Author: Daniel Margrain

I graduated in 2001 with an Upper Second Class Honours degree in Human Geography and Social Policy. I then successfully completed my masters in Globalisation, Culture and the City at Goldsmiths, London. I am a massive fan of the musician Neil Young. My favourite book is Murder In Samarkand by Craig Murray. My favourite album is Van Morrison's Astral Weeks and my favourite film is Giuseppe Tornatore's Cinema Paradiso. I have traveled widely and fell in love with Cuba and Madagascar. My other interests include politics and current affairs and social and urban theory.

The Sunday Times Continue To Lie As If Iraq Never Happened

It seems as though the lies establishment journalists’ peddled in relation to claims that Saddam had in his possession WMDs that in reality never existed in order to sell to the public an illegal war, are at it again. 

Murdoch’s Sunday Times (June 14) published their lead front-page article, headlined “British Spies Betrayed to Russians and Chinese.” This comes in the aftermath of a recent pro-Snowden court ruling and a new surveillance law. Coincidence? The article which references unnamed “senior officials” infers that the revelations of the whistleblower  are a danger to MI6 and have disrupted their operations. However, lawyer and investigative journalist Glenn Greenwald has raised serious doubts as to the credibility of the article:

https://firstlook.org/theintercept/2015/06/14/sunday-times-report-snowden-files-journalism-worst-also-filled-falsehoods/

Here is Greenwald discussing the revelations on the BBCs Today programme:

http://www.bbc.co.uk/programmes/p02trg49

And here he is being questioned by a journalist from Sky News:

Further, Ryan Gallagher argues extremely persuasively in favour of Greenwald here:

http://notes.rjgallagher.co.uk/2015/06/sunday-times-snowden-china-russia-questions.html

Former UK diplomat, Craig Murray, arguably posits even more authoritatively, the five reasons why the Sunday Times story is a lie:

1) The alleged Downing Street source is quoted directly in italics. Yet the schoolboy mistake is made of confusing officers and agents. MI6 is staffed by officers. Their informants are agents. In real life, James Bond would not be a secret agent. He would be an MI6 officer. Those whose knowledge comes from fiction frequently confuse the two. Nobody really working with the intelligence services would do so, as the Sunday Times source does. The story is a lie.

2) The argument that MI6 officers are at danger of being killed by the Russians or Chinese is a nonsense. No MI6 officer has been killed by the Russians or Chinese for 50 years. The worst that could happen is they would be sent home. Agents’ – generally local people, as opposed to MI6 officers – identities would not be revealed in the Snowden documents. Rule No.1 in both the CIA and MI6 is that agents’ identities are never, ever written down, neither their names nor a description that would allow them to be identified. I once got very, very severely carpeted for adding an agents’ name to my copy of an intelligence report in handwriting, suggesting he was a useless gossip and MI6 should not be wasting their money on bribing him. And that was in post communist Poland, not a high risk situation.

3) MI6 officers work under diplomatic cover 99% of the time. Their alias is as members of the British Embassy, or other diplomatic status mission. A portion are declared to the host country. The truth is that Embassies of different powers very quickly identify who are the spies in other missions. MI6 have huge dossiers on the members of the Russian security services – I have seen and handled them. The Russians have the same. In past mass expulsions, the British government has expelled 20 or 30 spies from the Russian Embassy in London. The Russians retaliated by expelling the same number of British diplomats from Moscow, all of whom were not spies! As a third of our “diplomats” in Russia are spies, this was not coincidence. This was deliberate to send the message that they knew precisely who the spies were, and they did not fear them.

4) This anti Snowden non-story – even the Sunday Times admits there is no evidence anybody has been harmed – is timed precisely to coincide with the government’s new Snooper’s Charter act, enabling the security services to access all our internet activity. Remember that GCHQ already has an archive of 800,000 perfectly innocent British people engaged in sex chats online.

5) The paper publishing the story is owned by Rupert Murdoch. It is sourced to the people who brought you the dossier on Iraqi Weapons of Mass Destruction, every single “fact” in which proved to be a fabrication. Why would you believe the liars now?

There you have five reasons the story is a lie.

https://www.craigmurray.org.uk/archives/2015/06/five-reasons-the-mi6-story-is-a-lie/

 

 

Neil Young’s 50 Greatest Songs

I’ve been a huge fan of Neil Young since I first heard the album After The Gold Rush aged eleven in 1973. These are my favourites from his vast catalogue covering almost five decades.

Flying On The Ground Is Wrong

Broken Arrow

Expecting To Fly

Old Laughing Lady

The Last Trip To Tulsa

Here We Are In The Years

Cinnamon Girl

Down By The River

Cowgirl In The Sand

After The Gold Rush

Only Love Can Break Your Heart

Birds

Out On The Weekend

Harvest

Heart Of Gold

Old Man

Ohio

Soldier

Love In Mind

Don’t Be Denied

On The Beach

Ambulance Blues

Revolution Blues

Tonight’s The Night

World On A String

Borrowed Tune

Mellow My Mind

Albuquerque

Tired Eyes

Danger Bird

Bar Stool Blues

Cortez The Killer

Like A Hurricane

Thrasher

Pocahontas

Powderfinger

Sedan Delivery

Hey Hey, My My

Rockin’ In The Free World

Crime In The City

Sleeps With Angels

Change Your Mind

Trans Am

Loose Change

Slip Away

Silver And Gold

Horseshoe Man

Razor Love

Love And War

Ramada Inn

Drumbeating For War: Clinton’s ‘Tonkin’ Incident?

The American media’s tendency for replicating official government propaganda as a means of justifying US government-initiated warfare, has a long established history that pre-dates Iraq by at least 40 years. On August 5, 1964 a Washington Post headline announced “American Planes Hit North Vietnam After Second Attack on Our Destroyers; Move Taken to Halt New aggression” (http://www.cah.utexas.edu/services/finding_items/newspapers_gannett.php).

On the same day, the front page of the New York Times reported: “President Johnson has ordered retaliatory action against gunboats and ‘certain supporting facilities in North Vietnam’ after renewed attacks against American destroyers in the Gulf of Tonkin” (ibid).

But there was no “second attack” by North Vietnam — no “renewed attacks against American destroyers.” By reporting official claims as absolute truths, American journalism opened the floodgates for the bloody Vietnam War and the  over 50,000 American deaths and millions of Vietnamese casualties that followed.

