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Archive for February, 2009

Feb 23 2009

Apparently the Queen of England in her infinite wisdom asked the probing question: ‘Why did no one see the financial crisis coming?’ As much as I am sure we all sympathise with how upsetting the current crisis must be for her personally, I am not convinced the presupposition behind her question is altogether sound. Going out on a limb here I wonder if in the real world outside her castle there weren’t people who actually saw the crisis coming years in advance. Off the top of my head I can think of three people accurately predicting the crisis as inevitable over 10 years ago. The first is George Soros, the (as of late) philanthropist financier (good for some $18 billion) who became an international economic guru and the centre of attention in the economic forum Davos 1995 after having “broken the Bank of England” by accurately predicting seismic devaluation of the British pound and the Swedish crown in 1992. “Soros walked away with a profit of $1 billion from a couple of months’ work.

The unregulated market is a greater threat to an open society than any totalitarian ideology.

In The Crisis of Global Capitalism (1998) Soros argues that over the last 20 years, the emergence of “market fundamentalism” – that is, the idea that markets need only be regulated by the forces of profit and competition – has distorted the role of capital to the extent that it “is today a greater threat to open society than any totalitarian ideology.” As one reviewer comments: “It comes as a surprise that a person that has earned billions because of lack of regulation of the world economy has concluded that unless international regulations are established capitalism will collapse.”

One would have thought that Queen Elizabeth II would at least have taken notice of the man who made the biggest ever dent in that cute little face of hers which ornaments the pound coin.

Soros has a massive influence in the world, both by means of his philanthropic organization the Open Society Institute which sponsors projects that strengthen democratic, non-totalitarian regimes (from which he himself suffered, being a Jew and survivor of Nazi Germany), and by pumping millions of dollars into the previous anti-Bush campaigns, as well as decisive financial backing of Obama via moveon.org.

The second influential person I can think of is the British professor John Gray. No, not that one (although I wish more hockey mums had bought False Dawn thinking it was a continuation of Men are from Mars, Women are from Venus).  John N. Gray is a professor of European Thought at London School of Economics where Soros also studied, both under influence of the monumental philosopher Karl Popper.

An unfettered global free market economy will not spawn a self-regulating utopia, but increasing social instability and economic anarchy.

In False Dawn: The Delusions of Global Capitalism (1998) he argues along the same lines, claiming that the boom of the 1980s was an exception to the rule, and that a decline in state regulation leaves the society highly vulnerable once the bubble bursts. An economic system made up of individual amoral players who gamble for maximum profit cannot be expected to result in an over-all moral system. “An unfettered global free market economy will not spawn a self-regulating utopia, but increasing social instability and economic anarchy”.

It is in response to the Queens question The Guardian is organizing a debate on the theme Capitalism in Crisis Part Two – The global economy: Can we fix it? in London on 2 March, where Prof. Gray will present his case for anyone willing to listen. 

The third person I would promote is the British documentary maker Adam Curtis, who continues to explore and contextualize current events through his original and stylistic BBC productions. This is the fourth part of a series called The Mayfair Set (1999) which traces drama in UK corporate and political life from the 1960s to the present day.

 

10 YEARS LATER

At first sight it might appear that the current crisis was primarily caused by Americans home owners defaulting on their morgages, but digging deeper it doesn’t make sense since “only about 5 to 10 percent of these loans failed – not enough to cause systemic financial failure“.

“What did cause the crisis was the writing of credit derivatives. In theory, they were insurance policies for investors; in practice, they became a guarantee of global financial collapse.[...] About $2 trillion in credit derivatives in 1989 jumped to $8 trillion in 1994 and skyrocketed to $100 trillion in 2002.[...now standing at ] at $596 trillion. Credit derivatives are breaking and will continue to break the world’s financial system and cause an unending crisis of liquidity and gummed-up credit. Warren Buffett branded derivatives the ‘financial weapons of mass destruction.’”

It would have been the end of our economic system and our political system as we know it.

On 15 September, 2008, in the space of 2 hours the US Federal Reserve “noticed” a “draw down” (euphemisms galore) of $550 billion that suddenly “left” the money market. To me is shows how economy is really psychology, since nothing with real value would devalue that much that quickly. They immediately pumped $105 billion into the system, but realized they could not stem the tide. Instead they managed to stop the panic by offering some kind of guarantee on the accounts. “If they had not done that,” says Rep. Kanjorski 3 min into this interview, “their estimation was that by 2 o’clock that afternoon $5.5 trillion dollars would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States and within 24h the world economy would have collapsed. [...] It would have been the end of our economic system and our political system as we know it.”

