Article 43
Saturday, September 04, 2004
Welcome
Welcome to article43.com - a memorial to the layed off workers of (PRE SBC MERGER) AT&T, and the disappearing MIDDLE CLASS citizens of America. It is NOT endorsed or affiliated with AT&T or the CWA in any way.
In addition to INFORMATION, resources and opinion for former AT&T workers DEALING WITH the EFFECTS OF LAYOFF and looking for meaningful employment, some articles here are meant to bring into awareness the LARGER PICTURE of corporate dominance of the UNITED STATES’ political and economic policies which brazenly DISREGARDS, disrespects and EXPLOITS worker, citizen and HUMAN RIGHTS under masks like FREE TRADE and the PATRIOT ACT - resulting in a return to a society of very rich and very poor dominated by a few very rich and powerful - whose voices are anything but - for the people. If left UNCHALLENGED, the self-serving interests of those in control may result in the end of DEMOCRACY, the end of the middle class, irreversible ENVIRONMENTAL damage to the planet, and widespread global poverty brought on by exploitation and supression of the voices of common people EVERYWHERE, while the United States turns into a REINCARNATION of the ROMAN EMPIRE. Author Thom Hartmann shares some history and outlines some basic steps to return our country to “The People” in his two articles TEN STEPS TO RETURN TO DEMOCRACY and SAVING THE MIDDLE CLASS. I support CERNIG’S idea for a new POLITICAL MOVEMENT - if not a revolution to cleanse our country of the filth ruling it - as we EVOLVE into a GLOBAL community - assuming we learn the THE LESSONS OF OUR TIME and don’t DESTROY CIVILIZATION first.
Everything here can be viewed anonymously. Inserting or commenting on articles requires a free user account (for former AT&T employees with a real, non throw-away, email address.) There’s no third-party scripts here like privacy-eroding WEB COUNTERS, hidden datamining widgets like Pay-Pal donation boxes, or AMAZON DOT COM tracking stuff. The RSS feeds are pulled by the server, and have no relation to anything you may be doing here. Standard Apache WEB LOGS of info like IP, and pages visited are rotated every few days, and used internally to check the web server’s performance. Logs of suspicious activity may be shared with law enforcement, or other ISPs, to deal with troublemakers. Nothing here is for sale, and donations are not solicited.
Per U.S.C. COPYRIGHT LAW - TITLE 17, SECTION 107, this not-for-profit site may reproduce copyrighted material not specifically authorized by the copyright owner. Such articles will either have a web link to the source, home page, and/or show credit to the author. If yours is here and you have a problem with that, send me an EMAIL, and I’ll take it off. Stuff I wrote carries a CREATIVE COMMONS LICENSE permitting non-commercial sharing. In addition, this site’s owner forbids insertion and injecting data of any kind - especially advertisements - into ours by any person or entity. Should you see a commercial ad that looks like it’s from here, please report it by sending me a tcpdump and/or screenshot in an EMAIL, then READ UP about how the PARTNERING OF INTERNET SERVICE PROVIDERS and companies like NEBUAD are DESTROYING INTERNET PRIVACY.
Resumes of layed off AT&T workers are posted for free HERE.
Information on the Pension Class Action Lawsuit against AT&T is HERE. More pension-related articles are HERE.
Links to some Telecom companies’ career pages are HERE.
Click HERE to learn a little about Article 43 and why I loathe the CWA.
Click HERE or HERE to learn what the CWA did when given a chance to do the right thing.
Click HERE for a glimpse of undemocratic and hypocritical CWA practices.
Click HERE for an article on Corporate Unionism.
Click HERE for an article of AFL-CIO’s undemocratic history.
If you’re looking for telco nostalgia, you won’t find it here. Check out THE CENTRAL OFFICE, BELL SYSTEM MEMORIAL, MUSEUM OF COMMUNICATIONS, TELEPHONE TRIBUTE, and THE READING WORKS websites instead.
This site can disappear anytime if I run out of money to pay for luxuries like health care or internet service.
Discernment of truth is left to the reader - whose encouraged to seek as much information as possible, from as many different sources as possible - and pass them through his/her own filters - before considering how much truth is contained here, or elsewhere.
...the Devil is just one man with a plan, but evil, true evil, is a collaboration of men…
- Fox Mulder, X FilesToday my country, your country and the Earth face a corporate holocaust against human and Earthly rights. I call their efforts a holocaust because when giant corporations wield human rights backed by constitutions and the law (and therefore enforced by police, the courts, and armed forces) and sanctioned by cultural norms, the rights of people, other species and the Earth are annihilated.
- Richard L. GrossmanUnthinking respect for authority is the greatest enemy of truth.
- Albert EinsteinHe who is not angry when there is just cause for anger is immoral. Why? Because anger looks to the good of justice. And if you can live amid injustice without anger, you are immoral as well as unjust.
- AquinasIf you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality.
- Bishop Desmond TutuOur lives begin to end the day we become silent about things that matter.
- Martin Luther King JrThose who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.
- Benjamin FranklinIf we do not hang together, we will surely hang separately.
- Benjamin FranklinWe must be prepared to make heroic sacrifices for the cause of peace that we make ungrudgingly for the cause of war.
- Albert EinsteinSolidarity has always been key to political and economic advance by working families, and it is key to mastering the politics of globalization.
- Thomas Palley
Update 8/11/07 - As we head into the next depression, fueled by selfish corporate greed, and a corrupt, SOCIOPATHIC US government, MIKE WHITNEY has a solution that makes a lot of sense to me:
The impending credit crisis cant be avoided, but it could be mitigated by taking radical steps to soften the blow. Emergency changes to the federal tax code could put more money in the hands of maxed-out consumers and keep the economy sputtering along while efforts are made to curtail the ruinous trade deficit. We should eliminate the Social Security tax for any couple making under $60, 000 per year and restore the 1953 tax-brackets for Americans highest earners so that the upper 1%-- who have benefited the most from the years of prosperity---will be required to pay 93% of all earnings above the first $1 million income. At the same time, corporate profits should be taxed at a flat 35%, while capital gains should be locked in at 35%. No loopholes. No exceptions.
Congress should initiate a program of incentives for reopening American factories and provide generous subsidies to rebuild US manufacturing. The emphasis should be on reestablishing a competitive market for US exports while developing the new technologies which will address the imminent problems of environmental degradation, global warming, peak oil, overpopulation, resource scarcity, disease and food production. Off-shoring of American jobs should be penalized by tariffs levied against the offending industries.
The oil and natural gas industries should be nationalized with the profits earmarked for vocational training, free college tuition, universal health care and improvements to then nations infrastructure.
Sunday, February 07, 2010
Book: The End Of Materialism
Can science and spirituality LIVE TOGETHER without fighting? Is it possible to be a rigorous, rational scientist, and at the same time apply the methods of science to EXPLORE spiritual ideas without automatically collapsing everything into mechanistic, materialistic, or reductionistic terms? Why is the data of parapsychology viciously and irrationally attacked by THOSE WHO IMAGINE THEMSELVES TO BE DEFENDERS OF RATIONALITY? These are some of the interesting questions addressed in this book.