The official story was that North Vietnamese torpedo boats launched an “unprovoked attack” against a U.S. destroyer on “routine patrol” in the Tonkin Gulf on August 2 — and that North Vietnamese PT boats followed up with a “deliberate attack” on a pair of U.S. ships two days later.

The truth was very different.

Rather than being on a routine patrol, the U.S. destroyer Maddox was actually engaged in aggressive intelligence-gathering maneuvers — in sync with coordinated attacks on North Vietnam by the South Vietnamese navy and the Laotian air force in “retaliation” for a North Vietnamese torpedo attack that never happened.

One of the Navy pilots flying overhead on the night of the alleged North Vietnamese attack was squadron commander James Stockdale, who gained fame later as a POW and then Ross Perot’s vice presidential candidate. “I had the best seat in the house to watch that event,” recalled Stockdale, “and our destroyers were just shooting at phantom targets — there were no PT boats there…. There was nothing there but black water and American fire power” (http://www.gwu.edu/~nsarchiv/coldwar/interviews/episode-11/stockdale1.html).

On the night of 26 March, 2010, 40 years or so later, the South Korean navy ship Cheonan split in half and sank while patrolling not far from the North Korean coast. Although the definitive cause is still unclear, the South Korean and US governments are keen to convince the world that North Korea was responsible.

On 20 May, South Korea announced it had “overwhelming evidence” that a torpedo fired by a North Korean submarine sank one of its warships, the Cheonan, in March with the loss of 46 sailors (http://www.democracynow.org/2010/5/27/nk).

The Korea Times reported the “overwhelming evidence” to be a propeller that “had been corroding at least for several months,” In April, the director of South Korea’s national intelligence, Won Se-hoon, told a parliamentary committee that there was no evidence linking the sinking of the Cheonan to North Korea. The defence minister agreed. And the head of South Korea’s military marine operations said, “No North Korean warships have been detected [in] the waters where the accident took place.” The reference to an “accident” suggests the warship struck a reef and broke in two (http://watchingthewarmakers.org.uk/).

US Secretary of State, Hillary Clinton, urged Pyongyang to halt its “policy of belligerence.” She went on to say that this amounted to “unacceptable provocation by North Korea” and urged China to back the international community and chastise North Korea for its actions (http://www.democracynow.org/2010/5/27/nk).

Hillary Clinton-JKZ-003178.jpg

Meanwhile, the world’s media have been virtually silent about the fact that the US and South Korea were holding a joint naval exercise around 60 miles to the south of where the alleged incident occured, and that Hillary Clinton has been backing the regime of South Korean president Lee Myung-bak who has been ratcheting up tensions on the peninsula (http://www.socialistworker.co.uk/art.php?id=21402).

This is the same language that was used when the US accused the North of unprovoked aggression when the Korean War started sixty years ago. Then, as now, tensions are being ratcheted-up to the extent that, according to historian Bruce Cumings, a second Korean War is a possiblity (http://www.democracynow.org/2010/5/27/nk).

One possible explanation of the North’s alleged attack, not apparently being considered by the US government and the media, is that the North Korean’s had fired on the Cheonanin in response to having initially been fired on themselves. A second outcome not being considered, is North Korea’s denial that it was involved in the sinking, and the parallel with the lies used to justify the occupation of Iraq (http://www.reuters.com/article/idUSTRE6581TW20100609?feedType=RSS&feedName=topNews).

What is certain is that US government had failed to point out the background to the tragedy which has a bearing on what happened. For instance, in 1999, a North Korean ship went down with thirty sailors lost and maybe seventy wounded. And last November, a North Korean ship went down in flames. Both happened in a no man’s land, or waters, off the west coast of Korea that both North and South claim and where the US and South Korea demarcated a so-called Northern limit line unilaterally.

The North has never accepted this demarcation line which it claims is under the joint jurisdiction of the North and South Korean militaries. Moreover, US intelligence is aware that North Korean and South Korean fishermen continually fight over the issue of who is entitled to the fishing rights in this area.

The Cheonan ship was sailing in these disputed waters when it was allegedly hit by the North Korean’s.

Furthermore, the US recently completed Operation Full Eagle, an annual joint military exercise with the South Koreans, including naval exercises south of this particular region involving 26,000 soldiers. According to historian Bruce Cumings, these exercises are regarded by the North Koreans as a prelude to a possible attack (http://www.democracynow.org/2010/5/27/nk).

These contextual issues have rarely, if at all, been reported in the corporate mainstream media.

The greatest of all the “elephants in the room” however, is the fact that US imperialism lies behind the 1945 division of the Korean peninsula and the ongoing conflict between the two Koreas described above. Using its huge military bases in Japan and South Korea, the US wants to maintain its increasingly precarious dominance in East Asia and keep China hemmed in (http://www.socialistworker.co.uk/art.php?id=21402).

But North Korea has remained a thorn in America’s side, continuing to “defy the international community” over its nuclear testing and maintain its independence despite its economic collapse (http://www.onebigdog.net/north-korea-defies-international-community/).

Essentially, the US is using its ally South Korea in a dangerous game of  “imperial chess” in the region. The South is one of the world’s biggest military spenders and second only to Israel as a buyer of US arms. Under these circumstances, the South is aware that it is able to flex its political and military muscle in the region with impunity.

But the South is also caught in a vortex of power relations between other powerful players – Japan, Russia and China. Hillary Clinton is aware that the latter is a veto-wielding member of the Security Council and a North Korean ally. Hence, as the New York Times reported, the US would be unlikely to impose new sanctions on the North (http://www.nytimes.com/2010/05/27/world/asia/27diplo.html).

Nevertheless, South Korea and the US are using this latest incident to put pressure on the North whether the North was involved or not. After flying to Seoul on the 26 May, where she demanded that the “international community must respond” to “North Korea’s outrage”, Clinton flew on to Japan. Here the new “threat” from North Korea conveniently eclipsed the briefly independent foreign policy of Japanese prime minister Yukio Hatoyama, elected last year with popular opposition to America’s permanent military occupation of Japan (http://www.newstatesman.com/middle-east/2010/06/north-korea-vietnam-pilger).

