Monday, May 26, 2014

Revolutionary Messiah


Revolutionary Messiah

“How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?”  - Pope Francis

By J. M. Hamilton  5-26-14


Religion, with all its mystery and human foibles, has always mesmerized me.  Besides one cannot study power, economics, and politics without studying the Almighty and the religious affect.  My earliest memories of church involved attending Assemblies of God with my mother on Sunday evening, and Lutheran church service Sunday morning with dad.  It was a study in contrasts.

For a child to take in Evangelical worship before the age of five... Well, maybe there are limits to what a child should be exposed to.  I found those speaking in tongues to be not only surreal but ostentatious.  (Then again, perhaps I was never given this gift?)  Evangelicals, despite proclaiming the grace and promise of Christ's salvation, seemed to emphasize the "fire and brimstone" side of things.  Always it seemed, was the emphasis on the law, obeying the God's law, being "saved/born again," or facing the eternal hell fires of the damned.  Moreover, if you wanted to get to heaven, one best stay attendant to an Assemblies of God church, because all other protestant denominations were doomed, as were the Catholics.  The entire premise of the church and the road to salvation appeared fear based.

So it was with some relief, not without some considerable guilt mind you, that my dad forbid my sister and I to attend my mother's church after ten years of age.

Dad's Lutheran church (Wisconsin Synod) was positively boring, compared to mom's church but it was staid and welcome.  There were no raised hands in the air, shouts of "praise God" mid-sermon, and no praying in the aisles.   Lutherans were also, a little more tolerant, since it was okay to drink.   Lutheran communion, or the sacrament, was served with real wine, as opposed to grape juice.  Not unlike the Evangelicals, the Lutherans too, felt that they had it all figured out, and that pretty much everybody else was going to hell, particularly those Pope loving Catholics.   As for those of Jewish faith, despite both churches acknowledging that the Jews were God's chosen people, and they should always be treated with dignity and respect, there seemed to be a general belief that their failure to recognize Christ might prohibit admittance to heaven.

All this emphasis on the law, and "thou shalt nots," with a sprinkling of God's grace (but only if you were a member of the correct Protestant faith or sect) -some years later - struck me as the ultimate in branding/marketing.  Think about it?  How likely is your flock going to stray, when faced with damnation for joining an alternative religion or philosophy, such as Catholicism, Judaism, or even Zen Buddhism?  All that "guilt," with an emphasis on Old Testament law, as opposed to the New Testament tolerance and Christ's salvation, also has a way of reinforcing church structures, hierarchy, and orthodoxy.  Having fallen short many times, how are we, the church congregation, to question the church's hierarchy and patriarchal structures, since they, the church ministers and administration, are so close to God?  (Or so we thought.)

Emphasis on the one true faith, to the exclusion of all others, also made me extremely curious about these other faiths and religions.  After all, just how decadent and depraved were those Catholics, Hebrews, and other Protestants?  What forbidden fruit was I missing?  Being preternaturally curious, I had to find out.  Eventually, quite by accident, I started dating a Catholic girl, and began attending Mass.  Imagine my complete shock when I discovered that Catholic mass was nearly identical to the Lutheran service or sermon, w/just a few minor changes to the Lord's Prayer and the Nicene Creed.  And it all made perfect sense.  After all, Luther before he nailed his complaints against a Renaissance Pope, for selling indulgences to wealthy patrons, on the church door - in essence kicking off the Protestant Reformation - was a Catholic priest.

How bad could all those Catholics be?  Later, going through Pre - Cana, I discovered that the older Catholic padres felt that the Protestants were the heretics, apostates, and the ones destined for Hades, while the younger Father I was dealing with, was more tolerant and ecumenical in outlook.  Clearly, there appeared to be a generational divide within the Catholic Church: with older priests focused on the law and the younger generation focused on God's grace and salvation, or at the minimum, appeared more tolerant.  As with the Protestants, however, it appeared that the Catholic hierarchy, traditionally, used fear and old testament law, as a means to keep the flock in line, strictly adhering to Catholic dogma, and keeping faith and allegiance with the Church in Rome.

Jesus Christ, however, appeared to have an altogether different plan.  If one believes passages from the New Testament, Christ appeared to democratize faith and communion with God.  He surrounded himself with the poor, the socially undesirable, prostitutes, and the lame and the ill.  It's worth noting that nowhere in the Bible is Christ, specifically, quoted as speaking out against homosexuality.  During biblical times, Jesus' following would have been the 99.999 percent.  With the elite and the educated in Israel made up of nobility, Jewish religious leaders, a hand full of bankers and traders, and the Roman Prefect.... This was a time of extreme poverty, and Christ and his teaching would have been a direct threat to the Jewish religious hierarchy, and potentially destabilizing to the Romans as well.  After all, if God is walking the earth, hanging out with the masses, feeding thousands, healing the lame and the blind... Why would anyone show up in synagogue on Saturday, or ever listen to the Roman or Jewish authorities/patriarchy ever again?  Most importantly Christ offered salvation and hope, and the de-emphasis of the Old Testament and the law.

Christ states that he came into this world carrying a sword.  Surely, that sword was not directed at the poor/the 99.999 percent, Jesus' following; but rather, it was aimed directly at the heart of the economic, political, and religious hierarchy/patriarchy in Jerusalem, who respectively, kept the poor fearful and economically oppressed.  According to the scriptures, if we are to believe them, Christ entered Jerusalem triumphant on Palm Sunday.  One day later, he drove from the temple the money changers and bankers. Two days later, he took on the city's religious leaders and the patriarchy.  And for those "sins," of taking on the establishment, Christ was crucified that same week.  By crucifying Christ, the authorities, both the Roman and Jewish elite, hoped to remove a threat to their mortal existence and their moral authority; but in crucifying Christ, they made him God and a revolutionary figure, who was a model for the ages to come.  (In the 20th century, think Gandhi and MLK)

In particular, Christ's primary commandment, 'love your brother as yourself,' did not contain the caveat: but only if your "brother “was the same skin color, came from the same socio-economic background, attended the same schools, and worshipped at your local church or synagogue.

