Today's Stories

April 3-5, 2009

Kathy Kelly /
Brian Terrall
Getting a Closer Look at the Killer Drones

April 2, 2009

Robert Weissman
What If Obama Had Treated Detroit Like Wall Street?

Eric Toussaint /
Damien Millet
A G20 Meeting for Naught

George Bisharat
Israel's Impunity Must End

Russell Mokhiber
Something is Rotten at PBS

Franklin Lamb
Has Washington Lost Lebanon?

Gareth Porter
Settling Scores in Iraq: Maliki Draws US Troops into Crackdown on Sunni Rivals

David Macaray
Obama and the Ruling Class: "Only the Little People Pay Taxes"

Chris Genovali
B.C.'s Bloody Grizzly Hunt

Sam Smith
The Politics of Adulation

Suzan Mazur
Is Neo-Darwinism Dead?

Website of the Day
Fighting for Change in St. Louis

April 1, 2009

Chris Floyd
Surging Further Into the Afghan Abyss

Stanley Heller
Israeli War Crimes: Thank God, It Was Only Rumors

Mark Brenner, Mischa Gaus and Jane Slaughter Obama's Perilous Plan for Detroit: Restructure the Big 3, But Not With Bankruptcy

Jonathan Cook
The Slow Demise of Ehud Olmert

Eric Walberg
EU in Tatters: Only the Protesters Have Any Vision

Richard Morse
Why Haiti Can't Forget Its Past

Don Fitz
Guess Who Came to Dinner with a Match? Green Mayoral Candidate's Van Firebombed in St. Louis

Laray Polk
Texas and Evolution

Belén Fernández
12 Años de Soledad?

Harvey Wasserman
Cracking the Media Silence on Three Mile Island

Website of the Day
Pentagon Fraud Investigations Fell, While Contracts Soared

March 31, 2009

Uri Avnery
The Deception Tango

Peter Lee
Ghosts in the Machine: the World's Hottest Cyberwar Battlefield

Nicholas Dearden
A New Global Debt Crisis

Dave Lindorff
The Obama Betrayal

Joanne Mariner
"We'll Make You See Death"

Ron Jacobs
Obama's Pakistan Gambit

Wiliam S. Lind
Another Lost War

David Michael Green
Who Says the GOP Doesn't Have a Plan?

Benjamin Dangl
Beyond Elections in the Americas

Johnny Barber
Meditation in Orange

Dedrick Muhammad
Economic Inequality: the Foundation of the Racial Divide

Website of the Day
How the Obama Dems Took Over the Peace Movement

March 30, 2009

Michael Hudson
Financing the Empire: Do US Face G20 Mutiny?

Patrick Cockburn
What Next in Afghanistan?

Henry A. Giroux
Hard Lessons

Mike Whitney
Where's Eliot Spitzer Now That We Need Him?

Ralph Nader
Where's All the Money Coming From?

Paul Craig Roberts
Obama's War on the (Upper) Middle Class

Jeremy Scahill
The Logistical Nightmare in Iraq

Robert Bryce
The Cellulosic Ethanol Delusion

Jonathan Cook
Remembering Land Day in Palestine

Ray McGovern
Obama Bombs

Website of the Day
Hersh: Syria Calling

March 27-29, 2009

Alexander Cockburn
Obama's Fall Guy

Arno J. Mayer
Too Big to Fail?

Michael Hudson
How the Scam Works

José Pertierra
Gesture for Gesture: How to Free the Cuban Five

Andy Worthington
A Letter to Obama From a Guantánamo Uighur

Mike Whitney
Geithner's Hog Wallow

Winslow T. Wheeler
What Does an F-22 Cost?

Souad N. Al-Azzawi
Iraq: Let the Numbers Speak for Themselves

Dave Lindorff
A Financial History Lesson

Ian Masters
The Zombie Presidency

Barbara Rose Johnston
Water Culture Wars

Jami Tarn
Smearing Tristan Anderson

Diane Farsetta
The Nuclear Industry Targets Wisconsin

David Ker Thomson Against Democracy

Ramzy Baroud
Netanyahu and the Future of the Peace Process

Rannie Amiri
Saudi Shiites' One-Word Demand

Wajahat Ali
Writer as Fighter: the Genius of Ishmael Reed

Nick Egnatz
Whatever Happened to the Fierce Urgency of Now?

Gregory A. Burris
The Insolents Abroad: a Defense of Iceland

Missy Beattie
This Land

Stephen Martin
The Broken Stone of Corporatism

Charles R. Larson
Obama, Smoking and Me

David Yearsley
How They Built Bach's Face (Is the Bard Next?)

