Wednesday, October 29, 2008

History Repeating: The 40-Year Cycle Of Change...Is Here...

Written in 2005:

"First, I want to take notice of D-Day, June 6, 1944, the battle which set the stage for the defeat of fascism in Europe. (Interestingly, the battle which turned the tide in the Pacific War occurred at roughly the same date, June 3 - 7, off Midway Island, in 1942. U.S. planes destroyed four Japanese aircraft carriers and even more importantly, the cream of Japanese naval aviation. But that's another story).

As we consider a day 61 years ago, it calls to mind the broad sweep of history, and various cyclical patterns of history--those posited by Nicolai Kondratieff and Ralph Nelson Elliott. For starters, let's consider 1893, 1932 and 1974. Interestingly enough, those bottoms of financial panics or depressions seem to operate on about 40-year cycles. If there is indeed a pattern there, we should get a humdinger of a depression around 2012.

Kondratieff posited that an economic cycle of debt buildup and repudiation repeats every 50-60 years. Given the enormous borrowing binge the world has gleefully embarked on during the past five years (M-3 expansion of around $2 trillion by some estimates, American homeowners tapping their equity to the tune of $1.6 trillion in new debt, Federal budget deficits on the order of $400 billion annually, etc.), it's difficult to dismiss Kondratieff's fundamental insight as entirely wrongheaded.

Many in his camp believe we are entering the "winter" phase which will culminate in a collapse or repudiation of all that debt. It's something to consider, given one irrefutable fact: no economy runs up forever in a straight line of unending growth.

"The low-interest-rate-fueled growth in the U.S. economy, says Robert Brusca, president of Fact and Opinion Research, has played out principally through reckless spending from refinanced real estate. I'm convinced that people have taken this money and blown it on gewgaws and junk," he says. "We're basically borrowing money to support our consumption, and we are living well beyond our means."

These "long waves" seem to suggest a severe and long-lasting downturn in the world economy is close at hand, based on the fundamental insight that the enormous mountains of debt which have been accumulated must now be repudiated in order to set up the next cycle of growth.

There is another eerily repetitive pattern of change which has occurred on 40-year cycles in the past century: one of social tumult and change. Consider the explosion of artistic freedoms in film and music of the 1920s, and the concurrent lifting of social constraints, and then note the similarity to the 1960s (ending either with the disasterous Rolling Stones concert at Altamont in 1969, or Watergate in 1974,depending on your taste in history). If the 40-year pattern holds, we are in the midst of, or at least entering, a similar decade of social turmoil.

We could posit that the cycle began on Septemebr 11, 2001, ushering in a period not of artistic expression but of new constraints and paranoia. The rise of the religious right as a political force could be seen as the penumbra of the 1960s, just as the rise of a radically reactionary Islam could be seen as a reverse analog of the big-power Communist threat the U.S. faced in the 60s.

Where the 60s were all about questioning the conformity which had dominated social and political life in the 1950s, this decade seems to be about reining in the chaos, both outside the national borders and within. A new "ownership" ethic has replaced the paternalistic state ideal of the 1960s, and each new excess in the popular culture (hideously violent Playstation games, crudely misogynist hip-hop music is matched by a shrill new constraint (banning medical marijuana, stem cells, etc.).

Even more troubling, the divide between the wealthy elites and the middle class is widening; as the economy stumbles toward breakdown, the wealth of the nation has flowed to the top 5% of citizenry. As the average Schmoe relentlessly taps his home equity to support a lavishly foolish "upper-middle class lifestyle" filled with the spiritual rot of gimcrack distractions and useless toys, (Wall Street Journal, May 17, 2005, "Lagging Behind the Wealthy, Many Use Debt to Catch Up") the real wealth of the nation aggregates in the elites' hands. As tax rates for the wealthiest plummet to all-time lows, medical insurance becomes a luxury for everyone not independently wealthy or employed by a government agency.

The nation careens down the path of a fiscal policy of endless deficit, transferring whatever wealth remains in the hands on the young to the elderly via unsustainably expensive Medicare benefits, and yet the citizenry are strangely complacent, as if their internal compasses have been scrambled. The events of the decade ahead may provide a lodestone for the dazed American citizenry; as things fall apart, they may find their internal compasses re-set, and the distractions of consumerism less mesmerizing. Can it happen too soon? I think not.

-Charles Hugh Smith ("Are We Poised on the Precipice of Another Age of Turmoil?" 6.2005. Image: - Martin Luther King Jr.'s Mug Shot,, 4.16.1963).

"King was arrested and jailed in Birmingham Alabama after a peaceful protest of segregation. It is here that King wrote "The Letter from Birmingham Jail." The open letter was a response to a statement made by eight white Alabama clergymen entitled "A Call For Unity" which agreed that social injustices were taking place but believed that the battles should be taken solely to the court not to the streets in order to better the city of Birmingham. King responded that without forceful, direct actions such as his, true civil rights could never be achieved. As he put it, "This wait has almost always meant 'never.'" He held that Civil Disobedience is justified in the face of unjust laws."-NationMaster Encyclopedia, 2005).

Sunday, October 26, 2008

On Iraq: Big Disguise, Bigger Disinformation, Biggest Denial...