The essential theme is that some aspects of materialism, one of the key assumptions underlying many of the successes of modern science, have hardened into a kind of dogma. Adherents to this “scientistic” dogma are blinded by faith and can no longer see that one of the doctrines of their faith is actually an assumption, and that there is ample, empirical data that powerfully contradicts that assumption. Charles Tart explores this idea in depth, arguing that materialism is no longer a viable scientific assumption. I find the argument clearly stated, backed up with substantial data, and persuasive.
- Dean Radin, PhD, author of Entangled Minds: Extrasensory Experiences in a Quantum Reality
I’ts high prestige in many circles to say that your “scientific” or “skeptical” in your approach to life, compared to being a “believer,” or that you already know everything important, “Dont bother me with stuff I don’t believe in!” But genuine science or skepticism means you really care for truth and don’t think current explanations are all that good, so you look into things more deeply, and what you believe you know is always subject to revision as new information comes in. “Believer,” in the negative sense of the word, means youve gotten intellectually and emotionally attached to a certain view of the world and you DEFEND THAT VIEW BY DENYING OR ATTACKING alternative ways of looking at things. Faith can be very valuable at times, but I’m biased to think that mental flexibility is a good way to adapt to the world most of the time.
- Charles T. Tart, Author: The End Of Materialism
GET THE BOOK
QUESTIONS OF CONSCIOUSNESS VIDEO PART 1
QUESTIONS OF CONSCIOUSNESS VIDEO PART 2
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Bad Moon Rising Part 38 - The Second Wave
Not everyone who says to me, Lord, Lord, will enter the kingdom of heaven, but only one who does the will of my Father in heaven. On that day many will say to me, Lord, Lord, did we not prophesy in your name, and cast out demons in your name, and do many deeds of power in your name? Then I will declare to them, I never knew you; go away from me, you evildoers.
- Matthew 7:21-23
The Crisis is Not Over
By Paul Craig Roberts
Counterpunch
February 3, 2010
Is the financial crisis over? Is the recovery for real and, if not, what are Americans prospects? The short answer is that the financial crisis is not over, the recovery is not real, and the U.S. faces a far worse crisis than the financial one. Here is the situation as I understand it:
The global crisis is understood as a banking crisis brought on by mindless deregulation of the U.S. financial arena. Investment banks leveraged assets to highly irresponsible levels, issued questionable financial instruments with fraudulent investment grade ratings, and issued the instruments through direct sales to customers rather than through markets.
The crisis was initiated when the U.S. allowed Lehman Brothers to fail, thus threatening money market funds everywhere. The crisis was used by the investment banks, which controlled U.S. economic policy, to secure massive subsidies to their profits from a taxpayer bailout and from the Federal Reserve. How much of the crisis was real and how much was hype is not known at this time.
As most of the derivative instruments had never been priced in the market, and as their exact composition between good and bad loans was unknown (the instruments are based on packages of securitized loans), the mark-to-market rule drove the values very low, thus threatening the solvency of many financial institutions. Also, the rule prohibiting continuous shorting had been removed, making it possible for hedge funds and speculators to destroy the market capitalization of targeted firms by driving down their share prices.
The obvious solution was to suspend the mark-to-market rule until some better idea of the values of the derivative instruments could be established and to prevent the abuse of shorting that was destroying market capitalization. Instead, the Goldman Sachs people in charge of the U.S. Treasury and, perhaps, the Federal Reserve as well, used the crisis to secure subsidies for the banks from U.S. taxpayers and from the Federal Reserve. It looks like a manipulated crisis as well as a real one due to greed unleashed by financial deregulation.
The crisis will not be over until financial regulation is restored, but Wall Street has been able to block re-regulation. Moreover, the response to the crisis has planted seeds for new crises. Government budget deficits have exploded. In the U.S. the fiscal year 2009 federal budget deficit was $1.4 trillion, three times higher than the 2008 deficit. President Obamas budget deficits for 2010 and 2011, according to the latest report, will total $2.9 trillion, and this estimate is based on the assumption that the Great Recession is over. Where is the U.S. Treasury to borrow $4.3 trillion in three years?
This sum greatly exceeds the combined trade surpluses of AmericaҒs trading partners, the recycling of which has financed past U.S. budget deficits, and perhaps exceeds total world savings.
It is unclear how the 2009 budget deficit was financed. A likely source was the bank reserves created for financial institutions by the Federal Reserve when it purchased their toxic financial instruments. These reserves were then used to purchase the new Treasury debt. In other words, the budget deficit was financed by deterioration in the balance sheet of the Federal Reserve. How long can such an exchange of assets continue before the Federal Reserve has to finance the governments deficit by creating new money?
Similar deficits and financing problems have affected the EU, particularly its financially weaker members. To conclude: the initial crisis has planted seeds for two new crises: rising government debt and inflation.
A third crisis is also in place. This crisis will occur when confidence is lost in the U.S. dollar as world RESERVE CURRENCY. This crisis will disrupt the international payments mechanism. It will be especially difficult for the U.S. as the country will lose the ability to pay for its imports with its own currency. U.S. living standards will decline as the ability to import declines.
The financial crisis is essentially a U.S. crisis, spread abroad by the sale of toxic financial instruments. The rest of the world got into trouble by trusting Wall Street. The real American crisis is much worse than the financial crisis. THE REAL AMERICAN CRISIS is the offshoring of U.S. manufacturing, industrial, and professional service jobs such as software engineering and information technology.
Jobs offshoring was initiated by Wall Street pressures on corporations for higher earnings and by performance-related bonuses becoming the main form of managerial compensation. CORPORATE EXECUTIVES increased profits and obtained bonuses by substituting cheaper foreign labor for U.S. labor in the production of goods and services marketed in the U.S.
Jobs offshoring is destroying the ladders of upward mobility that made the U.S. an opportunity society and ERODING VALUE OF A UNIVERSITY EDUCATION. For the first decade of the 21st century, the U.S. economy has been able to create net new jobs only in domestic nontradable services, such as waitresses, bartenders, sales, health and social assistance and, prior to the real estate collapse, construction. These jobs are lower paid than the jobs were that have been offshored, and these jobs do not produce goods and services for export.
Jobs offshoring has increased the U.S. trade deficit, putting more pressure on the dollar’s role as reserve currency. When offshored goods and services return to the U.S., they add to imports, thus worsening the trade imbalance.
The policy of jobs offshoring is insane. It is shifting U.S. GDP growth to the offshored locations, such as China, thus halting growth in U.S. consumer incomes. For the past decade, U.S. households substituted an increase in indebtedness for the lack of growth in income in order to continue increasing their consumption. With their home equity refinanced and spent, real estate values down, and credit card debt at unsustainable levels, it is no longer possible for the U.S. economy to base its growth on a rise in consumer debt. This fact is a brake on U.S. economic recovery.
Stimulus packages cannot substitute for the growth in real income. As so many high value-added, high productivity U.S. jobs have been offshored, there is no way to achieve real growth in U.S. personal incomes. Stimulus spending simply adds to government debt and pressure on the dollar, and sows seeds for high inflation.
The U.S. dollar survives as reserve currency because there is no apparent substitute. The euro has its own problems. Moreover, the euro is the currency of a non-existent political entity. National sovereignty continues despite the existence of a common currency on the continent (but not in Great Britain). If the dollar is abandoned, then the result is likely to be bilateral settlements in countries own currencies, as Brazil and China now are doing. Alternatively, John Maynard KeynesҒ bancor scheme could be implemented, as it does not require a reserve currency country. Keynes plan is designed to maintain a country’s trade balance. Only a reserve currency country can get its trade and budget deficits so out of balance as the U.S. has done. The prospect of U.S. default and/or inflation and decline in the dollars exchange value is a threat to the reserve system.
