BRADLEY MANNING, the US soldier who handed thousands of classified government files to WikiLeaks, faces spending the rest of his life in prison despite being acquitted yesterday of help read full article
The verdict for Manning was predetermined, and the show trial in a kangaroo court – a post-modern American remix of China in the 1960s during the Cultural Revolution – just signed, sealed and… read full article
Bradley Manning acquitted of aiding enemy in WikiLeaks case … information that included battlefieldreports from the Iraq and Afghanistan wars. … a professor of international relations at Boston University and former officer in …
The American journalism trade is breathing a collective – but premature and, in many cases, grossly hypocritical – sigh of relief today. A military judge has found Bradley Manning guilty of many crimes, but “aiding the enemy” isn’t one of them.
Had the judge found Manning guilty of aiding the enemy, she would have set a terrible precedent. For the first time, an American court – albeit a military court – would have said it was a potentially capital crime simply to give information to a news organization, because in the internet era an enemy would ultimately have been able to read what was leaked.
However, if journalism dodged one figurative bullet, it faces many more in this era. The ever-more-essential field of national security journalism was already endangered. It remains so. The Obama administration’s war on leaks and, by extension, the work of investigative reporters who dare to challenge the most secretive government in our lifetimes, has been unrelenting.
The Manning verdict had plenty of bad news for the press. By finding Manning guilty of five counts of espionage, the judge endorsed the government’s other radical theories, and left the journalism organization that initially passed along the leaks to the public, Wikileaks, no less vulnerable than it had been before the case started. Anyone who thinks Julian Assange isn’t still a target of the US Government hasn’t been paying attention; if the US can pry him loose from Ecuador’s embassy in London and extradite him, you can be certain that he’ll face charges, too, and the Manning verdict will be vital to that case.
The military tried its best to make life difficult for journalists covering the Manning trial, but activists – not traditional journalists – were the ones who fought restrictions most successfully. Transcripts weren’t provided by the government, for example. Only when the Freedom of the Press Foundation crowd-sourced a court stenographer did the public get a record, however flawed, of what was happening.
That public included most of the press, sad to say. Only a few American news organizations (one is the Guardian’s US edition) bothered to staff the Manning trial in any serious way. Independent journalists did most of the work, and did it as well as it could be done under the circumstances.
The overwhelmingly torpid coverage of this trial by traditional media has been yet another scandal for the legacy press, which still can’t seem to wrap its collective brain around the importance of the case, and especially its wider context. National security journalist Jeremy Scahill summed it up after the verdict when he told Democracy Now: “We’re in a moment when journalism is being criminalized.”
For those who want to tell the public what the government is doing with our money and in our name, there are new imperatives. Governmental secrecy, surveillance and the systematic silencing of whistleblowers require updated methods for journalists and journalism organizations of all kinds. Americans pursuing this craft have to understand the risks and find countermeasures.
That is not enough. The public needs to awaken to the threat to its own freedoms from the Obama crackdown on leaks and, by extension, journalism and free speech itself. We are, more and more, a society where unaccountable people can commit unspeakable acts with impunity. They are creating a surveillance state that makes not just dissent, but knowledge itself, more and more dangerous. What we know about this is entirely due to leakers and their outlets. Ignorance is only bliss for the unaccountable.
Bruce Fein & Associates, Inc.
722 12th Street, N.W., 4th Floor
Washington, D.C. 20005
July 26, 2013
President Barack Obama
The White House
1600 Pennsylvania Avenue, N.W.
Washington, D.C. 20500
Re: Civil Disobedience, Edward J. Snowden, and the Constitution
Dear Mr. President:
You are acutely aware that the history of liberty is a history of civil disobedience to unjust laws or practices. As Edmund Burke sermonized, “All that is necessary for the triumph of evil is that good men do nothing.”
Civil disobedience is not the first, but the last option. Henry David Thoreau wrote with profound restraint in Civil Disobedience: “If the injustice is part of the necessary friction of the machine of government, let it go, let it go: perchance it will wear smooth certainly the machine will wear out. If the injustice has a spring, or a pulley, or a rope, or a crank, exclusively for itself, then perhaps you may consider whether the remedy will not be worse than the evil; but if it is of such a nature that it requires you to be the agent of injustice to another, then, I say, break the law. Let your life be a counter friction to stop the machine.”
Thoreau’s moral philosophy found expression during the Nuremburg trials in which “following orders” was rejected as a defense. Indeed, military law requires disobedience to clearly illegal orders.
A dark chapter in America’s World War II history would not have been written if the then United States Attorney General had resigned rather than participate in racist concentration camps imprisoning 120,000 Japanese American citizens and resident aliens.
Civil disobedience to the Fugitive Slave Act and Jim Crow laws provoked the end of slavery and the modern civil rights revolution.
We submit that Edward J. Snowden’s disclosures of dragnet surveillance of Americans under § 215 of the Patriot Act, § 702 of the Foreign Intelligence Surveillance Act Amendments, or otherwise were sanctioned by Thoreau’s time-honored moral philosophy and justifications for civil disobedience. Since 2005, Mr. Snowden had been employed by the intelligence community. He found himself complicit in secret, indiscriminate spying on millions of innocent citizens contrary to the spirit if not the letter of the First and Fourth Amendments and the transparency indispensable to self-government. Members of Congress entrusted with oversight remained silent or Delphic. Mr. Snowden confronted a choice between civic duty and passivity. He may have recalled the injunction of Martin Luther King, Jr.: “He who passively accepts evil is as much involved in it as he who helps to perpetrate it.” Mr. Snowden chose duty. Your administration vindictively responded with a criminal complaint alleging violations of the Espionage Act.
From the commencement of your administration, your secrecy of the National Security Agency’s Orwellian surveillance programs had frustrated a national conversation over their legality, necessity, or morality. That secrecy (combined with congressional nonfeasance) provoked Edward’s disclosures, which sparked a national conversation which you have belatedly and cynically embraced. Legislation has been introduced in both the House of Representatives and Senate to curtail or terminate the NSA’s programs, and the American people are being educated to the public policy choices at hand. A commanding majority now voice concerns over the dragnet surveillance of Americans that Edward exposed and you concealed. It seems mystifying to us that you are prosecuting Edward for accomplishing what you have said urgently needed to be done!
The right to be left alone from government snooping–the most cherished right among civilized people—is the cornerstone of liberty. Supreme Court Justice Robert Jackson served as Chief Prosecutor at Nuremburg. He came to learn of the dynamics of the Third Reich that crushed a free society, and which have lessons for the United States today.
Writing in Brinegar v. United States, Justice Jackson elaborated:
The Fourth Amendment states: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing
the place to be searched, and the persons or things to be seized.”
These, I protest, are not mere second-class rights but belong in the catalog of indispensable freedoms. Among deprivations of rights, none is so
effective in cowing a population, crushing the spirit of the individual and putting terror in every heart. Uncontrolled search and seizure is one of the
first and most effective weapons in the arsenal of every arbitrary government. And one need only briefly to have dwelt and worked among a people possessed of many admirable qualities but deprived of these rights to know that the human personality deteriorates and dignity and self-reliance
disappear where homes, persons and possessions are subject at any hour to unheralded search and seizure by the police.
We thus find your administration’s zeal to punish Mr. Snowden’s discharge of civic duty to protect democratic processes and to safeguard liberty to be unconscionable and indefensible.
We are also appalled at your administration’s scorn for due process, the rule of law, fairness, and the presumption of innocence as regards Edward.
On June 27, 2013, Mr. Fein wrote a letter to the Attorney General stating that Edward’s father was substantially convinced that he would return to the United States to confront the charges that have been lodged against him if three cornerstones of due process were guaranteed. The letter was not an ultimatum, but an invitation to discuss fair trial imperatives. The Attorney General has sneered at the overture with studied silence.
We thus suspect your administration wishes to avoid a trial because of constitutional doubts about application of the Espionage Act in these circumstances, and obligations to disclose to the public potentially embarrassing classified information under the Classified Information Procedures Act.
Your decision to force down a civilian airliner carrying Bolivian President Eva Morales in hopes of kidnapping Edward also does not inspire confidence that you are committed to providing him a fair trial. Neither does your refusal to remind the American people and prominent Democrats and Republicans in the House and Senate like House Speaker John Boehner, Congresswoman Nancy Pelosi, Congresswoman Michele Bachmann,and Senator Dianne Feinstein that Edward enjoys a presumption of innocence. He should not be convicted before trial. Yet Speaker Boehner has denounced Edward as a “traitor.”
