ALL OF MARYLAND'S CANDIDATES FOR GOVERNOR SUPPORT THIS PRIVATIZATION OF HEALTH CARE AND EDUCATION----WHERE IS LABOR AND JUSTICE!!!
As you see your state is using your medical data for government revenue but selling it for pennies on the dollar as the corporations that buy it from the state then sell it for billions. This is what makes the state sponsored health co-ops ready to roll in cash. Drs Sharfstein, Barbot, and Beilensen are all part of this system of moving health information for sale under the guise of containing health care costs and giving better quality health service. The using of taxpayers/public wealth to boost private profit has become standard just as O'Malley ties the state to all kinds of credit bonds while knowing the economy is going to crash. Billions of public money was moved to Wall Street from government coffers through fraud and public malfeasance and now, not only your Entitlements will be stolen----your personal data will be used by health professionals to cash in on you. Think being forced to purchase health insurance and then not be able to access care is a bad policy? Think about it from a corporate profit standpoint from which it comes......you will pay a premium to access what is mainly preventative care costing little while all of your medical data is sold and billions of dollars made on those sales. Much of these premiums will be taxpayer subsidies that offer little quality of care but move money-making health data to market.
The same thing is happening to education. All of what they are installing in education has nothing to do with quality and achievement----it has to do with moving public money to corporate profit.
THIS IS WHAT MAKING PUBLIC SERVICES A BUSINESS IS ALL ABOUT!
Below you see a link to what is a long list of patents by this former #1 ranked hospital. It is so captured by corporate interests that it is now the pits in patient care.
MAYO FOUNDATION FOR MEDICAL EDUCATION AND RESEARCH Rochester, MN
US MAYO FOUNDATION FOR MEDICAL EDUCATION AND RESEARCH Patent applications
If you notice all of the NIH grant money that comes to these patent-laden institutions involve clinical research that leads to patents. In Baltimore, Johns Hopkins has so many clinical research operations that target people who cannot afford health care that citizens avoid going to this hospital at all cost.....they say they are used for research....AND THEY ARE. So, NIH funding has increased....Obama and neo-liberals made funding NIH and building research building for this research #1 priority in 'job creation' funding. TRILLIONS OF TAXPAYER DOLLARS ARE BEING SENT TO BUILD WHAT IS A CORPORATE STRUCTURE FOR HEALTH CARE WITH NO THOUGHT OF PATIENT ACCESS AND QUALITY CARE BUT ONLY RUSHING TO MARKET AND SELLING PATENTED MEDICAL DEVICES AND PROCEDURES TO A GLOBAL MARKET all while US citizens are now able to access less and less in all this health care they paid to develop. That is it!
Is funding health research bad? Of course not. It becomes bad when research is driven by what is profitable and not what is needed by patients for their well-being.....WHICH IS WHAT IS HAPPENING.
No ordinary cancer drugs in stock because these patents are no longer profitable causing people to die from lack of access! THAT IS NAKED CAPITALISM SAY NEO-LIBERALS AND MARYLAND POLS ARE ALL NEO-LIBERALS!
SHAKE THE BUGS FROM THE RUG AND RUN AND VOTE FOR LABOR AND JUSTICE IN ALL PRIMARIES!
Your Medical Records Are for Sale
By Jordan Robertson August 08, 2013 Photograph by Heimo Schmidt Bloomberg Financial
As hospitals shift to digital medical records, administrators promise patients better care and shorter waits. They often neglect to mention that they share files with state health agencies, which in turn sell the information to private data-mining companies. The records are stripped of names and addresses, and there’s no evidence that data miners are doing the legwork to identify individual patients. Yet the records often contain patients’ ages, Zip Codes, and treatment dates—enough metadata for an inquiring mind to match names to files or for aggressive companies to target ads or hike insurance premiums.
Latanya Sweeney, the director of Harvard University’s Data Privacy Lab, identified 35 patients from a Washington database by buying state medical data and creating a simple software program to cross-reference that information with news reports and other public records. “All I have to know is a little bit about a person and when they went to a hospital, and I can find their medical record in this kind of data,” Sweeney says. She says data in 25 other states are just as vulnerable.
