MAXIMUM WAGE

http://jacobinmag.com/2013/09/against-tipping/
http://www.bloomberg.com/news/2013-09-05/how-the-black-death-spawned-the-minimum-wage.html
How the Black Death Spawned the Minimum Wage
by Stephen Mihm  /  Sep 5, 2013

Fast-food joints, long inhospitable to any kind of labor activism, are suddenly beset by a surge in strikes. Over the past few months, workers at chains such as McDonalds Corp. have walked off the job in more than 60 cities, demanding a “living wage” of $15 an hour. Regardless of whether the strikes lead to better pay, they have rekindled debate over what constitutes a living wage. That debate, however, has stranger, older and more curious origins than either proponents or detractors of the living wage might imagine.

The story begins in medieval England in the 14th century. Life, never particularly easy at this time in history, had become especially nasty, brutish and short. The preceding year, the “Great Pestilence,” better known as the Black Death, had arrived in continental Europe. The pandemic, one contemporary noted, “began in India and, raging through the whole of infidel Syria and Egypt,” reached England in 1349, “where the same mortality destroyed more than a third of the men, women and children.” Once the dead had been buried, feudal society was shaken to its core by a startling realization. As this same chronicler complained, “there was such a shortage of servants, craftsmen, and workmen, and of agricultural workers and labourers, that a great many lords and people … were yet without all service and attendance.” Survivors could now command much higher compensation for their work, and they weren’t shy about asking for it: “The humble turned up their noses at employment, and could scarcely be persuaded to serve the eminent unless for triple wages.” In response, King Edward III — a wealthy landowner who was as dependent on serfs as his many lords — issued the “Ordinance of Labourers,” which put a ceiling on how much workers could charge for their labor, setting wages at pre-plague levels. Subsequent amendments of the law — for example, the Statute of Labourers in 1351 — amplified the penalties for paying above set rates.

These laws effectively set what we would call a maximum wage. But the measures reflected something a bit more complicated than an attempt to stick it to the serfs. They embodied a distinctly medieval belief that one’s earnings should be commensurate with one’s station in life. The Catholic theologian Thomas Aquinas wrote that a man’s “external riches” must be sufficient “for him to live in keeping with his condition in life.” Anything less was cruel; anything more was an enticement to sin and a threat to the social order. As the historian Kevin Blackburn has convincingly argued, while laws governing wages initially set a ceiling on compensation, they were ultimately used to set a living wage, arguably as early as 1389, when an amendment to the Statute of Labourers effectively pegged wages to the price of food.

As the centuries passed, the justices of the peace charged with setting maximum wages appear to have begun setting formal minimum wages as well, though the evidence is fragmentary. Nonetheless, the practice eventually gained statutory recognition with the passage of an “Act Fixing a Minimum Wage,” issued in 1604 during the reign of James I and aimed at workers in the textile industry. The idea of encumbering wages with either an upper or lower limit would soon fall victim to the liberalizing tendencies of an increasingly capitalistic England. By the early 19th century, the Statutes of Labourers had been repealed. But the argument over wages didn’t disappear. As labor unrest swept many industrial nations in the 19th century, the concept of the minimum wage or living wage resurfaced in unexpected places.

The first was the Vatican. In 1891, Pope Leo XIII offered a distinctly medieval take on the labor question. In his Rerum Novarum, the pontiff called for the passage of laws to remove “the causes which lead to conflicts between employers and [the] employed.” Foremost among those causes, he averred, was the insufficiency of wages. “To defraud any one of wages that are his due is a great crime which cries to the avenging anger of Heaven,” he declared. But there was an easier way to solve the problem than involving the Almighty. Instead, the pope counseled the revival of the medieval living wage, arguing that the compensation of a wage earner should be sufficient “to support a frugal and well-behaved wage-earner.” The encyclical resonated in nations that had high numbers of both Catholics and aggrieved workers. Among these was Australia, which along with New Zealand would become a cradle of the modern minimum wage movement. In the 1890s, Australian Catholics began agitating for the implementation of a living wage. The year of the encyclical, Australian Cardinal Patrick Francis Moran called for wages sufficient to “yield a competence … for the frugal support of [a worker’s] wife and family.”

The first genuine minimum wage laws were established in the states of Victoria (1894) and New South Wales (1895). They dictated that unskilled workers employed by the government be paid a living wage of seven shillings a day.As one legislator declared in 1894, “the workers should have a rate of payment which would enable them to maintain themselves and their families in decent comfort.” In the succeeding years, support for minimum wage legislation grew. Catholic reformers continued to revive the medieval idea of a living wage. Foremost among these figures was Henry Bournes Higgins, the presiding judge in the Commonwealth Court of Conciliation and Arbitration.

In 1907, Higgins heard a case involving the Sunshine Harvester Works, the largest manufacturer of farming implements in Australia. Under a newly passed law, the company would have to pay a significant tax unless it could prove that it paid its workers “fair and reasonable” wages. The law didn’t set those wages; it was up to the court to decide whether Harvester met that threshold. Higgins rejected the company’s claims that it paid reasonable wages. More important, Higgins declared that the court had the right to a set a national minimum wage in the private sector, and he did: seven shillings a day for those working at unskilled labor. Higgins declared that a living wage must be sufficient to provide a “reasonable and frugal comfort.” As Blackburn observed, Higgins effectively “secularized the living wage,” reviving a medieval concept for modern times.

Though Harvester managed to get the decision reversed by a higher court, the opinion quickly became iconic. Higgins and his judicial allies managed to secure widespread acceptance of the idea of a national minimum wage through other opinions. The minimum wage was here to stay. Australia soon became a kind of Mecca for reformers elsewhere, who made the pilgrimage to study these and other innovations firsthand. When reformers in the U.S. proposed a minimum wage to drive wages up, they immediately went Down Under.

http://truth-out.org/opinion/item/18582-building-the-commons-as-an-antidote-to-the-predatory-market-economy
http://blogs.reuters.com/great-debate/2013/08/29/why-a-medieval-peasant-got-more-vacation-time-than-you/
Why a medieval peasant got more vacation time than you
by Lynn Parramore  /  AUGUST 29, 2013

Life for the medieval peasant was certainly no picnic. His life was shadowed by fear of famine, disease and bursts of warfare. His diet and personal hygiene left much to be desired. But despite his reputation as a miserable wretch, you might envy him one thing: his vacations. Plowing and harvesting were backbreaking toil, but the peasant enjoyed anywhere from eight weeks to half the year off. The Church, mindful of how to keep a population from rebelling, enforced frequent mandatory holidays. Weddings, wakes and births might mean a week off quaffing ale to celebrate, and when wandering jugglers or sporting events came to town, the peasant expected time off for entertainment. There were labor-free Sundays, and when the plowing and harvesting seasons were over, the peasant got time to rest, too. In fact, economist Juliet Shor found that during periods of particularly high wages, such as 14th-century England, peasants might put in no more than 150 days a year.

As for the modern American worker? After a year on the job, she gets an average of eight vacation days annually. It wasn’t supposed to turn out this way: John Maynard Keynes, one of the founders of modern economics, made a famous prediction that by 2030, advanced societies would be wealthy enough that leisure time, rather than work, would characterize national lifestyles. So far, that forecast is not looking good. What happened? Some cite the victory of the modern eight-hour a day, 40-hour workweek over the punishing 70 or 80 hours a 19th century worker spent toiling as proof that we’re moving in the right direction. But Americans have long since kissed the 40-hour workweek goodbye, and Shor’s examination of work patterns reveals that the 19th century was an aberration in the history of human labor. When workers fought for the eight-hour workday, they weren’t trying to get something radical and new, but rather to restore what their ancestors had enjoyed before industrial capitalists and the electric lightbulb came on the scene. Go back 200, 300 or 400 years and you find that most people did not work very long hours at all. In addition to relaxing during long holidays, the medieval peasant took his sweet time eating meals, and the day often included time for an afternoon snooze. “The tempo of life was slow, even leisurely; the pace of work relaxed,” notes Shor. “Our ancestors may not have been rich, but they had an abundance of leisure.”

Fast-forward to the 21st century, and the U.S. is the only advanced country with no national vacation policy whatsoever. Many American workers must keep on working through public holidays, and vacation days often go unused. Even when we finally carve out a holiday, many of us answer emails and “check in” whether we’re camping with the kids or trying to kick back on the beach. Some blame the American worker for not taking what is her due. But in a period of consistently high unemployment, job insecurity and weak labor unions, employees may feel no choice but to accept the conditions set by the culture and the individual employer. In a world of “at will” employment, where the work contract can be terminated at any time, it’s not easy to raise objections.

It’s true that the New Deal brought back some of the conditions that farm workers and artisans from the Middle Ages took for granted, but since the 1980s things have gone steadily downhill. With secure long-term employment slipping away, people jump from job to job, so seniority no longer offers the benefits of additional days off. The rising trend of hourly and part-time work, stoked by the Great Recession, means that for many, the idea of a guaranteed vacation is a dim memory. Ironically, this cult of endless toil doesn’t really help the bottom line. Study after study shows that overworking reduces productivity. On the other hand, performance increases after a vacation, and workers come back with restored energy and focus. The longer the vacation, the more relaxed and energized people feel upon returning to the office. Economic crises give austerity-minded politicians excuses to talk of decreasing time off, increasing the retirement age and cutting into social insurance programs and safety nets that were supposed to allow us a fate better than working until we drop. In Europe, where workers average 25 to 30 days off per year, politicians like French President Francois Hollande and Greek Prime Minister Antonis Samaras are sending signals that the culture of longer vacations is coming to an end. But the belief that shorter vacations bring economic gains doesn’t appear to add up. According to the Organisation for Economic Co-operation and Development (OECD) the Greeks, who face a horrible economy, work more hours than any other Europeans. In Germany, an economic powerhouse, workers rank second to last in number of hours worked. Despite more time off, German workers are the eighth most productive in Europe, while the long-toiling Greeks rank 24 out of 25 in productivity.

Beyond burnout, vanishing vacations make our relationships with families and friends suffer. Our health is deteriorating: depression and higher risk of death are among the outcomes for our no-vacation nation. Some forward-thinking people have tried to reverse this trend, like progressive economist Robert Reich, who has argued in favor of a mandatory three weeks off for all American workers. Congressman Alan Grayson proposed the Paid Vacation Act of 2009, but alas, the bill didn’t even make it to the floor of Congress. Speaking of Congress, its members seem to be the only people in America getting as much down time as the medieval peasant. They get 239 days off this year.

http://www.theatlanticcities.com/jobs-and-economy/2013/08/how-poverty-taxes-brain/6716/
How Poverty Taxes the Brain
by Emily Badger  /  Aug 29, 2013

Human mental bandwidth is finite. You’ve probably experienced this before (though maybe not in those terms): When you’re lost in concentration trying to solve a problem like a broken computer, you’re more likely to neglect other tasks, things like remembering to take the dog for a walk, or picking your kid up from school. This is why people who use cell phones behind the wheel actually perform worse as drivers. It’s why air traffic controllers focused on averting a mid-air collision are less likely to pay attention to other planes in the sky. We only have so much cognitive capacity to spread around. It’s a scarce resource. This understanding of the brain’s bandwidth could fundamentally change the way we think about poverty. Researchers publishing some groundbreaking findings today in the journal Science have concluded that poverty imposes such a massive cognitive load on the poor that they have little bandwidth left over to do many of the things that might lift them out of poverty – like go to night school, or search for a new job, or even remember to pay bills on time. The condition of poverty imposed a mental burden akin to losing 13 IQ points.

In a series of experiments run by researchers at Princeton, Harvard, and the University of Warwick, low-income people who were primed to think about financial problems performed poorly on a series of cognition tests, saddled with a mental load that was the equivalent of losing an entire night’s sleep. Put another way, the condition of poverty imposed a mental burden akin to losing 13 IQ points, or comparable to the cognitive difference that’s been observed between chronic alcoholics and normal adults. The finding further undercuts the theory that poor people, through inherent weakness, are responsible for their own poverty – or that they ought to be able to lift themselves out of it with enough effort. This research suggests that the reality of poverty actually makes it harder to execute fundamental life skills. Being poor means, as the authors write, “coping with not just a shortfall of money, but also with a concurrent shortfall of cognitive resources.” This explains, for example, why poor people who aren’t good with money might also struggle to be good parents. The two problems aren’t unconnected. “It’s the same bandwidth,” says Princeton’s Eldar Shafir, one of the authors of the study alongside Anandi ManiSendhil Mullainathan, and Jiaying Zhao. Poor people live in a constant state of scarcity (in this case, scarce mental bandwidth), a debilitating environment that Shafir and Mullainathan describe in a book to be published next week, Scarcity: Why having too little means so much. What Shafir and his colleagues have identified is not exactly stress. Rather, poverty imposes something else on people that impedes them even when biological markers of stress (like elevated heart rates and blood pressure) aren’t present. Stress can also positively affect us in small quantities. An athlete under stress, for example, may actually perform better. Stress follows a kind of classic curve: a little bit can help, but beyond a certain point, too much of it will harm us. This picture of cognitive bandwidth looks different. To study it, the researchers performed two sets of experiments. In the first, about 400 randomly chosen people in a New Jersey mall were asked how they would respond to a scenario where their car required either $150 or $1,500 in repairs. Would they pay for the work in full, take out of a loan, or put off the repair? How would they make that decision? The subjects varied in annual income from $20,000 to $70,000. Before responding, the subjects were given a series of common tests (identifying sequences of shapes and numbers, for example) measuring cognitive function and fluid intelligence. In the easier scenario, where the hypothetical repair cost only $150, subjects classified as “poor” and “rich” performed equally well on these tests. But the “poor” subjects performed noticeably worse in the $1,500 scenario. Simply asking these people to think about financial problems taxed their mental bandwidth. “And these are not people in abject poverty,” Shafir says. “These are regular folks going to the mall that day.”

The “rich” subjects in the study experienced no such difficulty. In the second experiment, the researchers found similar results when working with a group of farmers in India who experience a natural annual cycle of poverty and plenty. These farmers receive 60 percent of their annual income in one lump sum after the sugarcane harvest. Beforehand, they are essentially poor. Afterward (briefly), they’re not. In the state of pre-harvest poverty, however, they exhibited the same shortage of cognitive bandwidth seen in the American subjects in a New Jersey mall. The design of these experiments wasn’t particularly groundbreaking, which makes it all the more astounding that we’ve never previously understood this connection between cognition and poverty. “This project, there’s nothing new in it, there’s no new technology, this could have been done years ago,” Shafir says. But the work is the product of the relatively new field of behavioral economics. Previously, cognitive psychologists seldom studied the differences between different socio-economic populations (“a brain is a brain, a head is a head,” Shafir says). Meanwhile, other psychology and economics fields were studying different populations but not cognition. Now that all of these perspectives have come together, the implications for how we think about poverty – and design programs for people impacted by it – are enormous. Solutions that make financial life easier for poor people don’t simply change their financial prospects. When a poor person receives a regular direct-deposited paycheck every Friday, that does more than simply relieve the worry over when money will come in next. “When we do that, we liberate some bandwidth,” Shafir says. Policymakers tend to evaluate the success of financial programs aimed at the poor by measuring how they do financially. “The interesting thing about this perspective is that it says if I make your financial life easier, if I give you more bandwidth, what I really ought to look at is how you’re doing in your life. You might be doing better parenting. You might be adhering to your medication better.”

The limited bandwidth created by poverty directly impacts the cognitive control and fluid intelligence that we need for all kinds of everyday tasks. “When your bandwidth is loaded, in the case of the poor,” Shafir says, “you’re just more likely to not notice things, you’re more likely to not resist things you ought to resist, you’re more likely to forget things, you’re going to have less patience, less attention to devote to your children when they come back from school.” At the macro level, this means we lost an enormous amount of cognitive ability during the recession. Millions of people had less bandwidth to give to their children, or to remember to take their medication. Conversely, going forward, this also means that anti-poverty programs could have a huge benefit that we’ve never recognized before: Help people become more financially stable, and you also free up their cognitive resources to succeed in all kinds of other ways as well. For all the value in this finding, it’s easy to imagine how proponents of hackneyed arguments about poverty might twist the fundamental relationship between cause-and-effect here. If living in poverty is the equivalent of losing 13 points in IQ, doesn’t that mean people with lower IQs wind up in poverty? “We’ve definitely worried about that,” Shafir says. Science, though, is coalescing around the opposite explanation. “All the data shows it isn’t about poor people, it’s about people who happen to be in poverty. All the data suggests it is not the person, it’s the context they’re inhabiting.”


Nathan Yau’s data visualization maps the food deserts in the United States. 

http://www.truth-out.org/opinion/item/18395-pinching-pensions-to-keep-wall-street-fat-and-happy
http://www.medicalnewstoday.com/releases/265569.php
Violent behavior linked to nutritional deficiencies  /  03 Sep 2013

Deficiencies of vitamins A, D, K, B1, B3, B6, B12 and folate, and of minerals iodine, potassium, iron, magnesium, zinc, chromium and manganese can all contribute to mental instability and violent behavior, according to a report published in the Spring 2013 issue of Wise Traditions, the journal of the Weston A. Price Foundation. The article, Violent Behavior: A Solution in Plain Sight by Sylvia Onusic, PhD, CNS, LDN, seeks reasons for the increase in violent behavior in America, especially among teenagers. “We can blame violence on the media and on the breakdown of the home,” says Onusic, “but the fact is that a large number of Americans, living mostly on devitalized processed food, are suffering from malnutrition. In many cases, this means their brains are starving.”

In fact, doctors are seeing a return of nutritional deficiency diseases such as scurvy and pellagra, which were declared eradicated long ago by public health officials. Many of these conditions cause brain injuries as well. Symptoms of pellagra, for example, include anxiety, hyperactivity, depression, fatigue, headache, insomnia and hallucinations. Pellagra is a disease caused by deficiency of vitamin B3. Zinc deficiency is linked with angry, aggressive, and hostile behaviors that result in violence. The best dietary sources of zinc are red meat and shellfish. Leaky gut and gluten sensitivities may exacerbate nutrient deficiencies. Gluten intolerance is strongly linked with schizophrenia. “Making things worse are excitotoxins so prevalent in the food supply, such as MSG and Aspartame,” says Onusic. “People who live on processed food and who drink diet sodas are exposed to these mind-altering chemicals at very high levels.” In an effort to curb child obesity, the dairy industry recently petitioned FDA to include aspartame and other artificial sweeteners in dairy beverages featured in school lunches, without appropriate labeling. Recent research has established the fact that aspartame actually leads to weigh gain because of its effect on insulin. Other ingredients in the food supply linked to violent behavior include sugar, artificial colors and flavorings, caffeine, alcohol and soy foods. The toxic environmental burden includes mercury, arsenic, lead, fire retardants, pesticides, heavy metals and Teflon. Adding psychiatric drugs to this mix puts everyone at risk. “The only solution to the mounting levels of violence is a return to real, nutrient-dense food,” says Sally Fallon Morell, president of the Weston A. Price Foundation. “We must create a culture in which eating processed food is seen as uncool, and in which home cooking is embraced as a life-enhancing skill.” The Weston A. Price Foundation has pointed out the poor nutritional quality of school lunches and the flaws in the USDA dietary guidelines, which schools receiving federal funding are required to follow. At a press conference in January, 2010, the Foundation proposed guidelines that include eggs, organ meats and healthy animal fats. “Our brains need cholesterol to function properly,” said Fallon Morell, “and our children need cholesterol-rich food for optimal mental and emotional development.” Studies have shown that depressed individuals, offenders who show the most violent behavior, and the most violent suicides have low cholesterol levels.


{Jay Smith/DISCOVER}

http://discovermagazine.com/2013/may/13-grandmas-experiences-leave-epigenetic-mark-on-your-genes
Grandma’s Experiences Leave a Mark on Your Genes
Your ancestors’ lousy childhoods or excellent adventures might change your personality, bequeathing anxiety or resilience by altering the epigenetic expressions of genes in the brain.
by Dan Hurley  /  June 11, 2013

Darwin and Freud walk into a bar. Two alcoholic mice — a mother and her son — sit on two bar stools, lapping gin from two thimbles. The mother mouse looks up and says, “Hey, geniuses, tell me how my son got into this sorry state.” “Bad inheritance,” says Darwin. “Bad mothering,” says Freud. For over a hundred years, those two views — nature or nurture, biology or psychology — offered opposing explanations for how behaviors develop and persist, not only within a single individual but across generations. And then, in 1992, two young scientists following in Freud’s and Darwin’s footsteps actually did walk into a bar. And by the time they walked out, a few beers later, they had begun to forge a revolutionary new synthesis of how life experiences could directly affect your genes — and not only your own life experiences, but those of your mother’s, grandmother’s and beyond. The bar was in Madrid, where the Cajal Institute, Spain’s oldest academic center for the study of neurobiology, was holding an international meeting. Moshe Szyf, a molecular biologist and geneticist at McGill University in Montreal, had never studied psychology or neurology, but he had been talked into attending by a colleague who thought his work might have some application. Likewise, Michael Meaney, a McGill neurobiologist, had been talked into attending by the same colleague, who thought Meaney’s research into animal models of maternal neglect might benefit from Szyf’s perspective. “I can still visualize the place — it was a corner bar that specialized in pizza,” Meaney says. “Moshe, being kosher, was interested in kosher calories. Beer is kosher. Moshe can drink beer anywhere. And I’m Irish. So it was perfect.” The two engaged in animated conversation about a hot new line of research in genetics. Since the 1970s, researchers had known that the tightly wound spools of DNA inside each cell’s nucleus require something extra to tell them exactly which genes to transcribe, whether for a heart cell, a liver cell or a brain cell.

