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October
12, 2001
Imran
Khan
Try
Them in Court
Vijay
Prashad
War
in a Passive Voice
Patrick
Cockburn
Bombing
the Taliban
October
11, 2001
David
Vest
Bob
Dylan and 9/11
Amb.
Edward Peck
Bush
War Plan "Dumb"
Hani
Shukrallah
West
Is As West Does
Patrick
Cockburn
Looming
Humanitarian Crisis
October
10, 2001
Tom
Turnipseed
Earth
is Our "Homeland"
Steve
Perry
What
Is To Be Done?
Simon
Jenkins
The
Dumbest Weapon
Tariq
Ali
The
Pakistan Maelstrom
Cockburn/St.
Clair
The
Empire Strikes Back
October
9, 2001
David
Vest
The
Rout That Wasn't
Michael
Mandel
This
War Is Illegal
Patrick
Cockburn
Bombs
Weaken Taliban
Lenni
Brenner
Powell
the Owl
Zha
Marginalization
and Terror
Steve
Perry
It
Begins
October
8, 2001
Zbigniew
Brzezinski
How
Jimmy Carter and
I Started the Muj
Philip Agee
The
USA and Terrorism
Mahajan
and Jensen
A
War of Lies
Patrick
Cockburn
Northern
Alliance
Builds an Airport
October
7, 2001
John Pilger
Hitchens'
Slurs
Tariq
Ali
Who
Said History
Stopped Being Ironical?
October
6, 2001
Vijay
Prashad
US
War Aims
Kevin
Gray
The
Trap:
Blacks and 9/11
October
5, 2001
Ronnie
Gilbert
Déjà
Vu: The FBI's War
on Civil Liberties
Patrick
Cockburn
Taliban
Cluster Bombs
Dave
Marsh
John
Brown, Woody Guthrie
and the Secret Music of 9/11
Babak
Nahid
A
Suspect's Perspective
October
4, 2001
David
Vest
Send
in the Cons
Robin
Blackburn
Road
to Armageddon
Noam
Chomsky
Chatting
with Chomsky
Tony
Blair
The
Dossier on bin Laden
Resources:
100s of Links
About 9/11
CounterPunch:
Complete
Coverage of 9/11 and Its Aftermath
Five
Days That
Shook The World:
Seattle and Beyond
By
Alexander Cockburn
and Jeffrey St. Clair
Photos by Allan Sekula
(Click Here to Order from CounterPunch
Online at 20% Off Amazon.com's price!)
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EXCLUSIVE
TO
COUNTERPUNCH
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Published Oct. 3, 2001
8-Page Special
Issue
Aftermath
Diary
Ashcroft's Onslaught
on
Civil Liberties
Ridge Long Groomed
for
Cheney's Job
Those CIA Killing
Bids
Never Stopped
The Not-So-Great
Mayor Giuliani
Crop Duster
Ban
Will Save Lives
Madeleine Albright's
Deadly Legacy
How the Bin
Laden Women
Fled Bel Air
Tom Ridge's
Vietnam
Same as Kerrey's?
A CounterPunch
Journey
to Ramallah
A Word About
God
Nostrodamus
Jam-maker
Search
CounterPunch
Read Whiteout and Find Out
How the CIA's Backing of the Mujahideen Created the World's Most
Robust Heroin Market and Helped to Finance the Rise of the Taliban
and Osama bin Laden
Whiteout:
CIA, Drugs & the
Press
by Alexander
Cockburn
and Jeffrey St. Clair
A Pocket Guide to
Environmental Bad Guys
by James
Ridgeway
and Jeffrey St. Clair
The
Phoenix Program
by Douglas
Valentine
Al
Gore:
A User's Manual
by Cockburn
and St. Clair
Buy
This Explosive
New Book at an
Amazing Discount!
Reviews of Gore:
a User's Manual
New Stories:
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October 12,
2001
Can War Save The
Economy?
Boom, Bubble, Bust
By Alexander Cockburn
No, the new war on terror isn't going
to be of much use in combating the present plunge in America's
economic well being. Well before the Twin Towers fell to earth
the country was entering a fierce decline, and it is assuredly
going to get worse. The fall in growth and investment from early
2000 to early 2001 was the fastest since 1945, from 5 per cent
GDP growth to zero. So fast indeed that people are only now catching
on to the extent of the bad numbers, and battening down the hatches
as bankruptcies begin to rise.
How did we get from the Merrie Then to the Dismal Now? The bubble
in stock prices in those last five years sparked an investment
boom as corporations found mountains of cash available, either
from the sale of overvalued stocks or by borrowing money from
the banks against the high asset value of these same stocks.
