Monday, October 27, 2014

The Public Bank Option

Building an Ark

By Mike Krauss
Bucks County Courier Times

Ellen H Brown is an attorney, researcher, author and daughter of U.S. diplomats. And observant.

In the aftermath of the Wall Street collapse and the catastrophe it let lose, she noticed that while forty-nine of the fifty states and thousands of municipal governments were drowning in red ink and deficits, one state was not: North Dakota.

She investigated and discovered that unlike the other states, the people of North Dakota owned their own central bank, a mini Federal Reserve, the Bank of North Dakota (BND), and as one North Dakota banker put it, “When the crash hit, the BND never blinked, and the credit kept flowing.”

Affordable credit is the life blood of modern economies, providing families and individuals who are not wealthy the essential tool to create some wealth and prosperity, and enabling businesses to grow and create jobs.

The BND is not a commercial bank. It partners with, and does not compete with local banks, credit unions and financial institution. allowing them to make larger loans than otherwise possible, or “buying down” interest rates, making loans more affordable so that local banks can approve more loans.

This is a no branches, no tellers, no ATM, no advertising, no mega salary or mega bonus bank. Low overhead and very profitable. Last year the bank returned $94 million in profits to the state – non tax revenue – for a budget surplus.

The BND has a current loan portfolio of $3.2 billion at work creating jobs in a state of 670,000 people, about the population of the county where this newspaper is published. Unemployment in North Dakota is 2.6%.

The story line out of Wall Street and Washington is that the BND has nothing to do with the prosperity of that state. It’s all about the shale gas boom.

Nice try.

The BND was putting in $30 million a year to the state before the shale gas boom. North Dakota’s neighbor states all have gas and oil, and went into budget shock when the crash came.

Pennsylvania is in a shale gas boom, but unemployment is at 5.7 percent,  not counting those who have given up looking for the jobs that are not there, and lawmakers had to close yet another budget deficit - $1.4 billion.

Small wonder twenty state legislatures now have some kind of public bank legislation pending. But getting a bill through a state legislature is a long slog, So municipalities, cities and counties, which are more agile, are taking the lead.

Last month, Santa Fe, NM became the first American city to move formally to consider how to establish its own bank. More will follow.

Why the urgency?

An unprosecuted and unrepentant Wall Street parties on.  The next crash is only a matter of time. It will take much of what is left of the prosperity of the American people with it, including municipal deposits banked on Wall Street.

But a public bank can hold those municipal deposits, securely and not leveraged to back the almost insane $200 trillion plus of derivative gambles that now sit on the balance sheets of the largest U.S. banks, just waiting for the piper to come calling.

Public banks can do something else of immediate benefit to taxpayers: drive down debt service.

Newly formed public banks can immediately grow their assets and balance sheets, and grow gradually into credit creation,  by buying up high cost municipal debt, replacing it with lower cost debt and driving down the debt service that is often a large part of municipal budgets.

The latest Consolidated Annual Financial Report (CAFR) available for county in which this newspaper is published shows total debt of $330.2 million, of which $79.5 million is interest. And as reported in this newspaper, the county’s debt service obligation will increase by 17 percent in 2014.

That has to be paid for by taxes.


Ellen Brown founded the American public banking movement. In a recent essay she explains that creation of public banks is more than tax relief and prudent management of public funds; it may be a vital necessity -  a way to build an Ark to safeguard public funds in the coming flood that Wall Street will let lose.

The Great Depression on steroids


The coming Wall Street collapse

By Mike Krauss
Bucks County Courier Times

The story line coming out of Washington and the Federal Reserve is that life is getting better all the time for the American people. It is a false narrative, pure propaganda.

The reality is that the overwhelming majority of the American people remain trapped in a slow moving social catastrophe, almost six years of bankster induced austerity – savage budget cuts and crippled public services, crumbling infrastructure, high unemployment, home foreclosures, bankruptcies, failing schools, crushing student debt, higher taxes and more public debt.

