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Fevers, Feuds, and Diamonds, Ebola and the Ravages of History, Paul Farmer, 2020

Young Paul Farmer and Future World Bank President Kim Jim Yong in Haiti

Ebola was not simply a deadly disease; it was the manifestation of neolibereralism as an affliction, which wrecks havoc in the world’s most vulnerable societies. –Ibrahim Abdullah and Ismail Rashid, Understanding West Africa’s Ebola Epidemic: Toward a Political Economy, 2017

Charles Taylor Liberian Warlord

There can be no understanding of this medical wasteland, and its vulnerability to Ebola, without knowledge of the shared and distinct histories… Their shared history has long involved rapacious extraction and forced labor regimes. Rapacity on this scale requires and foments violence, resulting in more illness and injury…That’s (colonial rule) where control-over-care strategies originated…In the first part of the twentieth century at least, black doctors were shunted aside or formally excluded from the colonial medical services…Many West Africans still harbor memories of campaigns to isolate (and sometimes destroy) settlements afflicted by smallpox, cholera, and vector-borne diseases such as plague, malaria, and trypanosomiasis. In the course of many of these epidemics, and for a century or more, funerals and wakes were banned, travel restrictions imposed, and punitive measures (from fines to incarceration) routine. Medical care was not…After independence, tardy efforts of link disease control to care were nonetheless under way in Guinea and Sierra Leone and, to a lesser extent, Liberia. But health expenditures of any sort remained a tiny fraction of postcolonial national budgets. That fraction shrank further when their governments signed on to structural adjustment programs (austerity) — and geared up for war…Neglectful policies first written by the sanitarians of fading colonial governments have left a disastrous imprint, but other disastrous policies were advanced by development institutions claiming to represent the poor, or frail or failed states. Few of these ventriloquists were natives of West Africa…Externally imposed austerity meant that governments lost much of their scant capacity to engage in anything resembling caregiving.

Commentary on most epidemics sends history down the drain. That’s no accident. Surely the successful rebranding of European empires as “Western democracies” and the inevitable focus on “local” disasters of African politics or epidemiology stand as impressive examples of willed amnesia. This entire process of shrugging off human agency — a.k.a. history — lets external actors and forces off the hook, allowing expatriate pundits and self-dealing global bureaucrats to argue that local greed and tribal grievance are the primary cause of independent Africa’s woes, including its poor economic, political, social, and physical health. But those without shelter are of course obliged to pay closer attention to the clouds above.

…if you want to address the delivery problems, you need a social medicine incorporating staff, stuff, space, and systems. But Western Africa, like the northern Congo, has not known this sort of social medicine, because of the extractive arrangements that I’ve described in the previous four chapters; slavery, racism, colonialism, and war. Its medical and public-health systems have failed repeatedly to delivery on the promise of discovery.

Ebola, like Marburg has received scant attention from the best basic scientists and clinical researchers, and from the world’s largest research based pharmaceutical concerns, for a simple reason: there’s not much money in it.

The critical step in preventing future epidemics will be finding ways of delivering vaccines and therapies to those who need them — and who need them in part because they live in a clinical desert that was created when their predecessors were enslaved and subjugated so that people and nations in other parts of the world could amass great wealth and prosperity.

Public-health nihilism and its control-over-care variant retain their force largely among the poor living in what are now called low-income countries. These countries are, of course, the former colonies; strains of the paradigm run rampant within them, and in the field now widely known as global-health.

The postcolonial world still suffers from control-over-care logic, and from the plague. In the Indian state of Gujarat, population forty-five million, plague killed hundreds in the 1990s–with the diamond polishing city of Surat the epicenter of a major outbreak in 1994.

One of the few happy aftermaths of the Western Ebola epidemic has been the development of what appears to be be a safe and protective vaccine… We can expect the usual debates about whether further and different clinical trials are needed, and which regulatory hurdles must be cleared before it and other vaccines are licenses, and by which agencies…Ebola-nomics is sure to influence these discussions, since the disease’s victims, like those sickened by cholera and plague, are mostly poor people of color, as are their primary caregivers.

…Ebola and other public-health calamities strike most often in places from which human capital and raw materials have been extracted for centuries. From the rural reaches of Haiti and Rwanda, from the prisons of Siberia, and from the slums of urban Peru; for thirty years, I’ve been pointing out how the epidemics that people have suffered in these places have arisen because of the inequalities — political, economic, and medical –that such extraction invariably worsens.

Kill Switch; The Rise of the Modern Senate, Adam Jentleson, 2021

Harry Reid with Jentleson

Jentleson was an aide to former Democratic Senate majority leader Harry Reid of Nevada.

James Madison

The first black slaves arrived in Virginia in 1619, one year before the Mayflower. This book is primarily the story about how white men, terrified of the possibility that they would one day be in the minority, fought a four hundred year war to assure that despite their inevitable eventual status as a minority could still find ways to maintain control of the US government. Their first attempts to create such a government resulted in the Articles of Confederation and Perpetual Union which went into effect in 1781. This confederation of states was so dysfunctional because of minority obstruction due to the super-majority requirements that a new basis of government was required. A convention was called in 1787 and a new form of government under the Constitution was formed in 1789. James Madison and Alexander Hamilton in the Federalist Papers called for a government based exclusively on the principal of majority rule. To get the support of southern white slaveholders (white supremacists) the great compromise was to create a senate where each state was allocated two senators serving for 6 year terms with 1/3 being elected each 2 years. In 1789 Virginia was 14 times the population of Delaware. Today California is 70 times the population of Wyoming making the US Senate the most malapportioned legislature in the world. Another part of the great compromise was to reserve super-majorities for impeachment, treaties with foreign nations, and amendments to the Constitution. The signers believed they had created a Senate where the majority ruled. Time has proved them wrong.

Slavery is a positive good John C Calhoun

In the nineteenth century, obstructionist minorities invented the filibuster to give themselves the power to defy the majority. In the twentieth century, under the banner of “unlimited debate”, southerners made the filibuster into a super-majority hurdle.

From the end of reconstruction in 1877 until 1964, the only bills that were ever stopped by filibuster were civil rights bills.

The Johnson Treatment

Lyndon Johnson and Harry Reid created leadership structures capable of making the formerly leaderless institution march in lockstep behind a leader’s agenda…Mitch McConnell paired those tools of control with the filibuster to give reactionary, wealthy, white, anti-choice conservatives (WWAC) minority veto power over everything the majority attempts to accomplish.

After two successive elections (2004-2008) in which broad, diverse majorities of voters had delivered unmistakable rejections of Republican governance, McConnell was claiming equal standing for a group of forty-one Republicans he led—of whom thirty-six were men and thirty-nine white.

Over the past few decades, changes to the Senate’s rules have meant that senators representing as little as 11 percent of the population can deliver the obstructionist agenda these white, conservative voters desire, blocking progress across most issues…This group is not just a minority, it is a super-minority.

The new rules and procedures rendered the old-style talking filibuster (Mr Smith Goes to Washington Movie 1939 James Stewart) antiquated. While there were now multiple tracks, there was still only one Senate floor. When a senator blocked one track with a filibuster, the Senate switched to another track to move forward with other business; the moving track became the main track, and the filibuster got pushed from the floor…The silent filibuster is also the result of leaders coming to rely on what are known as “unanimous consent” agreements of UCs…a UC is an all-encompassing agreement that governs every aspect of the Senate floor; when votes will occur, what amendments will be voted on, how long each vote will last, and so on.

With the UC the Senate can hold twenty votes in twenty minutes, or set the vote threshold at ten votes to pass a bill. The downside is that a single senator can block any UC.

Obama had promised to fix our broken politics, but the modern Senate made it easy for McConnell to impose gridlock.

The 2010 Citizens United v. Federal Election Commission Supreme court decision unleashed massive secretive outside money increasing midterm election funding from $70 million to $310 million, most of it flowing rightward. The 2010 midterms saw the ascendance of the disorganized Tea Party joined by the well organized and funded Koch brothers political machine.

Merrick Garland nomination

He (McConnell) had the foresight to open the floodgates to corporate cash, and to use the blockade of Garland (Obama Supreme court nominee) to unify the Tea Party base with the GOP establishment. He pioneered the blanket deployment of the filibuster, far beyond anything contemplated by previous leaders. But McConnell followed generations of white supremacist southern obstructionists who had come before him. Ever since John Calhoun set foot in the Senate, they fought against Madison’s vision of a majority ruled institution, forging new ways to impose their will on a country where progress threatened their power.

Undoing Border Imperialism, Harsh Walia, 2013

Walia refers to North America by its folklore Native American name Turtle Island. She refers to Vancouver as Indigenous Coast Salish territories. The No One is Illegal (NOII) movement often chants No One is Illegal, Canada is Illegal. Walia is a long-haul anti imperialist revolutionary with impressive intellect. Highly recommended but wish the publisher, AK Press of Oakland (Edinburgh) had not produced a pocket version with unreadably small print. Phoenix Library has only one copy of this important book.

On many days, fighting against border imperialism is like swimming in glue or grieving against gravity. But I remember all the battles we have won and the shifting terrain for migrant justice movements that has centered the voices and experiences of our immigrant, refugee, and non status communities within the broader social movements. In the words of Davis, “What we manage to do each time we win a victory is not so much to secure change once and for all, but rather to create terrains for struggle.”

Within movement building, the strengthening of external alliances and facilitating internal leadership both require a strong grounding in antioppresssion analysis and practice. Antioppresssion analysis attempts to examine and address the varied – often unintentional and invisible – effects of systemic marginalization and differential power dynamics between individuals, groups, and communities by providing a a critical analysis of the intersecting lived realities of race, class, gender, sexuality, and ability.

“Democracy is not, to begin with, a form of State. it is in the first place, the reality of the power of the people that can never coincide with the form of a State. There will always be a tension between democracy as the exercise of a shared power of thinking and acting, and the State, whose very principle is to appropriate this power.”- Jacques Ranciere Democracy is not, to begin with, a form of State

“What we want is democracy and inclusion of all – not in a nation, a state, or an identity that always presupposes exclusion – but in a life in common.” – Carlos Fernandez, Meredith Gill, Imre Szeman, and Jessica Whyte, Erasing the Line, or, the Politics of the Border.

Why don’t we alter the frames of the question, asking, instead, what feminism actually means and whether feminism, both as a political movement and analytical tool, is amenable to Islam and religious identity and practice? Anti imperialist movements reject the white man’s (and woman’s) burden – or what author Teju Cole characterizes as the “White Savior Industrial Complex” – represented by state interventions and certain progressive movements, to rescue women, children, and queers from their so called backward traditions. By challenging the ideologies of superiority and uniformity underlying cultural imperialism, anti-imperialist movements diversify and hence decolonize our understanding of how coercion is experienced.

