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Did The World Narrowly Avoid “Financial Armageddon” Last Week?

Monday, September 22nd, 2008

By Mike Adams | According to insider traders speaking to the New York Post, the global financial system was only 500 trades away from experiencing a global meltdown — “Financial Armageddon” — which was narrowly halted by a last-minute capital infusion by the Fed. In other words, the financial house of cards we’ve been warning readers about very nearly collapsed last week. Had the Fed been one hour later in its rescue, huge sectors of the global economy would have collapsed and the riots would already be under way.

But we’ve all been handed a temporary reprieve by the Fed. Through its emergency (and artificial) intervention in financial markets, we now have extra time before reality unravels our global system of multi-trillion-dollar debt. Remarkably, the Fed has just handed you more time to protect yourself and avoid a total loss of all investments and bank deposits.

They haven’t altered the laws of economics, however. Bad debt must still be paid. It can’t be swept under the rug, nor swept into a giant “debt rescue fund” and simply forgotten. Ultimately, it will all come back to you and me — the taxpayers.

Socializing losses, privatizing gains

In bailing out these financial institutions and preventing a global financial meltdown, the U.S. government has done something truly bewildering: They’ve socialized the losses and privatized the gains from financial institutions.

In other words, they’ve allowed the wealthy elite criminals who created these problems to walk away with their pockets stuffed full of profits. All the losses, however, are being distributed among taxpayers, who are now burdened with a multi-generational debt bill that’s thrown on top of the existing $9 trillion in debt the U.S. already owes to world investors.

How’s that for smart economic planning? We the taxpayers get ALL the losses, NONE of the gains, and NONE of the ownership if the company is sold in the future. It’s such a bad business decision to invest in this way that you’d have to be smoking crack, shooting up heroin or sitting in the White House to even propose such a system.

It also appears that our financial decision makers have snorted up one too many kilos of smack, because — get this — they are now proposing that U.S. taxpayers bail our FOREIGN banks, too!

Yes, friends, it’s not just wealthy elite American bankers who deserve to walk home with all their gains while scattering their hundreds of billions of dollars in losses among American taxpayers; now our federal government is proposing that American taxpayers pay for all the losses of British banks, French banks, German banks, Japanese banks, Chinese banks and any other bank that suffered lending losses operating in the United States. See: http://www.politico.com/news/stories/09…

It just keeps getting more bizarre by the day…

Before last week, I was already concerned about the financial future of America. During last week, I was astonished. Today I’m flabbergasted. I’ve never seen any government pull so many debt tricks out of their magician’s hat and sell it to the People using such blatant misdirection.

As Treasury Secretary Henry Paulson said on ABC’s This Week: “That’s a distinction without a difference to the American people. …Remember, this is about protecting the American people and protecting the taxpayers, and the American people don’t care who owns the financial institution. If the financial institution in this country has problems, it’ll have the same impact whether it’s the U.S. or foreign.”

That’s funny, I actually DO care who owns the financial institutions. And I don’t know about you, but I say that if the American people have to pay for the losses of these institutions, they should at least be issued common stock in those companies! Let’s send home those financial crooks with their pockets empty, and then let’s send all their stock shares out to the people actually footing the bill, shall we?

Oh, and by the way, just in case you thought it all wasn’t crazy enough already, a U.K. newspaper (http://www.independent.co.uk/news/busin…) is now reporting that the top people at the now-failed Lehman Brothers will share a $2.5 billion bonus that was set aside before the investment house filed for Chapter 11 bankruptcy.

How do you like that? A few billion in bonuses for the people who created a mountain of bad debt for the taxpayers! Think about that the next time you’re punching the clock at your nine-to-five.

Friends, we almost witnessed the financial demise of the global banking system. But thanks to timely intervention, what we witnessed instead was a global financial swindle so grand, it’s one for the history books. That giant sucking sound you heard was a financial vacuum pulling dollars out of YOUR bank accounts, and depositing them directly into the accounts of the very people who caused this problem: Rich bankers, greedy derivatives traders and economically-illiterate politicians who think debt doesn’t matter and money is free.