Ben Sonnenberg
Won't You Please Get Thee Behind Me? Buñuel's Simon of the Desert

Kim Nicolini
The Mafia Without Moralizing: Garrone's Gomorrah

Lorenzo Wolff
Pat Boone Syndrome

Poets' Basement
Four Poems by Paulann Petersen

Website of the Weekend
Ann Coulter: a Portrait by Ben Tripp

March 26, 2009

Paul Craig Roberts
Is the Bail Out Breeding a Bigger Crisis?

Sharon Smith
Another Blow to Labor ... from the Democrats

Neve Gordon
Avigdor Lieberman, Israel's Shame

Patrick Madden
Why the Geithner Plan Will Fail

Gareth Porter
The Big Con on Iraq

Dave Lindorff
Why Do We Need a Health Insurance Industry?

Hannah Safran
The Israeli Resistance: "Ready to be Traitors"

Keith Newell
Will the Cellphone Please Take the Stand?

Todd Chretien
Behind the Green Collar

Nelson P. Valdés
When It Comes to Cuba and the Media Anything Goes

Website of the Day
G20 Meltdown

March 25, 2009

Robin Blackburn
Media Revolution or Mirage?

Conn Hallinan
Europe in Crisis

David Rosen
Sexting: a First Amendment Challenge for Obama

Jonathan Cook
Turkey's Fallout with Israel Deals Blow to Settlers

Dean Baker
Billions More for Failed Banks

Ron Jacobs
Karzai on a String

Russell Mokhiber
Corporate Liberals vs. Single-Payer

David Macaray
Slice and Dice on Card Check

Dave Lindorff
Geithner's Power Grab

Sarah Knopp
LA Teacher's Sit-In Over Layoffs

Website of the Day
How to Create an Animal Rights "Terrorist"

March 24, 2009

Robert Sandels
Obama and Cuba: Real Change or Minor Tweaks?

Harvey Wasserman
People Died at Three Mile Island

Franklin Lamb
Who Tried to Kill Palestinian Ambassador Abass Zaki and Why?

Michael Donnelly
Obama's Team of Losers

Norman Solomon
Denial and Evasion on Afghanistan

Elizabeth Schulte
The Stark Facts About Violence Against Women

John Goekler
The Most Dangerous Person in the World?

Nicole Colson
Is Justice Finally in Sight for Sami Al-Arian?

Global Balkans
NATO's 78-Day Bombing of Yugoslavia: Ten Years On

William S. Lind
Cat-and-Mouse Off Hainan Island

Website of the Day
Video: IDF Fired on Medics in Gaza

March 23, 2009

M. Shahid Alam
Capitalism From the Standpoint of Its Victims

Uri Avnery
Israel's Most Revolting Law?

Mike Whitney
Zombie Economics: Judgment Day for Geithner

Ralph Nader
Bush the Teacher

Brian Cloughley
Tilting at Afghan Windmills

Dave Lindorff
Toxic Bailouts

Amira Hass
The Rules of Engagement in Gaza: Open Fire on Rescuers

Chris Irwin
When Nonprofit Groups Go Bad

Binoy Kampmark
The Celebrity of Celebrity

Michael Dickinson
Tollbridge Over Troubled Waters

Website of the Day
State of the Birds

March 20-22, 2009

Alexander Cockburn
On the Edge of the Volcano

Paul Craig Roberts
When Things Fall Apart

P. Sainath
Slumdogs vs. Billionaires

Robert Weissman
Lessons From AIG

Saul Landau
Sliding Down in Anger: If We Bail Out the Banks, Why Shouldn't We Own Them?

David Michael Green
Obama and the Altar of Greed

Greg Moses
Winter Soldiers Come to Texas

Ron Jacobs
Pakistan in Turmoil: an Interview with Farooq Tariq

Michael D. Yates
A Nation of Immigrants

John V. Whitbeck
Happy New Year, Iran!

Andy Worthington
The Case of Ahmed Zuhair

Linn Washington Jr.
Supreme Test: the Latest Twist in the Mumia Case

David Ker Thomson
Actions: Things to Do Instead of Hailing the Chief

Laurent Jacque
Is the Euro Doomed?

Rannie Amiri
The Middle East's Jittery Monarchies

Reiko Redmonde /
Larry Everest
The Cold-Blooded Murder of Oscar Grant

David Macaray
The Myth of the Powerful Teachers' Union

Kenneth Couesbouc
Where has the Consumption Gone?

Martha Rosenberg
Meltdown in the Drug Industry

Alan Farago
The Recession, the Developers and Baseball

Missy Beattie
Still Waiting for Change

Richard Rhames
Invisible But Not Completely Insolvent

Stephen Martin
Barack and the Jets

Charles R. Larson
Impeach Obama!

David Yearsley
On Bach's Birthday

Lorenzo Wolff
Manic Levity

Poets' Basement
Three Poems by Gary Corseri

Website of the Weekend
Teachers for CEO Merit Pay!

