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Economic Meltdown: the New World Depression Disorder

What the Corporatist media does not want you to see. Oh look Britney Spears just had a lesbian kiss with Madonna again.
Economic Meltdown: the New World Depression Disorder

World Stock Prices Plummet Amid Fears of Global Recession
Stock markets around the globe have plummeted over growing fears of a worldwide recession. In Japan, the Nikkei market has seen its worst two-day decline in nearly two decades. In India, the country's main stock index suffered its second-worst single-day tumble in history. In Germany, the Frankfurt Stock Exchange dropped seven percent Monday- its steepest one-day decline since the Sept. 11 attacks. Monday marked the first day of trading since President Bush called for a $145 billion economic stimulus package.

President Bush: "By passing an effective growth package quickly, we can provide a shot in the arm to keep a fundamentally strong economy healthy. And it will help keep economic sectors that are going through adjustments, such as the housing market, from adversely affecting other parts of our economy. I'm optimistic about our economic future, because Americans have shown time and again that they are the most industrious, creative and enterprising people in the world. That's what has made our economy strong. And that is what will make it stronger in the challenging times ahead."

Economist: U.S. Could Face "A Real Depression" Like in 1929
While President Bush said he was optimistic about the country's economic future, many economists are making comparisons to the period prior to the Great Depression.

Martin Hennecke, of the Tyche Group: "What investors need to understand, it's not just about subprime and mortgages it's really a big crisis of debt on all levels, even government debt hitting the West now and that's very significant. In our view, it's just getting started and it will really develop into a very, very severe recession maybe a real depression of the style we saw in 1929."


The Coming Global Depression
Published on Tuesday, January 22, 2008.

Source: IntelStrike - Lee Rogers

The global economic situation looks increasingly bad as we face a certain global depression primarily due to the insane monetary policies of the central bankers. The Federal Reserve is now attempting to bail out failing financial institutions by creating more money out of thin air. Some of the big banks are reporting losses greater than the assets they have on the books. Foreigners are also coming in and are buying up this nation's infrastructure. It is a complete disaster. Amazingly, the Federal Reserve is indicating that they are likely to reduce interest rates again which will cause further value destruction of the U.S. Dollar. This combined with Bush's so called economic stimulus package are phony solutions that will do nothing to stave off the coming economic calamity. In fact, the Federal Reserve is doing the exact opposite of what they should be doing if they sought a long term solution. A long term solution would involve strengthening the U.S. Dollar with a sound monetary policy. By devaluing the U.S. Dollar they are robbing the average American blind and most don't even realize it. Much like the Great Depression, the international bankers are now preparing to consolidate more wealth through these irrational policies as an excuse to bring in regional currencies and regional governmental bodies. As a result, we remain bullish on gold, silver and other sound financial instruments in light of this economic tyranny. Expect short term volatility but in the long term expect gold, silver and commodities to rise in U.S. Dollar denominations.
The U.S. Dollar as the world's reserve currency has now been called an experiment and a historical anomaly by the Council on Foreign Relations. This is an accurate assessment as never before in the history of man have we had a reserve currency on a global scale with no backing. A hundred years ago, it was inconceivable that a monetary system could exist without gold or silver, now many economists can't conceive of a monetary system with gold and silver. It is literal madness, but that mindset might be changing. Currently, the U.S. Dollar and the Euro are competing for the status as the world's reserve currency despite the fact that neither monetary unit has any backing. The economic elites are now pondering bringing back gold to play a role in the global economy. The Council on Foreign Relations has economists openly discussing this possibility as the experiment in paper money continues to unravel. This is a bullish sign for precious metals considering the influence that this group has with the establishment.

A symptom of the monetary problems could be clearly seen today with the London FTSE crashing 5.5 percent, France's CAC-40 Index declined 6.8 percent, German's DAX 30 plunged 7.2 percent, Hong Kong's Hang Seng index plummeted 5.5 percent and Canada's Toronto Stock Exchange went down 4 percent. This is a sign that the global market does not buy into the phony short term fixes that Bush's economic stimulus and the Federal Reserve's rate cuts represent. The U.S. stock market was closed for the holidays today but there are estimates floating around that we could see losses upwards of 500 and even 1,000 points in the Dow Jones Industrial Average tomorrow. That may or may not happen depending on if the President's Working Group on Financial Markets decides to step in and interfere with the market. This group which is more commonly referred to as the Plunge Protection Team operates in a very secretive fashion and has a mandate of making sure the economy remains stable. Another words, they interfere in the market in order to make the numbers look good for the average American. The government manipulates the stock market which is contrary to all free market principles.

Recently, gold and silver have gone down on days that most would normally expect them to do well. This happened again today after a huge plunge in the global financial markets. This is because the precious metals markets are manipulated by the central bankers in order to disguise what is actually happening. If gold went up $30-$40 on a day like today it would draw attention to the fact that gold serves as a hedge against collapsing financial markets. This is why they manipulate the gold price down on days when precious metals would typically do well. The manipulation game is nothing new though. Central bankers for many years have consistently dumped gold into the market in order to artificially suppress its price. In fact, this precious metals bull market has been largely suppressed by the powers that be so they can more easily manage a slow decline of the U.S. Dollar without alarming too many people. A sudden collapse would create alarm and could in fact hurt the establishment insiders, so a slow managed decline of the U.S. Dollar and a slow rise in precious metals is preferable for them.