This was all orchestrated by the greatest money thieves of all time: The Federal Reserve and your own government. No con artist in human history has even approached the scope of the swindle that just happened right before our eyes, in full view of the press, the public and the politicians.

“Give me control of a nation’s money supply, and I care not who makes its laws.”
– Mayer Amschel Rothschild

Where do things go from here?

Lucky for you! You now have the “privilege” of participating in paying back nearly $1 trillion to rich fat cats who conspired with the U.S. government to steal it from the People. And oh, by the way, if you’re late on your house payment, they’ll still repossess your house, by the way. Just because you’re paying for all this debt doesn’t mean you actually get to live in it. You still have to pay all your bills, even if the financial institutions don’t.

With this historical, yet bizarre, financial move, the federal government has doubled its resolve to destroy the U.S. dollar and guarantee a gargantuan future implosion of unequalled magnitude. The more they artificially intervene and try to delay the inevitable, the longer the problem festers and grows. In time, it will devastate the global financial system, bringing it all tumbling down to reality.

Financial reality can be delayed by deliberate (and expensive) intervention for a while longer, but certainly not forever. The future of the U.S. dollar — and perhaps even the U.S. government itself — is no longer in doubt.

What can you do to protect your retirement accounts, savings accounts and dollar investments? I’ve got some resources to help you:

First, subscribe to my free Mindful Wealth email list to receive announcements about money protection and wealth attraction strategies for hard times: http://www.naturalnews.com/MindfulWealt…

Secondly, join my LIVE audio seminar that starts this Wed., Sep. 24th at 7PM Pacific time. It’s a live event where you listen in through any web browser as we cover “insider” strategies for financial protection during difficult times. Get the details on that at: http://www.truthpublishing.com/ProductD…

Third, subscribe to the Daily Reckoning at www.DailyReckoning.com - it’s written by Bill Bonner, who is without question the brightest and best-informed financial writer living today.

Finally, subscribe to Stephen Leeb’s The Complete Investor, which is my #1 top recommend newsletter for smart financial advice. Leeb is on top of the situation with oil, energy and the U.S. dollar, and he’ll help you avoid the financial pitfalls now threatening us all.

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200 Years of Standing Up to U.S. War Lies

Monday, September 22nd, 2008

By David Swanson | Murray Polner and Thomas E. Woods, Jr., have edited a new collection of writings called “We Who Dared to Say No to War: American Antiwar Writing from 1812 to Now.” Read it and weep … and cheer. Weep because we’ve been lied into wars in very similar ways for two centuries and have had to discover the deception anew each time. Cheer because some people have been there to denounce the lies on the spot every time, and their ranks have steadily grown.

In 1812, taking over Canada was going to be a cakewalk. In 1846 Mexico had supposedly attacked the United States, whereas the opposite was true. Ending slavery was a belated excuse for the Civil War already underway (much like spreading democracy to Iraq), and it is likely that slavery would have ended swiftly had the South been allowed to secede in peace; slaves escaping north would have been escaping to another nation. In 1898 lies about the Spanish that would have made Fox News proud (including lies about the Maine, a ship that was actually blown up from within) helped launch a U.S. war to liberate Cuba, which however occupied Cuba instead of liberating it and occupied the Philippines for good measure, slaughtering people there by the thousands for years.

In 1916 Woodrow Wilson was reelected president on the slogan “He Kept Us Out of War,” and proceeded to set up an early version of the White House Iraq Group known as the Committee on Public Information whose mission it was to make Americans hate Germans. The lies (including about the content of the Lusitania) were so effective that they shaped the settlement at the end of the first world war, contributing to the rise of Nazism and the second world war. We entered that second war following an unprovoked attack by the Japanese, unless the threats we had sent the Japanese and the economic sanctions we had imposed on them count as provocation, and ignoring the fact that the U.S. Navy had been given, nine days before Pearl Harbor, orders to shoot down any Japanese planes and blow up Japanese boats it encountered.

