Archive for the ‘classwar’ Category

Capitalist Fools

December 25, 2008

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http://www.vanityfair.com/magazine/2009/01/stiglitz200901?printable=true&currentPage=all
by Joseph E. Stiglitz

Behind the debate over remaking U.S. financial policy will be a debate over who’s to blame. It’s crucial to get the history right, writes a Nobel-laureate economist, identifying five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion.
by Joseph E. Stiglitz January 2009

Treasury Secretary Henry Paulson and former Federal Reserve Board chairman Alan Greenspan bookend two decades of economic missteps. Photo illustration by Darrow.

There will come a moment when the most urgent threats posed by the credit crisis have eased and the larger task before us will be to chart a direction for the economic steps ahead. This will be a dangerous moment. Behind the debates over future policy is a debate over history—a debate over the causes of our current situation. The battle for the past will determine the battle for the present. So it’s crucial to get the history straight.

What were the critical decisions that led to the crisis? Mistakes were made at every fork in the road—we had what engineers call a “system failure,” when not a single decision but a cascade of decisions produce a tragic result. Let’s look at five key moments.
No. 1: Firing the Chairman

In 1987 the Reagan administration decided to remove Paul Volcker as chairman of the Federal Reserve Board and appoint Alan Greenspan in his place. Volcker had done what central bankers are supposed to do. On his watch, inflation had been brought down from more than 11 percent to under 4 percent. In the world of central banking, that should have earned him a grade of A+++ and assured his re-appointment. But Volcker also understood that financial markets need to be regulated. Reagan wanted someone who did not believe any such thing, and he found him in a devotee of the objectivist philosopher and free-market zealot Ayn Rand.

Greenspan played a double role. The Fed controls the money spigot, and in the early years of this decade, he turned it on full force. But the Fed is also a regulator. If you appoint an anti-regulator as your enforcer, you know what kind of enforcement you’ll get. A flood of liquidity combined with the failed levees of regulation proved disastrous.

How did we land in a recession? Visit our archive, “Charting the Road to Ruin.” Illustration by Edward Sorel.

Greenspan presided over not one but two financial bubbles. After the high-tech bubble popped, in 2000–2001, he helped inflate the housing bubble. The first responsibility of a central bank should be to maintain the stability of the financial system. If banks lend on the basis of artificially high asset prices, the result can be a meltdown—as we are seeing now, and as Greenspan should have known. He had many of the tools he needed to cope with the situation. To deal with the high-tech bubble, he could have increased margin requirements (the amount of cash people need to put down to buy stock). To deflate the housing bubble, he could have curbed predatory lending to low-income households and prohibited other insidious practices (the no-documentation—or “liar”—loans, the interest-only loans, and so on). This would have gone a long way toward protecting us. If he didn’t have the tools, he could have gone to Congress and asked for them.

Of course, the current problems with our financial system are not solely the result of bad lending. The banks have made mega-bets with one another through complicated instruments such as derivatives, credit-default swaps, and so forth. With these, one party pays another if certain events happen—for instance, if Bear Stearns goes bankrupt, or if the dollar soars. These instruments were originally created to help manage risk—but they can also be used to gamble. Thus, if you felt confident that the dollar was going to fall, you could make a big bet accordingly, and if the dollar indeed fell, your profits would soar. The problem is that, with this complicated intertwining of bets of great magnitude, no one could be sure of the financial position of anyone else—or even of one’s own position. Not surprisingly, the credit markets froze.

Here too Greenspan played a role. When I was chairman of the Council of Economic Advisers, during the Clinton administration, I served on a committee of all the major federal financial regulators, a group that included Greenspan and Treasury Secretary Robert Rubin. Even then, it was clear that derivatives posed a danger. We didn’t put it as memorably as Warren Buffett—who saw derivatives as “financial weapons of mass destruction”—but we took his point. And yet, for all the risk, the deregulators in charge of the financial system—at the Fed, at the Securities and Exchange Commission, and elsewhere—decided to do nothing, worried that any action might interfere with “innovation” in the financial system. But innovation, like “change,” has no inherent value. It can be bad (the “liar” loans are a good example) as well as good.
No. 2: Tearing Down the Walls

The deregulation philosophy would pay unwelcome dividends for years to come. In November 1999, Congress repealed the Glass-Steagall Act—the culmination of a $300 million lobbying effort by the banking and financial-services industries, and spearheaded in Congress by Senator Phil Gramm. Glass-Steagall had long separated commercial banks (which lend money) and investment banks (which organize the sale of bonds and equities); it had been enacted in the aftermath of the Great Depression and was meant to curb the excesses of that era, including grave conflicts of interest. For instance, without separation, if a company whose shares had been issued by an investment bank, with its strong endorsement, got into trouble, wouldn’t its commercial arm, if it had one, feel pressure to lend it money, perhaps unwisely? An ensuing spiral of bad judgment is not hard to foresee. I had opposed repeal of Glass-Steagall. The proponents said, in effect, Trust us: we will create Chinese walls to make sure that the problems of the past do not recur. As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest—toward short-term self-interest, at any rate, rather than Tocqueville’s “self interest rightly understood.”

The most important consequence of the repeal of Glass-Steagall was indirect—it lay in the way repeal changed an entire culture. Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people’s money very conservatively. It is with this understanding that the government agrees to pick up the tab should they fail. Investment banks, on the other hand, have traditionally managed rich people’s money—people who can take bigger risks in order to get bigger returns. When repeal of Glass-Steagall brought investment and commercial banks together, the investment-bank culture came out on top. There was a demand for the kind of high returns that could be obtained only through high leverage and big risktaking.

There were other important steps down the deregulatory path. One was the decision in April 2004 by the Securities and Exchange Commission, at a meeting attended by virtually no one and largely overlooked at the time, to allow big investment banks to increase their debt-to-capital ratio (from 12:1 to 30:1, or higher) so that they could buy more mortgage-backed securities, inflating the housing bubble in the process. In agreeing to this measure, the S.E.C. argued for the virtues of self-regulation: the peculiar notion that banks can effectively police themselves. Self-regulation is preposterous, as even Alan Greenspan now concedes, and as a practical matter it can’t, in any case, identify systemic risks—the kinds of risks that arise when, for instance, the models used by each of the banks to manage their portfolios tell all the banks to sell some security all at once.

As we stripped back the old regulations, we did nothing to address the new challenges posed by 21st-century markets. The most important challenge was that posed by derivatives. In 1998 the head of the Commodity Futures Trading Commission, Brooksley Born, had called for such regulation—a concern that took on urgency after the Fed, in that same year, engineered the bailout of Long-Term Capital Management, a hedge fund whose trillion-dollar-plus failure threatened global financial markets. But Secretary of the Treasury Robert Rubin, his deputy, Larry Summers, and Greenspan were adamant—and successful—in their opposition. Nothing was done.
No. 3: Applying the Leeches

Then along came the Bush tax cuts, enacted first on June 7, 2001, with a follow-on installment two years later. The president and his advisers seemed to believe that tax cuts, especially for upper-income Americans and corporations, were a cure-all for any economic disease—the modern-day equivalent of leeches. The tax cuts played a pivotal role in shaping the background conditions of the current crisis. Because they did very little to stimulate the economy, real stimulation was left to the Fed, which took up the task with unprecedented low-interest rates and liquidity. The war in Iraq made matters worse, because it led to soaring oil prices. With America so dependent on oil imports, we had to spend several hundred billion more to purchase oil—money that otherwise would have been spent on American goods. Normally this would have led to an economic slowdown, as it had in the 1970s. But the Fed met the challenge in the most myopic way imaginable. The flood of liquidity made money readily available in mortgage markets, even to those who would normally not be able to borrow. And, yes, this succeeded in forestalling an economic downturn; America’s household saving rate plummeted to zero. But it should have been clear that we were living on borrowed money and borrowed time.

The cut in the tax rate on capital gains contributed to the crisis in another way. It was a decision that turned on values: those who speculated (read: gambled) and won were taxed more lightly than wage earners who simply worked hard. But more than that, the decision encouraged leveraging, because interest was tax-deductible. If, for instance, you borrowed a million to buy a home or took a $100,000 home-equity loan to buy stock, the interest would be fully deductible every year. Any capital gains you made were taxed lightly—and at some possibly remote day in the future. The Bush administration was providing an open invitation to excessive borrowing and lending—not that American consumers needed any more encouragement.
No. 4: Faking the Numbers

Meanwhile, on July 30, 2002, in the wake of a series of major scandals—notably the collapse of WorldCom and Enron—Congress passed the Sarbanes-Oxley Act. The scandals had involved every major American accounting firm, most of our banks, and some of our premier companies, and made it clear that we had serious problems with our accounting system. Accounting is a sleep-inducing topic for most people, but if you can’t have faith in a company’s numbers, then you can’t have faith in anything about a company at all. Unfortunately, in the negotiations over what became Sarbanes-Oxley a decision was made not to deal with what many, including the respected former head of the S.E.C. Arthur Levitt, believed to be a fundamental underlying problem: stock options. Stock options have been defended as providing healthy incentives toward good management, but in fact they are “incentive pay” in name only. If a company does well, the C.E.O. gets great rewards in the form of stock options; if a company does poorly, the compensation is almost as substantial but is bestowed in other ways. This is bad enough. But a collateral problem with stock options is that they provide incentives for bad accounting: top management has every incentive to provide distorted information in order to pump up share prices.

The incentive structure of the rating agencies also proved perverse. Agencies such as Moody’s and Standard & Poor’s are paid by the very people they are supposed to grade. As a result, they’ve had every reason to give companies high ratings, in a financial version of what college professors know as grade inflation. The rating agencies, like the investment banks that were paying them, believed in financial alchemy—that F-rated toxic mortgages could be converted into products that were safe enough to be held by commercial banks and pension funds. We had seen this same failure of the rating agencies during the East Asia crisis of the 1990s: high ratings facilitated a rush of money into the region, and then a sudden reversal in the ratings brought devastation. But the financial overseers paid no attention.
No. 5: Letting It Bleed

The final turning point came with the passage of a bailout package on October 3, 2008—that is, with the administration’s response to the crisis itself. We will be feeling the consequences for years to come. Both the administration and the Fed had long been driven by wishful thinking, hoping that the bad news was just a blip, and that a return to growth was just around the corner. As America’s banks faced collapse, the administration veered from one course of action to another. Some institutions (Bear Stearns, A.I.G., Fannie Mae, Freddie Mac) were bailed out. Lehman Brothers was not. Some shareholders got something back. Others did not.

