GRAPES OF WRATH – 2011

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Posted on 25th February 2012 by Administrator in Economy |Politics |Social Issues

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Oldie But Goodie

“And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands it is taken away. And that companion fact: when a majority of the people are hungry and cold they will take by force what they need. And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed.” – John SteinbeckGrapes of Wrath

 

John Steinbeck wrote his masterpiece The Grapes of Wrath at the age of 37 in 1939, at the tail end of the Great Depression. Steinbeck won the Nobel Prize and Pulitzer Prize for literature. John Ford then made a classic film adaption in 1941, starring Henry Fonda. It is considered one of the top 25 films in American history. The book was also one of the most banned in US history. Steinbeck was ridiculed as a communist and anti-capitalist by showing support for the working poor. Some things never change, as the moneyed interests that control the media message have attempted to deflect the blame for our current Depression away from their fraudulent deeds. The novel stands as a chronicle of the Great Depression and as a commentary on the economic and social system that gave rise to it. Steinbeck’s opus to the working poor reverberates across the decades. He wrote the novel in the midst of the last Fourth Turning Crisis. His themes of man’s inhumanity to man, the dignity and rage of the working class, and the selfishness and greed of the moneyed class ring true today.

Steinbeck became the champion of the working class. When he decided to write a novel about the plight of migrant farm workers, he took his task very seriously. To prepare, he lived with an Oklahoma farm family and made the journey with them to California. Seventy years later the plight of the working class is the same. If Steinbeck were alive today he would live with a Michigan auto manufacturing family making a journey to fantasyland of green energy, where automobiles ran on corn and sunshine. The working class bore the brunt of the Great Depression in the 1930s and they are bearing the burden during our current Greater Depression. Steinbeck knew who the culprits were seventy years ago. We know who the culprits are today. They are one in the same. The moneyed banking interests caused the Great Depression and they created the disastrous collapse that has thus far destroyed 7 million middle class jobs. Steinbeck understood that the poor working class of this country had more dignity and compassion for their fellow man than any Wall Street banker out for enrichment at the expense of the working class.

Okies and the Land of Milk & Honey

“How can you frighten a man whose hunger is not only in his own cramped stomach but in the wretched bellies of his children? You can’t scare him–he has known a fear beyond every other.” - John Steinbeck – Grapes of Wrath

  

The America of 1930 was different in many aspects from the America of 2011. The population of the U.S. was 123 million, living in 26 million households, or 4.7 people per household. Today the population of the U.S. is 310 million, living in 118 million households, or 2.6 people per household. The living and working structure of the country was dramatically different in 1930. The percentage of the population that lived in rural areas exceeded 40%, down from 60% in 1900, as the country rapidly industrialized. One quarter of the population still worked on farms. Today, less than 20% of Americans live in rural areas, while less than 2% live on farms. In 1935, there were 6.8 million farms in the U.S. Today there are 2.1 million farms. The family farm has been slowly but surely displaced by corporate mega-farms since the 1920s, with 46,000 farms now accounting for 50% of all farm production today.

figure 1 - both the U.S. farm population and rural population have dwindled as a share of the Nation's overall population

The sad plight of the American working farmer did not begin with the Stock Market Crash of 1929. The seeds of destruction were planted prior to and during World War I. Automation through technology allowed for more cultivation of land. Agricultural prices rose due to strong worldwide demand, leading farmers to dramatically increase cultivation. With food commodity prices soaring, farmers fell into the classic trap that McMansion buyers fell into from 2000 through 2006. Farmers took on huge amounts of debt to acquire more land and farming equipment as local banks were willing to feed their illusions with loans. It was a can’t miss proposition. Jim Grant in his book Money of the Mind: Borrowing and Lending from the Civil War to Michael Milken described the end result:

Like bull markets in stocks, the bull market in farmland engendered the belief that prices would rise forever. “Speculators who had no interest whatever in farming bought land for the 6 percent or 8 percent annual rise that seemed a certainty throughout the early years of the century…” The rise in farm prices had only begun. The price of wheat was 62 cents a bushel in 1900. It was 99 cents in 1909, $1.43 in 1916, and $2.19 at the peak in 1919. To put $2.19 in perspective, it was not a price seen again until 1947.

The collapse of prices in the early 1920s would have been devastating enough, but the damage was compounded by debt. By the summer of 1921, crop prices were down by no less than 85 percent from the postwar peak. Nebraskans, finding that corn had become cheaper than coal, burned it. As it does in every market, the fall in prices revealed the weaknesses in the structure of credit that had financed the rise.

Between 1919 and 1921, the number of banks that failed totaled 724, with only one of the largest, National City Bank, being bailed out by Washington DC. The heartland, where more than 40% of the population lived, did not participate in the Roaring Twenties. Wall Street and the urbanized Northeast experienced the rapid wealth accumulation during the 1920s. The working poor of the farm belt struggled to subsist. Land under cultivation continued to rise even after the bust of the early 1920s, tripling between 1925 and 1930. The land was over farmed and not properly cared for, depriving the soil of organic nutrients and increasing exposure to erosion. Then Mother Nature took her pound of flesh, much like she is doing today across the globe. 

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The Dust Bowl was a period of severe dust storms causing major ecological and agricultural damage to Midwest prairie lands from 1930 to 1936. The phenomenon was caused by severe drought coupled with decades of extensive farming without crop rotation, fallow fields, cover crops or other techniques to prevent erosion.Deep plowing of the virgin topsoil of the Great Plains had displaced the natural deep-rooted grasses that normally kept the soil in place and trapped moisture even during periods of drought and high winds. These immense dust storms—given names such as “Black Blizzards” and “Black Rollers”—often reduced visibility to a few feet. The Dust Bowl affected 100,000,000 acres, centered on the panhandles of Texas and Oklahoma.

Small farmers were hit especially hard. Even before the dust storms hit, the invention of the tractor drastically cut the need for manpower on farms. These small farmers were usually already in debt, borrowing money for seed and paying it back when their crops came in. When the dust storms damaged the crops, not only could the small farmer not feed himself and his family, he could not pay back his debt. Banks would then foreclose on the small farms and the farmer’s family would be both homeless and unemployed. Between 1930 and 1935, nearly 750,000 farms were lost through bankruptcy or sheriff sales.

Millions of acres of farmland became useless, and hundreds of thousands of people were forced to leave their lifelong homes. They set out on Route 66 toward the land of milk and honey – California. Hundreds of thousands of families traveled this lonely road during the 1930s.

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Many of these families, often known as “Okies”, since so many came from Oklahoma migrated to California and other states, where they found economic conditions little better during the Great Depression than those they had left. Owning no land, many became migrant workers who traveled from farm to farm to pick fruit and other crops at starvation wages. While the Great Depression affected all Americans, about 40% of the population was relatively unscathed. Not so for the “Okies”.

Californians tried to stop migrants from moving into their state by creating checkpoints on main highways called “bum blockades.” California even initiated an “anti-Okie” law which punished anyone bringing in “indigents” with jail time. While Steinbeck highlights the plight of migrant farm families in The Grapes of Wrath, in reality, less than half (43%) of the migrants were farmers. Most migrants came from east of the Dust Bowl and did not work on farms. By 1940, 2.5 million people had moved out of the Plains states; of those, 200,000 moved to California.

Man’s Inhumanity to Man

“It has always seemed strange to me… the things we admire in men, kindness and generosity, openness, honesty, understanding and feeling, are the concomitants of failure in our system. And those traits we detest, sharpness, greed, acquisitiveness, meanness, egotism and self-interest, are the traits of success. And while men admire the quality of the first they love the produce of the second.”John Steinbeck

 

Steinbeck’s novel was a national phenomenon. The book won Steinbeck the admiration of the working class, due to the book’s sympathy to the common man and its accessible prose style. It also got him branded a communist by the large California land barons and the non-stop harassment by J. Edgar Hoover and the IRS for most of his life. The book was lauded, debated, banned and burned. A book can only generate that amount of heat by getting too close to a truth that those in power do not want revealed. The Grapes of Wrath did just that. Steinbeck meant to pin the blame where it belonged:

“I want to put a tag of shame on the greedy bastards who are responsible for this [the Great Depression and its effects].”

The bankers who took their farms and cast them aside like a piece of trash, the Wall Street speculators who got rich by peddling debt to the working class, and the wealthy land barons who treated the migrant farm workers like criminals, were to blame for the suffering of millions. The pyramid of wealth was as unequal in 1929 as it is today. Unequal wealthThe 1% of the population at the very top of the pyramid had incomes 650% greater than those 11% of Americans at the bottom of the pyramid. The tremendous concentration of wealth in the hands of a few meant that continued economic prosperity was dependent on the high investment and luxury spending of the wealthy.