Since The Passion, Church hierarchy has often had a symbiotic relationship with the economic and political elite (in fact, if you go back far enough, church hierarchy was often the ruling elite in parts of Europe and vv. - here think of the Holy Roman Empire).  Nobility and the economic aristocracy accepted, encouraged, and sponsored the church as long as it emphasized earthly and biblical law, kept the masses fearful of their immortal soul and in check; and above all, as long as the church recognized that kings and monarchs had a Devine right to rule, and/or at least on this earth, the primacy of various forms of earthly government.  That is to say, the church emphasized to the lay the metaphysical:  Christ's kingdom in heaven, the need to obey "Caesar" and biblical laws (laws the ruling class often rarely obeyed themselves, see Machiavelli's - The Prince), and do good works on this earth, in order to gain admittance into heaven.  De-emphasized by the church was Christ's teaching that God was accessible, that one could pray and confess their sins directly to God, w/out intercession from the church or its administration, and that Christ had little tolerance for religious or governmental autocratic or patriarchal structures - that stood between him and his flock; nor, did Christ appear to have a strong affinity for the wealthy, who often exploited and oppressed the poor or 99.999 percent (through usury, and sometimes enslavement or indentured servitude, et al.).  

Not to put too fine a point on it, often de-emphasized by the religious authorities through the ages was Christ's enlightenment, his passion for the poor's physical needs, and his striving for earthly economic and social justice.

Christ through his actions and his teachings demonstrated a revolutionary agenda, not just metaphysical in nature, but both economic and political in this temporal world.

Fast-forward to 1971, and Gustavo Gutierrez's book, A Theology of Liberation.  This book marked the beginning of a new theology, refocusing on Christ's revolutionary zeal and advocacy for the poor.   The theology was called Liberation Theology.  Liberation Theology (LT) flourished in Latin America in the 50's, 60's and 70's (and even to this day), in response to the extreme economic and social injustice experienced by the poor.  LT also spun off social justice movements for women, minorities and indigenous peoples.  In the early to mid eighties, aspects of LT were condemned by the Church in Rome for being overtly Marxist, and for emphasizing institutional sin, the sin of the elite, (government, commercial, and economic systems) over the sin of the individual.  In short, Liberation Theology was a direct threat to symbiotic relationship between church hierarchy, and the ruling economic and political elite.

What really got the Vatican's robes in a bunch, however, was LT identifying The Church in Rome as both sponsor and part of the cycle of crushing economic oppression, and The Church hierarchy as being members of the elite establishment, themselves.  Liberation Theology also empowered the lay, who began conducting their own masses, and emphasized practice (or praxis) over church orthodoxy and dogma.  Praxis being the interpretation of Christ's teachings, true to form, from the poor's vantage point.  (Note: That would be as opposed from the vantage point of the plutocracy.)  Under pressure from the lay, and the ruling power elite, this democratization of Catholic faith was a direct threat to both the Church in Rome and church hierarchy.

Enter Cardinal Ratzinger, Pope John Paul II's enforcer and oft described Pit Bull (later Pope Benedict XVI), who denounced Liberation Theology for its emphasis on praxis over church orthodoxy.   Cardinal Ratzinger's words speak best for themselves:  "(the) people is the antithesis of the hierarchy, the antithesis of all institutions, which are seen as oppressive powers.  Ultimately anyone who participates in the class struggle is a member of the 'people.'  The 'church of the people' becomes the antagonist of the hierarchical Church."  Cardinal Ratzinger had also been critical of attempts to apply Christ's Sermon on the Mount to the modern day poor, and to the social, political and economic conditions surrounding the 20th century  poor.  As if the 20th and 21st century poor are somehow different than the biblical poor.

Despite The Church in Rome’s denunciation of aspects of LT, Cardinal Ratzinger was said to have went on to denounce the crime of colonialism and the scandal of the arms race.  Pope John Paul II went on to decry the ever-growing expanse between the wealthy and the poor, and stated "expropriation"is not inappropriate as a remedy, despite affirming the legitimacy of private property rights.

As a result of the Cardinal's denunciation, in the 80' s and 90's, various Latin American priests were suspended, censured, and even ex-communicated.  Moreover, aspects of Liberation Theology were strictly prohibited from being taught under Catholic Church auspices.


Like the Protestant comparisons of my youth, today presents a political, economic, and religious study in contrasts for global society as a whole.  Perhaps never before in the history of man has the mechanizations and strategies of the economic and political elite been so exposed to double standards and hypocrisy.  Where the poor or middle-class can go to jail for a victimless crime like marijuana possession, but the banking and financial elite can be caught in numerous acts of collusion, commit hundreds of billions in fraud, and never enter a jail cell; where approximately, twenty-five short years ago democracy with the fall of the Berlin Wall appeared to be on the march, and today, thanks to a Citizens United and McCutcheon SCOTUS decisions, democracy is for sale and purchase by the highest bidder.  For the average citizen, the expectation is the same, often exhorted by churches, both Protestant and Catholic: follow church rules and obey the state.  While for the wealthy, the expectations are also the same:  break the rules, re-write the laws to achieve maximum advantage, and dodge paying taxes.  For the elite, it's play nation states off one another in a regulatory, labor and tax arbitrage race to the bottom.... All in the name of unmitigated greed and at the 99 percent’s expense.  Everyone saw in 2008, that socialism worked perfectly well, when it came time to bailout global banks and the wealthy, as well as, printing money in support of same; and yet, the socialism in the form of food stamps for the indigent, or healthcare assistance (at a fraction of the bank bailout expense), is all too often considered moral hazard by the GOP and global conservative and business interests.  The economic elite want the masses to compete hourly for their daily bread and advocate free market principals for everybody else, while seeking out grants of monopoly and cartel from the government for the businesses they own and operate.  In short, competition is good for everyone else, except the ruling plutocracy.  Pointless wars are now fought, with fruitless and endless nation building exercises, that appear to profit immensely jingoist, the MIC and MIC supporters, while ignoring real threats and wreaking havoc within the federal budget.

Even the Catholic Church is faced with unprecedented pressures, between its obligations to the power elite - Caesar, and its obligation to reverse course and become true again to the teachings of the revolutionary messiah.   Catholic and Protestant church attendance is on the wane in the West.  Many Western Catholics are highly upset by the patriarchy that runs the Catholic Church, its treatment of women, and worse still, the abuse of children.

