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By RAR

There is a war being waged among economists over whether or not it is wise to stimulate - some would say, "prop up" - the U.S. economy using borrowed money.

Rather than let the marketplace find its own level, as current front-runner for the GOP nomination Mitt Romney is suggesting should have been done, the Bush and Obama administrations have green-lighted the Federal Treasury to create money in the form of Treasury Bonds, which the U.S. government has sold broadly, and some of which it has purchased from itself using funds borrowed from China and Japan. Funds have been doled out to financial institutions at zero percent interest, and most famously to auto makers (General Motors), to create stability within key companies. This is what Republicans refer to as "picking winners", while Democrats argue that it has saved the U.S. from another 1930s-style Depression, and therefore is one of President Obama's crowning 1st-term achievements.

The administration's policy has been to keep money available at low interest rates as a hedge against a double-dip recession taking place as the result of economic deflation. Fed Chairman Ben Bernanke and Obama Economic Advisor Tim Geithner have championed this approach, which economists such as Paul Krugman has suggested has been too small. Krugman suggests that the Fed pump $8-10 trillion dollars more into the economy just to achieve "quantitative easing". Otherwise put, to keep the whole economy from collapsing more quickly.

Others aren't so sure that is wise. In fact, they doubt the stimulus and the bailouts were ever a good idea in the first place.

We should all know pretty soon about whether or not they were right. 

READ MORE...

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Political Unrest in Russia

120,000 people demonstrated in Moscow against Prime Minister Vladimir Putin on the eve of Presidential elections they say are rigged to keep Putin in power for six more years.

What can the U.S. learn from watching the former Communist state struggle with how far to take free market reforms? READ MORE

020512

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USE THIS LINK OR CLICK ON THE GRAPHIC ABOVE TO READ MORE

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Miscalculations of the Right

Republican Candidates Go Retro with Arguments Shifting Economic Blame to the Shiftless Poor

By RAR

Newt Gingrich, whose primary asset is a willingness to use for self-promotion purposes any hyperbole that may pop into his ungoverned mind, was tossing the red meat to the high-spirited crowd attending Fox News Channel's South Carolina Republican debate Monday night (1/16/12). South Carolina is, after all, his last chance to re-establish his unlikely candidacy for the highest land in the office: a late-life attempt at reinvention in pursuit of a job that one suspects he hardly wants. What Gingrich really wants is the level of recognition that he alone believes he deserves; not the kind he got from the ethics investigations and scandals that drove him from the House speakership way back when (1998). Newt wants to be admired and to be paid well for being so.

Gingrich is furious at Romney and his Super PAC buddies for running those reminders in New Hampshire of Newt's wayward ways. They seemed almost to deliver a death blow to Gingrich's surprising gains toward becoming a top-tier candidate. Now, in ultra-conservative South Carolina, Gingrich is trying to muscle his way back into contention by going "medieval on their asses", which to a Republican means reaching back for some old nugget from their philosophy of greed and acquisition that has worked for Republican campaigners before. The money-in-the-bank red meat for die-hard Republicans is to blame the country's poor for our economic woes. The poor, goes the refrain, are a drain on a government system that is too large, too invasive and disruptive to the capitalistic system, and that has no business providing welfare in the first place.

In fact, the social safety net programs that Republicans label as "welfare" only account for 14 percent of federal government annual spending. These so-called "handouts" include the refundable portion of the earned-income and child tax credits, Supplemental Security Income for the elderly or disabled poor, unemployment insurance, food stamps, school meals, low-income housing assistance, child-care assistance, and assistance in meeting home energy bills, as well as programs that aid abused and neglected children.

In "the world according to Newt", the low income population in the U.S. is comprised of slackers who have no history with nor habit of working, nor the inclination to develop in any productive way as long as they are living high on the hog at the government's expense.

Newt Gingrich and Rick Santorum, who spins a similar tale of baloney, are both apparently un-curious idiots for were they not they would have looked a little deeper into the problems with our economy, which have next to nothing to do with the social safety net. (Factoid: The Social Security Trust Fund has no problems related to its own sustainability beyond the extent to which it has been raided to pay for other general expenses.)

The chart below was developed by the RCJ from Bureau of Labor statistics that are presently showing the U.S. unemployment rate to be at 8.5 percent. This, it is widely understood, undercounts actual unemployment by about half, making it more likely that the current rate is more like 16 percent. Were it to climb over 20 percent, we would be revisiting the conditions of The Great Depression of the 1930s.

