From Australian Business Insider:

A Utah biotech company Myriad Genetics owns the patent to BRCA1, the so-called “breast cancer gene” responsible for Angelina’s Jolie’s decision to have a preventative double mastectomy. They also on the patent on a similar breast cancer gene called BRCA2. Moreover these gene patents also give Myriad a monopoly on testing for these genes.

At present a suit cancer groups have filed to invalidate these patents is being heard in the U.S. Supreme Court. Cancer advocates argue that it’s illegal and unethical for biotech companies to patent nature. Joseph Stiglitz has written in Slate that allowing Myriad to hold exclusive patents for BRCA1 and BRCA2 removes the opportunity for other scientists to come up with better and cheaper tests. In this way, they make the tests less widely available and possibly prevent women from knowing they carry these genes and taking preventive measures.

Surprisingly, Justice Antonin Scalia, one of the courts most conservative and pro-corporate justices, seems to be siding with Stiglitz.  “You haven’t created a type of gene that does not exist in the body,” he told a lawyer for Myriad.

Read how other justices argued here. A decision is expected next month.

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A recent study from Farleigh Dickinson University reveals that 29% of Americans believe an armed revolution may be necessary in the next few years to “protect liberties.”

18% of Democratic respondents shared this view, 27% of Independents and 44% of Republicans.

The study, which interviewed registered voters (only 71% of eligible adults are registered) differs from those conducted by corporate pollsters in that it included a substantial proportion of low income cellphone-only households

Christopher Greene of AMTV discusses the implications of this groundbreaking study:

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Crossposted at Daily Censored

Guest post by Steven Miller

(This is the last of three guest blogs by Steven Miller about Obama’s BRAIN Initiative and Wall Street’s broader agenda of privatizing all aspects of medical treatment and research. In this last post, he makes the alarming revelation that corporations fund the bulk of university research in the US. This means future decisions about medical research will be based on profit considerations, rather than patient need.)

The human brain is next

President Obama knows all this history. He is not naïve. He is consciously opening up the privatization of the human brain. Let’s examine exactly what he said when announced the initiative:

 Today I’ve invited some of the smartest people in the country, some of the most imaginative and effective researchers in the country — some very smart people to talk about the challenge that I issued in my State of the Union address:  to grow our economy, to create new jobs, to reignite a rising, thriving middle class by investing in one of our core strengths, and that’s American innovation.

“Ideas are what power our economy.  It’s what sets us apart.  It’s what America has been all about.  We have been a nation of dreamers and risk-takers; people who see what nobody else sees sooner than anybody else sees it.  We do innovation better than anybody else — and that makes our economy stronger.  When we invest in the best ideas before anybody else does, our businesses and our workers can make the best products and deliver the best services before anybody else.

“And because of that incredible dynamism, we don’t just attract the best scientists or the best entrepreneurs — we also continually invest in their success.  We support labs and universities to help them learn and explore.  And we fund grants to help them turn a dream into a reality.  And we have a patent system to protect their inventions.  And we offer loans to help them turn those inventions into successful businesses. (5)

“Investing in ideas”, “investing in their success”, “attracting the best entrepreneurs” and “supporting labs and universities” are all code words for corporate ownership. When Jonas Salk worked on polio, the federal government funded the bulk of scientific research as a subsidy to corporations. It still does so today, although they are reducing their contribution. In the 1950s, federal R & D went to universities, which turned their results over to the government as public property. Not so today.

The same year as the Chakrabarty Decision (what a coincidence!!), the Bayh-Dole Act was passed to allow universities and corporations to license and patent government-funded research. Then the Federal Technology Transfer Act of 1986 permitted university labs to accept funding from corporations in exchange for intellectual property rights. Corporations are now authorized to commercialize inventions owned by universities through various leasing agreements. Further, they get massive tax credits for investing in university research. (6)

In other words, corporations now own the vast bulk of publicly funded university research in the US. This is a historic transition in how scientific inquiry is organized. Private funding increased 250% from 1985 to $2.4 billion in 2005. In the ‘70s, about 62% of government-funded research was basic research – science to investigate fundamental issues of science. (7) This is being increasingly replaced with “commercial research” that is driven by the market and the corporate demand for private profits. Universities are being warped into being a component of global capitalism.

Consequently corporations will make the choices over what is researched. This will be based on corporate interest and private profit, rather than the public interest. We see the results already. While there are dozens of animal diseases that are treated with immunizations, there is little research to find them for humans. It is far more profitable to find a medicine that treats the disease for life without eliminating it.