The lies of the Cold War, and the Gulf of Tonkin, and the mythical babies taken out of incubators prior to the first Gulf War are still familiar to most Americans. What is unfamiliar to most Americans is the history of truth telling that has accompanied all these warmongering lies. If you want to be informed and inspired by this rich heritage, pick up a copy of “We Who Dared to Say No to War.” Here we find Daniel Webster and John Randolph opposing the War of 1812, Henry Clay and Abraham Lincoln Denouncing the Mexican War, Stephen Crane and William Jennings Bryan opposing the war on Cuba and the Philippines, Robert M. La Folette and Helen Keller speaking against World War I, and many, many lesser known prophets for peace. And the endless wars against native Americans are not even included.

Henry Wallace and Robert Taft oppose the Cold War, while Wayne Morse and Philip Berrigan oppose the slaughter in Vietnam, along with many other eloquent voices. And the chapter on Iraq and the “War on Terror” is richer than any before it. Numerous other lesser wars might have been included as well, but this collection is a thing of beauty.

“Where is it written in the Constitution,” asked Daniel Webster, “in what article or section is it contained, that you may take children from their parents, and parents from their children, and compel them to fight the battles of any war, in which the folly or the wickedness of Government may engage it?”

“[T]aking for true,” said Abraham Lincoln, “all the President states as fact, he falls far short of proving his justification; and … would have gone farther with his proof, if it had not been for the small matter, that the truth would not permit him.”

“I have agonized over this vote,” said Congresswoman Barbara Lee on September 15, 2001, when she stood alone against launching an open-ended war on Afghanistan. “But I came to grips with it in the very painful yet beautiful memorial service today at the National Cathedral. As a member of the clergy so eloquently said, ‘As we act, let us not become the evil that we deplore.’”

While it’s not included in the book, I want to add something sung by Pete Seeger:
“When will we ever learn?
“When will we ever learn?”

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Treasury Seeks Authority to Buy $700 Billion Assets

Monday, September 22nd, 2008

By Alison Fitzgerald and John Brinsley | The Bush administration asked Congress for unchecked power to buy $700 billion in bad mortgage investments from U.S. financial companies in what would be an unprecedented government intrusion into the markets.

The plan, designed by Treasury Secretary Henry Paulson, is aimed at averting a credit freeze that would bring the financial system and economic growth to a standstill. The bill would bar courts from reviewing actions taken under its authority.

“It sounds like Paulson is asking to be a financial dictator, for a limited period of time,” said historian John Steele Gordon, author of “Hamilton’s Blessing,” a chronicle of the national debt. “This is a much-needed declaration of power for the Treasury secretary. We can’t wait until the next administration in January.”

As congressional aides and officials scrutinized the proposal, the Treasury late today clarified the types of assets it would purchase. Paulson would have authority to buy home loans, mortgage-backed securities, commercial mortgage-related assets and, after consultation with the Federal Reserve chairman, “other assets, as deemed necessary to effectively stabilize financial markets,” the Treasury said in a statement.

The Treasury would also have discretion, after discussions with the Fed, to make non-U.S. financial institutions eligible under the program.

Bigger Than Pentagon

The plan would raise the ceiling on the national debt and spend as much as the combined annual budgets of the Departments of Defense, Education and Health and Human Services. Paulson is asking for the power to hire asset managers and award contracts to private companies. Most provisions of the proposal expire after two years from the date of enactment.

A failure by the government to support the U.S. financial system could lead to “a depression,” Senator Charles Schumer told reporters in New York. “To do nothing is to risk the kind of economic downturn this country hasn’t seen in 60 years.”

The Treasury is seeking authority to step in as buyer of last resort for mortgage-linked assets that few other financial institutions in the world want to buy, following government takeovers of mortgage giants Fannie Mae and Freddie Mac and insurer American International Group Inc.

“Democrats will work with the administration to ensure that our response to events in the financial markets is swift,” House Speaker Nancy Pelosi said in a statement.

Fast Track

The majority party will seek to reduce mortgage foreclosures and create “fast-track authority” for an overhaul of financial regulation, Pelosi said. Democrats will ensure “the government is accountable to the taxpayers in any future actions under this broad grant of authority, implementing strong oversight mechanisms.”

The proposal will include curbs on executive pay for the companies whose assets the government will be buying, Steve Adamske, a spokesman for Representative Barney Frank, said today in an interview.

