venerdì 30 marzo 2012

How privatization rendered USSR bankrupt

How the west rendered USSR bankrupt

LONDON: A new analysis showing how the radical policies advocated by western economists helped to bankrupt Russia and other former Soviet countries after the Cold War has been released by researchers at the University of Cambridge. 

The study, led by academics at the University of Cambridge, is the first to trace a direct link between the mass privatisation programmes adopted by several former Soviet states, and the economic failure and corruption that followed, a university release said.

Devised principally by western economists, mass privatisation was a radical policy to privatise rapidly large parts of the economies of countries such as Russia during the early 1990s.

The policy was pushed heavily by the International Monetary Fund, the World Bank and the European Bank for Reconstruction and Development (EBRD).

Its aim was to guarantee a swift transition to capitalism, before Soviet sympathisers could seize back the reins of power, the release added.

Instead of the predicted economic boom, what followed in many ex-Communist countries was a severe recession, on a par with the Great Depression of the United States and Europe in the 1930s.

The reasons for economic collapse and skyrocketing poverty in Eastern Europe, however, have never been fully understood.

Nor have researchers been able to explain why this happened in some countries like Russia, but not in others such as Estonia, the release said.

Some economists argue that mass privatisation would have worked if it had been implemented even more rapidly and extensively.

Conversely, others argue that although mass privatisation was the right policy, the initial conditions were not met to make it work well.

Further still, some scholars suggest that the real problem had more to do with political reform.

Writing in the new, April issue of the American Sociological Review, Lawrence King and David Stuckler from the University of Cambridge and Patrick Hamm, from Harvard University, test for the first time the idea that implementing mass privatisation was linked to worsening economic outcomes, both for individual firms, and entire economies.

The more faithfully countries adopted the policy, the more they endured economic crime, corruption and economic failure.

This happened, the study argues, because the policy itself undermined the state's functioning and exposed swathes of the economy to corruption.

The report also carries a warning for the modern age: "Rapid and extensive privatisation is being promoted by some economists to resolve the current debt crises in the West and to help achieve reform in Middle Eastern and North African economies," said King.

"This paper shows that the most radical privatisation programme in history failed the countries it was meant to help.

"The lessons of unintended consequences in Russia suggest we should proceed with great caution when implementing untested economic reforms."

Mass privatisation was adopted in about half of former Communist countries after the Soviet Union's collapse.

Sometimes known as "coupon privatisation", it involved distributing vouchers to ordinary citizens which could then be redeemed as shares in national enterprises.

In practice, few people understood the policy and most were desperately poor, so they sold their vouchers as quickly as possible.

In countries like Russia, this enabled profiteers to buy up shares and take over large parts of the new private sector.

The researchers argue that mass privatisation failed for two main reasons.

First, it undermined the state by removing its revenue base - the profits from state-owned enterprises that had existed under Soviet rule - and its ability to regulate the emerging market economy.

Second, mass privatisation created enterprises devoid of strategic ownership and guidance by opening them up to corrupt owners who stripped assets and failed to develop their firms.

"The result was a vicious cycle of a failing state and economy," King said. 

Read more:

ECB: A failed central banking system

Monetary and credit reform

Monetary and credit reform: full-employment, end of debt slavery

This is my paper for The Center of Process Studies’ conference, Money-Creation in a Finite World (free and open to the public, April 10-12, 2012; Claremont Colleges, CA):
Money and credit as public services for full-employment, optimal infrastructure, ending debt slavery: Epic proponents, related history of US government and corporate media, partnership for Occupy victory
It’s divided into these 11 parts for articles (links added with each new section):

Continue reading on Monetary and credit reform: full-employment, end of debt slavery - National Nonpartisan |

