Tuesday, September 29, 2009

The Price of Pretense in Pittsburgh

By Peter Schiff
Campaign For Liberty

Peter Schiff is president of Euro Pacific Capital and author of The Little Book of
Bull Moves in Bear Markets and Crash Proof: How to Profit from the Coming
Economic Collapse.

As another G20 meeting rolls around, this time on home soil, the time comes once again for the
economically curious but politically unconnected to wonder what is really happening behind closed
doors. But while admiring the pageantry, chuckling at the awkward group photos, and parsing the
joint communiques like newly found Dead Sea scrolls, the overwhelming majority of observers will
miss the meeting's dominant theme: hypocrisy.
Everyone agrees that the principal agenda item in Pittsburgh will be the need to rein in the "global
imbalances" that created the late economic crisis. Everyone also agrees that these imbalances
involve too much spending and borrowing by Americans and too little of both by the Chinese and
other developing nations. In his remarks this week at the United Nations, President Obama used his
peerless rhetorical skill to frame the issues clearly and plainly. Noting that a return to pre-crisis
economics is impossible, the president assured the world that his administration will pursue policies
to increase savings and decrease spending at home and challenged his Chinese counterparts to
enact measures with the opposite effect in their own country.
While this is roughly what needs to happen, President Obama is actually doing everything in his
power to prevent it. In point of fact, every policy move undertaken by his administration has
exacerbated the very imbalances he supposedly wants to curtail. To so seamlessly profess one goal
while simultaneously undermining it is an impressive piece of political theater. Unfortunately, this
particular drama is likely to have an unhappy ending -- and the ticket price will be staggering.
What exactly are the federal fiscal stimuli other than deliberate, but clumsy, efforts to get people,
companies, and governments to spend money they don't have? Programs like tax credits for new
homebuyers or "cash for clunkers" are intended to encourage consumers to spend money that they
otherwise might have saved. Grants to municipalities allow them to hire workers and spend money
locally that they otherwise would have forgone.
Federal intervention in the mortgage and credit card debt markets, where they are now nearly the
sole buyer, has been specifically undertaken to keep interest rates low and financial firms solvent --
so that Americans can keep buying homes and using their credit cards. While the Fed will continue
to hand out free money to any and all borrowers for an "extended period," the abysmally low interest
on deposits that such a policy creates disincentivizes personal savings even further.
In 2009, despite the tilted playing field, the American people have heroically managed to increase their savings (although clearly not as much as they would have in a free market). But President
Obama's runaway deficit spending is undermining their efforts. The simple truth is that government
debt is our debt. So if a family manages, at some cost to their lifestyle, to squirrel away an extra
$1,000 in saving this year, but the government adds $20,000 in new debt per household (each
family's approximate share of the $1.8 trillion fiscal 2009 deficit), that family ends up owing $19,000
more than they did at the beginning of the year!
So much for our end of the bargain. How about on the other side of the Pacific? Will the Chinese
restore balance by increasing their spending? How can they while they are lending us all their
money? Remember, any money the Chinese spend is money they cannot loan to us. So, if China
really wanted to spur domestic consumption, the best way to do so would be to stop buying our
debt. Even better, they could sell Treasuries they already own and distribute the proceeds to their
citizens to spend.
However, the Obama administration is heavily lobbying the Chinese to get them to step up to the
plate and buy record amounts of new Treasury debt. Obama cannot have it both ways. He cannot
claim he wants the Chinese to spend more, but then beg the Chinese government to take money
away from Chinese consumers and loan it to the United States Treasury.
In the end, Obama will get precisely what he publicly claims to desire but privately dreads. The
Chinese government will come to its senses and stop buying Treasuries. This will cause the U.S.
dollar to collapse, but it will also allow Chinese citizens to fully enjoy the fruits of their labor.
Once the Chinese begin consuming more of their own products, those products will no longer be
available to Americans. Once they start spending more of their incomes on themselves, those funds
will no longer be available for us to borrow. Unfortunately, that is when our real economic crisis will
begin. The worst part is that the longer these imbalances are allowed to continue, the larger they
grow and the more painful the ultimate adjustment process becomes.
But for now, it's all pomp, circumstance and hypocrisy in Pittsburgh. Why yes, Madam Finance
Minister, I'd love another of those crab cakes!
Copyright 2009 Euro Pacific Capital

AUDIO: Alex Jones Interview With Ron Paul

Ron Paul speaks of coming dollar collapse and the "Audit The Fed" bill:


VIDEO: A Portable Prision Just For You

VIDEO: Refuse Swine Flu Shot & You'll Go To A Concentration Camp

Saturday, September 26, 2009

Stop Cap and Tax !!!

by John Tate
Campaign For Liberty
Sept 17, 2009

Dear Friend of Liberty:

One day, you hear a loud knock on your front door.

But it’s not a neighbor visiting or someone trying to sell you a subscription.

Instead, it’s a federal agent -- the federal government’s newest threat to your liberty demanding to check your household appliances . . . your light bulbs . . . your thermostat . . . and this is NO JOKE.

Believe me, I wish it was.

But should the so-called Cap and Trade Bill (which should be called Cap and Tax) pass, what I just described could be EXACTLY what you and I see in home after home, town after town all across our country -- along with skyrocketing taxes, home electric bills and heating prices.

That’s why it’s vital you sign the petition linked at the end of this letter to your U.S. Senators, insisting they vote against this dangerous power grab IMMEDIATELY.

You see, if passed, Cap and Tax would give the federal government UNPRECEDENTED control over the private sector -- and our very lives.

Big Government bureaucrats in Washington would effectively be able to tax businesses for emitting more carbon dioxide than they think is “appropriate.”

Just as bad, they’ll be able to demand you change your way of living -- forcing you to “retrofit” your house with “government-approved” light-bulbs, refrigerators, water heaters, toilets, air conditioners, and whatever else they can dream up.

And don’t think for a second they won’t send around federal jackboots to make sure you’re complying.

In fact, the Cap and Tax Bill SPECIFICALLY AUTHORIZES just such intrusive home visits by government snoops, empowered to sniff around your basement, climb into your attic and search your closets.

And that’s not all.

You see, Cap and Tax is just another excuse for Big Government to reach their greedy little hands deep into our wallets.

If passed, Cap and Tax would:

*** Increase taxes by $650 BILLION, virtually guaranteeing that our economy gets even worse and NEVER recovers;

*** Result in over ONE MILLION lost American jobs per year as energy-intensive industries are forced to shut their doors or move overseas;

*** Allow Big Government politicians to decide which businesses get taxpayer subsidies and which ones are shut down, virtually guaranteeing massive corruption on a scale we’ve never seen before in the United States.

And don’t believe the lies. This bill has nothing to do with the environment.

In fact, the best experts agree Cap and Tax will have almost zero impact on the environment anyway -- except, of course, for lost jobs, higher taxes, and blighted small towns and rural communities.

So what is Cap and Tax really about?

Raw government POWER.

Government POWER to tax.

Government POWER to enter your home to “check for compliance.”

And government POWER to control the economy, our lives and our freedom.

Just take a look at Spain -- the Cap and Taxers’ “shining” example of an eco-socialist paradise.

There, unemployment is approaching 20% and rising.

And what about all those new “green” jobs Cap and Tax apologists are claiming will be generated?

In Spain, for every new “green” job created (at a taxpayer cost of $800,000 EACH mind you), 2.2 economically-productive jobs are destroyed!

The fact is, passage of Cap and Tax could send our economy nose-diving off a cliff!

So it’s never been more important that you act TODAY.

The good news is, Campaign for Liberty has a plan to fight back.

But, I’m afraid, unless you act IMMEDIATELY, Cap and Tax will become law.

Sign the petition right here:


I won’t mince words. Our backs are against the wall. Already, Big Government politicians on both sides of the aisle have rammed this bill through the U.S. House.

And President Barack Obama would love nothing more than to flash a grin for his pals in the national media as he signs Cap and Tax into law.

So that means our ONE CHANCE to stop this radical bill is the U.S. Senate.

And there, our job isn’t easy. Just like in the House, there are pro-Cap and Tax Senators in both parties.

But there is good news.

There are also a lot of VERY nervous Senators in both parties. In fact, even John McCain is now wavering from his past support for Cap and Tax.

These Senators are nervous because they know that freedom-loving folks like you are catching on to what is happening and are fighting back against their schemes to take over health care and are unified in our fight to reign in the out-of-control Fed.

They’re nervous because we’ve come a long way in stopping their assaults on our liberty.

So now, in this latest fight, many Senators are riding the fence.

They’re afraid of what YOU’LL do to them if they vote to ram Cap and Tax into law.

So today, our job is to KNOCK those Senators off the fence and squarely onto our side by sending this one very LOUD and very CLEAR message to the U.S. Senate . . .