From a brief local-news story on a motorcycle crash, she matched retired Vietnam veteran Ray Boylston to a patient file documenting a broken pelvis, ruptured spleen, kidney failure, and bladder removal. “I feel I’ve been violated,” says Boylston, 62. “I don’t really feel that the public has a right to read up on my medical history.” Most of the patients whose names Sweeney uncovered asked to remain anonymous, including an executive treated after being assaulted whose medical records say he’s addicted to painkillers. Another businessman, who appeared in a missing-person report, has been diagnosed with pancreatic cancer and attempted suicide by poison, according to his medical records.
STORY: Engaged? Have Heartburn? Own a Boat? Your Data's Worth More Exempt from federal health-privacy laws, states have long sold medical data to help finance public health studies. Demand for the information, which is relatively cheap, has shifted from university research programs to commercial data miners, which incorporate it into reports and databases they sell to direct marketers, insurers, and makers of drugs and medical devices. Twelve of the most populous U.S. states generated $1.91 million from 1,698 data sales in 2011, the latest year for which figures are available, public records show. (The data-mining industry, which buys the information and resells it to medical companies, will top $10 billion in revenue by 2020, McKinsey estimates.) Washington State’s health agency sold its database 95 times that year, collecting a mere $15,950. Donn Moyer, a spokesman for the state’s health department, says it chose to release extra identifying information such as patients’ Zip Codes to make its data more useful.
Companies that buy the state data include IMS Health, a provider of prescription data; OptumInsight, a division of UnitedHealth (UNH), the biggest U.S. health insurer; and WebMD (WBMD). Danbury (Conn.)-based IMS purchased Boylston’s record, as did IVantage Health Analytics, a Portland (Me.)-based evaluator of hospital performance. IMS’s U.S. marketing director, Jody Fisher, says his company, which sells medical data to drug companies for sales pitches to doctors and consumers, maintains a database of 260 million prescription-drug patients but doesn’t try to identify any whose names have been redacted. John Morrow, executive vice president of IVantage, says his company scrubs information like Zip Codes. With that kind of identifier, he says, “You might as well have the patient’s electronic medical record number.”
Jim Pyles, a principal at law firm Powers Pyles Sutter & Verville who specializes in health law and policy, says digitized medical data has the potential to prevent physicians from missing a key element of a patient’s history or to help analysts identify larger health trends, such as hospital costs or the spread of diseases. The sale of that data, though, makes patients even more vulnerable than they already are in an era of increasingly sophisticated hacking, he says. “Electronic health information is like nuclear energy,” Pyles says. “If it’s harnessed and kept under tight control, it has potential for good. But if it gets out of control, the damage is incalculable.”
VIDEO: Your Health Data for Sale: Who's Selling, Buying? Health agencies for Washington, Tennessee, Nevada, and Arizona say they have begun reviews of their collection policies following a Bloomberg News story published on June 5 about state health data collection. (Washington now requires buyers to sign a confidentiality agreement, though a full review of the policies will take months, says Moyer.) California, Illinois, New Jersey, Massachusetts, Connecticut, Nebraska, and Alaska already had reviews under way, according to those states’ agencies. “The real takeaway,” says Harvard’s Sweeney, “is we can do better than this.”
Another Example Of How Patents Skew Medical Research
from the why-bother? dept
When it comes to patents, the argument for pharmaceutical patents is a lot more compelling than for many other areas. However, as you start to dig into the details, the argument for pharma patents becomes a lot more troublesome in that it creates incentives that have little to do with improving healthcare, and quite a lot to do with what can be patented. The monopoly power granted by patents pushes all research money into only things that can be patented, ignoring other possible cures, even if they can be both profitable and quite helpful. A recent GAO study found this to be a worrisome trend, noting that fewer new innovative drugs are being created -- with pharma firms instead focusing on ways to extend the patent protection on existing products by pulling a few tricks (such as "reinventing" Claritan as Clarinex just to get more patent coverage).
