Tells the Facts and Names the Names

oct. 1-15, 2008 Alexander Cockburn and Jeffrey St. Clair vol. 15, no. 17 The End of the The Election of 2008 Washington Consensus By Alexander Cockburn and Jeffrey St. Clair he morning of the third presi- Barack Hussein Obama would be hit with By Michael Hudson and dential debate, a friend of ours in similar accusations (actually, first aired Jeffrey Sommers Landrum, South Carolina, con- by Hillary Clinton last April) of being an Tducted an informal survey of voter sen- alien radical, with intimate ties to a man all Street’s financial meltdown timent in this rural town in the heart of who had tried to blow up Congress and marks the end of an era. What Dixie. He pulled over at a convenience the Pentagon. has ended is the credibility of store-cum-coffee shop, and walked in It might have worked but for the fact, theW Washington Consensus – open mar- with a wad of McCain/Palin stickers. which apparently escaped the notice kets to foreign investors and tight money “Don’t you bring those things in here,” of the well-paid campaign consultants austerity programs (high interest rates said the man behind the register. Our running the McCain campaign – that and credit cutbacks) to “cure” balance-of- friend strolled around among the regu- America was engulfed in the worst eco- payments deficits, domestic budget defi- lars sipping their coffee, most of them re- nomic crisis since the Great Depression. cits and price inflation. On the negative tired, and could find no takers. “Not one, There was a total disconnect between the side, this model has failed to produce the and these were people who voted 100 per financial hurricane hitting America and prosperity it promises. Raising interest cent for Bush in 2004. They’re angry.” some archaeology about a Sixties radical rates and dismantling protective tariffs Why? After a terrible summer of soaring sitting with Obama on the board of the and subsidies worsen rather than help gas prices and plunging stock portfolios, Woods Fund, a nonprofit financed by the the trade and payments balance, aggra- “a lot of them have lost their retirement Annenberg Foundation (and today fea- vate rather than reduce domestic budget funds and health savings.” Our friend turing board members from other known deficits, and raise prices. The reason? said that at local nursing homes – an up- terrorist organizations such as British Interest is a cost of doing business while scale place near Tryon – some residents Petroleum and the Swiss banking giant foreign trade dependency and currency are telling staff they can’t afford to stay. UBS, whose U.S. operation has on its depreciation raise import prices. He added that all the talk about Obama’s payroll as a vice president McCain’s pal But even more striking is the positive links to terror, to Islam, to bombers has and advisor, Phil Gramm). side of what can be done as an alterna- also had the effect of intimidating elderly In fact, some of the archaeology is of tive to the Washington Consensus. The Republicans from even putting McCain/ scant comfort to McCain. We can reveal $700 billion U.S. Treasury bailout of Wall Palin signs in their yards. here that in the early 1970s, when Ayers Street’s bad loans on October 3 shows Our friend’s experience in Landrum was underground and being sought by that the has no intention of came amid the inglorious tailspin of the FBI, he found refuge in an old min- applying this model to its own economy. the disastrous strategy of trying to sink ing camp in the Oregon Cascades, called Austerity and “fiscal responsibility” are Obama by hanging former Weatherman Jawbone Flats. This mining camp was for other countries. America acts ruth- around his neck. When then owned by Vic Atiyeh and his wife. lessly in its own economic interest at any Republican consultants like Mary The camp was being run at the time given moment of time. It freely spends Matalin and Steve Schmidt first pon- as a kind of hostel by Atiyeh’s nephew more than it earns, flooding the global dered this tactic in the late summer, it George, a Vietnam vet who would later economy with what has now risen to $4 must have seemed to them like a no- play a central role in the campaign to trillion in U.S. government debt to for- brainer – a reprise of the way George protect the ancient forests of the Pacific eign central banks. H.W. Bush finished off Michael Dukakis Northwest. The crown jewel of these old- This amount is unpayable, given the in 1988. Lee Atwater, Bush’s smear man- growth stands, Opal Creek, is adjacent to chronic U.S. trade deficit and overseas ager, picked up Al Gore’s use of Horton the mining camp. military spending. But it does pose an – the black rapist furloughed for a week- Vic Atiyeh, a Republican of Syrian de- interesting problem: why can’t other end under a law passed by Gov. Dukakis scent, became the first Arab-American countries do the same thing? Is today’s – and retooled it, throwing in slurs about governor in the United States, when policy asymmetry a fact of nature, or is it Dukakis as being some foreign outsider. Oregonians elected him to the post in Hudson/sommers cont. on Page 3 So, in the final weeks of Campaign 2008, 1979. He served as one of best and most october 1-15, 2008 popular governors in Oregon’s history, Mae’s payroll, McCain chickened out, as ties. Five weeks later, he won 19 per