People, Power, and Profits, Progressive Capitalism For An Age of Discontent, Joseph E. Stiglitz, 2020

Stiglitz is an optimist believing that the enormous concentration of wealth and income (23 people own 50% of the world’s total wealth) can be corrected with a more equal distribution brought about by political action. Thomas Piketty shares Stiglitz’s concern with income and wealth inequality but Piketty’s optimism is based on the study of history and how fast enormously significant and rapid changes have occurred in the past. It’s unclear what the basis for Stiglitz’s optimism is. He talks extensively about how unhappy large majorities of American citizens are, but how this can be translated into meaningful political change is unclear given how broken our current political system is.

Progressive International Elizabeth Goméz Alcorta Yanis Varoufakis Noam Chomsky

Japanese Translation

By 2018, those soaring ideas seem finally to have crashed to Earth. The 2008 financial crisis showed that capitalism wasn’t all that it was supposed to be–it seemed neither efficient nor stable. Then came a rash of statistics showing that the main beneficiaries of the growth of the last quarter century were those at the very top.

The elites had ignored the plight of too many Americans as they pushed for globalization and liberalization, including the financial markets, promising that all would benefit from these “reforms”. But the promised benefits never materialized for most citizens. Globalization hastened de industrialization, leaving behind a majority of citizens, especially the less educated, and of these, especially the men.

Financial market liberalization led to the 2008 financial crisis,the worst economic downturn since the Great Depression that began in 1929. Yet while tens of millions around the world lost their jobs, and millions of Americans lost their homes, none of the major financial executives who brought the global economy to the brink of ruin were held accountable. None served time; rather they were rewarded with mega-bonuses.

No wonder that in the aftermath of the economic failures we have described…there developed a skepticism of the elites and of the knowledge institutions from which they had supposedly derived their wisdom (Chicago School)…good academics had pointed out that globalization could actually lead to lower wages of unskilled workers…unless the government took strong counterveiling measures. They had pointed out that financial liberalization would lead to instability.

Hayek Friedman Reagan Thatcher
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…Swedes knew that a prosperous country required a high level of public expenditures, on infrastructure, education, technology, and social protection, and that the government needed revenues to sustainably finance these expenditures.

The truly greedy and shortsighted in the 1 percent have come to understand that the globalization, financialization, and other elements of the current economic rulebook are not supported by the vast majority of Americans…these super rich have thus formulated a three part strategy: deception, disenfranchisement, and disempowerment.

A misshapen economy creates misshapen individuals and a misshapen society

In economics,it will require both regulating the market and doing what the market can’t do. We will have to get over the shibboleths that markets on their own are self-regulating, efficient, stable, or fair, or that government is inevitably inefficient…we have to save capitalism from itself. We have to construct a new social contract that enable everyone in our rich country to live a decent, middle-class life.

Nor is an economy doing well if GDP goes up, but meanwhile the environment is deteriorating and resources are being depleted. A country living off the past and not investing in the future–or destroying its children’s environmental heritage–is one in which the generation is doing well at the expense of its descendants.

Finance was central to the creation of today’s economic, social, and political malaise: in the economic crisis that America endured for almost a decade as well as in the increase in inequality and the slowing of growth. Resources–including some of the most talented young people–went into finance rather than into strengthening the real economy.

The bank bailout of 2008 itself showed the power of the banks. They had caused the crisis, yet government provided massive largess to the banks and the bankers–without any sense of accountability for the crisis they had created, and with miserly help for the workers and homeowners who seemed but collateral in the financier’s war of greed.

Over the past half century, (some) economists have come to a deeper understanding of the circumstances in which some form of collective action is needed to ensure the attainment of societal objectives–and which markets by themselves fail to produce efficient or fair outcomes…in the absence of regulations, individuals will fail to take into account the cost of their pollution in their economic calculus. Market on their own produce too much pollution, inequality, and unemployment, but too little basic research.

Banks know how to take advantage of others through predatory and deceptive lending. Large banks engage in excessive risk-taking, knowing that they are too big to fail, so that if they run into a problem, they will be rescued.

There can only be trust if there is a belief that the political system is fair, and that our leaders are not just working for themselves. Nothing destroys trust so much as hypocrisy and gaps between what leaders promise and what is delivered…We had created a system where the inequalities in justice seemed as wide as those in income, wealth, and power. No wonder that so many Americans were angry.

Reset: Reclaiming the Internet for Civil Society, Ronald J. Deibert, 2020

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Deibert is professor of Political Science and founder and director of the Citizen Lab at the Monk School of Global Affairs and Public Policy, University of Toronto. He is also co-founder and a principal investigator of the OpenNet Initiative and Information Warfare Monitor projects. He was one of the founders and former VP of global policy and outreach for Psiphon.

A central theme of this book is the growth and dominance of Surveillance Capitalism by a handful of enormously rich and powerful companies and individuals.

Today it is virtually impossible to protect yourself from privacy encroachment via the Internet even using tools like Tor or end to end encryption like that found on Signal and WhatsApp. When Citizen Lab researchers cross international borders they must totally erase their Chromebooks to prevent seizure of their work. Much of Citizen Labs work is uncovering security and privacy vulnerabilities in existing Internet products such as Zoom with vulnerable camera and microphone control and the big hack of 2020. A huge problem with the Internet is its dependency on multiple layers of independently developed software deployed without adequate attention to security issues and problems. Governments may compound the security problem by requiring exploitable back doors, promoting faulty encryption that they can break, or the forced disclosure of encryption keys as a precondition for use in their jurisdictions.

Using Privacy Badger, Deibert found fifteen trackers on LinkedIn and a comparable number of trackers on the New York Times “Privacy Project” site.

As I write this book, the nerves of our World Brain are vibrating with full-on assaults on truth, science, ethics, and civility.
It’s a perfect storm–tools that enable precise details about people’s preferences and habits; Sophisticated machines that can swiftly analyze and then manipulate data as points of leverage around human emotions; unethical companies willing to do anything for a profit; and clandestine government agencies that lack public accountability but do have big budgets and a blank cheque to use social media as an experimental laboratory for their dark arts. The potential implications of this perfect storm should be profoundly unsettling for everyone concerned about democracy, the public sphere, and human rights.

Receiving special attention here is Isreali-based NSO Group and their flagship spyware Pegasus which the Saudi government used to spy on Saudi dissident and exile in Canada student Omar Abdulaziz and his friend Jamal Khashoggi. Citizen Lab had a bead on the number of Pegasus infected phones and realized that one of those phones was in Montreal. Going door to door with a short list of Saudi dissidents in Montreal, they uncovered the needle in the haystack Omar Abdulaziz and were able to confirm that his phone was infected. It is more than likely that information from this infected phone informed Saudi intelligence of Omar’s conversations with Khashoggi and may well have led to Khashoggi’s assassination by MBS.

Deibert estimates that 90% of the most active campaigners in the 2011 Arab Spring have vanished, in large part due to the use of NSO Group’s spyware.

Citizen Lab was able to infect an Iphone with Pegasus spyware in a laboratory environment and to reverse engineer Pegasus itself.

The spyware was extraordinarily sophisticated; it included exploits that took advantage of three separate flaws in Apple’s operating system that even Apple was unaware of at the time…After disclosing the vulnerabilities to Apple, which pushed out a security patch to more than one billion users, and publishing our report on targeting Mansoor, we reverse engineered Pegasus and began scanning for and monitoring NSO’s infrastructure and government client base.

Finding exploitable flaws in operating systems can be sold for as much as $1 million.

Also receiving special attention is China’s security apparatus courtesy of the Chinese government obsession with the Tibetan refugees settled in Dharamsala particularly with the Dalai Lama. Deibert representing Citizen Lab made numerous trips to Dharamsala and had a personal audience with the Dalai Lama. Citizen Lab’s history studying GhostNet goes back to 2009 when China’s large-scale electronic espionage program used to spy on individuals, organizations, and governments was discovered. The threat actors breached 1,295 computers in 103 countries over a two-year period, predominately focusing on governments in Southeast Asia. Citizen Lab’s first report on GhostNet was issued in 2009.

…recent years have brought about a disturbing descent into authoritarianism, fueled by and in turn driving income inequality in grotesque proportions and propelling the rise of a kind of transnational gangster economy. There is today a large and influential class of kleptocrats spread across the globe and supported by a professional service industry of lawyers, shell companies, accountants, and PR firms, the members of which move seamlessly between the private sector and agencies of the state…They thrive by victimizing innocent others, undermining individuals and organizations that seek to hold them to account, and using the power of the state for personal gain. There is no jurisdiction that is immune to corruption and authoritarian practices–only greater or lesser degrees of protection against them.

…In fact, the most disturbing dynamics are playing themselves out within normally liberal democratic countries. Hyper-militarized policing practices that draw on big data and AI-enabled surveillance tools are creating states on steroids…Meanwhile the constraints on abuse of power seem quaint and old-fashioned, as if constructed for a different time and context. We now have twenty-first century policing practices with nineteenth and twentieth century checks and balances.

The growing critical commentary on social media and surveillance capitalism is at a stage similar to the environmentalism of the 1960s and 1970s. The works of Shoshana Zuboff, Siva Vaidhyanathan, Bruce Schneier, and others are, in this respect, the social media equivalent of Rachel Carson’s Silent Spring, Barry Commoner’s The Closing Circle, and Paul Ehrlich’s The Population Bomb. They have dissected what’s wrong and have helped wake us up to a serious pathology, but they have yet to carve out a confident alternative way to organize ourselves.

Commenting on Europe’s GDPR and California’s Consumer Privacy Act, Deibert says “However promising, these statutes on their own are not so much prompting a fundamental behavior shift as they are further trivializing informed consent.”

Thanks to the Snowden disclosures, we now know that a flawed encryption protocol was foisted clandestinely on much of the world by the U.S., Canadian, and U.K. signals intelligence agencies, which enable them to crack the code of their adversaries communications. Critical infrastructure throughout the world depended on the integrity of the protocol. It’s unclear how many governments or criminals knew of and exploited it, or whether people were harmed in the process–but it is conceivable some malfeasance took place because of it.

Deibert takes us into a brief history of “republicanism” from the Greeks to the U.S. founding fathers, to today. “…One shorthand way to think about republican political theory is to take virtually anything that Republican Senate majority leader Mich McConnell advocates and think of the exact opposite of that position.”