The threats to the U.S. economy are extreme. Yet, neither the Obama administration, the Republican opposition, economists, Wall Street, nor the media show any awareness. Instead, the public is provided with spin about recovery and with higher spending on pointless wars that are hastening America’s economic and financial ruin.
Paul Craig Roberts was Assistant Secretary of the U.S. Treasury in the Reagan administration. His latest book, How The Economy Was Lost, has just been published by CounterPunch/AK Press. He can be reached at: PaulCraigRoberts at yahoo.com
Section Bad Moon Rising • Section Dying America • Section Next Recession, Next Depression •
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Saturday, February 06, 2010
Markets Fail When Humans Are Unregulated
By Paul Craig Roberts
February 6, 2010
Former Federal Reserve chairman Alan Greenspan answered that he had placed his trust in a flawed theory when he was called before Congress to explain why he, Goldman Sachs Treasury Secretary Robert Rubin and Deputy Treasury Secretary Larry Summers, prevented Brooksley Born, head of the Commodity Futures Trading Corporation, a government regulatory agency, from doing her job of regulating over-the-counter derivatives,
The efficient markets theory is that unregulated markets are efficient and rational. According to this theory in which Greenspan placed his trust, unregulated markets produce the best possible result. Any regulatory interference worsens the outcome.
Greenspan blamed his own bad judgment on a theory. The theory, or Greenspans understanding of it, nevertheless still holds sway as Congress has proved impotent to re-regulate the gambling casino that is Wall Street. Clearly, the theory serves powerful interests.
But what is the truth?
The truth is that markets are a social institution. Their efficiency depends on the rules that govern the behavior of people in markets. When free market economists talk about markets deciding this or that, they are reifying a social institution and ascribing to it decision-making power. Socialists make the same mistake when they blame markets for the results of human action. But, of course, markets do not act or make decisions. People act and make decisions, and markets reflect the decisions and actions of people.
The entire debate over regulation is misconstrued. It is not the market, an efficient social institution, that is regulated. What is regulated is the behavior of people in markets. If you want good results from markets, good regulation of human behavior is a requirement.
The market is like a computer. Garbage in, garbage out.
If people who use markets are not regulated, they issue fraudulent financial instruments.
They leverage assets with absurd amounts of debt. They market their instruments with fraudulent investment grade ratings. They deal themselves aces.
Did Greenspan not know this? Was he a victim of a theory or an enabler of greed unleashed by the absence of regulation?
The way to bring socialists and capitalists together is to recognize that markets are efficient and that self-interested human behavior requires social regulation.
The failure to regulate financial markets has produced enormous losses to all Americans except the super-rich. But the U.S. government is guilty of an even greater failure. Washington has not only permitted but also encouraged the unemployment of its citizens by enabling greed-driven corporations to send American jobs abroad in order to maximize profits for CEOsҒ bonuses, shareholders, and Wall Street.
As Ralph Gomory has made clear, economic theory has been shattered, because there is no longer any connection between the profits of American companies and the welfare of Americans. The profits of American companies are derived from the cheap labor in offshored locations and are at the expense of the American work force.
This dispossession of American labor has been heralded by offshorings pimps in the major universities as the “New Economy”.
The “New Economy” is a hoax like most everything else the bought-and-paid-for-media feeds to Americans. There is no new economy. There is an unemployed economy. The headlined unemployment rate is just over 10 percent. The real unemployment rate, as measured by the current methodology is 17 percent. The unemployment rate as measured by the methodology of 1980 is 22 percent.
If jobs offshoring is a benefit to America, as the hired pimps of the transnational corporations claim, why is more than one-fifth of the U.S. work force unemployed? Why does the U.S. have the largest trade deficits in world history? Why is the U.S. dollar losing value over time to other tradable currencies?
Greed and elected representatives, who are toadies to special interests, are decimating the American economy.
Consider President ObamaԒs budgets for 2010 and 2011. The combined red ink is $2.9 trillion. No one anywhere in the world has this kind of money to lend to Washington. How will these massive deficits, never before experienced on earth, be financed? They can only be financed by the Federal Reserve destroying its own balance sheet by its purchase of toxic financial instruments from the banks thereby providing the banks with cash with which to buy the Treasurys bonds, or by the Federal Reserve itself purchasing the TreasuryҒs bonds by creating new money, or by another collapse in equity values that sends investors fleeing into safeӔ Treasury bonds.
American power is on the precipice, about to fall. Perhaps it is a good thing. The world will be rid of bullying, of invasions of innocent countries based on blatant lies, of torture and murder of woman and children, of redistribution of income from the poor to the rich.
The criminal record accumulated by the United States makes it the least indispensable country on earth.
Dr. Roberts was Assistant Secretary of the Treasury in the Reagan administration. His latest book, How The Economy Was Lost, has just been published by CounterPunch/AK Press.
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Deepening Debt Crisis: The Bernanke Reappointment: Be Afraid, Very Afraid
By Prof Michael Hudson
Global Research
February 2, 2010
If the economy deteriorates in the L-shaped hockey-stickӔ rut that many economists forecast, what political price will President Obama and the Democrats pay for having returned the financial keys to the Bush Republican appointees who gave away the store in the first place? Reappointing Federal Reserve Chairman Ben Bernanke may end up injuring not only the economy but also the Democratic Party for years to come. Recognizing this, Republicans made populist points by opposing his reappointment during the Senate confirmation hearings last Thursday, January 27 the day after Mr. Obama’s STATE OF THE UNION ADDRESS.
The hearings focused on the Feds role as Wall Street’s major lobbyist and deregulator. Despite the fact that its Charter starts off by directing it to promote full employment and stabilize prices, the Fed is anti-labor in practice. Alan Greenspan famously bragged that what has caused quiescence among labor union members when it comes to striking for higher wages or even for better working conditions ֖ is the fear of being fired and being unable to meet their mortgage and credit card payments. One paycheck away from homelessness,Ӕ or a downgraded credit rating leading to soaring interest charges, has become a formula for labor management.
As for its designated task in promoting price stability, the Feds easy-credit bubble has made asset-price inflation the path to wealth, not tangible capital investment. This has brought joy to bank marketing departments as homeowners, consumers, corporate raiders, states and localities run further and further into debt in an attempt to improve their position by debt leveraging. But the economy has all but neglected its industrial base and the employment goes with manufacturing. The Fed’s motto from Bubblemeister Alan Greenspan to Ben Bernanke has been “Asset-price inflation, good; wage and commodity price inflation, bad.”
Heres the problem with that policy. Rising prices for housing have increased the cost of living and doing business, widening the excess of market price over socially necessary costs. In times past the government would have collected the rising location rent created by increasing prosperity and public investment in transportation and other infrastructure making specific sites more valuable. But in recent years taxes have been rolled back. Land sites still cost as much as ever, because their price is set by the market. Land itself has no cost of production. Locational value is created by society, and should be the natural tax base because a land tax does not increase the price of real estate; it lowers it by leaving less free rent to be paid to the banks.