It is reported that most Americans could not lay hands on $400 to cover an emergency, while the gap in income and wealth between the less than one percent and the rest of the American people grows ever more obscenely wider. Some recovery.

At the heart of this travesty lies the slavish devotion of the federal government – the Congress, administration and the regulatory agencies – to the predatory banks on Wall Street.

We all know this.

What we may not all know is that nothing has been done to change the business practices of the banks that collapsed the prosperity of a nation; and on account of this, they have gone on doing what they had been doing.

It is only a matter of time before those practices induce another, more devastating collapse – the Great Depression on steroids.

But, you say, the Dodd-Frank reforms cleaned up that mess. Think again. Dodd- Frank was written by an army of Wall Street lobbyists, as were the rules to implement even its most mild of corrections.

Party on, Wall Street.

There have been only two tangible results of Dodd-Frank. One is to push ever more community banks and credit unions out of business, allowing Wall Street to gobble up more customer deposits to back their bets. The other is that affordable credit has dried up, as the Wall Street banks abandon lending to businesses in our communities to chase the mega profits in the derivatives casino.

The “too-big-to-fail” U.S. banks have collectively gotten 37% larger since the 2008 banking crisis. The six largest banks now control 67 percent of all banking assets.

According to the most recent quarterly report from the Office of the Controller of the Currency, five "too-big-to-fail" banks now have more than 40 trillion dollars each in exposure to derivatives.

Derivatives, like the interest rate swaps that cost Philadelphia and its school district about $500 million, are bets -  and bets on bets, and bets on bets on bets, waiting for one large failure to send Wall Street into a frenzy of calling in the bets, desperate to salvage their paper profits before the losers go bust.

Who will be the big losers in the next crash? Depositors.

Dodd-Frank prohibits taxpayer funded bailouts like that of 2008. So, in the coming crash the Wall Street banks will go under? Of course not.  Instead, they will be “bailed in” by seizing depositors funds. The dry run was Cyprus.

But, you say, that’s my money! No, it isn’t. Legally, when you deposit money in a bank, it belongs to the bank, and what the depositor has is an IOU; which gets paid if there is any money left in a bank meltdown.

And there won’t be. The reserves of the FDIC will get blown away in days, if not minutes. And the 2005 bankruptcy “reform,” gives the counter parties to derivative bets “super priority” status to get paid off before “unsecured creditors.”

That’s you, and any local government which parks its money on Wall Street; money needed to meet payroll, for example.

This pending catastrophe is not something members of Congress, the president, or the real power in the U.S., the Federal Reserve, want to discuss.

But those responsible for public funds must pay attention to what the “invisible hand” at the Federal Reserve is doing, understand that it controls the American system of banking and finance and the U.S. economy, and that it works for the banksters on Wall Street and no one else.


In the next column, how the American people can survive another banking catastrophe.

Sunday, October 19, 2014

Philadelphia: broke unless you count the $11 billion


Putting the common wealth to work for the common good

By Mike Krauss

The finances of Philadelphia and its school district continue their roller coaster ride from one crisis to the next, taking the people of the city – and the children – along for the ride.

The latest jolt was delivered by the School Reform Commission (SRC), the unelected junta that controls Philadelphia public education. Meeting in an almost clandestine session, the SRC abrogated a long standing contractual agreement  with the teachers and compelled them to make contributions to their health care benefits.

Some will look at this and say, “Well, I pay for my health care, so why not teachers.” Sounds reasonable, until you consider the facts.

Teachers make a considerable investment in their own education.   Many are burdened with the debt they incurred for that education. They want to see a return on that investment, like any smart private business person, the kind who sit on the SRC.

In contract negotiations, health care is a part of the teachers’ compensation, in place of higher pay. It makes more sense to buy health care as a group and get lower premiums, than to take more salary and buy health care individually.

So the action by the SRC is in fact a pay cut, which was justified by two arguments which don’t stand up to scrutiny.

The first is that the savings by the district can be immediately distributed to our struggling schools for such critically needed items as teaching material, counseling, nurses and all the many critical aids to good teaching that have been cut.