The original proposal by Treasury Secretary Henry Paulson, a three-page document that would have provided $700 billion for the secretary to spend at his sole discretion, without oversight or judicial review, was an act of extraordinary arrogance. He sold the program as necessary to restore confidence. But it didn’t address the underlying reasons for the loss of confidence. The banks had made too many bad loans. There were big holes in their balance sheets. No one knew what was truth and what was fiction. The bailout package was like a massive transfusion to a patient suffering from internal bleeding—and nothing was being done about the source of the problem, namely all those foreclosures. Valuable time was wasted as Paulson pushed his own plan, “cash for trash,” buying up the bad assets and putting the risk onto American taxpayers. When he finally abandoned it, providing banks with money they needed, he did it in a way that not only cheated America’s taxpayers but failed to ensure that the banks would use the money to re-start lending. He even allowed the banks to pour out money to their shareholders as taxpayers were pouring money into the banks.

The other problem not addressed involved the looming weaknesses in the economy. The economy had been sustained by excessive borrowing. That game was up. As consumption contracted, exports kept the economy going, but with the dollar strengthening and Europe and the rest of the world declining, it was hard to see how that could continue. Meanwhile, states faced massive drop-offs in revenues—they would have to cut back on expenditures. Without quick action by government, the economy faced a downturn. And even if banks had lent wisely—which they hadn’t—the downturn was sure to mean an increase in bad debts, further weakening the struggling financial sector.

The administration talked about confidence building, but what it delivered was actually a confidence trick. If the administration had really wanted to restore confidence in the financial system, it would have begun by addressing the underlying problems—the flawed incentive structures and the inadequate regulatory system.

Was there any single decision which, had it been reversed, would have changed the course of history? Every decision—including decisions not to do something, as many of our bad economic decisions have been—is a consequence of prior decisions, an interlinked web stretching from the distant past into the future. You’ll hear some on the right point to certain actions by the government itself—such as the Community Reinvestment Act, which requires banks to make mortgage money available in low-income neighborhoods. (Defaults on C.R.A. lending were actually much lower than on other lending.) There has been much finger-pointing at Fannie Mae and Freddie Mac, the two huge mortgage lenders, which were originally government-owned. But in fact they came late to the subprime game, and their problem was similar to that of the private sector: their C.E.O.’s had the same perverse incentive to indulge in gambling.

The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal. Looking back at that belief during hearings this fall on Capitol Hill, Alan Greenspan said out loud, “I have found a flaw.” Congressman Henry Waxman pushed him, responding, “In other words, you found that your view of the world, your ideology, was not right; it was not working.” “Absolutely, precisely,” Greenspan said. The embrace by America—and much of the rest of the world—of this flawed economic philosophy made it inevitable that we would eventually arrive at the place we are today.

Joseph E. Stiglitz, a Nobel Prize–winning economist, is a professor at Columbia University.

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Michael Parenti — Functions of Fascism (Real History)

December 2, 2008




Michael Parenti, Ph.D. in political science from Yale University
has taught at several universities, colleges, and other institutions.
He is the author of twenty books and many more articles.
His works have been translated into at least seventeen languages.

10 days That Changed Capitalism

March 30, 2008

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By Rob Johnson and Robert Borosage

http://www.ourfuture.org/blog-entry/10-days-changed-capitalism

The world has changed. The market fundamentalism that has dominated our economics over last three decades has been unmasked as a sham, deemed useless by the guardian of the integrity of finance itself, the Federal Reserve.

Without a vote of the Congress or a public debate, the Bush administration and the Federal Reserve have made government the guarantor of the shadow banking system – the unregulated, unhinged hedge funds and investment houses whose compulsive excesses now threaten the global economy. They say necessity is the mother of invention, but we seen only a part of the new machine, not surprisingly, the part that buttresses Wall Street. They have scrambled to put this together in an emergency, behind closed doors, without a hint of the necessary regulatory changes that must rationally accompany such guarantees. That is what the fight in the coming months will surely be about.

As the article below by David Wessel of the Wall Street Journal summarizes, the intervention puts at risk hundreds of billions of taxpayer dollars.

It also transforms the economic debate. It is inconceivable that taxpayers should be asked to bail out private buccaneer speculators without enforcing limits on their speculation – capital reserves, limits on what gambles they can take, oversight, transparency, new restrictions on their pay packages to remove the current multi-million dollar personal incentives to invent new Penza schemes and scams.

The shadow banking system now must be brought out of the shadows. After all we are constantly told that finance serves the economy, and the market system is the best means to solve our social goals. It feels very uncomfortable when our servant’s servant becomes our master’s master as Wall Street has been permitted to become in America in recent years by contribution- hungry elected officials.

As Barack Obama noted in his speech yesterday, the deregulation that fostered this folly was supported by both parties. It began under Jimmy Carter, accelerated under Ronald Reagan, went into hyper speed under Bill Clinton, and spiraled into catastrophe under George Bush. The freedom to gamble with other peoples’ money has been protected by lavish campaign contributions and powerful lobbies. These financial buccaneers have treated the laws and rules that govern our financial markets like just one more asset to be bought and sold. They have been unabashed in their arrogant abuse of power, rigging the rules and daring the world to stop them. A particularly audacious example occurred only last year when a concerted lobby campaign convinced the Democratic majority in the Senate to sustain the tax dodge that enables billionaire hedge fund operators to pay a lower tax rate than their secretaries.

This cannot continue. They ask to pocket their profits and have taxpayers protect them from their losses. That offends the principles of both democracy and the market. If they are too big to fail – if their failure will bring down the entire economy – then they are also too big to gamble on their own. They must be regulated – or perhaps nationalized, as the British have just done with one of their leading banks. After all they are asking to nationalize their losses. Why not some of their profits too?

This debate must be accessible to, and reflect the concerns of, citizens. It cannot be the exclusive province of so-called experts, Wall Street operators, economists and legislators. Too often, Wall Street manages to profit having the party and then make a bundle from the government in cleaning up the mess as they socialize the losses that they created.

It is important to understand how reckless Wall Street has been. They have not only victimized the American people through recession and bailouts. Their recklessness threatens to blow up their own cherished role as well. They have damaged the international reputation of the U.S. dollar, turning the world’s reserve currency into the equivalent of a junk bond. The excesses of their hubris-driven repackaging of assets has muddied the U.S. credit allocation process and accelerated the US decline as the financial center of world commerce. Their sacred cow of “free trade” is unlikely to withstand the pressure of a prolonged slump. Wall Street is compulsively consuming itself.

We are going to follow this debate closely at CAF. It will be a constant feature of this blog. We’ll call on the best progressive economists and analysts to break it down. We’ll collect the best documents so you can follow the debate. And we’ll be driving campaigns to make certain that the public doesn’t once more get stuck with the bill for the bankers’ party, with no assurances that the reckless structure of finance has been repaired.

David Wessel provides good summary of where we are below.


http://online.wsj.com/article/SB120657397294066915.htmlTen Days That Changed Capitalism
Officials Improvised
To Rescue Markets;
Will It Be Enough?
March 27, 2008; Page A1

David Wessel

The past 10 days will be remembered as the time the U.S. government discarded a half-century of rules to save American financial capitalism from collapse.

On the Richter scale of government activism, the government’s recent actions don’t (yet) register at FDR levels. They are shrouded in technicalities and buried in a pile of new acronyms.

But something big just happened. It happened without an explicit vote by Congress. And, though the Treasury hasn’t cut any checks for housing or Wall Street rescues, billions of dollars of taxpayer money were put at risk. A Republican administration, not eager to be viewed as the second coming of the Hoover administration, showed it no longer believes the market can sort out the mess.

“The Government of Last Resort is working with the Lender of Last Resort to shore up the housing and credit markets to avoid Great Depression II,” economist Ed Yardeni wrote to clients.

First, over St. Patrick’s Day weekend, the Fed (aka the Lender of Last Resort) and the Treasury forced the sale of Bear Stearns, the fifth-largest U.S. investment bank, to J.P. Morgan Chase at a price so low that a shareholder rebellion prompted J.P. Morgan to raise the price. To induce J.P. Morgan to do the deal, the Fed agreed to take losses or gains, if any, on up to $29 billion of securities in Bear Stearns’s portfolio. The outcome will influence the sum the Fed turns over to the Treasury, so this is taxpayer money; that’s why the Fed sought Treasury Secretary Henry Paulson’s OK.

Then the Fed lent directly to Wall Street securities firms for the first time. Until now, the Fed has lent directly only to Main Street banks, those that take deposits from ordinary folks. That’s because banks were viewed as playing a unique economic role and, supposedly, were more closely regulated than other types of lenders. In the first three days of this new era, securities firms borrowed an average of $31.3 billion a day from the Fed. That’s not small change, and it’s why Mr. Paulson, after the fact, is endorsing changes to give the Fed more access to these firms’ books.

Increased Leverage

In the days that followed, the Republican Treasury secretary leaned on two shareholder-owned, though government-chartered, companies — Fannie Mae and Freddie Mac — to raise capital that their boards didn’t want to raise. In exchange, their government regulator allowed them to increase their leverage so they can buy about $200 billion more in mortgage-backed securities.

So Fannie and Freddie will get bigger, a welcome development when mortgage markets are in trouble. Already, they have regained lost market share. They accounted for 76% of new mortgages in the fourth quarter of last year, up from 46% in the second quarter, Mr. Paulson said Wednesday. But everyone knows that if Fannie or Freddie stumble, taxpayers will get stuck with the tab.