And as the Lewinsky years frolicked gaily by, there was a simultaneous
consumption boom as the richest fifth of the citizenry, the pampered
Delta Force of our national consumers, saved a lot less, spent
a lot more.
The shadows were there for
those who cared to look for them. In 1998, 1999 and 2000, when
the boom was reaching historic proportions, when annual borrowing
by US corporations had reached a historic peak as a percentage
of GDP, when Fed Chairman Alan Greenspan was vaunting the power
of markets, the rate of profits was falling in the non-financial
corporate sector, significantly so in manufacturing.
The bubble was due to burst
and then it did. Now, with the market going down, corporations
have less money, can borrow less, and invest less. Consumers
have less to spend and begin to lose the appetite anyway. Down
go the rates of investment and consumption, and the amount of
government debt that the Bush administration can muster as a
Keynesian stimulus is more than offset by the decline in private
debt as people turn prudent and ratchet up their savings.
But the problem goes deeper.
The corporate investment boom of the late 1990s took place against
a backdrop of falling profitability. Who builds new plants when
the bottom line is turning sourer year by year? Answer: US corporations
in the late Nineties. There was no correlate of investment against
the rate of return, hence the amassing of over-capacity on a
Herculean scale. Between 1995 and 2000 retail store space grew
five times faster than the population. Earlier this year Business
Week reckoned that only 2.5 per cent of communications capacity
is being used.
The most notorious sector was
indeed telecommunications, where borrowing was vast and stocks
insanely inflated, with stock analysts boiling up ever more ludicrous
ways of claiming profitability for their favored picks. The degree
to which stocks rose above profits was greatest in technology,
media and telecommunications (TMT). In this sector, the leading
edge of the boom, between 1995 and 2000 the value of TMT stocks
grew by 6.1 times but their earnings by only 2.1 times.
The OECD's economic survey
of the US for 2000 makes for chastening reading. By that year,
the final distension of the bubble, the value of Internet companies
reached 8 per cent of the total value of all non-financial corporate
assets in the economy. But most of these companies tallied only
loses. Of 242 Internet companies reviewed in the OECD study only
37 made profits in the third quarter of '99, the pre-peak of
the bubble. Their price to earnings ratio was 190 to 1; precisely
2 of these accounted for 60 per cent of profits. The other 35
profitable companies traded on an average p/e ratio of 270 to
1, the 205 remaining companies made losses. For 168 of these
companies, for which data are available, total losses in third
quarter of 1999 amounted to $12.5 billion at an annualized rate
even as their stock market valuation reached $621 billion.
You want a definition of a
bubble? That's it.
So was there really a "New
Economy" emerging in the sunset of the century, as proclaimed
by so many exuberant choristers? True, the 1995 to 2000 economy
did do better than in any five year period back to the early
Seventies. By all standard measures such as productivity, economic
growth, wages, growth of investment unemployment, inflation,
it was a pretty good time. But, as Professor Robert Brenner of
UCLA, whose "Boom, Bubble, Bust: the US in the World Economy"
is about to be published by Verso, aptly asks, "If the five
years 1995 to 2000 truly saw the emergence of a New Economy,
manifesting 'extraordinary performance', as Clinton's Council
of Economic Advisers put it, what are we to call the period 1945
to 1973 which excelled it every respect?" Productivity growth
was about 15 per cent slower in those five recent years than
in the 25 years between 1948 and 1973.
Obit writers for the great
boom of 1995-2000 usually avert their eyes from the fact despite
all the exuberance of those giddy years, in terms of growth of
gross domestic product, of per capita GDP, wages and productivity
the Nineties did worse than the Eighties and the Eighties worse
than the Seventies. In other words, the golden twilight of the
twentieth century's final years was merely a continuance of the
long stagnation of the world economy that began in 1973.
For now? On the one hand, over-capacity;
on the other, a drop in investment and consumption driven first
by the drop in the market, then by fear. It will be quite a while
before anyone feels the need to invest, hence to borrow. Give
the rich a tax cut? It won't help. They'll put it in the bank.
Government investment? Yes, it could be done on an appropriately
vast scale, but only by public investments of a sort that Republicans
have never countenanced and that vanished from the political
platform of the Democratic Party decades ago. For sure, planes
and missiles for the Navy and Air Force, plus millions worth
of food aid dropped on Afghanistan, plus new computers for the
Office of Homeland Security aren't going to do the trick.
CP
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