The teachers are made to pay for what the people’s government will not.

What’s next? Will  police be asked to pay for their uniforms and weapons? Will firefighters be asked to pay for their protective gear?

The second argument for this pay cut for the teachers is that “There’s no more money.” But that is not so. This city has lots of money. It is just not managed to maximum benefit for the city.

The people of Philadelphia hold more than $11 billion in investments, managed by the Pension and Retirement Board, the Treasurer or various agencies and authorities. It is managed, in the case of the Pension and Retirement Board, by more than 100 different managers of different types of investments, financial products.

The Pension and Retirement Board regularly moves that money around from one investment to another, generating fees and commissions for the managers, but no appreciably greater return than had the money sat in the stock market.

Virtually none of the $11 billion is invested in and at work in the city, creating jobs and the tax revenues that can support a first class, world class education for our children.

There is an alternative.

Some portion of those investments – say  5 percent, or about $550 million - can be redirected into an equity position in the formation of a pubic Bank of Philadelphia, modeled on the hugely successful public Bank of North Dakota (BND).

Those funds are then leveraged as with any bank, in partnership with our community banks, credit unions and development agencies to generate many times that amount in affordable credit – the life blood of modern economies – flowing into the city.

For job creation, neighborhood improvement, infrastructure, sustainable business, better schools and more  - all those things the people of this great city deserve, but are told are not affordable.

The BND last year returned $94 million of profit to the state’s general fund, helping to post yet another budget surplus. No layoffs or cutbacks. It has $3.2 billion dollars invested in that state’s economy, with a population half that of Philadelphia, helping to drive unemployment to 2.6 percent. It helps reduce the interest paid on bond issues – public debt – and interest paid is to the people and into their own bank.

Perhaps most important, the state deposits its own money in its own bank, safely away from the casino on Wall Street, whose banks have done this city great harm but only small favors.

For too long, Philadelphia’s leaders have fought the annual budget battle with the same old tools – layoffs, cutbacks, more taxes, more debt or givebacks from employees.

Public banking is the new tool this city needs to build a new future of broadly shared prosperity, opportunity and justice for all its sons and daughters.

And get the city and its children off the roller coaster.

Mike Krauss is Chairman of the Pennsylvania Project and a founding director of the Public Banking Institute. www.publicbankingpa.org


Thursday, July 10, 2014

The Disappearing Congress

Turning back the clock on democracy
By Mike Krauss
Bucks County Courier Times

Americans are generally taught that the Declaration of Independence sprung whole from the mind of Thomas Jefferson, to launch America to greatness. But in fact that great work was preceded or accompanied by 90 like minded state and local “declarations of independence.”

As Bill Bigelow of the Zinn Education Project put it, “Jefferson was not a lonely genius conjuring his notions from the ether; he was part of a nationwide political upheaval.”

That upheaval was a long time coming, as Jefferson and all the “Founders” and “Framers” of the United States and its Constitution well knew.

The American Revolution was a step forward in more than 500 years of struggle, beginning in England in 1252 with the Magna Carta, which set the first limits on the old feudal order of arbitrary, aristocratic privilege and “royal” executive authority.

The language of the Declaration and the Bill of Rights in the U.S. Constitution echo earlier democratic writers and an English Bill of Rights promulgated in 1689, which the Founders and Framers of our democracy also knew well.

The protection against “cruel and unusual punishment” was written into American law because they knew the savage punishments common in English law up to the decades of the colonization of the New World.

The right of the accused in American courts to a speedy, public trial at which evidence must be presented and can be contested was written into our law precisely because the Founders and Framers well knew the secret courts of English “justice” and the prisons in which those arrested by royal command could languish for years, or have their confessions “extracted” (read torture), to be condemned and executed on trumped up evidence or a mere assertion of guilt.

The Declaration and the Constitution followed from the long struggle to establish democracy and the rule of law against feudal privilege and power.

That history is still being written.