That 8.5 percent figure is based entirely on the numbers of people who have signed up for unemployment benefits and employment development programs. The Bureau of Labor Statistics recognizes four categories of unemployed workers:

• Workers who lost regular employment or completed temporary jobs (4.9 percent)

• Workers who left jobs voluntarily (0.6 percent)

• Workers attempting to re-enter the workforce (2.2 percent)

• Workers attempting to enter the workforce for the first time (0.8 percent)

Those percentages are added together to arrive at the 8.5 percent unemployment figure. Just looking at the likelihood of sign-up from unemployed workers in those categories - first-time entry into the workforce, for instance, probably includes only a small percentage of unemployed recent college graduates - gives you a sense for how little these numbers tell us about the overall employment picture. They don't count those people who have exhausted their benefits and are no longer on unemployment, even though they remain unemployed. These workers are often classified as "no longer seeking employment", as if that is an option, though there is a growing population of unemployed who have become "dependents", adding to the income burdens on other relations. (See the chart below regarding dependents and their relationship to "income poverty".)

The Right Wing argument that "welfare" is bankrupting the country is undercut by the fact that half of the unemployed population receives no government benefits at all. In fact, while Gingrich goes on about how Barack Obama has been the most-effective "Food Stamp President" of all time, the truth is that only 1 in 5 U.S. families that qualify for Food Stamp assistance actually apply for the benefit. There are a lot of reasons for that, but certainly stigma accounts for part of it. Vicious creeps like Newt Gingrich and Rick Santorum have helped to villainize the most vulnerable of our citizens, effectively denying benefits to people who have probably paid into that social security system and rightly deserve coverage. 

The Right's argument is that people just need to clean themselves up and go out and get a job. But as this table below shows, America is filled with working poor.

THE WORKING POVERTY TABLE

We have listed median salaries for various positions in the four "growth sectors" of the U.S. employment picture. We have also indicated the standard the government uses to identify "poverty rates" in the country, which for a single wage earner are calculated against the number of dependents their pay goes to support.

A single worker with no dependents must earn more than $10,890 per year to be above the poverty level, and that figure goes up by $3,800 for each dependent he or she supports. That means, according to the national average, a wage earner supporting a family of four would need to earn more than $22,350 per year for his family to be above the Federal Poverty Level. As this chart shows, the kinds of jobs that the workers in those four Bureau of Labor Statistics categories referenced above can realistically get in our current economic environment, often are not sufficient to provide anything like financial stability for them or their family.

No one working near the Federal minimum wage level of $7.25 an hour is saving money to go to college, or investing in stocks. They probably don't get health coverage through their employment, and so their wages are not "loaded" in the way that the packages of full-benefit workers are, and for those who have full-benefit packages those are becoming less robust and more dependent upon higher office co-pays.

In our contracting economy, those jobs in the Fast Food industry that once provided initial employment opportunities to young people are now often held by older workers with dependents. We are seeing more multi-generational homes, with young adults with children also caring for older relatives under their roofs, adding further burden to their incomes - incomes, by the way, that have been retreating in terms of actual buying power for more than 40 years! Where once just getting a job could set a U.S. worker up with a reasonable expectation of a good life, now it isn't a guarantee of anything.

The improvements in the unemployment picture are not even signs of recovery, but are instead driven by hiring of seasonal workers, all of whom will lose their jobs once their seasonal employment ends, and the average worker can expect to then be unemployed for around six months.

While workers earning above the poverty level (the red sections below, which are only carried out to seven dependents but can grow much larger) may seem technically stable financially, none of those single wage earners in the brown "Financial Insecurity" zone are saving money or investing in growth opportunities. They are probably trying to keep their head above water with credit card debts, and some may have college loans dragging down their financial outlook for years. They are one cruel surprise away from sliding into the red zone, the poverty trap, where Gingrich and Santorum seem to think people go to kick back.

There is a generally held belief that the $70,000 income level is the "Golden Mean", the juncture at which people begin to exhale and relax. The myth goes that while you can buy more stuff with incomes above $70,000 per year, people don't generally report that their level of happiness increases any with earning above $70K. But even that depends upon where you live. In the San Francisco Bay Area, a family of four living on $80,000 per year would be functionally poor, once you back out the area's living expenses.

The Right's diversionary tactic that blames problems on the poor is morally and intellectually false. All that money from government programs that goes to assist the needy is returned directly into the economy, effectuating a straight win-win for the benefit recipient and the public. Grocery stores stay open and crime rates stay capped the way they wouldn't were desperation allowed to hold sway in high-unemployment areas.

The welfare that is not necessarily returned to the economy is the corporate welfare that comes from tax deductions and even massive give-backs, often amounting to millions of dollars for well-healed businesses. That money doesn't go back into the system, but it often goes to buy-out other smaller competitors and to tighten the grip on corporate monopolies, which in turn drives down wages and creates the situation we have today, characterized by the disintegration of the American middle class.

The greatest error made to date by the Obama Administration has been its failure to reverse the failed policies that have created tax breaks for the wealthy, while pulling back assistance to the poor.

The great defining opportunity was this housing crisis, which could have been solved had Obama just chosen to feed the struggling, underwater home owners and forced the mortgage companies to write down absurd principal amounts on loans. All of the big financial and auto bailouts could have been avoided, including the secret billions moved behind the scenes to prop up the charade that this was somehow saving the economy.

