An interview with Michael Hudson

an expensive house

on greed, debt & the inevitable housing crisis

by Joseph Roberts

Michael Hudson is one of the world’s leading economists. He acts as an economic advisor to governments worldwide including Greece, Iceland, Latvia and China on finance and taxation. www.michael-hudson.com

Joseph Roberts: You wrote The Bubble and Beyond before the 2008 financial crash happened.

Michael Hudson: [There were] articles I’d written since about 2004, basically, and I hadn’t yet put it all together in a book. I’d submitted a book to a number of publishers, The Fictitious Economy, forecasting there was going to be a crash in 2008. One year before at Harper’s, I published all the charts based on this book, showing exactly why it was going to happen. Then it happened right on schedule.

JR: What causes bubbles like that?

Michael Hud
Michael Hudson

MH: Debt. The reason bubbles burst is that they’re financed by debt. People will lend more and more and more against real estate or companies and the cost of servicing this debt, the interest and amortization, exceeds the cash flow, the profit or income that’s being earned, and there’s a break in the chain of payments. The tendency of debt in every economy is to grow exponentially. Every interest rate is a doubling time. It can be thought of as that. And the debts grow independently of the economy.

When debts grow faster than the economy’s ability to pay, there’s a crash. That’s why the booms, the build-up and expansion of a business cycle are rather slow, but the crash comes very quickly. So it’s really not a cycle at all. It’s not like Schumpeter described in his book on business cycles: a very smooth sine curve. It’s a ratchet effect.

They’ll pay all of the increased rental value to the bank as interest because they’re hoping for a capital gain, because that’s where the action has been for the last 50 years in the US. Not income. Most people have got rich, not by saving their earnings, but they’ve got rich by the capital gain, which includes middle class families that got rich, not by saving their wages, but by their house appreciating.

JR: Why did Wall Street get bailed out in 2008 rather than Main Street? The US House and the Senate first initially rejected the bail-out. What happened after their first vote?

MH: A lot of pressure was put on the Republicans to say, “Wait a minute, most of your campaign contributions come from the financial sector, the FIRE sector: Finance, Insurance and Real Estate. Who are you going to be for, the voters or your campaign contributors?” And the politicians said, “Our campaign contributors. They’re our constituency.” Or, as Hillary Clinton’s people called them, “the donor class” – the large financial firms and monopoly real estate investors. So President Obama, essentially influenced by his mentor Wall Streeter Robert Rubin, decided to save the banks, not the economy.

Inner engineering

JR: Vancouver, Toronto and other Canadian cities have these huge, expensive bank towers housing the Royal, TD, Montreal and Scotia banks, other financial corporate palaces and now even Trump Towers. But for the majority of people, there is a housing crisis. Housing has drastically changed. In 1957, my parents bought a brand-new, two-story, three-bedroom home in Coquitlam for $13,000. It had a big back yard where we put in apple trees, a large front yard and a double car garage. Within three years, my parents had it paid off. They both worked; my dad was a machinist and my mother a schoolteacher. We were a working class family. Our children can’t do that today.

MH: That’s right. People think that if their grandparents and parents could somehow buy a house and it would go up in value, that would be their retirement fund. Since WWll, that’s how the middle class was essentially created. They often made more money on house appreciation in a year than they would make working for a whole year. And it’s gone up. In some cases, they made more on the house appreciation than all of their salaries for a lifetime.

That’s come to an end and people don’t want to acknowledge that era is over. Already, the economy is fully loaned-up. That’s the word that Wall Street uses. “Loaned-up” means there’s no more debt it can carry. All of the surplus income that families have, over and above basic subsistence needs, is paid to the banks and the real estate sector, the FIRE sector. There’s no more leeway in the economy to grow because it’s all been pledged for debt service. The growth is over. That’s why since 2008, the US economy has been shrinking, except for the wealthiest five percent. The bottom 95% have actually shrunk.

JR: Last year, the amount of capital gains in housing exceeded all of the labour combined in Vancouver. How did that occur?

MH: It happened because banks are willing to lend so much more money that the bank loans bid up the price of property. Property is worth as much as a bank lends against it, and it’s true that foreign investors have come – speculators Blackstone, I’m told, from America. The hedge fund was bought here. Chinese and European investors have all been bidding up the price of commercial property and luxury buildings.

But for the rest of Vancouver, [with regard to] the vast majority of buildings and houses, banks have lent more and more money because they don’t particularly care if the occupants go broke. If the occupants have to borrow so much to buy a home in Vancouver, over a million dollars for many single homes in Vancouver, well, in order to pay debt service on a million dollars, you have to earn about $100,000 a year. If they don’t earn that, if they go under, the banks will say, “Never mind, we’re not going to lose a penny on that because the land is more valuable.”

And if enough families can go broke and be foreclosed on, the banks will then say, “Okay, look, we have a big parcel of land. We’ve got the homeowners off. They’ve had to leave because of debt. Now, we can be building another great big office building.”

JR: How does foreign debt and foreign capital affect our housing and economy? Japan once held the most US capital debt, mostly in US treasury bonds, and now it’s China. These debt-rich countries go to the US to cash in that debt. They want to buy a super-port or Standard Oil of California and the US says, “No it is not in our national interest.” How do they unload their US treasury bonds? Does Canada accept US treasury bonds from China and other countries as currency?