William Stepp points us to an example of how this focus on patents has helped to hold back one doctor's promising research on a way to help heal brain injuries. The doctor in question had come across some interesting findings back in the 1960s, but one of the problems in getting support for the research was that the findings wouldn't produce a patentable pharmaceutical product. Instead, it just showed that progesterone, a natural female hormone, could help heal brain injuries. Since it's just a natural hormone, there's nothing that can be patented, and the doctor had a very difficult time finding anyone to back the research. After decades of working on it -- often completely on the side, it seems that he's finally been able to build up some support -- and it turns out that his early findings did make sense and that the results appear to work equally well in humans as in rats (his initial test subjects). This is a clearly a big discovery -- and it was delayed decades because the focus on patents obscured the bigger issue.
This is the exact same thing that is seen repeatedly in Andy Kessler's book, The End of Medicine about the healthcare system. Time and time again, it's the pharmaceutical industry and their focus on what can they patent (rather than what can be done to improve healthcare) that gets in the way of real improvements that could save lives. The focus on what can be patented, and the games played to extend patents (at great costs) means that money that should be going towards much more useful areas of healthcare get diverted into less useful, but artificially profitable, endeavors. That's what happens when you set up artificial monopolies. ______________________
This is a long and technical article so just scan it if you are not interested. What it shows is the growing use of medical academic patenting through Clinton years. You can imagine how this sky-rocketed during the Bush years and Obama made it a point to fund this corporate university structure to the max under the guise of 'job creation' because health and education are the next global markets.
All of this funding for corporate universities comes at a cost.....funding public health for people has to go so this is why we have health care reform that will keep most people from accessing care. Nothing like cutting down on Medicare spending by making people unable to access care! Student tuition too high----WELL SOMEONE HAS TO PAY FOR THE ADMINISTRATION OF CORPORATE UNIVERSITY PATENTING COSTS!
MARYLAND IS #1 IN ALL OF THIS CORPORATIZATION OF UNIVERSITY CAMPUSES!
The Anatomy of Medical School Patenting
Pierre Azoulay, Ph.D., Ryan Michigan, M.Phil., and Bhaven N. Sampat, Ph.D.
N Engl J Med 2007; 357:2049-2056November 15, 2007DOI: 10.1056/NEJMsa067417
Over the past quarter century, faculty members at U.S. medical schools increasingly have become involved in a range of commercial activities, including patenting and licensing. The dramatic growth in academic biomedical patenting and licensing has been accompanied by an equally striking growth in controversies and concerns relating to these activities and to academic–industry relationships in the life sciences more generally.1,2
One concern relates to the effects of increased academic patenting and licensing activity on the values and culture of medical schools.3,4 A related concern is that growth in these activities reflects a shift from fundamental to applied research at medical schools.2 Whereas these issues arise in debates about the effect of patenting on the academy generally, a specific concern regarding academic medical centers is that potential conflicts of interest may arise when clinical researchers obtain patents on therapies they are testing in patients. However, other commentators have cautioned that these criticisms of patenting by academic faculty members and university–industry relationships in academic medicine are misguided and overblown.5,6
There are few systematic data regarding the growth of patenting in medical schools, the extent of faculty involvement in patenting, and the characteristics of medical school faculty who patent. Most of the evidence of the participation of biomedical researchers in commercial activities is based on anecdotal reports or cross-sectional survey results.7 We conducted a systematic, longitudinal analysis of patenting in medical schools with the use of a data set that combines information about all medical school faculty members, patents, and National Institutes of Health (NIH) grants during the period from 1981 through 2000.
Methods Collection of Data
Our data set is based on three main sources: the Association of American Medical Colleges (AAMC) Faculty Roster, which includes information on active full-time faculty from all medical schools during the period from 1981 through 2000; the NIH Consolidated Grant Application File (CGAF), which provides information on grants awarded, principal investigators and their institutions, and several project characteristics; and the database of patents issued by the U.S. Patent and Trademark Office (USPTO) during the period from 1976 through 2004. The USPTO database contains information on issued patents, the inventors listed on the patents, and the institutions to which they are assigned.
