by Gilles d'Aymery
"Inequality is now widening in America, and at a rate not seen in three-quarters of a century. A young male in his 30s today has an income, adjusted for inflation, that is 12 percent less than what his father was making 30 years ago."
—Joseph Stiglitz, "The Economic Consequences of Mr. Bush," Vanity Fair, December 2007
(Swans - November 19, 2007) WE HAVE IT MADE! Look, in Japan, when a government official or a corporate executive fails miserably, he either resigns in disgrace or commits Hara-Kiri. Not so in America: the more you screw up, the more you get rewarded. Take the bureaucracy: slam-dunk George Tenet, the former director of the CIA. No WMDs in Iraq? No problem, here is the medal of honor...and, please Georgie, go on the speaking tour, write a memoir, join a couple of think tanks and corporate boards -- success assured. Bremer and countless other bureaucrats have joined the speaking circuit, the corporate boards, and the think tanks' cushy assignments. Ever heard of the revolving doors? It's a dandy positional stage -- Holbrooke joins Bolton and Rumsfeld -- until the next assignment takes place. In between, money reigns. But, hey, what would life be without money and power (and sex)?
STILL, THIS IS SMALL POTATOES compared to the "private" sector. Take the subprime and collateralized debt obligations meltdown that will soon rival the Savings and Loan swindle of the 1980s. It began when the Wall Street "Most Admired" securities firm, Bear Sterns, presided upon the collapse of two of their major hedge funds that were backed by subprime loans. A few heads rolled -- not CEO James E. Cayne's though; he is one of the major shareholders of the company. Co-presidents Warren Spector and Richard A. Marin -- the latter was responsible for the hedge funds -- were forced out with golden parachutes worth tens of millions of dollars. Then Merrill Lynch got hit and lost some $8.5 billion. Its CEO, Stanley O'Neal, had to resign with a neat package worth about $161.5 million. Lose $8.5 billion, make $160 million! (see "Wealth, Merrill Lynch, and Corporate America's Creation Myth," Too Much, November 5, 2007). Charles O. Prince III (what a name!), the CEO of Citigroup, the world's largest company with a staggering $2.4 trillion in assets, had to be etched out too with a "modest retiring package" of about $60 million. And on it goes. As they say, there is nothing more profitable than failure when you are at the top of the food chain. For everybody else, there is MasterCard, Las Vegas, and the Lotto.
AMUSINGLY, in light of these poor souls losing their jobs, the Establishment feels the need to circle the wagons. Think about this for a moment: Who's charged to look over CEOs? Boards of Directors would be the answer to the question. Right? You'd imagine that when a CEO is discredited and forced to resign, that the Directors would be somewhat held responsible for their supervising failure. You'd imagine right, but you'd be wrong. Stanley O'Neal was succeeded by board member Alberto Cribiore in the case of Merrill Lynch (until the board found a replacement, John A. Thain, who will be paid a measly $50 million a year, which could turn into $120 million if the stock rises again). At Citigroup, Robert Rubin, the chairman of the Executive Committee and member of the Office of the Chairman, co-chairman of the board of directors of the Council on Foreign Relations, the former co-chairman of Goldman Sachs, and former Secretary of the Treasury under the Clinton administration, became its chairman. What goes around does not always mean it comes around! Well, except, if you are a loser. In that case, who cares? America is a winner-take-all nation and culture.
SO, FORGET ABOUT THE LOSERS, and let us take a quick look at the people who are benefiting from the subprime mess, because after all, money does not disappear into thin air. Tens, hundreds of thousands of families are losing their home. They are losers. But cui bono is the question du jour. There are winners in that game. Remember George Soros, the guy at the center of deception in the Balkans, and the guy who short-sold the pound in 1992 and brought the Bank of England to its knees? For all I know he might be speculating against the US dollar right now, under our self-losing noses. When money is lost, money is gained. Enter John Paulson who as the head of a hedge fund short-sold billions of subprime loans. He made so much money for his investors that he took some $1.2 (or was it $1.3?) billion home. He's not the only one to have seized the moment (Soros missed it, though at an estimated $8+ billion personal worth, why would he care?), but Paulson's take was enough to launch him into the Forbes 400 richest people in the world. Poor people lose, rich ones wins. What's new in America?
RICHES: Maybe you did not follow the thread that I have consistently chased over time. Last year, in 2006, to make the Forbes 400, you needed a paltry $1 billion -- first time ever. This year the cream of the cream had to up the ante to $1.3 billion. John Paulson made the list...for cause. Money managers -- the leeches that suck your (and my) blood are making it big time. Take John Arnold who runs Centaurus Energy (another hedge fund): At 33, he's already made $1.5 billion. Arnold used to be a trader at Enron. See, Enron went belly up but not everybody turned out to be a loser! Anyway, those 400 are worth $1.54 trillion; $290 billion more than last year. How's your "worth" comparing? Checked your credit card account lately?
