It ain't Socialism.

Military Industrial Complex 2.0

Cubicle Mercenaries, Subcontracting Warriors, and Other Phenomena of a Privatizing Pentagon

by Frida Berrigan
Published on Monday, September 15, 2008 by TomDispatch.com

EXCERPT...

Consider the following: In fiscal year 2005 (the last year for which full data is available), the Pentagon spent more contracting for services with private companies than on supplies and equipment -- including major weapons systems. This figure has been steadily rising over the past 10 years. According to a recent Government Accountability Office report, in the last decade the amount the Pentagon has paid out to private companies for services has increased by 78% in real terms. In fiscal year 2006, those services contracts totaled more than $151 billion.

Ever more frequently, we hear generals and politicians alike bemoan the state of the military. Their conclusion: The wear and tear of the President's Global War on Terror has pushed the military to the breaking point. But private contractors are playing a different tune. Think of it this way: While the military cannot stay properly supplied, its suppliers are racking up contracts in the multi-billions. For them, it's a matter of letting the good times roll.

What a Difference a War Makes

As we prepare to close the book on the Bush presidency, it is worth exploring just how, in the last seven-plus years, the long War on Terror has actually helped build a new, privatized version of the Pentagon. Call it Military Industrial Complex 2.0.

Consider fiscal year 2001, which conveniently ended in September of that year. It serves as a good, pre-War on Terror baseline for grasping just how the Pentagon expanded ever since -- and how much more it is paying out to private contractors today.

Back then, the Pentagon's top 10 suppliers shared $58.7 billion in Department of Defense (DoD) contracts, out of a total of $144 billion that went to the top 100 Pentagon contractors. Number 100 on the list was The Carlyle Group with $145 million in contracts. Keep in mind, of course, that this was the price of "defense" for a nation with no superpower rival.

Fast forward to 2007 and the top 10 companies on the Pentagon's list of private contractors were sharing $125 billion in DoD contracts, out of a total of $239 billion being shared among the top 100 contractors. The smallest contract among those 100 was awarded to ARINC and came in at $495 million.

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http://www.commondreams.org/view/2008/09/15-3

Making some sense of $700 billion

By James Carroll
October 6, 2008

HOW MUCH is 700 billion? The mind registers the number with such imprecision as to make it meaningless. One blogger proposed this way of grasping the figure: As a stack of $100 bills, it would reach 54 miles high. But who can imagine that? On the other hand, someone at the Smithsonian once calculated that counting to one billion, at the rate of one digit per second, would take 30 years. By that scale, counting to 700 billion would take 21,000 years.

SNIP...

By a nice coincidence, though, the financial rescue package of $700 billion duplicates a number that was also in the news last week - the Pentagon budget. In the fiscal year just beginning, the Defense Department will spend $607 billion on normal military costs, and an additional $100 billion on the wars in Iraq and Afghanistan. (As of June 30, 2008, Congress had appropriated $859 billion for the wars; Congressional Budget Office projections assume further costs of $400 billion to $500 billion as the wars wind down). But for the coming year, $700 billion is the Pentagon's nice round number (this includes neither Homeland Security nor intelligence costs).

Step back. All of last week's hand-wringing hoopla over the emergency bailout stands in stark contrast to the utter indifference with which politicians approved an equivalent layout for the military - an approval so routine that it was ignored in the press and by the public.

Barack Obama has no issue with current Defense expenditures. The annual American military budget is at least 10 times larger than the military budgets of Russia and China; it is 20 times larger than the entire budget of the US State Department. But last week's demonstration of anguish over the historic financial rescue figure throws an entirely new light on the nearly identical number that will fund the Pentagon for one measly year.

This is not a matter merely of comparison. Here is the question that no one is asking about America's grave financial crisis: By fueling corporate profits, jobs, and private-sector growth for two generations with massive over-investment in the military, has the United States gutted the real worth of its economy?

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http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/10/06/making_some_sense_of_700b/

Super-rich hide trillions offshore

Study reveals assets 10 times larger than UK GDP

Exchequers deprived of hundreds of billions in tax

Nick Mathiason
The Observer (UK)
Sunday March 27 2005

The world's richest individuals have placed $11.5 trillion of assets in offshore havens, mainly as a tax avoidance measure. The shock new figure - 10 times Britain's GDP - is contained in the most authoritative study of the wealth held in offshore accounts ever conducted.

