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Tuesday, April 28, 2009

Who’s Trying to Kill Evo Morales?

Millions watch CSI in its various incarnations on US television as investigators sift through crime scene evidence, follow leads, and unravel crimes. Yet it would appear that few in the international media have learned anything from this popular drama. Soon after the Bolivian government announced that the Bolivian security services had foiled a plot to assassinate President Evo Morales in the hostile province of Santa Cruz the US and European press began a lemming-like campaign to cast doubt on the official claims.

Never mind historical precedence: the well documented thousands of provocations and assassination attempts against progressive, leftist, and socialist leaders over the last sixty years. Never mind the reluctant US government revelations that US security services have been engaged in de-stabilization, provocation, and assassination in nearly every corner of the world since the onset of the Cold War. These facts carry no weight with the “free” press. Just the assassination attempts against Fidel Castro alone fill an entire book.

But even the recent attempts to destroy the Morales government are ignored as background to the official Bolivian government claims. No monopoly media account that I know of mentions the earlier attempt on Morales life last spring by ultra-right youth who were promptly released by the Santa Cruz police. None mention the slaughter of workers rallying behind Morales – an act that went unpunished - or the assassination attempt on one of his ministers last fall. None had the integrity to frame the plot in the context of the violence and bitter hatred evident in Santa Clara province. Instead, they hide behind the cowardly quotation marks – a “plot” – as did The Wall Street Journal on April 20.

Accounts agree that five individuals - mostly of foreign origin – were suspected of planting an explosive devise at the home of a Catholic Cardinal in Santa Cruz. When the authorities attempted to arrest them, they fled to a four star hotel where a gun battle ensued. Three were killed. Bolivian authorities claim that evidence of a far ranging assassination plot and a weapons cache were discovered.

Attention has focused on the suspected ring leader, a man of Hungarian and Bolivian nationality and Croatian citizenship (though his passport status is unclear) who has a history as both a soldier of fortune and a dedicated anti-Communist. His military exploits in Croatia in the Balkan wars were documented in a book that he authored and the subject of a projected film. Since his death, a Hungarian journalist has come forth with a filmed interview of his intentions to organize and fight on behalf of the Santa Cruz secessionists. Apologists, along with the kept press, have focused on his off-handed dismissal of any intention to attack Morales: “I am not going there to organize the attack of La Paz and chase away the president, that doesn’t even cross the easterners’ minds…” This quip is taken as evidence that he meant no harm to Morales, as though he would candidly express his plans to a journalist. Where is CSI when we need them? Imagine the hysteria of the US press if he were a jihadist discussing his forthcoming adventure in the US!

Much consideration – especially in the Irish press – has been given to the young Irishman who was killed in the gun battle. We know that he was employed in security work in Ireland and appeared to have some para-military training before leaving for Bolivia last year. We do not know why he chose Bolivia. Nor do we know how an unemployed 24 year old financed his travel or his stay in expensive hotels on Lake Titicaca and in Santa Cruz. But this – along with his association with his unlikely acquaintances – should pique the interests of a vigilant press, if one still exists in the monopoly-dominated universe. In the face of Northern skepticism, the Bolivian security officials on Saturday, April 25 previewed for the press a three minute video purporting to show the Croatian, the Irishman and the their Romanian companion discussing a bomb attempt on Morales at a visit to Lake Titicaca. They left Lake Titicaca on April 3 and lodged at the four star Hotel Santa Cruz until their encounter with the police on April 16.

Rather than agreeing to share information with the Bolivian security officials, Croatia, Hungary and Ireland have all called for independent investigations of the Santa Cruz incident, a hasty and blatantly chauvinistic response that challenges Bolivian competence and integrity. One searches one’s memory for an equal skepticism over the contrived US invasion of Iraq by these self-righteous governments.

While much still seems uncertain, even more should be apparent to even the most casual observer unless blinded by ideology or dependency:
● Several individuals of diverse and unlikely backgrounds came together in Bolivia and found some common cause for at least three weeks of close, organized activity.
● None appear to have the independent, financial means to justify their prolonged stay within Bolivia, especially their joint occupancy of expensive hotels for an extended period.
●All have incomplete, but confirmed histories involving para-military or security work.

These circumstantial facts alone should establish prima facie credence to the Bolivian security service’s claims.

The question remains: who could have brought these personalities together and provided the financial support to explain their activities in Bolivia?

