Propaganda

Unemployment Up Dramatically! Stocks Rise! Huh?

dlindorff — Fri, 06 Nov 2009 22:29:34 -0500

By Dave Lindorff

Ordinary, average, struggling Americans might be scratching their
heads over the news today, as the Labor Department reports that
unemployment is up by four-tenths of a percent for the month to a
record 10.2%, fully three-tenths of a percent higher than economists
had been forecasting, and stocks do what? Rise by a quarter of a
percent!

What’s going on here?

Well, the tube analysts are quick to say, unemployment figures are
a “lagging” indicator. That is, employment generally lags the overall
economy, with layoffs coming after a recession kicks in, and hiring
waiting until a recovery is well underway.

But that isn’t true with a deep recession like this one, because at
some point—and we’re well past that point—high and prolonged
unemployment leads to reduced demand for goods and services, and to a
psychology of fear and consumer withdrawal. Once people feel that they
aren’t going to find a new job soon, and once those who still have jobs
feel that their employment is not secure, they no longer buy things
except what they absolutely need. And in an economy where fully 72% of
economic activity is consumer spending, that is no longer a “lagging
indicator.” High, prolonged unemployment becomes a causal factor in the
economic downturn.

If people aren’t buying stuff, then companies won’t make it, which
means that they stop hiring, and even lay more people off, and so
unemployment becomes a downward spiral of cause and effect.

But what about the stock market rise? Why would investors think that a worse-than-expected jobs report is a good thing?

There are several explanations for this ugly phenomenon. First of
all, rising unemployment—particularly sharply rising unemployment—means
that the Federal Reserve will definitely not, for the foreseeable
future, raise interest rates. A rise in interest rates would hit
companies hard, and always batters the stock market, and the government
and the Fed don’t want to do either of those things. So investors
almost always jump into the market and push stocks up when they get
some signal that the Fed is going to lower, or at least hold the line
on interest rates. With rates effectively set at 0, the Fed can’t lower
them, but it is saying, no doubt with the bad news about unemployment
in mind, that it won’t be raising them anytime soon.

But there is another reason high unemployment may excite investors.
Current layoffs are likely, for many workers, to be permanent. A recent
report that productivity—work output per worker—was up at a 9.5 annual
rate in the Third Quarter, is an indication that those companies that
haven’t shut down operations are making or doing more with fewer
workers. That kind of thing happens in recessions, because as
joblessness gets worse, those workers who still have jobs become more
docile and are willing to be worked harder by management. Of course,
you get more on-the-job injuries, more stress-related illness, etc.
along with that kind of speed-up, but over the shorter term, it looks
good on the books if you’re cranking out more product with a lower
payroll.

Of course, longer term, this is all a disaster, not just for
laid-off and afraid-to-be-laid-off workers, but for the country as a
whole. You can’t rebuild an economy with more than one-in-ten workers
unemployed. And remember, that’s just the people who are our of a job
and still looking for one; it doesn’t count those who have been out of
work for so long, or who work in professions that are so gone (like
construction or maybe manufacturing Saturns) that they’ve just given up
looking, or those who have taken part-time jobs in ice-cream parlors or
selling apples to survive but who want to be fully employed again. If
you add those people into the mix (which is the way the US used to
count unemployment until the 1980s), you get an unemployment rate
closer to 20%, or one in five! And you sure can’t rebuild an economy
with one in five workers unemployed.

That’s what makes all the happy talk in the news and in Washington
about the recession being over because last quarter showed a 3.5%
annualized jump in the so-called Gross Domestic Product so ridiculous.

Most of that rise was the result of government subsidies to
car-buyers and first-time house buyers. It was a one-shot stimulus that
pushed forward spending, but it was no indication of a recovering
economy, just a spasm of spending using taxpayer money. Furthermore, an
excellent article in Businessweek by Michael Mandel noted that fully
one-percent of that GDP gain was the result of a failure by government
economists to account for a collapse in corporate spending on research
and development and on training and retaining intellectual assets (a
complicated way of saying that engineers, scientists and technology
workers were being laid off at a higher rate than other workers, and
much R&D work was being shipped overseas for good), So really the
“growth” of GDP in the third Quarter should have been at a 2.5% rate,
and even that was largely government pump priming, not recovered
economic activity.

The truth is, we’re falling deeper into recession, and apparently,
according to the October unemployment figures, at an accelerating rate.
And there is no indication that the Obama Administration or the
Democratic Congress are planning any significant jobs-creation program.
They seem to be happy with this.

So quick, run out and buy some stock! It’s the American thing to
do. Probably not a bad idea either, since those dollars you are using
will keep sinking in value as long as the Fed is constrained from
jacking up interest rates.
______________

DAVE LINDORFF is a Philadelphia-based journalist. His latest book is
“The Case for Impeachment” (St. Martin’s Press, 2006). His work is
available at www.thiscantbehappening.net

Our Out-of-Whack Economy and the Happy Talk Propagandists

dlindorff — Thu, 29 Oct 2009 14:42:23 -0400

By Dave Lindorff

If you listen to the happy-talk folks at Treasury and the Fed, and
on the tube, you’d think things had finally turned a corner. The
economy grew at a 3.5% annualized rate in the third quarter ended
September 30. “The Economy is Back in Gear” shouted the headline on an
article by CNN senior writer Chris Isadore. “The recession ended
unofficially in September,” said a reporter on NPR.

There was some mention of the fact that earlier in the week there
were reports that consumer confidence had fallen, foretelling a
sluggish Christmas retail season, and that new home sales slipped an
unanticipatedly high 3.6% in September, when analysts had been
expecting a rise in sales. Meanwhile, new unemployment claims filed
during the third week of October jumped to 531,000, well above the
predicted 520,000, indicating that the official unemployment rate is
likely to top 10% in the next Department of Labor report due out in
early November. As well, fully one-third of the nation’s homeowners
were now said to be “underwater,” meaning that their outstanding
mortgage balances are greater than the current value of their homes.
Not surprisingly, foreclosures are continuing to surge.

How to explain this seeming oxymoronic situation? Well, that
positive economic growth figure, which comes on the heels of a 6.4%
decline in GDP in the first quarter and a .7% decline in the second
quarter, is, according to government analysts, actually largely the
result of two government stimulus programs—the “cash for clunkers”
program that induced people to rush out and buy a new car (usually a
much smaller, cheaper and, for the car makers, less profitable one than
they had been buying in prior years), and the $8,000 new home tax
credit, which led a lot of people to rush out and buy a first home.

The thing about those two stimulus programs is that they don’t so
much expand economic activity as they push it forward. That is to say,
a person who takes advantage of the cash-for-clunker program is
generally someone who owns a worn-out junker and needs to buy a new
vehicle anyhow, so what the government subsidy does really is just push
that purchase forward. Once the program ended, sales of cars plummeted
(not to mention that the bulk of the payments went to people who
purchased foreign cars, so the economic boost was just for dealers in
the US, not car makers). The same is true with houses. Very few people
would make the decision about whether to buy a home or not based on
just $8000, but the availability of an $8000 government subsidy for a
limited time would lead people to push forward their plan to purchase a
home.

