Very good analysis of where the Internet is being taken to homogenise Truth and learning in the image of what the powers that be say is truth. Truthstream Media quite rightly say that this is very dangerous.
A valuable reflection on the state of politics and the Deep State in the current situation. That situation is exposing the workings of people and the tactics used to manipulate and control us.
A systemic crisis in the global Deep System has driven the violent radicalization of a Deep State faction
By Nafeez Ahmed
Feb 10, 2017
President Donald Trump is not fighting a war on the establishment: he’s fighting a war to protect the establishment from itself, and the rest of us.
At first glance, this isn’t obvious. Among his first actions upon taking office, Trump vetoed the Trans Pacific Partnership, the controversial free trade agreement which critics rightly said would lead to US job losses while giving transnational corporations massive power over national state policies on health, education and other issues.
Trump further plans to ditch the Transatlantic Trade and Investment Partnership (TTIP) between the EU and US, which would have diluted key state regulations on the activities of transnational corporates on issues like food safety, the environment and banking; and to renegotiate NAFTA, potentially heightening tensions with Canada.
Trump appears to be in conflict with the bulk of the US intelligence community, and is actively seeking to restructure the government to minimize checks and balances, and thus consolidate his executive power.
His White House chief strategist, Steve Bannon, has restructured the National Security Council, granting himself and Trump’s Chief of Staff Richard ‘Reince’ Priebus permanent seats on the NSC’s Principals’ Committee – opening the door to the White House politicization of the government’s highest national security body.
So what is going on? One approach to framing the Trump movement comes from Jordan Greenhall, who sees it as a conservative (“Red Religion”) Insurgency against the liberal (“Blue Church”) Globalist establishment (the “Deep State”). Greenhall suggests, essentially, that Trump is leading a nationalist coup against corporate neoliberal globalization using new tactics of “collective intelligence” by which to outsmart and outspeed his liberal establishment opponents.
But at best this is an extremely partial picture.
In reality, Trump has ushered in something far more dangerous:
The Trump regime is not operating outside the Deep State, but mobilizing elements within it to dominate and strengthen it for a new mission.
The Trump regime is not acting to overturn the establishment, but to consolidate it against a perceived crisis of a wider transnational Deep System.
The Trump regime is not a conservative insurgency against the liberal establishment, but an act of ideologically constructing the current crisis as a conservative-liberal battleground, led by a particularly radicalized white nationalist faction of a global elite.
The act is a direct product of a global systemic crisis, but is a short-sighted and ill-conceived reaction, pre-occupied with surface symptoms of that crisis. Unfortunately, those hoping to resist the Trump reaction also fail to understand the system dynamics of the crisis.
All this can only be understood when we look at the big picture. That means the following: we must look a little more closely at the individuals inside Trump’s administration, the wider social and institutional networks they represent, and what emerges from their being interlocked in government; we must contextualize this against two factors, the escalation of global systemic crisis, and the Trump regime’s ideological framing(s) of that crisis (both for themselves, and for public consumption); we must connect this with the impact on the transnational Deep System, and how that links up with the US Deep State; and we must then explore what this all means in terms of the scope of actions likely to be deployed by the Trump regime to pursue its discernable goals.
This investigation will help to establish a ground state for anyone on which to build a meaningful strategy of response that accounts for the full systemic complexity of our Trumpian moment.
So the first step to diagnosing our Trumpian moment is to see who is leading it. We’ll begin by looking at a cross-section of some of Trump’s most prominent nominations and appointments.
- The Trump regime
If all Trump’s appointees are confirmed, his administration will be among the most business-heavy, corporate-friendly governments in American history.
Five of the 15 people nominated by Trump as Cabinet secretaries have no public sector experience, and have spent their entire careers in the corporate sector. “That would be more business people with no public-sector experience than have ever served in the Cabinet at any one time”, concludes Pew Research Center.
Betsy DeVos has been nominated for Education Secretary. She’s a billionaire married to the Amway conglomerate.
Andrew Puzder has been nominated as Labor Secretary. He’s a billionaire CEO of fastfood chain owner CKE Restaurants.
Trump’s nominee for Commerce Secretary is Wall Street veteran Wilbur Ross. He’s a billionaire financier who invests in buying and selling companies in distressed industries, and who made his early fortune as a fund manager at the Rothschild Group.
Steven Mnuchin, Trump’s Treasury Secretary, is a former partner at the global investment bank Goldman Sachs, a hedge fund manager and, until his nomination, a board member of the Fortune 500 financial holding company, CIT Group. He’s also a member of the Yale University secret society, Skull and Bones.
Vincent Viola is Trump’s nominee for Army Secretary. He’s a billionaire, former chairman of the New York Mercantile Exchange (NYMEX), and current chairman of Virtu Financial, a high-frequency trading firm.
Linda McMahon is Trump’s Small Business Administrator. She’s a co-founder and former CEO of WWE, which is now valued at around $1.5 billion, and married to billionaire WWE promoter Vincent McMahon.
Gary Cohn is Trump’s chief economic advisor and Director of the White House National Economic Council. He just left his previous post as president and chief operating officer at Goldman Sachs for the job.
Anthony Scaramucci has served as a senior advisor to Trump on the executive committee of the Presidential Transition Team. Previously he was founding co-managing partner of global investment firm SkyBridge Capital. Like Steve Bannon, he also began his career at Goldman Sachs.
Walter ‘Jay’ Clayton is Trump’s nominee for the Securities & Exchange Commission (SEC), the financial industry’s top regulatory watchdog. Yet Clayton himself is a Wall Street lawyer who has worked on deals for major banks, such as Barclays Capital’s acquisition of Lehman Brothers’ assets, the sale of Bear Stearns to JP Morgan Chase, and the US Treasury’s capital investment in Goldman Sachs. In the same capacity, he has campaigned to reduce restrictions on foreign public companies, and sought lax enforcement of the Foreign Corrupt Practices Act. His wife, Gretchen Butler, works for Goldman Sachs as a private wealth advisor.
Trump’s crack team of money monsters is clearly not planning on acting in the interests of American workers — they will instead do what they know best: use the considerable power of the American state to break down as many regulatory constraints on global banking finance as possible, with a special view to privilege US banks and corporations.
Source: Earth Island Journal via Chris van Es http://www.chrisvanes.com
Fossil Fuel Freaks
Trump’s administration has not just been bought by Wall Street. It’s been bought by the oil, gas and coal industries.
Rex Tillerson is Trump’s Secretary of State, and former chairman and CEO of giant oil and gas conglomerate ExxonMobil. As the world’s largest oil major of all, ExxonMobil is the de facto king of fossil fuel interests. Tillerson has close business ties with Russian president Vladimir Putin, and has previously headed up the joint US-Russian oil company Exxon Neftegas.
Tillerson is a friend of Igor Sechin, who heads up the military security services faction of the Kremlin known as ‘Siloviki’. ExxonMobil also had intimate ties with Saudi Arabia, Qatar and the United Arab Emirates under Tillerson. In any case, Trump has richly rewarded Tillerson for services rendered — 91% of the $1.8 million donated to federal candidates by ExxonMobil’s PAC under Tillerson for this election cycle, went to Republicans.
It’s well-known that ExxonMobil has funded climate denialism to the tune of tens of millions of dollars. What’s less well-known is that in the 1970s, ExxonMobil’s own scientific research fully validated the scientific reality of climate change. Yet company executives made a self-serving business-decision to suppress these findings, and fund efforts to discredit climate science.
Rick Perry, the former governor of Texas, is Trump’s Secretary of Energy. Perry holds board directorships at Energy Transfer Partners LP and Sunoco Logistics Partners LP, which jointly developed the Dakota Access Pipeline project. The CEO of Energy Transfer Partners, Kelcy Warren, donated $5 million to a super-PAC supportive of Perry. More generally, his two presidential campaigns received over $2.6 million from the oil and gas industry.
Scott Pruitt, former Attorney General in Oklahoma, is the new head of the Environment Protection Agency. Pruitt has a track record of launching federal lawsuits to weaken and overturn EPA regulations not just on carbon emissions, but on all sorts of basic environmental rules on air and water pollution. The New York Times reports that he and other Republican attorneys general have forged an “unprecedented, secretive alliance” with the oil industry.
Congressman Ryan Zinke is Trump’s nominee for Secretary of the Interior. During Senate confirmation hearings, he refused to admit the accuracy of the scientific consensus on human activity being the dominant cause of climate change. Zinke has supported clean energy measures in the past, but in May 2016, he sponsored a bill for a time limit on Obama’s moratorium on federal coal leasing. He routinely voted against environmental protection measures, supporting fossil fuel use, seeking to minimize public and state involvement in managing public lands, while opposing protections for endangered species.
Zinke’s philosophy is basically ‘drill, baby, drill’. That’s why he’s taken over $300,000 in campaign donations from oil and gas companies that want to accelerate drilling across public lands.
Mike Catanzaro is Trump’s nominee for Special Assistant for Energy and the Environment. He is also a climate-denying lobbyist for the oil and gas industry, working for Koch Industries, America’s Natural Gas Alliance (ANGA), Halliburton, Noble Energy, Hess Corporation, and many others. Early on in his career, he was Deputy Policy Director of the 2004 Bush-Cheney presidential campaign.
