Explaining Monsanto’s Desire to Ban Current Milk Labeling

by: Jo Hartley, Natural News:

Over the past century, Monsanto has dabbled in many projects – Agent Orange, Terminator seeds, PCBs, and now “recombined” milk. Monsanto’s latest obsession is milk labels. Specifically, those that are labeled “rBST-free” or “rBGH-free”. They are not concerned with the BST and the BGH on your milk labels. What worries them is the “r” in the label, which stands for “recombined.” Recombined milk is not a natural state of milk and recent evidence suggests that it is probably not as good for us.

Consuming dairy products coming from cows treated with rBGH poses some health risks, including antibiotic resistance (because of antibiotic use to treat cows’ mastitis and other health problems), and a link to a certain range of cancers due to an elevated level of Insulin-like Growth Factor 1.

Monsanto is waging a war of words to attempt to stop the threat against its bottom line. Consumers are becoming skeptical about recombined food and so the company is attempting to suppress or ban the “rBGH-free” label at the state level.

They contend that rBST is a supplement used to help cows produce more milk. Because of the fact that the supplement is injected into the cow and not the milk, they insist that the resulting milk is exactly the same. They state that there is no difference in this milk.

While it is true that all cows have naturally occurring bovine growth hormone, only cows injected with the genetically engineered bovine growth hormone have rBGH. To call this hormone a mere “supplement” is inaccurate as well. Cows that receive this hormone typically last only two lactation cycles before they are slaughtered. Non-rBGH cows normally produce milk for 4-7 years and can live as long as 10 years.

Canada, Australia, and parts of the European Union have banned Monsanto’s recombined milk due to its threats to both humans and cows. To date, the U.S. has yet again allowed Monsanto the freedom to unleash its possibly lethal products on the unsuspecting consumer. And so, it comes down to a battle between the FDA (and its supporters) and those who don’t follow the FDA. Proposed bans on rBGH-free labels are not to protect the consumer, they are to protect Monsanto’s pocketbook.

Public sentiment is turning against rBGH products. More medical authorities are voicing concerns about physical and psychological health issues. In addition, farmers and consumers are demanding a differentiation between recombined milk and milk in its natural form.

Just because there is no commercial test for this drug does not translate into there not being a difference between recombined milk and natural milk. Monsanto’s tactic has been to equate the absence of a verifying lab test with the label being misleading. This doesn’t hold true as there are many products with legitimate labels that haven’t been verified by lab tests – bottled water comes to mind.

Monsanto continues to muddy the waters by insisting that to label the different milks is misleading because “they make consumers believe there is a difference, when in fact there is none.”

Monsanto nearly succeeded in a ban on rBGH-free labels in Pennsylvania in 2007; however the ban failed at the eleventh hour. Several other states are expected to revise or lift their bans on rBGH-free labels due to opposition.

At this juncture, Monsanto seems to have accepted the consumer’s rejection of genetically modified bovine growth hormones. At this point they are experimenting with some funding of grass-roots farming coalitions. The American Farmers for Advancement and Conservation of Technology (AFACT) is one such recipient of Monsanto’s generosity. The farmers from organizations such as these have been known to harass their state legislators, force scientists who may be skeptical of advisory panels, and general intimidation.

As more consumers become aware of the issues involved and make their choices for rBGH-free products, it becomes more and more apparent that Monsanto’s goal is censorship to protect their own interests, not the public’s. One need only take a cursory look at Monsanto’s past pattern with products like Agent Orange, PCBs, and Terminator seeds. The bottom line is that more information is never a bad thing and anything or anyone who tries to restrict the flow of information is likely anti-consumer.

About the author

Jo Hartley
Wife, Mother of 8, and Grandmother of 2
Jo is a 40 year old home educator who has always gravitated toward a natural approach to life. She enjoys learning as much as possible about just about anything!
http://www.loftymatters.com

Food crisis the latest ‘Eve of Destruction?’

By John Crisp, Scripps Howard News Service:

It’s worth remembering that the world has often appeared to be on the point of a vast destruction.

In fact, in the 14th century, as the Black Death spread across China, India, and Europe and eventually killed about a third of the European population, some thought that all of civilization was coming to an end ― literally.

And many American citizens of a certain age grew up with a deeply ingrained sense of potential destruction that had its roots in the long nuclear standoff between the United States and the U.S.S.R.

The threat of thermonuclear disaster became a part of the landscape: we talked about it in school, we heard about it on TV and in the movies, and nearly all of us knew someone who had built a fallout shelter. In 1965 Barry McGuire’s “Eve of Destruction” was at the top of the charts.

But the apocalypse never happened, and even George Orwell’s 1984 came and went, anticlimactically.

The natural world appears to have plenty of endurance; it should keep chugging along for a long time, whether human beings are around to be a part of it, or not.

And, like the natural world, maybe civilization bears within it a preserving principle that keeps some semi-civilized version of human life going on earth, no matter how bad things might look. Maybe, in spite of our best efforts, we’re not really wired to completely destroy ourselves.

On the other hand, in a recent New York Times opinion column, Princeton economist Paul Krugman describes the current “world food crisis,” and it’s rather a dark picture.

Even Americans are aware that food is costing more these days.

Krugman says that part of the blame for the increase in food prices can be attributed to factors that aren’t necessarily anyone’s fault. But a great deal of the blame belongs to long-term trends and policies interwoven with the very fabric of our civilization, especially our extravagant appetite for energy.

Food prices everywhere are being driven up by the burgeoning demand in China for meat, which is a relatively inefficient food; by the price of oil, an essential for industrial-scale agriculture; and by ill-advised efforts to substitute ethanol for our diminishing oil supply.

All of these factors make a trip to the supermarket much more costly, even for Americans.

But in the same edition of my local paper that carried the Krugman column, a report says that the Egyptian government is trying to mollify angry rioters with bonuses after two days of protests sparked by high food prices. Forty percent of Egyptians already live in poverty.

An adjacent story reports that desperate Haitians stormed the presidential palace and had to be beaten back with rubber bullets and tear gas. Food prices in Haiti, already one of the world’s poorest countries, have risen 40 percent during the last year, and Haitians aren’t simply angry, they’re hungry. Associated Press reporter Jonathan Katz says that some Haitians have resorted to ”cookies” made of dirt, vegetable oil, and salt.

Egypt and Haiti aren’t exceptional. The U.N. warns that many poor nations ― and there are plenty of them ― are vulnerable to chronic malnutrition and the kind of unrest that only hunger can arouse.

At present, we Americans are largely immune to this sort of disorder. I read Krugman’s column in an IHOP, while enjoying the special: two eggs, two bacon, two sausages, two pancakes, and two French toast.

But it’s unrealistic to imagine that the consequences of this crisis won’t affect us in ways more significant than somewhat higher prices in our lavish supermarkets.

And the food crisis is closely connected with other foreboding predicaments like energy depletion, climate change, pollution, and rising tensions over diminishing resources of all types.

Of course, the outlook for civilization has been grim before. Even the Black Death was overrated.

In fact, nothing would please me more than to take my place in a long succession of discredited doomsayers.

This time, however, looks and feels different. The roots and consequences of the current crises are truly global, and the disquieting part is that, even though disaster appears to be almost inevitable, very little is being done to prevent it.

Public asked to shape open-government bill; lobbyists say F*ck no!

Foundation posts proposed bill online for public to tweak, bypassing lobbyists.

By Rebecca Carr, Statesman.com:

There is nothing unusual about an open-government group advocating new legislation that would shine a light on the secretive ways of Congress and the executive branch.

But rather than hire an army of lobbyists to push the proposal, as is the custom in Washington, the Sunlight Foundation is taking its measure directly to the public.

