Friday, 30 September 2011


Following the testimony of Adm. Michael Mullen, chair of the joints chiefs of staff, to the senate Armed Services Committee on 21 September 2011, about Pakistani tolerance of Afghanistan's Haqqani rebels, Sen. Lindsey Graham went on FOX NEWS and argued that all options were on the table, in essence threatening Pakistan with military action. Pakistani officials immediately criticized US suggestions that the country was destabilizing the region and called for calmer attitudes to prevail.
A number of journalists and political observers noted that the comments of both Mullen and Graham were just a rhetorical warning and nothing more. That assessment turns out to be less than accurate, for on 30 September 2011, the US launched a missile strike killing three suspected militants in a Pakistani tribal region near the Afghan border, an area where the US has been urging the Pakistanis to go in and engage the rebels.

The US has been active in drone warfare along the Pakistan-Afghanistan border for the past few years, launching at least 100 drone attacks in 2010 and at least 50 in 2011 in the region of North Waziristan where the US has been demanding that Pakistanis move in to wipe out Haqqani rebels. While the Pakistani government is adamantly against US ground troops chasing Afghan rebels on Pakistani soil, the idea of drone warfare seems as the lesser evil, although very much dreaded.

Meanwhile, Pakistan's intelligence chief denies that Pakistan has provided any kind of logistical or intelligence support to Haqqani rebels, and Pakistan's foreign minister insists the country has done all it could to fight terrorism. Evidently, US demands that Pakistan launch attacks along the border against Haqqani and Pakistan's refusal to become entangled in such a war is seen by Washington as 'helping' the Haqqani network. While Pakistani officials have been denying any links to Haqqani and argue that Pakistan has made many sacrifices in the last ten years, more than fifty religious leaders are now calling for jihad against the US. Even more significant, Pakistani officials have been showering China with praise. Interior Minister Rehman Malik pledged to a high-level Chinese official that China's enemy is Islamabad's enemy.Pakistan has also been trying to get closer to Saudi Arabia in this time of tensions with Washington.

The anxiety on the US and Pakistan's part stems from the futile and costly war in Afghanistan that is unlikely to yield the result the US wants. Moreover, the weariness of the war has caused a segment of Pakistani society, including officials and not just the poor and fanatic Muslims, to become even more nationalistic than they were before the US launched war against Afghanistan.

The question for the US now is damage control, or going all out as Sen. Graham would like perhaps.  Exactly what does the US want from Pakistan for the duration, not just this year but for the decade and beyond, and what is it willing to do - and not do -  in order to secure a solid relationship with Islamabad that so desperately looks to China for support? Even if the Haqqani network were to be wiped off the face of the earth, that would not change the situation in Afghanistan to the degree that a pro-West regime could sustain power for very long once NATO troops are out. So what exactly has the US won by alienating Pakistan?


Does China's global port expansion pose a threat to US national security, especially when it concerns ports so close to the US borders such as Bahamas and Panama, or is China merely acting as a world commercial power without much choice but to secure ports around the world for transport purposes? Container shipping is the way mass transoceanic transport is carried out and the Chinese are the largest transporters of container shipping business. If they have commercial control of global ports, however, what is to prevent them from reverting them to strategic uses at some point in the future, and what would that mean for the world balance of power?

From Brazil and Bahamas, from Greece and Pakistan, China has been securing some of the world's most strategic -  commercially and militarily - world ports and laying the groundwork for global shipping preeminence in the 21st century without much of a challenge from any country. Is China merely paving the way to dominate the world's markets through ports, or is it also interested in using the ports for strategic reasons if/when necessary as some Western hawkish analysts believe? Even if China were to use commerical ports for strategic purposes far in the future, does that mean that it will be furthering or undercutting its commercial goals?

One of the lures that China uses is that it offers credit to shipping companies interested in building vessels in China, but in turn China usually demands port concessions. Setting itself up as the world's largest exporter for the 21st century, China sees that it has a stake in controlling aspects of the transport infrastructure in key countries of every continent. Through the China Development Bank, Chinese interests have permeated global markets from Europe to Latin America, from Asia to Africa.

The US and EU have been concerned about China's rapid port expansion around the world, but both US and EU are willing to tolerate a lot more in autumn 2011 than they were in autumn 2010, owing to the looming public debt crisis in which China can play a positive role buying bonds. Because China has been largely conforming to international commercial, financial and monetary rules, it is very difficult for those concerned about China's immense and sudden rise in the world economy to complain, except to warn about geopolitical consequences that commercial power will have in the future. Many critics argue that China has been 'aggressively' securing ports around the world, language not used when the Europeans and US were engaged in the exact same conduct during the Age of Imperialism and Cold War.

One major concern on the part of the US and the EU is energy and China's share of energy resources. As a potential player in Pakistan and there have been pressures on China to make a decision, for or against Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. If China invests in the project, TAPI would be completed. However, the US has promised the Pakistanis to help with foreign financing for solar and wind energy, pipe dream that would sink Pakistan deeper into Western dependence.

China has invested $200 million to build Pakistan's port of Gwadar and if the takeover is completed it will signal a new balance of power in Pakistan, something that the US does not want. Beijing has been under pressure not to proceed with the project, but interestingly it is the Pakistanis who want China on thier soil as a counterweight to US and India.

The US has warned China about inordinate influence in Pakistan and about China's close commercial and financial ties to Iran at a time that the US is trying to isolate Iran from the world community. At this juncture the US would not use a possible Iran-Pakistan 'nuclear axis' as a pretext for military adventures, because Russia and China offer a sufficient deterrent and historic claims to having a voice to determine the regional balance of power. Who watches China as it is unquestionably on its way to global commercial dominance? The other great powers of course as they have a stake in making sure that China's growing power is checked.

Wednesday, 28 September 2011


 I invite blog readers to review carefully what I have been writing about the global financial crisis of 2008-present. My numerous postings clearly show that I attribute blame for the crisis first and above all to:

1. the political economy;
2. the financial institutions;
3. governments that failed to regulate them;
4. corrupt practices of individual bankers/investment officers;
5. multilateral financial institutions, especially the IMF;
6. central banks, especially the FED and European Central Bank.
All of this is a matter of record in my postings during the last four years for those who care to review it.

There are those who believe that the bloated public sector is to blame; other who insist that the welfare state is the problem; still others would have the public believe in the 'few rotten apples' theory, that is, individuals are the problem and not the system; other argue that this is just a normal evolution of the expanding-contracting market economy; others note that highly paid workers, especially trade unionists account for lack of competitiveness; and so it goes with varieties of theories. In short, any one and everyone is responsible but the financial structure as it operates under the existing political economy.

It seems to me that apologists for the banks lack much support these days not from critics like me that have no political or economic leverage, but from a few honest bankers on either side of the Atlantic who acknowledge that the financial structure was an accident waiting to happen and that banks made serious mistakes, if not engaged in illegal and corrupt practices, that cost the world economy's downfall.

For example, bankers at the Davos annual meeting in January 2010 accepted responsibility for youth unemployment and economic downturn after Lehman Brothers. Unlike many intellectuals who are apologists for banks, bankers had the sense not to attribute the financial meltdown to 'act of God or nature', but a deliberate act of greedy financial officers and investors.

On 27 September 2011, Bill Winters, former Chief Executive of J. P. Morgan Investment, the bank that invested credit defaults in the 1990s, has accepted responsibility for institutional malpractices that ruined the credit economy, undercut the governments' credit capabilities, and sunk society into a cycle toward downward social mobility.  Winters has pledged to correct mistakes of the past, but that is just one person who has the moral rectitude to admit mistakes and promise reform. Winters told BBC news that 'there is an element of immorality in bankers keeping bonuses and staying out of jail'. Winters candidly admitted that his own banking practices under legal cover but extraordinarily corrupt led to the wrecking of economies and have led to the lost generation in which his daughter belongs.

There are EU and US officials that have similar attitude about financial institutions as J.P. Morgan banker Winters. Nor is there much support from EU and US officials for the corrupt practices of banks that refuse to accept reform and accept government to sacrifice social welfare so that banks can thrive. EU officials recently lashed out at the US, arguing that the lingering recession started in America and specifically with Lehman Brothers, not with the EU periphery debtor nations as some in the US are now trying to argue.

If there are still people who believe that the financial system is not to blame and that its ailments are not symptomatic of the structural weaknesses of the political economy, I hope that such individuals are well paid consultants by financial institutions. Because to believe in banks as innocent victims of the financial crisis after all that has taken place in the world in the last five years is a sad commentary on the apologist commentator.

In the recent German-American heated rhetoric about who is to blame for not doing enough about stabilizing the world economy, it is apparent that both sides are correct because they see the problem in terms of what is to the tangible benefit of their national economies. In fact, every one who analyzes with any degree of cohesiveness the long-term and immediate causes of the global recession, and proposes the solutions as a remedy does so from a political perspective - unless of course the analyst has descended from Mars and has no stake in earthy matters in which the rest of us dwell on a daily basis. Those who are honest with themselves and with their audience explain or at least imply that their position is based not on some abstract and universal principle of right and wrong as though political economy is religious dogma coming down to earthy sinners as commandments from the burning bush, but rather that the analysis and the solution are indeed based on the group's interests on whose behalf they advocate.