MH: Well, yes. They’re certainly marketable and any country is willing to buy treasury bonds at pretty much the market price. Maybe a teeny margin below. The US, as Obama said, is the “exceptional country.” What does that mean? That means we don’t have to obey international law. International law is for other people. We’re the exception to international law. We’re the only country in the world that doesn’t have to obey international law.

We don’t obey any foreign court. We don’t obey the international courts. We don’t obey the Geneva Convention. Because we’re the “exceptional country.” We insist that other countries open their market to American investors to buy their commanding heights and then privatize them and treat their infrastructure as monopolies. But we won’t let China even buy gas stations in the US when it wanted to buy a set of oil distributors on the west coast. This is the double standard and it’s why China and Russia and Iran and other countries said it’s a guaranteed losing game. “They want to buy us but they won’t let us buy anything.”

JR: If a country doesn’t play along with the US empire, the empire strikes back.

MH: Yes. As it did in Chile.

JR: America has a list of countries that won’t comply to their unipolar world currency. Would it make sense to have more than one international currency system in the world?

MH: That is happening. That would be called a ‘multi-polar world’ and that’s exactly what countries out of the US are saying. That’s why China and Russia are moving closer together. They have a bank clearing system to replace the American/European bank clearing system to clear bank transfers in case the US says they will wreck their banking economy by unplugging them electronically from SWIFT system (Society for Worldwide Interbank Financial Telecommunication). They’re having their own systems.

Other countries are having to protect themselves by withdrawing from the globalization order. That’s exactly why you have Brexit in England. The French election debated this. And north Italy parties are threatening to withdraw from the Euro Zone. The most active people supporting withdrawal from the Euro are the Portuguese because so many Portuguese are having to emigrate to Brazil where they speak the same language. Spain. And of course Greece.

So America, in being the “exceptional country,” with its double standard, says, “If you don’t do what we tell you, we’re going to treat you like we treated Gaddafi or Saddam or Assad.” Other people can say we want to decouple as quickly as we can. Globalization really means a US double standard of military, economic and financial control while other countries are trying to survive because, for them, this is really a new feudalism.

JR: So what’s different today from 30, 40 or 50 years ago in terms of the housing situation?

MH: Well, here’s the issue. Vancouver is part of a naturally rich British Columbia territory. It’s well situated geographically. Who is all this natural wealth going to benefit? Is it going to benefit the citizens who live in Vancouver or are they going to let one percent of the population – the political insiders, the real estate developers and bankers – siphon all of this rising property and rental value of real estate, just take it for themselves and shift the tax burden on to the wage earners and the businesses? That’s what’s happening now.

The fact is that if Vancouver acted in the way that Adam Smith, John Stuart Mill and the classical economists urged, they would say, “Look, all this rising land value should be in the tax base.” Suppose this vast amount – really, I think a trillion dollars by now over the last decade of increased land value – suppose that instead of leaving it to landlords to be paid out as interest to the banks, this had been the tax base. Vancouver could’ve supplied public services freely. It could have free transportation, free schooling. There’s no need for Vancouver to have a sales tax. There’s no need for it to have an income tax because these taxes raise the cost of living and, therefore, raise the cost of doing business.

When Vancouver lets the real estate developers and the banks benefit from all this rise in the price of land that increases the cost of living to new buyers, that means you’re priced out of the market. In order to get a job in Vancouver and live here, you have to earn over $100,000 a year. In other parts of the world, people are able to do the same job for much less because they haven’t had a real estate boom. So it turns out the real estate boom that people think is a sign of prosperity and wealth is actually impoverishing Vancouver by driving it into debt. In order to buy into the real estate boom, new buyers have to take on an enormous new debt and the result will leave Vancouver debt strapped.

JR: People are pressured into playing the game.

MH: They really believe it’s still possible to get rich by going into debt, and for 50 years after WWll ended in 1945, that was the case. You could buy a house and as the economy got richer, the value of the house would go up and cities built more parks and schools and urban amenities. The value would go up, but all of that has now reached a limit.

When I first went to work on Wall Street, with the Citizens Savings Bank And Trust Company, basically banks would lend mortgages only if the cost of servicing a mortgage absorbed 25% of their income. If the mortgage costs were more than a quarter of your income, the bank would say, “Sorry, you can’t afford it.” Well, now in the US, almost all residential mortgages below super castles are government-guaranteed up to 43% of the wage earner’s income, of the borrower’s income.

Now, just imagine if you have to pay 43% of your income for a mortgage or for rent. In NYC, it’s common to pay 40% of your income for rent. You may also have to pay another 10% of your income for other debt – credit card, student loan, auto debts. There’s about a 15% automatic wage withholding for a very regressive social security tax and a healthcare tax. Then about 10-15% more regular income taxes and sales taxes. People don’t realize that only about 25-30% of the average family budget in America can be spent on goods and services. So how is the economy going to afford to buy what it produces? It can’t. Most people in NYC cannot afford to go out and eat in restaurants anymore so all over the city restaurants are closing down. In fact, all over the US. In March, it was announced that corporate and business bankruptcies are way, way up. The trend is for bankruptcies.