This trend isn’t going to stop with the BRAIN Initiative. However, there is one aspect of this that is still under public control. The project will be organized by the military (assuming the military is not privatized) through DARPA (Defense Advanced Research Projects Agency, the Defense Department’s research arm. DARPA itself has a significant portfolio of companies that research biological and neuroscience.

How reassuring!

Back in the day (in the ‘80s), the happy, chirpy slogan was “GE – we bring good things to life!” Today it is becoming abundantly clear that the global corporatocracy – the organized power of the 1% – demonstrates the malign intent of a psychopath.

These corporate persons sell depleted uranium bullets to the army that spread radiation everywhere. They consciously let New Orleans flounder in Hurricane Katrina. They openly organize the pipelines so that they can burn the Canadian Tar Sands, which will release so much carbon dioxide that it will trigger climate collapse. They brag that they will continue to make a profit off the end of human civilization. Meanwhile they are addicting our children to high fructose corn sugar and producing an epidemic of diabetes in children. And if you don’t like it, corporations will use their private drones to enforce their will.

Corporations are a carcinogen, a cancer that grows at the expense of the human body, both publicly and individually. As they unleash crisis after crisis, they are systematically destroying the institutions of society. That means we have no choice but to build new institutions that benefit the public in all directions. We really don’t have much choice. This will require a historic political battle that will heal humanity and the planet.

The technology they claim as private property has the potential for the first time to free humanity from misery, yet they can only use it to degrade society even further. Corporate property no longer serves real people. The very intent is malign and destructive. The solution is to make it public property and to place its control in the cooperative hands of the public.

Notes

5) Remarks by the President on the BRAIN Initiative and American Innovation http://www.whitehouse.gov/the-press-office/2013/04/02/remarks-president-brain-initiative-and-american-innovation

6) David Hill, “Corporate Sponsored Research and Development at Universities in the United States.” AIPPI Journal, June 2002

7) EastBay Express, April 10-16, 2013

Steven Miller has taught science for 25 years in Oakland’s Flatland high schools. He hasbeen actively engaged in public school reform since the early 1990s. When the state seized control of Oakland public schools in 2003, they immediately implemented policies of corporatization and privatization that are advocated by the Broad Institute. Since that time Steve has written extensively against the privatization of public education, water and other public resources. You can email him at nondog2@hotmail.com

photo credit: Novartis AG via photopin cc

Crossposted at Daily Censored

Guest post by Steven Miller

This is the 2nd of three guest blogs by Steven Miller about Obama’s BRAIN Initiative and Wall Street’s broader agenda of privatizing all aspects of medical treatment and research. In this post Miller traces how decisions in the Supreme Court and US Patent office led to the patenting of bacteria and other life forms, human genes, blood and cancer cells and Taxol and other treatments originating from natural sources. 

Privatizing Life

In 1980, the Supreme Court, in the Chakrabarty Decision, held that the scientist could patent a bacterium that he had “invented”. Chakrabarty had taken an existing bacterium and inserted genes from another existing bacterium. The court said that since isolated genes did not exist in nature or in any cell (which is of course true), the scientist therefore created something new by isolating them. This opened the door to patenting life forms.

Patents traditionally have been for tangible, hard inventions, real human-created things like a device or a manufacturing process. Natural processes had never before been considered as private property. These were things like laws of nature, the force of gravity or the vibrations of atoms, or natural things like oceans or Antarctica. You could own a horse, but you couldn’t own the species.

Quickly corporations began to besiege the US Patent Office with patents on various life forms, including human DNA. The Supreme Court decision did not address human DNA, but the Patent Office did, in secret procedures since these are not open to public debate. They allowed the extension of patent rights to every form of life without any public debate whatsoever.

Privatization rapidly followed. Sequanna Therapeutics filed for patents on the cells and genes of indigenous tribes in New Guinea. Rice-Tec got patents on the famous Basmati variety of rice that has been grown in India for centuries. How can it be that a US company can patent crops created by farmers in another country, thousands of years ago? Well, US law allows patents for the party that registers first, not necessarily for the discoverers. Corporations will always beat you to that.

During the 1960s, scientists showed that the bark of the Pacific Yew tree, found in Oregon and Washington, contained a protein that could kill cancer cells. This was marketed as the drug Taxol. The next question obviously was…  what other marvelous proteins exist in Nature? Today corporations are rapidly privatizing every life form they can get their hands on, from frogs to herbs to insects… and to humans.

In the 1980s, an engineer named John Moore was treated for hairy-cell leukemia at the UCLAMedicalCenter. Doctors took cell samples of Moore from his blood, skin, bone and sperm. They then began to grow Moore’s cells in cell cultures for research. Though cells die inside of an organism in the ordinary life process, they can be kept alive indefinitely for years in a petri dish. The doctors recognized that Moore’s cells produced some unique proteins, so they sold them, for a profit, to a biotech company.

