DR. KURT RICHEBACHER says

Dr. Richebacher’s words . . .

Dr.Kurt Richebacher“All this emphasis on statistics and calculations…” he went on, rapping his silver-handled cane on the table for emphasis, “without a proper theory, it is all nonsense. And your economists seem to have no theory at all… they just think they can manipulate the system in order to get whatever outcome they want.

They think economic growth comes from consumer spending and that they can control consumer spending by adjusting lending rates. It is unbelievable that anyone takes this seriously. It is capital formation that really matters. A rich society is one with a great stock of capital… one that builds capital and puts it to work to create more capital. A rich society is not one where people consume. Just the opposite.

It is not what is consumed that creates wealth; it is what is NOT consumed. Yet, all the Anglo-Saxons focus on motivating consumers to consume. And now they are consuming more than they make. I tell you, in 70 years of studying economics, I have never seen such nonsense.”

http://richebacher.com

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THE SHOCK DOCTRINE

Jane SmileyJane Smiley, Pulitzer Prize-Winning Novelist and Essayist wrote, in the Huffington Post, September, 2007,  a brief synopsis of  Naomi Klein’s new book, The Shock Doctrine.  I have excerpted Jane’s writing in that article to give a short trailer of Naomi Klein’s book.

As an introduction, The Shock Doctrine is a critical review of the use and consequences of free-market economics. It takes its title from the application of shock therapy to bring economic transformation, shock and awe, the military strategy of Donald Rumsfeld used in the invasion of Iraq, but also elsewhere, and of electricshocks and the use of torture to sustain authoritarian governments.

And now, here is and excerpt from Ms Smiley’s article on the subject. ~ daniel w. jacobs

“Her thesis is this (and if I am slightly inaccurate, blame me, not Naomi): In the fifties and sixties in the US, at least two lines of thought converged. One was about how to change people’s minds without leaving marks and the other was about what was the best way of organizing a given economy. The first grew out of experiments in psychological torture (whoops, I mean electroshock therapy) run by Ewen Cameron in the late 1940s. The theory was that patients could be rid of mental illnesses by “regressing” them to an infantile state, attaining a “clean slate” upon which new patterns of behavior and thought would be etched. Cameron used both electroshock and powerful drugs to attain his clean slate, having no actual knowledge of the chemistry of the brain or how it works — in other words, he was operating in accordance with a metaphor. The result of Cameron’s experiments, for the patients, was often considerable loss of short-term and even long-term memory and a subsequent lifelong feeling of “blankness” on the part of the patients (apparently, later refinements of electroshock techniques have mitigated these effects). In the 1950s, the CIA redirected these techniques toward torture of political opponents, allegedly to find out information, but really to test the techniques themselves (hello, Jose Padilla!).

At the same time, Milton Friedman was coming up with the idea that if only an economy could be purified of any kind of restraints on the free market (for example labor unions or socialized medicine or history), then the free market would be able to perfectly gauge the value of any type of good or service, and therefore an economy would balance itself, and, most importantly, inflation would be controlled (also, as you can see, a metaphor, or, perhaps, an extended analogy).

According to Klein, it soon became apparent that all-powerful shocks to a system had a similar effect, whether the system was a human body or a national body, and this was to temporarily disable the system’s defenses. The US government, the CIA, and the free market economists began to act on this insight, to collude in larger experiments. The first of these was the right-wing coup, in Chile, led by Augusto Pinochet, in 1973. At the time, Chile had a functioning leftist government and economy, and the voters had already rejected Friedman’s pure free market troika: privatization of government functions, an end to social spending, and deregulation.The new economy was dependent upon outside investors and highly profitable to them — let’s call that the allure of globalization. Pinochet set about instilling terror in the population (that’s the shock therapy) using death squads, exemplary killings, and torture. Taking advantage of this, the economists installed the new free market way of doing things within days of the coup. But Friedman’s ideas did not work — inflation rose. In the eighties, the Chilean government tried again, this time by inducing a profound economic crash — essentially impoverishing the populace in order to bring them to heel. Ultimately, the Chilean “miracle” (Friedman’s term) did nothing for the population, but it did enrich the top ten per cent and put 45% below the poverty line. It turns out that as far as the economists were concerned, this was a good thing.