The Barnes and Noble where I live in New York has gone out of business. The bookstores I used to know are all out of business. Near NY University, on 8th Street, the main street, which used to be the street for bookstores and other big shopping, half of the storefronts are all boarded up, for rent, empty, going out of business.

And in Vancouver, the first day I was here, we walked down a big major street with wonderful art galleries going out of business. Other stores for rent, going out of business. Other buildings obviously had just been renovated, empty, nobody in them. So the effect is to empty out Vancouver.

JR: And who profits from that?

MH: Ultimately, the banks profit because most of the real estate is bought on credit. As I said, the motto of real estate investors is “rent is for paying interest.” They’ll pay all of the increased rental value to the bank as interest because they’re hoping for a capital gain because that’s where the action has been for the last 50 years in the US. Not income. Most people have got rich, not by saving their earnings, but by the capital gain, which includes middle class families that got rich by their house appreciating. That’s why groups that are left out of home ownership have missed this whole capital gain bit.

So you’re having a bifurcated economy: an economy between a generation that inherits trust funds and is able to sort of live on money that their wealthy parents have made in the financial real estate sector and people who don’t inherit trust funds and are literally the disinherited. This polarization is going to widen and widen and become increasingly a political crisis.

JR: The inequality gap that’s occurring is astounding.

MH: And that should be what economics is all about. But if you look at all of the economic models, they’re all about equilibrium. The pretense – and this is junk economics – is that if an economy gets out of balance, automatic stabilizers return it to equilibrium. The reality is just the opposite: once an economy gets out of balance, it tends to veer further and further out of balance. Mathematicians call that hysteresis. Until there’s a crash.

JR: And there will be continual crashes because…

MH: Because they’ll get bigger and bigger and these economic crashes will be turned into political crashes.

JR: Thank you so much for this insightful conversation.

MH: Well, it’s been really good to be in Vancouver because I’m impressed by how many people really do understand the problems with finance and real estate. Obviously, there’s a lot of frustration in it not getting through politically. So the problem is how do they translate this economic understanding that things are out of balance into a political policy and movement that will put it back in balance?

And it can be put back in balance by a combination of fiscal policy, tax policy and financial policy. But it requires an educated electorate.

house image by Selensergen

RCMP admits to cellphone spying

photo of David Christopher

INDEPENDENT MEDIA
by David Christopher

Finally. After years of obfuscation, the RCMP has admitted they are using invasive surveillance devices known as IMSI-catchers or Stingrays to spy on Canadians’ cell phones. The admission came early last month, seemingly prompted by revelations from CBC News that Stingray devices had been in use in downtown Ottawa and at the international airport in Montreal.

In those instances, Public Safety Minister Ralph Goodale issued a strong denial that Canadian agencies, such as the RCMP or CSIS, were involved, but the controversy brought a great deal of public attention to the RCMP’s own use of Stingray devices.

Stingrays are deeply problematic for a number of reasons. About the size of a small suitcase, they operate by mimicking a wireless tower, tricking all cell phones within a radius of up to two kilometres into switching their connection to the Stingray. Once that connection is made, instead of targeting just a single device, Stingrays indiscriminately vacuum up sensitive personal information from all devices within range, essentially making them a tool of mass surveillance.

There’s no need to be a target of a police investigation to have your private information compromised; you just need to be in the wrong place at the wrong time. And when you consider just how many cell phones are located within a two-kilometre radius of, say, a downtown Toronto intersection, that gives some indication of just how many Canadians have likely been impacted.

Secondly, Stingrays are capable of collecting information on everything from your location to details of every call, email and text you make. They can even listen in on and record the content of cell phone calls. Nor should we be reassured by the RCMP saying they only use Stingrays to collect location and device identification metadata. As Brenda McPhail of the Canadian Civil Liberties Association points out, “Metadata includes location information. That is intimately personal. The fact that they only collect metadata doesn’t let them off the hook.”

For those of us working in the field of digital privacy, the RCMP’s belated admission did not exactly come as a surprise. It will, however, hopefully prompt the informed democratic debate Canadians deserve about whether the use of these surveillance devices can ever be justified and, if so, what safeguards are necessary to protect the public’s privacy?

Unfortunately, the RCMP left many important questions unanswered. Why not tell us how many innocent Canadians have had their private information compromised over the past 10 years? Or let us know whether Stingrays have ever been used to monitor a political protest? And why did the RCMP wait until just a few weeks ago before applying for permission from Innovation, Science, and Economic Development Canada to use the devices?

Last, but far from least, the fact that the use of Stingrays can apparently be authorized based merely on suspicion of wrongdoing is hugely worrying. Surely, a much higher standard of evidence should be required, given the serious privacy implications for the general public?

It’s clear we deserve answers to all these questions from Public Safety Minister Ralph Goodale. Canadians should keep up the pressure on the government by supporting our 48,000-strong campaign at StopStingrays.org

David Christopher is communications manager for OpenMedia, a community-based organization that works to keep the Internet open, affordable and surveillance-free. openmedia.org

John Horgan interview videos

interviewing John Horgan

Watch Common Ground’s in-depth interview with NDP Leader John Horgan

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Policy payola? Illegal donations being investigated

BC Liberals linked to illegal donations from Woodfibre LNG for political favours

by Tracey Saxby

The BC Liberals are under investigation by Elections BC and the RCMP after the Globe and Mail revealed the party is accepting illegal donations from lobbyists, highlighting donations by Byng Giraud and Marian Ngo from Woodfibre LNG.

