2007 August 24

The U.S. military chief is expected to call on President George W. Bush to reduce American troops in Iraq next year, a newspaper reported Friday.

General Peter Pace, chairman of the Joint Chiefs of Staff, is expected to tell Bush privately that maintaining more than 100,000troops of the currently 162,000 in Iraq through 2008 year would severely strain the military, the Los Angeles Times reported, citing military and administration officials.

The Joint Chiefs have voiced concerns that the Iraq war has compromised the military’s ability to respond to other threats, and wanted to reduce U.S. troops in Iraq by up to half of the 20 combat brigades in the country, the newspaper said.

The Times said Pace’s recommendation would differ from that being prepared by General David Petraeus, the top U.S. commander in Iraq. Petraeus would suggest to Bush in a report on Iraq due in September that Washington maintain high troop levels there for 2008 and beyond.

Pace’s term as the Joint Chiefs’ chairman will expire at the end of September this year.

Last stand for Bush’s ’stay the course’ crowd?

Freedom’s Watch, a new group of former ambassadors and Bush pitchmen are targeting dozens of congressional representatives with $15 million worth of pro-war radio and television advertisements

It’s been a long time since the halcyon days of the 1980s when religious and secular right wing organizations would round up the troops, create a letterhead group, drop a boatload of direct mail fundraising letters, and successfully promote the domestic and foreign policy agenda of President Ronald Reagan. Before, and during the early months after the U.S. invasion of Iraq, conservatives initiated a similar spate of activities aimed at organizing support for the invasion. Predicting immediate success, these groups not only promulgated their vision of a Middle East dominated by the U.S., they also demonized any and all opponents of the invasion.

Now, with the stench of a lame duck president permeating the White House, Freedom’s Watch, a new group of Bush administration former ambassadors and high-powered donors, has launched a multi-million dollar campaign to win back the public’s support for the war on Iraq. Is this the ’stay the course’ crowd’s last stand?

According to its website, Freedom’s Watch, a 501 (c) (4) nonprofit corporation, is “dedicated to fighting to protect the ideals and issues that keep America strong and prosperous.” It is “rallying together” to:

Despite Andrew Card’s famous dictum about not introducing a marketing campaign in the dog days of August, Freedom Watch is up against the wall. In a press release issued by the group on August 22, it announced the “launch[ing] a nationwide grassroots campaign aimed at ensuring Congress continues to fully fund the troops with the ultimate goal of victory in the War on Terror.” It claimed that it will spend some $15 million on radio and television advertisements from now through mid-September, the time Gen. David Petraeus delivers his progress report on the situation in Iraq.

“The mission of Freedom’s Watch is to ensure a strong national defense and a powerful effort to confront and defeat global terror, especially in Iraq,” said Bradley A. Blakeman, the group’s president. “Those who want to quit while victory is possible have dominated the public debate about terror and Iraq since the 2004 election. Freedom’s Watch is going to change all that.”

The Politico’s Mike Allen reported that “The opening ad, by Jamestown Associates of New Jersey, shows a military veteran saying:

Congress was right to vote to fight terrorism in Iraq and Afghanistan. I re-enlisted after Sept. 11 because I don’t want my sons to see what I saw. I want them to be free and safe. I know what I lost. I also know that if we pull out now everything I’ve given and the sacrifices will mean nothing. They attacked us and they will again. They won’t stop in Iraq. We are winning on the ground and making real progress. It’s no time to quit. It’s no time for politics.

Upon his viewing of a Freedom’s Watch’s ad the New Republic’s Jason Zengerle pointed out that “On an emotional level, the ad’s bluntly honest — in that there’s no real way to question the sincerity of the double-amputee vet when he says ‘[I]f we pull out now, everything I’ve given and sacrificed will mean nothing.’ On an intellectual level, the ad’s bluntly dishonest — from its reference to the Congressional ‘vote to fight terrorism in Iraq’ to its implication that the people we’re now fighting in Iraq are the people who attacked us on 9/11. But, because it’s a wounded vet making the case, I’d imagine the ad’s emotional punch will carry the day.”

Freedom’s Watch’s advertisements, which will be broadcast in more than 20 states and dozens of congressional districts, and feature a toll-free phone number for the public to call their representatives, is unambiguous: “urge” your representative not to “surrender to terror.”

Blakeman added that Freedom’s Watch “will spare no effort” to “protect our country.” “Our goal is to make clear that when America goes to war, victory is the only outcome. That’s what the troops are saying in these advertisements and what Freedom’s Watch believes. We do not agree with those groups pressuring our lawmakers to abandon victory.”

A former member of President George W. Bush’s Senior Staff as the Deputy Assistant to the President for Appointments and Scheduling before joining Park Strategies LLC as a lobbyist in 2006, Blakeman is also the Senior Advisor for Gordon C. James Public Relations, and is a former vice president of Barbour, Griffith and Rogers.

Congresspedia, a project of the Sunlight Foundation and the Center for Media & Democracy, pointed out that Freedom’s Watch was “Using a propaganda tactic similar to that currently being employed by the pro-war in Iraq Republican front group Vets for Freedom … [by] us[ing] ads featuring ‘Iraq war veterans and parents of veterans who lost family members in the war’ to urge both Republican and Democratic members of Congress ‘who have supported the war not to switch their vote.’ The ‘central message’ will be that ‘the war in Iraq can be won and Congress must not surrender.’”

On August 22, Tom Matzzie, Washington Director of MoveOn.org Political Action/Americans Against Escalation in Iraq, pointed out on AMERICAblog that nearly $6 million was going to be spent between August 22 and September 23, targeting mostly Republican members of Congress:

Freedom’s Watch has brought Ari Fleischer, former White House press secretary to President George W. Bush from 2001 to 2003, on board as its spokesman. He is also a founding board member. Fleischer, who has been out of the news lately, recently received some media attention when he was hired by the Don’t Take My Bat Away Coalition (website), an organization opposed to a ban on the use of aluminum baseball bats.

In addition to Bateman and Fleischer, key players include Mel Sembler, the controversial Florida multi-millionaire, former U.S. Ambassador and longtime Republican donor, William P. Weidner, president and chief operating officer of the Las Vegas Sands Corp, and Matt Brooks, executive director of the Republican Jewish Coalition.

In a post dated August 22, The Politico’s Mike Allen identified the following Freedom’s Watch donors: Sembler; Anthony Gioia, a longtime Republican Party donor who served as U.S. Ambassador to Malta until 2004; Kevin Moley, who served as the U.S. Permanent Representative to the United Nations and Other International Organizations in Geneva from September 2001 to April 2006; Howard Leach, a big-time GOP donor who served as Ambassador to France until 2005; Dr. John Templeton, Jr., the son of mutual-funds pioneer Sir John Templeton and chairman and president of the John Templeton Foundation; Edward Snider, chairman of Comcast-Spectacor, the huge Philadelphia sports and entertainment firm; Sheldon Adelson, chairman of the Las Vegas Sands Corp. and ranked by Forbes magazine as the third wealthiest American; Gary Erlbaum, Vice Chairman of the Jewish Federation of Greater Philadelphia and Chairman of the Federation’s Israel Emergency Campaign and the Executive Vice President of the Jewish Publishing Group which publishes the Jewish Exponent and Inside magazine; Richard Fox, chairman of the Jewish Policy Center and Pennsylvania State Chairman of the Reagan/Bush campaign in 1980.

SourceWatch noted that “in November 2005 it was reported that Sembler and Leach both donated to the legal defense fund of I. Lewis Scooter Libby, the now-convicted former Assistant to the President and Chief of Staff to Vice President Dick Cheney.”

Freedom’s Watch’s “strategy is nearly identical to the one that the swift boat group implemented in 2004 against John Kerry. Get experienced DC-based political operatives, and parade soldiers in front of the camera to tout whatever message across. It’s quite effective, in that it will probably cause at least a few Republicans to buckle,” The Blue State Blog commented August 22.

“And because soldiers are the ones saying it, the lines that these PR people are feeding them can go farther than the most right-wing lawmakers. They tell us that we will get hit again if we pull out. Kind of like what Cheney said in 2004 about what would happen if Kerry got elected,” Blue State noted.

Bush: is the president imploding?

His aides are jumping ship, his inner circle is torn apart by feuds and his orders are being ignored. Bush has 17 months left in the White House, but he is now a rudderless leader.