We collected data from the AAMC Faculty Roster on 158,266 faculty members with an M.D. degree, a Ph.D. degree, or a joint M.D.–Ph.D. degree. We also extracted demographic information such as the faculty members' sex, department, and experience (years since the last academic degree had been earned).
Some inaccuracies in the AAMC Faculty Roster data reflected lags in reporting changes in academic appointments. These inaccuracies did not compromise our ability to match faculty members with NIH grant data, since the two data sources included a common set of individual-level identifiers. However, these inaccuracies were an issue in matching faculty members with the patent data for which no such identifiers exist, and our matches were instead based on the faculty member's name and institutional affiliation. For the subgroup of faculty members who were both NIH grantees and patent holders, we found a 1-year lag in recording appointment transitions for 5% of the faculty members and a 2-year lag in recording such transitions for an additional 2% of the faculty members.
We began by matching the AAMC Faculty Roster data to the USPTO data, using information on individual names, institutions, and the timing of patenting. To prevent a compromise of this matching process because of the lags in the reporting of affiliation changes — that is, to avoid false negative results — we identified each faculty member whose name (or variant thereof) appeared in both the AAMC Faculty Roster and the patent database but whose institutional information did not match, and we used information from Web pages, publication history, and patents to determine whether the faculty member was in fact the same person. Similarly, to guard against false positive results, we used such information to determine whether a person with a common name was in fact the same person. Specifically, we paid particular attention to the records containing a last name that was common to five or more faculty members in the AAMC Faculty Roster.
On the basis of these matches, we obtained counts of all awarded patents that were applied for during the period from 1981 through 2000 and granted by 2004 to each of the faculty members. We also determined the cumulative number of patents granted to the department with which the person was affiliated.
Finally, we used the unique individual identifiers in the AAMC and CGAF databases to collect information on grants awarded to the medical school faculty members, including data on amounts awarded per year. Because we were interested in grants reflecting individual-level research productivity, we concentrated on individual awards, including research grants, cooperative agreements, research and development contracts, and career awards.
We pooled data on medical school faculty, NIH grant activity, and patenting to examine changes in the propensity to apply for a patent during the period from 1981 through 2000, the distribution of these activities among departments, and the relationships between individual-level patenting and variables associated with individual faculty members, including sex, academic degree, experience (years since the faculty member's last academic degree had been earned), patenting by departmental peers, and history of NIH funding.
In addition to basic descriptive statistics, we used regression modeling to estimate the number of patents that a faculty member would be expected to receive according to the date of the application year of the patent. Since the dependent variable — the number of patents — is a count variable, we estimated Poisson models. Estimates are presented as relative rates, or the effect of a unit change in an explanatory variable on the relative rate of patenting. Coefficients of less than 1 indicate that a variable has a negative effect on patenting, whereas coefficients exceeding 1 indicate a positive effect on patenting.
The first model related patenting to the following factors: the faculty member's years of experience since he or she received the last academic degree and the square of this number of years (to capture variations in the propensity to apply for a patent over the life cycle), variables indicating the type of degree, sex, an indicator variable for each department, and an indicator variable for each year (to capture secular changes in the propensity to patent).
The second model included a set of variables to capture the variation in past research productivity. These variables were the dollar amounts of previous NIH funding received. We deflated these amounts by means of the Biomedical R&D Price Index to adjust for inflation.8 A cumulative funding variable, the total “stock” of NIH funding, captures both the person's past research intensity and scientific eminence, as determined by the NIH peer-review community. Our model also included 1- and 2-year lagged NIH funding measures. After adjustment for the cumulative stock of NIH funding, these measures captured the effects of recent deviations from the level of funding that would be predicted from a person's history. Although we could not directly measure the effects of departmental “culture” on a person's propensity to apply for a patent, we used the cumulative number of patents granted to the department in which the person worked as a proxy variable.