John Moore sued the doctors, Sandoz (a pharmaceutical company) and the Regents of the University of California. The California Supreme Court held in 1991 that John Moore had no right to his “discarded” cells, or to any profits made from them.

Try this yourself. If by chance you have to have your appendix removed ask the hospital to give it back to you. “Sorry”, they will respond, “You signed the papers. We keep it or there’s no operation.” They own your tissue, not you.

The recent book, The Immortal Life of Henrietta Lacks, by Rebecca Skloot, details the horrific story of how corporations harvested the cells of an African-American cancer patient before she died in 1951 to begin a highly profitable HeLa cell line. Trillions more HeLa cells exist today than there ever were in the body of Ms Lacks. “One scientist estimates that if you could pile all HeLa cells ever grown onto a scale, they’d weigh more than 50 million metric tons—an inconceivable number, given that an individual cell weighs almost nothing.”  (2)

The HeLa cell line was even used in creating the polio vaccine! To this day, her family has received no compensation for anything, even though her cells changed the face of medicine.

Ownership of human life in the form of slavery was legal in the US from 1620 to 1865. Under the banner of private property, the slaves were denied access to all they produced. Today – under the banner of private property – humans are being harvested once again for what they produce. This might sound harsh and disconcerting, but there is truth here.

Every single person who was arrested or detained by the US military during the Iraq War (and no doubt everywhere the military is active) has been forced to give up cell samples in the form of a simple mouth swab with a Q-tip. Although it is “proprietary information” and therefore not readily available to the public, there can be no doubt that the infrastructure exists to culture these cells to see what is interesting.

In 2012, the 9th U.S. Circuit Court of Appeals ruled that a 2004 California law requiring officials to collect the DNA samples from prisoners does not violate the U.S. Constitution’s ban on unreasonable searches. Claiming that these are fingerprints for the 21st Century, California Attorney General Kamala Harris claimed this as “a victory for public safety in California.”  (3)

With corporations working night and day to privatize literally everything in the world, it is hard to imagine that they haven’t found a way to seize and profit from these potential cell lines. How far, are we, from an America of 315 million petri dishes, all tested and controlled by automated machinery that flag any unique chemical process for further investigation? The potential wonder of this technology is crippled by corporations that use it only for private corporate profit.

The sequencing of the Human Genome in 2000 kicked off the next bio gold rush. By claiming that they had discovered the function of a given gene, corporations then patented them. The classic, and highly notorious, case is that of the so-called Breast Cancer genes, BRCA I and BRCA II, which, if you have them, are associated with breast cancer. Here’s how Wikipedia describes what happened:

A patent application for the isolated BRCA1 gene and cancer-cancer promoting mutations, as well as methods to diagnose the likelihood of getting breast cancer, was filed by the University of Utah, National Institute of Environmental Health Sciences (NIEHS) and Myriad Genetics in 1994; over the next year, Myriad, in collaboration with other investigators, isolated and sequenced the BRCA2 gene and identified relevant mutations, and the first BRCA2 patent was filed in the U.S. by Myriad and the other institutions in 1995. Myriad is the exclusive licensee of these patents and has enforced them in the US against clinical diagnostic labs.

This business model led from Myriad being a startup in 1994 to being a publicly traded company with 1200 employees and about $500M in annual revenue in 2012; it also led to controversy over high prices and the inability to get second opinions from other diagnostic labs, which in turn led to the landmark Association for Molecular Pathology v. Myriad Genetics lawsuit. The patents begin to expire in 2014.” (4)

Their “business model” was to demand that anyone who wanted to be tested for the genes had to pay Myriad to access their “intellectual property”, even though the genes existed in their body. Strangely, the cost of access was… exorbitant.

Notes

2) Rebecca Skloot. “The Immortal Life of Henrietta Lacks.” New York Times, February 2, 2010

3) Terry Baynes. “U.S. appeals court finds DNA testing constitutional”, February 23, 2013: http://www.reuters.com/article/2012/02/24/us-usa-dna-database-idUSTRE81N04020120224

4) http://en.wikipedia.org/wiki/BRCA2

To be continued.