The Member of Congress for the district in which this newspaper is published championed two bills, the Enforce the Law Act and the Faithful Execution of the Law Act. The point of these bills is that the president is deciding what parts of legislation the Congress enacts he will choose to enforce.

To some extent, these bills are part of the GOP’s never ending hissy fit over Obamacare. That’s unfortunate, because what the Congressman rightly calls “executive over-reach” is a real threat to our democracy and the rule of law.

Under our Constitution, the representatives of the people in Congress are empowered by the people to make the laws. The president, the executive, is charged to “faithfully execute” his office; that is, to carry out those laws.

This arrangement is not accidental. As the American jurist and diplomat, Craig S. Barnes notes in his seminal book, Democracy at the Crossroads, the intended purpose was to insure that in America, “The chief executive [the president] would have no royal prerogative to act on his own…Law would come from the compromise fashioned in the assembly [Congress] draw from the people. The [president’s] oath of office would be an explicit and solemn remedy for the severe grievances against which the colonists’ ancestors had been struggling for more than five hundred years.”

But beginning with Richard Nixon and his chief of staff, Dick Cheney, American presidents have been embarked on a power grab, and now issue “Signing Statements” to accompany the laws Congress has passed, indicating which parts of the law they will and will not enforce.

On whose authority does the president assert this extraordinary power? His own.

Hail, Caesar and thank you, Your Majesty.

The congressman is rightly concerned. This subversion of the Constitution has been fully embraced by George Bush and Barack Obama, and turns back the clock on democracy and the rule of law.

But the Congressman’s bills do not need to be enacted. The Constitution provides a remedy for a president who forswears the great oath to “faithfully execute” his office and “preserve, protect and defend the Constitution of the United States.” The remedy is impeachment.

But that remedy will not be employed, and nor will the congressman’s bills become law, because this Congress has almost no support among the American people, who know full well that only the one percent of the one percent who fund elections now have a voice there.

The congressman is shadow boxing.


The corruption of our elections, the captured Congress they produce and an increasingly autocratic presidency are pulling our hard won democracy back into the undemocratic injustice of the old, feudal order which the first American patriots threw off.

Tuesday, June 3, 2014

The Public Banking Debate: Three part series

The public banking debate, Part 1
The American middle class and democracy: going, going…

By Mike Krauss
Bucks County Courier Times

The American middle class and the democracy it supported are going down faster than the Hindenburg. 

With every passing day the United States looks more like the old Europe of aristocratic privilege which the first Americans cast off.

That’s the conclusion of university researchers and think tanks now getting their fifteen minutes in the news; and one scholar, Thomas Piketty, whose book “Capital in the Twenty-first Century” seems to have awakened even some American politicians.

But I doubt the readers of this column need any Ivy League experts to awaken them to the reality they experience every day and can see with their own eyes.

Since the Reagan years, the income and wealth of the nation have been steadily and grotesquely  concentrated in ever fewer hands. 

Unions were once a force for the middle class. But ‘free trade” sent the jobs off shore to fatten the wallets of the one percent and corporate CEOs, while the real wages of workers have not kept pace with the cost of living.

The political parties that were once broadly representative agents of our democracy have been reduced to irrelevance. They no longer control election financing, and those elected toe the corporate line; kept in line by a system of legalized bribes and post-Washington rewards.

Wall Street and the corporate elite own the federal government. The Supreme Court has locked in their domination with the most far reaching excess of any court in American history, declaring that corporations – created in the law by the people – have the same rights as the people whose law created them, and can spend at will to buy elections.

The betting now is that Jeb Bush and Hilary Clinton have the inside track to the White House. Americans talk of “dynasty” as if this were the seventeenth century of aristocratic privilege.

Because it is. The forward drive of the American people has been reversed.  The dynasty that will continue to occupy the White House will be the Wall Street Dynasty.

As Piketty put it, “The [American] egalitarian pioneer ideal has faded into oblivion, and the New World may be on the verge of becoming the Old Europe of the twenty-first century’s globalized economy.”