Because of potential unobserved correlations between the characteristics of individual faculty members and these variables, we also estimated a third model with indicator variables (fixed effects) for each faculty member. The estimates from this model were based solely on changes in the explanatory variables and patenting during a faculty member's career. Faculty variables that did not vary over time (e.g., academic degree, sex, and department) were not included in these models, since they would be collinear with the faculty-member indicator variables. Moreover, in the conditional Poisson model, estimates were based only on observations in which the sum of the outcome variable was not zero — that is, data for faculty members who had at least one patent during their career.9
Growth of Patenting by Medical School Faculty Figure 1Figure 1Medical School Patenting, According to Issue Year, from 1976 to 2003. shows that the number of patents granted to faculty members from the AAMC Faculty Roster increased dramatically over time. The number of patents granted to medical school faculty increased from 122 in 1976 to 2175 in 2003 (with a peak of 2664 in 1999). This increase was not simply due to the increase in the number of medical school faculty during this period, since the increase was also evident on a per capita basis, as shown in Figure 1.
Moreover, Figure 2Figure 2Medical School Patents, Academic Patents, Total Biomedical Patents, and Total Patents, According to Issue Year, from 1976 to 2003. shows that patents granted to faculty members of medical schools accounted for an increasing share of all academic patents (from 29% in 1976 to 53% in 2003), even though the share of all domestically assigned patents from universities increased during this period. Similarly, academic biomedical patents represented an increasing proportion of all domestically assigned biomedical patents awarded during this period, even though biomedical patents increased as a share of all domestically assigned patents during this period.
Distribution of Patenting by Institution and Department
Table 1Table 1Distribution of Patent Holders among Departments. shows the number of patent holders and the total number of faculty members by department among medical schools. During the period from 1981 through 2000, a total of 7874 of these persons (5%) applied for at least one patent that was subsequently granted. Although the total numbers shown in Table 1 are based on the number of patents granted per year, the data on patents issued per faculty member that are presented here and below are based on the application date, since the application date was closer to the time when the research was completed.
The propensity to apply for a patent varied strikingly among departments. Although much of the discussion about the effect of patents on medical schools concerns faculty members who are engaged in patient-oriented research, in our study, the share of faculty members from clinical departments who were patent holders was 3.5%, which was significantly lower than the 12.1% of faculty members from basic science departments who were patent holders. Although in absolute terms there were more patent holders from clinical departments, this was due to the larger size of these departments (especially internal medicine) relative to the size of basic science departments.
Faculty Characteristics and Patenting
Table 2Table 2Characteristics of Faculty Members. shows the distribution of faculty members who were granted patents during this period, according to whether or not they were NIH grantees, sex, and academic degree. Overall, almost 5% of faculty members were issued one or more patents that were applied for during the period from 1981 through 2000. Moreover, the propensity to apply for a patent was significantly higher among NIH grantees than among non-NIH grantees. The propensity to apply for a patent was also significantly higher for faculty members with Ph.D. or M.D.–Ph.D. degrees than for those with M.D. degrees. We determined the robustness of these correlations in multivariate regressions.
Table 3Table 3Rate of Patenting According to Faculty Characteristics and NIH Funding. shows the results of the multivariate Poisson regression models. The findings from our first model do not include the NIH funding variables. The estimated coefficients for experience suggest a curvilinear effect of experience on the probability of patenting with the probability peaking 12 years after a researcher earned his or her final academic degree and declining thereafter. These multivariate results also confirm the results shown in Table 2. Female faculty members were 63% less likely to be patent holders than their male counterparts (P<0.001). Moreover, the probability of being a patent holder was significantly higher for medical school faculty members with Ph.D. degrees or M.D.–Ph.D. degrees than for faculty members with M.D. degrees. When all other variables in the model were held constant at their mean values, faculty members with Ph.D. degrees and those with M.D.–Ph.D. degrees were almost three times as likely to be patent holders as faculty members with M.D. degrees (P<0.001). Finally, a person's propensity to apply for a patent was also positively associated with the cumulative number of patents applied for by other faculty members in the same department.
The results of the second model also include the variables for previous NIH funding. A faculty member's NIH funding in the previous year was positively associated with the propensity to apply for a patent. The effect was also significant (P<0.001). At the mean values of the other variables, an increase of 1 SD ($290,413) in NIH funding in the previous year was associated with a 2.08% increase in the probability of applying for a patent. NIH funding 2 years previously did not have a significant effect on the probability of applying for a patent, although the cumulative stock of lagged funding did have such an effect.