For the faithful, it's no surprise that Pope Francis has now appeared at a time when Christian religion, capitalism (what remains of it), and democracy are all at a crossroads.  Pope Francis hails from Argentina, and assuredly was influenced by: the extreme poverty; economic and political cronyism/corruption; and right-wing oppression/death squads he saw in that country.  That he was exposed to Liberation Theology is not in dispute; and that, publicly, he's the first pope possibly in centuries that emphasizes the grace and salvation of Christ, the promise of the New Testament, over the fear, loathing, and intolerance produced by Old Testament law, also appears not in dispute.

Like Christ before him, Pope Francis seems bent on lifting up the poor, and saving the souls of men.... even at the grumbling and possible expense of patronage and support from the wealthy and the powerful.  He's put badly needed reforms within the church into review and play, at the risk of upsetting the Roman Curia.  The pope has eschewed the vestiges of royalty in favor of asceticism, even removing a German bishop who sought to live like a monarch at the poor's expense.  Pope Francis appears ready and able to champion the earthly and spiritual needs of his global flock, at the possible expense of the church's present hierarchy... And perhaps in doing so, is saving the Catholic Church in the process.

As such this pope appears more contented to embrace, teach, and live by the path established by Christ, than any political or religious figure that I have witnessed in my lifetime.  His fire for economic and social justice in this world, along with his desire to save men's souls for the next, makes him a revolutionary pope.  No matter your faith or beliefs, arguably, we should all pray for the pope's physical health, strength, moral clarity, and longevity.  Above all let’s pray he stays the course, in both advocacy for the poor, and bringing about real reforms to the Catholic Church.

The pressure on this man to dial down his rhetoric, his actions, and his proposed and pending reforms will be tremendous from many sides.  How far Pope Francis will go in walking the path of the revolutionary messiah remains to be seen.  Right now - the Pope appears to be a gift from God.


P.S.

As for my study of religion, I continued to broaden my horizons.  Studying Zen Buddhism as a philosophy and reading the Koran, post 9-11.  Contrary to what I was told in my youth, the study of alternative beliefs and religions only strengthened my faith in the Rabbi, Christ.  Today, I see more similarities between Catholics and Protestants than I see differences.  I believe the future of Judeo-Christian values in the West is one of tolerance, a return to the core message of hope and salvation, and advocacy for the poor - married with advocacy for real reforms in our present economic and political systems.  Absolutely key to tolerance is a more ecumenical outlook among the clergy, of all faiths, including Judaism.  Through the ages, it seems that we should not worry so much about God's word, as distorted as it may sometimes seem - handed down generation after generation; but rather, how man all too often shapes, manipulates, and perverts core religious values (for his own ends), that spans most successful faiths and philosophies.  Unfortunately, religion, including Christian religion, has been used by man through out history to justify all manner of atrocities (including but not limited to wars and crusades) that are an abomination to the teachings of Christ.

Finally, western democracy has long held the importance of a separation between church and state, so that people of all faiths are free to practice their religion.  In the last century worship of money and the material, in a "live for today" ethos, has taken on a religious dynamic, if not become a religion itself.  So that democracies are often subverted by this new religion, faith in Ayn Randian greed.  Perhaps it's time to introduce a new tenet or law to modern day democracy to address this new religion:  the separation between commercial interests and state.  Such a separation would save democracy and capitalism from the decay and destruction caused by today's movement towards crony economic and political systems, where an elite few benefit immensely to the near exclusion of everyone else.

Revolutionary Messiah was inspired and written in Munchen and Berlin Germany, and Salzburg Austria.

Copyright JM Hamilton Publishing 2014

Saturday, May 3, 2014

Heart of Darkness


A quick note:  The following piece was publishing nearly three years ago.  Prescient?  Judge for yourself, and then, read J.M.H., regularly, so you can remain three years ahead of current events.  - J.M.H.


Heart of Darkness

By J.M. Hamilton (9-5-11)

“Mistah Kurtz — he dead.”

For thrills and chills, I have never been much into fiction.  The cold hard realities of this world provide all the excitement, drama, and surreal energy I’ll ever need.  Why just open up your New York Times, and be prepared for shock and awe.  However, on occasion I have come across a piece of fiction that hits home.  The story puts the hook into me because of the core truth it exposes about the human condition.  Such a work is Heart of Darkness by Joseph Conrad, which I believe is the greatest story ever told.  This story has everything: empire, anthropolatry, mass murder, and capitalist excess.  

Oh, did I mention cannibals?

And of course, ultimately, it’s a love story!

Heart of Darkness is a study in what Carl Jung would refer to as the “duality of man,” unchecked power, and the megalomania that often follows.   Having studied power for decades, the story rings true on many levels.   A wunderkind goes into the jungle to seek his fortune so that he can marry above his caste.  Driven by this love and his passions, Mr. Kurtz loses himself, and with his tribe of warriors in deepest dark Africa begins cutting off heads, so as to gather more ivory.  As more ivory accumulates and is sent back to Mr. Kurtz’s corporate masters, his fame and reputation grows, often to his business colleague’s dismay. The more Mr. Kurtz enriches others the greater the license he is given.  Sound familiar?

Heart of Darkness was published in 1899, and the story is set in the colonialism of the period, but examples of Mr. Kurtz and his behavior can be seen everywhere at the genesis of the twenty-first century.  The troubled times we find ourselves in amplify and magnify these figures as they stride across the business and political landscape, indeed across the globe.   Many of these figures exhibit myopia that excludes nearly all social conscience, an all consuming goal, great economic or political power, and in some instances enjoy a cult following.  Often some or all ethical and moral restraint is abandoned so as to achieve “the dream,” even at the expense of the destruction of others, and ultimately, themselves.  That pretty much defines what I like to call Heart of Darkness syndrome or HDS.   Please read on, as the blog offers up examples of HDS here in 2011.

$$$  Mr. Lloyd – Doing God’s Work – Blankfein exhibits many of the characteristics of HDS.  His problems are legendary, but to sum up include selling short the American Dream and the American economy, and of course, client double-dealing.   His singleness of purpose is manifest to all; his ethical bypass complete, as he continues to fight and lobby for the very rules and regulations (or the lack thereof) that brought this nation’s economy to its knees.  Not content to having enriched his company, Goldman Sachs, and his management team many times over, he has insured his and Goldman’s success by purchasing all the politicians Goldman’s money can buy, and placing his employees in the highest chambers of global government.  And he probably believes he is doing “God’s work,” after all Mr. Blankfein does his best to operate within the confines of the rules Goldman’s attorneys lobbied for, created, and helped to legislate.   Mr. Blankfein and his cadres seem oblivious to the human toll and suffering he and his banking peers on Wall Street have created.  And my favorite thought from Goldman, recently released, was the assurance that the hiring of Reid Winegarten, criminal defense attorney, was “routine.”