Ms. Pelosi has pontificated that Edward “did violate the law in terms of releasing those documents.” Ms. Bachmann has pronounced that, “This was not the act of a patriot; this was an act of a traitor.” And Ms. Feinstein has decreed that Edward was guilty of “treason,” which is defined in Article III of the Constitution as “levying war” against the United States, “or in adhering to their enemies, giving them aid and comfort.”
You have let those quadruple affronts to due process pass unrebuked, while you have disparaged Edward as a “hacker” to cast aspersion on his motivations and talents. Have you forgotten the Supreme Court’s gospel in Berger v. United States that the interests of the government “in a criminal prosecution is not that it shall win a case, but that justice shall be done?”
We also find reprehensible your administration’s Espionage Act prosecution of Edward for disclosures indistinguishable from those which routinely find their way into the public domain via your high level appointees for partisan political advantage. Classified details of your predator drone protocols, for instance, were shared with the New York Times with impunity to bolster your national security credentials. Justice Jackson observed in Railway Express Agency, Inc. v. New York: “The framers of the Constitution knew, and we should not forget today, that there is no more effective practical guaranty against arbitrary and unreasonable government than to require that the principles of law which officials would impose upon a minority must be imposed generally.”
In light of the circumstances amplified above, we urge you to order the Attorney General to move to dismiss the outstanding criminal complaint against Edward, and to support legislation to remedy the NSA surveillance abuses he revealed. Such presidential directives would mark your finest constitutional and moral hour.
Counsel for Lon Snowden
When Lady Liberty Wept
By Gary Corseri
“Not like the brazen giant of Greek fame,” she recalled,
“With conquering limbs astride from land to land””
And yet, even so, it had come to pass,
With every military base, with drones
Hovering everywhere, in the drowned dreams
Of exiles, “refuse,” “yearning to breathe free.”
And what freedom now in the Surveillance State
Where every thought was subject to review
And “newsmen” scurried to assess the threat
From hydra-headed, huddled masses–lost,
Renditioned, imprisoned, killed at the behest
Of elected, cowardly Pinocchios,–
Smiling before drug-induced amnesiacs?
They could not remember who they claimed to be;
Nor why; nor how it mattered to posterity.
Only a looming sense of dread embalmed
Them in a kind of amber ghosts might study
In the years ahead–if there were years” ahead.
And so, she wept” as some say Mother Mary weeps;
As some say Rachel wept for her lost children.
Copper-colored tears from cupreous eyes;
Copious tears from her iron skeleton.
And the wind blew the tears upon her torch.
And the light went out.
By Gary Corseri – Copyright, 2013. Permission is granted for reprint in blog, or web media if this credit is attached and the title and contents remain unchanged. Gary Corseri has published novels and collections of poetry, and his dramas have appeared on Atlanta–PBS and elsewhere. He has taught in US public schools and prisons, and at US and Japanese universities. His work has appeared at periodicals and websites worldwide, and he has performed his work at the Carter Presidential Library.
Here is letter #5:
My name is Mike Eastwood, I’m just a 20-year-old kid from a small town in Oklahoma, but let me tell you my story. I come from a stable and mostly happy family life. I have two sisters (I’m a middle child) who graduated valedictorians of their high schools. I graduated with a 3.7 GPA from my 3A high school in 2009.
My older sister graduated in 2003 from a state college. She worked for the next five years but has been inconsistently employed and predominantly unemployed since 2008, when she moved to San Diego to join her husband who was stationed there by the Marines. All the while, she’s been trying to pay off the $90,000 in student loans she racked up while trying to get a degree in pharmaceuticals that she is not able to use.
I am still going through college, attempting a degree in history. I decided to go to a community college after high school to avoid debt. I’ve been attending classes that do not challenge me intellectually in any way because, frankly, I was and am too scared of the debt that comes from a decent school. I do this in hopes that I can someday be a teacher, though I know that is a career that will leave me in debt for the rest of my life, regardless of how hard I work. My younger sister just graduated (again, a valedictorian with a 4.0 GPA) and she chose not to go to college after seeing the debt involved in getting a degree, as well as numerous examples of people racking up debt for a degree that doesn’t help them move forward in life. Each of us attempted and qualified for many scholarships but none of us qualified for PELL Grants or FAFSA Student Aid. Our parents combined (my mother is a teacher, my father runs a collating machine) make about $65,000 a year, putting us just out of reach of any federal assistance.
Why do I mention this to you? Goldman Sachs doesn’t have anything to do with school directly and I can’t place the blame for our debts on the shoulders of your corporation, nor would I try to. I tell you this because I want to show the state and cost of education, even at a local level, and far more importantly, I want to bring to your awareness the lives of those people who seem to have slipped beyond the vision of you and your fellow executives. My sister, with $90,000 in total student loans and paying a bit above the minimum payment (minimum payment is $345 a month; she pays $400) and paying against an 8.9% annual interest rate, cannot successfully pay off that student loan during her lifetime, assuming she is forced to continue working for K-Mart. And to perhaps offer a bit more perspective on her situation, she works forty hours a week at the minimum wage of $7.25, which earns her roughly $780 a month. Just repaying her student loans costs her more than half of her total income and it’s a payment that will never end.
Again, this isn’t your fault. She didn’t make the job market for those entering the field of pharmaceuticals plummet. And again, I do not blame Goldman Sachs for these problems. Allow me to give another example. As I said before, I’m only 20 years old. I was diagnosed with juvenile diabetes in April of this year. Type-1 diabetes means I’ll have to take insulin shots for the rest of my life, avoid some foods, and remove other foods from my diet completely. I was diagnosed after attending a local soccer game where I fell unconscious while sitting and watching. My blood sugar had gotten so high that the fact I hadn’t had a stroke was a true miracle (1,115, in case you’re curious.) This serious medical problem and diagnosis cost me $2,470. I will also have to pay nearly $160 a month for all of my insulin and diabetes supplies. I don’t have health care myself, but fortunately, because I’m under 24 and thanks to the new laws passed in 2010, I can remain listed on my mother’s health insurance. Unfortunately, my mother is a teacher and her coverage is not all that great. On top of my now $15,000 in school debt and the $1,045 loan I took out last January to cover the cost of my and my fiancé’s bills for a month when she was out of work, I’m in a lot of debt for a kid who was only in high school two years ago, and it is especially high considering that I live in a one-bedroom apartment with my fiancé, I drive a beat-up Pontiac Sunbird, and try desperately not to exceed my means.
I want to stress that I don’t blame Goldman Sachs for these problems; I’m not trying to insinuate in any way that you are at fault for this debt or these problems in my life or my family’s lives. What I do want to show you is the gap between the lives of everyday Americans and the lives you all lead as the executives of such a prestigious operation. Between your lives and the lives of those of us who have had to struggle and fight for every bit of happiness we have.
You’ve influenced our government elections using more than $11,200,000 for the sake of your own interests, leaving the American people with no other alternative but to watch and pray it all gets better. Your profits in 2010 were about $21,700,000,000. My siblings and I made a combined $31,859 and, with my parents’ income, that’s $96,859. This is barely enough to pay back my older sister’s student loans. My family, with the possible exception of my father, is well-educated, hardworking, and politically involved, and yet there is no light at the end of the tunnel. “Work hard and you’ll have a good life” is a cruel axiom.
The reason I sent you this message is so that you might read it and understand that we are frustrated by our lives, by the fact that a huge portion or our incomes are taken away for the sake of supporting federal and state governments that ignore the people they are supposed to represent, and that ignore them because global business juggernauts have the ability to simply buy a vote. Your corporate tax breaks are ridiculous. Your unlimited access to involvement in the affairs of the politics that are supposed to allow the people to improve the quality of their own lives is cruel and unfair. Most of all, your ignorance of the trials and hardships of the average American is unforgivable.
Please understand why we stand in the streets with signs. It is not for handouts, it’s not to taunt or torment the rich, and it’s most certainly not because a bunch of lazy, uneducated hippies want to lay blame on the shoulders of giant corporations. It’s because our lives are in shambles and because you have taken from us our only outlet for change. So we forge a new outlet and we stand shoulder to shoulder in solidarity. Let us change, begin to change yourselves, so that we will again have the American Dream.
Michael EastwoodBartlesville, Oklahoma 74003
* Abby Joseph Cohen (born 1952 in Queens, New York) is an American economist and financial analyst on Wall Street. She is a partner and—as of March 2008—Senior U.S. investment strategist at Goldman Sachs responsible for leadership of the firm’s Global Markets Institute. Prior to that date, she was Chief Investment Strategist. In 2001 she was named one of the 30 most powerful women in America by Ladies Home Journal. (from Wikipedia)
Fort Meade, MD – The United States has had, clearly, a bit of an issue with whistleblowers in recent years. The newest and biggest one, perhaps the most damaging, is still ongoing but there is still another one playing out in the courts, the saga of Bradley Manning which is rapidly coming to a conclusion.