The foundation has posted its Transparency in Government Act of 2008 on the Web at publicmarkup.org and has invited the public to tweak, add to or criticize any aspect of the proposed bill. The goal, said Ellen Miller, executive director of the foundation, is to change the backroom, secretive way that legislation is typically passed in Washington.

“This is front-porch politics,” Miller said.

The bill seeks to require Congress and the executive branch to be more transparent by making information, including sensitive financial data, available online so that people living in Austin or anywhere else have as much access to the way government works as people witnessing it in Washington.

The notion of bypassing lobbyists is turning heads on Capitol Hill and among lobbyists.

“Any time that we can hear directly from the American people and not paid lobbyists, it is a good thing,” said U.S. Sen. John Cornyn, R-Texas, who has sponsored several open-government initiatives.

The idea of letting the public shape legislation levels the playing field between affluent groups that can afford lobbyists and the public, Cornyn said.

The idea was not as well received by Paul Miller, past president of the American League of Lobbyists. Miller says lobbyists are unfairly portrayed as backroom-deal makers.

There is more transparency in legislation than ever before, Miller said. But he disagrees with putting bills up for all to rewrite.

“I don’t think the way you advocate is to put everything online and say, ‘All right American people, weigh in on that,’ because then what’s next?” Miller asked. “Are we going to let the American people decide our defense policy, our trade policy, our immigration policy?”

Other lobbyists say the idea has the potential to engage the public.

Thomas Susman, who has lobbied on a wide range of issues, called the Sunlight Foundation’s approach novel. But passing legislation requires a lot more, he said. Timing of legislation, committee assignments and communicating with lawmakers are crucial.

“Lobbyists are not going to become obsolete because the process is just too complicated, convoluted and difficult,” Susman said.

BEST OF WEB: Resurrecting Greenspan: Hillary Joins the Vast, Rightwing Financial Conspiracy

By Michael Hudson, CounterPunch:

On Monday, March 24, presumably representing Wall Street–as any New York senator must do in view of its dominant financial role in the state’s political campaigns–Hillary Clinton proposed that Congress show its bipartisan spirit by appointing an “emergency working group on foreclosures,” to be led by none other than Alan Greenspan and earlier Federal Reserve Chairman Paul Volcker, and Clinton Treasury Secretary Robert Rubin. Her idea was for them to come up with a plan to alleviate the subprime and financial crisis. This seems like calling in arsonists to help put out the fire that they and their own constituency had set in the first place. Their lifelong interest, after all, had been to promote deregulation and special tax favoritism for their Wall Street constituency, highlighted by repeal of Glass-Steagall in 1999 under Pres. Clinton. Representing the banking sector and Wall Street (and hence being essentially Republicans in spirit), they were precisely the lobbyists most in favor of anti-labor, pro-creditor policies.

Even the Wall Street Journal expressed surprise. Jon Hilsenrath noted the seeming irony: “In August 1999, as the tech-stock bubble was worsening, Alan Greenspan stood before central-banking colleagues in Jackson Hole, Wyo., and argued it wasn’t the central bank’s job to prevent asset bubbles. All it could do was clean up the mess after the bubble had burst.” On the contrary, the commentator noted, the Fed could have slowed the bubble by raising interest rates and boosting margin requirements on stock trading during the tech bubble. Mr. Greenspan could have heeded the advice of Fed Governor Ed Gramlich to slow and regulate subprime mortgage lending. Instead, Mr. Greenspan’s–and Mr. Paulson’s–idea was simply to clean up the bubble’s debt aftermath by bailing out Wall Street.

Mrs. Clinton’s logic, she explained on March 24, was simply that Mr. Greenspan had a “calming influence.” Republican Presidential nominee John McCain certainly seemed glad to propose him to head a commission to overhaul the tax code. Barack Obama’s spokesman Bill Burton said that her selection of Mr. Greenspan to head her working group featured “the same people who helped to create these problems or have a direct financial industry stake in the outcome.” Sen. Obama himself said that her crypto-Republican plan lacked credibility in view of the heavy campaign donations she received from Wall Street financial lobbyists. (As of mid-April he had raised an almost identical sum from this source.)

Elaborating her views three days later, Sen. Clinton made it seem as if it were the job of the financial victims–the mortgage debtors–to solve the mortgage crisis. “In today’s economy, trouble that starts on Wall Street often ends up on Main Street … When there’s a run on mortgage-backed securities and the bottom falls out for investment banks, the bottom falls out for families who see the value of their homes–their greatest source of wealth–decline.” To cure the problem, she endorsed the spirit of Mr. Paulson’s Wall Street bailout, including having the Federal Housing Administration, Fannie Mae and Freddie Mac “buy, restructure and resell these underwater mortgages.” This is a far cry from debt forgiveness.

In her debate with Barack Obama on April 16, Senator Clinton once again heaped praise on Mr. Greenspan’s “bipartisan” commission that nearly doubled the tax rates that workers had to give up out of their paychecks. A token income-tax cut was offset by F.I.C.A. withholding that, for many workers, now exceeds their income-tax liability. And what certainly must be the most unmitigated gall rivaling even her notorious Yugoslavia-under-sniper-fire gaffe, Mrs. Clinton rejected Senator Obama’s policy of raising the F.I.C.A. Withholding rate above the present $97,000 level, all the way up to hedge fund managers making billions of dollars per year. Mrs. Clinton said explicitly that there were more progressive ways to resolve the Social Security and Medicare tax problem. The exchange has to be read to be believed.

OBAMA: “One of the centerpieces of my economic plan would be to say that we are going to offset the payroll tax, the most regressive of our taxes, so that families who are earning–who are middle-income individuals making $75,000 a year or less, that they would get a tax break so that families would see up to a thousand dollars worth of relief. the rules in Washington–the tax code has been written on behalf of the well connected. And that’s been a central focus of our campaign.

MODERATOR: You have however said you would favor an increase in the capital gains tax.” [It's now 15 percent, compared to 28 percent under Bill Clinton.] “It’s now 15 percent. That’s almost a doubling if you went to 28 percent. But actually Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20 percent.

OBAMA: Right.

MODERATOR: And George Bush has taken it down to 15 percent.

OBAMA: Right.

In an argumentative mode, the moderator pointed out the long-discredited “supply side” Republican rationale for tax cuts. Is it not true, he asked, that each time the capital gains tax was cut, receipts increased? He did NOT explain that asset-price inflation had gone hand in hand with tax cuts. Nor did he note the fact that some 80% of the tax is in land-price gains–gains that speculators made “in their sleep” while Mr. Greenspan at the Federal Reserve was flooding the real estate bubble with credit.

OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year–$29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That’s not fair. I want businesses to thrive and I want people to be rewarded for their success. But what I also want to make sure is that our tax system is fair and that we are able to finance health care for Americans who currently don’t have it and that we’re able to invest it in our infrastructure and invest in our schools.

In response, Sen. Clinton said:

CLINTON: I don’t want to take one more penny of tax money from anybody.”

MODERATOR: Would you say, ‘No, I’m not going to raise capital gains taxes’?

CLINTON: I wouldn’t raise it above the 20 percent if I raised it at all. I would not raise it above what it was during the Clinton administration. I don’t want to raise taxes on anybody. I’m certainly against one of Senator Obama’s ideas, which is to lift the cap on the payroll tax, because that would impose additional taxes on people who are, you know, educators here in the Philadelphia area or in the suburbs, police officers, firefighters and the like. So I think we have to be very careful about how we navigate this. So the $250,000 mark is where I am sure we’re going. But beyond that, we’re going to have to look and see where we are.

