Introduction to Gaither Stewart’s Trails of Memory: A Century of Nazism, by Rowan Wolf

Charlottesville "Unite the Right" Rally

Image by Anthony Crider via Flickr

Sent to Dandelion Salad by Gaither Stewart

by Rowan Wolf
November 30, 2021

I did not realize until I read Trails of Memory – A Century of Nazism how much that time and political movement has harmonics in this time. I am in the U.S., where decades of effort on the part of one of the major political parties – Republicans – moved them, and perhaps the nation, deeper and deeper to the right. At the same time, the efforts of capitalists continued to break the bonds of community and the treads of continuity, while the broader efforts of Republicans created a more jaded and less informed public. I did know from my studies of white nationalism that it was an ideology that actively spanned continents and was not just contained to North America. Likewise, this movement towards right-wing populism is not confined to the United States, and it is not the only nation experiencing the awful allure of strongman leaders with dreams of dictatorial rule.

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Words Unspoken by Gaither Stewart

24th Panzer Division in Stalingrad

Image by Cassowary Colorizations via Flickr

by Gaither Stewart
Writer, Dandelion Salad
Rome, Italy
August 7, 2019

Editor’s Note:

Historical fiction is a special and important genre. It can bring history to life, but more importantly it can allow us to put ourselves in the lives of those of another time, another context. There is a strong tendency in the United States toward historical amnesia. This is perhaps one of the biggest character flaws of the country. Floating in a constant now there is a complex, but highly malleable, context that disappears in the moment. This can drain the richness from our lives, set us on paths both personally and societally destructive, and perhaps most importantly, totally erode the concept of free will replacing it with faux will.

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Economic Globlization and Speculation Coming Home to Roost By Rowan Wolf

Dandelion Salad

Sent to me by Jason Miller from Thomas Paine’s Corner. Thanks, Jason.

By Rowan Wolf
10/7/08

Simulposted with CJO’s Avenger 212

With the current economic crisis which seems to be spreading across the world we are dealing with far more than a “subprime” crisis, or an attempt to “quarantine “toxic debt.” There is a much bigger avalanche waiting to come tumbling down. Namely the derivatives market now estimated to be over $1 quadrillion (that is 1,000 trillion) in global derivatives holdings. That makes the current $700 billion bailout look like less than a drop in a very large bucket.

As the long predicted crash started unfolding, I have been nagged by a long sequence of events that seem to be culminating at the current moment. There have been significant structural changes in the U.S. and elsewhere that have impacted both labor markets, and capital. In terms of labor markets (also known as workers) the transitions have been stark. In the United States we have watched the long term decimation of the manufacturing sector and a transition to a “service” economy. I remember the concerns in the 1980’s about the transformation of the U.S. economy from a production economy to a consumer economy. This trend was accelerated with broad implementation of corporate-driven globalization and formalized by the passage of NAFTA (North American Free Trade Act) and the rewriting of GATT (General Agreement on Tariffs and Trade).

These two international trade agreements were structured along similar philosophies. Namely the removing of “boundaries” to trade, and enhancing the “boundaries” around workforces. Those boundaries were national boundaries and national sovereignty. We saw the exportation of U.S. job (outsourcing and off-shoring) accelerate. We also started seeing the merger mania of the 1980s which have continued to the present. In fact, they are a prominent feature of the current crisis.

Other nations, in a competitive and revolving fashion, became the cheap, exploitable labor force for a global economy. China, maximizing on its single most abundant resource (people) successfully positioned itself as the cheap workforce for global corporations searching to always maximize profit. (Now they too import even cheaper labor).

All along this path towards removal of boundaries, there has been increasing financial and investment penetration in an increasingly intertwined global financial market.

Facilitating what might be framed as an integration of financial and corporate markets, the U.S. (and other nations) have engaged in almost three decades of deregulation and the removal of other boundaries and barriers – particularly in the “financial” areas. Insurance companies become investment marketers, banks become investment bankers, banks cash in on the lucrative credit market, credit card companies start offering mortgage financing. Functions and institutions that once had high barriers between them with regulation and oversight, became increasingly deregulated and shadowy. They pushed for, and got passed, barriers against predatory lending – like those pesky bankruptcy laws.