After weeks of testimony and legal finagling, yesterday Judge Denise Lind retired to her chambers to deliberate in the remaining charges against Manning. Some of the initial crime with which he was charged Manning has pled guilty to, but others still stand and many of them are very, very serious.
Now Manning will await his fate, judge by a single person and not by a jury of his peers, this being a military court and all, which could very well result in a conviction for the 25-year old Manning. Actually, given the politically charged atmosphere of the case and there really being no other option, it’s pretty much guaranteed that he will be found guilty on all the charges, heck there’s no real reason to even bother with the deliberation, it’s going to happen.
“He’s not seeking attention. He’s saying he’s willing to accept the price. That is a whistleblower, period. That is somebody who wants to inform the American public,”said Manning’s lawyer David Coombs upon concluding his case.
Really, little of what Manning leaked mattered all that much save for a single video showing U.S. troops gunning down Reuters reporters, which was a little embarrassing.
Despite a willingness to take responsibility for his actions, it’s believed that Manning would still prefer to not go to jail for the rest of his life.
“I think it’s pretty clear what the judge’s decision is going to be since this case is what it is. I mean this is no small thing, not tiny little event that just happened to happen. Aside from the trouble that it cause, giving him release could give other people so inclined to do the same thing, and that is not something anyone wants I would think,” said Scrape TV Legal analyst Gabe Hawthorne. “This is one of those cases where the law is actually not totally relevant to the outcome, what matters is what people want and people want Manning to go to prison for a long time. Manning obviously not but he doesn’t really get a say.”
Manning has said on multiple occasions, perhaps even to the judge, that he would prefer to stay out of prison if that is possible.
“It’s really a sticky situation where what is right legally is not necessarily in lock step with what people seem to want. Often that results in people getting angry, but that is unlikely here because Manning acted against the government. Perhaps if the information belonged to a young black kid if Florida he would be okay, but the U.S. government is a different animal,” continued Hawthorne. “That is really what has gotten him in the most trouble, who he went up against. A lesser agency and everything would have been fine because what he did wasn’t really that bad, but he made the government look bad and when that happens they will seek revenge, and have it most likely.”
The judge is believed to be just waiting around to announce the decision she made before the trial started
At a time when much of the world is looking with a mix of envy and excitement at the recent boom in USA unconventional gas from shale rock, when countries from China to Poland to France to the UK are beginning to launch their own ventures into unconventional shale gas extraction, hoping it is the cure for their energy woes, the US shale boom is revealing itself to have been a gigantic hyped confidence bubble that is already beginning to deflate. Carpe diem!
America: The New Saudi Arabia?
If we’re to believe the current media reports out of Washington and the US oil and gas industry, the United States is about to become the “new Saudi Arabia.” We are told she is suddenly and miraculously on the track to energy self-sufficiency. No longer need the US economy depend on high-risk oil or gas from the politically unstable Middle East or African countries. The Obama White House energy adviser, Heather Zichal, has even shifted her focus from pushing carbon cap ‘n trade schemes to promoting America’s “shale revolution.”
In his January 2012 State of the Union Address to Congress, President Obama claimed that, largely owing to the shale gas revolution, “We have a supply of natural gas that can last America nearly 100 years.” 
Renowned energy experts like Cambridge Energy Research’s Daniel Yergin in recent Congressional testimony waxed almost poetic about the purported benefits of the recent US shale oil and gas exploitation: “The United States is in the midst of the ‘unconventional revolution in oil and gas’ that, it becomes increasingly apparent, goes beyond energy itself.” He didn’t explain what exactly energy going beyond energy itself means. He also claimed that “the industry supports 1.7 million jobs – a considerable accomplishment given the relative newness of the technology. That number could rise to 3 million by 2020.” Very impressive numbers.
Mr Yergin went on to suggest a major geopolitical dimension of America’s shale oil and gas industry, saying “expansion of US energy exports will add an additional dimension to US influence in the world…Shale gas has risen from two percent of domestic production a decade ago to 37 percent of supply, and prices have dropped dramatically. US oil output, instead of continuing its long decline, has increased dramatically – by about 38 percent since 2008. Just the increase since 2008 is equivalent to the entire output of Nigeria, the seventh-largest producing country in OPEC…People talk about the potential geopolitical impact of the shale gas and tight oil. That impact is already here…”
In their Energy Outlook to 2030, published in 2012, BP’s CEO Bob Dudley sounded a similar upbeat projection of the role of shale gas and oil in making North America energy independent of the Middle East. BP predicted that growth in shale oil and gas supplies—“along with other fuel sources”—will make the western hemisphere virtually self-sufficient in energy by 2030. In a development with enormous geopolitical implications, a large swath of the world including North and South America would see its dependence on oil imports from potentially volatile countries in the Middle East and elsewhere disappear, BP added.
There’s only one thing wrong with all the predictions of a revitalized United States energy superpower flooding the world with its shale oil and shale gas. It’s based on a bubble, on hype from the usual Wall Street spin doctors. In reality it is becoming increasingly clear that the shale revolution is a short-term flash in the energy pan, a new Ponzi fraud, carefully built with the aid of the same Wall Street banks and their “market analyst” friends, many of whom brought us the 2000 “dot.com” bubble and, more spectacularly, the 2002-2007 US real estate securitization bubble. A more careful look at the actual performance of the shale revolution and its true costs is instructive.
One reason we hear little about the declining fortunes of shale gas and oil is that the boom is so recent, reaching significant proportions only in 2009-2010. Long-term field extraction data for a significant number of shale gas wells only recently is coming to light. Another reason is that there have grown up huge vested corporate interests from Wall Street to the oil industry who are trying everything possible to keep the shale revolution myth alive. Despite all their efforts however, data coming to light, mostly for the review of industry professionals, is alarming.
Shale gas has recently come onto the gas market in the US via use of several combined techniques developed among others by Dick Cheney’s old company, Halliburton Inc. Halliburton several years ago combined new methods for drilling in a horizontal direction with injection of chemicals and “fracking,” or hydraulic fracturing of the shale rock formations that often trap volumes of natural gas. Until certain changes in the last few years, shale gas was considered uneconomical. Because of the extraction method, shale gas is dubbed unconventional and is extracted in far different ways from conventional gas.
The US Department of Energy’ EIA defines conventional oil and gas as oil and gas “produced by a well drilled into a geologic formation in which the reservoir and fluid characteristics permit
the oil and natural gas to readily flow to the wellbore.” Conversely, unconventional hydrocarbon production doesn’t meet these criteria, either because geological formations present a very low level of porosity and permeability, or because the fluids have a density approaching or even exceeding that of water, so that they cannot be produced, transported, and refined by conventional methods. By definition then, unconventional oil and gas are far more costly and difficult to extract than conventional, one reason they only became attractive when oil prices soared above $100 a barrel in early 2008 and more or less remained there.
To extract the unconventional shale gas, a hydraulic fracture is formed by pumping a fracturing fluid into the wellbore at sufficient pressure causing the porous shale rock strata to crack. The fracture fluid, whose precise contents are usually company secret and extremely toxic, continues further into the rock, extending the crack. The trick is to then prevent the fracture from closing and ending the supply of gas or oil to the well. Because in a typical fracked well fluid volumes number in millions of gallons of water, water mixed with toxic chemicals, fluid leak-off or loss of fracturing fluid from the fracture channel into the surrounding permeable rock takes place. If not controlled properly, that fluid leak-off can exceed 70% of the injected volume resulting in formation matrix damage, adverse formation fluid interactions, or altered fracture geometry and thereby decreased production efficiency.
Hydraulic fracturing has recently become the preferred US method of extracting unconventional oil and gas resources. In North America, some estimate that hydraulic fracturing will account for nearly 70% of natural gas development in the future.
Why have we just now seen the boom in fracking shale rock to get gas and oil? Thank then-Vice president Dick Cheney and friends. The real reason for the recent explosion of fracking in the United States was passage of legislation in 2005 by the US Congress that exempted the oil industry’s hydraulic fracking, astonishing as it sounds, from any regulatory supervision by the US Environmental Protection Agency (EPA) under the Safe Drinking Water Act. The oil and gas industry is the only industry in America that is allowed by EPA to inject known hazardous materials – unchecked – directly into or adjacent to underground drinking water supplies.
The 2005 law is known as the “Halliburton Loophole.” That’s because it was introduced on massive lobbying pressure from the company that produces the lion’s share of chemical hydraulic fracking fluids – Dick Cheney’s old company, Halliburton. When he became Vice President under George W. Bush in early 2001, Cheney immediately got Presidential responsibility for a major Energy Task Force to make a comprehensive national energy strategy. Aside from looking at Iraq oil potentials as documents later revealed, the energy task force used Cheney’s considerable political muscle and industry lobbying money to win exemption from the Safe Drinking Water Act. 