Steven Miller has taught science for 25 years in Oakland’s Flatland high schools. He has been actively engaged in public school reform since the early 1990s. When the state seized control of Oakland public schools in 2003, they immediately implemented policies of corporatization and privatization that are advocated by the Broad Institute. Since that time Steve has written extensively against the privatization of public education, water and other public resources. You can email him at nondog2@hotmail.com

photo credit: mknowles via photopin cc

Crossposted at Daily Censored

It’s hard to read any investment or economics blogs without being bombarded with recommendations to buy gold. The conventional wisdom is that it’s the only safe investment when banks stop paying interest and stock prices vastly overinflated with the current Wall Street bubble. While real estate and other investments linked to specific currencies (such as the US dollar) can become virtually worthless when the currency collapses, gold supposedly has intrinsic value as a precious metal. Unless, of course, food and other necessities are in such short supply that no one will trade them for gold. With so many Americans, and governments such as China, India and Russia buying gold, investors have been baffled that the price of gold has been dropping. According to supply and demand, the price should rise. In a recent essay in Global Research, former Reagan economic adviser Paul Craig Roberts reveals that the Federal Reserve has been actively suppressing the price of gold through “naked” short selling.  In short selling an investor sells a stock or commodity he expects to drop in price, then buys it back at the lower price. In “naked” short selling, an investor sells a stock or commodity he doesn’t own. The effect of a large number of investors selling short is to drive the price of a stock or commodity down. According to Roberts, the Fed short sold 500 tons of gold on April 12th, at a cost of $1.16 billion (remember they didn’t own the gold to begin with).  No individual or bank could handle that kind of loss, but it’s no problem for the Fed. They just print the money, via Quantitative Easing, to cover it.

In the video below, Greg Hunter interviews Roberts about his recent article. Roberts explains that the US government has no choice but to suppress the price of gold to protect the value of the US dollar. In the last four years the Fed has “printed” one trillion dollars pure year, using “quantitative” easing to purchase bad bank debt. This would be fine if there were sufficient demand with the US economy or overseas to soak up $5 trillion and thus prevent inflation. Thus to prevent a run on the dollar, through massive conversion of dollars to gold, the Fed discourages investors from buying good by effectively capping the price.

According to Roberts, attacking the price of gold helps the dollar by propping up bond prices (especially of bonds based on derivatives) that are the life blood of investment banks. Because private banks, rather than government, have primary responsibility for issuing money (by issuing loans not covered by reserves) the health of the US dollar is intimately connected to the health of investment banks and the bonds they issue and hold.

Other mechanisms the US uses to prop up the dollar include persuading other governments to inflate their own currencies by printing more money. If the euro and yen are also over inflated, currency traders aren’t tempted to exchange all their dollars for European and Japanese currency.

He mentions that Australia, which has much closer ties with China than the US, has refused to print money by engaging in the quantitative easing game. All you need to do is look at the exchange rate to get a real sense how rapidly the US dollar is losing value. When I first moved to New Zealand, $1.00 Aus sold for $0.90US. Now it sells for $1.03 US.

The change in New Zealand’s exchange rate (China has just exceeded Australia has our major export partner) is even more extreme. In 2002 $1.00 NZ sold for $0.50 US. Now it sells for $0.88 US.

The most interesting part of the interview is toward the end, in which Hunter and Roberts discuss the likelihood the US dollar will collapse and the US government will seize depositors’ savings accounts (like they did in Cyprus) and private pensions. Hunter asks if this is why the government is trying to restrict citizens’ access to guns. Roberts makes the very astute observation that no police state can operate in a society with an armed population.  “As we move closer and closer to a police state, they’re going to have to take the guns away. . . The police state has doomed the 2nd amendment. It’s just a question of time.”

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BBC investigative reporter Greg Palast published a fascinating article in Vice Magazine this week (Nicolas Maduro Did Not Steal the Venezuelan Election) about being hired by Hugo Chavez and Nicolas Maduro in 2004 to investigate the possibility the US might tamper with Venezuela’s elections (following Palast’s 2001 expose detailing how Florida governor Jeb Bush stole the election for his brother).

The article describes how he presented Chavez and Maduro with a collection of secret FBI memos revealing that ChoicePoint Corp – under a no-bid contract (from the US government) – had “shoplifted” Venezuela’s voter rolls, as well as the voter rolls of Argentina, Brazil, Nicaragua, Mexico and Honduras, all of whom were on the verge of electing presidents from the political left.

By coincidence it was a subsidiary of ChoicePoint Jeb Bush engaged in 2000 to illegally “purge” more than 56,000 voters, the vast majority black and poor, from Florida’s voter rolls. A maneuver which would ultimately give George Bush the US presidency by just 537 ballots.

After reading Palast’s report, Chavez moved swiftly to establish a virtually tamper-proof electoral system. In Venezuela every voter gets TWO ballots. One is electronic; the second is a paper print-out of the touch-screen ballot, which the voter reviews, authorizes and places in a locked ballot-box. Fifty-four percent of the boxes are opened at random and checked against the computer tally – making the system virtually tamper proof.

