Chasing dreams

EU bailout for Greece, others is not enough

By establishing a 750 billion euro fund to bailout Greece and aid other struggling governments, Germany and other strong European states are chasing a dream -- a single European currency and broader European unity -- that may have no place in reality.

More budget crises will follow, if not in Greece then in Portugal, Spain, or perhaps Ireland or Italy, because the euro is simply not backed by a strong central government.

Although the currency is managed by a European Central Bank, European states have not ceded to the European Union enough power to tax and spend.

Absent a central government that can tax citizens and businesses in richer nations, like Germany, to shoulder some of the costs of pensions, health care and other social benefits in poorer nations like Greece, fiscal stability in the less wealthy states, and a single currency, is simply not possible.

Since the late 19th Century, the Europeans have been two generations ahead of the Americans on social policy, and much more aggressive in assuring that each citizen, no matter his station in life, enjoys comprehensive health care and a significant measure of economic security.

With the commercial integration that followed World War II through the European Common Market, composed initially of only six nations, and the broader European Free Trade Area, which encompassed most of the non-communist states, public aspirations for benefits in poorer nations and regions, like Portugal, Greece and southern Italy, grew to rival those in richer states.

Politicians responded by expanding and enriching social safety nets but costs rose too, as doctors, teachers and the like, expected to enjoy salaries and benefits more comparable to their colleagues further north.

The price tag outran the ability of employers and governments to pay, and inflation and national budget headaches followed.

Until the euro was adopted in 1999, southern nations would let their national currencies gradually fall in value against the German mark and other currencies of richer nations.

That boosted exports and tax revenues, but the pensions paid by Portugal, Greece and others became worth less if spent in Germany and other northern jurisdictions. Conversely, these Mediterranean states became great places for Americans and northern Europeans to vacation and retire.

After 1999, national governments in Spain, Portugal and Greece, and to a lesser extent more prosperous Italy, faced the difficult prospect of telling their citizens they could not retire as young, enjoy the same health benefits or employment security as the wealthier French, Germans and Dutch.
Instead, these governments borrowed heavily and now face severe retrenchment and perhaps eventual bankruptcy.

The Teutonic austerity Germany and others will compel to bail out these floundering governments will shatter the myth that the welfare state can be provided equally across Europe, or Mediterranean states will simply quit the euro and take with them the Franco-German dream of European Unity.

Before we chasten our warm water friends too harshly for living beyond their means, remember northern reluctance to share wealth through a strong central government has much to do with their predicament.

In the United States, the states can’t print money and some spend more aggressively than others but most social benefits are substantially assisted by Washington, which can tax New York to subsidize Mississippi.

Unless Germans and others are willing to let Brussels tax them as necessary to equalize social spending between richer and poorer states, the euro will remain an uncertain adventure and European unity a utopian dream.

Deepwater Horizon disaster

On Tuesday, the US senate began hearings into the Deepwater Horizon disaster, which took the lives of 11 workers in an April 20 explosion and has since poured millions of gallons of oil into the Gulf of Mexico, threatening the region with an environmental and economic catastrophe.
Appearing before the Energy and Natural Resources Committee in the morning and the Environmental and Public Health Committee in the afternoon were executives from the three corporations implicated in the disaster: Lamar McKay, president of the US operations of BP, which owned the oil and the drill site; Steven Newman, president of Transocean, the contractor that owned the rig and employed most of its workers; and Tim Probert, an executive with Halliburton, which contracted for the work of cementing the rig’s wellhead one mile beneath ocean’s surface.
The hearing resembled a falling out among thieves, with multi-millionaire executives—who, until April 20, had collaborated in thwarting basic safety and environmental considerations—each blaming the other for the explosion.
McKay of BP blamed Transocean. “Transocean owned the Deepwater Horizon drilling rig and its equipment, including the blowout preventer,” he said. “Transocean’s blowout preventer failed to operate.”

Newman flatly denied that the blowout preventer was responsible for the disaster, shifting blame to BP, which he said controlled the operation, and Halliburton, which was responsible for the cementing around the well cap. “The one thing we know with certainty is that on the evening of April 20 there was a sudden, catastrophic failure of the cement, the casing, or both,” Newman said. Probert of Halliburton pushed back, indicating that BP and Transocean had moved forward operations before cementing was adequately set.
There was, in fact, some harmony between the accounts offered by the executives of Halliburton and Transocean, both of whom appeared to suggest that BP ordered the skipping of a usual step in offshore drilling—the placing of a cement plug inside the well to hold explosive gases in place.