To the American media, North Korea’s guilt is beyond doubt, just as North Vietnam’s guilt was beyond doubt, just as Saddam Hussein had weapons of mass destruction, just as Israel can terrorise with impunity. However, unlike Vietnam and Iraq, both North Korea and South Korea have nuclear weapons. This is why, the US games are dangerous and the consequences of  a war therefore unimaginable for all of the 70 million Koreans caught in the crosshairs.

Copyright: Daniel Margrain.

Israeli Terrorism In International Waters: Explaining Obama’s Silence

In the early hours of Monday May 31 Israeli forces attacked a flotilla of ships carrying 10,000 tons of humanitarian aid to the besieged Gaza strip. Dubbed the Freedom Flotilla, the ships were aiming to break Israel’s illegal 3-year blockade of Gaza.

At least 15 people were killed and dozens injured when Israeli troops attacked the lead ship in the convoy–the Turkish “Mavi Marmara”. The attack happened in international waters, 75 miles off the coast of Israel and Gaza.

The media were quick to depict the atrocity as one that was of the activists making by repeating various official Israeli government statements suggesting that the Israeli military – the IDF – after having descended on the lead ship, reacted in self-defence to the violent actions of those on board. The media aligned these official pronouncements with Israeli edited video footage that purported to show activists repeatedly striking members of the IDF with rods and batons.

But as the dust has begun to settle, a different reality has slowly started to emerge. Witnesses on board have stated that it was the IDF who initiated the violence firing live bullets prior to embarking the vessel and then continuing with what is described as “disproportionate” and “indiscriminate” acts of violence against unarmed activists.

“The ship turned into a lake of blood,” Turkish activist Nilufer Cetin told reporters in Istanbul. She had been seized after the attack on the convoy, held in Israel and then returned to Turkey because she had a child with her. She said Israelis attacked at around 4am on Monday, using “smoke bombs followed by gas canisters. They started to descend onto the ship with helicopters” (http://www.socialistworker.co.uk/art.php?id=21412).

More detailed eye-witness accounts can be accessed here: (http://www.abc.net.au/lateline/conte…0/s2916676.htm) and here:(http://english.aljazeera.net/news/middleeast/2010/06/20106193546785656.html).

The victims interpretation of the sequence of events that unfolded on the vessel was almost completely absent from media analysis. Further, media parroting of Israel’s staged version of events which inverted blame for the violent actions of the perpetrators onto the victims, followed Israeli claims that they had uncovered a weapons cache on board the impounded ship.
In fact, the so-called cache consisted of chains, knives and an assortment of tools of the kind usually found on similar vessels (see photograph below).

The supposed cache of weapons – grenades, pistols and rifles which the Israeli’s accused the activists of hiding – did not in fact exist. The Turkish authorities confirmed as much prior to the ship setting sail after they undertook routine checks (http://www.hurriyetdailynews.com/n.php?n=who-the-hell-does-israel-think-she-is-2010-06-01).

Needless to say, the ludicrous Israeli claims and the related accusations of guilt by association went unchallenged by the media.

More importantly, journalists failed to mention the ‘elephant in the room’ – the significant question as to why it was that a ship containing humanitarian supplies intended for starving and impoverished people, was attacked in international waters.

Israel justified this illegal attack by claiming that “terrorists” were aboard the vessel. But if this was indeed the case, why was it that the Israeli’s had in the past given permission for similar vessels to dock in Gaza unhindered? And why if the Israeli’s believed “terrorists” were aboard as they claimed, did they not wait until the time the boat either reached Israeli territorial waters or alternatively wait until it arrived at its destination before apprehending it?

In addition, the Israeli government has rejected requests for an international investigation of its conduct (www.focus.de/politik/ausland/…id_515363.html) and its army has been criticised by the Foreign Press Association for what it called “a selective use of videos confiscated from journalists on the ships to justify its deadly raid at sea” (http://news.yahoo.com/s/ap/20100603/…tleWhvbm9ycw–).

All this strongly points to Israel’s guilt, and suggests that the official Israeli line is a smokescreen.

So what were the real reasons for the attack? And why, given the near universal international condemnation of Israel, did US president, Barack Obama, remain silent – particularly as the rest of the permanent members of the Security Council not only condemned the attack, but explicitly called for Israel’s three-year blockade of the Gaza Strip to be lifted?

For the answers we need to examine what is widely considered to be a “special relationship” between the two countries. It is a relationship that can be characterized as one in which Israel acts as a “bulldog” and proxy for the US as a means to cement the latters geopolitical and economic strategic interests throughout the middle east. This is a situation, in other words, where the US dog wags the Israeli tail as a method of divide and control (http://www.newdemocracyworld.org/War/Why%20Politicians.htm).

The current situation—not only but especially in the Middle East—is defined by the imperialist offensive mounted by the United States and its closest allies (notably Israel and Britain) since 11 September 2001. Carried out under the slogan of the “war on terrorism”, the real aim of this offensive is to perpetuate the global domination of US capitalism (hence the title of the neocon ‘Project for the New American Century’) (http://www.isj.org.uk/?id=241).

Domination in this way requires the control of the world’s land, air, maritime and space – a military concept known as “Full-Spectrum dominance” (http://en.wikipedia.org/wiki/Full-spectrum_dominance). In return, Israel by virtue of its strategic importance, receives favoured nation status by way of preferential “aid” amounting to 3 billion dollars annually, effectively allowing Washington de facto control.

What began with Ben-Gurion’s Plan D – the ethnic cleansing of the Palestinian’s – is now in its final stages, termed “Operation Cast Lead”. The F-16 jet fighters, the 250-pound “smart” GBU-39 bombs supplied on the eve of the attack on Gaza during December 2008, which killed 1,4oo Palestinian’s, is part of the wider grand US imperial control of countries’ resources in the region.

Lord Curzon, viceroy of India in 1898 likened this imperial coming together as “pieces on a chessboard upon which is being played out a great game for the domination of the world” (http://revcom.us/a/089/iran-en.html).

Brzezinski, adviser to several presidents, has written virtually those same words. In his book The Grand Chessboard: American Primacy And Its Geostrategic Imperatives, he writes that the key to dominating the world is central Asia, with its strategic position between competing powers and immense oil and gas wealth (http://sandiego.indymedia.org/media/2006/10/119973.pdf).