Crowdfunding bill backed

Crowdfunding bill backed by US House of Representatives

Barack ObamaThe bill is expected to be signed by President Barack Obama soon

Related Stories

Raising money for start-ups via the internet is set to become easier after a new bill was backed by the US House of Representatives.
Supporters of the Jumpstart Our Business Startups Act (Jobs) said it would help firms to "crowdfund" capital from small investors.
However, critics have warned the measures could lead to increased levels of fraud.
President Barack Obama is expected to sign the bill soon.
The proposals were supported overwhelmingly in the House with members voting 380-41 in favour. It was backed earlier in the week by the Senate.
Crowdfunding has become an increasingly popular way for small companies to gain early investment using the internet.
US-based site Kickstarter has raised millions of dollars for mostly arts and media projects.
The biggest of these, a video game called Double Fine Adventure, raised more than $3m (£1.9m) from over 80,000 backers.
However, while sites like Kickstarter provide funds on a philanthropic basis, the Jobs Act intends to allow small-scale investors to own equity in companies they back.
Up to $1m can be raised via crowdfunding, or $2m for companies that provide investors with fully audited financial statements.
Currently, small businesses with more than 500 investors must open up their books to US financial regulators.
In the proposed bill, that threshold is raised to 2,000. It would, backers said, reduce red tape and cut the costs of running a business.
'Petri-dish of fraud'
The bill has been largely welcomed by start-up companies looking to secure vital funding in a year when lending by US banks is expected to drop.

Crowdfunding in the UK

  • Crowdcube, based in Exeter, has raised over £2.5m to fund UK businesses - including itself. The site said that the investments have lead to the creation of 320 jobs.
  • Another site,, borrows heavily from the Kickstarter format, but is yet to receive anywhere near the same level of funds for its creative projects.
  • For small businesses of any type, - which operates out of London - has dished out over £25m in loans offered up by individual investors. Unlike most other crowdfunding sites, money offered through FundingCircle is not a goodwill gesture - investors expect to earn interest on any loans provided.
Michael Lipton, founder of digital firm Breakfast, told the BBC the measures meant a wider array of businesses could be created.
"If someone believes in an idea and believes in a company's strategic vision, they should be able to put their capital behind it," he said.
However Jesse Eisinger, a finance reporter for the US news website ProPublica, described the proposals as a "petri-dish of fraud", and dismissed pledges it would lead to significant job creation.
"It's a bad deal for the retail investor," he told the BBC.
"They're going to get solicitations online, they're going to be asked for small investments.
"The only jobs that are really going to benefit from this are fraudsters, shills and Wall Street analysts."

mercoledì 28 marzo 2012

Bankenstein: Madrid escorts declare sex war

Banking services withdrawn: Madrid escorts declare sex war

Published: 22 March, 2012, 17:43
A prostitute checks her make up on a street in the centre of Madrid (AFP Photo / Philippe Desmazes)
A prostitute checks her make up on a street in the centre of Madrid (AFP Photo / Philippe Desmazes)
Madrid’s high-class escorts have found a way to regulate the Spanish banking sector. The ladies want to have their say in the economy by withholding sexual pleasures from bank employees.
The largest trade association for luxury escorts in the Spanish capital has gone on a general and indefinite strike on sexual services for bankers until they go back to providing credits to Spanish families, small- and medium-size enterprises and companies.
It all started with one of the ladies who forced one of her clients to grant a line credit and a loan simply by halting her sexual services until he “fulfills his responsibility to society.”
The trade association's spokeswoman praised their success by stressing the government and the Bank of Spain have previously failed to adjust the credit flow.
"We are the only ones with a real ability to pressure the sector," she stated. “We have been on strike for three days now and we don't think they can withstand much more.”
She has revealed that bankers have made some pitiful attempts to use their services by pretending to be engineers or architects.
“But they don't fool anyone since it has been many years since these professionals could afford rates that start from 300 euro an hour," she continued.
The bankers reportedly became so desperate that they even decided to call in the government for mediation.
The Mexican website, which initially published the story, cites the Minister of Economy and Competitiveness as admitting that the lack of legislation regulating the escort sector makes it very difficult for the government to intercede in the conflict.
"In fact, there has not even been a formal communication of the strike — the escorts are making use of their right of admission or denying entry to…well, you know. So no one can negotiate," he was quoted as saying.