Even the propagandists in the media are being forced to admit that we are in a recession despite the fact that we've been in one for quite sometime now. For awhile now, they have asked if we are entering a recession instead of admitting that we've been in one. Now the reality is becoming so clear that some are saying that we are facing the worst economic crisis since the Great Depression. It is really quite amazing that the media has blacklisted coverage on Ron Paul's presidential campaign when he is the only one providing solutions to this economic crisis that we find ourselves in. Obviously, the powers that be in the media aren't interested in resolving these problems because it matters not to them if the economy crashes. They are monopoly men that seek consolidating wealth and power. They did this in the Great Depression by contracting the available money supply and through the seizure of the American people's gold. It looks as if they are on the track to do it again but this time they will do it by destroying the value of the U.S. Dollar through mass amounts of inflation.

Clearly, things do not look good as a global depression is a very likely possibility. Gold should easily reach $1,000 an ounce and beyond this year and we should also see silver hit $20 an ounce by year's end. Keep in mind that these are conservative estimates. On a long term basis the U.S. Dollar is heading further into the toilet simply because we have insane people creating money out of nothing who think they can solve the existing problem by creating even more money. It is mass insanity on a large scale and the more they do this, the more attractive gold and silver becomes. Don't expect Bush's stimulus package of tax rebates to help matters. If Bush really wanted to stimulate the economy to have a lasting effect, he'd call for the abolishment of the IRS and the federal income tax. He'd also call for the elimination of the Federal Reserve System and a return to an honest monetary system. This phony solution is nothing more than smoke and mirrors designed to pacify the American people into thinking that the government is doing something to fix the problem. Buy gold, buy silver, buy storable foods, buy ammunition, buy firearms and buy survival equipment. Those are the best long term investments at this point in time and whatever you do, do not trust what the establishment corporate controlled media or the government says. These people have proven time and time again that they are chronic liars and propagandists.

From  http://www.roguegovernment.com/news.php?id=6203


IMF warns of serious meltdown
Published on Tuesday, January 22, 2008.


Source: Gulf Daily News

All developed countries are suffering from the slowdown in the US putting the world economy in a serious situation, IMF Managing Director Dominique Strauss-Kahn said yesterday.
His comments came after world stock markets fell sharply and demand for safe-haven bonds.
"The situation is serious," he said.
He warned that emerging market growth could also be dragged down by the outlook in the US.
Meanwhile, top European finance officials stressed that their economies remained solid as global stock markets plunged on concerns about a risk of recession in the US.
"The excess of volatility of the markets is not good news," EU Economic and Monetary Affairs Commissioner Joaquin Almunia said.
"I hope they will become more quiet because at least in Europe the fundamentals of our economies are sound," Almunia added.
Seeking to allay fears about the impact of US weakness on Europe, Dutch Finance Minister Wouter Bos said a US slowdown "will have an impact on the European economy but it will be moderate."
"We are all concerned. We are following the events on a daily basis, we hope things will not be as bad as they may look," said Slovenian Finance Minister Andrej Bajuk, whose country holds the rotating EU presidency.
Spanish Finance Minister Pedro Solbes acknowledged: "We are worried in the sense that we have to follow what's happening every hour and to try to understand what's happening."


Tuesday Could Bring 1,000 Point Drop in Dow

A 1,000 Point Drop On The Dow? (C)(BAC)(AXP)(AAPL)
Published on Monday, January 21, 2008.


Source: 24/7 Wall Street

Tuesday could bring a 1,000 point drop on the Dow, especially if markets in Asia and Europe repeat their Monday performances tomorrow. China's big Hang Seng index fell 5.5% to 23,818. The percentage drop in Shanghai was a bit less.
Europe markets have also been off over 5% most of the day with the German DAXX and French CAC 40 leading the way. Huge multinational Siemens (SI) has fallen as much as 7.3%. French financial services giant AXA (AXA) has been off almost 8%.
A 6% drop on the Dow tomorrow would be almost 750 points. If concerns over a US recession and the lack of real solutions in the Bush economic stimulation plan rattle the markets more Dow components like Citigroup (C), JP Morgan (JPM), and American Express (AXP) could be hit especially hard.
Bank of America (BAC) and Apple (AAPL) report tomorrow. If the market thinks those companies might report below consensus the shares could be pushed down early.
For the Dow to drop 1,000 points it would have to sell of 8%. On October 19, 1987 the index sold off over 22% and it lost 7% of its value in one trading day on both September 21, 2001 and April 14, 2000.
With the deep concerns with the market, it could happen again.


Bank of America net sinks 95 percent
Published on Tuesday, January 22, 2008.