cent from 1979 to 1987. And yes, Atiyeh the he always does. He played a feeble role of the vote, thereby costing George H.W. Arab, host of domestic terrorists, is now in Washington and voted meekly for the Bush the election. John McCain’s honorary campaign chair- bailout, and, thereby, threw away the A similar scenario could have unfold- man in Oregon. chance to put Obama on the defensive ed in this election, with the most likely It could have been different. At the and to allow Palin to taunt Biden for his standard bearer of a third force being Ron end of August, the gods seemed to be vote, when she faced the paid agent of the Paul, the libertarian congressman from smiling on McCain. Hurricane Ike kept credit card companies in St. Louis. Texas. Paul had plenty of money and a Bush and Cheney out of the Convention This election has advertised not only national organization. He would have in St Paul. Palin’s surprise nomination McCain’s stupidity but also the absence been able to launch effective attacks on nullified Obama’s bounce and seemed of an effective third force in American both candidates on the issue of war and to invigorate McCain. Then the eco- politics, at a moment when the cred- the bailout. At his well-attended shadow nomic crisis intensified. At this fraught ibility of both parties and of both major convention in St Paul, he could have de- moment, with Obama keeping a cau- candidates is open to sweeping chal- clared as an independent. He declined. tious profile, McCain could have seized Ralph Nader is a man for whom the initiative. Even after the stumble This election has the economic crisis has come as total about the fundamentals of the economy advertised not only vindication of everything he has been being sound, the senator could have re- proclaiming for decades about the cor- couped by saying that he was returning McCain’s stupid- ruption of Wall Street, the ties between to Washington to lead the opposition ity but also the ab- Wall Street and Congress, the economic to the bailout. McCain could have gone sellouts of Clinton time, from free trade into the first debate attacking Obama for sence of an effec- deals to the repeal of Glass-Steagall. Yet, his support of the bailout. He could have tive third force in Nader has no party and hence suffers sent Palin across the country denouncing from hugely diminished political pur- Wall Street greed and predatory bank- American politics, at chase on everything, from volunteers to ers, as she did in her debate with Biden. a moment when the finance to media presence, at a moment Unlike McCain, Obama and Biden, Palin when his message could have resonated had no Wall Street cash showing in her credibility of both hugely with the furious and fearful elec- campaign war chest, filled only with vir- parties and of both torate. The political groups and coalitions tuous mooseburgers. that rallied to Nader in 2000 are all shad- With Phil Gramm whispering in his major candidates is ows of their former selves. Eight years of ear and McCain’s campaign manager open to challenge. Bush have pushed the environmental and Rick Davis’ lobby shop still on Fanny labor lobbies back into the Democratic lenge. Voters are disgusted with the en- Party, where their voices are inaudible tire system and the direction the country and political influence scarcely visible to is taking. Disapproval of Bush and of the the naked eye. Obama pounds the drum Democrats running Congress is at the for nuclear power and hugely toxic coal- EDITORS same high level. Obama and McCain to-gas conversion plants and campaigns Alexander Cockburn share many positions, starting with the through the industrial wastelands of the Jeffrey St. Clair bailout and continuing with endorse- Midwest, while remaining more or less ment of a belligerent foreign policy from mute on “free” trade. ASSISTANT EDITOR Georgia to Iran, total fealty to Israel and If there was to be a boomlet for the Alevtina Rea a ramp-up of the doomed Afghan cam- Libertarian Party’s Bob Barr (one of the

BUSINESS paign. With this in mind, it is instructive better transformations in political ideol- to look back at the Perot campaign of ogy in our memory), the economic crisis Becky Grant 1992. overwhelmed it. Deva Wheeler After scoring very high polling num- It looks as though a big win for Obama DESIGN bers in June of 1992, showing him to and the Democrats might be in the off- Tiffany Wardle be in the lead over Clinton and Bush, ing. Seldom has economic catastrophe Perot announced his withdrawal from come so propitiously for a candidate. COUNSELOR the race, later disclosing that he didn’t But though crisis has helped him, he has Ben Sonnenberg want his candidacy to prompt release, by not risen to the occasion. He has actu- CounterPunch Republican operatives, of compromising ally got less inspiring as the weeks pass. PO Box 228 photos of his daughter before her wed- On September 23, he stated on NBC that Petrolia, CA 95558 ding. Perot didn’t re-enter the race until the crisis and prospect of a huge bailout October 1. He talked his way into the required bipartisan action and meant 1-800-840-3683 debates and riveted the nation with his he likely would have to delay expansive [email protected] famous denunciations of free trade and spending programs, outlined during his www.counterpunch.org laments for America’s industrial decline, campaign for the White House. Thus does All rights reserved. which he blamed on both the major par- CockBurn/St.Clair cont. on Page 8