I have no problem with a paid analyst of financial institutions advocating for that segment of society, as long as there is full disclosure. I have no problem with an analyst arguing that ideological commitment drove him/her to such a position. Nor do I have a problem with the Communist trade unionist advocating socializing the means of production to benefit workers, therefore, bankers must be put in prison and banks nationalized. This is not an issue of what is right and wrong - abstract moral absolutes are for theologians and philosophers - for in the absence of social groups that have a stake in the crisis, no argument makes any sense for anyone down here on earth where people live and work and die. The reality is that billions of peoples' lives are impacted by this lingering global financial crisis, and I am amazed that J. P. Morgan investment banker Winters has been more honest and has maintained a higher moral ground on this issue than most intellectuals hiding behind vacuous rhetoric.

To the degree that the state has surrender monetary, fiscal, and economic policy to financial institutions via central banks, what is the responsibility of financial institutions to society in terms of public policy, and what does this entail for the social contract in 'democratic' societies?

Tuesday, 27 September 2011


Recent (9/2011) trade deals between Iran and Pakistan that could have bilateral trade amounting to $10 billion annually at some point in the future appears as a thawing of relations between two countries that have not had the best relationship since the Iranian Revolution. That Pakistan needs energy, especially natural gas that can come from the proposed Iran-Pakistan pipeline and the Turkmenistan-Afghanistan-India-Pakistan pipeline suggests that the US is indeed an obstacle to the economic progress of Pakistan, because as long as war is taking place the latter pipeline cannot be operational. To compensate for Pakistan's energy needs and steer it away from Iran, the US has pledged to help Pakistan with wing and solar energy development, but that too is long-term, and it does not address the high unemployment and low living standards that contribute to Islamic fundamentalism.  

What we do with certainty is that as long as Pakistan is involved in America's war with Afghanistan, Pakistan cannot move forward with much needed economic development.  Without the benefit of classified documents, I cannot state with certainty that Pakistan invited the US on its soil as a launching base against the war in Afghanistan. Pakistan has had a long-standing relationship with the US, from the Baghdad Pact (1955-1979), to a special military deal when the Soviets invaded Afghanistan, to supporting the Taliban that Iran and Russia opposed, to caving under pressure after 9/11 when the US decided to bring down the Taliban regime and hunt down al-Qaeda.

The evidence that does exist indicates that Pakistan had no choice other than inviting the US on its soil or facing bombing. Pakistan does receive at least $10 billion in total US aid in the past ten years, but the cost in political terms as well as economic is hardly worth the foreign aid; at least this is how many analysts see it from Pakistan's perspective rather than that of NATO allies. Without classified documents to tell us what goes on in secret negotiations, without intelligence reports to tell us what Pakistani intelligence has been doing in supporting or undercutting the Pakistan-US alliance, I must conclude that Pakistan as the weaker country under US-NATO military occupation, is at a distinct disadvantage at the very least, and a temporary semi-colony at worst. If a percentage of Pakistanis see the issue from this perspective, then we in the West must at least consider if not respect their view and not insist on a Euro-American-centric perspective to the exclusion of all other.

Two WAISers have now raised the nuclear issue as though it is an option for Pakistan to use nuclear weapons against any country. Nuclear weapons are leverage and nothing more. Those who have studied the history of nuclear weapons and how the 'nuclear club' has used them as leverage, know that this is a weapon for storage only. There are extreme, very extreme scenarios, such as something going seriously wrong in Kashmir that would force Pakistan or India to resort to 'first use', but I try to stay on the optimistic side of this argument. 

Furthermore, at present there is no prospect of an Iran-Pakistan nuclear axis, but even if there were down the road, it would still mean nothing more than diplomatic/geopolitical leverage that can easily be countered by India, Russia, China and of course Israel and the US, not to mention France and UK. Finally, given that Iran wants to be the major regional power, given that Pakistan-Iran relations were rather hostile in the last three decades, especially in the 1990s, Iran would only consider a Pakistani alliance as a last resort. This also because of its relationship with India that has been supportive of Iran's nuclear program. 

Monday, 26 September 2011

AMERICA'S BEST and WORST TRAITS: Part II - social and cultural aspects

Co-optation is the theme of my synoptic perspective on  "America's Best and Worst Traits" as they pertain  to the social structure and culture. One of the successes of American-style capitalism has been its remarkable ability to remain as dynamic as the social and cultural movements, and for many business people to view counterculture as a potential ally rather than an enemy, as a tool for selling products more readily rather than an obstacle to commerce.

Given that the social and cultural trends that have been the most dynamic invariably come from the middle class or aspire toward upward mobility, 'identity social movements' and counterculture trends are for the most part expressions of middle class values that are outside the institutional mainstream. Hence, co-optation by the mainstream is essential to maintain the much-desired 'middle class consensus'. In the absence of social and cultural co-optation, political/societal consensus and trendy successful consumerism could not have been possible; both catalysts in the political economy.

'Identity social movements' are those with unique characteristics such as ethnic, race, religion, gender/sex, and class-based groups having a consciousness of separateness, but  endeavoring to fit into the broader society by having its voice heard and rights constitutionally protected. The civil rights and  women's rights movements are the best examples of 'identity movements' co-optation that have evolved, at least segments of these movements, from radical origins into the mainstream of the social milieu, from leftist ideological/political positions to conservative.

In the field of cultural co-optation the most blatant examples are the use of otherwise radical counter-culture music used in advertisements to promote products by manipulating and redirecting cultural trends toward a narcissistic course that has been at the core of American society and exported to the world. The culture of narcissism is inexorably linked to the market economy that largely determines the political system and social structure, thus the culture of narcissism is a manifestation of hedonistic egoism that society values and promotes.

The dialectic of social and cultural change is invariably linked to grassroots forces trying to find expression within the institutional mainstream. The success of the American political economy is largely the result of the success of mainstream institutions to co-opt 'identity movements' and grass roots cultural trends/movements.

The social structure of a country reflects its political economy, where it has been and where it is headed. Historically in the case of the US, social class has always been based on 'identity movements', especially ethnicity and race, but with the post-WWII middle class expansion the country developed the world's most dynamic middle class and projected the image that class transcends 'identity movement'; the reality of course is a different matter.

In July 2008, several months after the economic crisis erupted in the US, the Pew Research Center crafted a study arguing that the middle class was divided into four groups; 35% the upper middle class, 25% the satisfied middle class, 23% the anxious middle and 17% the struggling middle. The Pew study was just a palatable way to say that 40% of the American middle class is disappearing. Scholarly studies demonstrate without any ambiguity that the American middle class has in fact been shrinking in size and income levels in the last 30 years, and it has taken a turn for the worst in the last four years.Within that broader middle class divided into four groups as Pew contends, 'identity movements' remain at the bottom of the social ladder.

The global recession of 2008-present has accounted for what I would generically label the widespread sentiment of an anxious middle class regardless of whether the individual is in the top or bottom layer of the social strata. In short, the American social fabric so finely woven owing to an expanding economy throughout the 20th century is gradually coming unglued. The best thing about America's social structure is that any person of any race, ethnicity, religious or social background can still feel that it is possible to realize the American Dream of  enjoying a middle class life. Identity movement can have the hope for integration into the mainstream, although for the majority within identity movements the 'American Dream' remains just a dream.

That fewer people are able to realize the American Dream is a reflection of the political economy as it has evolved into debt-ridden welfare capitalism. The result is that one in four New Yorkers, most belonging to 'identity movements', live below poverty level; this result as updated by the Bloomberg administration and not as defined by the federal government in 1969. Officially, there are 46 million Americans living below poverty, but unofficially the number is much larger because many are not counted as they live in parks and other facilities where the census does not reach them. 

As America's demographics change and the minorities belonging to identity movements become the majority in the 20th century, the social structure may reflect a race/ethnicity bias; not to the degree of pre-Civil rights era, but certainly not the kind of social structure one would expect of a pluralistic society that promises upper social mobility based on merit, but delivers a social class structure based on heredity.

Many non-Western scholars, journalists and politicians have complained for decades that America has been able to maintain its social structure at the expense of the rest of the world, in part because the US attracts the best students and best talent from doctors to engineers in a process called 'brain drain'. For example, Mexico pays to train its best doctors, but they leave for the US for better pay. Russia educates the best scientists, but the US lures them with higher pay.

The social structure is in a constant state of renewal because the best talent from around the world works in the US and benefits the society, keeping it competitive and on the cutting edge of new scientific and technological developments. If the political economy evolves to undercut the middle class social structure and an increasing percentage of people feel that they are 'outsiders' unconnected to the institutional mainstream, does this entail social discontinuity in the course of the 21st century?