Source: Reuters - Jonathan Stempel

NEW YORK - Bank of America Corp said on Tuesday quarterly profit sank 95 percent, hurt by more than $7 billion of losses tied to write-downs, poor trading decisions and mounting credit woes.
Fourth-quarter net income for the second-largest U.S. bank fell to $268 million, or 5 cents per share, from $5.26 billion, or $1.16, a year earlier.
Analysts' average forecast was a profit of 19 cents per share, according to Reuters Estimates.
Bank of America shares fell $2.46, or 6.8 percent, to $33.51 in pre-market trading.
"This is a weak set of results, (and) rather disappointing if you look at the core numbers, especially credit quality deterioration," wrote Ed Najarian, an analyst at Merrill Lynch & Co in New York.
Results reflected $5.44 billion of trading losses, compared with a year-earlier profit of $460 million. This reflected a $5.28 billion write-down related to collateralized debt obligations, which the bank said reduced trading profit by $4.5 billion and other income by about $750 million.
Charlotte, North Carolina-based Bank of America also set aside $1.74 billion for credit losses, including a $1.33 billion addition to reserves. It also incurred $800 million of losses and write-downs to help some money market mutual funds exposed to risky debt maintain the $1 per share net asset value that all such funds try to keep.
The bank's Tier-1 capital ratio, a measure of its ability to cover losses, fell to 6.87 percent in the fourth quarter from 8.22 percent in the third quarter. Regulators say a 6 percent ratio reflects a "well-capitalized" bank.
"We certainly are not pleased with our performance," Chief Executive Kenneth Lewis said in a statement. "We are cautiously optimistic about 2008, though we believe economic growth will be anemic at best in the first half."
Last week, Bank of America set plans to cut 650 jobs in its markets and investment banking unit, including deep cuts in structured products.
The bank said it ended the year with $15.65 billion of net exposure to super-senior CDOs, before write-downs.
Analysts have said market conditions may prompt Bank of America to renegotiate its planned $4 billion purchase of Countrywide Financial Corp, the largest U.S. mortgage lender.
When the deal was announced on Jan 11, it valued Countrywide at $7.16 per share. Countrywide shares fell 10.7 percent to $4.43 in pre-market trade.
Bank of America joined Citigroup Inc, JPMorgan Chase & Co and other banks in reporting losses related to leveraged loans, mortgages, consumer credit, or a combination.
Last week, JPMorgan said quarterly profit fell 34 percent to $2.97 billion, while Citigroup posted a record $9.83 billion quarterly loss.
Bank of America generates more of its business in the United States, exposing it more to weakening economic conditions at home, such as in housing.
Its profit from consumer and small-business banking fell 28 percent to $1.87 billion. Net interest margin fell to 2.61 percent from 2.75 percent a year earlier but held steady from the third quarter.
The fourth-quarter results were the first to reflect the bank's $21 billion purchase on October 1 of ABN AMRO Holding NV's LaSalle Bank.
Corporate and investment banking operations posted a $2.76 billion loss, compared with a year-earlier profit of $1.4 billion. Wealth and investment management profit fell 42 percent to $334 million.
The bank ended the quarter with $1.72 trillion of assets.
Bank of America shares closed Friday at $35.97 on the New York Stock Exchange. Through Friday, they had fallen 33 percent in the last year, compared with a 34 percent drop in the Philadelphia KBW Bank Index.
(Additional reporting by Dan Wilchins; Editing by John Wallace)


Black Monday as biggest FTSE crash since 9/11
Published on Monday, January 21, 2008.


Source: This is London

The stock market was in meltdown today as nearly 60billion was wiped off London shares.

A combination of poor economic figures and the worsening global credit crunch sent the FTSE 100 plunging.
At one stage the drop was the biggest since 9/11 in 2001, although the index of Britain's biggest companies later clawed back some of the losses. At lunchtime the Footsie was down 250.1 points to 5647.8.
That means the FTSE 100 has now fallen by around 10 per cent in the last 10 days, by around 15 per cent over the last month and is well on the way to being off 20 per cent since its most recent high of 6754 in July - before the world's banking system was sent spiralling.
It is also the worst start to the year for the stock market since records began in 1936. "I smell the acrid stench of fear and uncertainty," said markets commentator David Buik of BGC Partners.
European markets also tumbled.
The fall in the Footsie came after figures revealed a record government borrowing deficit for December of 7.8billion.
Howard Archer of forecasters Global Insight said: "The Chancellor's target of cutting public sector borrowing next fiscal year now looks like wishful thinking."
Big fallers included Wolseley, the building supplies company, which reported a 40 per cent drop in profits.
Pointing the way: A trader signals the direction of UK and European indices after the biggest single fall in Japan since 9/11
It came as Asian markets fell overnight after leading shares on Wall Street's Dow Jones Industrial Average slipped into the red on Friday.
Investors were left unimpressed by the US government's tax-relief plans to stimulate the economy.
The Footsie is now down 10.5 per cent on the opening mark of 6456.9 this year - the worst opening since records began in 1936.
The grim economic outlook comes as Gordon Brown has announced a rescue plan for the ailing Northern Rock.
The Treasury aims to sell millions of Government-backed bonds which will effectively prop up the bank, a move which is likely to make it more attractive to private investors.
The news sent shares in the stricken bank soaring this morning.
Mark Outten, senior trader at GFT Global Markets, said: "There is a general nervousness in the markets at the moment over an economic slowdown."
Last week, the index dipped below the 6,000 barrier for the first time since the start of the credit crunch in August.
Earlier this morning, the Footsie was almost 170 points lower, touching levels not seen since August 2006.
Just a handful of shares were in positive territory, including Friends Provident, which was buoyed by talk of a bid for the life assurer.
Markets also fell in Europe, with the CAC-40 in Paris down more than 3 per cent and the Dax in Frankfurt down almost 3 per cent as they digested the news from across the Atlantic.
On Friday, President George Bush unveiled plans for a special package of measures worth billions of dollars to help avoid a downturn in the US economy.
He said the growth package would have to be big enough to make a difference to the "large and dynamic" US economy.
But US shares turned sharply lower following the announcement, with some market participants saying that Mr Bush's plan did not go far enough.

 link to www.thisislondon.co.uk

The New Kings of Wall Street
Six gulf states control sovereign wealth fund assets of some $1.7 trillion. Here are the men who manage these funds
By Emily Thornton

The men who manage the so-called sovereign wealth funds of the Persian Gulf for their governments are quickly becoming some of the world's most powerful money managers. They are using billions from Persian Gulf oil revenues to change the face of global finance by buying big chunks of blue chip companies, partnering with private equity firms to do buyouts, and increasingly snapping up companies on their own. As the credit crisis deepens, investment banks and buyout firms are stepping back from dealmaking to nurse their wounds. Gulf funds, which already have more assets than the entire $1 trillion buyout industry, are filling the void. Move over, Steve Schwarzman at the Blackstone Group (BX), and meet the new kings of Wall Street.


