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THE INSIDE HISTORY OF THE ISRAEL LOBBY Former top CIA analysts Kathleen and Bill Christison give CounterPunchers the real scoop on the Israel lobby and precisely how powerful it is. Read how US presidents from Wilson, through FDR to Truman were manipulated by the Zionist lobby; how Israel bent LBJ, Reagan and Clinton to its purpose; how Bush's White House has been the West Wing of the Israeli government; how Washington's revolving doors send full-time Israel lobbyists from think-tanks to the National Security Council and the Pentagon's Office of Special Plans. For all who want a true measure of the Lobby's power, the Christisons' 8-page dossier, exclusive to CounterPunch newsletter subscribers, is a MUST read. CounterPunch Online is read by millions of viewers each month! But remember, we are funded solely by the subscribers to the print edition of CounterPunch. Please support this website by buying a subscription to our newsletter, which contains fresh material you won't find anywhere else, or by making a donation for the online edition. Remember contributions are tax-deductible. Click here to make a donation. If you find our site useful please: Subscribe Now! |
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Today's Stories June 15, 2006 Gabriel Kolko June 14, 2006 Nicole Colson Jonathan Cook Joseph Schechla Michael Carmichael Evelyn Pringle Ward Churchill Rev. William E. Alberts Website of the
Day
June 13, 2006 Medea Benjamin Anthony Alessandrini Paul D'Amato Dave Lindorff John Ross Gabriel Garcia Hilton Obenzinger Yitzhak Laor Juan Antonio
Ocasio Rivera Jennifer Van
Bergen Website of the
Day
June 12, 2006 Paul Craig Roberts Patrick Cockburn Mike Marqusee Lee Sustar Robert Fisk Michael J. Smith Felice Pace Jennifer Loewenstein Website of the Day
June 10 / 11,
2006 Robert Fisk Diane Christian Joe Allen Ralph Nader Fred Gardner Dave Lindorff Dave Zirin /
John Cox Dennis Perrin Greg Moses John Chuckman Michael J. Smith Roger Burbach Ira Moskowitz Sam Bahour Seth Sandronsky Michael Berg Kirsten Roberts Ron Jacobs Jeffrey St. Clair Poets' Basement Website of the
Weekend
June 9, 2006 Alexander Cockburn Paul Craig Roberts Gary Leupp Eric Ruder Evelyn Pringle Mickey Z. Michael J. Smith Patrick Cockburn Website of the
Day
June 8, 2006 Chris Floyd Michael Dickinson Ron Jacobs William S. Lind Joshua Frank Missy Comley Beattie Lloyd Williams Bill Christison Website of the Day
June 7, 2006 Dave Lindorff Sunsara Taylor John Walsh David MacMichael Mickey Z. Evelyn Pringle Myles Palmer Laura Ribeiro Website of the Day
June 6, 2006 Diane Christian Paul Craig Roberts Ralph Nader Norman Solomon Darmont / Genovali Manuel Garcia,
Jr. Subcomandante Marcos Patrick Cockburn Website of the Day
June 5, 2006 Bruce Jackson Chris Floyd Michael Neumann Heather Gray William Hughes David Swanson Alexander Cockburn Website of the Day
June 3 / 4, 2006 Robert Fisk James Petras Rosemary Radford Ruether Harry Clark Jeffrey St. Clair Ron Ridenour Ron Jacobs Fred Gardner Peter Montague John Walsh Greg Moses Sean Donahue Mike Whitney Dave Patten Ali Khan Robert Dotson,
MD Hammond Guthrie St. Clair / D'Antoni Poets' Basement Website of the
Day
June 2, 2006 Kathy Kelly Alan Maass Mickey Z. Dave Lindorff Chris Kutalik Sunsara Taylor Sam Husseini Mike Ferner Website of the
Day
June 1, 2006 Brian Cloughley David Peterson Lee Ballinger Jonathan Cook Mike Whitney Paul Rockwell Clifton Ross Kevin Zeese Website of the
Day
May 31, 2006 Dave Lindorff Joshua Frank Roxanne Dunbar-Ortiz P. Sainath Ramzy Baroud Seth Sandronsky Mickey Z. Ralph Nader Jeffrey St. Clair Website of the Day
May 30, 2006 Lee Ballinger Jonathan Cook Gary Leupp John Ross Robert Jensen Michael Dickinson Michael Carmichael Tim Wise Harry Browne Website of the
Day
May 27 / 29,
2006 Paul Craig Roberts Kathleen Christison Kathy Kelly Christopher
Reed Lawrence R. Velvel Tom Barry Gary Leupp Col. Dan Smith Ron Jacobs Don Fitz Fred Gardner Peter Montague Raymond Garcia John Farley Seth Sandronsky Tia Steele Lenni Brenner Dr. Susan Block Scott Michael Perey Jeffrey St. Clair Poets' Basement Recipe of the
Weekend Website of the Weekend
May 26, 2006 Col. Douglas
MacGregor Brian J. Foley Michael Dickinson Missy Comley Beattie Pierre Tristam Joe Allen Kona Lowell Roger Burbach Website of the
Day
May 25, 2006 Les AuCoin Jeff Halper Dave Lindorff Ron Jacobs Bob Wing Elise Gould Robert Bryce Website of the Day
May 24, 2006 Michael Donnelly Patrick Cockburn Lucinda Marshall Dave Lindorff Shmuel Rosner Moshe Adler Heather Gray Pratyush Chandra Paul Craig Roberts Floyd Rudmin Website of the Day