OBAMA: What I have proposed is that we raise the cap on the payroll tax, because right now millionaire and billionaires don’t have to pay beyond $97,000 a year. That’s where it’s kept. Now most firefighters, most teachers, you know, they’re not making over $100,000 a year. In fact, only 6 percent of the population does. And I’ve also said that I’d be willing to look at exempting people who are making slightly above that.

MODERATOR: But Senator, that’s a tax.

OBAMA: Well, no because the alternatives, like raising the retirement age, or cutting benefits, or raising the payroll tax on everybody, including people who make less than $97,000 a year — those are not good policy options.

Senator Clinton responded with more wishy-washy defense of her position. Sounding like an old-time Republican, she gave the old mantra of America’s fiscal class war:

“When it comes to Social Security, fiscal responsibility is the first and more important step. . . . And with all due respect, the last time we had a crisis in Social Security was 1983. President Reagan and Speaker Tip O’Neill came up with a commission. That was the best and smartest way, because you’ve got to get Republicans and Democrats together. That’s what I will do.”

She promised not to “impose additional burdens on middle-class families”–that is, implicitly defining the middle class as those who earn from $97,000 to $3,000,000,000 per year. This remarkable definition of “middle class” has yet to make it into the sociological textbooks, but I’m sure the University of Chicago will soon make the requisite adjustment.

Senator Obama was quick to respond: “That commission raised the retirement age, Charlie, and also raised the payroll tax.” He said that she was proposing a “magic solution.” (This was the equivalent of “voodoo economics” of which President Bush I accused Ronald Reagan of practicing.)

Then came Sen. Clinton’s most remarkable claim of the evening–but one that the papers have not picked up:

CLINTON: “But there are more progressive ways of doing it than, you know, lifting the cap.”

But what could be more progressive than raising the cap on F.I.C.A. withholding? What on earth could be more progressive than starting to reverse the tax shift onto labor that has been occurring ever since the Reagan and Greenspan regimes?

For that matter, how can deregulation of the financial markets be deemed fair?

In an earlier presidential primary debate Mrs. Clinton also cited the Democrats’ acquiescence in the Greenspan Commission’s 1983 tax shift off the high income brackets onto wage-earners–by increasing F.I.C.A. wage withholding for Social Security as a personal user fee rather than funding it out of the general budget–as a model of the bipartisan spirit she hoped to emulate if elected. She thus reflected the attitude of her husband, when as President, Bill Clinton appointed Mr. Greenspan to a new term as Fed Chairman, saying: “This chairman’s leadership has been good, not just for the American economy and the mavens of finance on Wall Street. It has been good for ordinary Americans.”

Yet it was Greenspan that acted as a kind of economic Karl Rove in crafting anti-labor policies favoring the very rich, above all the Social Security tax-shift onto labor’s shoulders to which Mrs. Clinton pointed. He welcomed recession as an excuse to cut taxes, ostensibly to “jump-start” economic growth but actually producing a benefit mainly for wealthy investors and property owners.

Packaging deregulation as new, more efficient regulation

The Bush Administration’s enormous commitment of public funds to support Wall Street prompted columnist Martin Wolf of the Financial Times to announce that the free market was dead. “Remember Friday March 14, 2008,” he wrote; “it was the day the dream of global free-market capitalism died. Deregulation has reached its limits.” The price for Treasury support would have to be an end to the deregulation that had permitted the debt crisis to reach such unprecedented proportions. As evidence of the new attitude Wolf cited “the remark by Joseph Ackermann, chief executive of Deutsche Bank, that ‘I no longer believe in the market’s self-healing power.’”

Although more extensive public regulation was the traditional aftermath of financial crisis, the debt bubble has provided the financial sector with unprecedented wealth to translate into political law-making policy to dismantle regulation. Financial lobbyists accordingly anticipate that “the coming fight will rival the storm leading up to the 1999 passage of the Gramm-Leach-Bliley Act [which repealed Glass-Steagall]. That law made it easier for securities firms and banks to be owned by the same company, dropping regulatory barriers in place since the Great Depression. In 1998 and 1999, when Congress was finalizing passage of that law, the financial-services industry spent a combined $417 million on lobbying, according to the Center for Responsive Politics. In 2007, financial-services companies spent more than $402 million on lobbying, led by $138 million from the insurance industry.”

The focal point of this lobbying effort has been Mr. Paulson’s Treasury working group to draw up a Blueprint for Financial Regulatory Reform. As he explained in his speech on March 31, the Treasury Department’s Blueprint for Financial Regulatory Reform had been moving earnestly since June 2007 to “reform” the nation’s regulatory structure. He concluded his speech with a paean to the repeal of Glass-Steagall under President Clinton: “We recognize that these ideas will generate some controversy and healthy debate. This is not unlike the circumstances surrounding the 1991 “Green Book,” which after a period of constructive discussion resulted in the passage of the Gramm-Leach-Bliley Act, modernizing our financial services industry some eight years later.”

Repeal of Glass-Steagall gave the subprime debacle its jump start by removing the Depression-era roadblock from bank merging with brokers. This permitted financial conglomerates to be formed and gave them the ability to securitize (that is package), loans as investments. Vertical financial conglomerates were formed, starting with Citibank’s merger with Travelers Insurance, and leading up to the recent intention of Bank of America to acquire the troubled Countrywide Financial, the nation’s leading subprime lender.

Rather than seeing this as the source of the subsequent subprime problems as Senators Paul Wellstone and Byron Dorgan did at the time, Mr. Paulson explained, “I am not suggesting that more regulation is the answer.” Just the opposite. “A state-based regulatory system is quite burdensome. It allows price controls to create market distortions. It can hinder development of national products and can directly impact the competitiveness of US insurers.” The aim is to dismantle what remains of public regulation.

Reflecting the financial interests behind him, Mr. Paulson’s solution is to assign overall regulatory authority to the Federal Reserve. The Fed works for its owners, the commercial banking system, and its chairman is appointed by a government that believes in “central bank independence.” The result is a financial sector regulated by its own leaders and lobbyists, not by elected officials–seemingly a clear conflict of interest. The lobbyists evidently have decided that the best public relations wrapping is to present deregulation as “simplification,” and to claim that “streamlining” it will lower costs to investors and help prevent a loss of “competitiveness” to Europe, especially London. Especially annoying to Wall Street are the Sarbanes rules requiring full disclosure of information, passed in the aftermath of the Enron fraud. Upon taking office, Mr. Paulson claimed that these rules handicapped U.S. financial firms relative to their foreign counterparts. “In November 2006, the Committee on Capital Markets Regulation released a report concluding, ‘It is the committee’s view that in the shift of regulatory intensity balance has been lost to the competitive disadvantage of U.S. financial markets.’”

The implication is that anything that lowers costs to Wall Street–by rolling back regulatory bureaucracies and reporting requirements such as are called for by the Sarbanes-Oxley legislation–will be passed on to customers. Such presumptions ignore the fact that Wall Street prefers to pay out its profits as bonuses or dividends rather than pass on cost savings. What is passed onto its customers instead is runaway CEO compensation. “Market discipline” has not kept financial markets honest or low-priced. Deceptive subprime practices have made dollar investments a pariah in global financial markets. Investors have lost faith in the nation’s investment bankers, mortgage brokers and credit-rating firms, drying up the market for U.S. mortgage-backed securities and leading to their being dumped across the board.

In sum, the mid-March crisis provided an opportunity for Mr. Paulson to pull out the deregulatory plan he proposed when he became Secretary of the Treasury in summer 2006, and paste a “regulatory” cover story on it. Mr. Paulson plan for deregulation anticipates “consolidating banking and insurance regulators and potentially merging the Securities and Exchange Commission with the Commodity Futures Trading Commission, then stripping the combined entity of much of its regulatory authority.” A major aim is to prevent any repeat of state attorneys general or other regulators emulating Eliot Spitzer’s $1.4 billion in fines against Wall Street companies for their improper behavior and close-down of Arthur Andersen.