 october 1-15, 2008 cont. from page 1 Hudson /Summers a better public-private balance? can follow suit, as it has done in recent merely voluntary and the result of igno- Washington’s idealized picture of how days – why can’t all countries do this? rance (spurred by an intensive globalist free markets operate (as if such a thing Why can’t they get rich by following that ideological propaganda program, to be ever existed) promised that countries path that the United States actually has sure)? Does India, for instance, need to outside the United States would get rich taken, rather than merely doing what its privatize its state-owned banks as earlier faster, approaching U.S.-style living stan- economic diplomats tell them to do with was planned, or is it right to pull back? dards if they let global investors buy their sweet self-serving rhetoric? U.S. experi- More to the point, have the neoliberal key industries and basic infrastructure. ence itself provides the major reason why programs imposed on the former Soviet For half a century, this neoliberal model the free market, run by financial institu- Union succeeded in “Americanizing” has been a hypocritical exercise in poor tions allocating credit, is a myth, a false their economies and raising production policy at best, and deception at worst, to map of reality to substitute for actual capacity and living standards as prom- convince other economies to impose self- gunboats in getting other countries to ised? Or, was it all a dream, indeed, a destructive financial and tax policies, en- open their asset markets to U.S. investors nightmare? abling U.S. investors to swoop in and buy and food markets to U.S. farmers. The three Baltic countries, for instance their key assets at distress prices. (And By contrast, the financial and trade – Latvia, Estonia and Lithuania – have for the U.S. economy to pay for these in- model that U.S. oligarchs and their al- long been praised in the Western press lies are promoting is a double standard. as great success stories. The World Bank We expect the Most notoriously, when the 1997 Asian classifies them among the most “business financial crisis broke out, the IMF de- friendly” countries, and their real estate post-Soviet econo- manded that foreign governments sell prices have soared, fueled by foreign- mies to go the way out their banks and industry at fire-sale currency mortgages from neighboring prices to foreigners. U.S. vulture capital Scandinavian banks. Their industry has of Iceland, having firms were especially aggressive in grab- been dismantled, their agriculture is in taken on foreign bing Asian and other global assets. But ruins, their male population below the the U.S. financial bailout stands in sharp age of 35 is emigrating. But real estate debt with no visible contrast to what Washington Consensus prices added to the net worth on their na- means of paying it institutions imposed on other countries. tional balance sheets for nearly a decade. There is no intention of letting foreign Has a new “moment of truth” arrived? off. investors buy into the commanding U.S. Just because the Soviet economic system heights, except at exorbitant prices. And culminated in bureaucratic kleptocracy, vestment outflows in the form of more for industry, the United States has once has the neoliberal model really been so and more U.S. Treasury IOUs, yielding more violated international trade rules by much better? Most important of all, was a low or even negative return when de- offering special bailout money and subsi- there a better alternative all along? nominated in hard currencies.) dies to its own Big Three U.S. automakers We expect the post-Soviet economies The neoliberal global system never was (, Ford and Chrysler) but to go the way of Iceland, having taken on open in practice. America never imposed not to foreign-owned automakers in the foreign debt with no visible means of pay- on itself the kind of shock therapy that United States. In thus favoring its own ing it off via exports (the same situation President Clinton’s Treasury Secretary national industry and taking punitive in which the United States finds itself), (and now Obama’s advisor) Robert Rubin measures to injure foreign-owned invest- or even further asset sales. Emigrants’ promoted in Russia and the rest of the ments, the United States is once again remittances are becoming a mainstay former Soviet bloc, from the Baltic coun- providing an object lesson in nationalis- of their balance of payments, reflecting tries in the northwest to Central Asia in tic economic policy. their economic shrinkage at the hands of the southeast. Just the opposite! Despite Most important, the U.S. bailout pro- neoliberal “reformers” and the free-mar- the fact that America’s own balance of vides a model that is far preferable to the ket international dependency that the trade and payments is soaring, consumer Washington Consensus-for-export. It Washington Consensus promotes. So, prices are rising and financial and prop- shows that countries do not need to bor- just as this crisis has led the U.S. govern- erty markets are plunging, there are no row credit from foreign banks at all. The ment to shift gears, is it time for foreign calls among its power elite