Critical to the proper functioning of civil society is an educated and fully informed, enlightened citizenry. With this in mind, Deibert presents the mission statement of his own University.

The University of Toronto is dedicated to fostering an academic community in which the learning and scholarship of every member may flourish, with vigilant protection for individual human rights, and a resolute commitment to the principles of equal opportunity, equity and justice…
Within the unique university context, the most crucial of all human rights are the rights of freedom of speech, academic freedom, and freedom of research. And we affirm that these rights are meaningless unless they entail the right to raise deeply disturbing questions and provocative challenges to the cherished beliefs of society at large and of the university itself…
It is this human right to radical, critical teaching and research and which the University has a duty above all to be concerned; for there is no one else, no other institution and no other office, in our modern liberal democracy, which is the custodian of the most precious and vulnerable right of the liberated human spirit.

Herbert Marshall McLuhan (July 21, 1911 – December 31, 1980) was a Canadian philosopher, whose work is among the cornerstones of the study of media theory. He joined the University of Toronto in 1946 and taught there until his death. Harold Adams Innis (1894 – 1952) was a Canadian professor of political economy at the University of Toronto and the author of seminal works on media, communication theory, and Canadian economic history.

Ron Deibert follows in an important tradition at the University of Toronto.

The Jakarta Method, Washington’s Anticommunist Crusade & the Mass Murder Program that Shaped Our World, Vincent Bevins, 2020

Zhou Enlai Nehru Nasser Sukarno Nehru

In 1955 President Sukarno of Indonesia organized a conference of the leaders of the non aligned third world nations (former colonies) held in Bandung Java Indonesia. The conference was attended by representatives of 29 former colonial nations. Notable attendees in addition to Sukarno were Jawaharlal Nehru of India, Gamal Abdel Nasser of Egypt, and Zhou Enlai of China. The core principles of the Bandung Conference were political self-determination, mutual respect for sovereignty, non-aggression, non-interference in internal affairs, and equality. US Secretary of State John Foster Dulles (older brother of Allen Dulles) was strongly opposed to the conference. The Bandung conference represented the high point of the attempt to forge cooperation among non aligned third world nations.

This book features two contrasting Americans, Frank Wisner who worked for Allen Dulles in the WWII OSS and after at the CIA as Dulles’ master of covert (black ops) operations until Wisner killed himself in 1965; and Howard P. Jones, who served as US Ambassador to Indonesia from 1958 to 1964 and as Chancellor of the East West Center University of Hawaii from 1965 to 1968. President Truman wanted the CIA to serve as intelligence gatherers only, so Allen Dulles maneuvered Frank Wisner into position as OPC Chief and by 1952 OPC was operating 47 overseas stations operating out of US embassys and consulates and employed 3000 people. Wisner is the mastermind behind the early 1953 Iran coup (executed by Kermit Roosevelt) and the Guatemala coup of 1954 and every black ops through the 1964 Brazilian coup and the 1965 Indonesian coup.

Unlike Wisner, who was a die hard crusader, Jones had a completely different approach to the rest of the world. Rather than viewing every situation in terms of a black and white global struggle, he sought to engage deeply with the complexities of each situation.

Sukarno with Jones

Jones played an important role in repairing the damaged caused to United States-Indonesian relations by the Eisenhower Administration’s covert support for the failed PRRI/Permesta regional uprisings in Sumatra and the Celebes. Following the capture of an American pilot Allen Lawrence Pope (in 1958) who was participating in a Central Intelligence Agency (CIA) black op in support of the Permesta rebels, Jones portrayed Pope as an American “paid soldier of fortune” and expressed his regret at the involvement of an American.

JFK traveled widely after WWII, visiting Indonesia twice. When JFK became President he told Jones that Jones was solely in charge of relations with Sukarno and Indonesia. Reeling from the Bay of Pigs disaster, JFK no longer trusted the CIA and wanted Jones to have a hand free of interference from CIA black ops. After JFK’s assassination, LBJ, with almost no international experience but listening to JFK’s holdover advisors, stopped all cooperation with Sukarno and recalled Ambassador Jones. The CIA now had a free hand to move forward with overthrowing the Sukarno government and attacking the PKI communist party of Indonesia, at the time the third largest communist political party behind China and the Soviet Union. The coup began on Sept. 30, 1965 and on October 2, an unknown (except to key US policy makers) army general Suharto took over the government. On Oct 5, Ambassador Howard Green cabled the State Department:

Spread the story of PKI’s guilt, treachery and brutality (this priority effort is perhaps most needed immediate assistance we can giver army if we can find way to do it without identifying it as solely or largely US effort). .. The army now has the opportunity to move against Communist Party if it moves quickly…”It’s now or never.”

On Oct 29 Frank Wisner killed himself.

On Nov 22, D.N. Aidit, leader to PKI in Central Java was arrested and executed. The military reported and Newsweek published Aidit’s confession that the PKI planned to take over the country. His confession was impossible and a part of an anticommunist black propaganda operation.

In Jan. 1966, Bobby Kennedy was the only American politician to speak up:

We have spoken out against the inhuman slaughters perpetrated by the Nazis and the Communists. But will we speak out also against the inhuman slaughter in Indonesia, where over 100,000 alleged Communists have not been perpetrators but victims

What followed was a state sponsored massacre and genocide of a million Indonesians, many ethnic Chinese. These events are largely unknown in the US although a 2012 documentary The Act of Killing and a companion 2014 documentary The Look of Silence raised awareness for some Americans and others around the world. Indonesia is the only country that engaged in genocide and never attempted an accounting or reconciliation.

…in the years 1945-1990, a loose network of US-backed anticommunist extermination programs emerged around the world, and they carried out mass murder in at least twenty-two countries. there was no central plan, no master control room where the whole thing was orchestrated, but I think that the extermination programs in Argentina, Bolivia, Brazil, Chile, Columbia, East Timor, El Salvador, Guatemala, Honduras, Indonesia, Iraq, Mexico, Nicaragua, Paraguay, the Philippines, South Korea, Sudan, Taiwan, Thailand, Uruguay, Venezuela, and Vietnam should be seen as interconnected and a crucial part of the US victory in the Cold War… The men carrying out purposeful executions of dissidents and unarmed civilians learned from one another. Sometimes they even named their operations after other programs they sought to emulate. I found evidence indirectly linking the metaphor “jakarta”, taken from the largest and most important of these programs, to at least eleven countries. But even the regimes that were never influenced by that specific language would have been able to see, very clearly, what the Indonesian military had done and the success and prestige it enjoyed in the West afterwards.

Following are the conclusions of Harvard historian Odd Arne Westad:

We can see the Cold War as the global circumstances under which the vast majority of the world’s countries moved from direct colonial rule to something else, to a new place in a new global system. If we view it this way, then there is not a simple winner/loser binary between the United States and the Soviet Union. In the third world, there were many paths each country could take; more importantly, most of them are still on the specific path that was shaped and taken during the Cold War

The primary subject of this book is the CIA led mass murder programs designed to eliminate communist and any left leaning populations, but Bevins does spend some attention on the enormous economic pressures the US is able to exert on any government it is trying to undermine. The combination of trade policy, withholding of capital investment and International Monetary Fund (IMF) Neo-Liberal lending can bring any third world economy to its knees without any resort to CIA inspired mass murder programs. Neo-Liberal policies first found their experimental base in the 1972-3 Chili coup when several Chili native Chicago School graduates took charge of Chili’s economy under Pinochet and invited their professor Milt Friedman to advice them. Since that time, Neo-Liberal Chicago School economics have dominated most of the first world approach to the third world and Southern Europe and Ireland.

This book is very personal to this reader. In June 1965, I arrived as a graduate student grantee at the East West Center to work on a masters degree in International Relations with a goal of becoming a State Department diplomat. Chancellor (Ambassador) Howard Jones arrived at the East-West Center a month later.
Under the grant, students from the US and Asia study at the University of Hawaii for one year and then are granted a one year field trip in Asia or America. I passed the foreign service exam in Hawaii and was scheduled for an oral interview in Karachi Pakistan. There were a number of students from Indonesia at the Center and we all socialized so I was somewhat aware of events in Indonesia as they unfolded.

Hotel Indonesia Kempinski built by Sukarno in 1962

When I left Hawaii, I had heard that as many as a half million Indonesians, many of them of Chinese ancestry had been killed. Sometime in late 1966, I arrived in Jakarta for a couple of week visit. I was met by an American from the Embassy who claimed to be there by chance. I am sure he was sent specifically to escort me. He insisted I was required to stay at the Intercontinental Hotel (five star, now Hotel Indonesia Kempinski) and was required to arrange any travel through the official travel agency located in the hotel’s arcade. The nightly room cost alone put a huge dent in my monthly travel stipend. Then I got lucky. The young Indonesian woman at the travel agency, realizing I knew Indonesian students studying in Hawaii arranged a great itinerary; by bus and train to Bandung, then on to Yogyakarta (the old pre-colonial capital). During the train trip to Yogyakarta, I met a young, Dutch trained military officer who was on his way to his wedding. He invited me meet his beautiful fiancee and to the reception, an Indonesian feast. From there I traveled by bus to the coast where I boarded a WWII landing craft to cross to Bali. All hotels were Dutch colonial era with ceiling fans. In Bali, plans were underway for a massive tourist buildup with an enlarged airport and numerous beachfront hotels. Outrigger canoes were arriving from Hawaii and Hawaiians were busily training Balinese for the expected tourists. There were nightly gamelan tourist performances in Denpasar but if I walked away from town guided by the gongs, I could find natural events in the nearby villages. I met an engineer living in a beachfront cottage who was working on the airport expansion. I then flew back to Jakarta where I explored for a few more days. At no point did anyone mention the killings. Bevins says that one of the Bali tourist hotels is called Ku De Ta, which he thinks may be Indonesian humor. It is possible this hotel and others have been built on mass beach front burial grounds. Bali experienced the highest level of killings per capita anywhere in Indonesia.

I met other US diplomats on my travels and quickly concluded that the State Department was not for me. One of my professors in Hawaii was a Bengal Communist who introduced me to several Indian Communist Labor leaders. I met one in Delhi who told me about a labor demonstration scheduled for that day. I got a bicycle rickshaw and dropped by the demonstration on my way to an evening party at the US Embassy. The demonstration was met by armed police who opened fire and killed a number of demonstrators. That evening I asked a reporter from Time Magazine and several diplomats about the demonstration and the killings and no-one had heard anything. A month later, while I was in Calcutta, a Communist labor leader told me about an upcoming general strike. A few days later, Calcutta was completely shut down by a massive, coordinated labor strike. In the 1967 general election the Communist Party won a majority in the state of Kerala. India somehow was spared the “jakarta” mass extermination experience. I later met diplomats and their wives in Katmandu who were all miserable and disappointed with their career paths. I never showed up for my Karachi interview and have never regretted that decision.

