Article 43

 

Sunday, November 15, 2009

The Audacity of Failure

wethepeople.jpgmiddle-class-squeeze.jpg

In a government of law, the existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipresent teacher. For good or for ill, it teaches the whole people by example. Crime is contagious. If the government becomes a lawbreaker, it breeds contempt for the law; it invites every man to become a law unto himself; it invites anarchy.
- Justice Louis Brandeis

Those of us who manage the publics dollars will be held to account - to spend wisely, reform bad habits, and do our business in the light of day because only then can we restore the vital trust between a people and their government.
- President Barack Obama, A New Era of Responsibility, the 2010 Budget

For there is no authority except that which God has established. The authorities that exist have been established by God
- Romans 13:1

“This is not just about supporting government employees. “If we do nothing, the entire economy will suffer.
Ethan Pollack - EPI, November 23, 2009

The world is a dangerous place to live; not because of the people who are evil, but because of the people who dont do anything about it.
- Albert Einstein

The 4-year presidency of Barack Hoover Obama

By Mike Whitney
Information Clearinghouse
November 15, 2009

BARAK OBAMA is on his way to becoming a one-term president. According to Politico:

“President Barack Obama plans to announce in next years State of the Union address that he wants to focus extensively on cutting the federal deficit in 2010 and will downplay other new domestic spending beyond jobs programs, according to top aides involved in the planning.

The president’s plan, which the officials said was under discussion before this month’s Democratic election setbacks, represents both a practical and a political calculation by this White House.” (politico dot com)

Er, now who exactly is telling Obama that raising taxes or cutting spending in the middle of a severe economic contraction is a good idea?

This clip from Politico tells us more about the people surrounding Obama, than it tells us about Obama himself. Clearly, his chief lieutenants are just as committed to savaging Medicare, Medicaid and Social Security as their GOP counterparts. This is obvious by the way they’ve handled the fiscal stimulus. Where are the jobs programs, the boost to Green Technology, the massive infrastructure rebuild?

Nowhere. Because the industry-reps and bank lobbyists who fill out the Obama roster adhere to the same pro-business credo as the members of Team Bush, that is, that all public assets and resources should be strip-mined from their rightful owners and transferred to the robber barons at the top of the economic food-chain. There’s no way that Geithner, Summers and the rest of the Wall Street insiders would ever dream of rebuilding the public safety net they’ve been trying to destroy for the last decade or more. That’s not in their interests at all.

The administration’s announcement is tantamount to a stealth-attack on Social Security in the name of “fiscal responsibility”. It’s another public relations ploy intended to enrich the parasite class by stealing crusts of bread from penniless retirees. Surely, there must have been a quid pro quo between the two-year Illinois senator and his political backers about how they planned to deal with “entitlements problem”. In other words, Obama must have given the green light to the party bosses who wanted to purloin the last few farthings in the Social Security trust fund.

So, how will Obama’a attack on Social Security etc. effect the so-called “jobless recovery”?

For one thing, it makes a double-dip recession unavoidable. After all, (according to Goldman Sachs) last quarter’s surge in GDP to 3.5% was entirely a result of government stimulus. Take away the stimulus, and the economy slips right back into to recession. Is that what Obama wants, another stretch of negative growth, plunging economic activity, lower demand and higher unemployment? Why? To satisfy the GOP “deficit hawks”?

All the handwringing over deficits is just more gibberish from the same people who brought us the Iraq War. The deficits are about as big a problem as the fictional WMD, maybe less. Here’s a clip from an article by Marshall Auerback which sheds a bit of light on the deficit fiasco:

“Large deficits are not the problem....Lets all take a deep breath here: Whilst the dollar index has fallen some 15% from the high sustained earlier this year, it is still above the lows sustained at the height of the credit crisis reached about a year ago. Secondly, there seems to be a fear that the current fall in the dollar could well engender inflation, and create a panicked response from policy makers where the Fed actually does raise rates and the Treasury begins to reduce government spending. Given high prevailing debt levels and the weak state of the consumerҒs personal balance sheet, this would be an unmitigated disaster.