May 23, 2006 Paul Craig Roberts Sharon Smith Sunsara Taylor Joel Whitney Alice Cherbonnier Ron Jacobs Kristen Ess Patrick Cockburn Website of the
Day
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June 15, 2006 "The Demons of Greed are Loose"Why a Global Economic Deluge LoomsBy GABRIEL KOLKO People who know the most about the world financial system are increasingly worried, and for very good reasons. Dire warnings are coming from the most "respectable" sources. Reality has gotten out of hand. The demons of greed are loose. What is that reality? It includes a number of factors. Alone they would be exceedingly serious; combined, they are very likely to be lethal. First of all, the International Monetary Fund (IMF) has been undergoing both a structural and intellectual crisis. Structurally, its outstanding credit and loans have declined dramatically since 2003, from over $70 billion to a little over $20 billion today, leaving it with far less leverage over the economic policies of developing nations--and even less income than its expensive operations require. It is now in deficit.1 A large part of the IMF's problems are due to the doubling in world prices for all commodities since 2003 -- especially petroleum, copper, silver, zinc, nickel, and the like -- that the developing nations traditionally export. While there will be fluctuations in this upsurge, there is also reason to think it may endure because rapid economic growth in China, India, and elsewhere has created a burgeoning demand that did not exist before, when the balance-of-trade systematically favored the rich nations. The U.S. has seen its net foreign asset position fall as Japan, emerging Asia, and oil exporting nations have become far more powerful over the past decade, and have increasingly become creditors to the U.S.2 As the U.S. deficits mount, with its imports being far greater than its exports, the value of the dollar has been declining -- 28 per cent against the euro from 2001 to 2005 alone. Equally important, the IMF
and World Bank were severely chastened by the 1997-2000 financial
meltdowns in East Asia, Russia, and elsewhere, and many of the
two institutions' key leaders lost faith in the anarchic premises,
descended from classical laisser-faire economic thought, which
guided Worse yet, the whole nature of the global financial system has changed radically in ways that have nothing whatsoever to do with "virtuous" national economic policies that follow IMF advic. These are ways the IMF cannot control. The investment managers of private equity funds and major banks have displaced national banks and international bodies such as the IMF, moving well beyond the existing regulatory structures and they have "reintermediated" themselves between the traditional borrowers, both national and individual, and markets. They have deregulated the world financial structure, making it far more unpredictable and susceptible to crises. They seek to generate high investment returns, which is the key to their compensation, and they take mounting risks to do so. A "brave new world" has emerged in the global financial structure, one that is far less transparent because there are fewer reporting demands imposed on those who operate in it. Financial adventurers are constantly creating new "products" that defy both states and international banks. The IMF's managing director, Rodrigo de Rato, at the end of May, 2005, deplored these new risks -- risks the weakness of the U.S. dollar and its mounting trade deficits have magnified greatly.4 In March of this year the IMF released Garry J. Schinasi's book, Safeguarding Financial Stability, giving it unusual prominence then and thereafter. In essence, Schinasi's book is alarmist, and it both reveals and documents in great and disturbing detail the IMF's deep anxieties. Essentially, "deregulation and liberalization", which the IMF and proponents of the "Washington consensus" advocated for decades, have become a nightmare, creating "tremendous private and social benefits" but also holding "the potential (although not necessarily a high likelihood) for fragility, instability, systemic risk, and adverse economic consequences." Anyone who reads the data in Schinasi's superbly documented book will share his real conclusion that the irrational development of global finance, combined with deregulation and liberalization, has "created scope for financial innovation and enhanced the mobility of risks". Schinasi and the IMF advocate a radical new framework to monitor and prevent the problems now able to emerge, but success "may have as much to do with good luck" as policy design and market surveillance.5 Leaving the future to