For Memorial Day Weekend, I thought I’d curate a few documents on war. Here’s the second:

The translation is Richard Lattimore’s. The Trojans have set fire to the Greeks’ beached ships, but the Greeks (Danaans, Achaians) are now driving them back from the shore:

[297] And as when from the towering height of a great mountain Zeus
[298] who gathers the thunderflash stirs the cloud dense upon it,
[299] and all the high places of the hills are clear and the shoulders out-jutting
[300] and the deep ravines, as endless bright air spills from the heavens,
[301] so when the Danaans had beaten from their ships the ravening
[302] fire, they got breath for a little, but there was no check in the fighting;
[303] for the Trojans under the attack of the warlike Achaians
[304] had not yet turned their faces to run away from the black ships.
[305] They stood yet against them, but gave way from the ships under pressure.
[306] There man killed man all along the scattered encounter
[307] of the leaders, and first among them, the strong son of Menoitios,
[308] threw and struck Areïlykos in the thigh, as he turned
[309] back, with the sharp point of the spear, and drove the bronze clean through.
[310] The spear smashed in the bone and he fell to the ground headlong
[311] on his face. Meanwhile warlike Menelaos stabbed Thoas
[312] in the chest where it was left bare by the shield, and unstrung his limbs’ strength.
[313] Meges, Phyleus’ son, watched Amphiklos as he came on
[314] and was too quick with a stab at the base of the leg, where the muscle
[315] of a man grows thickest, so that on the spearhead the sinew
[316] was torn apart, and a mist of darkness closed over both eyes.
[317] Of the sons of Nestor one, Antilochos, stabbed Atymnios
[318] with the sharp spear, and drove the bronze head clean through his flank, so
[319] that he fell forward; but Maris with the spear from close up
[320] made a lunge at Antilochos in rage for his brother
[321] standing in front of the corpse, but before him godlike Thrasymedes
[322] was in with a thrust before he could stab, nor missed his quick stroke
[323] into the shoulder, and the spearhead shore off the arm’s base
[324] clear away from the muscles and torn from the bone utterly.
[325] He fell, thunderously, and darkness closed over both eyes.
[326] So these two, beaten down under the hands of two brothers,
[327] descended to the dark place, Sarpedon’s noble companions
[328] and spear-throwing sons of Amisodaros, the one who had nourished
[329] the furious Chimaira to be an evil to many.
[330] Aias, Oïleus’ son, in an outrush caught Kleoboulos
[331] alive, where he was fouled in the running confusion, and there
[332] unstrung his strength, hewing with the hilted sword at the neck,
[333] so all the sword was smoking with blood and over both eyes
[334] closed the red death and the strong destiny. Then Peneleos
[335] and Lykon ran up close together, since these with their spear-throws
[336] had gone wide of each other, and each had made a cast vainly.
[337] So now the two of them ran together with swords. There Lykon
[338] hacked at the horn of the horse-hair crested helm, but the sword blade
[339] broke at the socket; Peneleos cut at the neck underneath
[340] the ear, and the sword sank clean inside, with only skin left
[341] to hold it, and the head slumped aside, and the limbs were loosened.

The Greeks were led in this foray by Patroclus, wearing Achilles’ armor. At the end of Book XVI, the Trojan Hector kills Patroclus, who dies prophesying Hector’s death. By the end of the epic, Hector dies by the hand of Achilles, who has returned to battle, enraged at Patroclus’s death.

So Book XVI may be seen as the pivot on which the plot turns. I recall Book I verse 1 as “This is the story of the wrath of Achilles,” but Lattimore has “Sing, goddess, the anger of Peleus’ son Achilleus,” and the more literal prose translation from The Perseus Project has “The wrath sing, goddess, of Peleus’ son, Achilles,” putting wrath first. As it should be?

Readers, thoughts?

NOTE I’m even less a Greek scholar than I am a Civil War scholar; and although I’m not sure Lattimore’s translation is the most musical, it seems to the one that’s online; readers more expert than I am can post their own sources or versions in comments!

I wrote about the Mexican drug lords’ enormous New Zealand connection here. It’s a long post about a meaty $400Bn, yes that’s Billion, of moneylaundering, via  front companies set up from New Zealand.

Now there is a new reputational disaster. According to New Zealand’s internet newspaper, Stuff, the Russian mafia also had its way with New Zealand’s magnificently lax, yet painfully transparent, company incorporation regime:

Another New Zealand shell company has been linked to an alleged fraud worth more than US$150m – this time involving Ukrainian state-owned companies.

The company, Falcona Systems Ltd of Albany, Auckland, was struck off the New Zealand Company Register last October but only after it was used to gain $150m in kickbacks for Ukrainian and Latvian officials, according to East European media reports.

The latest allegations involving New Zealand shell companies comes five days after Fairfax Media was told by the Latvia Finance Ministry that New Zealand had been struck off a European Union banking and corporate ”white list” over our weak money laundering and terrorism financing controls.

Yes indeed, there goes New Zealand’s spotless reputation. Well we told ya that would happen, same NC post as above, final paras; we just picked out the wrong angry Eastern European minister.

One imagines that this hit to New Zealand’s reputation could at last spell the end for John Key’s pitifully idiotic plan to turn New Zealand into an offshore financial “hub”, too, but then, that inane pet project has survived all sorts of heavy contact with reality already.

Back to Stuff:

Latvian authorities said they moved after revelations Tormex Ltd, of Queen Street, Auckland, allegedly washed US$680m through a Riga bank account – no explanation of where the money came from or went. However, a multi-national investigation points to the Russian Mafia.

Two years ago another New Zealand shell company, SP Trading Ltd of the same Queen Street address, was found to have chartered a Georgian registered plane to fly embargo-busting arms from North Korea to an unknown Middle Eastern state. They were intercepted in Bangkok.

Falcona Systems has its registered office at 23/17 Georgia Terrace, Albany, Auckland. Fairfax investigations found an unoccupied townhouse.

Pleasingly, the mystery of 23/17 Georgia Terrace, Albany, which I can solve, offers an opportunity to trump Stuff’s investigation and suggest another line of enquiry.

In fact 23/17 Georgia Terrace is one of the old addresses of the dirt cheap company registration service Company Net Limited, which has the web site ExpressBiz. That explains why so many overseas companies have their registered offices in Georgia Terrace…and gives quite a hint about who is registering them. A dive into the splendidly-built but horribly contaminated NZ company register tells us that this unassuming location has been the registered address of 765 companies, of which 35, not all of them obviously dubious, survive. So there’s a spot of mole-whacking still to do there.  Company Net Limited has had a couple of other addresses, so they will be worth checking out too. More on that later in the post.

Back to the Stuff article and Falcona Systems:

Its solitary director is Inta Bilder of Latvia. A search of the Company Register shows 942 results for Bilder as director and shareholder.

OK that is a giant hit. Go Stuff!

Stuff digs onward and finds another interesting office address:

Falcona Systems main shareholder is Interhold Ltd, of Level 4, 44 Khyber Pass, Grafton, Auckland…

This location seems to have a profusion of alternative versions in the register; for instance:

Level 4 Outsource It Tower, Grafton, Auckland 1150, New Zealand
Level 4 Newcall Tower, 44 Khyber Pass, Grafton, Auckland , New Zealand
Level 4, 44 Khyber Pass, Grafton, Auckland

Simply searching the register for “44 Khyber Pass” gives 1036 active companies. Evidently this too is a popular address for company registrations, so perhaps that is an overcount. Narrowing the search to the known-to-be-dodgy “Level 4 Khyber Pass” still gives 594 results though. Yikes!