Special Weapons for Fighting Giants

Special Weapons for Fighting Giants

Revoke their charters, and other legal tools to hold corporations accountable to our laws.

posted Mar 14, 2012
EPA Protest photo courtesy of Rainforest Action Network
Anti-coal photographer and activist Mark Schmerling brought his photo of Massey Energy’s destruction of Kayford Mountain to an EPA hearing in Philadelphia. Delaware Attorney General Joseph R. “Beau” Biden is being urged to decharter Massey because of the company’s reckless history. 
Photo courtesy of Rainforest Action Network.
The last few years have seen a series of corporate catastrophes, for which the perpetrator companies have escaped any meaningful accountability. Big banks and giant Wall Street firms tricked and ripped off homeowners and investors, and crashed the national and global economy. BP’s reckless operations poisoned the Gulf of Mexico in one of the worst oil disasters in history. Massey Energy’s cost-cutting led to the Upper Big Branch coal mine collapse that killed 29 workers.
There have been virtually no criminal prosecutions for Wall Street wrongdoing related to the crash, and precious few civil actions. Criminal charges are likely to be filed against BP, but the company already has been granted new permits to drill for oil in the Gulf. Massey Energy—now owned by Alpha Natural Resources—was forced to pay $200 million in penalties but avoided any criminal prosecution.
This history notwithstanding, We the People, and our government representatives, do have the power to hold companies accountable for the wrongs they commit. The challenge is to mobilize sufficient political pressure to demand that available tools be used and new mechanisms of accountability be created. 
One powerful way to hold companies accountable is through debarment—denying corporate wrongdoers the right to obtain government contracts. Almost every major company does significant business with the government, so debarment is a penalty with teeth. Similarly, federal, state, and local governments should deny other government benefits to corporate criminals and wrongdoers. Denying BP the right to drill in the Gulf is a penalty that would sting. Drug companies that can’t sell to Medicare, Medicaid, and the Department of Veterans Affairs are deprived of more than a third of their market. The Federal Communications Commission has the authority to deny broadcast licenses to media corporations that do not exhibit “good character.” Federal and state governments do frequently debar companies, but typically only smaller firms that engage in massive fraud or operate as criminal enterprises.
Charter revocation effectively constitutes the death penalty for a corporation. Even occasional use would be a major deterrent to corporate wrongdoing.
A second tool to discipline corporate wrongdoers is charter revocation. Establishing a new corporation requires that a state government grant a charter to operate. (This is typically a perfunctory requirement, as evidenced by the state of Virginia’s grant of a charter to Licensed to Kill, Inc., a company whose articles of incorporation state that it will engage in “manufactur[ing] and marketing of tobacco products in a way that each year kills over 400,000 Americans and 4.5 million other persons worldwide.”) State governments have the right to revoke charters from companies that do not serve the public interest. Free Speech for People has petitioned Delaware to revoke the charter of Massey Energy. Charter revocation effectively constitutes the death penalty for a corporation. Even occasional use against large corporations would be a major deterrent to corporate wrongdoing.
A third form of control on corporate wrongdoing is civil litigation. Lawsuits against corporate wrongdoers not only afford victims an opportunity to receive some compensation for the harms they have suffered, they work to strip corporations of ill-gotten gains. The civil justice system is a vital deterrent to corporate misconduct, because it means corporations will at least sometimes be forced to pay for the harms they cause. And lawsuits provide direct justice to victims of corporate wrongdoing, without the need to persuade government officials to act. In many ways, the U.S. civil justice system is the most important form of corporate accountability we have.
It’s for exactly these reasons that corporations have worked for decades to undermine the functioning of the civil justice system, making it harder to file cases, interfering with the ability of victims to join together in class actions, making it harder for victims to obtain evidence, capping the damages that victims may recover, limiting punitive damages, and forcing victims out of the civil justice system (real courts) and into arbitration tribunals biased to favor giant corporations.
In recent years, organizations like EarthRights International and the Center for Constitutional Rights have innovated new ways to hold corporations accountable in U.S. courts for harms perpetrated overseas, relying especially on a law passed in 1789 called the Alien Tort Claims Act. The U.S. Chamber of Commerce has responded with a campaign to foreclose such litigation.
Hot Coffee PosterWho Really Gets Burned With Tort Reform?It's not about protecting ordinary people. It's about the profits of the people and corporations who cause injuries.
In addition to using these and other corporate accountability tools already at our disposal, we need more. Among other things, we need to significantly strengthen the penalties for corporate endangerment of people’s lives and well-being. In many instances, there is no criminal penalty applicable for recklessly putting consumers’ or workers’ lives at risk by knowingly selling dangerous pharmaceuticals or defective cars or by exposing workers to deadly toxic chemicals or other hazards. A law that would make it a felony to recklessly endanger consumers or workers, with stiff fines and sanctions for companies and jail time for responsible corporate management, would make our world safer and restrain corporate misconduct.
We live in a time of massive disparity between penalties for street criminals and corporate wrongdoers. Corporations, which claim all the rights of “persons,” are subjected to much weaker punishments than real people. It doesn’t have to be.