You certainly wouldn’t think there was a crisis. There’s no sense that the Bush administration has plunged into a shambles of epic and probably unprecedented proportions, either: Dick Cheney has gone fishing, Congress is out for the summer, and much of Georgetown has fled the August mugginess of Washington for the beaches of Nantucket, Martha’s Vineyard or the Hamptons. President George W Bush himself, 61 last month, is about to break a record previously held by Ronald Reagan: before the end of this month, according to my calculations, he will have surpassed the old Gipper’s record of having taken 436 days’ holiday while in office.

Indeed, this past week, Air Force One touched down at Waco airport in Texas - I swear this is true - for the 66th time since Bush took office, so he could relax at his 1,583-acre “ranch” (there’s not so much as a hint of any livestock to be seen or heard there) nearby. Nor should we forget - how could we? - that, barring anything extraordinary happening, the 43rd US president still has almost 17 months left in the White House.

But the symbolic meltdown of his administration came on the South Lawn of the White House on 13 August when a semi-tearful Karl Rove, 56, announced he will be leaving the administration on 31 August. Though nominally only deputy chief of staff, Rove had become increasingly indispensable to Bush since they first met 34 years ago. He was the amoral political über-strategist who somehow propelled Bush - an alcoholic who had already failed in both politics and business - to four election victories between 1994 and 2004, handing him two terms as Texas governor and then as US president. Bush bristles at the implications of Rove being described as “Bush’s brain”, but happily calls Rove the “boy genius” and “the architect” behind his supreme electoral triumph.

And yet, that hot August morning, the dreams of both men lay in tatters. The wheels of amorality had come full circle. Though Bush was Rove’s best-known political trophy, he had also virtually single-handedly turned Texas from the stolidly Democratic state of LBJ into a strongly Republican one. I have catalogued in these pages before some of the smear tactics Rove used while doing that, such as starting a whispering campaign in 1994 that Ann Richards - Bush’s Democratic rival that year and the then popular incumbent Texas governor, since deceased - was a closet lesbian.

But Rove’s ultimate dream, which he came perilously close to realising in the 21st century, was to pull off what he had done to Texas with the entire country: to create a durable Republican base, centred on the so-called “Christian right” he set about mobilising, despite being an avowed agnostic himself, which would become the springboard of local and federal Republican rule throughout the US for decades to come.

Instead, in 2007 Rove has found himself the target of both criminal and congressional investigations, and Bush is now frequently described by friends and enemies alike as the worst and most unpopular US president in history. Yet each squandered unique political capital of which they could only have dreamed when Bush took office in 2001: shortly after the 11 September atrocities, Republicans were favoured 57-28 per cent over Democrats across the nation.

Today, says Gallup, just 41 per cent of Americans identify themselves as Republicans, compared with 51 per cent who see themselves as Democrats; 40 per cent of Republicans believe the Democrats will win the 2008 presidential election. According to an NBC/WSJ poll a few days ago, Americans believe by margins ranging from 22 to 39 per cent that the Democrats would do better than Bush on issues ranging from education to global warming. Because the Democrats regained control of both the House and Senate last November - a further blow to Rove’s reputation as electoral wonderboy - Bush, Rove et al are the targets of countless congressional probes and subpoenas that threaten to uncover ever more scandal and incompetence.

All of which explains why there was such a sombre, almost funereal, mood on the South Lawn that sunny morning on 13 August. Rove the non-believer vowed to Bush, with a straight face, that he would pray “for God’s continued gifts of strength and wisdom for you and your work . . . and for the Almighty’s continued blessing of our great country”. Bush described Rove as “a dear friend” who is now “moving on down the road”, adding grimly, and rather strangely: “I’ll be on the road behind you here in a little bit.”

The two men hugged each other for a long time and then Laura Bush, too, emotionally embraced Rove before they all headed for Marine One, the waiting presidential helicopter. Rove’s wife and teenage son joined them at Andrews Air Force Base and all boarded Air Force One - en route, naturally, to a holiday at the beloved “ranch”. Rove insists, unconvincingly, that he and his second wife, Darby, will now settle in the tiny town of Ingram in mid-Texas so they can be near their son, Andrew, a student at Trinity University in San Antonio, 63 miles away.

If you believe that, you’ll believe that Rove is at this moment on his knees, praying fervently to the Almighty in whom he does not believe for Bush’s deliverance. The August quiet of Georgetown and Pennsylvania Avenue is therefore misleading - rather like the summer doldrums before the coming megastorm - because Rove’s departure signals that the game really is up for the Bush administration. It’s routine for White House staff to start to look elsewhere at this stage of an administration, but Bush has now been deserted by almost his entire cast - with the notable exceptions, so far, of Cheney and Condi. Alberto Gonzales, his almost comically inept attorney general, stays only because Bush has too much hubris to swallow the universal view that he should be sacked.

The exodus started with Rummy’s resignation on 8 November last year (actually, we learned a few days ago, he handed it in on 6 November - but it was election day on 7 November so the news was suppressed by the administration for 48 hours, though it didn’t do them any good). The following month John Bolton, Bush’s less-than-lovable ambassador to the UN, called it a day knowing his appointment would never be ratified by a Democratic Senate. In January, Harriet Miers - Bush’s former family lawyer in Texas whom he wildly over-promoted to be White House counsel and then nominated, in a doomed move that was egregious even by Bush’s standards, to the Supreme Court - finally went in the midst of more disclosures about the administration’s firing of eight federal prosecutors for political reasons (in which Rove, too, was prominently involved: watch this space).

I can count 16 more front-line people who have gone, including Dan Bartlett (a key White House counsellor who vetted speeches, planned events and shaped communications strategy) and Rob Portman (who had been director of the Office of Management and Budget for barely a year when he resigned in June, citing the unconvincing Rovian cliché that he wanted to spend more time with his family). Tony Snow, Bush’s likeable chief spokesman and a former Fox News anchor, who is now stricken with advanced cancer of the colon, says he will also go before Labor Day on 3 September.

Feuding and vicious warfare have flared in the inner circle, too. Matthew Dowd, Rove’s former protégé-in-chief, is no longer on speaking terms with him and says publicly what everybody else says privately: that he has lost faith in Bush. Matthew Scully, special assistant and senior speechwriter in the White House until 2004, has just published an article excoriating the honesty of Michael Gerson - Bush’s chief speechwriter until last year and a self-proclaimed Christian often dubbed “the conscience of the White House”, who came up with many of Bush’s pithiest scripted lines. David Frum, yet another former White House speechwriter, whose “axis of hatred” Gerson changed to Bush’s infamous “axis of evil” for his first post-9/11 State of the Union address, now says that “polarisation is Karl Rove’s speciality”.

The conundrum, of course, is that it was precisely that dark art which got Bush into the White House in the first place. The poisonous divisiveness that gradually festered around him as a result now allows the state department, to take just one example reported in the Washington Post, to think nothing of simply ignoring an order from the president. Yet I suspect that the extent to which the Bush administration has become so shambolic will not come home to many Americans until the country returns to work on 4 September. Bush is now a truly rudderless president, with no realistic agenda left for the next 513 or so days, other than to tread water and hope for the best.

He has already decreed that the much-awaited “Petraeus report” - the supposedly crucial testimony on Capitol Hill from General David Petraeus and Ryan Crocker, US ambassador in Baghdad, on what the military situation in Iraq is really like following “the surge” - will not now go ahead as planned. The most Congress can expect by the promised 15 September deadline is a private briefing and a report written by administration staff, rather than by Petraeus or Crocker themselves.

Bush will undoubtedly trumpet the resulting flammed-up “report” as proof that significant progress is being made in Iraq - none other than Rove himself was on duty peddling the line on the talk shows that 50 per cent of Baghdad is now under the control of the US army, compared with only 8 per cent in February, and that things are going wonderfully in Anbar Province, too. But cynicism with the Bush administration is such that, according to a CNN/Opinion Research poll released on 16 August, 53 per cent of Americans believe that the “report” will try to make the situation in Iraq sound better than it actually is, and 47 per cent of those opposed to the Iraq War say they simply will not trust it.

