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Health Care & Environment

11.18 How Extreme Weather Is Shrinking the Planet

11.18 Air pollution levels ‘forcing families to move out of cities’ [like from desertification, lack of drinkable water and rising oceans, there will also be pollution-caused immigration until humans fix things]

11.17 Policies of China, Russia and Canada threaten 5C climate change, study finds [Climate catastrophe is increasingly likely without worldwide organization, funding and commitment to winning THE WAR AGAINST GLOBAL WARMING.]

11.16 Scotland was first Industrialized Country to Run wholly on Wind in October

11.16 How pesticide bans can prevent tens of thousands of suicides a year [how many thousands more die early from eating pesticide-laced food?]

11.15 The Earth is in a death spiral. It will take radical action to save us [fossil fuel burning, un-recyclable plastic production/use and methane gas release must cease ASAP.]

11.15  The long read:  The plastic backlash: what's behind our sudden rage – and will it make a difference? [the world wants to throw-up...]

11.15 Claws out: crab fishermen sue 30 oil firms over climate change [workers are waking-up...]

11.15 Trump administration to cut air pollution from heavy-duty trucks

11.14 Backed by Ocasio-Cortez, Youth Climate Activists Arrested in Pelosi's Office Demanding Democrats Embrace 'Green New Deal'

11.13 What would a smog-free city look like?

11.13 Global report highlights Australia’s renewables potential amid mixed signals for coal

11.13 Interior department whistleblower: Ryan Zinke hollowed out the agency

11.12  This Land is Your Land:  The Zinke effect: how the US interior department became a tool of industry [behaving ignorantly again...]

11.12 Planned Parenthood's new president warns of 'state of emergency' for women's health

News Media Matters

11.19 The Biggest Threat to Free Speech No One Is Talking About

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

11.19 Last Week Tonight with John Oliver 11/18/2018 (HBO) [29:26 video]

11.19 Michael Bloomberg: Why I’m Giving $1.8 Billion for College Financial Aid

11.19 Trump’s Diminishing Power and Rising Rage

11.19 Trump Says He Was 'Fully Briefed' and Also 'Not Briefed Yet' But Either Way Saudi Crown Prince 'Absolutely' Not Involved Because Trump Knows 'Everything That Went On' Without Listening to Tape of Khashoggi Murder

11.19 'We Need New Leaders, Period': Progressive Newcomers Urge Democrats to Embrace Bold Agenda or Face Primary Challenges [Current Democrat leaders are highly compromised by corporate donations]

11.19 SNL explains Jeff Bezos and Amazon’s HQ2 strategy: trolling President Trump [2:55 SNL video]

11.18 Trump says Pelosi deserves speakership, offers Republican votes [An affirmation of Pelosi's unsuitability]

11.18 Khanna to Pelosi: Don't Just Create Green New Deal Select Committee, Make Ocasio-Cortez Its Chair [Will Pelosi earnestly change, or end her career in disgrace?]

11.18 Chuck Schumer, Feckless Hack [Neoliberal Democrats must go!]

11.18 What the State of the VA Tells Us About Trump’s War on Welfare [Privatizing often results in outright fraud and higher costs by private prisons, privatized health insurance and health care, privatized public schools and online "colleges" like Trump University]

11.17 What the State of the VA Tells Us About Trump’s War on Welfare

11.17 As Energy for Medicare for All Explodes, Steny Hoyer's Plan Includes Waiting for Trump to Help Make Obamacare Better [Another who is unfit to be Democrat leader]

11.17 'A Staggeringly Bad Idea': Outrage as Pelosi Pushes Tax Rule That Would 'Kneecap the Progressive Agenda' [Unfit to be Democrat leader]

11.17 Trump Is Starting to Panic

Justice Matters
High Crimes?

11.14 The Guardian view on Yemen’s misery: the west is complicit [WAR CRIMES]

Economics, Crony Capitalism

11.19 Bankrupt Sears wants to give executives $19 million in bonuses [blatantly immoral and sick to richly reward those who led the company into the bankruptcy]

11.18 Big Pharma Bankrolled Pro-Trump Group As Trump Pushed Pharma Tax Cut [Corruption Central!]

11.16 Amazon’s HQ2 Will Get a Tax Break Designed to Help the Poor [a Republican program that directly helps participating wealthy companies—but only helps workers if and when 'trickle-down' occurs.]