"The US and Britain have triggered an episode more deadly than the Rwandan genocide. On both sides of the Atlantic, a process of spinning science is preventing a serious discussion about the state of affairs in Iraq. For longer than the US has been a nation, Britain has pushed us at our worst of moments to do the right thing. That time has come again with regard to Iraq. It is wrong to be the junior partner in an endeavour rigged to deny the next death induced, and to have spokespeople effectively respond to that death with disinterest and denial." - Dr. Les Roberts (IndependentUK, 2.14.07).

"Dr. Les Roberts risked his life a few years ago to get some numbers that some people fiercely attack as inaccurate, misleading and that many others pay little or no attention to. Dr. Roberts, a physician and prominent public health scientist at Columbia University believes there is solid evidence that close to half a million people, mostly civilians, have been killed in the Iraq war. His statistics are about 10 times higher than the estimates put forth by the Bush administration and the Pentagon.

"But a much bigger problem than the numerical disparity is the simple fact that so few even ask.
I think it's important that every American understand the true magnitude of this tragedy," says Roberts.

Unfortunately, few in the media or in government appear to want to draw attention to the deaths that have so severely altered the lives of so many.

In 2004, Roberts and colleagues sneaked into Iraq with dyed beards and dressed in robes to conduct a series of mortality "cluster point" surveys in various communities. His team initially estimated the civilian death toll as at least 100,000 (two to three times the official estimate) but later analysis prompted him to raise the estimate. The findings were reported in the British medical journal, the Lancet in 2006.

"To help people understand this, given the population of Iraq, it would be like New York City having two 9/11 attacks every week over a period of three years,"
Roberts said.

Another report, issued in January, estimated that 151,000 Iraqis died from violence between March 2003 and June 2006. The estimate was based on projections by the Iraqi government and the World Health Organization.

"General David Petraeus testified earlier this year about the fewer deaths we're seeing in Iraq, but his numbers suggested that life in Baltimore was more violent than in Iraq."
Before a Congressional Hearing, Dr. Roberts wrote Senators asking them to challenge the statistics, but nobody uttered a word. News reporters stayed silent as well.

"Everybody wants to believe things are getting better because Republicans want to declare victory and Democrats want an excuse to get out. Meanwhile, the media continue to ignore the issue. My professional life and purpose is based on the belief that most of the time, valid data leads towards truth and that truth... can lead toward justice,"

-Tom Paulson (Excerpt: "Doctor Laments Brush-Off of Iraqi War Dead," Seattle Post-Intelligencer, 10.24.08. Image: -American Colony, "Iraqis In The Streets," Library of Congress, Iraq, 1932 ).

Thursday, October 23, 2008

Non-Cooperative Human Subjects: Danger, Will Robinson, Danger!

“The Pentagon is looking for contractors to provide a "Multi-Robot Pursuit System" that will let packs of robots "search for and detect a non-cooperative human".

Original Department of Defense Proposal:

SITIS Topic Details
Program: SBIR
Topic Num: A08-204 (Army)
Title: Multi-Robot Pursuit System
Research & Technical Areas: Ground/Sea Vehicles
Objective: Develop a software and sensor package to enable a team of robots to search for and detect human presence in an indoor environment.

Description: There are many research efforts within robotics in path planning, exploration, and mapping of indoor and outdoor environments. Operator control units are available that allow semi-autonomous map-based control of a team of robots. While the test environments are usually benign, they are slowly becoming longer and more complex. There has also been significant research in the game theory community involving pursuit/evasion scenarios.

This topic seeks to merge these research areas and develop a software/hardware suit that would enable a multi-robot team, together with a human operator, to search for and detect a non-cooperative human subject. The main research task will involve determining the movements of the robot team through the environment to maximize the opportunity to find the subject, while minimizing the chances of missing the subject. If the operator is an active member of the search team, the software should minimize the chance that the operator may encounter the subject. As a simplification, the building layout could be given, although operating in an unknown environment with unknown obstacles is more realistic. The latter case should be studied at least in simulation. The software should maintain awareness of line-of-sight, as well as communication and sensor limits. It will be necessary to determine an appropriate sensor suite that can reliably detect human presence and is suitable for implementation on small robotic platforms. Additionally, the robot may not have the intelligence, sensing, or manipulative power to perform reconnaissance under full autonomy.

For example, the robot may not be able to negotiate all obstacles, determine the course of action when confronted with difficult choices, or have sufficient team members to optimally search. Part of the research will involve determining what role the human operator will play in the search task. The system should flag the operator when assistance is required. Typical robots for this type of activity are expected to weigh less than 100 Kg and the team would have three to five robots.

PHASE I: Develop the system design and determine the required capabilities of the platforms and sensors. Perform initial feasibility experiments, either in simulation or with existing hardware. Documentation of design tradeoffs and feasibility analysis shall be required in the final report.

PHASE II: Implement the software and hardware into a sensor package, integrate the package with a generic mobile robot, and demonstrate the system’s performance in a suitable indoor environment. Deliverables shall include the prototype system and a final report, which shall contain documentation of all activities in this project and a user's guide and technical specifications for the prototype system.

PHASE III: Robots that can intelligently and autonomously search for objects have potential commercialization within search and rescue, fire fighting, reconnaissance, and automated biological, chemical and radiation sensing with mobile platforms.

-DOD Small Business Innovation Research SITIS (, 2007).

“Given that iRobot last year struck a deal with Taser International to mount stun weapons on its military robots, how long before we see packs of droids hunting down pesky demonstrators with paralyzing weapons? Or could the packs even be lethally armed? I asked two experts on automated weapons what they thought. Both were concerned that packs of robots would be entrusted with tasks - and weapons - they were not up to handling without making wrong decisions.