Culture is determined by many factors from political and religious to geography to foods people eat, music and dance, and clothes they wear. Moreover, culture is influenced more by hard times or chronic downturn of the economy impacting a large segment of the population as was the case in the US during the 1930s, than it is by affluent times that impact a smaller number of people as was the case in the 1920s. Everything from music to literature is impacted by the prevailing socioeconomic and political trends that rest on existing cultural layers and change to reflect the ever-changing present.

The US has had enjoyed a resounding success commercializing and selling its culture and its cultural values to the rest of the world in the last half century or so. One of those success stories has been Hollywood-style 'escapist entertainment' that the rest of the world has been buying and trying to emulate. Whether it comes from Hollywood, the web or mass entertainment media, is 'escapist entertainment' the essence of America's mass culture appealing to hedonistic and egoistic proclivities of the middle class?

What is the essence of culture in America, a country with a long history of identity movements, with people from the entire world and cultural influences reflected in everything from food to values. Is American culture divided by region, West coast vs. East coast, Midwest v. South, urban vs. rural; or is it divided by neighborhoods where there are large concentrations of identity social movements? Is American culture determined by race, ethnicity, and class, or has it been so commercialized and homogenized that the only thing that matters is what is projected among large masses of people, and how it is received?

Is American culture embodied in the NRA and NASCAR, the Dukes of Hazzards and muscle cars, football and Country music, boxing and Blues music, Thanksgiving and fast food restaurants, mall shopping and TV shopping networks, Broadway theater and ballet, county fairs, and church festivals, colleges and business social clubs? Do all of these have anything in common, or are there indeed many Americas within the US as some scholars of humanities and social science have been arguing? If indeed US support for the fine arts is much lower than it is in most other advanced and even semi-developed nations, is this a sign that only commercial cash-value hedonistic mass culture must and will prevail in America?

And what does it say about US culture that attracts the best talent from around the world, but the National Endowment for the Arts (NEA) has a shrinking budget largely because southern conservative politicians feel threatened by the questionable value of NEA-sponsored programs that tend to appeal to East-coast liberals? And if the US did not have generous tax deductions for wealthy individuals and corporations who contribute to the arts would the US be able to maintain a top-tier fine arts culture for the upper middle class? Would American culture, as magnificent as it is in its various forms, enjoy such preeminence if the society did not attract the world's best talent, as did Rome in its glory days, and if it did not enjoy economic affluence?

American culture in all its forms and varieties is headed toward the mass marketing meat grinder of video-game world where everything from motion pictures to literature is designed to conform to that mass marketing cash-value model. While the great authors of the 19th and 20th century criticizing the hypocrisy of American 'puritanism' and conservatism are no longer permitted to raise their heads unless it is in the form of some inane comedy show that secures corporate sponsors, the US still has the largest and best market for dissident artistic and literary voices that find their way in tiny trendy markets.

If Edith Wharton and Theodore Dreiser had difficulty with social class and social mobility themes expressing their version of identity social movements, so do authors of today. Nevertheless, American culture still permits the expression of all voices to be heard and those that a segment of society deems meritorious rise above the rest. If such dissident voices can be commercialized and used to sell a product/service or political cause, then they move into the mainstream.

Deconstructing the mainstream definition of the norm in American culture is always a possibility and that in itself is wonderful for the continuation of cultural diffusion that feeds culture. If artists and writers are still able to use their talents creatively to capture the public's imagination about the immoral corporate world that defines society and about the absence of moral compass in a society hypocritically obsessed with conformity for the sake of 'security', then there is hope after all for a better tomorrow. Even more significant, if such artistic and literary works make their way around the world, then escapist sex-and-violence entertainment is not America's only cultural export, even though it is the largest and most profitable.

If a segment of the performing arts from arts - jazz, country, bluegrass, and blues - makes its way around the world, then that too dispels the myth of monolithic American culture, and the assumption that cultural expression of identity movements is doomed to remain on the fringes. It is true that authentic performing arts, which in recent years include everything from extreme break dancing to hip-hop and rap music, become commercialized and thus lose their intended purpose, authenticity and much of their originality and creative aspects in the process of commercial co-optation. Nevertheless, that such performing arts with grass roots origins reflecting identity movements provide a creative outlet and further stimulate cultural diffusion is another positive result of American culture.

As long as the institutional mainstream will have the ability to co-opt identity social movements and cultural trends, society will remain strong and dynamic; failure to successfully co-opt will result in the gradual waning of the entire system and it will be the nascent stage of social discontinuity.


The issue of debt default for Greece in particular and the periphery southern EU members in general, as well as the issue of the eurozone's integrity has been analyzed for the most part on the basis of political and economic interests. That is to say, investors shorting the euro and bonds of debtor nations like Greece are betting to make money in case of default of some sort, or at the very least restructuring and/or managed default where the euro is preserved and the banks are protected but the debtor government stops payments to creditors for a specified period, before negotiations resume to start new payments under roll-over debt.

The other school of analysts is purely political, divided between the mainstream supporters of the status quo - conservatives, centrists, and center-leftists - and those opposed to the status quo ranging from Communist and non-Communist leftists opting for default on debt payments because they want the bleeding from the taxpayers to banks to stop, to right wingers who want the end of the eurozone and a return to national currencies and national identity of fiscal, monetary, trade, economic and labor policies.For both the far left and the far right, the issue is how to capitalize on the debt issue to win popular support from the middle. Hence, the real possibility that the parliamentary system is indeed weakening as a result of the debt crisis.

It is often amusing to see neo-Nazi and other ultra right wing groups from across Europe use the Greek debt crisis as a symbol of all that has gone wrong with the European Union, and as a propaganda tool to promote extreme forms of nationalism. Equally amusing are the efforts of major European banks arguing that they cannot accept any more 'haircut' proposals with regard to the Greek bonded debt, invariably linked to the entire EU economy, unless every possible effort is made to extract 'surplus' public and private capital from Greece in order to service the public debt. Of course when the trade unions and leftist parties threaten with demonstrations and a possible uprising, the fear on the part of bankers is the possibility of losing everything. The entire affair is a game of leverage and the degree to which the other side blinks first.

For their part, the leftists argue that ordinary middle class and working people in the debtor nations as much as in the creditor countries are asked to pay the banks that have caused the financial crisis in the first place. The answer for the left is that governments everywhere must turn to the wealthy for higher taxes as the only means to pay for the seemingly insurmountable debt. The public debt is really more political than it is an economic issue not just in Greece, not just in Europe, but in the US as well. The question is who pays and who benefits. The interest group (s) with the lobbying muscle benefits, while the interest groups without a voice in government pays. The public debt issue is in the last analysis a political issue, no matter how hard economists try to convince the public otherwise.


On 25 September 2011, Republican Senator Lindsey Graham serving on the Senate Armed Services Committee stated on FOX NEWS that the U.S. should consider war against Pakistan, a country known to have supported anti-NATO Afghan rebels. Although the war in Afghanistan is unpopular with the majority of Pakistanis, although it is unpopular with NATO allies, and although the US has decided to pull out in three years or so because it is not making any progress toward the stated goal of 'democratizing' (in reality containing) the country, there are politicians who use the emotional issue of 'terrorism' to perpetuate the policy of militarism at any cost to society. While nationalism works to mobilize voters around a hyper-sensitive cause such as 'terrorism' in the manner that the US has defined it, the flip side is that nationalism of one side is responsible for engendering nationalism on the other side, in this case Pakistan.
In a recent testimony, Adm. Mike Mullen, Joint Chiefs chair, acknowledged that Pakistani intelligence has been implicated in Afghan Haqqani rebel network engaged in anti-US activity, including planning and executing assaults on the U.S. Embassy. Sen. Graham argued that unless Pakistan agrees to submit its defense and intelligence policies and actions to the US, then it is itself 'terrorist' and war against the country should be considered. 
But why stop with Pakistan? If the US policy of containment of radical Islam is to work, why not go to war with every country that has Muslims and is suspected of having 'Muslim terrorists' on its soil? How else would containment work, unless there is a global campaign and wars on multiple fronts? Why not declare war against the entire horn of Africa, why not Yemen, and why stop there and not extend it down to Indonesia as well?