By 1929, the richest 1% owned 40% of the nation’s wealth. The top 5% earned 33% of the income in the country. The bottom 93% experienced a 4% drop in real disposable income between 1923 and 1929. The middle class comprised only 20% of all Americans. Society was skewed heavily towards the haves. By 1929, more than half of all Americans were living below a minimum subsistence level. Those with means were taking advantage of low interest rates by using margin to invest in stocks. The margin requirement was only 10%, so you could buy $10,000 worth of stock for $1,000 and borrow the rest. With artificially low interest rates and a booming economy, companies extrapolated the good times and invested in huge expansions. During the 1920s there were 1,200 mergers that swallowed up more than 6,000 companies. By 1929, only 200 mega-corporations controlled over half of all American industry. The few were enriched, while the many wallowed in poverty and despair.

When self proclaimed experts on the Great Depression, like Ben Bernanke, proclaim that the Federal Reserve contributed to the Depression by not expanding the monetary supply fast enough, they practice the art of the Big Lie.  The Great Depression was mainly caused by the expansion of the money supply by the Federal Reserve in the 1920’s that led to an unsustainable credit driven boom. Both Friedrich Hayek and Ludwig von Mises predicted an economic collapse in early 1929.  In the Austrian view it was this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and capital goods. Ben Strong, the head of the Federal Reserve, attempted to help Britain by keeping interest rates low and the USD weak versus the Pound. The artificially low interest rates led to over investment in textiles, farming and autos. In 1927 he lowered rates yet again leading to a speculative frenzy leading up to the Great Crash. The ruling elite of society were the Wall Street speculators. Only 1.5 million people out of an entire population of 127 million invested in the stock market. Margin loans increased from $3.5 billion in 1927 to $8.5 billion in 1929. Stock prices rose 40% between May 1928 and September 1929, while daily trading rose from 2 million shares to 5 million shares per day. By the time the Federal Reserve belatedly tightened in 1928, it was far too late to avoid a stock market crash and depression.

The Federal Reserve was created by bankers to benefit bankers. The Federal Reserve purchased $1.1 billion of government securities from February to July 1932, which raised its total holding to $1.8 billion. Total bank reserves only rose by $212 million, but this was because the American populace lost faith in the banking system and began hoarding more cash, a factor very much beyond the control of the Central Bank. The potential for a run on the banks caused local bankers to be more conservative in lending out their reserves, and was the cause of the Federal Reserve’s inability to inflate. From its backroom middle of the night creation in 1913, the bank owned Federal Reserve has sought to benefit its owners, the large Wall Street banking interests and its politician protectors in Congress. The working class has always been nothing more than hosts used by the parasites to tax and peddle debt to.

Income and wealth inequality reached a new peak in 2007, the highest level of inequality since 1929. William Domhoff details this inequality in the following terms:

In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one’s home), the top 1% of households had an even greater share: 42.7%.

Source: Domhoff

Real median household income in the U.S. is $49,777 today. It was $52,388 in 1999 before George Bush took office. This is a 5% decline over ten years. Even more disturbing is the fact that the top 20% of households showed real increases in income. The bottom 50% lost income during the last ten years, with the bottom 20% losing 8% of income over this time frame. No wonder there is so much anger among the working middle class in the country regarding the bailout for the top 1%. Sixty million households make less today than they made 10 years ago. The policies of the Federal Reserve over the last ten years have benefitted speculators and punished seniors, savers and the working middle class. Every policy, program and regulation rolled out by the Federal Reserve in the last three years has been to prop up, enrich, and support their Too Big To Fail Wall Street owners. The middle class American working family is Too Small To Matter.

Steinbeck presciently realized that the suffering of the working class was not due to bad weather, bad luck, or the actions of the working class. It was caused by the rich ruling elite wielding their power and influence across the land in their effort to enrich themselves by any means necessary. Historical, social, and economic circumstances separate people into rich and poor, landowner and tenant, and the people in the dominant roles struggle viciously to preserve their positions. During the Great Depression it was the brokers, bankers and businessmen who maintained a dominant role, while farmers, workers, and the common man were treated like dogs. Steinbeck used this symbolism by having the Joad’s family dog be run over by a rich person driving a fancy roadster early in the novel. Steinbeck saw the large California landowners as the epitome of the evil Haves. The landowners created a system in which the migrants were treated like animals, shuffled from one filthy roadside camp to the next, denied livable wages, and forced to turn against their brethren simply to survive.

Steinbeck’s world was black and white, good and evil, rich and poor. Today, the corporate mainstream media would brand him a anti-capitalist, socialist crackpot. Those in control want to keep the masses lost in shades of grey. In the 1930s it was clearer regarding who was to blame. The social safety net of New Deal programs from FDR had just begun. At the time, I’m sure they seemed like a good idea to ease the suffering of the poor. In reality, they did little to help, as the unemployment rate was still 18% in 1939, ten years after the Depression began. These programs, along with hundreds implemented since the 1930s, have created a dependent underclassand have left America with unfunded liabilities in excess of $100 trillion. The rich use the 70,000 page IRS tax code to avoid taxes. They use their wealth to buy influence in Washington DC, rigging the game in their favor. The bottom 50% of the population pays no income taxes. The working middle class, with declining real incomes, foot the bill. They are bamboozled into believing they can live like the rich by a financial industry willing to lie, obfuscate and defraud them. Corporate superstar CEOs, fawned over by the corporate media, outsourced their good paying middle class jobs to foreign lands, boosting EPS, their stock price and their mega-million bonuses. This may not look like the 1930s, but it is worse for millions of American working middle class families.  

The Dignity of Wrath

“…and in the eyes of the people there is the failure; and in the eyes of the hungry there is a growing wrath. In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage.”  - John Steinbeck - Grapes of Wrath

 

Steinbeck’s feelings about the people he was writing about can be summed up in this passage:

“If you’re in trouble, or hurt or need – go to the poor people. They’re the only ones that’ll help – the only ones.”

The Joads refuse to be broken by their circumstances. They maintain their dignity, honor and self respect, despite the trials and tribulations that befall them. Hunger, tragic death, and maltreatment by the authorities do not break their spirit. Their dignity in the face of tragedy stands in contrast to the vileness of the rich landowners and the cops that treated the migrant workers like criminals.

No matter how much misfortune and degradation are heaped upon the Joads, their sense of justice, family, and honor never waver. Steinbeck believed that as long as people maintained a sense of injustice—a sense of anger against those who sought to undercut their pride in themselves—they would never lose their dignity. Tom Joad is the symbol of all the mistreated working poor who refuse to be beaten down. The landowners and the police are the oppressors. Tom kills a policeman in a struggle for the dignity of the workers. Tom’s farewell to his Ma, captures the essence of the struggle:

“Wherever they’s a fight so hungry people can eat, I’ll be there. Wherever they’s a cop beatin’ up a guy, I’ll be there. If Casy knowed, why, I’ll be in the way guys yell when they’re mad an’—I’ll be in the way kids laugh when they’re hungry n’ they know supper’s ready. An’ when our folks eat the stuff they raise an’ live in the houses they build—why, I’ll be there.” – Tom Joad – Grapes of Wrath

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Steinbeck’s wrath was directed towards the bankers who stole the farms, the California landowners that treated the workers like vermin, and the police who sided with the wealthy and carried out the brutality on the workers. Tom Joad’s anger and wrath toward those who meant to make them cower is portrayed powerfully in this passage:

“I know, Ma. I’m a-tryin’. But them deputies- Did you ever see a deputy that didn’t have a fat ass? An’ they waggle their ass an’ flop their gun aroun’. Ma”, he said, “if it was the law they was workin’ with, why we could take it. But it ain’t the law. They’re a-working away at our spirits. They’re a-tryin’ to make us cringe an’ crawl like a whipped bitch. They’re tryin’ to break us. Why, Jesus Christ, Ma, they comes a time when the on’y way a fella can keep his decency is by takin’ a sock at a cop. They’re working on our decency”.”

Today, Steinbeck’s wrath would be focused upon Wall Street Mega-Banks, Mega-Corporations and the politicians that allow them to pillage the wealth of the nation. Droughts, foreclosures and technology drove millions of farmers into the cities during the 1930s and it accelerated with the onset of World War II. America became manufacturer to the world, with manufacturing accounting for over 28% of GDP in the mid-1950s. The business of banking, insurance and real estate accounted for less than 11% of GDP.  

