According to Pam Martens latest essay, our well-heeled grifters petition Uncle Sam to do all the work for it:
We've arrived at the finish line in the race to the bottom and it's clear there are few winners: once the little fish were eaten, the big fish fed on each other (Madoff's Ponzi scheme and assorted hedge fund frauds against the wealthy). Now the big fish have no where else to feed but at the government's bailout trough, transferring the debt-ownership society to our children.
This is the warning given by Yves Smith of Naked Capitalism. The United States has been the willful consumer of first and last resort during much of the post-war era. However, it may not want to occupy that role in the future and may be unable to do so in any case given its growing debt and the current economic situation. As a matter of fact, the dollar continues to weaken and the United States may wish to increase its exports in the near future. But, if every country, including the United States, tries to export its surplus, which country would absorb the world's surplus if not a rich country like United States? It is clear, though, that this system logic could produce a world-wide trade war as every country attempts to survive the global crisis by increasing its exports.
The Times recommended fixes include: 1) More diplomacy, less war-making; 2) better exploiting America's technological advantages; and 3) forcing the service branches to play nice with each other. It is unsurprising, however, that the Times overlooked the one path that would greatly reduce the dangerous burdens the country places on these men and women. The path: The country abandons its empire and imperial governance in general.
A Russian academic and former KGB member, Igor Panarin, predicts the United States will dissolve in 2010, according to a recent Wall Street Journal report. The immediate causes of America's self-destruction: Economic and moral collapse along with mass immigration. The endgame: A civil war fought by America's regions and, once the dust settles, the absorption of the remnants by Russia, Canada, Mexico, Japan or China and the European Union.
Surely predictions like the one offered by Panarin gain much traction during times of crisis, such as the crisis America is currently enduring. However, the nature of these judgments tends to compromise their credibility. On the one hand, they acquire plausibility from the fact that human creations cannot be immortal; but they falter, on the other hand, because they attempt to identify a unique event that has yet to occur and because the hypercomplexity of the kind of event they would predict, describe and explain makes them utterly simple hot air. In other words, contemporary circumstances coupled to features of the human condition makes Banarin's assertion look reasonable enough while the nature of his prediction makes it look fantastic. America, troubled as it is, has a number of futures, including futures in which it fragments.
The author, actor, director, poet... died this past Christmas Eve. He was 78 at the time. Posterity will remember him for his literary work. But it is noteworthy that Pinter used his Nobel Prize lecture to administer a powerful critique of the United States and its imperial ways. His lecture can be viewed here and the English text can be read here.
There is no doubt that we will miss his voice. The real question: Can anyone stand in for him now that he is gone?
Glenn Greenwald rightly takes to task those duopoly politicians who publicly support Israeli state terrorism in the Gaza. After writing about the consensus among America's political elite on the Israel question, Greenwald then points out that:
By itself, the degree of full-fledged, absolute agreement — down to the syllable — among America's political leaders is striking, even when one acknowledges the constant convergence between the leadership of both parties. But it becomes even more striking in light of the bizarre fact that the consensus view — that America must unquestioningly stand on Israel's side and support it, not just in this conflict but in all of Israel's various wars — is a view which 7 out of 10 Americans reject. Conversely, the view which 70% of Americans embrace — that the U.S. should be neutral and even-handed in the Israeli-Palestinian conflict generally — is one that no mainstream politician would dare express.
In a democracy, one could expect that politicians would be afraid to express a view that 70% of the citizens oppose. Yet here we have the exact opposite situation: no mainstream politician would dare express the view that 70% of Americans support; instead, the universal piety is the one that only a small minority accept. Isn't that fairly compelling evidence of the complete disconnect between our political elites and the people they purportedly represent?
December 29, 1890 is the day on which the 7th Calvary massacred the remnants of the Lakota Sioux at Wounded Knee Creek, South Dakota. The Calvary had orders to ethnically cleanse the area by disarming and then transporting the Sioux to Nebraska.
It is worth keeping this historical record in mind when considering America's modern support for Israel.
Maddow of MSNBC hit herself with a pain-stick yesterday for giving Laura Tyson, a Clinton and Obama insider, the opportunity to defend, with strong criticism, the controversial Bush-Paulson bailout program without also disclosing that Tyson sits on the Morgan Stanley Board of Directors, owns much stock in the company and is thus an indirect beneficiary of the bailout program. Maddow's mea culpa can be found below:
The initial piece with Professor Tyson can be viewed here:
The original link to the Maddow apology can be found at AlterNet where David Sirota identifies Tyson's deception and lauds Maddow for her integrity.
