http://www.uruknet.de/?p=m47991&hd=&size=1&l=e
Mutant Seeds for Mesopotamia by Andrew Bosworth, Ph.D. October 15, 2008
One would think that Iraqi farmers, now prospering under "freedom" and "democracy," would be able to plant the seeds of their choosing, but that choice, under little-known Order 81, would be illegal.
But first, it is important to set the context. Most people have never heard of the infamous "100 Orders," but they help explain why the majority of Iraqis remain opposed to foreign occupation. The 100 Orders allow multinational corporations to basically privatize an entire nation, and this degree of foreign and private control has not been witnessed since the days of the British East India Company and its extraterritoriality treaties.
A few examples of the 100 Orders are illuminating:
Order 39 allows for the tax-free remittance of all corporate profits.
Order 17 grants foreign contractors, including private security firms, immunity from Iraq's laws.
Orders 57 and 77 ensure the implementation of the orders by placing U.S.-appointed auditors and inspector general in every government ministry, with five-year terms and with sweeping authority over contracts, programs, employees and regulations. (1)
Back to one of the most blatant orders of all: Order 81. Under this mandate, Iraq's commercial farmers must now buy "registered seeds." These are normally imported by Monsanto, Cargill and the World Wide Wheat Company. Unfortunately, these registered seeds are "terminator" seeds, meaning "sterile." Imagine if all human men were infertile, and in order to reproduce women needed to buy sperm cells at a sperm bank. In agricultural terms, terminator seeds represent the same kind of sterility.
Terminator seeds have no agricultural value other than creating corporate monopolies. The Sierra Club, more of a mainstream "conservation" organization than a radical "environmentalist" one, makes the exact same case:"This technology would protect the intellectual property interests of the seed company by making the seeds from a genetically engineered crop plant sterile, unable to germinate. Terminator would make it impossible for farmers to save seed from a crop for planting the next year, and would force them to buy seed from the supplier. In the third world, this inability to save seed could be a major, perhaps fatal, burden on poor farmers." (2)
What makes this Order 81 even more outrageous is that Iraqi farmers have been saving wheat and barley seeds since at least 4000 BC, when irrigated agriculture first emerged, and probably even to about 8000 BC, when wheat was first domesticated. Mesopotamia's farmers have now been trumped by white-smocked, corporate bio-engineers from Florida who strive to replace hundreds of natural varieties with a handful of genetically scrambled hybrids.
Where does such hubris come from? It comes from the entire mission surrounding the invasion of Iraq, which, upon closer inspection, had been planned years in advance by a faction of "neo-cons" who adopted Leon Trotsky's glorification of the state, his theory "permanent revolution," and his goal of exporting revolution worldwide. The neo-con revolution aims to alter the economic, political and cultural foundations of nations on the other side of the planet (rejecting old-fashioned notions of self-determination, popular sovereignty and even the nation-state system). This mission includes the transformation of agriculture and the establishment of "food control" over local populations.
Order 81 fits into this revolutionary program, and it is quite diabolical upon closer inspection. First, it forces Iraq's commercial farmers to use registered terminator seeds (the "protected variety"). Then it defines natural seeds as illegal (the "infringing variety"), in a classic Orwellian turn of language.
This is so incredible that it must be re-stated: the exotic genetically scrambled seeds are the "protected variety" and the indigenous seeds are the "infringing variety."
As Jeffrey Smith explains, author of Order 81: Re-Engineering Iraqi Agriculture:
"To qualify for PVP [Plant Variety Protection], seeds have to meet the following criteria: they must be 'new, distinct, uniform and stable'... it is impossible for the seeds developed by the people of Iraq to meet these criteria. Their seeds are not 'new' as they are the product of millennia of development. Nor are they 'distinct'. The free exchange of seeds practiced for centuries ensures that characteristics are spread and shared across local varieties. And they are the opposite of 'uniform' and 'stable' by the very nature of their biodiversity." (3)
Order 81 comes with the Orwellian title of "Plant Variety Protection." Any self-respecting scientist knows, however, that imposing biological standardization accomplishes the exact opposite: It reduces biodiversity and threatens species. So Order 81 comes with an Orwellian title and consists of Orwellian provisions.