Back to Stuff, who were talking about Interhold Limited:

…It, in turn, is owned by Genhold Ltd, of the same address, with a Panama-resident director.

Oh, here we go, Panama again. Genhold Limited’s director is Fernando Enrique Montero de Gracia, Calle Primera, Panama Viejo, House 496, Panama City, Republic Of Panama. De Gracia is also a director of Pacific Metal Recycling and Trading Ltd, which is wholly owned by Maxhold Limited, whose director is Manti Effrosyni, of Cyprus. Now, if the Russian Mafia is behind this, it’s only right that there would be a Cyprus connection somewhere:

Typically, Russian investors create “brass-plate” companies to take advantage of Cyprus’s low 10% corporate tax rate. Many of these funds are reinvested back in Russia – ¤1.4bn [sic] in 2008 – avoiding Russian tax. The Cypriot authorities angrily deny that the island is a haven for money laundering. They also point out that Russians invest more cash in Austria and the UK.

But many analysts are sceptical: “We are talking about Russian money laundered through Cyprus. The Russian mafia uses Cyprus extensively,” said Hubert Faustmann, associate professor of European studies at Nicosia University. “This is why Russia has no interest in Cyprus going down economically.”

Tax havens and organized crime go together like dung and flies. Well, we knew that.

Anyway, via the Cyprus connection, another modest opportunity to trump Stuff’s piece turns up: Manti Effrosyni is in fact the director of 88 other New Zealand companies. Meanwhile another Cyprus resident, Petr Zika, directs Brithold, which is owned by the same Genhold Limited mentioned by Stuff. Zika directs another 124 New Zealand companies. The network is getting bigger!

Back to Stuff:

Genhold is in turn 100 per cent-owned by Trust (NZ) Holdings Ltd of the same address. Its sole director and shareholder refused to comment on the company’s ownership.

The name of the director is Liliya Soboleva. In fact our Liliya was a director of a total of 16 New Zealand companies at one time or another. Via another of her companies, Club Property Limited, we find the registered address of C/-y T Choi Lawyers, Level 8, Phillips Fox Tower, 205 Queen Street, Auckland, New Zealand. I suppose that, pending clarification, those lawyers have a little red flag waving over them too.

Looking at more companies of which Inta Bilder used to be a director finds us a further sprinkling of names and companies to be wary of:

Via Metalwest Limited , we find another Russian name, Borysova Tatyana (vice versa, I suspect: who registered that name? Not Borysova herself).

Via Equity Law Barristers, we find Evgeny Orlov, current director. He is a director of 7 New Zealand companies.

Via Third Capital Limited, we find John Benjamin Foster Aosta of Panama, current director. He is a director of 4 New Zealand companies

Via NZ Evolution Trade Limited, Olga Belchikova, a current director of just that one New Zealand company.

Via GBFX Limited, we find Riccardo Luigi Alberico GAGLIARDI, 5827 Prairie Cr, On L5n 6b4, Mississauga , Canada, current director.

Via One World FX Limited, Eng Neng Chaw, 13a-06 Taragon Puteri Bintang No 136, Changkat Thambi Dollah, Kuala Lumpur, 55100 , Malaysia, current director.

A mixed bag. Goodness knows why Mississauga, Canada, is such a magnet for expats running dodgy New Zealand companies. is that another Russian mafia connection? There was something like that in Ontario, way back, ten years ago, but I though it was all cleaned up. Perhaps our Canadian readers can help.

More Stuff, now looking into other names connected with Bilder:

Dzerkalo Tyzhnia newspaper names an Erick Vanagels as being involved with both Highway and Falcona.

A search for Vanagel’s name in the Company Register produces 318 results with both Panama and Latvia addresses.

We can find still more related addresses and names via Macronet Impex Limited, of which Inta Bilder also used to be a director. It has company address 69 Ridge Road, Albany, Auckland , which delivers an impressively enormous 1766 results when you look for it in the register. This is another historic address of the company registration service Company Net Limited. Every single one of those 1766 companies is now struck off. One knows that startups fail, but that is still a remarkable rate of attrition. Some have been struck off by the NZ authorities, others, having served their purpose, whatever that was, by the company officers. A really good guess at how many of them were just fronts for crime requires a volume of investigation that is well beyond the scope of this post, sadly. A quick sampling turned up some regular-looking companies, along with plenty of Russian names and Cyprus residents, and plenty of appearances of Erick Vanagels, so one can’t simply pronounce the whole lot to be shady.

Note well: being struck off doesn’t necessarily mean it’s all over with those companies. When you strike off a company in the UK, its local bank account is frozen, after an interval for closedown activities be to completed. I imagine it is the same in New Zealand, though Companies House isn’t explicit on this point: perhaps a local can confirm that in the comments. What happens in NZ when the directors are overseas, and the bank account is overseas too, isn’t clear at all. It may be that New Zealand’s latest gift to the world is a huge number of (very) superficially legitimate-looking company bank accounts, in all sort of domiciles, attached to defunct NZ companies of dubious origin. A money launderer’s paradise; I hope it is not so.

Let’s recap the main points. Assume we agree with the premise of the Stuff story (Russian mafia). Assume also, reasonably, that if one connected company is dodgy, it means all of them are at least worth a quick look. On that basis, we have a whole bunch of active companies worth a quick look, as follows:

35 active New Zealand companies, some with possible Russian Mafia links, at 17 Georgia Terrace, Albany.

594 active New Zealand companies, many with possible Russian Mafia links (run inter alia, by Vanagels, Bilder and miscellaneous residents of Cyprus), at Level 4, 44 Khyber Pass Road.

…and…

another 730 defunct New Zealand companies at 17 Georgia Terrace, Albany, many with possible Russian Mafia links, that may still, in the worst case, have active overseas bank accounts.

1766 defunct New Zealand companies at 69, Ridge Road, Albany, many with possible Russian Mafia links, that may still, in the worst case, have active overseas bank accounts.

That’s 3,000 companies that are worth some level of closer scrutiny: or at least, the (large) subset of that 3,000 that has overseas directors.

These counts and assumptions may exaggerate the scale of the problem, but not necessarily by much. And if I’ve missed any other big clusters, which is perfectly possible, the problem is bigger. For instance a thorough trawl of New Zealand company directors with addresses in Cyprus, Latvia, Panama, the US and Canada might throw up some interesting patterns. One can’t do that kind of investigation via the register’s public interface, but a sleuth with SQL-level query access and a bit of gumption could serve up some pretty neat (and alarming) reports, I should think.

By way of taster, among the companies at those three hot spot addresses in Albany we can quickly identify (in addition to Stuff’s red flags):

People running 28 active or defunct New Zealand companies (Liliya Soboleva, Evgeny Orlov,  John Acosta, Olga Belchikova) who are indirectly connected with alleged moneylaunderers.

88 active New Zealand companies with possible Russian Mafia links, all run by one guy in Cyprus.

124 active New Zealand companies with possible Russian Mafia links, all run by another guy in Cyprus.

One is not necessarily impressed by the vigilance of the New Zealand authorities. Once alerted to the Stuff article (many thanks to ChrisPacific and John G.), it took me half a bureaucrat’s working day to put this list together. It’s not that hard to get a first-cut idea of the size of the problem. One can look for patterns in the register (by way of starting point, looking for very large counts of companies registered at the same address, or very prolific company officers). With more comprehensive access to their database than I have, the NZ authorities can do this even more easily than I can. It might be time for them to make a start on that.