  

Since the adoption of the credit card on a large scale in the late 1960′s, the role of bankers and debt in our society has grown relentlessly and recklessly. The point of no return occurred in the mid-1980′s when the financial sector passed the manufacturing sector in relative importance for our economy. Today, banker generated profits from peddling debt to the middle class, creating derivatives to defraud widows and pension funds, and running their institutions like leveraged casinos on steroids account for 21.5% of GDP. Manufacturing profits now account for a pitiful 11.2% of GDP, as the CEO titans of industry at General Electric, Hewlett Packard, Intel, and Apple shipped the manufacturing jobs to Asia in a noble effort to boost earnings per share and reward themselves with $30 million pay packages.   

Source: www.mybudget360.com

Total U.S. debt as a percentage of GDP was remarkably stable at approximately 130% for three decades, while financial profits as a percentage of GDP consistently ranged just below 1%. The ascension of Alan Greenspan to the throne of the Federal Reserve unleashed a dust storm of debt and banking profits over the last 25 years. Total credit and financial industry profits each grew by more than 250%. Real wages of middle class workers are lower today than they were in 1971. Since the higher paying manufacturing jobs were shipped overseas, Wall Street stepped into the breach by providing trillions of debt to the average American so they could buy stuff being produced in China by people who took their jobs. Wall Street and the corporate media convinced middle class Americans that their standard of living was increasing upon the waves of debt. The godfather, Greenspan, watched over and protected the big banks. When they screwed up in their efforts to pillage and plunder on a grand scale, the godfather would reduce interest rates and flood the system with liquidity. Heads they win, tails America loses.  

Source: Barry Ritholtz

The powerful Wall Street banks were un-refrained, unregulated and unscrupulous in their unquenchable looting and ransacking of the wealth of the American public. The Federal Reserve provided the fuel and Congress lit the fuse with the repeal of Glass-Steagall, ultimately leading to the biggest financial explosion in world financial history in 2008. The financial crisis was created by the biggest Wall Street banks and the policies of the Federal Reserve. It is a tribute to their monetary power, complete capture of the mainstream media, and total ensnarement of the corrupt politicians in Washington DC, that somehow the Too Big To Fail banks are bigger than they were before the crisis. The working middle class has footed the bill for the trillions that have been shoveled into the coffers of these criminal enterprises. As a reward, the savers receive .25% on their savings. These men have put 8.5 million people out of work in the last three years. Steinbeck understood that bankers who foreclosed on the homes of poor farmers and fed the speculation that led to the Great Crash were nothing more than extensions of an evil monster:

“No, you’re wrong there—quite wrong there. The bank is something else than men. It happens that every man in a bank hates what the bank does, and yet the bank does it. The bank is something more than men, I tell you. It’s the monster. Men made it, but they can’t control it.”

The bankers that control our economy today deserve the same scorn and wrath that Steinbeck heaped on bankers and California landowners in the 1930′s. Jesse, from Jesse’s Café Americain captures the wrath in this assessment of our current state of affairs:

“The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery. All else is looting and folly, with apathy and complacent self-interest as their accomplices.”

Selfishness & Altruism

I ain’t never gonna be scared no more. I was, though. For a while it looked as though we was beat. Good and beat. Looked like we didn’t have nobody in the whole wide world but enemies. Like nobody was friendly no more. Made me feel kinda bad and scared too, like we was lost and nobody cared…. Rich fellas come up and they die, and their kids ain’t no good and they die out, but we keep on coming. We’re the people that live. They can’t wipe us out, they can’t lick us. We’ll go on forever, Pa, cos we’re the people. – Ma Joad - Grapes of Wrath

The power elite that believe they can control the masses as puppet master commands a puppet should beware. The wrath of the masses can be fierce and sudden. Ask Hosni Mubarak. As Steinbeck realized many decades ago, selfishness run amok, supported and encouraged by the authorities lead to poverty, despair and sometimes revolution. The false mantra of an economy based on self-interest and free markets is a smokescreen blown by the few with wealth and power to obscure the truth that they have used their wealth and power to rig the game in their favor. The have-nots can dream about becoming a have, but the chances of achieving that dream today are miniscule. Steinbeck pointedly distinguishes between the selfishness of the moneyed class and the altruism of the working poor. In contrast to and in conflict with this policy of selfishness stands the migrants’ behavior toward one another. Aware that their livelihood and survival depend upon their devotion to the collective good, the migrants unite—sharing their dreams as well as their burdens—in order to survive. 

Those in control need to keep the masses divided. They need Americans to be distracted by phantom terrorist threats, inconsequential political differences, American Idol, Charlie Sheen, Lindsey Lohan and Lady Gaga. They need Americans to be focused on “I”. Their greatest fear is that the American people realize that “We” can change the direction of this country and bring the perpetrators of crimes against the people of this country to justice. John Steinbeck saw the potential power of the common man if they became “We”:  

One man, one family driven from the land; this rusty car creaking along the highway to the west. I lost my land, a single tractor took my land. I am alone and bewildered. And in the night one family camps in a ditch and another family pulls in and the tents come out. The two men squat on their hams and the women and children listen. Here is the node, you who hate change and fear revolution. Keep these two squatting men apart; make them hate, fear, suspect each other. Here is the anlarge of the thing you fear. This is the zygote. For here “I lost my land” is changed; a cell is split and from its splitting grows the thing you hate–”We lost our land.” The danger is here, for two men are not as lonely and perplexed as one. And from this first “we” there grows a still more dangerous thing: “I have a little food” plus “I have none.” If from this problem the sum is “We have a little food,” the thing is on its way, the movement has direction. Only a little multiplication now, and this land, this tractor are ours. The two men squatting in a ditch, the little fire, the side-meat stewing in a single pot, the silent, stone-eyed women; behind, the children listening with their souls to words their minds do not understand. The night draws down. The baby has a cold. Here, take this blanket. It’s wool. It was my mother’s blanket–take it for the baby. This is the thing to bomb. This is the beginning–from “I” to “we.” - John Steinbeck - Grapes of Wrath

 

The American people have a choice. They can continue on a course of apathy, selfishness and worship of mammon, or they can rally together with selflessness and concern for the welfare of their fellow man and future unborn generations. The current path, forged by a minority of privileged wealthy elite, will lead to the destruction of this country and misery on an unprecedented scale. It is up to each of us to show the courage of John Steinbeck, who without a thought for himself, stood up against the stones of condemnation, and spoke for those who were given no real voice in the halls of justice, or the halls of government. By doing so he became an enemy of the political status quo. Are you prepared to incur the wrath of the vested interests and meet their lies and propaganda with the fury of your own wrath in search for the truth? These men are sure you don’t have the courage, fortitude and wrath to defeat them.

 

Mine eyes have seen the glory of the coming of the Lord:
He is trampling out the vintage where the grapes of wrath are stored;
He hath loosed the fateful lightning of His terrible swift sword:
His truth is marching on.

- Battle Hymn of the Republic



ISRAEL TO ATTACK IRAN?

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Posted on 17th July 2011 by Administrator in Economy |Politics |Social Issues

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Zero Hedge with a very disturbing article. This would fit nicely into the Fourth Turning storyline.

I really want to know SSS’ opinion about Robert Baer. Did he know him? Are his warnings credible? Is he just looking for publicity or is he trying to stop a terrible event from happening?

If Israel is foolish enough to start a war, oil prices will set records and destroy our economic house of cards.

CVN 77 G.H.W. Bush Enters Persian Gulf As CIA Veteran Robert Baer Predicts September Israel-Iran War

Tyler Durden's picture

Submitted by Tyler Durden on 07/17/2011 16:02 -0400

One look at the most recent naval update maps shows that in addition to global insolvency (courtesy of the broke European dominoes and a potentially technically broke US), a UK on the verge of a parliamentary scandal courtesy of a media baron whose empire is crumbling, and not to mention yet another downward inflection point in the global economic slowdown courtesy of the end of QE2 and no replacement yet, market watchers may have to start factoring in geopolitical risk yet again. While the fact that Syria, Yemen, Egypt, Tunisia, and now Turkey, are ever more increasingly on edge is apparently something Mr. Market has managed to internalize, when it comes to geopolitics everyone stops to listen when renewed Iran-Israel rumblings reappear. Which may just be the case. As the most recently updated naval map from Stratfor demonstrates, the CVN 77 G.H.W. Bush has just entered the Persian Gulf, the first time a US aircraft carrier has passed through the Straits of Hormuz in months. What is also notable is that the LHD 5 Bataan amphibious warfare ship has just weighed anchor right next to Libya: this is odd since the coast of Tripoli had been left unattended for many weeks by US attack ships. And topping it all off is that a third aircraft carrier, the CVN 73, is sailing west from the South China seas, potentially with a target next to CVN 76 Ronald Reagan which is the second carrier in the Straits of Hormuz area. Three carriers in proximity to Iran would be extremely troubling, yet fit perfectly with the story of CIA veteran Robert Baer, the man played by George Clooney in Syriana, who as Al Jazeera reports, appeared on KPFK Los Angeles, warning that Israeli PM Netanyahu is “likely to ignite a war with Iran in the very near future.” It gets worse: “Masters asked Baer why the US military is not mobilising to stop this war from happening. Baer responded that the military is opposed, as is former Secretary of Defense Robert Gates, who used his influence to thwart an Israeli attack during the Bush and Obama administrations. But he’s gone now and “there is a warning order inside the Pentagon” to prepare for war.” The punchline: “There is almost “near certainty” that Netanyahu is “planning an attack [on Iran] … and it will probably be in September before the vote on a Palestinian state. And he’s also hoping to draw the United States into the conflict“, Baer explained.” For the betting public out there, an September CL call may not be the dumbest trade possible…

First, the naval update per Stratfor:

And, courtesy of Al Jazeera and Haaretz, the full take from Robert Baer:

Earlier this week, Robert Baer appeared on the provocative KPFK Los Angeles show Background Briefing, hosted by Ian Masters. It was there that he predicted that Israeli Prime Minister Binyamin Netanyahu is likely to ignite a war with Iran in the very near future.