March 19, 2009

Dave Marsh
Sir Bono: the Knight Who Fled From His Own Debate

Paul Craig Roberts
Was the Bailout Itself a Scam?

Mike Whitney
Why Business is Hysterical About Card Check (And Why America Needs It)

Sam Smith
The Economy in Two Eras of Democrats

Harvey Wasserman
The Crash of France's Nuclear Poster Child

Binoy Kampmark
Back Into NATO: the End of French Exceptionalism

Kathy Sanborn
Broken Culture: the Desecration of Iraq's Art Treasures

Christopher Brauchli
Taxing Problems

George Wuerthner
Permanent Damage From Temporary Logging Roads

Diann Rust-Tierney
New Mexico Abolishes the Death Penalty

Website of the Day
Bailout Plan: "Cross Your Fingers and Hope"

March 18, 2009

Michael Hudson
The Real AIG Conspiracy

Paul Craig Roberts
Israel's American Chattel

Nelson P. Valdés
Why Obama's New Cuba Rules Violate the Constitution

Jonathan Cook
Bedouin Villages Left in the Dark Ages

John Ross
The Death of the American Newspaper

Yifat Susskind
Where Are We Leaving Iraqi Women?

Dave Lindorff
Who's Calling the Shots Now?

Frances Moore Lappé
The City That Ended Hunger

Richard Grossman
Beware the Madoff Diversion!

Rev. William E. Alberts
On Being Whole Not Holy

Website of the Day
Three Weeks in Cuba: a Painter's Perspective

March 17, 2009

Michael Hudson
Mr. Bernanke Spreads the Fire

James G. Abourezk
Show Business: AIG and the Posturing Democrats

Harry Browne
Ireland's Blast From the Past

Joanne Mariner
U.S. Human Rights Abuses in the War on Terror

Alan Farago
The National Ponzi Scheme

Dean Baker
Getting Lehman Bros. Wrong ... Again

Peter Morici
Cuts for Autoworkers, Bonuses for Derivatives Traders

Bill and Kathleen Christison
Obama and the Empire

Richard Gott
Victory for the Left in El Salvador

Walter Brasch
Dog Mutilations vs. Cosmetics

Website of the Day
Single-Payer Action

March 16, 2009

Pam Martens
Has a Comedian Just Saved America?

Uri Avnery
The Rape of Washington

Mike Whitney
Bernanke's Witness Protection Program

Ralph Nader
Americans Want Justice for Wall Street Crooks

Nikolas Kozloff
Down But Not Out: the Latin American Right

John Walsh
Redbaiting on the Left

Ron Jacobs
A Call for Common Sense

Binoy Kampmark
The Case of Tim K

Stephen Fleischman
Coxey's Army Will March Again!

Christian Christensen
A 25-Year Misunderstanding: Springsteen's "Born in the USA"

Scott Handleman
Shooting Tristan Anderson

Website of the Day
Clean, Green, Sustainable

March 13 / 15, 2009

Alexander Cockburn
The Parable of the Shopping Mall

Peter Lee
What the Chas Freeman Fight Was Really About

Diana Johnstone
NATO's Global Mission Creep

David Harvey
Is This Really the End of Neoliberalism?

Petrino DiLeo
Inside Obama's Housing Plan: Will Millions be Left Out in the Cold

David Ker Thomson
Tender to the Earth

Eric Ruder
Massacre in Slow Motion: an Interview with Haider Eid on Gaza

Fred Gardner
Cannabidiol Now!

David Yearsley
Music Torture

Saul Landau
How Israel Gives Jews a Bad Name

Laura Carlsen
Drug War Doublespeak

Robert Weissman
We Told You So

John Goekler /
Merle Lefkoff
The Struggle in Saffron

Tom Barry
Imprisoning Immigrants for Profit

Kathy Sanborn
Money Out of Thin Air

Chris Mobley / Leela Yellesetty
Criminalizing Poverty: the Jail Seattle Doesn't Need

David Michael Green
The Perils of Being Right and Wrong

Alan Maass /
Lee Sustar
A Socialist Moment?

Christopher Brauchli
Pity, the Poor Tax Collectors

Richard Morse
Clinton in Haiti

Lorenzo Wolff
Taking It From the Streets: From Springsteen to the Wu-Tang Clan

Poets' Basement
Springate and Johnston

Website of the Weekend
Hear the Buffalo

March 12 , 2009

Sharon Smith
Bottom Feeders at the Trough

Christopher Ketcham
Full Spectrum Penetration: Israeli Spying in the United States

Mike Whitney
Haircut Time for Bondholders

Ray McGovern
Obama Caves to the Lobby

Eric Toussaint /
Damien Millet
The Doublespeak of a Discredited IMF

John Ross
The War is Not Over

M. Reza Pirbhai
Men in Black: Another View of Pakistan

Chris Floyd
Lost Liberty Blues: Prisons, Profits and the Banality of Evil

Steve Early
Why Labor Doesn't Need a "House of Lords"

Quentin Gee
Hiding the Costs of Coal

Website of the Day
Amadee Coral Reef: a Spherical Panorama

March 11 , 2009

Mike Roselle
From Birmingham to Coal River: Why is the Environmental Movement So Timid?