. . . Any politician who votes FOR Cap and Tax should look for another job.


Here’s how Campaign for Liberty plans to do that -- hopefully, with your help.

First, we’re already busy contacting up to five million activists nationwide through mail, phones and email to generate petitions to the U.S. Congress demanding U.S. Senators vote AGAINST Cap and Tax.

And that’s just the beginning.

With your help, we’ll work the blogs and write guest editorials.

We’ll brief influential writers and columnists who will be sympathetic to our efforts.

We’ll work the talk radio stations and grant local media interviews to further turn up the pressure on Congress.

And a few days before the vote, if we have the resources, we’d also like to run hard-hitting targeted radio, TV and newspaper ads calling on Senators to vote against Cap and Tax.

Now, none of this is going to be easy -- or cheap.

But, with your help, I’m confident we can turn up so much grassroots pressure on our U.S. Senators, they’ll find out what REAL heat feels like!

So, in addition to your signed petition, I also hope you’ll agree to make a contribution of $250, $100 or $50 -- to Campaign for Liberty.

I know times are hard, but this fight is absolutely critical.

If you and I don’t fight back . . . well, I shudder to think about what could happen.

But I’m sure you’ll agree, the America you and I treasure could end up looking much, much different in just a few years.

So can I count on you to join the fight to STOP Cap and Tax by signing your petition, and by making a generous contribution of $50, $100 or $250 -- or whatever you can afford -- to Campaign for Liberty?


John Tate

P.S. H.R. 2454, the Cap and Tax Bill, has already been rammed through the U.S. House and our ONE CHANCE is to stop the bill in the Senate.

If passed, the Cap and Tax Bill could send the entire U.S. economy nose-diving off a cliff, and you and I will be handing unprecedented control of our lives to the federal government.

That’s why it’s vital you sign your petition IMMEDIATELY along with a generous contribution of $250, $100 or $50!


VIDEO: WeAreChange Schools Pittsburgh Police on Constitution

We Are Change
Friday, September 25, 2009

Luke Rudkowski of Wearechange.org schools Pittsburgh police on their duty to the constitution and thier oath. Police use LRAD sound cannons and tear gas on peaceful protesters.

VIDEO: Jackboot Police State At The Pittsburgh G20 Summit

Scenes wouldn’t look out of place in Communist China, Nazi Germany

Steve Watson
Friday, Sept 25, 2009

Video footage is pouring onto Youtube that clearly shows riot police in Pittsburgh using intimidation tactics and military weapons to disperse peaceful assemblies in the vicinity of the G20 summit.

In the first video an officer appears on the scene where protesters are peacefully gathered and immediately tells them to leave the area, threatening everyone with arrest should they not comply.

The in a scene that looks as if it took place in Communist China, riot officers form a line parallel to the protesters, extending to both ends of the street, and slowly walk towards them, noisily and simultaneously marching and beating their shields with their batons.

This is a clear intimidation tactic to cause fear and psychologically effect the peaceful protesters in an effort to herd them and get them to disperse.

We Are Change and Infowars reporter Luke Rudkowski speaks into a bullhorn throughout, as this complete violation of the First Amendment unfolds. He notes how LRAD sound weapons used in Afghanistan and Iraq are now being used against peaceful American citizens on the streets of Pittsburgh by armed military troops.

Chants of “USA, USA” ring out and protesters holding cameras and signs break into applause at Luke’s words as the jackboot police continue to advance. It is hard to believe that this is America

The LRAD Weapons are then brought to the scene and an announcement blasts out towards the protesters:



Watch the video:

Here is another video of the LRAD sound weapons in full force:

Here are more videos from the scene that clearly show police and troops using sound wave weapons against peaceful protesters and indiscriminately beating people:

Friday, September 25, 2009

PJB: The Return of Protectionism

Posted by Patrick J. Buchanan
September 15, 2009

Down at the Chinese outlet store in Albany known as Wal-Mart, Chinese tires have so successfully undercut U.S.-made tires that the Cooper Tire factory in that south Georgia town had to shut down.

Twenty-one hundred Georgians lost their jobs.

The tale of Cooper Tire and what it portends is told in last week’s Washington Post by Peter Whoriskey.

How could tires made on the other side of the world, then shipped to Albany, be sold for less than tires made in Albany?

Here’s how.

At Cooper Tire, the wages were $18 to $21 per hour. In China, they are a fraction of that. The Albany factory is subject to U.S. health-and-safety, wage-and-hour and civil rights laws from which Chinese plants are exempt. Environmental standards had to be met at Cooper Tire or the plant would have been closed. Chinese factories are notorious polluters.

China won the competition because the 14th Amendment’s “equal protection of the laws” does not apply to the People’s Republic. While free trade laws grant China free and equal access to the U.S. market, China can pay workers wages and force them to work hours that would violate U.S. law, and China can operate plants whose health, safety and environmental standards would have their U.S. competitors shut down as public nuisances.

Beijing also manipulates its currency to keep export prices low and grants a rebate on its value-added tax on exports to the U.S.A., while imposing a value-added tax on goods coming from the U.S.A.

Thus did China, from 2004 to 2008, triple her share of the U.S. tire market from 5 percent to 17 percent and take down Cooper Tire of Albany.

But not to worry. Cooper Tire has seen the light and is now opening and acquiring plants in China, and sending Albany workers over to train the Chinese who took their jobs.

Welcome to 21st century America, where globalism has replaced patriotism as the civil religion of our corporate elites. As Thomas Jefferson reminded us, “Merchants have no country.”

What has this meant to the republic that was once the most self-sufficient and independent in all of history?

Since 2001, when George Bush took the oath, the United States has run $3.8 trillion in trade deficits in manufactured goods, more than twice the $1.68 trillion in trade deficits we ran for imported oil and gas.

Our trade deficit with China in manufactured goods alone, $1.58 trillion over those eight years, roughly equals the entire U.S. trade deficit for oil and gas.

U.S. politicians never cease to wail of the need for “energy independence.” But why is our dependence on the oil of Saudi Arabia, the Gulf, Nigeria, Canada, Mexico and Venezuela a greater concern than our dependence on a non-democratic rival great power for computers and vital components of our weapons systems and high-tech industries?

As Executive Director Auggie Tantillo of the American Manufacturing Trade Action Committee compellingly argues:

“Running a trade deficit for natural resources that the United States lacks is something that cannot be helped, but running a massive deficit in manmade products that America easily could produce itself is a choice—a poor choice that is bankrupting the country and responsible for the loss of millions of jobs.”

How many millions of jobs?

In the George W. Bush years, we lost 5.3 million manufacturing jobs, one-fourth to one-third of all we had in 2001.

And our dependence on China is growing.

Where Beijing was responsible for 60 percent of the U.S. trade deficit in manufactured goods in 2008, in the first six months of 2009, China accounted for 79 percent of our trade deficit in manufactured goods.

How can we end this dependency and begin building factories and creating jobs here, rather than deepening our dependency on a China that seeks to take our place in the sun? The same way Alexander Hamilton did, when we Americans produced almost nothing and were even more dependent on Great Britain than we are on China today.

Let us do unto our trading partners as they have done unto us.

As they rebate value-added taxes on exports to us, and impose a value-added tax on our exports to them, let us reciprocate. Impose a border tax equal to a VAT on all their goods entering the United States, and use the hundreds of billions to cut corporate taxes on all manufacturing done here in the United States.

Where they have tilted the playing field against us, let us tilt it back again. Transnational companies are as amoral as sharks. What is needed is simply to cut their profits from moving factories and jobs abroad and increase their profits for bringing them back to the U.S.A.

It’s not rocket science. Hamilton, James Madison and Abraham Lincoln all did it. Obama’s tariffs on Chinese tires are a good start.
Article URL: http://www.takimag.com/site/article/the_return_of_protectionism/

Tuesday, September 15, 2009

Is Economic Doomsday Set For 9/30/09?

By Bix Weir
Sept 15, 2009

Everything is lining up for the implementation of the Gold Standard in the USA (as well as around the world!). As planned and implemented by Alan Greenspan and friends over the last 40 years we have come down to the final weeks/months for the Banking Cabal. By now you should all be prepared for the most frightening yet exhilarating ride of your lives. If you do not understand what I am talking about please review my Road to Roota series summarized here: When Atlas Shrugs.

Behind the scenes the final preparations for the End of Fiat Money are lining up like orderly ducks in a row!

If you want a front row seat… watch and follow these ducks:

Duck #1 – The End of Globalization

The end of Globalization is upon us. As planned, the US and China have begun a trade war that has ramifications around the world. It may appear as a minor clash on tire duties at the moment but it will continue to escalate over the next few weeks. The visible animosity between China and the US has never been stronger with China practically forcing their will on the US Government in the forms of threatened US dollar dumping, promoting of gold and silver investment to their population and their Government sanctioned derivative default agenda. Again, as outlined in Road to Roota II, the Chinese are in on the plan to take down the bankers. A continued trade war will end very badly for the banking cabal that relies on globalized trade and foreign asset ownership to support their global control of the world monetary system. A failure of that system will result in the total Nationalization of EVERYTHING and the end of global trade around the world…countries will have to fend for them selves for a while until the dust settles.

