Over the last couple of weeks I have been harangued by otherwise intelligent persons on the failure of Obama to waive the Jones Act so that foreign ships can assist in the cleanup. When I point out that there are plenty of foreign ships working on the spill and that the Jones Act doesn’t even apply beyond the 3-mile international limit, I am met by sneers and otherwise “more informed that you” looks that indicate minds that long ago snapped shut.

McClatchy sets out the facts

Text of The Jones Act

42 USC §55113 Use of foreign documented oil spill response vessels

The right-wingnut response to inconvenient facts, even among friends and loved ones, has always been extremely frustrating to me. The idea that if the facts contradict your beliefs then you ought to carefully examine those beliefs seems to be a completely alien concept to this type of person. It is always disheartening to contemplate that a substantial number of adults in the U.S. still believe that Saddam Hussein had something to do with the 9/11 attack on the WTC when even George Bush finally admitted that the government had no evidence to support Saddam’s involvement.

Here’s a partial explanation from the blog Stop the Spirit of Zossen 2.0:

Narrative radicalization and escalating vehemence through cant and acting out must — by internal logic — treble when fantasy can not surmount the limits imposed by Objective Reality (say Nov. 2008). Obama’s victory is a crisis threatening the ability to segregate their disassociated fantasized self-image with their often fragmented and undeveloped self. Why anyone remotely close to the Movement who said after defeat “now is the time for introspection” was doomed to be mau maued and kicked off the island. And Lord help you if there was a photo with you hugging Obama . . .

Read the entire post: Rightist Collective Narcissism And Why Obama’s Own Fantasy Of Rational Dialogue Is Doomed

I felt from the beginning that Obama was in error, if not denial, in striving for a bipartisan approach. There is a certain strategic advantage to appearing reasonable when your opponent is determined to do anything in his power to make you fail, including causing a great deal of unnecessary suffering to the American People, but at some point it becomes imperative to be honest with everybody and state the unvarnished truth about your opponents, that they are scoundrels who would sacrifice this nation’s welfare in a Texas minute to regain political power.

It’s the right thing to do. Secondly, there is the 25-30 percent of the voters who will not change their minds if the Lord himself descended from heaven holding gold tablets with the truth written on them in 7th grade English, if the contents of the tablets contradicted their beliefs. The rest of the electorate expects Obama to do something more that he has done so far. Part of his failure must be attributed to his misguided attempt to appeal to the better natures of the Republicans in Congress. (His other major mistake is in listening to Summers, Geithner and Bernake, the gruesome threesome that played such a huge part in bringing about the current financial mess.) They have no better natures and will stop at nothing to defeat him. That’s a fact.

Tags: Jones Act, GOP

Facing South reports that BP is attempting to hire marine faculty at southern universities to do research on the oil spill. The catch: they cannot reveal the results of their research without BP’s permission. In addition, they are to communicate through BP’s lawyers, a provision obviously intended to clothe their results in attorney-client privilege.

Backlash grows against BP's effort to 'buy up' Gulf scientists

Tags: BP, Oil Spill

Click on the picture to see it enlarged and read the BBC article. The horizonal white line through
the center is our own galaxy, the Milky Way.

The Planck telescope photographs the universe using longer wavelengths (infrared and microwave)
in order to study what scientists believe is light created shortly after the Big Bang.

Tags: Planck telescope

Here’s an interesting article on income inequality in the United States. The Gini coefficient measures how far the distribution of income differs from a perfectly equal income distribution, and is used by the Census Bureau to measure inequality. A population in which everyone makes the same income has a Gini coefficient of 0, whereas a perfectly unequal population—one person at the top receives all the income—would have a Gini coefficient of 1.

The article lists each state and its Gini coefficients along with the third-world nation with the closest-matching Gini coefficient. Mississippi (Gini coefficient = .471) most closely resembles Nepal by that measure.

The title of the linked article, “Is the U.S. Becoming a Third-World Country?” thus has an answer: Mississippi is already a third-world country. The rest of the U.S. is following us onto the plantation.