The Shock Doctrine traces what the US, the CIA, the economists, the Neocons, and the multinational corporations learned from the Chilean experiment and subsequent ones (Argentina, Uruguay, Brazil, Poland, Russia, China, England) and finally makes its way to Iraq (this is a 590 page book, and the print is small). Essentially, they learned that a small economy is easier to “regress” than a large one, that the shock has to be brutal, and that the free market doesn’t work as Friedman said it would (automatically assigning appropriate value), but that it sure does make a few people rich beyond their wildest dreams, and that these people were Friedman’s (and his students’) benefactors and paymasters. They also learned to lie lie lie in order to sell what amounts to a program of inhuman greed to voters who have other needs, wishes, and ideas.

For our purposes, the more interesting section of Klein’s book is about Iraq, where she traveled in the first year after the invasion, and this section forms part of her series of posts at the Guardian. She believes that the Iraq War was intended to not only steal Iraqi oil, but also to impose a radical free market on an unwilling populace, and that that was what was behind the installation of Bremer as the capo of Iraqi reconstruction. She believes that, thanks to the resistance of the Iraqis and their deep resentment at being used and exploited by the Americans, this effort has failed. However, a parallel effort, to shock the US economy into absolute deregulation, privatization, and an end to social spending, has been and is succeeding. What this amounts to is the fleecing of the American taxpayer in order to enrich the war making industries. The byproduct, as in Chile, is the gutting of the rule of law and the American political system as we have known it. Why did Bush and Cheney go to war? Well, where do they get their fortunes? The Shock Doctrine works perfectly for them. As for that 45% below the poverty line, well, once the globalizing manufacturers exported the well-paying US jobs, then the globalizing financiers moved in and sold the newly impoverished working class a few sub-prime mortgages guaranteed to take whatever else they had. Then the financiers screamed for a bailout, and Bernanke gave it to them. The free market, you might say, is working perfectly now, at least according to its shock principles.

So, John Dean, stop wondering what happened to your fellow Republicans. They embarked, knowingly in many cases, unknowingly in some cases, with utter indifference in still other cases, upon the destruction of the common good. They began doing this in the Cold War and kept up with it when it turned out to benefit them economically. Some of them did this because they were fearful and aggressive by nature, and hurting those outside their own families and clubs felt good, or reassuring. Some did it for money. Some did it for “patriotism.” Some did it for religion and some did it out of pure cussedness, but they did it, and they did it over time.

Klein ends her book on a hopeful note — in many places such as Chile and Lebanon, the people have learned from their experiences — they are cannier and more resistant to the shocks administered to them by Bushco and their own ruling classes. Having endured “Disaster Capitalism” for several decades, they understand their own self-interests better and aren’t as easy to fool. I would like to be as hopeful. The question, as always, with Bush and Cheney, is how far are they willing to go? And, is anyone willing to stop them? From John Dean’s article, it doesn’t sound as though it is going to be the Republicans.” ~ Jane Smiley

RUGGED INDIVIDUALISM vs PATERNAL SOCIALISM

One thing is sure, my father-in-law, Carl Whorton, had a visceral dislike for  President Herbert Hoover.Carl Whorton

Carl was a workingman who grew up in the Alabama during the great depression working in the coal mines.  He saw people who needed help very badly, sometimes nearly starving at times; and he thought that Mr. Hoover was only out for the big money guys, ignoring the rest.

Although Carl believed in hard work and independence, it became exceedingly real that feeding a young family of five is sometimes not possible even with the help of the church or other volunteerism.

I always admired that he was never shy about doing an honest day’s work for an honest days wage doing what he had to do to earn a living. He worked in the mines then moved north to Southern Michigan and worked in the factories carving out a life for himself and his family with the tools he had available.

Still, he never varied in his dislike of President Herbert Hoover; he was very clear about that. Carl may well have been spot-on in his evaluation of Herbert as many other Americans shared his opinion during the years of 1929-1933 when Hoover was President of the United States.

But to be fair, I have found a couple of probing questions that Herbert posed in a campaign speech before his election in 1929 that are as relevant today as they were in 1928.

herbert hoover

These two questions are from Herbert Hoover’s “Rugged Individualism” campaign speech (Oct 22, 1928) where he states:

“When the war closed (WWI), the most vital of all issues both in our own country and throughout the world was whether Governments should continue their wartime ownership and operation of many instrumentalities of production and distribution.

