Product review: "Throwback" Pepsi™

How long ago was it since I had a real Pepsi ™ or a real Coke ™, or any other kind of soft drink for that matter? It must have been the early 1980s, but no later than 1986. When did the onslaught of HFCS (High Fructose Corn Syrup) begin? Under Reagan ™, when else would it have begun? Well, OK, as usual, it's not as simple as that. It took successive administrations of Republicans.

For close to an entire generation American soft drinks, and many other beverages, have had this garbage pumped into it, contributing to making many in that generation sick and obese. The soft drink corporations wanted to sell us more of their fizzy-liquids and there were incentives all over the place for corn farmers to implement corn syrup production for use as an all-purpose sweetener (of bottom lines). Note the next time trade agreements between the United States and other nations occur. The recriminations over subsidized American agricultural commodities are sound.

So began one part of this trend so that King corn could thrive at the taxpayer's expense:

Previously neglected because of low yields and bad coloring, HFCS became an industrial reality in the 1960s, when a xylose isomerase enzyme was successfully used to convert glucose into fructose at levels of 42% fructose and higher (Landis 86). That breakthrough, in conjunction with the fact that corn is both planted on nearly 80 million acres (Baker) and is subsidized in the USA (Hopkins), led to a huge gain in HFCS’s popularity because HFSC soon became cheaper than actual sugar. In fact, the “use of HFCS grew rapidly, from less than three million short tons in 1980 to almost 8 million short tons in 1995” (Forristal). Furthermore, “during the late 1990s, [the] use of sugar actually declined as it was eclipsed by HFCS… [And] today Americans consume more HFCS than sugar” (Forristal). ("HIGH FRUCTOSE CORN SYRUP: HISTORY, SPREAD, and CONSUMPTION," Cosmos Cluster 7, 25 July, 2009, UC Davis.edu, P.2)

The links to adult and even child diabetes and obesity are gradually coming in from academic studies and are sure to continue coming in; but just take a look around the social landscape. We've gotten fatter. The worst part of all of this is the sheer number of sources that Americans get HFCS from, but one of the most jam-packed ones is from soft drinks. The average American gets 200 calories-per-day from HFCS. No one ever accused Ronald Reagan's administration--or subsequent ones--correctly that they were against subsidies for large-scale farmers and agribusiness. Reagan was all for it. So was most of Congress during the 1980s, and selling to grain to the former Soviet Union didn't bother them either. Pork? Don't get me started.

Just a few years ago I was shopping at a local supermarket chain and lo-and-behold, in the Mexican foods section was a real find--Mexican Cokes. Who cares, right? Me! Other shoppers, other households, who remembered what soft drinks used to taste like previous to the 1980s! The truth is, the problems really began--as they often did--under Richard Nixon:

In 1973, Earl "Rusty" Butz, President Nixon's USDA chief, did away with the agricultural price supports introduced by the Roosevelt administration. These supports were intended to protect farmers' finances by limiting supply when bumper crops would have otherwise flooded the market and to avoid squeezing consumers by releasing the warehoused grain when crop yields were low and prices would naturally spike. Butz ginned up political support for the administration by encouraging farmers to plant "fencerow to fencerow" while the government provided them with subsidies to cover the difference between market prices and production costs.
Of course, growing "fencerow to fencerow" did exactly what one would expect: production exceeded demand, and prices took a dive. This didn't sit too well with Archer Daniels Midland (ADM), the nation's largest corn refiner.

Now, there's only so much corn one person can eat. ADM suddenly needed to figure out how to somehow stimulate sales of all that excess food. ("America's Crazed Corn Habit," Mises Institute, 12.22.2009)

Thanks again Dick! Indeed, we are "all Keynesians now," and so was Reagan! I could have told you that, and I'm not even remotely an economist.

The best part about those Mexican Cokes™ was that they were in glass-bottles, so icing them up wasn't going to be a problem, that taste was coming, and those coveted bottles didn't disappoint at all. Why? Because Mexico doesn't have the kinds of crop subsidies we do on corn, they don't put HFCS in everything for that and a variety of other reasons, they got it right. I bought-up as many of them as I could that summer, it was a real treat, and it ended quickly. The local bottler had them pulled, they're gone.

But how did throwback Pepsi™ taste to these buds? Coupled with the vintage packaging, it was like being rocketed back to better times--or at least better than now, the 1970s. I was literally taken aback at how familiar it tasted, I hadn't forgotten after decades of HFCS film on the surface of every soft drink (and the roof of my mouth), even in fruit juices! Childhood memories and images flooded into my brain after that first sip. It was truly refreshing in the best sense of the word. I could recall some blistering summer days that were punctuated with a Pepsi™ or a Coke™, and they tasted so much better back then because they were made with cane sugar rather than HFCS.

I didn't notice as much of a change with their throwback Mountain Dew™ (before there was meth...), but the Pepsi was perfect, and the throwback packaging really takes me back to another America. Not necessarily a better one, but one before the fall of America to Reaganism and a slimmer public! Oh yeah, and early in 2009 it was found that mercury is often found in trace amounts in HFCS.

http://www.pepsithrowbackhub.com/

Biased, but in a reasoned sense (better to err on the side that HFCS's bad): http://www.highfructosecornsyrup.org/

"America's Crazed Corn Habit," Mises Institute, 12.22.2009: http://mises.org/daily/3934

Why did the IRS bust Swiss Bank UBS?