Democrats also will include a plan to stem foreclosures, which may involve tapping the loan-modification abilities of the Federal Housing Administration, the Federal Deposit Insurance Corp., and Freddie Mac and Fannie Mae, Adamske said. Frank, a Democrat from Massachusetts, is chairman of the House Financial Services Committee.

“The consequences of inaction could be catastrophic,” Senate Majority Leader Harry Reid said in a statement.

`Serious Issues’

“While the Bush proposal raises some serious issues, we need to resolve them quickly,” he said. “I am confident that, working together, we will.”

House minority leader John Boehner, an Ohio Republican, said today he is reviewing the proposal but didn’t say whether he was inclined to support it.

“The American people are furious that we’re in this situation, and so am I,” Boehner said in a statement. “We need to do everything possible to protect the taxpayers from the consequences of a broken Washington.”

Congress, which may pass legislation as soon as Friday, needs to “make sure there are protections built in for taxpayers,” said Schumer, a New York Democrat on the banking committee. Lawmakers should ensure “taxpayers who gave the money will be put ahead of the stockholders, bondholders and others.”

Paulson is seeking an expansion of federal influence over markets that hasn’t been seen since the Great Depression, said Charles Geisst, author of “100 Years of Wall Street” and a finance professor at Manhattan College in New York.

Hoover Era

Geisst likened the plan to the Reconstruction Finance Corp., which was chartered by Herbert Hoover in 1932 with the goal of boosting economic activity by lending money after credit markets seized up.

President George W. Bush said he called leaders in both houses of Congress and “found a common understanding of how severe the problem is and how necessary it is to get something done quickly.”

“This is going to be a big package because it’s a big problem,” Bush said following a meeting with Colombian President Alvaro Uribe at the White House. “We need to get this done quickly, and the cleaner the better.”

Democratic presidential nominee Barack Obama said in a radio address that he “fully supports” Paulson and Fed Chairman Ben S. Bernanke’s efforts to stabilize the financial system. The plan, however, should benefit both main street and Wall Street, he said.

Republican Presidential nominee John McCain “looks forward” to reviewing the proposal while focusing at least in part on “minimizing the burden on the taxpayer,” said Jill Hazelbaker, communications director for the McCain campaign.

Ban Legal Challenges

The ban on legal challenges of actions by Treasury is “distasteful, it’s unfortunate and it’s bad precedent, but this is an emergency and you have to act,” said Jerry Markham, a law professor at Florida State University and author of “A Financial History of the United States.”

“What you don’t want happen is to have lawsuits that will slow things down and cause problems,” he said.

The proposal would raise the nation’s debt ceiling to $11.315 trillion from $10.615 trillion and require the Treasury secretary to report back to Congress three months after Treasury first uses its new powers, and then semiannually after that.

Paulson would gain discretion to act as he “deems necessary” to hire people, enter into contracts and issue regulations related to a revival of U.S. mortgage finance, according to a three-page proposal. The Treasury would “take into consideration” protecting taxpayers and promoting market stability.

Hiring Authority

The Treasury plans to hire managers to purchase the assets through so-called reverse auctions, seeking the lowest prices, a person briefed on the proposal said yesterday. The document specifies that Treasury may buy only assets from U.S.-based financial institutions issued or originated on or before Sept. 17.

The House will pass legislation to implement the plan by the end of next week, and the Senate will act soon after, Frank said yesterday in an interview on Bloomberg Television’s “Political Capital with Al Hunt.”

Bush today said he’s unconcerned that the price tag on the package may seem high.

“I’m sure there are some of my friends out there that are saying, I thought this guy was a market guy, what happened to him,” the president said. “My first instinct was to let the market work, until I realized, while being briefed by the experts, how significant this problem became.”

The Bush administration seeks “dictatorial power unreviewable by the third branch of government, the courts, to try to resolve the crisis,” said Frank Razzano, a former assistant chief trial attorney at the Securities and Exchange Commission now at Pepper Hamilton LLP in Washington. “We are taking a huge leap of faith.”