 

Perhaps the most shocking thing about this clip is not how close to a complete melt-down we are, or how unstable the system is when within 24h the equivalent of half  the US national debt could “disappear”, but how helpless and powerless the government appears to be when a member of congress asks a desperate hockey mum if she has any better idea on how to solve the problem, because “we don’t know”.

Yet this is supposed to be the liberal democratic system that will bring stability and wealth to the whole world. This is the system destined to end all other systems and establish the glorious New American Century.

BLINDED BY RELIGIOUS DELUSIONS OF GRANDEUR

The myth of the universal supremacy of the American way, and the apocalyptic myth of the return of Christ.

While “our boys overseas” have been fighting against fictitious weapons of mass destruction, the boys back home have been busy building real ones as well as unleashing the greatest global economic instability in at least 80 years. The neo-cons with their Project for the New American Century actually believe that the American regime is the ultimate system that will bring stability and safety to the world – or at least to Americans – but the masters of that system, the likes of Buffett and Soros, explicitly warned about the instabilities built into it. Why did those in power not listen to their own experts? Why did they ignore the facts? How could people like Peter Schiff be met with laughter and redicule? Possibly because they saw no other options, but more worryingly – maybe they did not want to. I would argue that they were blinded by a belief in their own version of Divine Providence, their own Cold War propaganda, the Good vs Evil mentality, where they had a destiny to fulfill. Deep in the neo-con psyche – and in the American public’s psyche in general – there are two utterly fictional myths that alone help to shed light on the world we live in; The myth of the universal supremacy of the American way, and the apocalyptic myth of the return of Christ. These are not just prophecies, but myths they actively try to turn into self-fulfilling prophecies by means of armed forces. Sheer greed is not enough to explain their profound blindness before reality. Economists are clever. The irrationality of the last decade is imbued with rationalised mythology, faulty reasoning, apocalyptic preaching and false certainties of the type we only find in religious circles. The religious attitude implies a deep unwillingness to face reality and is often in direct opposition to drawing rational conclusions thereof.

The Project for the New American Century is an American neo-conservative think-tank that freely published the most shocking expression of American hubris and overt self-interest. While the activity seems to have officially ceased the website is still available. Only by reading the views of American imperialism found therein can one understand the prophecies of world-domination that have fuelled the irrational behaviour of the last decade. PNAC was founded in 1997 by the likes of Jeb Bush, Dick Cheney, Paul Wolfowitz, William Kristol and Francis Fukuyama and their arrogant statement of principles is still available for all to see - not the least to militant Muslims.

• we need to increase defense spending significantly if we are to carry out our global responsibilities today and modernize our armed forces for the future;
• we need to strengthen our ties to democratic allies and to challenge regimes hostile to our interests and values;
• we need to promote the cause of political and economic freedom abroad;
• we need to accept responsibility for America’s unique role in preserving and extending an international order friendly to our security, our prosperity, and our principles.

The most extreme expression of the idea of how American liberal democracy is the inevitable winner in the global battle over how society should be organised can be found in Fukuyama’s The End of History and the Last Man, where history is seen as having an inevitable direction that culminates in the American regime. It is that kind of evangelical certainty that can underpin acts of extreme violence and stir up a religious fervour whose apocalyptic undertones suggest that the US cannot fail.

Which is the greatest myth in history? The myth of One Great Nation under God.

 The noble aim of the conservative approach is stability. But the questionable assumption is that a precondition for stability is to be found in national unity. This idea that in order for a state to be stable the masses need to have common myths to identify with, goes back to the theories of Wolfowitz’s teacher Leo Strauss, and ultimately to Plato’s Republic and the concept of The Noble Lie. Which is the greatest myth in history? The myth of One Great Nation under God. How do you strengthen that sense of group identity? By maintaining a constant enemy, be it Communists, atheists, Muslims or some abstract Terror concept.