Duck #2 – The FDIC is Broken

Sheila Bair has put up a valiant fight against the whole notion of FDIC insolvency but hers is a battle that can’t be won. Unfortunately, Sheila does not pull the strings that make the FDIC a viable entity going forward. Her organization has been forced by the banking cabal to massively over insure not only the individual bank deposits but also the bankster bailouts. Had the FDIC stuck to their original mandate of insuring individual investors up to $100,000 they may have had a slight chance of surviving the coming banking collapse. Unfortunately, Sheila and friends were forced to increase their exposure to individual accounts by 150% as well as offering up the FDIC sovereign backing to include massive derivative bailouts in the TLGP and PPIF programs. The banksters have aligned the once venerable FDIC individual protection with their own bailout interests trying to force the US Congress to bailout both individual depositors and the failing banks. Unfortunately, now both will suffer from the collapse.

Duck #3 – Public Anger Rising

The banking collapse that was scheduled for September of last year failed for two reasons. The first was the massive creation of secret bailout money by the Federal Reserve under special rules created 95 years ago with a mountain of additional derivatives added to the already overgrown pile. And the second was that the US Citizenry had been lulled to sleep after years of feeling safe in their fiat money cocoons that hadn’t faltered in 80 years. Only a tiny handful of people understood how all fiat money systems relied solely on faith so when Atlas Shrugged last year the people ran to the Government for protection. Of course the government did what they always do and temporarily printed away the problem. Now it’s a year later and not much has improved with bank failures picking up steam again. WAIT! Maybe something did happen. There is a large and growing crowd of recently educated Citizens who have seen the problem and are speaking out. Around the country people are erupting in anger at Town hall meetings, tea parties, public rallies, etc. Ron Paul’s book “End the Fed” was just released and Barney Frank has finally called for a hearing on the Audit the Fed bill. Maybe the most media worthy explosion of bankster directed anger will come on August 2nd with the release of Michael Moore’s movie “Capitalism: A Love Story”. All of the above is hitting at the very moment the banking stresses have re-emerged and they will be coming back to Congress for more bailouts….BAILOUTS AIN’T GONNA HAPPEN THIS TIME!!!

Duck #4 - A Public Healthcare Option

Have you asked yourself why it is so urgent to pass a public healthcare option bill as soon a possible? Could it be that the banking collapse will also collapse the corrupt US healthcare system? Normally, I’m a free market kind of guy and would be against public healthcare but these are not normal times. A public healthcare option will makes a lot more sense if Congress is preparing for a complete collapse of the fiat money system. Healthcare is a basic human necessity and a fiat monetary implosion would pretty much end the private healthcare business overnight. How many US Citizens will be glad they have that Public Option after the crash? My guess is all of them.

Duck #5 - The End of the Federal Reserve System

“Word on the street” is….the secret year end of the US Federal Reserve System is September 30, 2009. As of that date, all banks have to be Basel II & III compliant bringing all off balance sheet obligations back onto the books. The US Federal Reserve, their member banks and their manipulation counterparties (like AIG) are knee deep in Derivatives to the point of insanity. Rumors are that nuclear derivative bombs are held in “Special Purpose Vehicles” and in off shore entities that have never been accounted for. Can you say “Unreported derivatives in the “Quintillions”? Of course, I am not privy to any inside information on these rumors but it has always perplexed me that large banks can hold hundreds of $Billions in derivative instruments but the US Federal Reserve has never declared if they are counterparty or have insured any derivatives themselves. I guess that’s why Bernanke is so against the Audit…Oh, Ben. I think “thou doth protest too much”!

Duck #6 - Lessons To Be Learned

Recently, even I have become fearful of the coming collapse and how long it will take to recover. That’s really not like me. Although I believe this transition will ultimately be a very good thing for humanity (i.e. - a complete DEBT JUBILEE where all debt is forgiven) there are indications that a lesson must be learned in this transition so that we don’t make the same mistakes in the future. Those lessons may make the next few months very disturbing for the majority of Americans as well as the world. Lessons in fiat money abuses are harsh with hyper inflation in certain items (food, gold/silver, oil) and hyper deflation in others (housing, luxury items) Imagine massive shortages or complete disappearance of imported goods (TV’s, Medicines, Consumables). As our government tries to fix or cover-up the problems with the same old remedies the people will rise up in mass. We’ve reached the tipping point of trust in our elected officials and unless they start coming clean we are staring at a revolution by years end. It’s too bad that the US Government didn’t face its insolvency head on last year instead of kicking our problems on down the road. Well, the road has ended and a very painful but very valuable lesson is about to be learned. Buckle up my friends!

Duck #5 – The Gold/Silver Solution

The coming banking collapse will be the greatest Creative Destruction event of all time. Personal and corporate fortunes that took hundreds of years to accumulate will disappear over night in the swirling derivative implosion. The people of the world will rise up in anger at their controllers, demand answers and retribution finally installing a new, more equitable monetary system that is out of the control of the government/banking system. Physical gold and silver money will prove to be the only solution that can effectively replace the fiat system. The painful lessons will be passed on through the generations to ensure a glorious future for humanity. The problems are vast and immense but the solution is simple: Reinstate the US Constitution!

So there you have it. Those are the ducks and you have a great seat to watch them line up in an orderly row. Cross your fingers that those ducks come into line or we’re all in trouble.

Take care of you and your family…we will need all hands on deck to rebuild our future!

All the best.


Sunday, September 13, 2009

VIDEO: 9/11 Ripple Effect

The film that's being hailed as the most professionally produced and up to date 9/11 video ever made... See it for free or buy it on DVD. 911 Ripple Effect champions a very powerful message; backed by expert examination of video evidence and packaged in an imaginative and captivating production that will keep you on the edge of your seats. An absolute must see!

VIDEO: Charlie Sheen's Video Message to President Obama

Charlie Sheen addresses the President about 9/11 in a special video message, shortly after releasing his "20 Minutes with the President," specifically addressing 20 key points that need to be answered by a truly independent investigation.

Sheen's message is a call to action, not only for President Obama to address the pertinent issues, but for activists everywhere to pressure their representatives and leaders, wherever they may be, to 'be on the right side of history' and take back the country through peaceful revolution and true grassroots dissent.

Top Economists Say Obamanomics Could Lead To An Argintina Style Economic Meltdown

Barack Obama is committing the same mistakes made by policymakers during the Great Depression, according to a new study endorsed by Nobel laureate James Buchanan.

Is history repeating itself? President Obama has been accused by some economists of making the same mistakes policymakers in the US made in the Great Depression, which followed the Wall Street crash of 1929, pictured Photo: AP

His policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says...........

You can read the full article here:

To fully understand the potential ramifications of an "Argentina style economic collapse" for the average American than you'll want to read this article. It's absolutely frightening!