The Bush-Rove tragedy is that the two complemented each other and combined to create a uniquely combustible mix that has had such catastrophic consequences for America and the world. To Rove, a college dropout, Bush was a morally malleable blank slate with everything he lacked: an exceedingly well-known, respected family name and a wealthy political background that had enabled him to start life in the privileged Wasp enclaves of Connecticut and end up in Texas via Yale and Harvard. Perfect for the White House in, say, 2001?

For Bush, Rove represented proven cunning viciousness and, yes, a brain - one that was crammed with political and demographic facts and figures. Besides his enthusiasm for peculiarly nasty dirty tricks, Rove’s genius was to invent wedge issues which did not actually concern the overwhelming majority of Americans, but which he managed to push to the forefront of political debate. Rove may have been an agnostic himself, but he could certainly work up the electoral bloc that he invented and called “the Christian right” into lathers of rage over, say, gay marriage.

We now know that Rove was chairing meetings of the shadowy and secret White House Iraq Group plotting the invasion of Iraq as early as 2002, and that he was already pushing the line that, because of 9/11, the Bush administration was engaged in a messianic struggle between good and evil. He seized the opportunity to convince Bush that he was a president placed on this planet by God to liberate mankind and bring “democracy” to the un-American and thus politically pagan world. For Bush, it was an intoxicating vision to fill the blank slate.

By 2003, Rove had an office in the West Wing and Bush let him loose on cherished domestic dreams such as “reforming” social security and immigration. But his high-handed approach soon enraged congressional Republican leaders such as Tom DeLay and Dick Armey, and the beginning of the collapse of the Bush edifice had started. The wars on Iraq and terror were sacrosanct, but when it came to their bread-and-butter issues, the likes of DeLay and Armey weren’t going to be pushed around by a power-mad, devious Washington outsider like Rove.

Hence the terrible mess Washington will soon be in. Bush has always been obsessed with how history will view him, and all that now keeps him safely wrapped inside his bubble of self-delusion is an almost Hegelian certainty that he is a providential and necessary creation of our times whom history will not only vindicate, but glorify - even if it is long after our deaths. Rove’s job after 31 August, once he is released into the big-bucks world of the lecture, talk-show and publishing circuits, will be to spin the Bush-Rove legacy. He seems less optimistic than Bush, telling TV viewers: “The president will say to me, ‘Don’t worry about it. History will get it right and we’ll both be dead.’”

In the meantime, the cicadas in Georgetown are chirping away, the weathermen tell us we will all be under a “heat advisory”, and children are flocking to swimming pools before the dreaded return to school. And 1,500 miles away, in Texas, America’s president is furiously biking away while Iraq and Afghanistan burn. Yet history will come to see him as the brave hero who did what he knew was right - even if it takes centuries to come round to that conclusion.

North American Integration and the Militarization of the Arctic

Market Efficiency Hokum

You know the story triumphantly heard in the West. Markets work best when governments let them operate freely - unconstrained by rules, regulations and taxes about which noted economist Milton Friedman once said in an interview he was “in favor of cutting….under any circumstances and for any excuse, for any reason, whenever it’s possible (because) the big problem is not taxes (but government) spending.

Friedman is no longer with us, but by his reasoning, the solution to curbing it is “to hold down the amount of income (government) has (and presto) the way to do it is to cut taxes.” He seemed to forget about borrowing and the Federal Reserve’s ability to print limitless amounts of ready cash the way it’s been doing for years and during the current credit squeeze. Friedman further added in the same interchange “If the White House were under (GW) Bush, and House and Senate….under the Democrats, I do not believe there would be much spending.”

Clearly, either the Nobel laureate wasn’t paying attention or age was taking its toll late in his life. Since 2001, Democrats embraced tax cutting and overspending policies as enthusiastically as Republicans with both parties directing the benefits hugely to the right pockets. They’re on Wall Street and in corporate boardrooms where recipients know “free markets” work great with a little creative resource directing from Washington.

In investment finance, Eugene Fama is generally regarded as the father of efficient market theory, also known as the “efficient market hypothesis (EMH).” He wrote his 1964 doctoral dissertation on it titled “The Behavior of Stock Market Prices” in which he concluded stock (and by implication other financial market) price movements are unpredictable and follow a “random walk” reflecting all available information known at the time. Thus, no one, in theory, has an advantage over another as everyone has equal access to everything publicly known (aside from “insiders” with a huge advantage). That includes rumored and actual financial, economic, political, social and all other information, all of which is reflected in asset prices at any given time.

Those buying this theory believe Milton Friedman knew best. He became the modern-day godfather of “free market” capitalism and leading exponent that markets work efficiently and best when unfettered by government intervention that generally gets things wrong. In 1958, Friedman explained it in his famous “I, Pencil” essay. In it, he illustrated the notion of Adam Smith’s invisible hand and conservative economist Friedrich Hayek’s teachings on the importance of “dispersed knowledge” and how the price system communicates information to “make (people) do desirable things without anyone having to tell them what to do.”

Friedman’s “pencil” story explained “a complex combination of miracles: a tree, zinc, copper, graphite, and so on.” Added to these ingredients from nature is “an even more extraordinary miracle: the configuration of creative human energies - millions of tiny know-hows configuring naturally and spontaneously (responding to) human necessity and desire and in the absence of any human master-minding.” None of them working independently was trying to make a pencil. No one directed them from a central office. They didn’t know each other, lived in many countries, spoke different languages, practiced different religions, and may have even hated each other. Yet, their unrelated contributions produced a pencil.

By Friedman’s reasoning, this could never happen through central planning. It sounds good in theory, but how does it jibe with reality. The Soviets split the atom, were first in space ahead of the US with Sputnik 1, and developed many advanced technologies even though they were outclassed and outspent by the West overall with greater resources to do it.

In practical reality, governments, like individuals operating freely in the marketplace, can succeed or fail. It comes down to people skills and how well they do their jobs. Top down or bottom up has little final effect on the end result, but does direct what’s undertaken and what isn’t. Top down in Canada, Western Europe and Venezuela delivers excellent state-funded health care to everyone. Bottom up in America offers it to anyone who can pay, but if not, you’re out of luck if your employer won’t provide it. Forty-seven million and counting had their luck run out, and Friedman’s pencil making miracle won’t treat them when they’ll ill.

Put another way, if “free market” capitalism works best and America is its lead exponent, why then:

– 3.5 million or more homeless and heading higher in the wake of subprime defaults;

– the nation, in fact, bankrupt according to a 2006 study for the St. Louis Fed.

Clearly, something is wrong with the “pencil miracle” working for some but not for most. Friedman no longer can respond and his acolytes won’t.

Economist Hyman Minsky was mostly ignored while he lived, but his star may be rising 11 years after his death in 1996. Some described him as a radical Keynesian based on the theories of economist John Maynard Keynes who taught economies operate best when mixed. He believed state and private sectors both play important roles with government stepping in to stimulate or constrain economic activity whenever private sector forces aren’t able to do it best alone.

It’s the opposite of “supply-side” Reaganomics and its illusory “trickle down” notion that economic growth works best through stimulative tax cuts its proponents claim promote investment that benefits everyone. It was Reagan-baloney then and now, and so is the notion markets are efficient and work best when left alone.

Minsky explained it, and people are now taking note in the wake of current market turbulence. His work showed financial market exuberance often becomes excessive, especially if no regulatory constraints are in place to curb it. He developed his theories in two books - “John Maynard Keynes” and “Stabilizing an Unstable Economy” as well as in numerous articles and essays.

In them, he constructed a “financial instability hypothesis” building on the work of Keynes’ “General Theory of Employment, Interest and Money.” He provided a framework for distinguishing between stabilizing and destabilizing free market debt structures he summarized as follows:

“Three distinct income-debt relations for economic units….labeled as hedge, speculative and Ponzi finance, can be identified.”

– “Hedge financing units are those which can fulfill all of their contractual payment obligations by their cash flows: the greater the weight of equity financing in the liability structure, the greater the likelihood that the unit is a hedge financing unit.”

– “Speculative finance units are units that can meet their payment commitments on ‘income account’ on their liabilities, even as they cannot repay the principle out of income cash flows. Such units need to ‘roll over’ their liabilities - issue new debt to meet commitments on maturing debt.”

– “For Ponzi units, the cash flows from operations are (insufficient)….either (to repay)….principle or interest on outstanding debts by their cash flows from operations. Such units can sell assets or borrow. Borrowing to pay interest….lowers the equity of a unit, even as it increases liabilities and the prior commitment of future incomes.”