Sukanto Tanoto with Rich Coleman,
Woodfibre LNG owner Sukanto Tanoto with Rich Coleman, BC Minister of Natural Gas. Photo obtained by theBreaker.news via FOI (Freedom of Information).

This latest scandal is simply “business as usual” for Woodfibre LNG, which is owned by the notorious Indonesian billionaire, Sukanto Tanoto, whose companies have a history of tax evasion, animal rights violations and human rights offences. And let’s not forget that Woodfibre LNG vice-president Byng Giraud, who has been linked to a robo-call scandal, formerly worked for Imperial Metals, the company responsible for the Mount Polley mining disaster. Nice guys.

But the scandal prompted us to dig a little deeper: when did Woodfibre LNG start donating to the BC Liberals? How much have they donated?

Since 2013, to date, Woodfibre LNG and their staff have donated at least $166,934 to the BC Liberal Party. The donations start to ramp up almost immediately after the substituted environmental assessment was approved, putting the Provincial Government in charge of conducting the environmental assessment on behalf of the Federal Government. Never mind that the BC Minister of Natural Gas Development, Rich Coleman, who was responsible for reviewing the environmental and social impacts of Woodfibre LNG, also has a mandate to develop an LNG export industry. Let’s ignore that conflict of interest.

There was a flurry of donations right about the time the BC Liberals unveiled Bill 6, the LNG Income Tax Act, which halved the tax on LNG export facilities to 3.5% on net income. This means BC now bears all the risk and no reward, as profits may never be realized.

The donations continued over the summer of 2015, leading up to the inevitable rubber stamp approval of Woodfibre LNG’s environmental assessment certificate by Ministers Coleman and Polak. No surprises there.

The donations kept on pouring into BC Liberal coffers, with some of the biggest donations in late 2016, right about the time Rich Coleman flew to Singapore to meet with Sukanto Tanoto. They signed an MOU (Memorandum of Understanding) that the BC Liberals have refused to release to the public, and posed for a photo. A few weeks later, Premier Christy Clark helicoptered in to the Woodfibre LNG site, to put on a hard hat and announce to media fanfare, “Woodfibre LNG is a go” thanks to a new e-Drive subsidy worth $34-45 million every year. By the way, your hydro bill will go up so Woodfibre LNG can have cheap power.

And still the donations kept coming, as Woodfibre LNG now has to apply for an amendment to their environmental assessment certificate. Oh, and there’s another tax break as the BC Liberals eliminated PST on clean energy purchases (including LNG) in February 2017.

That’s a pretty good return on $166,934.

Has big money corrupted the environmental assessment process? Has Woodfibre LNG bought a rubber stamp approval for the project, along with other political favours including tax breaks, tax exemptions, and the e-Drive subsidy? It sure doesn’t look good.

Tracey Saxby is co-founder of My Sea to Sky, an organization started by a group of Squamish citizens in March 2014, in response to growing concerns about the proposed Woodfibre LNG project. Take action at www.myseatosky.org

Junk Economics

financial magician

Realities of a deceptive system

Sharmini Peries of The Real News Network interviews Michael Hudson

Michael Hudson, author of the newly released J is for Junk Economics, says the media and academia use well-crafted euphemisms to hide fictitious capital, debt deflation and the global economic crisis.

Sharmini Peries: Why did you write J is for Junk Economics: A Guide to Reality in the Age of Greed and Deception?

J is for Junk EconomicsMichael Hudson: I originally wrote it as an appendix to a book to have been called The Fictitious Economy. That draft was written before the 2008 crisis. My point was that the way the economy is described in the press and in university courses has very little to do with how the economy really works. The press and journalistic reports use a terminology made of well-crafted euphemisms to confuse understanding of how the economy works.

In addition to giving key words to explain what’s positive and how to understand the economy, I discuss the misleading vocabulary, the Orwellian double-think used by the media, bank lobbyists and corporate lobbyists to persuade people that austerity and running into debt is the key to wealth, not its antithesis. The aim is to make them act against their own interests, by drawing a fictitious picture of the economy as if it’s a parallel universe.

If you can make people use a vocabulary and concepts that make it appear that when the 1% gets richer, the whole economy is getting richer – or when GDP goes up, everybody is improving – then the people, the 95% who did not improve their position from 2008 to 2016 somehow can be made to suffer from the Stockholm syndrome. They’ll think, “Gee, it must be my fault. If the whole economy is growing, why am I so worse off? If only we can give more money to the top 5% or the 1%, it’ll all trickle down. We’ve got to cut taxes and help them so they can give me a job because as Trump and other people said, Well, I never met a poor person who gave me a job.”

I’ve met a lot of rich people, and instead of giving people jobs when they buy a company, they usually make money for themselves by firing people, downsizing and outsourcing labour. So you’re not going to get the rich necessarily giving you jobs. But if people can somehow think that there’s an association between wealth at the top and more employment, and that you have to cut the taxes on the wealthy because it’ll all trickle down, then they have an upside-down view of how the economy works.