To contact the reporter on this story: Alison Fitzgerald in Washingtont ; John Brinsley in Washington at jbrinsley@bloomberg.net

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When Corporations Rule the World

Monday, September 22nd, 2008

PCDF | Those of us who seek to intervene in policy debates in favor of economic justice and environmentally sustainability are regularly assured by the world’s power brokers that they are fully committed to these goals so long as economic growth and the expansion of free trade are not compromised by governmental restraints on the market. So sacred have growth and free trade become in our modern culture that only rarely do we find the courage to ask why they should be given precedence over the needs of people and nature. Indeed, why should we consider accelerating growth and trade to be of any importance at all except to the extent that they serve people and nature?

When the proponents of growth, market deregulation, and free trade tout their benefits, it is well to bear in mind what some of the most outspoken of these proponents really have in mind. Take this account from a recent issue of Forbes magazine.

As disillusion with socialism and other forms of statist economics spreads, private, personal initiative is being released to seek its destiny. Wealth, naturally, follows. The two big openings for free enterprise in this decade have come in Latin America and the Far East. Not surprisingly, the biggest clusters of new billionaires on our list have risen from the ferment of these two regions. Eleven new Mexican billionaires in two years, seven more ethnic Chinese.

Taking a slightly more populist view, Business Week presented its own special report titled “A Millionaire a Minute,” providing this breathless account of what the free market has accomplished in Asia.

Wealth.. . . Now East Asia is generating its own wealth on a speed and scale that probably is without historical precedent. The number of non-Japanese Asian multimillionaires is expected to double to 800,000 by 1996. . . . East Asia will surpass Japan in purchasing power within a decade. . . . There are new markets for everything from Mercedes Benz cars to Motorola mobile phones to Fidelity mutual funds. . . . To find the nearest precedent, you need to rewind U.S. history 100 years to the days before strong unions, securities watchdogs and antitrust laws.

Neither article made more than passing reference to the 675 million Asians who continue to live in absolute deprivation. So there we have it. In the eyes of two leading business journals, economic success is about creating millionaires and billionaires by denying workers the right to organize independent unions and giving free reign to securities fraud and the extraction of monopoly profits.

Most everyone is aware that we live in an unequal world. Few realize, however, just how extreme the inequality has become or how fast the gap between the poor and the super rich is growing. Forbes tells us the world now has 358 billionaires. Their combined net worth exceeds the combined net worth of the world’s poorest 2½ billion people. This is but one manifestation of the extreme economic and social distortions created by the globalized free market economy idealized by business publications such as Forbes and Business Week.

Evidence is mounting that economic growth and free trade are not leading us toward economic justice and environmental sustainability. To the contrary, they are taking us in the direction of increasing economic injustice and environmental unsustainability. The debates over jobs versus the environment miss a basic point. Assuring everyone the means to meet their basic needs and achieving a sustainable balance with the environment are mutually supportive goals. Indeed, there are powerful theoretical arguments why, in a resource scarce world, neither is possible without the other. There is, however, an irreconcilable conflict between the goal of creating economically just and environmentally sustainable societies and embracing sustained economic growth, unregulated markets, and free trade as the organizing principles of public policy. The resulting policies are well suited to producing more millionaires and billionaires. They are ill suited to achieving justice and sustainability.

THE MONEY GAME

The world’s most powerful instrument of governance is not a government. Nor is it a global corporation. Rather it is a global financial system that is running dangerously out of control.

Each day half a million to a million people–primarily Western Europeans, North Americans, and Japanese–arise as dawn reaches their part of the world, turn on their computers, and leave the real world of people, things, and nature to immerse themselves in playing the world’s most lucrative computer game: the money game. As their computers come on line, they enter a world of cyberspace constructed of numbers that represent money and complex rules by which those numbers can be converted into a seemingly infinite variety of financial instruments, each with its own distinctive risks and reproductive qualities. Through their interactions, the players engage in competitive transactions aimed at acquiring for their own accounts the money that other players hold.

Players can also pyramid the amount of money in play by borrowing from one another and bidding up prices. Indeed, the money game players have been so successful in creating play money that for every $1 now circulating in the productive world economy of real goods and services, it is estimated that there is $20 to $50 circulating in the world of pure finance–”investment” funds completely delinked from the creation of real value. In the international currency markets alone, some $800 billion to $1 trillion changes hands each day–unrelated to productive investment or trade in actual goods and services.