“….if hedge financing dominates….the economy may….be (in) equilibrium. In contrast, the greater the weight of speculative (and/or) Ponzi finance, the greater the likelihood that the economy is a deviation-amplifying system….(based on) the financial instability hypothesis (and) over periods of prolonged prosperity, the economy transits from financial relations (creating stability) to financial relations (creating) an unstable system.”

“….over a protracted period of good times, capitalist economies (trend toward) a large weight (of) units engaged in speculative and Ponzi finance. (If this happens when) an economy is (experiencing inflation and the Federal Reserve tries) to exorcise (it) by monetary constraint….speculative units will become Ponzi (ones) and the net worth of previous Ponzi units will quickly evaporate. Consequently, units with cash flow shortfalls will be forced to (sell out). This is likely to lead to a collapse of asset values.”

Disturbances of various kinds change investor perceptions and disrupt markets. It may be a tightened economic policy from higher interest rates or investors and lenders retrenching in reaction to:

– a housing bubble, credit squeeze, and growing subprime mortgage delinquencies and defaults with spreading contagion affecting:

– collateralized debt obligation (CDO) instruments (packages of mostly risky junk and other debt),

–commercial and residential mortgage-backed securities (CMBS and RBMS - asset backed by mortgage principle and interest payments), and even

Following displacement, markets bottom and prices begin rising as fundamentals improve. Investors start noticing as it becomes evident and gains momentum.

Recovery needs help and plentiful easy credit provides it. As conditions improve, it fuels speculation enticing more investors to jump in for financial opportunities or to borrow for a new home or other consumer spending. The easier and more plentiful credit gets, the more willing lenders are to give it including to borrowers with questionable credit ratings. Yale Economist Robert Shiller shares the view that “booms….generate laxity in standards for loans because there a general sense of optimism (like) what we saw in the late 80s” preceding the 1987 crash that doesn’t necessarily signal an imminent one now.

New type financial instruments and arrangements also arise as lenders find creative and risky ways to make more money. In recent years, sharply rising housing prices enticed more buyers, and lenders got sloppy and greedy by providing interest-only mortgages to marginal buyers unable to make a down payment.

The cheaper and easier credit is, the greater the incentive to overtrade to cash in. Trading volume rises and shortages emerge. Prices begin accelerating and easy profits are made creating more greed and foolish behavior.

This is the most dangerous phase. Cooler heads are worried but fraudsters prevail claiming this time is different, and markets have a long way to go before topping out. Greed trumps good sense and investors foolishly think they’re safe and can get out in time. Stories of easy riches abound, so why miss out. Into the fire they go, often after the easy money was made, and the outcome is predictable. The fraudsters sell at the top to small investors mistakenly buying at the wrong time and getting burned.

The pros have seen it before, understand things have gone too far, and quietly sell to the greater fools buying all they can. It’s the beginning of the end.

When cheap credit ends, enough insiders sell, or an unexpected piece of bad news roils markets, it becomes infectious. It can happen quickly turning euphoria into revulsion panicking investors to sell. They begin outnumbering buyers and prices tumble. Downward momentum is far greater and faster than when heading up.

Sound familiar? It’s a “Minsky Moment,” and the irony is most investors know easy credit, overtrading and euphoria create bubbles that always burst. The internet and tech one did in March, 2000, and since mid-July, reality caught up with excess speculation in equity prices, the housing bubble, growing mortgage delinquencies and subprime defaults. Goldilocks awoke and sought shelter as lenders remembered how to say “no.” This time, central banks rode to the rescue (they hope) with huge cash infusions, the Fed cut its discount rate a half point August 17, and it signaled lower “fed funds” rates ahead if markets remain tight.

Intervention may reignite “animal spirits” and work short-term but won’t easily band-aid over what noted investor Jeremy Grantham calls “the broadest overpricing of financial assets - equities, real estate, and fixed income - ever recorded” with the financial system dangerously “overstretched (and) overleveraged.” His view is that current conditions have “almost never been this dire,” and we’re “watching a (too late to stop) very slow motion train wreck.” Minsky would have noticed, too.

Grantham’s exhaustive research shows all markets revert to their mean values, and all bubbles burst as the greatest Fed-engineered equity one ever in US history did in 2000 but didn’t complete its corrective work. In Grantham’s view, lots more pain is coming and before it’s over, it will be mean, nasty and long, affecting everyone. Minsky saw it earlier, studied it, and wrote about it exhaustively when no one noticed. If he were living today, he’d say “I told you so.”

Federal Reserve Engineered Housing Bubble and Resultant Financial Market Turmoil

Astute observers continue to speculate and comment that the housing bubble and resultant current financial market turmoil came from deliberate widespread malfeasance aided by considerable cash infusion help from the Federal Reserve in the lead on the scheme.

Economist Paul Krugman is one of the latest with his views expressed in an August 16 New York Times op ed piece titled “Workouts, Not Bailouts.” He began by debunking Wall Streeter Treasury Secretary Henry Paulson’s ludicrous April claim that the housing market was “at or near the bottom” followed by his equally absurd August view that subprime mortgages were “largely contained.” Krugman’s response: “the time for denial is past….housing starts and applications for building permits have fallen to their lowest levels in a decade, showing that home construction is still in free fall….home prices are still way too high (at 70% above their long-term trend values according to the Center for Economic and Policy Research, and) the housing slump (will be around) for years, not months” with all those empty unbought homes needing hard to find buyers to fill them.

In addition, mortgage problems are “anything but contained” and aren’t confined to the subprime category. Krugman believes current real estate troubles and mortgage fallout bear similarity to the late 1990s stock bubble. Like today, they were accompanied by market manipulation and scandalous fraud at companies like Enron and WorldCom. In his view, “it is becoming increasingly clear that the real-estate bubble of recent years (like the 1990s stock bubble)….caused and was fed by widespread malfeasance.” He left out the Fed but named co-conspiratorial players like Moody’s Investors Service and other rating agencies getting paid lots of money to claim “dubious mortgage-backed securities to be highest-quality, AAA assets.” In this role, they’re no different than were “complaisant accountants” like Arthur Andersen that lost its license to practice from its role in the Enron fallout.

In the end, this scandal may be more far-reaching than earlier ones because so many underwriters and other firms are part of the fraud or are seeking to profit from it. At this point, it’s hard separating villains from victims as, in some cases, they may be one in the same. They’re all involved in dispersing up to trillions of dollars of risks through the derivative alchemy of highly complex, hard to value, packages of mostly subprime CDO and various other type debt instruments that may even end up in so-called safe money market funds unbeknownst to their unsuspecting owners.

Before this scandal ends, they’ll be plenty of pain to go around, but as always, small investors and low income subprime and other mortgage homeowners will be hurt most. Krugman says this is “a clear case for government intervention,” but it won’t be the kind he wants. He cites a “serious market failure (needing fixing to) help (as many as) hundreds of thousands” of Americans who otherwise may lose their homes and/or financial nest eggs. Faced with this problem, “The federal government shouldn’t be providing bailouts, (it should) arrange workouts….we’ve done (it) before (and it worked) - for third-world countries, not for US citizens.” It helped both debtors escape default and creditors get back most of their money.

By providing huge cash infusions to ease credit and reignite “animal spirits,” the Fed and other central banks showed they aren’t listening. It proves what Ralph Nader said in his August 19 Countercurrents article called “Corporate Capitalists: Government Comes To The Rescue” that’s also on CounterPunch titled “Greed and Folly on Wall Street.” With “corporate capitalists’ knees” a bit shaky, Nader recalled what his father once explained years ago when he asked and then told his children: “Why will capitalism always survive? Because socialism will always be used to save it.” Put another way, the American business ethic has always been socialism for the rich, and, sink or swim, free market capitalism for the rest of us.

As the housing slump deepens and many tens of thousands of subprime and other mortgage holders default, vulture investors will profit hugely buying troubled assets at a fraction of their value as they always do in troubled economic times. Writer Danny Schechter calls the current subprime credit squeeze debacle a “sub-crime ponzi scheme (in a) highly rigged casino-like market system” targeting unsuspecting victims. Schechter wants a “jailout” for “criminal….financial institutions (posing) as respectable players.” Krugman, on the other hand, wants a “workout” for the victims. Neither will get what he wants. In the end, as ordinary people lose out, big government will again rescue “corporate capitalism” (at least in the short-term) the way it always does when it gets in trouble. It’s the “American way.” It’ll be no different this time.