One such extra element is the methyl group, a common structural component of organic molecules. The methyl group works like a placeholder in a cookbook, attaching to the DNA within each cell to select only those recipes — er, genes — necessary for that particular cell’s proteins. Because methyl groups are attached to the genes, residing beside but separate from the double-helix DNA code, the field was dubbed epigenetics, from the prefix epi (Greek for over, outer, above). Originally these epigenetic changes were believed to occur only during fetal development. But pioneering studies showed that molecular bric-a-brac could be added to DNA in adulthood, setting off a cascade of cellular changes resulting in cancer. Sometimes methyl groups attached to DNA thanks to changes in diet; other times, exposure to certain chemicals appeared to be the cause. Szyf showed that correcting epigenetic changes with drugs could cure certain cancers in animals. Geneticists were especially surprised to find that epigenetic change could be passed down from parent to child, one generation after the next. A study from Randy Jirtle of Duke University showed that when female mice are fed a diet rich in methyl groups, the fur pigment of subsequent offspring is permanently altered. Without any change to DNA at all, methyl groups could be added or subtracted, and the changes were inherited much like a mutation in a gene. Now, at the bar in Madrid, Szyf and Meaney considered a hypothesis as improbable as it was profound: If diet and chemicals can cause epigenetic changes, could certain experiences — child neglect, drug abuse or other severe stresses — also set off epigenetic changes to the DNA inside the neurons of a person’s brain? That question turned out to be the basis of a new field, behavioral epigenetics, now so vibrant it has spawned dozens of studies and suggested profound new treatments to heal the brain. According to the new insights of behavioral epigenetics, traumatic experiences in our past, or in our recent ancestors’ past, leave molecular scars adhering to our DNA. Jews whose great-grandparents were chased from their Russian shtetls; Chinese whose grandparents lived through the ravages of the Cultural Revolution; young immigrants from Africa whose parents survived massacres; adults of every ethnicity who grew up with alcoholic or abusive parents — all carry with them more than just memories. Like silt deposited on the cogs of a finely tuned machine after the seawater of a tsunami recedes, our experiences, and those of our forebears, are never gone, even if they have been forgotten. They become a part of us, a molecular residue holding fast to our genetic scaffolding. The DNA remains the same, but psychological and behavioral tendencies are inherited. You might have inherited not just your grandmother’s knobby knees, but also her predisposition toward depression caused by the neglect she suffered as a newborn. Or not. If your grandmother was adopted by nurturing parents, you might be enjoying the boost she received thanks to their love and support. The mechanisms of behavioral epigenetics underlie not only deficits and weaknesses but strengths and resiliencies, too. And for those unlucky enough to descend from miserable or withholding grandparents, emerging drug treatments could reset not just mood, but the epigenetic changes themselves. Like grandmother’s vintage dress, you could wear it or have it altered. The genome has long been known as the blueprint of life, but the epigenome is life’s Etch A Sketch: Shake it hard enough, and you can wipe clean the family curse.

Voodoo Genetics
Twenty years after helping to set off a revolution, Meaney sits behind a wide walnut table that serves as his desk. A January storm has deposited half a foot of snow outside the picture windows lining his fourth-floor corner office at the Douglas Institute, a mental health affiliate of McGill. He has the rugged good looks and tousled salt-and-pepper hair of someone found on a ski slope — precisely where he plans to go this weekend. On the floor lays an arrangement of helium balloons in various stages of deflation. “Happy 60th!” one announces. “I’ve always been interested in what makes people different from each other,” he says. “The way we act, the way we behave — some people are optimistic, some are pessimistic. What produces that variation? Evolution selects the variance that is most successful, but what produces the grist for the mill?” Meaney pursued the question of individual differences by studying how the rearing habits of mother rats caused lifelong changes in their offspring. Research dating back to the 1950s had shown that rats handled by humans for as little as five to 15 minutes per day during their first three weeks of life grew up to be calmer and less reactive to stressful environments compared with their non-handled littermates. Seeking to tease out the mechanism behind such an enduring effect, Meaney and others established that the benefit was not actually conveyed by the human handling. Rather, the handling simply provoked the rats’ mothers to lick and groom their pups more, and to engage more often in a behavior called arched-back nursing, in which the mother gives the pups extra room to suckle against her underside. “It’s all about the tactile stimulation,” Meaney says. In a landmark 1997 paper in Science, he showed that natural variations in the amount of licking and grooming received during infancy had a direct effect on how stress hormones, including corticosterone, were expressed in adulthood. The more licking as babies, the lower the stress hormones as grown-ups. It was almost as if the mother rats were licking away at a genetic dimmer switch. What the paper didn’t explain was how such a thing could be possible.  “What we had done up to that point in time was to identify maternal care and its influence on specific genes,” Meaney says. “But epigenetics wasn’t a topic I knew very much about.” And then he met Szyf.

Postnatal Inheritance
“I was going to be a dentist,” Szyf says with a laugh. Slight, pale and balding, he sits in a small office at the back of his bustling laboratory — a room so Spartan, it contains just a single picture, a photograph of two embryos in a womb. Needing to write a thesis in the late 1970s for his doctorate in dentistry at Hebrew University of Jerusalem, Szyf approached a young biochemistry professor named Aharon Razin, who had recently made a splash by publishing his first few studies in some of the world’s top scientific journals. The studies were the first to show that the action of genes could be modulated by structures called methyl groups, a subject about which Szyf knew precisely nothing. But he needed a thesis adviser, and Razin was there. Szyf found himself swept up to the forefront of the hot new field of epigenetics and never looked back. Until researchers like Razin came along, the basic story line on how genes get transcribed in a cell was neat and simple. DNA is the master code, residing inside the nucleus of every cell; RNA transcribes the code to build whatever proteins the cell needs. Then some of Razin’s colleagues showed that methyl groups could attach to cytosine, one of the chemical bases in DNA and RNA. It was Razin, working with fellow biochemist Howard Cedar, who showed these attachments weren’t just brief, meaningless affairs. The methyl groups could become married permanently to the DNA, getting replicated right along with it through a hundred generations. As in any good marriage, moreover, the attachment of the methyl groups significantly altered the behavior of whichever gene they wed, inhibiting its transcription, much like a jealous spouse. It did so, Razin and Cedar showed, by tightening the thread of DNA as it wrapped around a molecular spool, called a histone, inside the nucleus. The tighter it is wrapped, the harder to produce proteins from the gene. Consider what that means: Without a mutation to the DNA code itself, the attached methyl groups cause long-term, heritable change in gene function. Other molecules, called acetyl groups, were found to play the opposite role, unwinding DNA around the histone spool, and so making it easier for RNA to transcribe a given gene. By the time Szyf arrived at McGill in the late 1980s, he had become an expert in the mechanics of epigenetic change. But until meeting Meaney, he had never heard anyone suggest that such changes could occur in the brain, simply due to maternal care. “It sounded like voodoo at first,” Szyf admits. “For a molecular biologist, anything that didn’t have a clear molecular pathway was not serious science. But the longer we talked, the more I realized that maternal care just might be capable of causing changes in DNA methylation, as crazy as that sounded. So Michael and I decided we’d have to do the experiment to find out.”

Actually, they ended up doing a series of elaborate experiments. With the assistance of postdoctoral researchers, they began by selecting mother rats who were either highly attentive or highly inattentive. Once a pup had grown up into adulthood, the team examined its hippocampus, a brain region essential for regulating the stress response. In the pups of inattentive mothers, they found that genes regulating the production of glucocorticoid receptors, which regulate sensitivity to stress hormones, were highly methylated; in the pups of conscientious moms, the genes for the glucocorticoid receptors were rarely methylated. Methylation just gums up the works. So the less the better when it comes to transcribing the affected gene. In this case, methylation associated with miserable mothering prevented the normal number of glucocorticoid receptors from being transcribed in the baby’s hippocampus. And so for want of sufficient glucocorticoid receptors, the rats grew up to be nervous wrecks. To demonstrate that the effects were purely due to the mother’s behavior and not her genes, Meaney and colleagues performed a second experiment. They took rat pups born to inattentive mothers and gave them to attentive ones, and vice versa. As they predicted, the rats born to attentive mothers but raised by inattentive ones grew up to have low levels of glucocorticoid receptors in their hippocampus and behaved skittishly. Likewise, those born to bad mothers but raised by good ones grew up to be calm and brave and had high levels of glucocorticoid receptors.

Before publishing their findings, Meaney and Szyf conducted a third crucial experiment, hoping to overwhelm the inevitable skeptics who would rise up to question their results. After all, it could be argued, what if the epigenetic changes observed in the rats’ brains were not directly causing the behavioral changes in the adults, but were merely co-occurring? Freud certainly knew the enduring power of bad mothers to screw up people’s lives. Maybe the emotional effects were unrelated to the epigenetic change. To test that possibility, Meaney and Szyf took yet another litter of rats raised by rotten mothers. This time, after the usual damage had been done, they infused their brains with trichostatin A, a drug that can remove methyl groups. These animals showed none of the behavioral deficits usually seen in such offspring, and their brains showed none of the epigenetic changes. “It was crazy to think that injecting it straight into the brain would work,” says Szyf. “But it did. It was like rebooting a computer.” Despite such seemingly overwhelming evidence, when the pair wrote it all up in a paper, one of the reviewers at a top science journal refused to believe it, stating he had never before seen evidence that a mother’s behavior could cause epigenetic change. “Of course he hadn’t,” Szyf says. “We wouldn’t have bothered to report the study if it had already been proved.” In the end, their landmark paper, “Epigenetic programming by maternal behavior,” was published in June 2004 in the journal Nature Neuroscience. Meaney and Szyf had proved something incredible. Call it postnatal inheritance: With no changes to their genetic code, the baby rats nonetheless gained genetic attachments due solely to their upbringing — epigenetic additions of methyl groups sticking like umbrellas out the elevator doors of their histones, gumming up the works and altering the function of the brain.

The Beat Goes On
Together, Meaney and Szyf have gone on to publish some two-dozen papers, finding evidence along the way of epigenetic changes to many other genes active in the brain. Perhaps most significantly, in a study led by Frances Champagne — then a graduate student in Meaney’s lab, now an associate professor with her own lab at Columbia University in New York — they found that inattentive mothering in rodents causes methylation of the genes for estrogen receptors in the brain. When those babies grow up, the resulting decrease of estrogen receptors makes them less attentive to their babies. And so the beat goes on. As animal experiments continue apace, Szyf and Meaney have entered into the next great step in the study of behavioral epigenetics: human studies. In a 2008 paper, they compared the brains of people who had committed suicide with the brains of people who had died suddenly of factors other than suicide. They found excess methylation of genes in the suicide brains’ hippocampus, a region critical to memory acquisition and stress response. If the suicide victims had been abused as children, they found, their brains were more methylated. Why can’t your friend “just get over” her upbringing by an angry, distant mother? Why can’t she “just snap out of it”? The reason may well be due to methyl groups that were added in childhood to genes in her brain, thereby handcuffing her mood to feelings of fear and despair. Of course, it is generally not possible to sample the brains of living people. But examining blood samples in humans is routine, and Szyf has gone searching there for markers of epigenetic methylation. Sure enough, in 2011 he reported on a genome-wide analysis of blood samples taken from 40 men who participated in a British study of people born in England in 1958. All the men had been at a socioeconomic extreme, either very rich or very poor, at some point in their lives ranging from early childhood to mid-adulthood. In all, Szyf analyzed the methylation state of about 20,000 genes. Of these, 6,176 genes varied significantly based on poverty or wealth. Most striking, however, was the finding that genes were more than twice as likely to show methylation changes based on family income during early childhood versus economic status as adults.

Timing, in other words, matters. Your parents winning the lottery or going bankrupt when you’re 2 years old will likely affect the epigenome of your brain, and your resulting emotional tendencies, far more strongly than whatever fortune finds you in middle age. Last year, Szyf and researchers from Yale University published another study of human blood samples, comparing 14 children raised in Russian orphanages with 14 other Russian children raised by their biological parents. They found far more methylation in the orphans’ genes, including many that play an important role in neural communication and brain development and function. “Our study shows that the early stress of separation from a biological parent impacts long-term programming of genome function; this might explain why adopted children may be particularly vulnerable to harsh parenting in terms of their physical and mental health,” said Szyf’s co-author, psychologist Elena Grigorenko of the Child Study Center at Yale. “Parenting adopted children might require much more nurturing care to reverse these changes in genome regulation.” A case study in the epigenetic effects of upbringing in humans can be seen in the life of Szyf’s and Meaney’s onetime collaborator, Frances Champagne. “My mom studied prolactin, a hormone involved in maternal behavior. She was a driving force in encouraging me to go into science,” she recalls. Now a leading figure in the study of maternal influence, Champagne just had her first child, a daughter. And epigenetic research has taught her something not found in the What to Expect books or even her mother’s former lab. “The thing I’ve gained from the work I do is that stress is a big suppressor of maternal behavior,” she says. “We see it in the animal studies, and it’s true in humans. So the best thing you can do is not to worry all the time about whether you’re doing the right thing. Keeping the stress level down is the most important thing. And tactile interaction — that’s certainly what the good mother rats are doing with their babies. That sensory input, the touching, is so important for the developing brain.”

The Mark Of Cain
The message that a mother’s love can make all the difference in a child’s life is nothing new. But the ability of epigenetic change to persist across generations remains the subject of debate. Is methylation transmitted directly through the fertilized egg, or is each infant born pure, a methylated virgin, with the attachments of methyl groups slathered on solely by parents after birth? Neuroscientist Eric Nestler of the Icahn School of Medicine at Mount Sinai in New York has been seeking an answer for years. In one study, he exposed male mice to 10 days of bullying by larger, more aggressive mice. At the end of the experiment, the bullied mice were socially withdrawn. To test whether such effects could be transmitted to the next generation, Nestler took another group of bullied mice and bred them with females, but kept them from ever meeting their offspring. Despite having no contact with their depressed fathers, the offspring grew up to be hypersensitive to stress. “It was not a subtle effect; the offspring were dramatically more susceptible to developing signs of depression,” he says. In further testing, Nestler took sperm from defeated males and impregnated females through in vitro fertilization. The offspring did not show most of the behavioral abnormalities, suggesting that epigenetic transmission may not be at the root. Instead, Nestler proposes, “the female might know she had sex with a loser. She knows it’s a tainted male she had sex with, so she cares for her pups differently,” accounting for the results. Despite his findings, no consensus has yet emerged. The latest evidence, published in the Jan. 25 issue of the journal Science, suggests that epigenetic changes in mice are usually erased, but not always. The erasure is imperfect, and sometimes the affected genes may make it through to the next generation, setting the stage for transmission of the altered traits in descendants as well.

What’s Next?
The studies keep piling on. One line of research traces memory loss in old age to epigenetic alterations in brain neurons. Another connects post-traumatic stress disorder to methylation of the gene coding for neurotrophic factor, a protein that regulates the growth of neurons in the brain. If it is true that epigenetic changes to genes active in certain regions of the brain underlie our emotional and intellectual intelligence — our tendency to be calm or fearful, our ability to learn or to forget — then the question arises: Why can’t we just take a drug to rinse away the unwanted methyl groups like a bar of epigenetic Irish Spring? The hunt is on. Giant pharmaceutical and smaller biotech firms are searching for epigenetic compounds to boost learning and memory. It has been lost on no one that epigenetic medications might succeed in treating depression, anxiety and post-traumatic stress disorder where today’s psychiatric drugs have failed. But it is going to be a leap. How could we be sure that epigenetic drugs would scrub clean only the dangerous marks, leaving beneficial — perhaps essential — methyl groups intact? And what if we could create a pill potent enough to wipe clean the epigenetic slate of all that history wrote? If such a pill could free the genes within your brain of the epigenetic detritus left by all the wars, the rapes, the abandonments and cheated childhoods of your ancestors, would you take it?

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AUSTERICIDE



“A policeman tries to extinguish a fire on a man after he set himself ablaze outside a bank branch in Thessaloniki in northern Greece September 16, 2011. The 55-year old man had entered the bank and asked for a renegotiation of his overdue loan payments on his home and business, according to police, which he could not pay, but was refused by the bank.”

AUSTERITY KILLS
http://www.guardian.co.uk/society/2013/may/15/recessions-hurt-but-austerity-kills
by Jon Henley /  15 May 2013

The austerity programmes administered by western governments in the wake of the 2008 global financial crisis were, of course, intended as a remedy, a tough but necessary course of treatment to relieve the symptoms of debts and deficits and to cure recession. But if, David Stuckler says, austerity had been run like a clinical trial, “It would have been discontinued. The evidence of its deadly side-effects – of the profound effects of economic choices on health – is overwhelming.” Stuckler speaks softly, in the measured tones and carefully weighed terms of the academic, which is what he is: a leading expert on the economics of health, masters in public health degree from Yale, PhD from Cambridge, senior research leader at Oxford, 100-odd peer-reviewed papers to his name. But his message – especially here, as even the IMF starts to question chancellor George Osborne’s enthusiasm for ever-deeper budget cuts – is explosive, backed by a decade of research, and based on reams of publicly available data: “Recessions,” Stuckler says bluntly, “can hurt. But austerity kills.”

In a powerful new book, The Body Economic, Stuckler and his colleague Sanjay Basu, an assistant professor of medicine and epidemiologist at Stanford University, show that austerity is now having a “devastating effect” on public health in Europe and North America. The mass of data they have mined reveals that more than 10,000 additional suicides and up to a million extra cases of depression have been recorded across the two continents since governments started introducing austerity programmes in the aftermath of the crisis. In the United States, more than five million Americans have lost access to healthcare since the recession began, essentially because when they lost their jobs, they also lost their health insurance. And in the UK, the authors say, 10,000 families have been pushed into homelessness following housing benefit cuts. The most extreme case, says Stuckler, reeling off numbers he knows now by heart, is Greece. “There, austerity to meet targets set by the troika is leading to a public-health disaster,” he says. “Greece has cut its health system by more than 40%. As the health minister said: ‘These aren’t cuts with a scalpel, they’re cuts with a butcher’s knife.'” Worse, those cuts have been decided “not by doctors and healthcare professionals, but by economists and financial managers. The plan was simply to get health spending down to 6% of GDP. Where did that number come from? It’s less than the UK, less than Germany, way less than the US.”

The consequences have been dramatic. Cuts in HIV-prevention budgets have coincided with a 200% increase in the virus in Greece, driven by a sharp rise in intravenous drug use against the background of a youth unemployment rate now running at more than 50% and a spike in homelessness of around a quarter. The World Health Organisation, Stuckler says, recommends a supply of 200 clean needles a year for each intravenous drug user; groups that work with users in Athens estimate the current number available is about three. In terms of “economic” suicides, “Greece has gone from one extreme to the other. It used to have one of Europe’s lowest suicide rates; it has seen a more than 60% rise.” In general, each suicide corresponds to around 10 suicide attempts and – it varies from country to country – between 100 and 1,000 new cases of depression. In Greece, says Stuckler, “that’s reflected in surveys that show a doubling in cases of depression; in psychiatry services saying they’re overwhelmed; in charity helplines reporting huge increases in calls”. The country’s healthcare system itself has also “signally failed to manage or cope with the threats it’s facing”, Stuckler notes. “There have been heavy cuts to many hospital sectors. Places lack surgical gloves, the most basic equipment. More than 200 medicines have been destocked by pharmacies who can’t pay for them. When you cut with the butcher’s knife, you cut both fat and lean. Ultimately, it’s the patient who loses out.” Such phenomena, he says, “are just a few of many effects we’re seeing. And with all this accumulation of across-the-board, eye-watering statistics, there’s a cause-and-effect relationship with austerity measures. These issues became apparent not when the recession hit Greece, but with austerity.” But public health disasters such as Greece’s are not inevitable, even in the very worst economic downturns. Stuckler and Basu began to look at this before the crisis hit, studying how large personal economic shocks – unemployment, loss of your home, unpayable debt – “literally could get under people’s skin, and cause serious health problems”.

