Category: Aggregated

Sen. Bernie Sanders (I-Vt.) has gone where Obama has refused (in his State of the Union speech, for example) to go: calling for a $1 trillion investment to repair our disintegrating infrastructure.

Sanders, a potential 2016 Presidential candidate, and now the ranking member of the Senate Budget Committee, produced the report in advance of hearings sure to be dominated by a Republican bloodlust for budget cuts, with a fresh Congressional Budget Office annual report on the state of the U.S. economy out yesterday afternoon, focused on deficits and the national debt. In his report, Sanders compiles his own list of “deficits,” starting with the Jobs deficit; Infrastructure; Income and Equality (both the lack thereof and the unequal distribution of); Retirement Security (where workers are forced to work longer and retire with smaller pensions); Trade and Education deficit.

Sanders’ report on infrastructure reads:

A warning that the oil debt crisis is likely to repeat the financial crash of 2008 appeared in the Financial Times Jan. 25; actually the more serious for its comical attempts to disguise itself as a “reassurance” that this is not likely to occur.  “Oil Price Slide Is Not Akin to Subprime Fiasco” was the name of the column, also republished in Oil & Companies News Jan. 26 and elsewhere. Most notably, the article was clearly based on a worried presentation by a Bank of Canada governor at a recent “energy markets” meeting in Wisconsin.

“Last decade, investors learnt a nasty lesson about contagion,” the article begins.

The nature of the “reassuring statements” offered, is indicated by this one: After citing “big differences” from 2008, the article proffers that regulators are much more mobilized now; the Bank of Canada is doing stress tests on $35/barrel oil. This is laughable after the Wall Street banks’ roughshod ride over the U.S. Congress and “regulators” regarding derivatives in December.

Then this:

And if that doesn’t let the reader whistle past Lehman’s grave, this: “Whereas the banks that got into trouble in 2007 were the bedrock of the entire financial system, energy companies and commodity trading houses are not. True, if oil companies start defaulting on their bonds, the effects will ripple through the financial system….”

And finally: “The pattern could become more pernicious if it turns out that there are big financial interconnections that regulators cannot see. This scenario cannot be ruled out, given that these two corners of the financial system are murky. There is limited public data, for example, about what is happening inside the gigantic trading houses or how they are entwined with investment banks.”

The Wall Street system of banks is again facing a bankruptcy crisis — this time triggered by collapsing oil and commodity debt and derivatives — and even central bankers know that it will be as bad as a second 2008 crash, or worse.

These banks have been generally bankrupt since the impact of the elimination of Glass-Steagall. Wall Street’s bankruptcy crisis is made worse by the free fall of the euro and the fact that all the biggest European banks, most definitely including the London banks, are loaded to the gills with toxic debt securities of more and more varieties, and have never written any of it off since 2008.

A financial crash worse than 2008 is looming over this whole bankrupt London-Wall Street system of banks. The United States must act immediately to generate a buffer against this crash for its economy and citizens.

The Wall Street banks should effectively be shut down, put through a bankruptcy reorganization so that they may continue some limited function as commercial banks. Their ability to manage things in the U.S. economy must be terminated now, or the economy faces a terrible crisis.

Launch the bankruptcy reorganization of these megabanks by reinstating the Glass-Steagall Act to separate the doomed speculative divisions from their insured, regulated commercial banks — and let the former go.

As a substitute, a buffer of credit must be created — Federal credit — to put people into productive, well-paid work. That means above all, work related to crucial new projects of modern infrastructure.

Provide a source of Federal credit to be used by states and Federal governments to provide skilled employment and economic development. The United States must incur a limited debt to do so, but devoted entirely to this purpose. This has been done before; it must be done again.

Create a Reconstruction Finance Corporation with initial government capital and issue RFC bonds to the public and to commercial banks, to support national and state projects.

And, create a National Bank with an initial capital of new Treasury debt, and provide the great majority of that Bank’s capital by the voluntary trade of existing 3- to 30-year Treasury debt. If $500 billion of U.S. debt is voluntarily invested in the National Bank, the Treasury can issue $500 billion in Treasury notes to the Bank to start providing credit for productivity and employment.

Aid the states in a national high-speed rail network. Give credit support to state and municipal bond issues for new economic infrastructure. Provide western drought measures, from large-scale water diversion to a large network of nuclear desalination/power plants. Restore and replace the ancient national network of locks and dams, water navigation and water management, flood and storm protection. Restore cutbacks in medical care, firefighting, sanitation, water purification and build anew. Restore the nation’s historic levels of investment in NASA projects.

Most crucial for this new National Bank and RFC: Join the BRICS! Accept China’s President Xi Jinping’s offer to Obama at the APEC Summit last November.

Use the National Bank and RFC to join with the Asian Infrastructure Investment Bank and the other new international development banks and funds for Silk Road and Maritime Silk Road infrastructure which have been created since the BRICS-allied nations summit in Brazil last July. In the process, multiply the buffer of Federal credit for new infrastructure and productivity investments in America.

Create a new economic platform for America’s economy, “driven” by development of fusion technologies and thermonuclear fusion power. Relaunch America’s presence in the Solar System in competition and cooperation with China’s lunar program, now the world’s leading space program.

Wall Street blowing out again will hit the economy like a major war. And Wall Street’s desperation is turning to escalating financial and other warfare actions against “enemies” China and Russia, which is leading toward actual, thermonuclear war.

That’s why the new institution, and the new economic platform, must be supplied immediately.

We need to put everything we have into making it happen.