The problem is that what the tax collector relinquishes is now available to be paid to banks as interest. And prospective buyers bid against each other until the winner is whoever is first to pay the land’s location rent to the banks as interest.
This tax shift to the benefit of the bankers, not homeowners has made Mr. Obamas hope of doubling U.S. exports during the next five years ring hollow. This is the upshot of creating wealth in the form of a debt-leveraged real estate and stock market bubble. Labor must pay more for debt-financed housing and education, not to mention payments to health insurance oligopoly and higher sales and income taxes shifted off the shoulders of financial and real estate.
Once the Republicans were certain which way the vote would go, they were able to voice some nice populist sound bites for the mid-term elections this November. Jeff Sessions of Alabama and Sam Brownback of Kansas voted against Mr. BernankeԒs confirmation. Jim deMint of South Carolina warned that reappointing him would be The biggest mistake that weӒre going to make for a long time. He added: ԓConfirming Bernanke is a continuation of the policies that brought our economy down.
Among Democrats running for re-election, Barbara Boxer of California pointed out that by spurring the asset-price inflation, the FedԒs pro-Bubble (that is, pro-debt policy) has crashed the economy, shrinking employment. The Fed is supposed to protect consumers, yet Mr. Bernanke is a vocal opponent of the Consumer Finance Products Agency, claiming that the deregulatory Fed alone should be the sole financial regulator seemingly an oxymoron.
Mr. Obama supports Mr. Bernanke and his State of the Union address conspicuously avoided endorsing the Consumer Financial Products Agency that he earlier had claimed would be the centrepiece of financial reform. Wall Street lobbyists have turned him around. Their logic was the same mantra that Connecticut insurance industry֒s Sen. Chris Dodd repeated at the confirmation hearings: Mr. Bernanke has saved the economy.Ӕ
How can the Fed be said to do this when the volume of debt is growing exponentially beyond the ability to pay? Saving the debtӔ by bailing out creditors by adding bad private-sector debts to the public sector֒s balance sheet is burdening the economy, not saving it. The policy only postpones the crisis while making the ultimate volume of debt that must be written off higher ֖ and therefore more traumatic to writeoff, annulling a corresponding volume of savings on the other side of the balance sheet (because one partys savings are anotherҒs debts).
What really is at issue is the economic philosophy that Mr. Bernanke will apply during the coming four years. Unfortunately, Mr. Bernankes questioners failed to ask relevant questions along these policy lines and the economic theory or rationale underlying his basic approach. What needed to be addressed was not just his deregulatory stance in the face of the Bubble Economy and exploding consumer fraud, or even the mistakes he has made. Republican Sen. Jim Bunning elicited only smirks and pained looked as Mr. Bernanke rested his chin on his hand, as if to say, ғIm going to be patient and let you rant.Ҕ The other Senators were almost apologetic.
One popular (and thoroughly misleading) description of Bernanke that has been cited ad nauseum to promote his reappointment is that he is an expert on the causes of the Great Depression. If you are going to create a new crash, it certainly helps to understand the last one. But economic historians who have compared Mr. Bernankes writings to actual history have found that it is precisely his misunderstanding of the Depression that is leading him tragically to repeat it.
As a trickle-down apologist for high finance, Prof. Bernanke has drawn systematically wrong conclusions as to the causes of the Great Depression. The ideological prejudice behind his view is of course what got him his job in the first place, for as numerous observers have quipped, a precondition for being hired as Fed Chairman is that one does not understand how the financial system actually works. Instead of recognizing that deepening debt, low wages and the siphoning up of wealth to the top of the economic pyramid were primary causes of the Depression, Prof. Bernanke attributes the main problem simply to a lack of liquidity, causing low prices.
As my Australian colleague Steve Keen recently has written in his DEBTWATCH No. 42 the case against Mr. Bernanke should focus on his neoclassical approach that misses the fact that money is debt. He sees the financial problem as being too low a price level for assets to be collateralized for bank loans. And to Mr. Bernanke, “wealth is synonymous with what banks will lend, under existing credit terms.”
In 1933, the economist Irving Fischer (mainly responsible for the modern monetarist tautology MV = PT) wrote a classic article, “The Debt-Deflation Theory of the Great Depression,” recanting the neoclassical view that had led him to lose his personal fortune in the 1929 stock market crash. He explained how the inability to pay debts was forcing bankruptcies, wiping out bank credit and spending power, shrinking markets and hence the incentive to invest and employ labor.
Mr. Bernanke rejects this idea, or at least the travesty he paraphrases in his Essays on the Great Depression (Princeton, 2000, p. 24), as Prof. Keen quotes:
Fisher’s idea was less influential in academic circles, though, because of the counterargument that debt-deflation represented no more than a redistribution from one group (debtors) to another (creditors). Absent implausibly large differences in marginal spending propensities among the groups, it was suggested, pure redistributions should have no significant macroeconomic effects.
All that a debt overhead does is transfer purchasing power from debtors to creditors. Bernanke is reminiscent here of Thomas Robert Malthus, whose Principles of Political Economy argued that landlords (Malthuss own class) were necessary to maintain economic equilibrium in a way akin to trickle-down theorists through the ages. Where would English employment be, Malthus argued, without landlords spending their revenue on coachmen, fine clothes, butlers and servants? It was landlords spending their rental income (protected by EnglandҒs agricultural tariffs, the Corn Laws, until 1846) that kept buggy-makers and other suppliers working. And by the same logic, this is what wealthy Wall Street financiers do today with the money they make by lending to enable homeowners and savers to get rich making capital gains off asset-price inflation.
The reality is that wealthy Wall Street financiers who make multi-million dollar salaries and bonuses spend their money on trophies: fine arts, luxury apartments or houses in gated communities, yachts, fancy handbags and high fashion, birthday parties with appearances by modish pop singers. (I see the yachts of the stock brokers; but where are those of their clients?) This is not the kind of spending that reflects the “real” economy’s production profile.
Mr. Bernanke sees no problem, unless rich people spend less of their gains on consumer goods and the products of labor than average wage earners. But of course this propensity to consume is precisely the point John Maynard Keynes made in his General Theory (1936). The wealthier people become, the lower a proportion of their income they consume - and the more they save.
This falling propensity to consume is what worried Keynes about the future. He imagined that as economies saved more as their income levels rose, they would spend less on goods and services. So output and employment would not be able to keep pace unless the government stepped in to make up the gap.
Consumer spending is indeed falling, but not because economies are experiencing a higher net saving rate. The U.S. saving rate has fallen to zero, because despite the fact that gross savings remain high (about 18 percent), most is lent out to become other peoples debts. The effect is thus a wash on an economy-wide basis. (18 percent saving less 18 percent debt = zero net saving.)
The problem is that workers and consumers have gone deeper and deeper into debt, saving less and less. This is just the opposite of what Keynes forecast. Only the wealthiest 10 percent or so of the population save more and more - mainly in the form of loans to the bottom 90 percent. Saving less, however, goes hand in hand with consuming less, because of the revenue that the financial sector drains out of the “real” economys circular flow (wage-earners spending their income to buy the goods they produce) as debt service. The financial sector is wrapped around the production-and-consumption economy. So an inability to consume is part and parcel of the debt problem. The basis of monetary policy throughout the world today therefore should be how to save economies from shrinking as a result of their exponentially growing debt overhead.