And then, the federal regulator of the low-profile Federal Home Loan Banks, which are even less well capitalized than Fannie and Freddie, said they could buy twice as many Fannie and Freddie-blessed mortgage-backed securities as previously permitted — more than $100 billion worth.

Was this necessary? It’s messy, uncomfortable and undoubtedly flawed in many details. Like firefighters rushing to a five-alarm fire, policy makers are making mistakes that will be apparent only in retrospect.

Too Great to Ignore
But, regardless of how we got here, the clear and present danger that the virus in the housing, mortgage and credit markets is infecting the overall economy is too great to ignore. The Great Depression was worsened because the initial government reaction was wrong-headed. Federal Reserve Chairman Ben Bernanke spent an academic career learning how to avoid repeating those mistakes.

Is it working? It is helping. One key measure is the gap between interest rates on mortgages and safe Treasury securities. A wide gap means high mortgage rates, which hurt an already sickly housing market. A lot of recent activity, including Wednesday’s previously planned auction in which the Fed is trading Treasurys for mortgage-backed securities, is aimed at increasing demand for those securities to drive down mortgage rates.

The gap remains enormous by historical standards, but has narrowed. On March 6, according to FTN Financial, 30-year fixed-rate mortgages were trading at 2.92 percentage points above the relevant Treasury rates; Wednesday the gap was down to 2.22. Normal is about 1.5 percentage points. Money markets are still under stress, as banks and others hoard cash and super-safe short-term Treasurys.

Is it enough? Probably not. Although it’s hard to know, the downward tug on the overall economy from falling house prices persists. The next step, if one proves necessary, is almost sure to require the explicit use of taxpayer money.

Cushion the Blow

The case for doing more is twofold. One is to cushion the blow to families and communities, even if some are culpable. The other is to disrupt a dangerous downward spiral in which falling prices of houses and mortgage-backed securities lead lenders to pull back, hurting the economy and dragging asset prices down further, and so on.

In ordinary times, a capitalist economy lets prices — such as those of homes, mortgage-backed securities and stocks — fall to the point where the big-bucks crowd rushes in, hoping to make a killing. But if the big money remains on the sidelines, unpersuaded that a bottom is near, the wait for bargain hunters to take the plunge could be very long and very painful.
So the next step, no matter how it is dressed up, is likely to involve the government’s moving in ways that put a floor under prices, hoping that will limit the downside risks enough so more Americans are willing to buy homes and deeper-pocketed investors are willing, in effect, to lend them the money to do so.http://www.ourfuture.org/blog-entry/10-days-changed-capitalism

Families Torn by Citizenship for Fallen

March 24, 2008

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A young, ambitious immigrant from Guatemala who dreamed of becoming an architect. A Nigerian medic. A soldier from China who boasted he would one day become an American general. An Indian native whose headstone displays the first Khanda, emblem of the Sikh faith, to appear in Arlington National Cemetery.

These were among more than 100 foreign-born members of the U.S. military who earned American citizenship by dying in Iraq.

Jose Gutierrez was one of the first to fall, killed by friendly fire in the dust of Umm Qasr in the opening hours of the invasion.

In death, the young Marine was showered with honors his family could only have dreamed of in life. His sister was flown in from Guatemala for his memorial service, where a Roman Catholic cardinal presided and top military officials saluted his flag-draped coffin.

And yet, his foster mother agonized as she accompanied his body back for burial in Guatemala City: Why did Jose have to die for America in order to truly belong?

Cardinal Roger Mahony of Los Angeles, who oversaw Gutierrez’s service, put it differently.

“There is something terribly wrong with our immigration policies if it takes death on the battlefield in order to earn citizenship,” Mahony wrote to President Bush in April 2003. He urged the president to grant immediate citizenship to all immigrants who sign up for military service in wartime.

“They should not have to wait until they are brought home in a casket,” Mahony said.

But as the war continues, more and more immigrants are becoming citizens in death — and more and more families are grappling with deeply conflicting feelings about exactly what the honor means.

Gutierrez’s citizenship certificate — dated to his death on March 21, 2003, — was presented during a memorial service in Lomita, Calif., to Nora Mosquera, who took in the orphaned teen after he had trekked through Central America, hopping freight trains through Mexico before illegally sneaking into the U.S.

“On the one hand I felt that citizenship was too late for him,” Mosquera said. “But I also felt grateful and very proud of him. I knew it would open doors for us as a family.”

“What use is a piece of paper?” cried Fredelinda Pena after another emotional naturalization ceremony, this one in New York City where her brother’s framed citizenship certificate was handed to his distraught mother. Next to her, the infant daughter he had never met dozed in his fiancee’s arms.

Cpl. Juan Alcantara, 22, a native of the Dominican Republic, was killed Aug. 6, 2007, by an explosive in Baqouba. He was buried by a cardinal and eulogized by a congressman but to his sister, those tributes seemed as hollow as citizenship.

“He can’t take the oath from a coffin,” she sobbed.

There are tens of thousands of foreign-born members in the U.S. armed forces. Many have been naturalized, but more than 20,000 are not U.S. citizens.

“Green card soldiers,” they are often called, and early in the war, Bush signed an executive order making them eligible to apply for citizenship as soon as they enlist. Previously, legal residents in the military had to wait three years.

Since Bush’s order, nearly 37,000 soldiers have been naturalized. And 109 who lost their lives have been granted posthumous citizenship.

They are buried with purple hearts and other decorations, and their names are engraved on tombstones in Arlington as well as in Mexico and India and Guatemala.

Among them:

_ Marine Cpl. Armando Ariel Gonzalez, 25, who fled Cuba on a raft with his father and brother in 1995 and dreamed of becoming an American firefighter. He was crushed by a refueling tank in southern Iraq on April 14, 2003.

_ Army Spc. Justin Onwordi, a 28-year-old Nigerian medic whose heart seemed as big as his smiling 6-foot-4 frame and who left behind a wife and baby boy. He died when his vehicle was blown up in Baghdad on Aug. 2, 2004.

_ Army Pfc. Ming Sun, 20, of China who loved the U.S. military so much he planned to make a career out of it, boasting that he would rise to the rank of general. He was killed in a firefight in Ramadi on Jan. 9, 2007.

_ Army Spc. Uday Singh, 21, of India, killed when his patrol was attacked in Habbaniyah on Dec. 1, 2003. Singh was the first Sikh to die in battle as a U.S. soldier, and it is his headstone at Arlington that displays the Khanda.

_ Marine Lance Cpl. Patrick O’Day from Scotland, buried in the California rain as bagpipes played and his 19-year-old pregnant wife told mourners how honored her 20-year-old husband had felt to fight for the country he loved.

“He left us in the most honorable way a man could,” Shauna O’Day said at the March 2003 Santa Rosa service. “I’m proud to say my husband is a Marine. I’m proud to say my husband fought for our country. I’m proud to say he is a hero, my hero.”

Not all surviving family members feel so sure. Some parents blame themselves for bringing their child to the U.S. in the first place. Others face confusion and resentment when they try to bury their child back home.

At Lance Cpl. Juan Lopez’s July 4, 2004, funeral in the central Mexican town of San Luis de la Paz, Mexican soldiers demanded that the U.S. Marine honor guard surrender their arms, even though the rifles were ceremonial. Earlier, the Mexican Defense Department had denied the Marines’ request to conduct the traditional 21-gun salute, saying foreign troops were not permitted to bear arms on Mexican soil.

And so mourners, many deeply opposed to the war, witnessed an extraordinary 45-minute standoff that disrupted the funeral even as Lopez’s weeping widow was handed his posthumous citizenship by a U.S. embassy official.

The same swirl of conflicting emotions and messages often overshadows the military funerals of posthumous citizens in the U.S.

Smuggled across the Mexican border in his mother’s arms when he was 2 months old, Jose Garibay was just 21 when he died in Nasiriyah. The Costa Mesa police department made him an honorary police officer, something he had hoped one day to become. America made him a citizen.

But his mother, Simona Garibay, couldn’t conceal her bewilderment and pain. It seemed, she said in interviews after the funeral, that more value was being placed on her son’s death than on his life.

Immigrant advocates have similar mixed feelings about military service. Non-citizens cannot become officers or serve in high-security jobs, they note, and yet the benefits of citizenship are regularly pitched by recruiters, and some recruitment programs specifically target colleges and high schools with predominantly Latino students.

“Immigrants are lured into service and then used as political pawns or cannon fodder,” said Dan Kesselbrenner, executive director of the National Immigration Project, a program of the National Lawyers Guild. “It is sad thing to see people so desperate to get status in this country that they are prepared to die for it.”

Others question whether non-citizens should even be permitted to serve. Mark Krikorian of the conservative Center for Immigration Studies, argues that defending America should be the job of Americans, not non-citizens whose loyalty might be suspect. In granting special benefits, including fast-track citizenship, Krikorian says, there is a danger that soldiering will eventually become yet another job that Americans won’t do.

And yet, immigrants have always fought — and died — in America’s wars.

During the Cvil War, the Union army recruited Irish and German immigrants off the boat. Alfred Rascon, an illegal immigrant from Mexico, received the Medal of Honor for acts of bravery during the Vietnam war. In the 1990s, Gen. John Shalikashvili, born in Poland after his family fled the occupied Republic of Georgia, became chairman of the Joint Chiefs of Staff.

After the Iraq invasion, the U.S. Embassy in Mexico fielded hundreds of requests from Mexicans offering to fight in exchange for citizenship. They mistakenly believed that Bush’s order also applied to nonresidents.

The right to become an American is not automatic for those who die in combat. Families must formally apply for citizenship within two years of the soldier’s death, and not all choose to do so.

“He’s Italian, better to leave it like that,” Saveria Romeo says of her 23-year-old son, Army Staff Sgt. Vincenzo Romeo, who was born in Calabria, died in Iraq and is buried in New Jersey. A miniature Italian flag marks his grave, next to an American one.

“What good would it do?” she says. “It won’t bring back my son.”