Speculation naturally falls upon US security services, the godfather to thousands of similar provocations and intrigues. President Obama assured the Bolivians that his administration knew nothing of the plot. This statement may well be true, though we have many precedents where US agencies acted outside of White House approval or knowledge. In any case, US security services quite often are completely aware of independently formulated plans, render clandestine encouragement and support, and simply watch for the outcome – a method of passive action that insures deniability and avoids administrative scrutiny. Such was likely the case with the assassinations of General Schneider and Orlando Letelier during and after the Allende era. And this might also have been the case with the attempted coup against Hugo Chavez.

Certainly the connection between a seemingly inconsistent attack upon both an ally of the Santa Cruz secessionists – a Catholic Cardinal – and the arch proponent of Bolivian unity – President Morales – fits the pattern of previous destabilization campaigns. Even if unsuccessful, these acts would foment further friction, hostility, and chaos in Bolivia – a crisis that might encourage foreign intervention and make the disintegration of the nation more likely. Those who failed to see this process at work in the Balkan wars and the dismemberment of Yugoslavia have a chance to see it again in South America.

If a plot to assassinate the democratically elected president of Bolivia is not an act of terror, then nothing is. This incident, along with the intrigues against Venezuelan President Hugo Chavez, challenge those who endorse the US sponsored “War on Terror”. Sincerity dictates a call for full support for the Bolivian investigation of the assassination attempts and vocal condemnation of those involved in any way in their planning and encouragement.

Zoltan Zigedy

Thursday, April 23, 2009

Profit in the Shadows

Defenders of capitalism are quick to remind us that contemporary capitalism is not the economic system that Marx and Engels wrote about a century and a half ago. In one ironic sense, they are right. Marx and Engels wrote of the exploitation of labor as the nexus for capital accumulation, but they never envisioned how profoundly accumulation – profit-making – would press beyond the boundaries of wage-exploitation towards out-and-out theft, corruption, and wasteful, unproductive activity.

The mainstream media skirts the edges of this cesspool of corruption, deception, and wholesale robbery when they sensationalize the abundant frauds that are perpetuated by Madoff and others of that ilk. While they make for great entertainment, these schemes tend to deflect from the day-in-and-day-out, systemic corruptions that account for entire occupational sectors. By focusing on the most outrageous thievery, the media distracts attention from those living comfortably on the table scraps of capitalism, old-school connections and graft. For a system heralded for hard-work, creativity, and productivity, there are a lot of the most “successful” in the capitalist hierarchy who seem to sidestep these values.

Take Harvey Miller, for example. As the lead attorney for Weil, Gotshal, and Manges LLP, Miller has labored 795 hours over the last 4 1/2 months representing the interests of the bankrupt Lehmann Brothers financial firm. Miller has averaged more hours than that of a normal working day to assiduously defend the interests of his client for a meager $950 an hour, according to The Wall Street Journal (4-16-09). Weil, Gotshal, and Manges LLC submitted a record setting bill to the bankruptcy judge for $55.1 million. If things go well for the firm, they are set to recoup $200 million in fees from the corpse of Lehmann Brothers – a figure surpassing the previous record (also held by Weil, Gotshal, and Manges LLC) of $159 million billed from the Enron bankruptcy.

But Miller doesn’t get all of this money, nor does he do all of the work. Defending the Lehmann Brothers interests engaged 100,000 billable hours from September 15 to the end of January, an amount that would require 139 attorneys to labor a 40 hour week for the entire billing period – a truly Herculean task. But even dedicated attorneys need sustenance: the firm billed $200,000 for business meals. Assuming that they were not McDonald’s value meals, the hard working attorneys ate rather well with their business colleagues – at, say, $100 per meal, 2000 meals in 4 ½ months should go along way towards restoring the vigor of hard-pressed attorneys.
When the attorneys were not eating, they had to travel to and from their business meetings. These obviously necessary business lunches and other meetings required travel: local travel – buzzing around the Big Apple – cost our bankruptcy lawyers $115,000. Undoubtedly, they did not employ their subway Metrocards, otherwise they could have taken 57,500 rides at $2.00 each. But lawyers favor cabs and limousines.

Defending the interests of defunct Lehmann Brothers required Weil, Gotshal and Manges LLP to bill $439,000 for research and $287,000 in photocopies at 10 cents per page. The 2,870,000 pages of documents allegedly generated would require diligent attorneys to read 287 pages of documents every hour of the 100,000 hours billed. Yes, that’s one page every thirteen seconds.