Show Me the Moneymen
A buzzy Web site brings scrutiny to the previously secretive world of VC investing
by Spencer E. Ante

Adeo Ressi has long had a problem with authority figures. When he was in college, at the University of Pennsylvania, he ran an environmental newspaper called The Green Times. He tried to turn in copies of the paper as his senior thesis, but his professor wouldn't accept them. Ressi dug in his heels and refused to submit a traditional thesis. He never did get a degree. "He's always done his own thing," says younger brother Alex Ressi.
With his latest venture, Adeo Ressi is taking on the Establishment once again. A year ago, the 35-year-old New Yorker started up TheFunded.com, a Web site that lets entrepreneurs anonymously rank, review, and post comments about venture capital firms. As an entrepreneur who has started numerous companies, Ressi saw a need to shine a spotlight on the previously secretive industry. "Venture capital definitely needed a kick in the pants," he says.
It's certainly getting one. TheFunded has become the talk of Silicon Valley, as venture firms have come in for increasing scrutiny and in many cases harsh criticism. One recent winter day, in a cramped conference room in his Greenwich Village office, Ressi pecked his way through the site, waving his long arms and poking at the computer screen. "They stole as much information as they could about my business," reads one recent post. "It was a very unfriendly atmosphere," reads another. Ressi points to a third comment about a venture employee who was 40 minutes late for an appointment, didn't apologize, and then was obnoxious. "How much you wanna bet that guy gets fired in a few months?" he says.
Ressi isn't just an angry young man. He's also a successful entrepreneur, with a track record that provides him legitimacy in the tech industry. Over the past decade, he has sold three of the businesses he started for a total of more than $100 million, including the sale of his online gaming company Game Trust to RealNetworks (RNWK) a few months ago.
In person Ressi comes across more as idealist than insurrectionist. He argues that airing the venture industry's dirty laundry will ultimately improve the efficiency of the funding process as well as relations between financiers and entrepreneurs. Ressi has just moved to Palo Alto, Calif., with his family to get inside the Silicon Valley "echo chamber," which he believes will allow TheFunded to have a bigger impact. "The only surprise for me is that something like this took so long to show up," says Paul Kedrosky, a partner with Ventures West Management.
Still, many VCs are infuriated by TheFunded. Critics say the site lets disgruntled entrepreneurs unfairly vent their frustrations behind a cloak of anonymity. Recently, Silicon Valley's Hercules Technology Growth Capital went so far as to send a letter to Ressi about a post that it called "false and defamatory" on TheFunded. "[W]e urge you to remove the posting immediately so that we can avoid a lawsuit," an attorney for the firm said.
Ressi has never bent to such criticism. In fact, he's planning to go even further in exposing the inner workings of the venture world. Next week he plans to launch an addition to the site that will allow entrepreneurs to post the sensitive information contained in their venture financing offers. These contracts, most often signed with confidentiality agreements, include crucial details such as liquidation preferences and redemption rights. Ressi says the step is necessary to expose the increasingly onerous terms being written into deals. But he admits, "even my lawyers are a little nervous."
Ever since he was a child, Ressi has thought of himself as something of an outsider. While most New York City kids spent their summers in sleepaway camps in the Catskills and such, the gangly teenager begged his parents to send him to Arcosanti, an "experimental city" founded in the Arizona desert by the Italian architect Paolo Soleri. He ended up spending four summers there as its youngest inhabitant. It changed his life, though he ended up doing mostly menial labor. "
I had the opportunity to experience a very utopian vision of the world," he recalls.
One side project that Ressi is working on was inspired by his experience at Arcosanti. Ressi is setting up a Web site that will allow people to contribute ideas and plans for building more sustainable urban developments. He hopes one day to use the contributions to build what he calls the City of the Future.
Growing up on New York's Upper West Side, Ressi was shaped by his parents' differing personalities. From his father, a quiet civil engineer, Ressi inherited a love of architecture and technology. From his mother, an outgoing social worker, Ressi developed a more gregarious side. "My mother has a hardwire from brain to mouth," says brother Alex. "Adeo has inherited some of that quality."
After college at Penn, Ressi was drawn to the nascent Internet scene. It was the perfect fit for a young soul who knew how to manipulate computers and didn't want to work for The Man. In 1994 he helped run one of the first local Web sites, Total New York, which America Online bought in 1997. In 1995 he launched methodfive, a Web development firm, and in 2000, he sold the 250-person startup to Xceed for $88 million.
The idea for TheFunded was born out of Ressi's experience at Game Trust, the developer of online games he founded in 2002. Ressi says he had lined up a $10 million investment from Softbank Capital for a second round of funding. But in February, 2005, on the day the deal was supposed to close, Softbank pulled its offer. The withdrawal set in motion a chain of events that ended 18 months later with one of Game Trust's new investors trying to boot Ressi out of the company.
The coup failed, but Ressi knew he had to do something. So over the winter in 2006, he built TheFunded.com. The idea was to create a place to help him evaluate venture capitalists in case he needed to raise money in the future. The site struck a chord with other entrepreneurs, and Ressi quickly signed up hundreds of members, who began posting juicy stories under titles such as "The Truth About Matrix Partners."
TheFunded.com isn't a big money maker. Ressi pulls in revenue by selling advertising, as well as $400-a-year subscriptions, typically to the institutional investors who put money into venture funds. To date, Ressi claims 450 subscribers. He says the site is profitable and revenue "will easily hit seven figures" this year.
Still, the site's popularity with entrepreneurs is surging. So far, some 4,600 have signed up as members (who must register, but don't pay fees like subscribers), up from 3,100 last fall. For them, the site functions like an after-hours club and support group. In the Advice section, entrepreneurs can post tips about the fund-raising process. In another area, members can rate a venture fund on a scale of 1 to 5. And while venture capitalists are not allowed to view comments in the members-only area, Ressi created a section where they can publish their own profiles and comment on posts made in that section.
Venture firms are pressuring Ressi for more involvement and influence. George Zachary, a partner at Charles River Ventures who counts himself as a friend of Ressi's, says TheFunded should forbid anonymous posts. "There should be more transparency," he says. "Anonymous comments allow people to make up stuff."
Ressi retorts: "Anonymity provides entrepreneurs with a comfortable environment to speak their minds freely."
TheFunded could create long-term challenges for Ressi. As a frenetic entrepreneur, he likely will try to raise venture money for one of his future startups. But it may be tough to persuade VCs to cut him a check after he has so publicly taken on the industry Establishment. "Yes," he says with a smile, "it will be difficult."