I had written an appendix to the book and that took on a life of its own. If you have a vocabulary that describes how the world and the economy actually work, then one word will lead to another and soon you build up a more realistic picture of the economy. So I not only discuss words and vocabulary, I discuss some of the key individuals and the key economists who’ve made contributions that don’t appear in the neoliberal academic curriculum.

There’s a reason the history of economic thought is not taught anymore in the universities. If people really read what Adam Smith wrote and what John Stewart Mill wrote, they’d see that Smith criticized the landlords. He said that you’ve got to tax away their rents because it’s a free lunch. Mill defined rent as what landlords make in their sleep, without working. Adam Smith said that whenever businessmen get together, they’re going to conspire as to how to get money from the public at large – how to do a deal and mislead people that it’s all for society’s good.

This is not the kind of free enterprise that people who talk about Adam Smith explain when they depict him as if he were a tax cutter, an Austrian economist or a neoliberal. They don’t want to hear what he actually wrote. So my book is really about reality economics. I found that to discuss reality economics, we have to take back control of the language or economic methodology, not use the logic that they use.

Mainstream economists talk as if any status quo is in equilibrium. The subliminal trick here is that if you think of the economy as always being in equilibrium, it implies that if you’re poor or you can’t pay your debt, or you have problems sending your kids to school, that’s just part of nature. As if there isn’t an alternative. That is what Margaret Thatcher said: “There is no alternative.” My book is all about how, of course, there’s an alternative. But to make an alternative, you need an alternative way of looking at the world. And to do that you, as George Orwell said, you need a different vocabulary.

To make an alternative, you need an alternative way of looking at the world. And to do that you, as George Orwell said, you need a different vocabulary.

SP: You also talked about how businessmen use these terminologies in order to mislead us. We have a businessman in office, as president of the United States, who is proposing all kinds of economic reforms supposedly in our favour, in terms of workers. And you know, the big infrastructure projects he is proposing that are supposed to elevate and lift people out of poverty and give them jobs and so on. What is the mythology there?

MH: Well, you just used the word “reform.” When I grew up, and for the past century, “reform” meant you unionize labour, you protect consumers and you regulate the economy so there’s less fraud against consumers. But the word “reform” today, as used by the International Monetary Fund in Greece when it insists on Greek reforms, means just the opposite: You’re supposed to lower wages by 10 or 20%. You cut back the pensions by about 50%. Ideally, you stop paying pensions in order to pay the IMF and other foreign creditors. You stop social spending. So, what you have is an inversion of the traditional vocabulary. Reform now means the opposite of what it meant early in the 20th century. It’s no longer Social Democratic. It’s right wing, anti-labour, pro-financial “reform” to cut back social spending and leave everything in a privatized way to the wealthy, and to the corporate sector.

So reform is the first word that I’d use to illustrate how the meaning has changed as it’s used in the mainstream press. Basically, what the right wing has done in this country is hijack the vocabulary that was developed by the labour movement and by socialist economists for a century. They’ve appropriated it and turned it to mean the opposite.

There are 400 words that I deal with. Many of these words show how the meaning has been turned upside down, to get people to have an upside-down view of how the economy works.

Michael Hudson
Michael Hudson

Michael Hudson is a distinguished research professor of economics at the University of Missouri, Kansas City, and author of many books including: The Bubble and Beyond and Finance Capitalism and Its Discontents, and Killing the Host: How Financial Parasites and Debt Destroy the Global Economy. Hudson’s most recent book J is for Junk Economics: A Guide to Reality in the Age of Greed and Deception is an A-to-Z guide that explains how the world economy really works – and who the winners and losers are. The book includes 400 concise acerbic entries, essays, and full topic index. Junk Economics covers contemporary terms that are misleading or poorly understood, and important concepts that have been abandoned – many on purpose – from the long history of political economy. Two key concepts are Rent Theory and Debt, which explain how Unearned Income and the Financial Sector impoverish governments and populations the world over as power and riches flow upward into the hands of the few. Several additional essays provide background for key points and explore today’s uncertain political and economic environment.     

To understand what’s really going on, it’s not necessary to re-invent the wheel; the major issues that guide healthy economies were known to the Ancients and were expanded upon by the classical economists of the 18th and 19th centuries, including Adam Smith, David Ricardo, John Stuart Mill, E. Peshine Smith, Simon Patten, Karl Marx, Thorstein Veblen, and others of many political stripes whose aim was to leave the brutal legacy of feudalism behind. Their ideas and principles are brought back into the spotlight here. His book will deconstruct today’s “value-free,” watered-down and deceptive economics that favor the wealthy. This knowledge empowers the next generation to create a successful economy with proper checks and balances for the social benefit of all. www.michael-hudson.com www.therealnews.com


EVENT: Michael Hudson, in person

April 11, Rio Theatre
1660 East Broadway (at Commercial), Vancouver
Doors 6:30, Starts 7:00 PM.

Tickets: www.real-estate-crisis-vancouver.eventbrite.com


photo montage by Tom Voidh | source photos © Scott Hancock © Ljupco

Internet surveillance

Is your data ending up in NSA’s hands?

photo of David Christopher

INDEPENDENT MEDIA
by David Christopher

How many websites have you visited today? How many emails have you sent? How many times have you logged onto Facebook? How often have you used services like Slack or Skype?