The Price of Peace; Money, Democracy, and the Life of John Maynard Keynes, Kachary D. Carter, 2020

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Three Conscientious Objectors in 1915 Bertrand Russell, John Maynard Keynes, Lytton Stratchey

As a freshman at Cambridge University, Keynes was invited to join a secretive club, the Apostles, a sort of graduate seminar and dinner party where one member would present a paper. Keynes represented a new generation of Edwardians, leading a sexual revolution with Lytton Strachey, contrasting with the older Victorians like Bertrand Russell. Stratchey wrote of Keynes to Leonard Woolf in 1905, “He analyses with amazing persistence and brilliance. I never met so active a brain (I believe it’s more active than either (G.E.) Moore’s or Russell’s)…he perpetually frightens me.” Bertrand Russell wrote: “Keynes’s intellect was the sharpest and clearest that I have ever known. When I argued with him, I felt that I took my life in my hands, and I seldom emerged without feeling something of a fool.” An artistic grouping, Bloomsbury was born around 1905 at the house where Virginia (Woolf) and her sister Vanessa lived. Apostles Keynes, Leonard Woolf, Lytton Stratchey, E.M. Forster, Clive Bell and others moved to London. In 1906 Keynes took a job at the India Office where he worked on Indian currency and monetary policy.

In 1914, as WWI started, an obscure genius known to some in government from his India Office days, John Maynard Keynes, was summoned to London by Treasury and the Bank of England. Witnessing banker’s pursuit of their own narrow concerns during a bank run crisis, where Bankers focused on their own short-term pecuniary profit, abandoning all thought of “the honour of our old traditions or future good name”, Keynes concluded that political oversight of the bankers was needed. Keynes conceived a solution which Treasury and Parliament blessed that foreign bills could be redeemed for gold but domestic needs including those of the banks would be met with a new alternative paper currency. The plan worked and the run was stopped.

Keynes was invited to Paris for the WWI treaty of peace negotiations. Disturbed by the Allied demand for massive reparations that were unrealistic , Keynes proposed that Germany be allowed to issue bonds guaranteed against default by the Allied governments. Keynes was not privy to the negotiations drawing new borders and breaking up the Ottoman Empire so doesn’t appear aware of the division of oil reserves among the Allies. When Wilson rejected Keynes “Grand Scheme”, Keynes resigned from the peace negotiations and penned maybe his most influential work in 1919, “The Economic Consequences of the Peace” which Carter describes as:

…provincial, shortsighted, vicious, and in many respects deeply unfair polemic. It is also a masterpiece and very likely the most influential work Keynes ever put his name to—a furious tirade against the autocracy, war, and weak politicians. It is at once a howl of rage directed against the most powerful men in the world and an ominous prophecy of the violence that would again sweep the continent in the years to come.

Keynes wrote:

The resulting international system created at Versailles was extremely fragile and would only function if workers believed in it, and workers would not believe in it unless it worked. Break the collective faith in a better tomorrow, and workers will walk off the job, riot in protest, or worse.

The principle of accumulation based on inequality was a vital part of the pre-war order of Society and of progress as we then understood it. This principle depended on unstable psychological conditions, which it may be impossible to recreate. It was not natural for a population, of whom so few enjoyed the comforts of life, to accumulate so hugely. The war has disclosed the possibility of consumption to all and the vanity of abstinence to many.

Bolshevism in Russia was already known to all as an alternative to La Belle Epoque. All over Europe, but particularly in Germany conditions were ripe for the rise of a strongman. Without jobs, food, a sense of purpose, and confidence in a better tomorrow, Europe was already on the path to another war.

Keynes formalized his political theory of economics with three lectures in 1926 “The General Theory of Employment, Interest and Money“,”The End of Laissez-Faire“, and “A Short View of Russia“. Overlooked in Britain even though Bloomsbury loved them, they formed the core of a unique, practical political theory that the United States would apply on a vast scale during the great depression and WWII.

In 1930, Keynes published “A Treatise on Money” an assault on the ability of central bank interest rates to affect investment. Keynes suggested that the state spend money on public works since domestic investment was the problem. This direct assault on laissez-faire caused Austrian Friedrich von Hayek to pen two part indictment of the book. Milton Friedman later claimed von Hayek encourage a do nothing policy that did harm by recommending that “you just have to let the bottom drop out of the world.” Keynes himself responded to von Hayek; “one of the most frightful muddles I have ever read.”

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Franklin D. Roosevelt in his inaugural address in 1933 said

Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men…They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish…The money changers have fled from their high seats in the temple of our civilization. We may now restore the temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

In his first 100 days FDR created the FDIC, the SEC, the TVA, and the Agricultural Adjustment Administration.
Felix Frankfurter, a friend of Keynes and appointee to the US Supreme Court in 1939, delivered a letter from Keynes to FDR and arranged meetings for Keynes in 1934 with key administration players not totally on board with Keynesian ideas. One player Keynes met was John Kenneth Galbraith who was running the office of price administration. Galbraith described the meeting as the Pope visiting the lowly village priest. Keynes largely found himself preaching to the choir.
FDR met Keynes and thought him politically naive about the President’s relationship with Wall Street. FDR believed a banking industry hostile to his reforms was driving up interest rates on government debt by sitting out Treasury bill auctions. “There is a practical limit to what the Government can borrow– especially because the banks are offering passive resistance in most of the large centers,” Keynes did make progress with Fed Chairman Eccles who understood the need to keep interest rates low to help the government spend its way out of the Depression.

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In 1936 Keynes published his most important work “The General Theory of Employment, Interest and Money“, a work that Carter calls the most important work in economics in 160 years, to be compared with the monuments of Aristotle, Thomas Hobbes, Edmund Burke, and Karl Marx.

It is a theory of democracy and power, of psychology and historical change, a love letter to the power of ideas. The book is dangerous because it demonstrates the necessity of power. It is a liberation book because it re-framed the central problem at the heart of modern economics as the alleviation of inequality, pivoting away from the demands of production and the incentives facing the rich and powerful that had occupied economists for centuries. It is a frustrating book because it is written in novel abstractions, argued in convoluted sentences and dense equations. And it it a work of genius because it proves a simple truth that, once offered, seems obvious: Prosperity is not hard-wired into human beings; it must be orchestrated and sustained by political leadership.

Keynes said of the genius of Sir Issac Newton:

Newton could hold a problem in his mind for hours and days and weeks until it surrendered to him its secret. Then being a supreme mathematical technician he could dress it up, how you will, for purposes of exposition, but it was his intuition which was preeminently extraordinary…The proofs, for what they are worth, were, as I have said, dressed up afterwards–they were not the instrument of discovery.

Explaining his own method in The General Theory Keynes says:

The object of our analysis is, not to provide a machine, or method of blind manipulation, which will furnish an infallible answer, but to provide ourselves with an organized and orderly way of thinking out particular problems…Too large a proportion of recent “mathematical” economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and inter-dependencies of the real world in a maze of pretensions and unhelpful symbols.

The term macroeconomics hadn’t even been coined. Keynes not only invented modern economics, he invented the modern economist and placed him at the top of the new intellectual power structure. The book is a collaborative work done by the Cambridge “Circus” an almost cult like group with its own private language. The two most important contributors beyond Keynes were Joan Robinson and Richard Kahn. Carter says Robinson is the most important economist never to have won a Nobel prize in economics. Two of her students Amartya Sen and Joseph Stiglitz were honored with the Nobel prize. In fact she was only named full professor at Cambridge in 1965, thirty years after publication of her most significant work for which she is not credited. Carter likens Joan Robinson to Rosalind Franklin who discovered the double helix of DNA and was never recognized. Joan Robinson’s published contributions to economics continued until her death in 1983. Much of the The General Theory is incomprehensible. The book is difficult and obscure because Keynes wanted it to be. Its sheer ugliness created a small industry of interpreters. Two economists won Nobel prizes for interpreting the work.

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Keyesian economics found its first real world application during the FDR years. For Joan Robinson “The economic theory which was developed in America was a return to pre-Keynesian doctrines that smothered everything important in Keynes.” For Richard Kahn, the re-engineering of The General Theory into mathematics was a Faustian bargain–a fatal turn that would ultimately lead to Keynes being discredited.

In June 1942, Keynes was rewarded for his service with a hereditary peerage. On 7 July his title was gazetted as Baron Keynes, of Tilton, in the County of Sussex.

Maynard’s wife Lydia was a principal ballet dancer with Ballets Russes under Diaghilev and partnered with Nijinsky

Lydia partnered by Vaslav Nijinsky
There is a youtube video of Lydia dancing with George Balanchine in 1929.

Bretton Woods agreement 1944-1972 Lydia was 5’0″ Maynard was 6’7″

In 1944 Keynes attended the Bretton Woods conference in New Hampshire to hammer out a new international economic system. The Mount Washington Hotel overlooked the Ammonoosuc River where Keynes’s wife Lydia bathed nude each morning.
Keynes called for a new Supernational Bank to regulate the global money supply, currency, and trade flows. This international central bank would issue “Supernational Bank money (SBM) to national central banks like the Federal Reserve, the Bank of England, and their other counterparts throughout the world. These national central banks would borrow SBM from the Supernational Bank as a matter of course as they conducted their ordinary monetary policy operations.
The Supernational Bank would allow nations to grapple with domestic problems without resorting to deflation. Nations would never have to worry about running out of money in an emergency, because the Supernational Bank would always be there to provide money on reasonable terms. No government would have to intentionally create unemployment to resolve a currency or trade problem. Under the old system, when loans became unavailable for any reason–war, banking instability, bad monetary policy, a stock market bubble, or a simple disinterest in foreign lending–the only way a country running a trade deficit to fix its situation would be to force down the price of its goods in foreign markets. Ultimately it would resort to deflation and mass unemployment to do so. Keynes argued the surplus nations were not injured by countries that ran deficits. While the deficit country ran up large financial debts, the surplus country enjoyed fat export trade that employed its workers and raised the standard of living.
What the world also needed was an international authority that could punish countries for running a persistent trade deficit or a persistent trade surplus. Keynes proposed an International Clearing Union (ICU). Each participating central bank would open an account with the ICU. International trade payments would be made through those accounts, using a new international currency called Bancor that the ICU would create at will. When a country ran a persistent deficit or a persistent surplus, the ICU would require it to revalue its currency to bring the system back toward balance. The revaluations would be up or down to a limit of 5%.