The black hole? The collapsing bubble economy produced by decades of Reaganomic policy and finance-friendly capitalism. This shift was political in nature, as Michael Hudson suggests:
Governments have replaced industrial growth with purely financial wealth creation in the form of a real estate and stock market bubble. This has turned the economic universe upside-down relative to what the classical writers expected to result from the technological progress unleashed by the Industrial Revolution and its parallel agricultural, commercial and financial revolutions. Property and credit have become costs instead of a benefit, institutional forms of rent- and interest-extracting overhead rather than helpful inputs.
The fix, according to Mike Whitney, to the mess created by this malignant state of affairs requires wage increases for the nation's 'LOFers' or Low Income Families! According to Whitney:
A strong, resilient economy, that can withstand the periodic buffeting of cyclical downturns, must be built on a rock-solid foundation of wages that keep pace with production. If wages stagnate, as they have for the last 30 years, the only way a consumer-driven economy can grow is through the expansion of personal debt, which isn't so hot in the long run [emphasis added].
Productivity gains must result in wage gains for the many, which is to say, these gains will generate effective demand for the goods produced by this increasingly productive economy. Unfortunately:
The Fed and its Wall Street colleagues have reworked the economy in a way that diverts energy from productive activity to myriad credit-enhancing scams that create an inherently unstable financial system. Even now, with manufacturing in tatters, consumer spending at its nadir and factories hemorrhaging jobs at a Depression-era pace; Bernanke is still trying to keep the teetering banking giants propped up and out of Chapter 11. It's a fool's errand. The economy needs to fixed from the bottom-up not the top-down; that's just throwing money down a rathole.
Whitney concludes by advocating the improbable:
If the Fed was serious about fulfilling its mandate, it would be looking for ways to create a living wage for all workers so that opportunity is more than just an empty slogan. Better still, Bernanke should abandon his credit-generating enterprise altogether and support the movement to strengthen unions so that wages can keep pace with production. That's the best bailout plan yet.
A recent New York Times report suggests that Hillary Clinton wants to build an empire in the State Department. The putative goal of her power-seeking activity would have the State Department handling its usual chores but also tasks generated by the global economic crisis.
This is Leo Gerard's term for the 31 Republican Senators who recently and stridently put the material interests of foreign capital before the interests of the country, its citizens and its labor unions. Gerard also documents the corporate welfare some of the relevant southern states gave to foreign automakers to entice them to locate plants in their states, plants which these Senators would protect by destroying a significant fraction of America's productive capacity. Gerard then points to the support most of these Senators gave to the fraudulent Bush-Paulson Wall Street bailout. They were not at all bothered to fund grifters when the confidence men and women belong to the politically correct class. One might judge these politicians hypocrites if it were not for the enduring Republican commitment to sell the country to whoever has the largest wallet.
The source said that one associate director in the enforcement division had in recent days ordered junior staff to review every case that's been closed over the last few years, to ensure that violations weren't missed — as they appear to have been in the 2006 investigation of Madoff. "There's a real paranoia around here," the source added.
That paranoia — or at least extreme concern — apparently extends to commission officials in Washington. The source said that since the Madoff allegations came to light last week, SEC brass had sent out numerous emails warning staffers not to destroy documents relating to the case — which is being investigated both by SEC enforcement and by the FBI. There have also been several warnings not to speak with the press, the source added.
Elsewhere, TPM reports that SEC Chairman Chris Cox "…in many ways worked to dismantle the SEC," Ed Nordlinger, a former longtime enforcement director in the commission's New York office, told TPMmuckraker. 'He slowed everything down. I don't think he believed in heavy regulation.'"
Dare to believe, Chris!
While writing about Wall Street insider Bernie Madoff, Pam Martens' latest article contains a retelling of Harry Markopolos' story. An accountant working for another investment firm, Mr. Markopolos took the time to document Madoff's fraud. He began to inform the Securities and Exchange Commission about Madoff's scam in 1999! The SEC, however, did nothing. The choice paragraph in Martens' account:
Mr. Markopolos, a private citizen, uses his personal time and energy over a seven year period to document a fraud occurring under the nose of the SEC that could impact the international reputation of the United States along with the financial well being of pensioners, university endowments, foundations and private investors. After losing track of the case for five years, the SEC finally gets around to investigating using taxpayers' monies. They come up with nothing despite being given a perfect path to follow to the fraud. And their final suggestion for dealing with the investigation is to destroy the files! With regulators like these, who needs Ponzi artists?