Bernanke’s apologetics for finance capital: Economies seem to need more debt, not less
Bernanke finds declines in aggregate demand to be the dominant factor in the Great Depression (p. ix, as cited by Steve Keen). This is true in any economic downturn. In his reading, however, debt seems not to have anything to do with falling spending on what labor produces. Taking a bankers-eye view, he finds the most serious problem to be the demand for stocks and real estate. Mr. Bernanke promises not to let falling asset demand (and hence, falling asset prices) happen again. His antidote is to flood the economy with credit as he is now doing, emulating Alan Greenspan’s Bubble policy.
The wealthiest 10 percent of the population do indeed save most of their money. They lend savings and create new credit - to the bottom 90 percent, or gamble in derivatives or other zero-sum activities in which their gain (if indeed they make any) finds its counterpart in some other parties loss. The system is kept going not by government spending, Keynesian-style, but by new credit creation. That supports consumption, and indeed, lending against real estate, stocks and bonds enables borrowers to bid up their prices, enabling their owners to borrow yet more against these assets. The economy expands - until current revenue no longer covers the debts carrying charges.
That’s what brings the Bubble Economy down with a crash. Asset-price inflation gives way to crashing prices and negative equity for real estate and for much financial debt leveraging as well. It is in this sense that Prof. Bernankes blames the Depression on lower prices. When prices for real estate or other collateral plunge, it no longer can be pledged for more loans to keep the circular flow of lending and debt repayment in motion.
This circular financial flow is quite different from the circular flow that Keynes (and Say’s Law) discussed the circulation where workers and their employers spent their wages and profits on consumer goods and investment goods. The financial circular flow is between the banks and their clients. And this circular flow swells as it diverts more and more spending from the “real” economy’s circular flow between income and spending. Finance capital expands relative to industrial capital.[1]
Higher prices in the “real economy” may help maintain the circular financial flow, by giving borrowers more current income to pay their mortgages, student loans and other debts. Mr. Bernanke accordingly sees FDRs devaluation of the dollar as helping reflate prices.
Today, however, a declining dollar would make imports (including raw materials as well as key consumer goods) more costly. This would squeeze the budgets of most families, given AmericaҒs rising import dependency as its economy is post-industrialized and financialized. So Mr. Bernankes favored policy is to get banks lending again - not for the government to spend more on deficit spending on infrastructure, social services or other full employment projects. The government spending that Mr. Bernanke has endorsed is pure bailouts to the banks, insurance companies, real estate packagers and other Wall Street institutions so that they can support asset prices and thereby save the economys financial balance sheet, not its employment and living standards.
More debt thus is not the problem, in Chairman Bernanke’s view. It is the solution. This is what makes his re-appointment so dangerous.
Devaluation of the dollar FDR-style will make U.S. real estate, corporations and other assets cheaper to global investors. It thus will have the same positive effects (if you can call making homes and office buildings more costly to buyers a positive effect) as more credit and without the debt service needing to be raked off from the economy. This policy is akin to the International Monetary Fund’s stabilization and austerity programs that have caused such havoc over the past few decades.[2] It is the policy being prepared for imposition on the United States. This too is what makes Bernankes re-appointment so dangerous.
The problem is a combination of Mr. Bernanke’s dangerous misreading of economic history, and the bankers-eye perspective that underlies this view - which he now has been empowered to impose from his perch as central planner at the Federal Reserve Board. Pres. Obamas support for his reappointment suggests that the recent economic rhetoric heard from the White House is a faux populism. The President promises that this time, it will be different. The former Bush appointees - Geithner, Bernanke and the Goldman Sachs managers on loan to the Treasury will be willing to stand up to Goldman Sachs and the other bankers. And this time the Clinton-era Rubinomics boys will not do to the U.S. economy what they did to the Soviet Union.
With this stance, it is no wonder that the Obama Democrats are relinquishing the populist anti-Wall Street card to the Republicans!
The Bernanke albatross
Mr. Bernanke misses the problem that debts need to be repaid - or at least carried. This debt service deflates the non-financial real economy. But the Feds analysis stops just before the crash. It is a good news theory limited to the happy time while the bubble is expanding and homeowners borrow more and more from the banks to buy houses (or more accurately, their land sites) that are rising in price. This was the Greenspan-Bernanke bubble in a nutshell.
We need not look as far back as the Great Depression. Japan since 1990 is a good example. Its land prices declined every quarter for over 15 years after its bubble burst. The Bank of Japan did what the Federal Reserve is doing now: It lowered lending rates to banks below 1%. Banks earned their way out of debt by lending to global speculators who used the yen loans to convert into foreign currency and buy higher-yielding assets abroad - capped by Icelandic government bonds paying 15%, and pocketing the arbitrage difference.
This steady conversion of speculative money out of yen into foreign currency held down Japans exchange rate, helping its exporters. Likewise today, the FedҒs low-interest policy leads U.S. banks to borrow from it and lend to arbitrageurs buying higher-yielding bonds or other securities denominated in euros, sterling and other currencies.
The foreign-exchange problem develops when these loans are paid back. In Japans case, when global financial markets turned down and Japanese interest rates began to rise in 2008, arbitrageurs decided to unwind their positions. To pay back the yen they had borrowed from Japanese banks, they sold euro- and dollar-denominated bonds and bought the Japanese currency. This forced up the yenҒs exchange rate eroding its export competitiveness and throwing its economy into turmoil. The long-ruling Liberal Democratic Party was voted out of power as unemployment spread.
In the U.S. case today, Chairman Bernanke֒s low interest-rate regime at the Fed has spurred a dollar-denominated carry trade estimated at $1.5 trillion. Speculators borrow low-interest dollars and buy high-interest foreign-currency bonds. This weakens the dollars exchange rate against foreign currencies (whose central banks are administering higher interest rates). The weakening dollar leads U.S. money managers to send more investment funds out of our economy to those promising stock market gains as well as a foreign-currency gain.
The prospect of undoing this credit creation threatens to lock the United States into a low-interest trap. The problem is that if and when the Fed begins to raise interest rates (for instance, to slow the new bubble that Mr. Bernanke is trying to inflate), global speculators will repay their dollar debts. As the U.S. carry trade is unwound, the dollar will soar in price. This threatens to make Mr. ObamaҒs promise to double U.S. exports within five years seem an impossible dream.
The prospect is for U.S. consumers to be hit by a triple whammy. They must pay higher prices for the goods they buy as the dollar declines, making imports more expensive. And the government will be spending less on the economys circular flow as a result of Pres. Obama’s three-year spending freeze to slow the budget deficits. Meanwhile, states and cities are raising taxes to balance their own budgets as tax receipts fall. Consumes and indeed the entire economy must run more deeply into debt simply to break even (or else see living standards eroded).
To Mr. Bernanke, economic recovery requires resuscitating the Goldman Sachs squid that Matt Taibbi so artfully has described as being affixed to the face of humanity, duly protected by the Fed. The banks will lend more to keep the debt pyramid growing to enable consumers, businesses and local government to avoid contraction.
All this will enrich the banks as long as the debts can be paid. And if they can֒t be paid, will the government bail them out all over again? Or will it be differentӔ this time around?
Will our economy flounder with Mr. Bernankes reappointment as the rich get richer and the American family comes under increasing financial pressure as incomes drop while debts grow exponentially? Or will Americans get rich off the new bubble as the Fed re-inflates asset prices?