Tags: Gini Coefficient, income, inequality

Vampires are mythological or folkloric beings who subsist by feeding on the life essence (generally in the form of blood) of living creatures. Typically, they are the undead—not living but not actually dead, and their victims usually turn into vampires themselves. Killing a vampire, according to the literature, requires driving a stake through its heart.

At a Jungian dream seminar I once attended, led by the late Fr. Michael Dwinell, the vampire was presented as the archetype for addiction, a monster that reducea its victim and those close to him to zombies. But that is a subject for another place and time.

Similarly, the big banks of Wall Street, still holding debt assets at their face value for purposes of calculating their balance sheets, have become veritable vampires, lacking solvency themselves and frantically attempting to suck money out of any convenient victims, whether they be the Federal Reserve, the U. S. Treasury, investors, or debtors, most notably their mortgagors and credit card holders. The latest propaganda meme put out by the banks is the threat of “strategic defaulters,” loosely defined as homeowners who can make their house payments but walk away from the house because it is underwater. The meme has the same deceitful purpose as Reagan’s non-existent “welfare queens” and Bush’s “war on terror”: to conceal the real reasons behind otherwise unacceptable public policies.

It would not be too far out to say that the archetype for financial meltdown is the vampire.

For the last few months it has been more and more obvious to me that the behavior of the big banks can be explained only by assuming that they are insolvent and are remaining in existence only through accounting dishonesty, that is, valuing their assets far above their real value. Before I decided to write a blog post setting out these conclusions, a recent post on Naked Capitalism, Strategic Defaulters are the New Welfare Queens, made such an article superfluous. Here’s an excerpt:

So why all this hysteria about strategic defaulters? If I were conspiracy-minded, I’d say this is a very clever push to stoke jealousy among what is left of the middle class to keep the focus off the way the banksters wrecked the economy, got lots of cash and prizes, and have every reason to repeat that profitable exercise. So focus public ire instead about the commies in our midst, um, the new welfare queens, aka various forms of alleged housing deadbeats. The immediate reason is that the more people are made to resent the breaks they fantasize their neighbors are getting, the more they will oppose deep principal mods, which historically is what banks always did when they had a borrower get in trouble who still had a remotely viable income.

Why would the banks oppose principal mods? It will force an end to extend and pretend, and when THAT happens, a lot of financial firms will be shown to be undercapitalized and in need of rescue or resolution (as we and others have pointed out repeatedly, Mike Konczal’s conservative analysis of second mortgage portfolios at the four biggest US banks, Bank of America, JP Morgan, Citigroup, and Wells Fargo, shows that they probably need another $150 billion in equity among them, and others contend the writedowns on seconds should be much more aggressive than Konczal assumed).

The entire article is well-worth reading.

The term “deep principal mods” means that either the banks would be forced to carry the debts on their books at actual value, taking into account the decline in collateral values (the bursting of the housing bubble, in other words) or bankruptcy courts would be empowered to adjust mortgage principals downwards to reflect the actual value of the mortgaged property. The latter process is known as “cram down” and a bill to give bankruptcy cram down power was defeated in Congress by the finance lobby.

The basis of the problem is politics and denial. The housing bubble was, for the most part, a bipartisan project, hence the reluctance of either major political party to make it an issue. The mainstream media, including its economic experts, was inexcusably negligent for years in ignoring the housing bubble and they are reluctant to admit that the emperor has no clothes. With a few exceptions, it is still spouting economic nonsense. Economist Dean Baker has been chronicling this willful blindness for years and his has been a lone voice in the wilderness.

Disconnection from reality eventually exacts a fearsome price. We have already experienced housing value losses in excess of $6 trillion and the reduction in demand that invariably results from such a loss. The financial reform bill, despite all the hype it has been given by its proponents, is inadequate to address the real causes of our current malaise and does little to lessen the likelihood of another speculative bubble and meltdown. Nevertheless, it is a start.

7/19/2010 Update:

Nobel laureate Joseph Stiglitz puts it very well in his latest column:

The “innovations” unleashed by modern finance did not lead to higher long-term efficiency, faster growth, or more prosperity for all. Instead, they were designed to circumvent accounting standards and to evade and avoid taxes that are required to finance the public investments in infrastructure and technology – like the Internet – that underlie real growth, not the phantom growth promoted by the financial sector.