The fossil fuel freaks want to burn all the oil, gas and coal they can, at any cost — and they are willing to dismantle whatever environmental protections stand in their way.
Black Ops Brigade
It would be mistaken to assume that Trump’s conflicts with the US intelligence community mean he is necessarily at odds with the military-industrial complex. On the contrary, his defense appointees and advisors are embedded across the military-industrial complex. Trump’s education secretary, DeVos, is the sister of Erik Prince, the notorious founder of disgraced private security firm Blackwater, now known as Academi, which was outed for slaughtering 17 Iraqi civilians.
A source in Trump’s transition team confirms that Erik Prince has advised Trump’s team on intelligence and security issues. Prince now runs another security firm, Frontier Services Group. He supports Trump’s proposal for the US military to grab Iraq’s oil and recommends the escalated deployment of private defense contractors across the Middle East and North Africa, such as in Libya, to crackdown on refugees.
General ‘Mad Dog’ James Mattis is Trump’s Secretary of Defense. He was also, until his resignation due to his political appointment, on the board of directors of General Dynamics, the fifth largest private defense contractor in the world. Mattis is also on the board of Theranos, a biotechnology company known for its questionable automated fingerstick blood test technology.
Lieutenant-General Mike Flynn was Trump’s National Security Advisor until his resignation on February 13 over his ties to Russia. He is a former head of the Pentagon’s Defense Intelligence Agency (DIA) under Obama, and a longstanding military intelligence and special operations insider. Previously, he was director of intelligence for the Joint Special Operations Command; director of intelligence for the US Central Command; commander of the Joint Functional Component Command for Intelligence, Surveillance and Reconnaissance; chair of the Military Intelligence Board; and Assistant Director of National Intelligence. Flynn also runs Flynn Intel Group, a private intelligence consulting firm.
Flynn has just co-authored a book with Michael Ledeen, The Field of Fight: How We Can Win the Global War Against Radical Islam and its Allies. Ledeen is a leading neoconservative defense consultant and former Reagan administration appointee who was involved in the Iran–Contra affair as a consultant of then US National Security Advisor, Robert McFarlane. Currently a Freedom Scholar at the Foundation for the Defense of Democracies (FDD), he was a staunch advocate of the 2003 invasion of Iraq (he was directly involved with the Yellowcake forgeries attempting to fabricate a weapons of mass destruction threat to justify the war) and has campaigned for military interventions in Syria, Iran and beyond. Ledeen’s aggressive foreign policy vision was deeply influential in the formation of the Bush administration’s foreign policy strategy.
It’s worth noting how low Ledeen stoops with his political philosophy. In his 2000 book, Tocqueville on American Character, Ledeen argues that in some situations, “[i]n order to achieve the most noble accomplishments, the leader may have to ‘enter into evil.’” (p. 90) He even argues that this is sanctioned by the Christian God: “Since it is the highest good, the defense of the country is one of those extreme situations in which a leader is justified in committing evil.” (p. 117)
That sort of thinking has led him to endorse the ‘cauldronization’ of the Middle East. In 2002, he wrote in support of invading Iraq that: “One can only hope that we turn the region into a cauldron, and faster, please. If ever there were a region that richly deserved being cauldronized, it is the Middle East today.”
General John F. Kelly is Trump’s Secretary of Homeland Security. He is a retired United States Marine Corps general who previously served under Obama as commander of the US Southern Command, responsible for American military operations in Central America, South America and the Caribbean. Before that Kelly was the commanding general of the Multi-National Force-West in Iraq, and the commander of Marine Forces Reserve and Marine Forces North. Kelly is also a vice chairman at the Spectrum Group, a defense contractor lobbying firm; and on the board of directors of two other private Pentagon contractors, Michael Baker International and Sallyport Global.
James Woolsey, the former CIA director and neoconservative stalwart — a former Vice President at NSA-contractor Booz Allen Hamilton and among Michael Ledeen’s bosses at the Foundation for Defense of Democracies — was an early Trump supporter, and a senior advisor to Trump on his transition team. He dropped out over reservations with Trump’s plans to restructure the intelligence community.
Lieutenant General Joseph Keith Kellogg is Chief of Staff and Executive Secretary of Trump’s White House National Security Council – but has replaced Flynn as acting National Security Advisor. Kellogg was the US military’s top information technology official during the Bush administration’s invasion of Iraq in 2003.
He went on to become chief operating officer for the Coalition Provisional Authority in Baghdad, the mechanism for the US occupation of Iraq, from November 2003 to March 2004 — the period widely recognized as being particularly corrupt and inept.
In between, Kellogg had joined the board of directors of US government IT contractor, GTSI Corp, where he returned as an independent director after his Iraq stint from 2004 until 2013 — when the firm changed its name to ‘UNICOM Government Inc.’ in an attempt to distance itself from earlier revelations of misconduct.
Kellogg later joined the Advisory Board of US defense contractor Raytheon’s Trusted Computer Solutions Inc., and the Strategic Advisory Board of RedXDefence, a US military contractor part-owned by Regina Dugan, former director of the Pentagon’s Defense and Advanced Research Projects Agency (DARPA).
In 2012, Wired magazine outed RedXDefense for creating completely rubbish bomb detection technology under a multi-million dollar DARPA contract during Dugan’s tenure. Despite its flaws, the tech was purchased widely by the US military, and numerous allied militaries around the world.
Mike Pompeo is the icing on the cake. As Trump’s CIA director, this Republican Congressman has no obvious experience relevant to running a national intelligence agency, except perhaps for one thing: as Jane Mayer writes in her book Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (Doubleday 2015), Pompeo is “so closely entwined with the climate-change denying Koch brothers that he was known as the ‘congressman from Koch.’”
The Koch brothers, who made their fortune investing in fossil fuels, now have a direct line to America’s premiere national intelligence agency. Now that’s what you call a coup.
Ku Klux Klan
Virulent white nationalism is another fundamental defining feature of the Trump regime.
Steve Bannon was founding executive chair of Breitbart News, “the platform of the alt-right” according to Bannon himself. Breitbart is widely known for its publication of “racist, sexist, xenophobic and anti-Semitic material.” Bannon himself is also a prolific film producer, and has made or contributed to a range of xenophobic films.
Before his rise to media mogul status, though, Bannon spent a brief time as acting director of the Biosphere 2 experiment, an effort to create a self-sufficient ‘closed system’ environment survivable by a small group of people from 1993 to 1995. At the time, Bannon appeared to share and strongly support the concerns of the Biosphere 2 scientists about the danger of climate change driven by, in his own words, “the effect of greenhouse gases on humans, plants and animals.” He later underwent an Exxon-like about-turn, illustrated by Breitbart’s rampant opposition to the idea that the burning of fossil fuels by human civilization is intensifying climate change.
In 2007, Bannon produced a proposal for a new documentary, ‘Destroying the Great Satan: The Rise of Islamic Facism [sic] in America’, which accused various media outlets, “Universities and the Left”, the “American Jewish Community”, the American Civil Liberties Union (ACLU), the CIA, the FBI, the State Department, and the White House as being “enablers” of a covert mission to establish an “Islamic Republic in the United States.”
Bannon consulted on the proposal with Steven Emerson of the Investigative Project on Terrorism. In 2015, Emerson was described as a “complete idiot” by then Prime Minister David Cameron for claiming falsely on Fox News that Britain is full of Muslim “no go zones” (like the entire city of Birmingham), and that London is run amok by Muslim religious police who beat and wound people who refuse to dress according to a Muslim dress code.
Bannon’s list of interviewees for the proposed film is like a Who’s Who of far-right bigotry. Two of the most well known names included Walid Phares, who advised Trump on his national security team during the presidential campaign, and Robert Spencer. Both are connected to the Washington DC-based Center for Security Policy (CSP), a far-right think tank run by former Reagan defense official Frank Gaffney, where they appear regularly as guests on CSP’s ‘Secure Freedom’ radio podcast run by Gaffney. Phares is also a senior fellow at the Foundation for the Defense of Democracy.
Frank Gaffney’s CSP commissioned the original flawed opinion poll that was cited by Trump to justify his ‘Muslim ban’ when he first announced it in late 2015. So it’s clearly no coincidence that Kellyanne Conway, the pollster who carried out the flawed poll, is now Counselor to the President.
Gaffney thus has a significant degree of ideological influence on the Trump regime. He has appeared at least 34 times on Bannon’s Breitbart radio program. His work has also been cited in speeches by Michael Flynn, Trump’s national security advisor.
Alarmingly, Gaffney has disturbing connections to full-blown neo-Nazi groups across Europe, such as the Danish People’s Party (DPP) and the Vlaams Belang (VB) in Belgium.
But he simultaneously has close ties to the US military-industrial complex. In 2013, CSP tax records showed that the CSP had received funding from six of America’s biggest aerospace and defense contractors, namely Boeing ($25,000); General Dynamics ($15,000); Lockheed Martin ($15,000); Northrup Grumman ($5,000); Raytheon ($20,000); and General Electric ($5,000). The CSP has a particularly close relationship with Boeing, the second largest defense contractor in the world, which still provides Gaffney’s group with “general support.”
Michael Reilly, who has been Director of Federal Budget and Program Analysis at Boeing since 2010, was previously Gaffney’s Vice President for Operations at the CSP.