During Cheney’s term as vice president he moved to make sure the Government’s Environmental Protection Agency (EPA) would give a green light to a major expansion of shale gas drilling in the US.
In 2004 the EPA issued a study of the environmental effects of fracking. That study has been called “scientifically unsound” by EPA whistleblower Weston Wilson. In March of 2005, EPA Inspector General Nikki Tinsley found enough evidence of potential mishandling of the EPA hydraulic fracturing study to justify a review of Wilson’s complaints. The Oil and Gas Accountability Project conducted a review of the EPA study which found that EPA removed information from earlier drafts that suggested unregulated fracturing poses a threat to human health, and that the Agency did not include information that suggests “fracturing fluids may pose a threat to drinking water long after drilling operations are completed.” Under political pressure the report was ignored. Fracking went full-speed ahead.
© n/a Fracking toxic waste. This diagram depicts methane gas and toxic water contaminating the drinking water as the fracturing cracks penetrate the water table.
The Halliburton Loophole is no minor affair. The process of hydraulic fracking to extract gas involves staggering volumes of water and of some of the most toxic chemicals known. Water is essential to shale gas fracking. Hydraulic fracturing uses between 1.2 and 3.5 million US gallons (4.5 and 13 million liters) of water per well, with large projects using up to 5 million US gallons (19 Million liters). Additional water is used when wells are refractured; this may be done several times. An average well requires 3 to 8 million US gallons of water over its lifetime. Entire farm regions of Pennsylvania and other states with widespread hydraulic fracking report their well water sources have become so toxic as to make the water undrinkable. In some cases fracked gas seeps into the home via the normal water faucet.
© Screenshot from HBO film Gasland – Rural resident flicking on cigarette lighter next to his kitchen faucet and watching his drinking water, infused with gas and chemicals, ignite in flames as high as 3 feet.
During the uproar over the BP Deepwater Horizon Gulf of Mexico oil spill, the Obama Administration and the Energy Department formed an Advisory Commission on Shale Gas, ostensibly to examine the growing charges of environmental hazards from shale gas practices.
Their report was released in November 2011. It was what could only be called a “whitewash” of the dangers and benefits of shale gas.
The commission was headed by former CIA director John M. Deutch. Deutch himself is not neutral. He sits on the board of the LNG gas company Cheniere Energy. Deutch’s Cheniere Energy’s Sabine Pass project is one of only two current US projects to create an LNG terminal to export US shale gas to foreign markets.
Deutch is also on the board of Citigroup, one of the world’s most active energy industry banks, tied to the Rockefeller family. He also sits on the board of Schlumberger, which along with Halliburton, is one of the leading companies doing hydraulic fracking. In fact, of the seven panel members, six had ties to the energy industry, including fellow Deutch panel member and shale fracking booster, Daniel Yergin, himself a member of the National Petroleum Council. Little surprise that the Deutch report called shale gas, “the best piece of news about energy in the last 50 years.” Deutch added, “Over the long term it has the potential to displace liquid fuels in the United States.” 
Shale gas: Racing against the Clock
With regulatory free-rein, now also backed by the Obama Administration, the US oil and gas industry went full-power into shale gas extraction, taking advantage of high oil and natural gas prices to reap billions in quick gains.
According to official US Department of Energy Energy Information Administration data, shale gas extraction ballooned from just under 2 million MCF in 2007, the first year data was tracked, to more than 8,500,000 Mcf by 2011, a fourfold rise to comprise almost 40% of total dry natural gas extraction in the USA that year. In 2002 shale gas was a mere 3% of total gas.
Here enters the paradox of the US “shale gas revolution.” Since the days of oil production wars more than a century ago, various industry initiatives had been created to prevent oil and later gas price collapse due to over-production. During the 1930’s there was discovery of the huge East Texas oilfields, and a collapse of oil prices. The State of Texas, whose Railroad Commission (TRC) had been given regulatory powers not only over railroads but also over oil and gas production in what then was the world’s most important oil producing region, was called in to arbitrate the oil wars. That resulted in daily statewide production quotas so successful that OPEC later modeled itself on the TRC experience.
Today, with federal deregulation of the oil and gas industry, such extraction controls are absent as every shale gas producer from BP to Chesapeake Energy, Anadarko Petroleum, Chevron, Encana and others all raced full-tilt to extract the maximum shale gas from their properties.
The reason for the full-throttle extraction is telling. Shale Gas, unlike conventional gas, depletes dramatically faster owing to its specific geological location. It diffuses and becomes impossible to extract without the drilling of costly new wells.
The result of the rapidly rising volumes of shale gas suddenly on the market was a devastating collapse in the market price of that same gas. In 2005 when Cheney got the EPA exemption that began the shale boom, the marker US gas price measured at Henry Hub in Louisiana, at the intersection of nine interstate pipelines, was some $14 per thousand cubic feet. By February 2011 it had plunged amid a gas glut to $3.88. Currently prices hover around $3.50 per tcf.
In a sobering report, Arthur Berman, a veteran petroleum geologist specialized in well assessment, using existing well extraction data for major shale gas regions in the US since the boom started, reached sobering conclusions. His findings point to a new Ponzi scheme which well might play out in a colossal gas bust over the next months or at best, the next two or three years. Shale gas is anything but the “energy revolution” that will give US consumers or the world gas for 100 years as President Obama was told.
Berman wrote already in 2011, “Facts indicate that most wells are not commercial at current gas prices and require prices at least in the range of $8.00 to $9.00/mcf to break even on full-cycle prices, and $5.00 to $6.00/mcf on point-forward prices. Our price forecasts ($4.00-4.55/mcf average through 2012) are below $8.00/mcf for the next 18 months. It is, therefore, possible that some producers will be unable to maintain present drilling levels from cash flow, joint ventures, asset sales and stock offerings.” 
Berman continued, “Decline rates indicate that a decrease in drilling by any of the major producers in the shale gas plays would reveal the insecurity of supply. This is especially true in the case of the Haynesville Shale play where initial rates are about three times higher than in the Barnett or Fayetteville. Already, rig rates are dropping in the Haynesville as operators shift emphasis to more liquid-prone objectives that have even lower gas rates. This might create doubt about the paradigm of cheap and abundant shale gas supply and have a cascading effect on confidence and capital availability.” 
What Berman and others have also concluded is that the gas industry key players and their Wall Street bankers backing the shale boom have grossly inflated the volumes of recoverable shale gas reserves and hence its expected supply duration. He notes, “Reserves and economics depend on estimated ultimate recoveries (EUR) based on hyperbolic, or increasingly flattening, decline profiles that predict decades of commercial production. With only a few years of production history in most of these plays, this model has not been shown to be correct, and may be overly optimistic….Our analysis of shale gas well decline trends indicates that the Estimated Ultimate Recovery per well is approximately one-half the values commonly presented by operators.” In brief, the gas producers have built the illusion that their unconventional and increasingly costly shale gas will last for decades.
Basing his analysis on actual well data from major shale gas regions in the US, Berman concludes however, that the shale gas wells decline in production volumes at an exponential rate and are liable to run out far faster than being hyped to the market. Could this be the reason financially exposed US shale gas producers, loaded with billions of dollars in potential lease properties bought during the peak of prices, have recently been desperately trying to sell off their shale properties to naïve foreign or other investors?
Three decades of natural gas extraction from tight sandstone and coal-bed methane show that profits are marginal in low permeability reservoirs. Shale reservoirs have orders of magnitude lower reservoir permeability than tight sandstone and coal-bed methane. So why do smart analysts blindly accept that commercial results in shale plays should be different? The simple answer is found in high initial production rates. Unfortunately, these high initial rates are made up for by shorter lifespan wells and additional costs associated with well re-stimulation. Those who expect the long-term unit cost of shale gas to be less than that of other unconventional gas resources will be disappointed…the true structural cost of shale gas production is higher than present prices can support ($4.15/mcf average price for the year ending July 30, 2011), and that per-well reserves are about one-half of the volumes claimed by operators. 
Therein lies the explanation for why a sophisticated oil industry in the United States has desperately been producing full-throttle, in a high-stakes game laying the seeds of their own bankruptcy in the process—They are racing to offload the increasingly unprofitable shale assets before the bubble finally bursts. Wall Street financial backers are in on the Ponzi game with billions at stake, much as in the recent real estate securitization fraud.
One Hundred Years of Gas?