I can’t help but thinking that (in part) we are seeing the “jobless recovery” of the 2001 recession coming home to roost. Lots of folks wrote about the jobless recovery including myself (What Jobs? What Recovery?) and even Ben Bernake (The Jobless Recovery). Most of us, myself included, focused on the restructuring of the economy at that time as a major component of what was going on. However, it was also clear that money was flowing from somewhere into the financial markets. Wall Street was recovering – the people (and workers) were not. This money flowing around was symptomatic of the liberalization of investment restrictions which was a major feature of international globalization.

Unfortunately while there was money being brought into the market, much of it was “little people’s” money (i.e. money from state and corporate retirement funds). The little people’s money provided grease for much bigger financial fish, and “derivatives” took a whole new life and growth spurt.

What the Hell are “Derivatives?”

Wikipedia defines derivatives:

Derivatives are financial instruments whose values depend on the value of other underlying financial instruments. The main types of derivatives are futures, forwards, options, and swaps.

The main use of derivatives is to reduce risk for one party. The diverse range of potential underlying assets and pay-off alternatives leads to a wide range of derivatives contracts available to be traded in the market. Derivatives can be based on different types of assets such as commodities, equities (stocks), residential mortgages, commercial real estate loans, bonds, interest rates, exchange rates, or indexes (such as a stock market index, consumer price index (CPI) — see inflation derivatives — or even an index of weather conditions, or other derivatives). Their performance can determine both the amount and the timing of the pay-offs. Unregulated Credit derivatives have become an increasingly large part of the derivative market.

If you don’t feel particularly enlightened, you are not alone. One off the best articles I have found on the current derivative situation was written by Ellen Brown and published at [Web of Debt]. In It’s the Derivatives, Stupid! Why Fannie, Freddie, AIG had to be Bailed Out,” Brown states:

The Anatomy of a Bubble

Until recently, most people had never even heard of derivatives; but in terms of money traded, these investments represent the biggest financial market in the world. Derivatives are financial instruments that have no intrinsic value but derive their value from something else. Basically, they are just bets. You can “hedge your bet” that something you own will go up by placing a side bet that it will go down. “Hedge funds” hedge bets in the derivatives market. Bets can be placed on anything, from the price of tea in China to the movements of specific markets.

“The point everyone misses,” wrote economist Robert Chapman a decade ago, “is that buying derivatives is not investing. It is gambling, insurance and high stakes bookmaking. Derivatives create nothing.”1 They not only create nothing, but they serve to enrich non-producers at the expense of the people who do create real goods and services. In congressional hearings in the early 1990s, derivatives trading was challenged as being an illegal form of gambling. But the practice was legitimized by Fed Chairman Alan Greenspan, who not only lent legal and regulatory support to the trade but actively promoted derivatives as a way to improve “risk management.” Partly, this was to boost the flagging profits of the banks; and at the larger banks and dealers, it worked. But the cost was an increase in risk to the financial system as a whole.2

Since then, derivative trades have grown exponentially, until now they are larger than the entire global economy. The Bank for International Settlements recently reported that total derivatives trades exceeded one quadrillion dollars – that’s 1,000 trillion dollars.3 How is that figure even possible? The gross domestic product of all the countries in the world is only about 60 trillion dollars. The answer is that gamblers can bet as much as they want. They can bet money they don’t have, and that is where the huge increase in risk comes in.

Credit default swaps (CDS) are the most widely traded form of credit derivative. CDS are bets between two parties on whether or not a company will default on its bonds. In a typical default swap, the “protection buyer” gets a large payoff from the “protection seller” if the company defaults within a certain period of time, while the “protection seller” collects periodic payments from the “protection buyer” for assuming the risk of default. CDS thus resemble insurance policies, but there is no requirement to actually hold any asset or suffer any loss, so CDS are widely used just to increase profits by gambling on market changes. In one blogger’s example, a hedge fund could sit back and collect $320,000 a year in premiums just for selling “protection” on a risky BBB junk bond. The premiums are “free” money – free until the bond actually goes into default, when the hedge fund could be on the hook for $100 million in claims.