Argentina: Between disintegration and revolution
by James Petras Henry Veltmeyer

Throughout the early and mid-nineties, the International Monetary Fund (IMF), World Bank, the Inter-American Development Bank, and the G-7 countries, all praised Argentina's liberalization program as an economic model for the Third World. Then President Carlos Menem and Economic Minister Domingo Cavallo promised the Argentine people that they would soon become part of the "First World."
Today, Argentina is in total disintegration. Not only is the economy in its fifth year of recession/depression, but its banking system has collapsed, the unemployment rate has skyrocketed, and over half the population lives below the poverty line.
No country in contemporary Latin American history has fallen swifter and further into mass poverty and experienced as prolonged an economic collapse as Argentina. Though most Latin American countries have applied neoliberal policies, none has been as thorough and rapid as Argentina. Moreover, no Latin American country was as industrially advanced or had as diversified an economy. Finally, Argentina had the highest standard of living in the region, the most qualified and skilled labor force, and the political leadership most determined to follow the precepts of the International Financial Institutions (IFls) and the G-7.
Argentina is a test case for the efficacy or failures of the neoliberal approach under optimal conditions: a willing government, a well-developed infrastructure, a skilled labor force, long-term links to world markets, and a significant middle class with Euro-American patterns of culture and consumption.
The number of Argentines below the poverty line has grown geometrically: Ten years ago there were less than 15%, two years ago it was 30%. In June 2002 the percentage exceeded 50%. In that month, Eduardo Duhalde's regime acknowledged 18.2 million people (51%) below the poverty line. Of these, 7.8 million are indigents according to SIEMPRO (Spanish acronym for System of Information, Monitoring and Evaluation of Social Programs), an official institution under the jurisdiction of the President. Children and adolescents living in poverty number almost 8.2 million. Between January and May 2002, the number of poor grew by 3.8 million, or 762,000 a month, or 25,000 a day. The rate of indigence is growing even faster. In 1998, 29% of the poor were indigent; in June 2002, 43%. The massification of extreme poverty is manifested in the high rates of child malnutrition-over 58% in Matanzas, a working-class suburb of Buenos Aires. In the interior there are numerous reports of children fainting in school for lack of food, and over 60% of newborns in Misiones suffer from anemia-a direct result of government cutbacks to meet G-7 and IMF demands.
Apart from the top 10% of the population, all working sectors and pensioners have experienced an average 67% income decline. In 1997, the United Nations Development Program (UNDP) calculated per capita annual income at $8,950. In March 2002 it was $3,197. The decline affects all regions of the country. If we use as rough indicators of "class" the different regions of the province of Buenos Aires, we can approximate the social impact of the crisis. The income in the capital city of Buenos Aires, which we can take as largely middle class, saw the average fall from $909 a month in December 2001 to $363 in March 2002; in the working-class suburbs (conurbano) of the city of Buenos Aires income fell from $506 to $202; in the province of Buenos Aires, from $626 to $250. The largest decline is among workers in the informal sector (work without benefits or employment protections) and among pensioners. In the capital, income of the "informals" dropped from $643 to $257; in the working class suburbs from $334 to $134; in the province from $394 to $158. Among pensioners the decline was from $437 to $175 in the capital; from $320 to $128 in the working-class suburbs and from $360 to $144 in the province. The situation is far worse in the other provinces, where pay scales are lower, unemployment is higher, and where there are frequently three to six month delays in payment of salaries and pensions.
For the working and middle classes, the loss of formal employment means a sharp decline in income. Employed wage earners in the private sector of the capital earned $904 in December 2001. Those who were forced into under-employment were earning $257 in the informal sector three months later. A 30% rise in prices during the same period accompanied the skyrocketing loss of jobs.
The decline of income among the different occupational categories indicates both the absolute and relative decline of the middle class, a clear process of proletarianization. Bank employees in the capital have seen their income decline by nearly 60%, from $1,081 to $432 per month, and public employees have experienced a drop from $1,144 to $458 per month. As of April 2002, income of the former middle class did not cover the basic necessities of rent, food, transport, school and health expenses.
If we take the figure of $400 as the cutoff for the poverty line and $250 as the cutoff line for indigence, we find that every occupational category in the working class in the suburbs of greater Buenos Aires is below the poverty line and several categories are "indigent."
Those whose main income is a pension are indigent in all geographical sectors, as are all unemployed workers (30% of the labor force) living in the suburbs and greater Buenos Aires. Even if we assume that some workers classified as unemployed are actually working in the informal sector, almost all are near or below the line of indigence. The massive growth of unemployment to 30% nationally, from 40 60% in the working-class suburbs, and even higher in some of the former one-industry towns of the interior, is reminiscent of the worst years of the U.S. depression of the 1930s and of Weimar Germany in the 1920s.
Accompanying and interrelated to the impoverishment of the mass of the middle and working classes is the concentration of wealth in the ruling and upper middle classes and foreign capitalists and bankers. In 1974 the top 10% received 28% of national income, in 1992 slightly over 34% and in 2001 over 37%, while the poorest 10% received 2.2% in both 1974 and 1992 and 1.3% in 2001- before the devaluation and sharp increase of unemployment.
Together the upper classes-the ruling elite plus the upper middle class-receive 53% of declared income. Because the upper classes were able to withdraw their funds (estimates run as high as $40 billion) from the banks and send their money outside the country, avoiding the confiscation of December 2001, the percentage of wealth in the hands of the upper classes is probably close to 80%.
In that confiscation, the government froze all bank accounts, and subsequently converted them to pesos. The conversion rate in June 2002 was 3.5 pesos to the dollar. In effect, the accounts were reduced from $45 billion to approximately $13 billion and declining. The regime's attempt to convert the remainder into state bonds redeemable in ten years at 2% interest would devalue these personal savings accounts even further, given the 30% rate of inflation for the first quarter of 2002. This attempt by the regime to swindle the account holders out of their savings was prevented by massive demonstrations by the impoverished middle class-the potbanging cacerolazos-which threatened the Congress and stormed the banks.
During the first three months of 2002, industrial activity declined by over 18%. Textiles and manufacturing were down 48% over the previous year. The number of plant closures accelerated throughout the 1999-2002 period, reaching unprecedented levels in the last trimester of 2001 and the first half of 2002. Unused industrial capacity was running at more than 50% in most sectors of the economy, including metal, textiles and auto parts.
Between 1990 and 1998, the foreign debt grew from $58 billion to $140 billion. Over the same period the cumulative sum of capital flight plus interest payments rose from $75 billion to $197 billion. In other words, external borrowing largely financed capital flight and part of the mushrooming debt payments, leaving a net deficit in capital flow. This eroded the economy's capacity to sustain growth and subsequently led to the recession, further budget cuts, and later turned the recession into a depression. The foreign and domestic elites' massive withdrawal of funds-aided and abetted by the foreign banks led to the confiscation of savings of millions of Argentines and the virtual collapse of the financial system. Throughout 1999-2001, IMF loans merely served to pay back private banks and the IFls, while exacerbating the debt problem, deepening the recession, and lowering living standards. In order to get short-term loans, Argentina was paying 16% over U.S. Treasury notes as late as August 2001. Once the fall took place, neither the IFls nor the G-7 were willing to lend new money, unless the central government repealed its Economic Subversive Law (a law designed to prosecute illicit banking practices), abolished the provincial currencies which kept the local economies afloat, and fired several hundreds of thousands of health, educational and other public employees.
The key concern of the IFls with repealing the Economic Subversive Law was that it was an instrument to prosecute G-7 banks that were involved in the illegal transfer of over $50 billion in the year 2001-02. In June 2002, under IMF pressure, the law was repealed. While the IMF blamed the Argentine "savers" for the financial crisis-by making panic withdrawals-substantial data demonstrate that the private, principally foreign-owned banks had already consummated a massive transfer of funds out of the country and were not willing to re-capitalize the banks. Furthermore, the IMF and World Bank pressured the Argentine government to assume the private banks' obligations to their depositors and issue ten-year state-guaranteed bonds in lieu of direct payments to holders of savings accounts. Lacking funds and facing total unwillingness of foreign bank corporations to recapitalize their Argentine subsidiaries, the foreign and national private banks claimed to be on the verge of bankruptcy, at exactly the moment that the rightful claimants attempted to withdraw their savings.
The immediate cause for the collapse of Argentine capitalism was the role of the foreign-owned banks and the IFls, led by the IMF, in emptying the Argentine financial system. The longer-term reasons are rooted in regressive structural changes including privatization, Structural Adjustment Programs (SAPs), open markets, and quasi-criminal "deregulation" of the economy. All these led to the collapse of domestic production, wholesale pillage of the economy, and the confiscation of millions of saving accounts.
In the months leading up to the crisis, the ten leading banks moved approximately $27 billion out of the Argentine financial system. This system operated on two levels: a formal system of deposits and loans and an "informal sector" where mega-accounts operated, largely to launder funds and carry out speculative activity in the financial sector. The "other" categories in February 2001 amounted to $57 billion in assets and $60 billion in obligations. By November the totals of "others" declined to $25 billion for assets and $35 billion in obligations. A closer analysis reveals that of the $25 billion decline in assets, over 74% of it took place among the ten biggest banks. The IMF loans to Argentina served to cover the growing drain of resources out of the financial system by the financial elites, while imposing harsher cuts in public spending and investment. The triple phenomena of deepening economic depression, financial flight, and growing indebtedness were caused by the alliance of the IFls, the foreign and local big financiers, and the foreign-owned banks. The small and medium Argentine depositors were victims of a covert financial swindle, and not the perpetrators, as the apologists charged. Their desperate and belated effort to withdraw their savings was a reaction to the financial swindle executed by the financial elite. Most small and medium savers, however, were not successful. Bank liabilities after the flight of big accounts and the drying up of overseas credits far exceeded their assets; with the economic crisis, many of their outstanding loans were delinquent and there was no way that headquarters would inject new funds to cover the demands of depositors. The government intervened to "save the banks" by freezing all deposits and preventing depositors from recovering any of their savings. The gross class character of the government's financial rescue plan infuriated the dispossessed middle and lower classes. The subsequent devaluation of the peso in effect robbed them of two-thirds the face value of their frozen savings and depressed their incomes, while the upper middle and ruling classes who got their money out of the financial system were able to lower their cost of living, production and consumption by a commensurate 65%.
Argentine industry was pressured both by inexpensive consumer imports from low-wage areas (Asia) as well as upmarket goods from high-tech, large-scale, heavily subsidized Euro-American manufacturers. The liberal argument that "competition" would make Argentine enterprises more "efficient" was false few Argentine companies had the scale and financing to compete with the top U.S. and European multinationals, and even the lowest paid Argentine workers could not compete with a Chinese worker earning a dollar a day. The rapid lowering of barriers also precluded any preparation for competition, and the lack of reciprocity in lowering subsidies and barriers in the U.S. and Europe prevented Argentine companies that were competitive from capturing overseas markets.