$$$  Secretary of the Treasury, Tim Geithner -  Mr. Geithner, as the former head of the New York Fed, we are often told helped save this nation from ruin and another great depression, with a little help from his friends Messrs. Henry Paulson, Fed Chairmen Bernanke, and Larry Summers.   But three years into the economic quagmire many Americans and businesses find themselves in, Mr. Geithner and his colleagues appear not to have saved the American economy so much, as have bailed out the banks, repeatedly.    And the trickle down from these banks just hasn’t happened, just ask Shadow Government Statistics, who show true unemployment and underemployment creeping north of 22%.   By not restructuring the Wall Street banks and not writing down home loans, when America had a chance, Mr. Geithner and his colleagues have consigned the U.S. housing market, and indeed the Western economies, to years and years of economic turmoil and malaise.  Trust me, the fun is just beginning. However, the ultimate cost will not even be borne by this generation, but rather, it will fall upon our children and future generations.  It is they, and ourselves, who will have to deal with a devalued currency and debt piling ever higher, as good money is thrown after bad – all for the enrichment and aggrandizement of a few, and at the expense of virtually all.

If President Obama loses his bid for re-election in 2012, he will have to thank Tim Geithner for the outcome.   By the way, the transparent assurances of Mr. Buffet aside, it’s never too late to nationalize and restructure the banks, starting with Bank of America.  Why look at GM, who was nationalized and restructured, and just reported record sales figures, up eighteen percent!

$$$  The Republican Party and the Politics of the Heart of Darkness – The Republican party’s disdain and visceral objection to the President taps right into the Heart of Darkness.   What does it say when the Senate Republican Leader’s primary goal is not the betterment of his home state of Tennessee or the country, the job for which he was presumably elected, but rather unseating the President of the United States.   This party of which I was once a proud member, has completely run off the rails, and now is run by megalomaniacal billionaires, the intolerant, and those who politically exploit the evangelicals and Christian community.   Ironically, the party of Christ, as the Republican Party would have you believe, worships money and is the lap dog of corporate interests, often at the expense of all other considerations.   If the GOP was really adhering to the teachings of Christ they would be providing aid and assistance to the poor and the elderly, not shutting down government assistance or attempting to privatize same.  Governor Rick Perry’s connections to the plutocracy and fund raising capabilities are legendary, and yet, he wants to kill social security.

There’s just one problem, the Republican Party and the Chamber of Commerce are rapidly finding themselves turned inside out, by the alleged extremes within the party tent, many of whom are anti- multinational, anti-Wall Street, and anti-Fed.   Seems that some of the elements within the party can appreciate, greatly, American business and capitalism, but don’t share a similar fondness for cartels and monopolies who exploit government largess, tax loopholes, and the legislative process.   This party claims the mantle of fiscal responsibility while often presiding, from the White House, over the greatest Keynesian raid heretofore known to man, from Reagan through Bush (W).  Hypocrisy defined.

$$$  Steve Jobs and Apple Computer.   Talk about singular focus, look no further than Mr. Jobs.  The man truly is great, and has changed America and the world in so many different ways, often for our betterment.  But could Mr. Jobs be greater?   By hiring U.S. labor, instead of exploiting labor on foreign shores, one economist estimates Apple’s profit margin on the iPhone would drop from 60% to50%.   Not a terrible price to pay for helping out your home country, right?  Or by insisting that Apple’s vendors in China pay a fair living wage, with a normalized work week, Mr. Job’s would set a standard for multi-nationals, and bring the differences between U.S. labor and China’s labor market one more step closer to parity or equilibrium.   Mr. Jobs could also insist that vendors in the Pacific Rim not hire child labor, or pollute.   Mr. Jobs will go down in history as a tremendous talent and inventor, but might he have been greater?  Instead of employing more American’s we have a company that exploits U.S. tax law and is sitting on more cash than the U.S. Treasury presently has on hand.

With great power comes great responsibility; U.S. corporations want to be treated like royalty, but often eschew a great deal of the social responsibility that comes with that privilege.  That is to say, corporations often enjoy greater privilege and deference under the law, than any single citizen would ever be accorded; and yet, often get away with crimes that no citizen could ever escape, individually.  If corporations want to be accorded great privilege should they not be held to a commensurate standard?

The annual drive for the United Way is great, but could Corporate America do more?   Apple computer, and the cult of personality that follows Mr. Jobs, could change the corporate/social responsibility dynamic if they so choose, and with a minimal hit to their bottom line.  In fact, this blog argues that any short term reduction in income – as a result of a renewed commitment to the United States and its citizens – could be made up for, in terms of profits, many times over in the intermediate and longer term.

Speaking of great works of fiction, probably the greatest lie told over the last three years has been that the Obama administration is anti-business.   

Take a look at the productivity gains of the American corporation, the increases in net income, and the mountains of cash many of these entities lay upon, and convince me that this administration is anti- business.  Meanwhile, American labor has not seen a real increase in income over the last two decades.

$$$  Exxon Mobil:   This story is priceless, but first a little history.   On August 23, 1939, Adolph Hitler signed a deal with the devil, Joseph Stalin.  Also known as the Molotov –Ribbentrop Pact, the deal basically carved up Poland and Northern and Eastern Europe between the two ambitious men.  The “deal with the devil” eventually disintegrated with Hitler’s Operation Barbarossa, and the Russian winter.   (Hitler apparently learned nothing from another person exhibiting HDS, Napoleon Bonaparte, who made the same mistake in attacking Russia too late in the summer, and was also fighting wars on too many fronts.  We can all be thankful that Hitler was apparently not a student of history.)