Is there any hope for an American government of the people, by the people and for the people? I believe there is, but it will not be found in Washington.

The key to a real and lasting American recovery is jobs: good paying jobs that produce broadly shared prosperity. Only this will reverse the collapse of the American middle class into an historical anomaly - that brief time in history between the Second World War and until the rise of the one percent that began with Reagan tax policies, a time  when the American middle class was the wonder of the modern world.

But neither the administration, Federal Reserve, Congress, Clinton II or Bush III will propose what it will  take to fund a national policy to put America back to work on a scale and with the wages which alone can provide relief and hope for the middle class.

Where will the money and initiative come from to put America bank to work? From the American people. We are sitting on trillions.

The money can be found in something called the Consolidated Annual Financial Report (CAFR) which most governments are required to produce, but never publicize. It sits in pension funds and an astounding array of other agency and authority investments, rolling over from year to year, making money for fund managers  and campaign contributions for politicians, but producing often inadequate and sometimes negligible returns for the people whose money it is.

The Controller of New York City reports $150 billion in city pension funds, and by one estimate the city holds $150 billion more in other “agency” investments -  a third of a trillion dollars. The 2013 CAFR for Philadelphia shows more than $11 billion in investments.  The Commonwealth of Pennsylvania is similarly endowed.

 In my next column: how the American people can bypass Washington, invest in their own communities, restore middle class prosperity and take back the American democracy .

Mike Krauss is a former officer of Pennsylvania county and state government, an international logistics executive, chair of the Pennsylvania Project and a founding director of the Public Banking Institute.  www.publicbankingpa.org

The public banking debate, Part 2

Banking for Main Street


In the wake of the 2008 failure of Wall Street, American middle class prosperity collapsed and along with it state and municipal tax revenue. Legislators and local officials responded with the tools they had to balance budgets: cutbacks, layoffs, more taxes and more debt.

In Pennsylvania, the governor and legislators settled on “austerity” and the promise of fracking:  cut spending and in a few years all will be well. It didn’t work out that way. Three years on, and Pennsylvania faces a $1.2 billion deficit.

What happened?

What happened is that you cannot grow an economy by shrinking the amount of money and credit in circulation. To the contrary, and the “falling” unemployment statistics are  propaganda,  bogus numbers manufactured by not counting the all time high percentage of Americans who have given up looking for work – young and old alike – because there are not enough jobs.

Here are two statistics you can trust.

CNN Money reports there were 1.2 million homeless American school children during the 2011-12 academic year, “up 10% from last year and 72% from the start of the recession.”

Wilkes Barre area newspapers report that 40 percent of the children in Pennsylvania’s Lycoming Valley live in poverty.

Because of this reality, state and local revenues remain insufficient to balance the budget and Pennsylvania public education, safety and health – already crippled – will take another hit.

It is much the same across the nation, except for one state, North Dakota, where the 2008 crash went unnoticed. Banks kept lending, no bank failed or needed to be bailed out, the economy kept growing, unemployment reached a record low of 2.6 percent, the state went on posting budget surpluses.

The middle class is alive and well in North Dakota. So it’s worth asking, what has North Dakota got that Pennsylvania and the rest of the nation do not?

The people of North Dakota own a bank, the public Bank of North Dakota (BND).

 For more than a decade the BND has generated almost $400 million in profits for the state general fund. Last year it posted record profits of $94 million.

This public bank has a current commercial loan portfolio of more than $3.2 billion invested is that state’s economy, supporting small businesses, infrastructure, affordable student loans, disaster relief and more.  With the BND as a partner, North Dakota banks offer loans with a 1 percent interest rate for the first five years of the term.

This generates jobs, economic activity and tax revenue.

Especially important for taxpayers, the public bank provides a lower cost alternative to the bond issues that drive municipal debt service costs and the higher taxes to pay them. Not only can a public bank lower these interest costs, any interest paid to the bank stays in the state or municipality that owns the bank.