We are challenged with a peace-time choice between the American system of rugged individualism and a European philosophy of the diametrically opposed doctrines of paternalism and State socialism.”

“. . . Our American experiment in human welfare has yielded a degree of well-being unparalleled in all the world. It has come nearer to the abolition of poverty, to the abolition of fear of want than humanity has ever reached before.”

Our 31st President of the United States held the office during the worst economic times in America for the 153 years of its existence at that time as the Wall Street crash of 1929 came just eight months after he took office.  His attempts to combat the Great Depression with volunteer efforts and other impotent methods failed to change the tide of the economic downturn.  For this and other reasons, he is largely remembered among the poorest of past American Presidents.

Setting aside this historical position he occupies in the minds of many, I still credit him with two important questions; vitally relevant to our country then as they are today.

The two questions are:

1.  Whether Governments should continue their wartime ownership and operation of many instrumentalities of production and distribution.

2. Whether to continue the American system of rugged individualism or go with the European philosophy of paternalism and state socialism.

These two questions have reappeared with a vengeance with the roiling seas of tumultuous financial and economic waters in which we tread today in 2009.

Through implementation of nefarious methods ably outlined in the book by Naomi Klein, “The Shock Doctrine,” we see the current Government – through the printing press and computerized money creation and other means – gobbling up major institutions and industries of the American economy and culture; effectively owning the means of production, distribution and consumption.  Any Totalitarian dictator would be proud of the “progress” made in this direction.

The rugged individualism, whether born of necessity or design, which created an American humanistic ideal for the world, is eroding faster than ever imagined.  And the movement toward the European model of paternalism and state socialism has become a fact and a way of life in our country.  Both of these “new ideas” are promoted as humanitarian progress and “for the good of all.”  But giving away our “inalienable rights” as if they were Halloween candy has become “normal.”  Demanding that the Government do it all for us is the byword.  Freedoms once considered sacred and inviolable are thrown away and discarded like yesterday’s trash.

In other articles, I have written, “the price of freedom is never too great when the cost of indifference is so dear.” Freedom is the bedrock on which this country was founded.  It is now and has been since inception, the guidon for people of the world.  It is what is wanted at any cost and it’s need is without question.

Although the spark of freedom can be smothered, it can never fully be extinguished.  It is always lying there dormant, waiting to come back to life in spite of all attempts to dominate or eradicate it.  It cannot be killed.  There is nothing that is stronger. For freedom is an idea.  It can cut through a ten-inch inch armor plate as if it weren’t there; it knows no boundary; it is not limited by physical barriers; it is, in fact, not subject to the limitations of the physical universe in any way.

Freedom is a concept, an idea, a thought, a feeling that is invisible to the eye; it cannot be measured with any known scale, is impervious to any efforts to dissolve or destroy it.  It is not of this universe.  It can be temporarily supplanted by economic, familial, political, financial pressures, but is still always there.  It resides in the mind of mankind, and it is the goal, the purpose, the dream of any live being.

When a people align themselves with the concepts of personal freedom it does not go unnoticed; rather, it stands out like Mars at Perihelion.  The spotlight of freedom draws people to it no matter the obstacle.  You don’t have to sell people on the idea; just let them know where it can be obtained, and they will come.

America today still holds the position as the final bastion of hope for freedom in the world.  But the erosion of the position is rapidly increasing.  People in positions of power, whether by design or pressures of high office, are giving up on the concept of rugged individualism and instead, adopting the easier route of paternalism and State socialism. instead.

cross-roads(This photo,Crossroads after a night of rain” is by MARTIN LIEBERMANN. (c) by Martin Liebermann/zeitspurenare, available for purchase at  http://www.flickr.com/photos/liebermann/580181284)

This has brought us to a crossroads in history in my opinion: whether to maintain the vital, animating, activating element of humanity . . a factor of freedom; or go the way of too many in history and succumb to the acceptance of slavery.

The choice is yours.  To be free and alive or to be a slave, cared for by the State to do its bidding at its whim.