The pair examined data from major economic upsets in the past: the Great Depression in the US; post-communist Russia’s brutal transition to a market economy; Sweden’s banking crisis in the early 1990s; the East-Asian debacle later that decade; Germany’s painful labour market reforms early this century. “We were looking,” Stuckler says, “at how rises in unemployment, which is one indicator of recession, affected people’s health. We found that suicides tended to rise. We wanted to see if there was a way these suicides could be prevented.” It rapidly became clear “there was enormous variation across countries”, he says. “In some countries, politicians managed the consequences of recession well, preventing rising suicides and depression. In others, there was a very close relationship between ups and downs in the economy and peaks and valleys in suicides.” Investment in intensive programmes to help people return to work – so-called Active Labour Market Programmes, well developed in Sweden (where suicides actually fell during the banking crisis) but also effective in Germany – were a factor that seemed to make a big difference. Maintaining spending on broader social protection and welfare programmes helped, too: analysis of data from the 1930s Great Depression in the US showed that every extra $100 per capita of relief in states that adopted the American New Deal led to about 20 fewer deaths per 1,000 births, four fewer suicides per 100,000 people and 18 fewer pneumonia deaths per 100,000 people. “When this recession started, we began to see history repeat itself,” says Stuckler. “In Spain, for example, where there was little investment in labour programmes, we saw a spike in suicides. In Finland, Iceland, countries that took steps to protect their people in hard times, there was no noticeable impact on suicide rates or other health problems. “So I think we really noticed these harms aren’t inevitable back in 2008 or 2009, early in the recession. We realised that what ultimately happens in recessions depends, essentially, on how politicians respond to them.” Poorer public health, in other words, is not an inevitable consequence of economic downturns, it amounts to a political choice – by the government of the country concerned or, in the case of the southern part of the eurozone, by the EU, European Central Bank and IMF troika.

transcript (RT)

Stuckler seizes on Iceland as an example of “an alternative. It suffered the worst banking crisis in history; all three of its biggest banks failed, its total debt jumped to 800% of GDP – far worse than what any European country faces today, relative to the size of its economy. And under pressure from public protests, its president put how to deal with the crisis to a vote. Some 93% of the population voted against paying for the bankers’ recklessness with large cuts to their health and social-protection systems.” And what happened? Under Iceland’s universal healthcare system, “no one lost access to care. In fact more money went into the system. We saw no rise in suicides or depressive disorders – and we looked very hard. People consumed more locally sourced fish, so diets have improved. And by 2011, Iceland, which was previously ranked the happiest society in the world, was top of that list again.” What also bugs Stuckler – an economist as well as a public-health expert – is that neither Iceland nor any other country that “protected its people when they needed it most” did so at the cost of economic recovery. “It didn’t break them to invest in programmes to help people get back to work,” he says, “or to save people from homelessness. Iceland now is booming; unemployment fell back to below 5% and GDP growth is above 4% – far exceeding any of other European countries that suffered major recessions.” Countries such as those in Scandinavia that took what Stuckler terms “wise, cost-effective and affordable steps that can make a difference” have seen the impact reflected not just in improved health statistics, but also in their economies. Which is why, occasionally, the austerity argument angers him. “If there actually was a fundamental trade-off between the health of the economy and public health, maybe there would be a real debate to be had,” he says. “But there isn’t. Investing in programmes that protect the nation’s health is not only the right thing to do, it can help spur economic recovery. We show that. The data shows that.” Drilling into the data shows the fiscal multiplier – the economic bang, if you like, per government buck spent, or cost per buck cut – for spending on healthcare, education and social protection is many times greater than that for money ploughed into, for example, bank bailouts or defence spending. “That,” says Stuckler, “seems to me essential knowledge if you want to minimise the economic damage, to understand which cuts will be the least harmful to the economy. But if you look at the pattern of the cuts that have happened, it’s been the exact opposite.” So in this current economic crisis, there are countries – Iceland, Sweden, Finland – that are showing positive health trends, and there are countries that are not: Greece, Spain, now maybe Italy. Teetering between the two extremes, Stuckler reckons, is Britain. The UK, he says, is “one of the clearest expressions of how austerity kills”. Suicides were falling in this country before the recession, he notes. Then, coinciding with a surge in unemployment, they spiked in 2008 and 2009. As unemployment dipped again in 2009 and 2010, so too did suicides. But since the election and the coalition government’s introduction of austerity measures – and particularly cuts in public sector jobs across the country – suicides are back.

Ministers seem unwilling to address the increase in suicides, arguing it is too early to conclude anything from the data. Stuckler points out that this is because the Department of Health prefers to use three-year rolling averages that even out annual fluctuations. But based on the actual data, he is in no doubt. “We’ve seen a second wave – of austerity suicides,” he says. “And they’ve been concentrated in the north and north-east, places like Yorkshire and Humber, with large rises in unemployment. Whereas London … We’re now seeing polarisation across the UK in mental-health issues.” He cites, also, the dire impact on homelessness – falling in Britain until 2010 – of government cuts to social housing budgets, and the human tragedies triggered by the fitness-for-work evaluations, designed to weed out disability benefit fraud. “What’s so particularly tragic about those,” he says, “is that the government’s own estimates of fraud by persons with disabilities is less than the sum of the contract awarded to the company carrying out the tests.” At least, though, no one in the UK has been denied access to healthcare – yet. Stuckler confesses to being “heartbroken” as what he sees happening to the NHS. “Britain stood out as the great protector of its people’s health in this recession,” he says. “By all measures – public satisfaction, quality, access – the UK was at or near the top, and at very low relative cost.” But that, he says, is now changing. “I don’t know if people quite realise how fundamental this government’s transformation of the NHS is,” he says. “And once it’s in place, it will be difficult, if not impossible, to reverse. We haven’t yet seen here what can happen when people are denied access to healthcare, but the US system gives us a pretty clear warning.” He finds this all in stark and depressing contrast to the post-second world war period, when Britain’s debt was more than 200% of GDP (far higher than any European country’s today, bar Iceland) and the country’s leaders responded not by cutting spending but by founding the welfare state – “paving the way, incidentally, for decades of prosperity. And within 10 years, debt had halved.”

The Body Economic should come as a broadside, morally armour-plated and data-reinforced. The austerity debate, Stuckler says, is “a public discussion that needs to be held. Politicians talk endlessly about debts and deficits, but without regard to the human cost of their decisions.” What its authors hope is that politicians will take the message they have uncovered in the data seriously, and start basing policy on evidence rather than ideology. (Some already do. When Stuckler and Basu presented some of their findings in the Swedish parliament, the MPs’ response was: “Why are you telling us this? We know it. It’s why we set up these programmes.” Others, notably in Greece, have sought to divert responsibility.) “Our book,” says Stuckler, “shows that the cost of austerity can be calculated in human lives. It articulates how austerity kills. It shows austerity and health is always a false economy – no matter how positively some people view it, because for them it shrinks the role of the state, or reduces payments into a system they never use anyway.” When times are hard, governments need to invest more – or, at the very least, cut where it does least harm. It is dangerous and economically damaging to cut vital supports at a time when people need them most. “So there is an opportunity here,” Stuckler concludes, “to make a lasting difference. To set our economies on track for a happier, healthier future, as we did in the postwar period. To get our priorities as a society right. It’s not yet too late. Almost, but not quite.”

‘NATURAL EXPERIMENT’
http://www.nytimes.com/2013/05/13/opinion/how-austerity-kills.html
by David Stuckler & Sanjay Basu / May 12, 2013

Early last month, a triple suicide was reported in the seaside town of Civitanova Marche, Italy. A married couple, Anna Maria Sopranzi, 68, and Romeo Dionisi, 62, had been struggling to live on her monthly pension of around 500 euros (about $650), and had fallen behind on rent. Because the Italian government’s austerity budget had raised the retirement age, Mr. Dionisi, a former construction worker, became one of Italy’s esodati (exiled ones) — older workers plunged into poverty without a safety net. On April 5, he and his wife left a note on a neighbor’s car asking for forgiveness, then hanged themselves in a storage closet at home. When Ms. Sopranzi’s brother, Giuseppe Sopranzi, 73, heard the news, he drowned himself in the Adriatic. The correlation between unemployment and suicide has been observed since the 19th century. People looking for work are about twice as likely to end their lives as those who have jobs. In the United States, the suicide rate, which had slowly risen since 2000, jumped during and after the 2007-9 recession. In a new book, we estimate that 4,750 “excess” suicides — that is, deaths above what pre-existing trends would predict — occurred from 2007 to 2010. Rates of such suicides were significantly greater in the states that experienced the greatest job losses. Deaths from suicide overtook deaths from car crashes in 2009. If suicides were an unavoidable consequence of economic downturns, this would just be another story about the human toll of the Great Recession. But it isn’t so. Countries that slashed health and social protection budgets, like Greece, Italy and Spain, have seen starkly worse health outcomes than nations like Germany, Iceland and Sweden, which maintained their social safety nets and opted for stimulus over austerity. (Germany preaches the virtues of austerity — for others.) As scholars of public health and political economy, we have watched aghast as politicians endlessly debate debts and deficits with little regard for the human costs of their decisions. Over the past decade, we mined huge data sets from across the globe to understand how economic shocks — from the Great Depression to the end of the Soviet Union to the Asian financial crisis to the Great Recession — affect our health. What we’ve found is that people do not inevitably get sick or die because the economy has faltered. Fiscal policy, it turns out, can be a matter of life or death. At one extreme is Greece, which is in the middle of a public health disaster. The national health budget has been cut by 40 percent since 2008, partly to meet deficit-reduction targets set by the so-called troika —  the International Monetary Fund, the European Commission and the European Central Bank — as part of a 2010 austerity package. Some 35,000 doctors, nurses and other health workers have lost their jobs. Hospital admissions have soared after Greeks avoided getting routine and preventive treatment because of long wait times and rising drug costs. Infant mortality rose by 40 percent. New H.I.V. infections more than doubled, a result of rising intravenous drug use — as the budget for needle-exchange programs was cut. After mosquito-spraying programs were slashed in southern Greece, malaria cases were reported in significant numbers for the first time since the early 1970s.

In contrast, Iceland avoided a public health disaster even though it experienced, in 2008, the largest banking crisis in history, relative to the size of its economy. After three main commercial banks failed, total debt soared, unemployment increased ninefold, and the value of its currency, the krona, collapsed. Iceland became the first European country to seek an I.M.F. bailout since 1976. But instead of bailing out the banks and slashing budgets, as the I.M.F. demanded, Iceland’s politicians took a radical step: they put austerity to a vote. In two referendums, in 2010 and 2011, Icelanders voted overwhelmingly to pay off foreign creditors gradually, rather than all at once through austerity. Iceland’s economy has largely recovered, while Greece’s teeters on collapse. No one lost health care coverage or access to medication, even as the price of imported drugs rose. There was no significant increase in suicide. Last year, the first U.N. World Happiness Report ranked Iceland as one of the world’s happiest nations. Skeptics will point to structural differences between Greece and Iceland. Greece’s membership in the euro zone made currency devaluation impossible, and it had less political room to reject I.M.F. calls for austerity. But the contrast supports our thesis that an economic crisis does not necessarily have to involve a public health crisis. Somewhere between these extremes is the United States. Initially, the 2009 stimulus package shored up the safety net. But there are warning signs — beyond the higher suicide rate — that health trends are worsening. Prescriptions for antidepressants have soared. Three-quarters of a million people (particularly out-of-work young men) have turned to binge drinking. Over five million Americans lost access to health care in the recession because they lost their jobs (and either could not afford to extend their insurance under the Cobra law or exhausted their eligibility). Preventive medical visits dropped as people delayed medical care and ended up in emergency rooms. (President Obama’s health care law expands coverage, but only gradually.) The $85 billion “sequester” that began on March 1 will cut nutrition subsidies for approximately 600,000 pregnant women, newborns and infants by year’s end. Public housing budgets will be cut by nearly $2 billion this year, even while 1.4 million homes are in foreclosure. Even the budget of the Centers for Disease Control and Prevention, the nation’s main defense against epidemics like last year’s fungal meningitis outbreak, is being cut, by at least $18 million. To test our hypothesis that austerity is deadly, we’ve analyzed data from other regions and eras. After the Soviet Union dissolved, in 1991, Russia’s economy collapsed. Poverty soared and life expectancy dropped, particularly among young, working-age men. But this did not occur everywhere in the former Soviet sphere. Russia, Kazakhstan and the Baltic States (Estonia, Latvia and Lithuania) — which adopted economic “shock therapy” programs advocated by economists like Jeffrey D. Sachs and Lawrence H. Summers — experienced the worst rises in suicides, heart attacks and alcohol-related deaths.


Police protect bank from graffiti artists

Countries like Belarus, Poland and Slovenia took a different, gradualist approach, advocated by economists like Joseph E. Stiglitz and the former Soviet leader Mikhail S. Gorbachev. These countries privatized their state-controlled economies in stages and saw much better health outcomes than nearby countries that opted for mass privatizations and layoffs, which caused severe economic and social disruptions. Like the fall of the Soviet Union, the 1997 Asian financial crisis offers case studies — in effect, a natural experiment — worth examining. Thailand and Indonesia, which submitted to harsh austerity plans imposed by the I.M.F., experienced mass hunger and sharp increases in deaths from infectious disease, while Malaysia, which resisted the I.M.F.’s advice, maintained the health of its citizens. In 2012, the I.M.F. formally apologized for its handling of the crisis, estimating that the damage from its recommendations may have been three times greater than previously assumed. America’s experience of the Depression is also instructive. During the Depression, mortality rates in the United States fell by about 10 percent. The suicide rate actually soared between 1929, when the stock market crashed, and 1932, when Franklin D. Roosevelt was elected president. But the increase in suicides was more than offset by the “epidemiological transition” — improvements in hygiene that reduced deaths from infectious diseases like tuberculosis, pneumonia and influenza — and by a sharp drop in fatal traffic accidents, as Americans could not afford to drive. Comparing historical data across states, we estimate that every $100 in New Deal spending per capita was associated with a decline in pneumonia deaths of 18 per 100,000 people; a reduction in infant deaths of 18 per 1,000 live births; and a drop in suicides of 4 per 100,000 people. Our research suggests that investing $1 in public health programs can yield as much as $3 in economic growth. Public health investment not only saves lives in a recession, but can help spur economic recovery. These findings suggest that three principles should guide responses to economic crises. First, do no harm: if austerity were tested like a medication in a clinical trial, it would have been stopped long ago, given its deadly side effects. Each nation should establish a nonpartisan, independent Office of Health Responsibility, staffed by epidemiologists and economists, to evaluate the health effects of fiscal and monetary policies. Second, treat joblessness like the pandemic it is. Unemployment is a leading cause of depression, anxiety, alcoholism and suicidal thinking. Politicians in Finland and Sweden helped prevent depression and suicides during recessions by investing in “active labor-market programs” that targeted the newly unemployed and helped them find jobs quickly, with net economic benefits. Finally, expand investments in public health when times are bad. The cliché that an ounce of prevention is worth a pound of cure happens to be true. It is far more expensive to control an epidemic than to prevent one. New York City spent $1 billion in the mid-1990s to control an outbreak of drug-resistant tuberculosis. The drug-resistant strain resulted from the city’s failure to ensure that low-income tuberculosis patients completed their regimen of inexpensive generic medications. One need not be an economic ideologue — we certainly aren’t — to recognize that the price of austerity can be calculated in human lives. We are not exonerating poor policy decisions of the past or calling for universal debt forgiveness. It’s up to policy makers in America and Europe to figure out the right mix of fiscal and monetary policy. What we have found is that austerity — severe, immediate, indiscriminate cuts to social and health spending — is not only self-defeating, but fatal.

The Excel coding error

BAD MATH
http://www.newyorker.com/online/blogs/comment/2012/12/austerity-economics-doesnt-work.html
http://www.nextnewdeal.net/rortybomb/researchers-finally-replicated-reinhart-rogoff-and-there-are-serious-problems
http://www.theatlantic.com/business/archive/2013/04/who-is-defending-austerity-now/275200/
Who Is Defending Austerity Now?
The Excel error heard ’round the world has deficit-cutters backpedaling
by Matthew O’Brien  /  2013-04-22

Austerians have had their worst week since the last time GDP numbers came out for a country that’s tried austerity. But this time is, well, different. It’s not “just” that southern Europe is stuck in a depression and Britain is stuck in a no-growth trap. It’s that the very intellectual foundations of austerity are unraveling. In other words, economists are finding out that austerity doesn’t work in practice or in theory. What a difference an Excel coding error makes. Austerity has been a policy in search of a justification ever since it began in 2010. Back then, policymakers decided it was time for policy to go back to “normal” even though the economy hadn’t, because deficits just felt too big. The only thing they needed was a theory telling them why what they were doing made sense. Of course, this wasn’t easy when unemployment was still high, and interest rates couldn’t go any lower. Alberto Alesina and Silvia Ardagna took the first stab at it, arguing that reducing deficits would increase confidence and growth in the short-run. But this had the defect of being demonstrably untrue (in addition to being based off a naïve reading of the data). Countries that tried to aggressively cut their deficits amidst their slumps didn’t recover; they fell into even deeper slumps.


Enter Carmen Reinhart and Ken Rogoff. They gave austerity a new raison d’être by shifting the debate from the short-to-the-long-run. Reinhart and Rogoff acknowledged austerity would hurt today, but said it would help tomorrow — if it keeps governments from racking up debt of 90 percent of GDP, at which point growth supposedly slows dramatically. Now, this result was never more than just a correlation — slow growth more likely causes high debt than the reverse — but that didn’t stop policymakers from imputing totemic significance to it. That is, it became a “fact” that everybody who mattered knew was true. Except it wasn’t. Reinhart and Rogoff goofed. They accidentally excluded some data in one case, and used some wrong data in another; the former because of an Excel snafu. If you correct for these very basic errors, their correlation gets even weaker, and the growth tipping point at 90 percent of GDP disappears. In other words, there’s no there there anymore. Austerity is back to being a policy without a justification. Not only that, but, as Paul Krugman points out, Reinhart and Rogoff’s spreadsheet misadventure has been a kind of the-austerians-have-no-clothes moment. It’s been enough that even some rather unusual suspects have turned against cutting deficits now. For one, Stanford professor John Taylor claims L’affaire Excel is why the G20, the birthplace of the global austerity movement in 2010, was more muted on fiscal targets recently.

The discovery of errors in the Reinhart-Rogoff paper on the growth-debt nexus is already impacting policy. A participant in last Friday’s G20 meetings told me that the error was a factor in the decision to omit specific deficit or debt-to-GDP targets in the G20 communique.

For another, Bill Gross, the manager of the world’s largest bond fund, and who, as Joseph Cotterill of FT Alphaville points out, used to be quite the fan of British austerity, made a big about-face in an interview with the Financial Times on Monday:

The UK and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term, is the way to produce real growth. It is not. You’ve got to spend money.Bond investors want growth much like equity investors, and to the extent that too much austerity leads to recession or stagnation then credit spreads widen out — even if a country can print its own currency and write its own checks. In the long term it is important to be fiscal and austere. It is important to have a relatively average or low rate of debt to GDP. The question in terms of the long term and the short term is how quickly to do it.

 



Growth vigilantes are the new bond vigilantes. Gross thinks the boom, not the slump, is the time for austerity — which sounds an awful lot like you-know-who. The austerity fever has even broken in Europe. At least a bit. Now, eurocrats can’t say that austerity has been anything other than the best of all economic policies, but they can loosen the fiscal noose. And that’s what they might be doing, by giving countries more time and latitude to hit their deficit targets. Here’s how European Commission president José Manuel Barroso framed the issue on Monday:

While [austerity] is fundamentally right, I think it has reached its limits in many aspects. A policy to be successful not only has to be properly designed. It has to have the minimum of political and social support.

That’s not much, but it’s still much better than the growth-through-austerity plan Eurogroup president Jeroen Dijsselbloem was peddling on … Saturday. Now, Reinhart and Rogoff’s Excel imbroglio hasn’t exactly set off a new Keynesian moment. Governments aren’t going to suddenly take advantage of zero interest rates to start spending more to put people back to work. Stimulus is still a four-letter word. Indeed, the euro zone, Britain, and, to a lesser extent, the United States, are still focussed on reducing deficits above all else. But there’s a greater recognition that trying to cut deficits isn’t enough to cut debt burdens. You need growth too. In other words, people are remembering that there’s a denominator in the debt-to-GDP ratio. But austerity doesn’t just have a math problem. It has an image problem too. Just a week ago, Reinhart and Rogoff’s work was the one commandment of austerity: Thou shall not run up debt in excess of 90 percent of GDP. Wisdom didn’t get more conventional. What did this matter? Well, as Keynes famously observed, it’s better for reputation to fail conventionally than to succeed unconventionally. In other words, elites were happy to pursue obviously failed policies as long as they were the right failed policies. But now austerity doesn’t look so conventional. It looks like the punchline of a bad joke about Excel destroying the global economy. Maybe, just maybe, that will be enough to free us from some defunct economics.