Paul Craig Roberts
The Criminal Injustice System

Henry A. Giroux
Academic Labor in Dark Times

Nikolas Kozloff
The Death Cries of the Salvadoran Right

Norm Kent
I am Patient Number 380206011

Mitu Sengupta
Reforming the World Bank: Different Image, Same Tune?

Ludwig Watzal
The Structure of Israel's Occupation

David Macaray
The Battle Over EFCA Has Begun

William S. Lind
Rounding Up the Usual Suspects

Martha Rosenberg
A Merger From the Folks Who Brought You Vytorin

Website of the Day
American Indicator: One in Fifty Kids are Homeless

March 10 , 2009

Franklin Spinney
What Israeli Peace Process?

Vijay Prashad
What Did Hillary Clinton Do?

Stan Cox
There's No Free Lunch on Your Browser: the Internet's Energy Drain

Zoltan Grossman
Coffee Strong: Listening to the G.I. Voice at Fort Lewis

Reuven Kaminer
Pure and Unadulterated Racism

Jonathan Cook
Memoricide in the West Bank

Dave Lindorff
Business Rules

Brian McKenna
How Anthropology Disparages Journalism

Harvey Wasserman
Is This the End of the Age of the Automobile?

Corey Pein
He Told You So

Website of the Day
AIG and Systemic Failure: $1.6 Trillion in Insured Deriviatives

March 9 , 2009

Pam Martens
Madoff and the Sorkin Affair

Ralph Nader
Too Big...Period

Peter Lee
Meet Gulbuddin Hekmatyar: the US's Worst/Best Hope for Afghanistan?

Mike Whitney
Geithner's Charade

Peter Morici
Fixing the Banks: Treasury's Doomed Strategy

Dean Baker
Why Do We Need a Private Health Insurance Industry, Anyway?

Steve Ault
Kiss Thailand's Tolerance for Gays Goodbye

Stephen Lendman
Guantánamo Under Obama

Farooq Sulehria
Tennis Without Spectators

Belén Fernández
Chávez, a Cockfight and the Caracazo

Website of the Day
How Lincoln Learned to Read

March 6-8 , 2009

Alexander Cockburn
Harlots High and Low

Chris Floyd
Tangled Up in Karl

Uri Avnery
Remember Ophira?

Dave Lindorff
Kiss the Banks Goodbye

Mark Weisbrot
The Crisis vs. the Dogma

David Ker Thomson
Against Work

Phil Aliff
Soldier Suicides

Rebekah Ward
Georgia Injustice: Another Young Life Wrecked

Tracey Briggs
How Capitalism Feels in the Head

Dean Baker
Depression Nostalgia?

Daniel P. Wirt, M.D.
Remove the Handle From the Health Insurance Misery and Death Pump

Carl Finamore
The Recovery Plan: Save Us From Those Who Would Save Us

Wajahat Ali
The Pakistani Monster

David Michael Green
Smart is the New Stupid

David Macaray
The Minimum Wage Revisited

Michael Dickinson
On Financial Fools Day

Susie Day
Line in the Sand

Bob Sommer
Echoes of the Townhouse Explosion

Ben Sonnenberg
No Forgiveness for the Bourgeoisie: Buñuel's "The Exterminating Angel"

David Yearsley
Sonic Fakery in "Slumdog" From the Mozart of Chennai

DC Larson
They're Writing Those Depression Songs, Again

Lorenzo Wolff
Live Truth: Music Sans Headphones

Poets' Basement
Dominquez, MacNeil and Buknatski

Website of the Weekend
The Environment & Obama: a Conversation with Jeffrey St. Clair

March 5 , 2009

James G. Abourezk
This Time It's Mrs. Clinton's Turn

Kathleen and Bill Christison
U.S. Military Aid to Israel

Robert Weissman
Wall Street's Best Investment: Paying for Public Policy

Patrick Cockburn
My Day at the Terror "Charity"

William Blum
Being Serious About Torture...Or Not

Robert Fantina
From Iraq to Afghanistan: Augmentation All Over Again

Saul Landau
The Unseen Crisis

Benjamin Dangl
Striking a Blow Against the Beer Cartel: a Grassroots Victory in Utah

Christopher Brauchli
The New Leaders of the GOP

Website of the Day
The Angola 3: 36 Years of Solitude

March 4, 2009

Marjorie Cohn
Blueprints for a Police State

Mike Whitney
Blowing Up the Economy: How Securitization Lit the Fuse

Ron Jacobs
The Banality of Occupation: the Rand Papers

Ashley Smith
War by Another Name

Joanne Mariner
Obama's War on Terror

Dan Bacher
The California Water Wars: Why It's Not a Conflict Between Fish and People

Mark Engler
Will the Winds of Change Reach El Salvador?