The SEC did file a complaint against Madoff on 12.11.2008.
On Friday (12.19.2008), President Bush announced that he intends to use financial bailout money(TARP) to aid General Motors and Chrysler. The aid will take the form of short-term loans. The amount: $13.4B. These loans come with conditions (see this), which are, according to the White House fact sheet:
- Firms must provide warrants for non-voting stock.
- Firms must accept limits on executive compensation and eliminate perks such as corporate jets.
- Debt owed to the government would be senior to other debts, to the extent permitted by law.
- Firms must allow the government to examine their books and records.
- Firms must report and the government has the power to block any large transactions (more than $100 million).
- Firms must comply with applicable Federal fuel efficiency and emissions requirements.
- Firms must not issue new dividends while they owe government debt.
- Reduce unsecured debt by two-thirds via a debt for equity exchange.
- Make one-half of Voluntary Employee Beneficiary Association (VEBA) payments in the form of stock.
- Eliminate the jobs bank.
- Work rules that are competitive with transplant auto manufacturers by December 31, 2009.
- Wages that are competitive with those of transplant auto manufacturers by December 31, 2009.
Although these loans will save at least two of the Big Three, the New York Times correctly asserts that Bush's bailout only "…hands off to President-elect Barack Obama the difficult political task of ruling on their future."
Toyota will lose money this quarter
Toyota Motors "announced Monday that it expected the first loss in 70 years in its core vehicle-making business…," according to the New York Times (here, but see also this, this, this and this). Three likely causes of this reversal? Falling demand, increasing commodity prices and the strength of the yen.
I am confident that President Bush, speaking as he was at the American Enterprise Institute, would not advocate a devious strategy meant to break the United Auto Workers union or to release Detroit from the obligations it has to its retired workers. He merely wants to save America's auto industry from destruction (on which see this, this, this, this, this, this, this). He is not at all like those Senate Republicans that broke the Congressional bailout plan.
The President would not deceive us like that. Nope. No siree.
Putting sarcasm aside for the moment, this is Bush's last gasp opportunity for adding a plus mark to his otherwise horrendous legacy. Accordingly, he still appears committed to getting a bailout done before he leaves office.
Goldman Sachs Group Inc., which got $10 billion and debt guarantees from the U.S. government in October, expects to pay $14 million in taxes worldwide for 2008 compared with $6 billion in 2007.
The company's effective income tax rate dropped to 1 percent from 34.1 percent, New York-based Goldman Sachs said today in a statement. The firm reported a $2.3 billion profit for the year after paying $10.9 billion in employee compensation and benefits.
To eliminate an expected budget deficit of $1.2B, New York's Metropolitan Transit Authority intends to raise fares and cut services in 2009, the New York Times reports. The Ravitch Commission's MTA rescue plan, announced earlier this month, would also include payroll taxes for those companies located within the MTA's area of operation.
These deficit closing measures, including the payroll tax, would be regressive since their costs fall disproportionately on those who individuals who can least afford to bear the greater costs. The payroll tax would also be regressive because it taxes only payroll, and thus fails to include every form of income. This point is relevant because New York's transportation system is, to put it concisely, a "real world" public good, one which actually benefits everyone living in the MTA service area even if they do not directly consume the good (use public transportation). Thus, everyone living in the area should contribute in equally to the provision of this good.
Writing for the Washington Independent, economist James Galbraith asserts that the United States has reached the end of its economic rope, so to speak. The future looks bleak since past practices have not worked.
And Tuesday's cut in interest rates to zero won't work either. We are in a full-fledged debt deflation, a credit collapse. It is not just an unwillingness to lend. It is also an unwillingness to borrow, and a collapse of the collateral — of home values and secure incomes — which people need in order to borrow. This is a failure at the very heart of the system, and if left untended it could both continue spiraling downward and go on for many years.