That this step was passed over was corroborated by two workers on the rig, who spoke to the Wall Street Journal on condition of anonymity. The workers also told the Journal that BP first cleared the decision with the US Department of the Interior’s Minerals Management Service (MMS). Both BP and the MMS refused comment to the Journal.
Robert Bea, a University of California at Berkeley engineering professor, has gathered testimony from Deepwater Horizon survivors that indicates the rig was hit by major bursts of natural gas, promoting fears of an explosion just weeks before the April 20 blast, the New Orleans Times-Picayune reports.

This raised concerns about whether mud at the well head should be replaced by much lighter seawater prior to installation of a concrete plug. The decision to proceed won out, according to information gathered by Bea.
Whatever the immediate cause of the disaster, the clear thrust of the hearings was to focus public outrage on a single, correctable “mistake,” such as a mechanical failure or regulatory oversight, in order to obscure the more fundamental reasons for the disaster: the decades-long gutting of regulation carried out by both Republicans and Democrats at the behest of the oil industry that made such a catastrophe all but inevitable.
A similar calculation lay behind Department of the Interior Secretary Ken Salazar’s Tuesday announcement that the MMS, which ostensibly regulates offshore oil drilling, will be split into two units—one that collects the estimated $13 billion in annual royalties from the nation’s extractive industries, and one that enforces safety and environmental regulations. Salazar’s claim that this would eliminate “conflicts of interest” in government regulation was nervy, to say the least, coming from a man with long-standing and intimate ties with oil and mining concerns, including BP.
Indeed, more farcical than the executives’ recriminations against each other was the spectacle of senators attempting to pose as tough critics of the oil industry. The US Senate, like the House of Representatives, the Department of the Interior, and the White House, is for all intents and purposes on the payroll of BP and the energy industry as a whole. Among the senators sitting on the two committees who have received tens of thousands in campaign cash from BP and the oil industry are Richard Shelby (Republican, Alabama), Mary Landrieu (Democrat, Louisiana), John McCain (Republican, Arizona) and Lisa Murkowski (Republican, Alaska).

One of the few truthful moments in the hearings came when an exasperated Murkowski told the executives, “I would suggest to all three of you that we are all in this together.” Murkowski and Landrieu also expressed concerns that the disaster could compromise offshore drilling.
None with even a passing familiarity of the workings of Washington or the Senate can have any doubt that Tuesday’s hearings were but the opening of a government whitewash. The ultimate aim is to shield the major industry players and the financial interests that stand behind them from any serious consequences.
The assemblage of the guilty parties inside the Senate chambers took place as ruptured pipes on the ocean floor continued to gush forth oil at a rate conservatively estimated at 220,000 gallons per day some 40 miles off Louisiana’s coast. The rate could be many times greater, but arriving at a more accurate estimate is impossible because BP has refused to release its underwater video footage for independent analysis.
BP, which is liable for cleanup costs, has all but admitted it has no idea of how to stop the leak. Its attempt last weekend to lower a four story box over the piping failed when ice crystals clogged a portal at the structure’s roof, a result that was widely anticipated. BP is now considering lowering a much smaller box in order to avoid icing. US Coast Guard and BP representatives have also floated the idea of a “junk shot,” firing golf balls, tire shreds, and other refuse at high pressure into the well.
The drilling of two relief wells continues, with the aim of disrupting the flow of oil from the current well. This option will take a minimum of 90 days, during which 18 million gallons more oil will pour out at the low-end estimate. Even this option provides no certainty. “The risks include unpredictable weather, since the wells will be operational at the start of hurricane season,” according to a report in the Christian Science Monitor. “The wells are also being drilled into the same mix of oil and gas that caused the original explosion, and operating two wells in the area creates the potential of igniting a second explosion that is more powerful.”
If the spill cannot be stopped—a distinct possibility—the ruptured well could release a large share of the deposit’s underground reserves into the Gulf of Mexico, which totals upwards of 100 million barrels of crude oil. And even if the spill is stopped at a lesser volume, with each day there is a growing probability that the oil will devastate the entire Gulf from Louisiana to Florida and possibly reach the Gulf Stream, impacting the Atlantic seaboard.
In the interim, the Environmental Protection Agency (EPA) has given BP clearance to resume pumping chemical dispersants into the oil column as it emerges from the broken piping. BP also continues to dump large quantities of dispersant onto the ocean’s surface. The environmental impact of such heavy use of dispersants is unknown, but a growing number of scientists and environmental groups are warning that the highly toxic substance could simply be transferring the brunt of the spill from the shore to marine ecosytems.
“The companies love the idea of using a chemical to spray on an oil slick to sink it,”

Rick Steiner, a former professor of Marine Conservation at the University of Alaska, told the World Socialist Web Site. “It’s ‘out of sight out of mind’ as far as the public is concerned because TV cameras can’t see it. This is the big oil company playbook: public relations, litigation protection, and image.”
Oil has now washed ashore in three places: the Chandeleur Islands off Louisana’s coast, on the coast of a navigable channel from the Mississippi River known as the “South Pass,” and on Alabama’s Dauphin Island.