Calling the federal power to annul state regulation or that of other agencies “regulation” is dependent on voters not understanding the bait-and-switch act going on. It needs the compliance of New York’s Wall Street Democrats, senators, congressmen and presidential candidates, whose campaign funding after all comes mainly from the state’s financial sector.

So where are the Democrats on this? Above all, Hillary would seem to be on the hot seat. Where was she at 3 o’clock in the morning on the day that Bill annulled Glass-Steagall?

What seems most remarkable in Mr. Paulson’s and Dr. Bernanke’s comments is the absence of quantitative discussion of just what the “systemic risk” is. The bailout is to be paid by the non-financial sector, above all labor (“consumers”) to “save the system.” But just what is the system? It certainly is not industrial production. It is more a faith that compound interest can keep on expanding ad infinitum. The reality is that the exponentially soaring debt overhead threatens to plunge the economy into chronic depression as interest and other financial charges eat further and further into the economy’s ability to spend on consumption and tangible capital investment. To ignore this financial dynamic is to turn economics into a junk science.

For the past decade the banking system and its mortgage-broker affiliates have avoided the usual wave of defaults and insolvencies by lending debtors enough money to pay the interest charges. Adding the interest onto the debt in this way is known as a Ponzi scheme. It requires an exponentially growing influx of funds to pay investors and creditors, and hence cannot be sustained for long, because no economy in history has grown at the exponential rates needed to keep up with the debt overhead. This is the basic problem at the core of today’s economic policy. It aims to save the “sanctity of debt,” that is, the financial sector’s claims on the rest of the economy. But this attempt only polarizes the economy between creditors at the top of the pyramid and an increasingly indebted base at the bottom.

A simple example may illustrate the debt treadmill. Consider a little brick home in a suburb of Cleveland, Ohio. There are two economic conditions under which you could own it. Choice One is to own the home free and clear of a mortgage, in an economy that values it at $100,000. Choice Two is to own it in a debt-fueled market that values it at $250,000, requiring the buyer to take on a $100,000 mortgage to afford it. This appears to maximize wealth creation inasmuch as the homeowner has $50,000 more net worth.

But the Choice Two homeowner owns only 60 percent of the property. At 6 percent interest the $100,000 mortgage absorbs $500 a month, not counting amortization payments. This $6,000 annual interest charge–plus $3,000 for self-amortization on the typical 30-year mortgage–absorbs 30 percent of gross income for a homeowner earning $30,000 per year. Net of about $10,000 in wage withholding for FICA and income tax, the homeowner must pay 45 percent of take-home pay even before property taxes, fuel and repairs.

So which homeowner is doing better: Choice Two with higher net worth on paper, or Choice One which is less debt-ridden and whose home therefore is more affordable?

The Federal Reserve’s net worth statistics give the impression that all Choice Two has more wealth creation. But most families “own” less and less, and must pay heavier carrying charges that eat into their spending power. By the end of 2007, home equity fell below 50 percent for the U.S. economy on balance–down to 47.9 percent. This means that most Americans now have less of an ownership share in their most basic asset than their bankers. On top of this, they are obliged to place their retirement savings in the hands of money managers whose fees absorb most of the income. Many pension funds are now left with substantial losses on packaged mortgages such as Bear Stearns was selling.

Germany is an example of the Choice One economy. Housing absorbs only about 20 percent of its average household budget, less than half that of most American homebuyers today. Its lower debt and property overhead, along with national health care, helps explain its competitive power in international markets. America, by contrast, is burdened with the high proportion of the cost of labor reflecting the inflation of housing prices that has forced more and more buyers into debt, while the middle class has seen its stagnant wages exacerbated by wage withholding for Social Security and medical insurance. Many have been able to maintain their living standards only by borrowing against their home equity.

Making loans is how banks make their money. As long as the loans are used to bid up property, stock and bond prices, they can claim that they are “responding to the market” by getting homeowners, commercial real estate investors, corporate raiders and financial managers to pledge their assets as collateral for yet new loans in a process that seems to be self-sustaining. But at a point the carrying charges on this indebtedness absorb all the disposable income and corporate cash flow. All it takes to upset the applecart is a major default, embezzlement or fraud.

Real estate reached this state of affairs by summer 2006. Behind the property bubble was an increasing entry price to buying a home–an access price that had to be paid in extra years of the buyer’s working life. Traditionally, economists have defined equilibrium pricing as the level at which the rental income just about covered an owner’s carrying charges. But as real estate prices exceeded the rents that could be charged to cover debt service, speculators withdrew from the market. It became much less costly to rent than to own. New buyers had to pay for their operating deficits out of income earned elsewhere.

The magic was gone once carrying charges could not be lowered any further. Interest rates had been lowered as far as they could be, down payments had been lowered to near zero, amortization had been lowered to zero (so that the mortgage loan never would be paid off, but simply carried), and fraudulent property assessment had become commonplace. Adjustable-rate mortgages were resetting at higher levels. Fuel costs were rising, increasing operating expenses for electric power and gas. Local property taxes were catching up with soaring real estate prices.

The mortgage market thus was set for a downturn. Every mortgage banker with whom I spoke by 2006 saw it coming. But until the break came, Wall Street managers wanted to get every last added fraction of a percentage point in interest that could be squeezed out. So did fund managers, who are graded every three months against the norm. This short-termism obliges them to follow the herd. They hope to reverse course in a hurry when the break comes, but financial crashes occur much faster than it takes for prices to rise. The business cycle is basically a run-up of real estate mortgage debt growing slowly but ending in a fairly rapid crash.

Bank credit–that is, debt for mortgage borrowers–was created almost without cost as the Federal Reserve held short-term interest rates quite low. An increasingly large debt overhead fueled an asset-price inflation that Alan Greenspan celebrated as “wealth creation.” Deregulated banks and other financial institutions packaged and sold mortgage loans to hedge funds, pension funds and other institutions. It seemed that a perpetual motion machine of financial wealth had been found. But it rested on the ability of the underlying “real” economy (production and consumption) to take on more and more debt and pay more and more interest.

The policies proposed by Republicans and Democrats alike treat strapped homeowners as deserving government aid only to the extent of enabling them to go pay the institutions that hold their mortgages. This fig leaf of humanitarian concern for debtors enables the government to provide public credit that ends up in the hands of the super-rich who own and manage the financial and property sector.

But one sees the dominant attitude in the vindictive rhetoric used by Sen. John McCain toward debtors he deems “undeserving” of government aid. He blames insolvent homebuyers for causing the problem for failing to calculate how deeply their adjustable-rate mortgages (ARMS) would eat into their stagnant disposable income or to anticipate how sharply property taxes, heating and electricity prices would rise as the dollar plunges in global markets.

Congress has proposed setting aside millions of dollars to provide mortgage counseling–a sanctimonious blame-the-victim re-education program to convince insolvent debtors at least that they should feel guilty if they walk away from properties worth less than the debts attached to them, as financial professionals do.

The kind of re-education program that really is needed would provide an understanding of the dynamic that threatens to lead to debt peonage. On paper, two thirds of Americans have seen their net worth grow mainly from the rising price of their homes–or more to the point, their land (“location, location, location,” magnified by the failure of property taxes to keep up with market prices). As long as mortgage lending was pushing up prices more rapidly than debt was growing all was fine. At the Federal Reserve, Mr. Greenspan took credit for orchestrating this “wealth creation.” It was a euphemism for asset-price inflation and debt creation.