Unfortunately for Keynes’s vision, Harry Dexter White, the US representative of the FDR administration arrived at Bretton Woods with a plan already formulated and the US had the clout to get its way. Keynes’s plan had been rejected before the conference even began. Instead all nations that joined the Bretton Woods project would agree to make their currencies convertible into dollars at a fixed exchange rate. The dollar only would be convertible into gold at a price later fixed at $35 per ounce. An International Monetary Fund (IMF) would be established to provide emergency loans in a crisis. A World Bank would be created to assist with post war reconstruction.

Instead of an international regulatory apparatus, Keynes got a gold standard with a bailout fund. White spend much of his time at the conference trying to secure USSR participation. He failed and the USSR never ratified the Bretton Woods agreement. Britain was broke and Keynes could do nothing about the outcome of the conference. Keynes died on Easter Sunday 1946.

The backlash against FDR’s New Deal and War powers was led by the bankers, wall street, and the corporate American elite. Undermining Keynesian economics combined the McCarthy era Communist scare accusations, the rise of the Ayn Rand inspired libertarian movement emphasizing unfettered individual freedom (freedom from government interference), and the resurgence of laissez-faire (market fundamentalism) economics centered at the Chicago School with von Mises and von Hayek and the London School of Economics.
Chicago School graduate Paul Samuelson wrote the textbook Economics: An Introductory Analysis, first published in 1948 that became the principal introduction to economics for generations of American students including this reader. While incorporating some Keynesian ideas, Samuelson was careful to couch these ideas in the long tradition of market fundamental economics. Some labeled Samuelson a neo-Keynesian .

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In 1958 Galbraith published his sensational The Affluent Society where the economics of scarcity had been replaced by an economy of abundance able to meet the needs of everyone with advertising used to encourage further consumption. Galbraith noted that great inequality still existed in America. The book had an immediate and wide spread impact on economic discussion which Carter calls similar to the impact of Thomas Piketty’s Capital in the Twenty-First Century, a history of inequality of income and wealth in France, Britain, and America. Galbraith was perhaps the best known member of the JFK brain trust. Expecting a cabinet appointment, Galbraith was instead named ambassador to India, then under Nehru and the Congress party. Galbraith was a vocal opponent of US involvement in Vietnam so likely JFK wanted to isolate him to quiet his opposition.

In 1972, Nixon shocked the world announcing the end of the post war Bretton Wood system. The gold standard was abandoned and massive monetary and fiscal stimulus programs were launched with low interest rates and business tax cuts. A 10% import tariff would be imposed and price controls put into place. Carter doesn’t discuss it but the US had moved from a trade creditor nation to a trade deficit nation by the late 1960’s. Strongest of the Creditors were Germany and Japan. Sometime about 1971, a young London School of Economics educated Paul Volcker penned a three page secret memo to his boss Henry Kissinger suggesting that foreign nations should be encouraged to have the United States recycle their surpluses through Wall Street. Yanis Varoufakis claims to have seen this secret memo, but the reality is that approximately 70% of all foreign trade surpluses, including China, are now recycled by the United States. Thus a new industry, financialization, which today dominates the US economy was created.

Volcker was named Fed Chairman by Jimmy Carter in 1979. He promptly raised interest rates to an unprecedented peak of 20%. Volcker had turned the Federal Reserve into the primary instrument of US economic policy to fight inflation. Further creative uses of the Fed would be used in the 2008 banking crisis.

The final nails in the coffin of New Deal economic mechanisms occurred under Bill Clinton taking the advise of Bob Rubin and Larry Summers. The Glass-Steagall act was repealed allowed the merger of banks with wall street to create too big to manage financial monsters. Then Clinton declared that there was no need to regulate Wall Street created derivatives that were at the heart of the 20008 sub prime mortgage crisis. Carter points out that the credit default swap (CDS) was the most explosive of these new derivatives. The CDS was a form of insurance whereby a default of an insured derivative would pay the holder. There was no requirement that the entity taking out the insurance actually owned the derivative insured.

The Obama administration was economically scammed by Tim Geithner and Larry Summers. The big banks were bailed out, Glass-Steagall was not reinstated, no banker was prosecuted for their illegal activities. And, according to Carter, 9.3 million lost their homes with government doing virtually nothing to preserve home ownership. A $75 billion plan designed to save 4 million homes never happened. The money was allocated but never spent. The family loss of homes contributed greatly to the increase in unemployment during this time.
Democratic Representative Dennis Cardoza of California in 2011 exclaimed:

For the life of me, I can’t figure out why a community organizer who says he cares about families, who says he cares about communities, has turned his back on one of the biggest problems in America.

Keynes believed that an enlightened management of the economy to produce widespread prosperity and job security would alleviate the problems of unrest that lead to revolutions either communist or fascist. Today the world has the highest level of inequality ever measured.

In 2008, Joseph Stiglitz calculated that if the $48 trillion global economy were simply divided among every one of its inhabitants, a family of four world receive $28,000, high enough to end poverty in every country. Carter calculated that the 2018 economy of $85.8 trillion economy and 7.5 billion people would yield an income of $45,000 for each family of four. “The economic problem of humanity is no longer a problem of production but of distribution–inequality.

Keynes was a conscientious objector dedicated to the elimination of the causes of war. Yet the history of the US after WWII was one of almost continuous real armed conflict and a continuous succession of virtual wars: the cold war til 1992, the war on drugs, and the war on terror after 9/11, The later two were not wars against state actors but against amorphous largely hidden force scattered globally. State actors found themselves invariably drawn into all these virtual wars often with terrible consequences. In real shooting wars with armies, Korea was fought to a draw; Vietnam was lost at a cost of more than 1 million lives; Afghanistan and Iraq never end; Syria and Libya appear to be without resolution. In foreign policy, the US, starting in 1953 and continuing to this day, assist in the overthrow of governments in country after country. The US today is the world’s greatest threat to stability and peace.

As Piketty documents, we are living in a period of unprecedented inequality of income and wealth. Carter concludes, the US government has remained, with the exception of Bill Clinton, stubbornly Keynesian but Keynesian principals are applied only during ever escalating economic crises. Applying Keynesian solutions in government policy sporadically and blind to people’s suffering serves only to rescue the oligarchs from their own incompetence and crimes. This malignant phenomenon has been named “Corporate Socialism“. The failures of the 2008 banking crisis highlighted the bankruptcy of Market Fundamentalist views of the world. Without extensive, enlightened, humane state management, unfettered capitalism is capable of generating enormous instability and suffering that only the state can correct. As an optimist foresees, the global economy, properly managed by the state, is capable of reducing income and wealth inequality and improve the lives and quality of life of everyone on earth, and eliminate war.

A bit of trivia; Keynes was 6’7″, Galbraith was 6’9″ and Volcker was 6’7″.

Capital and Ideology, Thomas Piketty, 2020
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A continuation of Piketty’s earlier 2014 work extending his previous analysis starting from 1500 to the present and adding France, India, China, Germany, Spain. the Nordic countries, Russia and Eastern Europe, the Petro-Monarchies, etc.
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Today, the postcommunist societies of Russia, China, and to a certain extent Eastern Europe…have become hypercapitalism’s staunchest allies. This is a direct consequence of the disaster of Socialism and Marxism and the consequence of all egalitarian internationalist ambitions. So great was the communist disaster that it overshadowed even the damage done by the ideologies of slavery, colonialism, and racialism and obscured the ties between those ideologies and the ideology of ownership and hypercapitalism–no mean feat.

Furthermore, social democrats never really reconsidered the issue of just ownership after the collapse of communism. The postwar social-democratic compromise was built in haste, and issues such as progressive taxation, temporary ownership, circulation of ownership (for example, by means of a universal capital grant financed by a progressive tax on property and inheritances), power sharing in firms (via co-management or self management), democratic budgeting and public ownership were never explored as fully or systematically as they might have been.

It (modern property law) originated…with Christian doctrine, which sought over many centuries to secure the property rights of the Church as both a religious and a property-owning organization.

…the concentration of private property, which was already extremely high in 1800-1810, only slightly lower than on the eve of the (French) Revolution, steadily increased throughout the nineteenth century and up to the eve of World War I…The case of Paris is especially noteworthy; there, the wealthiest 1 percent owned nearly 50 percent of all property in 1800-1810 and more than 65 percent on the eve of World War I.

As for achieving real equality, however, the great promise of the (French) Revolution went unfulfilled…And when a progressive income tax was finally adoption on July 15, 1914, it was not to finance schools or public services but to pay for war with Germany.

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When slavery was abolished in the 19th Century, the discussion in slave owning nations concerned compensation for the owner’s of slaves, never about compensation for the slaves.

It is easy to see that in a society where slaves represented virtually the entire work force, their market value could reach astronomical levels, potentially as high as seven or eight years of annual production…Recall that France saddled Haiti with a debt equivalent to three years of Haitian nation income in 1825 yet remained convinced that it was making sacrifices compared to what slaves in Saint-Dominique actually yielded in profit.

In 1860, the market value of (US) slaves (4 million in number) exceeded 250 percent of the annual income of the southern states and came close to 100 percent of the annual income of all the states. If compensation had been paid, it would have been saddled with interest and principal payments for decades.

The secession of the southern states and the resulting Civil War ended these discussions and US slave owners were never compensated for their loss of property as a result of the war and the emancipation proclamation.

Piketty follows the transformation, starting around 1500, of society from Ternary (Clergy, Nobility, Third estate–the workers) to Ownership societies with a centralized state. This transformation was accompanied by the rapid development of arms, warships, and navigation, needed to support the endless wars among the new nation states. This technological development of war tools enabled the co development of slavery and colonialism. Even the Ottoman and Chinese Empires were no match for the modern war machine. Gunboat diplomacy reigned supreme into the twentieth century. An extreme example are the two opium wars of Britain against China in the mid nineteenth century. Not only did China have to allow the sale of opium in China, but China was saddled with massive reparations for the costs of the wars.

Japanese Depiction of Perry’s black ships
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Japan reacted to the American (Admiral Perry), French and British visit by warship in the mid nineteenth century with the Meiji reformation, whereby Japan acquired and built its own advanced arms and warships and became a colonial power in its own right.

In the period 1880-1914, the United Kingdom and France earned so much from their investments in the rest of the world (roughly 5 percent additional national income for France and more than 8 percent for the United Kingdom) that they could allow themselves to run persistent structural trade deficits (an average of 1-2 percent of national income for both countries) while continuing to accumulate claims on the rest of the world at an accelerated pace. In other words, the rest of the world labored to increase consumption and standard of living of the colonial powers, even as it became increasingly indebted to those powers.