Jeffrey Smith peels away the layers of mischief behind Order 81, finding it nonsensical that six varieties of wheat have been developed for Iraq:"Three will be used for farmers to grow wheat that is made into pasta; three seed strains will be for 'breadmaking.'
Pasta? According to the 2001 World Food Programme report on Iraq, 'Dietary habits and preferences included consumption of large quantities and varieties of meat, as well as chicken, pulses, grains, vegetables, fruits and dairy products.' No mention of lasagna. Likewise, a quick check of the Middle Eastern cookbook on my kitchen shelves, while not exclusively Iraqi, reveals a grand total of no pasta dishes listed within it.
There can be only two reasons why 50 per cent of the grains being developed are for pasta. One, the US intends to have so many American soldiers and businessmen in Iraq that it is orienting the country's agriculture around feeding not 'Starving Iraqis' but 'Overfed Americans'. Or, and more likely, because the food was never meant to be eaten inside Iraq at all…" (4)
Just in case Iraqi farmer can't read, Order 81 enforces the new monopoly on seeds with the jackboot. Order 81 makes this clear in its own text, buried at the bottom of the document, as is most screw-you fine print:"The court may order the confiscation of the infringing variety as well as the materials and tools substantially used in the infringement of the protected variety. The court may also decide to destroy the infringing variety as well as the materials and tools or to dispose of them in any noncommercial purpose." (5)
Order 81 is about power and profit, but it disguises itself as humanitarian legislation.
Topping it all off, the entire document puts on rather magisterial airs. It was signed by L. Paul Bremer himself, with his own hand, and presumably with his own pen:
"Pursuant to my authority as Administrator of the Coalition Provisional Authority…"
Like the Roman Proconsuls, Paul Bremer also spent a year in the provinces, governing the so-called barbarians…
The above is an excerpt from Andrew Bosworth’s new book: Biotech Empire: The Untold Future of Food, Pills, and Sex, available at Amazon.
-Andrew Bosworth, Ph.D. is an assistant professor of Government at the University of Texas at Brownsville.
Notes
1. Uruknet Report, "Have You Ever Heard of Bremer's 100 Orders?" 11 April 2008.
2. Institutional Report, Genetic Engineering at a Historic Crossroads," The Sierra Club Genetic Engineering Committee Report, March 2001.
3. Jeffrey Smith. "ORDER 81: Re-Engineering Iraqi Agriculture - The Ultimate War Crime: Breaking the Agricultural Cycle." Global Research and The Ecologist, 27 August 2005, Vol 35, No. 1.
4. Jeffrey Smith. "ORDER 81: Re-Engineering Iraqi Agriculture - The Ultimate War Crime: Breaking the Agricultural Cycle." Global Research and The Ecologist, 27 August 2005, Vol 35, No. 1.
5 CPA/ORD/26 April 2004/81, p. 27.
Article nr. 47991 sent on 16-oct-2008 04:02 ECT
www.uruknet.info?p=47991
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of Uruknet .
Oct 21, 2008
Oct 7, 2008
Sow the wind, reap the whirlwind
The US Senate vote for the new, greatly improved, hundred page version of the Three Stooges bailout plan presented by Mr. Paulson was irrelevant.
The constitution of the United States establishes that appropriations (i.e., providing money) “appropriations bills must originate in the House"… the system was designed to require boondoggles to be approved first by those representatives who are up for election every two years.
The Senate, mostly very rich men nursing a desire to become president, like the House of Lords, is the senior body to which the appropriations of the House of Representatives, like the House of Commons, are delivered for their approval, change, or rejection, but that senior house can not, by itself, initiate spending.
That President George Bush could openly threaten to declare martial law, according to the accounts of several congressmen, is the price to be paid for not holding three dozen public hangings in Washington, DC, in having the Supreme Court halting the Florida recount, over which they had no jurisdiction, at the time of the original establishment of the Unitary Presidency in 2000, and generally acquiescing, even by silence, in all the scams that followed, of which this, “a historic swindle of the taxpayer” according to one Republican, is only the latest and largest.