For me the answer is simple, and I know I’m not alone. I share this sentiment with my father-in-law . . . I too never wanted to be a slave.

Daniel Jacobs
(c) 2009, all rights reserved

JOHN PAULSON VS HANK PAULSON

The link cited below is to an article from government and finance series I started in 2007.  Many of my past predictions are now ‘old news’ as we’ve become as blind to the bailout numbers as we were to the deception that started them.

In fall of 2008, during the midst of the greatest financial crises the world has known, I wrote a piece entitled, “The Game is Rigged.”  In it, I put in my two-cents to expose what I saw happening with the Hank Paulson bailout plan, which only served to bully us into enriching the cabal of ‘good ‘ole boys’ composed of  Wall Street banksters, government thieves and other criminal insiders while everyone else tightens their collective belts.

The Hammerin’ Hank Paulson Plan designed a plan to use pubic funds to solve private Hammerin' Hankindiscretions, corruption, and greed.  It was embarrassingly obvious if anyone cared to look.

He presented the plan in the fall of 2008 – intimating that some unimaginable disaster would happen unless we all did exactly what Hammerin’ Hank wanted us to do –  the congress capitulated and gave the banksters more money than most of us could imagine at that time, over seven hundred billion dollars!  Now we know that was only the tip of the iceberg.

It was a classic hustle, a con perfectly executed by well-trained, experienced operatives.  The money disappeared into an invisible hole that may never be recovered.  And to add insult to injury, the perpetrators of the crime awarded themselves obscene bonuses while the Wall Street financial institutions they worked for or were in charge of ended up losing money.  At that time, it was the largest heist the world has seen.  But hang on, you ain’t seen nothing yet!

Those of us who wrote to oppose this sleight of hand rip off but those voices were largely ignored and detractor of considerably higher profile than the musings of this humble author. 

John Paulson is one of these people, a renowned investor and speculator on Wall Street.  The article to follow reveals information you need to know to survive the systemic financial risk facing us all.  Let me introduce this man if you haven’t heard of him.

John Paulson – the most successful speculator of the last 20 years – is not related to former Goldman Sachs CEO and former U.S. Treasury Secretary “Hammerin’ Hank Paulson.”

In 1994, John Paulson started a hedge fund which as of 2008 had over $36 billion in assets under its direction.  By the end of 2009, he was on the Forbes 400 list of wealthiest Americans with an estimated net worth about $12 billion.  Then, Mr. Paulson made a calculation: The supply of dollars had expanded by 120% over several months. That surely would lead to a drop in its value, and an eventual surge in inflation. “What’s the only asset that will hold value? It’s got to be gold,” Mr. Paulson has now placed more than $4 billion of his firm’s assets in the metal.

A rare insight into what John Paulson is doing with his personal money is revealing.  Apparently, his fund offers a special option whereby you can invest using gold. You convert your cash into gold and buy into the fund using bullion. When you cash out, you are paid in gold at the value it is worth that day. John Paulson is 100% invested in this style.

“When the world’s most successful speculator would rather be invested in his own fund via bullion instead of dollars… you gotta wonder why you’re still carrying greenbacks in your wallet.” –  rickackerman.com

The writing to follow is a piece that John Paulson wrote for the Wall Street Journal, published on September 26, 2008.  He makes a compelling case against the “Hank Paulson Plan” and the $700 billion “invested” in Wall Street banks.  Hindsight has shown us that the “Paulson Plan” was nothing but a con-game scheme to cover the hubris, greed and arrogant criminality of Hammerin’ Hank’s bankster buddies and it did nothing for the people, except to further burden them with debt beyond any imaginable ability to repay.

I am proud that I wrote the articles I did a year ago in a small way to help raise awareness of what was going on.  I am prouder still that a high-profile  luminary such as John Paulson agrees with my point of view.

Read his article to follow, and you will end up with a very clear idea of what is really going on behind the curtain of subterfuge and deceit of our “loyal” government employees.  As will become clear, we have the best politicians and economists that money can buy.  And neither group is motivated by any other significant reason whatsoever.

daniel w. jacobs
(c) 2009-2020, all rights reserved

THE PUBLIC DESERVES A BETTER DEAL

The Treasury plan to buy illiquid financial assets has been widely criticized as being unfair to taxpayers, who will have to bear losses ahead of shareholders of the institutions that will be bailed out.