Before Weil, Gotshal, and Manages LLP, along with other law firms, finish picking over the carcass of Lehmann Brothers, experts estimate that legal fees may total over $900 million, topping the legal fees of the Enron bankruptcy ($756.6 million) and WorldCom ($620.4 million). Of course lawyers get the first taste of the assets of bankrupt firms.

This variety of vulture capitalism survives and thrives because bankruptcy judges are compliant and the other vultures have a vested interest in avoiding exposure in this lucrative field.

The innocent-sounding occupation, “placement officer”, masks another rapacious, parasitic job description that operates in the dark recesses of the investment world. As reported by the intrepid Wall Street Journal (4-17-09), it works like this: A hungry executive of an investment firm meets with a placement officer well connected to a pool of public funds, for example, an employee pension fund. The placement officer spells out his or her connections to the fund, suggesting strongly that for a generous fee, assets can be directed for investment to the executive’s firm. Hands are shaken and when the funds show up in the investment house, a handsome finder’s fee finds its way back to the placement officer. While this may look like a kick-back scheme, it only becomes one when the Security and Exchange Commission or aggressive Attorneys General, like Andrew Cuomo, catch them with their hands in each others’ pockets.

The Journal’s sources suggest that Steven Rattner, now a public servant heading the Obama administration’s auto task force, may well be tainted by a recent investigation. Quadrangle Group, a firm co-founded by Rattner, is under investigation for kicking back $1.1 million to a placement officer who delivered a nice slice of the $122 billion New York State Common Retirement Fund. Allegedly 20 investment firms made similar finder’s payments for their portions of the Retirement Fund. The New York scheme takes on comic tones when the SEC complaint details monies extorted for the production of a vanity movie project. Only Coppola could do justice to the Godfather-like intrigues surfacing from the investigation.

Follow up investigations (Wall Street Journal 4-2-09) show that the placement business involved in the New York scheme, Searle and Company, sought to connect investment firms to public assets in California, New Jersey, Connecticut, NYC, and New Mexico.

As with the bankruptcy hustle, one must assume that these practices are widespread in the “placement” industry. Moreover, on might speculate that other competitive firms have refrained from “ratting” others out because the business is so easy and lucrative. What could be better than getting paid on both ends: advising the public fund and extracting finder’s fees from the investment firms? The only loser is the public.

The fixer industry is not limited to retirement funds, but connects with every aspect of public funding from bond issuance to development projects and public-private partnerships. Where there is a fee to be grabbed, there’s an investment banker or consultant to suck the public dry. In many - if not most - cases, the kick-back is campaign monies for public officials.

Consultancy, a now deeply entrenched practice, constitutes one of the most wasteful activities of contemporary capitalism. Comedians joke that everyone today is a consultant – an expert in some area that fills a real or imagined need in social or economic affairs. No doubt some consulting projects pass the test of delivering more benefit than costs, but most merely cover up the incompetence, redundancy, or irresponsibility of management, particularly in the public sector. At their best, in the public sector, a consultant’s work covers decisions that public administrators are afraid to make because of narrow political considerations. Administrators hide behind the curtain of “fact-based” or “evidence-based” decision-making to implement policies that may be controversial. That may not be a bad thing if we want to encourage a breed of cowardly, responsibility-fleeing administrators. At their worse, consultants bring the cash-nexus into the arena of the common good. Administrators engage consultants to provide services that should fully fall within the skill-set of public-sector managers. More often than not, they also bring corruption - kick-backs, favoritism, business relationships, and costly and needless change – along with their fees. More often than not, the money trails loop back to the campaign financing of elected officials who urge the use of consultants in the first place. Right-wingers who, along with the talk radio gasbags, scream about wasteful public-sector studies on the sex lives of butterflies conveniently overlook this wasteful, unproductive drain on the public treasury. I’m reminded of the quote from business guru Peter Drucker: “There is nothing as useless as doing efficiently that which should not be done at all”. Nothing describes the role of consultant better.

Of course these examples only scratch the surface of monopoly-capitalism’s waste and excess. Paul Sweezy and Paul Baran in their important, but flawed study, Monopoly Capitalism (1966), brilliantly document the extraordinary societal irrationality and squander of advertising, branding, and product change, especially in their chapter on “The Sales Effort”. Contemporary capitalism offers a fertile field for further Marxist exposition of its corruption and absurdity.

