In the Belly of the Beast: 3/30/11: The Truth About the Economy: We’re Heading Back Toward a Double Dip

INDEX

The WikiLeaks News & Views Blog for Wednesday, Day 123

from The Nation Blogs: Media Fix by Greg Mitchell

Judge to Wisconsin GOP: Don’t you dare

THE ECONOMY

ENVIRONEMENT

NUCLEAR POWER

The WikiLeaks News & Views Blog for Wednesday, Day 123

from The Nation Blogs: Media Fix by Greg Mitchell

Judge to Wisconsin GOP: Don’t you dare

The judge is ticked that GOP Governor Walker and his state legislative cronies outright ignored a court order against implementing the state’s new union-busting law. So she’s now making things crystal clear:

“Apparently that language was either misunderstood or ignored, but what I said was the further implementation of (the law) was enjoined,” Sumi said during a hearing. “That is what I now want to make crystal clear.”

This is one of the big differences between Democrats and Republicans. Democrats work within the system to change laws they deem unjust. Republicans simply ignore the law. Bush didn’t like FISA, so he simply refused to go before the judges at all. Whereas when Obama didn’t like DOMA, the President sent his lawyers to the court to tell the judge they’d still be showing up in court, but they’d be arguing that the law is unconstitutional (and Obama notified Congress so the Republicans could take up the suit themselves, and they are). The Republicans would simply not show up at all.

Vatican warns the Internet is leading the young to Satan, then finds way to wiggle out of pedophilia scandal (again)

A Vatican affiliated university is holding a conference on Satan and exorcism because apparently the Internet has been a big boon for the lord of darkness.

“The internet makes it much easier than in the past to find information about Satanism,” said Carlo Climati, a member of the university who specialises in the dangers posed to young people by Satanism.

“In just a few minutes you can contact Satanist groups and research occultism. The conference is not about how to become an exorcist. It’s to share information about exorcism, Satanism and sects. It’s to give help to families and priests. There is a particular risk for young people who are in difficulties or who are emotionally fragile,” said Mr Climati.

And it wouldn’t be the Vatican if they didn’t roll out yet another excuse for their aiding and abetting of pedophilia.

The Vatican’s chief exorcist claimed last year that the Devil lurked in the Vatican, the very heart of the Catholic Church.

Father Gabriele Amorth said people who are possessed by Satan vomit shards of glass and pieces of iron, scream, dribble and slobber, utter blasphemies and have to be physically restrained.

He claimed that the sex abuse scandals which have engulfed the Church in the US, Ireland, Germany and other countries, were proof that the anti-Christ was waging a war against the Holy See.

Yes, the devil made you do it. Considering the Pope was a party to all of this, that would mean he’s been influenced by the devil too. And tell us again why then its okay for him to continue leading the church?

THE ECONOMY

The Truth About the Economy: We’re Heading Back Toward a Double Dip

Why aren’t Americans being told the truth about the economy? We’re heading in the direction of a double dip – but you’d never know it if you listened to the upbeat messages coming out of Wall Street and Washington.

Consumers are 70 percent of the American economy, and consumer confidence is plummeting. It’s weaker today on average than at the lowest point of the Great Recession.

The Reuters/University of Michigan survey shows a 10 point decline in March – the tenth largest drop on record. Part of that drop is attributable to rising fuel and food prices. A separate Conference Board’s index of consumer confidence, just released, shows consumer confidence at a five-month low — and a large part is due to expectations of fewer jobs and lower wages in the months ahead.

Pessimistic consumers buy less. And fewer sales spells economic trouble ahead.

What about the 192,000 jobs added in February? (We’ll know more Friday about how many jobs were added in March.) It’s peanuts compared to what’s needed. Remember, 125,000 new jobs are necessary just to keep up with a growing number of Americans eligible for employment. And the nation has lost so many jobs over the last three years that even at a rate of 200,000 a month we wouldn’t get back to 6 percent unemployment until 2016.

But isn’t the economy growing again – by an estimated 2.5 to 2.9 percent this year? Yes, but that’s even less than peanuts. The deeper the economic hole, the faster the growth needed to get back on track. By this point in the so-called recovery we’d expect growth of 4 to 6 percent.

Consider that back in 1934, when it was emerging from the deepest hole of the Great Depression, the economy grew 7.7 percent. The next year it grew over 8 percent. In 1936 it grew a whopping 14.1 percent.

Add two other ominous signs: Real hourly wages continue to fall, and housing prices continue to drop. Hourly wages are falling because with unemployment so high, most people have no bargaining power and will take whatever they can get. Housing is dropping because of the ever-larger number of homes people have walked away from because they can’t pay their mortgages. But because homes the biggest asset most Americans own, as home prices drop most Americans feel even poorer.

There’s no possibility government will make up for the coming shortfall in consumer spending. To the contrary, government is worsening the situation. State and local governments are slashing their budgets by roughly $110 billion this year. The federal stimulus is ending, and the federal government will end up cutting some $30 billion from this year’s budget.

In other words: Watch out. We may avoid a double dip but the economy is slowing ominously, and the booster rockets are disappearing.