Why not adopt the policy of the Romans in the Third Punic War when they decided that Carthage must not exist, so that Rome can feel hegemonic. Why not raise the defense and intelligence budgets and send the public debt through the roof in order to satisfy the psychotic obsessions of ideologues that will not admit Pax Americana was finished right after the Tet Offensive and never recovered since? Why not indeed reduce the US into an armed camp like ancient Sparta and devote all of society's energies toward war?
One reason for Sen. Lindsey's bellicose rhetoric is because this is election season and the Republicans want to energize the base and perhaps take away votes from Southern Democrats. Another reason is that Pakistan has indeed been playing both sides in the last ten years, but so have other countries, including Saudi Arabia. It is true that Pakistanis do not want US military occupation of their country, just as it is true that they would rather have an Islamic regime in Afghanistan rather than a secular pro-West one.  
It is true that chair of the Joint chiefs of staff Adm. Mullen gave ammunition to warmongers like Sen. Lindsey by leveling accusations against Pakistani intelligence agency and its support for Haqqani rebels. It is also true that the Pakistani government is anxious for the US to stop threatening with war, to stop destabilizing the country and the region, and to stop using the Indo-American alliance as leverage against Pakistan, simply because the US fears Iran now has the advantage in determining the regional balance of power.
A further reason is that the Republicans feel emboldened by the NATO campaign in Libya and feel that Syria cannot be far behind. Besides, the argument that Pakistan is helping Afghan rebels because it does not want a pro-US Afghanistan makes sense because it means that Pakistan would have to change and emulate its pro-American neighbor. These are all assumptions on the part of the Republican demagogues whose ignorance on the complex geopolitical issues involving US military intervention is only exceeded by their desperate ambition to win their own elected seat by invoking the 'terrorism threat' issue. 
What would the US gain and what would it lose by going to war against Pakistan?
1. An even larger percentage of Pakistanis would make sure to sabotage all US efforts to have their country remain a miltiarily occupied semi-colony.
2. A protracted war against Pakistan would involve China and Russia in some form, because they have a stake in the Asian balance of power.  3. A protracted war against Pakistan would benefit both China and Russia because it would weaken the US economically in the short-term and militarily in the longer term.
4. If the US cannot protect the CIA compound from a bomb attack on the same day that Sen. Lindsey announced US war as an option against Pakistan, how can the US ensure any type of security or any kind of success against terrorism in the region?
5. A war of short duration would damage US prospects for any kind of influence in most of the Islamic countries and it would entail a sharp rise in Muslim 'unconventional war', or terrorism against any US or pro-US target around the world. In short, the idea of taking any kind of military action against Pakistan, even if that means stationing troops as a sign of unofficial occupation would entail greater instability for the West and greater cost for overall security. Such a scenario would definitely strengthen Iran and China and perhaps Russia, unless there is an agreement with Moscow before any unilateral US action.

Pakistan has now been under semi-occupation for ten years. It had no choice other than to permit the US to come in and launch a war against Afghanistan, otherwise the US air force and navy would have bombed the country into oblivion. In September 2011, there are US politicians and Pentagon officials who feel that the choice are reducing Pakistan into a permanent US military base of bombing it into oblivion. Imperialism has a logic of its own, but even that logic must have some pragmatic basis in order to prevent the hastened or eventual demise of the imperialists.

Sunday, 25 September 2011


Ever since the publication of Democracy in America by Alexis de Tocqueville, there have been attempts to analyze the US and its institutions and what makes it unique as well as 'great' in comparison with the rest of the world. It is not unusual for the US government, think tanks such as the CATO Institute, media and other organizations to publish occasional studies on what makes the US number one in the world and what are its shortcomings that must be overcome so that it can remain number one.

Depending on the ideological/political orientation of the group/individual (s) conducting the study on what makes America great, the outcome is predictable. For example, FOX news and CATO stress the free enterprise principles; an independent university group may stress research universities like MIT and others in that league; a minorities-sponsored group may stress immigration, gender and sexual orientation policy; and so it goes. My own view is to put the positive and negative aspects of major institutions side by side from a synoptic perspective. Part I deals with the political and economic system, while part II deals with the social and cultural aspects of society.


Based on Enlightenment era ideals of freedom and democracy, meritocracy and equality of opportunity, the US has developed a unique institutional system that permits the individual to feel that the body politic represents every citizen on the basis of freedom and participation on the basis of merit-based equality of opportunity. Of course, that is only in theory and the reality is from the theory.

Combining the political philosophy of John Locke and Jean-Jacques Rousseau, and evolving to embrace progressive principles embodied in the Bill of Rights as America was changing in the 19th century, American institutions reflected both the legacy of northwest (Anglo-Saxon) Europe as well the evolution of societal developments with the institution of slavery, immigrants,and women demanding some rights as citizens at the very least, and to gain equal access into the political mainstream under the best of circumstances. In practice, 'equality of opportunity' means within the constraints of a white-male-dominated political party machine behind which are interest groups, among them the large campaign contributors determining the legislative course at the city, state, and federal levels.

While the system has the promise of 'a merit-based equality of opportunity for all', it also has the reality of 'interest group politics'. Moreover, pluralism has its limits within a society that has a tainted history with minorities, a tradition of isolationism shaped by the Cold War from 1947 to 1990, and the war on terror since 1990. While a resounding success story for individuals with money and talent coming from any place in the world, the American political system has had less success in integrating the lower classes into the political mainstream. To the degree that no other 'democracy' is as open to talent and as receptive to business, the American political system has been and remains a success story. However, in a society where class transcends race, gender and ethnicity, the wealthier the individual the more freedom and democracy s/he enjoys and the closer to living the American Dream.


While the US remains the world's wealthiest and most productive economy, followed by China, Japan, and Germany, it is expected to fall into the number two position at some point in the decade. This does not have to take place if China falters and US settles a number of lingering issues from its fiscal structure and balance of payments deficits to over-consumption, high unemployment, and grossly uneven income distribution for a developed country.

While America is the world's foremost market for companies to sell products, and it remains number one for foreign investment - six times higher than China - it stands to lose that position as China, Russia, Brazil, Mexico, India and other Asian and Latin American countries are developing. Again, anything can wrong with these new emerging economies, and the US can do much to improve, but that is speculation. For example, the US is no longer the world's largest car and computer manufacturer although it remains the world's largest foodstuff exporter. While the US has the edge because of research and development, increasingly US companies take their businesses abroad, thus the only benefit accruing to the US is national origin identity for brand names.

Brand name recognition remains the domain of the US, considering that half of the world's top one hundred brand names are American. However, those products are not necessarily manufactured in the US, and the companies manufacturing them - whole or as parts - have their capital spread around the world. For example, is there such a thing as an "American car", has there been for the last three decades or so? Nevertheless, brand name identity is a plus for the US, which is behind China and other surplus countries like Germany in terms of exports.

Another plus for the US is that it has a reserve currency with roughly 60% of the world's central banks holding dollars and the rest of their reserves in other currencies. The greenback is still king but the pretenders to the throne are trying to suffocate the aging ruler. That the US has an uncontrollable public debt at the federal level, and the fact that all but two or three states are insolvent is a sign that monetary decline may be inevitable and the dollar will not remain number one as it has been since Bretton Woods.This means that writing black checks without anything to back them up would become increasingly difficult.

The high entrepreneurial spirit that conservative and libertarian groups praise as a positive trait has the flip side of extreme materialism, greed and hedonistic values to the degree that all of society is defined by such values and which are part of the cause for America's continued decline. The high level of competitiveness is undercut by the reality of a declining social fabric that is impacted by lower wages and disintegrating social safety net in a nation that has many aspects of Third World within it.

Super concentration of capital and weak domestic consumption base will hasten America's decline. Finally, that the US spends on defense and intelligence almost as much as the rest of the world combined is a sign of weakness rather than strength as it appears to apologists of Pax Americana. No empire that goes on a sustained defense spending spree has ever survived to enjoy lasting success and the US is about to learn that valuable lesson from history.

Friday, 23 September 2011


After it was completely destroyed during WWII (1940-45), followed by a civil war and foreign military intervention (1946-1949), Greece endured a broader tragedy that had political, economic, and social dimensions during the Cold War; namely, endemic corruption, oligarchic/baksheesh-style capitalism, and military, economic, and political external dependence - on the US from the Truman Doctrine to the 1970s, and on the EU and US since the 1980s. If the tragedy of modern Greece was confined to the past, all would well and for historians to analyze. However, that Greece has a bleak future for the 21st century as a society that operated under the illusion of living the 'European Dream' (somewhat like the American Dream) is where the contemporary tragedy rests.
Throughout its modern history (Revolution of 1821 to the present), Greece has been financially dependent on the Great Powers, especially on Great Britain from the 1830s to 1940s, on the US from the late 1940s until the 1970s, and on France and Germany from the 1980s to the present. The price Greece has paid for financial dependence is structural underdevelopment. Financial dependence entails economic dependence that includes trade and manufacturing dependence. External financial dependence is continuing despite the fact that Greece is an EU member, which presumably projects the image of a First World country protected by the euro as a reserve currency and by EU trade and other regulations.

Structurally, Greece remains an externally dependent society that has raised living standards in the past four decades largely through public and private borrowing instead of sustainable economic development. A couple of years ago, I baptized the Greek economy “Baksheesh Capitalism” to distinguish it from “social welfare capitalism” practiced in the Scandinavian countries, or corporate welfare capitalism that prevails in the US. At the time, I noted that Greece is one of the most corrupt countries in the world, considering that about one-third of its GDP is in the category of “informal economy” and that every sector from banking and health care, to education and religion has been operating at some level under the rules of “Baksheesh Capitalism.”

There is no doubt that “Baksheesh Capitalism,” deeply ingrained into the country’s culture, is a major part of the problem, but even if Greece had “Icelandic-style capitalism,” the EU and IMF would still impose austerity measures. Under pressure to satisfy finance capital, which imposed credit card-style interest rates on Greek bonds, the EU compelled Greece to undertake a series of deficit-reduction measures that are as harsh as those that the IMF imposes on all borrowing members.