What that means is, don’t count on this “recovery” to last into
next year. The cars that needed to be bought have been bought, and the
homes that people wanted to buy have been bought. The car subsidy is
gone now, and even extending the home buying subsidy, as the realty
industry lobby is pressing Congress to do, isn’t going to induce that
many more people to buy.

Meanwhile it’s worth noting an oddity about this “recovery” being
trumpeted in government and media. The relationship between the dollar
and the stock market has become very strange. If you look back at
stories on these two things to 2007, before the financial crisis hit,
and earlier, you’ll see myriad articles explaining that the dollar and
the US stock market tend to move in tandem. This was always explained
as being because as the dollar strengthens, foreign investors want to
put their money into dollar-denominated assets. Similarly, if the
dollar weakened, analysts would write confidently that the stock market
would be hurt as investors pulled their money out of US equities to
invest in markets denominated in appreciating currencies.

Now, the analysts say that as equities strengthen, the dollar will
fall, but if equities fall, the dollar will appreciate. The reason for
this new inverse relationship should be cause for considerable alarm.
Why? In fact, it turns out that the last eight months of a rising
equities market has been largely the direct result of a shrinking
dollar. This is because so much of the sales and earnings of companies
in the S&P 500 and the much narrower Dow Index are earned overseas,
denominated in foreign currencies, but accounted for on the books of
these US-incorporated firms in dollars, that as the dollar declines in
value, corporate sales and earnings appear to be growing. Reportedly,
as much as 80 percent of the appreciation in the S&P Index since
last March 9 when the market hit bottom can be attributed to the
dollar’s fall against major world currencies.

Financial writers and reporters on TV don’t mention this tectonic
shift. They just report the new relationship (Stocks up, dollar down,
stocks down, dollar up) as though that’s they way it’s always been. But
actually, this is a phenomenon has normally ben characteristic of Third
World, so-called “developing” economies. That since the end of 2008 it
has become characteristic of the US economy should be cause for concern.

So don’t be conned by the happy talk salesmen at the Fed and
Treasury and in the White House, or by their propagandists in the
newsmedia, who are trumpeting the latest GDP growth figure as a sign
that the recession is over, apparently in the hopes that people will
run out to the mall and start spending (in those remaining stores that
don’t have their windows taped or covered in plywood). What we’ve seen
was a blip on the chart, engineered by a couple of “going out of
business” sales by the car and housing industry.

Real unemployment—measured the honest way it used to be 30 years
ago, to include those who have given up looking for work or who are
working part time involuntarily—is hitting 20% (for those who are bad
at math, that’s one out of five working-age Americans). Foreclosures
are hitting a record. Half of laid-off workers are cashing out their
401(k)s in order to buy food. State and local governments, both major
employers, are hitting a wall as tax collections plummet and federal
stimulus funds run out. This is not the foundation for a renewal of
economic growth; it is the precondition for a renewed or prolonged
recession.

And if the dollar continues its slide, which is likely given the
US’s huge budget deficits and trade deficits, as well as the Federal
Reserve’s inability to raise interest rates (a move that could
strengthen the dollar but which would crush the economy), all those
things that Americans buy abroad which are no longer made at home, as
well as the oil that is imported, will cost that much more, driving
consumers further into the hole. And remember, 70% of US GDP is
consumer spending, a result of our decimation of our industrial base.

Recession ending? Don’t bet on it.

_______________

DAVE LINDORFF is a Philadelphia-based investigative journalist.
His latest book is “The Case for Impeachment” (St. Martin’s Press,
2006). His work is available at www.thiscantbehappening.net

Obama's War: Afghanistan Is Spelled V-I-E-T-N-A-M

dlindorff — Thu, 27 Aug 2009 12:24:57 -0400

By Dave Lindorff

President Barack Obama has staked his presidency on winning his “necessary” war in Afghanistan. Coming into office, one of his first acts, on Feb. 18, was to boost US troop levels in that country by 17,000, bringing the total number of soldiers and Marines in the country to about 57,000, to which one must also add 74,000 private contractors who are doing jobs normally done by uniformed military, and about 33,000 other soldiers from NATO countries and Australia. That’s 164,000 foreign soldiers fighting against Taliban fighters.

Ominously, even with the new US troops, US military commander Admiral Mike Mullen this month has described the situation in Afghanistan as being “serious and deteriorating.” The Afghani national government—if an organization that is basically confined to the capital city of Kabul and a few other cities can be called a national government, is hopelessly corrupt and ineffective, and a current national election, which US forces sought to “protect” by sending troops to election districts, appears to have been a disaster, plagued by vote rigging and with low turnout.

The US war in Afghanistan, billed as part of a war on terror begun by President George W. Bush and Vice President Dick Cheney in September 2001, is now eight years old, and while the Taliban government that ruled Afghanistan at that time has been ousted from Kabul, its insurgency grows by the day in strength and popular support.

The US, meanwhile, is identified as an occupier and as the sole support of a corrupt regime of drug lords, thieves and charlatans.

Does this sound familiar? It should. It is a replay of what America did in Vietnam.

The roots of the current Afghanistan War lie in the period when the Soviet Union was occupying the country and backing a Communist-led government in the 1970s, and the US was conducting a proxy war against the Soviets, with the CIA training and funding both the Taliban and foreign fighters, mostly Arab, led by the likes of Osama Bin Laden. In the end, the Taliban, with the help of groups like Bin Laden’s Al Qaeda, triumphed, pushing the Russians out. But over time, as the Soviet Union crumbled and the US became more focused on the Middle East, successive US administrations became less and less happy with the power arrangement in Afghanistan. Meanwhile, following the US Gulf War in 1990-91, Bin Laden and other Arab fighters in Afghanistan and elsewhere began to see the US as an enemy, and the US began to shift its military focus from being based upon anti-Communism to being anti-Arab, or at least anti Arabist, as defined as being opposed to those Arabs who wanted to overthrow the corrupt dictatorial leaderships in the oil states of the Middle East.

When the World Trade Center and Pentagon were attacked in 2001, the Bush/Cheney administration, which had already planned to overthrow the government in Iraq, launched an attack on Afghanistan, claiming that its Taliban government was harboring Al Qaeda, which was blamed for the attacks. The Afghanistan War was on. The Taliban was quickly ousted from Kabul, and Al Qaeda was largely driven into the remote tribal areas of Pakistan, but the war was not won. Indeed, since then, it has gone from bad to worse for the US, as the Taliban has clawed back territory and recovered much of its prior power.

The background of the war in Vietnam dates from 1954, when Vietnam, after a long struggle, won its independence from its colonial ruler, France. Two years later, the US blocked a UN-supervised national referendum, effectively splitting the country into two parts, a Communist north led by the hero of Vietnam’s independence struggle, Ho Chi Minh, and the south, led by the corrupt former French colonial stooge Ngo Dinh Diem.

