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Nederlog


  April
14, 2014
Crisis: Predicting Crises, Hedges, NSA * 2, USA Oligarchy, Corporate Cash
   "They who can give up essential 
   liberty to obtain a little temporary
   safety, deserve neither liberty
   nor safety."
   -- Benjamin Franklin [1]
   "All governments lie and nothing
   they say should be believed.
"
   -- I.F. Stone.
   "Power tends to corrupt, and   
   absolute power corrupts
   absolutely. Great men are        
   almost always bad men."
   -- Lord Acton
















Prev- crisis -Next
Sections
Introduction

1. Banks fiddled while Rome burned: how to predict the
     next global financial crisis

2. The Myth of Human Progress and the Collapse of Complex
     Societies (VIDEO)

3. NSA Exploited Heartbleed for Own Use
4. The NSA's Heartbleed Problem is the Problem with the
     NSA
 
5. US Is an Oligarchy Not a Democracy, says Scientific Study
6. Corporate Cash Hoarding Is Killing the Middle Class

About ME/CFS


Introduction:

This is the Nederlog of April 14. It is another crisis issue.

This one starts with the issue of how to predict crisis, continues with an article by Hedges, also with video, followed by two on the NSA, continued with one that insists the USA is no longer a democracy but an oligarchy, and ends with one by Alan Grayson on how good the corporate entities without souls and bodies have it, compared with how bad many with bodies and souls are now.

1. Banks fiddled while Rome burned: how to predict the next global financial crisis

The first article today is by Larry Elliott on The Guardian:
This starts as follows:

Looking back, it was easy to see that the crash was coming. There had been too much cheap money. Debt had exploded. Speculation was rife. The gap between rich and poor had widened. Welfare spending had risen. The financial system was so stretched that even a modest tightening of policy was enough to make it impossible for over-borrowed debtors to service their debts.

The US in 2007? No, this was imperial Rome during the reign of Tiberius in AD33.
Well... I guess the operative term is "Looking back": In hindsight we all have 20/20 vision. This does not mean one cannot predict economical crises, but it does mean it is considerably more difficult to do when looking forward.

Also, this is mainly a review of a book called "Money Mania" by Bob Swarup, and I shall see what pointers can be derived from it. Here is a first one:
History suggests that certain conditions have to be in place for a crisis to develop. The first is that a decent period of time has to elapse after the previous crash. (...) A 15-year gap is the norm.
This suffers from not defining "crisis". I suppose this is not easy, but a crisis every 15 years seems to be a bit much. (I may be wrong: I am just looking back on the 64 years of my life, in which I count two major ones. But again, I have also no - serious - definition of "crisis", apart from the list I provided in Crisis: It is the deregulation, stupid!, and the serious suggestion that a real crisis involves more than only the economy and also lasts at least five years. And yes, the present crisis qualifies in those respects very well.)
The second condition is a sustained period of solid growth, by the end of which individuals convince themselves that the good times will go on and on.
I don't know about this one, and have two distinct reasons.

First, in one sense of the word "crisis", this is necessary to have a serious down at all: there must have been an up, rather like a mountain requires a valley. But that makes it necessary and logical rather than empirical.

Second, empirically I doubt it is correct: Hitler arose out of the economic mess of the twenties in Germany, that had lost the first World War, and was forced to huge payments to the Allies. Then again, this suffers again from "crisis" not being defined, and indeed under Hitler the economy improved, the first six years or so.

A third crucial factor is belief in those running the show.
Again, I don't quite know about this one: Clearly, some belief is necessary for there to be a boom, that is followed by a crisis, but how much of this constitutes "a belief" is unclear to me.

Then it is said:
Whip these three ingredients together and you have the recipe for a crisis.
No, I don't think so. That is, I do not think you can infer "there soon will be a crisis" from "there hasn't been one for 15 years" + "we had 15 years of solid growth" + "people believe in the folks leading the economy": if it were as simple as that, crises could be prevented.

Indeed, that is what the author also concludes in the next paragraph:
But more is needed to create the perfect bubble dish. Crises do not occur unless there is an abundance of credit to allow debt to build up and to permit speculators to take ever bigger bets.
Not only that:
Nobody really understood what the web of banks, hedge funds and shadow banks were up to as they traded credit default swaps and collateralised debt obligations.
So the recipe also requires "an abundance of credit" + "poorly managed and regulated financial systems".