These incestuous ties with the US private defense sector comprise one prime reason that fully 22 officers or advisors of Gaffney’s CSP ended up having appointments in the George W. Bush administration.
Senator Jeff Sessions is Trump’s Attorney General. Gaffney’s CSP awarded Sessions the annual ‘Keeper of the Flame’ award in 2015. Sessions has previously expressed sympathies for the Ku Klux Klan. He has closely associated with far-right anti-immigrant organizations founded by John Tanton, a driving force in America’s white nationalist movements. In 1993, Tanton declared: “… for European-American society and culture to persist requires a European-American majority, and a clear one at that.” Yet Trump’s new Attorney General is known for frequently quoting from Tanton’s groups, showing up at their press conferences, and has even received recognition and campaign contributions from them.
The John Tanton connection opens up a can of worms. Kellyanne Conway, Trump’s Counsellor, is also connected to Tanton. Her polling firm was previously contracted by Tanton’s anti-immigration platform Federation for American Immigration Reform (FAIR).
Numerous other officials involved in the Trump team — Lou Barletta, Kris Kobach and Julie Kirchner — have direct organizational ties to Tanton’s FAIR.
But this connects senior Trump officials to a grim history of neo-Nazi agitation in the US. Tanton received large sums of early money for FAIR from the Pioneer Fund, a pro-Nazi grant-giving organization which funded eugenics — the discredited ‘science’ of ‘racial hygiene’. Tanton’s various anti-immigrant platforms received money from the Pioneer Fund as late as 2002. According to a study in the Albany Law Review, the Pioneer Fund had direct ties to Nazi scientists, and its founding directors were Nazi sympathizers. One of them had even travelled to Germany in 1935 to attend a Nazi population conference.
Stephen Miller is a senior policy advisor to Trump. He previously worked as communications director for Jeff Sessions in his senator’s office, and crafted the strategy to defeat a bipartisan immigration reform bill in 2013. During his university days, he worked closely with the neo-Nazi leader Richard Spencer, who coined the term “alternative Right” as a new way of capturing a movement about white racial identity.
Miller denies having worked closely with Spencer when they were at university together as members of the Duke Conservative Union. According to Spencer, Miller helped him with fundraising and promotion for an on-campus debate on immigration policy in 2007. The event featured Peter Brimelow, who runs the white nationalist website Vdare.com, which regularly publishes articles by neo-Nazis. Miller’s relationship with Spencer at this time has been confirmed by email correspondence between Spencer and Brimelow.
It’s perhaps worth noting that the inspiration for Tanton’s neo-Nazi sympathies were, ostensibly, environmental concerns. In a recent article he admits, “my initial interest in curtailing immigration was motivated by a longstanding concern for the environment.”
From 1971 to 1975, Tanton was chair of the National Population Committee of one of America’s oldest environmental organizations, the Sierra Club. His theory was that immigration drives unsustainable population growth, which then drains resources and harms the environment. The environmental crisis, from Tanton’s point of view, is a population problem — specifically, a problem of too many people. Part of dealing with that means cracking down on immigration — this, ironically, in a nation founded on immigration.
This insidious proto-Nazi ideology now appears to have an operating influence on the White House through Tanton’s ideological surrogates, many of whom are connected to Gaffney and his acolytes in the Trump regime.
The unifying ideology that lends coherence to these intersecting networks of influence comes from a variety of people, but the following stand out in particular.
Michael Anton is a little-known but powerful figure in the Trump administration, now a senior director of strategic communications in the White House National Security Council. He launched his career as a speechwriter and press secretary for New York mayor Rudy Giuliani, before joining Bush’s White House in 2001 as a communications aide for the National Security Council. He went on to become a speechwriter for media mogul Rupert Murdoch at News Corp, then moved into the financial sector, firstly as director of communications for Citigroup, then as a managing director at the BlackRock investment firm.
Anton has played a major role in attempting to cajole and convince conservatives, through various anonymous writings in conservative publications and behind-the-scenes networking, of the necessity of voting Trump to head off the crisis of conservative decline amidst the apocalyptic failures of liberalism.
Rupert Murdoch has a direct line to the Trump White House through Michael Anton, but it’s one the News Corp owner has gone to pains to build personally. Murdoch and his wife Jerry Hall were hosted for dinner by Trump at his golf course in Scotland in June 2016. Later Murdoch was seen visiting Trump Tower in November 2016. Murdoch is set to have significant influence on Trump, who reportedly asked the Fox News owner to recommend his top preferred candidates to chair the Federal Communications Commission.
The Murdoch connection has other alarming ramifications. Since 2010, Murdoch has been an equity-holding board member of the American energy firm, Genie Oil & Gas. He had teamed up with Lord Jacob Rothschild, chairman of Rothschild Investment Trust (RIT) Capital Partners, to buy a 5.5% stake in the corporation then worth $11 million.
Murdoch and Rothschild also serve on Genie’s strategic advisory board. Joining them on the board are Larry Summers, former Director of President Obama’s National Economic Council; former Trump senior advisor James Woolsey; Dick Cheney, former Vice-President under George W. Bush; and Bill Richardson, former Secretary of Energy under Clinton and Governor of New Mexico.
Genie Oil & Gas has two main subsidiaries. One of them, Afek Oil & Gas, operates in Israel and is currently drilling in the Golan Heights, which under international law is recognized as Syrian territory. The Golan was captured by Israel from Syria in 1967, and unilaterally annexed in 1981 with the introduction of Israeli law to the territory. The other Genie subsidiary, American Shale Oil, is a joint project with the French major Total SA, and operates in Colorado’s Green River Formation.
Screenshot of Murdoch part-owned Genie subsidiary
On its website, the company offers an extraordinary declaration regarding its rationale for focusing on unconventional oil and gas resources:
“The peaking of world oil production presents the US and the world with an enormous challenge. Aggressive action must be taken to avoid unprecedented economic, social and political costs.”
This may well reveal much about the crisis-perceptions of those who influence the Trump regime.
Trump’s administration has been further augmented by a man with especially extensive ties to the US Deep State: Henry Kissinger.
Since December 2016, Kissinger, the notorious former Secretary of State convincingly accused of complicity in war crimes by the late Christopher Hitchens — who has played direct advisory roles in both the preceding Bush and Obama administrations — has become Trump’s unofficial foreign policy guru. Kissinger was a secret national security consultant to President Bush, and under Obama was directly involved in the US National Security Council’s chain-of-command.
He now appears to be intimately involved in the evolution of Trump’s foreign policies toward China and Russia. His firm, Kissinger Associates, has for some years played a central role in easing the passage of numerous US corporations into lucrative Chinese investments.
Trump’s peculiar brand of haphazard, unscripted and chaotic political announcements may well have endeared him to Kissinger, who has argued that “unpredictability” is a hallmark of the greatest statesmen. Such leaders act beyond the sort of “pre-vision of catastrophes” offered by established experts recommending caution, instead indulging in “perpetual creation, on a constant redefinition of goals.” The greatest statesmen are able to both “maintain the perfection of order” and “to have the strength to contemplate chaos”, where they can “find material for fresh creation.”
Kissinger’s critical role in developing Trump’s eastward facing strategy was revealed by the German tabloid, Bild, which obtained a document from the Trump transition team. The document confirmed Kissinger’s role as the key mastermind brought in to craft a way to rebuild relationships with Russia. Kissinger’s plan would include lifting US economic sanctions — paving the way for a potentially lucrative partnership between American and Russian oil and gas companies — and recognizing Russia’s ownership of the Crimea.
Kissinger’s advice on China policy, however, is not yet fully known. Writing in the South China Morning Post, Pepe Escobar argues that Kissinger’s record suggests Trump will deploy “a mix of ‘balance of power’ and ‘divide and rule’. It will consist of seducing Russia away from its strategic partner China; keeping China constantly on a sort of red alert; and targeting Islamic State while continuing to harass Iran.”
Kissinger’s ‘unofficial’ advisory role in the Trump regime is solidified through the direct influence of one of his longtime acolytes.
K.T. McFarland, who is to work under Michael Flynn as Trump’s Deputy National Security Adviser, was an aide to Henry Kissinger during the Nixon administration on the National Security Council from 1970 to 1976. In that capacity, she played a lead role in working on Kissinger’s notorious and originally classified 1974 National Security Study Memorandum 200 (NSSM200). The document advocated that population growth in poorer countries was the principal threat to US overseas security and other interests, especially by endangering US access to “mineral supplies”.
Making America hate again
It appears that there are common themes among the different groupings that comprise the Trump regime. Among them are experiences and recognition of crisis: Rex Tillerson and Steve Bannon, for instance, come from backgrounds acknowledging the reality of the planetary ecological crisis.
Energy interests linked to Murdoch believe in an imminent social, economic and political crisis due to peak oil.
Most Trump teamsters see their task as saving the fossil fuel industries from crises external to them, and now all ostensibly tend to deny the gravity of the industry’s environmental impacts.
All are worried about the profits of their friends in Wall Street.
A large number of Trump team associates have ties to John Tanton, whose proto-Nazi views are rooted in an eugenics-inspired belief that the environmental crisis is due to too many non-white people.
And now Trump’s national security team draws on the parallel views of the old Nixon era Kissinger team concerning the threat of overpopulated poor countries undermining US access to the world’s food, energy and raw materials resources — for which the solution could be to ‘cauldronize’ countries of strategic interest.