With elections off, a small group of partisans, the Viet Cong, began an insurrection against the government in the South in early 1959, which the US became committed to opposing, initially sending in “advisers” to train and direct the South Vietnamese army. That war went from bad to worse, and when, in 1964, it became clear to US police-makers, that the Viet Cong were likely to win, President Lyndon Johnson made a decision to send in massive numbers of US troops and to begin a major bombing campaign against the North Vietnam. From 2000 US troops in Vietnam in 1961, there were 16,500 in 1964, and by mid 1965, 100,000. That number continued to rise, reaching 200,000 by 1966, and ultimately, at the height of the war, over 500,000. But the Viet Cong, and later, the Viet Cong and the North Vietnamese troops sent down from the north, were never defeated. Indeed, they continued to grow in number and in their control of the countryside. While they suffered horrific losses because of the superior firepower of US forces, and an American scorched-earth policy in the countryside, the Vietnamese forces continued to gain more and more support from the Vietnamese people. In the end, after suffering over 58,000 dead, the US cried uncle and left Vietnam. By 1975, the puppet regime in Saigon fell, and Vietnam was finally unified again, under Communist rule.

From the beginning of America’s involvement in Vietnam, the country, a poor nation of peasant farmers, was presented to the American public as a critical threat to the security of the United States. If Vietnam were to “fall,” Americans were told, the rest of Southeast Asia, like a chain of dominos, would fall—first Cambodia and Laos, then Thailand and Malaysia, then Indonesia, and finally, even Australia would be at risk. Of course, no such thing happened. The Vietnamese Communists were always, and remained, a nationalist movement, and after winning their multi-generational struggle for independence, focused on developing their country (though they did step in and overthrow a genocidal Communist regime that had taken over in Cambodia, installing a saner government).

It had been a giant scam on the American people from the beginning, and it ended up costing several million Vietnamese, Cambodian and Laotian lives, and 58,000 American lives, though that scarcely tells the toll, in terms of those crippled mentally and physically, those poisoned by the widespread spraying of toxic defoliants, and the laying of millions of anti-personnel mines that are still killing and maiming people in Indochina today.

Now a new president, Obama, like Johnson before him, is telling Americans that a war half a world away is “necessary for American security.” This is a ludicrous assertion on its face. If Afghanistan, one of the poorest countries in the world, and really hardly a country at all, is a threat to US national security, so is Malawi, Burundi and Fiji.

Let’s be rational for a moment. The Taliban, whatever their irrational Islamic fanaticism and their misogyny, have no interest in America, other than to drive our troops out of their country. When they were in charge in Kabul back in 2001, they had their hands full just trying to hang on in the face of the war lords and drug kingpins who held (and still hold) sway in various parts of the country, and when they eventually win and drive the US and its NATO allies out of Afghanistan, they will have their hands full again, just clinging to power.

American national security is not to the slightest degree threatened by the Taliban.

Okay, so back in 2001 there was a gang of Arabs in Afghanistan which had since 1990, at least, expressed some hostility towards the US, but that crew, after all, had been set up by the CIA in the first place, and anyway, by 2002 it had been largely shattered and driven out of Afghanistan, and into Pakistan and parts unknown.

The current Afghanistan War, which President Obama claims is so necessary to American security, is not against Al Qaeda though; it is against the Taliban, and it simply cannot be won, anymore than the US war against the Vietnamese could be won.

Today, as in the late 1960s, the Pentagon is telling the president that it needs more troops. There is a military imperative not to lose a war. No general or admiral wants to be the guy in charge when the jig is declared up, and the troops have to be brought home as losers. And so they are asking for more and more troops and weapons, in hopes of hanging on until they get get cashiered out.

Obama, like Johnson before him, will buy into this criminal policy, because he too doesn’t want to “lose” a war before he leaves office.

That should be pretty scary, since I’m sure Obama is hoping that he will be in office not just through 2012, but through 2016. That’s a long time to keep escalating a hopeless and pointless conflict, just to avoid having to say it was a mistake in the first place.

But lest you say that it cannot happen, recall that the first US advisers went to Vietnam in 1959, the big escalation began in 1964, and the US didn’t leave until 1974. That’s 15 years of war and ten years of major warfare.

Because the Bush/Cheney administration was always more interested in invading Iraq than in invading Afghanistan, and pulled out many troops from the latter country in late 2002 to ship them to Iraq, the Afghan War has escalated more slowly than the Vietnam War did. But I’d say that today we are about where we were in Vietnam at the start of 1965. That is, the big lie, and the big escalation in the fighting, are both just getting going.

If the American people don’t rise up and demand an end to this thing right now, we could be in for another 8-10 years of brutal and bloody warfare, and in the end, the United States is, once again, going to lose.
____________________
DAVE LINDORFF is a Philadelphia-area journalist. His latest book is “The Case for Impeachment” (St. Martin’s Press, 2006). His work is available at www.thiscantbehappening.net

A Few More Thoughts About Single-Payer and Medicare

dlindorff — Thu, 13 Aug 2009 10:31:57 -0400

By Dave Lindorff

Some critics have written, in response to my article
calling for extension of the single-payer plan called Medicare to all
Americans, that actually Medicare is a badly flawed program that leaves
America's elderly without coverage for many important health services,
and which requires them to pay for supplemental insurance, or to go on
Medicaid, too.

These critics are correct. Medicare is great as far as it goes. It
is simple for people to use, allows them to go to the doctors of their
choice, covers 80 percent of their care, and is liked by nearly all who
use it. But it doesn't pay for needed tests, only lets seniors buy
mediocre medical devices like hearing aids, and most importantly, it
has been requiring more and more contributions by the elderly year
after year. Today, Americans over 65 and the permanently disabled pay a
greater percentage of their income for medical care than they did in
1964 before Medicare was established!

But having said that, I have to say that it has nothing to do with
whether or not it makes sense to expand Medicare to all Americans as a
way to solve our health care crisis--as Rep. John Conyers' bill, HR
676, would do.

The reason Medicare is inadequate is because the Republicans and the
conservative Democrats--the very "Blue Dog" vermin who, engorged on
health insurance, hospital and pharmacy bribes and campaign donations,
are undermining and destroying the already lousy health care "reform"
plan of President Barack Obama--have been underfunding it, and
performing a slow "privatization" of the program, chipping away at its
benefits, adding increased self-pay requirements, and raising the
Medicare tax on all workers.

They get away with this treachery because their actions only affect the minority of Americans served by Medicare.

If Medicare were expanded to include all Americans, suddenly this
kind of political backsliding would be opposed by everyone who was in
the program. It simply couldn't happen. Rather, the public would, as
one, demand better coverage, fewer self-pay requirements, and an end to
supplemental insurance.