Here in Bucks County, the debt owed on general obligation bonds for the county only, found in Note 13 to the most recent (2012) Consolidated Annual Financial Report (CAFR) shows  total debt (principal and interest) of $330.2 million, of which $79.5 million is interest: 24 percent.

The 2013 CAFR has not been released, but as reported in this newspaper, county debt service costs in the annual budget for 2014 were increased 17 percent over 2013. Take a bite out of that, and taxpayers get relief.

As important, pubic banks strengthen the vital local lending market, by partnering with local financial institutions to make larger loans than otherwise possible,  “buying down” the interest rates, providing  liquidity, assisting to collateralize municipal deposits and offering “bankers’ bank” products. With a public bank as a partner, community banks can take back market share from Wall Street, as happened in North Dakota.

Why do community banks matter? Here’s one reason. Throughout the never ending Great Recession, the states with the most number of community banks have had the lowest foreclosure rate (North Dakota was the lowest), and the states with the fewest community banks have had the highest foreclosure rate.

But our community banks are under siege, their numbers down nationwide from about 7,600 in 2008 to 6,200 today.

Budget cuts, layoffs, more debt and more taxes – the American version of the failed European austerity  –  cannot build prosperity. The builders need a new tool.

An American network of state public banks, working in concert with county and municipal public banks to grow local economies and the local banking industry can create a path back to sustained prosperity for the American people, and help rebuild a strong middle class, the backbone of every modern democracy.

 In my next column: the ABCs of public banking.
The public banking debate, Part 3
The ABCs of public banking
Public banks are capitalized with public funds and can hold state and municipal deposits safely away from the gamblers on Wall Street.


As with any bank, these funds are leveraged, but work in partnership with the local banking industry to meet the needs of communities they serve for affordable credit — to grow local economies, create jobs and tax revenue, reduce debt and help insure sound public finances. Banking in the public interest. 


This is the model developed with huge success by the Bank of North Dakota (BND). Across the nation, almost two dozen states and as many counties and municipalities are considering how best to establish similar public banks. Each faces similar challenges.

The first is to define mission. Generally, it’s all about generating affordable and sustainable credit to support locally directed economic development. But, where to direct that credit and the bank’s profits, which belong to the only shareholder, the people?

This depends on the needs of the people of the chartering government entity and varies from place to place, but here is a sample of what some communities are considering:

Provide mortgages and financing to reclaim the vacant buildings and properties that blight many neighborhoods, for homes or businesses. Support small businesses job creation. Refinance underwater mortgages. Consolidate student loans at lower interest. Reduce public debt. Finance community health centers. Support existing development agencies and infrastructure investment. Direct profits to schools and public safety.

The second challenge is capitalization. The Bank of North Dakota was started with a bond issue. Because the bank pays off its own bonds (self liquidating) that is an option. But this will depress profits in the early years of operation.

The option gaining the most traction is to examine existing public investments, identify those that are under-performing and replace them with an equity position in the bank. Prudent portfolio management.


The public Bank of North Dakota (BND) has consistently returned 17 to 25 percent on equity. I know of no municipal, state or pension fund investment that comes close. And some municipal investments are just dumb.

For example, Philadelphia and Pennsylvania both report in their Consolidated Annual Financial Reports (CAFR) major investments in foreign instruments — a staggering $1 billion in Philly. Not only is that money not invested in the city or state, it’s not even invested in America.

Moreover, few of these investments, whatever the return, can demonstrate any reinvestment in or tangible benefit for the communities whose money it is.

The third issue is governance. It is vital that, as in North Dakota, bankers run the bank and not politicians. Most adult Pennsylvanians will know what I am talking about.

Certainly, elected officials responsible for public funds must be able to remove a public bank CEO for cause. But staffing and management must be left to a CEO and directors with demonstrable banking experience, insulated from political manipulation and patronage hiring.

The forth issue is accountability. Elected officials must be able to insure the defined mission of the bank is fulfilled, which they may modify from time to time, and that the bank meets performance targets, or the CEO goes.