And there’s the catch: what if the hedge fund doesn’t have the $100 million? The fund’s corporate shell or limited partnership is put into bankruptcy; but both parties are claiming the derivative as an asset on their books, which they now have to write down. Players who have “hedged their bets” by betting both ways cannot collect on their winning bets; and that means they cannot afford to pay their losing bets, causing other players to also default on their bets.

The dominos go down in a cascade of cross-defaults that infects the whole banking industry and jeopardizes the global pyramid scheme. The potential for this sort of nuclear reaction was what prompted billionaire investor Warren Buffett to call derivatives “weapons of financial mass destruction.” It is also why the banking system cannot let a major derivatives player go down, and it is the banking system that calls the shots. The Federal Reserve is literally owned by a conglomerate of banks; and Hank Paulson, who heads the U.S. Treasury, entered that position through the revolving door of investment bank Goldman Sachs, where he was formerly CEO.

Now the picture becomes a bit clearer … and more dire. John Maggs, writing “Derivatives: The Other Shoe Waiting To Drop” for the National Journal quotes Warren Buffett:

Billionaire investor Warren Buffett has been calling these derivatives a “mega-catastrophe” waiting to happen since the 1990s, when they began to proliferate. Buffett warned in May 2007 that a crisis in the derivatives market wasn’t just a possibility–it was an eventuality. “The introduction of derivatives has totally made any regulation of margin requirements a joke,” he said, referring to the amount of borrowed money normally required to buy stocks and bonds. “We don’t know when it will end precisely, but … at some point some very unpleasant things will happen in the markets.”

John Riley, Chief Strategist for Cornerstone Money Management, notes that the derivatives market has grown dramatically. To wit, there has been a derivative growth of 473% for the top 25 U.S. banks since 1999.

So the derivative “bomb” is being mentioned quietly, but there is yet another troubling part of this scenario and the big players chew up and swallow whole other big players (with the help of the Federal Reserve and the Treasury). Buyouts, derivatives, and risk become a not so hidden story in a recent report from the Comptroller of the Currency, administrator of National Banks “OCC’s Quarterly Report on Bank Trading and Derivatives Activities First Quarter 2008.” I truly struggled to make deep sense of this report, but much of it is beyond me. However, a couple of important things leap out.

First is the chart on page 6 of the report which shows that 98.8% of the credit derivatives for the first quarter of 2008 were “Credit Default Swaps.” My understanding is that “swaps” are a primary tool of financial “speculation” – or crassly, financial gambling.

Page 9 of the report show a chart of the growth of derivatives among commercial banks from 1990 to 2008. The chart shows the grow from somewhere less that $10 trillion in 1990 to north of $160 trillion in the first quarter of 2008. Further, and confirming my suspicion that financial speculation played an important role in “jobless recovery,” is that derivatives took off in 2002. They climbed from approximately $50 trillion to the current amount held by commercial banks (an increase of over 300% in less than 6 years).

If you continue trudging through this (almost incomprehensible to the lay person) report, you will come to Graph 4 on page 12. There you discover that five commercial banks have the lions share of derivatives – almost 97% of derivatives held by commercial banks. Continue reading through graphs and charts, and you arrive at page 17 which finally tells who those five derivative holding institutions are – the five largest commercial banks in the United States (in order of size): JPMorgan, Bank America, Citibank, Wachovia, and HSBC.

Keep going and one comes to a startling piece of information . Table 1 on page 22 is a listing of the “notional amount of derivative contracts.” The top five banks (followed by 20 others) are right there at the top of the chart. JP Morgan shows total assets of $1.4 billion with total derivatives of almost $90 billion. This is a difference of almost 90 to 1, and most of those are those “swaps” discussed above. Anyone want to talk exposure and risk? For the entire group of top 25 commercial banks, the assets are roughly $10 billion with derivatives of $180 billion. Funny money … a whole lot of funny money.