The right knows this, and the health care industry knows this, and
that is why they are all bitterly opposing the expansion of
Medicare--and yet it is so obvious that Medicare is the answer to
America's health crisis--and it's staring us all in the face. It works,
it's cheap, and it could be implemented immediately.

We are being betrayed by President Obama and by the Democratic leadership in Congress, who will not talk about single-payer.

Not one of the committees working on the health reform bill in
Congress allowed any discussion of Rep. Conyers' HR 676. Under pressure
from the public, and groups like Physicians for a National Health
Program (PNHP.org) and Progressive Democrats of America (PDA), House
Speaker Nancy Pelosi has agreed to allow a floor vote next month on
Conyers' bill, but that is a sop. Floor votes are heavily manipulated
by the leadership and never go anywhere unless a committee has already
held hearings and voted to approve a bill, which was not allowed to
happen in the case of HR 676.

The so-called "reform" bill that is going to emerge from the current
process is going to be the legislative equivalent of road kill, barely
recognizeable either as health care or as a "reform." It will be a
Christmas present for the insurance industry, the hospital industry and
the phramaceutical industry, all three of which struck secret deals
behind closed doors with the White House.

It will set back health reform in America a generation, will require
everyone to buy inadequate and overpriced insurance, overpriced drugs
and to go to overpriced hospitals. And the cost of healthcare to
individuals, businesses, and the nation as a whole (already the highest
in the modern industrial world), will continue to soar.

This is not a case where the right thing to do is push for any bill,
and then try to move on. This is a case where Obama and the Democrats
have whored themselves out to the greedy industry that is causing all
the problems, and are pushing a plan that is worse than nothing.

We should all be working to kill this whole thing and start over, with HR 676.

If Congress won't do it, we need to start working for a new Congress in 2010 that will.

No Democrat running for House or Senate in 2010 who isn't solidly for expanding Medicare to all should get a single vote.
_____________
DAVE LINDORFF is a Philadelphia-based journalist. He is author of
“Marketplace Medicine” (Bantam Books, 1992) and more recently, “The
Case for Impeachment” (St. Martin’s Press, 2006). His work is available
at www.thiscantbehappening.net

Keeping It Real: This Recession Ain't Over by a Long Shot

dlindorff — Mon, 03 Aug 2009 13:16:36 -0400

By Dave Lindorff

The “happy talk” campaign in the US media and coming from the White House is just that: Happy Talk.

To get a real picture of what is happening with this economy, here are a few things to keep in mind.

Yes, the rate of decline in economic activity has slowed. But that
is to be expected. When an economy is going at full tilt, as the US
economy was doing in early 2007, a slowdown of any significance yields
huge numbers, in terms of falling production, falling factory
utilization, falling car sales, or, this time around, falling housing
prices.

But once you get to the same period in 2008, you’re already in a
deep recession, and there really isn’t that much farther to fall. If,
for example, the carmakers have basically shut down by fall of 2008,
and are just working off huge inventories, then you are not going to
see more factory closings and further reductions in production (how do
you reduce production below zero?).

The same can be said about unemployment, although here there is
another twist or two. Yes, the huge layoffs that saw the number of new
unemployed jumping by 6-700,000 per month in the early part of this
year seem to be over, and now new unemployment is rising by “just”
500,000 a month or so, but that’s because all the major employers have
already shut down or shut down entire shifts. There are not that many
people who can be laid off any more, at least in large groups. This
gets painted as “the pace of layoffs is slowing” as if that’s good
news, but it is the opposite.

But there is more trickery and misinformation regarding unemployment
statistics, too. One has to do with the oft-noted claim that the number
of people collecting unemployment benefits is declining—especially the
long-term unemployed. But the reason for this is not that people are
finally finding jobs. It’s that unemployment benefits are being
exhausted. The upper limit for collecting unemployment benefits in the
US is 79 weeks, and that’s only in some states where unemployment is
particularly high. In other states it is 72 weeks or even as low as 59
weeks.

Also, unemployment benefits, which reportedly average $300/week, but
can be a lot less depending upon where a particular person worked and
what state he or she lives in, are lost if a person does some part-time
work, and since nobody can support a family on $300 a week, many people
on unemployment end up getting part-time jobs and lose their
unemployment benefits. That’s not a good sign either.

Finally, unemployment benefits only cover about half of American
workers. The rest, because they have already only been able to find
part-time jobs, or because they’ve been working “off the books,” or
because they are so-called “independent contractors”—people like
gardeners, freelance writers, lawyers, consultants, plumbers,
etc.—aren’t covered by unemployment insurance. When they get laid off,
they are on their own. And increasingly, the layoffs and job losses in
this declining economy are falling on people in that category. The
early lay-offs were done by managements of big companies which looked
ahead, saw the downturn, and implemented “cost-cutting” measures, which
meant slashing production and laying off workers. Independent workers
and small businesses, whose owners are personally hit when they have to
shut down production or operations, have struggled to stay in business
as long as possible, but are now entering the jobless rolls at an
accelerating rate.

But, and here’s a crucial point, many of them simply don’t get
recorded by the government statisticians as being unemployed. Anyone
who works even a few hours a week at some odd job, or for free in a
family business, is not counted. Anyone who sees no job prospects out
there and just gives up isn’t counted. Anyone who finds a half-time
job, but needs a full-time job is counted as employed. It didn’t use to
be this way. In a more honest time, more than three decades ago, such
people were counted as unemployed, but politicians pushed to have them
excluded to keep the official unemployment numbers looking lower. If
all such people were added to the unemployment numbers we would have
unemployment in the US at over 18 percent, and possibly closer to 20
percent. That’s one in five Americans out of work.

And remember, even though we are now in an economy that is
functioning at a depressed level, it is still in decline, and those
unemployment numbers are rising, not stabilizing.

Put that together with the fact that Americans collectively have
lost $14 trillion in wealth. They’ve lost invested savings, which are
still down almost 20 percent from where they were a year ago, and don’t
appear likely to recover any time soon. (Remember, even if the stock
market falls 40 percent and then rises 40%, it will still be down.
Consider: If you had $1000 in vested in a broad index like the S&P,
and it dropped 40% as happened last fall, you lost $400, and have just
$600. If the market then recovered 40%, though, which it hasn’t by a
long shot, you only gain 40% of $600, or $240, so your portfolio is
still only back to $840.) That $14 trillion also includes the lost
value of people’s homes, which until 2008 were being used to prop up
living standards as people borrowed on the rising equity in their
property. With housing values in much of the country now down anywhere
from 20% to 80%, many homes are now worth less than the amount of money
still owed on people’s mortgages. They can’t sell, and often, they
can’t pay the mortgage check.

Where is the consumer spending supposed to come from that used to
represent a whopping 70% of economic activity in a United States that
long ago stopped making things? The answer is: nowhere. The amount of
lost wealth makes a joke of the celebrated Obama stimulus plan, which
was less than $1 trillion, and which is spread out over two years.