Obama failed miserably at this moment of opportunity, when America could have been made whole, and now we have the employment (and unemployment) situation we have today. I mean, just study the chart provided here for a moment and consider what it says about our future. While by no means a complete snapshot of our employment reality - it does not include high earning advanced degree holders like doctors, lawyers, engineers, scientists - it is real to the extent that it reflects the majority of America's working-class population, including positions held by the deteriorating middle class. (Updated 12012)

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Who Is Murdering Iran's Nuclear Scientists?

 

Four assassinated since 2007, along with an engineer - events that happen "unnaturally"

 

The Jerusalem Post is reporting that "'CIA, MI6 operations helped kill Iranian nuclear scientist", referencing the car bomb murder this week of 32-year old nuclear scientist Mostafa Ahmadi Roshan. That bit of diversionary reporting emphasized the known spy operations of the U.S. and British intelligence agencies, implying that those are the nations responsible.

The Daily Beast, on the other hand, is reporting that during the recent U.S.-Israeli “strategic dialogue” Israeli Mossad officers were quietly and obliquely bragging about the string of explosions in Iran. “They would say things like, ‘It’s not the best time to be working on Iranian missile design,’” one U.S. intelligence official at the December parley told The Daily Beast.

These kinds of actions even have their own Israeli euphemism, “events that happen unnaturally,” to quote the Israel Defense Forces Chief of Staff Benny Gantz, from his remarks before the Knesset on Tuesday. In his testimony, Gantz promised more such unnatural events in 2012 aimed at thwarting Iran’s nuclear program.

So the obvious nexus is the collaboration between the two western powers and Israel to slow the advance of nuclear weapons development in Iran.

Quoting further from The Daily Beast - A former Mossad officer now living in Canada who goes by the pseudonym Michael Ross said the attacks bore the hallmarks of an Israeli operation. “This tactic is not a new one for the Mossad, and worked very effectively against Egypt’s rocket program in the 1960s. During that period, the scientists involved in that project were assassinated and the program suffered immensely.”

The United States and Israel have cooperated on intelligence-gathering in Iran as well as, in some cases, sabotage operations such as the 2009 Stuxnet cyber attack that stymied the logic board that controlled the spinning centrifuges at the Natanz enrichment facility. Much of this kind of cooperation intensified in George W. Bush’s second term.

What are we setting up here, that's the question one asks? It has apparently been determined that Iran cannot be allowed the protection of assured mutual destruction that has checkmated aggression against every other nation that can claim this capability. Because of radical statements made by Islamic Fundamentalists, who have a hold on aspects of Iranian national affairs, Iran cannot be trusted to join this menacing club of mega-terrorists (nuclear powers). The irrational fear is that Iran would wipe Israel off the face of the earth.

The inability of the west to effectively dialogue with the Iranian government - only Switzerland maintains an embassy in Iran - has led western leaders to the illogical conclusion that Iran will act in irrational and ultimately suicidal ways.

To the opposite, it has been the western powers, particularly since the "9-11" bombing of the World Trade Center and since the invasion of Iraq in 2003, that has been acting with weird panic. One senses it has warped thinking in U.S. government circles to the point that assassinations on foreign soil, a hallmark of the Obama Administration, has become acceptable practice.

The U.S. has met its contractual agreement with the Iraq government and pulled U.S. troops out of the country, effectively ending that war, but they didn't go far, only to Kuwait. Because we aren't leaving that part of the Arabian Gulf any time soon. Every bit of intuition on this writer's part suggests that the western powers are going to do the illogical thing and go to war against Iran, probably sooner than later, before the Iranians develop their weapons systems any further.

Irrational behavior could trigger some utterly logical reactions, including Iranian support from Russia, China and North Korea.

Irrational minds haven't reasoned out yet that our economics and manufacturing is dependent upon China, particularly, as is much of the manufacturing of parts that would be required for us to even maintain our military should we rapidly consume our assets and resources. Europe won't help, they're broke.

Again, one has to ask, what are we setting up here? - RAR                                                           (11412)

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Greed Greater than Rome's

An estimated seventy percent of the population of Rome were "slaves", in some technical or real sense. Some were teachers, artisans, scribes, and some were just doing hard labor. The glory of Rome was built on the backs of exploited people, and yet the Romans were exceedingly willing make citizens of "non-Romans". The slave masters allowed some of their chattel to buy their freedom.

However hierarchical and inequitable ancient Rome may have been, the infamous greed of the Roman elite in no way compared to that of our current Master of the Universe, defined as the investment class globally. In ancient Rome, the top three percent of the population controlled only 16 percent of the total wealth. In the United States today, the top three percent control 40 percent of the nation's wealth, representing an inequality in distribution of wealth greater than that of half the nations of Africa.                                                           (121211)

 

 

Bracing for the Big One

Heavy rains, floods, waterborne disease and infestations of insects... The National Resources Defense Council readies for rocky times ahead...

 

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