These crisis-perceptions, however, are not grounded in systemic insight: but are refracted through the narrow lenses of self-serving power. The crises are relevant only insofar that they represent a threat to their interests. But most importantly, their ensuing beliefs about how to respond to these crises end up being refracted through the ideological framework of the conservative-liberal polarity.
- The Deep System
Perhaps the most powerful takeaway from this examination of who the Trump administration actually is, is that the Trump regime is not external to the Deep State. On the contrary, the people who hold senior posts in his administration, both formal and otherwise, are key nodes that represent whole layers of social and institutional networks within and across the wider US Deep State.
If this is not immediately obvious, it’s because there is much misunderstanding of what the Deep State actually is. The Deep State is not simply ‘the intelligence community’. When a more accurate understanding of the American Deep State and its symbiotic embeddedness in a transnational Deep System is adopted, the role of the Trump faction can be properly discerned.
Secret state, opaque system
In his book, Deep Politics and the Death of JFK (University of California Press, 1996), Professor Peter Dale Scott coined the term deep politics to designate the study of criminal and extra-legal practices linked to the state. He defined a deep political system or process as one in which institutional and non-institutional bodies, criminal syndicates, politicians, judges, media, corporations and leading government employees, resort to “decision-making and enforcement procedures outside as well as inside those sanctioned by law and society. What makes these supplementary procedures ‘deep’ is the fact that they are covert or suppressed, outside public awareness as well as outside sanctioned political processes.”
Deep political analysis is therefore concerned with revealing the tendency of the state to enter into activity outside of the state’s own rule of law. From the viewpoint of conventional political science, law enforcement and the criminal underworld are opposed to each other, the former struggling to gain control of the latter. But as Scott observes:
“A deep political analysis notes that in practice these efforts at control lead to the use of criminal informants; and this practice, continued over a long period of time, turns informants into double agents with status within the police as well as the mob. The protection of informants and their crimes encourages favours, payoffs, and eventually systemic corruption. The phenomenon of ‘organized crime’ arises: entire criminal structures that come to be tolerated by the police because of their usefulness in informing on lesser criminals.”
This can lead to a form of state-crime symbiosis, blurring the defining parameters of which side controls the other. From the outside, this appears as the emergence of an invisible “deep” dimension to state activities tying it to organized crime, when in reality what is happening is that the state is inherently porous: its “deep” invisible side connects it to all manner of private, extra-legal actors who often seek to operate outside or in breach of the law — or to influence or bend the law to serve their interests.
In his more recent opus, The American Deep State, (p. 14) Scott also acknowledges in this vein that the deep state “is not a structure but a system, as difficult to define, but also as real and powerful, as a weather system.”
As I’ve shown in my paper published in the anthology, The Dual State (Routledge, 2016), one of the least understood features of deep politics, then, is that the “deep state” must inherently be inter-networked with a vast array of non-state and often transnational influencers across corporations, financial institutions, banks, and criminal enterprises.
The postwar global deep system
America’s historic role as the principal shaper of global capitalism means that the globalization of capitalism enabled the emergence and expansion of a US-dominated transnational Deep System — within this global Deep System, a US-dominated transnational financial elite has become inherently entangled with criminal networks.
The expansion of global capitalism since 1945 was not an automated process. On the contrary, it was a deeply violent process led principally by the United States, Britain and Western Europe. Throughout, the CIA and Wall Street acted largely hand-in-hand. Globalization was tied directly to military interventions in over 70 developing nations designed to create the political conditions conducive to markets that would be ‘open’ to western capital penetration, and thus domination of local resources and labour. The logic of ‘deep politics’ required that much of this criminal political violence in foreign theatres be suppressed from public consciousness, or otherwise justified in different ways.
This was privately acknowledged by US State Department planners working in partnership at the time with the Council on Foreign Relations:
“If war aims are stated, which seem to be concerned solely with Anglo-American imperialism, they will offer little to people in the rest of the world… Such aims would also strengthen the most reactionary elements in the United States and the British Empire. The interests of other peoples should be stressed, not only those of Europe, but also of Asia, Africa and Latin America. This would have a better propaganda effect.”
The number of people that died in the course of this forcible integration of former colonies across Asia, Africa, South America and the Middle East into the orbit of an emerging US-UK dominated global economy, is astonishing.
In his book, Unpeople (2004), British historian Mark Curtis offers a detailed breakdown of the death toll at approximately 10 million — a conservative under-estimate, he qualifies. American economist Dr JW Smith, in his Economic Democracy (2005), argues that globalization was:
“… responsible for violently killing 12 to 15 million people since WW II and causing the death of hundreds of millions more as their economies were destroyed or those countries were denied the right to restructure to care for their people… that is the record of the Western imperial centers of capital from 1945 to 1990.”
On the back of this deep, transnational political violence — which remains obscured in mainstream media and history education — the US and UK erected a global financial architecture to serve the interests of their most powerful corporate and banking institutions, which hold overwhelming sway over the political class.
State power was deployed to integrate the resources, raw materials, fossil fuel energy reserves, and cheap labour from these vast areas of the world into a global economy dominated by transnational elite interests based largely in the US, UK and Western Europe.
This, too, opened the way for new forms of criminalization of state power. This can be illustrated with a powerful example from terrorism finance expert Loretta Napoleoni, who chaired the Club de Madrid’s terrorism financing group.
She reports that financial deregulation pursued by successive US governments paved the way for different armed and terror groups to link up with each other and with organized crime, generating an overall criminal economy valued at about $1.5 trillion. This criminal economy consists of “illegal capital flights, profits from criminal enterprises, drug trading, smuggling, legal businesses, and so on”, most of which is recycled into Western economies through money laundering via mainstream financial institutions: “It is a vital element of the cash flow of these economies.”
But the problem goes further. As the primary medium of exchange for this criminal economy is the US dollar, the latter’s role as the world reserve currency has cemented a structural situation in which the economic power of the US Treasury has become conditional on the economic immunity of transnational criminal networks, who systematically use US dollars for criminal transactions: The greater the stock of dollars held abroad, the greater the source of revenue for the US Treasury.
These examples illustrate how the US Deep State operates as the chief regulator of a global Deep System, in which seemingly legitimate international financial flows have become increasingly enmeshed with transnational organized crime, powerful corporate interests who control the world’s fossil fuel and raw materials resources, and the privatization of the military-industrial complex.
The Deep State faction behind Trump
Trump fits into this system snugly. Among his draft executive orders is one that would open the door for US corporations to engage in secretive corrupt and criminal practices to buy conflict minerals from the Congo — which are widely used in electronic products like smartphones and laptops.
From this broader perspective, it’s clear that far from representing a force opposed to the Deep State, the Trump regime represents an interlocking network of powerful players across sectors which heavily intersect with the Deep State: finance, energy, military intelligence, private defense, white nationalist ‘alt-right’ media, and Deep State policy intellectuals.
According to Scott, this reflects a deepening “old division within Big Money — roughly speaking, between those Trilateral Commission progressives, many flourishing from the new technologies of the global Internet, who wish the state to do more than at present about problems like wealth disparity, racial injustice and global warming, and those Heritage Foundation conservatives, many from finance and oil, who want it to do even less.”
So rather than being a nationalist ‘insurgency’ against the corporate globalist ‘Deep State’, the Trump regime represents a white nationalist coup by a disgruntled cross-section within the Deep State itself. Rather than coming into conflict with the Deep State, we are seeing a powerful military-corporate nexus within the American Deep State come to the fore. Trump, in this context, is a tool to re-organize and restructure the Deep State in reaction to what this faction believe to be an escalating crisis in the global Deep System.
In short, the Deep State faction backing Trump is embarking on what it believes is a unique and special mission: to save the Deep State from a decline caused by the failures of successive American administrations.
However, what they are actually doing is accelerating the decline of the American Deep State and the disruption of the global Deep System.
Slide from lecture at Global Sustainability Institute, Anglia Ruskin University (Ahmed)
- Systemic Crisis
The Trump faction is correct that there is a crisis in US power, but they fail to grasp the true nature of the crisis in its global systemic context.
Each grouping within the Trump faction, and the elite social and institutional networks they represent, has its own narrow understanding of the crisis, framed from within the ideological parameters of its own special interests and class position.
Each grouping suffers serious epistemological limitations which mean they are not only incapable of grasping the systemic nature of the crisis and its impacts, but they hold self-serving views about the crisis which tend to project their insecurities onto all sorts of Others.
The growth problem
For instance, the ongoing failure to lift the US economy into a meaningful recovery is framed by the Trump faction as due to not putting ‘America first’ in trade relations. Trump’s plan is to boost infrastructure investment to create jobs at home, and to adopt more protectionist trade policies to protect American industries and manufacturing.
The immediate reality here is that Trump’s money monsters are keenly aware that conventional neoliberal American economic and financial policies are no longer working: Under Obama, for instance, the median household income saw its first significant increase since the 2007–8 recession in 2015, rising by 5.2%. In real terms, though, little has changed. Median household income is at $56,516 a year, which when adjusted for inflation, is 2.4% less than what it was at the turn of the millennium.
So while Obama managed to create over a million new jobs, purchasing power for the working and middle classes hasn’t increased — it’s actually decreased. Meanwhile, although the poverty rate dropped by 1.2% in 2015, the overall trend since the 2007 crash has seen the number of poor Americans increase from 38 million to 43.1 million people.