We are still supposed to entertain hopes that the NZ authorities will say, or do, something that will put a stop to this endless whack-a-mole. Obviously one solution, in the new Companies and Limited Partnerships Amendment Bill, which will require companies to have a resident agent, won’t achieve anything at all, if the directorships held by Greg Roderick Stewart, New Zealand resident, are any guide. But extra (I hope, draconian) powers to investigate, warn about and deregister dubious overseas companies (another proposal that is in the Bill), will help a lot, if only to make sure that the moles actually do get whacked.

And perhaps there ought to be something in the bill that would impose more than a duty of care on people who register companies for a living. That would enable someone in authority in New Zealand to have a much more persuasive official word with the likes of the terrifyingly industrious Glenn Smith (no relation, as far as I know). He is the owner of bucket shop registration outfit Company Net Limited, formerly of 17 Georgia Terrace, Albany, later of 69, Ridge Road, Albany, and, for the last two or three weeks, of Unit O, 241 Rosedale Road, Albany (evidently he’s making enough out of it now to abandon working from home). As we have seen lot of the companies he has been registering at those addresses for overseas customers, at NZD320 a pop, via Company Net Limited, are dead dodgy. I wonder if he might remember registering a whole load more companies that had offices at 44 Khyber Pass Road, too.

This type of hectic registration activity will be familiar to folk familiar with the GT Global/drug lord story that I linked to at the top of the piece.

So is Glenn Smith another Geoffrey Taylor, unscrupulous mass registerer of dodgy companies? Or just another cowboy with an internet connection? I warned about a slghtly different type of hired hand, running offshore banks in New Zealand, here:

But the worst of this nonchalance about New Zealand’s registers and financial regulation is the potential it offers for New Zealand to be transformed into a full-on tax-dodging and money-laundering centre.  Then it won’t be Elvis impersonators or invisible Panamanians that one worries about, it will be the Mob.

What, exactly, is John Key’s aspiration for New Zealand, again? Does he want it to be a Financial Hub, or Panama, or is it to be Sicily?

With the Russian mafia having had such a field day in New Zealand, that’s an even better question than it looked at the time.

Further reading:
You can read much, much more about Tormex, just one of the (so far) ~3000 related NZ companies that someone in authority might want to take a little look at, if they can be bothered, and get a budget, here.
Here are some words from the New Zealand Justice Ministry here.
Here’s the new Companies and Limited Partnerships Amendment Bill again.

Let’s Talk Turkey About Greece Ian Welsh. Could Russia use a warm water port? Da?

A Very-Useful Chart To Prepare You For The Next Greece Election Chart from Credit Suisse Business Insider

Harsh Language from Lagarde: “IMF Has No Intention of Softening Terms”; From Head of Deutsche Bank: “Greece is a Failed Corrupt State”; Purposely Inflammatory Statements to Force Greece Exit Mish

Germany Walks Away From Greece Testosterone Pit. Reading the Lagarde tea leaves.

Beware hidden costs as banks eye ‘Grexit’ Gillian Tett. Party like it’s 2007…

Europe’s biggest fear: A run they cannot stop Schumpeter, Economist (RS)

Hard cash for tough times FT

Drug money saved banks in global crisis, claims UN advisor Guardian. Oldie but goodie!

Gentlemen prefer bonds

COSCO Seeks Gov’t Funds after Huge Losses, Sources Say Caixin. China’s biggest state-owned shipping firm.

J.P. Morgan replaces prime brokerage chief: report Reuters

Bank Regulators Under Scrutiny in JPMorgan Loss Times

JPMorgan: Jamie Dimon and the horse he fell off Jack and Suzy Welch. Yeah, but what about the horse he rode in on?

Former Lloyds head of fraud and security Jessica Harper charged over £2.5m fraud Telegraph (RS)

Lunch with the FT: Paul Krugman. Give the Booker Prize to the Maastricht Treaty!

Reddit’s Alexis Ohanian And Activists Aim To Build A “Bat-Signal For The Internet” Forbes

Economics Is Not Math The Institute for New Economic Thinking

Humbler horizons Free exchange, Economist. The new normal…

PG&E Violated Pipeline Safety Rules, Investigators Say WSJ

Killings, cancer, corruption and Azerbaijan: Eurovision in the Islamic Republic of BP Greg Palast

From Baku, With Love (And Intolerance) Slate

You can identify poor neighborhoods from space Grist

Next to U.S. firing range in Afghanistan, a village of victims WaPo

Cable theft delays Proastiakos [commuter rail] services Ekathimerini

Vatican in chaos after pope’s butler arrested for leaks, bank president ousted for negligence WaPo

The Imperial Mind Glenn Greenwald. Fake vaccines for Pakistani childen [all so Obama can whack OBL in an election year --lambert]

Egyptians ask why a Mubarak holdover like Shafik did so well McClatchy

Protest in the streets despite downpour and tornado warning, 1 arrest Montreal OpenFile

What are Lawn Removal Parties?

Night Thoughts in Hagsgate Archdruid Report

Antidote du jour (hat tip reader Lidia):

In the aftermath of the global financial crisis, optimists hoped that the BRIC (Brazil Russia India China) would drive the global economic engine. But China’s economic growth has slowed to its lowest rate in three years. Brazil’s economic growth has fallen from around 7.5% to under 3%. Russia’s economy is heavily dependent on oil and energy prices. India also has stalled. This 3-part paper looks at the development and future trajectory of the “I” in the “BRIC”. The first part looks at the background to India’s recent rise.

Despite the world and its citizens earnest desires, India seems destined to never fulfil its economic potential.

Hindu Growth…

In the 30 years following independence, India achieved a modest rate of economic growth of 3-4% per annum and incomes improved by 1-2% each year. This was the “Hindu rate of growth”; a derogatory term coined by economist Raj Krishna to draw attention to India’s poor performance compared to other Asian economies.

India’s poor economic performance was not driven by religious factors but the half-baked socialist policies of its leaders. India’s first Prime Minister Jawaharlal Nehru admired the Soviet Union, becoming one of the few followers of its ultimately unsuccessful economic policies.

The economy was administered by a central Planning Commission, through a series of 5 year plans, modelled on a similar process used in the Soviet system. Major businesses were State owned and operated. Private firms required official licenses, their operations being strictly controlled by the regulatory regime, rather than free-market demand.

The Indian economy was closed to the world. The principal policy was import substitution and a reliance on internal markets for development. India’s currency, the rupee, was inconvertible. A system of high tariffs and import licensing restricted foreign imports.

This was the era of the “License Raj”, a reference to the elaborate licenses, regulations and stultifying red tape required to operate businesses in India. Consents from up to 80 government agencies were required before private companies could produce goods and services. Under the terms of a license, the government regulated all aspects of operations, including production levels, prices, investment policy and financing. The government restricted businesses from laying off workers or closing factories.

At the time of its independence, India was a stable relatively open economy with high rates of economic growth and significant international trade and investment. By the 1980s, three decades of poor economic management meant India had low growth rates, was closed to trade and investment and prone to instability.

Desperate Revolution…

In the 1980s, India made tepid efforts at reform. By the early 1990s, the country was in dire straits. A combination of international factors (high oil prices) and domestic failures (public finance problems and political turmoil) left the nation effectively bankrupt. Remaining foreign exchange reserves were only sufficient to cover payments for less than 2 weeks. The Reserve Bank of India (“RBI”), the country’s central bank, was forced to airlift 47 tonnes of gold to the Bank of England as humiliating collateral for a loan, while it waited for assistance from the International Monetary Fund.