Steve Wright of Leeds Metropolitan University is an expert on police and military technologies, and last year correctly predicted this pack-hunting mode of operation would happen:

"The giveaway here is the phrase 'a non-cooperative human subject'. What we have here are the beginnings of something designed to enable robots to hunt down humans like a pack of dogs. Once the software is perfected we can reasonably anticipate that they will become autonomous and become armed. We can also expect such systems to be equipped with human detection and tracking devices including sensors which detect human breath and the radio waves associated with a human heart beat. These are technologies already developed."

Another commentator often in the news for his views on military robot autonomy is Noel Sharkey, an AI and robotics engineer at the University of Sheffield. He understands why the military wants such technology, but also worries it will be used irresponsibly: "This is a clear step towards one of the main goals of the US Army's Future Combat Systems project, which aims to make a single soldier the nexus for a large scale robot attack. Independently, ground and aerial robots have been tested together and once the bits are joined, there will be a robot force under command of a single soldier with potentially dire consequences for innocents. ...If you have an autonomous robot then it's going to make decisions who to kill, when to kill and where to kill them. The scary thing is that the reason this has to happen is because of mission complexity and also so that when there's a problem with communications you can send a robot in with no communication and it will decide who to kill."

Sharkey also warned that such autonomous weapons could easily be used in the future by law enforcement officials in cites, pointing out that South Korean authorities are already planning to have a fully armed autonomous robot police force in their cities.”

-Steve Watson ( “Pentagon Wants Packs Of Robots To Detect Non-cooperative Humans”,, 9.23.08. DoD Proposal: See Above. -Paul Marks,“Packs of Robots Will Hunt Down Uncooperative Humans,” New Scientist, 10.22.08. Image: Model B-9, Class M-3 General Utility Non-Theorizing Environmental Control Robot. From Irwin Allen's classic 1960s sci-fi television show, "Lost In Space,", 2008).

Monday, October 20, 2008

John Ralston Saul: Elitism, Expertise & A Mythical Moral Code...

"The Industrial Revolution had caused a severe mental trauma, one that still reaches out and extinguishes the memory of certain people. For them, modern history begins from a big explosion--the Industrial Revolution. This is a standard ideological approach: a star crosses the sky, a meteor explodes, and history begins anew."

" In the West, there had been a persistent growth of corporatism in spite of the outcome of the last world war. And that this growth continued. Why would this be shocking? Because corporatism was part of the anti-democratic underpinnings of Fascist Italy in particular, but also of Nazi Germany. Beneath the uniforms and the military ambitions and the dictatorial leadership and the racism lay corporatism. It was the intellectual foundation of fascism. And it was supposed to have been destroyed along with both regimes in 1945.”
- John Ralston Saul, “Unconscious Civilization,” 2006).

“Voltaire and his contemporaries believed that reason was the best defense against the arbitrary power of monarchs and the superstitions of religious dogma. It was the key not only to challenging the powers of kings and aristocracies but also to creating a more just and humane civilization. While the emphasis on reason has become one of the hallmarks of modern thought, today's rational society bears little resemblance to the visions of the great 17th and 18th century humanist thinkers. Our ruling elites justify themselves in the name of reason, but all too often their power and their methodology is based on specialized knowledge and the manipulation of rational "structures" rather than reason. Today the link between reason and justice has been severed and our decision-makers, bereft of a viable ethical framework, have turned rational calculation into something short-sighed and self-serving. The result, Saul observes, is that we live in a society fixated on rational solutions, management, expertise, and professionalism in almost all areas, from politics and economics to education and cultural affairs.

The cult of expertise is one of the defining characteristics of today's rational elites, as Saul sees it. "Among the illusions which have invested our civilization is an absolute belief that the solutions to our problems must be a more determined application of rationally organized expertise. The reality is that our problems are largely the product of that application."

The division of knowledge into "feudal fiefdoms of expertise" has meant that general understanding and coordinated action are increasingly difficult and often looked upon with suspicion, as evidenced by our systems of education which reward the specialist and disdain the generalist. It has also resulted in a fracturing of society into smaller and smaller and increasingly insulated professional groups. While the emergence of professionalism has paralleled the rise of individualism over the last two centuries, the result has not been greater individual autonomy and self-determination, as was once hoped, but isolation and alienation.

"The professional [found] that he could build his personal empire but curiously enough, the more expert he became, the more his empire shrank."

The great schism between the principles of democracy and the practices of modern rational governments has brought about not only widespread public frustration and anger, but also a general contempt among the ruling elites for the citizenry. While they cooperate with the established representational systems of democracy, Saul says, they do not believe in the value of the public's contribution. Nor do they believe in the existence of a public moral code.

"This means that in dealing with the public, they find it easier to appeal to the lowest common denominator within each of us. That this often succeeds reinforces their contempt for a public apparently capable of nothing better."

-Scott London ( Book Review: “Voltaire’s Bastards-The Dictatorship of Reason in the West by John Ralston Saul,” 1996. Image: -Lewis Wickes Hine, Child Laborers: Elsie & Sadie at their yarn machines, Yazoo City, Mississippi, May 1911).

Wednesday, October 15, 2008

The United Bank of America: A Call To Civil Service...