[The Public Deserves a Better Deal] Corbis

There is a better alternative to stabilize the markets: Invest the $700 billion of taxpayer money in senior preferred stock of the troubled financial institutions that pose systemic risks. Let’s call this the “Preferred plan.” In fact, it is the Fannie Mae and Freddie Mac model — which the Treasury Department has already endorsed and used in practice. It is also the approach Warren Buffett used for his investment in Goldman Sachs.

There are major problems with the Treasury plan. First, by buying banks’ worst assets at above-market prices, taxpayers take an immediate economic loss — while transferring wealth to shareholders and executives of the very institutions that brought on the financial crisis.

Second, this plan puts too much discretionary power in the hands of Treasury officials. Who determines what financial assets are purchased and at what prices? Who determines which bank gets to benefit from these taxpayer subsidies? Will bank shareholders continue to receive dividends, and executives continue to get paid huge bonuses?

When financial institutions borrow massive amounts of money to invest in assets that are now found to be illiquid and poorly performing, it is not the responsibility of taxpayers to bear the resulting losses. These losses should be borne by the shareholders.

If taxpayers have to step in and provide capital to keep operating enterprises that the government decides are key to the functioning of the economy as a whole, taxpayers must receive protection.

Treasury Secretary Henry Paulson said at the Senate Banking Committee hearing this week, “[the] Fannie Mae and Freddie Mac [interventions] worked the way they were supposed to.” These enterprises continued to function, maintaining homeowner access to and lowering the cost of mortgage financing. However, managements of these companies had to leave and forfeit the compensation packages they had negotiated.

Shareholders had their dividends blocked and remain first in line to bear losses, as they should have been. Taxpayers came both first and last — first to get paid back, as the new preferred stock is senior to all shareholders; and last in realizing losses, as common and other preferred equity would be extinguished before the taxpayers would be at risk.

This mechanism — purchases of senior preferred stock with warrants in troubled institutions — addresses the problems with the Treasury plan. The financial market is stabilized, companies get recapitalized, failures are avoided, debt securities are supported, and time is gained for illiquid assets to mature.

The institutions continue to function, their cost of funding will decline as equity capital increases, and innocent third parties like bank depositors, broker/dealer clients and insurance-policy holders are all protected. The only difference is that potential losses are kept with the shareholders where they belong.

The Treasury plan would also entail larger outlays than the Preferred plan. By allowing all banks to sell their worst assets to Treasury at inflated prices, taxpayers would be subsidizing healthy banks which have access to private capital (Goldman Sachs, J.P. Morgan, Wells Fargo, and Bank of America, for example) as well as banks that don’t have a private alternative. But under a Preferred plan, only banks that don’t have a private alternative will be given federal assistance. This would reduce the outlay otherwise required to solve the crisis.

Few people familiar with the issues deny that Treasury action is needed to stabilize the financial markets. However, the question is who should bear the cost?

Under the Treasury plan the taxpayer pays the price. Under a Preferred plan, the shareholders of the firms who created the problems bear the first loss. Who do you think should pay?

Before committing $700 billion of our money, we should encourage Congress to take a few extra days to get this legislation right.

Mr. John Paulson is president and portfolio manager of Paulson & Co. Inc., a New York-based investment management firm.

An Open Letter To President Obama by Lou Pritchett

Dear President Obama:

You are the thirteenth President under whom I have lived and unlike any of the others, you truly scare me.

President Obama
President Obama

You scare me because after months of exposure, I know nothing about you.

You scare me because I do not know how you paid for your expensive Ivy League education and your upscale lifestyle and housing with no visible signs of support.

You scare me because you did not spend the formative years of youth growing up in America and culturally you are not an American.

You scare me because you have never run a company or met a payroll.

You scare me because you have never had military experience, thus don’t understand it at its core.

You scare me because you lack humility and ‘class’, always blaming others.

You scare me because for over half your life you have aligned yourself with radical extremists who hate America and you refuse to publicly denounce these radicals who wish to see America fail.

You scare me because you are a cheerleader for the ‘blame America’ crowd and deliver this message abroad.

You scare me because you want to change America to a European style country where the government sector dominates instead of the private sector.