Congressmen report huge numbers of outraged communications from their constituents, over ninety per cent against the bailout bill, ("Emails are running about 50-50" said one congressman "between No and Hell No.") but then nobody wants to see martial law or doubts President Bush’s willingness to declare it. So much for democracy.
“The world,” explained Iranian President Mahmoud Ahmadinejad at the UN, “no longer has the capacity to absorb fake U.S. dollars.” That may be true, but the only consistent strategy visible from America is the printing of ever larger numbers of those dollars in the faith that their acceptance can be enforced at gun point. Only the kindness of strangers stands between Wile E Coyote and the canyon floor.
Decoupled: No Asian banks have failed or needed rescue.
Reduction to farce is achieved by the slow realization by congressmen and anyone with two brain cells to rub together that the American taxpayer is not the main holder of the funny money mortgage backed securities, and the $700 billion will be paid, not to them, but straight to the main holders of those funny money securities to stop them suing the Wall Street Investment banks that sold them to them, so that the whole exercise is a kind of hush money. Indeed, suggestions have already been made that the scheme may have originated with those same holders of the funny money securities as a condition, or they would sue the investment banks. Like China, for example, who will be paid a large slice of the cash.
______________________________________________
Not One Dime! By Mike Whitney 01/10/08 - "ICH" - -- The mystery has been solved.
For nearly a year, we have been asking ourselves why the investors and foreign banks that bought up hundreds of billions of dollars of worthless mortgage-backed securities (MBS) from US investment banks have not taken legal action against these same banks or initiated a boycott of US financial products to prevent more people from getting ripped off?
Now we know the answer. It's because, behind the scenes, Henry Paulson and Co. were working out a deal to dump the whole trillion dollar mess on the US taxpayer. That's what this whole $700 billion boondoggle is all about; wiping out the massive debts that were generated in the biggest incident of fraud in history. Rep Brad Sherman explained it like this last night to Larry Kudlow:
"It (The bill) provides hundreds of billions of dollars of bailouts to foreign investors. It provides no real control of Paulson's power. There is a critique board but not really a board that can step in and change what he does. It's a $700 billion program run by a part-time temporary employee and there is no limit on million dollar a month salaries....... It's very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn't owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can't buy it. It was rejected.
"The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20th that it can't be sold to the Treasury. Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure it can happen."
So, why hasn't the Treasury Secretary explained the real purpose of the bailout to the American people? Could it be that he knows that his $700 billion bailout would end up like the Hindenburg, vanishing in sheets of flames?
This is a terrible bill, and it confers absolute authority on one of the central players in the scandal, Henry Paulson, who was the Chairman of Goldman Sachs at the time this MBS garbage was being peddled around the planet to credulous investors. Now Paulson will be in a position to buy up any "troubled asset" he that he believes could pose a threat to "financial market stability". That's just great! It is clear that Paulson will use his unchecked powers to wipe the slate clean and remove any possibility that foreign investors will take legal action against the real perpetrators; the giant Wall Street investment banks.
So, how do the American people like paying off Paulson and Co. future legal bills? Is that how taxpayer revenue should be spent instead of on education, health care and infrastructure?
There's another reason why Paulson is working so hard to pass the Bailout for Tycoons Bill; it's a windfall for the banking giants. Citi did not simply pick up Wachovia by happenstance nor did JP Morgan purchase Washington Mutual because it wanted to perform its civic duty and prevent a full-system meltdown. No way; they were clearly aware of the way the wind was blowing. In fact, neither case manages to pass the smell test.
This is from AP's Sara Lepro: "Citigroup agreed Monday to purchase Wachovia's banking operations for $2.1 billion in a deal arranged by federal regulators, making the Charlotte-based bank the latest casualty of the widening global financial crisis.
"The deal greatly expands Citigroup's retail franchise—giving it a total of more than 4,300 U.S. branches and $600 billion in deposits—and secures its place among the U.S. banking industry's Big Three, along with Bank of America Corp. and JP Morgan Chase & Co.