“Democracy is the road to Socialism.” -Karl Marx

"In what now looks like the final phase of the credit crunch, one thing has become clear: Many of the world's major banks will end up in state control.

Britain is furthest down the track. This week, Royal Bank of Scotland Group Plc and HBOS Plc ceded majority control to the government in exchange for financial support. Already, the state is making demands. It will have the right to seats on the board, to fix dividends, and be allowed to set executive pay.

Other countries are likely to follow. Germany has put its own rescue package in place, and Chancellor Angela Merkel has said the way bankers pay themselves will have to change. Even U.S. Treasury Secretary Henry Paulson has promised the government will take a direct stake in banks such as Citigroup Inc. and Goldman Sachs Group Inc.

In effect, bankers are about to become civil servants. That will require a huge culture change. In a second, banking will have to switch from being a raucous, entrepreneurial and aggressive industry into a dull, safe and conservative one.

For that to happen, their brains will have to be completely rewired. Everything a generation of bankers grew up expecting will be forgotten. A new set of rules is being written.

The initial moves will be cosmetic. Out will go the round- the-clock, work-hard-play-hard culture. In its place will come the nine-to-five day with a break for tea and biscuits. Meetings will be sacrosanct, and the keeping of minutes precise. The gender-awareness officer will no longer be a figure of fun, but rather the most powerful person in the workplace. As for taking clients to lap-dancing clubs, don't even think about it.

It's a new world, get used to it.

-Matthew Lynn (Excerpt: "Bankers Find Their New Calling as Civil Servants," Bloomberg News, 10.15.08. Image: - Deathagony1917,,2008).

Monday, October 13, 2008

Mafia-Capitalism: Humanity As Commodity...

"What is the interest for my family?"
-Marlon Brando as Don Corleone (The Godfather, 1972).

"It is no longer our economy but our democracy that is in peril. It was the economic meltdown of Yugoslavia that gave us Slobodan Milosevic. It was the collapse of the Weimar Republic that vomited up Adolf Hitler. And it was the breakdown in czarist Russia that opened the door for Vladimir Lenin and the Bolsheviks. Financial collapses lead to political extremism. The rage bubbling up from our impoverished and disenfranchised working class, glimpsed at John McCain rallies, presages a looming and dangerous right-wing backlash.

As the public begins to grasp the depth of the betrayal and abuse by our ruling class, as the Democratic and Republican parties are exposed as craven tools of our corporate state, as savings accounts, college funds and retirement plans become worthless, as unemployment skyrockets and as home values go up in smoke we must prepare for the political resurgence of a reinvigorated radical Christian right. The engine of this mass movement-as is true for all radical movements-is personal and economic despair. And despair, in an age of increasing shortages, poverty and hopelessness, will be one of our few surplus commodities.

Karl Polanyi in his book "The Great Transformation," written in 1944, laid out the devastating consequences-the depressions, wars and totalitarianism-that grow out of a so-called self-regulated free market. He grasped that "fascism, like socialism, was rooted in a market society that refused to function."

He warned that a financial system always devolved, without heavy government control, into a Mafia capitalism-and a Mafia political system-which is a good description of the American government under George W. Bush. Polanyi wrote that a self-regulating market, the kind bequeathed to us since Ronald Reagan, turned human beings and the natural environment into commodities, a situation that ensures the destruction of both society and the natural environment. He decried the free market's belief that nature and human beings are objects whose worth is determined by the market. He reminded us that a society that no longer recognizes that nature and human life have a sacred dimension, an intrinsic worth beyond monetary value, ultimately commits collective suicide. Such societies cannibalize themselves until they die. Speculative excesses and growing inequality always destroy the foundation for a continued prosperity.

The corporate con artists and criminals who have hijacked our state and rigged our financial system still speak to us in the obscure and incomprehensible language coined by specialists at elite business schools. They use terms like securitization, deleveraging, structured investment vehicles and credit default swaps. The reality, once you throw out their obnoxious jargon, is not hard to grasp. Banks lent too much money to people and financial institutions that could not pay it back. These banks are now going broke.

The government is frantically giving taxpayer dollars to banks so they can be solvent and again lend money. It is not working. Bank lending remains frozen. There are ominous signs that the government may not be able to hand over enough of our money because the losses incurred by these speculators are too massive. The downward spiral could spread like a tidal wave across the country, especially since our corporate elite, including Barack Obama, seem to have no real intention of bailing out families who can no longer pay their mortgages or credit card debts.

Lenin said that the best way to destroy the capitalist system was to debauch its currency. If our financial disaster continues there will be a widespread loss of faith in the mechanisms that regulate society. If our money becomes worthless, so does our government. All traditional standards and beliefs are shattered in a severe economic crisis. The moral order is turned upside down. The honest and industrious are wiped out while the gangsters, profiteers and speculators amass millions. Look at Lehman Brothers CEO Richard Fuld. He walks away from his bankrupt investment house after pocketing $485 million. His investors are wiped out. An economic collapse does not only mean the degradation of trade and commerce, food shortages, bankruptcies and unemployment; it means the systematic dynamiting of the foundations of a society.