Robert Weissman wrote this article for 9 Strategies to End Corporate Rule. Robert is president of Public Citizen, a consumer advocacy and corporate accountability organization based in Washington, D.C.

Italy: Man sets himself on fire

Italy: Man sets himself on fire outside of tax agency

last update: March 28, 14:42
Bologna, 28 March (AKI) - A man is in serious condition after setting himself on fire in his car parked outside the Italian tax collection agency in Bologna on Wednesday in an apparent suicide attempt because of financial difficulties.
A helicopter ambulance flew him to a Parma hospital where he we was admitted to a burn unit. An official from the hospital said the man is serious condition with burns over almost 100 percent of his body.
Before setting himself aflame, the 58-year-old man wrote three suicide notes. In one of his missives he expressed the desire to take his own life, saying he has paid his taxes and is being mistreated by the tax authorities.
Italy, the European Union's fourth-biggest economy, is mired in recession with unemployment at its highest level in eight years.

JPMorgan Chase: another whistleblower

From: Z A N
JPMorgan Chase
Comment No: 57019
Date: 3/14/2012

Dear CFTC Staff,
Hello, I am a current JPMorgan Chase employee. This is an open letter to all commissioners and regulators. I am emailing you today b/c I know of insider information that will be damning at best for JPMorgan Chase. I have decided to play the role of whistleblower b/c I no longer have faith and belief that what we are doing for society is bringing value to people. I am now under the opinion that we are actually putting hard working Americans unaware of what lays ahead at extreme market risk. This risk is unnecessary and will lead to wide-scale market collapseif not handled properly. With the release of Mr. Smith's open letter to Goldman, I too would like to set the record straight for JPM as well. I have seen the disruptive behavior of superiors and no longer can say that I look up to employees at the ED/MD level here at JPM. Their smug exuberance and arrogance permeates the air just as pungently as rotting vegetables. They all know too well of the backdoor crony connections they share intimately with elected officials and with other institutions. It is apparent in everything they do, from the meager attempts to manipulate LIBOR, therefore controlling how almost all derivatives are priced to the inherit and fraudulent commodities manipulation. They too may have one day stood for something in the past in the client-employee relationship. Does anyone in today's market really care about the protection of their client? From the ruthless and scandalous treatment of MF Global client asset funds to the excessive bonuses paid by companies with burgeoning liabilities. Yes,we at JPMorgan that are in the know are fearful of a cascading credit event being triggered in Greece as they have hidden derivatives in excess of $1 Trillion USD. We at JPMorgan own enough of these through counterparty risk and outright prop trading that our entire IB EDG space could be annihilated within a few short days. The last ten years has been market by inflexion point after inflexion point with the most notable coming in 2008 after the acquisition of Bear.
I wish to remain anonymous as of now as fear of termination mounts from what I am about to reveal. Robert Gottlieb is not my real name; however he is a trader that is involved in a lawsuit for manipulative trading while working with JPMorgan Chase. He was acquired during our Bear Stearns acquisition and is known to be the notorious person shorting in the silver future market from his trading space, along with Blythe Masters, his IB Global boss. However, with that said, we are manipulating the silver futures market and playing a smaller (but still massively manipulative) role in manipulating the gold futures market. We have a little over a 25% (give or take a percentage) position in the short market for silver futures and by your definition this denotes a larger position than for speculative purposes or for hedging and is beyond the line of manipulation.