On 24 July 1991, Manmohan Singh, the current Prime Minister and then Minister of Finance, told the Indian parliament that “the room for manoeuvre, to live on borrowed money or time, does not exist any more. ” Mr. Singh succeeded in passing a reformist budget, devalued the rupee and opened the door to foreign investment in certain industries. He also reduced the tariffs and eased the system of licenses.

Mr. Singh ended his speech to parliament quoting French author Victor Hugo: “No power on earth can stop an idea whose time has come.” Within the next decade, the idea of India as a “major economic power in the world” seemed within reach.

Innians’ Success…

The actions of 1991 paved the way for a period of expansion and relative prosperity for India. Over the last two decades, India’s economy has almost quadrupled in size, growing at an average rate of about 7% per annum and over 9% from 2005 to 2007 – Chinese rates of growth.

The key drivers of growth included a large population which created a substantial domestic market, high savings rates which financed investment and an educated, English speaking workforce which was under employed. De-regulation allowed a latent commercialism, suppressed during the license raj days, to prosper.

While the reforms of 1991 and the nation’s natural resources were crucial, India was lucky. The opening up of India coincided with the rise of business process outsourcing (“BPO”). Developed nations commenced outsourcing basic support services and information technology (“IT”) to cheaper foreign providers. The need to re-code computer software to avoid the Y2K or Millennium Bug and support the Internet boom provided a significant boost to the India IT industry.

The external environment was favourable, characterised by strong global growth underpinned by the “peace dividend” from the end of the Cold War. The rise of emerging markets, especially the BRIC (Brazil, Russia, India, and China) nations, helped sustain a flow of investment into India. A weak Indian Rupee assisted growth, allowing Indian exporters to compete and encouraged foreign capital.

India also avoided the worst of the 1997/ 1998 Asian monetary crisis and the 2007/ 2008 global financial crisis. The high level of regulation of the financial system, including extensive capital controls, and domestic focus of the banking system protected the Indian economy.

The last factor which assisted growth was the large Indian Diaspora. The lost decades had resulted in a flight of human capital to developed economies. Beginning in the 1990s, there was a steady flow back of these skills, augmented by overseas education and experience, into the Indian economy.

Non-resident Indians (“NRIs”) were important in supplying capital. Indians working overseas, both in technical or more modest positions especially in the Middle East remitted more than $20 billion a year to India, the most of any country in the world. Successful expatriate Indian businessmen and professionals provided business connections which helped Indian business.

India and Indian had arrived on the global economic stage. Activist Arundhuti Roy satirised President George Bush’s favourable view of “Innians”: “…I like rish Innians…they are obedient and brainy…they provide additional brainpower to help solve problems… Innia is important as a market for US products…one billion people to exploit…” Domestic Innians now shared the success of their immigrant countrymen.

India Shining…

India’s GDP rose by 43% between 2007 and 2012, slightly less that China which increased by 56% but much fast than developed economies which grew only 2%.

Economists rushed to out do each other in spruiking the India story. Forecasts of growth rates of 8.5% per annum or even higher became commonplace. Morgan Stanley, the US investment bank, predicted that India’s growth would reach 9-10%, outpacing China’s pedestrian 8% within three to five years. In a report titled India: Better Off Than Most Others, Macquarie Capital, argued that India’s traditional weaknesses -low exports, a predominantly state-owned financial system lightly integrated to foreign markets, sluggish export growth because of bureaucracy and the large domestic agricultural sector producing only for domestic consumption- were now strengths underpinning growth.

Indian leaders moved between international forums, basking in their new found status and power. Indian businessman made trophy purchases of business overseas, financed by debt. At the World Economic Forum at Davos, representatives of the Indian government and business announced that India could grow in its sleep.

India’s economic hubris was exemplified by a marketing slogan, first popularised by the then-ruling Bharatiya Janata Party (“BJP”) for the 2004 Indian general elections – “India Shining”.

While India’s economic progress was evident, the benefits were narrowly based. A large portion of the population continued to struggle with low living standards or poverty, lacking access to basic amenities such as sufficient nutrition, clean water, sanitation as well as basic education and health services. The basis of the growth was also not balanced.

After years without a good news story, the Indian media focused on the nation’s “greatnesses”, relying on extraneous facts. The fact that the market capitalization of State Bank of India surpassed that of Citigroup was cheered. The press celebrated the first Indian edition of Harper’s Bazaar, which featured a crystal-studded cover, the introduction by Rolls-Royce of its new Phantom Coupe in India and the opening of a new BMW showroom in Delhi.

Billionaires Shining…

India now had nearly 7% of the world’s 1,000 or so billionaires, despite its GDP being only 2% of world GDP. The total wealth of Indian billionaires is more than 20% of the nation’s GDP, about the same as Russia but higher than China where it was less than 3%.

Mukesh Ambani, head of Indian based petrochemical giant Reliance Industries, and the fifth richest man in the world with a net worth of around $50 billion, used his wealth to build Antilia, a $2 billion house within sight of some of Mumbai’s slums. The lavish property was dubbed India 21^st century Taj Mahal.

Controversial from the outset, Mukesh Ambani and his family reportedly have not moved into their new completed home, preferring to move between Antilia and their previous residence, Sea Wind. The press speculated that the building did not comply with principle of Vaastu, an Indian tradition similar to Feng Shui, the ancient Chinese system of aesthetics. Antilia’s shape was supposed to move energy beneficially through the building to improve the wealth and well being of residents. But it may violate of a key principle of Vastu. The building’s Eastern side does not receive ample morning light. It is more open to the West, which exposes it to negative energy.

Hindus believe that living in a building not built according to Vastu principles brings bad luck. In recent times, Mukesh Ambani’s empire has been adversely affected by a bitter fight with his brother Anil as well as legal and regulatory problems with some of his businesses.

Like Ambani, India’s bad luck may be just beginning, as growth slows rapidly and her problems mount.

Prime Minister Singh recently conceded that “it would be wrong to conclude that India is now unshakeably set on a process of rapid growth.” It was a contrast to Home Minister P. Chidambaram earlier optimism: “Thanks to our domestic consumption and demand, India and a handful of other countries, despite world gloom, are a shining example of a resilient economy”.

For Memorial Day Weekend, I thought I’d curate a few documents on war. Here’s the first:

HEADQUARTERS MILITARY DIVISION of the MISSISSIPPI in the FIELD
Atlanta, Georgia,
September 12, 1864

James M. Calhoun, Mayor,
E.E. Rawson and S.C. Wells, representing City Council of Atlanta.

Gentleman:

I have your letter of the 11th, in the nature of a petition to revoke my orders removing all the inhabitants from Atlanta. I have read it carefully, and give full credit to your statements of distress that will be occasioned, and yet shall not revoke my orders, because they were not designed to meet the humanities of the cause, but to prepare for the future struggles in which millions of good people outside of Atlanta have a deep interest. We must have peace, not only at Atlanta, but in all America. To secure this, we must stop the war that now desolates our once happy and favored country. To stop war, we must defeat the rebel armies which are arrayed against the laws and Constitution that all must respect and obey. To defeat those armies, we must prepare the way to reach them in their recesses, provided with the arms and instruments which enable us to accomplish our purpose. Now, I know the vindictive nature of our enemy, that we may have many years of military operations from this quarter; and, therefore, deem it wise and prudent to prepare in time. The use of Atlanta for warlike purposes in inconsistent with its character as a home for families. There will be no manufacturers, commerce, or agriculture here, for the maintenance of families, and sooner or later want will compel the inhabitants to go. Why not go now, when all the arrangements are completed for the transfer, instead of waiting till the plunging shot of contending armies will renew the scenes of the past month? Of course, I do not apprehend any such things at this moment, but you do not suppose this army will be here until the war is over. I cannot discuss this subject with you fairly, because I cannot impart to you what we propose to do, but I assert that our military plans make it necessary for the inhabitants to go away, and I can only renew my offer of services to make their exodus in any direction as easy and comfortable as possible.