Robert Baer has had a storied career, including a stint in Iraq in the 1990s where he organised opposition to Saddam Hussein. (He was recalled after being accused of trying to organise Saddam’s assassination.) Upon his retirement, he received a top decoration for meritorious service.

Baer is no ordinary CIA operative. George Clooney won an Oscar for playing a character based on Baer in the film Syriana (Baer also wrote the book).

He obviously won’t name many of his sources in Israel, the United States, and elsewhere, but the few he has named are all Israeli security figures who have publically warned that Netanyahu and Defense Minister Ehud Barak are hell-bent on war.

Most former Mossad chiefs wary of Netanyahu

Baer was especially impressed by the unprecedented warning about Netanyahu’s plans by former Mossad chief Meir Dagan. Dagan left the Israeli intelligence agency in September 2010. Two months ago, he predicted that Israel would attack and said that doing so would be “the stupidest thing” he could imagine. According to Haaretz:

When asked about what would happen in the aftermath of an Israeli attack Dagan said that: “It will be followed by a war with Iran. It is the kind of thing where we know how it starts, but not how it will end.”

The Iranians have the capability to fire rockets at Israel for a period of months, and Hizbollah could fire tens of thousands of grad rockets and hundreds of long-range missiles, he said.

According to Ben Caspit of the Israeli daily Maariv, Dagan’s blasts at Israel’s political leadership are significant not only because Mossad chiefs, in office or retired, traditionally have kept their lips sealed, but also because Dagan is very conservative on security matters.

Caspit writes that Dagan is “one of the most rightwing militant people ever born here. … When this man says that the leadership has no vision and is irresponsible, we should stop sleeping soundly at night”.

Dagan describes the current Israeli government as “dangerous and irresponsible” and views speaking out against Netanyahu as his patriotic duty.

And his abhorrence of Netanyahu is not uncommon in the Israeli security establishment. According to Think Progress, citing the Forward newspaper, 12 of the 18 living ex-chiefs of Israel’s two security agencies (Mossad and Shin Bet), are “either actively opposing Netanyahu’s stances or have spoken out against them”. Of the remaining six, two are current ministers in Netanyahu government, leaving a grand total of four out of 18 who independently support the prime minister.

In short, while Congress dutifully gives Netanyahu 29 standing ovations, the Israelis who know the most about both Netanyahu and Israel’s strategic situation think he is a dangerous disaster.

But according to Baer, we ain’t seen nothing yet.

There is almost “near certainty” that Netanyahu is “planning an attack [on Iran] … and it will probably be in September before the vote on a Palestinian state. And he’s also hoping to draw the United States into the conflict”, Baer explained.

The Israeli air force would attack “Natanz and other nuclear facilities to degrade their capabilities. The Iranians will strike back where they can: Basra, Baghdad”, he said, and even Afghanistan. Then the United States would jump into the fight with attacks on Iranian targets. “Our special forces are already looking at Iranian targets in Iraq and across the border [in Iran] which we would strike. What we’re facing here is an escalation, rather than a planned out-and-out war. It’s a nightmare scenario. We don’t have enough troops in the Middle East to fight a war like that.” Baer added, “I think we are looking into the abyss”.

Another US war?

Masters asked Baer why the US military is not mobilising to stop this war from happening. Baer responded that the military is opposed, as is former Secretary of Defense Robert Gates, who used his influence to thwart an Israeli attack during the Bush and Obama administrations. But he’s gone now and “there is a warning order inside the Pentagon” to prepare for war.

It should be noted that the Iranian regime is quite capable of triggering a war with the United States through some combination of colossal stupidity and sheer hatred. In fact, as Baer explained, the Iranian Revolutionary Guard would welcome a war. They are “paranoid”. They are “worried about … what’s happening to their country economically, in terms of the oil embargo and other sanctions”. And they are worried about a population that increasingly despises the regime.

They need an external enemy. Because we are leaving Iraq, it’s Israel. But in order to make this threat believable, they would love an attack on their nuclear facilities, love to go to war in Bahrain and Saudi Arabia and Iraq and hit us where they could. Their defense is asymmetrical. We can take out all of their armored units. It’s of little difference to them, same with their surface-to-air missile sites. It would make little difference because they would use terrorism. They would do serious damage to our fleet in the Gulf.

Given all that, is it possible that the United States would allow Israel to attack when the president knows we would be forced to join the war on Israel’s side?

“The president is up for re-election next year,” Blair pointed out, and Israel is “truly out of control”.

What happens when you see 100 F-16′s approaching Iraq and there is a call to the White House [from Netanyahu] that says “We’re going in, we’re at war with Iran”? What does the President of the United States do? He has little influence over Bibi Netanyahu. … We can’t stop him. And he knows it.

It’s a pretty frightening scenario, made infinitely more so by the fact that top Israelis (who have heard Netanyahu’s thinking from Netanyahu himself) also see the future the same way. Those Israelis deserve a world of credit for sounding the warning bell loudly enough that we would hear it and do something about it – although it’s impossible to know if the people who matter are paying attention.

Actually, only one person matters: the US president. If Israel bombed Iran tomorrow, Congress would forget all about their partisan differences and run, not walk, to the House and Senate floors to endorse the attack and call for unstinting support for Israel. That is what Congress always does, and will always do so long as the lobby (and the donors it directs) are the key players in making our Middle East policies.

And who knows what Obama would do? So far, he has not exactly distinguished himself when it comes to standing up to Netanyahu.

But an Israeli attack on Iran would be different. It would endanger countless Americans (in the region and here at home, too). It would kill off any economic recovery by causing oil prices to skyrocket. It would engulf us in another Middle East war. And it would threaten the existence of the state of Israel.

This is something the president needs to focus on instead of being forced to nickel and dime with the likes of Representative Eric Cantor and Senator Mitch McConnell. How incredible that these two, and their right-wing allies, have our government tied in knots in their incessant effort to elevate themselves by destroying the President of the United States. It is sickening.

h/t devaang

IKEA – MY STORY

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Posted on 5th February 2011 by Administrator in Economy |Politics |Social Issues

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When I started this post I was just planning to talk about the article below and my knowledge of IKEA’s tax strategy. But, as I started writing it became my life story at IKEA. The memories came pouring out. When you spend 14 years giving your heart and soul to an organization, there are a lot of fond memories and a bitter ending. I hope you find it interesting. It meanders around because I kept remembering things that I inserted as I went along.

I guess it is cool that the 11th richest man on earth changed the course of my life 7 years ago. Only, it still eats away at me. Let’s get to the whole sordid story.

Another IKEA expose on Swedish television this week. They’ve “discovered” that IKEA tries to avoid taxes. No kidding. Every corporation in the world tries to avoid taxes. The story also notes the fact that the stores are designed to confuse shoppers and keep them trapped in the store. Wow!!! These journalists are sharp. The longer someone stays in a store, the more money they are likely to spend. What do they think the kid’s ball room and the restaurant were there for? The funniest part of the article is the rehashing of Ingvar Kamprad being a Nazi. I was there in 1993 when the info was revealed. The funniest part of Ingvar being a Nazi was that he joined the Swedish Nazi Party in 1945, AFTER EVERYONE KNEW THAT THE NAZIS HAD MURDERED 6 MILLION JEWS. His excuse was that it was a youthful indiscretion. He was 20 years old in 1945 and remained in the Party until the early 1950s.