to let the sys- government could have created its own countries to seek to become more in the tem self-correct. The Treasury is subsi- money and credit system rather than character of “mixed economies”? This has dizing America’s financial markets so as leaving foreign creditors to accrue inter- been the route taken by every successful to save its financial class (minus some est charges that now represent a perma- economy in history, after all. Total pri- sacrificial lambs) and support its asset nent and seemingly irreversible balance- vate-sector markets (in practice, markets prices. Interest rates are being lowered to of-payments drain. The United States has run by the banks and money managers) re-inflate asset prices, not raised to sta- shown that any country can monetize its have shown themselves to be just as de- bilize the dollar or slow domestic price own credit, at least domestic credit. A structive, wasteful and corrupt and, in- inflation. large part of the problem for Third World deed, centrally planned as those of totally The policy implications go far be- and post-Soviet economies is that they “statist” governments from Stalin’s Russia yond the United States itself. If the never experienced the successful model to Hitler’s Germany. Is the political pen- United States can create so much credit of managerial capitalism that predated dulum about to swing back more toward so quickly and so freely – and if Europe the neoliberal model, advocated since the

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1980s by Washington. and stock prices. Tangible capital invest- and other U.S. financial institutions – in- The managerial model of capitalism, ment is financed almost entirely out of vestments, on which they have lost many predominating during the post-World retained corporate earnings – and these tens of billions of dollars. To cap mat- War II period until the 1980s (with ante- too are being diverted to pay interest ters, pricing world oil in dollars kept the cedents in 18th-century British mercan- on soaring industrial debt. The result is U.S. currency stronger than underlying tilism and 19th-century American protec- debt deflation – a shrinkage of spending economic fundamentals justified. The tionism), delivered high growth. Postwar power as the economic surplus is “finan- U.S. economy paid for its imports with planners, such as John Maynard Keynes cialized,” a new word, only recently added government debt never intended to be in England and Harry Dexter White to the world’s economic vocabulary. repaid, even if it could be (which it can’t in the United States, favored produc- Since the 1980s, the U.S. tax system at today’s $4 trillion level, cited earlier). tion over finance. As Winston Churchill has promoted rent seeking and specula- The American economy, thus, has seen quipped, “nations typically do the right tion on credit to ride the wave of asset- its trade deficit and asset prices rise in thing [pause], after exhausting all other accordance with economic laws that no options.” But it took two world wars, in- U.S. experience it- other nation can emulate, topped by the terspersed by an economic depression ability to run freely into international triggered by debts in excess of the ability self provides the debt without limit. to pay, to give the final nudge required to major reason why Managerial capitalism mobilized rising promote manufacturing over finance and corporate net worth and equity value to finally do “the right thing.” the free market is a build up in the real economy. But since Finance was made subordinate to in- myth, a false map of the 1980s, a new breed of financial man- dustrial development and full employ- agers has pledged assets as collateral for ment. When this economic philosophy reality to substitute new loans to buy back corporate stock reached its peak in the early 1960s, the for actual gunboats and even to pay out as dividends. This has financial sector accounted for only 2 per pushed up corporate stock prices and, cent of U.S. corporate profits. Today, in getting other with them, the value of stock options that it is 40 per cent! Carrying charges on countries to open corporate managers give themselves. But America’s exponentially growing debt are it has not spurred tangible capital forma- diverting income away from purchasing their asset markets tion. goods and services to pay creditors, who to U.S. investors and A real estate bubble in all countries has use the money mainly to lend out afresh been fueled by rising mortgage debt. To to borrowers to bid up real estate prices food markets to U.S. buy a new home, buyers must take on a farmers. lifetime of debt. This has made many Subscription Information employees afraid to go on strike or even price inflation. This strategy increased to press for better working conditions, Subscription information can be found balance sheets as long as asset prices rose because they are “one check away from at www.counterpunch.org or call faster than debts (that is, until last year). homelessness,” or mortgage foreclo- toll-free inside the U.S. But it did not add to industrial capacity. sure. 