Global Economic
Trend Analysis

Recent Posts

Wednesday, October 01, 2014 2:20 PM

Congressman Rangel Calls for War Tax, Draft; Why Not Bomb the Entire Muslim World? Draft Worse Than Slavery

In a Time Magazine Op-Ed, Congressman Charles Rangel (Democrat from New York), a combat veteran says It’s Time for a War Tax and a Reinstated Draft.

While I am optimistic about our Commander-in-Chief’s strategy to defeat the Islamic State of Iraq and Syria, I voted against the Continuing Appropriations Resolution 2015 that would grant the President the authority to provide funds to train and arm Syrian rebels against the enemy. I opposed the amendment because I strongly believe amassing additional debt to go to war should involve all of America debating the matter. That is why I have called for levying a war tax in addition to bringing back the military draft.

Both the war surcharge and conscription will give everyone in America a real stake in any decision on going to war, and compel the public to think twice before they make a commitment to send their loved ones into harm’s way.

For a decade I have been calling for the reinstatement of the draft because our military personnel and their families bear a tremendous cost each time we send them to fight.
Draft Worse Than Slavery

Slavery is involuntary servitude. Is a draft anything less than slavery?

Actually, it's worse. You take a guy's freedom away, ship him overseas, give him a rifle, and force him to kill other people against whom he has no direct grievance, when the best such a person can ever hope for is to come back in one piece, years later, possibly with huge psychological stress after needless killing.

Rangel points out the "tremendous cost each time we send them [US troops] to fight" then proposes the stupidest solution possible, to force everyone to have the same opportunity.

I propose there can be no debate on a draft just as there can be no debate on whether we should revive slave trade from Africa.

Financing Wars

Rather than admit the stupidity of wasting $6 trillion in Iraq and Afghanistan and vowing to never do it again, Rangel proposes a War Tax.

The United States has borrowed almost $2 trillion to fund our military engagements on foreign soil. It is estimated that the total cost would be close to $6 trillion; we continue to pay a heavy toll for these conflicts. Each dollar spent on war is a dollar not spent on education, energy, housing, or healthcare. We cannot afford to tread this same path when we are slashing domestic programs that are the lifelines for so many Americans. I will soon introduce a bill that will impose war tax to ensure that we do not have to choose between further gutting the social safety net and adding to the $17.7 trillion of national debt.

Rangel was once Chairman of the House Ways and Means Committee.

Let's Bomb the Entire Muslim World

George Monbiot, writer for the Guardian, says "Humanitarian arguments, if consistently applied, could be used to flatten the entire Middle East".

Monbiot sarcastically asks Why stop at Isis when we could bomb the whole Muslim world?
Let’s bomb the Muslim world – all of it – to save the lives of its people. Surely this is the only consistent moral course? Why stop at Islamic State (Isis), when the Syrian government has murdered and tortured so many? This, after all, was last year’s moral imperative. What’s changed?

In Gaza this year, 2,100 Palestinians were massacred: including people taking shelter in schools and hospitals. Surely these atrocities demand an air war against Israel? And what’s the moral basis for refusing to liquidate Iran? Mohsen Amir-Aslani was hanged there last week for making “innovations in the religion” (suggesting that the story of Jonah in the Qur’an was symbolic rather than literal). Surely that should inspire humanitarian action from above? Pakistan is crying out for friendly bombs.

Is there not an urgent duty to blow up Saudi Arabia? It has beheaded 59 people so far this year, for offences that include adultery, sorcery and witchcraft. It has long presented a far greater threat to the west than Isis now poses. In 2009 Hillary Clinton warned in a secret memo that “Saudi Arabia remains a critical financial support base for al-Qaida, the Taliban … and other terrorist groups”.

The humanitarian arguments aired in parliament last week, if consistently applied, could be used to flatten the entire Middle East and west Asia. By this means you could end all human suffering, liberating the people of these regions from the vale of tears in which they live.

Yes, the agenda and practices of Isis are disgusting. It murders and tortures, terrorises and threatens. As Obama says, it is a “network of death”. But it’s one of many networks of death. Worse still, a western crusade appears to be exactly what Isis wants.

And if the bombing succeeds? If – and it’s a big if – it manages to tilt the balance against Isis, what then? Then we’ll start hearing once more about Shia death squads and the moral imperative to destroy them too – and any civilians who happen to get in the way. The targets change; the policy doesn’t. Never mind the question, the answer is bombs. In the name of peace and the preservation of life, our governments wage perpetual war.