DEATH IS THE GREAT EQUALIZER, we are told. Poor Barbara Cox Anthony, worth approximately $12.5 billion, did not make the list. She's dead. But don't worry, her two children, James Kennedy and Blair Parry-Okeden, inherited her fortune and have joined the list. What's unfair though is that those good people are blatantly discriminated by the appalling, god-awful Death Tax, which is known in some quarters as the Estate Tax. The Cox family has long been lobbying to repeal the Estate Tax altogether. Other unfairly-treated families include the Waltons (Wal*Mart), the Mars family, the Dorrance Family (Campbell Soup), the Gallo family (wine), etc. These families have spent millions to literally save billions!
DEATH TO THE DEATH TAX is their motto. Their allies in the Congress argue that the Estate Tax is un-American because it hurts small business owners and farmers. It's detrimental and hugely unfair to the small people, they vociferate. Farmers are forced to sell their land, businesses are crippled... Not only is the Death Tax unfair, which by and in itself is un-American, it also endangers the economy. How often have you heard this bunk? Never mind the actual facts that show that only one quarter of one percent of the American people, the super rich, pay any kind of Estate Tax, but they only pay a fraction of what they theoretically owe (currently 46% above $2 or $4 million) thanks to countless exemptions and loopholes in the tax code. It's much closer to 20%, which, to take Barbara Cox Anthony's estate, should cost about $2.5 billion in taxes and leave to her highly prejudiced children only $10 billion to share -- $5 billion each...an amount getting dangerously closer to the poverty line! The Institute for the Preservation of Dynastic Wealth reveals in tongue-and-cheek many details about this scam and United for a Fair Economy has long opposed the repeal of the Estate Tax and is a great source of information on this matter.
FOR THE REST OF US the economy remains strong, though there are some figures you'll be hard pressed to find in the American corporate press. For instance, between January 1, 2007, and November 1, 2007, the price of oil has increased by a paltry 63.5%; wheat's gone up 63%; lead shot up 118%; and milk's hike was just a measly 37%. But we in America, at least in California, should consider ourselves happy folks: gasoline, at $3.50 a gallon, remains cheaper than a gallon of water. If you wonder why the soaring costs of energy and food are not reflected in the rate of inflation, then wonder no more. These costs are not included in the Consumer Price Index -- Out of sight, out of mind! The tremendous increase in the price of lead is harder to explain except if one considers the number of bullets crossing the air from the Horn of Africa to Pakistan, along the Arc of instability, and in many African countries. It takes a lot of lead to replenish the arsenals of death. (The U.S. is the third largest producer of lead in the world, according to infomine.com.)
WANT TO SOLVE THE IRANIAN CONUNDRUM? I'm no energy specialist and my decade-long foray in the oil & gas industry certainly does not an expert make. There are many sites that present serious information on energy issues. Lately, I've depended on the knowledge of one Big Gav down under, at Peak Energy, and the folks at treehugger. There are many other resources on the Web -- check Big Gav's links to the wild world of energy -- but these two have satisfied my appetite for a while, and thanks to them I've learned enough to debunk the so-called Iranian Crisis, and found out that there are ample solutions to it, besides bombing yet another country to smithereens. Of course, a positive approach would entail that the US Establishment and its European cousins refrain from their favorite strategic tool -- regime change -- and learn to respect the sacrosanct property rights (how more capitalist could I be!?!) of the Iranian nation -- their oil and gas, which is what this sorry story of "bomb, bomb, bomb," is once again all about. There are several carrots, just on the energy side, that could be offered to the Iranian government.
BEFORE REVIEWING THEM QUICKLY (they'd deserve much deeper analysis), let's clear one misconception. People who assail the bad imperialists (I am one of those people) that all over the world, through their governments and their docile propagandists and gatekeepers (aka, MSM and think tanks), accuse Iran of wanting to develop nuclear power in order to build a nuclear bomb program, do not get it. Iranian leaders may or may not wish to have their own nuclear deterrent, and they certainly are entitled to peaceful nuclear energy, but these are moot and incorrect lines of reasoning. First, Iran ought not to develop a peaceful nuclear energy program because nuclear energy, of which I am a strong proponent (but of a different sort -- see below), is an energy whose radioactive waste we do not know how to handle and is perilously dangerous to the survival of the commons in the long term. Second, if the past is any indication of the present or the future, there is a sound basis to believe -- again correctly or not -- that Iran will want a nuclear deterrent and in so doing will launch a race among other countries in the region to develop their own nuclear capabilities (cf. Egypt's recent decision to develop "nuclear energy"). We do not need more nuclear powers. We need fewer. We need none; and that includes Israel, of course, and the U.S., and France, et al.