If you’re anything like me, you probably won’t be able to answer these questions. Even as I write this piece, I have 16 tabs open in my browser, I’m logged into Facebook and my office’s instant messaging service is chirping away.

The Internet has become such an interwoven part of my daily routine that it’s impossible to keep track of how many websites I visit or emails I send. One of the best things about the Internet is that ‘it just works.’ Few of us give any thought to what’s actually happening to our data when we hit ‘send,’ click on a link or tap ‘reply’ to an instant message.

Unfortunately, what’s actually happening to our data on its journey around the Internet has deeply concerning privacy implications. Over the years, spy agencies such as the U.S. National Security Agency (NSA) have built incredibly powerful surveillance systems capable of collecting vast quantities of our private communications data, including emails, video and voice chats, photos, videos, stored data and social networking details, and analyzing it for anything supposedly ‘suspicious.’

Although we like to think of the Internet as a ‘cloud,’ most of it relies on Internet Exchanges – buildings that connect the most important Internet cables together. Although these Internet Exchanges ensure our data reliably makes it from point A to point B, their physical nature makes us far more vulnerable to surveillance.

The NSA has taken advantage of this by installing listening posts, or ‘splitter rooms,’ in key US cities where Internet Exchanges are located. When your data travels through one of these Internet Exchanges, it is almost certainly subject to being intercepted by the NSA and stored at the main NSA Data Center in Utah. Once outside Canada, your data is treated by the NSA as foreign and loses Canadian legal and constitutional protections, representing a major loss of privacy.

Even more worrying is this surveillance is not restricted to when you visit a US website or send an email to someone south of the border. A team of experts at the University of Toronto and York University, led by Professor Andrew Clement, have been researching this extensively as part of the IXmaps project. They’ve concluded that at least 25 percent of domestic Canada-to-Canada data travels via the US where it is subject to NSA surveillance.

This phenomenon is known as “boomerang routing.” For example, an email sent from Vancouver to Toronto may ‘boomerang’ via Chicago. Even an email sent from one part of Vancouver to another may travel via the US, largely as a result of years of monopolistic practices by major Canadian telecoms, poor regulatory oversight and underinvestment in Canada’s Internet infrastructure.

At OpenMedia, we’ve worked with IXmaps researchers on a new educational platform to raise awareness of these issues in a project made possible by the financial support of the Office of the Privacy Commissioner of Canada (www.priv.gc.ca/en/)

Our platform includes an informational video, a series of infographics, a detailed FAQ and some pointers to tools to better safeguard your privacy online. See openmedia.org/en/IXmaps

David Christopher is communications manager for OpenMedia, which works to keep the Internet open, affordable and surveillance-free. openmedia.org

We can’t afford Christy Clark’s government

share of wealth in BC

If this government were in Russia, or China, the Balkans, or some developing-world country, it’s behaviour would just be written off as nepotism or corruption.

by Bruce Mason

We can’t continue to overpay Christy Clark and Rich Coleman & Company while they extract wealth for their election donors and foreign investors. BC’s in bad shape. For too long, the province’s deterioration has been ignored, neglected or deliberately misdiagnosed. Instead, the standing-government’s focus is the lucrative business of fund-raising, raking in $12.3 million last year – $8 million from corporations – including controversial pay-for-play dinners with the premier, some with a tab as high as $20,000. The pay-off included topping up Clark’s salary, a practice banned everywhere else except Saskatchewan.

A recent exposé of the corruption of Clark’s government by one of the world’s most-highly regarded sources, the New York Times, was greeted with a media maelstrom, long-overdue gasps and many red faces. “British Columbia: The ‘Wild West’ of Canadian Political Cash,” the headline screamed. But it’s not new news. BC’s local media has repeatedly reported on this issue. Why did it take the New York Times to shock a global audience in summing up the warning signs of our government’s bad habits? The rhetoric is a lot like confirming the causes of their persistent cough and shortness of breath to a two-pack-a-day smoker who has heard the warnings a million times.

Christy, apparently, has needed more than her $195,000 premier’s salary, plus additional perks and benefits. Post-Times fallout, she vowed to quit her additional $50,000 annual stipend – $300,000, in total – in favour of a filter-tipped expense account. But BC neoliberal outliers, caught sneaking an oil-addicted puff, with the other hand in a cookie jar, won’t quit or cut down on their consumption of large corporate and foreign donations.

Times reporter Dan Levin justified his disclosures as a “Kafkaesque dystopian nightmare of shady politics and conflict of interest. If this were in Russia, or China, the Balkans, or some developing-world country, it would just be written off as nepotism or corruption. Checks and balances are important and hopefully this will spur British Columbians to take a closer look at how their government behaves.”

Among other things, the Times noted Clark Liberals pocketed more than $718,000 from Kinder Morgan, the infamous, Texas-based pipeline giant whose Trans Mountain pipeline Christy just rubber-stamped with a wink, a grin and a green light.

Reaction to threats of corruption included our woefully out-of shape, out-of-touch, many-titled and entitled Deputy Premier, Minister of Natural Gas Development, and Minister Responsible for Housing Minister, Rich Coleman (whew). “Laughable,” he said, adding, “I do find it a bit rich when they’ve just spent about a billion dollars on the presidency in US.” Rich, who if re-elected may also be appointed Minister of Silly Walks, added, “We go out and work very hard to raise money and make those connections.”