There is simply no money to restart the orgy of consumer spending that kept the US economy afloat for so long.

People can’t even borrow if they want to. Banks are not lending,
because they know that the happy talk is nonsense, and they don’t want
to loan money to people and businesses that are liable to go belly up
as the recession continues. That’s why card companies like American
Express and many Visa issuers, instead of just charging a late charge
when card-holders miss a monthly payment deadline as in the past, are
now just jacking up the interest rate they charge, --in American
Express’s case to 28% or over 2% a month! That’s not the action of a
bank that is expecting to get repaid by a customer—it’s the
extortionate action of a usurer that wants to extract as much money as
possible from a borrower that it expects to have go bust. Banks are
canceling personal and business credit lines right and left too, making
a joke of the Obama administration’s claim that it bailed out the banks
so that they would “start lending again.”

Even the story about housing sales improving is misleading. The
reason it is happening is that so many homes have foreclosed that the
sale of foreclosed homes by banks is now a significant part of the
total housing market.

Again and again, much of the “happy talk” we hear, if examined
closely, turns out to be bad news being misinterpreted, often
deliberately.

Finally, it should be added that because of massive unemployment,
which is approaching levels not seen since the Great Depression, and
because of the massive loss of personal wealth, this recession is not
likely to act like any of the other recessions of the post-World War II
era. These have all been “U” or “V”-shaped affairs, where economic
activity would either drop and then after lingering at a low level for
a while, recover at an accelerating rate, slowly recover as in a “U”,
or plunge precipitously to a sharp bottom and then quickly recover, as
in a “V”. This time, we are more likely to see an “L”-shaped recession,
where the economy hits bottom at some point, and then operates for
years at a much lower level. That lower part of that “L” might rise
slowly, but it wouldn’t rise by much. In this case, we would see
continued high levels of unemployment, lower wages, and no bounce-back
in personal wealth.

So if we’re want to make the correct policy decisions, not to
mention the right political decisions and personal financial and basic
life decisions, let’s cut the happy talk, and start keeping it real.

__________________
DAVE LINDORFF is a Philadelphia-area journalist. His latest book is
“The Case for Impeachment” (St. Martin’s Press, 2006). His work is
available at www.thiscantbehappening.net

Obama, Like Clinton Before Him, is Blowing the Chance for Real Health Care Reform

dlindorff — Mon, 15 Jun 2009 09:48:01 -0400

By Dave Lindorff

If you want to fix the disaster that is called the American
healthcare system, the first thing to do is to clearly point out what
its major failings are, and there are two of these.

The first is cost. America is one of the or possibly the most
expensive places in the world to get sick or injured. The corollary of
that is that it is one of the best places to make a killing if you are
in the medical business, whether as a doctor, a hospital company, a
pharmaceutical firm or a nursing home owner.

The second is access. One in six Americans—a total of 50 million
people at latest count—have no way to pay for that care. Too young for
Medicare, too “well off” for Medicaid, but too poor to buy private
health insurance or too sick to be admitted into a plan, or employed by
a company that doesn’t provide health benefits, these people get no
medical care until they get so sick that they are brought into a
hospital emergency room where they get treated (often too late) at
public expense, or at the hospital’s expense, with the cost shifted
onto taxpayers or onto insured patients’ premiums.

Any reform of this atrocious “system” must address these two major failings or it is no reform at all.

And that’s where all the various versions of Obamacare fall flat.

Simply put, you cannot solve either of these problems by leaving
the payment system for medical care in the hands of the private
insurance industry, since the whole paradigm of insurance is to make
money by keeping high-risk people out of the insured pool, and by
keeping reimbursements and coverage for premium payers as low as
possible.

Having a so-called “public option” plan working in competition with
private insurance plans will not solve this problem. Either the public
option will become like the private options—trimming benefits and
rejecting some applicants—or it will become a dumping ground for all
the high-cost, high-risk people that the private sector insurance
industry doesn’t want. At that point, the public plan will become a
huge cost burden on the taxpayer, who will begin demanding that it cut
back in the benefits it provides, taking us right back to where we
started.

The fact that the Obama administration and the Democratic Congress
are both raising the issue of the high cost of health care “reform,”
and are talking about ways to raise revenues to pay for it
tells us all we need to know about the alleged “reform” schemes they
are contemplating. They are doomed and, even if implemented, will not
work.

Real reform of the American health care system would not cost money. It would save money.

There is a level of dishonesty in what passes for the debate over
health care “reform” in both Congress and the media that is stunning in
its brazenness and/or venality.
Of course real reform would cost more in government spending. But that
is because real reform would remove the cost of medical care from both
employers and from workers (who over the last 20 years have been
shouldering an increasing share of their own medical care). And that
shift would mean more profits for US companies, which would free up
more money for wages, and it would mean less money deducted from
paychecks, meaning higher incomes for workers.

If President Obama had any political courage at all, he’d simply
get on TV and say this: I will create a plan that will cover everyone,
lift the burden of paying for healthcare from individuals and
employers, and have the government pay for it all. You the taxpayer
will pay for this plan with higher taxes, but you will no longer have
any significant medical bills, you will no longer have health insurance
premiums deducted from your paycheck, your employer will no longer be
paying for employee medical coverage, and you will never have to worry
about losing health benefits again, even if you are laid off.
(Incidentally, eliminating employer-funded health insurance would go a
long way towards allowing workers to fight to unions, and to strike for
contracts, by ending the threat that they would lose their benefits.)

Of course, to do that the president would have to be talking about
what is variously known as national health care or a single-payer plan,
in which the government is the insurer of health care for all.

This option isn’t even being discussed in this so-called debate. As
I’ve written earlier, even though there is an excellent single-payer
system in place that has been running for a third of a century just to
the north in Canada—a system where patients have absolute freedom to
choose their doctor, get instant access to a hospital and to expert
specialist care in emergencies, and have a healthier society by every
statistical measure—all at a fraction of the staggering cost of
healthcare in the US, not one Canadian expert working in that system
has been invited down to discuss its workings with the White House or
with members of Congress.

There has been a lot of negative propaganda spread about Canada’s
single-payer system, by right wing, business-funded “no-think” tanks,
and by medical industry lobbies from the American Medical Assn. to the
pharmaceutical industry, but no government committee or agency has
bothered, or dared, to bring in Canadian experts to respond to and
debunk that propaganda. The corporate liars talk about waiting lists
and lack of access to CAT-scan or MRI machines. But all we really need
to know about the Canadian, and other similar single-payer systems, is
that nowhere that they have been instituted have they been later
terminated, even when, as in Canada, right-wing governments have been
elected to power. The public, whether in Canada, or France, or England,
or Taiwan or elsewhere, loves their public health insurance system,
whatever flaws or problems with underfunding those systems may have at
certain times. Trying ot eliminate such systems would be political
suicide for a conservative government, as even arch-free-marketer
British Prime Minister Margaret Thatcher, who never me a government
activity that she didn’t want to privatize, learned.