luck is not what economics originally promised. The IMF is desperate, and not alone. As the Argentina financial meltdown proved, countries that do not succumb to IMF and banker pressures can play on divisions within the IMF membership, particularly the U.S., comprising bankers and others to avoid many, although scarcely all, foreign demands. About $140 billion in sovereign bonds to private creditors and the IMF were at stake, terminating at the end of 2001 as the largest national default in history. Banks in the 1990s were eager to loan Argentina money and they ultimately paid for it. Since then, however, commodity prices have soared and the growth rate of developing nations in 2004 and 2005 was over double that of high income nation, a pattern projected to continue through 2008. As early as 2003 developing countries were already the source of 37 percent of the foreign direct investment in other developing nations. China accounts for a great part of this growth, but it also means that the IMF and rich bankers of New York, Tokyo, and London have far less leverage than ever. Growing complexity is the order of the world economy that has emerged in the past decade, and with it has come the potential for far greater instability, and dangers for the rich. High-speed Global Economics The global financial problem that is emerging is entwined with an American fiscal and trade deficit that is rising quickly. Since Bush entered office in 2001 he had added over $3 trillion to federal borrowing limits, which are now almost $9 trillion. So long as there is a continued devaluation of the U.S. dollar, banks and financiers will seek to protect their money and risky financial adventures will appear increasingly worthwhile. This is the context, but Washington advocated greater financial liberalization well before the dollar weakened. The world now has a conjunction of factors that have created a far greater risk than the proponents of the "Washington consensus" ever believed possible. There are now many hedge funds, with which we are familiar, but they now deal in credit derivatives and numerous other financial instruments. Markets for credit derivative futures are in the offing. The credit derivative market was almost nonexistent in 2001, grew fairly slowly until 2004 and then went into the stratosphere, reaching $17.3 trillion by the end of 2005. What are credit derivatives? The Financial Times' chief capital markets writer, Gillian Tett, tried to find out. She failed. About ten years ago some J. P. Morgan bankers were in Boca Raton, Florida, drinking, throwing each other into the swimming pool, and the like, and they came up with a notion of a new financial instrument that was too complex to be easily copied (financial ideas cannot be copyrighted) and which was sure to make them money. But she was highly critical of its potential for causing a chain reaction of losses that will engulf the hedge funds that have leaped into this market.6 It for reasons such as these, as well as others, even more opaque, such as split capital trusts, collateralized debt obligations, and market credit default swaps, that the IMF and financial authorities are so worried. Banks simply do not understand the chain of exposure and who owns what. Senior financial regulators and bankers now admit as much. The Long-Term Capital Management hedge fund meltdown in 1998, which involved only about $5 billion in equity, revealed this. The financial structure is now infinitely more complex and far larger. The top ten hedge funds alone in March 2006 had $157 billion in assets. Hedge funds claim to be honest but those who guide them are compensated for the profits they make, which means taking risks. But there are thousands of hedge funds and many collect inside information, which is technically illegal but it occurs anyway. The system is fraught with dangers, starting with the compensation structure, but it also assumes a constantly rising stock market and much, much else. Many fund managers are incompetent. But the 26 leading hedge fund managers earned an average of $363 million each in 2005; James Simons of Renaissance Technologies earned $1.5 billion. There is now a consensus that all this, and much else, has created growing dangers. We can put aside the persistence of imbalanced budgets based on spending increases or tax cuts for the wealthy, much less the world's volatile stock and commodity markets which caused hedge funds in May to show far lower returns than they have in at least a year. It is anyone's guess which way the markets will go, and some will gain while others lose. Hedge funds still make lots of profits, and by the