Where then did someone get the number to tell the US President that America had 100 years of gas supply? Here is where lies, damn lies and statistics play a crucial role. The US does not have 100 years of natural gas supply from shale or unconventional sources. That number came from a deliberate blurring by someone of the fundamental difference between what in oil and gas is termed resources and what is called reserves.
A gas or oil resource is the totality of the gas or oil originally existing on or within the earth’s crust in naturally occurring accumulations, including discovered and undiscovered, recoverable and unrecoverable. It is the total estimate, irrespective of whether the gas or oil is commercially recoverable. It’s also the least interesting number for extraction.
On the other hand “recoverable” oil or gas refers to the estimated volume commercially extractable with a specific technically feasible recovery project, a drilling plan, fracking program and the like. The industry breaks the resources into three categories: reserves, which are discovered and commercially recoverable; contingent resources, which are discovered and potentially recoverable but sub-commercial or non-economic in today’s cost-benefit regime; and prospective resources, which are undiscovered and only potentially recoverable.
The Potential Gas Committee (PGC), the standard for US gas resource assessments, uses three categories of technically recoverable gas resources, including shale gas: probable, possible and speculative.
According to careful examination of the numbers it is clear that the President, his advisers and others have taken the PGC’s latest total of all three categories, or 2,170 trillion cubic feet (Tcf) of gas—probable, possible and purely speculative—and divided by the 2010 annual consumption of 24 Tcf. To get a number between 90 and 100 years of gas. What is conveniently left unsaid is that most of that total resource is in accumulations too small to be produced at any price, inaccessible to drilling, or is too deep to recover economically.
Arthur Berman in another analysis points out that if we use more conservative and realistic assumptions such as the PGC does in its detailed assessment, more relevant is the Committee’s probable mean resources value of 550 (Tcf) of gas. In turn, if we estimate, also conservatively and realistically based on experience, that about half of this resource actually becomes a reserve (225 Tcf), then the US has approximately 11.5 years of potential future gas supply at present consumption rates.
If we include proved reserves of 273 Tcf, there is an additional 11.5 years of supply for a total of almost 23 years. It is worth noting that proved reserves include proved undeveloped reserves which may or may not be produced depending on economics, so even 23 years of supply is tenuous. If consumption increases, this supply will be exhausted in less than 23 years.
There are also widely differing estimates within the US Government over shale gas recoverable resources. The US Department of Energy EIA uses a very generous calculation for shale gas average recovery efficiency of 13% versus other conservative estimates of about half that or 7% in contrast to recovery efficiencies of 75-80% for conventional gas fields. The generously high recovery efficiency values used for EIA calculations allows the EIA to project an estimate of 482 tcf of recoverable gas for the US. In August 2011, the Interior Department’s US Geological Survey (USGS) released a far more sober estimate for the large shale plays in Pennsylvania and New York called Marcellus Shale. The USGS estimated there are about 84 trillion cubic feet of technically-recoverable natural gas under the Marcellus Shale. Previous estimates from the Energy Information Administration put the figures at 410 trillion cubic feet.
Shale gas plays show unusually high field decline rates with very steep trends, a combination giving low recovery efficiencies. 
Huge shale gas losses
Given the abnormally rapid well decline rates and low recovery efficiencies, it is little wonder that once the euphoria subsided, shale gas producers found themselves sitting on a financial time-bomb and began selling assets to unwary investors as fast as possible.
In a very recent analysis of the actual results of several years of shale gas extraction in the USA as well as the huge and high-cost Canadian Tar Sands oil, David Hughes notes, “Shale gas production has grown explosively to account for nearly 40 percent of US natural gas production. Nevertheless, production has been on a plateau since December 2011; 80 percent of shale gas production comes from five plays, several of which are in decline. The very high decline rates of shale gas wells require continuous inputs of capital—estimated at $42 billion per year to drill more than 7,000 wells—in order to maintain production. In comparison, the value of shale gas produced in 2012 was just $32.5 billion.”
He adds, “The best shale plays, like the Haynesville (which is already in decline) are relatively rare, and the number of wells and capital input required to maintain production will increase going forward as the best areas within these plays are depleted. High collateral environmental impacts have been followed by pushback from citizens, resulting in moratoriums in New York State and Maryland and protests in other states. Shale gas production growth has been offset by declines in conventional gas production, resulting in only modest gas production growth overall. Moreover, the basic economic viability of many shale gas plays is questionable in the current gas price environment.”
If these various estimates are anywhere near accurate, the USA has a resource in unconventional shale gas of anywhere between 11 years and 23 years duration and unconventional oil of perhaps a decade before entering steep decline. The recent rhetoric about US “energy independence” at the current technological state is utter nonsense.
The drilling boom which resulted in this recent glut of shale gas was in part motivated by “held-by-production” shale lease deals with landowners. In such deals the gas company is required to begin drilling in a lease running typically 3-5 years, or forfeit. In the US landowners such as farmers or ranchers typically hold subsurface mineral rights and can lease them out to oil companies. The gas (or oil) company then is under enormous pressure to book gas reserves on the new leases to support company stock prices on the stock market against which it has borrowed heavily to drill.
This “drill or lose it” pressure typically has led companies to seek the juiciest “sweet spots” for fast spectacular gas flows. These are then typically promoted as “typical” of the entire play.
However, as Hughes points out, “High productivity shale plays are not ubiquitous, and relatively small sweet spots within plays offer the most potential. Six of thirty shale plays provide 88 percent of production. Individual well decline rates are high, ranging from 79 to 95 percent after 36 months. Although some wells can be extremely productive, they are typically a small percentage of the total and are concentrated in sweet spots.” 
One estimate of projected shale gas decline suggests the peak will pass well before the end of the decade, perhaps in four years, followed with a rapid decline in volume
The extremely rapid overall gas field declines require from 30 to 50 percent of production to be replaced annually with more drilling, a classic “tiger chasing its tail around the tree” syndrome. This translates to $42 billion of annual capital investment just to maintain current production. By comparison, all USA shale gas produced in 2012 was worth about $32.5 billion at a gas price of $3.40/mcf (which is higher than actual well head prices for most of 2012). That means about a net $10 billion loss on their shale gambles last year for all US shale gas producers.
Even worse, Hughes points out that capital inputs to offset field decline will necessarily increase going forward as the sweet spots within plays are drilled off and drilling moves to lower quality areas. Average well quality (as measured by initial productivity) has fallen nearly 20 percent in the Haynesville, the most productive shale gas play in the US. And it is falling or flat in eight of the top ten plays. Overall well quality is declining for 36 percent of US shale gas production and is flat for 34 percent.
Not surprising in this context, the major shale gas players have been making massive write-downs of their assets to reflect the new reality. Companies began in 2012 reassessing their reserves and, in the face of a gas spot price that was cut in half between July 2011 and July 2012, are being forced to admit that the long-term outlook for natural-gas prices is not positive. The write-downs have a domino effect as bank lending is typically tied to a company’s reserves meaning many companies are being forced to renegotiate credit lines or make distress asset sales to raise cash.
Beginning August 2012, many large shale gas producers in the US were forced to announce major write-downs of the value of their shale gas assets. BP announced write-downs of $4.8 billion, including a $1 billion-plus reduction in the value of its American shale gas assets. England’s BG Group made a $1.3 billion write-down of its US shale gas interests, and Encana, a large Canadian shale gas operator made a $1.7 billion write-down on shale assets in the US and Canada, accompanied by a warning that more were likely if gas prices did not recover. 
The Australian mining giant BHP Billiton is one of the worst hit in the US shale gas bubble as it came in late and big-time. In May, 2012 it announced it was considering taking impairments on the value its US shale-gas assets which it had bought at the peak of the shale gas boom in 2011, when the company paid $4.75 billion to buy shale projects from Chesapeake Energy and acquiring Petrohawk Energy for $15.1 billion.
But by far the worst hit is the once-superstar of shale gas, Oklahoma-based Chesapeake Energy.
Part VI: Chesapeake Energy: The Next Enron?
The company by most accounts that typifies this shale gas boom-bust bubble is the much-hailed leading player in shale, Chesapeake Energy. In August 2012 there were widespread rumors that the company would declare bankruptcy. That would have been embarrassing for the company that was the nation’s second largest gas producer. It would also have signaled to the world the hype that was behind promotion of a “shale energy revolution” from the likes of Yergin and the Wall Street energy promoters looking to earn billions on M&A and other deals in the sector to replace their dismal real estate experiences.