11.16 Trump doesn’t want to punish Saudi Arabia over Khashoggi. His new sanctions prove it. [George W. Bush made a similar immoral decision for the same oily reasons after 9-11, protecting Saudi defense contracts while facilitating the slaughter of poorer Arab "terrorists" in the region.]

International & Futurism

11.18 New Evidence Emerges of Steve Bannon and Cambridge Analytica’s Role in Brexit

11.18 France demands UK climate pledge in return for Brexit trade deal [Excellent!]

11.17 Saudi crown prince's 'fit' delays UN resolution on war in Yemen

11.17 Thousands gather to block London bridges in climate rebellion [We're losing WWIII because the enemy is invisible while we're like frogs slowly cooking. We aren't informed enough to be alarmed, but must get organized and motivated to fight back. We need a War Plan to ruthlessly pursue the fight of our lives!]

11.17 CIA finds Saudi crown prince ordered Jamal Khashoggi killing – report

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  The Crisis is Not Over

THE AMERICAN IDIOCRACY:

The Crisis is Not Over

The Second Wave

by Paul Craig Roberts
Originally published on 3 February 2010

The threats to the U.S. economy are extreme. Yet, neither the Obama administration, the Republican opposition, economists, Wall Street, nor the media show any awareness. Instead, the public is provided with spin about recovery and with higher spending on pointless wars that are hastening America’s economic and financial ruin.

Is the financial crisis over? Is the recovery for real and, if not, what are Americans’ prospects? The short answer is that the financial crisis is not over, the recovery is not real, and the U.S. faces a far worse crisis than the financial one. Here is the situation as I understand it:

The global crisis is understood as a banking crisis brought on by mindless deregulation of the U.S. financial arena. Investment banks leveraged assets to highly irresponsible levels, issued questionable financial instruments with fraudulent investment grade ratings, and issued the instruments through direct sales to customers rather than through markets.

The crisis was initiated when the U.S. allowed Lehman Brothers to fail, thus threatening money market funds everywhere. The crisis was used by the investment banks, which controlled U.S. economic policy, to secure massive subsidies to their profits from a taxpayer bailout and from the Federal Reserve. How much of the crisis was real and how much was hype is not known at this time.

As most of the derivative instruments had never been priced in the market, and as their exact composition between good and bad loans was unknown (the instruments are based on packages of securitized loans), the mark-to-market rule drove the values very low, thus threatening the solvency of many financial institutions. Also, the rule prohibiting continuous shorting had been removed, making it possible for hedge funds and speculators to destroy the market capitalization of targeted firms by driving down their share prices.

It looks like a manipulated crisis as well as a real one due to greed unleashed by financial deregulation.

The obvious solution was to suspend the mark-to-market rule until some better idea of the values of the derivative instruments could be established and to prevent the abuse of shorting that was destroying market capitalization. Instead, the Goldman Sachs people in charge of the U.S. Treasury and, perhaps, the Federal Reserve as well, used the crisis to secure subsidies for the banks from U.S. taxpayers and from the Federal Reserve. It looks like a manipulated crisis as well as a real one due to greed unleashed by financial deregulation.

The crisis will not be over until financial regulation is restored, but Wall Street has been able to block re-regulation.

The crisis will not be over until financial regulation is restored, but Wall Street has been able to block re-regulation. Moreover, the response to the crisis has planted seeds for new crises. Government budget deficits have exploded. In the U.S. the fiscal year 2009 federal budget deficit was $1.4 trillion, three times higher than the 2008 deficit. President Obama’s budget deficits for 2010 and 2011, according to the latest report, will total $2.9 trillion, and this estimate is based on the assumption that the Great Recession is over. Where is the U.S. Treasury to borrow $4.3 trillion in three years?

This sum greatly exceeds the combined trade surpluses of America’s trading partners, the recycling of which has financed past U.S. budget deficits, and perhaps exceeds total world savings.

It is unclear how the 2009 budget deficit was financed. A likely source was the bank reserves created for financial institutions by the Federal Reserve when it purchased their toxic financial instruments. These reserves were then used to purchase the new Treasury debt. In other words, the budget deficit was financed by deterioration in the balance sheet of the Federal Reserve. How long can such an exchange of assets continue before the Federal Reserve has to finance the government’s deficit by creating new money?

Similar deficits and financing problems have affected the EU, particularly its financially weaker members. To conclude: the initial crisis has planted seeds for two new crises: rising government debt and inflation.