In 2001, the authoratitive Janes Weekly revealed that Israel needed a “trigger” of a suicide bombing to attack the West Bank with the aim of adhering to this strategic game (http://www.iags.org/n0124051.htm). On 23 November, 2001, Israeli agents assassinated the Hamas leader, Mahmud Abu Hunud, and got their “trigger”; the suicide attacks resumed in response to his killing.

Something uncannily similar happened seven years later on 5 November 2008 when Israeli special forces attacked Gaza, killing six people. Once again, they got their propaganda “trigger”. A ceasefire initiated and sustained by the Hamas government – which had imprisoned its violators – was shattered by the Israeli attack and home-made rockets were fired into what used to be Palestine before its Arab occupants were “cleansed”.

On 23 December, Hamas offered to renew the ceasefire, but Israel’s charade was such that its all-out assault on Gaza had been planned six months earlier (http://www.palestinemonitor.org/spip/spip.php?article1146).

The seven years to 2008 have resulted in the deaths of 14 Israeli’s by mostly homemade rockets fired from Gaza as against 5,000 Palestinians killed in Israeli attacks (www.guardian.co.uk/ commentisfree/2008/dec/30/israel-and-the-palestinians-middle-east).

Washington was fully aware of the nature, as well as the likely consequences of the IDF naval operation in international waters, including the killings of civilians (http://www.globalresearch.ca/index.php?context=va&aid=19447).

There are indications that the decision was taken in consultation with Washington. Indeed the Obama administration had given the green light to the deadly raids in international waters (http://www.globalresearch.ca/index.php?context=va&aid=19447).

As with the previous examples highlighted above, this current Israeli atrocity will likely provide the catalyst for the “trigger” for further Israeli incursions into Gaza.

The killing of unarmed civilians was part of the mandate of the Israeli naval commando. It was an integral part of the logic of  Dagan’s “Operation Justified Vengeance”, which presents Israel as the victim rather than the perpetrator and uses civilian deaths “on both sides” to justify a process of military escalation.

Operation “Cast Lead” was part of a broader military-intelligence operation initiated at the outset of the Ariel Sharon government in 2001. But it was under Sharon’s “Operation Justified Vengeance” that F-16 fighter planes were initially used to bomb Palestinian cities.

The strike on the Freedom Flotilla is part of the logic of transforming Gaza into an urban concentration camp. “Operation Justified Vengeance” was also referred to as the “Dagan Plan”, named after General (ret.) Meir Dagan, who currently heads Mossad, Israel’s intelligence agency (http://www.globalresearch.ca/index.php?context=va&aid=1868).

It should be understood that the raid on the Flotilla also coincided with NATO-Israel war games directed against Iran. According to the Sunday Times “three German-built Israeli submarines equipped with nuclear cruise missiles are to be deployed in the Gulf near the Iranian coastline” (http://www.zerohedge.com/article/israel-deploys-three-nuclear-cruise-missile-armed-subs-along-iranian-coastline).

Meir Dagan, in coordination with his US counterparts, had been put in charge of various military-intelligence operations. It is worth noting that Meir Dagan as a young Colonel had worked closely with then defense minister Ariel Sharon in the raids on Palestinian settlements in Beirut in 1982.

The 2009 ground invasion of Gaza, in many regards, bear a canny resemblance to the 1982 military operation led by Sharon and Dagan.

Dagan as head of Israeli intelligence, no doubt also took part in the decision to launch the strike on the Freedom Flotilla. Moreover, it seems inconceivable that Obama did not personally authorize the strike also(http://www.globalresearch.ca/index.php?context=va&aid=1868).

Copyright: Daniel Margrain

Greece: Exposing The Media Myths

April 21 is a notorious day in Greek history. It was on this day in 1967 that a US-led authoritarian military coup overthrew socialist democracy in the country. It was US support for this authoritarianism, predicated on the illusion that socialism undermined democracy, that was said to be the cause of rising anti-American sentiment in Greece during and following the junta’s rule (http://www.time.com/time/magazine/article/0,9171,903399,00.html).

April 21, 2010 is also a day now embedded in Greek history. It was on this day that a delegation from the IMF, European Union (EU) and the European Central Bank (ECB) arrived in Athens to implement what they term as planned economic ‘stabilization’ measures, characterized by cuts to public services and reductions in living standards.  The Greeks hatred of this modern form of imperialism that stem from the events of April 21 1967, is manifested on the streets of Athens in the form of mass protests against the austerity measures imposed by the bankers. As one Greek activist contrasting the events of 1967 with the present put it: “We suffered from the military then. We suffer from the bankers now” (http://www.socialistreview.org.uk/article.php?articlenumber=11258).

As I illustrated in my last article, the debt crisis presently sweeping Greece and throughout the globe has its roots in the credit boom period in the US a decade ago, the ideological justifications of which have been legitimized as a result of the capitalist logic that underpins it. But one would be hard pressed to arrive at this conclusion by reading the mainstream media, the vast majority of whom have characterized the crisis essentially as a trajedy that is specific to Greece and where the public response to the crisis is unjustifiably deemed to be negative rather than positive. It is hardly surprising then, that Greece is presented not as a beacon for democracy, but as a “junk country” getting its comeuppance for its alleged “bloated public sector” and “culture of cutting corners” (http://www.guardian.co.uk/world/2010/may/09/greece-debt-crisis-euro-imf). 

The reason why the media are attempting to tarnish Greece in this way is because the Greek people have mobilized on mass against the bankers’ attempts to insist the people pay for the so-called “rescue” of their country by way of massive austerity programmes, without a fight. The memories of 1967 allied to the accompanying acts of popular resistance, remain a feature of the collective Greek consciousness in a way that is for example, absent in a country like Britain. Such resistance is anathema to Europe’s central bankers and regarded as an obstruction to German capital’s need to capture markets in the aftermath of Germany’s troubled reunification. In this sense, the Greece of today is a microcosm of a modern class war that is rarely reported as such and is waged with all the urgency of panic among the imperial rich. Ordinary people are not cowed by the corrupt corporatism that dominates the European Union (http://www.johnpilger.com/page.asp?partid=576).

The right-wing government of Kostas Karamanlis, which preceded the present Pasok (Labour) government of George Papandreou, was described by sociologist Jean Ziegler as “a machine for systematic pillaging the country’s resources” (http://socialistworker.org/2010/05/24/the-modern-class-war).

