Today's Stories

April 9, 2009

Mike Whitney
The Decade of Darkness

Patrick Cockburn
What It Would Take to Mend Fences with Islam

Stephen Soldz
Diagnostic Abuse of Veterans

P. Sainath
The Rise of the Shoe-cide Bomber

Gareth Porter /
Jim Lobe
Obama and Israel's Threat to Strike Iran

Jerry Kroth
Saving GM From Bankruptcy--With the Stroke of a Pen

April 8, 2009

John Prados
The Af-Pak Paradox

Bill Moyers /
Michael Winship
Changing the Rules of the Blame Game

Winslow T. Wheeler
The Tooth Fairy and the Defense Budget

Russell Mokhiber
PBS Lashes Back

Kathy Sanborn
Depression Fury

Rev. William E. Alberts
If the Shoe Fits: Bush and Al-Zaidi

James McEnteer Rashomon and the Binghamton Shooter: the Rush to Interpret Jiverly Wong's "Statement"

Nadia Hijab
Olmert's Nightmare

Adam Turl
Card Check on the Ropes

Kevin Zeese
Escaping the Drug War Quagmire

Website of the Day
Walk Score Your Neighborhood

April 7, 2009

David Price
Counterinsurgency's Free Ride

Uri Avnery
Who's the Boss?

Chris Floyd
Talking Peace in Prague, Dropping Bombs in Pakistan

Winslow T. Wheeler Defense Cuts: Gates and the System

Marjorie Cohn
Prosecuting the Bush Torture Team: Spain Leads the Way

Dean Baker
Hands Off Social Security

Diana Johnstone
NATO, Strasbourg and the Black Block

Dave Lindorff
Politicizing Accounting

Martha Rosenberg
Life on HBO's Factory Hog Farm

Evelyn Pringle
Motherhood and the Psycho-Pharmaceutical Complex

Website of the Day
Gaza: Closed Zone

April 6, 2009

Michael Hudson
The IMF Rules the World

Andy Worthington Bagram: Guantánamo's Dark Mirror

Ray McGovern
Profiles in Cowardice: Eric Holder and Colin Powell

Deepak Tripathi
The Pakistan Enigma

Mike Whitney
Bernanke's Financial Rescue Plan: a Glide-Path to Destitution

Norman Solomon
Meet the New Escalators: the Democrats and the Afghan War

Jonathan Cook
Israel Railways Accused of Racism in Firing of Arab Workers

Judith Bello
Justice for the Developmentally Disabled

Deena Metzger Blackwater in Liberia

Dr. M. Kamiar
"There's No 'Eye' in Iran:" Obama's Pronunciation Problem

Website of the Day
Prison Talk

April 3-5, 2009

Alexander Cockburn
From Twin Towers to Twin Camelots

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

Sue Sturgis
Fooling with Disaster? Startling Revelations About Three Mile Island Raise New Doubts Over Nuclear Plant Safety

Peter Morici
Girding for a Depression

Kathy Sanborn
Homeless in Tent City, USA

Andy Worthington
Britain's Guantánamo: Fact or Fiction?

Rob Larson
Subprime Supreme Court: The Roberts Court Has Become a Powerful New Tool for Business

Saul Landau
Biden and Nixon: a Tale of Two Latin American Experiences

Steve Early
An Evening with Andy Stern

John Goekler
Was Gaza Israel's Waterloo?

Rannie Amiri
Arab League Reconciliation Summit a Bust

Dave Lindorff
Hooray for Juries! A Courtroom Victory for Ward Churchill and Academic Free Speech

Lee Ballinger
Sound Garden: Tom Morello at the Grammy Museum

Ron Jacobs
Artifacts for Survival

David Macaray
AIG Plays the Sympathy Card

John Wight
G20: Capital's New World Symphony

Keeanga-Yamahtta Taylor
Race in the Obama Era

Mychal Bell
Surviving Jena Six

Missy Beattie
Hoop Hopes, War and Peace

Reza Fiyouzat
The Iran/US Rapproachment Dance

Michael Boldin
The War on Drugs is a War on You

Christopher Brauchli
The Pope's Batting 50-50

Charles R. Larson
Too Much Stuff

Susie Day
Bernie Breakout Shocker!!