The Road to Debt Peonage
Last week, Senator John Kerry of Massachusetts acknowledged many Americans’ anger about the bailouts of the big banks: It’s understandable why there is debate, questioning and even anger about Mr. Bernanke’s re-nomination. “Still,” he added, “out of this near calamity, I believe Chairman Bernanke provided leadership that was urgent, nimble, strong and vital in staving off greater disaster.”
Unfortunately, by disaster Sen. Kerry seems to mean losses for Wall Street. He shares with Chairman Bernanke the idea that gains in raising asset prices are good for the economy for instance, by enabling pension funds to pay retirees and “build wealth” for America’s savers.
While the Bush-Obama team hopes to reflate the economy, the $13 trillion bailout money they have spent trying to fuel the destructive bubble takes the form of trickle-down economics. It has not run up public debt in the Keynesian way, by government spending such as in the modest Stimulus package to increase employment and income. And it is not providing better public services. It was designed simply to inflate asset prices or more accurately, to prevent their decline.
This is what re-appointment of the Fed Chairman signifies. It means a policy intended to raise the price of housing on credit, with a corresponding rise in consumer income paid to bankers as mortgage debt service.
Meanwhile, rising stock and bond prices will increase the price of buying a retirement income. A higher stock price means a lower dividend yield. The same is true for bonds. Flooding the capital markets with credit to bid up asset prices thus holds down the yield of the assets of pension funds, pushing them into deficit. This enables corporate managers to threaten bankruptcy of their pension plans or entire companies, General Motors-style, if labor unions do not renegotiate their pension contracts downward. This ֓frees yet more money for financial managers to pay creditors at the top of the economic pyramid.
Mr. BernankeԒs opposition to regulating Wall Street
How does one overcome this financial polarization? The seemingly obvious solution is to select Fed and Treasury administrators from outside the ranks of ideologues supported by indeed, applauded by ֖ Wall Street. Creation of a Consumer Financial Products Agency, for instance, would be largely meaningless if a deregulator such as Mr. Bernanke were to run it. But that is precisely what he is asking to do in testifying that his Federal Reserve should be the sole regulatory agency, nullifying the efforts of all others just in case some state agency, some federal agency or some Congressional committee might move to protect consumers against fraudulent lending, extortionate fees and penalties and usurious interest rates.
Mr. Bernanke֒s fight against proposals for such regulatory agencies to protect consumers from predatory lending is thus a second reason not to re-appoint him. How can Mr. Obama campaign for his reappointment as Chairmanship of the Fed and at the same time endorse the consumer protection agency? Without dumping Bernanke and Geithner, it doesnt seem to matter what the law says. The Democrats have learned from the Bush and Reagan administrations that all you have to do is appoint deregulators in key positions, and legal teeth are irrelevant.
Independence of the Federal Reserve is a euphemism for financial oligarchy
This brings up the third premise that defenders of Mr. Bernanke cite: the much vaunted independence of the Federal Reserve. This is supposed to be safeguarding democracy. But the Fed should be subject to representative democracy, not independent of it! It rightly should be part of the Treasury representing the national interest rather than that of Wall Street.
This has emerged as a major problem within AmericaҒs two-party political system. Like the Republican team, the Obama administration also puts financial interests first, on the premise that wealth flows from its credit activities, the financial time frame tends to be short-run and economically corrosive. It supports growth in the debt overhead at the expense of the realӔ economy, thereby taking an anti-labor, anti-consumer, anti-debtor policy stance.
Why on earth should the most important sector of modern economies finance - be independent from the electoral process? This is as bad as making the judiciary independent,Ӕ which turns out to be a euphemism for seriously right-wing.
Over and above the independence issue, to be sure, is the problem that the government itself if being taken over by the financial sector. The Treasury Secretary, Fed Chairman and other financial administrators are subject to Wall Streets advice and consent first and foremost. Lobbying power makes it difficult to defend the public interest, as we have seen from the tenure of Mr. Paulson and Mr. Geithner. I don’t believe Mr. Obama or the Democrats (to say nothing of the Republicans) is anywhere near rising to the occasion of solving this problem. One can only deplore Mr. Obamas repetition of his endorsements.
Allied to the independence issue is a fourth reason to reject Mr. Bernanke personally: the Fed’s secrecy from Congressional oversight, highlighted by its refusal to release the names of the recipients of tens of billions of Fed bailouts and cash-for-trash swaps.
Does it matter?
Now that the confirmation arguments against Mr. Bernankes reappointment have been rejected, what does it mean for the future?
On the political front, his reappointment is being cited as yet another proof that the Democrats care more for bankers than for American families and employees. As a result, it will do what seemed unfathomable a year ago: enable GOP candidates to strike the pose of FDR-type saviors of the embattled middle class. No doubt another decade of abject GOP economic failure would simply make the corporate Democrats appear once again to be the alternative. And so it goes… unless we do something about it.
The problem is not merely that Mr. Bernanke failed to do what the Feds charter directs it to do: promote employment in an environment of stable prices. The Republicans Җ and some Democrats read out the litany of Bernanke abuses. The Fed could have raised interest rates to slow the bubble. It didn֒t. It could have stopped wholesale mortgage fraud. It didnt. It could have protected consumers by limiting credit card rates. It didnҒt.
For Bernanke, the current financial system (or more to the point, the debt overhead) is to be saved so that the redistribution of wealth upward will continue. The Congressional Research Service has calculated that from 1979 to 2003 the income from wealth (rent, dividends, interest and capital gains) for the top 1 percent of the population soared from 37.8% to 57.5%. This revenue has been expropriated from American employees pushed onto debt treadmills in the face of stagnating wages.
Meanwhile, the government is permitting corporate tollbooth to be erected across our economy and un-taxing this revenue so that it can be capitalized into financialized wealth paying only a 15% tax rate on capital gains. It pays these taxes not as these gains accrue, but and only when they realize them. And the tax does not even have to be paid if the sales proceeds of these assets is reinvested! Financial and fiscal policy thus reinforce each other in a way that polarizes the economy between the financial sector and the “real economy”.
Behind these bad policies is a disturbing body of junk economics - one that, alas, is taught in most universities today. (Not at the University of Missouri at Kansas City, and a few others, to be sure.) Mr. Bernanke views money simply as part of a supply and demand equation between money and prices and he refers here only to consumer prices, not the asset prices which the Fed failed to address. That is a big part of the Fed֒s blind spot: Messrs. Greenspan and Bernanke imagined that its charter referred only to stabilizing consumer prices and wages while asset prices ֖ the cost of obtaining housing, an education or a retirement income have soared as a result of debt leveraging.
What Mr. Bernanke misses ֖ along with his neoclassical colleagues is that the money that is spent bidding up prices is also debt. This means that it leaves a debt legacy. When banks ֓provide credit by writing loans, what they are selling is debt.
The question their marketing departments ask is, how large is the market for debt? When I went to work for Chase Manhattan in 1967 as its balance-of-payments analyst, for example, I liaised with the marketing department to calculate how large the international debt market was Ԗ and how large a share of this market the bank could reasonably expect to get.