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 october 1-15, 2008 ingly perpetual motion credit-and-debt world’s burgeoning offshore banking and do this will merely aid foreign bankers machine. But the effect has been for the real estate sectors – only to stop abrupt- and financial investors, not the domes- richest 1 per cent of the population to in- ly when the real estate bubble burst. tic economy. Countries need to invest in crease its share of interest extraction, div- In these circumstances, what is to be their real economy, to raise productivity idends and capital gains from 37 per cent done? First, countries outside the United and wages. Governments must punish ten years ago to 57 per cent five years ago, States need to recognize how dysfunc- speculation and capital gains that mere- and nearly 70 per cent today. Savings re- tional the neoliberalized world economy ly reflect asset-price inflation, not real main high, but only the wealthiest 10 per has been made, and to decide which as- value. Otherwise, the real economy’s pro- cent are saving – and this money is being sumptions underlying the neoliberal ductive powers and living standards will lent out to the bottom 90 per cent, so no model must be discarded. Its preferred be impaired and, in the neoliberal model, net saving is occurring. tax and financial policies favor finance loaded down with debt. Policies should Internationally, too, the global econo- over industry and, hence, financial ma- encourage enterprise, not speculation. my has polarized rather than converged. neuvering and asset-price inflation over Investment seeks growing markets, Just as independence arrived for many which tend to be thwarted by macroeco- Third World countries only after their Countries outside nomic targets such as low inflation and former European colonial powers had the United States balanced budgets. We are not arguing put in place inequitable land tenure pat- that inflation and deficits can be ignored, terns (latifundia, owned by domestic need to recognize but rather that inflation and deficits are oligarchies) and export-oriented pro- how dysfunctional not all created equally. Some variants duction, so independence for the post- hurt the economy, while others reflect Soviet countries from Russia arrived after the neoliberalized healthy investment in real production. managerial capitalism had given way to world economy has Distinguishing between the two effects is a neoliberal model that viewed “wealth vital, if economies are to move forward to creation” simply as rising prices for real been made, and to achieve self-dependency. estate, stocks and bonds. Western advi- decide which as- In sum, a much better economy can sors and former emigrants descended be created by rejecting Washington’s fi- to convince these countries to play the sumptions under- nancial model of austerity programs, same game that other countries were lying the neolib- privatization selloffs and trade dependen- playing – except that real estate debt for cy, financed by foreign-currency credit. many of these countries was denomi- eral model must be Prosperity cannot be achieved by creat- nated in foreign currency, as no domestic discarded. ing a favorable climate for extractive for- banking tradition had been developed. eign capital, or by tightening credit and This became increasingly dangerous for tangible capital formation. Its anti-labor balancing budgets, decade after decade. economies that did not put in place suf- austerity policies and un-taxing of real The United States itself has always reject- ficient export capacity to cover the price estate, stocks and bonds divert resources ed these policies, and foreign countries of imports and the mounting volume of away from growth and rising living stan- also must do this if they wish to follow foreign-currency debt attached to their dards. the policies, by which America actually real estate. And nearly all the post-Soviet Likewise destructive are compound grew rich, not by what U.S. neoliberal ad- countries ran structural trade deficit, as interest and capital gains over the long visors tell other countries to do to please production patterns were disrupted with term. The real economy can grow only U.S. banks and foreign investors. the breakup of the U.S.S.R. a few per cent a year at best. Therefore, Also to be rejected is the anti-labor Real estate and capital gains from it is mathematically impossible for com- neoliberal tax policy (heavy taxes on asset-price inflation (not industrial capi- pound interest to continue unabated and employees and employers, low or zero tal formation) were promoted as the way for capital gains to grow well in excess of taxes on real estate, finance and capital to future prosperity in countries whose the underlying rate of economic growth. gains) and anti-labor workplace poli- profits from manufacturing were low and Historically, economic crises wipe out cies, ranging from safety protection and wages were stagnant. The problem is this these gains when they outpace real eco- health care to working conditions. The alchemy is not sustainable. An illusion of nomic growth by too far a margin. The U.S. economy rose to dominance as a success could be maintained as long as moral is that compound interest and result of Progressive Era regulatory re- Washington was flooding the globe with hopes for capital gains cannot guarantee forms prior to World War I, reinforced cheap money. This led Swedes and other income for its retirees or continue at- by popular New Deal reforms put in Europeans to find capital gains by extend- tracting foreign