It is true that excessive government deficit spending can be inflationary, and could therefore cause some impact on exchange value of dollar. But this cant be viewed in some sort of vacuum. The size of the deficit is irrelevant in itself. There is no meaning in the terms ґlarge deficit or Ғsmall deficit. You have to relate them to the extent of labor and capital underutilization, which is a human measure of the aggregate demand deficiency. The fact that labor underutilization is now in excess of 16 per cent in the US (combined unemployment, underemployment and hidden unemployment) and capacity utilization is in the 60-65 per cent range rather than 90 per cent range sends one very clear message - the deficit is not large enough.

So the correct policy response is to spend until we get to full employment. That is the only consequence of excessive deficits җ insolvency is not possible. Your social security check will never bounce in a country issuing debt in its own freely floating non-convertible currency.” ( “The US Dollar - Dont just do something, stand there!” Marshall Auerback, newdeal2.0)

Get it? The best way to restore economic well-being is to increase the fiscal stimulus, expand the deficits and put the country back to work. There’s no chance of inflation until unemployment drops to roughly 5%, which could be a decade away. And don’t believe the doomsayers about the dollar either. It’s a bunch of malarkey. Check this out:

“As I have shown in two recent papers, even very large currency depreciations in developed economies have no effect on inflation unless they are caused by policies that attempt to hold an economy’s unemployment rate below its equilibrium level. With US unemployment currently at 10 percent, there is no chance that inflation will rise in the near term. Whether inflation rises in the longer run will depend on whether US monetary and fiscal policy stimulus is withdrawn appropriately as the economy recovers (and tighter macroeconomic policies would tend to support the dollar).” ("Who’s Afraid of a Falling Dollar”, Joseph Gagnon, Baseline Scenario)

The dollar is dropping because the Fed is doing everything in its power to push it downwards. “It’s the policy, stupid.” A falling dollar increases exports and speeds up recovery. But once the Fed stops printing money via quantitative easing, (which is set for the end of 1st Q 2010) watch out. The dollar will rebound. Here’s an excerpt from an article in the Economist:

“This dollar declinism is overblown. It exaggerates the scale of the slide and misunderstands its cause. Much of the recent weakness simply reverses the earlier safe-haven flight to dollars, a sign of investors optimism about riskier assets rather than their fears about America’s currency. On a trade-weighted basis the dollar today is close to where it was before Lehman failed. Yields on Treasuries have not risen and spreads on riskier dollar assets continue to shrink. If investors were growing leerier of dollars, the opposite should have occurred.” ("The Diminishing Dollar”, The Economist)

When the financial crisis broke out two years ago, investors around the world flocked to the dollar for safety. Now that the crisis has (somewhat) abated, those same investors are less risk-adverse, which means they are putting that money in other assets (stocks, bonds, commodities) Naturally, that is weakening the dollar, but it is not a sign of impending collapse. And while it is true that the greenback faces stiff headwinds in the long-term--due to the US’s deteriorating fiscal situation--the dollar is in no immediate danger of losing its position as the world’s reserve currency. That will take a decade or more.

The growing fear about the dollar and the deficits is understandable given the amount of money that is being hurled at the financial system. But that shouldn’t dissuade reasonable people from doing what needs to be done. The dollar and the deficits are NOT the issue. The issue is jobs, jobs, jobs. Here’s an excerpt from an article by Henry Liu which sums it up perfectly:

“An economy that has collapsed under the burden of excessive debt cannot recover until such debt has been extinguished. And debt can only be extinguished by wealth creation, not by creating more debt with easy credit. And wealth can only be created by employment and not by financial manipulation.” (Federal Reserve Power Unsupported by Credibility; part 1 “No Exit” Henry Liu)

Bingo. The Fed is bailing out unproductive speculators, while tossing the “creators of the nation’s wealth”, the workers, a few table scraps. That’s why we need a different policy which focuses on jobs programs, fiscal stimulus, and more deficit spending so households can rebuild their tattered balance sheets and the “engine of global growth” (the US middle class) can be re-energized. We don’t need more belt-tightening, as Obama seems to think. That is precisely the wrong approach.

Henry Liu again:

“Thus we have financial profit inflation with price deflation in a shrinking economy. What we will have going forward is not Weimar Republic type price hyperinflation, but a financial profit inflation in which zombie financial institutions turning nominally profitable in a collapsing economy.”

