Category Archives: Wealth transfer to rich

MIT economist: Wall Street created worst recession since WWII

MIT economist: Wall Street created worst recession since WWII | The Raw Story – Digg.

rawstory.com — MIT economics professor Simon Johnson said on MSNBC’s The Rachel Maddow Show on Wednesday night that Wall Street “blew itself up,” which lead to the “most severe recession since World War II.” The former chief economist of the International Monetary Fund added that the enormous economic damage was “a direct consequence of what the biggest banks did and were allowed to get away with.” Watch video, courtesy of MSNBC, below: Visit msnbc.com for breaking news, […] 1 day 8 hr ago

MIT economist: Wall Street created worst recession since WWII | The Raw Story

China train crash blamed on signal design flaw

BBC News – China train crash: Signal design flaw blamed.

Serious flaws in a signalling system caused a fatal collision on China’s high-speed rail network, officials say.

Thirty-nine people died when a train ran into the back of another which had stalled on a viaduct near Wenzhou after lightning cut its power supply.

The system “failed to turn the green light into red”, said An Lusheng, head of the Shanghai Railway Bureau.

Chinese Premier Wen Jiabao, who has been visiting the crash site, vowed to “severely punish” those responsible.

Wen Jiabao held the news conference under the viaduct where six of these carriages came off during Saturday’s collision. He stressed that safety would be the absolute priority as China built its huge high-speed network. It is already the second-largest in the world and is set to be expanded.

Wen Jiabao, often referred to as “Granpa Wen”, is the soft face of the party. When there is a crisis or an accident like this, Premier Wen is the man with the common touch who deals with the public.

There was pressure on him to visit the scene. When asked why it took him so long to get to Wenzhou, he said he had been ill and his doctors had not wanted him to travel but he felt it was very important.

But still there is public anger here about the crash, which has raised safety questions about the whole of China’s high-speed network.

“The country’s development is for the people, so the most important thing is people’s lives,” Mr Wen told reporters at the scene.

“No matter if it was a mechanical fault, a management problem, or a manufacturing problem, we must get to the bottom of this.

“If corruption was found behind this, we must handle it according to law and will not be soft.”

Mr Wen earlier promised to take steps to improve safety on the high-speed rail network – one of the government’s flagship projects which it hopes highlights China’s development.

Six carriages derailed and four fell between 20m to 30m (65ft to 100ft) from the viaduct after Saturday night’s crash, which injured nearly 200 people.

The accident came just four years after the country’s first high-speed trains began operating.

Rail experts had warned against the rush to build the world’s longest and fastest high-speed rail network in record time amid safety concerns.

There are allegations that corners were cut during construction because of corruption, raising questions about infrastructure across the country.

This photo taken on July 24, 2011 shows workers clearing wreckage of mangled carriages after a Chinese high-speed train derailed Four carriages plunged from the viaduct

The BBC’s Martin Patience in Wenzhou says it is difficult to get to the truth because of a lack of transparency and accountability.

There is a real sense that things are perhaps being built too quickly and that safety is being jeopardised in the process, our correspondent says.

‘Public relations disaster’

Mr Wen’s visit to the crash scene comes amid growing public outrage at the accident.

Internet users and relatives of the victims have been angered by the government’s apparent unwillingness to answer questions about the crash.

This has led to accusations of government “arrogance”, amid suspicions of a cover-up.

The authorities have moved quickly to stem media coverage, urging reporters to focus on “extremely moving” stories, saying the overall theme should be “great love in the face of great disaster”.

Map

Chinese media have been ordered not to question the official line on the accident, but several newspapers have published editorials criticising the railway ministry.

In an unusually scathing editorial published in both its English and Chinese versions, the state-run Global Times on Wednesday said the government’s handling of the accident aftermath was a “public relations disaster”.

“The relationship between the government and the public is like that of a ship and water. Water can keep the ship afloat or sink it,” it said.

Some relatives of victims, who include two Americans and an Italian, have reportedly refused compensation and instead demanded to be given answers.

The accident is seen as a blow to China’s hopes of selling trains abroad in a bid to become a high-tech exporter.

Shares in Chinese rail and train builders have fallen sharply since the crash.

5 signs that Mexico is losing its drug war

5 signs that Mexico is losing its drug war – The Week.

In Mexico, drug violence has become a routine part of the news. But some moments stand out as particularly frightening

Marisol Valles Garcia is Mexico's youngest police chief and works in a town just 60 miles from Ciudad Juarez, the country's most violent city.