The third model includes indicator variables for each faculty member. The corresponding estimates are based solely on changes in the explanatory variables and patenting during a faculty member's career. After including individual effects, the influence of NIH funding in the first year remained positive and of the same magnitude as that in model 2, but the effects of funding in the second year and of cumulative funding up to the third year were no longer significant.
Our results clearly show an increase over time in the number of patents held by faculty members of medical schools during the period from 1981 through 2000. Although there is some evidence of a recent decline, it is unclear whether this decline is a deviation from the long-term trend. Overall, there has been an increase in the number of patents held by faculty members in academic medical centers during the past decades. This increase is of interest, given the historical reluctance by medical school faculty, and medical schools themselves, to be involved in these activities. At first glance, these results provide support for the notion that there has been a change in norms for patenting in U.S. medical schools.
However, we also found that patenting is concentrated among a relatively small number of departments and faculty members within medical schools. In particular, clinical faculty members were much less likely to be patent holders than their counterparts in basic science departments. In part, this difference reflects the fact that a substantial number of clinical faculty members are primarily engaged in clinical work and are therefore less “at risk” for patenting than faculty members in basic science departments.
We observed a strong positive relationship between recent scientific productivity, as measured by receipt of NIH funding, and involvement in patenting. This relationship may reflect the direct effect of NIH funds on the number of patents; in other words, faculty members with more resources generate more patents. Another interpretation is that the results of new research — those likely to pave the road for future NIH grants — are also likely to result in patents. Our finding that patenting activity was most strongly related to NIH grants received in the previous year provides some support for the latter interpretation, since it is implausible that these recent grants were directly resulting in patents. However, we cannot make this conclusion definitively, since the values of the variables associated with lagged funding are likely to be similar, given a 3-to-5-year grant cycle for NIH grants.
We also found that patenting activity within academic departments was associated with the propensity of individual faculty members to seek patents. Previous literature suggests that academic institutions vary with regard to perceptions of whether patenting and technology transfer are consistent with their missions.10 Our results suggest that views on patent holding differ among academic disciplines and, thus, among departments. However, they could also reflect labor-market sorting; that is, persons may be more likely to be attracted to (or attractive to) departments with faculty members who have similar patenting proclivities.
One potential limitation in interpreting our results is that different types of NIH grants may provide different signals of investigative vigor. Although all of the results described above are based on a specific set of individual-level grants, additional analyses showed that the results are robust with regard to the inclusion of center grants or to a definition of funding that is restricted to R01 grants (i.e., grants for research initiated by individual investigators).
In addition to the variables that we included, another potentially important factor affecting the propensity to apply for a patent at the individual or institutional level is industrial funding of biomedical research. Unfortunately, systematic data on this variable are unavailable.
Our data and analyses suggest that, increasingly, medical school research leads to patents, as well as to more traditional outcomes of scientific research. However, our results do not speak to the effects of increased patenting on the transfer or diffusion of patented knowledge. The consequences of these changes will depend on whether and how the patents affect the extent of university–industry technology transfer and the productivity of subsequent scientific research.11 These are extremely important topics for future research.
Finally, although much attention has been focused on clinical researchers, our data show that the proportion of clinical faculty members who are patent holders is extremely small. Most clinical faculty members are not patent holders and are thus not subject to the conflicts of interest created by intellectual property rights. Other conflict-of-interest issues may be at play — for example, the relationships of faculty members with consulting firms and their equity holdings or reliance on industrial funding. Investigators who are involved in specific types of clinical research (e.g., drug or device trials) also may be more likely to apply for a patent and perhaps are more prone to conflicts of interest.
Supported by a Sloan Foundation Industry Studies Fellowship (to Dr. Azoulay) and by the Merck Foundation Program on Pharmaceutical Policy Issues. No other potential conflict of interest relevant to this article was reported.
Why do I include a report that tells of the impending economic crash and the depths of economic impoverishment that will hit the 95%? With politicians like O'Malley and Rawlings-Blake loading up the state with credit bond debt the state will be mortgaged and public assets disappear along with public health care. Do you think having a state public health system handed to private non-profits is anything other than an attempt to hide what is happening in public health from public view?