You scare me because you want to replace our health care system with a government controlled one.

You scare me because you prefer ‘wind mills’ to responsibly capitalizing on our own vast oil, coal and shale reserves.

You scare me because you want to kill the American capitalist goose that lays the golden egg which provides the highest standard of living in the world.

You scare me because you have begun to use ‘extortion’ tactics against certain banks and corporations.

You scare me because your own political party shrinks from challenging you on your wild and irresponsible spending proposals.

You scare me because you will not openly listen to or even consider opposing points of view from intelligent people.

You scare me because you falsely believe that you are both omnipotent and omniscient.

You scare me because the media gives you a free pass on everything you do.

You scare me because you demonize and want to silence the Limbaughs, Hannitys, O’Relllys and Becks who offer opposing, conservative points of view.

You scare me because you prefer controlling over governing.

Finally, you scare me because if you serve a second term I will probably not feel safe in writing a similar letter in 8 years.

Lou Pritchett

Lou Prichett
Lou Prichett

The letter is authentic according to snoopes.com and urbanlegends.about.com. Lou Pritchett, author, motivational speaker and former Vice-President of Sales and Customer Development for Procter & Gamble, has acknowledged writing the above opinion piece and submitting it to the New York Times for publication, though to date it has only been published on the Internet, including on various conservative blogs and the American Family Association’s website.
Last updated: 06/09/09

FAIR USE NOTICE

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. This material is distributed without profit.

HOWARD ZINN and PATRIOTISM

Howard Zinn
Howard Zinn

Just Released: January 27, 2010, Howard Zinn, world-renowned historian, teacher, activist, author and playwright, passed away Wednesday of a heart attack while swimming in California, according to his daughter and the AP. He was 87 years old.

Zinn had a kind, friendly personality, was generous with his time, and spoke easily with others. He was also relentlessly unafraid to stand up for what he believed in, and speak the truth – even if doing so could cause him distress in his personal and professional life.

Over the course of his career, Zinn established himself as arguably the most influential historian in the United States. He led Americans to view their past through a more complex and often darker lens, and helped bring attention to social justice and human rights issues around the world, from Boston to Baghdad.

Although he wrote a number of books, it is his seminal text, “A People’s History of the United States”, for which he will most likely be remembered.  (from the nydailynews)  He was a highly respected American historian and Professor of Political Science at Boston University from 1964 to 1988.

I wrote a piece about Howard Zinn in July 2009 on this blog.  Today I felt the need to include this update of his (and our) loss.  Following is my original writing from last year.

Evidently many people subscribe to the message above as it has been attributed to many fathers.  While this quotation is widely misattributed to Thomas Jefferson, it is apparent that he did not author the saying.   In any case, I like this quotation on patriotism, and not only because of the message implied if you omit the first three and the last three letters of the word.  My research of the topic on the internet uncovered the following relevant facts.

From the website on the Jefferson Library, a guide to Thomas Jefferson quotations at http://www. monticello.org,  I found the following about the quote on patriotism.

“We see this one fairly frequently. We are not sure where it originated, although some speculate that Howard Zinn introduced it as recently as 2002 (see http://urbanlegends.about.com/b/a/146858.htm).

. . .

I also located the following relating to the source of this quotation:

Below is the quote from the actual interview with Howard Zinn. Published: Jul 03 2002Dissent In Pursuit Of Equality, Life, Liberty And Happiness

An Interview With Historian Howard Zinn

TomPaine.com: Dissent these days seems to be a dirty word. The Bush administration has, at least since September 11th, usually termed any criticism of its policies “unpatriotic.”

Howard Zinn: While some people think that dissent is unpatriotic, I would argue that dissent is the highest form of patriotism. In fact, if patriotism means being true to the principles for which your country is supposed to stand, then certainly the right to dissent is one of those principles. And if we’re exercising that right to dissent, it’s a patriotic act.

Sharon Basco is executive producer of TomPaine.com.

Howard Zinn is an historian and author of A People’s History of the United States. Sharon Basco interviewed him for TomPaine.com.

http://urbanlegends.about.com/b/2005/02/15/misattributed-dissent-is-the-highest-form-of-patriotism.htm

daniel w. jacobs
(c) 2009-2020, all rights reserved