This is not a shock, like oil prices hikes or high interest rates, to a healthy system. It is not just worse than previous recessions. It's qualitatively different. There is no source of growth in sight. Consumption and investment are being hit hard. And with the flight to the dollar, exports, which have been the one bright spot this past year, are set to suffer a sharp blow. We now have to address the economic crisis, recognizing that we have just one shovel left in the shed, and that is public spending.
Some call it "stimulus," but that's a term to resist because it suggests an exercise that adds energy to a viable private economy, which will come back in a short period of time. We must not count on this. The first task is, instead, to fill the sinkholes that are everywhere opening up.
The easiest way to do this is to build on an historical experience and also the surviving institutions from the New Deal and the Great Society.
It surely must gall the market fundamentalists that the only available, feasible and generally acceptable solution to the mess they have made of it includes implementing a state-led system-wide restructuring of the American economy. Hubris here meets nemesis.
According to the Independent (see this), British Prime Minister Gordon Brown and Iraqi Prime Minister Nouri Maliki jointly announced that:
"The role played by the UK combat forces is drawing to a close. These forces will have completed their tasks in the first half of 2009 and will then leave Iraq."
To my mind, the timing of this withdrawal suggests that "the role played by the UK combat forces" was to appease President Bush and his bloodthirsty advisors!
The Fed cuts its benchmark rate to near zero
The Federal Reserve Bank announced today that it will cut its Federal Funds interest rate to 0%-.25%. It will make this cut because:
…labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.
Moreover, "…inflationary pressures have diminished appreciably." And, finally, "…the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time."
The New York Times report asserts that, "Far more important than the rate itself, the Fed bluntly declared that it was ready to move to a new phase of monetary policy in which it prints vast amounts of money for a wide array of lending programs aimed at financial institutions, businesses and consumers."
This new strategy appears to be, as Business Week characterizes it, "Ben Bernanke's 'shock and awe' campaign." I would suggest that "shock and awe" is a disturbing but, perhaps, apt name for Bernanke's program since the Iraqi "shock and awe" campaign was a prelude to a much greater disaster.
The New York Times reports that New York Governor David Patterson intends to increase New York state taxes and fees in order to supplement cuts to the state's budget. By adopting this program Patterson means to address New York's looming budget shortfall (see this for background links). Although Patterson has no choice but to address this fiscal crisis, it remains the case that his revenue-generating moves look to be wholly regressive in nature, a conclusion the Times tacitly affirms when it reports that:
One element that Mr. Paterson left out of his budget was any broad-based tax increase affecting people in higher income brackets, a measure that some in Albany believed would be part of the plan. But ever since taking over as the state's chief executive in March, Mr. Paterson has steadfastly opposed raising income taxes as a way to prop up the state's worsening finances.
Caroline Kennedy will seek New York's open senate seat
Alas, Chelsea Clinton is still too young (b. 1980) to take her mother's place.
Nevertheless, celebrity-watchers need not despair since they do have a Kennedy for the job. The New York Times
reports that Kennedy's "…decision [to seek the seat] came after a series of deeply personal and political conversations, in which Ms. Kennedy, whom friends describe as unflashy but determined, wrestled with whether to give up what has been a lifetime of avoiding the spotlight." "Absent thee from felicity awhile," the Moirae seductively whispered to the reticent Princess!
Bloomberg News reports (see also this) that, in response to Bloomberg's recent FOIA request for information (on which see this) regarding the companies that received government emergency loans, the Federal Reserve still refuses to reveal the names of these firms and the assets they used as collateral.
The Fed's reluctance is both unsurprising and unfortunate. And need I mention here that its habit of introducing murkiness into its dealings with the public at large does little to quell fears that the Bush regime's economic crisis management program is just another instance of financial fraud?
The Columbia Journalism Review sadly notes that "it would be nice if other news organizations would jump on this bandwagon."
Reporting in the Los Angeles Times concurs with the conjecture that obstinate Senate Republicans made class (see this, this, this, this, this, this and this) and sectional warfare (see this and this) when they undermined the Detroit bailout. Their greatly coveted prizes: Defeat the Employee Free Choice Act (H.R.800), defend their 'local' firms and, maximally, break the union movement as a whole.
According to reports (see this, this, this, this and this), the Treasury Depart will provide short-term relief to the auto industry and the White House will also consider using money allocated to the TARP program for this purpose. The New York Times reports that:
On Friday, Ron Gettelfinger, the president of the autoworkers' union, said he was heartened by the response from the White House and Treasury Department, telling reporters at a news conference, "We need action sooner rather than later."
