Tag Archives: propaganda

Deficit commission report 1

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Link (pdf).  This thing is 50 pages long so I’m going to do it in several parts. It’s absolutely terrible and full of lies.  Its guiding principle was explained by Marx in Vol. I of Capital:

The system of public credit, i.e., of national debts, whose origin we discover in Genoa and Venice as early as the Middle Ages, took possession of Europe generally during the manufacturing period. The colonial system with its maritime trade and commercial wars served as a forcing-house for it. Thus it first took root in Holland. National debts, i.e., the alienation of the state – whether despotic, constitutional or republican – marked with its stamp the capitalistic era. The only part of the so-called national wealth that actually enters into the collective possessions of modern peoples is their national debt.  Hence, as a necessary consequence, the modern doctrine that a nation becomes the richer the more deeply it is in debt. Public credit becomes the credo of capital. And with the rise of national debt-making, want of faith in the national debt takes the place of the blasphemy against the Holy Ghost, which may not be forgiven.

The public debt becomes one of the most powerful levers of primitive accumulation. As with the stroke of an enchanter’s wand, it endows barren money with the power of breeding and thus turns it into capital, without the necessity of its exposing itself to the troubles and risks inseparable from its employment in industry or even in usury. The state creditors actually give nothing away, for the sum lent is transformed into public bonds, easily negotiable, which go on functioning in their hands just as so much hard cash would. But further, apart from the class of lazy annuitants thus created, and from the improvised wealth of the financiers, middlemen between the government and the nation – as also apart from the tax-farmers, merchants, private manufacturers, to whom a good part of every national loan renders the service of a capital fallen from heaven – the national debt has given rise to joint-stock companies, to dealings in negotiable effects of all kinds, and to agiotage, in a word to stock-exchange gambling and the modern bankocracy.

Keep that in mind the next time somebody tells you he had no idea what he was talking about.  As for the present, here is some good background on why a number of these things are lies:

1st Fiscal Sustainability Teach-In and Counter-Conference

Deficit spending 101 (part 2, part 3)

Fiscal sustainability 101 (part 2, part 3)

Ok, on to the report:

P. 4: “We must stabilize then reduce the national debt, or we  could spend $1 trillion a year in interest alone by 2020.”

To who? Who is this interest being paid to? No, it’s not China, nobody in China saves in or spends American dollars because they have their own currency.  This is “owed” to somebody who does save/spend in American dollars which is  (in theory) the American public and there’s no need to track money we owe to ourselves so we can be done with this, right?  No, we need shore up the balance sheets of insolvent banks (who were just given another $600 billion the other day by the Federal Reserve) with spending that otherwise would have been on other things.  Some of them are undoubtedly unnecessary, but many are not.

P. 5: “Invest in education, infrastructure, and high-value R&D.”

In other words: for-profit education, the FIRE sector, and the tech sector.

P. 6: “Bring spending down to 22% and eventually 21% of GDP.”

This is really bizarre.  Where did they come up with this number?  Why does it matter what percent of the GDP is federal spending?  It sounds like somebody is making it up as they go along.

P. 8: What are “illustrative” savings?

“Pass tax reform that dramatically reduces rates, simplifies the code, broadens the base, and reduces the deficit.”

Sounds like the Ryan plan.

P. 9: “Reduces tax rates, abolishes the AMT…”

The AMT is the Alternative Minimum Tax, not a particularly pressing problem.  A good indicator of the commission’s ideological extremism.

The charts and tables are extremely silly.  I’ll probably divide this up into three more posts with discretionary spending in part 2, tax reform in part 3, and the rest in part 4.

More on the “forecosure issue”

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As our elected officials have started to come to terms with what they’ve done:

The financial services industry is growing increasingly concerned as more politicians get behind the idea of a broad moratorium on home foreclosures, which banks and many outside analysts say could be good short-term politics but terrible long-term policy.One senior Wall Street executive told Morning Money over the weekend: ‘President Obama should be very cautious about aligning himself with Congressional leaders who are playing politics with the foreclosure issue. With foreclosed properties comprising one in every four homes sold in the United States, the spreading moratorium could disrupt real estate deals in progress, slow down the process of clearing the backlog of troubled home loans and [endanger] the economic recovery.’

“The recovery” meaning financial markets, not the economy that you and I actually live in, which is stagnant:

Now there are a number of details that have been drowned out by the massive public relations campaign that’s been put forward on this such as this New York Times article.  There’s a wonderful quote to describe this: “The most effective propaganda paradoxically uses information to drive information out of circulation.”  It was the same thing when the crisis started and we heard about all kinds of derivatives–which are problematic–rather than the massive housing bubble that they filled.  Curiously, that will actually help to explain the MERS problem.