This “machine” whose functionaries included Goldman Sachs and other US hedge fund operators, are currently being investigated by the US Federal reserve Board for their alleged speculating of public asset stripping by the Greek government and the resulting haemorrhaging of capital by way of capital flight which the ECB facilitates. This has prompted some mainstream commentators to question the apparent hitherto God-given logic which insists upon cuts as a means to appease financial markets as an unaviodable feature of system where such markets, instead of being our servants, are our masters (http://www.guardian.co.uk/commentisfree/2010/may/02/greece-default-debt-choice).

The reason why financial markets are perceived as masters in this way is due to the structural weaknesses of monetary union. All countries have the same access to the money markets, but they do not have the same access to credit, which is obtained at a different price by each country (http://researchonmoneyandfinance.org/media/reports/eurocrisis/fullreport.pdf).

The main problem highlighted by the Greek crisis is that the EU is at most a monetary union not a fiscal union. Fiscal policy—dependent on the power to tax and spend—remains, for reasons of self-interest, firmly in the hands of the nation-states. Governments’ only means of saving the capitalist system from itself was to bail out the financial institutions from which they could then borrow as a means to enact the fiscal measures necessary to rescue the market (Callinicos, Alex, 2010, Bonfire of Illusions, Polity).

Governments’ obsession with appeasing the market means that weaker capitalist states like Greece are not given the luxury of being able to choose the timing of their austerity programmes. Greece has been targeted by the financial markets and their facilitators – the unelected and unaccountable ECB – for reasons of speculative profilagcy to the extent that the country has become threatened with bankruptcy. As a response, the financial markets didn’t just force up the interest rates on the bonds of the weaker eurozone economies, they also pushed down the euro. This made the Greek crisis a problem for the entire eurozone (http://www.allbusiness.com/economy-economic-indicators/economic-conditions-deflation/14489907-1.html).

The dominant continental states, France and Germany, were divided over how to respond: France supporting a coordinated loan to keep Greece afloat, Germany resisting. Greece threatened to humiliate the EU by going to the International Monetary Fund for help, a bluff that was called by Germany. A few weeks ago, European leaders signed up to an unprecedented 750 billion euro ($920 billion) joint rescue package for the euro which has been proven to be inadequate to stabilize it. Instead, the European single currency has continued its dramatic fall, recently hitting a four-year low against the dollar (http://www.spiegel.de/international/europe/0,1518,697098,00.html).

The eventual agreement on the joint IMF-eurozone rescue reflected the fact that a Greek default would not be in the interest of the German banks, which have lent heavily to Greece and the other weaker eurozone economies. But the debate within Angela Merkel’s chronically weak conservative-liberal coalition in Berlin (which was accompanied by ferocious nationalist exchanges between the German and Greek media) tilted towards the hard line taken by Wolfgang Schäuble, the finance minister (http://www.msnbc.msn.com/id/36981501/ns/business/).

He proposed setting up a European Monetary Fund that could come to the rescue of eurozone members in Greece’s plight, in exchange for a tightening up of the Growth and Stability Pact, under which EU states are not supposed to run budget deficits greater than 3 percent of national income. Greece’s budget deficit is currently running at 13 per cent which is close to that of the UK and the US. But ministers want to reduce Greece’s deficit to 3 per cent within the next three years. Moreover, penalty clauses are to be inserted allowing states that broke the rules to be deprived of access to EU cohesion funds or even to have their voting rights temporarily suspended (http://www.ft.com/cms/s/0/c36bf126-2d41-11df-9c5b-00144feabdc0.html).

The message is clear. If Greece fails to implement the required austerity programmes, it will be ditched. The so-called rescue of the country is essentially an effort to rescue the French and German banks. If Greece defaults, it would deal a blow to the banks that are already weakened by the broader crisis (http://www.socialistworker.co.uk/art.php?id=21313).

This explains the nature of the anti-Greek propaganda that is pumped out by the media. This is the same media which claims that the Greek people have artificially high standards of living that must be brought down. But research by investigative journalists expose these lies and distortions. For example, figures show that the cost of living in Greece is one of the highest in Europe with the average shopping basket of food costing 66 per cent more than in Germany. Around 1 in 5 Greeks live on or below the poverty line of 6,648 euros per year. Unemployment stands at around 11 per cent. Public expenditure is equal to 40 per cent of gross domestic product. In Britain it accounts for 45 per cent. There is no “bloated public sector” (http://www.socialistworker.co.uk/art.php?id=21241).

Despite what the media portray, the crisis in Greece is connected to the broader crisis which will lead to increasing pressures on the euro. This will worsen the problems in Portugal, Ireland and Spain – the countries that along with Greece make up the so-called PIGS. According to leading Greek activist Panos Garganos, the intervention of the IMF and EU will not calm this crisis – it will make it worse because the example of Greece shows they have failed there, so they will fail to save Ireland, Portugal and Spain. The markets know this and will move quickly (http://www.socialistreview.org.uk/article.php?articlenumber=11258).

What all this indicates is that the Greek people are clear that it is the system which is responsible for the crisis and are standing up to fight back against the bankers and politicians who insist that they, along with other ordinary folks in countries like the US and UK, repay the debts of the rich and powerful who incurred them. Jobs, pensions and public services are to be slashed and burned, with privateers in charge. For the European Union and the IMF, the opportunity presents to “change the culture” and dismantle the social welfare of Greece, just as the IMF and the World Bank have “structurally adjusted” (impoverished and controlled) countries across the developing world (http://www.johnpilger.com/page.asp?partid=576).

As the illusionary Tweedledee and Tweedledum versions of parliamentary democracy throughout much of the world play to the fiscal tune of ruling class interests, the inspiration for the rest of us are the ordinary folk in Greece.

Copyright: Daniel Margrain

The Economic Crisis: What’s Going On?

Following the recent election result in Britain, the people of that country decided they did not want any one of the traditional three main political parties to rule over them. Throughout the election campaign, the public were fed an almost constant stream of propaganda from a big business perspective.

The mainstream corporate media acted as a kind of echo chamber for this propaganda by reporting ad-nauseum the politicians’ belief that the failure of the people to assign an overall majority to any one particular party would effectively undermine “the national interest”. But when politician after politician speaks about “the national interest”, they mean the interests of those who own and control industry and those who move trillions around the money markets.

What the British people have been witnessing since the election, in the full glare of publicity, is the three main parties jostling and manoeuvring over how this notion of the national interest can be best accommodated in the interests of corporate power.