On a side note, I do not work directly with accounts that would have been directly impacted by the MF Global fiasco but I have heard through other colleagues that we have involvement in the hiding of client assets from MF Global. This is another fraudulent effort on our part and constitutes theft. I urge you to forward that part of the investigation on to the respective authorities.
There is something else that you may find strange. During month-end December, we were all told by our managers that this was going to be a dismal year in terms of earnings and that we should not expect any bonuses or pay raises. Then come mid-late January it is made known that everyone received a pay raise and/or bonus, which is interesting b/c just a few weeks ago we were told that this was not likely and expected to be paid nothing in addition to base salary. January is right around the time we started increasing our short positions quite significantly again and this most recent crash in gold and silver during Bernanke's speech on February 29th is of notable importance, as we along with 4 other major institutions, orchestrated the violent $100 drop in Gold and subsequent drops in silver.
As regulators of the free people of this country, I ask you to uphold the most important job in the world right now. That job is judge and overseer of all that is justice in the most sensitive of commodity markets. There are many middle-income people that invest in the physical assets of silver, gold, as well as mining stocks that are being financially impacted in a negative way b/c of our unscrupulous shorts in the precious metals commodity sector. If you read the COT with intent you will find that commercials (even though we have no business being in the commercial sector, which should be reserved for companies that truly produce the metal) are net short by a long shot in not only silver, but gold.
It is rather surprising that what should be well known liabilities on our balance sheet have not erupted into wider scale scrutinization. I call all honest and courageous JPMorgan employees to step up and fight the cronyism and wide-scale manipulation by reporting the truth. We are only helping reality come to light therefore allowing a real valuation of our banking industry which will give investors a chance to properly adjust without being totally wiped out. I will be contacting a lawyer shortly about this matter, as I believe no other whistleblower at JPMorgan has come forward yet. Our deepest secrets lie within the hands of honest employees and can be revealed through honest regulators that are willing to take a look inside one of America's best kept secrets. Please do not allow this to turn into another Enron.
Kind Regards,
-The 1st Whistleblower of Many
We wouldn't bet on any of this actually being investigated by regulatory agencies, because according to President Obama and other politicians,nobody has committed any crimes.

What we would bet on is that this anonymous whistle blower isn't just blowing smoke. Given the recent revelations of other insiders like Greg Smith, a former Goldman Sachs executive director of their equities derivatives business, who warned this week of a toxic and destructive environment at the government's leading bailout darling, we're of the belief that JP Morgan is no different.

The entire system is rigged, and they have most certainly done a great job of keeping it afloat and maintaining the illusion of stability in the eyes of the masses. One day, perhaps soon, the people will lose confidence in these firms and the government institutions that are complicit in their manipulations. When that happens, look out, because we've got decades of paper receipts and derivatives valued in the tens of trillions of dollars that will be shown to be worth absolutely nothing.

When this ponzi scheme finally comes down it will be unlike anything we've ever seen in terms of economic collapse and financial asset annihilation.