Franklin Lamb
"What's Hezbollah Done for Us Lately?"

Cal Winslow
Slugging It Out in California

David Mandelzys
Apartheid Week

Website of the Day
Guantánamo: the Definitive Prisoner List

March 3, 2009

Conn Hallinan
Ethnic Cleansing and Israel

Fawzia Afzal-Khan
The Long, Dark Night of Pakistan

Brian M. Downing
The Changing Game in Afghanistan

Robert Larson
External Damnation: Companies are Designed for Destruction

Daniel P. Wirt, MD
Single-Payer Health Reform

Russell Mokhiber
Burn Your Health Insurance Bill!

William Loren Katz
Obama, One Ape and Two Newspapers

Kathy Sanborn
The Lazy Man's Guide to the Economic Crisis

Pauline Imbach
A New Start for the World Social Forum?

Christopher Ketcham
The Best Journalism You'll Write is Priceless

Website of the Day
The Surveillance Self-Defense Project

March 2, 2009

Andrea Peacock
A Poisoned Town's Shot at Justice

Paul Craig Roberts
Obama's Budget

Peter Lee
Pakistan Lurches Toward the Abyss

John Blair
Locking Down Big Coal

Peter Morici
Treasury's Flawed Plan for Citigroup

Uri Avnery
10 Ways to Kill Fatah

Michael Donnelly
Resistance to the War on the Wild

Fred Gardner
The Judge Who Ruled Marijuana is Medicine

Sonia Nettnin
Middle East Medical Mission Heroes

Andrew Lehman
A New Deal for the Web

Website of the Day
Pentagon Papers II?

Eric Holder and the Whitewashing of Racism

Tom Barry
Napolitano's Hard Line

Harvey Wasserman
Obama's Excellent Atomic Omission

Adam Turl
The Enemies of Unions and the Lies They Tell

David Macaray
When People are Fired Illegally

James McEnteer
Rush to the Rescue: Limbaugh's Secret Plan to Save the Economy

Website of the Day
The Carbon Casino

Weekend Edition
April 3-5, 2009

Another 663,000 Jobs Lost in March

Girding for a Depression

By PETER MORICI

Today, the Labor Department reported the economy lost 663,000 payroll jobs in March. The economy is shifting to permanently lower levels of production and employment, as the recession nears turns into a depression.

Unemployment reached 8.5 percent, and adding in discouraged adults who have left the labor force and part-time workers who would prefer to work full time, the real unemployment rate is closer to 17 percent.

Simply, investors and employers lack confidence in the overall likely effects of Treasury Secretary Geither’s plans to stabilize banks and President Obama’s stimulus package and budgets proposals.

Lacking confidence that the demand for what Americans make and sell will recover significantly, anytime soon, businesses are girding for a long siege—slashing employment and dividends and other hunkering down. They are preparing for a depression and the eclipse of American leadership.

The economy has shed 5.1 million jobs since December 2007, as the full weight of the banking crisis and trade deficit on oil and with China punish employment in autos, other manufacturing, construction and the broader economy. This drives down employment, wages and consumer spending and is creating a negative feedback cycle that threatens to cast the U.S. economy into something akin to Japan’s lost decade or worse.

Fundamental structural problems—poorly managed banks, wasteful uses for imported oil and the lopsided rules for competition with China and other Asia mercantilists—have come home to roost and threaten to topple American prosperity.

Unemployment increased to 8.5 percent in March and is headed for 10 percent. In 2009, unemployment and the trade deficit are reducing GDP by some $400 billion or about $2500 per worker.

Factoring in discouraged workers, unemployment is about 11 percent. Add workers in part time positions that cannot find full time employment and the hidden unemployment rate is about 16.7 percent.

A Permanent Contraction and Double Digit Unemployment

The economy contracted at about a 6.3 percent annual rate in the fourth quarter of 2008, and will contract further through most of 2009. The huge stimulus package will lift GDP a few percentage points in 2010 and 2011, but it will likely not prove enough to halt contraction over all. Even if the economy grows for a time, thanks to stimulus spending, it will fall back into recession.

The stimulus package will temporarily add about 2 to 2.5 million jobs, and only slow the pace of job losses. Unemployment will shoot past 10 percent once the effects of stimulus spending wears off in 2012, and perhaps sooner.

Increasingly, the economic slowdown looks more like a depression than a recession. Recessions are like stock market corrections—after a time, equity prices rebound without government intervention.