capital. Over a period of place in the Great Depression. Neoliberal ing loans to feed neighboring countries a lifetime, financial investments may not economics was promoted as a means from Iceland to Latvia, above all via their deliver significant gains. For the United of undoing these reforms. By undoing real estate markets. For some exporters States, it took markets about twenty-five them, the Washington Consensus would (especially Russia), rising oil and metal years, from 1929 to the mid-1950s, to re- deny to foreign countries the develop- export prices became the basis for capi- cover their previous value. ment strategy that has best succeeded tal outflows into Third World and post- Today’s desperate U.S. attempt to re- in creating thriving domestic markets, Soviet financial markets. Some of the inflate post-crash prices cannot cure the rising productivity, capital formation backwash, for example, flowed into the bad-debt problem. Foreign attempts to hudson/sommers cont. on page 8

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Remembering George Demmerle his fifteen minutes of fame. He talked more like a hippie from Hair than a hip- Portrait of a Police Informer pie from real life. Shortly after we met, he told a Dallas newspaper: “I loved By David Bonner Jerry and Abbie. I don’t want the ideals they stood for – love and freedom – to hen Frank Zappa died in Simon called him “the craziest person I die with them. The ideals of the Yippies 1993, I wrote his obituary in ever met.” According to the newspaper’s are the last hope for America.” I do think the Dallas Morning News. editor Jeff Shero, “Whenever there was he really believed his rhetoric, but I also WThe next day, I got a phone call from a a meeting, he’d get up and say to people, believe that his politics ultimately were total stranger named George DeMerle, ‘Anyone who wants to get arrested, come more about himself than anything else. who claimed that my article touched with me.’ A lot of people thought he was For George, politics were something to his psychedelic heart. It turned out that very cool and very radical.” He would dress up to. this George fellow happened to live only “sit at Yippie planning meetings playing And that he did. The described a couple of miles from where I did, so I with his own toy bombs,” reported the George as a “familiar sight on 8th Street invited him over. He was about 65 then East Village Other. Dave Dellinger re- and 6th Avenue, strutting in his lavender – some 30 years my senior: a kindly , hag- membered him bringing a “bloody pig’s jeweled Nehru shirt and Day-glo pink gard old hippie, who projected a vibe of head” to an anti-war meeting, and then helmet with two feather dusters on top peace and love at all times. accusing everybody there of being capi- like a Roman guard.” He would “show up Having begun our acquaintance with at demonstrations in a purple cape and an obit, it seemed only fitting that I end it The Rat described plumed helmet,” noted in her with one following his death last October. George as a “fa- memoir Growing Up Underground. The But I never got around to it until now, East Village Other recalled the time he one year later, as George comes back to miliar sight on 8th appeared at a demonstration “dressed as mind, thanks to the McCain campaign Street and 6th a dead Green Beret.” suddenly discovering Barack Obama’s Shortly after died in 1994, ex-Weatherman “pal,” Bill Ayers. Upon Avenue, strutting devoted an issue of his meeting, the first thing George told me in his lavender jew- satirical magazine The Realist to the was that he “used to run with Abbie and theme “Who Killed Jerry Rubin?” One of Jerry.” Being something of a Sixties buff, I eled Nehru shirt and the imaginary conspiracy theories that of course knew who Hoffman and Rubin Day-Glo pink hel- Krassner concocted was “The George were, even though I (like Obama) was Demmerle Connection.” This was unreal, only a child during their heyday. George met with two feath- of course, but he did preface it with a continued by saying that he had founded truthful and useful summary of George’s an offshoot of the Yippies, called “The er dusters on top background: “Demmerle had started out Crazies.” Then he topped it off by reveal- like a Roman guard.” with the reactionary John Birch Society, ing that he had been an FBI informer all switched to an ultra-right-wing militia, the while. talist dupes. Apparently, George was also the Minutemen, then tried to join the Naturally, I thought he was full of shit. the inspiration for the “Quick Kill Merle” FBI, which took him on as a volunteer However, after he went home, I went to character in ’ hilariously pro- – and later paid – informant ... When my shelves and consulted Jerry Rubin’s fane Yippie novel, Shards of God. the Yippies held a pre-Chicago event on 1971 book We Are Everywhere – and there During our first meeting, George pre- a pier at the Hudson River, nominating a was George, pictured in full glory on page sented me with a fairly rare pressing of pig for president, Demmerle played the 217. His name was spelled “Demmerle” Mothermania, an ironic “greatest hits” role of a stereotypical anarchist, using for back then, and he was “the craziest yippie LP by Frank Zappa and the Mothers of his prop a black bowling ball complete of them all,” according to Rubin. “George Invention. But it was quickly