When Maduro’s opponent Henrique Capriles officially challenged the recent outcome, he was allowed to add as many precincts as he wanted (12,000) to this automatic audit.

It would appear the US State Department doesn’t have a leg to stand on in backing opposition claims that Maduro’s win is fraudulent. Thus, according to Palast, they have turned to another old CIA trick, violent street demonstrations protesting the electoral outcome. He points out that most, but not all, of the voters killed in street protests are Chavistas.

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Crossposted at Daily Censored

Guest post by Steven Miller

(This is the last of three guest posts laying out the real story about the role of Wall Street banksters in the recent bankruptcy of Stockton California. In this post Miller lays out the extra-legal, criminal nature of government austerity measures.)

If the Oakland Tribune or any other newspaper were really representing the public interest they would spread the word that the people of this country are paying the Banksters twice. The government Bail Out to the banks was at least $16 trillion. This was free money at a dollar-for-dollar rate, unheard of in the history of finance. This money could have and should have been used to pay off all outstanding debts from personal debts to student debts, mortgage debts and city debts. After all, if you owe someone money, and then pay him off, you don’t have to keep on paying. Isn’t that how things work?

So why should we pay them a second time? This open collusion by the government to guarantee bank profits at the expense of everything else in America is the 21^st Century expression of how Mussolini famously defined fascism – the merger of the corporations and the state.

The economist Michael Hudson describes it this way:

“Today’s economic warfare is not the kind waged a century ago between labor and its industrial employers. Finance has moved to capture the economy at large, industry and mining, public infrastructure (via privatization) and now even the educational system. (At over $1 trillion, U.S. student loan debt came to exceed credit-card debt in 2012.) The weapon in this financial warfare is no larger military force. The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings.”  (10)

The Politics of Austerity

Austerity is implemented across the world in various forms, but mostly this is accomplished through extra-legal measures. Leaders of the G20 countries, the biggest national economies, met in Toronto to decide how to address the economic Melt Down. Surrounded by the army to hold off the protestors, these leaders “agreed” to implement Austerity across the board. There was no treaty. No legislation was proposed. No plebiscite was held to find out the will of the people. Austerity was simply imposed.

The same extra-legal process occurred earlier this year with the so-called $90 billion Sequester that permanently cuts social programs for millions of people in the US. A bi-partisan Congress that is supposedly broken and not capable of functioning passed the Sequester more rapidly than any legislation since the Bail Out. While the process was disguised with a few hearings, and did end with legislation, the process occurred completely outside of the legally established fact finding process. No one was legally sworn in to hold them accountable for their testimony and bogus inflammatory statements.

Two years ago Michigan passed Public Act 4 – the Emergency Manager bill. This law empowered the governor, at his own personal discretion, to seize any city or municipal government and appoint a financial manager – either a person or a corporation! – with total power to break contracts and sell off public land, parks, buildings, etc to private corporations. In the 2012 election, the people of Michigan voted for a constitutional amendment to void the act.

Two weeks later, the law was simply re-established in a slightly different form by the governor. (11) Then the governor seized the city of Detroit, depriving them of the civil right to vote. These maneuvers completely void the democratic process and confirm the old saying that law is simply the will of the 1%, written down. It is possible that California will see similar propositions proposed in the 2014 election.

This combination of legal and extra-legal maneuvers, the merging of corporations and the state, demonstrate what political power really is. The Banksters work at it 24/7 and impose it upon the rest of us. We are not going to reverse this class political power by voting every 4 years, or by trying to convince bought-off legislators to see things our way for once. It is time to learn from the masters. The 99%’s struggle for political power must consider how to impose the will of the people, every day and every way, and force government officials to be truly accountable or pay the price.

Notes

10)  Michael Hudson. “The Finance Industry Has Pried into Every Sector of the Economy, and Has Ended Up Running the Whole Show”. December 31, 2012

11)   Rally, Comrades, March-April, 2013. www.rallycomrades.org

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Originally posted at Daily Censored

Steven Miller has taught science for 25 years in Oakland’s Flatland high schools. He has been actively engaged in public school reform since the early 1990s. When the state seized control of Oakland public schools in 2003, they immediately implemented policies of corporatization and privatization that are advocated by the Broad Institute. Since that time Steve has written extensively against the privatization of public education, water and other public resources. You can email him at nondog2@hotmail.com

Guest post by Steven Miller

(This is the second of three guest posts laying out the real story about the role of Wall Street banksters in the recent bankruptcy of StocktonCalifornia. In this post Miller describes how interest rate swaps work. He also explains the LIBOR scandal – in which the crooks who run our big banks rigged interest rates to maximize their payoff from IRS’s. Note how charges have been dismissed against Bank of America, Barclays and JP Morgan Chase. Instead the good people of Stockton and the workers in the California Public Employees Retirement System are being forced to pay for their crime.)