It is a far cry from tangible capital formation. Instead of raising labor productivity and living standards, it is a purely mathematical dynamic that governments cannot rescue in the end. It is folly even to try to do so. Yet in March, Sec. Paulson mobilized the credit-creating power of the government’s financial and housing agencies to support the price of mortgage securities–and the land valuations that back them. The aim was not to help strapped homeowners but to save creditors who imagined that they could get rich while most of the economy was being driven into debt peonage.

Given this perverse financial plan, it is irresistible not to finish with how Franklin Roosevelt addressed the spirit of today’s proposed reforms:

These economic royalists complain that we seek to overthrow the institutions of America. What they really complain of is that we seek to take away their power. Our allegiance to American institutions requires the overthrow of this kind of power. In vain they seek to hide behind the flag and the Constitution. In their blindness they forget what the flag and the Constitution stand for. Now, as always, they stand for democracy, not tyranny; for freedom, not subjection; and against a dictatorship by mob rule and the over-privileged alike.

Today’s financial sector would turn this rhetoric of economic democracy on its head. This raises the following question: If FDR were alive and running today, would Hillary and others denounce him as an off-the-wall radical? Would he be out of touch with today’s voters? What would they say about his anger? How far would a presidential candidate get who announced at his Inauguration, as Roosevelt did on March 4, 1933, “The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.”

So let’s start by discarding the inane propaganda about unmanaged (that is, deregulated) “free” economies, the faith-based belief that self-regulating economic systems exist that must not be “interfered with” by government bureaucrats, formerly known as regulatory agencies, attorneys general and state prosecutors, Congressional oversight committees and what remains of New Deal agencies. This anti-government, anti-regulatory propaganda has been pushed for decades so that public agencies and Congress, supposed to act as representatives of the people, remain only passive spectators to an economy left in private hands for financial profit.

The reality is that all economies are managed, either by the private sector or by government–usually by a combination of the two. Any successful economy engages in forward planning, and any well-balanced economy shapes how “the market” operates. Adam Smith’s Wealth of Nations was all about how wise governments should shape–and tax–their markets. America’s present-day economic system didn’t evolve through natural forces, much less by divine intervention. Its industrial takeoff was subsidized by protective tariffs, internal improvements–that is, public infrastructure spending–and increasingly progressive taxation.

And conversely, the spate of tax laws, fiscal giveaways and Federal Reserve policies that helped inflate the real estate bubble since 2001 were man-made–and shaped specifically by real estate lobbyists and financial promoters. FDR fought the battle against high finance decades ago, explaining:

The royalists of the economic order have conceded that political freedom was the business of the government, but they have maintained that economic slavery was nobody’s business. They granted that the government could protect the citizen in his right to vote, but they denied that the government could do anything to protect the citizen in his right to work and his right to live.

This is the dimension missing in today’s election campaign. But is not democracy economic as well as political?

—

Michael Hudson is a former Wall Street economist specializing in the balance of payments and real estate at the Chase Manhattan Bank (now JPMorgan Chase & Co.), Arthur Anderson, and later at the Hudson Institute (no relation). In 1990 he helped established the world’s first sovereign debt fund for Scudder Stevens & Clark. Dr. Hudson was Dennis Kucinich’s Chief Economic Advisor in the recent Democratic primary presidential campaign, and has advised the U.S., Canadian, Mexican and Latvian governments, as well as the United Nations Institute for Training and Research (UNITAR). A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be reached via his website, mh@michael-hudson.com

Woman, 74, who refused screening lands in jail

You go, Granny!

By WILL VASH, Palm Beach Post:

A 74-year-old grandmother on her way to New York for the Passover holiday was arrested at Palm Beach International Airport Wednesday, after she refused to be screened and pushed a deputy.

Elena Reichman of Boca Raton refused a screening at about 1 p.m. and argued with Transportation Security Administration staff, according to a Palm Beach County sheriff’s probable cause affidavit.

“Reichman was arguing with TSA personnel and demanded she be allowed to proceed down the concourse without interruption,” according to the report.

After a deputy asked her to calm down and lower her voice, Reichman placed her hands on deputy Margaret Picerno and pushed the law officer, according to the report. Picerno then put Reichman in a chair and handcuffed her.

Reichman, who was taken to a local hospital to be checked after she complained of illness, was in the Palm Beach County Jail Wednesday night on $3,000 bail.

Reichman’s daughter, Mirona Mandel, said she was in shock when she learned her mother, who had never been arrested, was taken to jail. “She’s a European lady,” Mandel said from New York. “This is not who we are.”

Mandel said her mother left two short phone messages with relatives, one in Yiddish and another in English, at about 3:30 p.m. Her mother apologized for being late and said she had been arrested shortly after she attempted to undo a safety pin in her pants.

“This is so crazy,” Mandel said. ”You close your eyes and think it’s a … nightmare and it’s Passover.”

Bend over and take it bitches!

Source: Famous for 15 megapixels.

Hardly seems worth fighting over …yet

For those of us with a less, um, stochastic view of how the world works and who believe that shit doesn’t always ‘just happen’, mainstream media accounts of what’s going on in the world are often frustrating and, occasionally, amusing – but only in a very dark way

The coverage of the state of the British and World economy being the most immediate example that comes to mind

The British media has recently finally woken up to some key economic trends which have been noticeable for some time now but there has been far too much other, much more important stuff to report on. Those key economic trends include…

• The price of oil is going up lots
• The price of rice is going up lots
• The price of wheat is going up lots
• The price of gold is going up lots

• The value of the dollar is going down lots
• The value of the pound is going down lots
• The availability of retail credit is going down lots

And not only has the British media been rather slow in reporting these movements it is also meticulous about reporting these movements as unconnected events and giving some frankly bollocks explanations as to the causes

Last night, on Channel 4 News for example, we were treated to appearances from representative jackals from both the World Bank and the IMF; in two scrupulously separated news items, lying through their fucking teeth about why the British/ European/ World economy is going to go tits up and why people can’t afford food in a growing number of regions of the world

What neither owned up to is that the underlying reason why all these things are happening is that a massive re-balancing of the world’s already unequal distribution of wealth is now well under way

Re-balancing is, of course, a euphemism for naked theft

-

UK interest rates have just been cut by another 0.25% and even before the cut the media whores were warning people that this cut, as with the previous cuts, would probably not be passed onto ordinary borrowers and that banks would continue to cut back on the volume of mortgages they are lending to people

Which is all very strange when you think about. Central banks have been creating and pumping money into the global economic system but the stuff is, so we are told, still thin on the ground

Where’s it all going?

I’d suggest a good place to start looking is in the markets that speculate in the price of things none of us can do without. Right now, borrowing made-up money at 5% to punt on and drive up the price of food or oil another 20, 30, 40 or 50% is pretty much a one way bet

…only your average person hasn’t got the resources or the means to buy their food six months forward. So, they’ll just have to take it up the rear end when the prices rise won’t they?

We are repeatedly told, from cradle to grave, that the cost of the things we need is driven by supply and demand. For example, the price of houses in the UK and the US was driven by population pressure, the increase in the number of households and a failure to build enough new housing

Bollocks

That’s only half the story – and not the interesting half

The other key driver for the £ or $ price of a commodity is the supply and demand of the money used to pay for it. And if you can force up the price of something by flooding a market with money, whilst restricting increases in what people earn, you end fucking those people big time

and you can flatten the price of anything just as easily

The need for housing in the US or UK didn’t suddenly drop overnight

In the same way that the need for rice or wheat didn’t suddenly leap up overnight either

There are some very, very evil fuckers manipulating both the supply of the essentials of Life and the money used to pay for that supply. Those of us on the demand side are currently at their mercy. A quality that oligarchs are not exactly renowned for

Not-So-Quiet Food Riots

By: Richard Daughty, The Mogambo Guru – The Daily Reckoning

The big problem with inflation is that people get low blood sugar when they are hungry, and soon their moods turn sour. I know this for a fact because if breakfast or brunch or lunch or coffee break or dinner or any snack is five minutes late, I involuntarily turn into a screaming monster from hell demanding to know who stole my food and vowing bloody revenge. I can only imagine the anger when hunger is caused because someone can’t afford to buy food!