Federal Reserve interest rate cuts and stimulus spending and tax rebates shorten recessions and ease their impact. However, those policies will not end the current slump, because it is grounded in fundamental structural dysfunctions in U.S. banking, energy and trade policies.

A depression is not self-correcting. The economy shifts down to permanently lower levels of production and sales, high unemployment rates become chronic, and federal deficits become narcotic—federal deficits dull the senses but don’t cure the disease.

Employers in high tech, retailing, manufacturing, publishing, and elsewhere are not temporarily furloughing workers; rather they are restructuring employment downward, permanently, for what they expect to be smaller markets for their products for several years.

Without systemic reforms, the more than six million jobs lost in 2008 and 2009 will not be regained for many years. The crisis requires quick and bold action, and it requires more than a politically conceived stimulus package. It also compels radical changes in how Washington regulates banks and fosters international competition and wealth creation.

Unfortunately, the stimulus package is poorly structured and will prove too expensive for the 2 to 2.5 million jobs it creates for two years and then again disappear. The banking and trade policies President Obama is pursuing will drive the U.S. economy deeper in debt to Middle East oil exporters, China and other foreign creditors, throw the economy deeper into recession and destroy as many as 10 million jobs before the calamity has completely run its course by the middle of the next decade.

The Face of a Modern Depression

The economy need not reach the depths of the Great Depression to encounter permanent stagnation and evoke the pathos of vanished dreams—leaving older Americans without retirement incomes and scrounging for menial jobs and young workers without hope of promising careers.

Yet, without systemic reforms, unemployment will soar well above 10 percent, many college graduates will not find meaningful work, high school graduates will be trapped in low wage jobs and dependent on federal government largess, and older workers, abandoned by companies without adequate health care and pensions, will accept low wage jobs to supplement social security and work beyond the age of 70. Retirement will be for government workers and a few otherwise fortunate private sector workers but more generally, retirement will be the stuff of history books.

Roosevelt Administration stimulus spending—huge deficit spending—eased the pain but failed to end the Great Depression. Roosevelt’s policies did not put the U.S. economy on a track for growth, and President Obama’s policies will force Americans to relieve those frustrations.

In the 1930s, the economy suffered three false recoveries only to fall back into depression, because New Deal policies worsened structural problems that pulled the economy down in the first place. For example, the New Deal proliferated monopoly pricing, extended the life of undersized farms, raised structural savings rates, and created a system of home lending too dependent on federally sponsored banks—a system that ultimately contributed to the current crisis.

World War II and the Vietnam wars gave the U.S. economy reprieves from repeated downturns, but President Truman endured two recessions, President Eisenhower two recessions, Kennedy one recession and Nixon two recessions. Then surging oil prices created the Great Inflation. Only when President Carter began deregulation of the economy with the airlines, and Presidents Reagan, Bush and Clinton continued this process culminating with repeal of Glass-Steagall in 1999, did the economy enjoy the Great Moderation—an unprecedented, sustained period of growth with fewer recessions and less inflation.

During the Administration of George W. Bush, the abuse of free markets by the banks, domestically, and China, internationally through currency manipulation, high tariffs on imports and export subsidies, created the present crisis. George W. Bush ignored these threats to the benefits of free markets and open trade. Now President Obama is repeating his predecessor’s mistakes by not altering approaches to banking reform and trade and appears poised to the blunders of President Roosevelt by reregulating the economy and pushing out the frontiers of the state.

It is important to remember that the U.S. economy is built on industry and innovation and doubling the Department of Education or beefing up municipal bureaucracies does little to expand manufacturing or R&D. Making the Federal Reserve the systemic regulatory does nothing to dismantle the destructive compensation practices on Wall Street.

President Obama’s stimulus package is too weighed down with political baggage that will not boost employment—a bigger budget for the National Endowment for the Arts, extended welfare benefits, unemployment insurance for part-time workers—or create private sector jobs—extensive expansion of the Department of Education and fiscal relief for state and local governments that have added employment during the current contraction. Virtually all the jobs the stimulus package will create will not be permanent and those that are permanent will overwhelmingly be in government. In the end, someone has to pay taxes, but President Obama’s stimulus package won’t create many new taxpayers—in fact, it may leave us with few of them.

Many of the reforms proposed by President Obama, such as more welfare for the banks, restrictions on carbon emissions that apply to U.S. manufacturers but not their Chinese competitors, and the Employee Freedom of Choice Act which will eliminate secret ballots to select unions, threaten to strangle private initiative much as did the Roosevelt era reforms.

The challenges facing President Barack Obama could not be clearer. The current economic slowdown has two structural causes—bad management practices at the large money center banks and the huge foreign trade deficit. Either address those or preside over economic decline.