Sir Martin Sorell, chief executive of the advertising empire WPP, voiced the view of the major capitalists when he said that a hung parliament was the “worst possible” result:

http://blogs.news.sky.com/kleinman/Post:40de91a6-b227-432e-90c5-fe5869ab1a1d

Alan Clarke of BNP Paribas commented that “the UK could lose its top triple A credit status because of its failure to deliver a majority government with the authority to tackle the country’s public finances with immediete effect.”:

http://www.thisismoney.co.uk/news/article.html?in_article_id=495612&in_page_id=2

This is code for the insistence that ordinary people bear the brunt for the economic crisis by way of a series of austerity programmes and savage cuts to public services, while the rich get off scot free.

Sub-prime and the credit crunch

Let’s remind ourselves how we got here. The roots of the current crisis go some way back. After the 9/11 attack in New York, instability and fear pervaded financial markets. In order to steer the US and world economy out of a tight corner there was a reduction in interest rates and loosening of credit, encouraging people to borrow to sustain demand.

Banks took advantage of this and started to push mortgages. Initially the banks were lending on fairly good terms but then competition set in and those with money found they could expand their wealth by borrowing at low interest rates in order to lend to those prepared to pay higher interest rates. One of the main groups prepared to pay these higher rates were poorer sections of the population desperate to get somewhere to live and those who were previously regarded as uncreditworthy. As long as house prices continued rising, they seemed a safe group to lend to, since there was always a profit to be made by repossessing their homes if they failed to pay up on time. This lending became known as the “subprime mortgage market”.

Although on the surface this appeared to be a form of secure lending, in reality it was risky. Why? Because by 2006 the US economy began slowing down and profits in the US started to fall. As profits declined, firms got rid of workers and poor American’s could no longer keep up with their rising mortgage payments. Borrowing at one end of the chain could not be repaid. Repossessions led to falling house prices, and the “collateral” that supposedly guaranteed (provided security) against the loans, fell in value as well. An enormous 400 billion US dollars in lending was suddenly not repayable. 

A whole host of new institutions emerged that began specialising in the same manner as the banks. They would obtain cheap credit in the environment of low interest rates after 2001, use it to make loans, and then ‘securitise’ them. Other financial institutions would also use cheap credit to buy the new securities. Still other financial institutions would combine several of these securities to create even more complex, “synthetic” Collateralised Debt Obligations, which give their holders the right to interest accruing on the earlier securities, and so on.

In this baroque and opaque world, fuelled by cheap credit, it did not take long before just about all the major financial institutions across the world found themselves holding securities that contained bits of subprime mortgages. What was originally a small sickness within the US economy grew enormously because of the way capitalist credit works. In the end, governments’ were forced to intervene by bailing out vast swathes of the capitalist system as a precursor to saving it:

http://www.isj.org.uk/?id=395

In spring 2008, Bear Sterns became an early high profile casualty of the crisis on Wall Street which was followed by the next big Wall Street bank to collapse – Lehman Brothers. The meltdown in Greece followed shortly after. Speculators are already looking for the next domino set to topple after Greece. It might be one of the other weak eurozone countries, with Portugal tipped as the most likely, but it might well be Ireland, Britain or even the US, all of whom in 2010 have a higher projected budget deficit than Greece:

http://www.infiniteunknown.net/2010/05/05/uk-budget-deficit-to-surpass-greeces-as-worst-in-eu/

All this is happening despite the fact that the major economies are technically out of recession. The recovery can be characterised in three words: “weak”, “fragile” and “uncertain”. The recovery is weak because the crisis, in spite of its severity, has not resolved the underlying problems the global economy faces. These problems were created by three decades of sustained low profitability. A recent column in the UK’s Financial Times pointed out that after the Second World War profit rates held up at about 15 per cent in the US. By the 19080s it was 10 per cent, and today it is just 5 per cent:

http://www.permanentrevolution.net/entry/2976

This would appear to indicate that the underlying problems of the global economy are systemic.

Marx’s explanation

Marx’s basic line of argument was simple. Individual capitalists can increase their own competitiveness by increasing the productivity of their workforce. The way to do this is by using a greater quantity of the “means of production”—tools, machinery and so on—for each worker. There is a growth in the ratio of the physical extent of the means of production to the amount of labour power employed, a ratio that Marx called the “technical composition of capital”.

But a growth in the physical extent of the means of production will also be a growth in the investment needed to buy them. So this too will grow faster than the investment in the workforce. To use Marx’s terminology, “constant capital” grows faster than “variable capital”. The growth of this ratio, which he calls the “organic composition of capital”, is a logical corollary of capital accumulation.

Yet the only source of value for the system as a whole is labour. If investment grows more rapidly than the labour force, it must also grow more rapidly than the value created by the workers, which is where profit comes from. In short, capital investment grows more rapidly than the source of profit. As a consequence, there will be a downward pressure on the ratio of profit to investment—the rate of profit.

Each capitalist has to push for greater productivity in order to stay ahead of competitors. But what seems beneficial to the individual capitalist is disastrous for the capitalist class as a whole. Each time productivity rises there is a fall in the average amount of labour in the economy as a whole needed to produce a commodity (what Marx called “socially necessary labour”), and it is this which determines what other people will eventually be prepared to pay for that commodity. So today we can see a continual fall in the price of goods such as computers or DVD players produced in industries where new technologies are causing productivity to rise fastest:

http://www.isj.org.uk/?id=340

As the rate of return on investment declines in its totality, so it is the weakest companies financially – but not necessarily technologically – that go out of business. In turn, this results in an increase in unemployment. Thus workers are able to purchase fewer goods and services. This inevitably leads to a downward spiral of economic slump and crisis within the system as a whole.

But Marx argued that there were countervailing factors which mitigated against a total collapse of the system. For example, the diversion of investment from the production of goods and services to the production of arms – a process that is governed by states that are in constant competition with one another – provided a very important role in producing the long boom after the Second World War.