The bank quantified the debt market by measuring how large a surplus borrowers could squeeze out over and above basic break-even needs. For personal loans, the analogy was how much could a wage earner afford to pay the bank after meeting basic essentials (rent, food, transportation, taxes, etc.). For the real estate department, how much net rental income could a landlord pay out, after meeting fuel and other operating costs and taxes? The anticipated surplus revenue was capitalized into a loan. From the marketing departments vantage point, banks aimed at absorbing the entire surplus as debt service.
Financial debt service is not spent on consumer goods. It is recycled into new loans, after paying dividends to stockholders and salaries and bonuses to its managers. Stockholders spend their money on buying other investments - more stocks and bonds. Managers buy trophies yachts, trophy paintings, trophy cars, trophy apartments (whose main value is their location ֖ the neighborhood where their land is situated), foreign travel and other luxury. None of this spending has much effect on the consumer price index, but it does affect asset prices.
This idea is lacking in neoclassical and monetarist theory. Once moneyӔ (that is, debt) is spent, it has an effect on prices via supply and demand, and that is that. There is no dynamic over time of debt or wealth. Ever since Marxism pushed classical political economy to its logical conclusion in the late 19th century, economic orthodoxy has been traumatized from dealing about wealth and debt. So balance-sheet relationships are missing from the academic economics curriculum. That is why I stopped teaching economics in 1972, until the UMKC developed an alternative curriculum to the University of Chicago monetarism by focusing on debt creation and the recognition that bank loans create deposits, inverting the usual AustrianӔ and other individualistic parallel universe theories.
Notes
[1] I elaborate the logic in greater detail in Saving, Asset-Price Inflation, and Debt-Induced Deflation,Ӕ in L. Randall Wray and Matthew Forstater, eds., Money, Financial Instability and Stabilization Policy (Edward Elgar, 2006):104-24. And I explain how the recent expansion of credit and easing of lending terms fueled the real estate bubble in The New Road to Serfdom: An illustrated guide to the coming real estate collapse,Ӕ Harpers, Vol. 312 (No. 1872), May 2006):39-46.
[2] I explain the workings of these plans in greater detail in Super Imperialism: The Economic Strategy of American Empire (1972; new ed., 2002), Trends that can’t go on forever, wont: financial bubbles, trade and exchange rates,Ҕ in Eckhard Hein, Torsten Niechoj, Peter Spahn and Achim Truger (eds.), Finance-led Capitalism? (Marburg: Metropolis-Verlag, 2008), and Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy (1992, new ed. 2009).
Michael Hudson is a frequent contributor to Global Research.
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Tuesday, February 02, 2010
IT’s greatest enemies
How to spot—and take down—the six most nefarious adversaries of IT
By Dan Tynan
InfoWorld
February 1, 2010
Everybody keeps a list of the people who make their jobs and lives more difficult, even if they never writeit down. It’s a safe bet that IT pros’ lists are longer than most.
You might think IT’s greatest enemies are cyber criminals and malware authors. But far worse are those who make the lives of these evildoers that much easier. In fact, the greatest enemies of IT are members of the community IT serves: from clueless suits to annoying power users, from miserly managers to those friends and family members who are always hitting you up for free tech support. Any one of them can keep you from doing your best—or getting anything done at all.
Making an “enemies” list is not just a cathartic exercise but also a useful one, says Mark Kadrich, CEO of The Security Consortium.
“Though they often curse the user community, most IT pros don’t spend the time to identify good users from the bad ones,” he says. “You ask most of them how many users have administrative access to their systems, and the answer is usually either ‘I don’t know’ or ‘all of them.’ I think they need to take more time to classify their user communities.”
Here are the classic enemies of IT, how to recognize them, and what you can do to keep them at bay.
IT enemy No. 1: The Ostrich
The biggest enemy of many IT pros: bosses who bury their heads in the sand when it comes to technology, yet are still empowered to make critical IT decisions.
Businesspeople become the enemy when they refuse to acknowledge they have a role to play in how IT operates, says Daniel Teachey, senior director of marketing for data-quality specialists DataFlux. “Even if it’s something as simple as defining what the term ‘customer’ means to their business,” he says. “Data informs every action the business takes, and unless the business side takes some role in the management of data, IT will be left holding the bag and getting all the blame.”
EVEN WORSE, upper management types that don’t understand concepts like network security, yet OVERRIDE CRIICAL DECISIONS OF THEIR NETWORK ADMINS, says Randy Abrams, director of technical education for security vendor ESET.
“If you are in charge of network security but have no power to make decisions, then your job is to take the blame when things go wrong,” he adds.
The classic example: email attachments.
“Several years ago IT managers had an incredibly hard time getting management to allow them to block executable attachments in email,” says Abrams. “There was rarely a case when an executable file actually needed to be emailed, and the security advantages of blocking far outweighed the potential business costs of having these files blocked. Eventually the blocking of executables was built into Outlook, but it was a mindless battle of the clued vs. the powerful clueless for a long time.”
Recognizing the enemy: That glazed-over look when confronted with technical questions, or the moment they open their mouths, says Abrams.
“They tend to say no first without ever understanding the problem or seeing the trade-offs—even when the trade-offs are things that can ruin the business,” he says.
Your best defense: Seek air support from high command.
“You need a data governance plan that spans the entire organization, which means getting a CXO type to step in and say, ‘This is the way it’s going to be,’” says DataFlux’s Teachey. “They’re the only ones with the will, the persuasiveness, and most importantly the budget to get it done.”
But what if there’s no one to give support from above?
“Then you’re between a rock and a hard spot,” notes ESET’s Abrams. “The best you can do is hope to educate them. Figure out the best way to state your case so that it makes sense. Come up with a good analogy that’s relevant to them. Knowledge can be power, but only if it’s shared.”
IT enemy No. 2: The Penny Pincher
Whether it’s an enterprise-level CFO or a small-business owner, a penny-wise/pound-foolish manager can stand in the way of necessary IT investments—making your job much harder.
Penny-pinching CFOs are among the biggest enemies of IT, says Nancee Melby, director of product marketing at SHAVLIK TECHNOLOGIES. “Any CFO who thinks the free patching solutions from Microsoft are good enough needs to find a new job—or get out of IT’s business. Leaving your keys in the car and only locking the driver’s door will keep out only the stupid criminals.”
Granted, IT can be a bottomless pit, notes Peter Marsack, director of business development for Vision Computer Solutions, an IT services firm for SMBs. But that can often lead to an irrational fear of all spending.
“The beauty of technology is you can dump a virtually limitless amount of capital at it and still have problems in your technical infrastructure,” he says. “Because of this, getting purchasing requests approved can be a tedious process even if the cause is just.”
Marsack points to medical companies that refuse to become HIPAA-compliant—despite the security benefits and the penalties noncompliance might incur—simply because upgrading all their equipment cost too much.
“I have clients who refuse to replace their 7-year-old computers because ‘they still work’ even though their staff burns through 10 hours a week just waiting on slow machines,” he adds. “Most people think they can just purchase computers, put a network in place, set it, and forget it. We have to explain to them these machines need to be maintained and supported.”
Recognizing the enemy: Though you might garner clues from threadbare office furniture or those Windows 98 machines running in the reception area, the only way to know for sure is to ask pointed questions about how the organization allocates resources for technology, says Marsack.
“If they answer, ‘We never do that,’ or, ‘We get things as we need them,’ that’s a red flag. If they say they devote X amount of dollars or allocate money on a regular schedule, they’re more likely to invest the money required.”