But it would allow her to apply for citizenship for herself, a benefit only recently offered to surviving parents and spouses. Until 2003 posthumous citizenship was granted only through an act of Congress and was purely symbolic. There were no benefits for next of kin.

Romeo says she has no desire to apply. She says she couldn’t bear to benefit in any way from her son’s death. And besides, she feels Italian, not American.

Fernando Suarez del Solar just feels angry — angry at what he considers the futility of a war that claimed his only son, angry at the military recruiters he says courted young Jesus relentlessly even when the family still lived in Tijuana.

His son was just 13, Suarez del Solar said, when he was first dazzled by Marine recruiters in a California mall. For the next two years Jesus begged the family to emigrate and eventually they did, settling in Escondido, Calif., where the teen signed up for the Marines before he left high school.

Lance Cpl. Jesus Suarez Del Solar was 20 when he was killed by a bomb in the first week of the war. He left behind a wife and baby and parents so bitter about his death that they eventually divorced.

Today, his 52-year-old father has become an outspoken peace activist who travels the country organizing anti-war marches, giving speeches and working with counter-recruitment groups to dissuade young Latinos from joining the U.S. military.

“There is nothing in my life now but saving these young people,” he says. “It is just something I feel have to do.”

But first he had to journey to Iraq. He had to see for himself the dusty stretch of wasteland where his son became an American. In tears, he planted a small wooden cross. And he prayed for his son — and for all the other immigrants who became citizens in death.

mission accomplished – Bush has undone a century of progress by the US’s environmental protection movement

March 16, 2008
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By By Kaleem Omar

3/15/2008

President George W. Bush isn’t only hated by people in countries around the world opposed to the US’s invasion, occupation and destruction of Afghanistan and Iraq; he is also hated by many people in his own country opposed to his anti-environmental protection policies. Among other things, those policies have opened up millions of acres of America’s protected national wildlife refuges to oil and gas drilling operations by big US energy companies – putting the pristine wilderness at risk.A century ago, US President Teddy Roosevelt gave Americans the bountiful and enlightened National Wildlife Refuge System – the world’s first such system and one of America’s glories.There are national wildlife refuges in every American state, important centres for the preservation of a sense of wildness in each place. In addition, these refuges have served as models for states like New York, which have created their own supplemental patchwork of refuges large and small.

As much as anything, the refuge safety net has created a long-standing public policy for establishing wildlife sanctuaries, and the tacit understanding that without them, the wilderness is doomed.

As New York State’s Albany Times-Union newspaper noted, “For a century, a critical underpinning of America’s view of wilderness has been that we can’t live without it. It’s our heritage. National forests and parks have steadily grown in numbers and size, and public appreciation.”

Americans have consistently recognised that significant pieces of their natural environment need to be set aside. It hasn’t been a Republican agenda or a Democratic one; it’s been a remarkably bipartisan vision.

Democratic President Lyndon B. Johnson signed the far-reaching Wilderness Act forty-five years ago. Republican President Richard M. Nixon gave the country the Environmental Protection Agency and the Endangered Species Act; and Republican Ronald Reagan signed more wilderness protection legislation than any other president.

But what the Bush administration has been attempting seems to be nothing less than total reversal of a century of environmental flow in the United States. As the Albany Times-Union noted, “At every turn, the Bush administration is thumbing its nose at every president who’s gone before, back to Teddy Roosevelt.”

It is staggering how much environmental progress President George W. Bush is trying to undo. There is a cumulative sense over the last seven years of a level of greed and exploitation encouraged by the White House that at some points of America’s history would have been the stuff of impeachment.

Mining, lumbering, oil interests and developers in general have never had it so good on public lands, much of which were set aside explicitly or in the spirit of protecting the wilderness. “Sadly, public reaction has been surprisingly muted,” the Albany Times-Union noted.

One of the main reasons for this muted reaction, of course, has been the climate of fear created by the Bush administration as it has gone about pursuing its so-called “war against terrorism.” Dire warnings of imminent terrorist attacks continue to emanate from administration officials on an almost weekly basis. The result is a population so traumatised and apprehensive about what the future holds for them that environmental concerns have been pushed on to the backburner.

Known for its close links to US energy companies and other big business interest groups, the Bush administration seems more interested in giving its business cronies the opportunity to line their pockets by allowing them to exploit the natural resources of public lands and less interested in preserving the wilderness.

The administration has already allowed energy companies to drill for oil in some protected sections of the Alaska wilderness and plans are afoot to allow similar operations in other western states.

The topper has to be an attempt to export the Bush brand of exploitation abroad and turn on its head the Endangered Species Act.

As the Albany Times-Union noted, “Under a proposal being floated by the administration, trophy hunters, circuses and the pet industry would be permitted to kill, capture or legally import certain desired species, many of which are at the door of extinction.”

The sick premise being used by the Bush administration to justify the move is that poor countries can use the money raised by selling some of their endangered wildlife to support badly needed conservation efforts for the others.

The most reprehensible part of this plan is that only foreign endangered species would be involved: trophy hunting for rare beasts, exporting Asian elephants for US circuses and zoos, resuming a partial African ivory trade (internationally banned since the early 1980s), and encouraging shadowy collectors to retrieve rare birds from the Amazon rain forest.

American endangered species are not part of the proposal, probably because the hue and cry that would result nationally would deafen a few ears in Washington.

Worldwide, and especially in poorer countries, the black market trade in endangered species is a huge problem, tying up all kinds of international policing resources. But at least at present there’s something of a cap on the illegal activity.

With the Bush proposal, however, we may as well put up billboards telling poachers they now have a place in line behind lumbering, mining and oil. And please, after you’ve shot the last elephant, turn out the lights.

American national parks are not merely places of spectacular scenic features and curiosities. This sounds like a strange statement in the face of the advertised lure of wonders like the geysers of Yellowstone, the incredible blue of Oregon’s Crater Lake (which I had the good fortune to see in the summer of 1989), the unrivalled picture of the Grand Canyon, and the waterfalls of the Yosemite with their legends of Yosemite Sam and his “hoard of King Solomon’s gold,” of all things.

But nearly all the national parks, and many of the wilderness areas, would justify their existence even if they did not possess so great a scenic merit. The scenery is inspiring, unforgettable; but the meaning goes deeper.

When the Yellowstone National Park was established through an Act of Congress in 1872, it was as “a public park or pleasuring-ground for the benefit and enjoyment of the people.” Whatever Congress meant by those words, it occurred naturally to the early exploration parties that the wonders of the region were no ordinary creation of nature – that the volcanic phenomena especially were of world significance; and that consequently any private interests that could gain ownership would reap large profits.

In the act of Congress that set up the National Park Service, some forty-five years afterward, the field of purpose was much widened. The words of the act should be well remembered, for the National Park System operates today under that organic law, which orders the conservation of “the scenery and the natural and historic objects and the wild life” in the national parks, and the provision “for the enjoyment of the same in such a manner and by such means as will leave them unimpaired for the enjoyment of future generations.”

This is what the national parks are for – not a part, but the whole of the stated purpose. This, with the implication of policies and methods to achieve the stated ends, is the full meaning of the national parks. It is no longer “conservation.” It is preservation. Or it may be called conservation in another and newer sense: the conserving of resources that are not to be expressed in terms of money, but embrace the moral, spiritual, and educational welfare of the people and add to the joy of their living.

Included in the National Park System are twenty-eight areas designated as national parks, and eighty-six areas called national monuments. In addition, there are about sixty preserved places, mostly of small extent, which fall into various categories, according to the historical reasons for which they were set aside. Finally, there are three national parkways and the integrated group known as the National Capital Parks.

In 1898, the great American naturalist John Muir wrote: “Thousands of nerve-shaken, over-civilised people are beginning to find out that going to the mountains is going home; that wildness is a necessity; and that mountain parks and reservations are useful not only as fountains of timber and irrigating rivers, but as fountains of life.”

With every passing year, the truth of that statement in emphasised. But it is that very vision of Muir and Teddy Roosevelt that the Bush administration is seeking to undo. To Bush and his business cronies, the wilderness is not a necessity, not a fountain of life; it is a resource to be exploited for money.

 

Bush’s King Midas in reverse – everthing he touches turns to shit

March 16, 2008

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by Ed Naha | March 15, 2008 -dit_title=Mission accomplished: FUBAR 'R' us digg_skin=’compact’; 

Which one of these headlines scares you the most? “Recession fears rise on more job cuts.” “Fed takes new steps to boost cash for banks.” “World markets slide as US economy groans.” “Housing market spirals, no end in sight.” “Consumer confidence at lowest since 2002.” “Studies: Iraq costs US $12B per month.” “Gas prices rise to new national record.” “Consumers increased their borrowing by $6.9 billion in January.” “Bush says no recession in sight.”

Yeah, I know. It’s not even close. Once again, our President emerges victorious.

Over the years, Bush has acquired many critics. Some think him as being arrogant, stubborn, ill informed, short-sighted, paranoid, clueless and out of touch. Others consider him an ideologue, an overgrown frat boy with a warped sense of entitlement, a dry drunk, a sociopath, a fascist, a belligerent blow-hard, a monarch wannabe with the inherent intelligence of a kadota fig and a total failure. To be fair to Bush, he is all that and more – an unprecedented Black Hole in the history of American governance.

Our president, who believes in the piss on ’em, I mean, er, trickle down theory of economics and who has made a practice out of robbing the poor to give to the rich, is now faced with his latest monstrous creation: an American economy that has gone bust. The only reason there aren’t Hoovervilles popping up around the country is that nobody can afford the cardboard.

The sheer madness of King George has been highlighted in the past week by dire financial headline after headline and Bush’s reaction, or lack of it, to the consequences of his “let them eat caca” economic policies.

Last week, the Labor Department announced that 63,000 non-farm jobs were lost in February, following January’s 22,000 goners. February’s figures were the worst in five years. In addition, 450,000 folks bade adios to the labor force. They just stopped looking for jobs that weren’t there. (As a result, our unemployment rate eased to 4.8% from 4.9%, a fact Bush actually bragged about.)