I do not think the title is justified ("
how to predict the next global financial crisis") and I also do not think the present crisis, that started in 2008, has finished. But otherwise, this is fair article.
2. The Myth of Human Progress and the Collapse of Complex Societies (VIDEO)

The next item is an article by Chris Hedges on Truth Dig, that accompanies a video of a speech by him of 53 minutes:

I have not seen all of the video (I much rather read, since that goes much faster in my case) so all I can say is that the sound does get better after the beginning.

The article starts as follows:

The most prescient portrait of the American character and our ultimate fate as a species is found in Herman Melville’s “Moby Dick.” Melville makes our murderous obsessions, our hubris, violent impulses, moral weakness and inevitable self-destruction visible in his chronicle of a whaling voyage. He is our foremost oracle. He is to us what William Shakespeare was to Elizabethan England or Fyodor Dostoyevsky to czarist Russia.

I am doubtful about this. That is, I am willing to assume especially novelists have more freedom to explain the societies they describe than scientists, and also quite frequently have better insights, and I also like "Moby Dick", but I don't think a novel published more than 160 years ago can be used as a compass to chart the  present ills.

But OK - perhaps this is meant by way of illustration rather than as enlightenment, and further on Hedges does get to grips with the present ills:
Our financial system—like our participatory democracy—is a mirage. The Federal Reserve purchases $85 billion in U.S. Treasury bonds—much of it worthless subprime mortgages—each month. It has been artificially propping up the government and Wall Street like this for five years. It has loaned trillions of dollars at virtually no interest to banks and firms that make money—because wages are kept low—by lending it to us at staggering interest rates that can climb to as high as 30 percent. ... Or our corporate oligarchs hoard the money or gamble with it in an overinflated stock market. Estimates put the looting by banks and investment firms of the U.S. Treasury at between $15 trillion and $20 trillion. But none of us know. The figures are not public. And the reason this systematic looting will continue until collapse is that our economy [would] go into a tailspin without this giddy infusion of free cash.

The ecosystem is at the same time disintegrating.
I think he is mostly right about this, as he is also about the following:
The corporate assault on culture, journalism, education, the arts and critical thinking has left those who speak this truth marginalized and ignored, frantic Cassandras who are viewed as slightly unhinged and depressingly apocalyptic. We are consumed by a mania for hope, which our corporate masters lavishly provide, at the expense of truth.
There is more there, that I do not all agree with, but it is an interesting lecture.

3. NSA Exploited Heartbleed for Own Use

The next item is an article by Lauren McCauley on Common Dreams, indeed the first of two:

This starts as follows:

Not only did the NSA know about the Heartbleed internet bug—found to have exposed the sensitive information of countless web users—but they exploited it for their own intelligence gathering purposes for years, sources charge.

Bloomberg News reported late Friday that the agency found Heartbleed shortly after its introduction in early 2012, according to a person "familiar with the matter," and rather than reporting or repairing the flaw, the NSA adopted it as "a basic part of they agency's toolkit for stealing account passwords and other common tasks."

Heartbleed, believed to be one of the biggest flaws in the Internet's history, is a vulnerability in OpenSSL protocol, which is used to encrypt communications between users and websites. The bug makes those supposedly secure sites an "open book," Bloomberg explains. The existence of Heartbleed was first made public on April 7.

I am quite willing to believe this, but the operative term is "sources charge", which also does not name the sources. Also, it will be quite difficult to believe the public spokepersons of the NSA about this, simply because one of the reasons for their existence is to report such flaws, rather than keep them hidden and use them - and the present bug can be used against very many computers.

And as McCauley rightly says:

The incident highlights what many are saying are the "fundamentally incompatible" dual missions of the agency: securing cyber-infrastructure and gathering foreign intelligence.

There is more in the article, including a reference to the next one:

4. The NSA's Heartbleed Problem is the Problem with the NSA  

Next, an article by Julian Sanchez on Common Dreams, that originated on The Guardian:

This starts as follows:

The American intelligence community is forcefully denying reports that the National Security Agency has long known about the Heartbleed bug, a catastrophic vulnerability inside one of the most widely-used encryption protocols upon which we rely every day to secure our web communications. But the denial itself serves as a reminder that NSA's two fundamental missions – one defensive, one offensive – are fundamentally incompatible, and that they can't both be handled credibly by the same government agency.