Right now, with half of all Americans reportedly fearing that they
could lose their jobs, and with one in five Americans reportedly either
unemployed, or involuntarily working part-time, we have a situation
where a majority of Americans either have no health insurance, have
lost their health insurance, or are in danger of losing their
employer-funded health insurance. It is a unique moment when a bold
president and Congress could act to end private health insurance and
establish a public single-payer insurance plan to insure and provide
access to affordable medical care to all Americans.

Instead of this, we are being offered half measures or no measures
at all by leaders who are shamelessly in hock to the health care
industry or who are afraid of its power.

17 years ago, the Clintons had a similar opportunity to grab the
health care industry by the neck, strangle it, and produce a
single-payer alternative. They blew that chance by trying to keep the
health care greed-heads happy. Now, almost a generation later, we have
another shot at it, and Obama and his Democratic Congress are doing the
same thing again. There is a strong likelihood that they will fail,
like the Clintons before them. If they succeed in coming up with some
kind of hybrid public-private Frankenstein of a system that includes a
public insurance option, it will simply delay the inevitable disaster,
as medical costs, already 20 percent of GDP—the highest share of any
economy in the world—continue to soar, and as the cost of the public
plan, which will inevitably become a dumping ground for high-cost
patients, becomes politically untenable. In the end, we will have even
more expensive and inaccessible healthcare than we have today.

It doesn’t have to be this way, but only if Americans rip their
eyes away from their crisp new digital-image TV screens and start
demanding real health care reform will we get honest reform. A good
place to begin would be to start writing and phoning your local media
outlets to ask why they are not reporting on single-payer, and in
particular on the single-payer bill sponsored by Rep. John Conyers
(D-MI), which is being silently blocked and killed by his colleagues in
the Democratic congressional leadership and by the White House. A good
place to begin would also be to start calling your elected
representatives to demand that they support Rep. Conyers’ single-payer
bill.

___________________
DAVE LINDORFF is a Philadelphia-based journalist. His is author of
the critically acclaimed book “Marketplace Medicine: The Rise of the
For-Profit Hospital Companies” (Bantam Books, 1992). His latest book is
“The Case for Impeachment” (St. Martin’s Press, 2006). His work can be
found at www.thiscantbehappening.net

America's Stupid Health Care Debate: Keeping Some Ideas Off the Table

dlindorff — Fri, 27 Feb 2009 13:02:11 -0500

By Dave Lindorff

When President Barack Obama made his quick dash up to Ottawa last
week, it's too bad he didn't suffer a gastrointestinal attack, or slip
on some ice and twist an ankle or something. If he had, he might have
had a chance to do what he should have done anyhow: visit a Canadian
health clinic.

Maybe then he would have had his eyes opened to a better idea: government-run health care.

It is a sad commentary on the pinched and strictly censored level
of political discourse in this nation that any serious consideration of
Canada's successful approach to health care is simply out of bounds in
America. It is nothing short of absurd that even though the nation that
is closest to the US geographically, culturally, linguistically and
economically has, since 1973, had a system of provincially administered
single-payer government-run health systems which have kept the
country's health costs at about 3/5 of what they are in the US as a
percentage of GDP (9.7% vs. 17% for the US), at the same time serving all people and (not
surprisingly) achieving better health statistics than the US, no one in
Washington has talked about inviting Canadian health authorities down
to explain how their system works and whether it might make sense here.

Canadians have complete freedom to choose their physicians. They
pay nothing to go to hospital. I interviewed on hospital administrator
in Canada who had worked earlier managing a US hospital. He said a
whole wing of the facility in the US was devoted to billing and
accounting staff, while he had only two people for that job in Canada,
"mostly to handle the bills of the occasional American tourist!" (Some
20% of every US health care dollar goes for paperwork.) Interestingly,
when I interviewed the CEOs of a number of huge Canadian subsidiaries
of US corporations, they universally told me that they were ardent
supporters of the Canadian system, and in fact, were involved in
lobbying to have it expanded to include long-term care and psychiatric benefits.

There has for years been a huge ongoing propaganda campaign by US
health care companies and their lobbies to denigrate Canada's system,
but the big truth that they cannot deny is that it is loved by
Canadians. The best evidence of this: Despite years of conservative
governments in Canada, and in the various provinces, no political
leader has ever tried to re-privatize health care in Canada. Clearly
such an effort would be political suicide, so popular is the system
there. As Canadian resident Joe Sotham explains, "In Canada we complain about wait list length, and the reality is that there is rationing, but everyone gets care and nobody is bankrupted , no HMO clerk stands in the way of treatment. We treat health care like a fundamental right. I took my cat to the vet last year and got a 3-page, $1,875 bill. My comment was this must be what it's like in the States for people."

Well yeah, Joe, but you'd be hard-pressed to get out of a hospital ER in the US with a bill that small. My wife had an uninsured grad student who had the flu during spring break when the school's infirmary was closed. He went to the ER of Temple University Hospital, got looked at by a nurse practitioner, and was given some aspirin. His bill: $2000. That's pretty typical.

Surely, when President Obama assembles his panels to work out some
kind of health "reform" package for the out-of-control US health care
system, he should include Canadian health experts and ministers into
the mix. It makes absolutely no sense to embark on a $650-
billion-to-$2-trillion project without considering all the available
options--including options that have a proven track record of keeping
costs down, services available to all, and that delivers better health
outcomes.

The truth is that every other modern country in the world has long
ago figured out that you can't have cost-effective, universal health
care unless the government is the paymaster, with prices set by the
government. The truth too is that no country that has moved to such a
single-payer system has later rejected it--a good indication that the
people of these countries are satisfied with the results and with what
they're getting for what they're paying.

No one would say that about the US health care system, which is
failing over 50 million people completely, that is the leading cause of
bankruptcy, that is making US companies non-competitive, and that sucks
up over 17 percent of GDP while producing life expectancy and infant
mortality figures that make some Third World countries look good.

Next time President Obama travels to Canada, Britain, France,
Germany or some other country with a single-payer system, we should all
wish for him to "break a leg," as they say in the performing arts. He
might learn something valuable from the experience.
________________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. He
is the author of "Marketplace Medicine: The Rise of the For-Profit
Hospital Chains" (Bantam Books, 1992) and "The Case for Impeachment"
(St. Martin's, 2006). His work is available at www.thiscantbehappening.net

Muntadar al-Zaidi Did What We Journalists Should Have Done Long Ago

dlindorff — Mon, 15 Dec 2008 11:14:46 -0500

By Dave Lindorff

When Iraqi journalist Muntadar al-Zaidi heaved his two shoes at the
head of President George W. Bush during a press conference in Baghdad,
he did something that the White House press corps should have done
years ago.