Fast forward to this week, when Rex Tillerson’s Exxon Mobil signed, perhaps, another deal with the devil, Ex- KGB and now Russian Prime Minister, Vladimir Putin.   For a look into what Exxon stockholders can come to expect from a deal with Vlad, examine the tough love dished out to a present Russian partner, British Petroleum, from this week’s N.Y. Times:

MOSCOW — Police officers armed with assault rifles Wednesday raided the Moscow offices of the British oil giant BP, carrying out a type of ritual armed search of white-collar premises that is common enough here to have a nickname, “masky show.”

The timing of the raid, however, highlighted this peculiar type of Russian risk for another company — ExxonMobil, which just a day earlier agreed to take over the very Arctic exploration deal that fell through for BP.
BP is still involved in a dispute with its Russian partners over that oil-exploration deal; the police search was related to a lawsuit pending in a Siberian court.

Russia is as important for BP’s oil production as the United States, so even though the company has had such problems here for years, its share price often nudges up or down in response to police raids or the arrests of employees.

The police raids on Moscow’s glassy high-rises where foreign banks and oil companies have offices unnerve employees and disrupt business. They are called “masky shows” for the balaclavas often worn by the black-clad police.

What makes Tillerson’s deal so unique is not that he is getting into bed with a reformed commie, after all President –“ I can do business with this man” – Bush was snookered by Mr. Putin, too; but Exxon must know that the prospects for any longevity to this partnership cannot be good.   Many multi-nationals have sought to do business in the former Soviet Republic, only to find themselves shaken down by corruption, subjected to police state tactics, and with little recourse in a country where the rule of law often does not exist.

Of course, the allure of drilling in the Arctic Sea has to be a huge draw for Exxon, what with the U.S. still concerned about the Alaskan coast and its environment, why not do an “end around” U.S. energy policy and hook up with the Ruskies?  Selah!  If there’s a catastrophe, who’s likely to know if a few million barrels of the sticky black stuff dumps into the Arctic Ocean during a period of endless polar nights?   (Polar bear au chocolat?  Exxon appears down with that.)  Since this deal will have to be ratified by the congress and involves giving Mr. Putin’s Russia a share of Exxon’s U.S. assets, how much of this “dance” by Exxon is sincere, and how much of it is a way to put pressure on the U.S. government to open up the Alaskan coast to Exxon? 

Only time will tell, however, one thing is clear:  If you thought the banking crisis threw a wrench in the global economy take a look at the economic and foreign policy ramifications of the largest U.S. corporation, and a key energy provider, doing business with the Russian Prime Minister.   Does the U.S. really want a Russian Premier (who often exhibits HDS) holding U.S. foreign policy hostage via his arrangement with Exxon?   Mr. Putin, said of the deal: “The scale of the investment is very large.   It’s scary to utter such huge figures.”   Scary, indeed.

The Heart of Darkness syndrome is everywhere these days, and you don’t even have turn on the news to see it first hand, why look right next door.  One might see HDS exhibited in local judges, politicians, school superintendents, and even teachers, anywhere where near absolute power has the potential to corrupt, absolutely.  Men and women will often make mistakes, and become entranced by a goal, mission or dream.   And it’s this passion that can also, if channeled correctly, drive men and women to achieve great things.  The question is can the person with HDS pull up before it’s too late, or like Kurtz will the situation end in personal destruction and substantial collateral damage?

Mr. Kurtz died before reaching his goal of being reunited with his lover, his “intended.”

She never came to know his final words, which were:  “The horror!  The horror!” 

At the end, Mr. Kurtz came to rest where all the indispensable men and women of the world ultimately come to lay, in a dark grave, and possibly answering to a much higher power.



P.S.  I know the economy sucks, but is President Obama kicking some serious tail or what?  I mean if these were normal times, this guy would be coasting to victory in 2012.   Let’s look at his foreign policy score card, shall we? 

Osama bin Laden:  Check.

Colonel Gaddafi, check.

Wind up Mission in Iraq, check.

Start and conclude a war in Libya with multinational political, economic, and military support to prevent genocide by a ruthless dictator, setting a new benchmark for U.S. foreign policy:  Check again.

Ushering in a new – hopefully less costly – age in the U.S. military, that of covert operations, drones, cyber-ops, and less dependence on standing armies:  CHECK!

Pulling the hell out of Afghanistan… Under Review/Pending.

Foreign Policy grade for the Commander in Chief, and showing the Republican Party how to actually hunt down scum bags and win:   A

Note: If Obama was a Republican, the GOP would be singing his praises right now.

Note, if the U.S. can exit Afghanistan, possibly as the election nears, we predict that the President’s poll numbers will enjoy a boost.  Then America can say, definitively, “mission accomplished.”   Coming soon, the Presidents score card on U.S. domestic policy.   This blog has seen some promise from this administration on domestic matters, like having the Justice Department take on the AT&T monopoly, and combination with Sprint. The government’s law suit against the banks, initiated this week, over the fraud associated with mortgage debacle is another great start.  Potential here is limitless, as an agent of real change.  Obviously, jobs is priority one!

Saturday, April 26, 2014

The Fed and Perverse Incentives and Disincentives


The Fed and Perverse Incentives and Disincentives


By J.M. Hamilton  4-26-2014

An economics professors once told the class I was attending, that economist make terrific historians, but rarely get their forecasts right.  He said economist constrained foresight had something to do with too many endogenous and exogenous variables.  (Which explains why Dr. Nouriel Roubini is so famous, for correctly calling the financial crisis.)  My former prof., it turns out, was exceedingly wise.

The Federal Reserve, largely run by academics and economist, being a case in point.  Starting six years ago, the American public has been told repeatedly, since the financial crisis occurred in 2008, that the Fed's extraordinary measures (interest rate suppression, and quantitative easing) are completely necessary to heal the economy and put Americans back to work.  Another dozen months go by with similar sub-par results and poor employment figures, and the time line or horizon for what others have called inter-generational wealth larceny (interest rate suppression), and yet another back door bank bailout (quantitative easing), gets stretched out by the Fed Chair for another twelve to twenty-four month window.

Some say the definition of "insanity" is repeating the same act of failure over and over again, and expecting a different outcome.  Questionable as the act may seem, there is a method to the Fed’s possible madness.