The Reveal
For most of last year, the man behind TheFunded.com kept his identity secret. Adeo Ressi had no intention of ever giving up this anonymity. But last summer, rumors started to spread about the person behind the site. Ressi decided to manage his unmasking rather than be surprised by it. The result was a feature in the December issue of Wired revealing what writer Carlye Adler called "one of the tech industry's most tantalizing secrets."


homepage: homepage: http://groups.yahoo.com/group/Cascadian_Bioregionalism/


Stan Myers

The price of petroleum fuels are the cause of the depression. Internal combustion engines can run run on H2O. Want a way to get people pissed off and into the streets? Tell them about free energy and the fact that "The Man" won't let us use it!

the cause 22.Jan.2008 22:24

Ecotopian Yeti

the cause of this new great depression is many many factors such as multiple resource "mismanagement" (not just petroleum, but natural gas as well), the debt game (on all levels), the shifts in climates, the changing dynamics of over population, outright corporate greed, the global relocation of employment, the changing of means of labour, the erosion of human dignity, the erosion of dignity of life, growing gap between the elite and the impoverished, the emptiness of consumerism, the destructive production created out of the military industrial complex and the endless other factors converging to say "we are fucked". But hey maybe this is our "disaster wake up call" (to play off of Klein's Disaster Capitalism) to act up, act out and act now before we have a cancer invested corpse we once called the biosphere.

we were warned 23.Jan.2008 00:29

Ecotopian Yeti

none of this should have come as a surprise people

What will final Break the Amerikan Empire and cause Revolutions and Partitioning

Gold, Peak Oil, dollars and the collapse of the Amerikan Economy

Hate to have to point this out 23.Jan.2008 05:24

Mike Novack stepbystpefarm <a> mtdata.com

There's one teensy problem blaming the existence of recessions/depressions on central bankers creating "paper" money. Were THAT the cause then we would not have been having periodic recessions/depressions back in the days when everybody was using "hard" money.

Unfortunately, a quick glance at finanacial history will show you not so. Yes Viriginia, back in the days when we all were on the "gold standard" we had recessions/depressions too.

the real cause 23.Jan.2008 09:45


booms and busts are part of capitalism, but sometimes the system reaches its limit (growth cannot continued unlimited without reaching its natural boundaries... Marx called this the crisis of capitalism; wars and revolutions are the inevitable result.