apparent with fuse. Before he could carry out his was the craziest cat around. If you want- that he really didn’t have much under- mission to assassinate , he was ed anything flippy done, call George. He standing of what Zappa was all about. thrown into the water. After a while, the lived on the streets and worked with the He was visibly disappointed, for example, role began to play him.” people. He never took off his yippie but- when I mentioned that Frank was anti- His double role as informant and ton. When the Crazies were born, in an drug and didn’t get high. George did get Crazie couldn’t last. Here, in a nutshell, attempt to get an identity distinct from high, and over the next few months he is what happened. In the summer and yippie, George nicknamed himself ‘Prince would come over regularly, as I would fall of 1969, a collective of Weathermen- Crazy, Son of Yippie.’“ try to extract details of his former life, in type radicals – Jane Alpert, , Further research lent support to return for me providing him with a safe Dave Hughey, and Patricia Swinton – Rubin’s account. Bill Etra, a photogra- haven for smoking pot, which was pro- perpetrated several politically motivated pher for the -based under- hibited in his own home. bombings of prominent targets in New ground newspaper Rat, said that George As with his take on Zappa, George York City. (They targeted property only, “always went around as if he were on one seemed to have only the slenderest un- but one attack did cause minor personal big, big trip.” The Rat’s art director Paul derstanding of the scene which gave him injuries.) At the Woodstock Festival in

 october 1-15, 2008

August of that year, Melville struck up turn out as they did? That seems highly and finally making headlines in 1969. a friendship with Demmerle, who was implausible. On the contrary, I see him Change a few variables and Demmerle manning the Crazies booth; soon there- as typical of the dubious characters, who might’ve become Manson, or vice versa. after, Melville revealed to Demmerle in- regularly appear as informants “of known Once exposed, being useless to the FBI criminating secrets about the bombings. reliability” (meaning reliably unreliable) and hated by his former radical associ- In due course, Melville enlisted him in in the average FBI file. Jane Alpert, de- ates, George began drifting again, even- one of the collective’s bombing plots, spite her comment about George cleverly tually ending up in the Dallas-Fort Worth and Demmerle, in turn, snitched to his laying a trap, knew that Sam “couldn’t suburb of Arlington. By the time I met FBI handlers. The two men were busted have made it easier” for him. By the time him, he was living the life of a small-time as they attempted to place bombs under George stumbled into Sam’s life, I think artist, creating weblike installations out Army trucks at the 69th Regimental he had evolved to the point where Prince of some sort of synthetic material, upon Armory in Manhattan. Crazy was, indeed, his primary passion, which he would project multicolored “Then a day later,” wrote Jerry Rubin, but his self-perceived James Bond role lights. (He had constant health problems, “I read that George was released with- as an informer remained too irresistible perhaps due to the chemicals involved in out bail on the prosecution’s motion and to give up. Stew Albert: “George was the creating his web works.) Occasionally, he he was going to testify for the govern- ego maniac Prince Crazy. Even Jerry and would have an art exhibit, showing up ment. My heart stopped. I felt so shitty. Abbie didn’t pose that much (they let dressed as Prince Crazy, complete with George’s emergence as an FBI informer Hendrixian coat and other psychedelic ... dealt a temporary blow to the freaky The arc of his life attire. He was a regular at anti-war and movement in .” had much in com- other protest rallies, and generally wher- GEORGE DEMMERLE: THE PIG ever Dallas-Fort Worth weirdos were – WORE A DAY-GLO HELMET. That’s mon with his con- such as the rites held by something called how the headline in the East Village temporary, Charles the Eulessyian Hot Tub Mystery Religion. Other summed it up. Among movement His odd behavior and unusual past was people, the reaction of Bill Etra was typi- Manson. Both were a big hit among the young people who cal: “I just can’t believe that he was an born to broken fam- shared his company. agent all along. It’s really hard for me to What did this George – the George I conceive of a police agent being tripped ilies during the early knew – think of his earlier self? He readily out constantly.” Nor could Paul Krassner, Great Depression, admitted that “I am not innocent of being who flatly admitted, “I was fooled by a slimeball” for betraying people he pro- Demmerle.” As Jane Alpert noted, “Very condemned to foster fessed to admire. However, he attempted few actually suspected him of being an homes, then end- to justify the betrayal by claiming that he agent,” though her co-conspirator Dave was “trapped” in his role as an informer Hughey “actually believed he was an ing up immersed in a – an excuse that never rang true. And I undercover agent” and was furious with counterculture, and never perceived much remorse from him Melville for having entrusted him. In a regarding the fate of Sam Melville, who 1998 email to me, Stew Albert