Stephen Lendman lives in Chicago and can be reached in Chicago at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Steve Lendman News and Information Hour on TheMicroEffect.com Saturdays at noon US central time.

Wednesday, August 22, 2007

America and Venezuela - Constitutional Worlds Apart

America and Venezuela: Constitutional Worlds Apart - by Stephen Lendman

Although imperfect, no country anywhere is closer to a model democracy than Venezuela under President Hugo Rafael Chavez Frias. In contrast, none is a more shameless failure than America, but it was true long before the age of George W. Bush. The difference under his regime is that the mask is off revealing a repressive state masquerading as a democratic republic. This article compares the constitutional laws of each country and how they’re implemented. The result shows world’s apart differences between these two nominally democratic states - one that’s real, impressive and improving and the other that’s mostly pretense and under George Bush lawless, corrupted, in tatters, and morally depraved.

Before they’re old enough to understand its meaning, young US children are taught to “pledge allegiance to the flag of the United States of America and to the Republic for which it stands,” and, by inference, its bedrock supreme constitutional law of the land. At that early age, they likely haven’t yet heard of it, but soon will with plenty of misinformation about a document far less glorious than it’s made out to be.

This article draws on Ferdinand Lundberg’s powerfully important 1980 book, “Cracks in the Constitution,” that’s every bit as relevant today as then. In it, he deconstructs the nation’s foundational legal document, separating myth from reality about what he called “the great totempole of American society.” He analyzed it, piece by piece, revealing its intentionally crafted flaws. It’s not at all the “Rock of Ages” it’s cracked up to be, but students at all levels don’t learn that in classrooms from teachers going along with the deception or who simply don’t know the truth about their subject matter.

The Constitution falls far short of a “masterpiece of political architecture,” but it’s even worse than that. It was the product of very ordinary scheming politicians (not the Mt. Rushmore types they’re portrayed as in history books) and their friends crafting the law of the land to serve themselves while leaving out the greater public that was nowhere in sight in 1787 Philadelphia. Unlike the Venezuelan Constitution, discussed below, “The People” were never consulted or even considered, and nothing in the end was put to a vote beyond the state legislative bodies that had to ratify it. In contrast to popular myth, the framers crafted a Constitution that didn’t constrain or fetter the federal government nor did they create a government of limited powers.

They devised a government of men, not laws, that was composed of self-serving devious officials who lied, connived, used or abused the law at their whim, and pretty much operated ad libitum to discharge their duties as they wished. In that respect, things weren’t much different then from now except the times were simpler, the nation smaller, and the ambitions of those in charge much less far-reaching than today.

The Constitution can easily be read in 30 minutes or less and just as easily be misunderstood. The opening Preamble contains its sole myth referring to “We the people of the United States of America.” The only people who mattered were white male property owners. All others nowhere entered the picture, then or mostly since, proving democracy operatively is little more than a fantasy. But try explaining that to people today thinking otherwise because that’s all they were taught from the beginning to believe.

They were never told the American revolution was nothing more than a minority of the colonists seceding from the British empire planning essentially the same type government repackaged under new management. Using high-minded language in Article I, Section 8 of the supreme law of the land, the founders and their successors ignored the minimum objective all governments are, or should be, entrusted to do - “provide for….(the) general welfare” of their people under a system of constitutional law serving everyone. But that’s not its only flaw build in by design.

Our revered document is called “The Living Constitution,” and Article VI, Section 2 defines it as the supreme law of the land. In fact, it’s loosely structured for governments to do as they wish or not wish with the notion of a “government of the people, by the people, for the people” a nonstarter. “The People” don’t govern either directly or through representatives, in spite of commonly held myths. “The People” are governed, like it or not, the way sitting governments choose to do it. As a consequence, “The Living Constitution” was a “huge flop” and still is.

Popular myth aside, the 55 delegates who met in Philadelphia from May to September, 1787 were very ordinary self-serving, privileged, property-owning white men. They weren’t extraordinarily learned, profound in their thinking or in any way special. Only 25 attended college (that was pretty rudimentary at the time), and Washington never got beyond the fifth grade.

Lundberg described them as a devious bunch of wheeler-dealers likely meeting in smoke-filled rooms (literally or figuratively) cutting deals the way things work today. He called them no “all-star political team” (except for George Washington) compared to more distinguished figures who weren’t there like Jefferson, Adams (the most noted constitutional theorist of his day), John Jay (the first Supreme Court Chief Justice), Thomas Paine, Patrick Henry and others. Madison and Alexander Hamilton, who did attend, were virtual unknowns at the time, yet ever since Madison has been mischaracterized as the Constitution’s father. In fact, he only played a modest role.

The delegates came to Philadelphia in May, 1887, assembled, did their work, sent it to the states, and left in a despondent mood. They disliked the final product, some could barely tolerate it, yet 39 of the 55 attendees knowingly signed a document they believed flawed while we today extoll it like it came down from Mt. Sinai. The whole process we call a first-class historical event was, in fact, an entirely routine uninspiring political caucus producing no “prodigies of statecraft, no wonders of political (judgment), no vaulting philosophies, no Promethean vistas.” Contradicting everything we’ve been “indoctrinated from ears to toes” to believe, the notion that the Constitution is “a document of salvation….a magic talisman,” or a gift to the common man is pure fantasy.

The central achievement of the convention, and a big one (until the Civil War changed things), was the cobbling together of disparate and squabbling states into a union. It held together, tenuously at best, for over seven decades but not actually until Appomattox “at bayonet point.” The convention succeeded in gaining formal approval for what the leading power figures wanted and then got it rammed through the state ratification process to become the law of the land.

After much wheeling and dealing, they achieved mightily but not without considerable effort. Enough states balked to thwart the whole process and had to be won over with concessions like legitimizing slavery for southern interests and more. Then consider the Bill of Rights, why they were added, for whom, and why adopting them made the difference. It came down to no Bill of Rights, no Constitution, but they weren’t for “The People” who were out of sight and mind.

These “glorified” first 10 Amendments were first rejected twice, then only added to assure enough state delegates voted to ratify the final document with them included. Many in smaller states were displeased enough to want a second convention that might have derailed the whole process had it happened. To prevent it, concessions were made including adding the Bill of Rights because they addressed key state delegate concerns like the following:

– the right of people to bear arms, but not as the 2nd Amendment today is interpreted,

– the rights of free speech, the press, religion, assembly and petition, all to serve monied and propertied interests alone - not “The People,”

– various other provisions worked out through compromise to become our acclaimed Bill of Rights. Two additional amendments were proposed but rejected by the majority. They would have banned monopolies and standing armies, matters of great future import that might have made a huge difference thereafter. We’ll never know for sure.

In the end and in spite of its defects, the framers felt it was the best they could do at the time and kept their fingers crossed it would work to their advantage. None of them suggested or wanted “a sheltered haven….for the innumerable heavily laden, bedraggled, scrofulous and oppressed of the earth.” On the contrary, they intended to keep them that way meaning things weren’t much different then than now, and the founders weren’t the noble characters they’re made out to be.

There were no populists or civil libertarians among them with men like Washington and Jefferson (who was abroad and didn’t attend) being slave-owners. In fact, they were little more than crass opportunists who willfully acted against the will of “The People” they ignored and disdained. In spite of it, they’re practically deified and ranked with the Apostles, and one of them (Washington) sits in the most prominent spot atop Mt. Rushmore.

The constitutional convention ended September 17, 1787 “in an atmosphere verging on glumness.” Of the 55 attending delegates, 39 signed as a pro forma exercise before sending it to the states with power to accept or reject it. Again, “The People” were nowhere in sight in Philadelphia or at the state level where the real tussle began before the founders could declare victory.

Contrary to popular myth, the new government wasn’t constrained by constitutional checks and balances of the three branches created within it. In fact, then and since, sitting governments have acted expediently, with or without popular approval, and within or outside the law. In this respect, our system functions no differently than most others operating as we do. It’s accomplished through “the narrowest possible interpretations of the Constitution,” but it’s free to go “further afield under broader or fanciful official interpretations.” History records many examples under noted Presidents like Lincoln, T. and F. Roosevelt and Wilson along with less distinguished ones like Reagan, Clinton, Nixon, GHW Bush and his bad seed son, the worst ever of a bad lot.