The fundamental prescription for austerity measures has not changed in the past fifty years, and those measures that target slashing the public sector and reducing working class and middle class incomes are essentially the same for all IMF borrowers. That bond rates rose sharply in order for Greece to borrow is an indication of its lack of creditworthiness, speculation by bond traders and Hedge Funds, and the extremely tight global market for loans at a time that most of the world suffers staggering budgetary and balance of payments deficits. Portugal and Spain are currently facing similar problems and are now at the center of bond speculators.

Austerity or IMF-style stabilization is not about the funds applied to a country that needs to meet its domestic requirements, but about fiscal and economic policies that the country adopts which make it attractive for domestic and foreign capital investment. It is indeed ironic that those behind monetarist policies include politically affiliated Socialists like the head of the IMF as well as top EU officials and of course the Greek Prime Minister–further evidence that the mirage of the two-party system of right and center (or center-left) serves the same master, namely, finance capital. More political than they are economic, stabilization programs are a pretext for unpopular privatization/liberalization policies designed to replace the social welfare state with the corporate welfare state.

While IMF austerity entails cutting public sector spending, wages and benefits, and providing incentives for capital investment, the unique aspect about Greece having to resort to the IMF as Germany demanded is that it is a full member of the EU, thus a stab at the monetary union’s integrity. It now seems certain that Greek bonds (now Portuguese and Spanish bonds) were the vehicle speculators used to hit at the real target, which is the euro. German politicians belatedly recognized this reality and Chancellor Angela Merkel’s speeches indicate, but some of their own banks are making money in the process.

The periodic mass demonstrations and riots throughout 2010 in Athens and other cities were not just against the government that has become a mere caretaker for the EU and IMF as guardians of finance capital. In the recent past amid mass demonstrations, destruction to property and injuries to people are invariably carried out by anarchists and/or extreme right-wingers. It is estimated, however, that mass demonstrations on May 5th included more than 200,000 people who were workers and middle-class people protesting austerity and a bankrupt regime that has surrendered national sovereignty to finance capital. EU-IMF austerity measures are responsible for the death of the three people, including a four-month pregnant woman.

EU-IMF measures are responsible for the lower living standards that Greece and Southern Europe will suffer during the course of this decade. EU-IMF measures are responsible for the short-term strengthening of finance capital at the expense of inevitable sociopolitical instability that will plague the EU in the next few months and perhaps years unless monetarism and neo-liberalism designed to destroy the social welfare state are balanced with progressive policies. Tested under the extreme economic contracting conditions of 2008-2011, the EU inter-dependent integration model is not nearly as cohesive as it had promised in the past decades.

On the contrary, the EU inter-dependent integration model ostensibly more egalitarian than the US patron-client model proved rather tenuous because for the first time the IMF-style monetarist policies are imposed on a country with a reserve currency. This means that Germany opted to pursue the US patron-client integration model applied to Latin America and other economic satellites since the Spanish-American War. Meanwhile, the entire eurozone area has proved more vulnerable against intense global competition and it remains to be seen if it can survive attracts on more members currently watching how the stronger members weaken lesser countries like Greece.

The irony of the EU-IMF program is that its publicly stated goal to help Greece achieve equilibrium will not be achieved. On the contrary, at the end of the program’s course in 2013, Greece, whose public debt now stands at 300 billion euros or about 115% of GDP, will have total public debt of half-trillion euros or about 150-160% of GDP–unless of course Greece discovers massive reserves of oil or natural gas. In three years, the country’s socioeconomic structure will be weaker than it was during the early 1970s when the military dictatorship was in charge. About 8000 individuals who own about 80% of the wealth owe 20 billion euros in taxes in a country where tax evasion is rampant.

The small percentage of people who own most of the wealth and owe most of unpaid taxes have taken out of the country an estimated 20 billion in the past six months. They realized that the PASOK regime elected six months ago would pursue tax reform and pursue tax evaders. Besides tax evasion by the elites and street vendors alike, Greece spends about 4.5% of GDP on defense, a staggering percentage owing in part to NATO commitments–and to defend what exactly other than its borders from its old nemesis Turkey. The EU and IMF do not address defense spending.

While they do address tax evasion, the IMF-EU-dictated policies target labor and middle class, as they encourage government to offer tax incentives to finance capital to attract investment. Monetarist policies fifty years ago that the IMF imposed on borrowing nations in Latin America, Asia and Africa resulted in mass income distribution from the bottom of the social ladder up and from the borrower (invariably underdeveloped) to the creditor (developed) countries.

In their quest to preserve and strengthen finance capitalism and uneven economic development justified by the same neo-liberal ideology that caused the crisis of 2008-2011, IMF policies working to strengthen the advanced capitalist countries will continue to precipitate social unrest on a global scale and to undermine fragile democratic institutions in semi-developed and underdeveloped countries. After the Great Depression resulted in financial retrenchment from the less developed to the advanced capitalist countries, the latter squeezed as much capital as they could from the former to help strengthen their economies. Today we see the exact same process unfolding on a world scale. The question is what price is the G-7 willing to pay if/when social and political instability begins to spread throughout the world?

Offered in periodic installments, the IMF-EU package for Greece amounts to 110 billion euros, but the government in Athens has granted 100 billion to banks, a number of them foreign-owned; 100 billion in loans and guarantees that have come from the middle class and labor. Although the EU-IMF agreed to modestly lower the interest rate and extend the payment period for the loans because it is impossible for Greece to service the loans, the public debt to GDP ratio will be more than 160% in two years.

If we calculate the combined sovereign debt with that of pension funds, public enterprises, and private debt, the aggregate debt is just under one trillion euros, while the GDP is less than one-third that amount. The tragedy of contemporary Greece is that the generation now in the labor force, as well as the next four generations are condemned to work so their government can pay off mostly foreign creditors instead of building their future under a socially just society. The financial and political elites of Greece, the US and EU have stolen their future; a situation not much different that the ones in Ireland, Portugal and Spain.


About a year ago, I wrote that Greece was bankrupt. The question of bankruptcy is technical, if one follows how government leaders and bankers use the term 'bankrupt'. For example, Chancellor Merkel does not want Greece going 'bankrupt' in a sudden and mismanaged or unchecked manner. Those investing in CDS use the term 'bankrupt' to signify the official date of an announcement when servicing of loans take place, even if the servicing is temporary but then resumes - this is something that took place in the 1930s, and then FDR sent Cordell Hull to negotiate resumption of payments linked to new loans and trade deals.

I have argued endlessly that the Greek public debt will bring down the entire eurozone, which in essence means a crisis ten times worse than Lehman Brothers. Fear of the unknown, official bankruptcy, unchecked bankruptcy, some move toward temporary autarchy is what governments and markets fear. The recent drop in world markets reflects that kind anxiety emanating from a combination of fears that the public sector's inability to service loans will mean a prolonged recession. Some economists are already talking about banking as 'the economy's third rail' - public and private sectors are the two main ones - in which case what we are really witnessing is another banking crisis that the state cannot bring under control to the satisfaction of the markets. 

The current turmoil surrounding the Greek public debt issue and the question of bankruptcy, especially after Moody's downgraded Greek banks on 22 September 2011, is about the integrity of the eurozone and by extension the ability of the European Union to overcome the public debt crisis of one of its members without breaking apart as some analysts fear. Just ahead of the G-20-IMF meeting in Washington this weekend, Klaas Knot of the European Central Bank governing council stated that Greek default “is one of the scenarios. I’m not saying that Greece will not go bankrupt."
There is no best and worst case scenario; only very bad and worst case scenario options as a result of the public debt crisis, inexorably linked to the banking crisis, of EU's periphery members - Greece, Portugal,. Ireland, Spain, Italy, and even France that has enormous exposure to southern Europe's financial system. The only question is the degree to which the privileged classes - political and financial - in Europe will be able to maintain their privileges without feeling too much pressure from the middle class and workers that will be protesting as long as gross social injustice continues.


There is a video game called Destroy All Humans! 2: Make War Not Love that has been around for five years - from what I know at least, considering my ignorance of these things. While young people play this game to fill the void with pent-up energy that the video game allows to release, the logic of the game is based on the reality of what takes place in the real world today. War has its own logic rooted in ideology, value system, politics, economics, and culture that includes religion. That paradoxical logic may not make any sense to pacifists worshiping Mahatma Gandhi, but it is the aggressor who shall not inherit the earth, while the pacifist has a clear conscience!

Countries with the means to do so, as the US in the last fifty years, launch regional wars and then they have corporations rebuild the countries destroyed, thus generating economic activity and capital concentration. This is now unfolding before the world watching Libya on TV and web, just as it has in Iraq and Afghanistan. Three Islamic countries targeted for destruction by the US (NATO) war machine behind which there is the military-industrial complex; three Islamic countries where vital economic and strategic interests have been identified as 'vital interests'. After the war is over, comes rebuilding by western corporations that have a 'hold' on the assets of those countries (oil in the case of Iraq and Libya) destroyed and rebuilt hostage.