On Colonial state tax revenues in the eighteenth century:

…both countries (England and France) were taking in 600-900 tons of silver in 1700, 800-1100 tons in the 1750’s, and 1600-1900 tons in the 1780’s, leaving all other European powers far behind. Importantly, Ottoman tax receipts remained virtually unchanged from 1500 to 1780; barely 150-200 tons. After 1750, it was not only France and England that had a far greater tax capacity than the Ottoman Empire; so did Austria, Prussia, Spain, and Holland.

…the development of the modern state involved two great leaps forward. The first unfolded between 1500 and 1800 in the leading states of Europe, which were able to increase their tax revenues from barely 1-2 percent of national income to about 6-8 percent. This process was accompanied by the development of ownership societies at home and colonial empires abroad. The second leap forward came in the period 1930-1980, when the rich countries as a group went from tax revenues of 8-10 percent of national income on the eve of World War I to revenues of 30-50 percent of national income in the 1980s. This transformation was accompanied by a broad process of economic development and historic improvement in living conditions and gave rise to various forms of social-democratic society…It proved difficult to extend the second leap forward to poorer countries in the late twentieth and early twenty-first centuries…

If we include all military conflicts across the continent in each period, we find that European countries were at war 95 percent in the sixteenth centry, 94 percent in the seventeenth century, and still 78 percent in the eighteenth century (compared to 40 percent in the nineteenth century and 54 percent in the twentieth century). The period 1500-1800 was one of incessant rivalry among Europe’s military powers, and this is what fueled the development of unprecedented fiscal capacity as well as numerous technological innovations, particularly in the areas of artillery and warships.

By the end of the American Revolutionary and Napoleonic Wars (1792-1815), British public debt had soared to more than 200 percent of national income, the debt was so high that one-third of the taxes paid by British taxpayers between 1815 and 1914 (mainly by people of middle and low income) was devoted to repayment of the debt and interest (profiting the wealthy who had lent the government money to pay for the wars)…It also might have been preferable to tax the wealthy rather than allow them to become still wealthier by buying government bonds…with political power in the hands of the wealthy, the choice was made to spend money on the military and to finance it with public debt, and this helped to secure European domination over the rest of the world.

…these protectionist and mercantilist measures, imposed on the the rest of the world at gunpoint, played a significant role in achieving British and European industrial domination. According to available estimates, the Chinese and Indian share of global manufacturing output, which was still 53 percent in 1800, had fallen to 5 percent by 1900.

The colonial ideology that seeks to liberate and civilize nations in spite of themselves generally leads to disaster, no matter what the color of the colonizer’s skin (Japan).

The success of Japan’s proprietarian and industrial transition shows that the mechanisms at work have nothing whatsoever to do with Christian culture or Eueopean civilization…the Japanese experiences shows that proactive policies, especially regarding public infrastructure and investments in education, can overcome very strong and longstanding status inequalities in a matter of decades…we will see that the reduction of social inequality in Japan was further assisted by an ambitious program of agrarian reform in the period 1945-1950 as well as by highly progressive taxation of top incomes and large estates.

The fall of ownership society in the period 1914-1945 can be analyzed as a consequence of three challenges; the challenge of inequality with European ownership societies, which led to the emergence first of counterdiscourses and then of communist and social-democratic counter-regimes in the late nineteenth and first half of the twentieth centuries; the challenge of inequality among countries, which led to critiques of the colonial order and the rise of increasingly powerful independence movements in the same period; and finally a nationalist and identitarian challenge, which heightened competition among the European powers and eventually led to their self-destruction through war and genocide in the period 1914-1945.

The period from 1726-1914 saw low inflation and complete stability in the value of the pound sterling and the French gold franc. World War I put an end to monetary stability and the suspension of convertibility of their currencies into silver or gold.

…from 1914 to 1950 inflation averaged 13 percent a year in France (equivalent to a hundred fold increase in the price level) and 17 percent in Germany (a three hundredfold price increase).

…ownership societies that seemed so prosperous and solid on the eve of World War I collapsed between 1914-and 1945. The collapse was so complete that nominally capitalist countries actually turned into social democracies between 1950 and 1980 through a mixture of policies including nationalizations, public education, health and pension reforms, and progressive taxation of the highest incomes and largest fortunes. Despite undeniable success, however, these social-democratic societies began to run into trouble in the 1980’s. Specifically, they proved unable to cope with rampant inequality that began to develop more of less everywhere around that time.

Why did social democratic societies fail after 1980?

Ronald Reagan (R) and Margaret Thatcher wave after their arrival in Camp David, 22 december 1984, before their meeting. (Photo credit should read ARCHIVES UPI/AFP/Getty Images)

In the first place, attempts to institute new forms of power sharing and social ownership of firms remained confined to a small number of countries (especially German and Sweden). This avenue of reform was never explored fully as it might have been, even though it offered one of the most promising responses to the challenge of transcending private property and capitalism. Second, social democracy did not have a good answer to one pressing question; how to provide equal access to education and knowledge, particularly higher education. Finally, we will look at social-democratic thinking about taxation, especially progressive taxation of wealth. Social democracy did not succeed in building new transnational federal forms of shared sovereignty or social and fiscal justice. Today’s globalized economy is one in which regulation in all its forms has been undermined by free trade and free circulation of capital, instituted by agreements to which social democrats consented or even instigated. In any case, they had no alternative to offer. The resulting heightened international competition has gravely endangered the social contract (and consent to taxation) on which the social-democratic states of the twentieth century were built.

The French and British never embraced corporate power sharing and social ownership preferring nationalization of private companies:

Then in 1986-1988 the Gaullist and liberal parties returned to power in a new context of privatization and deregulation under Thatcher and Reagan, while at the the same time the Communist bloc was slowly crumbling. This led to the privatization of most of the companies that had been nationalized between 1945-1982.

…from 1917 to 1991, new thinking about private property was blocked by the bipolar opposition of Soviet Communism and American capitalism. One was either for unlimited state ownership or for full private shareholder ownership….The fall of the Soviet Union inaugurated a new period of unlimited faith in private property from which we have not yet completely emerged but which is beginning to show serious signs of exhaustion.

On the massive inequality that developed in the United States from about 1980:

The bottom 50 percent of the income distribution claimed about 20 percent of national income from 1960 to 1980, but that share has been divided in half, falling to just 12 percent in 2010-2015. The top centile’s share has moved in the opposite direction, from barely 11 percent to more than 20 percent…the share of total income going to the bottom 50 percent in Europe remains significantly larger than the share going to the top centile.

To sum up: in the light of the history of the past two centuries, educational equality played a more important sole in economic development than the sacrilization of inequality, property, and stability. More generally, history demonstrated the recurrent risk of an “inequality trap” which many societies have faced throughout the ages. Elite discourse tends to overvalue stability, and especially the perpetuation of existing property rights, whereas development often requires a redefinition of property relations and opening up of opportunities to new groups.

On the failures of progressive taxation:

First, parties of the left failed to foster the kind of international cooperation needed to protect and extend progressive taxation; indeed at times they contributed to the fiscal competition that has proved devastating to the very idea of fiscal justice. Second, thinking about just taxation too often neglected the idea of a progressive wealth tax, despite its importance for any ambitious attempt to transcend private capitalism, particularly if used to finance a universal capital endowment and promote greater circulation of wealth.

…we now know that the top centile’s share of total wealth can fall from 70 percent to 20 percent without impeding growth (quite the contrary, as Western European experience in the twentieth century shows). We know from experience with Germanic and Nordic versions of co-management that employee and shareholder representatives can each control half the voting rights in a firm and that such power sharing can improve overall economic performance.

On tax havens:

…this minimum estimate implies that the financial assets tucked away in tax havens are roughly equal to the total amount of all financial assets legal owned by Russian households inside Russia (roughly one year of national income). In other words, off shore property has become at least as important in macroeconomic terms as legal financial property…In a sense, illegality has become the norm.

…by exploiting data made public by the Bank for International Settlements (BIS) and the Swiss National Bank (SNB) on countries where assets are held, one can estimate each country’s approximate share of offshore assets held in tax havens relative to the total (lawful and unlawful) assets held by residents of each country. The results are as follows; “only” 4 percent for the United States, 10 percent for Europe, 22 percent for Latin America, 30 percent for Africa, 50 percent for Russia, and 57 percent for the petroleum monarchies.

On China:

China thus appears to have settled on a mixed-economy property structure: the country is no longer communist since nearly 70 percent of all property is now private, but it is not completely capitalist either because public property still accounts for a little more than 30 percent of the total–a minority share but still substantial. Because the Chinese government, led by the CCP, owns a third of all there is to own in the country, its scope for economic intervention is large: it can decide where to invest, create jobs, and launch regional development programs.

If we compare China to the other Asian giant, India, it is clear that since the early 1980s China has been both more efficient in terms of growth and more egualitarian in terms of income distribution (or, rather, less inegalitarian, in the sense that concentration of income has increased less dramatically than in India)…one reason for this difference is that China has been able to invest more in public infrastructure, education, and health care. China achieved a much higher level of tax revenue than India, where basic health-care and educational services remain notoriously underfinanced. China has nearly matched Western levels of taxation, taking in roughly 30 percent of national income in taxes (and roughly 40 percent if one includes profits from public firms and sale of public lands).

On the dangers posed by the central banks:

After the bankruptcy of Lehman Brothers in September 2008 and the ensuing financial panic, things changed completely…The world’s major central banks devised increasingly complex money-creation schemes collectively described by the enigmatic term “quantitative easing” (QE). In concrete terms, QE involves lending to the banking sectors for longer and longer periods (three months, six months, or even a year rather than a few days or weeks) and buying bonds issued by private firms and governments with even longer duration (of several years) and in much greater quantities than before. The Federal Reserve was the first to react In September 2008 its balance sheet increased from the equivalent of 5 percent of GDP to 15 percent; in other words the Fed created money equivalent to 10 percent of US GDP in a few weeks time. This proactive stance would continue in subsequent years; the Fed’s balance sheet had risen to 25 percent of GDP by the end of 2014…In Europe the reaction was slower. The ECB and other European authorities took longer to understand that massive intervention by the central bank was the only way to stabilize financial markets and reduce the “spread” between the interest rates of the various European countries. Since then, the ECB purchases of public and private bonds have accelerated, however, and the ECB’s balance sheet stood at 40 percent of Eurozone GDP at the end of 2018…By avoiding cascading bank failures and acting as “lender of last resort”, the Fed and ECB did not repeat the errors that the central banks committed in the interwar years, when orthodox “liquidationist” thinking (based on the idea that bad banks must be allowed to fail so that the economy can restart) helped push the world over the edge of the the abyss…What makes central banks so powerful is their ability to act extremely rapidly.