According to a breaking New York Times report, Senate Republicans scuttled the negotiated bailout proposal for the auto industry, thereby producing a resounding beat for President Bush and President-elect Obama. Why did the Republicans extend themselves this time around? Are they biased against the real economy? Do they actually despise common Americans who will suffer their decision for a generation or more? I ask because they want to use the UAW, the crisis in the auto industry and the economic crisis as a whole to build a more exploitative American auto industry or, failing that, to eliminate an example of a successful trade union. Senator Mitch McConnell (R-KY) put the matter in rather blunt terms:
The sticking point that we are left with is the question of whether the UAW is willing to agree to a parity pay structure with other manufacturers in this country by a date certain. And I understand their reluctance to do that.
Yet, the problem is not as simple as enforcing a bit of belt tightening, for, as Aaron Weiner of the Washington Independent reports:
Union leaders, not surprisingly, reject the notion that concessions are needed. "Talk of more givebacks by our union ignores the cuts we made just one year ago, when our union agreed to a 50 percent wage cut, down from $28 an hour to $14 an hour, and no pensions for new hires," said Hammer. "Reducing our quality of life would have a ripple effect on our entire economy, and would just make things worse. The reality is that our labor constitutes just 8 percent of the price of a new car. We could work for free, and it wouldn't solve the crisis."
Who, exactly, would or even could buy American-made vehicles if the United States were to become a low-wage, low-benefit, low-tax economy as the Republicans want it to be? If not Americans, then who? The hardnosed Republicans seem not to care about these questions. If McConnell and his allies did care and if it is a parity wage which entices them, then they may wish to consider taking measures meant to increase the average real wage if they want the United States to become again an internationally competitive economy. A structural crisis of this magnitude will not resolve itself as soon as it possibly could if the government promotes unemployment, wage and benefit cuts, balanced budgets or a return to the status quo ante. James Galbraith put the matter thusly:
This is a chronic illness. Swift action is definitely needed. But we also need recovery policies that will continue for years.
Well, the Senate Republicans seemingly want policies that will last for decades….
A victory here, a victory there….
In a small but still significant victory, the unionized workers of Republic Windows & Doors along with their allies forced Bank of America and other creditors to fund a severance package. According to an AP report:
With cheers and chants that echoed President-elect Barack Obama's campaign of change, jubilant workers agreed to a $1.75 million settlement that ends their six-day occupation of a shuttered Chicago factory that became a symbol of the plight of labor nationwide.
Republic Windows & Doors, union leaders and Bank of America reached the deal Wednesday evening. Each former Republic employee will get eight weeks' salary, all accrued vacation pay and two months' paid health care, said U.S. Rep. Luis Gutierrez, who helped broker the deal. He said it works out to about $7,000 apiece.
Observing the conflict from the left, Lee Sustar notes that:
What began as a resolute act of some 250 workers quickly became a national symbol of working-class resistance in a crisis-bound economy. Hundreds upon hundreds of union members and officials — not only from Chicago, but around the Midwest — came to the Republic factory to express their solidarity and bring donations of food and badly needed funds.
But support for the Republic struggle went beyond the ranks of organized labor. The fightback crystallized mass anger about the $700 billion bailout of Wall Street. Even though Bank of America — Republic's main creditor — is in line receive $25 billion in taxpayer money, the bank refused to finance the 60 days' pay due to workers under the WARN Act if a plant closes without the two-month notice required under the law.
James Pethokoukis of US News and World Report considers the settlement alarming. Where will it end? The plebes using the institutions of a liberal-democratic polity to force capital to observe its agreements — this is very scary!
Relying upon Tobin's Q Ratio metric, Russell Napier claims (see this and this) that the S&P 500 Index will continue its fall until 2014. Napier explains the length of the downturn by pointing to the massive stimulus programs recently implemented by many governments and the inevitability of deflation.
To properly commemorate this great event, Augusto José Ramón Pinochet died on this day in 2006.
In his latest, Mike Whitney warns that the Bush regime's crisis management efforts will fail because, well, debt-driven, speculation-addled economies cannot last forever. The American version will not prove to be an exception to the principle. Indeed, the morning's newspapers relentlessly reaffirm the point each day. Americans in general will regain the capacity to spend to consume from their earnings or the system will flounder under the weight of the debt it generates.