The real job loss for February is a tad higher than the official number. Construction lost 39,000 posts. Manufacturing took a 52,000 hit. Retailers cut 34,100 jobs. Financial companies slashed 12,000 positions. Even temp agencies reported 27,600 jobs cut. The total job loss number was offset by the creation of new jobs in such sectors as government, service, prostitution and television punditry. (Okay, I made some of that last stuff up.)

Consumer confidence sank to a new low of 33.1%.

“We’ve gotten to a point where there’s very little for the consumer to cheer about. Everywhere you look – homes, grocery stores, gasoline stations – there are things that are all weighing on consumer attitudes,” said Richard Yamarone, economist at Argus Research. “You have soaring energy and food prices, rising home foreclosures and uncertainties about the jobs climate. When you mix it altogether it is a recipe for miserable consumer sentiment.”

D’ya think?

Adding to the hilarity, the dollar slid to record international lows this past week. It’s right down there with colored beads, trinkets and beaver pelts.

Oil soared to a new high, just about $110 a barrel. Gas prices hit an all-time record, with regular unleaded going for $3.2272 a gallon, a figure that doesn’t accurately reflect what’s happening at the pump. In California, for instance, a gallon of unleaded averages $3.50, with one station in the northern part of the state pumping it up to $5.19! In other words, gas is now almost as costly as a D.C. hooker.

The amount of consumer credit owed to banks and credit cards rose to $6.9 billion this year because people are now using their credit cards to survive.

Probably not coincidentally, a survey measuring an individual’s outlook about their personal financial standing as well as that of the country’s came up with a resounding NEGATIVE 41.6%

Think of this way: all those folks who wanted to have a beer with Bush can no longer afford the beer. (Nor can they afford his policies.)

Bush’s King Midas in reverse financial touch is spreading across the land. Retail sales in January fell at the fastest pace in the last five years.

Retailers including AnnTaylor Stores Corp., Talbots Inc. and Pacific Sunwear of California Inc. have closed hundreds of stores so far this year. Gadget seller Sharper Image filed for bankruptcy protection last month and plans to shutter nearly half of its 184 stores.

That, along with the Chapter 11 bankruptcy of catalog retailer Lillian Vernon Corp., could mark the beginning of a wave of retail bankruptcies that’s expected to go well beyond the home furnishings stores hurt by the housing disaster.

Unless the economy dramatically improves, retail bankruptcies this year could reach the highest level since the 1991 recession. More closings could leave gaping holes in the nation’s retail centers, which have already seen average vacancy rates creep up to between 7 percent and 8 percent from 5 percent over the last six months.

David Solomon, president and CEO of ReStore, NAI Global’s retail division, expects the vacancy rate could hit 10 percent by the end of the year. Suzanne Mulvee, senior economist at Property & Portfolio Research, figures that vacancies could rise as high as 12.5 percent this year. Her figure includes retail spaces where tenants have defaulted on their rents.

Part of the problem, according to Mulvee, is that more retail space is coming to the market just as consumer demand is falling. Another 130 million square feet of retail space will become available this year, she predicts, on top of last year’s 143 million.

Another reason malls are being hit hard is that, despite dwindling business, landlords are raising rents, driving a lot of small stores out. Clearly, landlords subscribe to Bush’s sunny economic views. Either that or Helen Keller’s.

U.S. home foreclosure filings jumped 60 percent and bank seizures more than doubled in February as rates on adjustable mortgages rose and property owners were unable to sell or refinance amid falling prices.

More than 223,000 properties were in some stage of default, or 1 in every 557 U.S. households.

About $460 billion of adjustable-rate mortgages are scheduled to reset this year and another $420 billion will rise in 2011, according to New York-based analysts at Citigroup Inc. Homeowners faced higher payments as fourth-quarter home prices fell 8.9 percent, the biggest drop in 20 years as measured by the S&P/Case- Shiller home price index.

Foreclosure filings are likely to be “explosive” in May and June as more payments jump Rick Sharga, executive vice president of RealtyTrac, said in an interview. There may be between 750,000 and 1 million bank repossessions in 2008. Bank seizures rose 110 percent in February from a year ago, he said.

Even interest rates on 30-year fixed-rate mortgage are rising. Why? The mortgage market is short by roughly $1 trillion in capital.

Despite BushCo.’s efforts to make it nearly impossible for regular folks to declare bankruptcy, an average of 4,000 bankruptcy filings were made PER DAY in February.

Meanwhile, hidden bank fees are on the rise, with consumers paying over $36 billion in 2006, the last year on record.

Americans are getting slapped around worse than Curly of The Three Stooges. The official government response? “I’m not saying there’s a recession,” insists Edward Lazear, chairman of the White House Council of Economic Advisers. (Bush has Council of Economic Advisers??? One that even has a president??? Who knew?) Ever the realist, Lazear stated: “We have definitely downgraded our forecast for this quarter.”

That sort of thinking is akin to the National Weather Service forecasting “drizzle” before Katrina hit New Orleans.

The Ponzi Schemes run by unregulated lenders while Bush was asleep at the wheel has resulted in a housing credit mess that is almost unparalleled in American history.

For the first time since the Federal Reserve started tracking the data in 1945, the amount of debt tied up in American homes now exceeds the equity homeowners have built.

The Fed reported last week that homeowner equity actually slipped below 50 percent in the second quarter of last year, and fell to just below 48 percent in the fourth quarter.

Economy.com estimates 8.8 million homeowners, or about 10 percent of homes, will have zero or negative equity by the end of this month. Even more disturbing, about 13.8 million households will be “upside down” if prices fall 20 percent from their peak. Again, U.S. home prices plunged 8.9 percent in the final quarter of 2007, so that 20 percent figure isn’t all that far-fetched.

So far, the government has stepped in with a number of half-assed measures to contain the housing fallout. Last month, Congress passed a $168 billion economic stimulus package with provisions aimed at helping homeowners refinance into more affordable loans. The Federal Reserve has also slashed interest rates in hopes of spurring growth.

Fed Chairman Ben Bernanke suggested lenders reduce loan amounts to provide relief to beleaguered homeowners. (The lenders are sure to cave. That “pretty please with sugar on top” negotiating style has worked so well nationally during the last seven years.) Most economists believe that it’s all too little too late.

Peter Morici of the University of Maryland School of Business stated, on CNN: “This is a wholesale meltdown… Across the board the economy is shrinking. Over 600,000 Americans left the labor force. The labor department reports that unemployment is falling. That is simply because so many people have quit the labor market. They only count those that are looking for a job, not all those that are discouraged and decided to stay at home.

“We need 115,000 jobs (created a month) to break even. We lost over 100,000 jobs (in February). So, by all rights, the unemployment rate should have gone up to over 5 percent. The labor department only computes it on the basis of people that are actually participating, those that are employed and those that are looking. Those that quit looking don’t count in their mind. If we counted all the people that have quit, if we adjusted it for the labor force participation rate we had seven or eight years ago, the unemployment rate would be near 7 percent.”

As for Treasury Secretary Henry Paulson and Fed chief Ben Bernanke insisting that the sun will come out tomorrow, betcha bottom dollar that tomorrow, there’ll be sun, Morici was less than impressed.

“If you look at the (Congressional) testimony last week, Ben Bernanke’s testimony and Paulson’s speech in Chicago, according to Paulson, our manufacturing sector is just plain healthy, and there is nothing to worry about, even though it lost 50,000 jobs last month and over 3.5 million jobs during the course of the Bush administration. As for Bernanke, he keeps cutting interest rates thinking that is going to push the economy forward. But as he cuts interests rates credit card terms are becoming more difficult. Housing loans have all but dried up. The reason is that we have a wholesale breakdown in the credit markets.

“Normally, banks loan money to homeowners and they turn around and turn them into bonds and sell them to insurance companies. Because of the sub prime meltdown and all of the bad bonds they wrote, all of the bogus securities that are melting away in value, the fixed income buyers, the insurance companies, large private buyers, foreign governments and investors are no longer willing to accept paper that Citibank and the other large banks create. Bernanke has showed no recognition of this problem. He is not addressing it, instead he tells the banks to mark down the debt a bit. The credit markets are not functioning. Cutting the Fed rates will not help.”

But surely, our fearless leader has planned for such an economic emergency! Surely, he can face down a recession. Uh, not really. In fact, he doesn’t even think we’re in a recession. We’re experiencing a “slowdown.” And, once again, he’s on the case. (Uh-oh.) He’s administered, what he calls, “a booster shot.”

Bush addressed the economy in-between FISA snit-fits and anti-Cuba rants. “Losing a job is painful,” he imagined, “and I know Americans are concerned about our economy. So am I. It’s clear our economy has slowed, but the good news is, we anticipated this and took decisive action to bolster the economy, by passing a growth package that will put money into the hands of American workers and businesses.”

Unfortunately, Bush was not done in his speechifying: “I signed this growth package into law just three weeks ago, and its provisions are just starting to kick in. First, a growth package includes incentives for businesses to make investments in new equipment this year. These incentives are now in place, and they are starting to have an impact. My advisors tell me that investment in new equipment remains solid thus far in the first quarter.”

So, lets review. Businesses are going belly up. What’s the first thing on their minds? “Hey, we’re going under! Let’s expand and upgrade.” Note to whoever is advising Bush. Hide the bong when Cheney shows up.

Bush summed up his sunny views with a succinct: “So my message to the American people is this: I know this is a difficult time for our economy, but we recognized the problem early (Note: what tipped you off? The quiche lines in Kennebunkport?), and provided the economy with a booster shot. We will begin to see the impact over the coming months. And in the long run, we can have confidence that so long as we pursue pro-growth, low-tax policies that put faith in the American people, our economy will prosper.”

In other words, we’re fucked until a new president takes over.

The checks that Bush is sending out to some Americans are in the $600 to $1200 range. (“Look, ma! Now we kin buy ourselves that terlet paper we’ve been a’ hankerin’ for.”) Bush sincerely believes that these checks will perk up the economy. Why? Because, with all that dough burning a hole in their pockets, Americans will spend like drunken sailors.