The study, by Tax Justice Network, a group of accountants and economists concerned at the escalating wealth held in offshore locations, shows that the world's high-net-worth individuals earn $860 billion each year from their assets.

But there is growing alarm among regulators and campaigners because exchequers worldwide are missing out on at least $255bn of tax each year. Governments appear unable, or unwilling, to prevent the rich employing aggressive strategies to minimise their tax liabilities.

The OECD this weekend confirmed that international tax avoidance is a growing problem that troubles governments not just of rich countries, but middle-income ones as well.

'This is one of the defining crises of our times,' said John Christensen, co-ordinator of the Tax Justice Network and a former economic adviser to the Jersey government. 'One of the most fundamental changes in our society in recent years is how money and the rich have become more mobile. This has resul ted in the wealthy becoming less inclined to associate with normal society and feeling no obligation to pay taxes.'

James Jones, Anglican Bishop of Liverpool, said: 'In this country, we have created a culture of tax avoidance. The current debate is pandering to a culture of consumption and avoidance. We need a much better debate than the political parties are currently giving us.'

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http://www.guardian.co.uk/business/2005/mar/27/politics.economicpolicy

US nuclear tab at $5.8 trillion

South News July 1

Washington: In an enormous drain on resources the United States has spent $5.8 trillion on nuclear weapons according to a new study

A four-year study of newly declassified Pentagon documents, released yesterday by the Brookings Institute, looked at the expenditures of producing and deploying nuclear explosives over the past 5 1/2 decades with current spending on the arsenal at about $35 billion annually, or roughly 15 percent of the total defense budget.

Since the birth of the atomic weapons program in 1940, a total of $5.5 trillion was spent through 1996, the Washington think tank reports. That is 29 percent of all U.S. military spending and almost 11 percent of all government spending through the 52 years.

SNIP...

"Given the significant sums expended on nuclear weapons and their central role in the cold war, it is striking that so few have expressed an interest in either the cumulative or the annual costs,'' Schwartz wrote.

SNIP...

Highlights of the report:

• The United States produced 70,000 nuclear warheads between 1945 and 1990, with an arsenal that peaked in the 1960s at 32,000 warheads
• Making the warheads was relatively inexpensive. Firing, storing and handling them was extremely costly. The 70,000 warheads cost $409.4 billion, only about 7 percent of the total. But thousands of aircraft, submarines, ships, missiles, and a large network of factories, bases and personnel cost $3.241 trillion.
• In 1996 dollars, the World War II Manhattan Project cost more than $26 billion.
• The United States has produced 65 warhead types for 116 different weapons systems.
• Thirteen major U.S. facilities - including Washington state's Bangor submarine base - handle and maintain nuclear weapons, and cover an area larger than Delaware, Rhode Island and the District of Columbia combined.
• Some 6,135 strategic ballistic missiles were purchased at a cost of $266 billion, as well as 4,680 strategic bombers since World War II at a cost of $227 billion.
• The 2,975 submarine-launched ballistic missiles alone cost $97 billion, said the report. Since their inception, the United States has designed and deployed 14 kinds of strategic bombers. Some 210 nuclear-powered military vessels have been built or are being built.
• The figures include the estimated $7 billion costs of attempting to develop a nuclear-powered airplane, which never got off the ground.
• At the moment, the U.S. nuclear arsenal - long-range strategic and short-range tactical - is estimated at 10,635 warheads.
• The current stockpile has the equivalent explosive force of about 120,000 Hiroshima bombs.
• The United States is spending an estimated $35 billion a year on nuclear weapons and related programs, the Brookings Institution says in a massive study.

State Department spokesman James P. Rubin defended the nuclear program Wednesday, saying the weapons deterred the Soviet Union and the fact that the program was expensive "should not come as a surprise.''

Rubin said administration officials had not had a chance to assess the accuracy of the Brookings estimates. But he added, "It was worth the expense; communism was worth deterring through a combined policy of containment and modernization of nuclear forces.''