For all the talk of freedom, if it is to be found anywhere it is in educated Europe. How can anyone claim that American society is one of freedom and democracy when it is made up of a homogenous population of Bible thumpers, has a two party system and a state utterly powerless before the real economic forces? According to a Newsweeek poll 67% of Americans say they believe that the entire story of Christmas is historically accurate – the Virgin Birth, the Angels, the Wise Men… the whole lot. If America was indeed the country of freedom, surely there would be at least a great diversity of faith where each followed the spiritual path best suited to their temperament. If the American democratic system is the ultimate system to be adopted universally, how come after having gone to their schools 67% still believe Satan is real, 39% that atheists will go to hell and 52 % that Christ will return?

The scary answer to the Queen’s question is that the signs were not only seen but that the turmoil is a welcome “proof” that we are living in the last days when Jesus shall return in all his glory. “Hallelujah!” The numbing of the critical faculties, the encouragement of evangelical rapture and glorification of Armageddon goes a long way towards explaining how war and destruction can be seen as something positive. More moderate Christians may object – please do so, loud and clear! - but what does actually remain of a Christianity without the idea of the return of Christ? Is it not bizarre that an intensely Christian nation is supporting Israel? What other importance can Jerusalem possibly have to neo-con evangelists? According to one controversial theory the militant support of Israel is not due to the Jewish influence in Washington, nor solidarity with any humanitarian cause or even military presence in the M.E., but to the mythological role to be played by some Jews in the Last Days. 

“Originally a belief of a small, elite group in Britain, messianic dispensationalism arrived in America in the later decades of the 19th century and became part and parcel of the worldview of many conservative Protestants in this country.[…] They consider the Jews to be continuers of historical Israel and heirs to the covenant between God and his people, and define the church as the body of true believers, those persons who have undergone genuine experiences of conversion and have accepted Jesus as their personal savior.
Dispensationalists assert that true Christian believers will be removed from earth to heaven at the beginning of the apocalypse, will be spared the turmoil of that tumultuous time, and will come back to earth at the end of the millennial period. For the Jews, however, that period will be “the time of Jacob’s trouble” prophesized by Jeremiah (30:7). They will encounter a period of persecutions launched by the Antichrist, a tyrannical Jewish leader and messianic imposter who will rebuild the temple in Jerusalem and reinstate the sacrificial system. Following an international battle at Armageddon, a site in northern Israel, the Antichrist’s reign will come to an end, and Jesus will come back to earth with the true believers and establish a global righteous kingdom with Jerusalem as its capital.”

Here we have one possible answer to the question as to why no one in power acted as to prevent the current crisis. Perhaps they were too busy believing in their own supremacy and pushing their disturbing prophecies along by means of an unprecedented privatised military arsenal. The forward planning spans either 50 years until the return of Christ, or the 100 years of The New American Century. Rational minds would have spotted the inherent tension between world domination and eschatology. Religious minds are not looking for contradictions.

I apologize for upsetting anyone with a healthy religious faith, but this is too serious to brush aside. I also sincerely regret having to be this critical towards USA, because I do love Americans and should distinguish between the native and the hative, the Californians and the Presbyterians, the New Yorkers and the rednecks, the Progressives and the Neo-Cons and so on, but taken as the democratic country that re-elected Bush, so much more is to be expected from its audacity and power. It is of no consolation that the Muslim antagonists and conspiracy theorists are no less apocalyptic. The American potential for world improvement is paralleled only by the potential disaster implicated in some of their fundamental myths. The world needs educated moral examples, not death glorifying evangelists.

One thing is sure Queen Elisabeth – God will not save you. Let’s see what Obamarama can pull out of his sleeve.

Feb 14 2009

The door of my house in Granada is padded with metal and I had never given it any thought until an old lady that was born here 82 years ago came knocking and told stories about what happened here in the late 30ies. Some thugs came by one night she said and poured petrol on the door and was just about to set the house on fire when in the last minute they decided to leave the house with children alone and instead burn down the church at the mirador San Nicolas. Her father thus padded the door and all the windows so as to give them time to put out a fire should it happen again.

The most horrific crimes have been committed by perfectly normal people acting as a group, surrendering individuality and personal responsibility to a greater cause.

All over Spain there are discoloured bullet holes in the facades of beautiful old Gothic buildings and the horrific stories about mass-executions and farmers being shot through the eyes have an air of incredibility about them given the sublime beauty of the landscape today and the peaceful, fun loving mentality of the Andalusians I know. But the most horrific things humans have done are not crimes of individuals. The deaths caused by them are almost insignificant in comparison with the crimes performed by perfectly normal people acting as a group, surrendering individuality and personal responsibility to a greater cause, be that the Nation, the Leader, the Religion or the Ideology.