Piketty does not discuss the New Deal US Federal Deposit Insurance Corporation FDIC program which allows the federal government to instantly take over failing banks, reorganize them with new management, and reopen them after a single weekend, assuring depositors that their savings are insured and immediately available. Obama and his treasury secretary Tim Geithner refused to allow the Shiela Bair led FDIC to break up and reorganize the failing banks during the 2008 crisis. This would have been the available and desired solution to the failures.

…the danger is that these monetary policies, by avoiding the worst gave the impression that no broader structural change in social, fiscal, or economic policy was necessary. Nevertheless, the fact is that central banks are not equipped to solve all the world’s problems or to serve as the ultimate regulator of the capitalist system…To combat excessive financial deregulation, rising inequality, and climate change, other public institutions are necessary; laws, taxes, and treaties drafted by parliaments relying on collective deliberation and democratic procedures.

In the abstract, there is nothing to stop central banks from enlarging their balance sheets by a factor of ten or even more…From a strickly technical standpoint, the Fed or ECB could create dollars or euros worth 600 percent of GDP and attempt to buy all the private wealth of the United States or Western Europe…central banks and their boards of governors are no better equipped to administer all of a country’s property than were the Soviet Union’s central planners.

…the Bank of Japan and Swiss National Bank both have balance sheets in excess of 100 percent of GDP…It is nevertheless impossible to rule out that similar things will someday happen to the Eurozone or the United States. Financial globalization has assumed such proportions that it may lead those responsible for setting monetary policy step by step toward decisions that would have been unthinkable only a few years before.

Many citizens have quite understandably begun to ask why such sums were created to bail out financial institutions, with little apparent effect in jump-starting the European economy, and why it shouldn’t be possible to mobilize similar resource to help struggling workers, develop public infrastructure, or finance large investments in renewable sources of energy. Indeed it would be by no means absurd for European governments to borrow at current low interest rates to finance useful investments, on two conditions; first, such investments should be decided democratically, in parliament with open debate, and not by a Governing Council meeting behind closed doors; and second, it would be dangerous to lend credence to the notion that every problem can be resolved by printing money and taking on debt. The principal instrument for mobilizing resources to undertake common political projects was and remains taxation, democratically decided and levied on the base of each taxpayer’s economic resources and ability to pay, in total transparency.

And yet the Democratic presidents who followed Reagan, Bill Clinton (1992-2000) and Barack Obama (2008-2016) never made any real attempt to revise the narrative or reverse the policies of the 1980s. In particular, in regard to the reduction of the progressive income tax (whose top marginal rate fell to an average of 39 percent from 1980 to 2018, half its level in the period 1932-1980) and the de-indexing of the federal minimum wage (which led to a clear loss of purchasing power since 1980), the Clinton and Obama administrations basically validated and perpetuated the basic thrust of policy under Reagan…But it may also be that acceptance of the new fiscal and social agenda was partly due to the transformation of the Democratic electorate and to a political and strategic choice to rely more heavily on the party’s new and highly educated supporters, who may have found the turn toward less redistributive policies personally advantageous.

In particular, higher-income voters voted more heavily for Tony Blair’s New Labour in the period 1997-2005 than they had voted for Labour previously. That may seem logical given that New Labour also attracted more and more votes among college-educated people and its fiscal policies were relatively favorable to high earners. Just as the Clinton (1992-2000) and Obama (2008-2016) administrations had validated and perpetuated the Reagan reforms of the 1980s, New Labour governments in the period 1997-2010 largely validated and perpetuated the fiscal reforms of the Thatcher era.

I have tried to highlight the significant dangers posed by the rise of socioeconomic inequality since 1980. In a period marked by internationalization of trade and rapid expansion of higher education, social-democratic parties failed to adapt quickly enough, and the left-right cleavage that had made possible the mid-twentieth-century reduction of inequality gradually fell apart. The conservative revolution of the 1980s, the collapse of Soviet communism, and the development of neo-proprietarian ideology vastly increased the concentration of income and wealth in the first two decades of the twenty first century. For want of a constructive egalitarian and universal political outlet, these tensions have fostered the kinds of nationalist identity cleavages that we see today in practically every part of the world…When people are told that there is no credible alternative to the socioeconomic organization and class inequality that exists today, it is not surprising that they invest their hopes in defending their borders and identities instead.

In the broadest terms, the tax system of the just society would rest on three principal progressive taxes: a progressive annual tax on property, a progressive tax on inheritances, and a progressive tax on income. As indicated here, the annual property tax and the inheritance tax would together yield about 5 percent of national income, all of which would be used to finance capital endowments. The progressive income tax, would yield about 45 percent of national income, which would be used to finance all other public expenditures, including the basic income and, above all, the welfare state (which would cover health, education, pensions, and so on).

The model of participatory socialism proposed here rests on two key pillars; first, social ownership and shared voting rights in firms, and second, temporary ownership and circulation of capital. These are the essential tools for transcending the current system of private ownership. By combining them, we can achieve a system of ownership that has little in common with today’s private capitalism; indeed it amounts to a a genuine transcendence of capitalism.

If every individual is to have a chance of finding decently remunerated employment, we must put an end to the hypocritical practice of investing more in elitist educational programs and institutions than in institutions that cater to the disadvantaged. The labor code and, more generally the entire legal system need to be overhauled. New systems of wage bargaining, a higher minimum wage, a fairer wage scale, and sharing of voting rights within firms between workers and shareholders can all contribute to the establishment of a just wage, a more equal distribution of economic power, and a deeper involvement of workers in shaping the strategy of their employers.

The central goal of democratic equality vouchers is to promote participatory and egalitarian democracy. Currently, the prevalence of private (political) financing significantly biases the political process. This is particularly true of the United States where campaign finance laws (always inadequate) have been set aside by recent decisions of the Supreme Court. But it is also true in emerging democracies such as India and Brazil as well as in Europe, where current laws are equally inadequate and in some cases totally scandalous.

The redefinition of the global legal framework will require abandonment of some existing treaties, most notably those concerning the free circulation of capital that came into effect in the 1980s-1990s because these stand in the way of meeting the above mentioned goals. These treaties will need to be replaced by new rules based on the principles of financial transparency, fiscal cooperation, and transnational democracy.

Finally it should be noted that this book was written before the start of the global covid19 pandemic and the global recession/depression. Undoubtedly much is about to change socially and politically in response.

Chain of Title; How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, David Dayen, 2016

Amid the suffering of the 1930’s, communities banded together to fight foreclosures…Sustained action led to several foreclosure moratorium throughout the Midwest…To stop foreclosures, the Home Owner’s Loan Corporation (HOLC) bought defaulted mortgages from financial institutions at a discount and sold them back to homeowners. Beginning in 1933, HOLC acquire one million mortgages–one out of five in the country at that time. Eighty percent of HOLC clients saved their homes when they might have lost them…HOLC gave borrowers a twenty year mortgage with a fixed interest rate allowing them to gradually pay off the principal over the life of the loan…

Thus the New Deal gave birth to the modern mortgage industry.

No such governmental efforts were made during the subprime mortgage crisis of 2008. While campaigning, Obama favored cramdowns, where judges in bankruptcy can modify the terms of the mortgage, but Obama’s economic team opposed cramdowns and 10 senate Democrats voted against its use. HAMP, Obama’s loan modification program appealed to the banks primarily for the additional fees HAMP might generate. In this book, banks usually accepted HAMP applications at the same time they moved forward with foreclosure. Treasury claims (with no evidence) that 5 million loans were modified by HAMP (and other programs). This book estimates that 6 million homes were lost to foreclosure. A later book, Homewreckers puts the number of homes lost to foreclosure at 10 million. Homewreckers presents the macro view as millions of homes were sold by the banks with Obama government assistance to vulture funds. Most of these home remain off the market, empty, without repairs.

Lisa and Michael Researching fraudulent documents

This book features three Floridian victims of the great foreclosure banking fraud; Lisa Epstein, a nurse, Michael Redman, selling cars on the internet, and Lynn Szymoniak, a lawyer. They each discovered that their foreclosure cases were filled with fraudulent documents showing the wrong dates, the wrong plaintiffs, wrong amounts owed, wrong fees. They quickly uncovered a whole industry created to support mortgage securitization and its array of derivatives moving so fast that producing legally required documents would only be done after the fact, such as a need to foreclose on a single mortgage. Original documentation was usually destroyed by the originators. The Mortgage Electronic Registration System (MERS) was substituted for keeping track of securitized loans and they were never up to the task. County Recorders around the country are the keepers of the official legal filings for all mortgage documents and the mortgage industry went into overdrive to try to file postdated assignments, etc. regarding particular mortgages. The resulting chaos of documents creates broken chain of titles for millions of properties, meaning that no title company can insure the title and the property cannot be sold or transferred. There is no way to guarantee that a title or note claimant will not emerge in the future.

The three victims discovered the widespread practice of robo-signing, where unqualified people were signing massive numbers of documents (thousands a day) without examination and these signatures were often notarized at different times and locations and sometimes with expired on not yet valid notary licenses. A single person might sign as VP for many different banks and institutions. Some signers were dead or in prison at the time of signing.

One service company DocX created after the fact documents for banks. Lynn uncovered a document filed in Florida with BOGUS ASSIGNEE whose address is xxxxxxx. Whether intended as a joke or someone failed to replace the name is unknown but BOGUS ASSIGNEE documents started showing up in other states in official public records.

Michael received an anonymous document:

DocX printed a catalog for foreclosure mills and mortgage servicers , with an online order form called GetNet for missing documents. Curing a defective mortgage would cost you $12.95. Lost note affidavits and allonges were also $12.95. Creating a “missing intervening assignment?” $35.00. “Re-creating the entire collateral file”–that means the note, mortgage, securitization agreement, everything? It’s yours for the low,low price of $95.00.

The documents needed were often produced in foreign countries, some even in Panama.

Lynn Szymoniak

From 2009-2011 documenting the massive bank fraud, creating a grass roots movement with blogs, and chat rooms, in addition to fighting their own foreclosure cases became a full time occupation for all three featured activists. The robo-signing for a time got some national attention. In 2011, CBS’s 60 minutes came to Lynn’s house to film a segment. On April 3,2011 60 minutes aired two segments; one the interview with Lynn and a second on children of foreclosed homes living in Orlando vans and motels. 60 minutes received a award for the story. For a brief time some banks called a moratorium on foreclosure activity. The three believed that criminal indictments were imminent. In the Obama administration with Eric Holder as AG, none of this would happen on a national level.