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http://southmovement.alphalink.com.au/southnews/980701-USnukes.htm

Bush: Rich Avoid Taxes, So Let's Give Them Tax Cuts

When Chris Wallace sits down for a not-quite-Valentine's Day love fest with President Bush, you can be sure there will be some fun moments. This one caught my eye:

WALLACE: How does overcome all of that and...

BUSH: Because there's two big issues. One is, who's going to keep your taxes low? Most Americans feel overtaxed and I promise you the Democrat party is going to field a candidate who says I'm going to raise your tax.

If they're going to say, oh, we're only going to tax the rich people, but most people in America understand that the rich people hire good accountants and figure out how not to necessarily pay all the taxes and the middle class gets stuck.

We've had -- we've been through this drill before. We're only going to tax the rich and all you have to do is look at the history of that kind of language and see who gets stuck with the bill.

What a truly remarkable answer. The Democrats want to raise rates on the wealthiest Americans, but Bush is saying that in fact this will screw the middle class because the rich have ways to avoid paying taxes. The obvious question is, then, why has Bush spent so much time giving tax cuts to the rich?!?!

SOURCE: http://blogs.tnr.com/tnr/blogs/the_plank/archive/2008/02/10/bush-rich-avoid-taxes-so-let-s-give-them-tax-cuts.aspx

The Charmed Lives of the Crony Capitalists

How the Banksters are Making a Killing Off the Bailout

By PAM MARTENS
CounterPunch
Weekend Edition
October 17 / 20, 2008

In 1897, when 8-year old Virginia O’Hanlon posed her Santa Claus query to the New York Sun, she received a heart-warming editorial response reassuring her that “He exists as certainly as love and generosity and devotion exist….”

Today, we hand our 8 year olds a $13 trillion national debt while our Congress hands Wall Street banksters the national purse without so much as a hearing to determine the cause of the debt collapse. Worse still, the money is doled out to the very same individuals who leveraged their institutions to casino status.

Americans are correctly outraged at the spectacle of U.S. crony capitalism crashing stock and bond markets around the globe while simultaneously watching the poster boys of crony capitalism on Monday, October 13, 2008 march up the granite steps of the United States Treasury building in their Armani shoes and heist a fresh $125 Billion of taxpayer dough in broad daylight.

The U.S. Treasury Secretary, Henry Paulson’s, $700 billion bailout plan to buy up distressed mortgage assets has spun off its own $250 billion subsidiary plan (skipping that pesky detail called taxation with representation) to inject $125 billion in equity capital into 9 of the biggest commercial and investment banks in the country. Another $125 billion may possibly go to smaller regional banks and thrifts, assuming they will sign on to the deal.

And what will taxpayers get for their investment in these financial firms whose stock prices are getting hammered as the public recoils in revulsion at what they have done to our financial system? The taxpayers, who were not invited to send their own legal representative to the negotiating table, will receive a paltry 5% dividend, exactly half of what Warren Buffett received for his recent investment in General Electric, a company that actually makes something real, like jet engines and light bulbs.

Now we learn from the U.S. Treasury web site that it has hired the law firm of Simpson, Thacher & Bartlett to represent our taxpayer interests going forward at a cost to us of $300,000 for six months work. But we’re not allowed to know their hourly wages; that information has been blacked out on the Treasury’s contract. Curiously, the Treasury has named in its contract the specific lawyers it wants to work for us. Two of those are Lee A. Meyerson and David Eisenberg. Mr. Meyerson has been a central player in facilitating the bank consolidations that have led to the present train wreck, including building JPMorgan Chase from the body parts of Chemical Bank, Chase Manhattan and Bank One.