MERS is an electronic mortgage registry database that was used to speed up the whole process of securitizing these loans faster than they could keep track of who actually owned the properties they were for.  See this NYT article from 2009 describing the system.  The key quote is this:

MERS, a tiny data-management company, claimed the right to foreclose, but would not explain how it came to possess the mortgage notes originally issued by banks. Judge Logan summoned a MERS lawyer to the Pinellas County courthouse and insisted that that fundamental question be answered before he permitted the drastic step of seizing someone’s home.

“You don’t think that’s reasonable?” the judge asked.

“I don’t,” the lawyer replied. “And in fact, not only do I think it’s not reasonable, often that’s going to be impossible.”

If they really believed they were worth multiple trillions of dollars, you’d think they’d spend the time to make sure they could take back these valuable properties, but of course they didn’t, which was why it was a multi-trillion dollar bubble.  If you’re pawning something off on people, you want them to take it off your hands for more than its worth so they are the ones stuck with it and you’re gone when they realize it’s not worth what they paid.  The person in that position is here is the real estate broker, the lender assumes the deed to the property and is supposed to take a loss if the buyer can’t actually pay for it.  For assuming this risk they take interest on the loan.   What we have been surrounded by is a bizarre “bank always wins” mentality.  It’s having your cake and eating it too, then getting another one when it’s gone.

This is why the bizarre decision to preserve the debts that couldn’t be paid by doing a creditor bailout was so terrible, not “taxpayer dollars” which were far less than they’ve gotten in loan guarantees and access to the fed’s discount window.  The recipients of that money often pay a 15% capital gains tax rate on their alleged “investments” compared to the 25% income tax anyone who makes more than $34k a year pays and all of the sales taxes people pay for necessities.   Even people who have been able to keep up with their mortgage payments are in “negative equity” and paying for a loan on a house at bubble levels despite the bubble bursting.

Only under such a uniform standard could we so easily determine who the houses belong to.  Only under an effective media blackout could the NYT print a story attributing the “foreclosure issue” to something so mundane without embarrassment.

Fake Iraq exit #2

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For fake exit #1, see this and this.

As for the second attempt:

Guardian

The last US combat troops have left Iraq, seven-and-a-half years after the US-led invasion, and two weeks ahead of President Obama’s 31 August deadline for withdrawal from the country.

The final troops to leave, 4th Stryker Brigade, 2nd Infantry Division, rolled in convoy across the border and into Kuwait this morning, officially ending combat operations which began in March 2003.

The Obama administration had pledged to withdraw troops to 50,000 by 31 August. CNN reported that according to the US military there are now 56,000 US troops in Iraq, meaning another 6,000 must leave if the US president is to meet his own deadline.

….

“By the end of this month, 50,000 troops will be serving in Iraq. As Iraqi security forces take responsibility for securing their country, our troops will move to an advise-and-assist role.

“And, consistent with our agreement with the Iraqi government, all of our troops will be out of Iraq by the end of next year.

Ah, notice that it says combat troops.  The agreement being referenced is the 2008 U.S.-Iraq Status of Forces Agreement, which states:

All the United States Forces shall withdraw from all Iraqi territory no later than December 31, 2011.

AP

KHABARI CROSSING, Kuwait — A line of heavily armored American military vehicles, their headlights twinkling in the pre-dawn desert, lumbered past the barbed wire and metal gates marking the border between Iraq and Kuwait early Thursday and rolled into history.

For the troops of the 4th Stryker Brigade, 2nd Infantry Division, it was a moment of relief fraught with symbolism but lightened by the whoops and cheers of soldiers one step closer to going home. Seven years and five months after the U.S.-led invasion, the last American combat brigade was leaving Iraq, well ahead of President Barack Obama’s Aug. 31 deadline for ending U.S. combat operations there.

Makes for a nice photo-op.

Reuters

The U.S.-Iraq military pact that came into force in 2009 provides the legal basis for U.S. troops to be in Iraq. Under the agreement, all U.S. troops must be out by 2012. But U.S. negotiators say that even as the pact was being negotiated, it was considered likely it would be quietly revised later to allow a longer-term, although much smaller, force to remain.

There are currently 56,000 U.S. troops in Iraq, down from about 140,000 when Obama took office in January 2009.

With opinion polls showing Americans tired of nearly a decade of war in Afghanistan and Iraq, any decision to extend U.S. military involvement in Iraq would be enormously risky for Obama, who is up for re-election in 2012.

….

Iraq’s military commander, Lieutenant-General Babakir Zebari, caused consternation last week when he said his troops would not be ready to protect the country until 2020, and that the United States should keep its forces there until then.

And then there’s the contractors:

….the State Department is planning to more than double its private security guards, up to as many as 7,000, according to administration officials who disclosed new details of the plan. Defending five fortified compounds across the country, the security contractors would operate radars to warn of enemy rocket attacks, search for roadside bombs, fly reconnaissance drones and even staff quick reaction forces to aid civilians in distress, the officials said.

This isn’t exactly going to fool the Iraqis, so it’s clear who the intended audience is.