Also, Marx argued that profitability could be restored by crisis itself, through what he called “the annihilation of a great part of the capital”. During a recession some companies fail and are bought up by rivals, and others have to sell off parts of their business or dump their stock on the market to meet their obligations. Those companies that survive can take advantage of this, grabbing assets at a fraction of their real value and putting them to highly profitable use in the recovery that follows. Depressed wages and high unemployment also allow capitalists to squeeze more out of workers. A process of “creative destruction” may lead to a boom following a slump:

http://www.socialistreview.org.uk/article.php?articlenumber=11255

But this is not some automatic process that pushes the economy back towards some natural equilibrium. The post-war boom followed only after the prolonged horror of the 1930s slump and the destruction of the Second World War, which also forced states to intervene to reorganise whole national economies.

Comparing the present with the Great Depression

There are significant differences between the situation at the beginning of the present crisis and that in 1929.

First, state expenditure has for nearly 70 years been central to the system in a way in which it was not in 1929. In that year federal government expenditures represented only 2.5 per cent of GNP. In 2007 federal expenditure was around 20 percent of GNP:

http://www.usgovernmentspending.com/

And the speed and vigour with which the government has moved to intervene in the economy has been much greater this time. The Hoover administration (March 1929-February 1933) did make a few moves aimed at bolstering the economy, so that state spending rose slightly in 1930, and federal money was used to bail out some banks and rail companies through the Reconstruction Finance Corporation in 1932. But the moves were very limited in scope—and the state could still act in ways that could only have exacerbated the crisis in 1931 and 1932.

The Fed increased interest rates to banks and the government raised taxes. It was not until after the inauguration of the Roosevelt administration in March 1933 that there was a decisive increase in government expenditure. But even then the high point for total federal government spending in 1936 was only just over 9 percent of national output—and in 1937 began to decline.

By contrast, the cost of bailouts pushed through by the Bush government in its dying days, just as the credit crunch began to turn into a recession, could amount to an extra 10 percent of GNP:

http://www.isj.org.uk/index.php4?id=506&issue=121#121harman_65

Figure 1: Net federal expenditure as a percentage of GDP
Source: Éric Tymoigne, “Minsky and Economic Policy: ‘Keynesianism’ All Over Again?”, Levy Economics Institute, working paper

Figure 1

Figure 2: Composition of federal expenditure
Source: Éric Tymoigne, “Minsky and Economic Policy: ‘Keynesianism’ All Over Again?”, Levy Economics Institute, working paper

Figure 2

The increased importance of state expenditures—and the willingness of central banks and government to spend rapidly in trying to cope with the crisis—means there is a base level of demand in the economy which provides a floor below which the economy will not sink, which was not the case in the early 1930s. In this way, military expenditure, at $800 billion twice the level in current dollars of 2001, plays a particularly important role guaranteeing markets to a core group of very important corporations. Such spending can clearly serve to mitigate the impact of the crisis.

But there is an important second difference that operates in the opposite direction. The major financial and industrial corporations operate on a much greater scale than in the inter-war years and therefore the strain on governments of bailing them out is disproportionately larger. The banking crises of the early 1930s in the US was a crisis of a mass of small and medium banks—”Very big banks did not often become insolvent and fail, even in periods of widespread bank failures:

http://www.questia.com/library/book/too-big-to-fail-policies-and-practices-in-government-bailouts-by-benton-e-gup.jsp

This time we have seen a crisis of many of the biggest banks in most major economies. Within a day of Lehman Brothers going bust, banks such as HBOS in Britain, Fortis in the Benelux countries, Hypo Real Estate in Germany and the Icelandic banks were all in trouble. From there the crisis spread to affect other major banks and the “shadow banking system” of hedge funds, derivatives and so on. The most recent estimate of the total losses so far, from the Bank of England, amounts to a staggering $2,800 billion:

http://www.guardian.co.uk/business/2008/oct/28/economics-credit-crunch-bank-england

Despite this, global industrial production now shows clear signs of recovering. This is a sharp divergence from experience in the Great Depression, when the decline in industrial production continued fully for three years. Paradoxically, staving off a catastrophic slump may have simply guaranteed that problems linger on, ensuring that recovery remains weak.

The recovery is also uneven. Initial estimates suggested that British growth slowed to just 0.2 percent in the first quarter of 2010. The US is growing faster, and is also faring better than Germany and Japan, which are more export-oriented and have suffered more from the decline in world trade than from the initial financial meltdown. China was also hit by falling demand for its exports but has continued to boom due to a massive state-sponsored domestic investment programme:

http://www.socialistreview.org.uk/article.php?articlenumber=11255

This has revived the fortunes of some of the developing economies that supply it with raw materials. But even in China there are fears that growth is unstable, with widespread concerns about an emerging property bubble, a glut of lending raising the prospect of colossal levels of bad debt, and the danger that too much is being produced for still-limited markets.

The weakness of the global recovery means that workers will continue to suffer. In some countries this takes the form of high unemployment and attacks on wages, as in the US, Spain and Ireland. In others, such as Germany and Japan, where unemployment has not risen as fast, companies have sought to hold on to workers but have cut pay rates, reduced hours or shifted workers onto part-time contracts. Britain lies somewhere between the two extremes. ibid.

Unemployment and underemployment will persist well into any recovery. A recent IMF report argues that employment falls further and takes longer to recover during recessions that have a significant financial component. The report indicates that it could take a year and a half from the end of the recession for any substantial improvement, assuming that the recovery continues:

http://www.dailymarkets.com/economy/2010/04/22/imf-global-recovery-stronger-than-expected-but-strength-varies/

Finally, any recovery is and will remain uncertain. State interventions replaced private borrowing and investment with mountains of public debt, and falling tax revenues made it difficult to recover the money spent. Now governments everywhere face a dilemma. Do they cut back to pay off their debts, risking a “double-dip recession” as the stimulus is withdrawn? Or do they continue spending and risk a run on their currencies, as the eurozone experienced amid fears of a Greek default?

Copyright: Daniel Margrain.

Wanted – The Novel (A Work In Progress)

They hadn’t come for him yet. He was safe,  for the time being anyway, at least that’s what Jack said. Few people trust Jack but then what do they know? They hadn’t anticipated the outbreak of madness that was beginning to grip the city, but Jack had. Neither had they anticipated the day they would confiscate the paintings and writings that came to symbolize the underground movement, the only form of communication to the outside world that kept many of us sane, but Jack had. We had heard unconfirmed reports from Green Room number 77 that Marshall had blown his brains out with a pistol he had apparently purchased from a market trader on the day before his suicide.