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HARD TIMES TOKENS

& ‘MINT DROPS’

http://exonumismatics.com/survey/private.html#htt

The “Hard Times”, strictly speaking, referred to the “recession” of 1837-1838, when 90% of the factories and the United States closed following a banking crisis which was credited to Andrew Jackson. At the heart of this period, these large cent sized tokens became necessary substitutes for the government issued coins, which were to a large extent hoarded. This rich and varied series has achieved a substantial following, with some pieces commanding thousands of dollars. The series includes  politically oriented tokens, commercial advertising tokens, and anonymous monetary tokens. Perhaps the most enduring result of this series is emergence  of the donkey as the symbol of the Democratic Party.”

http://www.limunltd.com/numismatica/articles/hard-times-tokens.html

“The event that defines this era was the veto of the renewal of the charter of the Bank of the United States by Andrew Jackson in 1832. The BUS was slated to close in 1836, but Jackson didn’t wait. He withdrew Treasury money from the BUS. (Interestingly, the Treasury had an embarrassment of riches. The US was without debt.) However, when the BUS closed, credit collapsed. “I take the responsibilty”, says Andrew Jackson, standing in an empty treasure chest. Martin Van Buren’s ship of state has tattered sails on the obverse of a coin; the reverse shows Henry Clay’s sails billowing. “I follow in the steps of my illustrious predecessor”, says the jackass on the obverse while the reverse shows a treasure chest being borne off by a turtle. “Good for shinplasters” refers to worthless paper money used as stuffing in boots. Some, to avoid charges of counterfeiting bear the slogan “Millions for defense NOT ONE CENT for tribute.”

These tokens were about the size of a US Large Cent, just under 3 cm across, hefting over 10 grams. They were an east coast phenomenon, since metals, dies, etc., were found near industry. (Twenty five years later, Civil War tokens were issued from Michigan, Indiana, etc.) The fact that they are found today in middle grades around Fine indicates that they actually circulated in trade. America eventually recovered from the Panic of 1837. The debt rose. Finances moved from Chestnut Street in Philadelphia to Wall Street in New York. Hard times tokens retired to dressers and chests as government cents (soon smaller) circulated again.”


Hard Times Token, 1834

http://www.numismaticnews.net/article/tokens_merge_politics_with_business_need

“One of the more interesting aspects of American numismatics is the study of those tokens which served in place of coins. The best known of these were made in the late 1830s and today are called Hard Times Tokens because of the economic problems that affected the United States during that era. Prior to 1837 tokens were little used in the American marketplace but a series of events that began in 1834 was to change everything. In that year, after many years of debate, Congress finally reformed the gold coinage by lowering the weights. During the 1820s most coined gold had left the United States, leaving only silver and bank notes to conduct commercial affairs.

The act of June 1834 was meant to bring United States gold coins into line with the international ratio between gold and silver. The law of 1792 had set the ratio at 15 to 1 (i.e. one ounce of gold was worth 15 ounces of silver) but by the 1820s the world markets used ratios closer to 16 to 1. The result of the 1834 law was that gold flowed heavily into the United States because the ratio had been set a little too high, at 16 to 1. During 1835 and 1836 Mint and Treasury officials became concerned that the influx of gold was having the unwanted effect of driving out the silver coinage of the United States; foreign silver still arrived in considerable quantities, however. To solve this latest problem, Mint Director Robert M. Patterson prepared a comprehensive coinage bill that included a provision that slightly lowered the ratio, to about 15.9 to 1. The revised law was passed in January 1837 and proved beneficial. U.S. silver stopped leaving the country while gold continued to arrive.

During early 1837 the United States was perhaps the best supplied with gold and silver coins than had ever been the case in its history up to that time. But all of this would soon end, due to a series of blunders made by the states, as well as the federal government. The early 1830s witnessed a great expansion of business and with this came a call for roads and canals so that goods could be gotten to market and raw materials brought from the interior to the coastal manufacturing plants. All of this initiated massive borrowing by the states for these internal improvements. This spending created inflation and increased issues of paper money. The expansion of the roads and canals played out against another backdrop, the attack by President Andrew Jackson on the Bank of the United States. This bank, which had been chartered in 1816 for 20 years, served the nation well in forcing private banks to honor their paper currency with specie, usually silver but after 1834 in gold if desired.

The strong position of the Bank of the United States, however, inevitably led to political involvement and the bank leadership was openly against the Jackson Administration. This President felt the same about the bank and was determined to destroy it. The early 1830s saw a bitter struggle between the bank and Jackson. The bank lost. One of the strategies used by the President to undermine the bank was the removal of federal deposits (gold and silver coin). Such funds were placed in private banks friendly to the administration, called “pet banks” by Jackson’s enemies. These banks were sometimes poorly managed and the influx of hard money led them to issue loans to politically connected individuals without the proper collateral.


Hard Times Token, 1834

The federal government had also stepped in to make matters worse, much worse. Jackson had long felt that paper money, in particular that was issued by private banks, was holding back the economic expansion of the United States; the President believed that bank notes of less than $20 in value ought not to be issued. The problem with this was that was a large number of notes of less than $5 value in daily use, an unintended result of the monies going to pet banks. The disaster waiting to happen was politely termed the Specie Circular and had been issued by Treasury Secretary Levi Woodbury on July 11, 1836. It required that land purchases on the frontier be made strictly in gold or silver coin. Some exceptions were made for the use of paper money on a temporary basis but the intent was clearly to force paper money out of daily use. At the same time, the massive influx of gold into the United States from 1834 through 1836 caused problems in Europe, especially England. The Bank of England responded to the loss of gold by raising the discount rate to 5 percent in September 1836. This caused a reverse flow of gold to Great Britain although on a limited basis at first. By the spring of 1837 gold was leaving for England at a growing rate. The cumulative effect of the Specie Circular, funds to pet banks, and the English discount rate came crashing down in May 1837. On May 10 the New York banks suspended specie payments for their notes, triggering a run on banks throughout the United States. The financial upheaval forced many businesses to fail and a large number of workmen were laid off. The Panic of 1837, as it came to be known, was a severe recession but not a depression. Gold and silver were now rarely used in commerce, their place being taken by bank notes as well as scrip for values as low as a few cents. The government had meant well but failed to foresee what would happen by acting too quickly.

As in all such situations a number of people saw the opportunity not only to make money, but score political points against their enemies at the same time. It is hard to say which aim was the most important. The token coinage which resulted succeeded very well in both aims, much to the irritation of the supporters of Andrew Jackson and his hand-picked successor, Martin Van Buren. Van Buren had taken the oath of office as President on March 4, 1837, just in time to reap the whirlwind caused by the earlier mistakes. On the eve of the token explosion in 1837 the United States Mint had no idea of what would happen. But it did have a vested interest in seeing to it that the tokens were neither issued nor used in the marketplace. The reason was purely economic in that the Mint derived a considerable profit from issuing copper coins to the public. There was, however, a difficult problem that the Mint had in dealing with the token outbreak. Copper coins were not legal tender and not convertible into gold or silver except at the so-called exchanges, where copper cents could be converted to silver for a fee of several percent. Merchants had to pay their bills in specie (until the banks suspended specie payments) so the accumulation of United States copper coins was not exactly a blessing. (Legal tender status was not given to minor coins until 1864.) Just when the first Hard Times Tokens began to be seen in the marketplace is uncertain, but distribution of these pieces was well under way by the summer of 1837, perhaps as early as mid July. They apparently first appeared in New York City but this is also not quite certain and is based on the fact that more varieties of tokens are known for this area.

Whatever the exact sequence of events, they were unknown to Mint Director Robert M. Patterson until the fall of 1837. He noticed, in a local newspaper, an advertisement offering tokens for sale at a price well under the official value of a cent. Considering that the Mint needed the profit on copper coinage to offset other expenses, he was less than pleased at what he saw. Dr. Patterson sent a Mint employee to purchase a few of the tokens that had been advertised and then visited the United States district attorney, whose name was Reed. Patterson told Mr. Reed that the tokens in question were “spurious” and that the 1825 anti-counterfeiting statute was applicable in this case. Patterson testified before a federal grand jury and that body agreed with him; federal officials now ordered the local merchant to stop selling tokens on pain of prosecution. At first the Mint director believed that the token episode was an isolated one. However, he soon learned that he had witnessed but a small part of the business and that it was widespread throughout New England and New York State. Patterson then began writing letters to friends asking them to investigate the matter and report back to him. By late November Patterson had learned how much of a nuisance the tokens had become, at least in his mind. On Dec. 2, 1837, he wrote Treasury Secretary Woodbury on what he viewed as a worsening situation as the Mint’s profits on copper coinage were being eroded. Patterson began his letter by recounting the incident with the Philadelphia merchant and the grand jury. Patterson noted that similar problems were encountered at Baltimore but that the major problem was in New York City where the tokens were not only manufactured but used widely in ordinary business transactions. One friend of the director’s in New York had picked up 10 different kinds of tokens and sent them to the Mint for examination. The Mint director found that at least three of the tokens had been made at the same private mint because the design was similar. In particular Patterson mentioned the following tokens (or “store cards” as we might term them now): New York Joint Stock Exchange Company, Robinson, Jones & Company, and Ezra Sweet. He went on to note that a newspaper, the New York Observer, was reporting numerous kinds of such pieces in daily use throughout the city. According to the newspaper account, the tokens were sold for about 62 cents per hundred pieces, a nice profit when passed on for a cent.


“In its issue of Nov. 23, 1837, the Emancipator ran an advertisement offering the Female Slave tokens at $1 per hundred. Made of good copper and with a device on reverse similar to legal U.S. cents, they sold well. The ad also said that it was proposed to issue Kneeling Male Slave tokens as well, and this accounts for the few pattern pieces of HT 82, which were never produced for circulation.”
http://www.hardtimestokens.com/ht81details.html

According to Patterson, an anti-slavery newspaper, the Emancipator, reported that pieces similar to a cent of a “new emission” were being sold at the offices of the Anti-Slavery League on Nassau Street. The paper described the devices as being anti-slavery in nature. There is one anti-slavery token listed by Lyman Low (No. 54), in his study of Hard Times Tokens, which seems to fit the given conditions except that it is dated 1838. Perhaps the issuers felt that it would be coming out so late in 1837 that it ought to be given the next year’s date. The listing made by Dr. Patterson show another interesting aspect of the Hard Times Tokens in general. The date, if prior to 1837, may well mean nothing more than some important year connected with the business that issued them. The Robinson, Jones, & Company piece, for example, uses an 1833 date to show that it received a medal that year for a button display. Patterson also noted that tokens were well used in Boston though he did not give any names. The Boston tokens, as with most of the others, were lightweight compared to the genuine cent, averaging perhaps 70 percent of the weight. He thought that manufacturing costs were about 50 cents, or a bit more, for a hundred pieces which gave a decent profit when they were later sold at about 62 cents per hundred. The dies were crude and cheaply made, which helped hold costs down. Not only did the merchants get “cents” at a strong discount but most of these tokens had the added advantage of advertising their businesses. As far as they were concerned it was a win-win situation. Dr. Patterson, however, had a slightly different opinion.

In the meantime Treasury Secretary Woodbury had taken Patterson’s letter under consideration. On Dec. 4 he replied, noting that he had just written the federal attorneys at New York and Baltimore; he did not mention Boston but this was probably done as well. The attorneys were instructed to take such steps as to eradicate the problem. December 6 saw Patterson writing Woodbury again, this time to report that he had seen another 11 tokens, primarily from New York. His list included token issuers Henry Anderson, H. Crossman, Maycock & Company, Merchants Exchange, and Abraham Riker. These later tokens were somewhat heavier, though still light by as much as 32 grains below the legal standard of 168 grains. In an 1849 letter discussing these tokens Dr. Patterson mentioned that the legal attacks by federal attorneys had put a stop to the business. It is not clear from the letter, however, if the political tokens were interdicted by the same methods since no names appeared on these as issuers. It is believed that very few merchant tokens were struck after the spring of 1838. At the same time as the merchant pieces were issued, political opportunists saw the chance to not only attack Presidents Jackson and Van Buren but make a tidy profit in the process. Quite a few varieties of the political tokens were issued and are collected today by specialists.

It is of interest to note that the tokens of 1837-1838 are known as Hard Times Tokens, but this is a little less than accurate. The recession that started in May 1837 was essentially over within a year; New York banks resumed specie payments in May 1838. In June 1839, however, matters suddenly got worse and this time it was a full-blown depression with large numbers thrown out of work. The underlying cause of this second round of economic bad news was primarily the English discount rate, as too much gold had again left the island kingdom. This time the problem lasted until 1842, when important discoveries of gold in Russian Siberia provided massive quantities of the yellow metal for world markets. Hard Times Tokens are but a footnote in the numismatic history of the United States yet played a key role in the marketplace for a few months. They deserve to be better known.”

 http://www.hardtimestokens.com/fordintro.html

“Hard Times tokens represent an unusual period in the financial history of the United States. President Jackson, in his campaign of 1832, was vehemently opposed to the Second Bank of the United States. This central bank in Philadelphia was said by opponents to control the money supply in favor of the wealthy merchants. Populist Jackson vowed to abolish it. The bank issued its own currency, which quickly became the most stable paper money in the land. It exercised considerable control over credit and interest rates throughout the country. When Jackson was reelected, he tried to abolish the bank. Finally, in 1837 he succeeded in accomplishing his goal. In the meanwhile, the president of the bank, Nicholas Biddle, tightened the money supply, which then lead to a financial panic. Other banks issued paper money with little or no gold or silver backing and quickly folded. By 1837 over 100 banks had gone under. The small change necessary for commerce began to disappear. Tokens were issued to solve the needs of the public. They were frequently political or satirical in nature. The tokens of the period 1832-1844, when Van Buren became president, are classified as the Hard Time issues.”

02-

Mint Drop Token, 1837

“”Bentonian Currency” was hard money as opposed to paper. The crash of 1837 and the Hard Times which followed were by no means solely due as the Wing leaders would have it believed–to the overthrow of their policy and the “mint drops” or hard money of Jackson and Van Buren: they were only the culmination of evils which had long been threatening disaster.  The Panic of 1837 resulted in hoarding of coins in circulation. The withdrawal of public funds from the banks led to a contraction of the currency and great changes in apparent values, which were the apparent causes of “Hard Times.” To fill the need for small change in circulation, a wide variety of copper tokens appeared in 1837.”


Illustrious Predecessor Token, 1837

http://www.collectorsquest.com/blog/2008/11/13/martin-van-buren-and-the-hard-times/

“Because Van Buren was a supporter of Jackson — going so far as to state his intent to follow in Jackson’s footprints during his inaguration — Van Buren was a solid target for people’s resentment due to the failing economy.   The Hard Times tokens were minted in cheap copper and bronze blends by private businesses and infividuals, and enthusiastically decorated with political satire of all kinds.   Van Buren’s face didn’t adorn many (if any)  of these tokens, although caricatures of Jackson were quite common.   Mostly, Van Buren was mentioned as Bad Things To Come, represented by things such as the ship “Experiment” seen to the left, breaking up in stormy seas, representing the attempt to do without banks, despite the lack of previous evidence that it works.    Van Buren’s inauguration statement, “I follow in the footsteps of my illustrious predecessor” stuck with him — but were combined with a picture of a jackass to show just what his opponents thought of him.   That donkey, originally used as a visual ersatz Andrew Jackson, eventually became the way the public saw the Democrat party, and was revised to be a donkey for today’s Democrat logo.  These Hard Times Tokens were some of the first lasting representations of the Democrats as a donkey.

These tokens weren’t exactly currency, although some businesses accepted them in lieu of actual monies, seeing that due to the bank’s actions and Jackson’s opposition to federal currency these Hard Times tokens had just about as much monetary value as the so-called ‘real thing’.  Mostly, they were passed around like political buttons today, demonstrating political affiliation and making a statement against the government at the time.”

hard times

“I take the responsibility,” says Andrew Jackson, standing in an empty treasure chest. Martin Van Buren’s ship of state has tattered sails on the obverse of a coin; the reverse shows Henry Clay’s sails billowing. “I follow in the steps of my illustrious predecessor,” says the jackass on the obverse while the reverse shows a treasure chest being borne off by a turtle. “Good for shinplasters” refers to worthless paper money used as stuffing in boots. Many, to avoid charges of counterfeiting, bear the slogan “Millions for defense NOT ONE CENT for tribute.” In 1834, an economic downturn on the English stock market brought “hard times” to both Canada and the United States. However, the event that defines the start of this era in the USA was a clash between the Bank of the United States and President Andrew Jackson in 1832.

The BUS was a semi-private institution, the invention of Alexander Hamilton, and precursor to the Federal Reserve. It was slated for renewal in 1836, but Jackson didn’t wait. He withdrew US Treasury money from the BUS and deposited it in local banks. Interestingly, the Treasury had an embarrassment of riches, about $17 million in surplus gold and silver. Also, the US government was without debt. However, when the BUS closed, credit collapsed. Political activists and merchants created these 1-cent tokens to take up the slack. They were an East Coast phenomenon, since metals, dies, etc., required industry. (Twenty five years later, Civil War tokens were issued from Michigan, Illinois and Wisconsin in the West.) The fact that most types of Hard Times Token can be found today in grades from Fine down to Good indicates that they actually circulated in trade.

The standard reference manual for this series is Hard Times Tokens 1832-1834 by Russell Rulau. His work is based on a book from the 1899 by Lyman H. Low. Rulau includes the Low numbers in his catalog. He estimates retail price. He has added many new items over the years with each new addition. The book also approximates the rarity, R1 (common) to R8 (perhaps unique). Some of these coins are objectively rare and highly valued outside the world of numismatics. “Am I not a Woman” is the motto on an Abolitionist token. “Am I not a Man” is its companion piece. Professional Afro-Americans and full- time liberals have bid these up to about $80 in better grade and perhaps over $10,000 in uncirculated. These two are difficult to find in low grade because they have been popular with collectors for over 150 years.

You can find common Hard Times Tokens in almost any dealer’s inventory. You will find them priced all over the range depending on the dealer’s willingness to own them. You will have to use basic numismatic principles to grade them. Although they rate a general entry in The Red Book, not all services will slab them. Commons in low grade are no more than a $5 item, or about $15 below uncirculated. America eventually recovered from the Panic of 1837. The Federal Debt rose. Finances moved from Chestnut Street in Philadelphia to Wall Street in New York. Hard Times Tokens retired to dressers and chests as government cents (soon smaller) circulated again. If you really love American History and really treasure the values that define our nation, you will find a wealth of pride in these artifacts.

Matthew Hincman coins.
“Pomme de Terre, Pomme en l’Air.” Coins by Matthew Hincman

MAKE YR OWN
http://www.npr.org/blogs/money/2009/10/hard_times_coins.html
Coins For Hard Times: Artist Makes His Own Money
by David Kestenbaum /  October 05, 2009

I ran into artist Matthew Hincman last week, who has decided that things have gotten bad enough that it’s time to create your own money. Hincman designed the coin above and had 1,200 minted in copper, which he plans to leave on the ground at random locations for people to pick up and puzzle over. He says he modeled the coins after the Hard Times Tokens that circulated in the 1800’s, many of them satirical. Hincman has no plans to control the money supply at large. In fact, he’s trying to stay out of trouble. For one recent project, he installed an unusual version of the standard park bench — it was impounded by the authorities, though they liked it so much, it’s now back in place. Hincman figures there’s no law against leaving coins around. He says sometimes drops to one knee and pretends to be tying his shoe, then casually deposits one on the sidewalk.

PROPOSED BARTER TOKEN (ONGOING)
https://internationaldrinkticket.wordpress.com/
DESIGN CONTEST WINNER (ANONYMOUS) : 1st EDITION 2009

IDTfront
IDTback
Glow-in-the-Dark to prevent ‘counterfeiting’

Open Call for Entries: “The ‘producers’ of the International Drink Ticket herein announce a design contest for proposals to replace the current ‘Spanglish’ face of the Ticket, not pictured. The winning designer will get a small share (percentage) of any future known-universe profit. The winning design will be used to create the mold that is used to emboss one side of the IDT (the ‘Chinglish’ side will remain the same). The ‘Spanglish’ side may include a picture, as on a coin, such as Obama or a bird etc, but at minimum must include (English or Spanish) impressions that read “Int’l Drink Ticket” + “Brooklyn Mint” + the current year: “2009″.”

“The International Drink Ticket, printed in editions, is a currency alternative sincerely offered to replace the collapsed dollar (should the US dollar irrevocably fail). All over the world, even if one abstains, everyone knows someone who drinks: one International Drink Ticket is worth one drink, that is to say, one 4-count pour (using a pour spigot) of bottom shelf liquor (non-well), or a bottled beer. Everything else is negotiable. The IDT also easily gets used as barter coin. Common bartender uses are 2 cans of beer for one IDT, or sometimes two 2-count shots. One IDT currently is worth around USD$5 in NYC but this value fluctuates regionally. Design entries should be big enough to 3-D print, and fully detailed.” [Please post proposal editions below as comments.]

BY Pamela G. Parker
design by Pamela G. Parker

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REMEMBER WIRES?