That recalls his previous insults, especially the one regarding unaffordable accommodation: “I guess some people just have to get up and whine every day.”

The costs of making the Liberal war chest the top priority are enormous and twinge-worthy.

The Broadbent Institute’s PressProgress (www.pressprogress.ca) recently published three graphs, which confirm the results. The prognosis is as clear and worrisome as medical charts. While Christy took credit for jobs created, so-called balanced budgets and the elusive joys of pipe-dreamed fracked LNG, a very small group has absconded with BC’s wealth.

Clark’s carefully crafted takeaways and talking points don’t ever include this jaw-dropping divide between extreme wealth and poverty in BC, currently Canada’s highest and growing exponentially.

This disparity has also been reported (see Common Ground, June 2015) by Andrew MacLeod in his best-selling, award-winning book, A Better Place on Earth: The Search for Fairness in Super Unequal British Columbia (Harbour). Once again, it’s clear confirmation that this province’s obscene inequity is the direct result of the BC government’s deliberate policy to shift the tax burden away from wealthy donors.

Earnings of the top 10% began to spike at the 2000 millennium, while the share of BC’s bottom 50% sunk just as dramatically, as then-Liberal-premier Gordon Campbell introduced regressive tax policies to disproportionately benefit fat cats.

PressProgress also quotes the Canadian Centre for Policy Alternatives, noting that the BC Liberals’ “decade of tax cuts” and “regressive changes to the provincial tax system” helped to “exacerbate growing income inequality,” a practice perfected in Christy’s reign. The BC Poverty Reduction Coalition reports our provincial income gap is growing the fastest in Canada, noting, “The average household income of the top 1% in BC has increased by 36%” since the mid-2000s; the most current data from StatCan highlights that 10% in BC now own more than half of the wealth in our province.

The results are ubiquitous across BC. More people are slipping through gaping cracks into homelessness, joining the skyrocketing number of workers with full-time jobs sinking beneath the poverty line. Half of the folks in BC who turned to food banks in 2016 were low-wage breadwinners, up 3.4% from 2015. We have the highest child poverty rate in the country and we are the only province with no poverty reduction plan. More than 12% of BC wage earners reported dealing with food insecurity in 2016, along with Canada’s highest rents and lowest business taxes.

Our heel-dragging BC Liberals’ minimum wage was frozen at $8/hr. for a decade, before gradually and reluctantly rising to $10.85/hr (2016), still Canada’s lowest. One-quarter of BC’s workforce – half a million folks – currently earn under $15/hr, well below what most families need to make ends meet. As wages stagnate, costs for food housing and child-care costs are rising. In Vancouver, the price of a detached home jumped 19 times, relative to median household income, and the ratio for condos increased six times.

The obvious next question from any patient who receives such a stark diagnosis would be: “How long have I got?” The answer: until the provincial election, May 9, 2017.

Clark, whose attention span resembles a hummingbird, is taking time out from serving her corporate donors to beak about the Liberals’ truly laughable, much too-late, inadequate and distractive efforts on affordable housing investment, clean tech innovation, etc.

Warning: watch your diet, including the flood of sugary, big-budget government junk infotainment. And exercise is recommended, such as protest marching, volunteering and door knocking on behalf of more organic and healthy alternatives. The Liberal status quo is unsustainable, even downright dangerous, for you and your friends and family – especially your children.

Please email the issues in BC that concern you most to: brucemason@shaw.ca.

The High Price of Dishonesty and Deception

For ruthless men and women who strive to win at any cost and make it in a Trumpian universe, the new president provided tactics. Always take control.

by Roxanne Davies

Of all the horror films to come out of Hollywood, the one that creeped me out the most was Rosemary’s Baby. The psychological horror flick was written and directed by French-Polish director Roman Polanski, who, despite his personal foibles, is a talented filmmaker.

Polanski’s 1967 film follows tormented wife Rosemary Woodhouse (brilliantly portrayed by the waif-like Mia Farrow). Unbeknownst to her, she was chosen to bear the Devil’s spawn. Farrow’s wide-eyed innocent face fills the screen as she experiences physical and emotional changes beyond her control. When she rips into a piece of raw chicken, it will turn the stomach of the most avid carnivore. Yet it’s the last scene that truly shocks. Rosemary walks into a dimly lit chamber to see her baby for the first time. Seated around the room are all the people she thought she could trust: her husband, her doctor, her crazy neighbour, every one of the people closest to her complicit in the diabolical scheme. What terrified me was the ease with which the people closest to the victim were able to cover their deception.

Deception: anything that deceives or is meant to deceive; a delusion. For Rosemary, the consequences of deception and lying resulted in the birth of an evil spirit. For our American neighbours, it seems to have resulted in the surprise election of Donald J. Trump. A New York Times columnist likened Trump’s win to a moral and ethical 9/11. A rich white guy with a trophy wife told his supporters the sky is falling and he would save them. A xenophobic, misogynist of dubious ethics and morals with a short attention span now has the nuclear code. A thin-skinned pugnacious Chicken Little was elected to the most powerful position in the free world.

How on earth could Trump win the election? He wasn’t a polished politician; he was an outlier who even alienated fellow Republicans. Because he says it like we think his supporters smugly declared. They were tired of lies from the chattering class, professional pundits, career politicians, financial analysts, industry regulators. Name an industry and its privileged leaders lie.