"But it comes at a cost: Citigroup Inc. said it will slash its quarterly dividend in half to 16 cents. It also will dilute existing shareholders by selling $10 billion in common stock to shore up its capital position.
"In addition to assuming $53 billion worth of debt, Citigroup will absorb up to $42 billion of losses from Wachovia's $312 billion loan portfolio, with the Federal Deposit Insurance Corp. agreeing to cover any remaining losses. Citigroup also will issue $12 billion in preferred stock and warrants to the FDIC.
(Ed; Here's the punch line) "The government's proposed $700 billion rescue plan for financial institution, being voted on Monday by the House of Representatives, likely will prove of added benefit to Citi. While the plan broadly aims to prevent banks from profiting on the sale of troubled assets to the government, there is an exception made for assets acquired in a merger or buyout, or from companies that have filed for bankruptcy. This could allow Citigroup to sell toxic mortgages and other assets it gained from Wachovia for a higher price than the bank actually paid for them." ("Citigroup to buy Wachovia banking operations")
Huh?!? So Citi not only gets an army of depositors (the cheapest capital available!) but, at the same time, is going to be able to dump it's mortgage-backed junk on the taxpayer? And, guess what? The JP Morgan deal looks nearly identical.
Is this "insider baseball" or not?
Does anyone want to wager that G-Sax will also get a privileged spot at the public trough sucking up billions of taxpayer dollars to patch together its tattered balance sheet?
And what will the net result of Paulson's Bailout for Fraudsters be; more consolidation of the financial industry and the utter annihilation of local and regional banks. That's a sure thing. The mom and pop banks across the country are going to take it in the stern sheets if this bill is passed. Bet on it.
The country has no time for this cynical scavenger-hunt. The system is listing badly and we have ONE chance to get this emergency bill right. There is no way an industry rep like Henry Paulson, who has spent his entire career feathering his own nest and handing out plums to his buddies, can operate in the best interests of the American people. Paulson has got to go!
According to Bloomberg News , Sept 29:
"The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression. The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.
"The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone." (Bloomberg)
Get it? The Fed has ALREADY brushed aside Congress's "No" vote and pumped money into the system; and look what happened.
Nothing!
Libor is still at historic highs, the Ted spread has widened to record levels and interbank lending is grinding to a standstill. There's a run on the money markets that is reducing the ability of businesses to turn over short term debt. The system is shutting down, folks, and Paulson's snake oil won't help. Why throw another $700 billion down a rathole? 400 reputable economists--not the "faith based" industry hacks that work for the Bush administration--are opposed to this bailout. It has to be stopped.
This is a "real time" meltdown and it requires real solutions, not bailouts for foreign creditors and Wall Street Goliaths. (Foreign victims of this scam will have to sue the perpetrators not the US taxpayer) As Nouriel Roubini, chairman of Roubini Global Economics, points out, we are on the verge of the "mother of all bank runs", a cross-border savaging of reserves that would crash the entire financial system. Here's Roubini on the next shoe to drop:
"The next step of this panic could become the mother of all bank runs, i.e. a run on the trillion dollar plus of the cross border short-term interbank liabilities of the US banking and financial system as foreign banks as starting to worry about the safety of their liquid exposures to US financial institutions; such a silent cross border bank run has already started as foreign banks are worried about the solvency of US banks and are starting to reduce their exposure. And if this run accelerates - as it may now - a total meltdown of the US financial system could occur. We are thus now in a generalized panic mode and back to the risk of a systemic meltdown of the entire financial system. And US and foreign policy authorities seem to be clueless about what needs to be done next. Maybe they should today start with a coordinated 100 bps reduction in policy rates in all the major economies in the world to show that they are starting to seriously recognize and address this rapidly worsening financial crisis." (Nouriel Roubini's EconoMonitor)
We have no time for Paulson's self serving shenanigans. This is not how one goes about recapitalizing the banking system or bringing stability to the financial system. It's time to get rid of the lobbyists and banking vermin and bring in the economists and the people with real experience. Paulson's plan is loser. Not one dime should go to this latest Wall Street swindle. No bailout!