Your best defense: Gather intelligence. Find an incident where the organization’s lack of IT investment hurt its bottom line—say, a server that crashed or a backup that failed, leaving customers in the lurch—and exploit it.
“These are the kinds of things that happen when you’re not allocating appropriate resources to technology,” Marsack says.
Still, he adds, defeating this enemy isn’t easy.
“I’ve not met many people who enjoy writing a check for any amount budgeted for technology, even though their entire company runs on it,” he says. “The person with the checkbook is the hardest person to please in the business.”
IT enemy No. 3: The Power User
Every IT pro has stories about plebes who suck the lifeblood from the help desk with questions about their PC’s “any” key. But the real threat is posed by users who know just enough to be dangerous.
“For me the biggest enemy is not the clueless user, but the clued-in user who doesn’t have the whole picture,” says Kevin Thompson, information security manager for Minnesota State University at Mankato. “This is the guy that thinks he is helping by running pre-release software he downloaded from BitTorrent. This guy has all the passwords of the other users in his office and acts as the unappointed first line of technical support. Instead, he frequently breaks things.”
Not only do Power Users cause support and management headaches, they can be walking, talking security nightmares, says The Security Consortium’s Mark Kadrich.
“They’re usually engineering types or Ph.D.s who firmly believe they know more about the computer and network than you do,” he says. “They insist on having admin/root access so they can ‘configure’ their custom applications or memory, and believe firewalls are for the unwashed masses. They’re ‘savvy’ and can outwit any hacker on the planet. Besides, they ‘don’t have anything that a hacker would want,’ so why should they worry? Their naivet borders on the criminal.”
Recognizing the enemy: They might be wearing Armani or T-shirts and flip-flops, but they’re carrying a JAILBROKEN IPHONE in one hand, a Palm Pre in the other, and two laptops in their bag. Also: Anyone with a “Dr.” in his or her title.
Your best defense: PsychOps. The only way to get a Power User’s attention is to scare the hell out of them, then gradually bring them over to your side, says Kadrich. The exact approach depends on the position they hold in the corporate ranks.
“Executives don’t give a damn about security, but they do care about their brand,” he says. “You tell them, ‘What you just did caused a huge number of emails to go out proving how screwed up our brand is.’ That generally gets their attention.”
For lesser tribe members, Kadrich makes the threat personal. Thanks to the Power Users’ meathead behavior, their personal financial information has been compromised; now they have to call their bank and cancel all their accounts.
The second prong of attack? Training and awareness. Low-key regular luncheon sessions talking about the latest security breaches is the most effective way to alter people’s behavior, he adds.
“You want to make the people in your organization security ambassadors,” he says. “Taking the enemies of IT and converting them into true believers is the best approach.”
IT enemy No. 4: The Politico
As technology rises in importance across virtually every organization, office politicians will be looking to surf the IT wave into the executive suite—even if they have to ride on your back to do it.
That’s why CIOs who play politics are IT enemy No. 1, says Steven Levy, CEO of Lexician Consulting. “These CIOs don’t understand the businesses they serve, and they’ll say or do anything to get ‘a seat at the table.’”
In the long run, says Levy, they end up undermining the value of IT to the enterprise.
“When they talk about reducing complexity, they mean cutting the number of applications IT has to support, not simplifying the life of the business customers they serve,” he says. “They talk about IT being up to date and then can’t figure out how to roll out a new version of Windows or Office until three years after it shipped. They hire bureaucrats that they think are technocrats, but the technologists in IT laugh at their skills. And they’re terrified by the idea that departments and business teams might develop their own applications, seeing that as a threat to their fiefdoms rather than as a way to help the business support itself.”
Recognizing the enemy: Look for managers who’ve mastered the art of talking out of both sides of their mouths at the same time, says Levy.
Your best defense: Dig a trench and try to outlast them. Effective CEOs are veterans at spotting those playing office politics, and the CIO honeymoon period may be short, notes Levy. Or make allies with high command to shield yourself from radioactive fallout when things implode.
“The best solution is to get the business leaders in the C-suite or with highly respected voices to laud your work and talk up your solutions, thus covering your back in a way that the CIO can’t effectively undermine,” says Levy.
Next: IT enemy No. 5: The Freeloader
If you know anything about technology, you’ve surely encountered this time- and patience-sapping foe. A “simple” question about computers morphs into demands for free 24/7 tech help when you have actual paying customers to support.
“The absolute worst offenders are people who assume that they can pick up the phone and call you anytime they have even the most minor computer problems,” says Dan Nainan, a comedian and “computer genius” whose acting credits include an I’M A MAC COMMERCIAL (he’s the guy in the bubble wrap). “Having been a senior engineer with Intel and a computer nerd for my entire adult life, I am beset on all sides by people who think they can just pick up the phone and call me anytime with a computer question. Haven’t these people ever heard of Google?”
Clueless and greedy users are the No. 1 enemy, agrees Howard Sherman, founder of on-demand tech support site RoyalGeeks. “They don’t have a clue, don’t want a clue, and don’t even know what a clue is, yet they expect you to answer each and every question they have at work, on the golf course, at a dinner party, the bar, or a bar mitzvah. They shamelessly suck the knowledge out of you, in addition to your will to live.”
Recognizing the enemy: When they find out what you do for a living they immediately (a) ask for your card, (b) start flirting shamelessly, or (c) launch into a tale of technical woe.
Your best defense: If possible, retreat. “When you spot a user like this just start running down the hall screaming,” suggests Sherman.
Unfortunately, since you’re often related to these people, you will eventually run into them at weddings and funerals. Dan Nainan keeps a short list of those who deserve tier-one support—like his agent or the superintendent of his NYC apartment building. The rest he sends to voice mail or redirects to actual tech support lines. “I find if you wait 24 hours the problem solves itself—or they’ve found some other sucker to fix it for them,” he says.
IT enemy No. 6: You/Me/Us
We have met the enemy and he is us, to quote Pogo’s Walt Kelly. When things go wrong with technology, IT people often have no one to blame but themselves.
“I’d say human nature is the primary ‘enemy’ of IT people,” says Vladimir Chernavsky, president of DeviceLock, provider of data leak prevention software. “We as humans can be reckless beings who don’t feel the need to follow protocols at all times. We can take things for granted, which will result in doing wrong or stupid things, creating havoc and annoyance for people working in IT.”
Scott Dunlap, author of “The Dung Beetle Manager,” says IT people can be their own worst enemies, in part due to both an excess of optimism and overconfidence in their own abilities.
“IT people want to say yes and they want to impress,” he says. “But what ends up happening is that, each time they try to circumvent normal procedures for deploying enterprise IT, they end up taking some shortcuts around some hard but necessary steps. Just like you can’t make a baby in four months, you can’t make IT work without following the right processes.”
Recognizing the enemy: Look in the mirror, my friend.
Your best defense: Return to boot camp. Discipline and training help IT pros avoid succumbing to their weaker natures, says Chernavsky. However, no matter how well trained you and your IT colleagues may be, you’ll still have to deal with users who aren’t, he adds.
“Adopt a disciplined process and hold to it as much as the physics and politics of your systems will allow,” advises Dunlap. “Anchor yourself to a good foundational systems-engineering and software-development process. That’s the only insurance you have against a lot of stuff getting out of hand.”
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