US is running an annual budget deficit of around $1 trillion, which may widen further as a result of the new tax agreement. This level of annual borrowing is far too high for comfort. It must be cut, but how?

The problem is America's corrupted politics and loss of civic morality. One political party, the Republicans, stands for little except tax cuts, which they place above any other goal. The Democrats have a bit wider set of interests, including support for health care, education, training, and infrastructure. But, like the Republicans, the Democrats, too, are keen to shower tax cuts on their major campaign contributors, predominantly rich Americans.

The result is a dangerous paradox. The US budget deficit is enormous and unsustainable. The poor are squeezed by cuts in social programs and a weak job market. One in eight Americans depends on Food Stamps to eat. Yet, despite these circumstances, one political party wants to gut tax revenues altogether, and the other is easily dragged along, against its better instincts, out of concern for keeping its rich contributors happy.

This tax-cutting frenzy comes, incredibly, after three decades of elite fiscal rule in the US that has favored the rich and powerful. Since Ronald Reagan became President in 1981, America's budget system has been geared to supporting the accumulation of vast wealth at the top of the income distribution. Amazingly, the richest 1% of American households now has a higher net worth than the bottom 90%. The annual income of the richest 12,000 households is greater than that of the poorest 24 million households.

The Republican Party's real game is to try to lock that income and wealth advantage into place. They fear, rightly, that sooner or later everyone else will begin demanding that the budget deficit be closed in part by raising taxes on the rich. After all, the rich are living better than ever, while the rest of American society is suffering. It makes sense to tax them more.

The Republicans are out to prevent that by any means. This month, they succeeded, at least for now. But they want to follow up their tactical victory – which postpones the restoration of pre-Bush tax rates for a couple of years – with a longer-term victory next spring. Their leaders in Congress are already declaring that they will slash public spending in order to begin reducing the deficit.

Ironically, there is one area in which large budget cuts are certainly warranted: the military. But that is the one item most Republicans won't touch. They want to slash the budget not by ending the useless war in Afghanistan, and by eliminating unnecessary weapons systems, but by cutting education, health, and other benefits for the poor and working class.

In the end, I don't think they will succeed. For the moment, most Americans seem to be going along with Republican arguments that it is better to close the budget deficit through spending cuts rather than tax increases. Yet when the actual budget proposals are made, there will be a growing backlash. With their backs against the wall, I predict, poor and working-class Americans will begin to agitate for social justice.

This may take time. The level of political corruption in America is staggering. Everything now is about money to run electoral campaigns, which have become incredibly expensive. The mid-term elections cost an estimated $4.5 billion, with most of the contributions coming from big corporations and rich contributors. These powerful forces, many of which operate anonymously under US law, are working relentlessly to defend those at the top of the income distribution.

But make no mistake: both parties are implicated. There is already talk that Obama will raise $1 billion or more for his re-election campaign. That sum will not come from the poor.

The problem for the rich is that, other than military spending, there is no place to cut the budget other than in areas of core support for the poor and working class. Is America really going to cut health benefits and retirement income?  Will it really balance the budget by slashing education spending at a time when US students already are being out-performed by their Asian counterparts? Will America really let its public infrastructure continue to deteriorate? The rich will try to push such an agenda, but ultimately they will fail.

Obama swept to power on the promise of change. So far there has been none. His administration is filled with Wall Street bankers. His top officials leave to join the banks, as his budget director Peter Orszag recently did. He is always ready to serve the interests of the rich and powerful, with no line in the sand, no limit to "compromise."

If this continues, a third party will emerge, committed to cleaning up American politics and restoring a measure of decency and fairness. This, too, will take time. The political system is deeply skewed against challenges to the two incumbent parties. Yet the time for change will come. The Republicans believe that they have the upper hand and can pervert the system further in favor of the rich. I believe that they will be proved wrong.

Jeffrey D. Sachs is Professor of Economics and Director of the Earth Institute at Columbia University. He is also Special Adviser to the United Nations Secretary-General on the Millennium Development Goals.

No comments:

Post a Comment