Historically, the U.S. and EU countries have undergone a gradual process of selective liberalization, in stark contrast with the Argentine experience. Free convertibility in Europe did not take place until the economies were on their way to sustained expansion-which for some did not take place until well into the 1960s. Trade barriers, including quotas, tariffs and non-traditional constraints (health barriers, unfair trade and anti-dumping rules) are still frequently and extensively used to protect non-competitive sectors. Mass state subsidies and fiscal deficits are used to promote exports and to stimulate domestic growth.
The Menem regime gave the appearance of an "affluent regime" thanks to heavy borrowing and windfall income from the selloff of public properties. Most of the inflows of capital raised upper class consumption and facilitated wholesale corruption by the entire political class and their entourages of public officials, judges, customs officers, police, and military officials. Foreign bankers were willing to lend because the interest rates were 10 to 20 points above the Euro-U.S. rates and there was easy liquidity given free convertibility, and the de facto dollarization of the economy ensured monetary stability. Thus, each step of the liberalization process weakened the fundamentals of the economy: The domestic economy shrank, entrepreneurs fled into apparently lucrative financial-speculative activity, debt payments skyrocketed, the loans-for-privatization deals were approaching their limits, and external flight of capital accelerated as the upper classes sensed that the whole liberal edifice would eventually collapse, leaving neither a productive system nor monetary resources to revive it.
Crucial to the collapse of the bubble economy was the behavior of the Argentine big bourgeoisie. Powerfully ensconced in the Menem regime, they were the initial
beneficiaries of the privatization process and the loans from overseas lenders. They were also the group that dictated economic policy. The Menem regime's point of reference for developing the liberal agenda was, first and foremost, the dominant classes in Argentina who had investments overseas, were tightly linked to overseas banks via joint investments in privatized banks and via foreign loans, and who demanded a peso easily convertible into dollar equivalence. Liberalization to the maximum allowed this 'transnational' Argentine bourgeoisie to buy public banks and enterprises on the cheap and sell them to foreign capital. Deregulation of the banks allowed massive transfers of funds out of the country and the laundering of illicit gains. Cheap imports, easy loans and fast exits of funds were the Argentine elite's definition of liberalization.
For obvious reasons the G-7 countries and the IFls were wildly enthusiastic: They gained control over banks and deposits, lucrative telecommunications, airlines, oil and other money-earning public enterprises. They encouraged the regime to proceed full speed ahead with reckless abandon.
As the domestic economy, particularly in the provinces, collapsed, the provincial governments ran up huge debts-partly to finance corrupt political machines to sustain the national government, and partly to avoid provincial popular revolts. Unlike South Korea, China, and Japan, large-scale corruption did not grease the wheels of national production: Bribes greased the hands that sold off lucrative public enterprises to foreign investors who stripped assets and reduced local production in favor of large-scale speculative activity. There was an inverse relation: As corruption grew, industry declined, tax receipts were negligible and competitiveness became an empty slogan.
Meanwhile, foreign investors moved in on the agro-industrial sectors, retail trade (mega malls), real estate and hotels, in association with a small nucleus of the Argentine economic elite and sectors of the kleptocratic political class, headed by the extended Menem family and its political entourage.
The first major adverse effect was the slashing of employees in the process of preparing public enterprises for privatization. The state fired hundreds of thousands of workers in the telephone, railroad, and waterworks sectors, assuming the economic costs and taking responsibility for repressing the ensuing protests. Many cities in the interior, like the petroleum city of Neuquen, were turned from prosperous cities to ghost towns, with 30-40% unemployment rates. Promises of "alternative employment" were never kept, as provincial and local officials linked to the central government either stole the funds outright or used them to finance their political machines, through expansion of unproductive "administrative" jobs.
The "centralization" of legislative and executive powers in the presidency-in his very person-and the dictatorial methods Menem used to legislate (most industries and banks were privatized via presidential decrees) facilitated rapid and extensive liberalization.
U.S. Secretary of the Treasury Paul O'Neill weighed in on the side of the IMF's "final squeeze," endorsing the IMF bailout of the bankers and the takeover of the remaining sectors of the economy. But he demanded, in typical euphemistic language, "a political solution." He called for a strong authoritarian regime capable of ramming the mass job firings, budget cuts and abolition of local currencies policy down the throats of the impoverished Argentines. O'Neill questioned "the leadership capacity" of the Duhalde government. According to an interview, O'Neill said Argentina's problem boiled down to a single question: Will the Argentine government do what it has to do, namely, implement the IMF policies? What O'Neill and others in the IFls and G7 mean by "political will" is precisely to override the interests and survival of thirty-three million Argentines, elected congressional officials, governors, and mayors, and force upon them further bankruptcies and unemployment-to push beyond the 53% poverty level to satisfy overseas bankers and investors.
Probably the most obscene remarks came from Anne Krueger, second in command at the IMF, a U.S. appointee and a former Stanford professor. In an interview in the Financial Times, she claimed that "the Argentine authorities are not sufficiently realistic as they should be." Realism, according to Krueger, means that in the midst of a depression, cut public spending, lower living standards and increase unemployment. The "realism" referred to is the world of finance capital and its voracious appetite to squeeze even more interest payments from bankrupt provinces, businesses and public treasuries; to withdraw more savings from Argentina with impunity.
The U.S. embassy staff in Argentina went even further. Political attaché Michael Matera claimed the crisis was due not only to Argentina's political leaders but to the entire Argentine people. "The viewpoint of international economists is incompatible with the national mentality of the Argentines. Argentineans have a collective incapacity to change; they are immature and paranoid." The racist ideology explicit in such statements is inescapable.
The style and substance of Argentine relations with the G-7 speaks to a new imperialism: the pillage of the economy, the growth of vast inequalities, economic stagnation followed by a profound and enduring depression, and the massive impoverishment of the population as a consequence of the greatest concentration of wealth in contemporary Argentine history. The new imperialism works directly through the inter-state system and subsidiary financial institutions like the IMF to dictate policy. The April mission of the IMF, with its public pronouncements on every aspect of the Argentine economy, the blatant dictates of the U.S. embassy and the G-7 economic ministers, strongly resonate with the colonial relationship of the past.
In a trip to Tucuman Province in April 2002, we visited the vast villas de miseria, or slums, and spoke to the multitude of poor and destitute. They told us that between 2001 and 2002, in just one year, the number of children suffering from malnutrition increased six-fold. The combination of mass firings, inflation, and the cutoff of food rations turned the poor into destitute, unable to meet even their basic food needs.
A week later, while meeting with a delegate from the bank workers' union in Buenos Aires, we were informed that the banks were planning massive firings. A month later, on May 19, a newspaper close to the financial elite, La Nacion, reported that banks were planning to fire two-thirds of their employees (80,000 of the 120,000), and reduce the pay of remaining staff.
By early July the streets were noisy with demonstrators, crime was rampant, university professors with three positions (catedras) were making $200 a month, highways were blocked and the pot-banging impoverished retirees and former middle class were meeting to demand the ouster not only of the regime, but of the entire political class.
The deepening polarization in Argentina has taken a variety of social and political forms: a national uprising that overthrew the De la Rua regime in December 2001; permanent rebellion in the provinces; constant mass mobilizations of the unemployed (piqueteros); and popular assemblies (caceroleros) in the impoverished middle and working class neighborhoods.
On December 19 and 20, 2001, hundreds of thousands of Argentines took to the streets to protest the government's declaration of a state of siege banning public demonstrations, the confiscation of $40 billion in savings, the deepening recession and 23% unemployment rate. The uprising which finally forced President De la Rua to resign and exit from the presidential palace via a helicopter was the culmination of a series of mass road blockages by the unemployed piqueteros, potbanging neighborhood marches and assemblies, provincial mobilizations and attacks on governors, mayors and federal officials. While each of the particular mass actions has its own specific social base, forms of direct action, and priority demands, they all converge in rejecting repayment of the foreign debt, implementation of IMF austerity programs, and the confiscation of savings.
The mass unemployed workers' movement was the detonator for the uprising of December 19/20, even if the organized unemployed were not a decisive force on the day of the ouster of the President. The unemployed workers' movements (MTDs, for Movimientos de Trabajadores Desocupados) have spread throughout Argentina and escalated over the past six years as the recession has turned into a depression and millions of former unionized factory workers have become 'long term' unemployed. The MTDs are organized territorially-by barrio, municipality, and more recently across municipalities, and in some cases as competing national organizations. Their main tactics are to barricade major highways, blocking the transportation of goods, services, and labor to and from industries, banks and other sectors. Their demands invariably include state-financed jobs and food. They are usually autonomous from the main trade unions and political parties, though there are important exceptions. The MTDs usually meet in assemblies in their neighborhoods to decide on tactics, demands, and the distribution of jobs secured in successful struggles. By early 2002, over 200,000 unemployed workers were organized, though many more workers and underemployed participate in the street blockages and marches. The MTDs draw support from rank and file trade unionists, regional trade union leaders and the Marxist parties. The MTDs clearly spearheaded the opposition to the neoliberal regime in the absence of any sustained opposition from the political parties and the official trade unions.
Several theoretical points emerge from an analysis of the MTDs. First, the idea that the unemployed, outside the factories, cannot be organized because they are too dispersed, fragmented and without social leverage is false. The MTDs demonstrate that their common social situation, the leadership from below rooted in formerly unionized workers expressing themselves through popular assemblies in horizontal structures can succeed in organizing in the midst of a depression, despite the hostility and indifference of the entire trade union and political party leadership.
The activist mass has become in large part "feminized" as women are in most cases the head of the household and have taken the lead in organizing the barricades and the logistical support systems (roadside soup kitchens). Women from working class families bring to the MTDs the experience of two decades of neighborhood organizing, first via neighborhood reform schemes of the various regimes and over the past seven years through the autonomous militant MTDs. The road blockages have evolved from sporadic, quasi-spontaneous actions into systematic, organized activities coordinated among thousands of unemployed. There were 51 road blockages in 1998, 252 in 1999, 514 in 2000, and nearly a thousand in 2001. In 2002 the road blockages were often combined with generalized uprisings, particularly in the provinces of the interior, but also in the greater Buenos Aires region. In January 2002, for example, road blockages accompanied popular mobilizations in Cordoba, Santa Fe, Chaco, Misiones, Santiago del Estero, Salta and Formosa. The combined struggles included both the demands of the MTDs and those of other protesting sectors, such as back pay for public employees, housing for the homeless, an end of the confiscation of savings, and food distribution. In some cases municipal buildings were sacked, supermarkets were raided, and governors' mansions and state legislatures were occupied.
It is clear that the piqueteros are not all that they appear to be, unemployed workers fighting for social justice. Particularly the Peronist party, now in power, has used the job subsidies to try to divide the MTDs, handing out job application forms via their barrio ward bosses and organizing thugs to disrupt local meetings. In addition, local Peronist bosses have hired some unemployed to assault and intimidate assemblies n popular barrios, though they seldom attempt to threaten the MTDs.