"Perhaps what we need is to go back to the first Bretton Woods, to go back to discipline. It's absolutely clear that financial markets need discipline: macroeconomic discipline, monetary discipline, market discipline.'' --European Central Bank President Jean-Claude Trichet, October

Washington D.C./Zurich, Switzerland--This isn't a difficult question to answer. We're seeing a reinstitution of some of the principles of the Bretton Woods system that was crafted primarily by US and UK officials (at the core of the process were economists John Maynard Keynes and Harry Dexter White) during WWII, laying-out the foundations for what the postwar reconstruction and the resulting economic order would look like and how it would function. Why Bretton Woods?

Western leaders didn't want to repeat the same mistakes that created the Great Depression and that definitely played a major hand in taking the world to war in the middle twentieth century. American and British financial leaders crafted an economic blueprint that--in its overall scope--was to leave the United States in charge as the world's banker of a generally global form of capitalism (whatever that means), but with other elements addressing the domestic fronts of participating nations that emphasized state intervention in those economies through the strict regulation of capital flight.

What is capital flight? There are several definitions, but there is a general agreement on its core features. Tax Justice Network, a federation of international and academic economists notes some of the basic features of capital flight:

• Flight capital is domestic wealth permanently put beyond the reach of appropriate domestic authorities. Much of it is unrecorded due to deliberate misreporting;
• Because no (or little) tax is paid on wealth that is transferred as capital flight, it is associated with a public loss and private gain.
• Because tax evasion is illegal and subject to criminal sanction in most countries, the management of flight capital is a form of money laundering. Offshore secrecy arrangements play a crucial part in the laundering process by enabling the origin and ownership of the capital to be effectively disguised. ("Illicit Capital Flows and the Offshore Economy, Tax Justice Network, 2008)

Simply put: capital flight is the illegal transfer of enormous wealth to other financial markets to avoid legitimate and lawful taxation, to exchange one currency for another when one currency's value tanks (speculation), and occurs in the countries that the capital originates from over to the "receiving" nations. In short, capital flight is illegal money laundering. Under the current economic crisis where investment capital is lacking--even in the United States at this writing--the negative effects for development can become acute and long term.

This, surely, is a major factor in why the Obama administration's IRS are going after UBS Bank and 250-300 American tax cheats holding illegal accounts at the Swiss institution. Going after these depositors heralds an action that would never have occurred under Reagan, Bush I, Clinton, let alone Bush II. That it's happening at all suggest that there is no longer any choice but to enforce laws covering capital flight--with the caveat that the Swiss courts have been "pushing-back," undermining Keynes's original proposals that debtor and creditor nations do the enforcing and even be willing to alter their behaviors and laws to do so. Nothing succeeds like failure.

The UBS bust also signals that things are especially dire--even desperate--in the international financial markets thanks to decades of mismanagement that metastasized under Republican governance. There is worse: nationalist-based noncompliance by a "receiving" nation like Switzerland is possible, and is occurring right now.

A Swiss tribunal has barred financial regulators from handing over information of UBS bank clients to the United States Justice Department, which is attempting to break the country's banking secrecy laws. UBS, Switzerland's largest bank, reached a settlement with the US authorities on Wednesday. It agreed to pay 780 million dollars and reveal the names of between 250 and 300 US clients.

On Thursday, UBS rejected a new US lawsuit asking for the disclosure of the identities of some 52,000 US customers suspected of evading taxes. The populist Swiss People's Party has protested against what it describes as "foreign blackmail". ("Swiss court blocks bank data disclosure," Radio Netherlands, 02.21.2009)

The Great Depression lasted roughly twelve years, and we could be in for a similarly long run if things play-out the same as they did in the 1930s, namely from protectionism and general economic warfare. The next-step would likely be another world war. The recent developments in Switzerland do not bode well, but it's likely that Zurich will ultimately comply in the release of additional account information.But will other money laundering nations comply?

Swiss Justice Minister Eveline Widmer-Schlumpf travels to Washington on Monday for talks with her new US counterpart, Eric Holder, during which the UBS controversy is high on the agenda.
The Austrian chancellor, Werner Faymann, has defended banking secrecy, arguing on Swiss television on Tuesday that it did not stand in the way of punishing those who committed criminal offences. ("Pressure on UBS continues to weigh heavy," Swissinfo.ch, 02.24.2009)

Before the New Deal and Bretton Woods, regulation of America's economy under the Republican Party (with Democratic enabling, like now) was generally nil. Additionally, the idea of an international monetary system was entirely new in 1944 when the meeting at Bretton Woods, New Hampshire occurred.