Obama caught turning his back on labor
How so? He is making his betrayal by quietly abandoning his once strong support for the Employee Free Choice Act (see also this), according to Steve Early. The rest of the Democratic Party can be expected to follow the President's lead.
The Act means to facilitate union formation by enabling certified representatives to negotiate the new local's initial collective bargaining agreement.
With respect to Barack Obama and George W. Bush's double standards in matters having to do with the government bailing out private enterprises, Michael Hudson asks this pertinent question:
One may ask why Wall Street's leading offenders — Hank Greenberg of A.I.G., Charles Prince at Citibank — were bailed out as if saving them was saving "the economy" itself, while only the auto executives were told not to pay themselves such exorbitant salaries and bonuses. If the auto industry has a "bad engineering" problem for which it is being held responsible, why aren't the banks, A.I.G. and their enablers — hedge funds on the other side of the deals that the smart boys won and the careless boys let them win — not being held to a similar standard?
The explanation seems to be that the auto executives didn't have a cabinet official like Secretary Paulson working on their behalf to represent their special interests as being in the interest of the economy as a whole. On their own, they were not in a position to bring the economy crashing down around them if they did not get what they wanted. Only Wall Street is in a position to wreck the economy by plunging it into bankruptcy. It is this power that enables it to represent its interests as being that of the economy at large, and hence deserving protection that no other sector receives, certainly not labor.
It is only the latest — and biggest — sign of duress for the newspaper industry yet. Several newspaper companies have struggled to cope with declining revenues and mounting debt woes. Tribune has pared back the newsrooms of many of its papers, including The Chicago Tribune, The Los Angeles Times and The Baltimore Sun, and it sold off Newsday to Cablevision's Dolan family earlier this year.
Some of the laid-off workers at a Republic Windows and Doors factory in Chicago, IL have occupied the now closed facility, according to the Chicago Tribune. The United Electrical Workers (UE) represent those working at the plant. The relevant UE Political Action Update contends that operations at Republic Windows and Doors have been hindered by Bank of America's refusal to lend money to the company, an assertion confirmed by an Agence France-Presse report. Bank of America's refusal is noteworthy because the bank has already received federal bailout money.
The workers have demanded severance and vacation pay from Republic.
Peter Morici's response to the recent BLS monthly unemployment report includes the assertion that the reported numbers were "…much worse than was expected and represents wholesale capitulation." From this he infers that "the threat of a widespread depression is now real and present" [emphasis added]. Morici concludes by advising the President-elect that:
It's either renaissance or decline. Fix the banks, trade with China and energy policy or become America's Nero.
Now forced to confront the economic crisis which propelled his move into the White House, the Chicago Tribune reports that the President-elect:
…pledged to launch the biggest public works program since the construction of the interstate highway system in the 1950s as part of his plan to create millions of new jobs and stem an economic tailspin that is growing worse by the day.
Video of Obama's talk can be found here and below:
Dennis Rahkonen addresses the pervasive denial which pervades America's political culture. He writes that:
Despite joblessness and foreclosures uncontrollably soaring, we still think capitalism has a future. The Big Three auto makers are about to go bust, states and municipalities across the country are broke, and leading retailers are shuttering their doors. Great Depression II looms. Still, we think there can be a "turnaround."
Rahkonen ends with a plea for socialism.
From a surveillance to a garrison state
The Washington Post reports (the link comes via Glen Greenwald) that 20,000 troops will be stationed in the United States by 2011 and will train local law enforcement in the tactics needed to confront terrorist events involving weapons of mass destruction and, of course, to other domestic catastrophes. The Pentagon expects to rely upon the National Guard and the Reserves due to the manpower problems caused by the Bush administration's imperial adventures.
Nonfarm payroll employment fell sharply (-533,000) in November, and the unemployment rate rose from 6.5 to 6.7 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. November's drop in payroll employment followed declines of 403,000 in September and 320,000 in October, as revised. Job losses were large and widespread across the major industry sectors in November.
Paul Krugman anticipated this bit of bad news. As a response he asked whether it "will it, in fact, even be possible to pull the economy out of its nosedive before unemployment goes into double digits? I'm starting to wonder." Unfortunately, he need to wonder about it too long since the real jobless rate already exceeds 10% (see this and this).