_______________________________________________
THE AUSTRIAN SCHOOL AND THE MELTDOWN by Dr. Ron Paul
The financial meltdown the economists of the Austrian School predicted has arrived.
We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy – all the capital misallocation, all the malinvestment – and prevent the market’s attempt to re-establish rational pricing of houses and other assets.
[On September 25] the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I’d only be repeating what I’ve been saying over and over – not just for the past several days, but for years and even decades.
Still, at least a few observations are necessary.
The president assures us that his administration “is working with Congress to address the root cause behind much of the instability in our markets.” Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?
We are told that “low interest rates” led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments – investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.
Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or “wildcat capitalism” (as if we actually have a pure free market!).
Speaking about Fannie Mae and Freddie Mac, the president said: “Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.”
Doesn’t that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn’t that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn’t the federal government shown that the “many” who “believed they were guaranteed by the federal government” were in fact correct?
Then come the scare tactics. If we don’t give dictatorial powers to the Treasury Secretary “the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet.” Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.
It’s the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.
The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.
F.A. Hayek won the Nobel Prize for showing how central banks’ manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day – and which are being proposed, just as destructively, in our own:
Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.
To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection – a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.
The only thing we learn from history, I am afraid, is that we do not learn from history.
The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
Oh, and did you notice that the bailout is now being called a “rescue plan”? I guess “bailout” wasn’t sitting too well with the American people.
The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you’re supposed to have a voice in all this actually seems to annoy them.
I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects – the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.
H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.
In liberty, Ron Paul for The Daily Reckoning
Editor’s Note: Congressman Ron Paul of Texas enjoys a national reputation as the premier advocate for liberty in politics today. Dr. Paul is the leading spokesman in Washington for limited constitutional government, low taxes, free markets, and a return to sound monetary policies based on commodity-backed currency.
Dr. Paul is known among both his colleagues in Congress and his constituents for his consistent voting record in the House of Representatives. He never votes for legislation unless the proposed measure is expressly authorized by the Constitution. In the words of former Treasury Secretary William Simon, Dr. Paul is the “one exception to the Gang of 535” on Capitol Hill.
The financial meltdown the economists of the Austrian School predicted has arrived.
We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy – all the capital misallocation, all the malinvestment – and prevent the market’s attempt to re-establish rational pricing of houses and other assets.
[On September 25] the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I’d only be repeating what I’ve been saying over and over – not just for the past several days, but for years and even decades.
Still, at least a few observations are necessary.
The president assures us that his administration “is working with Congress to address the root cause behind much of the instability in our markets.” Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?
We are told that “low interest rates” led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments – investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.
Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or “wildcat capitalism” (as if we actually have a pure free market!).
Speaking about Fannie Mae and Freddie Mac, the president said: “Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.”
Doesn’t that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn’t that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn’t the federal government shown that the “many” who “believed they were guaranteed by the federal government” were in fact correct?
Then come the scare tactics. If we don’t give dictatorial powers to the Treasury Secretary “the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet.” Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.
It’s the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.
The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.
F.A. Hayek won the Nobel Prize for showing how central banks’ manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day – and which are being proposed, just as destructively, in our own:
Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.
To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection – a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.
The only thing we learn from history, I am afraid, is that we do not learn from history.
The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
Oh, and did you notice that the bailout is now being called a “rescue plan”? I guess “bailout” wasn’t sitting too well with the American people.
The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you’re supposed to have a voice in all this actually seems to annoy them.
I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects – the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.
H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.
In liberty, Ron Paul for The Daily Reckoning
Editor’s Note: Congressman Ron Paul of Texas enjoys a national reputation as the premier advocate for liberty in politics today. Dr. Paul is the leading spokesman in Washington for limited constitutional government, low taxes, free markets, and a return to sound monetary policies based on commodity-backed currency.
Dr. Paul is known among both his colleagues in Congress and his constituents for his consistent voting record in the House of Representatives. He never votes for legislation unless the proposed measure is expressly authorized by the Constitution. In the words of former Treasury Secretary William Simon, Dr. Paul is the “one exception to the Gang of 535” on Capitol Hill.