What the Fed has been exceedingly good at, going back to Mr. Greenspan, is setting up asset bubbles, the most recent of which is great for the wealthy but has done little for the middle-class and the destitute.  As JMH has argued, seems that trickle down economics is not only a failure for the economy when the tax code is rigged for the plutocracy, but it is also appears equally unsuccessful when trickle down is deployed by monetary policy means.  Then again, JMH has also argued traditional Keynesian economics could indeed work its magic, if Fed largess made its way directly into the hands of he American people, via mortgage relief and outright debt forgiveness.  As opposed to the Fed shuttling an ocean of free cash into Wall Street hands.  In sum, per the plutocracy: socialism for the elite is good; socialism for everyone else… is, ahem... Bad!

In terms of employment, the Fed's policies would appear to have fallen short (and that's putting it mildly), especially relative to its size-able balance sheet expansion.

This blog pointed this out in two recent pieces:  Having Failed, The Federal Reserve does Charity;  and the second piece, The Leviathan is Vertically Integrated.  In this latter piece, JMH points out the Fed has created a perverse incentive for corporations and the banking sector not to employ Americans... Namely, so as too keep Fed largess (QE uber alles) flowing for the wealthy.  The Fed has stated that its extraordinary measures will continue until the unemployment rate drops below 6.5 percent, which gives Wall Street every incentive not to hire.  This latter piece also pointed out that the banking sector, including shadow banking and private equity, are now so interconnected throughout the economy, via ownership, interlocking boards, and likely a ruling oligarchy, that they can control employment, and therefore, unemployment and underemployment.  Maximization of shareholder value in recent years often consists of not selling and exporting additional goods and services (i.e. increasing revenue); but rather, in engaging in the elimination of, and the export of, American jobs (i.e. cost cutting).

Is this what the McKinsey Group tells business leaders for a sizable fee: Want to make money, cut your staff and hire a handful back as temps... in short, embrace globalization?

Now before you dismiss my argument as paranoid, that the Wall Street Cartel is colluding to hold national rates of unemployment at artificially high levels, so as to keep the Fed's printing presses set on overdrive, consider what has been going on in Silicon Valley for sometime.  This is the locale where a company, who's motto is "do no evil," has colluded with the beloved Apple, et al., to suppress employee wages and not compete for each others engineering and IT talent.  So if that's happening in Silicon Valley, which has also turned tax avoidance into an art form, can you just imagine the collusion that is going on in other sectors of the economy?  One doesn't have to imagine of course, you can read about Wall Street collusion any day of the week: whether it be the LIBOR scandal, storing commodities to keep prices inflated, insider trading, FOREX manipulation, or private equity firms colluding amongst themselves to price fix LBOs, and now, even high frequency trading points to a rigged outcome.  

The game/economy is rigged, so why would rates of employment or unemployment be any different?  Labor being a key cost for nearly any enterprise.  In forsaking the American worker, the elite have cut themselves off from top line growth; but thanks to the Fed, they can increase revenue and profits through speculation, and increase ROE, through stock buybacks, often times financed via the Fed’s fire hose of liquidity (i.e. historically inexpensive debt).



Perverse incentives not to hire are one thing, there is yet another way in which Fed policies disincent employment opportunities.   But first a quick digression... Many knowledgeable persons will agree that many sectors of the American economy are now dominated by monopolies and cartels.  Ironically, monopolies and cartels are creatures of the state, and protected by the state that fails to enforce anti-trust laws, rules and regs., and creates barriers to entry.  Moreover, some of Wall Street's and Omaha's best and brightest have made billions investing in monopolies and cartels, because monopolies not only "short" the customer, and their employees, but they are magnificent at minting exceptional profits, especially for products and services with relatively inelastic demand.

Now your economics professor will tell you that monopolies should not exist in a free market economy because monopolistic profits will attract new entrants into the market place, which will increase competitiveness, enhance consumer services, aid or increase employment, and bring down the cost of goods and services.

However, arguably, we no longer live in a free market economy but rather, a crony economy (where collusion, regulatory capture, tax avoidance, and purchased politicians are the norm).  And this economy is kept buoyant for the elite, and is financed by, exorbitant amounts of Fed liquidity.

So let's cut to the chase:  Now if you are Mr. or Mrs. R. Barron and you have a lush and deep pool of capital to invest, do you place your equity into: Plan A) the stock market - juiced by the Federal Reserve - at limited costs and overhead to your hedge fund, a stock market which is now dominated by monopolies and cartels (hence minting profits); or, do you go with Plan B) and enter the time consuming process and aggravation of building a business (infrastructure, organization and staff) necessary to compete in a cartel driven market - possibly upsetting your elite friends in the process by eroding the profit making potential of the existing cartel or monopoly?

No mystery here.  Thanks to a stock market on steroids, courtesy of the Fed, Mr. and Mrs. R. Barron goes with Plan A.

In short, The Fed, by juicing the stock market (and by providing cheap debt to sponsor stock buy backs, private equity, and M&A behavior) causes the wealthy to have zero incentive to invest, take risk, and most importantly, hire Americans in establishing start up businesses.  Why would the plutocracy?  When thanks to the Fed, they can all reap significant rewards in a ginned-up stock (and commodities market), dominated by cartel and monopoly driven stocks -at minimal cost or overhead. That's just naked self-interest.

And arguably, it's classic rent seeking behavior, speculation, and a tax on society, and it is sponsored and supported by the Fed's printing presses.

That is to say and just to belabor the point, by inflating asset classes, the Fed creates a powerful disincentive to invest in start up businesses, hire American, and repair the tax base.

(As an aside, I also believe the Fed couldn't give a "flip" about maximum employment because it would increase labor costs, erode marginally, profits for the wealthy, and set off perhaps record cost push and demand pull inflation.  In fact, the Fed's policies are a disincentive for maximum employment for that very reason: The awesome specter of INFLATION.  The Fed has printed trillions to reward idle speculation among the rich, and these monies are nearly “sanitized/sterilized,” as they are – for the most part – kept out of the hands of the American public by the Wall Street cartel's failure to lend, and American enterprise' refusal to hire.)

The bottom line in all this is: If America wants a traditional economy that creates new businesses, produces competitive goods and services, and most importantly, raises aggregate demand by hiring Americans, than the Fed needs to take away the asset bubble and the punch bowl of inexpensive debt, so that the banks and shadow banking resume their traditional role. The role of lending and investing in American new businesses, that actually produce something and compete against existing monopolies and cartels.  Fed behavior may also explain why annual American GDP growth has stalled in recent years.