Marisol Valles Garcia is Mexico’s youngest police chief and works in a town just 60 miles from Ciudad Juarez, the country’s most violent city. Photo: Corbis SEE ALL 14 PHOTOS

In the four years since Mexican President Felipe Calderon launched a crackdown on drug cartels, clashes between powerful drugrunners and Mexico’s police have skyrocketed in frequency and intensity. Since 2006, over 28,000 people have been killed, including 2,000 police officers — and the carnage shows no sign of slowing down. Calderon remains optimistic, at least publicly, but faces mounting criticism over the violence. Here are five especially troubling signs for what many consider a failed war:

1. A town’s entire police force quits
No officers were injured when gunmen fired more than 1,000 shots at police headquarters in Ramons, a small town in an area “torn by fighting between the Gulf and Zetas drug gangs.”  But the attackers (who tossed six grenades for good measure) made their point — all 14 of the town’s police officers promptly quit. Their new headquarters had opened just three days before the attack. (Watch an AP report about the police force)

2. The college student who became chief of police
In the small, crime-ridden town of Praxedis Guadalupe Guerrero, nobody was eager to serve as police chief for understandable reasons — the last person who took the job was killed in June. So when 20-year-old criminology student Marisol Valles Garcia volunteered, she made international news. “I took the risk because I want my son to live in a different community to the one we have today,” Guerrero said at a press conference.

3. Cops accused of killing their mayor
It has become an all-too-common story in Mexico: A public official is murdered, and a security guard or police officer turns out to be involved. When Santiago mayor Edelmiro Cavazos was killed in August, six city police officers, including one posted at Cavazos’ home to protect him, were quickly arrested and accused of helping a drug cartel pull off the crime. It was hardly an isolated incident, since most of Mexico’s 430,000 officers “find themselves outgunned, overwhelmed and often purchased outright by gangsters.”

4. A police chief is decapitated
In early October, Rolando Flores, the lead investigator on a high-profile case involving two Americans, was murdered, and his severed head was left in a suitcase in front of a military compound. In a sign of how routine such incidents have become, officials weren’t sure if the decapitation was related to the Falcon Lake case or to other cases Flores was investigating.

5. Killers target rehab centers
Not content to kill judges and mayors, gunmen appear to be going after former colleagues who may be trying to reform themselves. Last Sunday, gunmen lined up 13 recuperating addicts and executed them; two days earlier, another 14 people undergoing rehab had been gunned down. Such attacks have occurred before, but their rising intensity “could signal the lengths to which Mexico’s drug lords will go to prevent reformed addicts from giving information to authorities.”

African land grab could lead to future water conflicts

African land grab could lead to future water conflicts – environment – 26 May 2011 – New Scientist.

IS THIS the face of future water conflicts? China, India and Saudi Arabia have lately leased vast tracts of land in sub-Saharan Africa at knockdown prices. Their primary aim is to grow food abroad using the water that African countries don’t have the infrastructure to exploit. Doing so is cheaper and easier than using water resources back home. But it is a plan that could well backfire.

“There is no doubt that this is not just about land, this is about water,” says Philip Woodhouse of the University of Manchester, UK.

Take Saudi Arabia, for instance. Between 2004 and 2009, it leased 376,000 hectares of land in Sudan to grow wheat and rice. At the same time the country cut back on wheat production on home soil, which is irrigated with water from aquifers that are no longer replenished – a finite resource.

Meanwhile, firms from China and India have leased hundreds of thousands of hectares of farmland in Ethiopia. Both China and India have well-developed irrigation systems, but Woodhouse says their further development – moving water from the water-rich south to northern China, for instance – is likely to be more costly than leasing land in Africa, making the land-grab a tempting option.

But why bother leasing land instead of simply importing food? Such imports are equivalent to importing “virtual water”, since food production accounts for nearly 80 per cent of annual freshwater usage. A new study into how this virtual water moves around the world offers an explanation for the leasing strategy. Ignacio Rodriguez-Iturbe of Princeton University and Samir Suweis of the Swiss Federal Institute of Technology in Lausanne have built the first mathematical model of the global virtual water trade network, using the UN Food and Agricultural Organization’s data on trade in barley, corn, rice, soya beans, wheat, beef, pork, and poultry in 2000. They combined this with a fine-grained hydrological model (Geophysical Research Letters, DOI: 10.1029/2011GL046837).

The model shows that a small number of countries have a large number of connections to other countries, offering them a steady and cheap supply of virtual water even if some connections are compromised by drought or political upheaval. A much larger number of countries have very few connections and so are vulnerable to market forces.

Most importantly, the model shows that about 80 per cent of the water flows over only about 4 per cent of the links, which Rodriguez-Iturbe calls the “rich club phenomenon”. In total, the model shows that in 2000, there were 6033 links between 166 nations. Yet 5 per cent of worldwide water flow was channelled through just one link between two “rich club” members – the US and Japan.

The power of the rich club may yet increase. The model allows the team to forecast future scenarios – for example, how the network will change as droughts and spells of violent precipitation intensify due to climate change. Predictably, this will only intensify the monopoly, says Suweis. “The rich get richer.”

China and India are not currently major players in the virtual water network on a per capita basis, and as the network evolves they could find themselves increasingly vulnerable to market forces and end up paying more for the food they import. Leasing land elsewhere is an attempt to secure their food and water supply in a changing world. But it could be a short-sighted move.

Last year, Paolo D’Odorico of the University of Virginia at Charlottesville showed that a rise in the virtual water trade makes societies less resilient to severe droughts (Geophysical Research Letters, DOI: 10.1029/2010GL043167). “[It] causes a disconnect between societies and the water they use,” says D’Odorico. The net effect is that populations in nations that import water can grow without restraint since they are not limited by water scarcity at home.