While the bombs fall, our states befriend and defend other networks of death. The US government still refuses – despite Obama’s promise – to release the 28 redacted pages from the joint congressional inquiry into 9/11, which document Saudi Arabian complicity in the US attack. In the UK, in 2004 the Serious Fraud Office began investigating allegations of massive bribes paid by the British weapons company BAE to Saudi ministers and middlemen. Just as crucial evidence was about to be released, Tony Blair intervened to stop the investigation.

Last week’s Private Eye, drawing on a dossier of recordings and emails, alleges that a British company has paid £300m in bribes to facilitate weapons sales to the Saudi national guard. When a whistleblower in the company reported these payments to the British Ministry of Defence, instead of taking action it alerted his bosses. He had to flee the country to avoid being thrown into a Saudi jail.

There are no good solutions that military intervention by the UK or the US can engineer. Whenever our armed forces have bombed or invaded Muslim nations, they have made life worse for those who live there. The regions in which our governments have intervened most are those that suffer most from terrorism and war. That is neither coincidental nor surprising.

Yet our politicians affect to learn nothing. Insisting that more killing will magically resolve deep-rooted conflicts, they scatter bombs like fairy dust.
Fraud of Humanitarin Wars

For humanitarian reasons, 2009 Nobel Peace Laureate Barack Obama has bombed seven Muslim nations: Iraq, Syria, Afghanistan, Pakistan, Yemen, Somalia, and Libya.
The utter lack of interest in what possible legal authority Obama has to bomb Syria is telling indeed: Empires bomb who they want, when they want, for whatever reason (indeed, recall that Obama bombed Libya even after Congress explicitly voted against authorization to use force, and very few people seemed to mind that abject act of lawlessness; constitutional constraints are not for warriors and emperors).

It was just over a year ago that Obama officials [Sec of State John Kerry] were insisting that bombing and attacking Assad was a moral and strategic imperative. Instead, Obama is now bombing Assad’s enemies while politely informing his regime of its targets in advance. It seems irrelevant on whom the U.S. wages war; what matters it that it will be at war, always and forever.

Six weeks of bombing hasn’t budged ISIS in Iraq, but it has caused ISIS recruitment to soar. That’s all predictable: the U.S. has known for years that what fuels and strengthens anti-American sentiment (and thus anti-American extremism) is exactly what they keep doing: aggression in that region. If you know that, then they know that.

As the disastrous Libya “intervention” should conclusively and permanently demonstrate, the U.S. does not bomb countries for humanitarian objectives. Humanitarianism is the pretense, not the purpose.
On May 2, Glenn Greenwald wrote about The Fraud of Humanitarian Wars. "All wars, even the most unjustifiably aggressive, are wrapped in the same pretty rhetorical packaging."

Goering at the Nuremberg Trials

Please recall what Reichsmarschall Hermann Wilhelm Göring (in English his name is also spelled as Hermann Goering) Nazi founder of the Gestapo, Head of the Luftwaffe, said at the Nuremberg Trials.

Here is a clip of the interview in Goering's cell in prison, after the war.
Göring: Why, of course, the people don't want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece? Naturally, the common people don't want war; neither in Russia nor in England nor in America, nor for that matter in Germany. That is understood. But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship.

Gilbert: There is one difference. In a democracy, the people have some say in the matter through their elected representatives, and in the United States only Congress can declare wars.

Göring: Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.
We Gotta Do Something!

Please note that all it took was a couple of beheadings for warmongers to get the rest of Congress behind bombing ISIS in Syria. And that's all it took for Obama to break his promise to get out of Afghanistan. Instead, we will be there until 2014 "at least".

For details, please see "Come Hell or High Water" Promise Morphs Into "Infinity and Beyond"

Public sentiment following the beheadings is "We Gotta Do Something!"

Indeed we do.

Instead of a draft coupled with a war tax, I propose we kick the warmongers out of office and stop all war funding except what's explicitly needed to protect US borders here, not half-way around the globe.

Unfortunately that goal is next to impossible. The industrial-military war machine backs every candidate who is in favor of perpetual war.