Stephen Martin
Gordon Brown's Chicken Run at the G20

Kim Nicolini
"Last House on the Left:" Vigilantes of the Bourgeoisie

David Yearsley
Homage to Moog and Mallards

Phyllis Pollack
An Interview with Legendary Rock Producer Chris Kimsey on Working with the Stones, Ronnie Wood, Jimmy Cliff, Peter Tosh and Saint Jude

Poets' Basement
Foley, Valentine and Kozak

Website of the Day
The Corner Store

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

April 9, 2009

Light at the End of the Tunnel? Wrong!

The Decade of Darkness

By MIKE WHITNEY

It's been 21 months since two Bear Stearns hedge funds defaulted, setting off a series of events which have led to the gravest economic crisis since the Great Depression. No one expected the financial earthquake to shake this hard or ripple this fast. The failure at Bear triggered a shock in the secondary market where mortgage loans are repackaged into securities and sold to investors. That market is now completely paralyzed cutting off 40 percent of funding for consumer and business loans and thrusting the broader economy into a deep recession. Banks and financial institutions have been forced to curtail their off-balance sheet operations and build their reserves which have ballooned from $45 billion to nearly $700 billion in the last 6 months alone. Like millions of homeowners who have seen their home equity vanish and their retirement savings slashed in half, the banks are hunkering down, hoping they can outlast the deflationary hurricane ahead.

Deteriorating economic conditions have taken their toll on consumer confidence and forced businesses to lay off employees that won't be needed during the slowdown. The system is hollow as an empty tomb with overcapacity. Demand is falling faster than any time since the 1930s. Inventories will have to be trimmed and budgets cut to muddle through the down-times. Foreign trade has slowed to a crawl, auto sales are down by 40 per cent or more, and unemployment is rising at a rate of 650,000 per month. Policymakers have pushed through a $800 billion stimulus plan, but it won't be nearly enough to stop the steady rise in unemployment or take up the slack in an economy where industrial output has been cut in half, new home construction has dropped to record lows, and manufacturing has fallen off the cliff.  Economists warn that when governments don't step in and provide stimulus to increase aggregate demand, consumers cut back sharply on spending  and push the economy deeper into depression.

Treasury Secretary Geithner and Fed chief Bernanke have lent or committed $13 trillion trying to keep the financial system functioning, but they've only managed to plug a few holes and avoid a system-wide collapse. The financial system is hobbled and unable to provide sufficient credit to generate growth. Every sector has suffered cutbacks, layoffs and slimmer profits. The problems go beyond toxic assets or complex derivatives. The system is plagued with stagnation, overcapacity and redundancy. The UCLA-based historian professor Robert Brenner sums it up like this in an interview in the Asia Pacific Journal:

"The current crisis is more serious than the worst previous recession of the postwar period, between 1979 and 1982, and could conceivably come to rival the Great Depression, though there is no way of really knowing. Economic forecasters have underestimated how bad it is because they have over-estimated the strength of the real economy and failed to take into account the extent of its dependence upon a buildup of debt that relied on asset price bubbles. In the U.S., during the recent business cycle of the years 2001-2007, GDP growth was by far the slowest of the postwar epoch. There was no increase in private sector employment. The increase in plants and equipment was about a third of the previous, a postwar low. Real wages were basically flat. There was no increase in median family income for the first time since World War II. Economic growth was driven entirely by personal consumption and residential investment, made possible by easy credit and rising house prices. Economic performance was weak, even despite the enormous stimulus from the housing bubble and the Bush administration’s huge federal deficits. Housing by itself accounted for almost one-third of the growth of GDP and close to half of the increase in employment in the years 2001-2005. It was, therefore, to be expected that when the housing bubble burst, consumption and residential investment would fall, and the economy would plunge. " ("Overproduction not Financial Collapse is the Heart of the Crisis", Robert P. Brenner speaks with Jeong Seong-jin, Asia Pacific Journal)

The economy is now in a downward spiral. Tightening in the credit markets has made it harder for consumers to borrow or businesses to expand.  Overextended financial institutions are forced to shed assets at fire sale prices to meet margin calls from the banks. Asset deflation is ongoing with no end in sight. Price declines in housing have reached 30 percent already and are now accelerating on the downside. This is the nightmare scenario that Bernanke hoped to avoid; a savage contraction in real estate that drags the rest of economy into a black hole. The economist Nouriel Roubini and market analyst Meredith Whitney predict that housing prices will drop another 20 per cent before they hit bottom. Nearly half of all homeowners will be underwater and owe more on their mortgages than the current value of their homes. That will increase the foreclosures and push scores of banks into default. According to Merrill Lynch's economist David Rosenberg:

"It would take over three years to achieve price stability (in housing) The problem is that prices do not begin to stabilize until we break below eight months’ supply – and they tend to deflate 3 per cent per quarter until that happens. So as impressive as it is that the builders have taken single-family starts below underlying sales, their efforts are just not sufficient to prevent real estate prices from falling further. In fact, even if the builders were to declare a moratorium immediately, that is, taking starts to zero,  demand is so weak and the unsold inventory so intractable that it would now take over three years to achieve the holy grail of price stability in the residential real estate market."