Theorized Bush: “The purpose is to encourage our consumers. The purpose is to give them money — their own to begin with, by the way — but give them money to help deal with the adverse effects of the decline in housing value. Consumerism is a significant part of our GDP growth, and we want to sustain the American consumer, encourage the American consumer and, at the same time, we want to encourage investment. So we’ll see how the plan works.”

In other words: lost your home, your job, and your health insurance? Buy shit! You know like you did after 9/11! Buy lotsa shit! “When the money reaches the American people, we expect they will use it to boost consumer spending,” Bush fantasized.

Clearly Bush has his pulse on the upraised finger of the nation.

Why else would he be moved towards such profundities as: “I’m concerned about the economy because I’m concerned about working Americans, concerned about people who want to put money on the table and save for their kids’ education.”

If you’re like me, you put that money right next to the mashed potatoes on your table. Yum. Pass the unpaid mortgage, please. I’m saving bankruptcy for dessert!

One day after “The Wall Street Journal” ran the results of a survey wherein 71% of economists polled thought we were in a recession now, Bush gave a speech devoted to our current crises. “I’m coming to you as an optimistic fellow,” he golly-geed. “I’ve seen what happens when America deals with difficulty. I believe that we’re a resilient economy, and I believe that the ingenuity and resolve of the American people is what helps us deal with these issues.”

If you’re religious by nature, that nails it. All gods have officially abandoned us.

Probably the most telling reflection of America’s current Bizarro state of affairs can be found in the story headlined: “Dr. Death to run for US Congress.”

It seems that assisted-suicide advocate Jack (“Dr. Death”) Kevorkian has decided to throw his cowl into the ring and run as an independent in Oakland, California’s 9th Congressional district. Kevorkian spent more than eight years in jail for the murder of a man whose videotaped assisted suicide was aired on national television. He claims to have helped 130 folks kick the bucket.

In a sense, Bush has fashioned a political career doing what Kevorkian does but on a much larger scale. Unlike Bush, Kevorkian was always upfront with his patients as he ended their suffering.

With Bush, all you get is: don’t worry, be happy.

And don’t worry about that dirty needle.

It’s good for you.

The Hole In The Whole

March 9, 2008
1929crash.jpgWritten by Realist http://pessimistplace.blugginout.com/
Published March 07, 2008Do attempt to convince me that the economy is not now in recession. Please. I want to have something to laugh about when you brag about all those bargains you picked up on the way down. Will they be worth anything a year from now?

I’ve been through many recessions in my time, and over the years, I have discovered one sure-fire sign that the economy is in recession: employers carp about having to pay their workers more than they “deserve”. “Expensive” labor causes employers to take out their poor management on their employees’ incomes, including reducing their hours of work (if workers aren’t terminated completely) even though productivity improved. As Nigel Gault, chief U.S. economist at research firm Global Insight, insists, “As long wages stay under control, inflation is not going to be able to get out of control like it did in the 1970s”.

No matter how the captains of industry and commerce attempt to spin the facts, workers know that they are being made the fall guys. Those who have jobs are doing all that they can to keep them, and those who were thinking of changing jobs are delaying taking action. There is a significant correlation between workers’ impressions of the condition of the job market and the onset of recessions. As people lose jobs and seek work, their neighbors are approached to aid in the search for replacement income, being asked if their own employers are hiring. That condition is more likely to be seen as an accurate assessment of the state of the economy no matter what so-called experts like Ben Bernanke and Henry Paulson say. These jobless facts don’t lie.

The search for new employment isn’t being helped by the record oil prices. Local LA television news is reporting, as of this writing, gas prices as high as $3.80 a gallon, and the effects of the record wholesale oil prices aren’t going to hit the pumps for several weeks yet. Few of those interviewed by the local reporters doubt that $4 gas is on the way.

Without that job, even those with good credit aren’t going to be able to continue to pay the mortgage. Those not yet caught up in the record numbers of foreclosures are instead walking away from their homes before they are foreclosed.

Just to show that the trickle-down theory can work only if one inverts the scale — as homeowners lose their homes, the investors who originally funded the mortgages are increasingly in borrowing trouble themselves. This will only lead to more investors distancing themselves from the mortgage market, making home loans as rare as a truthful statement from the Bush administration.

Mortgage investors and homeowners in distress are being joined by local governments, who are losing funding for their bonds as the costs of borrowing to float these notes exceeds the value of the notes’ collateral. Foreign investors are now seeking more profitable opportunities until the US economy stabilizes.

It doesn’t get any better soon. The Federal Reserve’s “Beige Book” report noted that the U.S. economy nearly ground to a halt in the fourth quarter of 2007 and that all of its districts reported decelerating economic growth in early 2008 as prices increased almost everywhere in the United States.

Throwing the effort to contain inflation overboard, the Fed has now clearly shifted its meager efforts to keeping the economic furnace of the ship of state stoked. Large banks are reporting tens of billion in losses, and expect more losses to emerge soon. The Fed is easing interest rates for large bank borrowing among themselves to deal with their short-term cash flow difficulties. This move does not change conditions for anyone else.

One move that will change conditions for the rest of us is the order from on high to increase the money supply by $100 billion in March. Allegedly, this is a move that will increase employment, but I expect to hear soon that the dollar is rapidly inflating and causing exchange rate slippage. Two dollar euros, anyone?

But even with all of these openly discussed difficulties, some CEOs still think they can party like there is no tomorrow. Countrywide Financial Corp. CEO Angelo Mozilo told a U.S. House panel that credit tightening has “gone too far”, but he’s only thinking of the poor homeowner who “can’t take advantage of lower home prices”.

Male. Bovine. Excrement.

After far too long, the Congress is beginning to look into the exorbitant remuneration executives receive even though their companies have gone in the tank. Angelo Mozilo is himself just one of the persons of interest to the House Committee on Oversight and Government Reform chaired by Rep. Henry Waxman.

Things should get even more interesting now that the Bush Family’s Carlyle Group subsidiary Carlyle Capital Corp. couldn’t meet several of the margin calls placed by investors concerned with saving at least a portion of their investment from that political slush fund. This indicates a loss of investor confidence in the Bush style of business management, but is not the only clue. For example, one of the largest corporate sector beneficiaries of Bush economic policy and tax cutting is now backing Democratic presidential candidates more than they are Lame John McCain.

I’m sure that this support is intended to act as a rear-guard defense as these same companies leave the United States – and the high-wage jobs they offer American citizens – in search of more profitable venues elsewhere in the world. Care for some lead in your Lipitor? You’ll be getting it soon enough!

Having destroyed our national regulatory capability, the mad scramble is now on in the corporatist sector of our society to retain as much of the wealth they acquired, whether by fair means or foul, and move it offshore. This alone is a sign that the party is over, and the piper is coming up the walk to demand payment. Those who have the assets, such as Pfizer, will relocate out of the United States before the offal obstructs the aerodynamic obdurator. Others, like General Electric’s GE Money, already have, removing itself – and all of its top executives – to London.

That way, these companies won’t have to settle accounts for their share of the mess.

We, the People of the United States, have this penalty coming. We believed Ronald Reagan’s Morning in America lies despite much evidence to the contrary, not to mention PATCO. We accepted George HW Bush’s excuses for suppressing investigation of the economic and international treasons committed under his watch as both VP and president. We failed to recognize that Bill Clinton was selling us out with NAFTA and GATT, and we didn’t life a finger to limit the predations allowed under George W. Bush. We aren’t going to escape the consequences of our 30-year inaction, for the sheriff is coming to reclaim the homestead we can no longer afford.

He has no choice — he doesn’t want to lose his.

What’s the Going Price for a Joint?

January 21, 2008

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More Than You Might Think
By PAUL ARMENTANO

What’s the current price for a bag of weed? According to the latest figures from the FBI, the human cost is roughly 739,000 a year.

That’s the number of American citizens arrested in 2006 for possessing small amounts of pot. (Another 91,000 were charged with marijuana-related felonies.) The figure is the highest annual total ever recorded, and is nearly double the number of citizens busted for pot fifteen years ago.

Those arrested face a multitude of consequences, primarily determined by where they live. For example, most Californians charged with violating the state’s pot possession laws face little more than a small fine. By contrast, getting busted with a pinch of weed in Ohio will cost you your driver’s license for at least six months. Move to Texas–well, now you’re looking at a criminal record and up to 180 days in jail. Or if you happen to be a first-time offender, possibly a stint in court-mandated ‘drug rehab’ (one recent study reported that nearly 70 percent of all adults referred to Texas drug treatment programs for weed were referred by the courts), probation, and a hefty legal bill. And don’t even think about getting busted in Oklahoma, where a first time conviction for minor pot possession can net you up to one year in jail, or up to ten years if you’re found guilty of a second offense. Thinking of growing your own? That’ll cost you a $20,000 fine, and–oh yeah–anywhere from two years to life in prison.

Yes, you read that right–life in prison.

Of course, not everyone busted for weed receives jail time. But that doesn’t mean that they don’t suffer significant hardships stemming from their arrest–including (but not limited to): probation and mandatory drug testing, loss of employment, loss of child custody, removal from subsidized housing, asset forfeiture, loss of student aid, loss of voting privileges, and the loss of certain federal welfare benefits such as food stamps.

And yes, some offenders do serve prison time. In fact, according to a 2006 Bureau of Justice Statistics report, 12.7 percent of state inmates and 12.4 percent of federal inmates incarcerated for drug violations are incarcerated for marijuana offenses. In human terms, this means that there are now about 33,655 state inmates and 10,785 federal inmates behind bars for violating marijuana laws. (The report failed to include estimates on the percentage of inmates incarcerated in county jails for pot-related offenses.)

In fiscal terms, this means that taxpayers are spending more than $1 billion annually to imprison pot offenders.

