Tell Me Lies about Vietnam

Where else but in The Australian do we see a shameless attempt to re-fight old culture wars, and bring back to life the long-since discredited spectre of the 'domino theory'? A fellow named Colebatch has decided that the domino theory was 'largely borne out' in events in South East Asia and Eastern Europe. Colebatch avers that we cannot allow 'Western military defeat' in Afghanistan, whatever this means, as Europe, having a large minority of Muslims, would be in strife - 'jihadist elements would be encouraged everywhere.'

This is the sort of imperialist bullshit that one expects to find on the stupidest of right-wing blogs (or in The Australian). There are lies and distortions from almost the first line. Take the claim that the domino theory was demonstrated in 1975, because 'Cambodia and Laos fell as, and plainly because, Saigon fell'. Putting aside the mass carnage wrought by US forces on all three Indochinese countries in this period, (strengthening support for the Khmer Rouge in particular), Cambodia went down the revolutionary path in spite of the Communists winning the war in Vietnam. It was actually the latter who eventually liberated Cambodia in 1979. Opposition between Vietnam and Cambodia was itself sympomatic of the Sino-Soviet split, wherein Cambodia was backed by China (and armed by Western Europe and the US), whilst the Vietnamese were backed by the Soviets. Hardly an example of 'domino theory'.

This shoddy, dishonest logic is at work throughout the piece, where Colebatch makes vague and sinister claims that defeat in Afghanistan (a campaign largely concerned with aerial bombings these days) will have 'consequences' for the West, because of the latter's supposedly latent radical Muslim population. In addition to the shameless bigotry, Colebatch insists that this scenario 'puts Australia's commitment of an additional 450 troops there into perspective'.

Indeed it does, but not in the way that Colebatch thinks. Once the 'good war' to Iraq's fiasco, Afghanistan has, for a long time, been a 'quagmire', where Coalition forces have supported all manner of butchers, warlords, and (despite official rhetoric) Islamists, for reasons that were dubious in the beginning, and utterly unjustifiable now. Casuistry such as the domino theory aside, there can be no military solutions to what are longstanding political problems.

Chomsky on 2009

Here's a wide-ranging interview transcript with the indefatigable Noam Chomsky. Some highlights:

On the economy:

In fact, if you look today, it's quite striking to see the advice that the Western powers are following, the programs that they're following, and compare them to the instructions given to the third world.

So, say, take Indonesia again. Indonesia had a huge financial crisis about ten years ago, and the instructions were the standard ones: "Here is what you have to do. First, pay off your debts to us. Second, privatize, so that we can then pick up your assets on the cheap. Third, raise interest rates to slow down the economy and force the population to suffer, you know, to pay us back." Those are the regular instructions the IMF is still giving them.

What do we do? Exactly the opposite. We forget about the debt, let it explode. We reduce interest rates to zero to stimulate the economy. We pour money into the economy to get even bigger debts. We don't privatize; we nationalize, except we don't call it nationalization. We give it some other name, like "bailout" or something. It's essentially nationalization without control. So we pour money into the institutions. We lectured the third world that they must accept free trade, though we accept protectionism.

On party politics in the US:

I mean, we basically are a kind of a one-party state. I think C. Wright Mills must have pointed this out fifty years ago. It's a business party, but it has factions—Democrats and Republicans—and they're different. They have somewhat different constituencies and different policies. And if you look over the years, the population has—the majority of the population has tended to make out better under Democrats than Republicans; the very wealthy have tended to make out better under Republicans than Democrats. So they're business parties, but they're somewhat different, and the differences can have an effect. However, fundamentally, they're pretty much along the same lines.

On healthcare in the US:

I mean, for decades, the healthcare issue has been right at the top of domestic concerns, for very good reasons. The US has the most dysfunctional healthcare system in the industrial world, has about twice the per capita costs and some of the worst outcomes. It's also the only privatized system. And if you look closely, those two things are related. And the privatized system is highly inefficient: a huge amount of administration, bureaucracy, supervision, you know, all kinds of things. It's been studied pretty carefully.

On the potential for a rise in fascism:

Now, if you listen to early Nazi propaganda, you know, end of the Weimar Republic and so on, and you listen to talk radio in the United States, which I often do—it's interesting—there's a resemblance. And in both cases, you have a lot of demagogues appealing to people with real grievances.

Grievances aren't invented. I mean, for the American population, the last thirty years have been some of the worst in economic history. It's a rich country, but real wages have stagnated or declined, working hours have shot up, benefits have gone down, and people are in real trouble and now in very real trouble after the bubbles burst. And they're angry. And they want to know, "What happened to me? You know, I'm a hard-working, white, God-fearing American. You know, how come this is happening to me?"

That's pretty much the Nazi appeal. The grievances were real. And one of the possibilities is what Rush Limbaugh tells you: "Well, it's happening to you because of those bad guys out there." OK, in the Nazi case, it was the Jews and the Bolsheviks. Here, it's the rich Democrats who run Wall Street and run the media and give everything away to illegal immigrants, and so on and so forth. It sort of peaked during the Sarah Palin period. And it's kind of interesting. It's been pointed out that of all the candidates, Sarah Palin is the only one who used the phrase "working class." She was talking to the working people. And yeah, they're the ones who are suffering. So, there are models that are not very attractive.