This “inability to buy food” is one of the problems with inflation, and that ugliness is now here, as we read from Bloomberg.com that “The World Bank in Washington says 33 nations from Mexico to Yemen may face ’social unrest’ after food and energy costs increased for six straight years.” Hahaha! No kidding?

World Bank chief Robert Zoellick says, “Thirty-three countries around the world face potential social unrest because of the acute hike in food and energy prices”, and that since 2005, “the prices of staples have jumped 80%”.

Like what? Like corn and wheat, which are making the news by rising like crazy, and the latest food emergency is that “Rice, the staple food for half the world,” is now double the price of a year ago, and a fivefold increase from 2001. Yikes!

100% inflation in the price of rice in one year! And 500% in seven years! Yikes again! No wonder that Jody Clarke at MoneyWeek.com reports that “Since January 2005 the average price of a loaf of bread in the US has risen 32%. Overall, US retail food prices rose 4 % last year, the biggest jump in 17 years, says the US Department of Agriculture. Meanwhile restaurant owners have been even harder hit, with wholesale price increases of 7.4%. That’s the biggest jump in nearly three decades, according to the National Restaurant Association.”

And worse yet for us alcohol-besotted worthless lushes out here, heroically keeping bartenders and comely barmaids gainfully employed year around, the price of hops, an integral ingredient in beer making, has soared from $4 a pound to $40.

The Marketbasket Survey, conducted by the American Farm Bureau Federation, says a basket of things like bread, milk, eggs and pork chops will cost you $3.50, or 8.9%, more this year than last. Both a five-pound bag of flour and a dozen eggs are up over 40% since January 2007.”

And speaking of pork and yummy pork products, there is a pig crisis in Britain because the government mandated that pig farmers institute some reforms to make the rearing process more humane, and that means that “Costs rose and farmers fled the sector. The U.K.’s breeding herd has fallen to about 425,000 – half the size it was in 1990. Now, soaring feed prices have tipped the industry into crisis.”

And food prices, and the resultant anger, are rising around the world, as we glean from a reader of George Ure’s Urbansurvival.com who has been using the Google search engine for references to “food riots.” He has submitted these returns:

“278 on the 22 Mar 08
289 23 Mar
330 24 Mar
380 26 Mar
970 02 Apr
1330 05 Apr
1698 07 Apr 08″

Mr. Ure has some data of his own; “Meantime, the word ’shortage’ is hanging around 33,000 hits a day, up from the 11,500 a day” back when he first started tracking it back March 15th, 2006.

Larry Edelson at MoneyandMarkets.com says, “Over the past eight years, the price of food worldwide has increased 75%; the price of wheat has gone up a dramatic 200%.”

And regardless of what idiots at the Federal Reserve or their toadying hangers-on say, inflation in prices follows inflation in the money supply, which brings up the terrifying fact that it is all going to get worse and worse, as from Bloomberg.com we read that “Federal Reserve officials signaled the central bank will keep lowering interest rates because financial markets remain distressed even after the fastest reduction of borrowing costs in two decades”, which goes along with another Bloomberg article that reported, “New York Federal Reserve Bank President Timothy Geithner said capital markets are still ’substantially impaired’ and policy makers and financial industry leaders must ‘act forcefully’ to stem the crisis.” Translation: You ain’t seen nothin’ yet.

Too bad it will be all for naught, as Jason Hommel of the silverstockreport.com is exactly right that “the Fed is doomed. Printing more will not work. Printing less will not work. Printing nothing will not work. All the inflation of all the years from 1913 until now is beginning to crash down on our heads, and it will keep crashing until it stops.”

I am not even from this planet, and I understand that something has to keep going “until it stops”, but when will that be? The answer, says Mr. Hommel, is simplicity itself: “Until bonds start paying more each year than gold is going up each year.”

So what does one do about the collapsing economy? Nothing! You can’t do anything! Your only freaking hope is to not get into this kind of mess in the first place! Ergo, the Constitutional requirement that only silver and gold can be money, which brings up chartoftheday.com, from whom we get the Quote of the Day, which reveals how we can prevent the damned Federal Reserve and the Congress from destroying us with inflation. It is Ludwig von Mises himself who states, “The gold standard makes the money’s purchasing power independent of the changing ambitions and doctrines of political parties and pressure groups. This is not a defect of the gold standard; it is its main excellence.”

And as a guy who is not excellent in anything, I can still recognize it in something that keeps us from being destroyed by inflation. And so when it comes to gold, if you ain’t buyin’, prepare for dyin’.

P.S. To get The Daily Reckoning sent directly to your inbox, sign up for our free email newsletter, or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.

Editor’s Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter – an avocational exercise to heap disrespect on those who desperately deserve it.

The Mogambo Guru is quoted frequently in Barron’s, The Daily Reckoning and other fine publications. Click here to visit the Mogambo archive page.

THE SO-CALLED “JOBS” THIS ADMINISTRATION SAYS IT HAS CREATED

Source: Financial Armageddon.

Are These the Jobs They Claim Credit For Creating?

Up until recently, the current adminstration — not to mention its blindly partisan cheerleaders — have repeatedly claimed credit for policies that have allegedly boosted employment and kept the U.S. economy on track.

However, given that the U.S. now appears headed into recession and evidence that some of the job gains, as detailed in the following report from MSNBC.com’s Eve Tahmincioglu, “More Workers Forced to Try Moonlighting,” might not necessarily be a sign of economic vitality, George W. Bush & Co. might want to think about blaming — er, giving the credit to — somebody else.

Growing number of workers seeking second jobs to meet rising costs

Moonlighting is back.

No, not that TV series from the 1980s that starred Bruce Willis and Cybill Shepherd.

I mean this: Lynda Nicely, a 28-year-old public relations administrator for a nonprofit in Milwaukee, found it increasingly hard to make ends meet on her $40,000 salary because of escalating gas and food prices. So last month she took on a second job as a cocktail waitress at night.

“I don’t have cable or the Internet, and I’ve cut down everything to the bare minimum. You’d think I’d make enough at my job to pay the bills and catch a Brewers’ game once in a while, but I don’t,” she says.

Dave Lattomus, a sous-chef at the DuPont Country Club in Wilmington, Del., despite his good salary recently had to take on a second gig teaching culinary arts at a trade school to cover a second mortgage and child support payments.

“I make pretty decent money,” he explains. “If you told me when I was in culinary school in Pittsburgh in 1998 that I’d need a second job even when I made it as a chef after working my way up from line cook, I wouldn’t have believed you.”

Moonlighting appears to be back in vogue. But it’s not because people want to expand their job horizons and try new careers. It’s because they need money. Money to deal with recessionary pressures — everything from inflation to fears they may lose their primary jobs.

Another big reason, according to Robert Reich, former labor secretary under the Clinton Administration, is “because wages are falling, adjusted for inflation.”

The number of workers in the United States who have a full-time job and also have a part-time job on the side has risen about 5 percent to 4.17 million in 2007 from 3.98 million the prior year, according to Department of Labor statistics.

“We’re starting to see more moonlighting by fear,” says Christine Durst, director of research for RatRaceRebellion.com, a work-at-home job-leads site. “We usually see moonlighting by choice.”