Yet this billion dollar price tag only estimates the financial costs on the ‘back end’ of a marijuana arrest. The criminal justice costs to taxpayers–such as the man-hours it takes a police officer to arrest and process the average pot offender–on the ‘front end’ is far greater, with some economists estimating the financial burden to be in upwards of $7 billion a year. Naturally, as the annual number of pot arrests continues to increase (according to the latest FBI data, marijuana arrests now constitute 44 percent of all illicit drug arrests), these costs are only going to grow larger.

There are alternatives, of course–options that won’t leave this sort of human and fiscal carnage in its wake, and that won’t leave entire generations believing that the police are an instrument of their oppression rather than their protection.

‘Decriminalization,’ as first recommended to Congress in 1972 by President Nixon’s National Commission on Marihuana and Drug Abuse, called for the removal of all criminal and civil penalties for the possession, use, and non-profit distribution of cannabis. Such a policy, if adequately implemented, would eliminate the bulk of the human and fiscal costs currently associated with enforcing pot prohibition.

A second option, ‘regulation,’ would also significantly slash many of society’s prohibition-associated fiscal and human costs. Legalizing the commercial sale and use of cannabis in a manner similar to alcohol, with state-mandated age controls and pot sales restricted to state-licensed stores, could also potentially raise billions of added dollars in tax revenue while simultaneously bringing an end to the more egregious and adverse black-market effects of the plant’s criminalization – such as the production of pot by criminal enterprises and its clandestine cultivation on public lands.

Would either option be perfect? No, probably not. (‘Decriminalization,’ for instance, might indirectly encourage pot use; ‘regulation’ might not entirely eliminate the black market sales of pot.) But how can continue with the status quo? Since, 1990, law enforcement have arrested over 10 million Americans–more than the entire population of Los Angeles county–on pot charges. Yet, according to federal figures, both marijuana production and use are rising. Isn’t it time we began looking at ways to address the marijuana issue that move beyond simply arresting and prosecuting an inordinate amount of otherwise law-abiding Americans? Or must we wait until another 10 million citizens are arrested before our state and federal politicians find the courage to begin this discussion?

Paul Armentano is the Deputy Director for NORML and the NORML Foundation in Washington, DC. He may be contacted at paul@norml.org.

The Fraud of Bushenomics: They’re Looting the Country

January 19, 2008

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The New York Times made it official. The Economy is a problem!

So, now, at last we can discuss it.

Not just discuss it, in rapid order “recession” became the word of the day, from White House, Congress, the Fed and the media.

It’s blamed, mostly, on the subprime crisis.

But that’s not the problem. It’s a symptom. It is the logical, and probably one of the necessary results, of Bushenomics.

Along with low, or no, job growth. Little or no business growth. Depressed wages. And the crashing dollar. (The president has a different vision of the economy. In his vision it’s booming! And the number of jobs is growing! Though there is this little blip.)

The idea under which Bushenomics was sold is this:

  • The rich are the investor class.
  • If the rich have more money, they will invest more.
  • Their investments will create more business.
  • Those businesses will create more wealth, thus improving everyone’s lives and making the nation stronger. They will also create new and better jobs.

Whether or not the people who say such things truly believe them, I cannot say. But that’s their pitch, and the media certainly seems to buy it, as do most of the establishment economists.

A more realistic — and less idealistic — view of Bushenomics is that the Bush administration and its cronies came at the economy with the attitude of oilmen.

  • They inherited a vastly wealth country.
  • They looked at it like the oil under the Alaskan wilderness. They craved to pump it out, turn it into cash and grab as much of that cash as possible.

Wherever possible, they literally sold off the assets. This was called privatization. Our biggest asset — in terms of size — is, of course, our defense establishment. With privatization, one dollar out of every three for direct military operations in Iraq and Afghanistan goes to private contractors like Halliburton and Blackwater. So when someone says, “Support the troops!” with budget appropriations, they should really yell, “Two-thirds support to the troops! One third support to Halliburton, et al.!”

This is just an estimate. The degree of privatization is unknown. Presumably, that’s deliberate. Nor does it count the amount of money the military spends with private purveyors to supply the troops and their operations. It is only the amount that goes directly to private contractors.

But for the most part, the assets of the United States, our collective wealth, could not be sold off in such a direct manner.

In order to turn them into cash, what the administration did was borrow against them.

That is, they cut taxes while continuing to spend lavishly, creating debt.

The debt is owed by all of us, the collective people of the United States.

The tax cuts hugely favored rich people. They also favored unearned income (dividends, capital gains, inherited money) as opposed to the kind of money people have to work for. The very richest got richer.

The spending was — to the degree possible — directed to themselves, their friends and their supporters: Big Pharma, the medical industry, insurance, banking and financial, among others. And, of course, Big Oil, from whom they have spent close to a trillion dollars of our money to conquer a big oil field for private exploitation.

Now let’s take a look at some numbers.

The numbers will tell us if their idealistic tale about unleashing the capitalists to create a better world for us all is correct. Or if it’s a fairy story that masks uncaring greed.

The big number is that the economy has grown.

As measured by the GDP it has. From 2001 to 2007 it went by 35 percent.

GDP stands for Gross Domestic Product. It could more accurately be called Gross Domestic Transactions, because it is the sum of all the financial transactions in the country.

Now let us look at job creation.

In the first six years of the Clinton administration, 13.7 million jobs were created. In the same period, under Bush, only 3.7 million jobs were created. Barely keeping up with population growth, if that. (Source: Fox News)

Now let us look at median income. That’s as opposed to average income (If Bill Gates walks into a bar with 10 people, the average income of everyone in the room goes up by $17,5000,000. But the median income just moves up half a notch, from between the fifth and sixth person, to the sixth person’s income). From 2001 to 2005, median income, for people under 65, went down $2,000.

That’s worth restating. From 2001 to 2005, the income of the average working person declined by $2,000.

Now, let’s look at the value of America’s businesses.

A good rough measure of the market value of America’s best businesses is the stock market. Under Clinton, the Dow Jones went up 324 percent. Wall-to-wall, after the dot.com bubble burst, it more than tripled in value.

Bush arrived in 2001. Since then the Dow Jones is up just 10 percent. Adjusted for inflation, that’s absolutely flat. (It was briefly up 23 percent. It is now below the 10 percent mark, and tumbling down as this is written). Just pain, no gain.

If jobs have not increased, salaries have gone down, and the value of business has not risen, where is that 35 percent growth in the economy?

There is a number called the M3 money supply.

The M1 is basically cash, plus checking and “current” accounts. The M2 adds savings accounts, money market accounts and CDs up to $100,000. The M3 adds in the big CDs, Eurodollar accounts and other large exotics.

Already rising very fast, the M3 took off like a rocket after 2001. The Fed stopped publishing the M3 in 2006 (conspiracy theorists, please note.) But a quick look at the chart of its growth, and assuming its trajectory continued, clearly shows that the M3 grew by something in the range of 35 percent.

The entire growth of the economy under Bushenomics is accounted for by growth in the money supply.

The administration did not directly inflate the economy by 35 percent.

They pumped it by the size of the deficit. The rest happened this way.

When a government is “printing money” (running big deficits), the big fear is inflation.

Particularly in the financial community. Bankers make their money on interest, and inflation eats their profits, point for point.

The administration, very proudly, grew the economy (or at least the amount of money in circulation), without inflation. Which actually is a pretty good trick.

In part, they were able to do so precisely because the policy was a failure.

If it had created business growth — actual business, not just financial business — that would have created jobs. Then there would have been inflationary pressure. Especially if they were good, high paying jobs. If salaries for ordinary people go up, even a little, the total is a big sum because there are so many of us.

But due to free trade, outsourcing, bad economic policy, policies aimed at keeping wages down, and relentless union busting, good jobs were lost, to be replaced with low-wage jobs, when they were replaced at all. The proof is in that median income figure (down $2,000 per worker).

Due to free trade and outsourcing, consumer goods mostly went down too. The exception being in favored industries like pharmaceuticals, insurance and oil.

Finally, and this the key to the next step in the process, the Fed kept interest rates down.

Low interest rates mean that it’s cheap to borrow.

The administration largely believes in supply-side economics (otherwise known as “trickle down,” or “piss on the people.”); if you increase the supply of something, consumers will appear to buy it.

The actual results are a perverse triumph of the idea.

The supply of money was increased. The price of money was kept artificially low.

Think of borrowing as buying money. It is.

People (and businesses and corporations) did rush forward to buy it. Once they had it, what was there to do with it? There was no new trend, no dot.coms, no high techs, no bio techs, no nothing.

So they went out and sold money. That is, they made loans.

There are two big retail loan areas, credit cards and housing loans. Both were pushed very aggressively. With cheap, cheap money available to finance home buying, that market heated up. At the same time, commercial interests started aggressively buying up loans, packaging them together, and reselling them as financial instruments. That created more desire to make more loans (sell money). Financial institutions bought more money (borrowed), in order to sell it at a profit (make loans). Since the loans were quickly resold — and profit taken off the top — the quality of the loans didn’t matter to the people who made them. The housing market — or rather the loans that fueled it — grew into a bubble.

The subprime crisis, the housing bubble, whatever you want to call it, is not the problem.

It’s a symptom of pumping in money with no place to go.

Other symptoms are no job growth, no business growth, no stock market growth, falling median incomes, disappearing pensions and health plans, and the fall of the dollar.

When Bush came into office, a Euro cost 95 cents. Now it costs a $1.50. The Canadian dollar (the Loony) was 70 cents. Now it costs a dollar. Most mainstream economists and pundits will opine that a low dollar is good for American industry, because it will help us sell our goods. That’s only true if we’re producing things that no one else is — or producing them better or cheaper — and we’re not.

Also, many foreign exchange rates are being kept artificially low against the dollar. Some, like many of the oil countries, are pegged to the dollar. They’re making up for it by raising the price of oil (currently traded in dollars). Others, like the Asian manufacturing countries, are keeping their currency down to retain their edge in selling here, thereby canceling whatever advantage we’re supposed to get from declining currency.

One way to think of what the administration has done, is as a leveraged buyout. That’s when someone buys a company, using the company itself as the collateral for the loan used to purchase it, usually at very high interest, then pays off the interest by cutting the work force and salaries, selling outsets and even breaking up the company.