The Patriot Act, the FISA Reform Act, the suspension of habeas corpus, the open use of torture in our offshore penal colonies, the stationing of a combat brigade on American soil, the seas of surveillance cameras, the brutal assaults against activists in Denver and St. Paul are converging to determine our future. Those dark forces arrayed against American democracy are waiting for a moment to strike, a national crisis that will allow them in the name of national security and moral renewal to shred the Constitution. They have the tools. They will use fear, chaos, the hatred for the ruling elites and the specter of left-wing dissent and terrorism to impose draconian controls to extinguish our democracy. And while they do it they will be waving the American flag, singing patriotic slogans and clutching the Christian cross.

This is a defining moment in American history. The next few weeks and months will see us stabilize and weather this crisis or descend into a terrifying dystopia. I place no hope in Obama or the Democratic Party. The Democratic Party is a pathetic example of liberal, bourgeois impotence, hypocrisy and complacency. It has been bought off. I would like to offer hope, but it is more important to be a realist. No ethic or act of resistance is worth anything if it is not based on the real. And the real, I am afraid, does not look good.

-Chris Hedges (Excerpt: "America’s Political Cannibalism,", 10.13.08. Image: Scene from "Mafioso," directed by Alberto Lattuada, Italy, 1962).

Sunday, October 12, 2008

Hanna Segal: The Distinction Between Lies & Truth...

At 90, the psychoanalyst Hanna Segal has spent decades probing the murkiest corners of the human psyche. She talks to Jon Henley about her search for truth, the healing power of art and what her years in practice have taught her about life

Segal is one of the most eminent psychoanalysts ever to have practiced in Britain.

Hers is rather a strange profession, though. All that poking around in the dark, walled-off corners of people's minds, hunting down explanations for bizarre adult behaviour in obscure childhood events that invariably involve breasts or toilets. A lot of people have no time for it.

Segal, obviously, does. "The more I think about it," she says, "the importance lies in seeking truth. Not 'The Truth' with a capital T, an omniscience, but truth that is the same as reality. All we are really looking for, in a patient on the couch, is a distinction between lies and truth."

The kind of people who came to see her were, she says, generally those who "seek to avoid truth, and so end up in delusion. What you are aiming to achieve is a change in the direction of the mind, a bend towards truth. And while all science aims at truth, psychoanalysis is unique in recognizing that the search for truth is, in itself, therapeutic."

The latter phrase is one penned by Segal and colleagues for the obituary of Melanie Klein, of whose work Segal is pretty much universally recognized as the most prominent postwar interpreter. Kleinian psychoanalysis is one of the two main schools within the British Psychoanalytical Society, the other being Freudian (after Anna, Sigmund's daughter).

The nuances between the two are not immediately apparent to the layperson, but if you ask Segal why, many years ago, she opted for the former rather than the latter, she answers that Freud's masterwork, The Ego and the Mechanisms of Defence, read "like a textbook. It didn't speak to my imagination at all." Klein's Psychoanalysis of Children, on the other hand, "was a revelation. It opened up a whole new world."

It was in Geneva that Segal first read the works of Sigmund Freud. "I read Proust first, before Freud," she says. "And I think I simply realised that there was nothing, absolutely nothing, more fascinating than human nature. And human relations."

So when the time came to choose a career, psychoanalysis was almost a natural choice. It satisfied her interest in human nature, assuaged a powerful social conscience ("I have to feel I am doing something useful. Something that might help people"), and allowed her to explore the third great passion in her life: art. Segal's major contribution to the world of psychoanalysis is most probably in aesthetics and what is known as symbolisation. Two of her best-known books are entitled Dream, Phantasy and Art, and Delusion and Artistic Creativity.

"We cope with our anxieties and desires," she explains, "in symbolical ways. We all need a capacity for symbol formation, or symbolization: hopefully, we will try to find someone like our mother to marry, rather than try actually to marry our mother.

Artists exist on the borderline of severe psychotic anxieties: if they succeed in symbolizing them, then they can produce great art - but if not, they can be in trouble."

Segal indicates a painting on the wall of a rather chaotic vase of flowers, all violent purples, magentas and reds. "Look closer," she says. "Can you see the face of a dog?" It's there, sort of; a gloomy bloodhound, all drooping jowls and sad, tortured eyes. "The work of a patient," she says. " It Saved him from madness."

I must look dubious, because she comes back at me with Van Gogh, whose story you really can't argue with. She cites another case that, in many ways, first opened her to the possibilities of psychoanalysis: many years ago, on an evacuation train before the war, a girl had a schizophrenic fit, screaming what sounded like hysterical nonsense.

"She kept shouting, 'I shat my lover in the loo! I shat my lover in the loo!'" Segal says. "Later, after I read Klein, I realized that girl's words actually had a very obvious meaning; you could understand them. She was the one being evacuated, but in her mind she had reversed that situation: she was the one doing the evacuating. This, I understood, was the language of subconscious fantasy."

I'm still dubious. How can psychoanalysts ever really know they're right?

"We can't," she says. "There's no quick cure or absolute certainty. And the truth rarely stays the truth; yesterday's truth is not today's. But there is a sense of accumulating evidence. You mustn't concentrate, or try to remember - but in the mass of patient communication, you have to select the right fact, with an open mind. And you have to be sure that fact is not just your idea, your own, overrated idea. It's not easy."

"We're always told not to treat society as if it were a patient on the couch," she says, "but group psychology can be understood because it is a group of humans." The function of a group, she contends, is certainly to work together, but also to act as a kind of repository for our projections of all those bad things we cannot tolerate in ourselves.