You cannot qualify war in harsher terms than I will. War is cruelty, and you cannot refine it; and those who brought war into our country deserve all the curses and maledictions a people can pour out. I know I had no hand in making this war, and I know I will make more sacrifices to-day than any of you to secure peace. But you cannot have peace and a division of our country. If the United States submits to a division now, it will not stop, but will go on until we reap the fate of Mexico, which is eternal war. The United States does and must assert its authority, wherever it once had power; for, if it relaxes one bit to pressure, it is gone, and I believe that such is the national feeling. This feeling assumes various shapes, but always comes back to that of Union. Once admit the Union, once more acknowledge the authority of the national Government, and, instead of devoting your houses and streets and roads to the dread uses of war, I and this army become at once your protectors and supporters, shielding you from danger, let it come from what quarter it may. I know that a few individuals cannot resist a torrent of error and passion, such as swept the South into rebellion, but you can point out, so that we may know those who desire a government, and those who insist on war and its desolation.

You might as well appeal against the thunder-storm as against these terrible hardships of war. They are inevitable, and the only way the people of Atlanta can hope once more to live in peace and quiet at home, is to stop the war, which can only be done by admitting that it began in error and is perpetuated in pride.

We don’t want your Negroes, or your horses, or your lands, or any thing you have, but we do want and will have a just obedience to the laws of the United States. That we will have, and if it involved the destruction of your improvements, we cannot help it.

You have heretofore read public sentiment in your newspapers, that live by falsehood and excitement; and the quicker you seek for truth in other quarters, the better. I repeat then that, bu the original compact of government, the United States had certain rights in Georgia, which have never been relinquished and never will be; that the South began the war by seizing forts, arsenals, mints, custom-houses, etc., etc., long before Mr. Lincoln was installed, and before the South had one jot or title of provocation. I myself have seen in Missouri, Kentucky, Tennessee, and Mississippi, hundreds and thousands of women and children fleeing from your armies and desperadoes, hungry and with bleeding feet. In Memphis, Vicksburg, and Mississippi, we fed thousands and thousands of the families of rebel soldiers left on our hands, and whom we could not see starve. Now that war comes to you, you feel very different. You deprecate its horrors, but did not feel them when you sent car-loads of soldiers and ammunition, and moulded shells and shot, to carry war into Kentucky and Tennessee, to desolate the homes of hundreds and thousands of good people who only asked to live in peace at their old homes, and under the Government of their inheritance. But these comparisons are idle. I want peace, and believe it can only be reached through union and war, and I will ever conduct war with a view to perfect an early success.

But, my dear sirs, when peace does come, you may call on me for any thing. Then will I share with you the last cracker, and watch with you to shield your homes and families against danger from every quarter.

Now you must go, and take with you the old and feeble, feed and nurse them, and build for them, in more quiet places, proper habitations to shield them against the weather until the mad passions of men cool down, and allow the Union and peace once more to settle over your old homes in Atlanta. Yours in haste,

W.T. Sherman, Major-General commanding

Readers, thoughts?

NOTE I’m no Civil War scholar, and information on the web seems scanty and sometimes tendentious; but see here on the general destruction of Sherman’s march to the sea, and here for some background for the letter.

UPDATE Here’s a more complete set of the correspondence.

Ally Financial: Newly Released Letter Show Scope Of Possible Mortgage Screwups Huffington Post

Obama Campaign Proud of Bashing Teachers’ Unions Firedoglake

Romney Argues Big Spending Cuts Would Cause ‘Depression,’ Contrary To Tea Party Activists Huffington Post

Obama challenged in Arkansas primary Washington Post

Is Wikipedia Politically Biased?  Conversable Economist

Fresh Fears as EU Finalises Reform Plans CNBC

JPMorgan shakes up board risk committee FT

Russell Brand brings ‘consciousness’ (and comedy) to ‘Brand X’ LA Times (Why is this story included in links?  Hmmm…)

30 Famous People With Law Degrees Mental Floss

Students will be tracked via chips in IDs San Antonio Express-News

Facebook flop hurts small investors’ trust in stocks Reuters

What the hell is going on in Quebec? Boingboing

Jamie Dimon And The Legitimacy Of The Federal Reserve System Baseline Scenario

Fox sues Dish over ad-blocking feature; Dish fires back LA Times

* * *

D – 105 and counting. *

Lambert here:

Furious activity is no substitute for understanding. –H. H. Williams, Oakland, CA

Montreal. “The protesters raided their kitchens and took to the streets with everything but the sink. Pots, pans, colanders and wooden spoons were all part of the tintamarre that washed over the city’s east end in what may well have been the most peaceful demonstration in a week. [This would be Gene Sharp's Non-Violent Tactic of Protest and Persuasian #28, "Symbolic Sounds," as in Chile.] [A] large minority of the crowd were middle-aged. The 40-something woman brandishing a soup pot may well have been last night’s most quintessential demonstrator.” “Voters such as Mr. Robitaille give a hint at why the students’ lament tapped into a vein of discontent. ‘The increase for the students came at the same time we hear about all the corruption in Quebec,’ he said. ‘The government says there’s not enough money for education, but at the same time, government contracts for roadwork cost 35-per-cent more here. All these stories about collusion. It kind of makes me sick.” “And we understand that the best way for us to support students in Quebec is to actually challenge our own government.”

Open letter to police officers, sent from a retired colleague, on Bill 78: “You should show reservation and ask the authorization of the Supreme Court before implementing this law. You should announce that you will wait for the legality of this law to be confirmed BEFORE implementing it. … No one, no one, no one will ever reproach you for having been prudent.”

Let the pearl clutching begin! Toronto Grope and Flail, Margaret Wente: “Quebec’s tuition protesters are the Greeks of Canada.” Montreal Gazoo, Henry Aubin: “Montreal’s street drama is hurting the upcoming tourist season.” “‘Because I think it’s a very pitiful spectacle when our family squabbles are exposed at the Cannes international festival.’” Anarchopanda +1 fan! Il faut que ça change, eh?

AR. Wolfe (42% in primary ) denied delegates by Ds, files suit, asks court to order party to follow its own rules.

CO. A May 12 fundraiser, Rep. Mike Coffman R: “I don’t know whether Barack Obama was born in the United States of America.” Reporter: “Who is the real Mike Coffman? .. [The] moderate guy we see on camera [or] the guy who was caught talking to donors behind closed doors”? Donor bloopers: Discrepancy between what pols tell donors (future employers) and what they tell voters. And see below at WI.

IA (Swing State). OHQ airs seven different teebee ads in past two months, so they don’t think the state is safe for them. Ds Boswell (IA-03) and Loebsack (IA-02) join Rs Latham (IA-04) and King (IA-05) in backing Keystone XL.