Courting Armageddon

The stimulus package will give the economy a temporary lift, but after the money is spent, unemployment will rise again and continue at unacceptable levels indefinitely without successively larger stimulus packages and huge federal borrowing from China and Middle East oil states. The economy is in a depression, not a recession.

To accomplish lasting prosperity, President Obama will have to fix the banks and the trade deficit. Obama must create a bad bank to work out perform triage on mortgages—work out mortgages for homeowners that are in trouble but can be saved, foreclose on those that can’t be reasonably assisted, and let mature those that will be otherwise repaid. Then the banks can sell new shares, repay their TARP assistance and once again make new loans to worthy homebuyers and businesses. Obama must make certain that banks do not continue to squander federal largess by paying outsized executive salaries and bonuses, acquiring other banks and pursuing new high-return, high-risk lines of businesses in merger activity, carbon trading and complex derivatives.

Questionable mortgage and other loan-backed securities must be completely removed from the books of commercial banks, and commercial banks must be separated in their ownership and control from other financial services, such as riskier investment banking, securities trading and hedge fund operations. Freed of these distractions, commercial banks could again raise private capital and repay TARP funds to the Treasury—essentially, purchase back the Treasury’s preferred shares in the commercial banks.

The yet unspent TARP money could be used to capitalize a “bad bank” or “aggregator bank” that would provide assistance to those distressed homeowners that can be reasonably assisted, undertake necessary foreclosures where homeowners simply cannot repay even with reasonable assistance, and service the vast majority of mortgages that left alone will be repaid. This would limit foreclosures to manageable numbers and put a floor under the decay in housing values. The bad bank would likely turn a profit, as did the Resolution Trust Corporation during the Savings and Loan Crisis and the Home Owners’ Loan Corporation during the Great Depression.

Instead, Secretary Geithner proposes a scheme to further enrich hedge funds and bankers instead of reforming the banking system.

Money spent on imported oil and imports of Chinese goods cannot be spent in the United States. Quite simply, those dollars don’t come back to purchase U.S. exports in sufficient amounts, and the resulting trade deficits are a huge structural drag on the demand for U.S. goods and services. That is why huge federal deficits are needed to keep the economy going but can’t be sustained indefinitely. Ultimately, trade deficits on oil and with China must be dramatically reduced to achieve adequate demand for U.S. production and employment and accomplish sustainable economic growth.

Most of President Obama’s energy proposals entail generating, transmitting and using electricity more efficiently. However most electricity is generated using domestic coal, natural gas and nuclear power; and reducing the oil import bill will require higher mileage standards for automobiles. Carmakers can build more efficient internal combustion engines and alternative propulsion vehicles; however, with cars lasting more than 15 years, incentives must be provided to get the gas guzzlers off the road sooner. A clunker subsidy based on the age of the vehicle and miles-per-gallon gained could encourage the rapid replacement of low mileage trucks, and SUVs; incentives to purchase fuel efficient vehicles could do more to stimulate the economy than tax rebates, increasing the budget of the National Endowments to the Arts and similar agencies, and hiring more local government bureaucrats.

China continues to print yuan and sell those for U.S. dollars in foreign exchange markets to keep the value of its currency artificially low. This makes exports artificially cheap in U.S. markets, U.S. exports artificially expensive in China, and causes U.S. manufacturers to shift production to China in industries where its low-cost labor provides little advantage, like automobiles and advanced automotive components.

If China refuses to stop currency manipulation to prop up its exports and to shut out imports, the Obama Administration should tax dollar-yuan conversion in direct proportion to China’s currency market intervention.

At his confirmation hearing Treasury Secretary Geithner acknowledged China is manipulating its currency and promised to work toward a realignment of currency values. But since then, Vice President Bidden backed off this position, much as did Democratic Senator Charles Schumer from his bill to take action against currency manipulation during the Bush presidency.

Near term, a stimulus package focused on infrastructure is critical for resuscitating growth. The recent round of tax rebate checks ended up in savings accounts or spent at the Wal-Mart on Chinese goods, and did little to create jobs or accelerate growth. Whereas projects to repair roads, rehabilitate schools and refurbish public buildings would create high-paying jobs at home and provide a legacy in capital improvements that assist growth now and in the future.

However, stimulus spending, alone, won’t fix what’s broke. Without fixing the banks, energy and trade with China, the stimulus package will give the economy a temporary lift, but then unemployment will rise again. Keeping Americans employed would then require progressively larger stimulus packages and foreign borrowing. Eventually, the foreign line of credit would run out, and widespread unemployment, depression and economic decline would follow.

Wages and Unemployment

In March, wages rose three cents per hour, or less than 0.2 percent. Wage pressures pose little threat to accelerate inflation.