CROWD-FUNDING ERIC DOLLARD (as in BUILD HIM a LAB)
http://www.indiegogo.com/projects/270537/
for $120 Donation = Aether Mage Training Kit (41 of 50 claimed)

“A collection of 5 books Eric has deemed essential to the understanding of working with the etheric formative forces, the type of electricity that Tesla discovered being one of these lost forces. These books are volumes of lost technology. One is over 1500 pages long and combined these books are almost 400 years old. Eric told me ‘Don’t bother talking to me about this stuff until you have read these'”

“Here are some amazing experiments proving Tesla’s work we did at Borderland labs in the late 1980’s.
* The One-Wire Electrical Transmission System
* The Wireless Power Transmission System
* Transmission of Direct Current through Space
* A novel form of electric light powered by a single wire which attracts material objects but repels a human hand!
Also presented is a longitudinal ground broadcast from our lab to a nearby beach, using the Pacific Ocean as an antenna. These experiments can be reproduced by any competent researcher, there are no secrets here!”


http://www.gestaltreality.com/energy-synthesis/eric-dollard/resources/

As a fifteen year old he got his first job with Americas biggest Radio corporation RCA, as a 16 year old he graduated high-school as a full fledged engineer and began working for Bell Labs and then went on to conquer every technical challenge the US Navy threw at him. Eric Dollard is without a doubt the Greatest Hacker Alive, much as Tesla was the greatest Hacker who ever lived. Eric Dollard has dedicated his life to discovering scientific truth to better humanity. He succeeded beyond all expectations and even surpassed Nikola Tesla. His reward has been tyranny and poverty. The work of Eric Dollard was the very pinnacle of any available material. As I got closer to his work I began to wonder what he was up to. I was shocked and horrified to learn that he was now homeless. His last lab having been destroyed and all his work stolen. There are active agents of suppression working against people like Eric Dollard and Tesla before him. These agents are shadowy and have great power. They can shatter the best laid plans of the individual. My hope is that we the people working together can triumph over them. Those that don’t believe that such powers exist should look for another worthy campaign to aid. Those looking at this as an investment, look elsewhere as this is not a mere charity campaign but a bold declaration of defiance to the powers that be.

All the funds will go to Eric Dollard. If we do not meet the goal all the funds also go to Eric Dollard. The goal is just my humble estimation of how much the legal proceedings will be for a few months and hopefully to get Eric off the street. The more we get the closer we can get Eric back his lab or setup a new lab. One of the most respected venture capitlists in this field said that “Eric has done more on foodstamps than all my other investments” This is what caught my eye and it is very true. Eric can make do with very little but I estimate it will take around $200,000 to set him up with a functioning bare bones lab again.

SUPPRESSED TECHNOLOGIES
http://www.gestaltreality.com/energy-synthesis/
http://www.gestaltreality.com/energy-synthesis/eric-dollard/
http://www.gestaltreality.com/energy-synthesis/eric-dollard/the-work-of-eric-dollard-by-tom-brown/
The Work Of Eric Dollard
by Tom Brown / 09-09-1988

Eric Dollard is a scientist of the type found in America around the turn of the century. He is an electrical engineer of the old school relying on experience with equipment rather than acceptance of mathematical considerations. He has studied the works of Nikola Tesla and Charles Proteus Steinmetz extensively and has applied their principles to his research. He has advanced the mathematical works of the early electrical pioneers to the stage of pragmatic industrial engineering. This was only possible by bypassing all modern relativistic theories and concepts of electrons flowing through wires, and instead maintaining the ether theories from which modern electrical equipment originally emerged. Eric’s work is a direct continuation of the works of Tesla, Steinmetz, Oliver Heaviside, Philo Farnsworth II, and other energy pioneers whose work can be reproduced and used.

Eric has written over 30 notebooks of material covering his years of research. Five of these notebooks have been published by Borderland Sciences Research Foundation: Condensed Intro To Tesla Transformers; Dielectric & Magnetic Discharges In Electrical Windings; Symbolic Representation of Alternating Electric Waves; Symbolic Representation of the Generalized Electric Wave (In Time); and The Theory of Wireless Power. These books are all practical and engineering oriented. The Alternating Electric Waves paper, presenting Eric’s Four Quadrant Theory of Electricity, was written after his discovery of how to generate excess magnetizing power in an industrial situation (using synchronous motors in a huge shipyard) and make the KVAR (Kilo Volt Amperes Reactive) meter turn backwards. Eric discovered that these industrial meters are pinned so that they will not turn backwards, but they can be stopped, creating readily realizable savings for the industrialist.

Further development of Eric’s ideas has been presented at the U.S.P.A. Conference in 1987 in his talk, Representations of Electric Induction, which also included a demonstration of the Tesla One-Wire Transmission of Electricity. The One-Wire Electric Transmission has direct commercial applications in the realm of real full spectrum incandescent lighting, which could be used in operating rooms, highway lighting, schoolrooms, offices, etc. In Eric’s talk at the 1988 International Tesla Symposium he presented the engineering mathematics to continue work on Tesla’s oscillating coils while shedding the misconceptions attached by modern physics which have brought real research into Tesla to a dead halt. The engineering mathematics developed by Eric will allow researchers to manufacture coils with practical uses rather than just making sparks.

The broadcasting of electricity, distortion free worldwide radio transmission, and single element full-spectrum incandescent lamps are just a few of the spinoffs taken from the realm of abstraction and brought to the reality of the lab bench by Eric’s work, but perhaps the most commercial of all is what Eric terms, “The Ultimate Sound System”. Eric has developed the principle and the first prototypes of distortion free audio amplification. This discovery, if properly applied, has the potential to revolutionize the entire audio industry, as well as the reality of related spinoffs into the communications and power transmission industries. In Borderland’s videotape, Transverse & Longitudinal Electric Waves, Eric presents practical uses of Tesla’s theories for power transmission, and in the process opens up, through the use of clear, reproducible experiments, aspects of electricity which have only been partially theorized in the past. Extensions of his industrial power work are presented with practical applications for increased power efficiency in industrial situations.

In brief, Eric Dollard has single-handedly carried the works of the early electrical pioneers to a stage where they can be applied to everyday uses. There is no false promise of “free energy” sometime in the future, just a better technology we can use NOW!


Eric made an excellent video about the truth of the Tesla Marconi radio station and why it was shut down. When this video was made Eric still did not know the full extent of the suppression. The books of Gerry Vassilatos, Secrets of Cold war Technology and the Vril Compendium, showed him just how far RCA and the shadowy organizations funded by the central banking cartel went to suppress Tesla’s longitudinal wave technology.

TESLA ROUND 2
http://ericdollard.com/
http://ericdollard.com/sample-page/
http://www.jinnwe.com/quest.php?id=1002
The Case of Eric Dollard

Nikola Tesla single handedly gave us the technology that has created our entire power grid and communications systems.  As the pinnacle of the evolution of the Victorian scientists Tesla aspired to create a system that would light up the entire world without wires. In the end a combination of his own wreck less decisions and the agenda of the moneyed elite brought upon his downfall and banishment. Undaunted by this, Eric’s set out to recreate all of Tesla’s technology and to design a system of self powering, faster than light and lossless  communication. Eric was successful in rediscovering Tesla’s core work, yet he is now living out in the desert. His laboratory and all of his possessions taken were from him. Eric’s story is the story of all those who fight for truth in defiance of power. How his story ends is up to us.

As a fifteen year old Eric was granted free access to RCA’s great Bolinas Radio Facility. RCA, America’s biggest Radio station at the time was happy to grand the young prodigy complete access to all of their facilities for his research into high frequency alternating current. Eric wasn’t on the payroll for legal reasons but those in the know were aware of how how great a competitive advantage Eric Dollard could give them. Bell Telephone quickly snatched him up right out of High School and also gave him free reign to persue his experiments, while not officially on the payroll. Eric was still only sixteen. Eric left high school with three certifications as a full fledged engineer at the age of sixteen. Bell Labs called him their “Golden boy” and “Angel of Electricity”.

To pursue true science is to pursue truth and all truth seekers are to tested. Eric learned this a hard way at an early age when his parents wrecked his garage laboratory and kicked him out of the house. This was to be the first time his laboratory and work would be deliberately destroyed. In desperation he enlisted in the US Navy. They gladly accepted the young recruit and after aptitude testing referred to him as “God’s gift to the Navy”.  He solved their “impossible problems” with ease and later returned to RCA to save their network from the rapidly advancing threat of satellite communications.

Eric was happy to be back at the massive Bolinas station as he was beginning to see just how special it was among radio facilities. The great Bolinas Radio station, also called KPH was one of the oldest in the world and it held a secret that had been covered up for decades. He began to see that much was being hidden about how radio really worked. With his free time he began peering into the forbidden history of radio. Then one day he read a copy of John O’Neill’s book Prodigal Genius.  The suppressed history of Nikola Tesla was laid before him. Eric began to see how the radio system as it was now was merely a shadow of what it was intended to be and once was.

Eric began reading all of Tesla’s patents and lectures. What he discovered was that after reinventing alternating current in the 1890’s Tesla then discovered an entirely new kind of electricity that was not electro magnetic in origin, hence completely different from the system we use today. This was confirmed by reading the court transcripts from the patent trial between Tesla and Marconi, where Tesla stated many times that his technology was not electro magnetic, a statement that at the time fell on deaf ears. Eric, however, heard him loud and clear. If Tesla’s discovery did not use electro magnetic waves then what kind of waves where they and how was it different? Eric did not turn to the false path of theorizing with nebulous mathematics as our modern day physics would but to experimentation, as Tesla himself always did. From his lab in California and working the salvage business  Eric managed to recreate all of Tesla’s key experiments. What he discovered would come as a surprise to even the most learned Tesla fan.

Most scientists associate Tesla’s work with Frankenstein movies the same way  children do. Even the most avid Tesla fans build Telsa Coils for Halloween entertainment and completely miss the point of his invention.
Tesla’s system of wireless transmission of power and communications was not through the sky, but through the earth, as in the actual ground. While it did naturally reach out into the atmosphere, the earth itself was the main conductor.
Tesla discovered a completely new kind of electrical energy, one that was faster than the speed of light and did not lose strength as it was transmitted. hence it was NOT electro magnetic. It has come to be called scalar waves by some but the proper term is longitudinal waves. Eric calls this energy in electrical form “dielectricity”
This new energy could send power through the earth and the earth amplified this energy as it traveled, meaning that one transmitting station could send one million volts through the ground and 5 receiving stations whether around the neighborhood or around the world could each receive one million volts, for a total of five million volts of power!
This energy could be used to send communications as well as power, and this was the case from 1900 to the 1919’s until RCA refitted the landmark Bolinas plant and suppressed the Tesla longitudinal technology.

Tesla’s secret project was about far more than simply transmitting electricity without wires. It was about all communications at faster than light speeds and giving energy away to all humanity for nothing. Tesla figured it all out in theory and tested it at Colorado Springs but did not complete his system at Wardenclyffee. Eric Dollard has figured out how to implement the core of these ideas into a viable system. The first major radio installation in the USA was at Bolinas California. The same station where Eric got his start as a fifteen year old engineer working for RCA. Bolinas was first built by Italian inventor Marconi in California in 1913. Marconi used 17 of Tesla’s patents to build this system and it worked. This station used massive plates in the ground, one buried in the ocean near the fault lines, to transmit radio waves that ALSO carried power, not enough to power homes but certainly enough to power radios. This is why the old crystal radio sets of the 20’s and 30’s had bright clear sound with NO BATTERY or WIRE to the WALL OUTLET!  You can still make radio wave powered radios using bottles and wires that work with no batteries our wall outlet. The science is very real.


This old crystal radio set from the 20s used to work LOUD and clear using the radio signals sent in that era, no wall outlet. Those radio stations have long since been taken down…

KPH
The Bolinas Tesla/Marconi radio station is also known as KPH by those old timers who still know of it’s significance. The secret this facility holds is the key to unlocking faster than light radio, wireless power transmission and free energy synthesis. Eric has dedicated 2/3rds of his life trying to save this secret and resurrect it for the benefit of mankind. Thus we can now see that the first radio stations in the USA were leading back to Tesla’s free power transmission system that sent radio waves using Tesla’s method. Marconi did not go all the way and build it as Tesla envisioned which was to broadcast  power to a network of such stations worldwide. The Tesla Marconi station sent out radio waves using Tesla’s longitudinal wave technology. These waves provided enough power to amplify the signals it sent without any external electricity, even worse the existence of such technology left the door wide open for others to naturally pursue the transmission of energy via radio. This was far too threatening for the energy industry and they had Marconi’s station shut down and replaced with an inferior system of electro magnetic waves, which is what we use today.


The Alexanderson Antennas MTA’s hold the secret to electrostatic non wave length radio technology. Faster than light, lossless and long suppressed.

Ernest Alexanderson was the protege of Charles Steinmetz. His generators based on Tesla tech are extremely advanced even today.

This plant was further augmented with the technology of another brilliant radio engineer by the name of Alexandersson. It became such a prized jewel into crown of the military industrial complex that it’s secret had to be hidden away. The true value of the Bolinas Radio station can now be seen.Not only did RCA bury it;s significance but other shadowy NGO’s such as Commonwael of Bolinas, California made it there prime directive to literally bury the facility under a pile of dirt and garbage. Commonwael poses as a harmless NGO but this belies it’s true purpose as a front of the central banking cartel to suppress forbidden technologies.

the TESLA MYSTIQUE
Tesla is now wrapped within the cloak of a deep mystique as a flawless genius who invented AC current, radio, electricity and pretty much everything else. Tesla was indeed a magnificent genius but he was far from perfect. People blame J.P. Morgan for crushing his dream at Wardenclyffe but they fail to do their research, read the book Empire of Lights, and see that Tesla had received monies from Morgan to develop telegraphic radio and from Astor for the florescent light bulk yet Tesla in his own idealistic way spent the money instead to further his own theoretical research, which lead not to the promised deliverables but to a lack of confidence amongst him and his investors instead. The mystique buries Tesla under a mountain of sugar and keeps his admirers from seeing the true and revolutionary nature of his work.

Eric Dollard claims that the vast majority of Tesla societies are dis-information fronts funded and controlled by the very same interests that suppressed Tesla’s work. Eric gave several long and deep presentations on the truth of Tesla’s work at the San Francisco Tesla Society. To this day these video presentations and even a book that Eric had written are being withheld from the Public by the San Francisco Tesla Society, a now revealed to be a front for the Lawrence Livermore National Labs. Those who wish to know the truth about radio and Tesla’s real work should connect Eric Dollard with an attorney willing to sue the San Francisco Tesla Society in court to retrieve the videos and book.

POLITICS of AETHER
After Eric confirmed and double checked all these findings he was left to accept a very painful political truth. All of Tesla’s work with this new type of electricity and wave form had been actively suppressed. Despite this new type of energy wave being far more cost efficient and effective it was banned from all commercial use and banished from textbooks as well. The scientific community has disavowed any knowledge of it, why? This original form of transmission, called dielectric wave forms, if allowed to proliferate through the industry would have naturally lead to the transmission  and synthesis of energy at no cost. The very intellectual admission of the existence of this type of energy was the admission that there was energy all around us. Victorian scientists up until the twentieth  century called this energy field that permeated the entire universe, the aether. Tesla believed that his system of longitudinal electricity worked because of the aether. The aether was a dangerous concept to the energy barons such as Rockefeller, Morgan and the central bankers that funded them such as the Rothschilds. It was not enough to destroy Nikola Tesla, and to tear down any trace of such technology such as the Marconi radio plants built with Tesla and Alexandersson dielectric technology. The powers that be had to completely destroy the very idea of the aether and ensure that free energy would never again threaten their monopoly.

Physics was hijacked and turned into a religious cult of personality. Nebulous theories and quirky characters were constructed to misinform all generations afterwards. Eric Dollard has not been shy in his writings and named The Theory of Relativity and Einstein as the main constructs to this end. Many other scientists support him and there is a growing movement to liberate physics from pseudo psychics and the high priests of nebulous pseudoscientific banker funded dogma. Time magazine, The NY Times and many other publications have recently published articles citing the evidence that Einstein was wrong. Einstein was proven wrong the moment he introduced his theory and has been proven wrong countless times since, yet we still hail him as a saint of science. The suppression is inter generational and Einstein was only the first pillar of the deception. Carl Sagan, Stephen Hawking and most recently Michio Kaku have taken up the flag of obfuscated mysticism in a desperate effort to suppress aether theory. All this at the bidding of the same central banking giants which sprang from the Rothchilds and Rockefellers. Knowing this and knowing the fate of Tesla and all those that tried after him to recreate his work was not enough to stop Mr. Dollard. Eric went about his work and peered even more deeply into the past.

BACH & ORGANIC ELECTRICITY
Science and logic alone were not enough to comprehend the aether and how energy flowed through it and from within it. Eric looked to the legendary mathematician Charles P Steinmetz and to Oliver Heaviside for answers. Their censored writings revealed that they too had taken this battle for truth upon themselves and were met with the same resistance. In their mathematics and Tesla’s experiments lie the key to unlocking the aether but there was one element missing to decipher the riddle. Johannes Sebastian Bach and his music held the answer. The multi-dimensional  organ music of Bach began to reveal an organic matrix to Eric. He began to see the work of Bach as a culmination of the same thread of natural science exposed by Pythagoras of Samos. The aether and the energy it produced was not some mechanical construct and thus pure mechanics and mathematics alone could not represent it. The aether was an organic energy matrix and it was as responsible for the static electricity in the air as it was for the plants that grow from the ground and the animals that walk the earth. Eric had begun to step out of the world of pure science and into the metaphysical.

Eric noticed in his experiments that when he ran this special electricity of Tesla’s through wood or other organic matter that it would burn tree like etchings into it. They looked like the branches of trees and their dimensions reflected the golden ratio. Going a step further Eric noticed that when this energy was transmitted within vacuum bulbs that galactic formations and cosmic arrangements would form within the bulbs. It was as if he was looking through the Hubble telescope through a light bulb on his lab bench. Further experiments revealed the fractal organic nature of all matter. The aether theory became all the stronger the more one compared the cosmic and organic. Eric would progress even further into the study of the ether. The more he experimented with channeling dielectricty through various enclosed spaces the more he uncovered the truth behind the “Theory of Creation” The Big Bang was a big Hoax and Einstein, Darwin and the whole lot of them were crushed by his experiments. Eric Dollard now became a very dangerous man to the establishment as his scientifically proven and tested research could destroy the web of lies which they had carefully built for over the past three hundred years. The aether was ever present and could project it’s formative powers to any proportions. The deeper he went into true science the more that he saw that science and spirituality were one and the same. He began to see quantum physics as a misinformation campaign for true aetheric science. The mystics of the past knew more of true science than the quantum physics of today.


The shape on the left has been burned into wood by a Tesla coil. The right is the special kind of electricity Tesla discovered in its pure raw form. Notice the organic shape.

GROUND RADIO
A retired aerospace technician named Walter J De-Roche, who would die under suspicious circumstances, left Eric a facility which was once used for Ionospheric and Telluric research. This was the last research laboratory Eric had and was located at Landers California. A wealthy investor in the alternative science scene once commented that “Eric Dollard has done more with food stamps than you all have with millions” This kind of praise was not an understatement as Eric single handedly transformed the long abandoned Landers facility into a radio base to serve the country of San Bernadino and the 29 Palms Marine Corp Base as a civil defense station and earthquake warning system. On a shoestring budget Eric had taken Telluric ,relating to the study of electricity within the earth, research to new heights and his facility could even detect underground nuclear blasts from North Korea. The Landers plant could be scaled to serve the entire country with free, loss less, faster than light radio, save lives via earth quake detection and potentially far more. Upon the completion of this modern day wonder, the powers that be swooped, shut it down and destroyed it. A certain Roy McGee and Olin Bates worked together to cheat Eric out of the property and even confiscated all his notes, gear and work.

After losing this, his last laboratory and being so close to implementing a system that would revolutionize communication for the community, Navy and possibly the entire country Eric has realized that his work shall always be marked for destruction. Eric wants those that truly desire the advancement of science to step forward and support a campaign to sue the guilty parties in court and get back his life’s work. The potential for the advancement of humanity is tremendous.

Eric inherited a radio station in Landers, CA from a friend. He spent years building it up and turned it into the an advanced ground radio station that could detect earthquakes before they occur, transmit faster than light radio with no losses and potentially far more. The “far more” part sent the powers that be scrambling to destroy it and they did.

Eric, now in his sixties has had to endure more hardship than most humans and even rebel scientists can imagine. He has been assaulted many times and suffered serious injuries. He has had his home and lab’s raided repeatedly and been driven to homelessness. All of his friends have betrayed him, all of his possessions taken from him and worse still all of his notes and work burned. In this last scenario they even took his pet dog away from him. While Eric has had to face off with the men in Black many times, it was the women in white that the powers that be choose to send after him this time. An NGO posing as a charitable foundation but in actuality being a front of the energy brokers was what did him in this time. They knew he was close to releasing something monumental and they swooped in and took everything but his life.