Not only is the money game challenging and fun, the play money it generates can be exchanged for real money to buy things from people who work in the real world–lots of things. Unfortunately for the rest of us, though it is played like a game and the transactions involve nothing more than moving numbers from one electronic account to another through a global web of computers, the money game has enormous real consequences. Take the recent Mexican peso crisis as an example.

Mexico became touted as an economic miracle by attracting $70 billion in foreign money over five years with high interest bonds and a super heated stock market. As little as 10 percent of this money went into real investment. Most of it financed consumer imports, capital flight, and debt service payments. It also helped to create 24 Mexican billionaires. The bubble burst in December of 1994 as the hot money flowed out. Mexico’s stock market and the value of the peso plummeted. The resulting Mexican austerity measures and a shifting terms of trade between Mexico and the United States resulted in massive job losses on both sides of the border. U.S. president Clinton put together a $50 billion bailout package at taxpayer expense to assure that the Wall Street firms that held Mexican bonds would be repaid. The new link between the dollar and the peso made currency speculators nervous and the value of the dollar fell sharply against the yen. Not a penny of the bailout money went to the 750,000 Mexicans who would be put out of work by government imposed austerity measures or the million Americans expected to lose their jobs to NAFTA by the end of 1995.

These are real world consequences of an out of control financial system in which reckless young traders backed by the massive financial assets of leading private financial institutions send billions of dollars sloshing around the world in a high stacks gambling frenzy with an almost complete absence of oversight.

At Kidder Peabody, a major U.S. investment house, a lone trader reported $1.7 trillion in phony trades over a period of 2½ years before his superiors noticed anything amiss. During this period he claimed he had earned the firm $350 million in profits, for which he was rewarded with an $11 million bonus. Only later was it found that he had in fact lost the company $85 million on the few trades he had actually made.

In one month a 28 year old trader at Barings bank lost $1.3 billion on bad derivatives bets and forced a venerated 233 year old bank into bankruptcy.

The global financial system is wildly out of control and no one is tending the store.

SOCIALIZING COSTS AND PRIVATIZING GAINS

In a deregulated global market economy global corporations are accountable to only one master, a rogue global financial system with one incessant demand–keep your stock price as high as possible by maximizing short-term returns. One way to do that is to shift as much of the cost of the corporation’s operations as possible onto the community. The pressures involved make it almost impossible to manage a corporation in the larger community interest. Indeed, any publicly traded corporation that attempts to manage its assets responsibly will almost certainly be bought out by a corporate raider.

Take the case of Pacific Lumber Company. It pioneered the development of sustainable logging practices on its substantial holdings of ancient redwood timber stands, provided generous benefits to its employees, fully funded its pension fund, and maintained a no lay-offs policy during downturns in the timber market. This made it a good citizen in the local community. It also made it a prime takeover target.

Corporate raider Charles Hurwitz gained control in a hostile takeover. He immediately doubled the cutting rate of the company’s holding of thousand-year-old trees, reaming a mile and a half corridor into the middle of the forest that he jeeringly named “Our wildlife-biologist study trail.” He then drained $55 million from the company’s $93 million pension fund and invested the remaining $38 million in annuities of the Executive Life Insurance Company, which had financed the junk bonds used to make the purchase–and subsequently failed. Turning reality on its head, corporate raiders refer to this process of pirating a firm’s assets as “adding value.”

Once upon a time local communities looked to corporations not only as sources of jobs, but as well of tax revenues to help cover the costs of essential local infrastructure and public services. For example, in 1957, corporations in the United States provided 45 percent of local property tax revenues. By 1987 their share had dropped to about 16 percent.

Indeed, local governments are now forced by the dynamics of global competition not only to give most large corporations tax breaks, but as well to directly subsidize their operations with public funds.