So why aren’t we getting the truth about the economy? For one thing, Wall Street is buoyant – and most financial news you hear comes from the Street. Wall Street profits soared to $426.5 billion last quarter, according to the Commerce Department. (That gain more than offset a drop in the profits of non-financial domestic companies.) Anyone who believes the Dodd-Frank financial reform bill put a stop to the Street’s creativity hasn’t been watching.

To the extent non-financial companies are doing well, they’re making most of their money abroad. Since 1992, for example, G.E.’s offshore profits have risen $92 billion, from $15 billion (which is one reason it pays no U.S. taxes). In fact, the only group that’s optimistic about the future are CEOs of big American companies. The Business Roundtable’s economic outlook index, which surveys 142 CEOs, is now at its highest point since it began in 2002.

Washington, meanwhile, doesn’t want to sound the economic alarm. The White House and most Democrats want Americans to believe the economy is on an upswing.

Republicans, for their part, worry that if they tell it like it is Americans will want government to do more rather than less. They’d rather not talk about jobs and wages, and put the focus instead on deficit reduction (or spread the lie that by reducing the deficit we’ll get more jobs and higher wages).

I’m sorry to have to deliver the bad news, but it’s better you know.

John Miller at US Uncut Protest; Jonathan Rowe

from Dollars & Sense Blog by Chris Sturr

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1. U.S. Uncut Teach-In John Miller, D&S collective member and columnist, participated in a recent US Uncutteach-in. (Here is the article from The Nation that got people excited about starting a U.S. version of UK Uncut.)

2. Jonathan Rowe, RIP. We just found out (via D&S collective member Bryan Snyder) that Jonathan Rowe, the writer and former editor of the Washington Monthly who wrote one of my favorite D&S articles, The Growth Consensus Unravels, died unexpectedly on Sunday, March 20th. (He also wrote Bad Company for D&S.) Rowe’s website has an archive of his writings, plus links to obituaries and remembrances, including this particularly nice one by David Bollier.

We include Rowe’s critique of the growth consensus in our textbooks every year, but we also mentioned it in the editorial note to our May/June 2008 issue, in connection with a cover story we were running on consumerism. Rereading that note reminded me how broadly applicable Rowe’s insights continue to be.  Here it is:

As skyrocketing prices for food and other commodities dominate the headlines, why is Dollars & Sense running a cover article criticizing consumerism? After all, basic necessities like food and fuel are stretching people’s household budgets in the United States, and are entirely out of reach for more and more people worldwide. How can overconsumption be a pressing economic problem worthy of our attention?

A recent email from a reader offers one explanation. Jackie Ovadia, a clinical nutritionist and weight management educator from Southern California, wrote to praise a D&S article from 1999, “The Growth Consensus Unravels,” by Jonathan Rowe: “Great article and a lot of insights on what is going on in our economy … I am including this article in my reading list for the students attending my ‘weight loss made simple’ class.”

Political economy for dieters? Seems odd, until you consider this passage from Rowe’s article:

A wide array of physical and social stresses arise from the activities that get lumped into the euphemistic term “growth.” … The economy in such cases doesn’t solve problems so much as create new problems that require more expenditure to solve. Food is supposed to sustain people, for example. But today the dis-economies of eating sustain the GDP instead. The food industry spends some $21 billion a year on advertising to entice people to eat food they don’t need. Not coincidentally there’s now a $32 billion diet and weight loss industry to help people take off the pounds that inevitably result. When that doesn’t work, which is often, there is always the vacuum pump or knife. There were some 110,000 liposuctions in the United States last year; at five pounds each that’s some 275 tons of flab up the tube. … It is a grueling cycle of indulgence and repentance, binge and purge. Yet each stage of this miserable experience, viewed through the pollyanic lens of economics, becomes growth and therefore good.

In the same vein, Thad Williamson’s think piece in this issue is not about berating consumers for our gluttony. Rather, it’s about evaluating—and superceding—an economic model that relies on ever-increasing consumption, including consumption that has very little to do with meeting genuine human needs.


Jon Stewart on the zero taxes paid by General Electric (while it’s cutting U.S jobs)

This is an especially good segment from Monday night’s Daily Show (You’ll see that the President thinks that “GE has something to teach businesses all across America”):

Krugman: The only way govt. belt-tightening won’t hurt growth is if consumers take on more debt

That’s a rather stunning statement, isn’t it? We’re in an environment in which government cutback (“austerity” is the moral-sounding term for it) is being urged in the US, the UK and all across Europe. But if government slows spending, where will replacement spending come from?

The answer is in the headline: In the current jobless environment, the only way government belt-tightening can work is if households increase their debt.

And before you think this is some left-wing economist talking, the idea comes from the conservative UK government itself, from one of their reports arguing for government cutbacks. Amazing.

Paul Krugman brings us news of this deeply dishonest argument (my emphasis):

[I]n Britain, via Yves Smith, people have been digging into the details of the government forecast, and finding that it relies on the assumption that household debt will rise to new heightsrelative to income[.] …

Why? Because the only way the economy can avoid taking a hit from government cuts is if private spending rises to fill the gap — and although you rarely hear the austerians admitting this, the only way that can happen is if people take on more debt. …

All in all, it’s quite a spectacle. It would be funny, except that millions of people will suffer the cost of this folly.