Fishing has been blocked over a wide area, effectively imposing layoffs on thousands of fishermen, many of whom are self-employed and therefore not entitled to unemployment benefits. Sightings of birds covered in oil and dead sea turtles washed ashore have increased in recent days.
In his testimony, McKay boasted that BP would make available “grants of $25 million to Louisiana, Mississippi, Alabama, and Florida,” and that it has paid out approximately $3.5 million in damage claims to those affected by the spill. These figures, presented as an act of enormous magnanimity, are such a tiny share of BP’s revenues as to be almost inconsequential.
The company took home $93 million per day in profits—for a total of $6.1 billion—during the first quarter alone. The $3.5 million in damage claims paid out are significantly less than CEO Tony Hayward’s 2009 compensation, estimated at over $4,700,000 by Forbes

Beijing Challenges American Expansionism

How Wars Are Born: China versus the U.S

Those of us making the “radical” claim that wars are the result of economic/corporate interests pushed abroad, were recently given a nod of approval from a typically unfriendly source, The New York Times.

The corporate controlled New York Times published a revealing article about how U.S. foreign policy really works, and why. The motive behind the sincerity is that China’s foreign policy was being attacked.

However, the article soon made it clear that China’s policy is the same as the U.S.’s :dominating regions that are of “economic (corporate) interest” — raw materials, cheap labor, shipping lanes, markets, etc. — through military buildup. Dangerously, the article discusses how China’s economic expansion —and the military buildup used to protect it — is coming into conflict with the U.S.overseas militarism.

For example:

"The Chinese military is seeking to project naval power well beyond the Chinese coast, from the oil ports of the Middle East to the shipping lanes of the Pacific, where the United States Navy has long reigned as the dominant force, military officials and analysts say."

“Chinese admirals say they want warships to escort commercial vessels that are crucial to the country’s economy, from as far as the Persian Gulf to theStrait of Malacca, in Southeast Asia, and to help secure Chinese interests in the resource-rich South and East China Seas.” (April 24, 2010).

Shen Dingli, a Chinese intellectual, recently argued in favor of creating the firstChinese overseas military bases (the U.S. has 909 military facilities in foreign countries):

“With the continuous expansion of China's overseas business, the governments are more accountable for protecting the overseas interests... the guarantee of smooth trading; the prevention of overseas intervention...” (January 28, 2010 - China.org).

Typically, the U.S. military is in charge of policing most of the global shipping lanes, so that corporate goods are unhampered by pirates or hostile nations, etc. But China is no longer content with this situation, and wants protections of its own. But why?

One reason is that China has been listening to the increasingly hostile attitude of the U.S. corporate elite, who have expressed the view that China’s economic rise is inherently in conflict with or in competition with the profit-making ability of U.S. corporations. Obama’s recent provocations against China — arm sales to Taiwan, the visit to Washington by the Dali Lama, threats about Iran, currency, etc. — are all proof that China’s economic rise will not be met with friendship and cooperation.

The above-mentioned New York Times article admits “...there are few indications that China has aggressive intentions toward the United States or other countries.” Nevertheless, the whole article intends to scare and frighten.

For instance:

“Of particular concern is that elements of China’s military modernization appear designed to challenge our [U.S. Navy’s] freedom of action in the region,” the admiral [Willard] said.

“Japan is anxious, too...” and “Lee Kuan Yew, the former Singaporean leader, reflected widespread anxieties when he noted China’s naval rise and urged the United States to maintain its regional presence.”

These scare tactics are intended to steer public opinion into a hostile stance towards China, which the U.S. government views as a possible war target.

This eventuality was made clear later in the article:

“...in reaction to China’s growth, the United States has recently transferred submarines from the Atlantic to the Pacific so that most of its nuclear-powered attack submarines are now in the Pacific... The United States has also begun rotating three to four submarines on deployments out of Guam, reviving a practice that had ended with the cold war...”

And most alarmingly:

“American vessels now frequently survey the [Chinese] submarine base at Hainan island, and that activity leads to occasional friction with Chinese ships.”

China’s economic and military rise is pushing up against territory dominated by the U.S. military, which is pushing back. Military “incidents” are increasingly likely in this situation, which can be used as a pretext for war.

Behind the military jockeying for power are economic interests.

Controlling the U.S. economy are powerful corporations, who rely on the U.S. military to ensure them super profits overseas, including domination over whole regions — the Middle East, Latin America, the Pacific — that are viewed as the “exclusive economic zones” of U.S. corporations.

The fact that China is now declaring itself master of its own zones is intolerable for U.S. corporations, which will stop at nothing — including war — to maintain U.S. military dominance over the globe Why is China expanding militarily?