After two days of the military offensive against Libya we have a situation in which there is massive destruction of the basic infrastructure that US, and EU multinational corporations will step in to rebuild after the civil war ends and a new regime replaces Gaddafi. But so far, Gaddafi's defiance seems to pose the question of whether air operations are sufficient without ground troops to force him from power. But that was not what the UN Security Council voted on, and it was certainly not something the US, UK, or France (the crusading trio) advertised before commencing military operations.

Turkey continues to object to military intervention, but at the same time tries to show that it respects UN Security Council decision to impose a no-fly zone, and it permits its military installations to be used in operations against Libya. Greece, a long-time ally of Libya and right next door, expresses support for UN Security Council decision, and permits its naval bases in Crete to be used for resupply and launch operations against Libya. The cost to bankrupt Greece under IMF-EU austerity measures is an estimated one million euros per day!

Germany abstained from the UN Security Council vote, but it has endured the wrath of the 'crusading trio'; a military alliance Germany views with deep suspicion. Nevertheless, it has allowed its military installations to be used for operations. Meanwhile, NATO cannot carry out any actions unless there is unanimous vote - having Turkey and Germany on the same side as China and Russia poses a problem, despite what countries are doing behind the scenes to support anti-Gaddafi operations.

The biggest problem for the 'crusading trio' is that the Arab League has now changed its position on military operations. Shocked at the fact that at least 110 tomahawk missiles were launched against pro-Gaddafi installations indiscriminately to destroy the infrastructure along with any human being standing in the way, the divided and politically bankrupt Arab League is now saying that it never meant for innocent human life to be lost and for such wholesale destruction to be visited on Libya. The 'crusading trio' is not releasing any information on civilians casualties; a policy the US adopted in the Iraq war.

The Arab League went as far as indicating that it was manipulated and used by the 'crusading trio', though it seems to support the UN Security Council's vote. On 21 March 2011, US Defense secretary Robert Gates visiting St. Petersburg, urged Russia to be more energetically involved in global affairs, meaning to actively support the 'crusading trio' efforts against Gaddafi. Putin stated that the military operations constitute a Medieval crusade; language that Gaddafi uses as well in order to win world public opinion. President Dmitry Medvedev differs to a small degree.

The situation is becoming worse than Putin describes it. The UK and France differ about how to proceed just two days after military operations. Both are concerned that Germany's position is undermining their united front at a time that France has decided on a major international gamble by assuming the lead role in Libya - perhaps duped by the US. Concerned that the situation is getting out of control with wider ramifications that will backfire, Obama and Robert Gates have stated that within a couple of days they want either NATO and/or EU to be in charge of the Libyan military operations, while US will be supportive from behind the scenes. 

War has its own logic and it is not based on anything rational. War is based on the adventure and romance of raw power and tangible political and economic interests accruing to the victors. Will Libyans be better off after the uprising interrupted by crusading Western intervention? According to some estimates, Libya has the highest per capita income in Africa. Will this be the case after the 'crusading trio' is finished with Libya? After the Gaddafi regime, the need for reconstruction owing to the massive destruction of the country by the crusading trio will mean billions for western corporations in contracts, for which Libya will have to devote oil revenues and lower living standards.

It is true that Gaddafi favored the Warfala tribe from which he comes at the expense of other tribes. Many from his own tribe have defected, as have many from the Zawiya, Zentan, the Bani Walid, and Obeidat tribes.Most of these tribes believe they will be better off under a post-Gaddafi regime, but living standards will decrease as oil contracts will most likely be signed on less favorable terms than exist currently, and enormous amounts would have to be spent on reconstruction. Given that we have a global recession in which the multinational corporations are trying to squeeze every dollar or euro they can from any place in the world, Libya presents a great opportunity to make money. It is all in the name of freedom and democracy and above all for the people!

Thursday, 22 September 2011


You are watching the newly-released JAMES BOND film. All of a sudden the master 'movie star spy' pops on the screen confronting the 'bad guy', and you are thinking Bond is spying for God and country. But what is the world coming to when James Bond has been outsourced to a multinational corporation, that Bond is something of a mercenary, an outsourced spy for hire to the highest bidder?

The practice of 'outsourcing' work to subcontractors is one that has been around for a long time in the private sector, but it became popular in government especially after Reagan was elected and he deemed that 'government was too big', and that was 'bad' for society. Action required: reduce the size of government, which really meant reduce the welfare state and upgrade corporate welfare, as Ralph Nader used to say. Reagan launched a massive effort to strengthen corporate welfare, using the public sector (taxpayer money) to strengthen private enterprise, and that included outsourcing federal government jobs in every agency.

Given that the private sector was weakening amid global competition after the Vietnam war, government became the pillar of support in a more direct manner than it had before. In part to circumvent federal hiring limits and to act quickly, government hires contractors who are paid more than public employees, but they can be dismissed easily. On the other hand, government agencies have become a farm system for contractors, as the CIA has acknowledged.The morale of the public employees has been sinking along with the sense of apprehension that their jobs are evaporating and their agencies are used to farm out work.

Outsourcing intelligence services may make sense on the surface, because the field is technology-driven and it does project the image that by some magic the private contractor is more efficient than the slothful federal employee. On the surface it appears that it may be cheaper and faster to farm out work to contractors - currently half of intelligence contracted work is in computers, management, planning, and personnel.

All of this started after 9/11 when Bush and congress raised CIA funding from $26.6 billion in 1997 to $44 billion in 2005. Between 50 and 60 percent of the budget goes to private contractors in every area from analysts and computer personnel to field personnel. Similarly, the Defense Intelligence Agency (DIA) spends about half of its budget on contractors, as does the National Clandestine Service (NCS). Among the corporations receiving contracts are AT and T, Verizon, Narus, Verint, the last two that have a working relationship with Israeli intelligence MOSSAD; a problem for the US given that information is sold and trades hands owing to profit motive.

There is a disturbing pattern between the private contractors and America's pro-Israel policy, but even worse is Israel's spying on the US and lack of congressional oversight and accountability for contractors. Even progressive Democrats would not call for public congressional hearings on the mercenary spy business that extended into domestic operations and created a climate of secrecy and police-state atmosphere.

Relying on private industries for intelligence means that very sensitive information passes through hands of people whose loyalty is to 'for-profit corporation' with only one motive, getting more contracts. The private sector has a motive for perpetuating its existence and generating profits means generating crises. Some in government, a few in the media and in academia have warned that lack of congressional oversight of private intelligence industry, the fastest growing in the US in the last five years, poses a major problem.

That the Defense Intelligence Agency spends 70% of its $50 billion budget on private contracts gives enormous leverage to contractors, as the Director of National Intelligence (DNI) has acknowledged. The US currently has 'top secret security clearance' employees who are about 1.5 times the population of Washington - more than 850,000 including private contractors. Who knew that an open democratic society society would have such a large number of 'intelligence' officers, many of them spying on their own citizens! Welcome to TOP SECRET AMERICA!

While there were contractors before 9/11, the number rose to the degree that the DNI became dependent on outsourcing, thereby completely transforming the Cold War intelligence bureaucracy into a 21st century private contractor machine. All this may sound great for advocates of less government and strengthening the private sector. But has privatization of spying enhanced US national security, or has it been a case of one disaster after another and countless cases of corruption as critics charge? Does it make any difference if a federal government employee is analyzing intelligence data or a private contractor, or if computer maintenance is carried out by CIA employees or a private contractors, even if the latter costs a great deal more to the taxpayers? 

Because intelligence budgets are secret, it is impossible for the public to have any sense of what contractors are doing with the billions of taxpayer dollars. Lack of accountability and the myth that contractors are 'better and more efficient' than federal government employees means that the cult of outsourcing precludes criticism for fear of appearing to go against the trend. Those who know people working in federal government are well aware of this fear. For a number of years, the stigma is with the federal government employee, while the glory is with the private contractor. But what if the private contractors have been manipulating intelligence data on terrorism, cheating and overcharging the government, engaged in official corruption, and what if they are generating and/or manufacturing crises with the use of such data to keep renewing their contracts? If so, is democracy in the hands of elected officials or have mercenaries hijacked it?

After six years of spying in the hands of private contractors, has the US made any progress in fighting terrorism? By the way, whatever happened to capturing Osama Bin Laden and eliminating al-Qaeda? CIA director Leon Panetta has stated that there are only a couple of hundred al-Qaeda operatives in the mountains of Pakistan and Afghanistan, but the US has close to one million 'intelligence' people dedicated to fighting this terrorism beast that seems to be growing with each contract offered to a private corporation! And all this while the US may still secretly be cutting deals with war lords in Afghanistan?

Where is the empirical evidence that private contractors have served national security interests better than federal employees? The government has created a huge problem in the intelligence field, as former CIA officer Robert Baer admitted: “Everyone I know in the CIA is leaving and going into contracting whether they’re retired or not.” Why not receive higher pay for doing the same work? Do we not live in the age of market ideology?