A third crisis is also in place. This crisis will occur when confidence is lost in the U.S. dollar as world reserve currency. This crisis will disrupt the international payments mechanism. It will be especially difficult for the U.S. as the country will lose the ability to pay for its imports with its own currency. U.S. living standards will decline as the ability to import declines.

The real American crisis is the offshoring of U.S. manufacturing, industrial, and professional service jobs such as software engineering and information technology.

The financial crisis is essentially a U.S. crisis, spread abroad by the sale of toxic financial instruments. The rest of the world got into trouble by trusting Wall Street. The real American crisis is much worse than the financial crisis. The real American crisis is the offshoring of U.S. manufacturing, industrial, and professional service jobs such as software engineering and information technology.

Jobs offshoring was initiated by Wall Street pressures on corporations for higher earnings and by performance-related bonuses becoming the main form of managerial compensation. Corporate executives increased profits and obtained bonuses by substituting cheaper foreign labor for U.S. labor in the production of goods and services marketed in the U.S.

Jobs offshoring is destroying the ladders of upward mobility that made the U.S. an opportunity society and eroding the value of a university education. For the first decade of the 21st century, the U.S. economy has been able to create net new jobs only in domestic nontradable services, such as waitresses, bartenders, sales, health and social assistance and, prior to the real estate collapse, construction. These jobs are lower paid than the jobs were that have been offshored, and these jobs do not produce goods and services for export.

Jobs offshoring has increased the U.S. trade deficit, putting more pressure on the dollar’s role as reserve currency. When offshored goods and services return to the U.S., they add to imports, thus worsening the trade imbalance.

The policy of jobs offshoring is insane. It is shifting U.S. GDP growth to the offshored locations, such as China, thus halting growth in U.S. consumer incomes.

The policy of jobs offshoring is insane. It is shifting U.S. GDP growth to the offshored locations, such as China, thus halting growth in U.S. consumer incomes. For the past decade, U.S. households substituted an increase in indebtedness for the lack of growth in income in order to continue increasing their consumption. With their home equity refinanced and spent, real estate values down, and credit card debt at unsustainable levels, it is no longer possible for the U.S. economy to base its growth on a rise in consumer debt. This fact is a brake on U.S. economic recovery.

Stimulus packages cannot substitute for the growth in real income. As so many high value-added, high productivity U.S. jobs have been offshored, there is no way to achieve real growth in U.S. personal incomes. Stimulus spending simply adds to government debt and pressure on the dollar, and sows seeds for high inflation.

The U.S. dollar survives as reserve currency because there is no apparent substitute. The euro has its own problems. Moreover, the euro is the currency of a non-existent political entity. National sovereignty continues despite the existence of a common currency on the continent (but not in Great Britain). If the dollar is abandoned, then the result is likely to be bilateral settlements in countries’ own currencies, as Brazil and China now are doing. Alternatively, John Maynard Keynes’ bancor scheme could be implemented, as it does not require a reserve currency country. Keynes’ plan is designed to maintain a country’s trade balance. Only a reserve currency country can get its trade and budget deficits so out of balance as the U.S. has done. The prospect of U.S. default and/or inflation and decline in the dollar’s exchange value is a threat to the reserve system.

The threats to the U.S. economy are extreme. Yet, neither the Obama administration, the Republican opposition, economists, Wall Street, nor the media show any awareness. Instead, the public is provided with spin about recovery and with higher spending on pointless wars that are hastening America’s economic and financial ruin.


Paul Craig RobertsPaul Craig Roberts is an economist who served as an Assistant Secretary of the Treasury in the Reagan Administration earning fame as the "Father of Reaganomics". He is a former editor and columnist for the Wall Street Journal, Business Week, and Scripps Howard News Service. He is the author of Supply-Side Revolution: An Insider's Account of Policymaking in Washington; Alienation and the Soviet Economy: The Collapse of the Socialist Era and Meltdown: Inside the Soviet Economy, and is the co-author with Lawrence M. Stratton of The Tyranny of Good Intentions: How Prosecutors and Law Enforcement Are Trampling the Constitution in the Name of Justice.

And recently Roberts has written another book, How the Economy was Lost, just published by CounterPunch / AK Press.

This article is published in the Baltimore Chronicle with permission of the author.



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This story was published on February 4, 2010.

 

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