The foundations of our prosperity

Ed Vulliamy on DemocracyNow:

Then, I thought, well, let’s set this in context. Talked to a man called Antonio Maria Costa, who’s the head of the U.N. Office on Drugs and Crime in Vienna. He’s not there any longer. He posits that the volumes of money coming in from Mexico, from—and obviously his speciality was Europe, Russia, you know, similar operations—laundering of vast quantities of the profits of drugs and, of course, the calamitous violence that is the scourge of Mexico, is basically propping up the banking system. It is a major pillar of the banking system. Without it, it would have collapsed long ago. Well, we know that the other pillar propping it up is tax dollars.

The interview continued in a Web exclusive, which is not yet up.

Nouriel calls BS on Eurozone agreement

Roubini (or, rather, his analysts; no link) says that when investors recognize the holes in the EZ agreement, the recent stock mania will recede. But there is some optimism that most bondholders will accept the haircut and not trigger a default in order to recover on their credit default swaps, possibly because those bondholders are banks who at this point exist at the sufferance of the German government.

Roubini also says that a recession is fairly likely in Europe, the UK, and the US.

More as more specifics become available.
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Added: Peter Spiegel of FT suggests that they will offer bondholders higher interest rates on reduced principal. This is an interesting approach. 1% interest on $100 is the same as 2% interest on $50. Or, one can change the term of payment. Paying 1.5% interest over 10 years might seem more attractive than 2% over 5 years. This would explain why default might not be triggered, although a non-Euro court might not agree.

But there’s no question that Nouriel is right: financial engineering is not the way out of this crisis. Growth is the way out.

Oakland heads for a general strike/Hedges models verbal non-violence

To see how verbal nonviolence works and overwhelms the opponents of its practitioners, see Chris Hedges (via Avedon).

Oakland is going to need it. The wounding of Iraq veteran Scott Olsen will precipitate an attempt at a general strike; the police obstructed the medical treatment of Olsen, aiming flashbangs directly at medics (see also David Dayen). These police actions appear to me to represent assault with a deadly weapon, with no mitigating circumstances. Read this account by FBI agents on injuries they suffered from the detonation of a defective flashbang in 2008 to understand how deeply irresponsible firing flashbangs was:

That’s when, Bain says, the flash-bang grenade in his vest just blew up.

“The car is on fire,” Bain recalled. “I was told later I was on fire. Smoke billowing in the car. It was obviously chaos.”

Scanzano remembers “it was like being in combat. There was smoke and fire in the vehicle, and I knew that we were in trouble.”

An ambulance rushed the three agents to a nearby hospital.

“To me, it felt like someone just whacked me in the back with a baseball bat as hard as they could,” said Bain, recalling the incident, which happened four years ago.

Bain suffered severe bruising, a concussion and burns to his neck and ears. All three agents said they have experienced hearing loss.

Beanbag rounds have a similar safety profile, which is to say that they are potentially lethal.

Click for more on general strikes