The Bubble

This post is largely unreferenced, though I've been reading a number of sources in recent days, including Business Spectator, and the highly recommended Bubblepedia, and these are my reflections.

Banks, property developers and governments, State and Federal, have been colluding to keep the housing market inflated. This has failed in the top end of the market, where housing prices have already dropped significantly (good news for those who need a bargain house in Toorak), but has kept the lower end of the market (often defined as reaching $400 or $500k!), dominated by first home buyers, in a bubble.

Everybody, from real estate spruikers, to government ministers, has been saying that now is the time for first home buyers to jump into the housing market, as the market has hit its 'bottom', and will only be going up.

The behaviour of these people belies their words. For instance, the government has struck an agreement with banks to guarantee mortgages for 12 months, in the instance of the borrower being unemployed. Banks themselves appear to be tightening their lending criteria. The first home buyers grant has been extended until June 2009, and lobbyists are campaigning for it to be continued, and even extended to other parts of the market.

So why are first home buyers being asked to sign themselves up for a mortgage now? The answer is greed. With all other home buyers and investors slowing down their purchasing activity, first home buyers are being asked to play the patsy for property developers and banks, perpetuating the housing bubble.

All this would be one thing if we held to the belief that housing prices will rise forever. If they continued to rise at about 8% per year, as they have, until recently, then nobody would have anything to lose. The borrower would have no negative equity, and the banks would not be exposed to any great risk in the event of a default, as the house would have risen in price anyway.

Despite the Pollyanna attitude of some industry spruikers, there are some good reasons to believe that the market will not continue to magically inflate.

For starters, the RBA has already dropped the cash rate to 3.25%, a discount which the banks are not passing on in any case. Whilst in theory, the RBA can go even lower than this, it is difficult to see the use of monetary policy if the RBA is at odds with the banks.

Secondly, the much-mooted housing shortage is, at least in part, a fabrication. Yes, there is a dire shortage of housing for those sleeping rough, or couch-surfing, or living in caravans, or on the years-long government waiting lists. These people, however, are not like to be purchasing a home in the near future, and the shortage of housing for them is not pushing up housing prices for everybody else. A recent stat in the Age's Good Weekend stated that 77$ of Australian homes have a spare bedroom. I'll believe there is a genuine housing shortage when I see shanty towns on the outskirts of Melbourne.

Unemployment rose half a per cent in March 2009, to hit 5.7%. This doesn't take into account under-employment. For years, governments have considered you 'employed' if you didn't receive benefits, or if you worked an hour a fortnight. Unemployment is tipped by many forecasters to hit around 7.5% by the end of the year. Some have said it will double from current levels. All of this will eat into demand.

The first home owner's grant is due to expire, and arguably, has not actually increased demand at all, but rather, brought it forward by placing an end-date on the handouts. Even if this waste of money is extended, it is unlikely to be able to keep house prices afloat indefinitely. Housing in Australia is among the least affordable in the world, when considered in relation to income. Virtually every developed nation has suffered massive drops in housing prices since the GFC. It is difficult to see how Australia can escape the same outcome.

In view of this, first home buyers who purchase now are exposing themselves to enormous risk, and are propping up the housing bubble at their own expense. Many of them will be among the most vulnerable to unemployment in the coming recession.

It is in the interest of banks, therefore, to pretend that the bubble cannot burst, and to keep the housing market inflated. Should you have deflation in the market, coupled with rising unemployment and defaulting borrowers, the housing market will crash even further. Banks will face severe losses, mortgage guarantee or no. This is especially so when we look at the risks some of the big banks have been taking. I read recently that about 20% of all first homeowners have a loan-to-value-ratio (or LVR) of between 95-100%. Anotyher 25% have a LVR of between 90-95%.

In short, Australian banks have been gambling, and have exposed themselves to something akin to the sub-prime fiasco in the US. (Of course, the big banks in Australia have fewer 'toxic assets', as I understand it, because they have been less inclined than their US counterparts to bundle loans into securities). If it were simply a matter of a few banks failing, most people would allow their passing to go unlamented. After all, the deregulation of the Keating era, supposed to bring greater competition, and therefore better prices and service, has failed. The punter on the street knows that if you walk into a bank and blink, you get hit with 17 different kinds of fees.

The problem is that, by now, we know how this tune goes. If banks go bust, the Australian economy will be held to ransom. Government and taxpayers will become a utility of the banks, rather than the reverse. Banks will have gambled, and lost badly, and the taxpayer will be left to foot the bill.

So whatever happens, there are no winners. Either we have the rather unlikely outcome of the housing bubble continuing, in which low-income earners are barred from ever owning a home. Alternatively, we have a crash, and the greed of banks and others will be paid for by ordinary Australians. Naturally, this is an over-simplification, and there are some other complexities, but these are the basic parameters of the current situation. And yes, the speculation on the part of banks, and the greed of develops and investors, acting as parasites on first home buyers by gamlbing on assets is part and parcel of neoliberalism.