Now we add the scenario that these banks are eating up other institutions (JP Morgan scooped up Bear Sterns and Lehmans; Citibank swallowed Washington Mutual and is fighting over number four Wachovia with number six Wells Fargo). As they concentrate their holdings into a smaller and smaller group of mega-institutions, they also increase their holding to the questionable – and not regulated – derivatives. What happens if the over the top holding of derivatives flips the iceberg upside down? It is a frightening thought. It is particularly frightening since the trend seems to be that the treasury (and us the tax payers) are going to stand surety for “arcane financial instruments” which have no real value.

So the U.S. is pushing “bail, bail, bail” for an economic boat which essentially has no hull. There is a very real problem here that has governments scrambling. Historically financial recovery strategies have been dealt with on a national basis (often reaching out to exploit “undeveloped nations”) to achieve economic recovery. However, there is now no real national boundaries to the financial markets. Everybody’s ass is blowing in the wind to one extent or the other, and the markets have been given virtually total control. While the US and European nations seem to be nationalizing the losses to one extent or another, no one seems to have any ideas of how to put the unruly borderless market horse back in the paddock – much less in the barn.

I think it is very important to not be lead astray by the claims of “corruption and greed.” While it is certainly true that these unflattering character traits were (and are) present, the systems have been restructured to reward avarice and illegal activity. Global investment and finance has become the biggest (and most rewarding) gambling venture ever known. It has been structured as a “money machine” that utilizes the labor and resources of the planet to extract every drop of wealth, and then protects the gamblers so that the big ones win regardless of whether those markets go up … or down.

The current insane situation we are in, and the reality of over the (unimaginable) sum of a QUADRILLION dollars hanging over us with nothing but air supporting it is more than a daunting prospect. But this was an environment that was created and facilitated by “decision makers” in and out of governments across the planet. Now it is has gotten so big and so precarious that its monstrous head is coming into the view of “the people.”

There hangs the question of what to do about it. My gut response is to slam the door. Put a wall around the real economies and the people in them, and declare derivatives and other “arcane” instruments and markets illegal. Shut them down and keep them shut down. Some how, some way, economies have to get back to real value. That value resides in the people, not in the Casino Royale of financial wizardry.

Rowan Wolf, a senior contributing editor to Cyrano’s Journal, is a sociologist, teacher, writer and activist. Her areas of interest include social justice, environment, and globalization/corporatization at the core. Since May of 2007 she has also been the main host and director of Cyrano’s special blog, AVENGER.

see

It’s the Derivatives, Stupid! Why Fannie, Freddie, AIG had to be Bailed Out

Kucinich: Wall Street Insider Cannot be an Unbiased Broker

Reality Report: Chris Martenson on the current financial crisis

Kucinich: Did Paulson ‘push Lehman Brothers off a cliff’?

James K. Galbraith: The Predator State

French Premier Francois Fillon: We’re on “the edge of the abyss” By Mike Whitney

Naomi Wolf: Give Me Liberty – A coup has taken place! (must-see video)

Russian markets slump to a halt

The Economy Sucks and or Collapse

Disaster Capitalism on a Grand Scale By Rowan Wolf

Dandelion Salad

By Rowan Wolf
http://www.bestcyrano.org/THOMASPAINE/
6/24/08

As the cost of food and fuel spirals out of control, and the mortgage and credit crises all strike at a global level, one has to ask if this is a “perfect storm” or a manufactured opportunity – or both. In her book, Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein documents the planned manipulation and creation of disasters as opportunities to advance a corporatized free market environment. While generally operating at a national level, the process has also been utilized at a regional level. For example, the deliberate attack during the Asian market collapse. As I have watched the unraveling of the global economy, I have wondered if the scheme has not moved to a global level.