"Groups contain our psychotic anxieties and delusions. Generally, we delegate what you might call the 'mad' functions - fighting, religion - to subgroups: the army, the church. But those subgroups must be under the control of the working part of the group. My point is that when mad things start happening, it's when subgroups get out of control, and particularly when they combine: God, money and the military is a particularly deadly recipe." The Iraq conflict was about "the need for an enemy", and "a religious fanaticism linked to, and covering up, mass robbery".

Today, Segal believes, our collective sanity is threatened by "a delusional inner world of omnipotence, and absolute evil, and sainthood. Unfortunately, we also have to contend with mammon." And since we tend to submit to the tyranny of our own groups, "speaking our minds takes courage, because groups do not like outspoken dissenters." The battle now "is between insanity based on mutual projections, and sanity based on truth". And all we, as citizens, can do is "struggle to expose lies, and strive for the preservation of sane human values".

She is not convinced she will ever see that battle resolved. But the important thing, she insists, adopting the vivid symbol she first found in Cormac McCarthy's post-apocalyptic fable The Road, is to "keep a little fire burning; however small, however hidden. I find this extraordinarily helpful: we live in a mad world, but for those of us who believe in some human values, it is terribly important that we just keep this little fire burning. It is about trusting your judgment, and the power of love. A little trust, and a little care".

-Jon Henley ("Queen of Darkness: John Henley talks to psychoanalyst Hanna Segal," GuardianUK, 9.8.08. Image: In Voluptate Mors by Salvador DalĂ­ & P.Halsman,1951).

Friday, October 10, 2008

On Wall Street: Let Them Hit Bottom, Let Them Go Bankrupt...

Legendary investor Jim Rogers warned during a CNBC interview this morning that global central banks are creating the environment for an inflationary holocaust by their ceaseless overprinting of currency, a measure that isn’t even successful in stabilizing the stock market.

Rogers said that the only solution to the market crisis was to let failing banks and speculators go bankrupt and stop pumping endless amounts of liquidity into the system, labeling it outrageous that responsible investors and taxpayers are being made to bail out crooks on Wall Street. “The way to solve this problem is to let people go bankrupt,” Rogers stressed, “All of this pumping money into the system is not going to save it - see what the market is saying, it’s saying we don’t buy that, let people go bankrupt...then you hit bottom and then you start over. The people who are sound will take over the assets from the people who aren’t sound and we'll start over. This is the way the world has worked for a few thousand years,” said Rogers.

Rogers warned that the reliance on governments printing money would not aid a recovery and would only lead to the problem becoming worse in the future. “We’re setting the stage for when we come out of this of a massive inflation holocaust,” he said.

Rogers said that excesses of credit and people becoming over-leveraged meant that they would now have to take some pain: “Never before in world history were people able to buy houses with no money down, many people bought four or five houses with no money down and no job and then they did it with cars and student loans and credit card loans, you just think we say well that’s too bad we’re gonna start over nobody loses his job….be realistic."

Rogers said that the G7 leaders, who are meeting this weekend, should “go down to the bar, have a beer and leave the rest of us alone, let the people who are sound succeed and let the other people fail. What I’m afraid of is they’re gonna keep doing what they’ve been doing - which the market hates, you can see the market hates it - because this is going to unleash rampant inflation around the world, rampant confusion in the currency markets and you’re gonna have currencies gyrating all over the world,” said Rogers, repeating that the central bankers were unleashing an “inflationary holocaust”.

A CNBC expert then expressed his confusion at Rogers’ argument that overprinting of currency caused hyper inflation, seemingly displaying less grasp of basic economic cause and effect principles than a 5-year-old would. Rogers again made the point: “When you print gigantic amounts of money and you flood the world with money, throughout history that has led to inflation.”

-Paul Joseph Watson, ("Rogers: Global Bankers Have Unleashed Inflationary Holocaust,", 10.10.08. Image: "Worthless,", 2008).

Monday, October 6, 2008

Consequence Management: Ready To Be Containerized?

“I can’t think of a more noble mission than this. We’ve been all over the world during this time of conflict, but now our mission is to take care of citizens at home ... and depending on where an event occurred, you’re going home to take care of your home town, your loved ones.”
-Col. Roger Cloutier, 1st Brigade Combat Team Commander referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals (aka: US Citizens)., 9.30.08.

A little-noticed story surfaced a couple of weeks ago in the Army Times newspaper about the 3rd Infantry Division's 1st Brigade Combat Team. "Beginning Oct. 1 for 12 months," reported Army Times staff writer Gina Cavallaro, "the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks."

Disturbingly, she writes that "they may be called upon to help with civil unrest and crowd control" as well.

The force will be called the chemical, biological, radiological, nuclear or high-yield explosive Consequence Management Response Force. Its acronym, CCMRF, is pronounced "sea-smurf." These "sea-smurfs," Cavallaro reports, have "spent 35 of the last 60 months in Iraq patrolling in full battle rattle," in a combat zone, and now will spend their 20-month "dwell time"-time troops are required to spend to "reset and regenerate after a deployment"-armed and ready to hit the U.S. streets.

The Army Times piece includes a correction stating that the forces would not use nonlethal weaponry domestically. I called Air Force Lt. Col. Jamie Goodpaster, a public-affairs officer for Northern Command. She told me that the overall mission was humanitarian, to save lives and help communities recover from catastrophic events. Nevertheless, the military forces would have weapons on-site, "containerized," she said-that is, stored in containers-including both lethal and so-called nonlethal weapons. They would have mostly wheeled vehicles, but would also, she said, have access to tanks. She said that any decision to use weapons would be made at a higher level, perhaps at the secretary-of-defense level.