The radical MTDs are dispersed throughout the country and in the greater Buenos Aires region. They include Anibal Veron, General Mosconi, Almirante Brown, Teresa Rodriguez, Solano the names of the communities in which they are based-and many others, including regional affiliates of the CCC (Coordinadora de Collectivos Clasistas) which have a militant confrontational style of social action, advocate total blockage of highways, and have retained autonomy from all the trade union confederations.
However, the radical MTDs are themselves internally divided along political lines, with the Trotskyist Workers Pole (Polo Obrero), the Communist "Land and Liberation" ( Terra y Liberacion) and other formations competing for hegemony. The result is that the radical MTDs at best have only tactical alliances, while more often than not they are in conflict, even to the point of separate negotiations with the regime.
The usually ubiquitous red flags and banners of the Marxist Left, dissident trade unions and piqueteros were almost completely absent when tens of thousands of Argentineans marched to the Plaza de Mayo facing the presidential palace, the Casa Rosada, on the hot summer afternoon of December 19, 2001.
The absence of the Left on the first day of the uprising can be attributed to several factors, both ideological and organizational. Most of the Left operated from a rigid class analysis from which it deduced political behavior. The Left was generally "workerist," in the sense that what didn't come out of the factories was suspect. This rigidity generally took the following logic: factory worker-unionization-revolutionary party general strike-revolution. In the meantime, the unionized workers became a minority, most workers were un- and underemployed and many were organized in MTDs. Belatedly the Left turned to organize, mobilize and fragment the MTDs.
Likewise, the Left missed the dynamics of class mobility: The rapid downward mobility of the middle class, its impoverishment and proletarianization. Having lost all their savings, the middle class had nothing to lose. They had become deeply alienated from their traditional conservative moorings. They were open to a radical democratic style of street politics and direct forms of assembly-style democracy.
The Left only joined the uprising on the second day, December 20, and then only the activists and militants, as the leaders remained in headquarters strategizing. Important contingents of public sector trade unionists, piqueteros, Marxist activists and tens of thousands of independent radicalized middle class people poured into the streets. Thousands of young people, from lower middle class students to young unemployed piqueteros, joined the march and the eventual battles with the police in front of the Presidential Palace in Buenos Aires and in other major cities. The downwardly mobile middle class demonstration was the detonator of the mass and continual assault on power. Four governments came and went in fourteen days.
The uprising was successful on several important counts. The Saa regime declared that Argentina would not meet its debt obligations. The populace was able to force the resignation of four presidents. The political class and the judicial system were delegitimized, their venality and anti-national, anti-popular character were fully exposed.
The December 19-20 mass uprising was historically unique for several reasons: It was the first time in Argentine history that a popular uprising had overthrown a bankrupt elected or dictatorial leader. It was the first time in history that the majority of Argentines had confronted and rejected the entire political class. The uprising and the solidarity that ensued led to new and creative forms of direct popular representation in the shape of barrio assemblies, and new tactics of struggle, such as pot-banging demonstrations capable of blocking state decisions adversely affecting the people. Preventing Duhalde from converting the confiscated savings accounts into the junkiest of junk bonds is one important example.
The popular assemblies increasingly relied on the work commissions to implement policy changes as the Marxist sects began to penetrate, debate, argue over tactics, programs and party turf, alienating many and recruiting few. There was a temporary retrocession from the high point of December 2001.
The pot-banging movement has demonstrated its capacity to veto presidential nominations and decrees. The internal warfare of the Left sects undermined the assemblies' attractiveness to many participants. Despite emerging weaknesses, the political experience and the sense of power have sustained an increasingly radical and growing current of opinion among the impoverished middle class. Public opinion polls on presidential candidates in late May 2002 favored a Marxist, Luis Zamora, over any and all of the persona from the major parties.
In light of the complete and total collapse of the Argentine neoliberal model, several alternative models of development have emerged. One of them, Plan Phoenix, put forth by over 100 economists and political scientists, is the most widely circulated and influential in intellectual circles. The other, which we can call Plan Prometheus is not yet a formal proposal or document, but a body of demands and proposals now being articulated within the emerging revolutionary democratic organizations.
Phoenix is both a critical diagnosis of neoliberal policies and a prescription for change and development. The critical diagnosis covers a wide range of economic policies, from taxation, public spending, ALCA (Area Libre Commercio de America) and MERCOSUR (Market of the Southern Cone) to privatization and technology policy. Phoenix's main virtues are found in its criticism of the total deregulation of the economy, the indiscriminate opening to the world market, the unilateral and radical reduction of tariff barriers (without reciprocity), the loss of control over monetary policy via the de facto dollarization, the dismantling of the state as an instrument of economic policy, the great concentration of economic power, and the lack of transparency in the privatization of public enterprise. Phoenix's rejection of globalization ideologues' argument that the nation-state is no longer a viable tool for policy making is part of a new project to revitalize the role of the state in pursuit of an industrial policy which prioritizes development of the internal market and international competitiveness.
In the area of reforms, Phoenix advocates reductions in debt payments via a moratorium or reduced payments-the document is self-contradictory. Its moderate proposals have been bypassed by subsequent events, since three months after Phoenix was published the government defaulted. Phoenix favors increased taxes on the rich, the financial groups and other "non-productive" sectors, and elimination of subsidies to privileged classes. The revenues raised would be channeled toward employment-generating investments in socially useful areas (schools, low income housing, child care centers), as well as worker training programs. The basic premise of the Phoenix document is that a coalition of political parties, productive private sectors, and civil society would be the political bases for a new regulatory regime. The state would direct financial capital to fund productive capitalism; foreign capital to reinvest profits in the national economy; and productive (as opposed to speculative) capital to invest in socially useful activities. Phoenix seeks to devise an economic policy to "reorient capital" toward the domestic market, regional (re-)industrialization and processing of raw materials to generate more value added to exports in the international markets. The priority of Phoenix would be to develop a national plan of development to reactivate the economy, fix social priorities, selectively protect local producers, seek sources of domestic funding and then negotiate with the IFls, including the IMF. The focus would be on internal transformation and the role of the national state, not on external agreements with the IFls.
The Phoenix document is without any connection to the powerful social movements and political uprisings that have occurred. They are not even mentioned in passing. The organized unemployed, the popular assemblies, the factory takeover movements, and the provincial rebellions-all of which have the most direct stake in the welfare, development and employment goals of Phoenix-are ignored. Instead, Phoenix looks to the discredited trade union bureaucrats of the confederations, the political parties and leaders who have been the main cause of the disaster to reenact a new national-popular coalition with foreign capital and credit from the IFls.
For Plan Prometheus, the people's movements are the point of departure. First and foremost is the need for a new social coalition of the 80% of Argentines suffering a severe decline in living standards, including the 55% below the poverty line. Employed and unemployed workers alone amount to close to 50%, and the impoverished middle class includes another 20-30%. This is a broad-based coalition, which is not linked to overseas banks. This gives a socialist state the social basis to re-nationaiize the banking and financial system and provides a political base to resist pressures from the G-7 bankers. The nationalization of foreign trade would provide the state with a mechanism for reorienting foreign exchange to finance public investment and national industrialization. The re-nationalization of petroleum would provide income and revenues to stimulate job training, infrastructure and social projects generating employment. Progressive taxes and tax collection can be enforced by threats to expropriate the property of tax evaders and tax delinquents.
The state reforms proposed by the Phoenix document should be articulated through new assembly forms of popular representation and the incorporation of the new social movements (piqueteros) in local and municipal governments. Popular assemblies should exercise direct control of budget allocations and expenditures, an advanced form of participatory public finance. Public ownership of strategic sectors of the economy is essential to sustain redistributive policies, as the recent decades attest. With privatization the inequalities widened, and decision-making power over macro-economic policies was monopolized by powerful economic groups.
The economic crisis has cut per capita income by two-thirds. Given the scarce resources and the disintegrating productive base, only a public takeover under workers' control can expand the material base and generate greater equality. Greater equality depends on social control of the income to be distributed. Social ownership is at the center of Plan Prometheus. It combines the tax and expenditures of Phoenix but within a vastly expanded social property sector, democratically controlled by the direct producers and administered by a meritocratic public administration. The plan is Promethean because it aims at the total reconstruction of a disintegrating economy with a shattered social fabric in the face of powerful U.S.-Euro imperial adversaries. Having control over the basic economic sectors, however, means the return and reinvestment of earnings in Argentina. Debt default means the savings of over 50% of export earnings. The diversification of production and the reactivation of the economy mean that optimal use can be made of existing unused capacity-over 50% of the total. MERCOSUR, China, the Arab countries and sectors of the EU and Russia offer alternative markets to any IFI-organized boycott. Public investments in innovation, technology, research and development can incorporate Argentina's highly trained but currently underutilized labor force. The reactivization of internal markets and selective protection of provincial producers can expand markets. Public investments in infrastructure can employ the unemployed and facilitate inter-provincial and inter-MERCOSUR trade.
Plan Prometheus incorporates the criticisms of Plan Phoenix and extends them from modifying the behavior of the private actors to transforming their structural position. Prometheus incorporates some of the specific welfare reforms of Phoenix but locates them in a more realistic political-economic properly framework that avoids the constraints and threats of private/foreign non-cooperation. Prometheus replaces Phoenix's proposed national-popular social coalition with a more realistic popular coalition rooted in the really existing social movements and their interests.
As of September 2002 there is no sign of recovery or outside relief-on the contrary, the crises have deepened. The collapse of the Argentine economy and the impoverishment of the majority of its people following the zealous application of "free market" doctrine is a warning to the rest of the Third World. By early summer the Brazilian and Uruguayan economies began their descent: Uruguay is in the midst of deep recession (with 15% unemployed) and was temporarily "saved" from collapse by a $1.5 billion IMF loan; in Brazil it took a $30 billion loan to stave off collapse. What is called a financial "contagion" is in reality the collapse of an economic model based on U.S. pillage, local corruption and joint exploitation.
In June, during a march organized by the Anibal Veron MTD, two piqueteros were executed by police officers-the act videotaped. The result was a massive protest which forced President Duhalde to announce new elections for early 2003. In response to the continuing crises and the IMF refusal to provide any support, a newly organized, massive popular rebellion is in the works. Date and place to be announced.