Eric has not given up. While he has rebuilt his lab many times and rallied to the finish line alone, this time it is different. Now in his sixties, black listed and without a penny to his name we cannot ask this man to try and bless the human race with the gift of free natural energy yet again, not without our help. There are three things you can do right now to help Eric P Dollard and his mission.
1. Believe in abundance, believe that energy for all humanity at no cost is as natural as a seed in the ground producing fruit. This is the hardest thing but it only takes a second.
2. Send this article to your friends and spread the word about The Mission of Eric P Dollard.
3. Write Eric a letter! Not an email, a real paper letter, in the mail! Eric is old fashioned. analog only and homeless but he does have a PO Box. It would help his spirits immensely to know he had believers. Eric has not given up, he is still trying to pass on his knowledge so that others might recreate his work and Tesla’s work.

Eric Dollard
General Delivery
Lone Pine, CA 93545

LOST SCIENCE
http://www.energeticforum.com/renewable-energy/1631-peter-whatever-happened-eric-p-dollard.html
http://research.borderlands.com/wiki/Category:Nikola_Tesla
http://www.gestaltreality.com/energy-synthesis/eric-dollard/personal-notes-on-energy-defined/
http://www.gestaltreality.com/energy-synthesis/eric-dollard/energy-defined/
http://www.gestaltreality.com/energy-synthesis/eric-dollard/the-theory-of-anti-relativity-by-e-p-dollard/

“The monophasic dielectric forces developed thru the work of Nikola Tesla nullify relativistic relations. Tesla, thru a unique space-time hysteresis electrically “grounded” to a zero order Galilean coordinate system. It is also the cathode ray projector tubes utilized by Tesla in his atomic studies also nullify relativistic relations. Tesla’s remarks about “radiant matter” indicate the existence of cosmic rays of immense penetrating power moving fifty (50) times faster than the velocity of light (Le Sage particles).”

RADIO-POWERED
http://blog.makezine.com/2012/07/13/explore-the-airwaves-with-weekend-projects/
Explore the Airwaves with Weekend Projects
by Nick Normal  / 2012/07/13

In just a few hours you can make a completely batteryless AM radio receiver with a range of around 25 miles. Built with a small assortment of components, some scrap wood, and a beverage bottle tightly wound with magnet wire, we call this project Bottle Radio. Similar to other “crystal radio” projects, the crystal in this build is contained inside a germanium diode, which rectifies incoming audio signal. The radio operates on the power from radio waves, and receives signal from a long wire antenna. When this signal enters the diode, it contains positive and negative peaks, however the diode, only allowing signal to pass in the forward direction, converts the alternating current of the signal into direct current. That current then vibrates a diaphragm inside a crystal earphone, allowing you to hear the radio without any visible power source!

If it sounds difficult, it’s not. In fact once you have your parts in hand, this project will only take a couple hours to assemble. Watch the video below to see how the entire circuit works, and we also provide some tips on the project page for extending the range of your receiver using a loop antenna and RF amplifier.

PREVIOUSLY on SPECTRE : DESIGNATED SUPERFUN SITE
http://spectrevision.net/2009/05/14/designated-superfun-site/
http://www.indiegogo.com/projects/204900
http://theoatmeal.com/blog/tesla_museum

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GOLDMAN REX

MAP DOES NOT INCLUDE PRIME MINISTERS or CENTRAL BANKS
http://www.goldmansachs.com/who-we-are/locations/index.html
http://www.businessinsider.com/current-goldman-alumni-in-key-public-positions-2012-11
http://www.bloomberg.com/news/2012-11-14/goldman-sachs-names-70-partners-fewest-as-public-company.html
http://dealbook.nytimes.com/2008/10/20/the-guys-from-government-sachs/
http://dealbook.nytimes.com/2012/11/26/bank-of-englands-new-leader-a-member-of-the-government-sachs-club/

COUP DE MONDE
http://truth-out.org/opinion/item/12996-goldman-sachs-global-coup-de-tat
Goldman Sachs’ Global Coup D’etat
by Thom Hartmann and Sam Sacks / 27 November 2012

When the people of Greece saw their democratically elected Prime Minister George Papandreou forced out of office in November of 2011 and replaced by an unelected Conservative technocrat, Lucas Papademos, most were unaware of the bigger picture of what was happening all around them. Similarly, most of us in the United States were equally as ignorant when, in 2008, despite the switchboards at the US Capitol collapsing under the volume of phone calls from constituents urging a “no” vote, our elected representatives voted “yes” at the behest of Bush’s Treasury Secretary Henry Paulsen and jammed through the biggest bailout of Wall Street in our nation’s history. But now, as the Bank of England, a key player in the ongoing Eurozone crisis,announces that former investment banker Mark Carney will be its new chief, we can’t afford to ignore what’s happening around the world. Steadily – and stealthily – Goldman Sachs is carrying out a global coup d’etat.

There’s one tie that binds Lucas Papademos in Greece, Henry Paulsen in the United States, and Mark Carney in the U.K., and that’s Goldman Sachs. All were former bankers and executives at the Wall Street giant, all assumed prominent positions of power, and all played a hand after the global financial meltdown of 2007-08, thus making sure Goldman Sachs weathered the storm and made significant profits in the process. But that’s just scratching the surface. As Europe descends into an austerity-induced economic crisis, Goldman Sachs’s people are managing the demise of the continent. As the British newspaper The Independent reported earlier this year, the Conservative technocrats currently steering or who have steered post-crash fiscal policy in Greece, Germany, Italy, Belgium, France, and now the UK, all hail from Goldman Sachs. In fact, the head of the European Central Bank itself, Mario Draghi, was the former managing director of Goldman Sachs International.

And here in the United States, after Treasury Secretary and former Goldman CEO Henry Paulsen did his job in 2008 securing Goldman’s multi-billion dollar bailout, he was replaced in the new Obama administration with Tim Geithner who worked very closely with Goldman Sachs as head of the New York Fed and made sure Goldman received more than $14 billion from the bailout of failed insurance giant AIG.

What’s happening here goes back more than a decade. In 2001, Goldman Sachs secretly helped Greece hide billions of dollars through the use of complex financial instruments like credit default swaps. This allowed Greece to meet the baseline requirements to enter the Eurozone in the first place. But it also created a debt bubble that would later explode and bring about the current economic crisis that’s drowning the entire continent. But, always looking ahead, Goldman protected itself from this debt bubble by betting against Greek bonds, expecting that they would eventually fail. Ironically, the man who headed up the Central Bank of Greece while this deal was being arranged with Goldman was – drumroll please – Lucas Papademos.

Goldman made similar deals here in the United States, masking the true value of investments, then selling those worthless investments to customers while placing bets that those same investments would eventually fail. The most notorious example was the “Timberwolf” deal, which brought down an Australian hedge fund, and which Goldman Sachs banksters emailed each other about, bragging, “Boy, that Timberwolf was one shitty deal.” This sort of behavior by Goldman helped inflate, and then eventually pop, the housing bubble in the United States. The shockwave then ran across the Atlantic, hitting Europe and turning Goldman’s debt-masking deal with Greece years earlier sour, thus deepening the crisis.

All of these antics should have brought about the demise of Goldman as well, but with their alumni in key policy positions on both sides of the Atlantic, Goldman not only survived, it flourished. As the DailyKos sums up, “The normal scenario usually involves helping a nation hide a problem and sell its debt until the problem blows up into a bubble that bursts in a spectacular way…Goldman Sachs then puts their ‘man’ into a position of power to direct the bailouts so that Goldman gets all its money back and more, while the nation’s economy gets gutted.”

For years, tinfoil hat crazies who’ve bookmarked Glenn Beck’s websites and often appear as “experts” on Fox so-called News have warned us about a one-world government (herehere, and here). The latest threat, according to them, is Agenda 21and the creation of a Soviet-style world authority that will confiscate private party everywhere, redistribute wealth to developing nations, and force us all to live by new global laws that sacrifice our national sovereignty. It’s totalitarian governments and not transnational corporations that we should be afraid of, they warn. But when the tinfoil hat is removed, you can see that a sort of one-world government has already been established in a far more subtle form, through the rise of Goldman Sachs and their colleagues in the Wall Street elite. A million questions arise when looking at what’s happening around the world. But many of these questions can be answered, once it’s acknowledged that Goldman Sachs alumni have executed a global coup d’etat.

Why are the working people of Greece, Portugal, Spain, and Italy suffering under austerity and being asked to sacrifice their pensions, their wages, and their jobs when, after five years, it’s clear these policies are only making these nations’ debts even harder to pay off? It’s because Goldman Sachs is sucking the last remaining wealth out of those nations to recoup whatever failed investments they made before the Crash. Why have thousands of homeowners in the United States turned to suicide, domestic violence, and even mass murder when faced with home foreclosure, when a simple solution like re-writing mortgages, which FDR did successfully during the Great Depression, could put an end to the bloodshed and misery?

It’s because re-writing mortgages would force banks like Goldman Sachs to take a hit. And thanks to the game they’ve created, they actually make more money when a home they own is foreclosed on. Why, despite mountains of evidence, have banksters at Goldman Sachs and other Wall Street institutions not been thrown in jail for defrauding customers, manipulating LIBOR interest rates, and throwing thousands of Americans out of their homes illegally in a massive robo-signing scandal? It’s because we have a two-tiered justice system in which those in power, like Goldman Sachs executives, get a slap on the wrist when they steal $50 billion, but people like you and me go to jail for stealing a 7-11 Slurpee. Now does it make sense why Wall Street was bailed out and Main Street was sold out?

In this post-crash world, where agents of Goldman Sachs have infiltrated key positions of power all around the world, we must all fundamentally re-understand how we view the global economy and just how much effect our democratic institutions have on this economy. We no longer have an economy geared to benefit working people around the world; we have an economy that’s geared to exploit working people for Goldman Sachs’ profits. Trader Alessio Rastani told the BBC in September before Goldman’s Lucas Papademos was installed as Greece’s Prime Minister, “We don’t really care about having a fixed economy, having a fixed situation, our job is to make money from it…Personally, I’ve been dreaming of this moment for three years. I go to bed every night and I dream of another recession.” Rastani continued, “When the market crashes… if you know what to do, if you have the right plan set up, you can make a lot of money from this.” And as we’ve seen over the last decade, Goldman Sachs knows exactly what to do. They’ve had the right plan set-up, and it’s nothing short of a global coup d’etat. As Rastani bluntly told the BBC, “This is not a time right now for wishful thinking that governments are going to sort things out. The governments don’t rule the world, Goldman Sachs rules the world.”

CITY of LONDON
http://blogs.wsj.com/source/2012/11/27/mark-carney-the-u-k-s-savior-maybe-not/
http://www.zerohedge.com/news/2012-11-26/goldmans-global-domination-now-complete-its-mark-carney-takes-over-bank-england
http://www.zerohedge.com/news/goldman-path-complete-world-domination-mark-carney-his-way-head-bank-england

“Far more importantly, Carney was a 13 year veteran of Goldman Sachs, most recently and very appropriately co-head of sovereign risk, which is ironic considering that Goldman had a grand rehearsal for the Greek currency swaps fiasco precisely with Carney at the helm in 1998, when Goldman got into hot water for the first time because while the company was advising Russia it was simultaneously betting against the country‘s ability to repay its debt.”

GREECE
http://www.spiked-online.com/index.php/site/article/11390/
http://wallstreetpit.com/85811-a-financial-coup-detat-in-the-making

LIBYA
http://www.deathandtaxesmag.com/97180/goldman-sachs-and-gaddafi-a-splendid-conspiracy/

GOLDMAN SACHS CONQUERS EUROPE
http://www.independent.co.uk/news/business/analysis-and-features/what-price-the-new-democracy-goldman-sachs-conquers-europe-6264091.html
by Stephan Foley / 18 November 2011

The ascension of Mario Monti to the Italian prime ministership is remarkable for more reasons than it is possible to count. By replacing the scandal-surfing Silvio Berlusconi, Italy has dislodged the undislodgeable. By imposing rule by unelected technocrats, it has suspended the normal rules of democracy, and maybe democracy itself. And by putting a senior adviser at Goldman Sachs in charge of a Western nation, it has taken to new heights the political power of an investment bank that you might have thought was prohibitively politically toxic. This is the most remarkable thing of all: a giant leap forward for, or perhaps even the successful culmination of, the Goldman Sachs Project.

It is not just Mr Monti. The European Central Bank, another crucial player in the sovereign debt drama, is under ex-Goldman management, and the investment bank’s alumni hold sway in the corridors of power in almost every European nation, as they have done in the US throughout the financial crisis. Until Wednesday, the International Monetary Fund’s European division was also run by a Goldman man, Antonio Borges, who just resigned for personal reasons. Even before the upheaval in Italy, there was no sign of Goldman Sachs living down its nickname as “the Vampire Squid”, and now that its tentacles reach to the top of the eurozone, sceptical voices are raising questions over its influence. The political decisions taken in the coming weeks will determine if the eurozone can and will pay its debts – and Goldman’s interests are intricately tied up with the answer to that question.

Simon Johnson, the former International Monetary Fund economist, in his book 13 Bankers, argued that Goldman Sachs and the other large banks had become so close to government in the run-up to the financial crisis that the US was effectively an oligarchy. At least European politicians aren’t “bought and paid for” by corporations, as in the US, he says. “Instead what you have in Europe is a shared world-view among the policy elite and the bankers, a shared set of goals and mutual reinforcement of illusions.”



This is The Goldman Sachs Project. Put simply, it is to hug governments close. Every business wants to advance its interests with the regulators that can stymie them and the politicians who can give them a tax break, but this is no mere lobbying effort. Goldman is there to provide advice for governments and to provide financing, to send its people into public service and to dangle lucrative jobs in front of people coming out of government. The Project is to create such a deep exchange of people and ideas and money that it is impossible to tell the difference between the public interest and the Goldman Sachs interest.

Mr Monti is one of Italy’s most eminent economists, and he spent most of his career in academia and thinktankery, but it was when Mr Berlusconi appointed him to the European Commission in 1995 that Goldman Sachs started to get interested in him. First as commissioner for the internal market, and then especially as commissioner for competition, he has made decisions that could make or break the takeover and merger deals that Goldman’s bankers were working on or providing the funding for. Mr Monti also later chaired the Italian Treasury’s committee on the banking and financial system, which set the country’s financial policies. With these connections, it was natural for Goldman to invite him to join its board of international advisers. The bank’s two dozen-strong international advisers act as informal lobbyists for its interests with the politicians that regulate its work. Other advisers include Otmar Issing who, as a board member of the German Bundesbank and then the European Central Bank, was one of the architects of the euro. Perhaps the most prominent ex-politician inside the bank is Peter Sutherland, Attorney General of Ireland in the 1980s and another former EU Competition Commissioner. He is now non-executive chairman of Goldman’s UK-based broker-dealer arm, Goldman Sachs International, and until its collapse and nationalisation he was also a non-executive director of Royal Bank of Scotland. He has been a prominent voice within Ireland on its bailout by the EU, arguing that the terms of emergency loans should be eased, so as not to exacerbate the country’s financial woes. The EU agreed to cut Ireland’s interest rate this summer.

Picking up well-connected policymakers on their way out of government is only one half of the Project, sending Goldman alumni into government is the other half. Like Mr Monti, Mario Draghi, who took over as President of the ECB on 1 November, has been in and out of government and in and out of Goldman. He was a member of the World Bank and managing director of the Italian Treasury before spending three years as managing director of Goldman Sachs International between 2002 and 2005 – only to return to government as president of the Italian central bank. Mr Draghi has been dogged by controversy over the accounting tricks conducted by Italy and other nations on the eurozone periphery as they tried to squeeze into the single currency a decade ago. By using complex derivatives, Italy and Greece were able to slim down the apparent size of their government debt, which euro rules mandated shouldn’t be above 60 per cent of the size of the economy. And the brains behind several of those derivatives were the men and women of Goldman Sachs.

The bank’s traders created a number of financial deals that allowed Greece to raise money to cut its budget deficit immediately, in return for repayments over time. In one deal, Goldman channelled $1bn of funding to the Greek government in 2002 in a transaction called a cross-currency swap. On the other side of the deal, working in the National Bank of Greece, was Petros Christodoulou, who had begun his career at Goldman, and who has been promoted now to head the office managing government Greek debt. Lucas Papademos, now installed as Prime Minister in Greece’s unity government, was a technocrat running the Central Bank of Greece at the time. Goldman says that the debt reduction achieved by the swaps was negligible in relation to euro rules, but it expressed some regrets over the deals. Gerald Corrigan, a Goldman partner who came to the bank after running the New York branch of the US Federal Reserve, told a UK parliamentary hearing last year: “It is clear with hindsight that the standards of transparency could have been and probably should have been higher.” When the issue was raised at confirmation hearings in the European Parliament for his job at the ECB, Mr Draghi says he wasn’t involved in the swaps deals either at the Treasury or at Goldman.

It has proved impossible to hold the line on Greece, which under the latest EU proposals is effectively going to default on its debt by asking creditors to take a “voluntary” haircut of 50 per cent on its bonds, but the current consensus in the eurozone is that the creditors of bigger nations like Italy and Spain must be paid in full. These creditors, of course, are the continent’s big banks, and it is their health that is the primary concern of policymakers. The combination of austerity measures imposed by the new technocratic governments in Athens and Rome and the leaders of other eurozone countries, such as Ireland, and rescue funds from the IMF and the largely German-backed European Financial Stability Facility, can all be traced to this consensus. “My former colleagues at the IMF are running around trying to justify bailouts of €1.5trn-€4trn, but what does that mean?” says Simon Johnson. “It means bailing out the creditors 100 per cent. It is another bank bailout, like in 2008: The mechanism is different, in that this is happening at the sovereign level not the bank level, but the rationale is the same.” So certain is the financial elite that the banks will be bailed out, that some are placing bet-the-company wagers on just such an outcome. Jon Corzine, a former chief executive of Goldman Sachs, returned to Wall Street last year after almost a decade in politics and took control of a historic firm called MF Global. He placed a $6bn bet with the firm’s money that Italian government bonds will not default. When the bet was revealed last month, clients and trading partners decided it was too risky to do business with MF Global and the firm collapsed within days. It was one of the ten biggest bankruptcies in US history.

The grave danger is that, if Italy stops paying its debts, creditor banks could be made insolvent. Goldman Sachs, which has written over $2trn of insurance, including an undisclosed amount on eurozone countries’ debt, would not escape unharmed, especially if some of the $2trn of insurance it has purchased on that insurance turns out to be with a bank that has gone under. No bank – and especially not the Vampire Squid – can easily untangle its tentacles from the tentacles of its peers. This is the rationale for the bailouts and the austerity, the reason we are getting more Goldman, not less. The alternative is a second financial crisis, a second economic collapse. Shared illusions, perhaps? Who would dare test it?

Mario Monti, Lucas Papademos and Mario Draghi have something in common: they have all worked for the American investment bank. This is not a coincidence, but evidence of a strategy to exert influence that has perhaps already reached its limits.

a ‘FRATERNAL ASSOCIATION’
http://www.presseurop.eu/en/content/article/1177241-our-friends-goldman-sachs
Our friends from Goldman Sachs…
by Marc Roche / 16 November 2011 / Le Monde

Serious and competent, they weigh up the pros and cons and study all of the documents before giving an opinion. They have a fondness for economics, but these luminaries who enter into the temple only after a long and meticulous recruitment process prefer to remain discreet. Collectively they form an entity that is part pressure group, part fraternal association for the collection of information, and part mutual aid network. They are the craftsmen, masters and grandmasters whose mission is “to spread the truth acquired in the lodge to the rest of the world.” According to its detractors, the European network of influence woven by American bank Goldman Sachs (GS) functions like a freemasonry. To diverse degrees, the new European Central Bank President, Mario Draghi, the newly designated Prime Minister of Italy, Mario Monti, and the freshly appointed Greek Prime Minister Lucas Papademos are totemic figures in this carefully constructed web.

Heavyweight members figure large in the euro crisis
Draghi was Goldman Sachs International’s vice-chairman for Europe between 2002 and 2005, a position that put him in charge of the the “companies and sovereign” department, which shortly before his arrival, helped Greece to disguise the real nature of its books with a swap on its sovereign debt. Monti was an international adviser to Goldman Sachs from 2005 until his nomination to lead the Italian government. According to the bank, his mission was to provide advice “on European business and major public policy initiatives worldwide”. As such, he was a “door opener” with a brief to defend Goldman’s interest in the corridors of power in Europe. The third man, Lucas Papademos, was the governor of the Greek central bank from 1994 to 2002. In this capacity, he played a role that has yet to be elucidated in the operation to mask debt on his country’s books, perpetrated with assistance from Goldman Sachs. And perhaps more importantly, the current chairman of Greece’s Public Debt Management Agency, Petros Christodoulos, also worked as a trader for the bank in London. Two other heavyweight members of Goldman’s European network have also figured large in the euro crisis: Otmar Issing, a former member of the Bundesbank board of directors and a one-time chief economist of the European Central Bank, and Ireland’s Peter Sutherland, an administrator for Goldman Sachs International, who played a behind the scenes role in the Irish bailout.