Of course not. When a health system moves from public interest to corporate profit in a WIN AT ALL COST environment----you are the prey just as with the Wall Street banks----and lose of public wealth means you are at the mercy of these profit-driven health institutions with no oversight.
HOW CAN THAT END WELL?
RUN AND VOTE FOR LABOR AND JUSTICE NEXT ELECTION PRIMARIES.....
In Baltimore they are having Homeland Security training on the east side complete with tanks and military weapons just as this article says....this is not hyperbole.....it is happening!
October 07, 2013
The Last Desperate Thrashings of a Dinosaur Is Homeland Security Preparing for the Next Wall Street Collapse?
by ELLEN BROWN Counterpunch
Reports are that the Department of Homeland Security (DHS) is engaged in a massive, covert military buildup. An article in the Associated Press in February confirmed an open purchase order by DHS for 1.6 billion rounds of ammunition. According to an op-ed in Forbes, that’s enough to sustain an Iraq-sized war for over twenty years. DHS has also acquired heavily armored tanks, which have been seen roaming the streets. Evidently somebody in government is expecting some serious civil unrest. The question is, why?
Recently revealed statements by former UK Prime Minister Gordon Brown at the height of the banking crisis in October 2008 could give some insights into that question. An article on BBC News on September 21, 2013, drew from an explosive autobiography called Power Trip by Brown’s spin doctor Damian McBride, who said the prime minister was worried that law and order could collapse during the financial crisis. McBride quoted Brown as saying:
If the banks are shutting their doors, and the cash points aren’t working, and people go to Tesco [a grocery chain] and their cards aren’t being accepted, the whole thing will just explode.
If you can’t buy food or petrol or medicine for your kids, people will just start breaking the windows and helping themselves.
And as soon as people see that on TV, that’s the end, because everyone will think that’s OK now, that’s just what we all have to do. It’ll be anarchy. That’s what could happen tomorrow.
How to deal with that threat? Brown said, “We’d have to think: do we have curfews, do we put the Army on the streets, how do we get order back?”
McBride wrote in his book Power Trip, “It was extraordinary to see Gordon so totally gripped by the danger of what he was about to do, but equally convinced that decisive action had to be taken immediately.” He compared the threat to the Cuban Missile Crisis.
Fear of this threat was echoed in September 2008 by US Treasury Secretary Hank Paulson, who reportedly warned that the US government might have to resort to martial law if Wall Street were not bailed out from the credit collapse.
In both countries, martial law was avoided when their legislatures succumbed to pressure and bailed out the banks. But many pundits are saying that another collapse is imminent; and this time, governments may not be so willing to step up to the plate.
The Next Time WILL Be Different
What triggered the 2008 crisis was a run, not in the conventional banking system, but in the “shadow” banking system, a collection of non-bank financial intermediaries that provide services similar to traditional commercial banks but are unregulated. They include hedge funds, money market funds, credit investment funds, exchange-traded funds, private equity funds, securities broker dealers, securitization and finance companies. Investment banks and commercial banks may also conduct much of their business in the shadows of this unregulated system
The shadow financial casino has only grown larger since 2008; and in the next Lehman-style collapse, government bailouts may not be available. According to President Obama in his remarks on the Dodd-Frank Act on July 15, 2010, “Because of this reform, . . . there will be no more taxpayer funded bailouts – period.”
Governments in Europe are also shying away from further bailouts. The Financial Stability Board (FSB) in Switzerland has therefore required the systemically risky banks to devise “living wills” setting forth what they will do in the event of insolvency. The template established by the FSB requires them to “bail in” their creditors; and depositors, it turns out, are the largest class of bank creditor. (For fuller discussion, see my earlier article here.)
When depositors cannot access their bank accounts to get money for food for the kids, they could well start breaking store windows and helping themselves. Worse, they might plot to overthrow the financier-controlled government. Witness Greece, where increasing disillusionment with the ability of the government to rescue the citizens from the worst depression since 1929 has precipitated riots and threats of violent overthrow.