But this problem goes beyond Obama — it’s systemic.
Over the last century, the net value of the energy we are able to extract from our fossil fuel resource base has inexorably declined. The scientific concept used to measure this value is Energy Return on Investment (EROI), a calculation that compares the quantity of energy one extracts from a resource, to the quantity of energy used to enable the extraction.
There was a time in the US, around the 1930s, when the EROI of oil was a monumental 100. This has steadily decreased, with some fluctuation. By 1970, oil’s EROI had dropped to 30. Over the last three decades alone, the EROI of US oil has continued to plummet by more than half, reaching around 10 or 11.
According to environmental scientist professor Charles Hall of the State University of New York, who created the EROI measure, global net energy decline is the most fundamental cause of global economic malaise. Because we need energy to produce and consume, we need more energy to increase production and consumption, driving economic growth. But if we’re getting less energy over time, then we simply cannot increase economic growth.
Trump’s Plans for Fossil Fuels Will Shrink the Economy – Motherboard
As President-elect Trump spearheads plans to boost oil, coal and gas, a major new study by one of the world’s foremost…motherboard.vice.com
And this is why there has been an unmistakeable correlation between long-term global net energy decline, and a long-term decline in the rate of global economic growth. There is also an unmistakeable correlation between that long-term decline, the rise in global inequality, and the increase in global poverty.
The self-styled liberal faction of the Deep State has convinced itself that capitalist growth helped halve global poverty since the 1990s, but there’s reason to question that. That success rate is calculated from the World Bank poverty measure of $1.25 a day, a level of very extreme poverty. But this poverty measure is too low.
While the numbers of people living in extreme poverty has indeed halved, many of those people are still poor, deprived of their basic needs. A more accurate measure of poverty shows that the number of poor worldwide has overall increased.
As the London-based development charity ActionAid showed in a 2013 report, a more realistic poverty measure lies between $5 and $10 a day. World Bank data shows that since 1990, the number of people living under $10 a day has increased by 25 percent, and the number of people living under $5 a day has increased by 10 percent. Today, 4.3 billion people — nearly two-thirds of the global population — live on less than $5 a day.
So really, poverty has worsened in the Age of Progress. And now the unsustainability of this equation is coming home to roost even in the centres of global growth, where wealth is most concentrated.
The UN’s Sustainability Plan Is ‘Doomed,’ According to Linguistic Analysis – Motherboard
The UN will launch its 2030 Sustainable Development agenda at the end of this month in New York City, where it will be…motherboard.vice.com
As of mid-2016, the GDP of Europe has been stagnant for over a decade, and the US has reached a GDP growth rate of 1.1 percent, nearly the same as its population. This means that the US has actually experienced no average increase in “per capita wealth”, according to SUNY’s Charles Hall.
To maintain this semblance of economic growth, we are using ingenious debt mechanisms to finance new economic activity. The expansion of global debt is now higher than 2007 pre-crash levels. We are escalating the risk of another financial crisis in coming years, because the tepid growth we’ve managed to squeeze out of the economy so far is based on borrowing from an energetically and environmentally unsustainable future.
And that growth-by-debt mechanism is also occurring within the oil industry, which has amassed two trillion dollars worth of debt that, in the context of the chronic oil price slump, means the industry is not profitable enough to generate the funds to ever repay its debt.
Both pro- and anti-Trump factions of the Deep State are in denial of the fact that this escalating crisis is due, fundamentally, to the global net energy decline of the world’s fossil fuel resource base.
In a time of fundamental systemic crisis, the existing bedrock of norms and values a group normally holds onto maybe shaken to the core. This can lead a group to attempt to reconstruct a new set of norms and values — but if the group doesn’t understand the systemic crisis, the new construct, if it diagnoses the crisis incorrectly, can end up blaming the wrong issues, leading to Otherization.
Slide from lecture at Global Sustainability Institute, Anglia Ruskin University (Ahmed)
The Trump faction ends up falling-back on the narrow pathways with which they are familiar, and believe that rather than requiring a different path, the problem is that we are not fully committed to pursuing the old path. They insist that the problem is not inherent to the structure of the fossil fuel industry itself, or the debt-infested nature of the parasitical global financial system. The problem is seen simply as insufficient exploitation of America’s fossil fuels; too much regulation of the financial system; constant economic pandering to unAmericans — Muslims, immigrants, Latinos, black people — who are either draining the financial system through crime, drugs and terror, or simply overburdening it with their huge numbers.
While they believe that business-as-usual growth must now be monopolized by ‘America first’ (and particularly by a white nationalist definition of ‘America’), their liberal detractors cling to the belief that business-as-usual will in itself usher in continued growth, with a tad of technocratic tinkering and billionaire philanthropy spreading the gains throughout the world.
Both worldviews suffer from serious ideological fallacies — but it’s the failure of the latter that has helped radicalize the former.
Looking at the writing of Trump’s senior advisor Michael Anton throws significant light on how the crisis has radicalized the Trump faction into a delusional, binary worldview. For Anton, the key culprit is the moral and ideological bankruptcy of the liberal paradigm, which has destroyed the economy and is eroding American values; as well as the failure of the conservative establishment to do anything meaningful about it. Anton pined for a great disruptor to revitalize conservativism on a new footing: in the process tearing down liberals and old conservatives in one fell swoop. And so began his ideological love affair with Donald Trump.
The result is Trump’s vision of himself as a sort of American messiah — but this is, of course, a grand construction. The Trump faction, following Anton’s line of argument, have simply framed all of America’s challenges through the narrow lens in which they see everything: the problem of liberals; and thus all America’s problems can be conveniently Otherized, pinned on the fatal combination of liberal decadence, and conservative bankruptcy.
Thus, Trump’s proposed programme is seen by its proponents as a war on both the liberal and conservative establishments responsible for the crisis. The vision seems simple enough.
Domestically and economically: kickstarting economic growth by ramping up massive investments in America’s remaining fossil fuel resources; using this to generate the revenues to fund the trillion dollar infrastructure plan; while refocusing efforts on revitalising American manufacturing; all of which will create millions of new American jobs.
The foreign affairs extension is to partner with Russia to facilitate US-Russian cooperation on new oil and gas projects in the region; weakening the Russia-China partnership to facilitate American pressure on China to capitulate to US encroachment on untapped oil and gas resources in the South China Sea.
The ‘war on terror’ corollary of the Trump vision is to rollback Iran’s expanding influence in the Middle East, which has greatly increased thanks to the 2003 Iraq War and the destabilization of Syria; thereby reconsolidating the regional geopolitical power of the Gulf states, where the bulk of the world’s remaining oil and gas resources are to be found.
The domestic dimension of that ‘war on terror’ corollary involves cracking down on the increasing numbers of ‘useless eaters’, the hordes of non-white Others, who are seen ultimately as parasites gnawing at America’s financial, cultural and national security. Thus, the walling off of Mexico, the ‘Muslim ban’, the crackdown on immigrants, and the veiled threats to the Black Lives Matter movement that its ‘anti police’ attitude will not be tolerated, all become explicable as the result of what happens when a systemic crisis is not understood for what it is, but simply projected onto those who are affected the most by that very crisis.
In all these areas, the common theme discernible across the Trump regime’s key appointments is to react to crisis-perceptions by attributing the crisis to various populations, both inside and outside the United States — invariably painted as out of control, rapidly growing in numbers, and thereby comprising an inherent threat to the ‘greatness’ of an ‘American’ identity that is increasingly defined in parochial, ethno-nationalist terms.
But that’s obviously not going to work. Instead it will escalate the crisis.
Slide from lecture at Global Sustainability Institute, Anglia Ruskin University (Ahmed)
Global net energy decline is not going to go away by drilling harder and faster. The very act of drilling harder and faster will ultimately accelerate net energy decline. The geophysical brake on economic growth will harden, not weaken.
And this means that Trump will be forced to rely on public private partnerships to bring in huge investment loans from the private sector to deliver his infrastructure plan. So whatever domestic low paid, sweatshop-style, factory jobs Trump manages to engineer in the near-term, American taxpayers will be forced to foot the bill for the trillions of dollars in repayment of those private loans. Trump’s plan will thus compound the already crisis-prone debt-levels in the American and global financial system.
Meanwhile, climate change will accelerate, even as international order becomes more unstable while Trump spearheads a more aggressive military posture in the Middle East and South Asia, particularly toward Iraq, Iran and China; and cracks down harder on minorities at home.
For every degree to which Trump upscales aggression, America’s real national security will be downgraded. And like any good despot, Trump’s failures will become food for his own propaganda, to be conveniently blamed on the myriad of Others who, in the small minds of the Trump faction, are preventing America from becoming ‘great again.’
- The future
As global systemic crisis intensifies, the myriad of networks, forces and factions that comprise the American Deep State are turning on each other: Trump is not the cause, but the symptomatic outcome of this structural rupture within the US establishment. What this means is that defeating Trump in itself is not going to weaken or rollback the forces which his regime has unleashed.
On the other hand, although this trajectory will produce immense upheaval and chaos while it lasts, the social support base for our Trumpian moment is dwindling.