The unemployment rate was 8.5 percent in March, up from 8.1 percent in February. However, these numbers belie more fundamental weakness in the job market. Discouraged by a sluggish job market, many more adults are sitting on the sidelines, neither working nor looking for work, than when George Bush became president. Factoring in discouraged workers, who have left the workforce, and those forced into part time employment owing to the lack of full time work, the unemployment rate is about 16.7 percent.

Manufacturing, Construction and the Quality of Jobs

Going forward, the economy will add some jobs for college graduates with technical specialties in business, health care, education, and engineering. However, for high school graduates without specialized technical skills or training and for college graduates with only liberal arts diplomas, jobs offering good pay and benefits remain tough to find. For those workers, who compose about half the working population, the quality of jobs continues to spiral downward.

Historically, manufacturing and construction offered workers with only a high school education the best pay, benefits and opportunities for skill attainment and advancement. Troubles in these industries push ordinary workers into retailing, hospitality and other industries where pay often lags.

Construction employment fell by 126,000 in March. This is a terrible indicator for future GDP growth. Retailing shed 48,000 jobs, and financial services lost 25,000 jobs.

Manufacturing lost 161,000 jobs, and over the last 108 months, manufacturing has shed 5.0 million jobs. The trade deficit with China and other Asia exporters are the major culprits.

Adding Up the Costs

The dollar is too strong against the Chinese yuan, Japanese yen and other Asian currencies. The Chinese government intervenes in foreign exchange markets to suppress the value of the yuan to gain competitive advantages for Chinese exports, and the yuan sets the pattern for other Asian currencies. Similarly, Beijing subsidizes fuel prices and increasingly requires U.S. manufacturers to make products in China to sell there.

Ending Chinese currency market manipulation and other mercantilist practices are critical to reducing the non-oil U.S. trade deficit, and instigating a recovery in U.S. employment in manufacturing and technology-intensive services that compete in trade. Neither Presidents Bush and Obama nor Congressional leaders like Charles Rangel and Charles Schumer have been willing to seriously challenge China on this issue.

Either President Obama must get behind a policy to reverse the trade imbalance with China, or preside over the wholesale destruction of many more U.S. manufacturing jobs. These losses have little to do with free trade based on comparative advantage. Instead, they derive primarily from currency practices that make Chinese products artificially cheap in U.S. and other markets and Chinese restrictions on imports. These Chinese policies deprive Americans of jobs in industries where they are truly internationally competitive.

Each dollar spent on imports that is not matched by a dollar of exports reduces domestic demand and employment, and shifts workers into activities where productivity is lower. Productivity is at least 50 percent higher in industries that export and compete with imports, and reducing the trade deficit and moving workers into these industries would increase GDP.

Were the trade deficit cut in half, the movement of workers and capital into more productive export and import-competing industries would increase by at least $400 billion or about $2500 for every working American. Workers’ wages would not be lagging inflation, and ordinary working Americans would more easily find jobs paying higher wages and offering decent benefits.

Put another way, the trade deficit is reducing 2009 GDP by $400 billion or about $2000 billion per worker.

Manufacturers are particularly hard hit by this subsidized competition. Through recession and recovery, the manufacturing sector has lost 5.0 million jobs since 2000. Following the pattern of past economic recoveries, the manufacturing sector should have regained about 2.5 million of those jobs, especially given the very strong productivity growth accomplished in durable goods and throughout manufacturing.

Longer-term, persistent U.S. trade deficits are a substantial drag on productivity growth. U.S. import-competing and export industries spend three-times the national average on industrial R&D, and encourage more investments in skills and education than other sectors of the economy. By shifting employment away from trade-competing industries, the trade deficit reduces U.S. investments in new methods and products, and skilled labor.

Cutting the trade deficit in half would boost U.S. GDP growth by one percentage point a year, and the trade deficits of the last two decades have reduced U.S. growth by one percentage point a year.

Lost growth is cumulative. Thanks to the record trade deficits accumulated over the last 10 years, the U.S. economy is about $1.5 trillion smaller. This comes to about $10000 per worker.

The Eclipse of American Leadership

In the end, without assertive steps to fix trade with China, as well as fix the banks and curtail oil imports, the Bush years will seem like a walk through the park compared to job and real income losses Americans will suffer during the Obama years.

Had the Administration and the Congress acted responsibly to reduce the deficit, American workers would be much better off, tax revenues would be much larger, and the federal deficit could be eliminated without cutting spending.

The damage grows larger each month, as the Administration and Congress dally and ignore the corrosive consequences of the trade deficit.

The choices for the new president are simple. It’s either recovery or depression. Fix the banks, trade with China and energy policy or preside over American decline and the eclipse of American leadership at the hands of China.

Peter Morici is a Professor at the Smith School of Business, University of Maryland School, and former Chief Economist at the U.S. International Trade Commission.

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