IL. Gotham is so shopworn.

MI (Swing State). Detroit’s unemployment rate 28 percent—”but it also has one of the most well-developed urban agriculture scenes in the country.”

MN. Mankato Free Press opposes Photo ID constitutional amendment.

NM. The Piper Malibu carrying Governor Martinez and her husband landed “gear up” at Santa Fe Airport because the non-professional pilot forgot to lower his landing gear again after one aborted landing due to high winds. “Of course her tirade against state executive aircraft got her into this position. All because of her right wing advisors. They could have killed her with their little mud slinging culture war against state owned airplanes.”

OK. Bloomberg headline: “Chesapeake’s directors enjoyed cozy deals,” “repeatedly failed to exercise independent oversight.” Directors including Former OK Gov Keating, current OSU Pres Hargis. Then there’s the employment of Keating’s son and daughter-in-law, gifts to OSU.

VT. Vermont wind proposals (a handy map).

WI (Swing State). How to print signs and funding cable ads for Barrett. DNC’s Wasserman Schultz on Barrett loss: “I think, honestly, there aren’t going to be any repercussions”. “When you’re facing $25 million or more in super-PAC funds, you need money”. Prima facie evidence Walker “divide and conquer” video contradicts sworn Walker’s House testimony. (Note: Video was Donor Blooper. See above at CO.)

Inside Baseball. Poll: The political consequences of financial stress. “Bill Clinton is super hot”! Savvy businessmenpersons! Swing counties in swing states: CO: Jefferson and Arapahoe (25% of total vote); VA: Henrico (Richmond suburbs), Loudon and Prince William (suburban Washington, D.C.), Virginia Beach and Chesapeake Ciit (20%).

Elizabeth Warren. Globe tosses gasoline on “Warren’s ethnic claims,” lights match.

Roboma vs. Obomney. Glenn Greenwald has a useful chart of legacy party faction brand identities (“candidates”) ranked by campaign contributions (“bribes”).

Green Party. Green Party Canada: Foreign investment a threat to oilsands: Green Party leader. Constitutional ballot access cases now under way in AL, CA, GA, IL, NM, NC, OH, PA, and TN.

Ron Paul. “They changed the locks at party headquarters and announced Thursday they could now focus on electing ‘genuine’ conservatives, leaving infighting behind.” The [libertarian] gentleman nodded thoughtfully, and told me I’d earned his vote. It was a great feeling for me, but it’s a terrible, terrible sign for the Republican Party.”

ZOMG!!! Teh Debt! “[OBAMA:] What he did not also tell you was that after inheriting a trillion-dollar deficit, I signed $2 trillion of spending cuts into law, so now I want to finish the job [gawd help us all]. So, in the long run, Keynes was dead too? “[ROMNEY:] If you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5%. That is by definition throwing us into recession or depression. So I’m not going to do that, of course.” Wait, wait. Keynes is alive? And resurrected by Mitt Romney? (via)

Romney. “For the first time, neither party’s candidate is a white Protestant.” So Romney’s only technically white?

Obama. “‘I feel like they [OHQ] are overly relying on the have-nots out-voting the haves,’ said one well-known Democrat close to the campaign.” In a Washington Post/ABC News poll this week, nearly twice as many people said they were worse off financially under Obama than said they were better off. Obama runs much better with the college-educated white women than any other segment of the white electorate. Hence, Obama’s recent discovery of a war on women.

420. Booker tweets: “Drug war is a failure costing billions of tax dollars annually AND destroying lives, plus it has a glaring racial component @LibProgressive” True! And Booker’s timing is 1000% coincidental; see here at “Intercept!”… Don’t Barack that joint, my friend!

* 105 days ’til the Democratic National Convention ends with ashes and sackcloth on the floor of the Bank of America Stadium, Charlotte, NC. 105: “Bus route of the Damned” in Montreal.

A la prochaine fois!

* * *

And the antidote…

New York Attorney General Eric Schneiderman, one of the five officials in charge of the group, said it is making impressive progress but could accelerate those efforts with more investigators.

“Do I want more resources, want things to go faster? Yes,” he said in an interview. “Am I asking for more? Yes. Do I believe we’ll get that? Yes.” A spokesman for the attorney general declined to specify how many extra people are needed.

That’s a public quote, so Schneiderman is necessarily being passive aggressive about it.  This anonymous quote from a Politico story a few days ago is more brazen.

A government source working on housing issues said the unit is struggling in part because of a lack of commitment from the White House since its roll out in the State of the Union, citing a leadership vacuum since DOJ Associate Attorney General Thomas Perrelli left the Obama administration in February.

“It’s not happening at the level that it should be happening,” the source said. “There’s no person with juice at the federal level that is banging heads and making sure things are happening the way they should.”

Just what’s going on?  Who is unhappy with the deal cut at the State of the Union?  All the issued subpoenas by this task force have been civil, and bank attorneys are gearing up for monetary penalties.  So this isn’t a task force that’s going to put handcuffs on anyone significant, it’s a task force designed for public relations purposes.  Someone working on ‘housing issues’ is publicly praising Tom Perrelli, who structured the task force so it would be focused on civil rather than criminal penalties.   This person is also blaming the existing White House staff for not knocking heads, meaning that there is frustration that the PR campaign isn’t working as it should.  Whose ass is on the line here?  Certainly not Obama’s, who is going to do just fine, whether he goes on the speaker circuit and becomes immensely wealthy by taking financial services industry cash or gets reelected and then goes on the speaker circuit.  So who is trying to shift blame, anonymously?

My guess is that it’s coming from Schneiderman’s office, not because Obama isn’t living up to his promises, but because Obama’s broken promises mean that Schneiderman is slowly becoming an embarrassment and a laughing stock, seen both as a light-weight when it comes to legal work and a pushover in politics.

Schneiderman still has a few years left as AG, so he could turn it around, but these first couple of years have been remarkable.  Have you ever seen someone’s political reputation collapse this quickly without a sex or corruption scandal?

Another month of EU stasis is unlikely to prove a winning formula. The eurozone’s manufacturing and service surveys for May were the worst in 35 months. “Truly dismal,” said Howard Archer from IHS Global Insight.

“The Greek exit effect is starting to take its toll on an already brittle eurozone economy,” said Nicholas Spiro, from Spiro Sovereign Strategy. The danger is no longer what will happen if Euroland unravels, but “what is happening”.

Meanwhile, the new President of France is proving to live up to his nickname, “Marshmallow.”

Last month, I reported on two amendments put forward in the House Financial Services Committee which would substantially limit the undemocratic power of the Federal Reserve and the national bank regulator, the Office of the Comptroller of the Currency.  They would subject these agencies to the regular appropriations process, meaning that Congress could cut off their funds if there were policy disagreements.  Right now, the OCC gets its money from banks and the Fed prints its own budget (nice work if you can get it).  The amendment put forward to bring the OCC into line with democracy was offered by Rep. Brad Miller, and it lost by a vote of 22-35.  The Fed amendment lost by a vote of 24-33.  What’s interesting, though, is that while Barney’s amendment on the Fed lost in a straight party line vote, Miller’s OCC amendment would have won if the seven Democrats who voted against it had voted for it.

This is especially useful to consider in light of the JP Morgan Chase debacle, because a key regulator of JP Morgan Chase is the OCC.  The second key regulator is the Fed.