Relay exclusive information to the bank’s trading rooms
How was this loyal network of intermediaries created? The US version of this magic circle is composed of former highly placed executives of the bank who effortlessly enter the highest level of the civil service. In Europe, on the other hand, Goldman Sachs has worked to accumulate a capital of relationships. But unlike its competitors, the bank has no interest in retired diplomats, highly placed national and international civil servants, or even former prime ministers and ministers of finance. Goldman’s priority has been to target central bankers and former European commissioners. Its main goal is to legally collect information on initiatives in the near future and on the interest rates set by central banks. At the same time, Goldman likes its agents to remain discreet. That is why its loyal subjects prefer not to mention their filiation in interviews or in the course of official missions. These well-connected former employees simply have to talk about this and that secure in the knowledge that their prestige will inevitably be rewarded with outspoken frankness on the part of those in powerful positions. Put simply they are there to see “which way the wind is blowing,” and thereafter to relay exclusive information to the bank’s trading rooms.

Bid for global dominance
Now that it has a former director at the head of the ECB, a former intermediary leading the Italian government, and another in charge in Greece, the bank’s antagonists are eager to highlight the extraordinary power of its network in in Frankfurt, Rome and Athens, which could prove extremely useful in these turbulent times. But looking beyond these details, the power of Goldman’s European government before and during the financial ordeal of 2008 may well prove to be an obstacle. The relationships maintained by experienced former central bankers are less likely to be useful now that politicians are aware of the unpopularity of finance professionals who are seen to be responsible for the present crisis. Where Goldman Sachs used to be able to exercise its talents, it now has to contend with opposition from public authorities raising questions about a series of scandals. A well stocked address book is no longer sufficient in a complex and highly technical financial world, where a new generation of industry leaders are less likely to be imbued with an unquestioning respect for the establishment. In their bid for global dominance, they no longer need to rely on high finance crusaders in the Goldman mould, while the quest to protect shareholder’s rights, demands for more transparency and active opposition from the media, NGOs, and institutional investors continue to erode the potency of “the network effect.”

{Translated from the French by Mark McGovern}



The giant American investment bank which is accused of helping the Greek state to conceal the real nature of its financial situation while speculating on its debts can count on a remarkable network of advisers with very close links to European leaders, reports Le Monde.

“GOVERNMENT SACHS”
http://www.presseurop.eu/en/content/article/1177241-our-friends-goldman-sachs
Goldman Sachs, the international web
by Marc Roche / 3 March 2010 / Le Monde

Petros Christodoulou affects not to care about compliments or their source. Ever since he was a teenager, this top-of-the-class student has grown used to hearing his praises sung. Appointed on 19 February to the head of the organization for the management of Greek public debt, he has arrived at the top of the tree. However, the trouble is that the former manager of global markets at the National Bank of Greece (NBG) is at the centre of an inquiry, announced on 25 February by the United States Federal Reserve, on contracts relating to Greek national debt, which link Goldman Sachs and other companies to the government in Athens. The New York based investment bank was paid as a banking advisor to the Greek government while speculating on the Hellenic nation’s sovereign debt. In particular, the American regulator is interested in the role played by Petros Christodoulou, who, in collaboration with Goldman, supervised the creation of the London company Titlos to transfer debt from Greece’s national accounts to the NBG. Before joining the NBG in 1998, Mr Christodoulou had worked as a banker for – you guessed it – Goldman Sachs.

“Government Sachs”
The affair has highlighted the powerful network of influence that Goldman Sachs has maintained in Europe since 1985 – a tightly woven group of underground and high-profile go-betweens and loyal supporters, whose address books open the doors of ministries of finance. These carefully recruited and extraordinarily well-paid advisors understand all the subtleties of the corridors of power within the European Union, and have a direct line to decision makers that they can call during moments of crisis. But who are the members of the European arm of the institution which is so powerful in Washington that it is referred to as “government Sachs”? The key figure is Peter Sutherland, chairman of Goldman Sachs International, the bank’s London-based European subsidiary. The former European commissioner for competition and ex-chairman of BP, is an essential link between the investment bank and the 27 EU member states and Russia. In France, Goldman Sachs benefits from the support of Charles de Croisset, a former chairman of Crédit Commercial de France (CCF), who took over from Jacques Mayoux, a government inspector of finances and former chairman of Société Générale. In the United Kingdom, it can count on Lord Griffiths, who advised former prime minister Margaret Thatcher, and in Germany, on Otmar Issing, a one-time board member of the Bundesbank and ex-chief economist of the European Central Bank (ECB).

Discreetly advances its interests
And that is not to mention the many Goldman alumni who go onto hold positions of power, which the bank can count on to advance its position. The best known of these is Mario Draghi, Goldman’s vice-president for Europe between 2001 and 2006, who is the current governor of the Bank of Italy and Chairman of international regulator, the Financial Stability Board. But do not expect to come across former diplomats in the austere corridors of Goldman Sachs International. As an institution with real world interests, the bank prefers to recruit financiers, economists, central bankers, and former highly placed civil servants from international economic organizations, but considers retired ambassadors to be jovial status symbols without any real high-level contacts or business sense. For Goldman Sachs, this network has the advantage of enabling it to discreetly advance its interests. In the Financial Times of 15 February, Otmar Issing published an article voicing his hostility to any attempt by the European Union to rescue Greece. However, he omitted to mention the fact that he has been an international advisor to Goldman Sachs since 2006. Nor did he say that the bank’s traders, who have been speculating against the single European currency, might well lose their shirts if the EU does intervene.


Max Keiser & Catherine Austin Fitts on Goldman Sachs (2009)

$7 TRILLION in SECRET LOANS
http://www.slate.com/articles/business/moneybox/2011/11/the_7_trillion_secret_loan_program_the_government_and_big_banks_should_be_punished_for_deceiving_the_public_about_their_hush_hush_bailout_scheme_.html
The government and the big banks deceived the public about their $7 trillion secret loan program. They should be punished
by Eliot Spitzer  /   Nov. 30, 2011

Imagine you walked into a bank, applied for a personal line of credit, and filled out all the paperwork claiming to have no debts and an income of $200,000 per year. The bank, based on these representations, extended you the line of credit. Then, three years later, after fighting disclosure all the way, you were forced by a court to tell the truth: At the time you made the statements to the bank, you actually were unemployed, you had a $1 million mortgage on your house on which you had failed to make payments for six months, and you hadn’t paid even the minimum on your credit-card bills for three months. Do you think the bank would just say: Never mind, don’t worry about it? Of course not. Whether or not you had paid back the personal line of credit, three FBI agents would be at your door within hours. Yet this is exactly what the major American banks have done to the public. During the deepest, darkest period of the financial cataclysm, the CEOs of major banks maintained in statements to the public, to the market at large, and to their own shareholders that the banks were in good financial shape, didn’t want to take TARP funds, and that the regulatory framework governing our banking system should not be altered. Trust us, they said. Yet, unknown to the public and the Congress, these same banks had been borrowing massive amounts from the government to remain afloat. The total numbers are staggering: $7.7 trillion of credit—one-half of the GDP of the entire nation. $460 billion was lent to J.P. Morgan, Bank of America, Citibank, Wells Fargo, Goldman Sachs, and Morgan Stanley alone—without anybody other than a few select officials at the Fed and the Treasury knowing. This was perhaps the single most massive allocation of capital from public to private hands in our history, and nobody was told. This was not TARP: This was secret Fed lending. And although it has since been repaid, it is clear why the banks didn’t want us to know about it: They didn’t want to admit the magnitude of their financial distress.

The banks’ claims of financial stability and solvency appear at a minimum to have been misleading—and may have been worse. Misleading statements and deception of this sort would ordinarily put a small-market player or borrower on the wrong end of a criminal investigation. So where are the inquiries into the false statements made by the bank CEOs? And where are the inquiries about the Fed and Treasury officials who stood by silently as bank representatives made claims that were false, misleading, or worse? Only now, because of superb analysis done by Bloomberg reporters—who litigated against the Fed and the banks for years to get the information—are we getting a full picture of the Fed and Treasury lending. The reporters also calculated that recipient banks and other borrowers benefited by approximately $13 billion simply by taking advantage of the “spread” between their cost of capital in these almost interest-free loans and their ability to lend the capital.

In addition to the secrecy, what is appalling is that these loans were made with no strings attached, no conditions, and no negotiation to achieve any broader public purpose. Even if one accepts the notion that the stability of the financial system could not be sacrificed, those who dispensed trillions of dollars to private parties made no apparent effort to impose even minimal obligations to condition the loans on the structural reforms needed to prevent another crisis, made no effort to require that those responsible for creating the crisis be relieved of their jobs, took zero steps towards the genuine mortgage-reform that is so necessary to begin a process of economic renewal. The dollars lent were simply a free bridge loan so the banks could push onto others the responsibility for the banks’ own risk-taking. If ever there was an event to justify the darkest, most conspiratorial view held by many that the alliance of big money on Wall Street and big government produces nothing but secret deals that profit insiders—this is it.



So what to do? The revelations of the secret loan program may provide the opportunity for Occupy Wall Street to suggest a few concrete steps that would be difficult to oppose.

First: Demand a hearing where the bank executives have to answer questions—under oath—about the actual negotiations, or lack thereof, that led to these loans; about the actual condition of each of the borrowing banks and whether that condition differed from the public statements made by the banks at the time.

Second: Require the recipient banks to use this previously undisclosed gift—the profit they made by investing this almost interest-free money—to write down the value of mortgages of those who are underwater. The loans to the banks were meant to solve a short-term liquidity problem, not be a source of profits to fund bonuses. Take back the profits and put them to apublic use.

Third: Require the government officials responsible for authorizing these loans to explain why there was no effort made to condition these loans on changes in policy that would protect the public going forward.

Fourth: Ask congress to examine every filing and statement made to Congress by the banks about their financial condition and their indebtedness to see if any misrepresentations were made in an effort to hide these trillions of dollars of loans. Misleading Congress can be a felony, and willful deception of the Congress to hide the magnitude of the public bailouts should not go unprosecuted.

Finally: Demand that politicians return all contributions made by the institutions that got hidden loans. Pressure the politicians who continue to feed from the trough of Wall Street, even as they know all too well how the banks and others have gamed the system and the public.



“RESCUE”
http://www.nomiprins.com/thoughts/2011/11/30/the-feds-european-rescue-another-back-door-us-bank-goldman-b.html
The Fed’s European “Rescue”: Another back-door US Bank / Goldman bailout?
by Nomi Prins /  November 30, 2011

In the wake of chopping its Central Bank swap rates today, the Fed has been called a bunch of names: a hero for slugging the big bailout bat in the ninth inning, and a villain for printing money to help Europe at the expense of the US. Neither depiction is right. The Fed is merely continuing its unfettered brand of bailout-economics, promoted with heightened intensity recently by President Obama and Treasury Secretary, Tim Geithner in the wake of Germany not playing bailout-ball.  Recall, a couple years ago, it was a uniquely American brand of BIG bailouts that the Fed adopted in creating $7.7 trillion of bank subsidies that ran the gamut from back-door AIG bailouts (some of which went to US / some to European banks that deal with those same US banks), to the purchasing of mortgage-backed–securities, to near zero-rate loans (for banks). Similarly, today’s move was also about protecting US banks from losses – self inflicted by dangerous derivatives-chain trades, again with each other, and with European banks. Before getting into the timing of the Fed’s god-father actions, let’s discuss its two kinds of swaps (jargon alert – a swap is a trade between two parties for some time period – you swap me a sweater for a hat because I’m cold, when I’m warmer, we’ll swap back). The Fed had both of these kinds of swaps set up and ready-to-go in the form of : dollar liquidity swap lines and foreign currency liquidity swap lines. Both are administered through Wall Street’s staunchest ally, and Tim Geithner’s old stomping ground, the New York Fed.

The dollar swap lines give foreign central banks the ability to borrow dollars against their currency, use them for whatever they want – like to shore up bets made by European banks that went wrong, and at a later date, return them. A ‘temporary dollar liquidity swap arrangement” with 14 foreign central banks was available between December 12, 2007 (several months before Bear Stearn’s collapse and 9 months before the Lehman Brothers’ bankruptcy that scared Goldman Sachs and Morgan Stanley into getting the Fed’s instant permission to become bank holding companies, and thus gain access to any Feds subsidies.) Those dollar-swap lines ended on February 1, 2010. BUT – three months later, they were back on, but this time the FOMC re-authorized dollar liquidity swap lines with only 5 central banks through January 2011. BUT – on December 21, 2010 – the FOMC extended the lines through August 1, 2011. THEN– on June 29th, 2011, these lines were extended through August 1, 2012.  AND NOW – though already available, they were announced with save-the-day fanfare as if they were just considered.

Then, there are the sneakily-dubbed “foreign currency liquidity swap” lines, which, as per the Fed’s own words, provide “foreign currency-denominated liquidity to US banks.” (Italics mine.) In other words, let US banks play with foreign bonds. These were originally used with 4 foreign banks on April, 2009  and expired on February 1, 2010. Until they were resurrected today, November 30, 2011, with foreign currency swap arrangements between the Fed, Bank of Canada, Bank of England, Bank of Japan. Swiss National Bank and the European Central Bank. They are to remain in place until February 1, 2013, longer than the original time period for which they were available during phase one of the global bank-led meltdown, the US phase. (For those following my work, we are in phase two of four, the European phase.) That’s a lot  of jargon, but keep these two things in mind: 1) these lines, by the Fed’s own words, are to provide help to US banks. and 2) they are open ended.

There are other reasons that have been thrown up as to why the Fed acted now – like, a European bank was about to fail. But, that rumor was around in the summer and nothing happened. Also, dozens of European banks have been downgraded, and several failed stress tests. Nothing. The Fed didn’t step in when it was just Greece –or Ireland  – or when there were rampant ‘contagion’ fears, and Italian bonds started trading above 7%, rising unabated despite the trick of former Goldman Sachs International advisor Mario Monti replacing former Prime Minister, Silvio Berlusconi’s with his promises of fiscally conservative actions (read: austerity measures) to come. Perhaps at that point, Goldman thought they had it all under control, but Germany’s bailout-resistence was still a thorn, which is why its bonds got hammered in the last auction, proving that big Finance will get what it wants, no matter how dirty it needs to play.  Nothing from the Fed, except a small increase in funding to the IMF. Rating agency Moody’s  announced it was looking at possibly downgrading 87 European banks. Still the Fed waited with open lines. And then, S&P downgraded the US banks again, including Goldman ,making their own financing costs more expensive and the funding of their seismic derivatives positions more tenuous. The Fed found the right moment. Bingo.

Now, consider this: the top four US banks (JPM Chase, Citibank, Bank of America and Goldman Sachs) control nearly 95% of the US derivatives market, which has grown by 20% since last year to  $235 trillion. That figure is a third of all global derivatives of $707 trillion (up from $601 trillion in December, 2010 and $583 trillion mid-year 2010. )



Breaking that down:  JPM Chase holds 11% of the world’s derivative exposure, Citibank, Bank of America, and Goldman comprise about 7% each. But, Goldman has something the others don’t – a lot fewer assets beneath its derivatives stockpile. It has 537 times as many (from 440 times last year) derivatives as assets. Think of a 537 story skyscraper on a one story see-saw. Goldman has $88 billon in assets, and $48 trillion in notional derivatives exposure. This is by FAR the highest ratio of derivatives to assets of any so-called bank backed by a government. The next highest ratio belongs to Citibank with $1.2 trillion in assets and $56 trillion in derivative exposure, or 46 to 1. JPM Chase’s ratio is 44 to 1. Bank of America’s ratio is 36 to 1. Separately Goldman happened to have lost a lot of money in Foreign Exchange derivative positions last quarter. (See Table 7.) Goldman’s loss was about equal to the total gains of the other banks, indicative of some very contrarian trade going on. In addition, Goldman has the most credit risk with respect to the capital  it holds, by a factor of 3 or 4 to 1 relative to the other big banks. So did the Fed’s timing have something to do with its star bank? We don’t really know for sure.

Sadly, until there’s another FED audit, or FOIA request, we’re not going to know which banks are the beneficiaries of the Fed’s most recent international largesse either, nor will we know what their specific exposures are to each other, or to various European banks, or which trades are going super-badly. But we do know from the US bailouts in phase one of the global meltdown, that providing ‘liquidity’ or ‘greasing the wheels of ‘ banks in times of ‘emergency’ does absolute nothing for the Main Street Economy. Not in the US. And not in Europe. It also doesn’t fix anything, it just funds bad trades with impunity.



LEVERAGE
http://www.nomiprins.com/thoughts/2011/11/21/as-the-world-crumbles-the-ecb-spins-fed-smirks-and-us-banks.html
As the World Crumbles: the ECB spins, FED smirks, and US Banks Pillage
by Nomi Prins / November 21, 2011

Often, when I troll around websites of entities like the ECB and IMF, I uncover little of startling note. They design it that way. Plus, the pace at which the global financial system can leverage bets, eviscerate capital, and cry for bank bailouts financed through austerity measures far exceeds the reporting timeliness of these bodies. That’s why, on the center of the ECB’s homepage, there’s a series of last week’s rates – and this relic – an interactive Inflation Game (I kid you not)  where in 22 different languages you can play the game of what happens when inflation goes up and down. If you’re feeling more adventurous, there’s also a game called Economia, where you can make up unemployment rates, growth rates and interest rates and see what happens. What you can’t do is see what happens if you bet trillions of dollars against various countries to see how much you can break them, before the ECB, IMF, or Fed (yes, it’ll happen) swoops in to provide “emergency” loans in return for cuts to pension funds, social programs, and national ownership of public assets. You also can’t input real world scenarios, where monetary policy doesn’t mean a thing in the face of  tidal waves of derivatives’ flow. You can’t gauge say, what happens if Goldman Sachs bets $20 billion in leveraged credit default swaps against Greece, and offsets them (partially) with JPM Chase which bets $20 billion, and offsets that with Bank of America, and then MF Global (oops) and then…..you see where I’m going with this.

We’re doomed if even their board games don’t come close to mimicking the real situation in Europe, or in the US, yet they supply funds to banks torpedoing local populations with impunity. These central entities also don’t bother to examine (or notice) the intermingled effect of leveraged derivatives and debt transactions per country; which is why no amount of funding from the ECB, or any other body, will be able to stay ahead of the hot money racing in and out of various countries.  It’s not about inflation – it’s about the speed, leverage, and daring of capital flow, that has its own power to select winners and losers. It’s not the ‘inherent’ weakness of national economies that a few years ago were doing fine, that’s hurting the euro. It’s the external bets on their success, failure, or economic capitulation running the show. Similarly, the US economy was doing much better before banks starting leveraging the hell out of our subprime market through a series of toxic, fraudulent, assets.

Elsewhere in my trolling, I came across a gem of a working paper on the IMF website, written by Ashoka Mody and Damiano Sandri,  entitled ‘The Eurozone Crisis; How Banks and Sovereigns Came to be Joined at the Hip” (The paper does not ‘necessarily represent the views of the IMF or IMF policy’.) The paper is full of mathematical formulas and statistical jargon, which may be why the media didn’t pick up on it, but hey, I got a couple of degrees in Mathematics and Statistics, so I went all out.  And it’s fascinating stuff. Basically, it shows that between the advent of the euro in 1999, and 2007, spreads between the bonds of peripheral countries and core ones in Europe were pretty stable. In other words, the risk of any country defaulting on its debt was fairly equal, and small. But after the 2007 US subprime asset crisis, and more specifically, the advent of  Federal Reserve / Treasury Department construed bailout-economics, all hell broke loose – international capital went AWOL daring default scenarios, targeting them for future bailouts, and when money leaves a country faster than it entered, the country tends to falter economically. The cycle is set.

The US subprime crisis wasn’t so much about people defaulting on loans, but the mega-magnified effects of those defaults on a $14 trillion asset pyramid created by the banks. (Those assets were subsequently sold, and used as collateral for other borrowing and esoteric derivatives combinations, to create a global $140 trillion debt binge.) As I detail in It Takes Pillage, the biggest US banks manufactured more than 75% of those $14 trillion of assets. A significant portion was sold in Europe – to local banks, municipalities, and pension funds – as lovely AAA morsels against which more debt, or leverage, could be incurred. And even thought the assets died, the debts remained.