Although this could be seen as a good thing, it will lead to greater exploitation of the world’s fresh water. The unused supplies in some areas that are crucial in case of major droughts in other areas will dry up. “In case of major droughts we [will] have less resources available to cope with the water crisis,” says D’Odorico.

In the end, then, the hunt for water that is driving emerging economies to rent African land to grow their crops could come back to haunt them.

Republican Economics as Social Darwinism

t r u t h o u t | Robert Reich | Republican Economics as Social Darwinism.

Really good Op-Ed

by: Robert Reich  |  Robert Reich’s Blog | Op-Ed

John Boehner, the Republican House leader who will become Speaker if Democrats lose control of the House in the upcoming midterms, recently offered his solution to the current economic crisis: “Liquidate labor, liquidate stocks, liquidate the farmer, liquidate real estate. It will purge the rottenness out of the system. People will work harder, lead a more moral life.”

Actually, those weren’t Boehner’s words. They were uttered by Herbert Hoover’s treasury secretary, millionaire industrialist Andrew Mellon, after the Great Crash of 1929.

But they might as well have been Boehner’s because Hoover’s and Mellon’s means of purging the rottenness was by doing exactly what Boehner and his colleagues are now calling for: shrink government, cut the federal deficit, reduce the national debt, and balance the budget.

And we all know what happened after 1929, at least until FDR reversed course.

Boehner and other Republicans would even like to roll back the New Deal and get rid of Barack Obama’s smaller deal health-care law.

The issue isn’t just economic. We’re back to tough love. The basic idea is force people to live with the consequences of whatever happens to them.

In the late 19th century it was called Social Darwinism. Only the fittest should survive, and any effort to save the less fit will undermine the moral fiber of society.

Republicans have wanted to destroy Social Security since it was invented in 1935 by my predecessor as labor secretary, the great Frances Perkins. Remember George W. Bush’s proposal to privatize it? Had America agreed with him, millions of retirees would have been impoverished in 2008 when the stock market imploded.

Of course Republicans don’t talk openly about destroying Social Security, because it’s so popular. The new Republican “pledge” promises only to put it on a “fiscally responsible footing.” Translated: we’ll privatize it.

Look, I used to be a trustee of the Social Security trust fund. Believe me when I tell you Social Security is basically okay. It may need a little fine tuning but I guarantee you’ll receive your Social Security check by the time you retire even if that’s forty years from now.

Medicare, on the other hand, is a huge problem and its projected deficits are truly scary. But that’s partly because George W. Bush created a new drug benefit that’s hugely profitable for Big Pharma (something the Republican pledge conspicuously fails to address). The underlying problem, though, is health-care costs are soaring.

Repealing the new health-care legislation would cause health-care costs to rise even faster. In extending coverage, it allows 30 million Americans to get preventive care. Take it away and they’ll end up in far more expensive emergency rooms.

The new law could help control rising health costs. It calls for medical “exchange” that will give people valuable information about health costs and benefits. The public should know certain expensive procedures only pad the paychecks of specialists while driving up the costs of insurance policies that offer them.

Republicans also hate unemployment insurance. They’ve voted against every extension because, they say, it coddles the unemployed and keeps them from taking available jobs.

That’s absurd. There are still 5 job seekers for every job opening, and unemployment insurance in most states pays only a small fraction of the full-time wage.

Social insurance is fundamental to a civil society. It’s also good economics because it puts money in peoples’ pockets who then turn around and buy the things that others produce, thereby keeping those others in jobs.

We’ve fallen into the bad habit of calling these programs “entitlements,” which sounds morally suspect – as if a more responsible public wouldn’t depend on them. If the Great Recession has taught us anything, it should be that.anyone can take a fall through no fault of their own.

Finally, like Hoover and Mellon, Republicans want to cut the deficit and balance the budget at a time when a large portion of the workforce is idle.

This defies economic logic. When consumers aren’t spending, businesses aren’t investing and exports can’t possibly fill the gap, and when state governments are slashing their budgets, the federal government has to spend more. Otherwise, the Great Recession will turn into exactly what Hoover and Mellon ushered in – a seemingly endless Great Depression.

It’s also cruel. Cutting the deficit and balancing the budget any time soon will subject tens of millions of American families to unnecessary hardship and throw even more into poverty.

Herbert Hoover and Andrew Mellon thought their economic policies would purge the rottenness out of the system and lead to a more moral life. Instead, it purged morality out of the system and lead to a more rotten life for millions of Americans.

And that’s exactly what Republicans are offering yet again.

Royal Dutch Shell and Exxon profits almost double

http://www.bbc.co.uk/news/business-10799128

Second-quarter profits at oil giant Royal Dutch Shell have almost doubled after the firm completed a year-long corporate restructuring programme. The firm reported profits of $4.5bn (£2.9bn) on a current cost of supplies basis, up from $2.3bn a year ago.

Chief executive Peter Voser also defended deep sea oil drilling in the wake of rival BP’s massive oil spill in the Gulf of Mexico.

Meanwhile, US oil giant Exxon Mobil reported quarterly profits of $7.6bn. Continue reading Royal Dutch Shell and Exxon profits almost double