the answer? struggle for socialism

instead of socialism why not.... 23.Jan.2008 10:45

Ecotopian Yeti

I know there is this big kick on socialism lately, but let me make an alternative to both capitalism and socialism. Why not look at Michael Albert and Robin Hahnel's idea of ParEcon (Participatory Economics). Parecon is being used by the Vancouver Parecon Collective ( http://vanparecon.resist.ca/). And I believe merged with the idea of bioregionalism would be ideal, because parecon advocates assumes the ecological factor is embedded within their system yet if merged with bioregionalism would make ecology (socio-ecology) a founding pillar of the idea. ParEcon believes in the democratization of the work place with decentralization and the removal of a management class (which has been the two key with socialist experiments). So a bioregional ParEcon would turn socialism upside down (by removing hierarchy and empowering people directly connected to production) and inside out (by decentralization) and yet keep the core values of socialism in the sense of protecting the needs of the people and safe guarding the social contract. Would I would like to see the evolution of Cascadia into a Bioregional Coooperative Commonwealth inn which localization, democratization and ecological harmony are the foundations of that commonwealth. Of course Albert criticizes bioregionalism as an incomplete replacement to capitalism and I would agree that its not a complete idea, but when you merge the core values of bioregionalism with parecon or horizontalism or autonomism (both movements have been applied to workers liberation movement in post Enron Argentin) you end up with a perfect replacement of capitalism while having the essence of the core values many of us idealize in socialism. As for a bioregional cooperative commonwealth we have historically seen an attempt that was relatively successful in Cascadia. That was the Equility Colony in Skagit which had the Brotherhood Cooperative Commonwealth (BCC)  http://vanparecon.resist.ca/). And I believe merged with the idea of bioregionalism would be ideal, because parecon advocates assumes the ecological factor is embedded within their system yet if merged with bioregionalism would make ecology (socio-ecology) a founding pillar of the idea. ParEcon believes in the democratization of the work place with decentralization and the removal of a management class (which has been the two key with socialist experiments). So a bioregional ParEcon would turn socialism upside down (by removing hierarchy and empowering people directly connected to production) and inside out (by decentralization) and yet keep the core values of socialism in the sense of protecting the needs of the people and safe guarding the social contract. Would I would like to see the evolution of Cascadia into a Bioregional Coooperative Commonwealth inn which localization, democratization and ecological harmony are the foundations of that commonwealth. Of course Albert criticizes bioregionalism as an incomplete replacement to capitalism and I would agree that its not a complete idea, but when you merge the core values of bioregionalism with parecon or horizontalism or autonomism (both movements have been applied to workers liberation movement in post Enron Argentin) you end up with a perfect replacement of capitalism while having the essence of the core values many of us idealize in socialism. As for a bioregional cooperative commonwealth we have historically seen an attempt that was relatively successful in Cascadia. That was the Equility Colony in Skagit which had the Brotherhood Cooperative Commonwealth (BCC)  link to www.stumpranchonline.com). a brief description of Equility and its movement:

"St. Louis in 1896 was the theater of a movement destined to have an effect on the history of the State of Washington. The Populist Convention held there split into three parts: one went with Bryan, one Nominated Weaver, and one plunged for a demonstration of the worth of socialism through co-operative colonies??.The Brotherhood of Co-operative Commonwealth was organized in Maine on a national and even international scale."

"Its objective was to move all the socialists into one state, develop co-operative colonies and eventually capture the state politically for socialism. The State of Washington was chosen and a site in Skagit (County) was selected for the first experiment. . . . The Brotherhood of the Co-operative Commonwealth put up $10,000 initial capital, collected from all over the country in amounts from dimes to hundreds of dollars . . ."
( http://republic-of-cascadia.tripod.com/republicorcommonwealth.html)

Again in Oregon in the 18450s there was the Aurora Colony (just south of Oregon City) that was a successful German communal society with many aspects of collective and social cooperativism, but was held together by a charismatic leader. Gandhi had the Tolstoy Farm that was also a cooperative commonwealth.

Online text:

Parecon: Life After Capitalism by Michael Albert

A Quiet Revolution In Welfare Economics
By Michael Albert and Robin Hahnel

The following is a more detailed definition of a Cooperative Commonwealth and its values from an excellent website ( http://www.geocities.com/coopnat1/coopcom2.html). As you read the definition imagine adding bioregional values such as advocating socio-ecological balance, eco-centricism (as opposed to (anthropocentricism), local empowerment, local economy, a shift from majority rule democracy to a BioDemocratic view and so forth:

Cooperative Commonwealth
"Though force can protect in emergency, only justice, fairness, consideration and cooperation can finally lead men to the dawn of eternal peace."
~ Dwight Eisenhower (1890-1969)
The problems facing America today are numerous. Outsourcing is sending American jobs overseas while replacing them with low paying "McJobs", large multi-national corporations receive tax breaks and subsidies while they drive small family shops into bankruptcy, there's a severe lack of affordable health care and child care, political corruption is widespread, the government at all levels has shown it's unable to respond properly to disasters, companies are breaking their promises to their employees and failing to fund their pensions, and the crass commercialization that has seeped into nearly all aspects of our lives are just a few of the problems America faces. While at the same time neither political party is willing to stand up and provide solutions. There seems to be a growing chorus of voices in America that there has to be a change.
On this site I advocate the peaceful conversion of America into a Cooperative Commonwealth based on democratic principles, diversity, social justice, self-reliance, mutual aid, and the renewal of community.
The Scope of this Web Site
This is not meant to be taken as some Utopian model of society. I don't pretend to be some Moses leading the people out of slavery. And the system I lay out here is far from complete and leaves as many questions as it answers. The purpose of this site is to provide a basic vision on the socio-economic system that I advocate.
What is a Cooperative?
A Definition
Before we define what a Cooperative Commonwealth is we must first define what a Cooperative is. According to the International Co-operative Alliance:
"A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise."
Cooperative Values
The ICA goes on to describe Cooperative Values to be:
"Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others."
The ICA combines this definition with the Cooperative Values to create a set of operating principles:
1st Principle: Voluntary and Open Membership
Co-operatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
2nd Principle: Democratic Member Control
Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organized in a democratic manner.
3rd Principle: Member Economic Participation
Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.
4th Principle: Autonomy and Independence
Co-operatives are autonomous, self-help organizations controlled by their members. If they enter to agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.
5th Principle: Education, Training and Information
Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation.
6th Principle: Co-operation among Co-operatives
Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.
7th Principle: Concern for Community
Co-operatives work for the sustainable development of their communities through policies approved by their members.