Mr. Eisenberg has played a central role in the proliferation of the credit derivatives blowing up on the books of the Frankenbanks created by Mr. Meyerson. Here’s what the Simpson, Thacher & Bartlett web site says about its relationships and Mr. Eisenberg’s work:

“The Firm’s practice benefits from established relationships with all of the major investment banks…Mr. Eisenberg is responsible for creating the asset-backed practice at the firm and has represented clients involved in the structuring of the first asset-backed commercial paper program, the first public offering of credit card-backed securities by a bank and the first offering of asset-backed securities supported by dealer floor plan loans…Mr. Eisenberg represents JPMorgan Chase Bank, as issuer, in its ongoing program of public offerings of its credit card receivables backed notes. In addition Mr. Eisenberg represented JPMorgan Chase Bank in connection with the issuance of notes backed by commercial loans and in connection with its offerings of Leveraged Notes for Credit Exposure, a credit derivative product. Mr. Eisenberg has also represented underwriters, issuers and sponsors of modeled index catastrophe bonds. Mr. Eisenberg has represented sellers and buyers of credit protection in connection with synthetic securitizations of consumer loans, commercial loans and high yield bonds.”

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http://www.counterpunch.org/martens10172008.html

Up in smoke

The abridged history of US investment banking

By Mike Whitney
Online Journal Contributing Writer
Analysis
Oct 20, 2008, 00:14

EXCERPT...

Before the EU finance ministers announced their plan to recapitalize the banking system, by injecting capital and guaranteeing deposits and interbank lending, the world was on its way to a complete financial meltdown. The EU, led by British Prime Minister Gordon Brown, pulled the world back from the brink of annihilation. It may be the greatest story of our generation, and very few people even know what really happened.

The system was completely frozen in place. Interbank lending had stopped, major corporations were unable to meet payroll because they couldn’t roll over their short-term debt. Cargo ships were stuck in ports around the world because buyers couldn’t get letters of credit.

As analyst John Mauldin said, “Just as the business world is dependent upon commercial paper as its life blood, the world of global trade depends on letters of credit (LOC). If you are a manufacturer of a product and want to sell to someone outside your borders, you typically require a letter of credit from the buyer before you load any cargo at a port. A letter of credit from a prime bank is considered to be proof of your ability to pay. . . . There are buyers’ and sellers’ agents who make sure these things happen seamlessly, and world commerce had grown because of it. . . . If you think the problems stemming from a meltdown with the commercial paper markets are threatening to the world economy, they are small potatoes when compared to a seizure in the letter of credit markets.”

The European initiative forced Secretary of the Treasury Henry Paulson to do the right thing. It is 100 percent certain now that his plan to use the $700 billion bailout to buy-back the non-performing loans and bad mortgage-backed securities from the banks would have failed and led to disaster. Paulson stuck by his wacko plan even though more than 200 economists opposed him and the stock market tumbled eight straight days in a row, losing more than 15 percent of its value. The EU had to put a gun to his head to force him to do the right thing. Paulson’s Wall Street bias is so great that he would have driven the country off the cliff just to reward his dodgy friends with lavish cash giveaways from the US taxpayer.

In fact, right after the European plan was announced, Paulson convened a meeting of the country’s largest banks so he could hand out $125 billion of freshly-minted, taxpayer-generated loot to shore up their flimsy balance sheets. Citigroup got $25 billion, as did JPMorgan Chase and Bank of America. Goldman Sachs and Morgan Stanley both netted $10 billion each. None of these banks had to submit to any type of regulatory investigation to see how much of their asset-base was held in worthless mortgage-backed slop or other structured garbage. Paulson never even tried to find out if they are even solvent! On top of that, taxpayers get no voting rights, no position on the board of directors, and no limits on executive compensation for the $125 billion contribution to Wall Street’s biggest white-collar criminals.

Last Thursday, all of the aforementioned banks reported horrendous quarterly losses, multi-billion dollar write-downs, and more grim warnings on future profits. It’s clear that Paulson wanted to deliver the bailout money before the public discovered the extent of the carnage.