There are an array of events and actions that seem to provide evidence that “disaster capitalism” is at play in current global events. These current disasters are running side by side and sweeping across the world. The global food crisis (particularly grains), the massive run-up in fuel prices, and the global mortgage crisis which has morphed into a global credit crisis, all evidence the hand of economic “liberalization.”

While called “liberalization,” this is a process aimed at undermining the sovereignty of nations by removing any “barriers” to trade, and any nation-based efforts to control their own economic and social policies. This “liberalization” is actually aimed at chaining the total resources of the planet to the total control of private capital.

FOOD CRISIS

I had suspected that these various crises were being manipulated (and in part constructed) for some time. However, recent events have shown the hand that is at play. The global food crisis is sending millions of people into poverty and even death. A complex of issues are involved in this crisis – petroleum costs, biofuels initiatives, global warming resulting in water and crop failures, and the implementation of global economic policies. As nations struggle with the crisis, and governments are shaking under the stomping feet of the hungry, one has to wonder at the solution being offered to address runaway costs. That solution is to further “liberalize” the global food markets.

This call for “liberalization” has sounded loudly twice – once from the UN world food summit, followed a week later by a statement from John Negroponte (U.S. Deputy Secretary of State) for removing trade barriers on food.

They (heads of state) agreed urgent economic assistance for affected countries, and to support agricultural production and trade through further liberalisation and reduced trade barriers. These measures, the conference statement says, would assure “better integration of small-scale producers with local, regional and international markets.” (IPS)

“These restrictions should be lifted. They have taken food off the global market, driven prices higher and isolated farmers from the one silver lining of the rise in food prices: higher incomes for agriculture producers,” he said. (Negroponte as quoted by Reuters)

There is apparently no discussion of how creating the import/export economies has undermined the food security of nations, nor how that has replaced small agriculture with plantation agriculture. Nor any discussion that while “biotechnology” may produce some yield gains, that it places the food chain directly in the hands of transnational agri-business.

It also seems a major oversight to call for dramatic increases in the amount of money for food aid at the same time that the push is on to further corporatize the food supply. Just whose pockets is food aid filling?

MORTGAGE / CREDIT CRISIS

The “creative” financing that blew up the housing bubble and is resulting in foreclosures across the United States and Britain (and perhaps elsewhere), were part of “creative” investing in a “liberalized” global marketplace. Low interest and risky loans were bundled and sold up the financing/investing food chain. Then bundled with other investments and sold again and again across a global financial market. Then interest rates rose and with them the mortgage payments of millions of people. The collapse has sent cannon blasts through the global financial markets spurring bail-outs by reserve banks in an attempt (purportedly) to stop the hemorrhaging. Unfortunately, it has not. Further, and not surprisingly, the mortgage crisis “turned into” a credit crisis. This was totally predictable given the “bundling” schemes.

The lie underlying the mortgage / credit crisis is the huge losses. While certainly lots of folks got hurt (and continue to be hurt), those bundled investments made a profit at each sale and re-bundling. Those profits went in somebody’s pockets. Further, Both the U.S. and the British federal reserve banks have thrown billions of dollars (and pounds) into the gapping maw. Those finances coming ultimately from our pockets … and ending up in someone else’s. This is a massive expropriation of present and future wealth – not to mention the potential collapse of national economies.

OIL (COST) CRISIS

Let me start by stating that what is driving oil prices is complex. I firmly believe that we are at (or beyond) peak oil. We are in a world where the demand for oil and natural gas continue to climb and the production is remaining steady or falling off. The increasing demand for a limited resource will drive up prices. This does not mean that there are not profit-taking opportunities. In fact, there are more opportunities than at any previous time. It is also true that manufacturing capacity has not been increased despite increasing demand. While the efficiency of refineries has increased, it appears to be maxed out. Therefore, regardless of increases in production, only so much petroleum can be refined – driving up prices by limiting supply. However, given peak oil it makes no sense to me to increase refinery capacity.

There is something significant happening beyond the realities of oil supply and capacity, and that is the commodities and futures market. It is estimated that 25% (or more) of the current cost run-up is “speculation.” It has been said that the market is “out of control.”