In May 2012, Bill Powers of the Powers Energy Investor, wrote of Chesapeake (CHK by its stock symbl): “Over the past year, however, CHK’s business model has broken down. The company’s shares continue to break to 52-week lows and the company has a funding issue—financial speak for the company is running out of money. While it was able to farm-out a portion of its Utica Shale assets in Ohio to France’s Total last year—this is remarkable given the accounting errors that resulted in Total receiving significantly less revenue from their Barnett Shale joint-venture—CHK has largely run out of prospective acreage to farm-out.” Powers estimated a $3 billion cash shortfall in 2012 for the company. That comes atop already huge corporate debt of $11.1 billion of which $1.7 billion was a revolving line of credit. 
Powers adds, “When the off-balance sheet debt and preferred issues are added to the company’s existing $11.1 billion of on-balance sheet debt, CHK’s has a whopping $20.5 billion of financial obligations. Given such a high level of indebtedness, CHK debt is rated junk and will be for the foreseeable future. “ He concludes, “Having America’s second largest natural gas producer as well as its most reckless destroyer of shareholder capital almost completely walk away from the shale gas business is a great indication that today’s natural gas price bubble is on the verge of popping. CHK has not made any money by drilling shale wells—and neither have virtually any of its peers—and now the dumb money has run out.” 
Angry shareholders forced a major shakeup of the Chesapeake board last September after a Reuters report that CEO Aubrey McClendon had been taking out large loans not fully disclosed to the company’s board or investors. McClendon was forced to resign as Chairman of the company he founded after details leaked out that McClendon has borrowed as much as $1.1 billion in the last three years by pledging his stake in the company’s oil and natural gas wells as collateral. In March 2013 the US Government Securities and Exchange Commission (SEC) announced that it was investigating the company and Chief Executive Aubrey McClendon and had issued subpoenas for information and testimony, among other items looking into a controversial program that grants McClendon a share in every well that Chesapeake drills.
The company is in the midst of a major asset sale of an estimated $6.9 billion to lower debt, including oil and gasfields covering roughly 2.4 million acres. It must invest heavily in drilling new wells to deliver the increased production of more lucrative oil and natural gas liquids, if it is to avoid bankruptcy. As one critical analyst of Chesapeake put it, “the company’s complex accounting methods make it almost impossible for analysts and stockholders to determine what the risks really are. The fact that the CEO is taking out billion-dollar loans and not openly disclosing them only furthers the perception that everything is not as it appears at Chesapeake – that the company is Enron with drilling rigs.” 
The much-touted shale gas revolution in the USA is collapsing along with the stock shares of Chesapeake and other key players.
F. William Engdahl is author of Myths, Lies and Oil Wars. He can be contacted via his website atwww.williamengdahl.com
 Roberta Rampton, Energy Policy Shifting as abundance replaces scarcity: Obama adviser, Reuters, February 25, 2013.
 President Barack Obama, President Obama’s State of the Union Address , January 25, 2012, The New York Times, January 24, 2012, accessed in http://www.nytimes.com/interactive/2012/01/24/us/politics/state-of-the-union-2012-video-transcript.html.
 Daniel Yergin, Subcommittee on Energy and Power of the House Energy and Commerce Committee
Testimony submitted for Hearings on ‘America’s Energy Security and Innovation,’ Washington D.C., February 5, 2013, accessed in http://energycommerce.house.gov/hearing/AESI-assessment-north-americas-energy-resources.
 BP, BP Energy Outlook 2030, London, January 2012.
 Glenn S. Penny, et al, Control and Modeling of Fluid Leakoff During Hydraulic Fracturing, Journal of Petroleum Technology, Vol. 37, no. 6, pp. 1071-1081.
 F. William Engdahl, Shale Gas: Halliburton’s Weapon of Mass Devastation, VoltaireNet.org, 17 May 2012, accessed in http://www.sott.net/article/245733-Shale-Gas-Halliburtons-Weapon-of-Mass-Devastation.
 Anthony Andrews, et al, Unconventional Gas Shales: Development, Technology and Policy Issues, Congressional Research Service, Washington D.C., October 30, 2009, p.7.
 John Deutsch, Robin West, The North American Oil and Gas Renaissance and its Implications, The Aspen Institute, 2012, Washington DC, accessed inhttp://www.aspeninstitute.org/sites/default/files/content/docs/pubs/2012GlobalForumRepFINALPDF_0.pdf.
 EIA, Natural Gas Gross Withdrawals and Production, US Department of Energy, Washington DC, accessed in http://www.eia.gov/dnav/ng/ng_prod_sum_dcu_NUS_a.htm
 Malcolm Maiden, Burnt Fingers all round in US shale gas boom, The Sydney Morning Herald, August 2, 2012, accessed in http://www.smh.com.au/business/burnt-fingers-all-round-in-us-shale-gas-boom-20120801-23g03.html
 SPEE, Canadian Oil and Gas Evaluation Handbook, Volume 1 — Reserves Definitions and Evaluation Practices and Procedures, SECTION 5: DEFINITIONS OF RESOURCES AND RESERVES, Petroleum Society of the Canadian Institute of Mining, Metallurgy and Petroleum, Calgary Chapter, accessed in www.petsoc.org.
 Stephen Lacey, After USGS Analysis, EIA Cuts Estimates of Marcellus Shale Gas Reserves by 80% ,August 26, 2011
 Rafael Sandrea, Evaluating production potential of mature US oil, gas shale plays, The Oil and Gas Journal, December 3, 2012, accessed in http://www.ogj.com/articles/print/vol-110/issue-12/exploration-development/evaluating-production-potential-of-mature-us-oil.html.
 Arthur E. Berman, After the Gold…
 Ed Crooks, Gas groups headed for large write-downs, Financial Times, August 31, 2012, accessed inhttp://www.ft.com/intl/cms/s/0/a0fd134e-f38d-11e1-b3a2-00144feabdc0.html#axzz2MehR4I7i.
 Marin Katusa, Does a Long-Term Natural-Gas Downturn Signal that Investors Should Exit?,http://www.caseyresearch.com/cdd/does-long-term-natural-gas-downturn-signal-investors-should-exit.
 Jeff Goodell, ‘World’s Biggest Fracker’ Pockets $1 Billion in Shady Deal, Rolling Stone, April 18, 2012, accessed in http://www.rollingstone.com/politics/blogs/national-affairs/worlds-biggest-fracker-pockets-1-billion-in-shady-deal-20120418#ixzz2N3vXTPH9.
 Reuters, SEC Investigating Chesapeake Energy, CEO, March 01, 2013, accessed inhttp://www.foxbusiness.com/business-leaders/2013/03/01/sec-investigating-chesapeake-energy-ceo/#ixzz2N40Rnm4d.
 Ed Crooks, Two directors forced out of Chesapeake, Financial Times, June 8, 2012, accessed inhttp://www.ft.com/intl/cms/s/0/7fbbd6a4-b182-11e1-bbf9-00144feabdc0.html#axzz2N3lAsPdW.
 Jeff Goodell, Op. Cit.
Canada has now been governed for some time by conservatives who allegedly care about deficits and debt, yet when the implosion of American banks dragged Canada into a recession, our government started spending far more, not less. Years later, we continue to spend into the red and our debt lurches ever higher. By contrast, even since the ascent of the Conservative Party in London, the U.K. has been biting a fiscal bullet. They have chosen to trim government spending in the hope of jump-starting future economic growth—in a word, austerity. According to Mark Blyth, this is a bad idea: “Austerity doesn’t work. Period.” Believing it only persists due to “epistemic arrogance and ideological insistence,” he sets out to trace the intellectual history of austerity, going back to its roots, from Adam Smith, David Hume and John Locke to more recent proponents like Joseph Schumpeter, Friedrich Hayek and current German leader Angela Merkel. Then Blyth gives us a decidedly discouraging historical tour of austerity in action, which among other things makes us feel sorry for Great Britain’s prospects.
Blyth, a professor at Brown University, is an unusually gifted communicator of complex economic ideas. But though he pens such colloquial sentences—“Iceland, in many ways, was Ireland on crack”—this book is most suitable for readers with at least an intermediate familiarity with macroeconomics. Blyth does not pause long to explain the importance of bond yields. Yet his book provides a rich background for understanding the policy options facing those who would solve the ongoing Euro-crisis. Blyth also revisits the momentous American decision to bail out its banks, which continues to prompt Republican murmurings about the necessity for belt-tightening. Insofar as the United States and Europe have a debt crisis, it is partly the result of a banking crisis. Bank bailouts created much of the debt that we hear so much hyperventilating about. As for puny Iceland, it chose to let its toxic banks go bust, and its economy is now doing rather well.
Blyth is too rigorous to be an ideologue. He thinks austerity measures have their place, but only under the right conditions. Now, apparently, is not such a time.