THE BASIS for believing that Iran's goal is indeed about acquiring nuclear weapons rests in the past. Electrical nuclear energy is a byproduct of the fission process, whose only ambition has always been the creation of that most awful tool of destruction, even annihilation, ever devised. With the only exception of Japan, which could produce these weapons at a moment notice, all the countries that developed that technology had first and foremost nuclear weapons in mind. Take a look at the list of states with nuclear weapons. Peaceful nuclear energy was not on the designing table ever. Even Canada, which has no nuclear weapons arsenal as she has made the choice to depend upon the US nuclear umbrella, was party to the Manhattan Project, and is a strong proponent of nuclear energy. Canada is the largest producer of uranium in the world and detains about one-third of worldwide uranium deposits. Canada is shamefully responsible for the Indian nuclear program that led to "Smiling Buddha" in 1974 and "Operation Shakti" in 1998, which in turn led Pakistan to her first nuclear tests, and to further proliferation. Once the genie is out of the bottle we seem incapable of locking it back in and we cannot imagine that a country whose leaders are deemed irrational and fanatics is actually wanting to honestly harness nuclear power for peaceful purposes. The simplistic thinking becomes: Hey, since we've done it, they'll do it too.
WHETHER IRAN DOES GET THE BOMB or not is another false choice. Iran ought not develop a nuclear energy program, whether it's a peaceful one or not, because it's the wrong path for the commons; not because we happen not to like their leaders. Iran should be assured that besides abandoning our dreams of regime change and our relentless saber-rattling, we are willing to work earnestly to abolish these terrible weapons (instead of creating a new generation of them), and to develop new sources of energy within an international framework in and from which all countries would be able to participate and to benefit. Absent this kind of fundamental change in approach, not just vis-à-vis Iran, but the entire nuclear energy challenge, the path ahead will lie into radioactive wastes of our own making and ultimately demise. Iran is not the problem. Nuclear energy as conceived to be a destroyer of life is.
KEEP IN MIND that when you create an enemy, you also become his enemy -- a lose-lose proposition, which in the nuclear age may well result with catastrophic consequences. We have to embrace a paradigm shift. Forget about the fabricated demons and focus on the real demons -- things like resource depletion, pollution, global warming, poverty, etc., and whether some like it or not the growing demand of energy will last for decades. If the overuse of fossil fuels is a climate killer, nuclear energy a radioactive killer, competition for depleting resources a war killer, what are we left with, at least rationally?
I KNOW OF NO MAGIC POTION to change societal behaviors, but from an energy perspective the prospects are not as gloomy as the prophets of doom and the profiteers would want us to believe. Several old and new technologies are in the pipeline, from nuclear energy based on thorium rather than uranium, geothermal power, wind, and solar thermal energy. Look at the work done by The Trans-Mediterranean Renewable Energy Cooperation that wants to harness the sun in the Sahara desert and create a super electrical grid between Europe, North Africa, and the Middle East. Similar projects are being studied and developed in the U.S. Geothermal power provides about 26% of energy consumption in Iceland. The largest geothermal field in the world, located in Lake County, north of San Francisco, supplies almost 800,000 homes with their energy needs.
BUT, TO STAY WITHIN THE IRANIAN QUESTION, thorium could be used as an alternative to uranium to feed nuclear reactors. Thorium is three times as abundant on earth than uranium and far less radioactive. It cannot be used for the production of nuclear weapons. It can produce 250 times more energy than uranium per unit of weight, according to Professor Egil Lillestol of the Institute of Physics and Technology at the University of Bergen. The U.S. experimented with thorium at the Oak Ridge National Laboratory in the 1960s, but abandoned the research for lack of funding in 1976. In 2004, the U.S. buried its thorium reserves in the Nevada desert -- over 3,200 metric tones. According to some reports, that amount would cover America's energy needs for two years. France is working on developing a nuclear plant fueled with thorium. India hopes to phase out her civilian nuclear energy based on uranium and replace it with thorium. Problem is Mr. Bush cannot pronounce "nuclear" and Th is not part of his vocabulary.
SERIOUSLY AND SADLY, the made-up Iranian Crisis has more to do with once again control of oil and greed than with the nuclear issue. Any rational participant to the blinded debate would offer Iran the incentive to be a part of an international consortium -- assuming we wanted to build one -- that would research and develop alternative sources of renewal energies. It's there for the taking, but we will keep using the violent means that never work and carry on creating chaos for the much-heralded profits of the happy few. Lead goes up. Another war on the horizon, more speculation in the making, the Forbes 400 will get beefier, the Death Tax will remain on the agenda... Meanwhile, working people do keep sending their hard-earned money up the top of the food chain and their sons and daughters to the meat grinder. Since no one cares, why should I?
Here are a few resources:
I'LL LEAVE YOU with a bit of much needed humor, courtesy of comedian Jon Fugelsang:
God Bless Hillary Clinton, but when I hear people -- when I say to people, well, Hillary voted for the war in Iraq and she voted for all the millionaire tax cuts; she voted for Alito and Roberts on the Court, she voted for No Child Left Behind and the Patriot Act twice, so why are you supporting Hillary?
Cuz we need change!
Wow -- what a crazy liberal she is...
HILLARY would nuke the world over if it could bring her to the White House. So would Giuliani by the way. It's all about power, money and sex -- the latter, poor Hillary did not get much. We, sex or not, are trying to perdure as best we can.
. . . . .
Ç'est la vie...
And so it goes...
La vie, friends, is a cheap commodity, but worth maintaining when one can.the life line won't hurt you much, but it'll make a heck of a difference for Swans.