_________________________________________________
Appendix - Chan Akya's table
http://www.atimes.com/atimes/Global_Economy/JJ04Dj01.html
In contrast, the combined assets/gross domestic product (GDP) of the top three US banks is only about 35%. Isn't that wonderful? Thanks to decades of mollycoddling their domestic industries, you now have a situation where European banks - many of whom Asians haven't even heard of - are now bigger than the GDPs of their home countries. Why does the ratio of assets over GDP matter? Because to pay for failed banks to foreign creditors and all that, governments have to run a surplus to GDP for a while.
Let's take an example. Iceland moved to guarantee its banking sector even as its top three banks are about 13 times the size of its GDP. In other words, if the government runs a budget surplus of 10% of GDP (massively contractionary fiscal policy), it would still take a trifling 130 years or so to pay for all its borrowings needed. For Switzerland, this figure is a mere 100 years, while for those like Belgium, that ratio stands at some 75 years. Remember, these are just figures for the bank losses, not counting all the other stuff that will be lost as a result of the failure of the banking system; for example the industrial base, trade and so on.
Oct 1, 2008
La citta dolente
A point of light has emerged from the US Treasury as to how they decided on the figure of $700 billion for the bailout plan. This was not decided on any "data points," apparently, that is, no one sat down and figured out what might be a reasonable price to pay for all that toxic mortgage backed debt. Instead, they simply said "Think of a really big number,” which $700 billion certainly is, roughly equal to spending a million dollars every day from the birth of Christ until now, ($732 billion.)
America's internal and external debt exceeds $60 trillion, over 400% of the country's annual GDP of a bit over $14 trillion.
At last count the amount borrowed by the US government between 2000 and 2008 at $1.35 trillion is greater that the amount borrowed by the US government between 1776 and 2000 at $1.25 trillion.
According to figures released in the quarterly review of the Bank for International Settlements (pp A103) in September the total notional amount of outstanding derivatives in all categories rose 15% to a mindboggling $596 TRILLION as of December 2007.
Arithmetic is as unforgiving as the desert or the ice sheet. Plato was right. Check Jack London’s story “To light a fire.”
The cockles of the heart warm to the Pathans, with air strikes called down on their wedding parties by red haired twerps, even of lofty parentage. Why exactly we’re there for some guy who left with no forwarding address is a question too obvious to have loomed yet, but at least the Pakistanis are firing back. The Hindu Kush is about the last place on earth I’d choose to fight in and the Pathans the very last people I’d want to be fighting. Read your Kipling. The Pathans haven’t changed; they’ve just acquired a lot more to take revenge for.
Republicans calling the Three Stooges bailout plan “a historic swindle of the taxpayer” leaves me without a lot to add. I’d always point to the US reneging on its promise to remove the North Koreans from the Sponsors of Terrorism list, resulting in the NK’s rebuilding the nuclear plant they’d demolished, as the true root of the problem, destroying what was a lonely looking but genuine triumph of diplomacy. Bad faith is not a foundation for anything except extreme caution, and perhaps sterner measures, in dealing with serial scam artists. The financial mess is the same translated into money.
I’m always fascinated by the fact that you can buy a Klashnikov and ammo for about $10 almost anywhere in Africa, but you can’t get a decent meal for ten times that amount within a day’s travel. Is that our future I’m looking at?
Meanwhile, China, which does nothing by halves, has taken off all of this week to celebrate Chinese national day, a period of rest and relaxation after recent efforts. Stockmarkets are closed, and so no hints of future action can be gained from there. About a quarter of humanity is celebrating Eid Ul-Fitri, the feast at the end of Ramadan. Eid mubarak. Happy Feast.
Some elements of the bail out plan are quite sensible. AIG is an enormous insurance company with business all over the world, and working one’s way through all their divisions and selling them off to other insurance companies should produce a healthy dollop of capital. It is, of course, the equivalent of selling the family silver but the Brits have been doing that for years. The BBC even has a long running program where you can watch people auctioning off their treasures to buy a video camera.