The mainstream media has had some reports that are critical of outsourcing intelligence, but in general there is a conspiracy of silence about intelligence contractors, even when they are involved in money scandals or death squads as has been the case with a number of them. Advising reducing dependence on private contractors, the Senate Intelligence Committee has found that the average annual cost of an intelligence contractor is double that of a government officer. Such reductions however are very difficult today because the private contractors are politically entrenched with powerful political allies in Congress and private sector. The House Permanent Select Committee on Intelligence has been equally skeptical about private contractors.

One of the country's largest intelligence contractors, Science Applications International Corp., has spent millions on congressional lobbying to make sure the billions in outsourcing contracts keep on coming. It is virtually impossible for politicians to go up against intelligence contractors like Lockheed Martin, Northrop Grumman, SAIC, General Dynamics, L-3 Communications, Booz Allen Hamilton, CACI International, DRS Technologies and Mantech International. It helps outsourcing of course to have former intelligence officials like George Tenent who earns millions as a consultant to four private intelligence firms.

Lawmakers support contractors from their districts because it means delivering jobs, but there are also the bribes that flow from these firms to politicians. In March 2006, Randy “Duke” Cunningham (R-Calif) resigned from congress and was sentenced to 8 years in prison for accepting $2 million from MZM defense contractor. The 'Duke' helped deliver tens of millions in intelligence contracts to his patrons mostly for spying on US citizens. The Cunningham case helped expose former CIA deputy director Kyle “Dusty” Foggo for steering contracts to MZM. Arizona Republican congressman Rick Renzi was also caught trying to steer contracts to intelligence contractor Mantech International where the congressman's father is an executive.

More than $75 billion for intelligence and how are taxpayers' interests served? Scandal and corruption, overcharging and no congressional accountability, declining morale among intelligence officers, conflict of interest on the part of private companies working for more than one government, death squad killings that further aggravate the very problem the US is supposedly trying to fix. What does the trend of outsourcing government services as sensitive as intelligence tell us about the nature of government? Is this a democratic government by people and for the people, or is it government by corporations and for corporations.  Why stop here? Why not privatize government in its entirety, including the IRS and have people pay corporations directly?


Judging from media reports, what we have today is just another 'run-of-the-mill' recession. A deeper examination, however, reveals that we are experiencing a government-backed mafia-style capitalist political economy in many countries, especially in the G-8. There have been many articles regarding mafia-style capitalism in Italy, Czech Republic, Russia, and many other countries including the US. Invariably, mafia-style capitalism involves banks as institutions that keep, move and launder money.

Banking scandals and government complicity at worst, or failure to protect the public at best are very old in the history of capitalism. The best example of the 20th century is that of the roaring 20's that resulted in the Great Depression of the 30's. The banking scandals of the 21st century are perhaps even larger in magnitude than those of the 1920's, but government safety nets are so ubiquitous today under welfare capitalism that today's banking crisis does not appear as bad as that of the 1920s.

We are currently experiencing a global crisis that started in 2008 and will continue for several more years because of banking scams and scandals, some of which politicians, the media and apologists of the free market present as 'legitimate hiccups' of the system. In the process of those 'hiccups' the 'insiders' who cause them profit while the rest of society suffers.

On 19 September 2011, Spain's central bank announced that it will cover $27 in losses for Caja Mediterraneo, an institution that the central bank took over in July 2011. Just a few days before the Bank of Spain's announcement, London police arrested a 31-year old whose 'after-hours action' cost Zurich-based UBS bank $2.3 billion, a scandal that potentially other rogue traders in other banks could be involved in as well. UBS is hardly an example of a model bank, considering that in February 2009 it was fined $780 million for tax evasion. The UBS scandal comes just weeks after the Society Generale $7.2 billion scandal of another rogue trader. No need to mention more of these, because the interested reader can easily research them.

On 21September 2011, Standard and Poor's downgraded seven Italian banks, after the country's debt rating was also downgraded. Greek banks, two of which are branches of French larger banks are volatile owing to the perennial fear of default and the reality that even without default the country is facing inescapable contraction for the balance of the decade. It is possible that a double dip recession - both the IMF and FED fear that it will take place - will be caused by banking losses amounting to a minimum of 300 billion euros, money that the European Central Bank (ECB) must provide. Keep in mind that the ECB is capitalized at two trillion, a figure hardly sufficient to cover banking losses and continue buying bonds to save the debtor nation members.

The links of European banks to Eastern Europe, Africa, Latin America, US and Japan would derail the world economy, especially if there is 'sudden and unexpected default' by Greece that would drag down the entire eurozone. While 300 billion euros in banking losses, or cash that EU banks will need to stay afloat, is a low figure when compared with the banking losses of 2008/2009, it is sufficient to put the stamp of lingering recession for the next two to four years for the advanced countries and for the entire decade for the weaker nations suffering high debt-to-GDP ratios and high balance of payments.

Banking losses will impact every sector of the economy around the world and will result in even higher unemployment and part time/seasonal employment, while living costs will rise as governments try to absorb more taxes to bail out banks. There have been reported rumors that the EU and US may be moving to crack down on banks, given that not much was done when the recession first shook the world in 2008. The reports are that there are banks laundering money of all sorts from drugs and guns to tax heavens for wealthy clients that include super rich government leaders and politicians.

That governments may resort to stricter banking measures may be a necessary step owing to public pressure and in order to save the capitalist system, such as it has evolved today. However, we must keep in mind that politicians are rewarded and often become wealthy themselves because they perform a valuable service to the financial elites. In short, the rumors regarding a cracking down on banks may be thin and may not reach very deep to clean out the entire mafia-style capitalist system.

The Wachovia Banking scandal, the last one before its merger with Wells Fargo and which the press exposed in April 2010, involved with a number of front companies that are involved with the Latin American cocaine trade and 'front companies' involved in the trade. The bank reached a deal with the government, admitting that it had moved $420 billion in drug money. The US fined the bank $160 million, while its executives and other operatives involved cashed in! Wachovia Bank had also been involved in a telemarketing scandal in which bank officials were stealing mostly from elderly customers.

The government also settled this case in 2008, but the bank continued business as usual, largely because the bank was making loans and campaign contributions in millions of dollars to politicians. Today we know that Wachovia was one of the big US banks responsible for the financial crisis that erupted in 2008. However, the government must collect the fines from Wells Fargo that purchased Wachovia with the government's blessing.

How can governments take on powerful banking houses like UBS, Deutsche Bank, Wachovia, and others that are the backbone of capitalism and whose corrupt practices could not possibly have taken place in the absence of a free pass by governments?  When system itself is based on 'legalized theft', why not take that extra step and engage in illegal theft that includes everything from money laundering to telemarketing and mortgage scams, to concealing losses from quarterly reports, etc.?

The rules of the game are accumulation of wealth, so the only issue really is how wealth is accumulated. As far as financial institutions are concerned the process is whatever they can get away with after making generous contributions to politicians. The exchange of 'money for favorable treatment' is also part of the systemic process, no matter how corrupt it may appear to the public that seems to accept welfare capitalism as legitimate but individual corruption scandals by banks as reprehensible. It is as though the individual acts of mafia-style capitalism are worse than mafia-style capitalism as a whole.

Wednesday, 21 September 2011


From the First Industrial Revolution in England to the present, Malthusian (Rev. Thomas Malthus 1766-1834) arguments as a pretext for grossly unequal income distribution, rise in poverty amid economic growth, and to deflect focus from a socially unjust political economy to the issue of  there are 'too many people, too few resources' in the world.

This is not to say that managing population growth is imprudent, but that the theory is a pretext for a problem that the political economy has caused. Today, the same Malthusian argument is used after UN and many government and non-government organizations are warning that during this century the population will grow disproportionately higher than the available natural resources, and such conditions may result in social unrest.

The projections for the rise in the population from the current 7 billion to 11 billion by the middle of the 21st century, and the limited energy, water, and food resources will be a major source of global sociopolitical instability, especially since the exploitation of natural resources rests primarily in the control of Western multinational corporations. Considering that the US has just under 5% of the world's population but accounts for 25% of the world's consumption, or 5% more than China and India combined whose population is more than seven times higher than the US. It is troubling, if not the ultimate social injustice, that 12% of the world's population in North America and Western Europe currently accounts for 60% of the world's private consumption spending, while one-tird of the world people living in Asia and sub-Sahara Africa account for just 3.2 percent of the world's private consumption.

Some are optimistic that urbanization in Asia and Africa will result in higher living standards. While it is true that no rural-based economy has reached high income levels, and that rich countries are urban, it is not true that all urban countries are rich. If that were the case, Latin America with a large concentration of its population in urban areas should have been as developed as US and Canada. In the first decade of the 21st century, the average annual  urbanization growth was 2%, while in the Middle East and Africa it was 3%, and in Asia Pacific 2.7%. Concerned about rapid population growth and the lack of resources to meet the rising demand, the UN has warned about a global labor market recession especially in the underdeveloped nations and possible social unrest.
UN figures show that 324 cities with a population of over 750,000 has a rise of 20.0% in the last decade, with Africa, Middle East, Asia Pacific and Latin America as leaders. Currently at one billion people, Africa will see a doubling of its population in the next half century, thus accounting for 20% of the world's population. Multinational corporations are counting on a continued surplus labor force that will keep consumption expanding horizontally, while keeping wages low.