Greek banks bought US-minted AAA assets and leveraged them. Norway did too (through the course of working on a Norwegian documentary, I discovered that 8 tiny towns in Norway bought $200 million of junk assets from Citigroup, borrowed money from local banks to pay for them, and pledged 10 years of power receipts from hydroelectric plants in return. The AAA assets are now worth zero, the power has been curtailed for residents, and the Norwegian banks want their money back–blood from a stone.) The same kind of thing happend in Italy, Spain, Portugal, Ireland, Holland, France, and even Germany – in different degrees and with specific national issues mixed in.  Problem is – when you’ve already used worthless collateral to borrow tons of money you won’t ever be able to repay, and international capital slams you in other ways, and your funding costs rise, and your internal development and lending seize up, you’re screwed – or rather the people in your country are screwed.

In the IMF paper, the authors convincingly make the case that it wasn’t just the US subprime asset meltdown itself that initiated Europe’s implosion, but the fact that our Federal Reserve and Treasury Department adopted a reckless don’t-let-em-fail doctrine. Even though Bear Stearns and Lehman Brothers failed, their investors, the huge ones anyway, were protected. The Fed subsidized, and still subsidizes, $29 billion of risk for JPM Chase’s acquisition of Bear. The philosophy of saving banks and their practices poisoned Europe, as those same financial firms played euro-roulette in the global derivatives markets, once the subprime betting train slowed down.

The first fatal stop of the US bailout mentaility was the ECB’s 2010 bailout of Anglo Irish bank, which got the lion’s share of the ECB’s Irish-bailout: $51 billion euro of ELA (Emergency Loan Assistance) and $100 billion euro of regular lending at the time. After the international financial community saw the pace and volume of Irish bank bailouts, the game of euro-roulette went turbo, country by country.  More ‘fiscally conservative’ governments are replacing any semblance of population-supportive ones. The practice of  extracting ‘fiscal prudency’ from people and providing bank subsidies for bets gone wrong has infected all of Europe. It will continue to do so, because anything less will threathen the entire Euro experiement, plus otherwise, the US banks might be on the hook again for losses, and the Fed and Treasury won’t let that happen. They’ve already demonstrated that. It’d be just sooo catastrophic.

In the wings, the smugness of Treasury Secretary Tim Geithner and Fed Chairman, Ben Bernanke is palpable – ‘hey, we acted heroically and “decisively” to provide a multi-trillion dollar smorgasbord  of subsidies for our biggest banks and look how great we  (er, they) are doing now? Seriously, Europe – get your act together already, don’t do the trickle-bailout game – just dump a boatload of money into the same banks – and a few of your own before they go under  – do it for the sake of global economic stability. It’ll really work. Trust us.’ Most of the media goes along with the notion that US banks exposed to the ‘euro-contagion’ will hurt our (nonexistent) recovery. US Banks assure us, they don’t have much exposure – it’s all hedged. (Like it was all AAA.) The press doesn’t tend to question the global harm caused by never having smacked US banks into place, cutting off their money supply, splitting them into commercial and speculative parts ala Glass-Steagall and letting the speculative parts that should have died, die, rather than enjoy public subsidization and the ability to go globe-hopping for more destructive opportunity, alongside some of the mega-global bank partners.

Today, the stock prices of the largest US banks are about as low as they were in the early part of 2009, not because of euro-contagion or Super-committee super-incompetence (a useless distraction anyway) but because of the ongoing transparency void surrouding the biggest banks amidst their central-bank-covered risks, and the political hot potato of how many emergency loans are required to keep them afloat at any given moment.  Because investors don’t know their true exposures, any more than in early 2009. Because US banks catalyzed the global crisis that is currently manifesting itself in Europe. Because there never was a separate US housing crisis and European debt crisis. Instead, there is a worldwide, systemic, unregulated, uncontained,  rapacious need for the most powerful banks and financial institutions to leverage whatever could be leveraged in whatever forms it could be leveraged in. So, now we’re just barely in the second quarter of the game of thrones, where the big banks are the kings, the ECB, IMF and the Fed are the money supply, and the populations are the powerless serfs. Yeah, let’s play the ECB inflation game, while the world crumbles.



MEANWHILE:
the WORLD ACCORDING to GOLDMAN SACHS
http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html
Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress
by Bob Ivry, Bradley Keoun and Phil Kuntz   /  Nov 27, 2011

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing. The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue. Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse. A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

‘Change Their Votes’
“When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio who in 2010 introduced an unsuccessful bill to limit bank size. “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.” The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News, won a court case against the Fed and a group of the biggest U.S. banks called Clearing House Association LLC to force lending details into the open. The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort — and that needy institutions would be reluctant to borrow in the next crisis. Clearing House Association fought Bloomberg’s lawsuit up to the U.S. Supreme Court, which declined to hear the banks’ appeal in March 2011.

$7.77 Trillion
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year. “TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.” Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.

‘Motivate Others’
JPMorgan Chase & Co. CEO Jamie Dimon told shareholders in a March 26, 2010, letter that his bank used the Fed’s Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He didn’t say that the New York-based bank’s total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on Feb. 26, 2009, came more than a year after the program’s creation. Howard Opinsky, a spokesman for JPMorgan (JPM), declined to comment about Dimon’s statement or the company’s Fed borrowings. Jerry Dubrowski, a spokesman for Bank of America, also declined to comment. The Fed has been lending money to banks through its so- called discount window since just after its founding in 1913. Starting in August 2007, when confidence in banks began to wane, it created a variety of ways to bolster the financial system with cash or easily traded securities. By the end of 2008, the central bank had established or expanded 11 lending facilities catering to banks, securities firms and corporations that couldn’t get short-term loans from their usual sources.

‘Core Function’
“Supporting financial-market stability in times of extreme market stress is a core function of central banks,” says William B. English, director of the Fed’s Division of Monetary Affairs. “Our lending programs served to prevent a collapse of the financial system and to keep credit flowing to American families and businesses.” The Fed has said that all loans were backed by appropriate collateral. That the central bank didn’t lose money should “lead to praise of the Fed, that they took this extraordinary step and they got it right,” says Phillip Swagel, a former assistant Treasury secretary under Henry M. Paulson and now a professor of international economic policy at the University of Maryland. The Fed initially released lending data in aggregate form only. Information on which banks borrowed, when, how much and at what interest rate was kept from public view. The secrecy extended even to members of President George W. Bush’s administration who managed TARP. Top aides to Paulson weren’t privy to Fed lending details during the creation of the program that provided crisis funding to more than 700 banks, say two former senior Treasury officials who requested anonymity because they weren’t authorized to speak.

Big Six
The Treasury Department relied on the recommendations of the Fed to decide which banks were healthy enough to get TARP money and how much, the former officials say. The six biggest U.S. banks, which received $160 billion of TARP funds, borrowed as much as $460 billion from the Fed, measured by peak daily debt calculated by Bloomberg using data obtained from the central bank. Paulson didn’t respond to a request for comment. The six — JPMorgan, Bank of America, Citigroup Inc. (C)Wells Fargo & Co. (WFC)Goldman Sachs Group Inc. (GS) and Morgan Stanley — accounted for 63 percent of the average daily debt to the Fed by all publicly traded U.S. banks, money managers and investment- services firms, the data show. By comparison, they had about half of the industry’s assets before the bailout, which lasted from August 2007 through April 2010. The daily debt figure excludes cash that banks passed along to money-market funds.

Bank Supervision
While the emergency response prevented financial collapse, the Fed shouldn’t have allowed conditions to get to that point, says Joshua Rosner, a banking analyst with Graham Fisher & Co. in New York who predicted problems from lax mortgage underwriting as far back as 2001. The Fed, the primary supervisor for large financial companies, should have been more vigilant as the housing bubble formed, and the scale of its lending shows the “supervision of the banks prior to the crisis was far worse than we had imagined,” Rosner says. Bernanke in an April 2009 speech said that the Fed provided emergency loans only to “sound institutions,” even though its internal assessments described at least one of the biggest borrowers, Citigroup, as “marginal.” On Jan. 14, 2009, six days before the company’s central bank loans peaked, the New York Fed gave CEO Vikram Pandit a report declaring Citigroup’s financial strength to be “superficial,” bolstered largely by its $45 billion of Treasury funds. The document was released in early 2011 by the Financial Crisis Inquiry Commission, a panel empowered by Congress to probe the causes of the crisis.

‘Need Transparency’
Andrea Priest, a spokeswoman for the New York Fed, declined to comment, as did Jon Diat, a spokesman for Citigroup. “I believe that the Fed should have independence in conducting highly technical monetary policy, but when they are putting taxpayer resources at risk, we need transparency and accountability,” says Alabama Senator Richard Shelby, the top Republican on the Senate Banking Committee. Judd Gregg, a former New Hampshire senator who was a lead Republican negotiator on TARP, and Barney Frank, a Massachusetts Democrat who chaired the House Financial Services Committee, both say they were kept in the dark. “We didn’t know the specifics,” says Gregg, who’s now an adviser to Goldman Sachs. “We were aware emergency efforts were going on,” Frank says. “We didn’t know the specifics.”

Disclose Lending
Frank co-sponsored the Dodd-Frank Wall Street Reform and Consumer Protection Act, billed as a fix for financial-industry excesses. Congress debated that legislation in 2010 without a full understanding of how deeply the banks had depended on the Fed for survival. It would have been “totally appropriate” to disclose the lending data by mid-2009, says David Jones, a former economist at the Federal Reserve Bank of New York who has written four books about the central bank. “The Fed is the second-most-important appointed body in the U.S., next to the Supreme Court, and we’re dealing with a democracy,” Jones says. “Our representatives in Congress deserve to have this kind of information so they can oversee the Fed.” The Dodd-Frank law required the Fed to release details of some emergency-lending programs in December 2010. It also mandated disclosure of discount-window borrowers after a two- year lag.

Protecting TARP
TARP and the Fed lending programs went “hand in hand,” says Sherrill Shaffer, a banking professor at the University of Wyoming in Laramie and a former chief economist at the New York Fed. While the TARP money helped insulate the central bank from losses, the Fed’s willingness to supply seemingly unlimited financing to the banks assured they wouldn’t collapse, protecting the Treasury’s TARP investments, he says. “Even though the Treasury was in the headlines, the Fed was really behind the scenes engineering it,” Shaffer says. Congress, at the urging of Bernanke and Paulson, created TARP in October 2008 after the bankruptcy of Lehman Brothers Holdings Inc. made it difficult for financial institutions to get loans. Bank of America and New York-based Citigroup each received $45 billion from TARP. At the time, both were tapping the Fed. Citigroup hit its peak borrowing of $99.5 billion in January 2009, while Bank of America topped out in February 2009 at $91.4 billion.

No Clue
Lawmakers knew none of this. They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible. Mark Lake, a spokesman for Morgan Stanley, declined to comment, as did spokesmen for Citigroup and Goldman Sachs. Had lawmakers known, it “could have changed the whole approach to reform legislation,” says Ted Kaufman, a former Democratic Senator from Delaware who, with Brown, introduced the bill to limit bank size.

Moral Hazard
Kaufman says some banks are so big that their failure could trigger a chain reaction in the financial system. The cost of borrowing for so-called too-big-to-fail banks is lower than that of smaller firms because lenders believe the government won’t let them go under. The perceived safety net creates what economists call moral hazard — the belief that bankers will take greater risks because they’ll enjoy any profits while shifting losses to taxpayers. If Congress had been aware of the extent of the Fed rescue, Kaufman says, he would have been able to line up more support for breaking up the biggest banks. Byron L. Dorgan, a former Democratic senator from North Dakota, says the knowledge might have helped pass legislation to reinstate the Glass-Steagall Act, which for most of the last century separated customer deposits from the riskier practices of investment banking. “Had people known about the hundreds of billions in loans to the biggest financial institutions, they would have demanded Congress take much more courageous actions to stop the practices that caused this near financial collapse,” says Dorgan, who retired in January.

Getting Bigger
Instead, the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble. Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data. For so few banks to hold so many assets is “un-American,” says Richard W. Fisher, president of the Federal Reserve Bank of Dallas. “All of these gargantuan institutions are too big to regulate. I’m in favor of breaking them up and slimming them down.” Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.

‘Wanted to Pretend’
“The pay levels came back so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out,” says Anil Kashyap, a former Fed economist who’s now a professor of economics at the University of Chicago Booth School of Business. “They shouldn’t be surprised that a lot of people find some of the stuff that happened totally outrageous.” Bank of America took over Merrill Lynch & Co. at the urging of then-Treasury Secretary Paulson after buying the biggest U.S. home lender, Countrywide Financial Corp. When the Merrill Lynch purchase was announced on Sept. 15, 2008, Bank of America had $14.4 billion in emergency Fed loans and Merrill Lynch had $8.1 billion. By the end of the month, Bank of America’s loans had reached $25 billion and Merrill Lynch’s had exceeded $60 billion, helping both firms keep the deal on track.

Prevent Collapse
Wells Fargo bought Wachovia Corp., the fourth-largest U.S. bank by deposits before the 2008 acquisition. Because depositors were pulling their money from Wachovia, the Fed channeled $50 billion in secret loans to the Charlotte, North Carolina-based bank through two emergency-financing programs to prevent collapse before Wells Fargo could complete the purchase. “These programs proved to be very successful at providing financial markets the additional liquidity and confidence they needed at a time of unprecedented uncertainty,” says Ancel Martinez, a spokesman for Wells Fargo. JPMorgan absorbed the country’s largest savings and loan, Seattle-based Washington Mutual Inc., and investment bank Bear Stearns Cos. The New York Fed, then headed by Timothy F. Geithner, who’s now Treasury secretary, helped JPMorgan complete the Bear Stearns deal by providing $29 billion of financing, which was disclosed at the time. The Fed also supplied Bear Stearns with $30 billion of secret loans to keep the company from failing before the acquisition closed, central bank data show. The loans were made through a program set up to provide emergency funding to brokerage firms.

‘Regulatory Discretion’
“Some might claim that the Fed was picking winners and losers, but what the Fed was doing was exercising its professional regulatory discretion,” says John Dearie, a former speechwriter at the New York Fed who’s now executive vice president for policy at the Financial Services Forum, a Washington-based group consisting of the CEOs of 20 of the world’s biggest financial firms. “The Fed clearly felt it had what it needed within the requirements of the law to continue to lend to Bear and Wachovia.” The bill introduced by Brown and Kaufman in April 2010 would have mandated shrinking the six largest firms. “When a few banks have advantages, the little guys get squeezed,” Brown says. “That, to me, is not what capitalism should be.” Kaufman says he’s passionate about curbing too-big-to-fail banks because he fears another crisis.

‘Can We Survive?’
“The amount of pain that people, through no fault of their own, had to endure — and the prospect of putting them through it again — is appalling,” Kaufman says. “The public has no more appetite for bailouts. What would happen tomorrow if one of these big banks got in trouble? Can we survive that?” Lobbying expenditures by the six banks that would have been affected by the legislation rose to $29.4 million in 2010 compared with $22.1 million in 2006, the last full year before credit markets seized up — a gain of 33 percent, according to OpenSecrets.org, a research group that tracks money in U.S. politics. Lobbying by the American Bankers Association, a trade organization, increased at about the same rate, OpenSecrets.org reported. Lobbyists argued the virtues of bigger banks. They’re more stable, better able to serve large companies and more competitive internationally, and breaking them up would cost jobs and cause “long-term damage to the U.S. economy,” according to a Nov. 13, 2009, letter to members of Congress from the FSF. The group’s website cites Nobel Prize-winning economist Oliver E. Williamson, a professor emeritus at the University of California, Berkeley, for demonstrating the greater efficiency of large companies.

‘Serious Burden’
In an interview, Williamson says that the organization took his research out of context and that efficiency is only one factor in deciding whether to preserve too-big-to-fail banks.  “The banks that were too big got even bigger, and the problems that we had to begin with are magnified in the process,” Williamson says. “The big banks have incentives to take risks they wouldn’t take if they didn’t have government support. It’s a serious burden on the rest of the economy.” Dearie says his group didn’t mean to imply that Williamson endorsed big banks. Top officials in President Barack Obama’s administration sided with the FSF in arguing against legislative curbs on the size of banks.

Geithner, Kaufman
On May 4, 2010, Geithner visited Kaufman in his Capitol Hill office. As president of the New York Fed in 2007 and 2008, Geithner helped design and run the central bank’s lending programs. The New York Fed supervised four of the six biggest U.S. banks and, during the credit crunch, put together a daily confidential report on Wall Street’s financial condition. Geithner was copied on these reports, based on a sampling of e- mails released by the Financial Crisis Inquiry Commission. At the meeting with Kaufman, Geithner argued that the issue of limiting bank size was too complex for Congress and that people who know the markets should handle these decisions, Kaufman says. According to Kaufman, Geithner said he preferred that bank supervisors from around the world, meeting in Basel, Switzerland, make rules increasing the amount of money banks need to hold in reserve. Passing laws in the U.S. would undercut his efforts in Basel, Geithner said, according to Kaufman. Anthony Coley, a spokesman for Geithner, declined to comment.

‘Punishing Success’
Lobbyists for the big banks made the winning case that forcing them to break up was “punishing success,” Brown says. Now that they can see how much the banks were borrowing from the Fed, senators might think differently, he says. The Fed supported curbing too-big-to-fail banks, including giving regulators the power to close large financial firms and implementing tougher supervision for big banks, says Fed General Counsel Scott G. Alvarez. The Fed didn’t take a position on whether large banks should be dismantled before they get into trouble. Dodd-Frank does provide a mechanism for regulators to break up the biggest banks. It established the Financial Stability Oversight Council that could order teetering banks to shut down in an orderly way. The council is headed by Geithner. “Dodd-Frank does not solve the problem of too big to fail,” says Shelby, the Alabama Republican. “Moral hazard and taxpayer exposure still very much exist.”

Below Market
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, says banks “were either in bad shape or taking advantage of the Fed giving them a good deal. The former contradicts their public statements. The latter — getting loans at below-market rates during a financial crisis — is quite a gift.” The Fed says it typically makes emergency loans more expensive than those available in the marketplace to discourage banks from abusing the privilege. During the crisis, Fed loans were among the cheapest around, with funding available for as low as 0.01 percent in December 2008, according to data from the central bank and money-market rates tracked by Bloomberg. The Fed funds also benefited firms by allowing them to avoid selling assets to pay investors and depositors who pulled their money. So the assets stayed on the banks’ books, earning interest. Banks report the difference between what they earn on loans and investments and their borrowing expenses. The figure, known as net interest margin, provides a clue to how much profit the firms turned on their Fed loans, the costs of which were included in those expenses. To calculate how much banks stood to make, Bloomberg multiplied their tax-adjusted net interest margins by their average Fed debt during reporting periods in which they took emergency loans.

Added Income
The 190 firms for which data were available would have produced income of $13 billion, assuming all of the bailout funds were invested at the margins reported, the data show. The six biggest U.S. banks’ share of the estimated subsidy was $4.8 billion, or 23 percent of their combined net income during the time they were borrowing from the Fed. Citigroup would have taken in the most, with $1.8 billion. “The net interest margin is an effective way of getting at the benefits that these large banks received from the Fed,” says Gerald A. Hanweck, a former Fed economist who’s now a finance professor at George Mason University in Fairfax, Virginia. While the method isn’t perfect, it’s impossible to state the banks’ exact profits or savings from their Fed loans because the numbers aren’t disclosed and there isn’t enough publicly available data to figure it out. Opinsky, the JPMorgan spokesman, says he doesn’t think the calculation is fair because “in all likelihood, such funds were likely invested in very short-term investments,” which typically bring lower returns.

Standing Access
Even without tapping the Fed, the banks get a subsidy by having standing access to the central bank’s money, says Viral Acharya, a New York University economics professor who has worked as an academic adviser to the New York Fed. “Banks don’t give lines of credit to corporations for free,” he says. “Why should all these government guarantees and liquidity facilities be for free?” In the September 2008 meeting at which Paulson and Bernanke briefed lawmakers on the need for TARP, Bernanke said that if nothing was done, “unemployment would rise — to 8 or 9 percent from the prevailing 6.1 percent,” Paulson wrote in “On the Brink” (Business Plus, 2010).

Occupy Wall Street
The U.S. jobless rate hasn’t dipped below 8.8 percent since March 2009, 3.6 million homes have been foreclosed since August 2007, according to data provider RealtyTrac Inc., and police have clashed with Occupy Wall Street protesters, who say government policies favor the wealthiest citizens, in New York, Boston, Seattle and Oakland, California. The Tea Party, which supports a more limited role for government, has its roots in anger over the Wall Street bailouts, says Neil M. Barofsky, former TARP special inspector general and a Bloomberg Television contributing editor. “The lack of transparency is not just frustrating; it really blocked accountability,” Barofsky says. “When people don’t know the details, they fill in the blanks. They believe in conspiracies.”

In the end, Geithner had his way. The Brown-Kaufman proposal to limit the size of banks was defeated, 60 to 31. Bank supervisors meeting in Switzerland did mandate minimum reserves that institutions will have to hold, with higher levels for the world’s largest banks, including the six biggest in the U.S. Those rules can be changed by individual countries. They take full effect in 2019. Meanwhile, Kaufman says, “we’re absolutely, totally, 100 percent not prepared for another financial crisis.”

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