Right again. The soaring stocks and commodities prices prove that central bank policies can create asset bubbles even during periods of severe deflation. (like now) Fed chair Ben Bernanke’s policies have had no material effect on households, consumers or workers. This is why credit contraction is in its 8th straight month and jobless claims continue to mushroom.

Bernanke--a disciple of Milton Friedman--has taken the monetarist “trickle down” approach throughout, which is why stocks are surging even though the broader economy is still flat on its back. The Fed chief is doing what he’s always done, stimulate demand by creating more bubbles. Only this time it’s not working because liquidity is unable to flow through the clogged credit system. The administration needs to bypass the credit system altogether and provide direct relief via state aid, tax cuts and jobs programs to jump-start the economy and reduce the widening output gap. What’s needed is more stimulus and an aggressive reform agenda aimed at putting the country back to work. Here’s Paul Krugman:

“Its truly amazing, and depressing, how completely deficit-phobia has swept the field in Washington. The economy remains in deeply dire straits....Yet the respectable thing, all of a sudden, is to claim that we can’t possibly afford to spend any more money on job creation.

History says differently...Other advanced countries have been substantially deeper in debt without either defaulting or having runaway inflation....

Id be a little more forgiving of the nonsense if all the people screaming about the deficit were sincere. And some are. But many, if not most, are perfectly happy to incur huge unfunded liabilities for the wars they want to fight, and/or to eliminate inheritance taxes for the heirs of multimillionaires. ItҒs only deficits incurred to help working Americans that get them all moralistic.

The point is that the economy desperately needs more help and yes, we can afford to provide it.” ("Fiscal Perspective” The conscience of a liberal, Paul Krugman, New York Times)

Yes, we can afford it. We just need to shrug off the deficit hawks and the dollar demagogues and provide the necessary resources to get the job done. It’s that simple.

Here’s more from Marshall Auerback:

“The Administration ... must free themselves from the discredited dogmas of neo-liberalism and channel the spirit of FDR’s bold experimentation. We need less deficit terrorism. Fiscal policy must be much more oriented to personal balance sheets, not bank balance sheets. We need to turn around the private sector and begin to produce more tax revenue, so that the large deficits would be short-lived.

If we continue down the current path, we slow recovery and court large budget deficits for many years to come. Far better to spend now to create jobs and get the private sector growing again.("New Agenda for America: How to Start Anew”, Marshall Auerback, newdeal 2.0)

Economists know what it will take to put the country back to work; debt relief, loan modifications, wage growth and full employment. But it will require a fundamental shift in ideology; a rejection of neoliberalism and a strong commitment to rebuild the middle class. Obama can either help in that process or follow the beggarly path to early retirement. So far, there’s no reason to be hopeful.

SOURCE

---

A Science Fiction Story

By Fidel Castro
Escrambre
November 13, 2009

Cuban Revolution leader Fidel Castro holds the view that before Obama completes his term there will be from six to eight right-wing governments in Latin America that will be allies of the empire. Likewise, the US extreme right will try to limit his administration to one term.

I very much regret to have to criticize Obama knowing that there are in that country other could-be presidents worse than him. I am aware that that position in the United States is today a major headache. The best example of this is the report in yesterdays edition of Granma that 237 US MEMBERS OF CONGRESS, or 44%, are millionaires. This does not mean that every one of them is an incorrigible reactionary but it is extremely difficult that they feel like the many million Americans who do not have access to medical care, who are unemployed or who need to work very hard to earn their living.

Of course, Obama himself is no beggar; he owns millions of dollars. He excelled as a professional and his command of language, his eloquence and intellect are unquestionable. Also, he was elected president despite his being an African American, a first time occurrence in the history of his country’r racist society, which is enduring a profound international economic crisis of its own making.

This is not about being an anti-American as the system and its huge media intend to label its adversaries.

The American people are not the culprits but rather the victims of a system that is not only unsustainable but worse still: it is incompatible with the life of humanity.

The smart and rebellious Obama who suffered humiliation and racism in his childhood and youth understands this, but the Obama educated by the system and committed to it and to the methods that took him to the US presidency cannot resist the temptation to pressure, to threaten and even to deceive others.