The issue turns on the “credit default swaps” that the banks tricked cities into taking. This is another financial weapon of mass destruction, like sub-prime mortgage loans. Cities issue bonds to get cash for projects, thus they must make regular payments on the bonds. Wall Street is the aggressive party here, not the cities. The financial boys try to sell the cities a form of insurance called an “interest-rate swap”. The deal is that if interest rates stay high, the bank will pay them extra as insurance, but if the rates stay low, then the cities pay the bankers.

Somehow the Banksters were eerily prescient: since 2008, the Fed has kept interest rates at zero “to stimulate the economy”. Now cities, school districts and water boards pay the banks millions of dollars a month. But the kindly bankers do permit cities to pay exorbitant termination fees. Between 2006 and 2008, banks collected at least $28 billion from cities on top of the swap payments. (3)

The Office of the Comptroller of the Currency reported in 2012 that U.S. banks held $183.7 trillion in interest rate contracts. Only four firms represent 93% of total derivative holdings: JPMorgan Chase, Citibank, Bank of America and Goldman Sachs. (4) They are the bedrock of the derivative market.

“Interest rate swaps are today the single largest type of derivative in existence, making up more than 80% of the value of all derivative contracts signed by U.S. commercial banks. Measured by their notional amounts (the “notional” of a swap is a fictive sum of money corresponding to an actual principle on real debt), U.S. banks have an outstanding $202 trillion in interest rate derivative contracts. In other words, U.S. banks are using swaps to transform interest rate payments on $202 trillion in debt, owed by corporations, governments, and other banks, so that these entities can switch from variable rates to fixed, or vice versa, and so that they can peg their debt payments to any number of global rates.

“On a global level the total notional amount of interest rate swaps were most recently estimated at $441 trillion by the International Swaps and Derivatives Association. These trillions of dollars represent the debts of virtually all major corporations and governments. More than any other development in the last thirty years, this new derivatives regime creates the globalized economy. (5)

Let’s put these incredible figures in context. What do they mean? The total GDP of the entire world for one year is around $50 trillion; for the US alone it is about $14 trillion. (6) So the total amount of interest rate swaps for the world is $441 trillion? Eight times the production of the entire world? How could this be?

Wall Street has been the greatest profit-making sector of the US economy since 2000. In 1973, financial returns were 16% of total corporate profits; by 2007, they reached 41%! Since these profits come mostly from loans, this meant the vast expansion of indebtedness throughout the US economy. (7)

Consumer borrowing doubled in the US between 1980 and 2007, but corporate borrowing quintupled, actually reaching 121% of the GDP in 2008! (8) These investments were mostly not in the form of loans; they were for highly speculative, completely unregulated “financial instruments”.

In a warm example of class solidarity, capitalists loan each other money at rates no normal person could ever hope to get. Capitalists “leverage” their debt by exploiting special laws that let them borrow $100 and more for every dollar they have! Most people are permitted by banks to borrow only a tiny percent, say 10% of their financial worth.

Corporate debt is thus vastly greater that federal debts, state debts, credit card debt, student debt and personal debt combined! That is what the $441 trillion represents. This debt is principally used to speculate on everything from food prices to student loans to interest rate swaps. Corporate debt drives Austerity today. This policy is a mechanism to transfer local assets into corporate assets so that corporations can go even more deeply into debt and borrow in order to speculate. Historically, debt and speculation have been a mechanism to centralize the ownership of everything into the hands of the 1%.

The Swaps Crisis was guaranteed by a second, related scam that many call the biggest single financial crime in history. This is the Libor scandal. Libor stands for London Interbank Offered Rate. This is supposed to reflect the rate that banks would pay to borrow from other banks. This is used as an indicator of how banks perceive their risk based on loans they issue. Libor is used to establish loan rates around the world, including adjustable rate mortgages, credit card payments and US student loans.

It is abundantly documented that Wall Street banks conspired to keep Libor low when the US government was bailing them out. By keeping the rates low, the price of the useless bonds they were turning over to the government were high. Citibank, for example, was reporting low borrowing costs to Libor, even though their credit default prices were sky high. (9)

Libor was likewise used to manipulate interest rate swaps across the country. As the economic crisis deepens, banks that “are too big to fail” are becoming “too big to jail”. On March 30, a US District judge in New York dismissed charges against Bank of America, Barclays and JPMorgan Chase, absolving them of their role in Libor.