Fifth is transparency, which is vital for accountability. But a public bank is both subject to regulation and audit by state banking examiners, and is publicly audited by an elected (in Pennsylvania) controller, also accountable to the people.

Then there is risk management, which is enhanced by public banks. Because loans are originated by a commercial lender which must first approve the risk, and only then offered to the public bank for participation, which must conduct its own, independent risk assessment, the risk of default is substantially reduced. The highly profitable BND has one of the lowest default ratios in the nation.

There are other policy and management issues which must be addressed in any business plan and would be familiar to any banker, such as policies for capital, deposits, lending, profit analysis, interest rate risk and managing the bank’s investments.

In proposing public banks, the Public Banking Institute and Pennsylvania Project approach state lawmakers, city council members, mayors, county commissioners and those who have charge of public funds as if they were being asked to invest in a start-up, which in effect they are, and these officials must proceed with due diligence.

But this is not rocket science. It is the sound banking with which our community bankers are familiar, but was abandoned by Wall Street.

Advocates for Pennsylvania public banks are not proposing to re-invent the wheel — just to roll it down to our commonwealth from North Dakota.

Thursday, May 15, 2014

Wall Street's Water War

Libya revisited

By Mike Krauss
Bucks County Courier Times

We don’t hear much about Libya these days. Possibly because after it’s “liberation” it is reported to be a failed state; unceasing violence, tribal and sectarian strife and the collapse of civil life. Sort of like Iraq, which we also don’t hear much about.

Not a good look. Liberate and move on.

Libya, we were told at the time by Washington and the corporate media, was part of the “Arab Spring,” the short lived grab for democracy that took place in Egypt, Tunisia and elsewhere. But from the start, Libya was different.

In other parts of the Arab world, ordinary citizens rose up spontaneously in the capital cities, where the political and economic action is. In Libya, “rebels” came out of literally nowhere — the Sahara desert — armed, equipped and trained to depose the Libyan leader, Muammar Gaddafi.

Question. Who paid to arm, equip and train that army?

The answer may lie in the first thing they did. They set up a bank. Why a bank? Libya already had one.

But from the point of view of Wall Street, Washington and its NATO allies, it was the wrong kind of bank. It used Libya’s oil revenue to capitalize its own bank and make low-cost credit available to ordinary Libyans — for education and health care, for example.

Libya was funding an African Development Bank, making similar low-cost loans throughout the continent and cutting out the high-interest loans of the International Monetary Fund and the World Bank, financed by Wall Street and the U.S./U.K global banking cartel.

Well, we can’t have that.

One of the most remarkable projects the Gaddafi government financed is a water project called by some — and unreported in American media — the “Eighth Wonder of the Modern World.” It is a massive project that tapped ancient underground water reservoirs deep in the Sahara Desert to be delivered to the coastal cities of the nation and provide large scale irrigation for agriculture, so that Libya could feed itself.

The “Rivers,” as the project is known, are a 2,500 mile network of lined concrete pipes, over 12 feet in diameter, buried in the desert sands to prevent evaporation. There are 1,300 wells, 500,000 sections of pipe and 2,300 miles of haul roads. More than 327 million cubic yards of earth were excavated. Large reservoirs provide storage and pumping stations control the flow into the cities. Components of the project were manufactured locally and not imported from multinational corporations.

This massive project had cost $30 billion up to the removal and murder of Gadaffi. It was financed at cost by the Libyan government from its own money, without any loans from the IMF, World Bank, Wall Street and the U.S./E.U. banking cartel.

It delivered water to millions for free. Is your water free?

During the “liberation” of Libya this project was bombed. Why? Why would the U.S. and its NATO allies make war on water?

To create a problem. People need water. Now millions don’t have it. But a solution is at hand. This vital infrastructure will be rebuilt: by private business, financed by the Wall Street, U.S./U.K banking cartel.

And every penny of that cost, and the private profit and bank cartel interest on top of it will be priced into what Libyans will now pay for the water they had for free.

Libyans will pay through the nose for the water to wash their faces.