Perhaps no one has been more marked by the seeming irrational bestiality of humans and at the same time done so much to try to comprehend, explain and fight against it as the Hungarian-born author Arthur Koestler. Just like Orwell, Hemingway and many European intellectuals at the time. Koestler came to Spain to fight against the Franco lead fascists 1936 and onwards.

Arthur Koestler

Arthur Koestler

The whole notion that a group of poets would run to the trenches in the front lines of another country is bizarre and very hard to understand for us today. What did they expect to achieve? Were they going to read at the enemy!? In order to understand this intellectual mobilisation it is important to realize the role played by Spain and what was perceived as being at stake. The Spanish Civil war between 36-39 was the stage for the battle between the public and the ruling aristocratic minority. In 1931 through general election there was established the Second Spanish Republic that granted citizens, including women, the right to vote, the freedom of religion and the abdication of the king. It was fundamentally a progressive step for justice, from a plutocratic feudal society with widespread poverty to something akin to modern democracy. One of the problems was that while the “public” agreed that the state should be separate from the church and workers given more rights, there was great disagreement about how the state should be organised. Spain was a melting pot of communists, anarchists, fascists, monarchists, and was internationally seen as a war by proxy between the old aristocratic capitalist ideology and Russian backed communism. Catalonia was mainly socialist or communist. Malaga was the strong-hold of the anarchists (but being anarchists they had problems of organisation and fell quite easily to Franco’s troops). The internal disagreements between the political parties representing “the people” was probably one of the reasons why Franco could rise to power and mobilise a coup d’etat with the unholy alliance between the aristocracy, the church and the guardia civil. Thus Spain was perceived as having immense symbolic value for the whole of Europe as the struggle between a frail democracy and an aristocratic fascist regime. Franco’s mass-execution in the bullring in Badajoz and the air-bombings of Madrid were the precursors of the way the WW II would be fought.

Although some intellectuals like Hemingway did take to arms in the struggle, their role was to “make themselves useful” and indeed reading propaganda to the soldiers to boost morale. Koestler’s role was different, and the nail-bitingly dramatic story that lead him to be imprisoned with a death sentence in Seville is utterly thrilling. He was 31 years old and had been working in Berlin as a journalist, and was secretly working for the communist propaganda organisation with its headquarters in Paris. At the time of the news of Franco conquering Seville, he was however utterly depressed due to disillusions with communism in practice and personal failures as a writer, and was living in absolute poverty in a hayloft outside Paris writing on some anti-fascist book. Upon hearing the news he went to the head of the communist propaganda organisation, Willy Münzenberg, and asked to be sent to fight in the war. Willy finding the idea of a journalist fiddling with a gun a waste had a moment of inspiration and suggested that Koestler would instead go as a journalist and try to achieve an interview with Franco, with the implicit mission to establish proof that the fascists were breaking the international non-intervention agreement and were in fact receiving support from Nazi Germany and Mussolini’s Italy. At this time it was denied by all three countries and UK and France did not take the threat seriously. Koestler was fixed up with a fake cover as a journalist for two fascist sympathising news papers, was given more money than he had ever seen in his life and given an elegant suit. He was to enter Spain via boat to Lisbon, but by an over-sight on his part when he arrived in Lisbon his real Hungarian passport had expired and he was sent to the Hungarian consulate.

Quipo de Llano

Queipo de Llano

By a fortunate (or unfortunate), twist of events, the Hungarian consul was friends with the Franco aristocracy living in exile in Lisbon. Koestler was thus invited to a posh party in a casino and from a hayloft he suddenly finds himself buying drinks out of the communist wallet for the Marques de Quintanar, the Dutchess Vega de so-and-so, and when someone suggests a toast to the Hungarian Regent Koestler reciprocates by drinking to the health of General Franco. The most extraordinary thing is that he is introduced to no one less than Franco’s brother, Nicolas Franco, from whom he obtains a priceless document called Safe-Conduct, describing him as a reliable friend of he National Revolution that leads him all the way to Seville and grants him a personal interview with Franco’s head general in Seville – General Queipo de Llano.