Talk of trouble on U.S. streets is omnipresent now, with the juxtaposition of Wall Street and Main Street. The financial crisis we face remains obscure to most people; titans of business and government officials assure us that the financial system is "on the brink," that a massive bailout is necessary, immediately, to prevent a disaster. If the economy does collapse, if people can't go down to the bank to withdraw their savings, or get cash from an ATM, there may be serious "civil unrest," and the "sea-smurfs" may be called upon sooner than we imagine to assist with "crowd control."

That's where the sea-smurfs come in. Officially formed to respond to major disasters, like a nuclear or biological attack, this combat brigade falls under the U.S. Northern Command, a military structure formed on Oct, 1, 2002, to "provide command and control of Department of Defense homeland defense efforts."

Military participation in domestic operations was originally OUTLAWED with the Posse Comitatus Act in 1878. The John Warner National Defense Authorization Act for Fiscal Year 2007, however, included a section that allowed the president to deploy the armed forces to "restore public order" or to suppress "any insurrection." While a later bill repealed this, President Bush attached a signing statement that HE DID NOT FEEL BOUND BY THE APPEAL.

We are in a time of increasing economic disparity, with the largest gap between rich and poor of any wealthy industrialized country. We are witnessing a crackdown on dissent, most recently with $100 million spent on "security" at the Democratic and Republican national conventions. The massive paramilitary police forces deployed at the RNC in St. Paul, Minn., were complete overkill, discouraging protests and conducting mass arrests (National Guard troops just back from Fallujah were there). The arrest there of almost 50 journalists (myself included) showed a clear escalation in attempting to control the message (akin to the ban on photos of flag-draped coffins of soldiers). There are two ongoing, unpopular wars that are costing lives and hundreds of billions of dollars. Nobel-winning economist Joe Stiglitz estimates that Iraq alone will cost more than $3 trillion.

In December 2001, in the midst of restricted access to bank accounts due to a financial crisis, respectable, middle-class Argentines rose up, took to the streets, smashed bank windows and ultimately forced the government out of power, despite a massive police crackdown and a failed attempt to control the media. Here in the U.S., with the prospect of a complete failure of our financial system, the people have spoken and do not want an unprecedented act of corporate welfare. We don't know how close the system is to collapse, nor do we know how close the people are to taking to the streets. The creation of an active-duty military force, the sea-smurfs, that could be used to suppress public protest here at home is a very bad sign.

-Amy Goodman & Denis Moynihan ("Invasion of the Sea-Smurfs,", 10.2.08. Image: Poster Illustration of the "People Scoop" in the classic sci-fi film "Soylent Green," directed by Richard Fleischer, 1973).

Saturday, October 4, 2008

Bailed Out: Financial Wise Guys & The Wall Street Casino...

"The Congress told the American people to go to hell."-Lou Dobbs, on the passage of the 700 billion dollar Wall Street bailout plan, 10.1.08.


"The federal reserve is still struggling to contain what is already the most severe credit contraction since the Great Depression. Yet in all of the press coverage, commentators have scarcely acknowledged that this old-fashioned panic is a child of deregulation. During the past decade, the financial economy has repeated the excesses of the 1920s -- too much borrowing to underwrite too many speculative bets with other people's money, too far beyond the reach of regulators, setting up the entire economy for a crash.

The Roosevelt schema of financial regulation was built around two principles -- disclosure and outright prohibition of inherent conflicts of interest. All publicly listed and traded companies were required to disclose to the Securities and Exchange Commission and to the public all financial information deemed "material" to investor decisions. The New Deal also prohibited stock trading based on insider information, and it created structural barriers against the kinds of temptations that ruined the economy in the 1920s. The most notable of these was the 1933 Glass-Steagall Act, which prohibited the same financial company from being both a commercial bank and an investment bank.

The Glass-Steagall wall was devised to prevent a repeat of the 1920s' scams, in which banks made speculative investments, turned the debts into securities, and sold them off to unsuspecting investors with the blessing of the bank. With Glass-Steagall, commercial banks were tightly supervised and given access to federal deposit insurance, to keep savings secure and prevent runs on banks. Investment banks, meanwhile, were not government-guaranteed and were free to do more speculative transactions for consenting adult customers. But Roosevelt's newly created SEC subjected securities markets to much tighter structures against self-dealing and insider conflicts of interest.

The New Deal also acted on the home mortgage front. Millions of people were losing their homes and farms to foreclosures, both creating human tragedies and deepening the Depression. In response, the Roosevelt administration literally invented the modern system of home finance. Pre–New Deal mortgages had typically been short-term notes, where most of the principal was due and payable at the end of a brief term, often just three to five years. The New Deal devised the modern long-term, fixed-rate, self-amortizing mortgage. Congress created the Federal Housing Administration to insure these mortgages and win their acceptance among lenders. It also created the Federal National Mortgage Association to sell bonds and buy mortgages, and thus replenish the funds of local lenders. And the New Deal devised a system of federal home loan banks to supervise and advance capital to savings and loan institutions. Deposit insurance was extended to government-supervised mortgage lenders.

The system worked like a watch, combining sound lending standards with expanded opportunity. The rate of home ownership rose from 44 percent in the late 1930s to 64 percent by the mid-1960s. Savings and loan associations almost always ran in the black, there were no serious scandals, and the government deposit-insurance funds regularly returned a profit.