For Trump, lying is a form of communication and a way of gaining power. We watched and listened with a mixture of horror and fascination as he sniffed his way through an inaugural speech filled with jingoistic rhetoric.

Some say Trump is no fool. He is a communicator who used a kind of wonky neuro-linguistic programming to mesmerize his audience. In 3AM Tweets, he shared his most incoherent ideas and bypassed the bewildered mainstream media. Trump says he fiercely protected his five children against the danger of smoking, drugs and alcohol, yet he has exposed them to the most dangerous and addictive substance on Earth: a lust for power.

For ruthless men and women who strive to win at any cost and make it in a Trumpian universe, the new president provided tactics. Always take control. Act like you know what you’re doing even if you don’t. Brag about your accomplishments, and never your mistakes. Find your opponents Achilles’ heel and never let go. Tell people you will give 100% percent or make it look like you do. And most importantly: even if you lose interest in what you are doing, there will be times when you will have to stretch the truth or downright lie. If women can control their fluttering lashes, they have the uncanny ability to be better liars. Smart agencies and corporations know that. Women are often the face of a company about to deliver some bad news or ‘alternative facts.’ Intelligent and ambitious men and women must wean themselves off the toxic value of lying to gain power and privilege.

If there is any comfort to the majority of people who did not vote for Trump, this 45th president might be the most analyzed and dissected in recent history. There is a crack in everything. That’s how the light gets in. If Trump fails to deliver what he has promised, let him remember that many of his most ardent supporters pack weapons.

Roxanne Davies lives in North Vancouver and is devoted to writing family memoirs and essays on a variety of topics. roxannemilanadavies@gmail.com

People power will stop Woodfibre LNG

protesting the proposed Woodfiber LNG project

Last month, MLA Jordan Sturdy and MP Jonathan Wilkinson hosted a meeting in Squamish with local government and indigenous leaders with the goal “to enhance transparency with respect to progress of the (Woodfibre LNG) project.”

More than 150 supporters stood outside to voice their opposition to Woodfibre LNG, as their representatives walked into the meeting at Squamish Municipal Hall, with banners reading “No Pipelines, No Tankers, No Woodfibre LNG.” People travelled from as far away as Vancouver, Bowen Island, Whistler and the Sunshine Coast, taking time off work on a Friday morning.

“Woodfibre LNG has donated more than $60,000 to the BC Liberals in 2016 alone. That’s pretty cheap to buy a rubber stamp for your environmental assessment. But Woodfibre LNG is not a done deal. Every community around Howe Sound has expressed their opposition to Woodfibre LNG. More than 10,000 people have signed the Howe Sound Declaration in opposition to Woodfibre LNG. People power will stop this project,” said Tracey Saxby, one of the co-founders of My Sea to Sky.

Following the demonstration, supporters wrote messages to their representatives in chalk:
“BC LNG is one big lie.”
“Focus on renewable energy.”
“Save Howe Sound.”
“For our kids.”

LNG tankers put Howe Sound residents at risk

Based on International Safety Standards, we know that Howe Sound is the wrong place for an LNG export facility. Canada still doesn’t have any safety regulations for LNG tankers and the information being used by the Technical Review Process of Marine Systems and Transhipment (TERMPOL) to develop LNG tanker regulations is old or flawed. Public safety is not being taken seriously.

Woodfibre LNG threatens the recovery of Howe Sound

Millions of taxpayer dollars have been spent cleaning up the toxic legacies of previous industries, such as the Nexen chemical plant, the Woodfibre pulp mill and the Britannia Beach mine. As a direct result, Howe Sound is slowly recovering: the herring and the whales are coming back. Woodfibre LNG threatens this recovery through underwater noise, which impacts herring, salmon, whales and other wildlife.

Air pollution from Woodfibre LNG will impact public health at a social cost of over $20 million per year.

Even though Woodfibre LNG is using electricity as the main power source, there will still be significant air pollution during operation. Woodfibre LNG is estimating air pollution emissions of 295.7 tonnes of nitrous oxides (NOx) and 43.8 tonnes of sulfur dioxide (SO2) every year.



Source: My Sea to Sky, a volunteer organization that was started in early 2014 in opposition to the proposed Woodfibre LNG project. More than 10,000 supporters have signed the Howe Sound declaration. www.myseatosky.org

photo by Les MacDonald

Public consultation is a real chance to repeal unpopular legislation

photo of David Christopher

INDEPENDENT MEDIA
by David Christopher

It’s here. Almost a year into their mandate, the Liberal government has finally launched its long awaited public consultation on Bill C-51, and a broad range of privacy and national security issues.

Speaking at the launch, Public Safety Minister Ralph Goodale and Justice Minister Jody Wilson-Raybould said they had already identified a limited number of areas of Bill C-51 they wanted changed and that they wanted to get Canadians’ views on how to deal with the rest of the unpopular legislation.

Bill C-51, readers may recall, is the highly controversial spying bill forced through Parliament by the previous Conservative federal government. Notably, the legislation turns the Canadian Security and Intelligence Service (CSIS) into what the Globe and Mail has called a “secret police force,” with little independent oversight or accountability.

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