Fear of that result could explain the massive, government-authorized spying on American citizens, the domestic use of drones, and the elimination of due process and of “posse comitatus” (the federal law prohibiting the military from enforcing “law and order” on non-federal property). Constitutional protections are being thrown out the window in favor of protecting the elite class in power.
The Looming Debt Ceiling Crisis
The next crisis on the agenda appears to be the October 17th deadline for agreeing on a federal budget or risking default on the government’s loans. It may only be a coincidence, but two large-scale drills are scheduled to take place the same day, the “Great ShakeOut Earthquake Drill” and the “Quantum Dawn 2 Cyber Attack Bank Drill.” According to a Bloomberg news clip on the bank drill, the attacks being prepared for are from hackers, state-sponsored espionage, and organized crime (financial fraud). One interviewee stated, “You might experience that your online banking is down . . . . You might experience that you can’t log in.” It sounds like a dress rehearsal for the Great American Bail-in.
Ominous as all this is, it has a bright side. Bail-ins and martial law can be seen as the last desperate thrashings of a dinosaur. The exploitative financial scheme responsible for turning millions out of their jobs and their homes has reached the end of the line. Crisis in the current scheme means opportunity for those more sustainable solutions waiting in the wings.
Other countries faced with a collapse in their debt-based borrowed currencies have survived and thrived by issuing their own. When the dollar-pegged currency collapsed in Argentina in 2001, the national government returned to issuing its own pesos; municipal governments paid with “debt-canceling bonds” that circulated as currency; and neighborhoods traded with community currencies. After the German currency collapsed in the 1920s, the government turned the economy around in the 1930s by issuing “MEFO” bills that circulated as currency. When England ran out of gold in 1914, the government issued “Bradbury pounds” similar to the Greenbacks issued by Abraham Lincoln during the US Civil War.
Today our government could avoid the debt ceiling crisis by doing something similar: it could simply mint some trillion dollar coins and deposit them in an account. That alternative could be pursued by the Administration immediately, without going to Congress or changing the law, as discussed in my earlier article here. It need not be inflationary, since Congress could still spend only what it passed in its budget. And if Congress did expand its budget for infrastructure and job creation, that would actually be good for the economy, since hoarding cash and paying down loans have significantly shrunk the circulating money supply.
Peer-to-peer Trading and Public Banks
At the local level, we need to set up an alternative system that provides safety for depositors, funds small and medium-sized businesses, and serves the needs of the community.
Much progress has already been made on that front in the peer-to-peer economy. In a September 27th article titled “Peer-to-Peer Economy Thrives as Activists Vacate the System,” Eric Blair reports that the Occupy Movement is engaged in a peaceful revolution in which people are abandoning the established system in favor of a “sharing economy.” Trading occurs between individuals, without taxes, regulations or licenses, and in some cases without government-issued currency.
Peer-to-peer trading happens largely on the Internet, where customer reviews rather than regulation keep sellers honest. It started with eBay and Craigslist and has grown exponentially since. Bitcoin is a private currency outside the prying eyes of regulators. Software is being devised that circumvents NSA spying. Bank loans are being shunned in favor of crowdfunding. Local food co-ops are also a form of opting out of the corporate-government system.
Peer-to-peer trading works for local exchange, but we also need a way to protect our dollars, both public and private. We need dollars to pay at least some of our bills, and businesses need them to acquire raw materials. We also need a way to protect our public revenues, which are currently deposited and invested in Wall Street banks that have heavy derivatives exposure.
To meet those needs, we can set up publicly-owned banks on the model of the Bank of North Dakota, currently our only state-owned depository bank. The BND is mandated by law to receive all the state’s deposits and to serve the public interest. Ideally, every state would have one of these “mini-Feds.” Counties and cities could have them as well. For more information, see http://PublicBankingInstitute.org.
Preparations for martial law have been reported for decades, and it hasn’t happened yet. Hopefully, we can sidestep that danger by moving into a saner, more sustainable system that makes military action against American citizens unnecessary.
Ellen Brown is an attorney, president of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her 200-plus blog articles are at EllenBrown.com.