Jack claimed that he had seen Marshall in Sector Two south east of the city just before dusk fell on the 23rd,  but nobody listened. Nobody wanted to hear was probably closer to the truth. It was easy to understand why many of the people in the Ministry of Information distrusted Jack, that’s if you can call these sharp-suited men and women who mechanically undertake their duties with all the devoted rigour of false consciousness patriots, people. I prefer to call them subservients. Technically they are people in as much as the blood that pumps through their veins and arteries is red, but as far as Jack is concerned, they are not people at all. Amongst this group the feeling was mutual.

I trust Jack for the same reasons that those who stalk the corridors of the Ministry of Information do not.  Jack is as passionate and considerate as they are cold, calculating and manipulative. He is a person of integrity and strength of character that I think is very rare. I like Jack precisely because of these qualities but many others dislike him for the same reason. They only appear to like him on a  superficial level during the odd occasion when the jovial side of his personality emerges. It is the dual nature of his character that so unnerve the plastic people of the Ministry of Information. They cannot understand how somebody could possibly burst into spontaneous laughter after recounting a scene from a Laurel and Hardy movie in one breath, and then talk passionately about the lyrical depth and beauty of a mid-1970s Joni Mitchell or the sheer joy of living in times past, in virtually the next. Such beauty, laughter and passion elude them completely and give rise to their distrust.

On the Wednesday morning following Marshall’s untimely and tragic death, the city was uncharacteristically covered in a blanket of grey-slated cloud and the vibrancy and colour of the cities main square, usually a hub of activity, was strangely quiet. It was almost as though the people of the city and God himself had somehow anticipated Marshall’s suicide. According to the news reports, the blood stained sucide note was short and there appeared to be no indications of foul play. Marshall used to be a well-respected employee of the Ministry of Interior, and the shock waves that spread throughout the corridors of power were palpable. His blood splattered body was discovered on Tuesday morning by office cleaners who naturally reported the discovery to their supervisor who then informed the police.

The entire city appeared to be in a state of shock as the news of the death slowly crept out. But this shock soon turned into anger. On a freezing Wednesday afternoon a handful of people had spontaneously gathered by the ornate fountain in the centre of the main city square holding crude home-made placards with the words ‘State Cover Up: We Want Answers’ emblazoned across them. Jack had maintained a close and long-standing friendship with Marshall, and the news of his death hit him particularly hard.

Jack is a man of 38 years who lives a reasonably comfortable life, meaning that he spends most of his cash on home comforts. He earns his money playing trumpet in a jazz band mainly at the weekend at a local bar called Cafe Paris which happens to be regularly frequented by the dullards of the Ministry of Information. He plays a good trumpet, well that’s what the dullards of the Ministry of Information keep telling him which to his mind meant that they were just saying this to please him rather than for any reason that they happened to be think that his playing was genuinelly good. The truth is that Jack was an accomplished player but lacked the range which could of propelled him to the top, not that he was particularly interested in striving for those grandiose heights anyway. Jack’s real passion is for painting. His art resembles a kind of detached style of an Edward Hopper and the freshness and vibrancy of  the Joni Mitchell album covers he loves so much.

Jack lives in the centre of the city in an old style crumbling apartment block  pretty close to the main square where the demonstration had taken place on the Wednesday. It’s a three storey building with a shared communal doorway and stairwell that has an old ornate art deco open style elevator than runs through the buildings spine. The floor is made of marble and Jack’s murals line the walls of the twisting stairway that lead to the hallway of  the first floor where a brightly painted red door and a huge number three emblazoned on it, await the visitor. To the right on entering the apartment is a small kitchen and to the left is the sitting room which ajoins a bedroom that Jack converted into a studio. It was here at precisely 2.28pm on Tuesday of the 24th of the 3rd month that Jack heard the news of his best friends untimely death.

Marshall’s body was discovered slumped over his desk in the early hours of that morning and the tragic news was subsequently relayed to Jack by telephone. The policeman who called him on that fateful afternoon broke the news to him in the only way that police officers can do. On hearing the news, he staggered back in shock and then crouched onto the varnished wooden floor of his studio with his head clasped tightly in his hands. The phone that he had held crashed to the floor. After a few seconds he stood up, and glanced over at the clock on the far wall beside the bay window which opened up to a small balcony.  24th of March, 2.28pm will be forever etched in the memory of  this humble yet intelligent artist and musician by the name of Jack T Burnham.

Charlotte, Jack’s neighbour, had just returned from taking her dog for a walk and the sound of the animal scuttling frantically up the marble stairway awoke Jack from a deep sleep. This was the first decent nights sleep he had had in a few weeks and he had slept for a full 12 hours. A dark shadow of stubble had grown on his face and his general appearance was unkempt and dishevelled. He glanced over at the clock by the bay window and was surprised to see the time was close to 1.30 in the afternoon. This was the time Charlotte, just like clockwork, returned from walking her dog. But somehow, on this particular ocassion and on this particular afternoon, Charlotte’s movements had not registered with Jack. His entire body-clock was out of synch and that made him feel uncomfortable and uneasy.

Jack is the kind of person who likes a certain amount of order and structure to his life which is mirrored in his apartment. This is not say that he is meticulous to the enth degree that is anyway unhealthy or anything, but he knows what is important to him and insists on avoiding what he considers to be bad habits. For Jack, his apartment represents a sense of order and structure in an otherwise chaotic world in which for him, human beings have no or very little control over. His apartment in other words, is a kind of ordered oasis – a space where he is able to find comfort in relaxtion which order implies. This explains why Jack spent a relatively high amount of his earnings on his apartment. The world outside was chaotic and disorderly but his apartment represented the anthesis of this chaos and disorder. For Jack it is a space for refuge and retreat from the madness of the vast space outside. This also explains why Jack doesn’t feel at home in a big metropolis like New York or London but is more of a provincial person. That’s not to say he dislikes the hussle and bussle of urban life and all of the cultural baggage that comes with it, but just that he appreciates an overiding sense of proportionality which for him impacts directly on his state of well-being. The fact that he slept in until the afternoon on this particular Sunday morning upset this equilibrium and thus unsettled him.

His usual routine involves waking at 7am, taking a shower, eating a light breakfast of toasted muffins with jam followed by a swift cup of filtered Colombian coffee. Then, after scanning what passes for news from the paper that is delivered to him every morning, he takes to the bathroom to brush his teeth……..

(To be continued)

Copyright: Daniel Margrain.