The United Nations Environment Program 2007 has described in reports (that will seldom if ever be reported in American media) a “water for profit scheme” which promotes the privatization and monopolization of the world’s water supplies by multinational corporations. Working hand-in-glove, the World Bank recently adopted a policy of water privatization and “full-cost” water pricing.

In the U.S., cash strapped municipal and state governments still struggle to solve another problem manufactured on Wall Street, the collapse of their economies and revenues. Pennsylvania, for example, has a $1.2 billion deficit to close, despite the jobs and revenue which the fracking boom is said to have created.

But there is a solution to this problem! Public infrastructure and property can be sold off to private owners (below market) and the American people can rent forever what they once owned: highways in California, parking spaces on Chicago streets, parking garages in Harrisburg, a part of the park at Washington’s Crossing and the gas works in Philly.


Watch out below. Wall Street at work.

Public opinion bought and paid for


The American problem

In a previous column I introduced a phrase with which many readers may not yet be familiar: “presstitute media.”

The phrase was coined by Paul Craig Roberts, a highly qualified observer of how America government actually works, who argues that the American national media is now largely a bought and subordinate unit of the corporate interests — Wall Street and finance first and foremost — which dominate the government in Washington.

I offered two examples of what Roberts is talking about. Here is another:

CNN anchor, Christine Amanpour recently interviewed the American diplomat, an assistant secretary of State, who was caught on tape months ago discussing the intended regime change in the Ukraine — which politician the U.S. administration would install as president of that unhappy nation.

In other words, which one would play ball with Wall Street banks, the IMF and World Bank; could be relied upon to stop buying oil and energy from the Russians and buy it instead from freedom loving Exxon Mobile; and which one would put Ukraine’s extraordinary wheat production in the hands of American agribusiness.

The diplomat, a woman who when she thinks she is not on the record, conducts herself in the language of a boys high school locker room, was being rehabilitated after the fallout from her cosmically embarrassing conversation.

She got lots of time to explain what Ukraine is really all about — freedom and democracy and self rule — and the noble assistance being offered by the U.S. and E.U.

Amanpour finally got around to that leaked conversation. And the U.S. diplomat got to explain, again, that her actions and that of the American government had nothing to do with regime change, but were about good U.S./E.U relations, and, of course, freedom, democracy and self rule.

Not self rule for the Ukrainians in the Crimea, who when given the chance, self-ruled themselves right out of the Ukraine and back to Russia. And not for the apparent millions in eastern Ukraine who want to do the same thing. Not that self rule.

Amanpour kept a straight face while this recovering diplomat related how, in the midst of the chaos (which she had helped orchestrate), she took life and limb in hand — and sandwiches. And went out on the street to deliver them to the people “on both sides.”

Diplomat and saint, by her own testimony. Fighting off the urge to laugh out loud, I stayed with CNN.

Amanpour then went immediately into a segment on propaganda. The Russians, we learned, are really good at it. But not so good as were the Nazis, we learned.

The attempt to link the Russian government with the Nazis was too obvious for words.

What explains that editorial decision to vilify the Russian government by association with the Nazis, which is the European equivalent of one American calling another a racist?

It was the desire to lead away from another American embarrassment. “Our side” bungled it in the Ukraine. In the ensuing chaos, the freedom loving Ukrainian leader we wound up with is a guy who fronts modern, honest to God, unrepentant Nazis.

It’s not just that their grandfathers fought with the Nazis against the Russians and Allies in WW II, but that to this day they spew the toxic language of racial and ethnic purity.

So the American corporate media spreads the corporate government line, dutifully directing the attention of the American people away from any information that explains why millions of Ukrainians want no part of the American government’s new friends there.

Which is not to say that the Russian government is not playing the propaganda game. I’m sure it is. And I suppose the Russian media is as manipulated by oligarchs as is the American national media. And maybe most Russians have no more idea what is going on in the Ukraine than most Americans.


But that’s their problem. The American problem is, we need a free press to sustain our democracy; but increasingly, the American national media appears as bought and paid for as everything and everybody else in Washington.