Notes

3) Pam Martens. “How Wall Street Gutted Our Schools and Cities”. AlterNet July 21, 2012.

4) Op sit

5) “The Swaps Crisis”. Dollars & Sense Magazine. May-June 2012

6) Tom Formeski. The Size of the Derivative Bubble  =  $190K per Person on Planet”. October 16, 2008

7) Dave McNally. The Global Slump. 2011. P 86

8) Op sit

9) How Wall Street Gutted Our Cities and Schools”

To be continued.

***
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Originally posted at Daily Censored

Steven Miller has taught science for 25 years in Oakland’s Flatland high schools. He has been actively engaged in public school reform since the early 1990s. When the state seized control of Oakland public schools in 2003, they immediately implemented policies of corporatization and privatization that are advocated by the Broad Institute. Since that time Steve has written extensively against the privatization of public education, water and other public resources. You can email him at nondog2@hotmail.com

Guest post by Steven Miller

(This is the first of three guest posts laying out the real story about the role of Wall Street banksters in the recent bankruptcy of Stockton California, the largest city to go bankrupt in US history. It’s a grisly tale involving a Ponzi scheme called interest rate swaps, the LIBOR scandal in which the criminal banking syndicate rigged interest rates to bilk even more money out of cities and how this plays into Wall Street’s secret plans to loot public employee pension funds. Coming soon to a city near you.)

We are marking the 10^th anniversary of the invasion of Iraq. This is equally the anniversary of the media treachery that justified this crime against humanity. In this light, the votes are in for the Donald Rumsfeld Award for Deception in Media for the first week of April. The award is now presented weekly since there are so many outstanding lies, distortions and deceptions in the news these days.

And the winner is… the Oakland Tribune!! They tried some dirty stuff this time!

On Monday, April 1, US Bankruptcy Judge Christopher Klein held that the city of Stockton, California, is allowed to go bankrupt. Stockton is a port town of 300,000 people on the river delta, about 50 miles east of San Francisco. This is the biggest municipal bankruptcy of a city in US history.

It is also a sign of things to come. Cities and government agencies commonly sell bonds to raise money for projects from city halls to sewer districts. The bonds are sold to the banks and hedge funds of the financial industry. The Banksters sucked the cities of America into various “debt swap” deals before the 2008 Financial Meltdown. Now some 80% must pay huge fees every month to Wall Street. San Bernardino will soon eclipse Stockton. Detroit will swamp them next. Cities are waiting in line to go broke. This is Austerity in action. Who benefits here?

First Wall Street hooked homeowners into fraudulent sub-prime mortgages. They followed this up with tons of illegal foreclosures. Far more foreclosures will be coming down the pike. Then they turned students into debt slaves, re-establishing debt peonage in America. Students (like felons) can no longer go bankrupt to pay off their loans; they must work for life to pay them off. Now the Banksters are beginning to foreclose on the cities. The debtor is tied more closely to the banker than the slave was to the master.

The Oakland Tribune addressed this issue in a Wednesday, April 3, editorial entitled “Who will pay for Stockton’s bankruptcy?” (link to editorial: http://www.contracostatimes.com/breaking-news/ci_22925442/stockton-bankruptcy-ruling-sets-stage-landmark-pension-showdown). First, the editors set up the trick: who, they wonder, “will have to take a haircut?” Could it be the bondholders? Could it be the California Public Employees Retirement System, the country’s largest pension fund? Could it be the “irresponsible managers” or could it be the workers?

This formulation implies “a fair and balanced” look at the issue. But the editorial is far from impartial. It makes two horrific statements to distort the significance of the bankruptcy. Funny thing – each goes to obscure the role of the Banksters and advance their agenda. The full editorial is appended at the end of this commentary.

The distortions:

“But what happens when a California pension showdown reaches federal bankruptcy court? This is new legal territory. “There are very complex and difficult questions of law that I can see out there on the horizon,” Judge Klein said, in what can only be described as understatement.

“We would not be here but for the irresponsible behavior of past Stockton officials. They thought the housing boom would never end, that the level in the property tax well would continue to rise. (1)

Here’s the case. Decide for yourself:

Let’s begin with a story printed in the Oakland Tribune on Tuesday, April 2, the day before the editorial, entitled “City OK’d to Pursue Bankruptcy”. Apparently the editors don’t pay too much attention to what is in their own paper:

“In a blistering critique, the judge assailed major Wall Street bondholders, Assured Guarantee Corporation and National Public Finance Guaranty Corp., for acting in a heavy-handed manner by refusing to negotiate the city’s bond debt unless Stockton took actions to cut its massive employee pension obligations.