Michael searched Illinois public records and found the Obama satisfactions of mortgage on their condo signed in 2005 by Chase robo-signer Marshe Caine. Michael posted this on his blog and hits soured after a Dutch blog linked to it. The next day Michael found a second robo-signed Obama document. Michael wrote on his blog; “Feel free to call or email me to discuss this further, Mr. President.” Three weeks later Bank of America resumed foreclosures.

On Feb 9, 2012, state and federal regulators announced the National Mortgage Settlement with the five largest mortgage servicers: Bank of America, JP Morgan Chase, Citigroup, Wells Fargo, and GMAC. Victims of the fraud would receive $2,000. Noone at the bank’s personnel would be fired or go to jail. The only silver lining; Lynn was awarded $18 million for her whistle blower case. After expenses and legal fees, she netted $5.5 million. Foreclosures would move forward at even more accelerated rates with Florida’s “rocket-docket” executing summary decisions in just 20 seconds per case. Public records may never be free of all the fraudulent Recorded documents.

Crooked banks rely on isolation and shame. The Isolation renders the prospect of individual homeowners fighting big banks impossible; the shame makes no level of misconduct from Wall Street as critical as missing a mortgage payment. The foreclosure fighters created community spaces to disarm isolation and shame, giving struggling homeowners a voice and a chance. Without the foreclosure fraud movement there is no Occupy Wall Street; there is no Elizabeth Warren wind of the Democratic Party; this is no student debt movement, or low-wage worker movement, or movement to transfer money to credit unions and community banks. Lisa and Michael and Lynn, and all the bloggers and lawyers and activists who put their heart into this issue, raised public consciousness so that mega-banks have lost just a hint of their aura of invincibility.

For more on Obama’s administration see Scamming the President.

Homewreckers; How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream, Aaron Glantz, 2019

Steve Mnuchin, Poster Child of the Homewreckers

10 million Americans lost their homes as a result of the Financial Crisis of 2007-2008. By 2010 more than 10% of Americans were unemployed. The Financial Crisis left 45 more million Americans below the poverty line. This book focuses on a handful of predators whose actions would not have been possible without the full cooperation and assistance of the Federal government and the Obama administration. Most of those houses became rentals owned by a handful of huge LLC limited partnerships. The new owners of all these houses are holding them waiting for real estate prices to recover sufficiently to satisfy their greedy requirements to profit from a disaster. These houses are not available to individual home buyers which is artificially driving the prices of homes higher. Charts (not shown in this book) illustrate the changes.

The financial crisis of 2007-2008 was the direct result of a Federal government failure of regulation of the banking industry and the confusion of FDIC banking with Wall Street style speculation. Three critical changes were required to assure it didn’t happen again: 1) Reestablish the Glass-Steagall Act to again separate FDIC regulated banking from Wall Street Speculation. This act was passed in 1933 and repealed in 1999 under Clinton. 2) Severely Regulate or outlaw financial derivatives, created by the Commodity Futures Modernization Act of 2000 signed into law by Clinton. 3) Break up the big banks and separate their FDIC insured portions from their Wall Street operations. Since all banks were insolvent by 2008, the FDIC had full authority to take over all banks, remove all management, and do whatever was necessary to restore sound banking practice. See also Sheila Bair’s book. The Obama administration did none of these things. These three changes were necessary and possible but re regulation would have required even more changes before banking could return to its rightful boring self. The blame for what happened to those 10 million American families who lost their homes couldn’t be clearer. Clinton broke banking and Obama didn’t fix it even though he could have. Now this book;

Through all of this, the administration of Barack Obama, like George W. Bush’s before him, did very little to stem the tide of foreclosures. …Congress passed a massive bank bailout that did little to help individual borrowers. The terms of the deals the federal government brokered afterward, like the sale of IndyMac to Steve Mnuchin’s group of hedge fund managers, encouraged foreclosures.
Then, as foreclosures spiraled out of control and the number of vacant and foreclosed homes mounted, the federal government did almost nothing to prevent communities from collapsing entirely…The Neighborhood Stabilization Program, extended grants to hard-hit communities to provide “emergency assistance to stabilize communities with high rates of abandoned and foreclosed homes.” …A typical NSP grant went to Riverside, California, where fourteen thousand homes were lost to foreclosure… The city…received just $6.5 million–barely enough to buy fifty homes (not even 1 percent of Riverside’s foreclosures).

The Barracks

The Depression era HOLC, by contrast, acquired nearly two hundred thousand properties through foreclosure. 90 percent of those home were sold to families. The Obama Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, simply bundled foreclosed houses into blocks sized between 500 and 10,000 homes at a time to be sold to the Federally subsidized (bailed out) banks and eventually to vulture LLCs. The banks had no intention of finding individual buyers and issuing mortgages so all these homes so they unloaded then in bulk to the vulture LLCs. No attempt was made to determine if the buyers were qualified to manage these properties. There were no promises by buyers to maintain the properties, keep rents affordable, or engage with the community. The home were simply dumped by the government and the banks. And house prices kept dropping through 2012. Las Vegas, Phoenix, Spokane, Riverside and San Bernadino County saw prices drop more than 50 percent. By late 2011 the fire sale was on. The book features Tom Barrack whose source of money to make the home purchases is murky but involves the Cayman Islands and strong suspicions of money laundering and tax evasion. It all ends with Delaware (Biden) LLCs and ultimately to Barrack’s parent company, Colony Capital LLC. Colony eventually amassed an empire of 31,000 houses, rivaling the size of Blackstone’s house empire. Chase lent Colony $1.1 Billion for 7,563 homes. This giant bundle created a derivative that was carved up into tranches and sold on the bond market. But the two LLC predatory vulture groups featured in this book taken together total about 60,000 houses which represent about .6 percent of the 10 million houses lost. Where are the rest of those 10 million houses?

The book outlines the takeover of two failed banks, BankUnited of Florida, and IndyMac of California. Both deals were very costly for the government and resulted in private equity LLC ownership by wealth seeking individuals without a shred of empathy for who was hurt by their actions. The preditors see themselves as simply taking advantage of market opportunities presented by the federal government.

Attention is also given to the unloading of OneWest bank to a who’s who of investors for $1.6 billion. The deal left the government on the hook for any losses incurred in dumping the bank’s mortgages. When the new owners stripped and sold the bank, their return was $5 billion tripling their investment in less than 5 years. The investors included George Soros, John Thain, John Paulson, J.C. Flowers, and others.

Sandy Jolley Reverse Mortgage Whistle blower

Drawing special attention here is the reverse mortgage for the elderly, pioneered during the Reagan years but kept small by government rules. By 2006, the cap was raised to 275,000. Even the government was selling them and packaging its own fully guaranteed reverse mortgages into mortgage backed securities, sold and sliced by the same speculators that brought down the whole system. Most troubling, subprime specialists like IndyMac started selling reverse mortgages using “boiler room” sales tactics and preying on seniors lacking the mental capacity to understand the contracts they signed. Glantz features one deal involving an elderley wife with Alzheimer’s and a dying husband unable to understand the reverse mortgage he was agreeing to. When the husband died, the daughter Sandy Jolley moved back home to care for her mother and fight off foreclosure. In any system with a functioning justice system, the reverse mortgage contracts would have been vacated, the home restored, and damages assessed. None of this happened but Jolley kept fighting, assembling a large group of similarly displaced homeowners and becoming a federal whistle blower. Twelve years after her parent’s reverse mortgage was signed, the case was settled in 2017 with a typical slap on the wrist award and no admission of wrongdoing. Sandy Jolley’s whistle blower’s reward was $978,000.

Too big to fail ($50 billion plus in assets enshrined under Dodd-Frank now raised to $250 billion) Chase bank acquired Bear Sterns and Washington Mutual Bank in 2008. Wells Fargo acquired Wachovia Bank in 2008. Bank of America acquired Merrill Lynch in 2008. All banks accelerated their foreclosure and bundled them for sale to vulture capital LLCs as the easiest way to get the houses off their books, and the Obama government was guaranteeing any losses incurred. All banks greatly decreased their mortgage business and offered mortgages only to customers with high income and impeccable credit. From 2014 to 2016 Chase issued six thousand mortgages under the FHA program (usually used by first time buyers). During this same period Chase loaned Tom Barrack’s Colony $3.3 billion as it created six mortgage backed securities covering 23,000 homes. For first time home buyers an entire generation has had no reasonably priced starter homes and no way to buy the few that were out there. Yet the Federal Reserve held interest rates at near zero throughout the period. Practically, this has meant FDIC deposits are practically free for banks and cheap money was available for speculation and vulture purposes.
The Vulture LLCs that acquired all these houses, bundled them into large groups and securitized them using the same vehicles journalists were calling weapons of mass destruction in 2008. The bundles were diced into trenches to receive different ratings by the same agencies like Moodies who contributed to the 2008 collapse. Typically 80 percent of the bundles received AAA ratings. Glantz researched a tiny Los Angeles Home which listed a mysterious LLC as owner and a lien for $500 million (later refinanced for $900 million).

When housing prices reach a suitably high level, no doubt the LLCs will start selling their huge collections of houses but for the time being they can continue to collect ever increasing rents while spending a minimum on maintenance. Expect these houses to be in awful shape when they eventually reenter the housing market as single family homes.

An article in RCLCO real estate advisors in 2016 found that the seven largest LLCs owned and rented out a total of 170,000 single family houses. A chart in this article shows that single family rental units now comprise 35 percent of total rentals. If there are 43 million renters, then 15 million would be renting single family units. The 10 million foreclosed homes must represent a very sizable portion of these rentals. The article puts the increase in occupied single family rentals during the period 2005-2014 at 3.8 million (probably under estimated) while the increase in single family ownership increased by just a tiny 482,000. It appears the government does little to actually track statistically what happened to foreclosed houses or to track what the deals assuring that banks or LLCs wouldn’t lose money from foreclosures actually cost the government. Mother Jones in 2009 put the financial crisis federal bailout cost at a staggering $14.4 trillion. At present, we seem to have no accurate way to determine what happened to the bulk of those 10 million foreclosed houses. The $14 trillion figure also appears in Ron Suskind’s 2011 Book.

Many of the vultures moved to the Trump administration and the administration’s big tax reduction giveaway showered particular largess on corporations and LLCs.