The advantage we have now is that we at least have these precedents, but the warnings went unheeded thanks to various forms of market extremism that have lost their lustre in the face of reality, sunlight. This is another plus, but some are going to hang onto these extremist beliefs to their detriment. Some of the keys to solving the economic crisis will be limiting the effects of these false values to their holders through the enforcement of existing laws. The Justice Department's February 19th release (here-in-full) undescores the problem of capital flight and why it's harmful to the interests of the nation:

United States Asks Court to Enforce Summons for UBS Swiss Bank Account Records

WASHINGTON - The government filed a lawsuit today in Miami against Swiss bank UBS AG, the Justice Department announced. The lawsuit asks the court to order the international bank to disclose to the Internal Revenue Service (IRS) the identities of the bank’s U.S. customers with secret Swiss accounts. According to the lawsuit, as many as 52,000 U.S. customers hid their UBS accounts from the government in violation of the tax laws.
The government alleges in the lawsuit that of those 52,000 secret accounts, about 20,000 contained securities and about 32,000 contained cash. According to a UBS document filed with the lawsuit, as of the mid-2000s, those secret accounts held about $14.8 billion in assets. Court documents allege that U.S. citizens failed to report and pay U.S. income taxes on income earned in those secret accounts.
According to the lawsuit, Swiss-based bankers actively marketed UBS’s services to wealthy U.S. customers within the United States. UBS documents filed with the lawsuit show that UBS bankers came to the United States to meet with U.S. clients nearly 4,000 times per year, in violation of U.S. law. According to court documents, the government alleges that UBS trained its bankers to avoid detection by U.S. authorities. Court documents further assert that many U.S. contacts occurred through UBS-sponsored sporting and cultural events, designed to appeal to extremely wealthy Americans.
The lawsuit alleges that UBS engaged in cross-border securities transactions in the United States that it knew violated U.S. security laws. The lawsuit also alleges that UBS helped hundreds of U.S. taxpayers set up dummy offshore companies, to make it easier for those taxpayers to avoid their reporting obligations under U.S. tax laws.
"At a time when millions of Americans are losing their jobs, their homes and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civic and legal duty to pay taxes," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. "It is time for those who are trying to hide from the IRS to rethink their actions. The Department of Justice is committed to do all that it can to aid the IRS in locating those who would seek to hide behind secret accounts and in holding them accountable under the federal tax laws."
"We are committed to moving forward with the summons enforcement process. This action sends a strong signal to taxpayers hiding their money offshore. The IRS will be aggressive in pursuing people who shirk their obligations under the tax law. These people owe it to their fellow citizens to pay their fair share of taxes," said IRS Commissioner Doug Shulman. "As Commissioner, I am committed to bringing to bear the full arsenal of IRS resources to pursue egregious offshore tax abuse. International tax issues are a top priority, and we will continue to aggressively pursue people hiding assets offshore. For people who are hiding money offshore, this serves as a wake-up call that they need to get right with their government. Taxpayers should talk to a tax professional and come forward under our voluntary disclosure process. Having the IRS find you could mean a much heavier price than coming forward on your own." ("United States Asks Court to Enforce Summons for UBS Swiss Bank Account Records," DOJ Release, 02.19.2009)

And today, it's practically a foregone conclusion that capital flight is going to be found to be a significant underlying factor in the current global economic crisis. It already has. That the Justice and Treasury Departments are currently pushing for the records of 52,000 other American depositors is a very dramatic development and practically unprecedented in economic history. Corruption and rampant criminality in the financial sectors of the world are the untold story of the economic crisis, (not) brought to us courtesy of the best mainstream media that money can buy. Reform at the FCC can address this problem, partly through legislative remedies.

Sound minds have been calling for reform of IMF and World Bank policies in these matters for decades, but what have we heard since at least as early as Ronald Reagan? That, "Government isn't the solution--it's the problem." But how else are the markets to be regulated to prevent economic catastrophes that lead to a worldwide conflagration like WWII? Even now, according to most American Libertarians and Republicans, there should be little-or-no state intervention in the financial and business sectors, it's amazing and stunning in its irrationality.
 

"Bretton Woods System" (happy reading):http://en.wikipedia.org/wiki/Bretton_Woods_system

"Stop this timidity in ending tax haven abuse," Financial Times, 04.04.2008: http://www.ft.com/cms/s/0/63cdb642-ea03-11dc-b3c9-0000779fd2ac.html?nclick_check=1

Google's Bretton Woods Timeline (BEWARE: right-wing think tank links): http://www.google.com/archivesearch?hl=en&q=Bretton+Woods&um=1&ie=UTF-8&scoring=t&ei=0FakScDjAYzVnQf2msmYBQ&sa=X&oi=timeline_result&resnum=12&ct=title

"Swiss court blocks bank data disclosure," Radio Netherlands, 02.21.2009: http://www.radionetherlands.nl/news/international/6186235/Swiss-court-blocks-bank-data-disclosure

"Illicit Capital Flows and the Offshore Economy, Tax Justice Network, 2008: http://www.taxjustice.net/cms/front_content.php?idcat=101

"Pressure on UBS continues to weigh heavy," Swissinfo.ch, 02.24.2009: http://www.swissinfo.ch/eng/news_digest/Pressure_on_UBS_continues_to_weigh_heavy.html?siteSect=104&sid=10373856&cKey=1235504307000&ty=nd