I know everything there is to know about IKEA’s tax strategy. I was hired by IKEA in 1989, a bright eyed and bushy tailed 25 year old. The company had only been in the US since 1985 and its revenues were less than $80 million. I was hired as Financial Reporting Manager/Tax Manager/Whatever Needed To Be Done Guy. We were a lean organization. There was one copy of Lotus 123 on one computer in the whole office. I was in that role for 4 years and then became Treasurer, still with responsibility for taxes. So, I became quite knowledgeable about IKEA’s tax structure and chipped in with a few creative ideas.

My boss, Mike, was the CFO. I worked under 4 CEO’s in my 14 years at IKEA. The first was Bjorn, Ingvar’s nephew. He was a drunk. But, he was a likeable drunk. The CFO wouldn’t let Bjorn see the financial results. You could find him at lunchtime in the Plymouth Meeting Mall bar having a drink or three. IKEA was the most politically incorrect place you could imagine when I started there. The Swedes were notorious for screwing around. There were affairs happening all over the office. The site for the 1st store was selected because the dude they sent over from Sweden liked the school district near the site for his daughter. It was like the Wild West. My boss was the biggest practical joker of all-time. The Swedes had a cruel sense of humor. When you turned 40, they would be unmerciless. Bjorn lived in Phoenixville. When he turned 40, my boss took out a full page ad in the Phoenixville newspaper announcing a 40th birthday party at Bjorn’s house with free beer and food for anyone who would like to attend. Bjorn’s house was inundated with biker types, as most of Phoenixville was on a lower income scale.

The stories about Ingvar and IKEA being cheap skinflints is absolutely true, in one sense. When Ingvar came to our offices he stayed at the George Washington Motor Lodge across the street from the Plymouth Meeting Mall. This may have been the crappiest motel on earth. The joke in our office was that before entering one of their rooms you should rattle your keys so the cockroaches would scatter. This billionaire would then walk to our offices. It was true that he was cheap, but other stories showed him to be a bit of a fraud. He lived in Switzerland and the Swiss IKEA organization decided to buy him a new Volvo car. He was surprised and delighted at the gift, but one problem. It was too ostentatious for him. It had power windows. He thought that was too much, so he requested that they replace it with one that had roll down windows. It seems Volvo had stopped making cars with roll down windows. No one told Ingvar, but Volvo made him a special car with roll down windows for a substantial added cost to the Swiss IKEA organization. He also owns great works of art, vineyards, ski resorts, yada, yada, yada. He ain’t living a pauper’s life.

We always flew coach. We were told to fly on our own time. We stayed in some of the dumpiest hovels the world has ever seen. The Best Western was an upscale hotel for us. We would work at the grand openings of our stores for one week, but we had to double up in the hotel rooms. For the Pittsburgh opening, I had to share a room with our Internal Audit manager at a Red Roof Inn. He snored like a freight train. It was a long week. IKEA was very much a family in those days. Our spouses were invited to work at the IKEA Elizabeth grand opening. Avalon and I got to work 12 hours a day and then stay at the Holiday Inn Newark at night. Lots of drinking, partying and crazyness. We’ll never forget it.

We’ll also never forget our two week adventure across Europe in 1991. Mike wanted me to visit the corporate offices in Humlabaek, Denmark and the heart of IKEA in Almhult, Sweden. Avalon and I had never ventured much farther than the Jersey Shore in our entire lives. We decided to tack on a 2nd week to my trip and take trains to Amsterdam and Brussels. On a map, they looked pretty close. We booked the flights, hotels, and trains and off we went on our adventure of a lifetime. It was the middle of summer and we left my car in the IKEA office parking lot and got a Shuttle to Newark Airport for our flight to Copenhagen. I had never driven a car with a stick shift in my life, so I requested an automatic when I booked my car for Copenhagen. Little did I know, but 95% of the cars in Denmark are stick. It was well known that everyone at the corporate off ice drove crappy old cars as a badge of honor (their Porsches were in their garages at home). When we arrived in Copenhagen the lady at the car desk handed me the keys and we went outside to find our car. To my horror, there was a beautiful huge shiny Jaguar in my spot. It was the only automatic transmission they had. We spent the weekend in Copenhagen. It is a beautiful place. We loved it. Monday we headed up the coast to the head office. I pulled in to the parking lot and parked as far away from the entrance as possible. No one saw me. After two days, it looked like I would avoid detection. It was now onto Almhult. We needed to drive our car on a ferry to Sweden and then drive to Almhult. It just so happened that Hannu, the worldwide Treasurer, was going to Almhult and offered to let us follow him. My heart went into my throat. He drove a dumpy 10 year old Volvo station wagon. I pulled behind him in my 1 year old Jaguar. We drove onto the ferry and parked. He got out of his car and with a huge smile on his face walked up to my window, looking my car up and down, and said in his Finnish accent, “Yim in a Yag”. Translation – Jim in a Jag. The cat was out of the bag. Phone lines from Denmark to the US were burning up. Practical jokes and abuse were heaped on me for years. Fake memos about my car choice were produced.

Eventually, Avalon and I got to the train portion of our adventure. The train rides were much longer and more uncomfortable than we envisioned. We had a great time in Amsterdam wandering that decadent place. Brussels had the best food we ever tasted. Bruges was a fascinating look into the past. But, being a clueless moron, I had booked our return flight from Copenhagen rather than Brussels. We needed to take a 12 hour train ride from Brussels back to Copenhagen to catch our flight home. That was bad enough, but we didn’t read Flemish very well, so we accidently got on the wrong train headed into the mountains of Belgium. The conductor barely spoke English. We were stuck at train station in the Belgian mountains waiting for another train. The train got to Copenhagen 1 hour before our flight home to Newark. We grabbed a cab and told him to floor it. The people at the airport said we’d have to make a run for it. Our terminal seemed like miles away. We did our best OJ Simpson impressions running through the airport and made it just as they were closing the doors. We had been awake for 15 hours on trains and must have smelled pretty ripe. Now another 8 hours across the Atlantic. Our luggage didn’t make it. Once in Newark we had to take a shuttle back to Plymouth Meeting. This was another 3 hours as they had to drop people off. Eventually, after about 30 hours of travel with virtually no sleep, we got back to the IKEA offices. As we dragged ourselves to my car, lo and behold, Mike my boss had shrink wrapped my entire car in the middle of the summer. The sun and heat had practically melted it solid. He had also accidently broken my side view mirror in the process. I was not a happy camper. But, it makes a good story in retrospect.

Now back to the main story.

Bjorn was replaced by Goran, a douchebag from Volvo. He was a pompous egotistical asshole. After 3 years he was eventually kicked upstairs to Europe and replaced by Jan. He was the best CEO I’ve ever had the privilege to work for.

He didn’t have an ego. He listened. He trusted the opinions of his lieutenants. He was a good person. He had a good sense of humor. And he managed the company to a $100 million profit on $600 million in revenue. When Jan left, the company went into the toilet. The morons in Europe felt they needed a diversity CEO. They promoted Pernille from HR Manager (HR was a joke) to CEO. She was the most clueless shrew to ever hold the title of CEO. She ran the company into the ground, eventually generating nice sized losses before being canned. Not before running me and many others out of the company.

But, back to the point of the story – IKEA’s tax strategy. I learned early on that Ingvar hated taxes. It was well known within the company that the entire structure of the company was to avoid taxes. It was owned by a charitable foundation. We all knew the foundation was a joke. Supposedly, Ingvar lived in Switzerland and had nothing to do with the retail organization. In reality, the European CEO was a figurehead and Ingvar called all the shots. There was a Treasury center in Brussels and other entities in Ireland. There was our own insurance company. All of these entities existed to take advantage of tax loopholes. It was a brilliant strategy.

The beauty of the setup was that the income could be generated in low tax jurisdictions and losses generated in high tax jurisdictions. In the US we had IKEA Retail, IKEA Wholesale, IKEA Property, IKEA Services, and IKEA Trading. As the goods were sourced and sold to the US entities, various “FEES” were paid. A franchise fee of 3%, product development fees of 5.5%, sourcing fees of 2%, interest on intercompany loans, manangement services fees of a couple million per year. In the early 1990′s we were losing $30 million per year and we just happened to be paying about $30 million per year to various foreign IKEA entities.

In my 3rd year we received notice that the IRS was going to audit the US operation. Ingvar’s right hand man, Hans, the architect of the legal structure got myself and my boss on the phone and warned us that we better not lose in the IRS audit. I felt the pressure. The clods from the IRS were in our offices for over a year and I convinced them that every fee, charge, and markup was legitimate. My star rose in Sweden.