What is a Cooperative Commonwealth?
Now that we've seen what an individual cooperative is we can now explore one vision of how this type of enterprise may be applied to the national economy.
The Current System
Under the current American economic system production is centered on privately held enterprises in which the owners are not the same as either the managers or the workers. By "privately held" I refer to fact that the controlling ownership of these corporations rests with the shareholders and not the workers of the enterprise. In such a system the workers sell their labor power to the company, which uses the labor power to produce commodities of exchange to be sold on a market. Because of the labor power of the workers, when these commodities are sold they have a value greater than the wage paid to the worker. This value is called a surplus value and creates the profit for the business. The workers don't see this profit from the surplus value they created but instead it goes to the owners, usually shareholders, who didn't provide any labor power but who reap the profits often in the form of dividends.
The goal of the current system is not to generate wealth for America, as the system advocates would have you believe. David Laibman, professor at Brooklyn College, CUNY, instead defines our current system as one "in which a surplus is extracted from the producers for the purpose of accumulation of power by a propertied minority".
A Cooperative Commonwealth System
In a Cooperative Commonwealth system the producers would directly own and democratically manage the means of production in which the products would be equitably distributed for the benefit of society. The core economic enterprise in a Cooperative Commonwealth would be in the form of autonomous worker owned cooperatives. These cooperatives would make up the bulk of all enterprises. The remainder would be small family owned enterprises, sole-proprietorships and partnerships. All of these would be connected through various councils composed of representatives of worker and consumer cooperatives along with family enterprises and community interest groups.
The Core Economic Units of a Cooperative Commonwealth
* Worker Owned Cooperatives
As mentioned earlier the core unit of a Cooperative Commonwealth system would be economic enterprises owned by workers and organized along similar lines to the before mentioned cooperative definition, values and operating principles.
There would be no one standard or mandated organizational structure for the co-ops though there would be some required elements set according to the by-laws similar to the cooperative principles mentioned previously. Workers in many small cooperatives would manage their operations directly while some may simply elect one of their own or hire a manager from outside. But some industries require large operations. In the larger enterprises workers would elect a board of directors who would elect or hire managers. These would operate as federations of worker cooperatives that would coordinate their productive activity while maintaining their independence.
* Small Family-Owned Enterprises
It's very important to emphasis that small family owned businesses would be encouraged and strongly supported in a Cooperative Commonwealth. This type of enterprise would make up a smaller, second core unit of the economic system. Small family businesses, while not necessarily following the cooperative principles, already share many of the same values as co-ops. According to the web article What Makes Family Businesses Different, "The business has a social purpose. Family businesses rarely justify their existence by profit-maximizing alone. The owners expect and need a higher purpose to retain their ownership, and to justify the sacrifice of personal freedom and economic diversification."
What would a Cooperative Commonwealth consider a "small family business"? First, what is meant by a "family business" has to be clarified. The magazine ColoradoBiz ranks Colorado's top 50 family-owned businesses every year. For the ranking they define a "family owned business" as one where, "a company's ownership must be controlled by a single family; the controlling family members must be active in top management; and the family has to have been involved in the company for at least two generations or seems likely to be."
While the ColoradoBiz ranking method is good further clarification is needed. In the current system a family owned business includes "mom and pop shops" on the town square as well as Wal-Mart in which the Walton family still owns controlling shares. So therefore the term "small" is added. But what defines "small"? The Small Business Administration defines a small business as 500 or fewer employees with annual revenue under $5,000,000. On the other side is a study of crime statistics by the Australian Institute of Criminology that defined a small business as "a business employing fewer than 20 full-time personnel (ABS 2001)." Society would have to decide what the acceptable size definition of a small family owned or sole proprietorship enterprise. What's acceptable in retail may be different than construction, for example.
While small family enterprises in a Cooperative Commonwealth wouldn't fail as often as in the current system they would probably still have a high rate of not being passed along to the children of the founders. In a Cooperative Commonwealth workers would have greater ability to choose their careers. If the children choose not to continue the enterprise, or if the founders decide to end it, then the workers would have the option to convert it to a cooperative. If they choose not to then the community could convert it to a community owned enterprise.
The End of Profit
By their nature worker owned cooperatives do not exist to create a profit for shareholders. Cooperatives operate to 1) provide a community service, and 2) provide for the economic well being of its worker/ owners. And as mentioned earlier small family owned businesses operate with something other than profit than a goal. This is different from the standard business model in the current economic system in which profit for the enterprise or its shareholder is the "bottom line". Service, to both the workers and the community, is the bottom line for a cooperative.
An important feature of a Cooperative Commonwealth must be to lessen the economic pressure on these enterprises. This can be done by increased social services such as universal health care, free day care, a real living Social Security benefit, and universal quality public education (preschool through college). In addition, a general reduction in cost of living due to the dominance of cooperatives and small family owned enterprises would also serve to reduce the economic pressure. So under a commonwealth systems then cooperatives/ family owned enterprises could center on providing high quality service, either in production or distribution, for the community and their workers/owners.
Quality Work Experience
Known by various names such as business performance management or organizational performance management these industries use various sociological and psychological tools to try to squeeze every penny of surplus value out of the worker. The problem isn't the science of performance management per se. The problem is the locus of control and the goal that they strive for. Currently the owners and managers, rather than the workers, use the technology to increase their profit margins. As a result this technology, rather than being put to the benefit of the worker, is simply another means by which the shareholders/ managers exploit the workers.