The movement to get an extra paycheck is often most notable among workers in industries that are struggling.

Mary Kurek, who does a lot of public speaking in the housing industry, and is author of “Who’s Hiding in Your Address Book,” has noticed the moonlighting phenomenon among the workers she meets.

“I’ve run into some of those same real estate agents from the workshop bartending at local restaurants,” she says. “I know one who drives a limo during ‘down times’ to bring in the extra cash. I know three in the industry who launched into network marketing gigs and another who took a job at a bed-and-bath store to help pay bills.”

With housing in the dumps, she says, people fear losing their jobs. “They are crunching numbers and moonlighting to make ends meet. For many the second job is what keeps them in the first job — the one in which they’ve invested a lot of time and money to get rolling.”

Even though there appears to be a growing desire by employees to get a second job, they face an economic conundrum.

During a recession, employers cut back on the number of jobs as they did last month when U.S. firms cut 80,000 positions, according to the Labor Department. That means fewer jobs to go around, says Gus Faucher, director of macroeconomics at Moody’s Economy.com.

“People are much more able to get a second job during an expansion,” he notes.

Indeed, Lattomus, the chef from Delaware, hit a brick wall when he tried to find another chef job at a local food establishment even though he has tons of friends and connections in the industry. “I asked other chefs if they had or knew of any part-time work available, but people are just not eating out as much these days so business is quiet,” he explains.

In a bright job-networking move, Lattomus put the word out to everyone he knew that he was looking for more work and ended up hearing about a part-time food instructor’s job at Delaware Technical & Community College through an associate.

“It’s enough to help cover my bills for now. I’ve been trying to sell my house, which was appraised at $303,000,” he says. He’s already dropped the price to below $300,000 and expects to just break even given how much he owes on the home.

Adding to his financial strife are fuel prices. “It now costs me $50 to fill up the tank on my Chevy Blazer,” he laments.

For many workers, concerns about escalating prices and the struggle to keep current with hefty mortgages won’t dissipate any time soon, says Economy.com’s Faucher. “I think it will get worse before it gets better,” he says of the economy.

But we can’t just blame the economy for second-job fever.

Manisha Thakor, co-author of “On My Own Two Feet,” says it’s also driven by consumerism.

“While some hard-working people are forced to take on second jobs because their primary jobs pay barely a living wage, there is another subsegment of second-jobbers who are facing the consequences of economic indigestion brought on by a supersizing of their consumptive appetites,” she says.

“What is considered ‘normal’ in terms of size of house, festivities surrounding weddings, the amount of clothes in one’s closet and food portions — all are significantly larger than in the 1950s or 1960s,” she says. “The result is not only second chins but also second jobs.”

It might be time to reassess your spending, she adds.

“We tell people to think about your income like it’s a pie with four slices,” she explains. “A healthy pie has typically at least a quarter for taxes, 15 percent for savings, and that leaves you with 60 percent for everything else.”

If you’re pie is out of whack, she says, you’ll have to spend less or earn more.

No matter what the reason, if you’re forced to start looking for gig No. 2, be smart about it.

“Rather than doing something for 10 hours a week you hate (just) to stay afloat, find something that enhances what you already do, or enhances your skills,” advises Marci Alboher, author of “One Person/Multiple Careers.”

And be careful when choosing your second job. You don’t want to end up doing something that diminishes you in the eyes of your employers or clients. “Cocktail waitressing, for example, could be the death of you if it’s discovered by the wrong person,” Alboher says.

For Nicely, who works in public relations by day and waitresses at night, the reaction to her new job has been positive so far. “Everyone has been extremely supportive including my manager,” she says.

And the extra money has helped take some of the financial pressure off. She waitresses from 6 p.m. to 11 p.m. three days a week and can make as much as $200 in tips on Friday nights.

The key is making sure you don’t take on too many hours, or you’ll end up unemployed from both jobs.

“When one takes on a second job that is added stress to oneself, family and the first and second job,” says Kathleen Hall, founder of The Stress Institute in Atlanta. “Absolutely, both jobs could be jeopardized because of the incredible amount of increased stress.”

Stress warning signs, according to Hall, include sleep problems, lack of productivity, headaches, stomach issues and depression.

Nicely admits juggling two jobs gets to her sometimes, but she is managing so far. “I grew up with a strong work ethic,” she says. “You have to make ends meet, so you do what you have to do.”

Polygamist cult gets millions from U.S. government

Source: Jack Douglas Jr., McClatchy Newspapers.

FT. WORTH, Tex. American taxpayers have unwittingly helped finance a polygamist sect that is now the focus of a massive child abuse investigation in West Texas, with a business tied to the group receiving a nearly $1 million loan from the federal government and $1.2 million in military contracts.

The ability of the Fundamentalist Church of Jesus Christ of Latter Day Saints, or FLDS, to operate and grow is largely dependent on huge contributions from its members and revenue from the businesses they control, according to a former accountant for the church, and government officials in Utah and Arizona, where the sect is primarily based.

One of those businesses, NewEra Manufacturing in Las Vegas, has been awarded more than $1.2 million in federal government contracts, with most of the money coming in recent years from the Defense Department for wheel and brake components for military aircraft.

A large portion of the awards were preferential no-bid or “sole source” contracts because of the company’s classification as a small business, according to online databases that track federal government appropriations.

NewEra, previously known as Western Precision Inc. and located in Hildale, Utah, also received a $900,000 loan in 2005 from the federal Small Business Administration, the data show.

The president and chief executive of the company is John. C. Wayman, identified as an FLDS leader and a close associate to Warren Jeffs, the sect’s “prophet,” who was convicted last year as an accomplice to rape for arranging the marriage of a 14-year-old girl to her 19-year-old cousin.

When Jeffs, who was one of the FBI’s Ten Most Wanted Fugitives, was arrested in the summer of 2006, he was driving Wayman’s late-model red Cadillac Escalade, government officials say.

Wayman did not return phone calls seeking comment.

On NewEra’s Web site Wayman says the company is “an honorable and valuable asset to our country” in helping build military and commercial airplanes that carry people throughout the world. He does not mention its ties to the FLDS.

Steve Barlow, human resources manager for NewEra, said last week that it would be inappropriate to comment, “Given everything that’s going on. I could only give you the company motto: ‘Good parts on time.’”

U.S. Rep. Kay Granger, the Fort Worth Republican who sits on the House Appropriations Committee that deals with issues of defense, military and homeland security, said she is surprised that the federal government is doing business with a group accused of mistreating women and children.

“It makes me very uneasy,” Granger said. “It needs to be investigated without a doubt.”

To begin with, she added, federal authorities should look into NewEra’s financial records.

John Nielsen, who worked for the company when it was Western Precision in Hildale, said in a 2005 affidavit that he and other FLDS members were made to work for little or no wages, even as the company was bringing in lucrative government contracts and other work.

At the same time, $50,000 to $100,000 in company profits were going each month to FLDS “and/or” Jeffs, Nielsen said in the affidavit, filed as part of a civil lawsuit.

He said he and other sect members thought their working for free or for extremely low wages would bring them redemption. Instead, Nielsen said in the affidavit, he was found to be “wanting” by the sect’s leadership, ordered off the property and separated from his five young children and his wife. She was “reassigned” to another man, becoming the fourth of his six wives.

“It broke my heart,” Nielsen said in the affidavit. He declined to comment when reached by phone Friday.

In Texas, authorities raided the FLDS’ sprawling YFZ Ranch near Eldorado on April 3, beginning an exhaustive search of its 1,691 acres. Authorities were acting on a tip from a 16-year-old girl inside the compound who said she had been beaten and raped by a 50-year-old man whom she was forced to marry.