As a side note, besides being responsible for our corporate tax returns, I also took care of the personal returns for all the Swedish executives. IKEA paid to have all the tax returns done for the foreign transferees. The funniest incident occurred with our architect Nils, who sometimes makes a comment or two on TBP. Peat Marwick handled our tax returns. After completing the tax returns, they would send a packet to the employee with a copy to keep and a copy to file. One day Nils came to my desk with a notice from the IRS saying he had not filed his tax return. I was confused because I know Peat Marwick had completed the return. I followed Nils to his desk. He pulled out the packet and both returns were still there. I asked him why both returns were still in the packet. He said that he read the words FILING COPY to mean that he should file it in his drawer. The IRS was not amused with our explanation, but they did waive the penalties.

I got creative while I was Treasurer. The US entities were originally incorporated in Pennsylvania. I researched the benefits of Delaware and convinced my boss to set up a Delaware Holding Company and incorporate all the entities in Del. We funneled all the intercompany loans through the Delaware Holding Company eliminating the taxes on interest in the US. We had the Property company charge enough rent to the Retail company so that the Retail company wouldn’t generate a profit. Without breaking any laws we were able to eliminate millions in state taxes. To give this whole sham some substance, we needed to have a real office in Delaware. Wilmington Trust was in the business of leasing out fake offices to all the Fortune 500 companies. For about $20,000 per year, you got a itsy bitsy office on one of their floors, a phone number, and if someone called the number, the one secretary on the floor would answer it as IKEA. The Gap had the office next to ours. To give it more substance, I grabbed Alan & Arn from the office and we trucked down some crappy white furniture from the store and spent a morning building it with our allen wrenches.

There were various other tax deals we did. Our Elizabeth, NJ store was built on a toxic waste dump, so they gave us a sales tax reduction. Whenever something orange would start bubbling up from the site, we’d cover it up and dig someplace else. The light poles vent methane gas. We financed this building with a REMIC that saved us millions in taxes over 10 years.

So yes, IKEA does avoid taxes, just like every corporation in the world.

Now onto the final chapter of how the 11th richest man on earth inadvertantly ended my career with IKEA. My 3rd role at IKEA was Real Estate Controller/Strategic Planning. IKEA decided to launch a massive expansion plan in the US and Canada starting in 1998 with the Schaumburg store in Chicago. My job was to control the billions that were being spent, figure out where to put the  stores, figure out what the sales would be, figure out the profitability and ROI for each project, and sell each project to the head honchos in Europe. I had the time of my life, for awhile.

The camaraderie from 1998 through 2002 was the best I’ve ever seen. We were a well oiled machine. I handled the numbers and my opinion was respected and listened to. We had great team building adventures in Banff Canada where my first time skiing was on the Olympic downhill  at Lake Louise. During this same trip, we went on dog sleds. I watched as our Construction manager knocked Mike off the sled and down a hill. Watching my 260 pound boss chasing a dog sled while making sure his pants didn’t fall down was a priceless sight. It was during this time frame when Ingvar announced that on an upcoming Saturday, the worldwide employees of IKEA would equally share the sales for the entire day. Not profits, but sales. This would benefit the lowest paid employees the most. Everyone in the main office went out to a store. I spent the day in Elizabeth NJ pushing carts for 12 hours. Every employee received a check for $2,300. Morale was at an all-time high.

Then something started to go off course. The CEO in Europe was convinced that a concentration strategy with multiple IKEA stores in each market would be a homerun. It was the Wal-Mart and Home Depot strategy. One problem. Ingvar insisted that every store be larger than 300,000 sq ft. IKEA stores are destination stores and draw from 40 miles away. During this time MikeinAz was my right hand man, handling all the accounting for the $1 billion or so we were spending.

I had worked with a brilliant guy named David Rogers to develop a regression model to predict IKEA store sales based upon population, furniture sales, number of college educated in the population, and a few other criteria. The model was highly accurate. The model would also calculate cannibalism on existing stores, if you put a new store too close. This is where things went downhill. A concentration strategy with very expensive 300,000 square foot stores didn’t work. I couldn’t get the numbers to work. When I modeled various scenarios, profits declined. The ROIs on the proposed projects weren’t high enough. The rocket scientists in Europe wanted 8 stores in NYC, 8 stores in LA, 4 stores in SF, 3 in Phila, 4 in DC, 7 in Toronto, 4 in Chicago, and 4 in Boston. I couldn’t even get 2 stores to work in Phila, let alone 8 in NYC. It just didn’t work.

Enter Pernille Lopez, former HR manager, and now CEO in 2002. Whenever you discussed facts and figures, her eyes glazed over because she was a clueless moron. I was reminded of the Far Side cartoon, replacing Ginger with Pernille, when trying to explain numbers to her.

 

Pernille hated my boss. My boss hated Pernille. Our organization was able to open 9 stores in the space of 8 months, on time and on budget. The sales projections were on target. This didn’t matter to Pernille. She surrounded herself with yes men, toadies, suckups, and diversity lackeys. The only people who told her the truth was the Real Estate group. I spent hours trying to explain that opening huge stores 20 miles apart would not be a profitable strategy for IKEA. She said if the numbers didn’t work, then I should change the assumptions so that the numbers did work. This went against every instinct in my body.

The company plunged ahead with their concentration strategy despite my warnings and misgivings. The strategy was rolled out in Phila, Washington, Toronto, SF, and LA. Eventually my boss decided to hit the road on his own terms. That left me and all the guys he hired hung out to dry. My new boss was a Swedish political animal with 25 years at IKEA under his belt. He acted supportive, but I knew he would throw me under the bus if necessary. There were still some people in the company who wanted the truth. They asked me for an analysis of the concentration strategy, how well our model worked, and the profitability. I produced a scathing 20 page powerpoint that bluntly and factually assessed the concentration strategy. My projections were accurate. The stores cannibalized each other. Profits plunged. There was the semi-annual Board meeting coming up. I gave the presentation to my boss and I sent it to some of the financial guys in Europe. They appreciated my analysis and concluded I was right. My boss decided to not show it to Pernille and the guys in Europe did nothing more with the report. None of the information was presented at the Board Meeting. I filed it in my drawer and tried to keep my head down.

This is where my old friend, Bjorn the lush, came back into my life. Being Ingvar’s nephew was good. After he left IKEA NA, Ingvar gave him his own franchise store in Seattle. Him and his partner Anders did a fabulous job in Seattle getting sales up to $125 million and raking in millions of profits for themselves. Things were getting so good, they were being pushed to open a 2nd store. They asked the CFO if anyone had any data about 2nd stores in markets. Don told them I had done plenty of analysis. Bjorn contacted me and asked if I had anything I could share with them. I still liked Bjorn and sent him my 20 page analysis. Him and Anders were practical guys. They loved the presentation and thanked me for helping them. I was glad to help and didn’t think about it again.

Months went by. Then the shit hit the fan. My boss came up to my desk one day and asked me to come into the conference room. He informed me that at a Worldwide Board meeting while the worldwide CEO was presenting the results of the expansion Ingvar suddenly whipped out my 20 page presentation and confronted the CEO with my conclusions. Evidently it wasn’t a pleasant scene. Anders, the worldwide CEO, called Pernille and yelled at her. Pernille grabbed my boss – Dan, and yelled at him. And as we all know, shit rolls downhill and it was shortly all over me. Dan asked me how Ingvar Kamprad ended up with my 20 page report. I honestly was flabbergasted. At that point I had no clue. I started contacting everyone who had seen the report to figure it out. A day later the culprit was found. My old friend Bjorn had come back into my life. It seems he and Ingvar are very close. They talked every day. Ingvar was complaining to Bjorn that this concentration strategy didn’t seem to be working. Bjorn said that he knew. He mentioned that he had an analysis from the US that came to that conclusion with facts to back it up. Ingvar asked to see it. Bjorn initially refused, but Ingvar promised not to use it for any other purpose. Bjorn relented and faxed it to Ingvar. It seems Ingvar lied to Bjorn. He used the report to pound the shit out of the CEO.

Bjorn sent an email to the CEO and Pernille apologizing and asking them not to blame me. Too late. The cat was out of the bag. I became a pariah. No one looked me in the eye. I was no longer invited to meetings. My roll was scrutinized and reduced. I had given over a decade of my life to IKEA and now my life was becoming a living hell because I tried to do what was best for IKEA. It ate me up inside. I knew that Pernille wanted me gone, but I tend to be somewhat of a prick sometimes. I wrote a scathing six page letter to Ingvar Kamprad detailing the crap that had been going on in the US since Pernille’s reign of error began. I didn’t send it, but I let it be known to some of the back stabbing psychophants that surrounded Pernille that I was ready to use it. Thus began my departure negotiations. People I thought were my friends had turned on me because they wanted to keep their jobs. In an odd turn of events, the HR manager (a diversity hire later fired for doinking his assistant) asked me to write a letter to him with my proposal for a separation amount. Pernille wanted me gone at any cost, but knew that I had done nothing against the company. Let’s just say that my severance was beyond my expectations. I signed the papers, walked out of the building over to Rosenbluth Travel and booked an 8 day vacation in Disney World at the Polynesian Resort without telling Avalon or the kids. We had the best vacation of our lives.