Key to understanding the American system is that “government is completely autonomous, detached, (and) in a realm of its own” with its “main interest (being) economic (for the privileged) at all times.” Constitutional shackles and constraining barriers are pure fantasy. Regardless of law, custom or anything else, sitting US governments have always been freelancing and able to operate as they please. They’ve also consistently been unresponsive to the public interest, uncaring and disinterested in the will and needs of the majority, and generally able to get around or remake the law to suit their purpose. George W. Bush is only the latest and most extreme example of a tradition begun under Washington, who when elected unanimously (by virtual coronation) was one of the two richest men in the country.

The Constitution then and since confers unlimited powers on the government constituted under its three branches of the Congress, Executive and Judiciary. Article I (with seven in all plus 27 Amendments) deals with the legislative branch. Section 8, Sub-section 18 states Congress has power “to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution….or in any department or officer thereof.” It’s for government then to decide what’s “necessary” and “proper” meaning the sky’s the limit under the concept of sovereignty.

The Executive and Judiciary branches are dealt with below with the three branches comprising a labyrinthine system the framers devised under the Roman notion of “divide and rule” as follows:

– a bicameral legislature with a single member in the upper chamber able to subvert all others in it through the power of the filibuster (meaning pirate in Spanish),

– a committee system controlled mostly by seniority or a political powerbroker,

– a separate judiciary able to overrule the Congress and Executive, but too often is a partner, not an adversary,

– staggered elections to assure continuity by preventing too many officials being voted out together,

– a two-party system with multiple constituencies, especially vulnerable to corruption and the influence of big (corporate) money that runs everything today making the whole system farcical, dishonest and a democracy only in the minds of the deceived and delusional.

Article III of the Constitution establishes the Supreme Court saying only: “The judicial power shall be vested in one Supreme Court, and in such inferior courts as the Congress may from time to time ordain and establish.” Congress is explicitly empowered to regulate the Court, but, in fact, the opposite often happens or, at times, it cuts both ways. The function of Congress is to make laws with the Court in place to interpret them and decide their constitutionality if challenged and it decides to adjudicate.

As for the common notion of “judicial review,” it’s nowhere mentioned in the Constitution nor did the framers authorize it. Nonetheless, courts use it to judge the constitutionality of laws in place and public sector body actions. They derive their power to do it by deduction from two separate parts of the Constitution: Article VI, Section 2 saying the Constitution, laws and treaties are the supreme law of the land and judges are bound by them; then in Article III, Section 1 saying judicial power applies to all cases, implying judicial review is allowed. Under this interpretation of the law, appointed judges, in theory, “have a power unprecedented in history - to annul acts of the Congress and President.”

With or without this power, Lundberg makes a powerful case overall that the constitutional story comes down to a question of money and money arrangement - who gets it, how, why, when, where, what for, and under what conditions. Also addressed is who the law leaves out. The story has nothing whatever to do with guaranteeing life, liberty, and the pursuit of happiness (Jefferson’s Orwellian language meaning property); establishing justice; upholding the rule of law equitably for everyone; promoting the general welfare; or securing the blessings of freedom for “The People” unconsidered, unimportant and ignored by the three branches of government serving monied and property interests only, of which they are a part.

Lundberg’s theme is clear and unequivocal. Under US constitutional law, the President is the most powerful political official on earth, bar none under any other system of government. “The office he holds is inherently imperial,” regardless of the occupant or how he governs, and the Constitution confers this on him. Unlike the British model, with the executive as a collectivity, the US system “is absolutely unique, and dangerously vulnerable” with one man in charge fully able to exploit his position. “The American President (stands) midway between a collective executive and an absolute dictator (and in times of war like now) becomes, in fact, quite constitutionally, a full-fledged dictator.” Disturbingly, the public hasn’t a clue about what’s going on.

A single sentence, easily passed over or misunderstood, constitutes the essence of presidential power. It effectively grants the Executive a near-limitless source, only constrained to the degree he chooses. It’s from Article II, Section 1 reading: “The executive power shall be vested in a President of the United States of America. Article II, Section 3 then almost nonchalantly adds: “The President shall take care that the laws be faithfully executed” without saying Presidents are virtually empowered to make laws as well as execute them even though nothing in the Constitution specifically permits this practice. More on that below.

To understand how the US government works, it’s essential to know what executive power is, in fact, knowing it’s concentrated in the hands of one man for good or ill. Also crucial is how Presidents are elected - “literally (by) electoral (unelected by the public) dummies” in an Electoral College. The scheme is a long-acknowledged constitutional anomaly as these state bodies are able to subvert the popular vote, never meet or consult like the College of Cardinals electing a Pope, and, in effect, reduce and corrupt the process into a shameless farce.

Once elected, it only gets worse because the power of the presidency is awesome and frightening. The nation’s chief executive:

– is commander-in-chief of the military functioning as a virtual dictator in times of war; although Article I, Section 8 grants only Congress that right, the President, in fact, can do it any time he wishes “without consulting anyone” and, of course, has done it many times;

– can make treaties that become the law of the land, with the advice and consent of two-thirds of the Senate (not ratification as commonly believed); can also terminate treaties with a mere announcement as George Bush did renouncing the important ABM Treaty with the former Soviet Union; in addition, and with no constitutional sanction, he can rule by decree through executive agreements with foreign governments that in some cases are momentous ones like those made at Yalta and Potsdam near the end of WW II. While short of treaties, they then become the law of the land.

– can appoint administration officials, diplomats, federal judges with Senate approval, that’s usually routine, or can fill any vacancy through (Senate) recess appointments; can also discharge any appointed executive official other than judges and statutory administrative officials;

– can veto congressional legislation, and history shows through the book’s publication they’re sustained 96% of the time;

– while Congress alone has appropriating authority, only the President has the power to release funds for spending by the executive branch or not release them;

– Presidents also have a huge bureaucracy at their disposal, including powerful officials like the Secretaries of Defense, State, Treasury, and Homeland Security and the Attorney General in charge of the Justice Department;

– Presidents also command center stage any time they wish. They can request and get national prime time television for any purpose with guaranteed extensive post-appearance coverage promoting his message with nary a disagreement with it on any issue;

– throughout history, going back to George Washington, Presidents have issued Executive Orders (EOs) although the Constitution “nowhere implicitly or explicitly gives a President (the) power (to make) new law” by issuing “one-man, often far-reaching” EOs. However, Presidents have so much power they can do as they wish, only constrained by their own discretion.

– George Bush also usurped “Unitary Executive” power to brazenly and openly declare what this section highlights - that the law is what he says it is. He proved it in six and a half years of subverting congressional legislation through a record-breaking number of unconstitutional “signing statements.” - They rewrote over 1132 law provisions through 147 separate “statements,” more than all previous Presidents combined. Through this practice, George Bush expanded presidential power well beyond the usual practices recounted above.

– Presidents are, in fact, empowered to do almost anything not expressively forbidden in the Constitution, and very little is; more importantly, with a little ingenuity and lots of creative chutzpah, the President “can make almost any (constitutional) text mean whatever (he) wants it to mean” so, in fact, his authority is practically absolute or plenary. And the Supreme Court supports this notion as an “inherent power of sovereignty.” If the US has sovereignty, it has all powers therein, and the President, as the sole executive, can exercise them freely without constitutional authorization or restraint.

In effect, “the President….is virtually a sovereign in his own person.” Compared to the power of the President, Congress is mostly “a paper tiger, easily soothed or repulsed.” The courts, as well, can be gotten around with a little creative exercise of presidential power, and in the case of George Bush, at times just ignoring their decisions when they disagree with his. As Lundberg put it: “One should never under-estimate the power of the President….nor over-estimate that of the Supreme Court. The supposed system of equitable checks and balances does not exist, in fact, (because Congress and the courts don’t effectively use their constitutional authority)….the separation in the Constitution between legislative and the executive is wholly artificial.”

Further, it’s pure myth that the government is constrained by limited powers. Quite the opposite is true “which at the point of execution (resides in) one man,” the President. In addition, “Until the American electorate creates effective political parties (which it never has done), Congress….will always be pretty much under (Presidents’) thumb(s).” Under the “American constitutional system (the President) is very much a de facto king,” and under George Bush a corrupted, devious, criminal and dangerous one.