Who knows, perhaps under such a scenario, maybe some cartels and monopolies will actually face competition again?  Good for the consumer.  Good for the tax base.  Good for American labor.  Good for management and in the long run, good for stockholders.

But don't count on it.  Yet another hallmark of a crony economy is an ocean of Fed liquidity keeping the insiders happy.  To support this insanity, one can argue that the Fed must keep Americans misinformed about the true nature of The Bank's/Fed's work, and keep the charade about wanting maximum employment in the press and news media.

All of which brings us back to my college prof.... Economist often make terrific historians but often fail in real time forecasts.  Both the current and prior Fed Chair appear to be no exception.  As one pundit described her, the current Fed Chair is either the most naive academic the Fed has yet encountered, or the ultimate insider - cynically exploiting the Fed's mandate and the American dollar, for the enrichment of an elite few.  


The Fed's policies play no small part in the Neo-Guilded age we are living through currently.  An age that has renewed calls for even greater socialism and merited calls for a global tax on wealth and capital.  Someone needs save capitalism from the crony system, and the monopolies and cartels, that wrap themselves in the cloak of the free market.  A reconsideration of present Fed policies would be a great start.


P.S.

Please pray with me: 

Please Dear Goddess… Do not present this nation with another Bush/Clinton match up in 2016.  Please provide for us a Warren/Paul presidential match up, instead. 

Amen.

Oh, and Dear Goddess… Please cast-out those evil doers, The FCC and the Federal Judge, who did Comcast’s bidding, and who struck down net neutrality.  The Internet is after all, a utility, and the cartel that makes billions off of it should be regulated and their profits subject to windfall taxes.  The NSA and the Net’s cartel have done so much to destroy internet freedom, U.S. dominion over the world-wide-web, and commerce over same.  In short, these tribes of inequity have collectively, sacrificed a huge cash-cow and a fountain of information and entertainment; please stop them before they do more harm.  

Selah.

Copyright JM Hamilton Publishing 2014

Saturday, April 12, 2014

President Protectionism


President Protectionism

Reagan “ has granted more import relief to U.S. industry than any of his predecessors in more than half a century.” -  Reagan Treasury Secretary, James A. Baker III

By J.M. Hamilton  4-12-14

“You’re a hypocrite.”  Ah, fighting words.

“I guess that’s fair,” I said to my sibling.  

I was in the middle of a rant on taxes, when she let me have it in mid-sentence. 

“Many of us are hypocrites to some degree.”  I said.  Some of us are hypocrites deliberately, some of us selectively, and some through willful ignorance. 

“Interesting times we live in.”

Cold silence on the other end of the phone, from my sister, the CPA.

“It’s not that I resent paying taxes… but I do resent paying at twice the rate of the wealthy. A flat tax is inherently progressive.” 


My sister:  “There’ll never be a flat tax.  You are talking about millions of accountants and tax attorneys losing their jobs.” 

“And I really resent,” I cut in, “that I have to buy $79 worth of software, plus added charges, to file on line.”  Not even Bach and a Cabernet induced-coma, with additional supplements, will smooth out the unmitigated misery of four horrific hours on line, grinding out another annual filing.

What a way to spend a spring weekend.


My sister, by the way, is awesome.  My sister is the living, breathing proof that males are the weaker sex.   Probably not an accolade she’d embrace, but the truth all the same.

One of the fun things about putting out this blog, year after year, is you get to go back and look at what you wrote.  Does it hold up?  Does it stand the test of time?  What did I get right and what did I get wrong?  While my record is mixed, I do occasionally get a few things right.

Take my piece from September of 2010, A Nation of Whiners!

In this piece, J.M.H., among other things, took former Texas Senator Phil Gramm to task for calling the U.S. a nation of “whiners.”  The Senator said Americans were “whiners” for not recognizing that the economic malaise perpetrated and visited upon the nation, by the very financial deregulation U.S. Senator Gramm sponsored and passed in the late ‘90s, was just a fiction or a mental defect created in the collective public’s mind.  Mr. Gramm, also a former economic campaign advisor to presidential candidate McCain, called the Great Recession a “mental recession.” The Great Recession, six years running, is "mental?"

This same piece, A Nation of Whiners, also took on “free trade” dogma.  I wrote: “While Republican orthodoxy demands strict adherence to 'free trade' dogma, most educated Americans know that there is no such thing as ‘free trade,’ just as we all know there is no Santa Claus.  In short, ‘free trade’ is nothing more than some form of arbitrage, whether it be labor, regulatory, or avoidance of tax, which often benefits some multi-nationals at U.S. (citizen) expense.”

Now anyone who took Macro Econ 101 had free trade rammed down their throats as a fundamental law or fact.  Notably, both Fresh and Saltwater schools of economic thought were in agreement on free trade.  The theory went that by nations specializing in a particular good or service, they could sell more of that good or service globally, than just domestically, and so on and so forth around the globe.  Moreover, if a nation wasn’t particularly strong at a particular good or service, it should willing surrender that product or service, and jobs, to another nation that did specialize in that particular good or service.  All in the interest of free trade, global economic harmony, and the consumer. 

The theory held that displaced workers, who had their jobs shipped overseas, would flow into the sectors of the economy that America was strongest at.  For instance, displaced manufacturing workers in Ohio and Pennsylvania would go to work on Wall Street.  Also, American consumers would benefit from cheaply produced goods, exported onto U.S. shores.  However, if you are among the increasing ranks of the “displaced,” or underemployed, it’s hard to gather up the funds for food, let alone an iPad.

As a result of this quaint "free trade" theory, the U.S. exported millions of jobs offshore, and exported its tax base and fiscal health with those jobs.  The ranks of the unemployed grew, and globalization, which is a fancy work for “free trade,” caused more Americans to file for unemployment benefits, further damaging the Federal government’s budget.  Therefore, free trade/globalization is a key contributor to ever mushrooming Federal debt.

It’s by no accident that at the same time laissez faire economics and free trade dogma hit its zenith in America… the disparity between the “wolfs and rabbits, ” the haves and the have-nots, has grown astronomically.  It’s also by no accident that the Obama administration wants congress to fast track free trade agreements, which it would like to negotiate behind closed doors for American and foreign oligarchs, and away from the prying eyes of the congress and U.S. citizens.  Ironically, President Obama, back in the day, campaigned against free trade agreements.  Theoretically, free trade is also politically beneficial to the Democratic Party, since it creates wards of the state.