He is a workaholic. Perhaps no other American president would dare to engage in such an intense program as he intends to carry out in the next eight days.

According to plan, he will take an extensive tour of Alaska where he intends to address the troops stationed there. He will be visiting Japan, Singapore, the Peoples Republic of China and South Korea. He will attend the Asia-Pacific Economic Cooperation forum (APEC) and that of the Association of East Asian Nations (ASEAN). He will hold talks with the Prime Minister of Japan and His Majesty Emperor Akihito in the land of the Rising Sun as well as with the prime ministers of Singapore and South Korea and the presidents of Indonesia Susilo Bambang, of Russia Dimitri Medvedev and of the PeopleҒs Republic of China Hu Jintao. He will be making speeches and giving press conferences. He will be carrying with him his nuclear briefcase, which we hope he will have no need to use during his hasty tour.

His Security advisor has said that Obama will discuss with the president of Russia the continuance of the START-1 Treaty set to expire on December 5, 2009. There is no doubt that some reductions of the enormous nuclear arsenal will be agreed upon, albeit this will be of no consequence to world peace and economy.

What is our distinguished friend planning to discuss during his intense journey? The White House has made its solemn announcement: climate change and economic recovery; nuclear disarmament and the Afghan war; and, the risks of war in Iran and in the Peoples Democratic Republic of Korea. There is plenty of material to produce a science fiction book.

But, how can Obama unravel the problems of climate change when the position of his representatives during the preparatory meetings of the Copenhagen Summit on the greenhouse effect gas emissions was the worst among those of the industrialized and rich nations, both in Bangkok and Barcelona, because the United States chose not to sign the Kyoto Protocol and the oligarchy of that country is not willing to really cooperate.

How can he contribute to the solution of the grave economic problems afflicting a large part of humanity when at the end of 2008 the total debt of the United States --including that of the federal, state and local administrations, the businesses and families amounted to 57 trillion dollars, that is, over 400% of its GDP, and that countrys budget deficit reached almost 13% of its GDP in fiscal year 2009, an information that Obama is certainly aware of.

What can he offer Hu Jintao when his openly protectionist policies have been aimed against the Chinese exports and he is demanding at all costs that the Chinese government revaluates the Yuan, an action that would adversely impact on the growing Third World imports from China?

The Brazilian theologian Leonardo Boff, who is not a disciple of Karl Marx but an honest catholic among others who are not willing to cooperate with the imperialism in Latin America, has recently said that “we are risking our destruction and the devastation of lifeŒs diversity.”

[] almost half of humanity is living today under the poverty line. “The wealthiest 20% are consuming 82.49% of all of the riches on Earth while the poorest 20% are living on a tiny 1.6%.” He also quotes the “FAO as he warns that there will be in the upcoming years from 150 to 200 million climate refugees.” And then he adds that “humanity is consuming today a 30% above the regenerating capacitythe planet is giving unmistakable signs that it can stand it no more.”

What he says is true, but Obama and the US Congress have yet to find out.

What is he leaving to us in the hemisphere? The shameful problem in Honduras and the annexation of Colombia where the United States will set up seven military bases. They also established a military base in Cuba more than one-hundred years ago and remain there by force. It was in that base where they installed the horrible torture center widely known around the world; the same that Obama has been unable to close, yet.

I hold the view that before Obama completes his term there will be from six to eight right-wing governments in Latin America that will be allies of the empire. Likewise, the US extreme right will try to limit his administration to one term. Once again there will be a Nixon, a Bush or the like of a Cheney in the White House. Then, the meaning will be clear of those absolutely unjustifiable bases threatening today the South American peoples with the pretext of fighting drug-trafficking, a problem created by the tens of billions of dollars that organized crime and the production of drugs in Latin America receive from the United States.

Cuba has shown it only takes justice and social development to fight drugs. In our country, the crime rate per 100,000 people is one of the lowest in the world. No other country in the hemisphere can exhibit such low rates of violence. It is known that, despite the blockade, no other country can boast our high education levels.

The Latin American peoples will resist the onslaught of the empire!

Obamas trip seems a science fiction story.

SOURCE

Posted by Elvis on 11/15/09 •
Section Dying America
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