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http://onlinejournal.com/artman/publish/article_3890.shtml

Tlön, Uqbar, Orbis Tertius

Jorge Luis Borges (1940)

I owe the discovery of Uqbar to the conjunction of a mirror and an encyclopedia. The mirror troubled the depths of a corridor in a country house on Gaona Street in Ramos Mejia; the encyclopedia is fallaciously called The Anglo-American Cyclopaedia (New York, 1917) and is a literal but delinquent reprint of the Encyclopedia Britannica of 1902. The event took place some five years ago. Bioy Casares had had dinner with me that evening and we became lengthily engaged in a vast polemic concerning the composition of a novel in the first person, whose narrator would omit or disfigure the facts and indulge in various contradictions which would permit a few readers - very few readers - to perceive an atrocious or banal reality. From the remote depths of the corridor, the mirror spied upon us. We discovered (such a discovery is inevitable in the late hours of the night) that mirrors hare something monstrous about them. Then Bioy Casares recalled that one of the heresiarchs of Uqbar had declared that mirrors and copulation are abominable, because they increase the number or men. I asked him the origin of this memorable observation and he answered that it was reproduced in The Anglo-American Cyclopaedia, in its article on Uqbar. The house (which we had rented furnished) had a set of this work. On the last pages of Volume XLVI we found an article on Upsala; on the first pages of Volume XLVII, one on Ural-Altaic Languages, but not a word about Uqbar. Bioy, a bit taken aback, consulted the volumes of the index. In vain he exhausted all of the imaginable spellings: Ukbar, Ucbar, Ooqbar, Ookbar, Oukbahr... Before leaving, he told me that it was a region of Iraq of or Asia Minor. I must confess that I agreed with some discomfort. I conjectured that this undocumented country and its anonymous heresiarch were a fiction devised by Bioy's modesty in order to justify a statement. The fruitless examination of one of Justus Perthes' atlases fortified my doubt.

The following day, Bioy called me from Buenos Aries. He told me he had before him the article on Uqbar, in volume XLVI of the encyclopedia. The heresiarch's name was not forthcoming, but there was a note on his doctrine, formulated in words almost identical to those he had repeated, though perhaps literally inferior. He had recalled: Copulation and mirrors are abominable. The text of the encyclopedia said: For one of those gnostics, the visible universe was an illusion or (more precisely) a sophism. Mirrors and fatherhood are abominable because they multiply and disseminate that universe. I told him, in all truthfulness, that I should like to see that article. A few days later he brought it. This surprised me, since the scrupulous cartographical indices of Ritter's Erdkunde were plentifully ignorant of the name Uqbar.

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http://interglacial.com/~sburke/pub/Borges_-_Tlon,_Uqbar,_Orbis_Tertius.html

Empire and White Supremacy The End of American Exceptionalism Goldmine Gramm BFEE

The End of American Exceptionalism?

Empire and White Supremacy

By COREY D.B. WALKER
CounterPunch
October 21, 2008

Now, when I say question the whole society, it means ultimately coming to see that the problem of racism, the problem of economic exploitation, and the problem of war are all tied together.

Martin Luther King, Jr.

So tell me why, can’t you understand
That there ain’t no such thing as a superman

Gil Scott-Heron

What happens to a nation once its most privileged symbols have been thoroughly discredited? Where does a country turn to begin again?

After eight years of the Bush-Cheney regime, the United States confronts these questions in light of a deep and profound crisis of legitimacy. The current crisis is intimately shaped by the demands of 21st century American imperialism and is reflected in the (un)spoken language of white supremacy.

The financial crisis engulfing the global capitalist system has exposed the hollow core of the American Dream. As thousands of individuals and families have their homes go into foreclosure, the symbolic center of the American Dream – the home – has turned into an economic nightmare from which no one can awaken.

The reckless financialization of global capitalism which accelerated over the course of the last decade has not only discredited free market fundamentalism, but has also severely compromised the economic and political standing of America’s unique brand of consumer capitalism. The ideology of an infinite American prosperity is no longer tenable as capitalism unravels and more and more Americans face desperate economic times with equally desperate choices.

The trends that progressives have for years been highlighting – the consolidation of wealth among a coterie of the elite, the record gap between rich and poor, the downward decline of wages, and the ever increasing level of poverty – are now coming to the forefront of public conversation.

And in so doing, calling into question the foundational assumptions of American superiority.

While the veiled and coded language of American foreign policy has been deciphered and well understood by those on the receiving end of America’s imperial promises, the rogue and cynical exploits by the recent administration has taken the mask off of the imperialistic machinations of American power. Average citizens have been forced to face the wide gulf between the rhetoric of politicians and the military actions pursued in the name of the American people.

