Yes, these are dire political times. Many who optimistically hoped for real change have spent nearly five years under the cold downpour of political reality. Here at CounterPunch we’ve always aimed to tell it like it is, without illusions or despair. That’s why so many of you have found a refuge at CounterPunch and made us your homepage. You tell us that you love CounterPunch because the quality of the writing you find here in the original articles we offer every day and because we never flinch under fire. We appreciate the support and are prepared for the fierce battles to come.
Unlike other outfits, we don’t hit you up for money every month … or even every quarter. We ask only once a year. But when we ask, we mean it.
CounterPunch’s website is supported almost entirely by subscribers to the print edition of our magazine. We aren’t on the receiving end of six-figure grants from big foundations. George Soros doesn’t have us on retainer. We don’t sell tickets on cruise liners. We don’t clog our site with deceptive corporate ads.
The continued existence of CounterPunch depends solely on the support and dedication of our readers. We know there are a lot of you. We get thousands of emails from you every day. Our website receives millions of hits and nearly 100,000 readers each day. And we don’t charge you a dime.
Please, use our brand new secure shopping cart to make a tax-deductible donation to CounterPunch today or purchase a subscription our monthly magazine and a gift sub for someone or one of our explosive books, including the ground-breaking Killing Trayvons. Show a little affection for subversion: consider an automated monthly donation. (We accept checks, credit cards, PayPal and cold-hard cash….)
To contribute by phone you can call Becky or Deva toll free at: 1-800-840-3683
Thank you for your support,
Jeffrey, Joshua, Becky, Deva, and Nathaniel
CounterPunch PO Box 228, Petrolia, CA 95558
Other People’s Money
The air is escaping from the little multi-hundred billion dollar balloon Bush administration floated to resolve sunken credit markets. Meanwhile, news on the economy, in the past week especially, has been massaged within an inch of its news cycle life. We’re not getting the whole story, by half.
Lifting the housing industry from its sharpest contraction seems to be the primary political focus of both Democrats and Republicans. The news media appears to be having difficulty parsing the differences.
Let’s start with a simple explanation. The first step of the free-market acolytes within the Bush administration involves nationalization.
That is what Federal Reserve chief Ben Bernanke did, authorizing the use of derivative debt tied to mortgages as collateral for loans to banks. US Treasury Secretary Paulson has said, the unprecedented step is "temporary", an "emergency response" to avert a financial meltdown, but journalists need to measure the two hundred billion against the ocean of toxic derivatives whose owners now have reason to come calling for charity. It is on the order of trillions.
Taken as a whole, the US financial system was turned into a chop shop where stolen property is taken to be dismantled and sold off piecemeal. That Republicans, the party of fiscal conservatism and limited government, presided over the unravelling of fiscal common sense is astounding.
Today, the Bush administration is engaged in a highly risky gamble through monetary policy: that the consumer can withstand more inflation so long as housing markets are jump started in the process.
A more cynical view is that allowing inflation to rise while home values decline will establish some sort of lower order, miserable equilibrium that will allow Republicans to hold onto political power. In response, we get more fictions– like the weak American dollar will lift exports and the fortunres of the economy.
Paul Craig Roberts wrote recently, "According to the latest US statistics as reported in the February 28 issue of Manufacturing and Technology News, in 2007 imports were 14 percent of US GDP and US manufacturing comprised 12% of US GDP. A country whose imports exceed its industrial production cannot close its trade deficit by exporting more."
Here is the point: even if we could export more, the sad truth is that after 20 years of globalization the manufacturing supply chain in the United States has rusted out. Except for airplanes and guns, every basic, wage-intensive industry that links raw commodities to end products has been shipped to low cost labor nations, either in whole or part.
The US economy spent the past decade balancing on one leg: housing. For a time, foreign investors in US debt were fine with arrangements that allowed them to charitably view this performance.
Roberts observes: "Noam Chomsky recently wrote that America thinks that it owns the world. That is definitely the view of the neoconized Bush administration. But the fact of the matter is that the US owes the world. The US "superpower" cannot even finance its own domestic operations, much less its gratuitous wars except via the kindness of foreigners to lend it money that cannot be repaid."
Using other people’s money only works when other people have confidence that you can deliver predictable repayment of your debts. There is nothing predictable about what is happening in the US economy, as skeins of markets unravel. Unprecedented, is the better word.
ALAN FARAGO of Coral Gables, who writes about the environment and the politics of South Florida, can be reached at email@example.com.