The financial sector pontificated not only about how to create a dynamic economy, but also about what to do in the event of a recession (which, according to their ideology, could be caused only by a failure of government, not of markets). Whenever an economy enters recession, revenues fall, and expenditures – say, for unemployment benefits – increase. So deficits grow.

Financial-sector deficit hawks said that governments should focus on eliminating deficits, preferably by cutting back on expenditures. The reduced deficits would restore confidence, which would restore investment – and thus growth. But, as plausible as this line of reasoning may sound, the historical evidence repeatedly refutes it.

Tags: mortgages, Defaults, Strategic defaults, Welfare queens, Reagan, bush, War on terror, vampire, Dean Baker

If you are unaware of how a little commodity trading by some very big and very greedy firms can destroy the health and lives of billions of people, read this article from The Independent, a British newspaper. It will turn your stomach. Ebenezer Scrooge would have been outraged.

Johann Hari: How Goldman Gambled on Starvation

The reader should keep in mind that until the financial system was deregulated in the ’80s, ’90s and the last decade, this kind of depraved behavior would not have happened.

Tags: Goldman Sachs, Merrill Lynch, Commodity futures, Starvation

Global Research, a Canada-based web site on economics, has published another article clarifying the economic and political forces that have brought us to the situation we are in today, and explains how the austerity measures called for by a suddenly-formed consensus goes about completing the vast transfer of wealth from the lower and middle classes to the tiny financial elite that has been proceeding apace for the last 30 years. It is a grim picture, and unlikely to improve, given the attitude of the victims, who lack the information or the intellectual preparation to understand how the scam operates.

Working people don’t rise to the task because they have been propagandized into believing that “fiscal austerity” is something that needs to be done in order to save their children from an even worse fate. What actually needs to happen in a deflationary collapse is to spend more money into the system, not pull it back out by paying off the federal debt; but the money needs to go into the real economy – into factories, farms, businesses, housing, transportation, sustainable energy systems, health care, education. Instead, the stimulus money has been hijacked, diverted into cleaning up the toxic balance sheets of the financial gamblers who propelled the economy into its perilous dive.

What’s happening to us is what has happened over and over to third-world countries in the grip of the Word Bank and IMF ”structural adjustment” programs that extract wealth from natural resources and impoverish their citizens through the mechanism of overwhelming debt. It does not take a lot of insight to realize that if our elites can impoverish yellow, brown, black and red people in other lands without the slightest twinges of conscience, they could to the same thing to their own people -- us, in other words.

If you doubt this, you should acquaint yourself with two of John Perkins’s books, Confessions of an Economic Hit Man and The Secret History of the American Empire: The Truth About Economic Hit Men, Jackals, and How to Change the World. They are eye-openers.

Update 6/3/2010; An even more trenchant explanation of the austerity program of global financial and political elites from New Economic Perspectives:

So we are witnessing a policy long in the planning, now being unleashed in a full-court press. The rentier interests, the vested interests that a century of Progressive Era, New Deal and kindred reforms sought to subordinate to the economy at large, are fighting back. And they are in control, with their own representatives in power – ironically, as Social Democrats and Labour party leaders, from President Obama here to President Papandreou in Greece and President Jose Luis Rodriguez Zapatero in Spain.

Having bided their time for the past few years the global predatory class is now making its move to "free" economies from the social philosophy long thought to have been built into the economic system irreversibly: Social Security and old-age pensions so that labor didn't have to be paid higher wages to save for its own retirement; public education and health care to raise labor productivity; basic infrastructure spending to lower the costs of doing business; anti-monopoly price regulation to prevent prices from rising above the necessary costs of production; and central banking to stabilize economies by monetizing government deficits rather than forcing the economy to rely on commercial bank credit under conditions where property and income are collateralized to pay the interest-bearing debts culminating in forfeitures as the logical culmination of the Miracle of Compound Interest.

From the article Europe’s Fiscal Dystopia: The “New Austerity” Road to Neoserfdom

Tags: vat, States, Deficits, Ellen Brown