It’s good for the guy who makes the deal, skims the cream off the top and gets rich. (The company that Mitt Romney got rich working for specialized in doing that.) It’s good for the lenders, who get a good return (if the buyer is able to squeeze enough money out of his purchase), but it’s bad for the work force, bad for the company, and, if no one comes along to replace it, bad for the business as a whole.

We’ve experienced a leveraged buyout of the national economy.

Our politicians, the media and economists are just now waking up to the fact that the economy is in trouble.

The current numbers make it clear that we are probably in, or probably headed for, a recession.

Also, the polls show that people are concerned about the economy, and it’s an election year. The people are out ahead of our governing and media and professional economic classes on this, because they live in the real economy, the one that’s been leveraged, and the professionals are either in, or work for, the investor class that has been doing well.

So there is, at last, talk about doing something about the economy.

The Feds will cut interest rates!

George Bush wants a stimulus package. Tax cuts, tax cuts and make my tax cuts permanent! After all, that policy has worked so well. He said the cuts must be at least 1 percent of the GDP. That will be $145 billion.

Harry Reid and Nancy Policy (the King and Queen of Effective Politics) will offer a competing one (tax cuts, tax cuts!). Although they promised pay-as-you-go economic policies from a Democratic legislature.

Pundits in the media talk about a crisis in consumer confidence. And how the fix is to restore it. So we will go out and buy. Presumably on credit.

How about consumers think there’s a problem because there is one. Not because they’re weird emotionally. They reasonably see themselves so overextended, with so little hope of being better earners, that they won’t be able to pay things off. Not even with a one-time government check of somewhere between $300 and $1,200.

In short, most of those solutions will go to making things worse.

The real solutions are pretty obvious and pretty simple.

First, we have to make a choice: Do we want a sound economy for all of us and a strong America? Or do we want to have a few people of unlimited wealth who use that wealth, among other things, to control the government so that it helps them milk more money from the rest of us?

By the way, this is not a call for socialism! Or other ism! Except a call for sensible and effective capitalism. Based on what we’ve seen work and seen fail.

In the real world, there are no such things as free markets.

In the real world, business people manipulate and conspire to control markets, and governments both control and collude with business, while tax policies and government spending have a major affect on the economy.

Let us accept that, and then the argument is only over how best to do it.

Simply giving money to rich people doesn’t work.

Bob Novak, the conservative commentator who calls the investor class “the most creative class,” is flat out wrong. As we’ve seen, outside of their ability to buy influence in politics, the media and the law, the rich are like the rest of us, relatively passive and unimaginative, prone to putting their money in the easiest place that promises a return, in whatever bubble is in fashion at the moment and wherever some salesman who gets their attention tells them.

Money has no mind of its own. It has to be directed toward areas that will generate and support business and good jobs at good wages. As it happens, our economic goals are on the same road as the social good.

The No. 1 target has to be alternative energy.

Energy that can be produced here, in the United States, renewable, nonpolluting, and not, like corn-based ethanol, requiring as much petroleum to produce it as it replaces. One-third of our balance of trade deficit is oil, year in and year out. If the United States can become the world leader in alternative energy and conservation technology, we will, at last, have something to export.

The No. 2 target is infrastructure.

By it’s nature, infrastructure has to be largely produced here with local labor and it stays here.

Hard infrastructure, like roads and bridges, cleaning up New Orleans and the Gulf Coast, protecting our coasts from future storms, internet and phone service as good as Europe’s, Japan’s and Singapore’s.

Soft infrastructure, like education, youth services, parks and recreation programs, public safety, and a saner criminal justice system. The United States has 5 percent of the world’s population and 25 percent of the incarcerated population. That’s expensive. And wasteful. Unsafe streets and high crime are expensive and wasteful.

Infrastructure makes doing business easier, quicker and cheaper. It becomes an invisible subsidy for all businesses. Try to imagine, for example, Fed Ex, that entrepreneurial triumph, without a national web of airports, flight controllers and roads.

The No. 3 target is health care.

Health care in the United States costs at least 50 percent more than the next-highest spending country and double what it does in most other modernized countries. All of them have better health than we do. They live longer and in better condition.

The difference is that they have national health plans. Mostly single-payer, usually tax-supported. Our plans are based on a hodge-podge of a thousand private insurers.

A single-payer national health plan should cut the costs of our health care by at least 25 percent, possibly 50 percent. That’s an astonishing number. That money could go to more productive things. Or to even more health care.

American businesses who supply health care to their employees claim they are noncompetitive with companies from countries that have national health. This will make them more competitive. This will make American labor more competitive.

The No. 4 four target is a balanced budget.

There are, in fact, times for deficit spending. Just as there are times in our personal lives to borrow and times for business to borrow.

This is probably not one of them.

There is an ocean of money sloshing all around the world, looking for a home. If there are real business opportunities in America (like taking the lead in alternative energy, bio tech, and whatever is next around the corner), it will come.

Especially if there is a sound business environment and dollar investments return to being the most reliable in the world. That means paying down our debt.

How can all this be done?

Raising taxes.

On the wealthy. And on corporations. That’s not class warfare. That’s simple practicality.

After your first $20,000, how much of the next 20 do you need, to live, thrive and survive? Damn near all of it. After your first 20 million, now much of the next 20 million do you need? Not a nickel.

The rich will whine, writhe and scream that they won’t do business, they’ll be driven out of business, that business will collapse. Bullshit. If they dislike keeping 20 or 30 or 40 cents of each dollar of profit so much that they won’t take the dollar, someone will come along who gladly will. That’s how markets work.

All of this is pretty straightforward and common sense.

The illogic of Bushenomics is obvious. The results were foreseeable. After all, similar effects took place under Reagan and Bush the Elder, until they reversed courses.

The alternatives are equally obvious. The facts bear out the theory. Go back to Hoover and Roosevelt, then look at the down, up, down, of Bush the Elder, Bill Clinton, and Bush the Lesser. (We do note that there are minor industries dedicated to proving that Franklin Roosevelt was, in the words of CNN’s Glenn Beck, “an evil son of a bitch,” that the New Deal really, really, really didn’t work, and that Bush the Elder was really, really, really responsible for the boom of the Clinton years and that Clinton was responsible for the first recession during the reign of Bush the Lesser. But they are like people who see the image of the Virgin Mary in bread sticks and crullers.)

None of our politicians, pundits or economists are addressing the fundamentals.

The last time we switched from the nonsense of worshiping unmitigated greed, disguised as free marketeering, it took a market crash and the Great Depression to move us out of our public relations-manufactured delusions and make us understand that when we all do well the rich get richer too, so let’s start with the common good.

Based on the dialogue as it stands now, we will go with tinkering and twaddle, doing more of what doesn’t work. And only if the whole things collapses will we address the real problems.
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About authorLarry Beinhart is the author of Fog Facts: Searching for Truth in the Land of Spin. Robert McChesney called it the book on the subject “against which all others will be measured.”

His novels include Wag the Dog, on which the film was based, and The Librarian which Rolling Stone described as “John Grisham meets Jon Stewart.”

He was a Fulbright Fellow, he’s won an Edgar, been nominated for two more, a Gold Dagger, an Emmy. He’s been a political consultant, made commercials, lectured at Oxford and he’s a part time ski instructor. His email is beinhart@fogfacts.com

Outlook worst since dotcom bust

January 5, 2008

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By Chris Giles and Delphine Strauss

Published: January 2 2008 02:00

Britain this year faces the most difficult economic conditions since the dotcom bubble burst, according to the Financial Times ‘ annual survey of leading economists. It shows deepening pessimism about the impact of the global credit squeeze.

The survey of 55 top economists shows confidence has tumbled from a year ago. The experts also fear that compared with 2001-02, the scope for financial authorities to mitigate any downturn is far more limited.

Nearly nine in 10 think public finances are not in good order so there is no leeway for discretionary tax cuts or increases in public expenditure. The third most-mentioned risk to the economy is inflation, limiting the ability of the Bank of England to cut interest rates.

Nearly two-thirds of the economists – from the City, academia and including five former members of the monetary policy committee – thought house prices would fall this year [2008], although there was wide disagreement over the effect of a housing downturn on the economy. Even those usually optimistic sounded a more cautious note after five months of deepening financial market problems.

Sir Alan Budd, provost of Queen’s College Oxford and former chief economic adviser to the Treasury, said: “I’m quite worried … mainly because some of the problems are unprecedented and don’t seem to be responding to treatment.”

Many of the problems stem from abroad, especially the likelihood of a housing market slump in the US.

Sir Howard Davies, director of the London School of Economics, saw a high probability of a recession in the US. He added: “That would be likely to spread to the UK and some other European countries where property prices seem similarly out of line.”

But at home, concerns centre on the limited ability of the government to mitigate any slowdown because it was still running a large deficit when the economy was performing strongly between 2004 and 2007.

Martin Weale, director of the National Institute of Economic and Social Research, said: “The public finances are in very poor shape … HM Treasury has managed several years of self-delusion. No doubt it will explain that it did not foresee the credit crisis and use this as an excuse.”

With inflationary pressures likely to be evident in the first half of 2008, the majority view was that life had got much tougher for the Bank of England, particularly since banks’ unwillingness to lend had reduced the ability of the Bank to influence monetary conditions.

Most, nevertheless, hoped the Bank would choose to turn a blind eye to short-term inflationary pressures and cut interest rates, since they believed that the coming economic slowdown would control inflation and the economy needed the stimulus of looser monetary policy.

With house prices falling across the country, most economists did not think a troubled housing market would be the cause of further weakness.

Some of those predicting the sharpest falls in house prices were also the most confident about the economy’s ability to withstand a housing downturn.

Willem Buiter of the LSE, a former MPC member, predicted prices would decline by 30 per cent over the next couple of years with no major effect.

Richard Lambert, director general of the CBI, said that 2008 would be a difficult year, but that it was important not to exaggerate risks and “talk ourselves into something much worse” than the soft landing he thought likely.