The last part is certainly correct. There is considerably more in explanation, and the article ends thus:

Because Internet security depends on trust and cooperation between researchers, the mission of a security-breaking agency is fundamentally incompatible with that of a security-protecting agency. It's time to spin off NSA's "defense" division from the "offense" team. It's time to create an organization that's fully devoted to safeguarding the security of Internet users – even if that might make life harder for government hackers.

Yes - although it is difficult to see how one government can play two such fundamentally opposed roles: guarding the secrets of the internet and breaking the secrets of the internet.

5.  US Is an Oligarchy Not a Democracy, says Scientific Study 

Next, an article by Eric Zuesse on Common Dreams: This starts as follows:
study, to appear in the Fall 2014 issue of the academic journal Perspectives on Politics, finds that the U.S. is no democracy, but instead an oligarchy, meaning profoundly corrupt, so that the answer to the study’s opening question, "Who governs? Who really rules?" in this country, is: 

"Despite the seemingly strong empirical support in previous studies for theories of majoritarian democracy, our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts. Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association, and a widespread (if still contested) franchise. But, ..." and then they go on to say, it's not true, and that, "America's claims to being a democratic society are seriously threatened" by the findings in this, the first-ever comprehensive scientific study of the subject, which shows that there is instead "the nearly total failure of 'median voter' and other Majoritarian Electoral Democracy theories [of America]. When the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy."

To put it short: The United States is no democracy, but actually an oligarchy.

I suppose that is true, and indeed that accords with what the authors of the study, which I have downloaded, say:
The central point that emerges from our research is that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence. Our results provide substantial support for theories of Economic Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism.
6.  Corporate Cash Hoarding Is Killing the Middle Class

Finally, an article by Alan Grayson that I found on AlterNet: Basically, this considers the Good News for the corporate entities that do have neither bodies nor souls with the Bad News for most of the entities that do have a body and a soul (see Hazlitt's "Corporate bodies have no souls", by which he did not mean a supernatural entity, but simply: thinking, feeling and desiring for oneself, with one's own body).

The Good News is that US corporations are sitting on some
$1,265,836,000,000 and that corporations have largely been excused from paying taxes.

The Bad News comprises this:
Well, 11 million of us are unemployed and more than seven million of us have part- time jobs, but can’t find full-time work. And in the past 10 years, the U.S. labor force participation rate has shrunk by three percent. Among those who are fortunate enough to find work, the average pay is a whopping $24 an hour. According to a University of Michigan report, around 1 in 5 households in America has a negative net worth — they owe more than they own. In addition 48 million Americans have no health coverage, and 48 million rely on food stamps to stave off hunger.
(...)

For non-corporeal entities, times are good. For flesh and bone, bad.

Legal fictions, good. Mothers, fathers, sons, daughters — all bad.

There is rather a lot more in the article, but it seems to me rather convincing support for my own statement that the crisis is not over, and indeed will not be over until the deregulations are undone, and much heavier taxes have been (re-)instituted on the rich.
---------------------------------
Note
[1] Here it is necessary to insist, with Aristotle, that the governors do not rule, or at least, should not rule: The laws rule, and the government, if good, is part of its executive power. Here I quote Aristotle from my More on stupidity, the rule of law, and Glenn Greenwald:
It is more proper that law should govern than any one of the citizens: upon the same principle, if it is advantageous to place the supreme power in some particular persons, they should be appointed to be only guardians, and the servants of the laws.
(And I note the whole file I quote from is quite pertinent.) 

About ME/CFS (that I prefer to call M.E.: The "/CFS" is added to facilitate search machines) which is a disease I have since 1.1.1979:
1. Anthony Komaroff

Ten discoveries about the biology of CFS(pdf)

2. Malcolm Hooper THE MENTAL HEALTH MOVEMENT:  
PERSECUTION OF PATIENTS?
3. Hillary Johnson

The Why  (currently not available)

4. Consensus (many M.D.s) Canadian Consensus Government Report on ME (pdf - version 2003)
5. Consensus (many M.D.s) Canadian Consensus Government Report on ME (pdf - version 2011)
6. Eleanor Stein

Clinical Guidelines for Psychiatrists (pdf)

7. William Clifford The Ethics of Belief
8. Malcolm Hooper Magical Medicine (pdf)
9.
Maarten Maartensz
Resources about ME/CFS
(more resources, by many)



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