spring of 2006 they were worth about $1.2 trillion worldwide, but they are increasingly dangerous. A great deal of money went from investors in rich nations into emerging market stocks, which have been especially hard-hit in the past weeks, and if they leave them the financial shock will be great. The dangers of a meltdown exist there too. Problems are structural, such as the greatly increasing ratio of corporate debt loads to core earnings, which have grown substantially from four to six times over the past year because there are fewer legal clauses to protect investors from loss, and to keep companies from going bankrupt when they should. So long as interest rates have been low, leveraged loans have been the solution. With hedge funds and other financial instruments, there is now a market for incompetent, debt-ridden firms. The rules some once erroneously associated with capitalism -- probity and the like--no longer hold even on paper. Problems are also inherent in speed and complexity, and these are very diverse and almost surreal. Credit derivatives are precarious enough, but at the end of May the International Swaps and Derivatives Association revealed that one in every five deals, many of them involving billions of dollars, involved major errors. As the volume of trade increased so did errors. They doubled in the period after 2004. Many deals were scribbled on scraps of paper and not properly recorded. "Unconscionable" was outgoing Fed chairman, Alan Greenspan's, description. He was "frankly shocked." Other trading, however, is determined by mathematical algorithm ("volume-weighted average price" it is called) for which PhDs trained in quantitative methods are hired.7 Efforts to remedy this mess only began in June of this year and they are very far from resolving a major and accumulated problem that involves stupendous sums. Stephen Roach, Morgan Stanley's chief economist, on April 24 of this year wrote that a major financial crisis was in the offing and that the ability of global institutions to forestall it -- ranging from the IMF and World Bank to other mechanisms of the international financial architecture are utterly inadequate. Hong Kong's chief secretary in early June deplored the hedge funds' risks and dangers. The IMF's iconoclastic chief economist, Raghuram Rajan, at the same time warned that the hedge funds' compensation structure encouraged those in charge of them to increasingly take risks, thereby endangering the whole financial system. The entire global financial structure is becoming uncontrollable in crucial ways its nominal leaders never expected. Instability is increasingly its hallmark. Financial liberalization has produced a monster, and resolving the many problems that have emerged is scarcely possible for those who deplore controls on those who seek to make money, whatever means it takes to do so. Contradictions now wrack the world's financial system, and if we are to believe the institutions and personalities who have been in the forefront of the defense of capitalism, it may very well be on the verge of serious crises. Gabriel Kolko is the leading historian of modern warfare. He is the author of the classic Century of War: Politics, Conflicts and Society Since 1914 and Another Century of War?. He has also written the best history of the Vietnam War, Anatomy of a War: Vietnam, the US and the Modern Historical Experience. His latest book, The Age of War, was published in March 2006. He can be reached at: kolko@counterpunch.org. Notes 1 IMF Survey, March 13, 2006, p. 66. 2 Philip R. Lane and G. M. Milesi-Ferretti, "Examining Global Imbalances," Finance & Development, March 2006, pp. 38-41. 3 Roberto Zagha et al, "Rethinking Growth," Finance & Development, March 2006, p. 11. 4 Raghuram Rajan, in Finance & Development, September 2005, pp. 54, 58; IMF Survey, May 29, 2006, p. 147. 5 Garry J. Schinasi, Safeguarding Financial Stability: Theory and Practice, pp. 8, 14, 17. 6 Gillian Tett, "The
dream machine," Financial Times magazine, March 25/26,
2006, pp. 20-26. Also Financial Times, March 20, 2006.
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from CounterPunch Books! The Case Against Israel By Michael Neumann  Grand Theft Pentagon: Tales of Greed and Profiteering in the War on Terror by Jeffrey St. Clair          Sick of sit-on-the-Fence speakers, tongue-tied and timid? CounterPunch Editors Alexander Cockburn and Jeffrey St Clair are available to speak forcefully on ALL the burning issues, as are other CounterPunchers seasoned in stump oratory. Call CounterPunch Speakers Bureau, 1-800-840-3683. Or email beckyg@counterpunch.org.                    |