Direct Democracy

Some 'populist' responses to the GFC:

Wall Street, according to one banking executive, is on red alert. "We are worried about a mob mentality. People are angry about the economy. And Wall Street is an obvious target."


Yes, it is.

Demographic Warfare and IDF 'self defence'

'Every successful joke indicates a victory against the inhibition that critical reason imposes on thought in the normal waking psychic state. Unlike dreams, there is no need for secondary elaboration or disguise to escape censorship. ' (source)


'Dead babies, mothers weeping on their children's graves, a gun aimed at a child and bombed-out mosques - these are a few examples of the images Israel Defense Forces soldiers design these days to print on shirts they order to mark the end of training, or of field duty...

There are also plenty of shirts with blatant sexual messages. For example, the Lavi battalion produced a shirt featuring a drawing of a soldier next to a young woman with bruises, and the slogan, "Bet you got raped!" A few of the images underscore actions whose existence the army officially denies - such as "confirming the kill" (shooting a bullet into an enemy victim's head from close range, to ensure he is dead), or harming religious sites, or female or child non-combatants.' (source, and here)

Conservatives and the GFC

Conservatives seem to have major problems when it comes to admitting the dangers of capitalism. They're quick to criticise the perceived decline of society, but utterly unable to acknowledge that consumer capitalism may have at least something to do with this. Some of them seem to hate immigration, but just don't get that immigration, in Australia, at least, has been necessary for the economy.

This ducking and weaving has morphed into full-blown lying with the advent of the global financial crisis (GFC). The race has been on to find a way to spin this crisis as being firstly, the fault of the US Democratic Party, and secondly, to blame the GFC more generally on government intervention, 'socialism', etc.

Now, unless you're a complete half-wit, it should be clear that the GFC had multiple causes. It was, (to use a Freudianism) 'over-determined'. Not for John Ray, who insists that the GFC was caused by Dems and poor people:

[T]he financial meltdown was caused by worthless mortgages -- mortgages that were forced on banks by such Democrat-sponsored laws as the "Community reinvestment act" and harassment of bank officials by such hard-Left organizations as ACORN. The fact of the matter is that "the cause of all this misery was the market suppression that they [Democrats] promoted so messianically".

This refrain is becoming increasingly familiar.

What Ray doesn't tell you is that the Community Reinvestment Act has been in place since 1977, and has survived several Republican administrations. Obviously, the claim that the GFC is attributable to a single political party is therefore bullshit.

Moreover, as recently as 2007, Ben Bernanke was recommending that the Act be extended by way of expansion of Fannie Mae and co. The GFC was not the by-product of excessive regulation, but rather, under-regulation. Analysts have noted that the banks may have had a whole series of reasons for engaging in 'predatory' lending practices, and the said practices were not effectively monitored by any regulatory agency. We can conclude, therefore, that simplistic claims of the nature 'regulation=GFC' are also bullshit.

I've often suspected that lefties could benefit from more knowledge on economic matters, but it appears that conservatives are outdoing everybody else when it comes to ignorance. Then again, interventions such as Ray's are not so much about economics as they are class-warfare.

A number of hard-right characters have noted, perhaps correctly, that a crisis such as the present is the ideal time to engage in bare-knuckle class warfare, and recruit a few budding fascists to the cause. See the recent BNP opportunism in England, where the latter party rode on the coat-tails of striking workers to promote their cause.

But back to the GFC. Not only did regulation not cause the crisis, the low-income US borrowers - holders of 'worthless mortgages' according to Ray - also did not cause the crisis. The poor did not securitise the loans, and sell them for profit. The poor were not speculating in the derivatives market, or allowing China to purchase US debt whilst exporting cheap goods. The poor did not instigate a range of incentives for executives to oversee sub-prime loans in the first place. The poor did not globalise the economy and financial markets. And, finally, it was not the poor who, in the wake of the dotcom collapse early in the noughties, lowered the US interest rate to stimulate growth.

I encourage others to read up on this topic. Nonsense such as Ray's will be repeated ad infinitum in the coming years. We should combat it with facts, before it sediments into 'history'. Information on this is widely available, and the views of Ray et. al. easily discredited.

And finally, for those who are genuinely concerned about the poor, and the GFC, do the right thing, and kick a lying 'conservative' in the head.

News in Brief

As we saw in the previous post, the wages of low-paid workers have often not kept up with inflation.

Adding insult to injury is a report that found that 41& of employers surveyed had cheated workers out of their wages. Most of the workers in question were young and low-paid.

Back to the Gaza Strip - Crikey has a decent wrap for a change. Note in particular the story about the doctor.

Finally, those well-known neo-Nazis at the Jerusalem Post have suggested that the Israeli Government should make the most of recent bloodshed, and grab a '$4 billion opportunity' by seizing control of gas reserves off the coast of Gaza. The ostensible reason for the proposed gas grab is to prevent any royalties being given to Hamas, apparently becuase in 'June 2007...Hamas violently ousted Fatah from power in the Gaza Strip, claiming ownership of the gas fields off the coast and the proceeds from the sale of the gas.'!

Ousted, voted in, who can tell these days?