Mike Whitney reminds us that "America's free market system is now entirely dependent on state resources," thanks to the economic crisis and the willingness of the market fundamentalists to abandon laissez faire in theory and practice. He goes on to point out that
Our present dilemma can be traced back to the 1980s — the Reagan era — and the rise of an organized, industry-funded movement, which advanced their business-friendly, "trickle down" ideology which, when put into practice, has led to greater and greater income disparity, unprecedented expansion of credit and, ultimately, economic disaster.
Nouriel Roubini seemingly cannot find a limit to his pessimism. His most recent summary judgment: "The US and the global economy are at risk of a severe stag-deflation, a deadly combination of economic stagnation/recession and deflation." He then warns that
The worst is not behind us: 2009 will be a painful year of a global recession, deflation and bankruptcies. Only very aggressive and co-ordinated policy actions will ensure the global economy recovers in 2010 rather than facing protracted stagnation and deflation.
Bloomberg reports that Americans are collecting unemployment benefits at number greater than any seen since 1982.
Harvard's endowment, the largest education endowment, reports suffering a massive loss (22%), according to the Wall Street Journal.
UAW President Ron Gettelfinger announced today that the union will make concessions to the Ford, Chrysler and General Motors corporations. The goal, of course, is to save as many of the Big Three as possible.
The always insightful Steve Fraser questions the use of the New Deal as a model for the Obama administration. Why question this comparison? First of all, after claiming that Obama's election truly does express the promise of a new era, Fraser then points to Obama's Clinton "fetish" as evidence indicating one impediment baring a return to New Deal activism, a commitment to responsible government and a concern for the plight of the common man and woman. His Cabinet choices reveal this obstacle because the Clinton administration shared a market fundamentalist bias with its GOP predecessors and successor. According to Fraser, "recycled Clintonism is recycled neo-liberalism." Therefore, a return to Bill Clinton's policies will not put an end to the "beggar thy neighbor" class politics that has defined America during the era of conservative dominance. Rather, a reimplementation of Clintonomics would entail more of the same fantastic thinking since Clintonomics can and ought to be considered a member of the neoliberal family, which also includes the economic programs of the Reagan and Bush presidencies. Adventurous Obama is not, as Fraser rightly asserts.
Second, despite having endured decades of market fundamentalist indoctrination and practice, Americans cannot claim to be innocent of governmental intervention in the economy as they were before FDR took office. The New Deal existed and endured. It left a legacy. So also the Great Depression. One aspect of that heritage is the responsibility Americans now place on their government for ensuring a viable and growing market economy. Any administration, no matter what ideological commitments it has made in the past, will attempt to manipulate the economy when it confronts an economic crisis. As Fraser states, "inaction has ceased to be a viable option for Washington." A government will act because the electorate if not also factions of the elite will hold it accountable for the mere presence of the crisis. Resolving the crisis is thus a political encumbrance a government must sometimes confront, one that is an intrinsic feature of a modern economy, especially an economy systematically linked to a democratic polity. A prudent government surely would make a good faith effort to resolve the crisis.
Third and accordingly, the Bush administration certainly has sought to manage the current economic crisis. Unfortunately but unsurprisingly, the Bush-Paulson crisis management program (.pdf) that eventually made it through Congress now appears to be but another instance of the GOP using the American state as a wealth extraction mechanism. By intent and, perhaps, by habit, the use of this mechanism in the resolution of this crisis only serves to benefit a fraction of America's finance capital. Nearly every other American, including those yet to be born, must contribute in to securing the health and welfare of this 'lucky' sector of the economy. Even modern propaganda techniques feeding a practically unlimited number of media outlets failed to obscure the kleptocratic features of the Bush-Paulson program, a failure which completely destroyed the inept McCain campaign. Moreover, it is not wholly obvious what the Bush administration could have done to resolve the crisis given its ideological commitments and often-demonstrated incompetence. Engorging itself and feeding its close friends while the common person pays the check is about all the GOP does well.
It is within this context, one defined by danger and greed, that Fraser asks: "How do we get beyond the bailout state?"
In Fraser's estimation, we are living through the moment when America can and ought to break with its market fundamentalist past. "A new era beckons," he writes. To enter this new era Americans should reject neoliberal thinking and practice, replacing these threadbare ideologies with a political economy consistent with democratic institutions and human well-being. Solidarity and a commitment to the commons, not rent-seeking selfishness, should inform the policy of this new era.