Al-Zaidi listened to Bush blather that the half-decade of war he
had initiated with the illegal invasion of Iraq had been “necessary for
US security, Iraqi stability (sic) and world peace” and something just
snapped. The television correspondent, who had been kidnapped and held
for a while last year by Shiite militants, pulled off a shoe and threw
it at Bush—a serious insult in Iraqi culture—and shouted “This is a
farewell kiss, you dog!” When the first shoe missed its target, he
grabbed a second shoe and heaved it too, causing the president to duck
a second time as al-Zaidi shouted, “This is from the widows, the
orphans, and those who were killed in Iraq!”

I’ll admit, listening to Bush lie his way through eight years of
press conferences, while pre-selected reporters played along and
pretended to get his attention so they could ask questions which had
been submitted and vetted in advance, I have felt like throwing my
shoes at the television set.

Al-Zaidi, who paid for his courageous act of protest by being
brutally beaten by security guards, is a hero of the profession. He
stopped taking the president’s BS and called him what he is: a murderer
and a criminal, with the blood of perhaps upwards of a million Iraqis
on his hands. Al-Zaidi used what was supposed to be a staged photo-op
for the president as an opportunity to speak up for those whose lives
have been ruined by this president—the ones our suck-up journalists
routinely ignore.

I’m not suggesting that journalists should routinely leave
presidential press conferences in their stocking feet. We have
different ways of expressing our sentiments to people we feel have
insulted our intelligence than throwing shoes at them, but it would be
nice to see a journalist or two flip the president the bird when he
lies so blatantly to them. Or they could all get up and just walk out,
leaving him standing alone at the presidential lectern.

It’s time for the press corps to stop treating presidents like
royalty. If he accomplished anything at all in eight years in office,
President Bush has demonstrated that, to the contrary, the president is
a very ordinary—and in his case a rather less than ordinary—man. The
office of president deserves no more respect than that of the mayor of
Detroit, or of Wasilla.

My suggestion is that the press corps use the remaining five weeks
of the Bush administration to develop a new relationship with the
presidency—one in which they drop all the phony propriety and tradition
and start acting like boisterous newshounds of old, barking questions,
laughing cruelly at inane answers, demanding follow-ups when they are
given the run-around, and, where necessary, walking out, or perhaps
tossing the occasional shoe.

The journalism profession was a full-blown disaster and an utter
disgrace during the Bush administration, and with all the crises facing
the country and the world, in part because of that failure on their
part, we cannot afford to have them continue that failure into the
Obama administration.

With the Bush administration reduced to a running joke at this
point, it gives the journalism profession a chance to redeem itself by
using these few remaining weeks to establish a new tradition for
presidential press conferences and photo-ops—one that can continue on
into the new presidency.