If you fast forward to 2000, much of this protective apparatus has been repealed. Regulators who didn't believe in regulation and a compliant Congress have allowed financial engineers to evade what remains. In the 1980s, regulators began allowing exceptions to Glass-Steagall. In 1999, Congress finally repealed it outright, permitting financial supermarkets like Citigroup to operate ANY KIND OF FINANCIAL BUSINESS THEY DESIRED, and profit from multiple conflicts of interest. The scandals that pumped up the dot-com bubble of the late 1990s, as well as the most flagrant cases like Enron, and the crash that followed, were the result of the SEC and the bank regulators CEASING TO POLICE CONFLICTS OF INTEREST. In the scandals of the 1990s, corporate CEOs, their accountants, and stock analysts working for their bankers, all conspired to puff up corporate balance sheets and pump up stock prices on which executive bonuses depended. This is a little harder today, thanks to the honest accounting requirements of the 2002 Sarbanes-Oxley Act (which the Bush administration hopes to water down). But the same kinds of conflicts and potentials for abuse exist when a mega-bank underwrites a leveraged buyout by an affiliated hedge fund, and then hypes the sale of securities when the fund is ready to sell the company back to the public.

Meanwhile, the once staid and socially directed system of providing home mortgages was seized by financial wise guys and turned into another casino. In the early 1980s, exploiting the Reaganite theme of government-bashing, the savings and loan industry persuaded Congress to substantially deregulate S&Ls -- which then speculated with government-insured money and lost many hundreds of billions, costing taxpayers upward of $350 billion in less than a decade.

In 1989 when Congress reregulated S&Ls, the financial engineers just did another end run. Mortgage companies that were exempt from federal regulation came to dominate the mortgage lending business. This loop of the story begins in 1968 with the privatization of Roosevelt's Federal National Mortgage Association. In the wake of that move, investment bankers invented a daisy chain known as "securitization" of mortgage credit. Through securitization, a mortgage broker could originate a loan, sell it to a mortgage banker, who would then sell it to an investment bank like Salomon Brothers, who in turn would package the mortgages into securities. These were then evaluated and coded (for a fee) by private bond-rating agencies according to their supposed risk, and sold off to hedge funds or pension funds. Each of these worthies took their little cut, raising the cost of credit to the borrower. Rather than diffusing risks, securitization concentrated them, because everyone was making the same bet on real-estate inflation.

In the sub-prime sector, you could get a loan without a full credit check, or even without income verification. The initial "teaser" rate would be low, but after a few years the monthly payment would rise to unaffordable levels. Both borrower and lender were betting on rising real-estate prices to bail them out, by allowing an early refinancing. But when a soft housing market dashed those hopes, the whole sub-prime sector crashed, and the damage spilled over into other financial sectors.

How aggressively the Fed should move has been the subject of extensive commentary. If the Fed moves too slowly or doesn't cut enough, it ends up playing catch-up behind an advancing panic. If it moves too quickly or too generously, it just invites the next round of speculation with cheap money, and in passing might erode confidence in the none-too-robust dollar. But all of this commentary misses the larger point: If monetary policy is the only tool the government has at its disposal, the Fed can't possibly solve the larger crisis (or prevent the next one) by using interest rates alone.

Indeed, until Congress dismantled financial regulation, the Fed was not called upon to mount these heroic rescues, which have become so common in recent years. Until the 1960s, the central bank could keep interest rates low, confident that they would underwrite the growth of the real economy rather than risky financial speculation, for the simple reason that entire categories of speculation did not exist.

But during the past quarter-century, as deregulation has turned the economy into a casino, the Federal Reserve has had to mount major rescues at least six times. In the early 1980s, it bailed out the big New York banks, some of which lost more than the total amount of their capital in failed speculative third world loans; the money-center banks would have been adjudged insolvent if the Fed hadn't bent its usual capital-adequacy rules. Next, the Fed poured huge quantities of liquidity into financial markets after the stock market crash of 1987, in which the market lost more than 20 percent of its value in a single day. The Fed intervened again on several occasions after speculators destabilized several third world currencies and economies from Mexico to Malaysia. The Fed cleaned up after the aforementioned Long Term Capital Management collapse. It flooded markets with money after the dot-com crash and the attacks of September 11, and most recently in the credit crunch of summer 2007.

Indeed, markets have become so reliant on the Fed's bailouts that they even have a term for it -- "the Greenspan put." A put is a financial term meaning a right to sell a financial security at a predetermined price. The knowledge that the Fed would cheapen money in a crisis reassured speculators that they could always unload their paper. That awareness also influenced financial insiders to behave more recklessly."


"There's plenty of blame to go around, and it doesn't fasten only on one party or even mainly on what Washington did or didn't do. As The Economist magazine noted recently, the problem is one of "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role." Here's a partial list of those alleged to be at fault:
  • The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
  • Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.
  • Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
  • Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
  • The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.
  • Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.
  • Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
  • Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
  • The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
  • An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
  • Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.
The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation."

-Robert Kuttner, PART I: "The Bubble Economy," The American Prospect, 9.24.07 , Part II: –Joe Miller & Brooks Jackson "Who Caused the Economic Crisis?", 10.1.08. Image: -John Wardell, "Roulette Wheel," Flickr 1.1.06).