Yet, Fraser does not end his essay on a purely hopeful note. Who among the emerging Obama administration would advocate taking this path? He asks the question because it now looks obvious that no one among the Clintonistas would ever speak on behalf of this novel future.
Jeremy Scahill compiled a list of right-wingers who applauded Barack Obama's Cabinet nominees.
After considering the significance of the recent Mumbai terrorist attack, Deepak Tripathi wrote:
The president-elect of the United States, Barack Obama, had made the economy his number one priority upon taking office on January 20, 2009. With the recent events in India, he faces another big challenge. Claims of improvement in Iraq are no longer enough to reduce America's engagement in the Middle East, to concentrate on the Afghan theater and rebuilding the US economy.
The truth is that the web of crises spans from Palestine through Iraq, Afghanistan and Pakistan to India and further east. The combination of extreme remedies applied as part of the 'war on terror' and neglect of the real issue in the Middle East — the Palestinian crisis — by the outgoing Bush administration have added fuel to the fire. The mistakes have alienated many decent ordinary people. The same old condemnations of 'uncivilized terrorists' and perfunctory support for their victims seem increasingly meaningless.
Indeed, the problem is political in nature, not military, as Tripathi recognizes:
A strong sense of alienation, humiliation and injustice pervades the Middle East and South Asia. When the situation is so volatile, local crises feed each other until they become a catastrophe….
The time has come to exercise a restraining influence on the Israelis. The president-elect says he is willing to negotiate with Iran — a country which has a nuclear program. In Afghanistan and Pakistan, the United States already conducts discreet negotiations with the Taliban. Israel does the same with Syria. In the light of these overtures, the refusal to hold talks with Hamas does not make sense.
The financial crisis is only one of multiple crises that will affect every country, rich and poor alike.
There's also the global poverty crisis. Tens of millions of people across the developing world are expected to fall into extreme poverty and joblessness as a result of an economic mess originating in the United States. This is bad news for workers everywhere, as it means even more brutal competition in the globalized labor pool.
And then there's the climate crisis. If we don't do something about that one, we could find out what a real meltdown feels like.
Yet the richest nations in the world appear fixated almost entirely on the financial crisis, and specifically, on propping up their own financial firms.
A new report by our organization, the Institute for Policy Studies, finds that the approximately $4.1 trillion that the United States and European governments have committed to rescue financial firms is 40 times the money they're spending to fight climate and poverty crises in the developing world.
And as officials head to two upcoming global summits, there's strong reason for concern that rich country governments may backtrack even further on their aid and climate finance commitments.
Obama intends to take the 'soft' road
While the Bush era approaches its conclusion, Barack Obama named his security 'team' today as promised (see this, this, this). After reviewing the dangers facing humanity and neglecting to mention that many of these dangers originate in the United States, Obama makes it clear that militarism and empire will remain key parts of his agenda:
And so, in this uncertain world, the time has come for a new beginning — a new dawn of American leadership to overcome the challenges of the 21st century, and to seize the opportunities embedded in those challenges. We will strengthen our capacity to defeat our enemies and support our friends. We will renew old alliances and forge new and enduring partnerships. We will show the world once more that America is relentless in defense of our people, steady in advancing our interests, and committed to the ideals that shine as a beacon to the world: democracy and justice; opportunity and unyielding hope — because American values are America's greatest export to the world.
Apart from the names on the doors, what, generally speaking, will change when Obama becomes the President?
To succeed, we must pursue a new strategy that skillfully uses, balances, and integrates all elements of American power: our military and diplomacy; our intelligence and law enforcement; our economy and the power of our moral example. The team that we have assembled here today is uniquely suited to do just that.
So, Obama intends to secure American hegemony and military supremacy mostly by relying on soft power (see this, this and this), which, to be sure, is much different and even better than the Bush strategy of threatening, killing, maiming, terrorizing, torturing, starving, dehydrating, freezing, baking, imprisoning and humiliating the "enemy."
Yet, the use of soft power remains a tool of empire and the military force which supports that empire.
Obama's expresses his moral scruples by selecting the following individuals to implement his imperial "vision."
Secretary of State
Secretary of Defense
National Security Advisor
Secretary of Homeland Security
Ambassador to the United Nations