In other words, protecting the OCC and the big banks can be laid at the feet of both the Republicans on the committee AND the seven Democrats who voted with the GOP.  These members are Mel Watt, Gwen Moore, Ed Perlmutter, Joe Donnolly, Jim Himes, John Carney, and Gary Peters.  Four of those members are in the New Democrat Coalition (Himes, Peters, Carney, Perlmutter), two are Congressional Black Caucus and Congressional Progressive Caucus members (Watt, Moore), and one is a Blue Dog (Donnolly).  Jim Himes is particularly worth noting – he’s a smooth and handsome former Goldman Sachs employee from Connecticut who ran for Congress and won in 2008, and hired a former UBS lobbyist as his chief of staff.  Ed Perlmutter, another New Dem, literally owned part of a bank that had been sanctioned for unsafe and unsound practices.  Mel Watt, the Congressman from Bank of America, fought against a Fed audit until he was soundly thrashed by Ron Paul and Alan Grayson in committee.  Watt’s banking staffer, Sanders Adu, shortly departed to head Federal lobbying for Wells Fargo.  It’s a pretty business as usual lot.

But now they, as well as the Republicans, are on the record supporting the bank-friendly OCC.  And four of them, Donnolly, Himes, Peters, and Carney, as well as most Republicans on the committee, are on record supporting the Federal Reserve’s right to print money to fund itself.  The person they were protecting, in the vote for the OCC, was this woman, Julie Williams.

Williams is the Chief Counsel for the Office of the Comptroller of the Currency, and that’s her testifying in December, 2011 to the Senate Banking Committee on the OCC’s approach to foreclosures.  Her most recent feat of evil is the foreclosure review process (which one whistleblower has called a sham), where she hired consultants to review foreclosures who had previously been credit risk managers on the predatory loans that are now in foreclosure.  Some of these firms even “scrub files” on behalf of the banks themselves.  Of course, the corrupt shadow regulator the Promontory Group is in the mix, since Promontory has loads of former OCC-employees on its payroll (and was in fact founded by former OCC Chief Gene Ludwig).

According to Senator Jeff Merkley, the OCC tried to keep these consultants secret and then failed after public pressure forced them to divulge the consultants involved in the reviews.  Williams, of course, probably lied about it to the Senate.  In other words, Julie Williams is basically the Lex Luther of the bank regulatory community, overseeing the preemption of state and local lending laws that allowed the housing bubble to blow out, and now running and defending the “foreclosure review” process that the OCC is using to cover up servicer fraud from the banks.  The OCC, remember, is responsible for the safety and soundness of national banks, which means that the failure of most (though not all) of the big ones, including Countrywide (until late 2006), Bank of America, and Citigroup, can be laid at the feet of the OCC.

The OCC has a new head, Thomas Curry, who was just confirmed by the Senate.  I’m told that he’s a respectable regulator with integrity, but that he’s a bit cautious.  I suspect that if he’s going to succeed in reigning in a bank regulator that is renowned for a track record of catastrophic failure, Williams will have to either be fired or marginalized.

In order to regulate banks like JP Morgan effectively, you need regulators who are willing to do so.  As long as Julie Williams is with the OCC, we can be sure that she’ll do everything in her power to make sure the will won’t be there for a serious approach to dealing with the problems in our banking system.

As our political system sputters, a wave of innovative thinking and bold experimentation is quietly sweeping away outmoded economic models. In ‘New Economic Visions’, a special five-part AlterNet series edited by Economics Editor Lynn Parramore in partnership with political economist Gar Alperovitz of the Democracy Collaborative, creative thinkers come together to explore the exciting ideas and projects that are shaping the philosophical and political vision of the movement that could take our economy back.

As resistance has grown to America’s widening gulf between the “1 percent” and the rest of the population, something new has exploded in America’s communities; “community wealth building” is an explicit strategy to democratize the ownership of wealth from the ground up. With traditional regulatory and tax-and-spend approaches faltering at every level, the notion that we should create new democratic economic institutions to build wealth, community by community, is quietly gaining traction. We now have the potential for larger and longer-term transformation throughout the nation.

Power for the People

The central idea is simple: people join together through some form of public, community or employee-owned business to meet local needs and thereby regain a measure of local economic democracy and control. Partly self-help, partly community mobilization, and partly sketches for future system-wide expansion, community wealth-building efforts can be found in virtually every region of the country. The range of efforts is vast. Community wealth-building institutions include community development corporations, community development financial institutions, social enterprises, community land trusts, employee-owned enterprises, and cooperatives. All pool capital in ways that create new jobs and anchor jobs in communities.

The efforts also define a new approach to challenging corporate power— a strategy that changes who owns, controls and benefits from the underlying economic wealth of the system. It involves not merely replacing private capital, but displacing it through developing community ownership of business. In other words, profits should flow to workers, consumers or the community—rather than outside investors. And these businesses need to succeed! Increasingly, too, ecological concerns are structured into the very core of many models.

Transformation Everywhere

Examples of the new approach are evident around the world, including worker-cooperatives in Argentina; the Grameen Bank of Bangladesh (which, with its founder, Muhammad Yunus, won the 2006 Nobel Peace Prize); and the Mondragón cooperative network in northern Spain, which employs nearly 85,000.

Non-profit social enterprise is a community wealth building strategy through which nonprofits independently secure resources to meet their missions in the absence of adequate government support. In San Francisco, a group known as REDF (formerly the Roberts Enterprise Development Fund) has helped boost the business activity of 50 social enterprises that have employed 6,500 people and earned revenues of more than $115 million. Three-fourths (77 percent) of social enterprise employees interviewed two years later were still working. Average employee wages had increased by nearly one-third (31 percent) and monthly incomes had almost doubled (90 percent). One of the enterprises in REDF’s portfolio is Buckelew Programs, a mental health agency with 220 employees that provides a continuum of services to roughly 7,000 clients each year and operates three social enterprises, including a green café and a green cleaning service, as well as a staffing service. This year, it intends to open a fourth social enterprise, a fresh-cut produce processing business.

In Grayland, Washington, Coastal Community Action—a nonprofit agency that operates a range of housing, food, healthcare, and employment programs—has built a 6 MW wind farm consisting of four wind turbines. The wind farm, which sells energy to the electrical grid, generates enough power to satisfy the energy needs of more than 1,500 households. The nonprofit estimates that its ownership of the $14-million wind turbine project generates $720,000 in unrestricted income each year, enabling it to increase service delivery options, lessen its local dependence on outside funding, and supplement the community’s ongoing projects and to meet more of the community’s needs.

In Seattle, Pioneer Human Services, founded in 1963, offers drug- and alcohol-free housing, employment, job training, counseling, and education to recovering alcoholics and drug addicts. It employs a total of 1,000 people and finances 99 percent of its $70 million budget through fees for services and earnings generated in the manufacture, distribution and sale of products. Businesses include retail cafés, sheet metal fabrication, aerospace precision machining (it’s a contractor for Boeing), wholesale food distribution, and contract packaging. Not only do these enterprises build community wealth and provide independent resources that finance social services, the businesses themselves are central to Pioneer’s mission of helping “people on the margins of society” stay out of prison and off the streets, enabling Pioneer to employ more than 700 men and women drawn from the ex-offender, homeless and drug-recovery populations it serves.

Community development corporations (CDCs), formed initially in the 1960s in a crucible of urban riots and rural neglect, now perform important community wealth-building and planning roles in cities and counties across the United States. CDCs can be found in virtually every major city. A Massachusetts study found that between 2003 and 2011, Massachusetts-based CDCs created or preserved over 9,000 homes and 14,000 jobs, while supporting more than 8,000 businesses and 160,000 families, generating nearly $2 billion of economic activity. A 2005 survey found that nationwide an estimated 4,600 CDCs help create 75,000 jobs per year.