Since then, a state district court judge has ordered the removal of 416 children, many of them young girls who have children or are pregnant after forced encounters with their “spiritual” husbands in the sect’s towering white limestone temple, officials say.

“There’s a lot of bad shit in there,” said a high-ranking official with the federal Justice Department who did not want to be identified because of the sensitivity of the case. On Tuesday, the Justice Department executed a sealed FBI search warrant at the ranch.

While the men of the sect have held close rein on their “plural wives” and children, seldom allowing them to associate with the outside world, the male leaders have fanned out into successful public business ventures. They work as government defense contractors, dairy farmers, engineers, construction contractors, log-cabin homebuilders and suppliers of lanyards, the cords used on eyeglasses or nametags.

In addition, JNJ Engineering, a company owned and operated by FLDS leaders, has made millions of dollars in Las Vegas, the Las Vegas Review-Journal reported in September. The company won $11.3 million in contract work from the Las Vegas Valley Water District; all but one of the project workers came from the twin towns of Hildale and Colorado City, Ariz., where most of the sect’s 10,000 members live.

Jethro Barlow, a former accountant for the FLDS whom Warren Jeffs excommunicated in 2003, said Jeffs ordered sect members, their families and the companies they operated to “give till it hurts….

“And people did.”

Jeffs was able to rally church members to tithe heavily, even if it hurt them financially, because he had convinced them that they had to prepare for the end of the world, Barlow said.

The fever-pitched preparation continued, even after several apocalyptic deadlines had passed. It motivated the rapid construction of the temple at the YFZ Ranch and the erection there of manufactured cabin-like homes made by sect members in Canada, he said.

Barlow, who remains in Hildale, said he believes he and his family were kicked out of the FLDS because they were not among the favored ones in Jeffs’ flock.

Although Jeffs is now behind bars, sect members still consider him their leader and prophet, said Bruce Wisan, a nonmember appointed by the state of Utah to replace Jeffs as manager of a the FLDS’ trust. Established in 1942 to “preserve and advance the religious doctrines” of the church, it is now estimated to be worth between $100 million and $150 million.

Under Jeffs’ direction, Wisan said, sect households are required to tithe at least 10 percent of their gross income to the church, plus an extra $1,000 a month.

Tim Bodily, an assistant attorney over the tax division of the Utah attorney general’s office, said Wisan has received little cooperation from those within the sect, which has traditionally shown distrust for outsiders.

“He’s been provided no records at all, and no one inside the organization has provided any inside knowledge. … It’s a very difficult thing to do,” Bodily said. “Progress moves slow when dealing with these people. Texas has its hands full.”

Douglas is a staff writer with the Ft. Worth Star-Telegram.

Speculators and soaring food prices

Source: William Pfaff, International Herald Tribune; commenting by Signs of the Times.

The meetings last weekend of the International Monetary Fund and the World Bank, both under new leaders – Dominique Strauss-Kahn of France and the American Robert Zoellick – made news principally on the question of world food price rises and shortages, an unwelcome development at a moment when the international credit crisis has banks on their knees and Western finance ministers under great pressure.

The food crisis is a real one, with rice – basic to the diet in much of Asia – rising in price by 75 percent in two months, and the rise in wheat, equally important to most Western countries, rising by 120 percent over the year. This risks famine in vulnerable countries.

Already, 100 million additional people are considered by the World Bank to have been forced into extreme poverty, and there have been food riots in Egypt, Haiti and elsewhere. Hence, the urgency in proposals for new funds to support food aid programs.

The conventional explanations for the flare in prices are population growth, diversion of corn and soybeans to biofuel production, rising Asian and Middle Eastern demand for high-value foods, higher transport costs and crop failures. Oddly little has been said about the role of speculation in the rise in commodity prices generally and specifically in food.

On the Chicago CME Group market, which deals in some 25 agricultural commodities – it is a merger of the former Chicago Mercantile Exchange and Chicago Board of Trade – the volume of contracts has increased by 20 percent since the start of the year and now has reached the level of a million contracts a day. This will soon exceed the rate of growth reached in all of 2007.

The hedge funds are now active in commodities and are playing the futures contracts, where upwards of 30 million tons of soybeans for future delivery are contracted for every day. They are also buying the companies that stock.

The argument sometimes is made that this speculation is unimportant because the futures speculators will never take delivery; but this is precisely the problem. It is why this speculation is highly destructive of the true market.

Futures purchases of agricultural commodities classically have been the means by which a limited number of traders stabilized future commodity prices and enabled farmers to finance themselves through future sales.

Speculative purchases have no other purpose than to make money for the speculators, who hold their contracts to drive up current prices with the intention not of selling the commodities on the real future market, but of unloading their holdings onto an artificially inflated market, at the expense of the ultimate consumer. Even the general public can now play the speculative game; most banks offer investment funds specializing in metals, oil and, more recently, food products.

It is astonishing in the present situation that the international financial institutions and government regulators have done little to control or banish this parasitical and antisocial practice. The myth of the benevolent and ultimately impartial market prevails against all contrary evidence.

Comment: It isn’t astonishing at all. Pfaff still buys the myth that these deviants have our best interests at heart. The myth of a benevolent and impartial market is exactly that, a myth, put into place to fool the gullible.

It does so in the seemingly unrelated area of development. The Social Science Research Council in New York, sponsor of interdisciplinary academic research, has just given general circulation to an analysis of Latin American growth, which demonstrates that the market-friendly policies recommended by the World Bank and IMF often hold nations back.

The author is Dani Rodrik of the Kennedy School at Harvard. (Note: Rodrik’s findings appear in the winter-spring issue of the Social Science Research Council’s quarterly publication, Items & Issues. The Web site is www.ssrc.org. Declaration of interest: I was for several years a member of the SSRC board of directors.)

The conclusion of his analysis is that the Latin America countries that applied the IMF-World Bank “Washington Consensus” program formulated in the 1980s have done poorly, measured against other countries, other regions – and against their own past performances.

Rodrik finds that in 1960-1980, prior to the formulation of the Washington Consensus, the Latin American countries overall did slightly less well in growth than countries in East Asia and the Pacific, but had more than twice the average growth than countries in South Asia.

Comment: Read Naomi Klein’s The Shock Doctrine to find out how these economies were sabotaged. It was a conscious plan because they were doing so well outside of the US sphere of economic interest. Washington couldn’t allow these economies to offer a “third way” between communism and US capitalism. So, under the ideological guidance of Milton Friedman, they went in and staged coup after coup to impose the “Washington Consensus”. Some “consensus”.

In the decade of 1980-1990, those Latin American countries that adopted Washington Consensus policies registered negative “growth” of minus-0.8 percent. East Asia and the Pacific had 5.6 percent average growth, and South Asia 3.3 percent.

Between 1990 and 2000, the Latins following Washington recommendations grew by 1.0 percent, South Asia by 3.3 percent and East Asia and Pacific by 6.4 percent.

Which Latin American countries benefited most from globalization? Argentina, Bolivia, Brazil, Chile, El Salvador, Mexico and Uruguay. Every one of them practiced “nonstandard” policies. All of them developed by faster rates than other Latin Americans, and also more rapidly than China, India or Vietnam.

All had bigger increases in inward investment along with rapid overall economic growth, despite IMF-World Bank disapproval of their methods. Their policies varied according to different national choices, demonstrating that they knew better than Washington what suited their needs and economies. This would seem to deliver a serious blow to consolidated “best practices” and standard solutions. As Rodrik observes, the “just privatize, liberalize, stabilize” commandment doesn’t work; you need to know the terrain and the political and economic culture of the country.