The blog post contains a government-generated chart that documents that assumption; it shows “Projected ratio of household debt to income” rising, from 160% to 175% as the engine of this supposed new growth that austerity will somehow cause.

As I said, a deeply dishonest argument, yet you can hear it being made as we speak, for example, here. Krugman on the hypocrisy:

So we have the spectacle of a government that inveighs against the evils of debt pinning all its hopes on an assumption that over-indebted households will dig their hole even deeper.

It seems pretty clear that the headline statement, if true, is actually an argument that government cutbacks willcontract the economy, not expand it. After all, which of us will increase our own debt if government cuts back its social services, its safety net? Very few, I think. A double-dip recession could be just as likely as economic expansion.

Not that any of this will stop the new “austerians” (as Krugman calls them), from pressing forward anyway — including, it seems, our Reagan-admiring current president. (For more about what austerity is doing to the UK,see this by Chris in Paris. Not pretty.)

CEO of JPMorgan Chase thinks regulatory reform will ‘damage America’

Remind me again which industry lost trillions and threw the global economy into a recession? Just because spoiled brat bankers like Dimon recovered nicely doesn’t mean that’s the case for everyone else. It’s amazing to think this guy was one of Obama’s leading candidates to run the Treasury department. Who is really damaging America here?

Jamie Dimon, chief executive of Wall Street giant JPMorgan Chase, lashed out on Wednesday at efforts by U.S. regulators to police the $600 trillion swaps market, in which his bank is a big player.

“Corporate America is in very good shape. It’s well-financed, it’s well-funded,” he said. “The consumer is spending … housing is better than it was.”

Dodd-Frank, he added, poses a “huge cost” for banks and has made regulatory compliance “even more complicated.”

NOTE FROM JOHN: Yes, and corporate America got bailed out. The rest of us, not so much. And just who’s doing better? Unemployment is still at horrendous levels. Income is still significantly down for a lot of us, myself included. As for consumer spending, I don’t know anyone who’s opening up their wallet any more this year than they did last. And finally, housing. Housing? Is back? Is he high?

Paul Krugman - New York Times Blog

March 30, 2011, 11:04 AM

 

The Exceptional Mr. Greenspan

Alan Greenspan continues his efforts to cement his reputation as the worst ex-Fed chairman in history; in today’s FT, he comes out for a repeal of financial regulations designed to prevent a repeat of the crisis for which he, more than any other individual, bears personal responsibility.

To be honest, I didn’t know quite how to respond; I was, very nearly, left speechless by the lack of self-awareness on display. But Henry Farrell shows us the way, pointing out that Greenspan’s piece contains this remarkable passage:

Today’s competitive markets, whether we seek to recognise it or not, are driven by an international version of Adam Smith’s “invisible hand” that is unredeemably opaque. With notably rare exceptions (2008, for example), the global “invisible hand” has created relatively stable exchange rates, interest rates, prices, and wage rates.

Henry then asks readers to chime in with other uses of the “with notably rate exceptions” phrase. Among the entries:

With notably rare exceptions, Newt Gingrich is a loyal and faithful husband.

With notably rare exceptions, Japanese nuclear reactors have been secure from earthquakes.

Though unredeemably(sic) opaque, Mr. Madoff’s operations delivered excellent returns, with notably rare exceptions.

With notably rare exceptions, the levees protecting New Orleans have held fast in the face of major hurricanes.

With notably rare exceptions, locking all exits to the workplace is a harmless way to improve your employees’ productivity.

With notably rare exceptions, petroleum extraction has minimal environmental impact.

ENVIRONEMENT




NUCLEAR POWER

“Prescription for Survival”: A Debate on the Future of Nuclear Energy Between Anti-Coal Advocate George Monbiot and Anti-Nuclear Activist Dr. Helen Caldicott

Play_nukesdebateThe crisis in Japan has refueled the rigorous global debate about the viability of nuclear power. Japan remains in a “state of maximum alert” as the experts scramble to contain radiation that is leaking from the Fukushima Daiichi nuclear power station. Nuclear energy remains a controversial topic in climate change discourse, as environmental activists argue how to best reduce the amount of greenhouse gases being emitted into the atmosphere—often the debate pits one non-renewable energy against another as renewable energy technology and research remains underfunded. Democracy Now! hosts a debate today about the future of nuclear energy between British journalist George Monbiot and Dr. Helen Caldicott. Monbiot has written extensively about the environmental and health dangers caused by burning coal for energy, and despite the Fukushima catastrophe, stands behind nuclear power. Caldicott is a world-renowned anti-nuclear advocate who has spent decades warning of the medical hazards posed by nuclear technologies, and while agreeing about the dangers of burning coal, insists the best option is to ban nuclear power. [includes rush transcript]

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This entry was posted in Background & Analysis, Corporations, Corruption, Events, Japan, Nuclear Power, Political Economy, UltraRight, US Economy, US Electoral Politics. Bookmark the permalink.

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