Zoltan Zigedy

Sunday, April 19, 2009

Springtime? Or January Thaw?

With the first buds of spring emerging, the optimistic voices of officialdom are beginning to foretell economic recovery. President Obama detects some positive economic signs, though warning of further difficulties still to be overcome. Federal Reserve head, Ben Bernanke, has embarked on a public relations tour, pointing to signs of improvement and promising a difficult, but assured restoration of economic health. Five of the twelve Federal Reserve Regional Banks report some signs of improvement. And, of course, the stock market has demonstrated a bit of life.

Other signs are not so promising: unemployment continues to mount and retail sales, industrial production, and capacity utilization have fallen more than projected. And commercial and personal loans from TARP-sapping banks have actually declined.

Yet it seems like forever since any political or business leader has dared to paint an even modestly rosy picture of the US economy. In reality, virtually all the pundits and pols were upbeat about the economy’s prospects as recently as last summer. Indeed, it was a severe economic winter.

Lost in the tea-leaf readings of the official cheer-leaders is the state of the world economy. A myopia – a US-centered focus – apparently blinds most to the profound contradictions in the global economy. As the once tightly wound, interdependent global market unwinds, the effects of this crisis promise to strike deep and powerful blows upon the US economy. I delve more carefully into these contradictions in an article – Cowboy Capitalism and the Demise of “Globalization” – forthcoming on Almost daily, the diverse and disruptive tensions and frictions within and between nation-states grow more serious.

An article (As Factories Vanish, Japan Seeks to Fashion a New Economy) in Monday’s Wall Street Journal (4-13-09) underlines this process of “de-globalization” and national restructuring, while hinting at the consequences for other economies. Japan, the second largest economy after the US, teeters on the precipice of collapse. GDP fell at an annualized rate of 12.1% during the last quarter of 2008 with the OECD forecasting a contraction of 6.6% for 2009. These loses are far deeper than the declines in the EU and the US. Heavily reliant upon exports, the Japanese economy experienced a catastrophic drop of 49% of exports in February against the prior year! Exacerbating this collapse, the Japanese economy has nearly doubled the export share of GDP over the last twenty years. For better or worse, the viability of the Japanese economy has become more dependent upon the global market and global demand. That demand has now collapsed.

As The Journal reports, Japanese manufacturers are determined to respond to the decline by moving production to low-wage countries, further eroding sinking domestic employment. For decades, Japanese industry has relied upon Japanese workers to provide the quality and workmanship that became the signature for products stamped “Made in Japan”. Luxury cars, sophisticated electronics, and other high-market goods required skilled labor and some accommodation to workers’ needs. With world demand collapsing, the exportation of these jobs to low-wage areas becomes a priority for Japanese firms bent on restoring profitability. Companies like Sharp and Nissan have already begun the exodus.

Mired in a profound political crisis, the Japanese ruling class lacks a plan to stimulate domestic demand as a response to the export catastrophe. The prospects are grim: declining growth and rising unemployment.

Those experiencing some spring-time optimism should also note divisions within the European Union that are threatening a unified policy for economic recovery. Some on the European Central Bank Governing Council favor following the US and buying bad “assets” in order to remove them from banking balance sheets, while others favor using Central Bank funds to pump credit into the banking system. Disagreements have also arisen over the optimal key bank interest rate, differences that are unprecedented in the decade long existence of the European Central Bank. These frictions reflect contradictions between the differing levels of development, resources, philosophies, etc. that define each constituent state in the EU.

The Marxist point is this: Capitalist states must individually strive for restoring economic health. The national differences are too great to devise a universal and common strategy. Moreover, cooperation for some greater good is beyond the logic of capitalist competitive advantage. Therefore, all the nation-states and economic blocs are searching for answers to the crisis that address the particular and specific ills that plague their economies. At the same time, “globalization” – the explosive growth of international trade – has created a mutual dependence between states that prohibits or, at least, inhibits, purely national solutions. Until world interdependence unwinds – until the world “de-globalizes” – moving beyond the economic crisis remains illusive.

Japan is the third largest recipient of US exports, accounting for nearly 7% of all products shipped abroad. The health of the Japanese economy will have a profound effect upon prospects for a US recovery, as will the fate of the EU and all other trading partners. Without gauging the health of the global economy, we must not be seduced by the first warm breezes of spring.

Zoltan Zigedy