On the other hand, the revelation by Mr. Nuri Al-Maliki, prime minister of Iraq, that in recent negotiations with the Americans on the end date for the completed withdrawal of all US forces from Iraq, the US pushed hard to move this end date backward, i.e., from 2010 to 2011, by a full year “because of domestic political considerations in the US,” marks a new honest low. Just how much “blood and treasure,” American and Iraqi, those domestic considerations in the US would consume over a full year is clearly not a priority consideration.
Ignore the Puritans reaching for your guilt buttons. The adulterous lovers drift on the winds of their passions in Limbo, the threshold of Hell, but are not involved in this.
“We are going” says Mr. Dante Alighieri, of Florence, Italy “down into the suffering city, among the lost people, who cry for the second death eternally.”
The “second death” does not come, of course. “After the first death there is no other.”
America's internal and external debt exceeds $60 trillion, over 400% of the country's annual GDP of a bit over $14 trillion.
At last count the amount borrowed by the US government between 2000 and 2008 at $1.35 trillion is greater that the amount borrowed by the US government between 1776 and 2000 at $1.25 trillion.
According to figures released in the quarterly review of the Bank for International Settlements (pp A103) in September the total notional amount of outstanding derivatives in all categories rose 15% to a mindboggling $596 TRILLION as of December 2007.
Arithmetic is as unforgiving as the desert or the ice sheet. Plato was right. Check Jack London’s story “To light a fire.”
The cockles of the heart warm to the Pathans, with air strikes called down on their wedding parties by red haired twerps, even of lofty parentage. Why exactly we’re there for some guy who left with no forwarding address is a question too obvious to have loomed yet, but at least the Pakistanis are firing back. The Hindu Kush is about the last place on earth I’d choose to fight in and the Pathans the very last people I’d want to be fighting. Read your Kipling. The Pathans haven’t changed; they’ve just acquired a lot more to take revenge for.
Republicans calling the Three Stooges bailout plan “a historic swindle of the taxpayer” leaves me without a lot to add. I’d always point to the US reneging on its promise to remove the North Koreans from the Sponsors of Terrorism list, resulting in the NK’s rebuilding the nuclear plant they’d demolished, as the true root of the problem, destroying what was a lonely looking but genuine triumph of diplomacy. Bad faith is not a foundation for anything except extreme caution, and perhaps sterner measures, in dealing with serial scam artists. The financial mess is the same translated into money.
I’m always fascinated by the fact that you can buy a Klashnikov and ammo for about $10 almost anywhere in Africa, but you can’t get a decent meal for ten times that amount within a day’s travel. Is that our future I’m looking at?
Meanwhile, China, which does nothing by halves, has taken off all of this week to celebrate Chinese national day, a period of rest and relaxation after recent efforts. Stockmarkets are closed, and so no hints of future action can be gained from there. About a quarter of humanity is celebrating Eid Ul-Fitri, the feast at the end of Ramadan. Eid mubarak. Happy Feast.
Some elements of the bail out plan are quite sensible. AIG is an enormous insurance company with business all over the world, and working one’s way through all their divisions and selling them off to other insurance companies should produce a healthy dollop of capital. It is, of course, the equivalent of selling the family silver but the Brits have been doing that for years. The BBC even has a long running program where you can watch people auctioning off their treasures to buy a video camera.
On the other hand, the revelation by Mr. Nuri Al-Maliki, prime minister of Iraq, that in recent negotiations with the Americans on the end date for the completed withdrawal of all US forces from Iraq, the US pushed hard to move this end date backward, i.e., from 2010 to 2011, by a full year “because of domestic political considerations in the US,” marks a new honest low. Just how much “blood and treasure,” American and Iraqi, those domestic considerations in the US would consume over a full year is clearly not a priority consideration.
Ignore the Puritans reaching for your guilt buttons. The adulterous lovers drift on the winds of their passions in Limbo, the threshold of Hell, but are not involved in this.
“We are going” says Mr. Dante Alighieri, of Florence, Italy “down into the suffering city, among the lost people, who cry for the second death eternally.”
The “second death” does not come, of course. “After the first death there is no other.”
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