We are witnessing the reactionary death throes of the social forces behind the Trump faction. Exit polls show that only 37% of young people aged 18–29 years old voted Trump.
However, while over 55% voted for Clinton, a large number of young people — approximately one million — who might have usually voted Democrat, simply didn’t come out to vote. That’s because while they may have disliked Trump, they didn’t particularly like Clinton either. One in ten millennial voters went for a third party candidate — though still a modest number, it’s three times higher than the number of third-party votes than in the previous election. At this rate of growth, the millennial shift to third party candidates could become fatal for Democrats.
According to Republican strategist Evan Siegfried, if millennials had turned out to vote in 2016, they could have swung the election away from Trump decisively. This is because the party’s traditional support base consists largely of middle class white people, rural voters and baby boomers.
“They are literally dying out,” said Siegried. “Every four years the white population decreases by two per cent, and the white non-college educated population decreases by four per cent.”
Siegfried thus argues that Trump’s victory was won by trying to ensure that millennials and minorities who were unlikely to vote for him didn’t even come out to vote at all.
But here’s the rub. While Siegfried concedes that the demographics continue to shift in favour of the Democrats in the long-run, Clinton was clearly a deeply uninspiring candidate, compromised utterly by her ties to Wall Street and the Deep State.
Democrats looking at these demographic dynamics in the run up to 2016 fooled themselves into believing that a Clinton victory was inevitable. They were wrong, obviously. And while the demographics prove that the Trump support base in America will shrink, this proves that the millennial future won’t just be sceptical of Republicans, but Democrats too.
Today, the composition of the Trump regime proves that Clinton’s loss was not a loss for the Deep State. On the contrary, the real problem is that the American electoral system reflects a form of regime-rotation within the Deep State itself. The rise of the Trump faction signals that the escalation of global systemic crisis has pushed the usual round of regime-rotation into a tipping point, where one branch of the Deep State is now at war with the other branch.
Both sides of the US Deep State blame each other for the system’s failures, neither wishing to admit their own complicity in driving the systems responsible for those failures.
One side wants to respond to the systemic crisis by accelerating market share of the old paradigm — extending the life of the fossil fuel system and deregulating predatory capital. While most are climate deniers, some even appear to recognize the dangers of environmental crisis and resource scarcity but wish to shore up the US Deep State against the crisis as a nationalist response: Fortress America.
The other side hold a deep faith that technological progress will save the day and permit business-as-usual and endless extraction-premised growth to continue — they believe that digitally-driven technological innovations will allow Wall Street to have its cake and eat it: we can grow the economy, and enrich a tiny number of financiers in the West exponentially, and the dividends will trickle down to the Rest with a bit of technocratic tinkering, selective regulation and generous philanthropy.
Neither side truly understands that they both remain locked into the old, dying industrial neoliberal paradigm. That both the conventional Republican and Democrat strategies have failed. And that if they continue to ignore and overlook the reality of the global systemic crisis and its escalating symptoms, they will both become increasingly disrupted and irrelevant to large sectors of the American population.
In that scenario, politics will become increasingly polarized, not less so. Republicans will seek to shore up their white nationalist support base while Democrats will continue to lose credibility as a genuine critical voice due to their establishment myopia.
In an alternative scenario, agents at different levels in both parties, third parties, and across civil society begin to see our Trumpian moment for what it really is.
They realize that both the conservative and liberal polarities are being disrupted by the global systemic crisis. That the Deep State is being disrupted by the global systemic crisis. And that Trump is merely an effort by a branch of the Deep State to stave off the disruption. And that the failures of the other branch of the Deep State are precisely what enabled and emboldened this eventuality.
In that scenario, the current political tendencies of the millennial generation open the possibility for new paths forward for politics, whether conservative or liberal: to re-build their parties, organizations and paradigms in accordance with the emerging dynamics of a global system in transition to a new phase state: beyond carbon, beyond endless growth, beyond mass consumerism, beyond the banal polarities of left and right, white and black, native and foreign, and in service to people and planet.
This article was amended on February 13 2017 to correct an error in describing the restructuring of the National Security Council. The previous version said that certain senior officials would be barred from NSC meetings unless their expertise was required. This is incorrect, and was based on a widely reported misconstrual of the policy. The status of Michael Flynn and Keith Kellogg was also updated on February 14 2017.
Dr. Nafeez Ahmed is an award-winning 15-year investigative journalist and creator of INSURGE intelligence, a crowdfunded public interest investigative journalism project.
Marshall Auerback / Independent Media Institute
In the aftermath of the greatest financial calamity since the Great Depression, then–chief of staff for the Obama administration Rahm Emanuel made the call for aggressive action to prevent a recurrence of the meltdown of 2008.
Although the U.S. government’s system of checks and balances typically produces incremental reform, Emanuel suggested that during times of financial upheaval, the traditional levers of powers are often scrambled, thereby creating unique conditions whereby legislators could be pushed in the direction of more radical reform. That’s why he suggested that we should never let a crisis go to waste. Ironically, that might be the only pearl of wisdom we ever got from the soon-to-be ex-mayor of Chicago, one of those figures who otherwise embodied the worst Wall Street-centric instincts of the Democratic Party. But give Rahm props for this one useful insight.
But we did let the crisis of 2008 go to waste. Rather than reconstructing a new foundation out of the wreckage, we simply restored the status quo ante, and left the world’s elite financial engineers with a relatively free hand to create a wide range of new destructive financial instruments.
To cite some examples, consider the case of the UK, where England’s local councils have taken on significant risk via structural financial products known as “LOBO loans” (lender option borrower option). Financial blogger Rob Carver explains how they work:
“[Let’s] say I offer to lend you £40 and charge you 3% interest for 5 years. Some other guy comes along and offers you the same deal; but the twist is he will have the option to ask for his money back whenever he likes.
“You wouldn’t borrow money from him because it’s clearly a worse deal. …
“Suppose he sticks to his guns but as a concession he will lend you the money at only 2.9% interest. Would you take that? What about 2.5%? 2%?”
What Carver is describing here is the so-called “teaser”: a seductively low starting interest rate that is sufficiently attractive to induce the buyer to take on the LOBO in the first place. It’s designed to entice someone away from fixed interest rate borrowing (which at least has the virtue of being constant and therefore more readily predictable). The seductive quality of the teaser is that one’s borrowing costs might appear “cheaper” than the higher initial fixed-rate costs offered by the Public Works Loan Board (PWLB), a wing of the government. But the troubles become more apparent with the passage of time.
What happens if and when rates unexpectedly move up? In general, as Carver notes, having to suddenly repay your loan when interest rates have risen to 4 percent is the worst possible time for you. It’s akin to taking away the umbrella the minute it starts to pour. Worse, the authority is likely locked into a contract that typically has a lifespan of 40-70 years. (And who can forecast with any degree of certainty the trend of interest rates over that sort of time span? It makes the whole notion of buying an instrument on that premise to be speculative in the extreme.) Banks have the option of raising rates at their discretion, and although the councils are able to opt out of their contract, they will pay huge penalties if they seek to renegotiate or exercise that option to opt out.
So there’s a huge negotiating imbalance built into the contract, and the likely upshot is that the local council ends up paying more in interest charges over the course of the loan. How much more? According to an activist group, #NoLOBOs (created to help housing authorities combat the impact of these instruments), “a substantial number of housing councils are facing 7-9 % interest rates, which is more than twice the current rate of lending at the PWLB.” And in many instances, the municipalities have been burdened with these higher borrowing costs at a time when additional funding from the national government has been cut back, so they are confronted with a double whammy on both sides of the balance sheet.
What was initially sold as a means to manage risk, then, ultimately metamorphoses into a recipe for financial fragility, especially when it occurs at the municipal level with institutions that don’t have the capacity to create new currency (as a federal authority can do). The “teaser” becomes a poison pill. This means a local authority (or level of government that is a user, rather than issuer, of currency) can go bust.
To give some sense of the magnitude of the market, the Independent notes:
“There is around £18bn worth of private sector loans on councils’ books, according to figures from the Department for Communities and Local Government. … [A]round £15bn of these are Lobos.
“Annual sales to local authorities regularly topped £1bn in the run-up to the financial crisis and peaked at £1.5bn in 2007, before crashing to £600m a year later and then dwindling to nothing in 2012.”
Their revival since 2012 has resulted in hundreds of millions of pounds being skimmed from struggling town hall budgets, which were hit by the double whammy of these toxic instruments, along with austerity-imposed cutbacks from the national government. One particularly egregious example was the cash-strapped town of Newham, which had £398m of exposure to LOBOs back in 2014. Faced as well with cutbacks from the national Tory government, the local council was forced to remove financial support from a homeless hostel, “leading to the eviction of a group of single mothers to save £41,000,” reported British publication Private Eye.
Needless to say, banks and brokers have profited handsomely from the whole exercise, pocketing hundreds of millions of pounds in profits.
Here’s another disaster waiting to happen: Globally, financial markets today are seeing a rebirth of “collateralized loan obligations” (CLOs), instruments broadly similar to the “collateralized debt obligations” (CDOs), which helped to blow up the financial system in 2008. CDOs were asset-backed instruments, a “blended” security comprised of risky mortgage-backed bonds and much of the rest from theoretically safer tranches. The theory underlying them was that the lower the investment quality, the higher the compensating yield, but in reality most turned out to be toxic junk. What distinguishes CLOs from their CDO “cousin” is that instead of repackaging mortgages, subprime and otherwise, CLOs repackage corporate loans, and consumer credit, such as car loans.