Community development financial institutions (CDFIs), first given federal recognition in the 1990s, have the explicit aim of building wealth in low-income communities through providing financing where conventional lenders fear to tread. Even in the face of contracting conventional finance, assets in community investing institutions rose more than 60 percent–from $25.0 billion in 2007 to $41.7 billion–in 2010. In 2008 alone, credit unions financed and assisted businesses and microenterprises that created or maintained 35,624 jobs, financed the construction or renovation of 60,205 units of affordable housing, and provided 16,405 responsible mortgages to first-time and other homebuyers.

Community land trusts provide still another powerful illustration of community wealth building. Beginning in the 1960s and 1970s, pioneers like Bob Swann in western Massachusetts and Charles Sherrod in Georgia struggled against huge odds to develop modest land trusts efforts, often also involving other concerns, like respect for environmentally sound land use practices and rural community development. Today hundreds exist; in Irvine, California, the city’s strategic plan calls for 5,000 units of housing to be developed using land trust strategies.

Trusts of this kind keep the ownership of land underlying housing in non-profit or public ownership. Appreciation in land values is split via a formula between the homeowner and the trust, thereby avoiding gentrification. A study of a community land trust in Burlington, Vermont — the nation’s largest — also found that during its first two decades, 61.9 percent of residents who sold their land trust home after an average residency of six years were able to “step up” to traditional homeownership. Meanwhile the equity gain that the trust retains enables it to continue providing affordable housing to future generations. In a down market, community land trusts are even more important. Simply put, community land trusts keep people in their homes. A 2011 study found that land trust homeowners were 10 times less likely to be in foreclosure proceedings than conventional homeowners.

Employee ownership is another powerful community wealth-building strategy. The National Center on Employee Ownership (NCEO) estimates that in 2009 there were 9,800 companies owned in whole or part by workers through their pension contributions through a form of ownership known as an employee stock ownership plan or ESOP. As of 2009, there are 10.3 million employee-owners of companies own in whole or part by ESOPs, with net assets of $869 billion. In other words, the average ESOP employee-owner has an ownership stake of over $84,000. NCEO estimates that since 2009 the number of ESOPs has climbed over 10 percent to 10,900 companies.

Employee ownership also has powerful economic stabilizing effects: between 2000 and 2008, while the number of manufacturing jobs fell 29 percent in the state of Ohio, employee-owned manufacturing jobs held steady, dropping only 1 percent. Nationally, in 2010, 12.1 percent of all workers—nearly one in eight—had faced a lay-off in the previous 12 months; by contrast, only 2.6 percent of workers who were employee-owners were laid off.

Sharing the Wealth

Perhaps the most visible form of a community wealth building is the cooperative. More than 130 million Americans are currently members of a co-op or credit union. Because many Americans own shares in more than one co-op or credit union, the total number of co-op memberships in the United States exceeds 350 million. Overall, a 2009 University of Wisconsin study found that nearly 30,000 cooperatives in the U.S. account for more than $3 trillion in assets, $514 billion in total annual revenue, and provide 856,000 jobs.

Credit unions are governed by the core cooperative principle of one-member, one-vote. Importantly, they make their loans directly to their members – member-owners of credit unions can be confident that their deposits will be reemployed productively through loans that help finance local consumer purchases, create jobs and build wealth at home.

Another powerful community wealth-building mechanism is the state-owned bank. In North Dakota, a state-owned bank has operated since 1918, earning the state more than $300 million over the past decade, while helping support local banks and local community investment. Legislation exploring or creating such banks has been introduced this past year in more than a dozen states, including Arizona, California, Hawaii, Illinois, Louisiana, Maine, Maryland, Massachusetts, Montana, New Mexico, New York, Oregon, Virginia, and Washington.

As experience with the various democratized forms has become increasingly enriched over time, innovative strategies of collaboration among enterprises and/or with local governments have also begun to emerge. In California, a comprehensive, community-owned development project consciously links individual and collective wealth building in the diverse working-class Diamond neighborhood in southeast San Diego. With the support of the Jacobs Family Foundation, the community raised philanthropic and government funding to develop a commercial and cultural complex, anchored by a shopping center. A key element was the community public offering, which provided community residents and employees an exclusive opportunity to buy shares (valued at $200 and capped at $10,000) for a total 20 percent ownership stake in the project. As one community owner noted, “That we own stock, and that we have an opportunity to make a difference in what type of business goes in the community [is unbelievable]. We have some say-so in the community environment.”

The Neighborhood Unity Foundation also has a 20 percent ownership share that provides it with a sustainable source of funding for its community wealth building efforts. The Jacobs Family Foundation, which retains 60 percent ownership, intends to turn over its share to community owners by 2018. Ultimately, area residents will own 50 percent of the project and the neighborhood foundation the other 50 percent, retaining the profits generated to benefit the community rather than outside investors.

In Cleveland, Ohio, an integrated group of worker-owned companies, supported in part by the directed purchasing power of large hospitals and universities, has opened a major new vector of urban strategy. The first of Cleveland’s planned network of cooperatives opened its doors for business in September 2009. The co-op industrial scale laundry is a state-of-the-art, ecologically green, commercial facility capable of handling 10 million pounds of healthcare linen a year. Its sophisticated business plan provides all employee-owners a living wage and health benefits. If current projections are realized after seven years on the job each employee will have a $65,000 equity stake in the enterprise.

In October 2009 a second employee-owned, community-based energy company began large-scale installations of solar panels for the city’s largest nonprofit health, education and municipal buildings. (Additionally, it provides home weatherization services.) A third business scheduled to start operations this year is a year-round hydroponic food production greenhouse capable of producing three million head of lettuce and approximately 300,000 pounds of basil and other herbs a year.

More to Come

Many other enterprises are in the planning stage. Cleveland mayor Frank Jackson praised the co-ops for being “a model for how we can put our people back to work and rebuild our community.” A growing number of economic development officials, tired of chasing corporations with public subsidy dollars, like the idea of creating anchored, community-owned enterprises that won’t get up and move. Already, the Cleveland co-ops have inspired efforts in other cities to develop similar networks, including Amarillo, Texas; Atlanta, Georgia; Pittsburgh, Pennsylvania; and Washington, DC.

Community wealth-building strategies offer powerful possibilities for longer-term change. First, in most instances, the new wealth-democratizing approaches provide responses (or suggestive directions of response) to economic dislocation and social pain where traditional political approaches have failed. Second, in many instances, they involve quite unusual local alliances, frequently including small business and religious leader support. Third, often the institutional trajectories have also begun to define (and secure) new supportive measures from local, state and national policy makers, thereby also beginning to define new directions for potential ongoing and more expansive policy and political action. Finally, that they are based in local, everyday experience may also lead to changes in the foundations of political and democratic cultural development over time.

Together the above suggest a long, slow developmental arc left in the wake of the failure of conventional politics and economics. And already, a growing number of Occupy activists are looking to worker-owned cooperatives as a way to self-fund the movement, displace corporate economic space, and develop an economic base that can support alternative economic and political formations. The path to building a truly democratic economy may be long, but the growing base of community wealth building institutions provide some building blocks that, over time, suggests the quiet development, potentially, of the basis for a community-sustaining economy that serves the interest of all Americans, rather than our current system which disproportionately benefits the wealthiest at the expense of the 99 percent.