Western regimes in the service of finance capital are only concerned about social unrest that would jeopardize the integration of the high-population areas of Africa and Asia into the capitalist West or capitalist Chinese economy currently second in the world and destined to become first mat some point in the 21st century. All of this assumes political stability, which is unlikely if the current integration model based on very low consumption and grossly uneven income distribution continues.

The International Labor Office (ILO) released a study in September 2010 indicating that people in 36 of 72 countries had less confidence in their government than they did before the 2008-2011 global recession. This was months before the Islamic uprisings that have many long-term and short-term causes beyond the current global recession. Moreover, the ILO has argued that the labor market recession is also linked to widespread social unrest throughout Europe from Slovenia to Ireland and Portugal. The International Monetary Fund, guardian of finance capital, has also warned that social inequality, jobless economic growth, and global imbalances - geographic income inequality - will mean political instability and perhaps war if such conditions continue.

The solution to preventing social unrest is not merely a jobs-creation economy throughout the world, but an economy that provides good paying jobs and opportunities for upward social mobility and government that abides by social justice and does not violate basic human rights. Are the regimes forced to accept US-style neo-liberal capitalism capable of delivering a socially just society, and are multinational corporations and banks willing to accept lower profits for the sake of social and political stability?

Just as no one believed that social unrest would spread so suddenly and so wide across North Africa and the Middle East, it is inevitable that social unrest will spread to sub-Sahara Africa that has suffered the lowest living standards on the planet from colonization to the present. Western neo-colonialism under the mask of globalization and neo-liberalism will be the cause for future sociopolitical instability in Africa and other parts of the world.


Is there a prejudice against capitalism by the intelligentsia in comparison with the general population, especially in advanced capitalist countries, and if so, do intellectuals oppose capitalism because they are not capitalists themselves to recognize the benefits and rewards of the system? Are intellectuals the exception to the average person who supports capitalism and tries to work within the system, and sees all the positive aspects of it in order to survive because there is no alternative? 

It may be that the intellectual is by training a critic who must investigate and point out the negative aspects of a system, thus the intellectual is paid to criticize whether from the left, center or right ideological perspective. After all, the great philosopher Socrates was somewhat of a pest with his method of questioning everything, his constant criticism of the status quo that cost him his life. How else can humans develop critical thinking if not by stating a point (thesis), then a counterpoint (antithesis), and arrive at a higher level of reality (synthesis) (Hegelian dialectic). This was the dialectical method that has been around in both East and West since ancient times and one that both G. W. Hegel and K. Marx used among many others. The method certainly appears scientific, though anti-historicist philosophers have rebelled against it, some on philosophical grounds others on political.  

If we assume that everything exists in time and is finite, made up of opposite forces and that lead to qualitative spiraling and horizontal change qualitatively. If we accept that the laws of opposites and negation necessarily lead to the law of transformation, then we accept that the political economy of capitalism exists in time it is finite and will wither away as a a higher mode of production will take the place of the existing one. Like previous modes of production, capitalism does not transcend time and we cannot assume that it will exist until the earth's extinction because it is an integral and unalterable part of human nature.

Perhaps intellectuals oppose capitalism not on any 'objective' grounds of the system itself, but on purely subjective ones. Given that the vast majority of intellectuals are not wealthy but belong in the broader middle class, their reward emanates from prestige and influence of their ideas - and the more original and creative those ideas, the greater the reward of approval for the intellectual. Going against established institutions and prevailing ideologies is neither in the interest of the individual nor easy to pursue, but it may be the case that a segment of the intelligentsia has a 'martyr' or Jesus complex and wants to save the world. It may be argued that this was the case with Marx who wrote against the political economy of 19th century industrial capitalism. Marx recognized that the political economy impacted every aspect of human conduct including mental attitude, ethos, and psychology at the individual and mass or community levels.

Capitalism shapes everything from how science is conducted and applied to how people carry out their interpersonal relationships and behave. In short, capitalism absorbs and subordinates the free will of humans to the system which is essential for survival. Intellectuals who have deviated from the conditioning that formal education has imposed on their minds are more aware of this reality than the general population. 

Whether they choose to be apologists or critics of capitalism, intellectuals know that their will has been subsumed by the mode of production in a society that does not honor them while affording all power, glory and prestige to capitalists who are behind political power. Even those intellectuals who dedicate (sell) their services in praise of capitalist institutions
know that they are mere servants and their role is only useful as a tool for something greater than their intrinsic value based on merit instead of money.
Intellectuals are critical of capitalism as a system, its particular institutions, lifestyle and ethical structure not only owing to the dialectical method that they feel obligated to embrace even in part as a means to understand the society, but they are obliged to examine the issue of value system. In short, the distributional process raises the question not just of value but of social justice. From ancient times to the present, intellectuals deem what they do 'valuable', in some cases the most valuable work than any other enterprise. Therefore, they are worthy of commensurate rewards, but in 'the real world' reward flow to capitalists who live by a very different value system.

The chasm between the sense of self-worth that in some cases translates into a sense of 'entitlement' in terms of societal appreciation and commensurate rewards, and the reality of the intellectuals' real societal role is a source of overt of underlying predisposition to criticize the system that gives rise to such injustice. Ironically, institutions that emerged alongside capitalism contain within them the seeds of criticism against the very system. Intellectuals merely reflect as much. The ideology of liberal democracy rooted in the Enlightenment's merit-based value system gave rise to a sense that society must be organized in a rational manner where individuals have opportunity to experience self-development and upward mobility on those criteria and no others such a aristocratic (birth) privilege.

That capitalism by nature concentrates wealth in few hands, thus limits opportunities of upward mobility and self-development for the vast majority, while it exists as a political economy under an ideology that preaches 'equality of opportunity' is at the root of the contradiction that intellectuals express when they analyze capitalism and its shortcomings. In other words, intellectuals critical of the capitalist political economy merely express the system's contradictions and the gap between theory that promises Shangri La for all people, and the reality that concentrates wealth for the few, while the many who create the wealth never own it.

Overall, intellectuals are not nearly as hostile to capitalism as the system that breeds inequality and social injustice merits. This much history attests in the last five hundred years. The vast majority of intellectuals fall into the majority of conformists who rarely question the system even when it works against them personally and in dramatic fashion like when they are unemployed, have lost their savings, etc.

The vast majority of intellectuals serve the system faithfully. On a daily basis, they indoctrinate others, from students to newspaper readers, to accept the system as the best and only option on earth that exists not beyond time for eternity like the universe itself. That there is a small minority questioning a political economy from every perspective in order to improve conditions for the victims of social injustice is an anathema to the political, social and financial elites who wonder why it is that not everyone has submitted their will and free thought to the cash register of capitalism.

Finally, let us imagine there was never any critic of capitalism and there were only apologists who constantly praised the system no matter its shortcomings in the various aspects of human life from economy and politics to education and culture. Could the system survive and evolve to accommodate changing human and societal conditions in a society where there was 100% robotic conformity by intellectuals and the general population to the system?


It is true that the ordinary person – a worker, a farmer, an insurance salesman,  a mother taking her child to school – probably does not think about institutional structures or the political economy and its nuances as they impact them personally.  It is also true that the average person only wants to live better and to live a legacy of a better life for their children. However, “ordinary people”, like intellectuals have a sense of social justice, and they are the judges of whether the social contract is distorted to benefit the few or whether it is based on some semblance of fairness for all. This much we find that John Locke had discussed in his political philosophy before the Glorious Revolution.

The ordinary person who works hard all of her/his life but sees that the system is stacked against them is ultimately the judge of whether to remain passive or become politically and socially active. They may not understand why the institutional structure has become distorted to benefit only the elites because that is the work of the intellectual, but they know something is wrong when the ordinary person works hard but the rewards for her/his labor go unrewarded because the societal system rarely rewards the people on the bottom of the pyramid, and always keeps the pyramid society in existence, despite promises of equality.

As far as intellectuals lacking a sense of real connection with the world, that too is a legitimate criticism and it has been around from Plato to Soren Kierkegaard and Bertrand Russell, all aware of the criticism that the intellectual operated like a bird flying above society gazing at it from the sky. The other legitimate criticism is that they are hypocritical, because they may be preaching one thing and living a different type of life. Pope Francis recently criticized intellectuals for hypocrisy and for lacking the intelligence to lead people to God. Is it a legitimate criticism to accuse intellectuals of atheism, even if some are indeed so, while priests may be guilty of not practicing what they preach, especially in the domain of Christian ethics? In the last analysis, intellectuals merely frame the arguments in a coherent manner, and they are rarely activists. However, if change is to come in society, it usually comes because intellectuals set the intellectual groundwork, as they have since the Enlightenment, and then it is from their ranks that people like Robespierre, Lenin, Mao and Castro emerge to lead the masses.