Unfortunately, in yet another instance of lessons unlearned from 2008, the collateralized loan obligations, like the CDOs, have virtually non-existent investor protection, “with over 70 percent lacking any covenants that would allow monitoring of financial condition and early intervention to manage problem borrowers. This exacerbates the risk of higher losses,” argues Satyajit Das, a former banker who first identified the risks to financial stability posed by these kinds of instruments back in 2008. In fact, Das elaborates, “relative to mortgages, [CLOs] typically are made up of fewer and larger loans, which increases concentration risk. Leveraged loans are highly sensitive to economic conditions and defaults may be correlated, with many loans experiencing problems simultaneously.” Which intuitively makes total sense: during a slowdown, virtually all economic activity slows down, whether that be housing, car sales, or consumer borrowing. Diversification of risk is therefore more apparent than real.
In an environment of prevailing low interest rates (and, hence, lower yields from conventional instruments), debt investors have been told (again) that they can enhance their portfolio returns, through these higher-yielding CLOs, while mitigating risk simply by diversifying. In theory, the risk is dispersed, but in practice, as Das has pointed out, if you’re simply diversifying different kinds of financial excrement, the end result is more likely to be insolvency for the whole instrument. A common theme is that in spite of the disastrous performance of these instruments during the market crash, many of the underlying loans today still lack standard provisions to protect lenders, such as reporting and requirements to maintain certain income and asset levels. Consequently, more toxic junk is being passed around the system like a hot potato. Last one holding the potato loses.
Given the scale of issuance, all major financial institutions are likely to be left holding these bags. CLOs, notes Das, have been growing at a rate of around $100bn a year for the past decade, and total levels outstanding now approach the size that existed in the CDO market by the time of the 2008 crisis. As the cycle has matured, the quality of the assets of the loans has diminished, and the borrowers have become increasingly leveraged.
This follows a classic pattern of a typical borrowing cycle, as credit structures move from relatively stable “hedge financing” (where the underlying units can meet payment commitments out of income flow) to “Ponzi” finance (borrowing simply to pay interest on the interest), a process originally outlined by the economist Hyman Minsky. Based on the relatively benign conditions of the recent past, both borrowers and lenders are lulled into a false sense of security and increase their respective risk profiles accordingly. Minsky was by no means the only economist whose work has become associated with manias, panic and crash. He built his analysis on the shoulders of analysts of the Great Depression, such as Irving Fisher, John Maynard Keynes, and John Kenneth Galbraith. But what distinguishes Minsky’s scholarship is that he focused it on the “upward” source of the financial instability, as opposed to its disastrous denouement. In relation to today’s CLO market, the parallel is that the decade-long period of stability in the aftermath of 2008 (in reality, faux stability achieved through the injection of trillions of dollars in public sector bailouts) has again given the users a stream of data providing the illusion that leverage is safe.
Rather than respond to each financial meltdown by seeking to curb the activities that led to the crisis in the first place, the sheer ongoing dominance of our financial sector has ensured that policy has merely worked to bail out the big players, and do everything to keep the rigged casino of the economy in their favor. Thus, financial institutions continue to concoct increasingly esoteric and opaque financial instruments that they market to less financially sophisticated counterparties.
Let’s roll back the tape to a few financial crises ago, from the early 1990s. At that time, Bob Citron, the Orange County treasurer, bankrupted his county via leveraged investments he made in structured notes (i.e., customized notes designed to fit the investment wishes and opinions of particular institutional buyers). If you tailor an exotic instrument to fit your investment outlook, you’d better know what you’re doing and appreciate the downside risks. Customization entails a level of financial expertise that Citron later conceded he did not fully possess. He was a sitting duck in a sea of sharks (to mix metaphors). Citron made a bet on the direction of interest rates (he bet they would stay low, which was wrong). As a result of his miscalculation, by 1994 Orange County’s investment portfolio began hemorrhaging hundreds of millions of dollars, ultimately going broke. Without conceding any liability, ultimately Merrill Lynch paid out $400m in penalties to settle the case.
That was an early warning signal, which unfortunately remained unheeded, as it was followed in quick succession by the Asian financial crisis in 1997, the bankruptcy of Long-Term Capital Management and the concomitant Russian debt default in 1998, the dot.com bust, and finally the complete seizure of the global financial system by 2008. Each time, a common foolhardy notion was the idea that higher levels of reward could be achieved without any corresponding increase in risk. All of this occurred against a backdrop of deregulation, minimal transparency and inadequate market supervision.
If you thought the near-breakdown of the global economy in 2008 was enough to make global policymakers and regulators rethink their persistent accommodation of financial innovation and deregulation, think again. Regulators have continued to accommodate this complexity, rather than minimizing it. Complex financial systems beget yet more complex (and ultimately ineffective) regulation. It is better to simplify the system in order to improve the quality of the regulation and the ease of oversight (which the complexity is designed to avoid).
Unfortunately, that’s not what our policymakers have done. Instead of redesigning the system, the monetary authorities have simply inserted themselves in the chain of intermediation that included an ever-evolving variety of books of business without actually considering whether there were too many weak links in the credit chain in the first place. Rather than shorten or redesign the economy’s credit structures, and curb the risks accordingly, central banks instead have simply acted as the ultimate guarantors in a supply chain from money-like instruments to longer-term and riskier credit. Absent any kind of sanction for undertaking more systemically dangerous activities, our policymakers have therefore made the same mistakes that were made in the early 2000s: they are establishing perverse ongoing incentives that increase risk, punishing the timid (prudent?) with low returns. It’s a classic illustration of Gresham’s Law, whereby bad money drives out good.
So here we go again. No less a figure than Claudio Borio, the chief economist of the Bank for International Settlements central, who warned of the dangers of a synchronized housing bubble well before the 2008 crisis, is again sounding the alarm about a recurrence. The crash gave us a chance to downsize finance and restrict its ability to wreak comparable havoc on the economy going forward. Instead, we let the crisis go to waste, which almost certainly means a nasty sequel to 2008 facing us in the near future.
Found at: Truthdig
This article was produced by Economy for All, a project of the Independent Media Institute.
Tales Faria at UOL
Justice Marco Aurélio Mello of the Brazilan Supreme Federal Court considers the destination of US$ 650 million to a foundation managed by the Operation Car Wash (Lava Jato) prosecutors to promote anti-corruption policies to be absurd. The money was deposited in January. It is the fruit of an agreement between US authorities, Petrobras and the team of the so-called Republic of Curitiba where Lava Jato is based. It represents 80% of the capital the Brazilian state company had to return to the US Treasury due to the irregularities found in Car Wash. According to Marco Aurélio Mello, such a destination, besides being illegal, sets up a super-entity and bypasses any oversight or control of its accounts. To this blog, he argued:
As has always been sustained by the Supreme Court, public bodies are funded only through the budget approved by the legislature. The mixing of public and private is not in the interests of the State, is not in the interests of society. It is pernicious to allow ‘super-entities’, and not to allow financial oversight. It is a loss of parameters, it is out of control, it is an administrative mess. It is Babel.
The power conferred on the prosecutors of Paraná is provoking fear in Bolsonaro’s closest circles. Allies of the President argue that he puts off to a possible second mandate his proposal to repeal re-election. Without the chance to run again, Bolsonaro would leave his government vulnerable during the campaign “Moro 2022”.
Sergio Moro is the leading judge behind Operation Car Wash which found alleged corruption in Lula’s PT government, sentenced him to prison and took him out of the running for the Brazilian Presidency, and who then became Justice Minister in the government that took power in Lula’s absence.
The foundation proposed is dangerous because with the same bias that took out Lula from the election, if present in the efforts of education and propaganda, could simply be used to support judge Moro’s political ambitions to get elected to lead the next government.
Cardboard cutouts of Facebook’s chief executive, Mark Zuckerberg, were placed outside the Capitol by protesters when he testified there in April 2018. Credit Saul Loeb/Agence France-Presse — Getty Images
Opinion: Zeynep Tufekci NYT
I was tempted to roll my eyes on Wednesday when Mark Zuckerberg, Facebook’s chief executive, posted a manifesto outlining his plan to make social networking more “privacy-focused” and less about the public disclosure of information.
Why take seriously someone who has repeatedly promised — but seldom delivered — improvements to Facebook’s privacy practices? This is a company, after all, that signed a consent decree with the Federal Trade Commission agreeing to improve how it handles the personal information of its users, after federal regulators filed charges against it for deceiving consumers about their privacy. That was about seven years ago, and it has been one scandal after another since.
But I don’t believe in cynicism: Things can get better if we want them to — through regulatory oversight and political pressure. That said, I also don’t believe in being a sucker. So I read Mr. Zuckerberg’s plan with a keen eye on distinguishing meaningful changes from mere platitudes and evasions.
The platitudes were there, as I expected, but the evasions were worse than I anticipated: The plan, in effect, is to entrench Facebook’s interests while sidestepping all the important issues.