Mike "Mish" Shedlock

Tuesday, September 30, 2014 9:00 PM

Draghi Pressures ECB to Buy "Junk-Rated" Loan Bundles of Greece and Cyprus

On September 4, ECB President pulled out a financial bazooka including a pledge to build up the ECB's balance sheet by another €1 trillion.

Draghi confirmed the asset purchases would "include the real estate, the RMBS, real estate ABS. It would also include a fairly wide range of ABS containing loans to the real economy," but only "the senior tranches, and the mezzanine tranches only if there is a guarantee."

Now, just three weeks later, he wants to buy outright junk, presumably without guarantees.

Please consider Mario Draghi pushes for ECB to accept Greek and Cypriot ‘junk’ loan bundles.

Mario Draghi is to push the European Central Bank to buy bundles of Greek and Cypriot bank loans with “junk” ratings, in a move that is set to exacerbate tensions between Germany and the bank.

The ECB’s executive board will propose that existing requirements on the quality of assets accepted by the bank are relaxed to allow the eurozone’s monetary guardian to buy the safer slices of Greek and Cypriot asset backed securities, or ABS, say people familiar with the matter.

However, the idea is likely to face staunch opposition in Germany, straining already tense relations between the ECB and officials in the eurozone’s largest economy.

Bundesbank president Jens Weidmann, who also sits on the ECB’s policy making governing council, has already objected to the plan to buy ABS, which he says leaves the central bank’s balance sheet too exposed to risks.

Wolfgang Schäuble, Germany’s finance minister, has also voiced his opposition, saying purchases would heighten concerns about potential conflicts of interest between the ECB’s role as monetary policy maker and bank supervisor.

While the safer slices – or senior tranches – of Greek and Cypriot ABS only make up a tiny proportion of Europe’s securitisation market, it would free up billions in liquidity for banks in two of the eurozone’s weakest economies, and potentially boost lending to credit-starved smaller businesses in the currency area’s periphery.
Free Up Liquidity?

The idea that swapping money for junk will free up liquidity is as ridiculous as moving a rotting fish from your pantry to the living room in hopes the stench will go away.

In this case, the stench on Greek bank balance sheets will not go away. Instead, stench will also appear on the balance sheet of the ECB.

And it will not do a thing to spur lending for the same reasons as noted in ECB's €1 Trillion Stimulus Gamble: ECB Pulls Out Bazooka, Cuts Rates, Buys Assets; Will this Stimulate Lending?

Here's the key snip.
Will this Stimulate Lending?

Everyone wonders if this will work. Let me ask a different set of questions:

  1. Why should it?
  2. Does the announcement fix any structural problems with the euro?
  3. Does the announcement fix any fiscal issues in any European country?
  4. Does the announcement fix any competitive disadvantages of France vs. Germany?
  5. Does this provide any impetus for structural reforms in France or Italy?
  6. If -0.1% rates for funds parked with the ECB did not stimulate lending, why should -0.2% rates?
Draghi Creates Bond Bubble

All Drahghi really accomplished with LTRO is to make Europe the biggest bond bubble in the world.

Well bubbles can always get bigger, until they pop.

Meanwhile none of these can-kicking efforts have fixed a single structural problem. Instead, they made it easy for governments to delay needed reforms.

Forcing Banks to Lend a Huge Mistake

These attempts to force banks to lend is a huge mistake. Banks lend if and only if ...

  1. Banks are not capital impaired
  2. Banks believe they have credit-worthy borrowers
  3. Credit-worthy borrowers want credit

If banks lend in other circumstances, they will incur losses. They also incur losses if they believe they have credit-worthy customers but they don't.

The problem should be obvious. European banks lack credit-worthy borrowers who want loans, or the banks are capital impaired.

I suggest both.

And if this move by Draghi does spur more lending to small uncreditworthy businesses, the ECB will have done nothing but compound Eurozone problems greatly.
 In response to the above post, a director at a global financial company pinged me with ...
"Hello Mish,

Mario Draghi is an idiot. Banks create money when they lend. The loans create a requirement for reserves which ultimately reverts back as deposits at the ECB. The negative interest rate is therefore a tax on capital and a tax on lending. This not rocket science.

I’d start a charity whereby every newly appointed central bank board member is sent a free copy of Rothbard’s Mystery of Banking except I am beginning to doubt their ability to read.
These actions by Draghi prove he is clueless about how the system even works.