ABOUT THE AUTHORS James Petras has 50 books and 375 scholarly articles to his credit. His work has been translated into 28 languages. Globalization Unmasked (with Henry Veltmeyer) is his most recent book. His web site: (Spanish), and (English).
Henry Veltmeyer teaches Sociology and International Development at St. Mary & University Halifax, Nova Scotia, and Universidad Aut6noma de Zacatecas, Mexico. Recent publications include: America Latina: Capital Global y la Perspectiva Del Desarrollo Alternativo, and Globalization Unmasked.

Is Obama Forming a Fascist “Shadow Government?”

posted at 4:29 pm on September 7, 2009 by Dafydd ab Hugh

Today, President Barack H. Obama appointed yet another “czar”, making the announcement at an AFL-CIO Laborious Day picnic in Cincinnati today; Ron Bloom will make the 33rd Obamic Czar, counting Van Jones, who just resigned but will surely be replaced with a less explosive (but every bit as Marxist) appointee, and after Obama taps someone else to fill Bloom’s old position as Car Czar.

Thanks to Glenn Beck, who has done a bravura job of journalism, here are the Czars; entries in blue are those Czar positions created expressly by Barack Obama:

1. Richard Holbrooke — Afghanistan Czar
2. Jeffrey Crowley — AIDS Czar
3. Ed Montgomery — Auto Recovery Czar
4. Alan Bersin — Border Czar
5. David J. Hayes — California Water Czar
6. Ron Bloom — Car Czar (moved to Manufacturing Czar today)
7. Dennis Ross — Central Region Czar
8. Todd Stern — Climate Czar
9. Lynn Rosenthal — Domestic Violence Czar
10. Gil Kerlikowske — Drug Czar
11. Paul Volcker — Economic Czar
12. Carol Browner — Energy and Environment Czar
13. Joshua DuBois — Faith Based Czar
14. Jeffrey Zients — Government Performance Czar
15. Cameron Davis — Great Lakes Czar
16. Van Jones — Green Jobs Czar (resigned)
17. Daniel Fried — Guantanamo Closure Czar
18. Nancy-Ann DeParle — Health Czar
19. Vivek Kundra — Information Czar
20. Dennis Blair — Intelligence Czar
21. Ron Bloom — Manufacturing Czar
22. George Mitchell — Mideast Peace Czar
23. Kenneth R. Feinberg — Pay Czar
24. Cass R. Sunstein — Regulatory Czar
25. John Holdren — Science Czar
26. Earl Devaney — Stimulus Accountability Czar
27. J. Scott Gration — Sudan Czar
28. Herb Allison — TARP Czar
29. Aneesh Chopra — Technology Czar
30. John Brennan — Terrorism Czar
31. Adolfo Carrion Jr. — Urban Affairs Czar
32. Ashton Carter — Weapons Czar
33. Gary Samore — WMD Policy Czar

In each case, the One has replaced functions normally carried out by cabinets or other agencies, headed by secretaries and directors who are subject to Senate confirmation (thus accountable to the United States Congress), with unelected, unconfirmed, unaccountable apparatchiks who ultimately answer to only one person: Barack Obama.

The departments raided of their authority in favor of Czars include the Departments of State, Defense, Homeland Security, Justice, Treasury, Health and Human Services, Labor, Interior, Energy, Commerce, and Housing and Urban Development (HUD) — that’s the entire cabinet except for the Departments of Education, Transportation, and Veterans’ Affairs).

Specific sub-cabinet level agencies subject to the Senate’s “advise and consent” rules, now looted of their powers by the Obamic Czardines, include the Central Intelligence Agency (CIA), Immigration and Customs Enforcement (ICE), Environmental Protection Agency (EPA), Office of Management and Budget (OMB), National Security Council (NSC).

A less charitable observer might conclude that President Obama is systematically creating a shadow government of special commissars, which will allow Obama to bypass congressional oversight and the checks and balances of “independent” (in a sense) agencies to rule the United States directly by decree.

Every “czar” steals some of the authority that would normally reside in the permanent bureaucracy and instead secretes it behind the impregnable wall of an Executive Order: unquestionable, uninvestigatable, unreviewable, unviewable, and of course, un-overturnable by any other branch of government. In fact, I don’t believe Congress can even subpoena a czar to testify before Congress what he’s doing and why, since the president can declare the questioning off limits under “executive privilege.”

Obama has some precedent on his side: Woodrow Wilson and Franklin D. Roosevelt also tried to overthrow our system of constitutional checks and balances, in order to rule by diktat, with some success. Wilson (if I recall correctly) wanted virtually all power invested in the Congress (mostly the House, the “people’s legislature”), whereas FDR demanded direct presidential control “for the duration” (of the Depression and World War II — which between them endured for all twelve years of Roosevelt’s tenure — which gave him a perverse incentive not to solve either “crisis”).