Me on the road

A crucial event happens on his third day in Seville, and takes place in the allegedly famous Hotel Cristina. Having lived in Seville for a year and a half I did not know of any such place and I was curious to see if I could track it down. A couple of days ago I was invited by an old friend, a flamenco dancer that was just having her solo debut in one of the main theatres in Seville, to come down for a visit and I thought I could drive down on my bike, enjoy the flamenco and try to locate the Hotel Cristina. There is next to no info online, but it was supposed to be central, so after a bit of research and asking older people that were likely to remember such an illustrious place I managed to find the Hotel where Nazi pilots stayed in 1936. I learn that it was completely rebuilt in 1983, but while the inside is private residencies only the exterior is kept exactly as it was. One señora now living there told me: “Si, si, esto era Hotel Cristina. Aqui ibamos a bailar despues de las bodas”. The building is the yellow complex between five star hotel Alfonso XIII and El Torre del Oro where you find the modern US equivalent of cultural achievment…the McDonalds, and as it turns out about 100m away from where I used to live. Back then foreign journalists in Seville were treated with utmost suspicion, and one notorious Captain Bolin of Scandinavian descent was particularly fierce and had put a gun under the nose of a French journalist before he was expelled.

Hotel Cristina

Hotel Cristina

Any journalist entering Hotel Cristina was instantly suspected a spy since mainly Nazis lived there. As for proof of German support of Franco, it was not hard to come by as the Swastika uniforms were everywhere to be found. Against his better judgement Koestler still decides to enter Cristina and finds a group of Nazi airmen sitting by a table in the lounge bar. He walks up to the bar and orders a sherry, when suddenly his gaze is met by one of the men at the table – Herr Strindberg, the son of the famous Swedish author August Strindberg. The two had worked together in Berlin some years earlier and Koestler knew instantly that Strindberg had not only recognised him but beyond any doubt could blow his cover. In a moment of irrational panic, he orders another sherry, swallows it, and utters loudly:

-”Hello, aren’t you Strindberg?”

Strindberg replies:
-”Excuse me, but I am in a conversation with this gentleman”.

Alfonso XIII

Alfonso XIII

Koestler then mounts this incredible argument, acting indignantly about Strindberg not having greeted him properly, and when the Nazi officer demands to see his credentials he starts shouting, waving his hands in the air, calling it an insult and demanding that Captain Bolin sets the record straight. By chance the Captain walks through the doors and Koestler carries on with his theatrical tantrum at which the Captain gets pissed off and basically says he could not care less about whether two foreign journalists greeted or not and that they could all fuck off! As the Captain walks out the lounge Koestler also walks off in a strop, and due to the confusion he is not stopped. When back at his hotel, the rumour has spread about what had happened and he is advised to leave at once. He manages to arrange a transport to Gibraltar and crosses the border one hour before the order for his arrest is issued.

Walk along history lane

Avenida de la Constitucion

Back in Paris, his story becomes front page news in both France and UK, and help raise the awareness of the brotherly bond between Hitler and Franco. Koestler return twice more to Spain, first in some secret mission personally requested by the Spanish Foreign Minister to recover some documents in Madrid, and then to report as a war correspondent in Malaga, where he is eventually captured by none other than Captain Bolin himself and is very nearly shot on the spot. Instead he spends three months in the Central Prison in Seville, under death sentence, where Franco had revived vile garotte as a means of execution. The vile garotte was a way of killing someone by screwing a vice into the back of an iron collar, and listening to the screams of his previous cell mates he suffers both extreme anxiety attacks as well as some mystical experiences inspired by Euclid’s proof of infinity. Details about this episode is documented in Dialogue with Death, available to read online.

He is released in exchange for a very beautiful lady from Seville, a wife of a fighter pilot, captured by the opposition. However, Koestler spends time in jail twice more in his lifetime. Once in Le Vernet in France, ironically as a suspected Nazi sympathiser, and in Pentonville prison in London due to lack of the appropriate documents. These were extremely political times, and almost every character in his autobiography dies an unnatural death.

Franco and Hitler alliance

Franco and Hitler alliance

I reread his story by the beautiful fountain in front of Cristina, where the now car free area is bathing in sunlight and busting with a sublime spring like euphoria. Tourists in horse carriages, students on the year abroad, locals riding the public bicycles whistling along la Avenida de la Consitucion. The Andalusian newspaper El Correo de Andalucia has put up historical front pages along the walk, and with a mildly hopeful smile I notice that someone has thrown a stone through the one declaring the united front of Franco and Hitler.

I will leave you with this gem, and if anyone can understand a word of what Franco is saying about “a movie man” please transcribe it below.