The next few years were unsettled, but ultimately I’ve found relative peace with this portion of my life. It was a wild ride. The 11th richest man on earth ultimately ended my career helping him become the 11th richest man on earth.

TBP members MikeinAz, Skinny and Robmu1 can confirm just about every detail in this sordid story.

Is the secret of Ikea’s thrifty founder out of the box?

The empire set up by Ingvar Kamprad is accused of siphoning billions into a tax haven

 By Tony Paterson
 

Wednesday, 2 February 2011Ikea founder Ingvar Kamprad denies avoiding taxes

Ikea founder Ingvar Kamprad denies avoiding taxesHe is one of the world’s wealthiest men with a fortune estimated at $23bn (£14bn), yet he drives a 15-year-old car, flies economy class and encourages the thousands of staff in his global empire to use both sides of company notepaper when writing letters.

Ingvar Kamprad, the 84-year-old founder of Ikea, has a legendary reputation for thriftiness, despite being the 11th-richest person on the planet. But Swedes have been shocked by recent revelations which suggest that Mr Kamprad may have taken his parsimony a step too far. It is alleged that he has been secretly running his empire via a Liechtenstein foundation, which is alleged to help Ikea avoid millions in tax. It is perfectly legal.

Mr Kamprad, who now lives in Switzerland, has insisted that he and his family no longer have any control over Ikea. But a television documentary by Sweden’s SVT channel alleges that he “secured control and power over Ikea and… created a foundation in one of the world’s tax havens – Liechtenstein”.

SVT claims in its two-part programme that there are two faces to Ikea – one public, the other. It maintains that Inka Holdings, the company that runs Ikea’s 280 stores around the world, is the corporation’s public face. The other, it claims, is a Liechtenstein-based holding called the Intergo Foundation, which was set up 20 years ago.

The documentary claims that Intergo and its Luxembourg-based subsidiary, Inter Ikea Systems, own the royalty rights to every single product the furniture giant sells. “Inter Ikea is the real Ikea,” the SVT programme insisted. It is alleged that 3 per cent of all Ikea sales were siphoned off to the Liechtenstein foundation in royalties which had allowed the concern to amass funds totalling 100bn Swedish kronor (£9.7bn). Mr Kamprad declined to be interviewed for the documentary. However, just before the programme was aired last week, he issued a statement admitting that he still had some control over Ikea via the foundation, whose existence had hitherto been unknown. He insisted that the foundation was run by an independent board. 

“Its mission is to invest in expansion and business deals and to secure the long-term survival of Ikea,” Mr Kamprad said. He flatly denied allegations that the foundation’s aim was to avoid tax and insisted that Ikea paid all required taxes. “However, we have always looked at taxes as a cost, just as any other cost that comes with doing business,” he said. 

Insisting that there was nothing wrong with trying to be tax-efficient, Mr Kamprad concluded in his statement on the Ikea website: “An optimised tax structure gives us the possibility of flexibility in using our assets that have already been taxed in one market. They can be used in new markets for further business development without the additional burden of double taxation.” 

In Sweden, the allegations have dented the image of one of the country’s best-known companies, which had enjoyed a reputation for scrupulous corporate responsibility. Questions are being asked about why Ikea has resorted to using a notorious tax haven like Liechtenstein. 

And it is not the first time that Mr Kamprad has faced embarrassing disclosures about his activities. In 1994, Swedes were shattered to discover that their iconic business entrepreneur had been a member of the country’s wartime pro-fascist New Swedish Movement, which raised funds and recruited members until 1945. The allegations emerged after the publication of letters written by the Swedish fascist Per Engdahl, who died that year. Mr Kamprad remained a friend of Mr Engdahl until the early 1950s. In a letter to Ikea employees in 1994, Mr Kamprad described his membership as “the greatest mistake in my life.” 

He is thought to have acquired his youthful fascist leanings from his widowed German grandmother, who came from the formerly German-speaking Sudetenland region of what is now the Czech Republic. She regarded the Nazi annexation of Sudetenland as a liberation. 

When Mr Kamprad was only a boy, he started selling matches to neighbours from his bicycle. He subsequently sold fish, Christmas tree decorations, pencils and ballpoint pens. When he was 17 his father gave him some money for passing his exams and he used it to set up Ikea, with the family farm as his base. 

The company’s name is made up of the initials of Mr Kamprad’s name, the name of the family farm, Elmtaryd, and the nearby village of Agunnard. But Ikea’s low prices undercut the Swedish cartel of the time and the company was boycotted. Mr Kamprad turned to Polish producers for inexpensive furniture components that could be assembled at home from flat packs. The Ikea as we know it was born. 

With 280 stores and 127,000 employees in 38 countries, Ikea has become a global empire. Company doctrine is enshrined in Mr Kamprad’s The Furniture Dealer’s Testament, which many refer to as the “Ikea Bible”. The tome is peppered with maxims such as “wasting resources is a mortal sin at Ikea” and “only when sleeping does one make no mistakes”. 

A study London University released last week provides a revealing insight into the Ikea doctrine. It found that the vast maze-like interiors of Ikea stores were deliberately designed to confuse customers, who were therefore more likely to make irrational snap purchases of the household items they came across. 

Mr Kamprad moved to Switzerland in 1976 to avoid Sweden’s punitive wealth taxes. He drives a 15-year-old Volvo 240, rarely wears a suit and is known to haggle for bargains in his village near Lausanne . He even admits to popping into Ikea stores to get a “cheap meal”. 

The miserly reputation is, in part, a deliberate attempt to enhance Ikea’s value-for-money image. Less known is the fact that Mr Kamprad owns a large country estate in Sweden and a vineyard in Provence. He also drove a Porsche for several years. 

Company savings policies are what drives his determination to always fly economy class. “How the hell can I ask people who work for me to travel cheaply, if I travel in luxury?” he once asked in an interview. “It’s a question of good leadership.”

REVOLUTION COMING TO YOUR NEIGHBORHOOD

19 comments

Posted on 28th September 2010 by avalon in Economy |Politics |Social Issues

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The coming gridlock after the 2010 elections will not solve our problems. This ain’t 1994. The linear thinkers have no clue. Farrell’s article fits perfectly with the Fourth Turning scenario that we have entered. Revolution and war are on the way. The linearists are trying to figure out what the Dow will be tomorrow or next week. They will be completely blindsided, as usual. I can picture the clueless look on Maria Bartiromo’s face when the shit hits the fan. She’ll lash out angrily against the masses. They will turn her Escalade over and burn it.

America on the brink of a Second Revolution

Commentary: 2010 elections guarantee gridlock, anti-capitalist class war

By Paul B. Farrell, MarketWatch

ARROYO GRANDE, Calif. (MarketWatch) — “What’s distinctive about the Tea Party is its anarchist streak — its antagonism toward any authority, its belligerent self-expression, and its lack of any coherent program or alternative to the policies it condemns,” warns Jacob Weisberg in Newsweek. But why not three cheers for the Tea Party Express?

Admit it, something historic is brewing. And yes, it’s good for America, even the anarchy. Revolution is renewal. Tea-baggers want to take on both parties, “restore honor” and “take back the country.” Bring it on, the feeling’s mutual.

OK, maybe most Americans just silently mimic the words, “we’re mad as hell, won’t take it any more.” But watch out: After November the campaign’s shrill rhetoric explodes into action.

Tea-baggers are kicking the revolution into high gear. Debt is sinking America. Both parties are to blame. So vote out incumbents. Spare no one. We need new leadership, another Reagan or Truman. Congress better get the message: Cut that budget, or they’ll dump the rest of you in the coming Great Purge of 2012.

Unfortunately they’re tone deaf. Congress cannot see past the election. All that changes in November.

So thanks Tea Party, Vegas odds must favor a Second American Revolution. Actually, the revolution is already roaring, hot, it’s about time. The GOP and the Dems had more than a decade. But America’s worse off. We need a real revolution to restore sanity … or we can kiss democracy and capitalism good-bye, permanently.

Warning: Another revolution will cost investors 20% more losses

Yes, big warning, the Second American Revolution will extract painful austerity, not the “happy days are here again” future touted by tea-baggers. For years it’ll be impossible for most of America’s 95 million investors to develop a successful investment or logical retirement strategy.