As for impeaching and convicting a President for malfeasance, Article II, Section 4 states it can only be for “treason, bribery, or other high crimes and misdemeanors.” Based on the historical record, it’s near-impossible to do with no President ever having been removed from office this way, and only two were impeached, both unjustly. John Adams, the most distinguished constitutional theorist of his day, said it would take a national convulsion to remove a President by impeachment, which is not to say it won’t ever happen and very likely one day will with no time better than the present to prove it.

In sum from the above, the US system of constitutional law is full of flaws and faults. “The People” were deliberately and willfully left out of the process proving the Constitution doesn’t recognize democracy in America in spite of the commonly held view it does. In addition, the President, at his own discretion, can usurp dictatorial powers and end republican government by a stroke of his pen. That should awaken everyone to the clear and present danger that any time, for any reason, the President of the United States can declare a state of emergency, suspend the law of the land and rule by decree.

How does America’s system of government contrast with rule under the 1999 Constitution of the Bolivarian Republic of Venezuela? Hugo Chavez was first elected president in December, 1998 and took office in February, 1999. He then held a national referendum so his people could decide whether to convene a National Constituent Assembly to draft a new constitution to embody his visionary agenda. It passed overwhelmingly followed three months later by elections to the National Assembly to which members of Chavez’s MVR party and those allied with it won 95% of the seats. They then drafted the revolutionary Constitucion de la Republica Bolivariana de Venezuela. It was put to a nationwide vote in December, 1999 and overwhelmingly approved changing everything for the Venezuelan people.

It established a model humanistic participatory social democracy, unimaginable in the US, providing real (not imagined) checks and balances in the nation’s five branches of government. They comprise the executive, legislative and judicial ones plus two others. One is the independent national electoral council that regulates and handles state and civil society organization electoral procedures to assure they conform to the law requiring free, fair and open elections. The other is a citizen or public power branch functioning as a unique institution. It lets ordinary people serve as ombudsmen to assure the other government branches comply with constitutionally-mandated requirements. This branch includes the attorney general, the defender of the people, and the comptroller general.

Venezuela is governed under a unicameral legislative system called the National Assembly. It’s composed of 167 members (compared to 535 in the two US Houses) elected to serve for five years and allowed to run two more times. It differs from the bicameral system in the US but is broadly similar to governments like in the UK. Although it’s bicameral, it’s governed solely by publicly elected members of the House of Commons that includes the Prime Minister and his cabinet as members of Parliament. The upper House of Lords is merely token and advisory, there by tradition like the Queen, with no power to overrule the lower House that runs everything.

The President is elected with a plurality of universally guaranteed suffrage. Article 56 of the Bolivarian Constitution states: “All persons have the right to be registered free of charge with the Civil Registry Office after birth, and to obtain public documents constituting evidence of the biological identity, in accordance with law.” In addition, all Venezuelans are enfranchised to vote under one national standard and are encouraged to do it under a model democratic system with the vast majority in it actively participating.

In contrast, the US system is quite different. Precise voting rights qualifications are for the states to decide with no constitutionally mandated suffrage standard applying across the board for everyone. The result is many US citizens are denied their franchise right. They’re unable to participate in the electoral process for a variety of reasons no democratic state should tolerate, but America built it into the system by design.

Under Article 2 in The Bolivarian Constitution, the judicial system shares equal importance to the law of the land. But it wasn’t always that way earlier when the Venezuelan judiciary had an odious reputation before Chavez was elected. It had a long history of corruption, a disturbing record of being beholden to political benefactors, and a tradition of failing to provide an adequate system of justice for most Venezuelans. Chavez vowed to change things and undertook a major restructuring effort after taking office. He put this government branch under the Supreme Tribunal of Justice and made it independent of the others. The law now requires those serving be elected by a two-thirds legislative majority (not the previous simple one), and tighter requirements are in place regarding eligible candidates along with public hearings to vet them.

In addition, to root out long-standing corrupt practices, Chavez created a Judicial Restructuring Commission to review existing judgeships and replace those not fit to serve. Henceforth, all sitting judges with eight or more corruption charges pending are disqualified. It effectively eliminated 80% of those on the bench in short order and showed the extent of malfeasance in the national judicial culture. It also suggested the huge amount throughout the government from generations of institutionalized privilege. Those in power were licensed to steal the country blind and enrich themselves and foreign investors at the expense of the vast majority.

Reform in all areas of government is still a work in progress, including in the judiciary needing much of it. The process hasn’t been perfect because of the enormity of the task. By the end of 2000, about 70% of sitting judges in the so-called capital region of Caracas, Miranda and Vargas states were replaced by provisional ones with charges of old judges removed for equally beholden new ones. It may be true and points to how hard the going is to change the long-standing culture of privilege and institute real democratic reforms throughout the government.

Nonetheless, the Constitution established Chavez’s vision for a foundation and legal framework for revolutionary structural change. He’s been working since to transform the nation incrementally into a model participatory social democracy serving all Venezuelans instead of for the privileged few alone the way it traditionally was in the past and how US framers designed American constitutional law. The differences between the two nations couldn’t be more stark.

The spirit of the Venezuelan Bolivarian Constitution is stated straightaway in its Preamble:….”to establish a democratic, participatory and self-reliant, multiethnic and multicultural society in a just, federal and decentralized State that embodies the values of freedom, independence, peace, solidarity, the common good, the nation’s territorial integrity, comity and the rule of law for this and future generations;”

It further “guarantees the right to life, work, learning, education, social justice and equality, without discrimination or subordination of any kind; promotes peaceful cooperation among nations and further strengthens Latin American integration in accordance with the principle of nonintervention and national self-determination of the people, the universal and indivisible guarantee of human rights, the democratization of imitational society, nuclear disarmament, ecological balance and environmental resources as the common and inalienable heritage of humanity;……”

This language would be unimaginable in the US Constitution, and, unlike our federal law, they’re more than words. This is Hugo Chavez’s commitment to all Venezuelans ordained under nine Title headings, 350 Articles, and 18 Temporary Provisions. It’s a first class democratic document, little known in the West, that greatly outclasses and shames what US framers’ enacted for themselves and privileged friends alone. Democracy was nowhere in sight then nor has it shown up since. In Venezuela under Hugo Chavez, it’s resplendent, glorious, still imperfect and a work in progress, but heading in the right direction with newly proposed changes discussed below.

The contrast with America today couldn’t be greater. The nation under George Bush is ruled by Patriot and Military Commissions Act justice under an institutionalized imperial system of militarized savage capitalism empowering the rich to exploit all others. A state of permanent war exists; civil liberties are disappearing and human rights are a nonstarter; dissent is a crime; social decay is growing; a culture of secrecy and growing fear prevail; torture is practically sanctified; injustice is tolerated; the dominant media function as virtual national thought-control police gatekeepers; and the law is what a boy-emperor president says it is. Aside from the privileged it serves, democracy in America is only in the minds of the bewildered and last of the true-believers who sooner or later will discover the truth.

Consider Venezuela’s Bolivarian spirit in contrast. The people freely and openly choose their leaders in honest, independently monitored elections. They’re unemcumbered by a farcical electoral college voting scheme (for Presidents) and a system of rigged electronic voting machine and other electoral engineered fraud corrupting the entire process sub rosa. They also have unimaginable benefits like free quality health and dental care (mandated in Articles 83 - 85) as a “fundamental social right and….responsibility of the state….to guarantee….to improve the quality of life and common welfare.” It’s administered through a national public health system proscribed from being privatized. That’s how health delivery in America gets corrupted for profit. The result is 47 million and counting are uninsured, many millions more have too little coverage, and the cost of care is unaffordable for all but the well-off or those on Medicare, Medicaid (if qualify) or under disappearing company-paid plans.

The Constitution also enacted the principle of participatory democracy from the grassroots for everyone. It’s mandated in Articles 166 and 192 establishing citizen assemblies as a constitutional right for ordinary people to be empowered to participate in governing along with their elected officials. Constitutionally guaranteed rights also ban discrimination; promote gender equity; and insure free speech; a free press; free, fair, and open elections; equal rights for indigenous people (assured a minimum three National Assembly legislative seats); and mandates government make quality free education available for all to the highest levels, as well as housing and an improved social security pension system for seniors, and much more.