I suspect that a combination of profit-taking is happening, and this is totally predictable in a scarce resource market – even if that scarcity is being manipulated. Regardless, the crisis creates opportunities to push through more transfer of wealth and accomplish “other goals.” Those goals range from a renewed push to exploit every potential oil resource (off shore drilling, ANWR, the Arctic) as well as increased pressure and manipulation on producer states (OPEC, military bases in Africa, increased U.S. military placement in Latin America). Those “other goals” may also include increased military presence and control of civilian populations.

TYING IT TOGETHER

Are we seeing a world-wide “shock doctrine” move? I believe that we are. The crises we are seeing, while certainly based in certain physical realities, have been manufactured to collapse level. That manufacturing has been facilitated by global economic and social manipulation that has removed the supports for stability (and response) at the same time that other “uncertainties” have been introduced and fanned into a seemingly out of control conflagration.

The instituting of a global war on terrorism manufactured by the neo-cons and the Bush administration (with the help of Congress and corporate media) has been great for achieving multiple goals. In the United States and elsewhere, the implementation of “anti-terrorist” legislation and machinery has undermined the transparency of government while creating actual threat to those who would resist the power grab. The occupation of Iraq has generated tremendous regional instability while removing oil resources from the market – both of which have been a consistent feature in increasing oil costs. Further, it has normalized (if not institutionalized) massive levels of corporatization – particularly of the military. This in turn has led to an incredible increase in global military spending. In fact, according to Agence France Presse there has been a 45% increase in global military spending over the last ten years. This is certainly a wind fall for the “defense” industry.

Also facilitating the current catastrophe is the “liberalization” of the financial markets. One of the segments of the market that is linked to at least two of the three crises is the commodities and futures market. In the wake of the Enron scandal, there was noise made about closing the “Enron loophole.” As far as I can tell, that “loophole” remains in full usage.

Legislation was not moved forward until September of 2007 to address this “weakness” in the commodities sector. That legislation was H.R. 4066 / S. 2058 -To amend the Commodity Exchange Act to close the Enron loophole, prevent price manipulation and excessive speculation in the trading of energy commodities, and for other purposes which was referred to Senate Committee on Agriculture, Nutrition, and Forestry on 9/17/07. That bill was added to the farm bill that Bush vetoed – which explains a lot about why he really vetoed the bill. The legislation to close the loop hole and provide greater oversight was included in the farm bill (Text of bill) which became Public Law 110-234 over Bush’s veto. However, 110-234 does not seem to exist in either text or pdf form in the GPO database, one can view the enrolled House version H.R. 2419 . I believe that this is (coincidentally) the bill which had some sort of error and was returned to the Senate (where apparently it has languished once again).

It seems to me that one way to control the “out of control” market speculation on both petroleum and grains, is to clamp down on this market – both here and globally. At the very least, there should be a commodities “holiday” to allow a cool down period, and to move to improve the transparency and controls on these markets.

As these crises continue to drag down economies, nations, and peoples, more and more “shock doctrine” mechanisms will be thrust forward. The current situation and crises create a perfect opportunity for a corporatist end game. Such a move, would be catastrophic for us all.

I could be incorrect in my reading of the current environment. However, I could also be right. I write this to raise people’s awareness of the possible “invisible hand” that is at play so that we (meaning the people of the world) are not totally disenfranchised in a Ponzi scheme pitched as “saving” us. The disasters themselves pose deadly challenges for much of the global population. I strongly believe that increased “liberalization” is not going to resolve any of these issues. However, it would dramatically advance an agenda that has already caused immeasurable harm to billions of people and the earth which is our home.

Rowan Wolf, a senior contributing editor to Cyrano’s Journal, is a sociologist, teacher, writer and activist. Her areas of interest include social justice, environment, and globalization/corporatization at the core. Since 5.6.07, she has also been the main host and director of Cyrano’s special blog, AVENGER.

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see

Naomi Klein “The Shock Doctrine” & “No Logo” interview (must-see video)

Klein-Naomi