The state of South Carolina in the United States has been warmly praised by the business press for its successful competitive bid for a new BMW auto plant. The company was attracted in part by cheap, nonunion labor and tax concessions. In addition, when BMW said it favored a 1,000 acre tract on which a large number of middle class homes were already located, the state spent $36.6 million to buy the 140 properties and leased the site back to the company at a $1 a year. The state also picked up the costs of recruiting, screening, and training workers for the new plant, and raised an additional $2.8 million from private sources to send newly hired engineers for training in Germany. The total cost to the South Carolina taxpayers for these and other subsidies to attract BMW will amount to $130 million over thirty years.

This is what global competition is really about–local communities and workers competing against one another to absorb ever more of the production costs of the world’s most powerful and profitable corporations.

Another tactic for externalizing costs is through “downsizing”–a process by which the U.S. Fortune 500 companies reduced their total employment by 4.4 million jobs between 1980 and 1993–a period during which their sales increased by 1.4 times, assets increased by 2.3 times, and CEO compensation increased by 6.1 times. Some observers claim that downsizing means the largest corporations are losing out to smaller, more agile and competitive enterprises. The claim has as much substance as the claim by tobacco company executives that cigarettes are not addictive.

While the giants are shedding people, they are not shedding control over money, markets, or technology. The world’s 200 largest industrial corporations, which employ only one third of one percent of the world’s population, control 25 percent of the world’s economic output. The top 300 transnationals, excluding financial institutions, own some 25 percent of the world’s productive assets. Of the world’s 100 largest economies, 51 are now corporations–not including banking and financial institutions. The combined assets of the world’s 50 largest commercial banks and diversified financial companies amount to nearly 60 percent of The Economist’s estimate of a $20 trillion global stock of productive capital.

Concentration of control over markets is proceeding apace. The Economist reports that in the consumer durables, automotive, airline, aerospace, electronic components, electrical and electronics, and steel industries the top five firms control more than 50 percent of the global market, placing them clearly in the category of monopolistic industries. In the oil, personal computers and media industries the top five firms control more than 40 percent of sales, which indicates strong monopolistic tendencies.

Downsizing is really about consolidating the firm’s monopoly control of markets, technology, and money in a small, well-paid headquarters staff. Everything else is contracted out to smaller firms that are forced into intensive competition for the firm’s business. The contractors–commonly located in low wage countries–compete by hiring workers at substandard wages under often appalling working conditions.

For example, the popular Nike athletic shoes that sell for US$73 to $135 around the world are produced by 75,000 workers employed by independent contractors in low income countries. A substantial portion of these workers are in Indonesia–mostly women and girls housed in company barracks, paid as little as 15 cents an hour, and required to work mandatory overtime. Unions are forbidden and strikes are broken up by the military. In 1992, Michael Jordan reportedly received $20 million from the Nike corporation to promote the sale of its shoes, more than the total compensation paid to the Indonesian women who made them.

An unregulated global market is shifting the financial rewards away from those who do productive work to those who control money and are successful at convincing people to buy what they do not need and often cannot afford. This goes to the heart of growing income disparities around the world.

The world’s most powerful corporations are also active in shaping public policy in ways that virtually forces us into a pattern of overconsumption that yields large profits to themselves at the expense of our quality of living. Evidence is mounting that to make our societies sustainable we will have to restructure our systems of production and consumption to largely eliminate:

Dependence on personal automobiles;
Long distance movement of goods and people;
The use of chemicals in agriculture; and
The generation of garbage that we cannot immediately recycle.

In each instance, we have an opportunity to substantially increase the quality of our living while reducing our burden on the environment. Why aren’t we doing it? Who wants to give over their living spaces to automobiles, take long business trips, eat contaminated foods, or live in a garbage dump?

One important reason we live this way is because it is profitable for politically powerful corporations. For example, the steel, automobile, construction, and oil companies have a major stake in policies that make survival without an automobile nearly impossible in most of our towns and cities. Chemical and agribusiness companies have had a similar stake in maintaining chemical and energy intensive agriculture systems that provide us with foods of dubious nutritional value laced with toxic poisons. Other industries benefit from encouraging our use of excessively packaged low durability products. So long as these corporate interests are allowed to dominate public policy processes, change is unlikely. Global civil society is mobilizing to reclaim the power that these interests have co-opted.

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