Why? Political chaos will translate into extreme volatility and a highly unpredictable stock market. Result: Wall Street will lose another 20% of the value of your retirement portfolio in the next decade, just as Wall Street did the last decade. So if you think you’re “mad as hell” now, “you ain’t seen nuthin’ yet!”

Here’s the timeline:

Stage 1: The Dems just put the nail in their coffin by confirming they are wimps, refusing to force the GOP to filibuster the Bush tax cuts for America’s richest.

Stage 2: The GOP takes over the House, expanding its war to destroy Obama with its new policy of “complete gridlock,” even “shutting down government.”

Stage 3: Obama goes lame-duck.

Stage 4: The GOP wins back the White House and Senate in 2012. Health care returns to insurers. Free market financial deregulation returns.

Stage 5: Under the new president, Wall Street’s insatiable greed triggers the catastrophic third meltdown of the 21st century Shiller predicted, with defaults on dollar-denominated debt.

Stage 6: The Second American Revolution explodes into a brutal full-scale class war rebelling against the out-of-touch, out-of-control greedy conspiracy-of-the-rich now running America.

Stage 7: Domestic class warfare is compounded by Pentagon’s prediction that by 2020 “an ancient pattern of desperate, all-out wars over food, water, and energy supplies would emerge” worldwide and “warfare is defining human life.”

What’s behind our 2010-2020 countdown? It became obvious after reading the brilliant but bleak “Decadence of Election 2010” report by Prof. Peter Morici, former chief economist at the International Trade Commission. He sees no hope from America’s political parties, just a dark scenario ahead.

Here are the 10 points we see in his message:

1. Expect nothing positive from Dems, the GOP or Tea Party

Yes, we’re all “justifiably ticked off.” But “Democrats, Republicans, and yes the Tea Party offer little that is encouraging.” Earlier Morici warned: “Democratic capitalism is in eclipse. … Politicians have deceived voters,” and are “suffering from delusions of grandeur, self deception and good old-fashioned abuse.”

2. Democracy has become too-big-to-govern … by anyone

“The current economic quagmire is a bipartisan creation.” Bush failures led to a “Great Recession … reckless Wall Street pay and fraud, a breakdown in sound lending standards by Fannie Mae, Freddie Mac … Countrywide, and a huge trade deficit with China and on oil” leaving “Beijing and Middle East royals with trillions of U.S. dollars that they invested foolishly” in bonds “financing the housing and commercial real estate bubbles.”

3. Clinton, Bush, Obama policies all feeding revolutionary flames

Even before Bush, “all was set in motion by bank deregulation engineered by Clinton … Secretaries Robert Rubin and Lawrence Summers … Clinton’s deal to admit China into the World Trade Organization” handed “China free access to U.S. markets” while blocking exports. Earlier Dems blocked “domestic oil and gas development” and froze “auto mileage standards.” Obama “finally imposed higher mileage requirements,” but after pushing offshore drilling, he “punished the entire petroleum industry” for the BP disaster.

4. Bush’s biggest mistake: Goldman CEO Hank Paulson

Morici admits: If Bush is “culpable for anything, it was to not see the gathering storm on Wall Street.” Worse, his Treasury picks were disasters: [John] Snow was clueless, Paulson devious. He conned a clueless Congress into bailout trillions, “believing banks could borrow at 3% and lend at 5 and pay MBAs three years out of school five-million-dollar bonuses to create mortgage backed securities.” Greed drove the Bush Treasury.

5. All partisan political leaders are destined to sabotage America

One thing is clear to Morici: Not only were America’s leaders a “bunch of second-rate incompetents” on both the Clinton and Bush teams, “Obama’s ratcheting up government spending and taxes won’t fix what’s broke, and neither will the GOP prescription of tax cuts and deregulation.” Get it? Democracy is in a classic double-bind, no-win scenario.

6. America’s democratic capitalism trapped in systemic failure

Morici simply dismisses “Obama’s two signature initiatives — health-care reform and financial services reregulation.” They “simply don’t work.” Why? Politicians “failed to address the root problem, Americans pay 50% more for doctors, hospitals and drugs, than subscribers to national health plans in Germany, France and other decadent socialist European countries.” Yet, insurers hate reform, will self-destruct America first.

7. Wall Street’s insatiable greed is a virus that never sleeps

Wall Street banks are “back to their old tricks,” warns Morici, “hustling municipal governments into the kind of quick-fix budget schemes, like selling parking meters and airport fees.” Why? Wall Street’s “hustling shoddy corporate bonds that lack adequate collateral and may never be repaid” to justify their absurd mega-bonuses. And they’ll keep doing it till the revolution creates a new non-capitalist banking system.

8. New political leaders offer no hope — Wall Street rules America

GOP’s next leaders will fail: “Cutting taxes and mindless deregulation are not the answer.” We need the revenue. They have no real plan to trim “$1 trillion from federal spending … few believe deregulation will fix health care or Wall Street.” The GOP has no “effective government solutions to health care, Wall Street, fixing trade with China, and dependence on foreign oil.” And the Tea Party “only offers a purer form of failed Republicanism. Tax and spend less, and turn the country over to the robber barons.”

9. Praying for a messiah, we’re sleepwalking till the revolution

Morici’s solution: America “needs a prophet, another Harry Truman or Ronald Reagan.” But we’ll never get one, until a catastrophe hits. Wall Street’s so greedy, so corrupt, so untouchable, so much in control, they will bankroll and control all future “prophets.”

10. The Second American Revolution coming

Yes, extreme austerity: “Americans must accept fewer government-paid benefits — for the rich, the poor and those in between — and must acknowledge the market works best most of the time, but it is not working in health care, banking, China, and oil.” Huh? Sounds like classic economist’s double-speak: “The market works most of the time” … except the market doesn’t work at all in the four biggest economic sectors? Fuzzy thinking?

Morici warns, we need “new approaches to regulating, yes regulating, what the medical industry charges, bankers pay themselves, what Americans tolerate and buy” and “guiding big oil and car companies to sustainable solutions.”

Holy cow, he suddenly sounds more like a liberal politician than conservative economist. Yes, he’s reflecting the total chaos coming on the short road to the Second American Revolution.

In the end, however, you have to admit the good professor does make a lot of sense: “Sounds radical but running the world has never been a choice between statism and anarchy,” says Morici.

Choice? Unfortunately, he offers a false choice: Running America effectively means accepting “that the private sector is not the enemy and government is not evil, but neither can serve the other, and us, if value is not seen in each.”

Laudable, but impossible because once the GOP Tea Party of No-No is back in power, compromising is not on their agenda, “gridlock” is. So anarchy is the only choice — they will never, never work with Democrats … until forced by the Second America Revolution when the middle class finally rises up and overthrows the greedy wealth conspiracy of Wall Street, Washington, CEOs and the Forbes 400.

Till then, anarchy rules as the conspiracy keeps looting Treasury, stealing from taxpayers, conning us all.

MASS DELUSION – AMERICAN STYLE (Featured Article)

140 comments

Posted on 14th August 2010 by avalon in Economy |Politics |Social Issues

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“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” – Charles Mackay - Extraordinary Popular Delusions and the Madness of Crowds

 

The American public thinks they are rugged individualists, who come to conclusions based upon sound reason and a rational thought process. The truth is that the vast majority of Americans act like a herd of cattle or a horde of lemmings. Throughout history there have been many instances of mass delusion. They include the South Sea Company bubble, Mississippi Company bubble, Dutch Tulip bubble, and Salem witch trials. It appears that mass delusion has replaced baseball as the national past-time in America. In the space of the last 15 years the American public have fallen for the three whopper delusions:

  1. Buy stocks for the long run
  2. Homes are always a great investment
  3. Globalization will benefit all Americans

Bill Bonner and Lila Rajiva ponder why people have always acted in a herd like manner in their outstanding book Mobs, Messiahs and Markets:

“Of course, we doubt if many public prescriptions are really intended to solve problems. People certainly believe they are when they propose them. But, like so much of what goes on in a public spectacle, its favorite slogans, too, are delusional – more in the nature of placebos than propositions. People repeat them like Hail Marys because it makes them feel better. Most of our beliefs about the economy – and everything else – are of this nature. They are forms of self medication, superstitious lip service we pay to the powers of the dark, like touching wood….or throwing salt over your shoulder. “Stocks for the long run,” “Globalization is good.” We repeat slogans to ourselves, because everyone else does. It is not so much bad luck we want to avoid as being on our own. Why it is that losing your life savings should be less painful if you have lost it in the company of one million other losers, we don’t know. But mankind is first of all a herd animal and fears nothing more than not being part of the herd.”

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