In a worker owned cooperative though this same technology would instead be under the control of the workers by which they could use this for their own benefit of increasing the quality of their work experience. One problem that would have to be faced is that there would still be unpleasant and monotonous jobs that would need to be performed. Performance management technology, under the control of workers, could be used to reduce the unpleasantness of such jobs and help those workers turn them into means of self-enhancement.
Cooperative Councils
The current system is designed to turn American against American, fighting for every scrap each can grab from his or her neighbor, in the name of economic competition. "Looking out for number one", rather than "United we stand", has become the American motto.
The cooperative system would change this. It would build on the sixth cooperative principle in which cooperatives work "together through local, national, regional and international structures." There would need to be coordinating bodies that would match the character of standing shoulder to shoulder with his or her neighbor in solidarity, which is the true nature of the American soul, to our economic relationships. Therefore, there would also be a need for nested layers of Cooperative Councils consisting of family enterprises, worker/ consumer cooperatives, and community interest groups.
A Cooperative Council would have numerous roles. It could allow the autonomous cooperatives of various sizes, sole-proprietorships, partnerships and small family owned enterprises to pool resources and training. It could provide a merit board by which disputes within cooperatives could be resolved, either concerning the removal of a manager by a cooperative or releasing a member by a cooperative due to performance or violation of by-laws. And it would allow the various cooperatives to coordinate their production for the maximum benefit of society.
One risk is that in all of the rush to give the reins of production to the workers the actual reason itself for the production may be lost. In a Cooperative Commonwealth production would be creating products for the use of all. The Cooperative Council could be a nexus by which the consumer cooperatives and various advocacy groups could interact in a positive fashion with the various production enterprises.
Some further clarification is needed here. First, these Cooperative Councils would not be government agencies. These would be bodies established by the cooperatives, small family enterprises, and community interest groups. Second, the participation of the advocacy groups in the Cooperative Councils would not mean that these groups would have controlling rights in the enterprises. They would be there to allow discussion and interaction between those groups and the co-ops/ small family enterprises.
Cooperative Banking
The conversion from a system dominated by big corporations would also require a conversion of banks into a system that supports individuals and families rather than making a profit for the shareholders of the banks.
A Cooperative Commonwealth banking system would mean, rather than large private banks that answer only to their shareholders, democratically owned banking. Such a system might include a combination of credit unions and community owned banks. There currently exists a federally chartered National Cooperative Bank (NCB) that makes loans to cooperatives and various non-profits. Similar cooperative banking enterprises could make low or no-interest loans to individuals for private purchases of homes, cars and other personal property goods.
Yet, what about banking and finance for cooperative enterprises and family/ sole proprietor enterprises? How would cooperatives raise the needed capital to start up their enterprises without privately owned banks?
Cooperative Financing
One of the great crimes, among the many, of the current system is the fact that only a small amount of the surplus is returned to the workers in the form of wages. The vast bulk of the surplus goes to the shareholders who don't actually produce. As a result the overwhelming majority of Americans are dominated by a small class of shareholders who control the surplus and the investments. And controlling the capital means controlling the nation.
These shareholders are currently necessary because in the current system without their money privately held businesses would not have the capital needed start-up or expand. Therefore, for the workers to be able to keep all of the surplus, which is their right since it belongs to them, and take their rightful place as owners of the economy a Cooperative Commonwealth would have to provide another source of financing apart from private shareholders.
As mentioned previously there currently exists the NCB, which makes loans to cooperatives and various non-profits. There are several problems with using the NCB as a model. First, is the fact that it provides loans. Debt equity simply doesn't have the efficiency of issuing stocks when it comes to raising capital. To start up or expand an enterprise loans are simply not as effective as investment notes. This is one reason there has been a movement by insurance companies to demutualize in recent years. Yet, stocks, as we've seen, divert the surplus from the rightful owners (the workers) to the shareholders in the form of dividends and capital gains. Second, the NCB, being organized as a cooperative itself, acquires capital as most cooperatives do by the notes issued to its members. And just as loans don't have the same bang as stocks neither do cooperative notes, which pay patronage dividends to it's owners. To be the source of capital to replace stocks and other corporate notes would require something more powerful than the NCB.
In a Cooperative Commonwealth the third operative principle, in which members of the cooperative "contribute equitably to...the capital of their co-operative", would be changed. Instead a new source of capital that has the same power as stocks, doesn't drain the surplus as stocks from the workers, doesn't require the workers to provide their own capital, and is a source of capital great enough to power a national economy with cooperative enterprises start-ups and expansion. Author David Schweickart, of Loyola University in Chicago, has proposed replacing private capital with a system of social investment. Social investment begins with a "capital asset tax" levied on the cooperative enterprises. This tax money is then returned back to the cooperative enterprises through non-profit regional and community banks in the form of grants. These grants would be used for start-up enterprises and expansions. While Schweickart's proposal only includes providing grant money to cooperatives I would include sole-proprietorships and family owned enterprises.
For more on Schweickart's views, and to compare them to the proposals on this site, click
Before one protests that such a tax would negatively impact these enterprises one should remember that no longer would productive enterprises pay dividends to non-worker shareholders. Any capital asset tax would be much smaller than the dividends that are now being drained off by shareholders. So such a tax would not be an increased burden. In addition, these tax dollars all go back into the economy in the form of capital for more enterprises, which is good for the existing cooperatives paying the tax and society as a whole. Such new enterprises would mean new innovative products and services to grow the economy, which would help the cooperatives. This differs from the dividends being paid in the current system that are not always returned as investments. Many dividends are pocketed by the shareholders and therefore don't benefit the current for-profit private enterprises or society as a whole.