July 28th marks the 35th anniversary of the political assassination of two Puerto Rican independence activists, Carlos Soto Arriví and Arnaldo Darío Rosado, in the infamous Cerro Maravillai case. This case, which was widely followed among Puerto Ricans, involved an agent provocateur that led the activists to an ambush that resulted in their brutal murder by paramilitary agents within the colonial police force. The event led to two investigations, the second of which revealed a conspiracy to cover up both the assassination plot as well as the destruction and manipulation of evidence carried out by the colonial police and justice department, and well as the federal justice department and FBI. Cerro Maravilla symbolizes for many the most outstanding recent example of repressive measures, from surveillance to political assassination, unleashed by US imperialism against the anticolonial movement in Puerto Rico.
The recent revelations of NSA spying by Edward Snowden have provoked mass outrage across the globe. Much of the consternation comes from what is commonly understood as a violation of privacy. In the official media, Snowden’s actions have been framed as a debate between ‘national security’ and ‘privacy’. However, framing the question in these terms is pure subterfuge. The Puerto Rican experience shows that the true objectives of surveillance programs by intelligence agencies like the NSA, CIA, and FBI having nothing to do with ‘security’ or ‘protection’ but rather political repression. Systematic surveillance can only be understood as an essential part of state repression, the purpose of which is to intimidate those that question the status quo by promoting a culture of fear. One can never be separated from the other.
The systematic surveillance and repression of Puerto Rico’s anticolonial movement is obviously just one example of many. A brief historical sketch of US imperialism’s repressive efforts against anticolonial forces in Puerto Rico must begin with the political intrigues that preceded the 1898 military invasion as well as the martial law that characterized both military and civilian colonial governments in its immediate aftermath. This history goes on to include the surveillance and repressive attacks against the Puerto Rican Nationalist Party and its followers from the 30s through the 50s, which included massacres of unarmed civilians, political assassinations and imprisonments, the harassment and attacks against labor unions and newly emergent socialist organizations of the same period, as well as COINTELPRO operations against resurgent nationalist and socialist political formations during the 60s and 70s.ii Indeed, in 1987 it was revealed that over 130,000 files on individuals and organizations had been accumulated through systematic surveillance on the island. This history is an integral part of the parallel campaigns of systematic state repression unleashed within the United States against groups such as the Black Liberation Movement, the American Indian Movement, the Chicano Liberation Movement, radical labor organizations, progressive students and antiwar activists, as well as communists.iii As such, what constitutes a scandal for the broader public is in fact part of the daily reality for those that fight for freedom and an end to oppression.
Snowden’s revelation that the United States Security Group Command’s Sabana Seca installation, located in the northern coastal municipality of Toa Baja, is part of an international surveillance network, which includes the Fornstat program, comes to no surprise to Puerto Rican anticolonial activists. From Sabana Seca, US naval intelligence monitors and gathers Internet, phone, and other forms of communication. In 1999, Duncan Campbell and Mark Honigsbaum of The Guardian already highlighted the naval intelligence’s “Echelon” operations from Sabana Seca and other locations both in the US and internationally as part of joint US British surveillance programs.iv
What is critical to highlight about US imperialism in Puerto Rico is the continued military character of colonialism on the island. For the benefit of those that may be unaware or who take the position that US militarism characterized only the past history of colonialism in Puerto Rico, a few contemporary examples serve to illustrate the point. Over the past decade and a half, Puerto Ricans have mobilized en masse to oppose a proposed military radar system intended for the Lajas valley in the southwestern part of the island, to end the practice of using the eastern island of Vieques as a bombing range by the US military and its allies (It should be noted that there was also a successful campaign to end the militarization of Culebra island also off the eastern coast of the main island in the 70s), and in more recent times against a system of potentially toxic and environmentally destructive antennas used both by the military and cellular companies that have proliferated across the island. In an article in the current issue of Claridad, the spokesperson for the grassroots Coalition of Communities Against the Proliferation of Antennas, Wilson Torres, sheds light on the US military’s Full Spectrum Dominance program currently being implemented in Puerto Rico. v
Understood in the context of pervasive unemployment, which serves to ensure an ever present pool of recruits used as cannon fodder in US military campaigns throughout the world as well as the structural dependence of large parts of the colonial economy on the Pentagon, this picture constitutes the modified form of US militarism in Puerto Rico in the present context. One may add the militarization of the colonial police force in the ongoing attacks against residents of public housing and other marginalized communities to this reality.
It would not be difficult to draw parallels between much of what is described immediately above and the realities faced by many North Americans. Heavy-handed policing and economically depressed communities dependent upon military or prison industries are a familiar reality for many. Yet the notion that the United States of America is characterized by a repressive state is much more difficult for the average person to accept. The narrative of 9/11 provides the pretext that results in the conflation of national security and state repression in the minds of many.
Notwithstanding, the revelations about the NSA spying program have provoked the condemnation of all except the most recalcitrant sycophants of US imperialism. Yet, it is absolutely necessary to place these programs in the context of the long history of state repression and militarism. Those on the left must push to extend the public discourse beyond questions of personal privacy to a discussion of systematic political repression within increasingly militarized “liberal” democracies. The experiences of anticolonial activists and militant, class-conscious revolutionaries from Puerto Rico lend valuable insights that add to the discussion around the significance of what Snowden’s leaks reveal: systematic surveillance and state repression are two sides of the same coin.
An insightful comment by Marx, writing in the New York Daily Tribune about British imperialism in India during the mid 1800s and often repeated among Puerto Rican comrades, is a useful starting point for the US left:
“The profound hypocrisy and inherent barbarism of bourgeois civilization lies unveiled before our eyes, moving from its home, where it assumes respectable form, to the colonies, where it goes naked.”
Carlos Borrero is a New York based writer.
Kevin O’Rourke links to an interesting paper by Jeff Frankel which discusses different ways recessions are measured. The standard European measurement says that when an economy falls two quarters in a row it is officially in recession (we know all about that given our official double-dip). This measurement has the advantage of being statistically clear and simple. This, though, can lead to false readings. For instance, over two years the economy declines in half of the eight quarters – leaving it much lower. If, though, none of those quarters were consecutive, then according to the European measurement, there was no recession even though output has fallen. This may be an extreme case but it shows how quirky this measurement can be.
The US has a different way of measuring recessions. According to Frankel:
‘In the United States, the arbiter of when recessions begin and end is the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER). The NBER Committee does not use that rule of thumb (Europe’s two consecutive quarters of decline), nor any other quantifiable rule . . . When it makes its judgments it looks beyond the most recently reported GDP numbers to include also employment and a variety other indicators, in part because output measures are subject to errors and revisions. The Committee sees nothing special in the criterion of two consecutive quarters.’
The problem with this approach is that there is no single definitive measurement so disputes easily arise.
I’d like to introduce another way to measure a recession. It is based on the sinking-ship metaphor. A ship starts sinking. It eventually stops and starts to rise again. While it’s rising back to the surface we can say that it is in recovery mode. However, it will remain below water until it gets back to the surface.
Similarly with an economy: an economy goes into decline, eventually stops falling and starts rising. However, it remains metaphorically below water until it returns to the point at which it had started sinking. If an economy is below its pre-recession levels it remains ‘recessed’.
Take, for instance, the US Great Depression in the 1930s. The economy tanked big time in 1929. However, by 1935 the economy had experienced nearly three years of rising GDP, employment, consumer spending and investment. However, no one then (or now) would have said that the Great Depression was over by 1935 – it was still well below its 1929 level.
In 2007, the economy was generating a little over €43,000 for every woman, man and child. As seen, according to the IMF projections, even by 2018 the economy will not have returned to the 2007 level. It won’t happen until 2019. In other words, the economy will remain under-water for 11 years – in other words, ‘recessed’.
Of course, this is GDP – which is flattered by multi-national accounting practices (profit-tourism, etc.). What does it look like when we measure GNP per capita? Here we use the Government’s own assumptions in their end-of-the-decade scenario.
When looking at this domestic measurement (with all its faults) we find that the economy will be underwater for 14 years. 14 years. We won’t find ourselves above pre-recession levels until 2022. And if that’s not depressing enough, the ESRI’s John Fitzgerald estimates that even our GNP figures are over-stated given the presence of re-domiciled multi-nationals. The real GNP figures are substantially lower which suggests that a return to the surface could take even longer based on projected trends.
Staying with the metaphor, when the ship returns to the surface what kind of shape will it be in? Even though the economy has returned to the surface, many people will still be underwater. The Government’s end-of-the-decade scenario projects double-digit unemployment by 2019. Average real wages may not return to pre-recession levels until 2020 and even later. How many will still be living in deprivation, how many in poverty, how many will have emigrated? The ship may be back on the surface, hundreds of thousands won’t be.
To give another idea of what we’re facing into, let’s use the Government’s assumptions to track the ‘jobs recession’.