Hugo Chavez brought permanent change, and most Venezuelans won’t tolerate returning to the ugly past. Why should they? They never got these essential social services before. Under a leader who cares, they do now, and their lives improved enormously.

The Bolivarian Constitution is a glorious document, fundamentally different in spirit and letter from its US counterpart it shames by comparison. Before Chavez took office in February, 1999, Venezuela only paid lip service to civil liberties, human rights and needs. They’re now mandated by law. It encompasses an impressive array of basic rights and essential services like government-paid health care, education, housing, employment and human dignity enforced and funded by a caring government as the law requires.

Article 58 in the Constitution also guarantees the right to “timely, true, and impartial” information “without censorship, in accordance with the principles of this constitution.” The opposite is true in America where major media are state propaganda instruments for the privileged.

Articles 71 - 74 establish four types of popular national referenda never imagined or held in America outside the local or state level where they’re often non-binding. The US is one of only five major democracies never to have permitted this type citizen participation. In Venezuela under Hugo Chavez, the practice is mandated by law and institutionalized to give people at the grass roots a say in running their government. Four types of referenda are allowed:

–consultative - for a popular, non-binding vote on “national transcendent” issues like trade agreements;

– approving - a binding vote to approve laws, constitutional amendments, and treaties relating to national sovereignty; and

Referenda can be initiated by the National Assembly, the President, or by petition from 10 - 20% of registered voters, with different procedural requirements applying for each.

Social, family, cultural, educational and economic rights are guaranteed under Chapters V - VII with the government backing them financially.

Indigenous Native Peoples’ rights are covered in Chapter VIII. Even environmental rights are addressed with Article 127 stating “It is the right and duty of each generation to protect and maintain the environment for its own benefit and that of the world of the future….The State shall protect the environment, biological and genetic diversity, ecological processes….and other areas of ecological importance.” Try imagining any US federal law with teeth containing this type language let alone the Constitution that includes nothing in its Articles or Amendments.

Citizen Power gets considerable attention under Articles 273 - 291. It’s exercised by “the Republican Ethics Council, consisting of the People Defender, the General Prosecutor and the General Comptroller of the Republic….Citizen Power is independent and its organs enjoy operating, financial and administrative autonomy.” Citizen Power organs are legally charged with “preventing, investigating and punishing actions that undermine public ethics and administrative morals, to assure lawful sound management of public property….(to help) create citizenship, together with solidarity, freedom, democracy, social responsibility, work” and more.

Venezuela’s Constitution covers much more as well under each of its nine Titles from:

– Protection of the Constitution in Title VIII to assure its continuity in the event of “acts of force” or unlawful repeal with each citizen having a duty to reinstate it if that need arises; and finally

– Constitutional Reforms in Title IX in the form of amendments, other reforms to revise or replace any of its provisions, and the National Constituent Assembly with power “resting with the people of Venezuela.” They’re empowered to call an Assembly to transform the State, create a new “juridical order” and draft a new Constitution to be submitted to a national referendum for the people to accept or reject. That’s how democracy is supposed to work. In Venezuela it does. In the US, it doesn’t, never did, and was never conceived or intended to from the nation’s founding to the present.

This happens because Americans know painfully little about their law of the land hidden from them in plain view. They’re taught misinformation about it and the framers who drafted it. Few ever read it beyond a quoted line or two and even fewer ever think about it. In contrast, in Venezuela, the Bolivarian Constitution is sold in pocket-sized form almost everywhere. People buy, read and study it. Why? Because it’s a vital unifying part of their lives codifying core democratic values and principles Venezuelan people cherish and wish to keep.

In July, President Chavez announced he’d be sending the National Assembly a proposal of suggested constitutional reforms to debate and consider. He stressed Venezuelans would then get to vote on them in a national referendum so that “the majority will decide if they approve….constitutional reform.”

Chavez submitted his proposal in an August 15 address to the National Assembly that will debate and rule on them in three extraordinary sessions over the next 60 to 90 days. Included are amendments to 33 of the Constitution’s 350 articles to “complete the death of the old, hegemonic oligarchy and the old, exploitative capitalist system, and complete the birth of the new state.” Chavez stressed the need to update the 1999 Constitution because it’s “ambiguous (and) a product of that moment. The world (today) is very different from (then). (Reforms now are) essential for continuing the process of revolutionary transition.” They include:

– unlimited reelections (that countries like England, France, Germany and others now allow); Chavez wants the reelection option to be “the sovereign decision of the constituent people of Venezuela;”

– guaranteeing the right to work and establishing policies to develop and generate productive employment;

– creation of a Social Stability Fund for “non-dependent” or self-employed workers so they have the same rights as other workers including pensions, paid vacations and prenatal and postnatal leave entitlements;

– reducing the workday to six hours so businesses would have to employ more workers and hold unemployment down;

– recognition of different kinds of property defined as social, collective, mixed and private;

– redefining the role of the military so henceforth “The Bolivarian Armed Forces (will) constitute an essential patriotic, popular and anti-imperialist body organized by the state to guarantee the independence and sovereignty of the nation…;” and

– guaranteeing state control over the nation’s oil industry to prevent any future privatization of this vital resource;

Chavez also wants other changes to strengthen the nation’s participatory democracy at the grassroots. He stresses “one of the central ideas is my proposal to open, at the constitutional level, the roads to accelerate the transfer of power to the people” in an “Explosion of Communal (or popular) Power.” It’s already there in more than 26,000 democratically functioning grassroots communal councils. They’re government-sanctioned, funded, operating throughout the country, and may double in number and be strengthened further under proposed constitutional changes.

Chavez wants “Popular (people) Power” to be a “State Power” along with the Legislature, Executive, Judicial, Citizen and Electoral ones and considers this constitutional change the most important one of all. If it happens, various sovereign powers and duties now handled at the federal, state and municipal levels will be transfered to local communal, worker, campesino, student and other councils. This will strengthen Venezuela’s bedrock participatory democracy making it even more unique and impressive than it already is.

In America, it’s unimaginable a President or other government officials would recommend “People Power” become our fourth government branch, co-equal with the others, with citizens empowered to vote in national referenda on crucial proposed changes in law.

Chavez also proposed a “new geometry of power” by amending article 16 that now states “the territory of the nation is divided into those of the States, the Capital District, federal dependencies and federal territories. The territory is organized into Municipalities.” Chavez wants this amended so popular referenda can create “federal districts” in specific areas to serve as states. He called this idea “profoundly revolutionary (and needed) to remove the old oligarchic, exploiter hegemony, the old society, and (quoting Gramsci weaken the former) historic block. If we don’t change the (old) superstructure (it) will defeat us.”

Chavez also stressed this new structure is needed to be in place when “Venezuela (grows to) 40 - 50 million people.” His plan includes “restructur(ing) Caracas” into a Federal District with more local autonomy, as it was at an earlier time.

These proposals and other initiatives are part of his overall socialism for the 21st century plan that’s also very business-friendly. Chavez opposes savage capitalism, not private enterprise, and under his stewardship domestic and foreign businesses have thrived. They’re a dominant force powering the economy to accelerated growth since 2003 with latest Central Bank 2nd quarter, 2007 figures coming in at 8.9%. With oil prices high and world economies prospering, this trend is likely to continue. That’s good news for business and households sharing in the benefits through greater purchasing power.

Chavez wants his new United Socialist Party (PSUV) to drive the revolutionary process and continue his agenda of reform for all Venezuelans. He wants everyone to enjoy the benefits, not just a privileged few like in the past and in the US today. Under his leadership, their future is bright while in America poverty is growing, the middle class is dying, and the darkness of tyranny threatens everyone under George Bush with his agenda likely continuing under a new president in 2009.

Governance differences exist between these two nations because their constitutional laws are mirror opposite, and America has no one like Hugo Chavez. He’s a rare leader who cares and backs his rhetoric with progressive people-friendly policies. In the US, there’s George Bush, and that pretty much explains the problem. Knowing that, which leader would you choose and under which system of government would you prefer to live?

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Steve Lendman News and Information Hour on TheMicroEffect.com Saturdays at noon US central time.You know the story triumphantly heard in the West. Markets work best when governments let them operate freely - unconstrained by rules, regulations and taxes about which noted economist Milton Friedman once said in an interview he was “in favor of cutting….under any circumstances and for any excuse, for any reason, whenever it’s possible (because) the big problem is not taxes (but government) spending.