But I digress, because the main point of this piece is that the belief that I first wrote about in 2010, that free trade is little more than arbitrage, for the enrichment of, well, the rich, and at the expense of a nation of “whiners” (per Senator Gramm) and her workers … appears to be gathering momentum.

None other than renowned economist, Joseph Stiglitz, and a former free trader at that, has now come out against free trade.  In his piece, On the Wrong Side of Globalization, he wrote:

“Trade agreements’ new boosters euphemistically claim that they are simply after regulatory harmonization, a clean-sounding phrase that implies an innocent plan to promote efficiency. One could, of course, get regulatory harmonization by strengthening regulations to the highest standards everywhere. But when corporations call for harmonization, what they really mean is a race to the bottom.”

Now, if you read my blog and curse it, you’ve likely already concluded that I’m some liberal/libertarian flake, who should be dismissed out of hand.


Of course, that’s really the difference between today’s GOP and yester-year’s GOP…. And the primary reason I abandoned the Party.  President Reagan, who had his own severe stagnation and recession to deal with in the early ‘80s, knew that in order for the nation to get back on its feet, he had to deploy protectionist measures to protect jobs, American labor, business, and the economy.  In deploying protectionist policy, surely President Reagan angered the wealthy (like the arch-conservative CATO Institute, then founded and run by the billionaire Koch Bros.) 


Mr. Reagan certainly paid lip service to free trade, but his second term and top line growth for American business depended upon a rational balance of protectionist policy, which protected the American worker, who after all, is the driver of aggregate U.S. consumption.


Today, the laissez faire crowd and the advocates of free trade, that have hi-jacked both political parties, know that they are doing unmitigated damage to the American people, workers, businesses, and the federal budget by backing free trade agreements (a rigged tax code is also endorsed by this same crowd), all in the name of making the rich richer, because they believe that’s a good thing.  Our politicians in catering to the elite with free trade agreements are serving their true master, American and global oligarchs.  Clearly, the interests of the rich and powerful have diverged from the interests of the majority of Americans, but that has always been the case.  Yester-year's GOP often struck the right balance between the republic’s interests and the plutocracy’s interests.  President Reagan's position on free trade and protectionism being a case in point.  




Then again, President Reagan did start out as a Democrat, and once represented the Screen Actors guild... I guess that would make him a parlor-pink, by today's oligarchy standards.

If we compare the two economies, both President Reagan and Obama inherited a really lousy situation.  However, Reagan had higher tax rates than Obama for much of his two terms in office, and Reagan engaged in protectionism (which the Robber Barrons will tell you are both "no- nos"and impediments to growth).  By comparison, President Obama has lower tax rates and has embraced free trade (which should make him a darling of the oligarchs). Both Presidents had monetary doves at the Fed, in the form of Messrs. Greenspan and Bernanke.  And yet, President Reagan's economic recovery was stronger than President Obama's.  Why?  

Thanks to protectionism, President Reagan was able to protect and preserve the middle-class.  The middle-class, thanks to three decades and more of laissez faire economics and free trade, has all been but gutted by the time President Obama entered office.  In brief, during President Obama's time in office, there has been no middle class recovery.  The missing ingredient for President Obama, existed for President Reagan.  Under both recoveries, however, the rich have grown richer, despite higher tax rates under President Reagan.

Unfortunately, some Americans through willful, or benign ignorance, turn a blind eye (I call it the “ostrich syndrome”); and either deliberately eschew politics, or duck their heads in the sand and hope, pray, and pretend things will get better, or have simply resigned themselves to the fact that things will only grow worse. 

“I can’t control these outcomes, so I must accept them,” so goes the familiar refrain.  To which I respond, “Yes, but what about your children and the future your apathy is bequeathing them.” 

The American pubic can control democracy and economic and political outcomes, by staying educated and exercising their enfranchised right.  I know this to be true, because why else would the rich pour hundreds of millions into political campaigns, attempting to overthrow the democratic process?  If I believed democracy didn't work in the long haul, I’d stop writing this blog tomorrow.  Nor is it “cynicism” to write on the problems of the nation, and attempt to point out the often obvious solutions; in fact, for some, it’s a patriotic responsibility.

Democracy comes at a price for its citizens, that means remaining actively engaged, knowledgeable, and insisting that your interests are represented.  It’s a small price to pay, remaining educated and informed, relative to all those men and women who have laid down their lives to fight for and protect this country.  Handing the car keys over to a band of pirates, cutthroats and plutocrats is a recipe for a nation in decline, and we are witnessing that decline.  If you believe staying actively engaged in our democracy is difficult and requires too much thought and time, in short - if you want to abdicate responsibility, than do nothing more and watch the plutocracy take hold and the economy continue to stagnate and grow worse.

And this has already happened.  Have you looked at the Federal budget lately?  It looks like private equity’s Carlyle Group has taken over the Federal government: we are leveraged to the hilt and gone bust.

In a democracy, liberal politicians, like President Reagan, knew that their true master was the republic and its citizens, and their duty and obligations were to same.   However, in a post- Citizen’s United world, in a post- McCutcheon world, money is worshiped, oligarchs are catered to by both political parties, and the people, the republic, and our economy suffer for it.

Continue on this path and we no longer live in a democracy, but rather are ruled and governed by a plutocracy.  The U.S. is in danger of becoming the very thing our founding fathers fled, a corrupt and crony Europe, ruled by monarchs.  We can give SCOTUS, the GOP stacked court, credit for that. 




P.S.

All of which brings up that famous Wall Street maxim:  Bears make money.  Bulls make money, but Pigs… well, they get slaughtered.

Would it really harm Apple’s margins if they manufactured iPhones in the U.S.?  The answer is an unmitigated “no,” but greed and the laissez faire ethos prevents that from happening.  And I would add, stockholders (like CalPERS) have been harmed, not in every instance but frequently and often, by business actions initiated by management and multi-nationals, in the name of “stockholder interests.”  Then again, I suppose in today's high frequency trading world... holding onto a stock for the long term, based upon sound business fundamentals and a management sponsored long term outlook, is considered passe and strange.


Copyright JM Hamilton Publishing 2014