Mike "Mish" Shedlock

4:13 PM

"Come Hell or High Water" Promise Morphs Into "Infinity and Beyond"

In 2010, vice-president Joe Biden publicly vowed the US would be “totally out” of Afghanistan “come hell or high water, by 2014.”

In a few short months, 2014 will be gone. Are US troops out of Afghanistan? Nope. Iraq? Nope. Instead, we have troops in Syria.

Political Promises

Political promises should never be believed.

Today the US signed an extension allowing US forces to remain in Afghanistan until "at least" 2024.

At Least Until 2024

The Guardian reports a new Afghanistan pact means America's Longest War Will Last Until at Least 2024.

The longest war in American history will last at least another decade, according to the terms of a garrisoning deal for US forces signed by the new Afghanistan government on Tuesday.

Long awaited and much desired by an anxious US military, the deal guarantees that US and Nato troops will not have to withdraw by year’s end, and permits their stay “until the end of 2024 and beyond.”

The entry into force of the deal ensures that Barack Obama, elected president in 2008 on a wave of anti-war sentiment, will pass off both the Afghanistan war and his new war in Iraq and Syria to his successor. In 2010, his vice-president, Joe Biden, publicly vowed the US would be “totally out” of Afghanistan “come hell or high water, by 2014.”

Under the Bilateral Security Agreement’s annexes, the US military will have access to nine major land and airbases, to include the massive airfields at Bagram, Jalalabad and Kandahar, staging areas not only for air operations in Afghanistan but the US drone strikes that continue across the border in tribal Pakistan.

The additional bases – in Kabul, Mazar-i-Sharif, Herat, Helmand, Gardez and Shindand – ensure the reach of the US military throughout Afghanistan.

US defense leaders greeted the signing of the accord with enthusiasm.
Enthusiasm of Defense Leaders Soars

Opium Connection

To help highlight the absurdity of US policy in Afghanistan, please consider U.S. Turns a Blind Eye to Opium in Afghan Town
KABUL, Afghanistan — The effort to win over Afghans on former Taliban turf in Marja has put American and NATO commanders in the unusual position of arguing against opium eradication, pitting them against some Afghan officials who are pushing to destroy the harvest.

From Gen. Stanley A. McChrystal on down, the military’s position is clear: “U.S. forces no longer eradicate,” as one NATO official put it. Opium is the main livelihood of 60 to 70 percent of the farmers in Marja, which was seized from Taliban rebels in a major offensive last month. American Marines occupying the area are under orders to leave the farmers’ fields alone.
Opium Production at Record High

That story was from 2010. An article from January of 2014 highlights the "success" of US opium strategy: Afghan opium production on the rise despite U.S. troops, inspector says
Citing the United Nations Office of Drugs and Crime, Sopkp said the cultivation of poppy plants — used to make opium and its derivative drugs such as heroin — is greater today than in 2001 when the United States invaded Afghanistan.

Indeed, he said it’s the highest in modern history.
Afghanistan Absurdities

  1. US troops protect the Afghanistan poppy harvest to aid local farmers in the battle against the Taliban.
  2. That battle has been so "successful" that the Taliban Storms Afghanistan and is on the march towards the capital.
  3. Meanwhile, drug agents attempt to intercept heroin before it hits the US.
  4. The effort to stop smuggling pushes up the price of heroin to the explicit benefit of drug lords who do get some of it through.
  5. Those drug lords are apt to be the Taliban.
  6. Drug money goes to buy weapons for the Taliban.
  7. To counteract the rise of the Taliban, we train "moderates" to fight the Taliban.
  8. We also give weapons to "moderates" to fight the Taliban.
  9. Unfortunately, we cannot successfully identify moderates. Many US weapons fall into the hands of the Taliban.
  10. Ultimately US weapons as well as weapons purchased with drug money are used to kill US soldiers and fight the puppet regime the US seeks to protect.

The above process necessitates keeping US troops in Afghanistan to 2024, if not infinity and beyond.
Thus, the Battle for Perpetual War is Won.

Is it any wonder the process has garnered rabid enthusiasm of the defense industry?

The only missing ingredient of the warmonger's ultimate fantasy is multiple wars on multiple fronts with a large power like Russia.

Mike "Mish" Shedlock

Last 10 Posts

Copyright 2009 Mike Shedlock. All Rights Reserved.
View My Stats