Shifting more and more governmental power into the hands of a single man on a white horse, who will personally speak for and on behalf of “the people,” is a classical sign of incipient fascism… which, coupled with Obama’s nationalization of the banks, of executive pay (even within companies that didn’t take a lick of “stimulus” money), energy production and distribution, news reporting and other journalism, labor relations, medical care — and soon food consumption and the body mass of each American — makes a chilling portent of what is to come. As one of Obama’s predecessors wrote, “Everything inside the state — nothing outside the state — nothing against the state.”

I wish somebody would tell me how many elements of fascism must come bubbling to the surface of the new administration (not even a year old… seems like a hundred) before we’re allowed to suggest that Barack Obama, the head of the fish, must himself be a liberal fascist.

Must we wait until he re-enacts Wilson’s sedition act and starts throwing in prison anyone who criticizes the government, the president, or any of the president’s policies?

Saturday, September 12, 2009

Ron Paul Has the Council on Foreign Relations Worried

Written by Steven Yates
Tuesday, 08 September 2009

Near the start of this year Ron Paul (R-Texas) introduced H.R. 1207, the Federal Reserve Transparency Act of 2009. The bill was referred to the House Committee on Financial Services. As of this writing, H.R. 1207 has 282 cosponsors.

A Senate equivalent, S.604, the Federal Reserve Sunshine Act of 2009, has been introduced by Bernie Sanders (I-Vt.). It has 23 cosponsors. Both bills have received a tremendous groundswell of grass-roots support. Much of the support is coming from ordinary people who have become aware of the fact that the Federal Reserve has created trillions of dollars literally out of nothing during the past calendar year in its effort to micromanage its way out of the worst economic crisis since the Great Depression.

If such a measure were passed by both houses of Congress and signed into law by President Obama, the resulting bill would allow the Government Accounting Office to conduct audits of Federal Reserve System monetary policy. The bill proposes to scrutinize the Fed’s dealings not just on domestic monetary policy but on dealings with foreign central banks and foreign governments.

The power elite is worried. Evidence for this can be found in a short article "The Fed's Political Problem" appearing on the website of Foreign Affairs, flagship journal for the Council on Foreign Relations (CFR). The article's author, Alan S. Blinder, is a senior-level economics professor at Princeton University who also directs Princeton’s Center for Economic Policy Studies. From 1994 to 1996 he served as vice chairman of the Board of Governors of the Federal Reserve System.

Blinder first argues a thesis he proposed back in 1997, that some areas of government are properly political and others are properly technocratic. He places monetary policy in the latter, where it can operate independently of political oversight. The drawback of Ron Paul’s bill is that it would transfer Fed oversight to the political realm and end its independence.

Blinder describes Dr. Paul as “an extreme libertarian and longtime foe of the Fed. He has, incredibly, persuaded almost two-thirds of the House of Representatives to co-sponsor a bill that would jeopardize the Fed’s independence.” According to Blinder, the Fed “gets plenty of critical evaluations” of its policies and decisions. He maintains that Dr. Paul’s bill “could easily develop into something quite dangerous.” He imagines this scenario:

Sometime in 2010, the Fed, wanting to avoid inflation, will likely begin to abandon the hyper-expansionary monetary policy it adopted during the recent crisis as a way to stave off a depression. As it does so, interest rates will start rising even as unemployment remains high. Predictably, Congress, being more closely attuned to public opinion, will be unhappy with this situation. Until now, the Fed’s independence has ensured that it can afford to ignore public opinion and take such necessary but unpopular economic measures. That is precisely why we want an independent monetary policy. But if the Paul bill passes, angry members of Congress could ask for a GAO audit. And, if the report is critical, they could use it to browbeat members of the Federal Open Market Committee, the Fed’s interest-rate-setting body, for killing the country’s economic recovery.

This misses the key argument Ron Paul has been making, which follows those of members of the Austrian school of economics (e.g., Ludwig von Mises). What Blinder euphemistically calls hyper-expansionary monetary policy actually is inflationary, if we understand inflation to be not merely rising prices but an increase in the amount of fiat currency in circulation. Mainstream economics has long preferred the public to see inflation almost exclusively in terms of visibly rising prices. If prices aren't rising, economists can maintain that inflation is low even though the money creation spigot is going full blast — as it has been since the economic crisis began a year ago.

If we understand inflation as an increase in the money supply, however, we see immediately that the Fed, far from being a controller of inflation, is actually an engine of inflation. Rising prices in this case are just one possible effect of monetary inflation. The Fed is responsible for the long-term decline in purchasing power of our dollars, which have been backed literally by nothing except legal tender laws and the willingness of the public to accept them since 1971, the year President Richard Nixon severed the last ties between the dollar and gold. Fed monetary policy is the reason a hamburger costs you several dollars when your grandfather could buy one for thirty-five cents. The dollar has lost slightly over 96 percent of its value since the Federal Reserve System was created in 1913. The national debt has soared during the period since 1971 from a few hundred million to its present $11.8 trillion. Millions will be added to the debt during the brief time it takes to read this article!

The dollar’s value will drop considerably more should it lose its status as the world’s reserve currency. The Chinese are getting very nervous about the money-creation spigot in Washington, D.C. Perhaps these are the kinds of developments that elites such as Blinder don’t want the public to know about. Clearly the elites are uncomfortable with the amount of attention the Fed has received — the public being aware of the trillions having been created literally out of thin air during the past year. “What will this do to the long-term purchasing power of my money?” is a perfectly valid question many ordinary Americans are asking.

What are the prospects for H.R. 1207 and S. 604? Even if these bills pass and a compromise bill reaches President Barack Obama’s desk, it is difficult to imagine him even considering signing it. The effort to bring more of the Fed’s activities into the light of day may receive a new ally in the Senate late next year, however, as Ron Paul’s son Rand Paul has announced his candidacy for one of Kentucky’s two slots and raised $815,000 as of this writing. Like father, like son: Rand Paul is also highly critical of the lack of transparency that characterizes crucial decisions made by the Federal Reserve and has vowed, if elected to the Senate, to work to “shed light on this secretive organization." He reminds us of the trillions the Fed has created out of thin air and adds, “The American people have a right to know to whom this money was given. For all its talk of transparency the current administration has done nothing to tear the shroud off the Fed.”

The Road to Health Care Serfdom

Posted by Anthony Gregory on 09/10/09

Obama is right that there are a lot of problems with America's health care system, but what is the source of the problems? In the 1960s, more than 80% of Americans had health insurance, and most of those who didn't saw no need for it, since health services were quite inexpensive. Doctors did house calls. Medications were affordable. A hospital visit cost a few days' pay, not a month's or year's pay.

This superior system could be restored, if only the government got out of the way. Phase out Medicare, Madicaid, subsidies, licensing and the FDA and we'd be a much healthier nation.

Medicare and Medicaid are unsustainable at the current time, as Obama points out, but why expand this socialism to the rest of America's health care system? He notes that when someone uninsured goes to the hospital, we all pay, but this is the result of government subsidizing health care in the first place.

Although the president says we should tweak the current system, rather than build a new health care system "from scratch," this would just leave in place the hybrid corporatist-socialist system that has driven up costs. Indeed, mandating insurance, which is morally and constitutionally repugnant, is a great way to shore up the corporate state, which is why the insurance industry is behind Obama's plan.

Obama says some on the right want to eliminate employer-based insurance. Well, I haven't heard many suggest this, but employer-based insurance is indeed one of the major problems here. As critics of the status quo point out, employees fear they will lose their coverage if they change or lose their jobs. This is a big problem. Distortions in the tax code make it profitable for businesses to treat health insurance as part of their workers' compensation, since it isn't taxed as income is.

How can it be addressed? We must understand what has caused these distortions. We have a modern health care maze brought about by regulation, tax structures and government interventions. In the 1970s, HMOs were forced upon businesses as an option, and soon these institutions were demonized, though the government gave them their power. Nowadays, health consumers are separated from the cost of their health care needs, which drives up prices and inflated demand. Providers bill insurance companies, who operated under a zillion mandates as to what they must provide their customers. This whole mess must be fundamentally addressed if we are to solve America's health care crisis.

We do have major problems in the health care sector, but Obama is wrong when he says he plans to be the last president to address them. A fully blown socialist model looks like it's off the table, which means any "reform" will contribute to the corporatist status quo, only make it worse, lead to rationing, worse service and higher costs. Of course, a full socialist solution would be much worse. But if we get the "compromise" that appears to be emerging, it will only exacerbate all the problems and lead to more calls for a full government takeover. Ludwig von Mises identified this vicious cycle of one intervention begetting more intervention, and unless we defeat the Obama plan root and branch, we will soon be on the road to medical Serfdom.