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http://www.counterpunch.org/walker10212008.html

Maybe the Rich Are the Problem

by Linda McQuaig
Published on Tuesday, October 21, 2008 by The Toronto Star

EXCERPT...

Some analysts are now arguing that the extreme concentration of wealth may have contributed to the crisis, just as a similarly extreme concentration of wealth in the 1920s contributed to the crash of 1929 and the Great Depression.

In his classic The Great Crash 1929, the late economist John Kenneth Galbraith put "the bad distribution of income" - the top 5 per cent of the population received one-third of all income - at the top of his list of key factors causing the disaster.

James Livingston, a historian at Rutgers University, sees strong similarities between then and now.

Livingston points out that in the 1920s there was a massive shift in the distribution of income away from wages toward corporate profits. With consumer demand suppressed by the restraint on wages, corporations had little incentive to invest their hefty profits in expanding production. So they turned to financial speculation.

Since the 1980s, there's been a similar income shift away from wages toward profits. Livingston argues that, with consumer demand suppressed, George W. Bush's massive tax cuts for the rich "produced a new tidal wave of surplus capital with no place to go except real estate," fuelling the housing bubble.

This suggests extreme inequality itself may lead to financial speculation. If so, meaningful solutions may have to go beyond re-regulation, and include a return to higher taxes on the rich.

CONTINUED...

http://www.commondreams.org/view/2008/10/21-7

We Have the Money

If Only We Didn’t Waste It on the Defense Budget

by Chalmers Johnson
Published on Monday, September 29, 2008 by TomDispatch.com

There has been much moaning, air-sucking, and outrage about the $700 billion that the U.S. government is thinking of throwing away on rich New York bankers who have been ripping us off for the past few years and then letting greed drive their businesses into a variety of ditches. In fact, we dole out similar amounts of money every year in the form of payoffs to the armed services, the military-industrial complex, and powerful senators and representatives allied with the Pentagon.

On Wednesday, September 24th, right in the middle of the fight over billions of taxpayer dollars slated to bail out Wall Street, the House of Representatives passed a $612 billion defense authorization bill for 2009 without a murmur of public protest or any meaningful press comment at all. (The New York Times gave the matter only three short paragraphs buried in a story about another appropriations measure.)

The defense bill includes $68.6 billion to pursue the wars in Iraq and Afghanistan, which is only a down-payment on the full yearly cost of these wars. (The rest will be raised through future supplementary bills.) It also included a 3.9% pay raise for military personnel, and $5 billion in pork-barrel projects not even requested by the administration or the secretary of defense. It also fully funds the Pentagon’s request for a radar site in the Czech Republic, a hare-brained scheme sure to infuriate the Russians just as much as a Russian missile base in Cuba once infuriated us. The whole bill passed by a vote of 392-39 and will fly through the Senate, where a similar bill has already been approved. And no one will even think to mention it in the same breath with the discussion of bailout funds for dying investment banks and the like.

This is pure waste. Our annual spending on “national security” -- meaning the defense budget plus all military expenditures hidden in the budgets for the departments of Energy, State, Treasury, Veterans Affairs, the CIA, and numerous other places in the executive branch -- already exceeds a trillion dollars, an amount larger than that of all other national defense budgets combined. Not only was there no significant media coverage of this latest appropriation, there have been no signs of even the slightest urge to inquire into the relationship between our bloated military, our staggering weapons expenditures, our extravagantly expensive failed wars abroad, and the financial catastrophe on Wall Street.

SNIP...

One of America’s greatest authorities on the defense budget, Winslow Wheeler, worked for 31 years for Republican members of the Senate and for the General Accounting Office on military expenditures. His conclusion, when it comes to the fiscal sanity of our military spending, is devastating:

“America’s defense budget is now larger in inflation-adjusted dollars than at any point since the end of World War II, and yet our Army has fewer combat brigades than at any point in that period; our Navy has fewer combat ships; and the Air Force has fewer combat aircraft. Our major equipment inventories for these major forces are older on average than any point since 1946 -- or in some cases, in our entire history.”

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http://www.commondreams.org/view/2008/09/29-1