Here are four pressing questions about privacy that Mr. Zuckerberg conspicuously did not address: Will Facebook stop collecting data about people’s browsing behavior, which it does extensively? Will it stop purchasing information from data brokers who collect or “scrape” vast amounts of data about billions of people, often including information related to our health and finances? Will it stop creating “shadow profiles” — collections of data about people who aren’t even on Facebook? And most important: Will it change its fundamental business model, which is based on charging advertisers to take advantage of this widespread surveillance to “micro-target” consumers?
Until Mr. Zuckerberg gives us satisfying answers to those questions, any effort to make Facebook truly “privacy-focused” is sure to disappoint.
Most of Mr. Zuckerberg’s post was devoted to acknowledging familiar realities about social media and citing familiar solutions. He noted that Facebook’s users don’t want to be pushed to be so public; they mostly want to keep in touch with people close to them, often using several of the company’s other services: Instagram, WhatsApp and Messenger. He also noted that users are hungry for less permanent communication features devised by other companies. So Facebook will continue to emulate Snapchat’s ephemeral messaging.
To be fair, there were some genuinely new announcements. For instance, Mr. Zuckerberg said that the company would expand end-to-end encryption of messaging, which prevents Facebook — or anyone other than the participants in a conversation — from seeing the content of messages. I’m certainly in favor of messaging privacy: It is a cornerstone of the effort to push back against the cloud of surveillance that has descended over the globe.
But what we really need — and it is not clear what Facebook has in mind — is privacy for true person-to-person messaging apps, not messaging apps that also allow for secure mass messaging.
At the moment, critics can (and have) held Facebook accountable for its failure to adequately moderate the content it disseminates — allowing for hate speech, vaccine misinformation, fake news and so on. Once end-to-end encryption is put in place, Facebook can wash its hands of the content. We don’t want to end up with all the same problems we now have with viral content online — only with less visibility and nobody to hold responsible for it.
It’s also worth noting that encrypted messaging, in addition to releasing Facebook from the obligation to moderate content, wouldn’t interfere with the surveillance that Facebook conducts for the benefit of advertisers. As Mr. Zuckerberg admitted in an interview after he posted his plan, Facebook isn’t “really using the content of messages to target ads today anyway.” In other words, he is happy to bolster privacy when doing so would decrease Facebook’s responsibilities, but not when doing so would decrease its advertising revenue.
Another point that Mr. Zuckerberg emphasized in his post was his intention to make Facebook’s messaging platforms, Messenger, WhatsApp and Instagram, “interoperable.” He described this decision as part of his “privacy-focused vision,” though it is not clear how doing so — which would presumably involve sharing user data — would serve privacy interests.
Merging those apps just might, however, serve Facebook’s interest in avoiding antitrust remedies. Just as regulators are realizing that allowing Facebook to gobble up all its competitors (including WhatsApp and Instagram) may have been a mistake, Mr. Zuckerberg decides to scramble the eggs to make them harder to separate into independent entities. What a coincidence.
In short, the few genuinely new steps that Mr. Zuckerberg announced on Wednesday seem all too conveniently aligned with Facebook’s needs, whether they concern government regulation, public scandal or profitability. This supposed shift toward a “privacy-focused vision” looks more to me like shrewd competitive positioning, dressed up in privacy rhetoric.
Sheryl Sandberg, Facebook’s chief operating officer, likes to say that the company’s problem is that it has been “way too idealistic.” I think the problem is the invasive way it makes its money and its lack of meaningful oversight. Until those things change, I don’t expect any shift by the company toward privacy to matter much.
Zeynep Tufekci (@zeynep) is an associate professor at the School of Information and Library Science at the University of North Carolina, the author of “Twitter and Tear Gas: The Power and Fragility of Networked Protest” and a contributing opinion writer.
Zeynap’s page: The Internet, technology, politics and society
Comment: Hoping that regulation of Facebook will happen with this President and Congress is in vain. The right wing will not let it happen so that capitalism and money-making is unfettered. The left wing believe in their meritocracy, that they know better than the rest of us what is fake and what is truth. They do not, and thereby lies the impasse. Big money finances both sides.
Carlos Stornelli (left), Marcelo D’Alessio (right)
Argentinean federal judge Alejo Ramos Padilla charged the false lawyer Marcelo D’Alessio as a member of an illegal organisation “dedicated to carrying out intelligence and psychological operations against various persons who were then blackmailed or coerced, until they panicked, finally declaring themselves in a certain way and becoming “repentant witnesses”, the Argentinean version of the “plea bargains” so common in the Brazilian Operation Car Wash (Lava-Jato).
The key point in this case is that the judge considers there to be an accord between the intelligence services and the Justice Department that goes against the democratic system using blackmail, coercion, dossiers, distortion and false lawyers demanding money of people, and furthermore, to set up and run judicial cases.
All this is very similar to the judicial scheme carried out in Brazil by the ex-judge Sergio Moro (now recompensed with the post of Minister of Justice in the government of Jair Bolsonaro), regarding bribes linked to the multinational Odebrecht, which had the aim of imprisoning ex-President Lula da Silva and of impeding him from participating in the elections. In the Argentinean case, they are seeking the imprisonment of ex-President Cristina Fernandez de Kirchner, to stop her from running against the current President Mauricio Macri seeking re-election in October.
In the 220 pages of his resolution, Judge Ramos Padilla showed there was a close link between the prosecutor Carlos Stornelli (an Argentinean Deltan Dallagnol) and the supposed lawyer D’Alessio, evident from the many messages and audios exchanged over Whatsapp, and by a four hour meeting between them at the Pinamar resort, as well as handwritten messages in notebooks seized during investigations. Due to this, the magistrate requested the Prosecution Service to investigate the prosecutor, and to begin the due process, if considered pertinent.
In this first resolution, the task is to describe the mechanisms of the crime, as to how Stornelli and D’Alessio extorted the businessman Pedro Etchebest, or how they used a hidden camera against the lawyer José Manuel Ubeira, or used the “repentant witness” statement of Leonardo Fariña, or coerced an ex-member of staff of the Venezuelan state company PDVSA to declare himself repentant.
Despite Stornelli refusing to hand over his mobile phones to enable the frequency and kind of contacts with D’Alessio to be determined – who is the nephew of the Clerk-General of the government, Carlos Marcelo D’Alessio – a third businessman appeared denouncing D’Alessio for extortion and involving the lawyer Rodrigo Gonzalez and the judicial operator of the newspaper Clarín, Daniel Santoro, although they have denied the charge.
The meeting place of the four, Stornelli, D’Alessio, Gonzalez and Santoro, was the restaurant El Obrero, decorated with photos of President Macri. Its owner is a partner in another business venture, of Charly Liñani – denounced by the ex-presidential secretary Pablo Barreiro, of the Cristina Kirchner government, for attempted extortion, committed together with D’Alessio and Gonzalez, as revealed by the journalist Horacio Verbitsky on his site Cohete a la Luna.
The messages and audios also show attempts to use Leonardo Fariña, forcing him to make the declarations required to incriminate Cristina Kirchner. Fariña presented himself spontaneously to the court, and told how D’Alessio offered him to take part in the extortion against Etchebest. That charge has been presented to the Justice Department.
The judicial dispatch includes various audios in which, by means of a plan to extort, one can glimpse the possibility of including the businessman Mariano Martínez Rojas, responsible for the fraud against the workers of the newspaper Tiempo Argentino intended to dismantle the outlet, which now functions as a cooperative of journalists. The blackmail involving Martínez Rojas attempted to make him testify against the Peronista governor of the province of Formosa, Gildo Insfran.
The operation to transform another executive into a repentant witness – Gonzalo Brusa Duvat, who worked in a branch of Venezuelan oil company PDVSA in Argentina – has the same characteristics. Duvat was threatened with an economic criminal judicial case, but would guarantee that the process would disappear in the files if he accepted to declare himself “repentant” for Stornelli.
Once softened up with the threat of a legal suit against him, D’Alessio and the journalist for Clarin, Daniel Santoro, published articles about the declaration by Duvat as repentant, which was announced with pomp and circumstance in dozens of audios and Whatsapp messages. The judge said the precise role of Santoro and of other journalists involved still had to be analysed.
What surprised analysts is that D’Alessio managed to join Stornelli’s investigation team, who is a Federal prosecutor, without being a lawyer and without being registered to work at the Prosecution Service. The other assistants of the prosecutor soon delivered a copy of the declaration D’Alessio later sent to another conservative journalist, Eduardo Feinman – a situation which is at the very least unusual and unprecedented.
Another surprise was the transcription made by the magistrate of a phone tap dated February 4th, in which the false lawyer speaks to someone identified as Andrés Goldemberg: “I am at your disposal, if you need to extract someone”. It also mentions he is able to make available an aeroplane with 14 seats to carry out the operation.
“(The evidence) leads me to the conviction that at least within his post at the Prosecution Service, there was a promiscuous situation (of Stornelli), generating relationships of complicity and mutual collaboration which should not have been permitted, with the consent of the prosecutor, including the carrying out of intelligence and psychological operations to achieve the expected results in the judicial investigations or to attend to the magistrate himself”, wrote the judge.
Rubén Armendariz is a Uruguayan journalist and political scientist, associated with the Latin-American Strategic Analysis Centre (CLAE)
Published originally at estrategia.la
On leaving the cemetery, Lula stood up on the Federal Police car and waved to his supporters. When he got down, the Federal Police agent said: “You should not have done that”.
“You know that I had to”, responded Lula.