“Klein concluded that National Public Finance and Assured “each took the position that there was nothing to talk about” unless the city sought concessions from the California State Employees Retirement System, to which it was paying $29 million a year. The city and CalPERS argued that pension costs had to be met.

” ‘The translation (was that) if you don’t intend to impair CalPERS, we’re not going to talk to you,’ Klein said of the creditors. “They absented themselves from all discussions….And, having voted with their feet, there was no point in talking to them further.”

“The judge ruled that Stockton had put forth a reasoned effort to resolve its massive fiscal debt but received “nothing but a stonewall on the other side.”

“He also chastised the city’s creditors for refusing to pay their required share of costs of pre-bankruptcy mediation, declaring, “The capital market creditors did not negotiate in good faith. And therefore, they do not have the ability to complain.” (2)

So the problem here is NOT irresponsibility of Stockton officials. But the Banksters are arguing something else. They are demanding that the city go after the CALPERS pension fund, the country’s largest. The city refused to take this step, which plays a role in determining who is “first in line” to get paid off from the bankruptcy. When a corporation goes bankrupt, the creditors are usually first in line and the workers, who may not have received wages for weeks, are last in line. But its new territory when a city goes bankrupt.

The Bankster lawyers refused to participate in the hearings because they are playing a bigger game. They are trying to set a precedent to break the pension fund. Privatizing pensions has been an avowed goal of Wall Street for a decade. This case may go to the Supreme Court and may become the precedent by which all other municipal bankruptcies are measured. They are just playing round one in Stockton. That is why they stonewalled the court – refusal to speak leaves no basis to attack this position. The goal is to force the issue up the judicial chain.

The editorial defines this as a problem of “a California pension showdown”, when in fact it clearly is a case of corporate blackmail, plain and simple. This is not “a pension showdown” at all. But the Banksters would like to characterize the bankruptcy this way, to hide their own dirty tricks. The Oakland Tribune openly collaborates with this.

Notes

1) Oakland Tribune, April 3, 2013

2) Oakland Tribune, April 2, 21 July 12, 3013

To be continued.

***

photo credit: Stuck in Customs via photopin cc

Originally posted at Daily Censored

Steven Miller has taught science for 25 years in Oakland’s Flatland high schools. He has been actively engaged in public school reform since the early 1990s. When the state seized control of Oakland public schools in 2003, they immediately implemented policies of corporatization and privatization that are advocated by the Broad Institute. Since that time Steve has written extensively against the privatization of public education, water and other public resources. You can email him at nondog2@hotmail.com

Ethos

Peter McGrain 2011

Film Review

The hour-long documentary Ethos, narrated by actor/activist Woody Harrelson, is now available free online.

In my opinion, it has powerful take home lessons for Americans across the political spectrum. Largely because it addresses what I view as the two main obstacles to political change in the US 1) the immense power private banks enjoy via their control over the money supply and 2) the enormous power the corporate media exerts over public information. Much of this is elucidated through excellent cameo interviews with prominent dissidents such as Noam Chomsky, Michael Moore, Howard Zinn, Edward Said, Cynthia McKinney, Norman Solomon, Benjamin Barber and Chalmers Johnson.

The main goal of the film is to clearly articulate the current political crisis Americans face in the 21^st century, which it does by exploring the historical context in which the crisis has developed. The documentary describes a number of significant historical events that are usually omitted from history textbooks.

It starts out with a general overview of the ways in which corporations have steadily increased their control over our supposedly democratic government.

There is special emphasis on the power private banks wield by controlling the money supply. Harrelson starts back in 1910 with the secret “conspiracy” by J.P. Morgan and other major bankers to create the Federal Reserve. Contrary to popular belief, the Fed isn’t a branch of the federal government. What it is, in essence, is a cartel of private banks.

Harrelson also devotes a long section to the use of the corporate media to manipulate public opinion and instigate Americans’ overwhelming drive to consume. He begins by describing the work, in the early 20^th century, of Edward Bernays. Bernays, considered the father of the public relations industry, held the view common to many corporate elites that the wider public must be controlled because they’re incapable of meaningful participation in democratic government. Bernays perfected the technique of manipulating unconscious fears and desires, not only to help corporations sell people stuff they don’t need, but to assist government in social control.

In the final part of the film, Harrelson reveals how the Bush administration used the science of public relations to 1) convince the American people of the need for the US to invade and occupy Iraq and Afghanistan and 2) generate sufficient fear in the population to pass legislation stripping Americans of most civil liberties guaranteed in the Bill of Rights.

photo credit: rick via photopin cc

Crossposted at Daily Censored