We won’t return to pre-crisis levels of employment until 2024. That’s 16 years under-water.
So when we start growing again – GDP, domestic demand, employment – just remember: we will have to grow for a long-time just to get back to where everything started collapsing. In other words, the ship may start rising soon but we will be underwater for a very long time.
Hopefully, you can hold your breath.
By Michael Taft,
― Jarod Kintz, The Days of Yay are Here! Wake Me Up When They’re Over.
The current global crisis is a manifestation of a fundamental problem in the process of the accumulation of capital. The problem is the lack of surplus value production. This contradiction has been concealed by decades of accumulating debt. Burgeoning financialisation involving bull runs since the 1980s have helped disguise the long-term weakening of the advanced capitalist economies. Economic performance in the United States, Western Europe and Japan has deteriorated since about 1973. The years since the start of the current cycle, which originated in 2001, have been worst of all.
The declining economic dynamism of the advanced capitalist world is rooted in a major sustained fall in profitability, caused primarily by the secular over-accumulation of capital. This problem goes back to the early 1970s. By 2000 in the United States, Japan and Germany, the rate of profit of private industrial capital had yet to make a comeback, rising no higher than that of the 1970s. With reduced profitability, capitalists had smaller surplus value to add to their labour processes. The perpetuation of reduced profitability since the 1970s has led to a steady falloff in accelerated capital accumulation across the advanced capitalist economies. The economic interventionism of the capitalist state have obstructed the realisation of the conditions for the necessary radical devalorisation of capital. Consequently economic downturn has not been precipitous enough to bring about a full recovery involving a restoration of profitability. The outcome is sustained stagnation.
To counter this persistent stagnation states, led by the United States, have been forced to underwrite ever greater volumes of debt through ever more varied and exotic financial forms. Initially, during the 1970s and 1980s, states were obliged to incur ever larger public deficits to sustain growth. But while provisionally keeping the economy relatively stable these deficits also rendered it increasingly stagnant. They thereby promoted the continued stagnation of capital by preventing capital proceeding through its “natural” cycle involving sharp downturns. This interventionism obstructed the return of accelerated capital accumulation. The state is now securing progressively less growth for any given increase in borrowing.
States, in the early 1990s, sought to overcome the problem by a budget balancing policy. Deficit reductions brought about by budget balancing resulted in a significant fall in aggregate demand. Consequently during the first half of the 1990s both Europe and Japan experienced devastating recessions that turned out to be the worst of the post-war period. The U.S. economy, itself, experienced the so-called jobless recovery.
Since the middle 1990s, the United States has been obliged to resort to more powerful and risky forms of stimulus to counter the tendency to stagnation. This is why public deficits were replaced with private deficits and asset inflation. In the great stock market run-up of the 1990s wealth on paper, fictitious capital, massively expanded. This development entailed a record-breaking borrowing increases. Consequently a powerful expansion of financial capital and consumption was sustained.
Government financial policy together with the general neo-liberal agenda of the bourgeoisie led to the historic equity price bubble of the years 1995-2000. Equity prices rose as a response to the law of the tendency of the general rate of profit to fall. New investment, free from significant technical composition of capital increases, exacerbated the prevailing over-accumulation of industrial capital. This was followed by the stock market crash and recession of 2000-2001.This development depressed profitability in the non-financial sector to its lowest level since 1980.
Greenspan countered the new cyclical downturn with another round in the inflation of asset prices. By reducing real short-term interest rates to zero for three years, he facilitated an historically unprecedented explosion of household borrowing. This contributed to and fed on rocketing house prices and household wealth. The world housing bubble between 2000 and 2005 was one of the biggest of all time. It made possible a steady rise in consumer spending and residential investment which together drove the expansion. Bush’s budget deficits together with record household deficits succeeded in obscuring the weakness of the underlying economic recovery by creating the appearance of sustained economic prosperity. The rise in debt-fuelled consumer demand as well as super-cheap credit superficially and provisionally revived the American economy. It also led to a new surge in imports and the increase of the balance of payments deficit to record levels.
Simultaneously, instead of increasing investment, productiveness and employment to increase surplus value, individual capitals sought to exploit the hyper-low cost of borrowing to improve their own and their shareholders’ position by way of financial manipulation — paying off their debts, paying out dividends, and buying their own stocks to drive up their value. This financialisation created a fictitious prosperity The same sort of things had been happening throughout the world economy — in Europe and Japan. In the United States and across the advanced capitalist world since 2000, the contradiction has been as follows: The slowest growth in the “real economy” since the 1970s and the greatest expansion of the fictitious economy in U.S. history.
Just as the stock market bubble of the 1990s eventually burst, the housing bubble eventually deflated. As a consequence, the house-driven expansion during the cyclical upturn moved into reverse. Just as the positive wealth effect of the housing bubble drove the economy forward, the negative effect of the housing crash drove it backward. With the value of their household residences declining and household borrowing collapsing households were forced to consume less. The sub-prime crisis arose as a direct extension of the housing bubble. Because of the ensuing enormity of the banks’ losses credit froze up at the very moment of the slide into recession.
It is clear from the above argument that it does not necessarily follow, as held by much of the Irish Left, that stimulus provided by the capitalist state to the domestic economy is not a prescription for providing a way out of recession. Indeed the argument above teaches the lesson that “artificial stimulus” can constitute a factor that sustains or encourages recession. Most of the Irish Left, including the less passive trade union UNITE, focus its efforts on campaigning for a solution within the framework of capitalism through the medium of the capitalist state which they misidentify as an eternal nanny state. They thereby sustain the illusion that capitalism is potentially a system that can serve the interests of the working class. If this utopianism of the Left were true then there would be no need for communist society.
The Euro crisis is a general a product of the conditions that contributed to the Great Recession. After the crash of 2008 the contradictions of the Euro grew increasingly visible. Consequently the market increasingly discovered its shortcomings. This manifested itself in the growing economic and financial problems of the so called peripheral states within the Euro zone. States such as Greece, Portugal and Ireland. These economies were running growing budget deficits. This meant that they were compelled to increasingly borrow on the financial markets. But because of the worsening economic conditions under which they were forced to do this, together with other factors, the interest rates at which borrowing was possible for them became increasingly usurious. No longer were they really in a position to borrow on the bond market. This meant they were left with merely two options: a bailout from the EU or default. In this way the economic crisis for these states became a growing problem for the EU itself culminating in a collapse of the Euro and its banking system.
One thing needs to be made clear. The Irish economy did not collapse because of irresponsibility regulation, banking and unscrupulous bankers. Pinning the blame on the aforementioned is a form of populism that distracts the attention of the working class from the real problem –the contradictory limits of capitalism. It is because the generation of surplus value within the reproduction process was the central problem facing the Irish economy that the bubble was created involving vast amounts of debt. To compensate for the absence of economic growth based on profitable industrial production bubble conditions were created that inevitable burst.
The banks of the core Euro zone were bloated and sitting on mountains of toxic debt collected from its periphery and elsewhere (the United States included). Consequently the core was vulnerable to collapse too. Because the core members were not prepared to let their banks collapse they imposed draconian conditions on the states that received financial help from them. This forms part of an attempt to protect its banks by rescuing funds from the periphery that was owed to the core of the European banking system. But the real aim of the markets was not merely to force the peripheral states into default. The underlying aim was to collapse of the Euro itself thereby bringing about the reconfiguration of the European capitalist system.
Ultimately the source of the Euro crisis is not, as some argue, its flawed architecture, rampant financialisation nor the Great Recession itself. Nor was the Euro crisis itself due to reckless spending by both the public and private sectors of Greece, Portugal and Ireland.
These latter factors and the Euro crisis are the result of the failure of the valorisation process to produce surplus value on a scale sufficient to provide accelerated accumulation of capital. Because of this failure capitalism has been compelled to conduct itself in a way that has led to massive financialisation involving copious credit culminating in financial crisis, crash and economic recession. Debt is not indefinitely sustainable when there obtains abject failure by the system to produce surplus value (profit) on a sufficiently large scale. As I have indicated before, the failure of capitalism to bring about an adequate restoration of profit during the 1974/75 crisis marked a turning point that resulted in the sustained stagnation of capital. The 74/75 dip was not sufficiently deep to overcome the crisis of capitalism. Consequently even if the ECB was to currently dish out mountains of Euro the problem would only partially sort itself out in the short term. In the long term it would lead to a much more acute problem.
Public nor private debt is not the problem. Public/private debt is a product of the problem of profitability. Because of the lack of profitability debt has ballooned thereby reinforcing the problem. For capitalism to economically recover a very deep depression involving massive reductions in the value of wages and social welfare spending is a necessity. The only other (authentic) option is communist revolution.