Meanwhile, I’m suggesting that my alma mater, the Columbia
University Graduate School of Journalism, hire al=Zaidi to teach a
class in press conference journalism techniques. They should make it a
multi-year appointment, because if he left after just one year, his
would be difficult shoes to fill.

~~~~~~~~~~~~~~~
NOTE: Speaking of shoes and the White House, Skip Mendler of
Honesdale, PA has a great idea. He suggests that everyone who is
disgusted with the outgoing Bush/Cheney administration send a shoe to
the White House. Just imagine a pile up of a million smelly old running
shoes in the White House mailroom! I think he's got something. Spread
the word!
_________________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His
latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and
now in paperback). His work is available at www.thiscantbehappening.net

Presidential Campaign Enters the Silly Season

dlindorff — Mon, 06 Oct 2008 09:12:11 -0400

By Dave Lindorff

I’ve been getting some emails that refer to Barack Obama as a
“Manchurian Candidate,” a guy who is somehow hiding a secret radical
and/or Muslim jihadist agenda that will burst forth if he’s elected
president. There is a certain idiot factor at work here, since if Obama
were a closet Weatherman, who somehow learned of and adopted that 1960s
college dropout organzation’s creed at the tender age of 8, it would
have clashed badly with any Muslim teaching he might have picked up as
a student in an Indonesian public school at the same time (he attended
an Indonesian public schoolfrom the age of 6 to 8 before transferring
to a Catholic-run institution).

But since some low-wattage and conspiracy-minded people seem ready
to believe this kind of stuff, let’s consider John McCain’s early
background, and the possibility of his being a Manchurian Candidate
too. Fair’s fair, right?

Okay. McCain, it turns out, was actually born outside the US, in
the Panama Canal Zone, which in 1936 was territory leased from Panama.
His father, a Navy officer, was stationed there with his wife at the
time of McCain’s birth. Now it’s a safe bet that McCain was largely
raised—fed, diapered, and spoken to—at that age by a local Panamian
woman. That’s what, after all, you do when you are an elite officer and
the wife of an elite officer in a foreign country where low-wage help
is abundant. Who knows what subversive ideologies were poured into the
young McCain’s tender ears at that vulnerable period of his life by his
Panamanian nurse? Maybe that would explain McCain’s support for an
amnesty program for immigrants from Latin America a few years back.
Does he have a secret agenda to throw open the doors of America to
Latin American immigrants once in the White House?

And worse yet, maybe his Panamian amah was a Marxist! Lord knows
that Central America in the mid-1930s was a hotbed of revolution. The
dreaded Augusto Sandino had only just been executed in Nicaragua, just
north of the Zone, two years before McCain’s birth, following a bloody
guerrilla war against US Marines, and the region was full of bitter and
vengeful nationalist and Marxist revolutionaries bent on throwing the
US out of Latin America. Could his nurse have been one of these people,
whispering and implanting the language of liberation into the young
boy’s still unformed mind, ready to spring to life once he assumed high
office in Washington?

Then we turn to McCain’s prisoner of war days in the hands of the
North Vietnamese. Certainly his mind was weak and vulnerable to
control. While many of McCain’s fellow POWs endured five, six or more
years of torture without cracking, he is said to have begun spilling
secrets and agreeing to broadcast anti-American propaganda statements
after only four days of torture shortly after his capture. We also know
that the Communists had a sophisticated system of mind control
developed, which was shared among the Communist nations of the USSR,
China, North Korea and North Vietnam. Were these techniques applied to
the captive McCain, and did they leave him after five long years of
captivity robotically programmed to seek and win the presidency, only
then to launch a campaign of sabotage to soften America up for
Communist takeover?

This prospect seems much more likely than that some Muslim teacher got to Obama in his grammar school in Indonesia.

Actually, I find the Obama Manchurian Candidate theory much weaker
than the McCain Manchurian Candidate theory, just based upon my own
experience. I was, after all, put through some serious indoctrination
by my own family. My parents sent me to Sunday School at the local
Congregational Church, from the age of six to the age of about 11. I
can still remember the earnest parent volunteers teaching us all the
nonsense about the earth being formed in six days, about Adam and Eve,
the burning bush, the parting of the Red Sea, the Virgin birth (What
was a virgin, I wondered? They wouldn’t say…), and the crucifixion and
resurrection. None of it stuck. Despite the indoctrinators’ best
efforts, I left Sunday School an atheist and remain one today. The only
thing I really learned in Sunday School was how to smoke—something a
number of us learned together while skipping class and hiding out in
the church attic. Is Christian dogma that much weaker that it can fail
to impress a young mind while Muslim dogma can take a firm hold in an
even shorter time? What an insult to Christianity!

My daughter too, is testimony to the limits of early childhood
propaganda efforts. At the age of 7, we brought her to Shanghai, China,
where for a year, she attended first grade in a local Chinese public
school. She learned excellent Chinese there, but though there was
considerable indoctrination in Maoist theory, with special focus on the
life of the young Mao and also of the selfless workers’ hero Lei Feng
(they actually had one daily class called “Loving the Country class”
and most other subjects had a propaganda aspect), and though she also
attended a fifth grade Chinese public school when we returned to China
a few years later, for a stay in Xi’an, at 24 she is hardly a Commie or
a Maoist, I’m sure though, that should she someday decide to run for
president, some of the same people who suspect Obama of being a closet
Muslim terrorist will say she harbors secret Communist sentiments from
her early school years.

Such is the state of some American minds.
__________________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. HIs
latest book is "The Case for Impeachment" (St. Martin's Press, 2006 and
now available in paperback edition). His work is available at www.thiscantbehappening.net

digg_url = 'http://www.afterdowningstreet.org/node/36666';
digg_title = "Presidential Campaign Enters the Silly Season";
digg_bodytext = "By Dave Lindorff\r\n\r\n I’ve been getting some emails that refer to Barack Obama as a “Manchurian Candidate,” a guy who is somehow hiding a secret radical and/or Muslim jihadist agenda that will burst forth if he’s elected president. There is a certain idiot factor at work here, since if Obama were a closet Weatherman, who somehow learned of and adopted that 1960s college dropout organzation’s creed at the tender age of 8, it would have clashed badly with any Muslim teaching he might have picked up as a student in an Indonesian public school at the same time (he attended an Indonesian public schoolfrom the age of 6 to 8 before transferring to a Catholic-run institution).\r\n\r\n But since some low-wattage and conspiracy-minded people seem ready to believe this kind of stuff, let’s consider John McCain’s early background, and the possibility of his being a Manchurian Candidate too. Fair’s fair, right? \r\n\r";
digg_skin = 'standard';

Iraq All Over Again: Bush, Paulson and Bernanke are Just Crying Wolf

dlindorff — Thu, 25 Sep 2008 09:09:57 -0400

By Dave Lindorff

Hold everything!

Talk about déjà vu. Remember when Bush and his cabinet officers were
running all over in late 2002 crying wolf about Iraq’s supposed nukes,
and threatening that inaction on a war resolution by the Congress would
leave them to blame when the “mushroom cloud” appeared over some
American city?

Well, now they’re doing it again, this time claiming that economic
Armageddon faces the US and even the global economy if Congress doesn’t
hand over all power over the economy to the Secretary of the Treasury
in absolute contravention of the most fundamental principle of the
Constitution, which establishes that the budget be in the control of
Congress. These guys are saying if Congress doesn’t vote to hand over
$700 billion or more of taxpayer money to the Treasury to dole out to
fat cat bankers, the resulting economic collapse will be on their heads.

But here’s the thing. Just as nobody else in the world was freaking
out about Saddam Hussein’s alleged nuclear threat, nobody is
particularly panicked about the US or the global economy. If investors,
who are supposed to be all wise about things economic, were worried
that the roof was about to cave in, they’d be selling stocks as fast as
they could dial their brokers. And the institutional investors—those
with the real inside information—not to mention the managements of
companies, who really know the true state of affairs of their own
firms—would be unloading shares at fire sale prices. The stock market
would be falling like it fell in 1987, or, if what these administration
con artists are claiming were really the case, even farther. That is to
say, we’d be seeing a 3000-4000 point drop in the Dow.

But we’re not seeing that. The Dow Jones average this week fell a
modest 8 percent and then recovered by 4 percent, and yesterday, the
broader S&P index actually rose. Some panic!

We’re told that there is a credit crisis, but people are still
getting mortgages. I know a retired woman of modest means who just went
in and refinanced her mortgage at a lower rate. Businesses are still
receiving loans, too, and while they might want a lower rate, they’re
still meeting payroll. Banks haven’t jacked up interest rates to absurd
levels.

Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke told
a select group of Congressional leaders earlier this week that if they
didn’t rush through their three-page proposal giving them draconian
power to shovel public money into banker’s coffers, the country would
be instantly plunged into a major recession.

But when Congress balked at this power-grabbing rip-off, it caused
barely a ripple in the stock markets, which are down less than 10
percent from their level when the crisis first struck with the bailout
of Fannie Mae and Freddie Mac.

Let’s be honest: this is an artificial panic, or worse, an effort
to create one. It’s not a real panic. When you have the president and
the treasury secretary and the Fed chairman going around warning of a
steep recession or a depression, you have to ask yourself why these
guys are yelling “Fire!” in the theater. In a real crisis, President
Franklin Roosevelt preached calm (“We have nothing to fear but fear
itself.”). This president says, “Be afraid. Real afraid!”

The truth is, this is a very normal economic downturn, with the
exception that a lot of banks are holding an unusual amount of really
rotten debt—the result of their own greed and fraud.

The answer is not to bail these rotten institutions out. It’s to let them fail.

I realized what was happening when the Bush Administration spent
$85 billion assuming all the bad debt of AIG in return for warrants
giving it the right to up to 80 percent ownership of the insurance
giant, when, at that day’s share value, the Treasury could have bought
the whole company outright for just $7 billion.

If we’re concerned about the homeowners who hold subprime
mortgages, the government can step in and order the banks to
renegotiate the terms of those loans to make them fixed 30-year
mortgages that people can actually afford to pay, and it can step in
and guarantee them. In return for covering the bankers’ asses on those
loans, the government can take over the worst banks, and take ownership
positions in others as it sees fit.

If the economy slows down because of all of this, the answer is for
the government to start spending on programs that will create new
jobs—R&D funding for new non-carbon energy sources, public funded
power generation projects using wind, waves and solar energy,
infrastructure repair, public transit expansion, more teachers for our
schools. Every dollar spent on these kinds of things will circulate
back into the economy immediately, helping to bring the economy back.
Funneling money to banks won’t help, because the odds are, much of it
will flow overseas where there’s a better return.

In short, Congress needs to call the president’s bluff.

The public knows it’s being had here. We’ve seen the deceitful
nature of this administration, and we know now that everything it says
is a lie.

Bush and his treasury secretary, however, are right about one
thing: Congress is going to be blamed if they do the wrong thing. But
the wrong thing isn’t failing to approve a $700-billion Wall Street
bailout. The wrong thing would be approving it.
________________________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His
latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and
now available in paperback edition). His work is available at www.thiscantbehappening.net