professed finally making head- ended up in Attica Prison and was shot to the same: “I suspected him, so we didn’t lines in 1969. death during the 1971 uprising there. Jane hang out ... I actually suspected he was a Alpert bitterly observed, “Sam Melville cop (and this was the only time I wasn’t other people name them). Narcissists like never killed anyone, intentionally or oth- fooled by infiltrators).” George don’t have loyalties – they only erwise, while George bears some ultimate Once his cover was blown, Demmerle’s follow their ego.” Even though his heart responsibility for Sam’s death.” To which reputation as a superspy commenced was almost certainly with his countercul- George would respond, sensibly: Who’s – a reputation that has been preserved ture associates, once he perceived that more to blame – the bomber or the one in memoirs, counterculture histories, it was for his own good to betray them, who snitches on the bomber?” and academic sociological studies. Jane that’s what he did. And, in the immediate Given his history, I’ll never be cer- Alpert believed that “Sam fell completely aftermath, he even managed to publicly tain that the George I knew was 100 per for the trap George had been laying for berate Abbie and Jerry and the rest, while cent “son of Yippie,” as he liked to claim. three years.” Jerry Rubin worried that “the basking in right-wing adulation of what Maybe he fooled me, as he fooled so goal of undercover pigs like George is to he’d done. many others. demoralize us and make us so paranoid Not surprisingly, George had a rotten In a Krassnerian myth, he might have that we suspect each other and become childhood. At some point it occurred to infiltrated the Dallas chapter of the totally ineffective.” Stew Albert, many me that the arc of his life had much in Committee in Solidarity with the People years later, was still contemplating the common with his contemporary, Charles of El Salvador (CISPES), whose rights extent of George’s reach. He told me to Manson. Both were born to broken fami- were being infringed by G-Men about the “ask Demmerle about Leslie Bacon and if lies during the early Great Depression, time George moved to town. And I can’t he had any role in her troubles. Also Judy condemned to foster homes and orphan- prove that he didn’t. Gumbo and me.” ages, decades of rambling, then ending But I do know that the George I knew Was George really a devoted spook, up immersed in a counterculture with was well liked – something that was ap- whose goal all along was for things to people much younger than themselves, parently not true back in the day. As

 october 1-15, 2008 CockBurn/St.Clair cont. From p. 2 hudson/Sommers cont. From Page 5 Jane Alpert explained, other than Sam he surrender power even before he gained and living standards. The effect has Melville, “none of us liked or respected it. The next day, he told reporters in been to decouple saving from tangible Demmerle, and “no one else thought very Clearwater, Florida, that “issues like bank- capital formation. They need to be re- highly” of him. By the end of his life, how- ruptcy reform, which are very important coupled, and this can be achieved only ever, George had an adoring wife, Carol, to Democrats, are probably something by restoring the kind of mixed economy and a large circle of friends who palled that we shouldn’t try to do in this piece by which North America and Europe around with him. I don’t regret being one of legislation.” In addition, he said that his achieved their economic growth.CP of them. CP proposed economic stimulus program “is not necessarily something that we should Michael Hudson is professor of David Bonner is the author of have in this package.” Then he worked Economics at the University of Missouri Revolutionizing Children’s Records: The the phone, hectoring recalcitrants in the (Kansas City) and chief economic ad- Young People’s Records and Children’s Congressional Black Caucus to vote for visor to Rep. Dennis Kucinich. He has Record Guild Series, 1946-1977. He can be the bailout, whose paramount importance advised the U.S., Canadian, Mexican reached at [email protected]. was as a show of force, as dramatic as and Latvian governments, as well as the nineteenth-century cavalry cutting down United Nations Institute for Training demonstrators at Peterloo. As an instiga- and Research (UNITAR). He is the au- tor of beneficial change, the Clinton ad- thor of many books, including Super ministration was over six months after Imperialism: The Economic Strategy of election day 1992, when Clinton turned to American Empire (new ed., Pluto Press, Al Gore and said, “You mean my re-elec- 2002). He can be reached via his website, tion hinges on the Federal Reserve and [email protected]. some f---ing bond traders?” Gore nod- ded, and Clinton promptly abandoned Jeffrey Sommersis a professor at Raritan his economic plan to follow the dictates Valley College, NJ, visiting professor at of Wall Street tycoons like Robert Rubin, the Stockholm School of Economics in now a top advisor to Obama. Assuming Riga, former Fulbrighter to Latvia, and he wins, Obama beat the speed of Bill fellow at Boris Kagarlitsky’s Institute for Clinton’s 1993 collapse by almost seven Global Studies in Moscow. He can be months. CP reached at [email protected]. www.counterpunch.org

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