The main economic indicators all point to a long period of retrenchment ahead. The slowdown in global trade has hit Germany, Japan, and most of Asia particularly hard. The export-driven model of growth has suffered a major setback and won't rebound for some time to come. With the  heroic US consumers unable to continue their debt-fueled spending efforts, surplus countries will have to develop domestic markets for growth, but it won't be easy. Chinese workers save 50 per cent of what they earn and German workers already have a comfortable life without increasing personal consumption. Higher wages and lower interest rates can help stimulate demand, but cultural influences make it difficult to change spending habits. Meanwhile, the economy will continue to languish operating well below its optimum capacity.

Capital flows have also suddenly reversed causing turmoil in the currency markets. January's TIC data indicates that net capital outflows for the US were negative $148 billion in January. Capital is now fleeing the country. Financial protectionism has triggered the repatriation of foreign investment causing a sharp drop in the purchase of US sovereign debt. This is from Brad Setser, an economist with the Council on Foreign Relations:

"The obvious implication of the recent downturn in total reserve holdings — and the $180 billion fall in the fourth quarter of 2008 wasn’t driven by currency moves — is that the pace of growth in the world’s dollar reserves has slowed dramatically...

The obvious implication: most of the 2009 US fiscal deficit will need to be financed domestically. The Fed’s custodial data indicates central banks are still buying Treasuries, though at a somewhat slower pace than in late 2008. But their demand hasn’t kept up with issuance. (Foreign Central banks aren't going to finance much of the 2009 US fiscal deficit; Their reserves aren't growing anymore", Brad Setser, Council on Foreign Relations)

The United States does not have the reserves to finance it own deficits which will soar to $1.9 trillion by the end of 2009. The Fed will have to increase its purchases of US Treasuries and monetize the debt. Foreign holders of Treasuries and dollar-backed assets ($5 trillion overseas) will be watching carefully as Bernanke revs up the printing presses to fight the recession and meet government obligations. China, Russia, Venezuela and Iran have already called for a change in the world's reserve currency. It won't happen overnight, but the momentum is steadily growing.

The S&P 500 has soared 23 per  cent in the last four weeks, but the current bear market rally is misleading. The prospects for a quick recovery are remote at best. The fundamentals are all weak. Corporate profits are down, GDP is negative 6 per cent, housing is in a shambles, and the banking system broken. The Fed has increased the money supply by 22 percent, but economic activity is at a standstill.  The velocity at which money is being spent is the slowest since 1987. Nothing is moving. The banks are hoarding, credit has dried up, and consumers are saving for the first time in 2 decades. The banks' credit-conduit cannot function properly until bad assets are removed from their balance sheets. But the magnitude of the losses make it impossible for the government to purchase them outright without bankrupting the country. According to the Times Online, the IMF has increased its estimates of how much toxic mortgage-backed paper the banks are holding:

"Toxic debts racked up by banks and insurers could spiral to $4 trillion, new forecasts from the International Monetary Fund (IMF) are set to suggest.

The IMF said in January that it expected the deterioration in US-originated assets to reach $2.2 trillion by the end of next year, but it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21. In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia.

Banks and insurers, which so far have owned up to $1.29 trillion in toxic assets, are facing increasing losses as the deepening recession takes a toll, adding to the debts racked up from sub-prime mortgages. The IMF's new forecast, which could be revised again before the end of the month, will come as a blow to governments that have already pumped billions into the banking system."

Since banks lend at a ratio of 10 to 1; the amount of credit cut off to the broader economy will ensure that sluggish growth well into the future. If there is a recovery, it will be weak. The Obama administration will have to increase its capital injections even though they will add to mushrooming deficits.  So far, financial institutions have only written down $1 trillion or 25 percent of their losses. This means the banking system is insolvent. Eventually, Obama will have to resolve the bad banks and auction off troubled assets, even though political support is rapidly eroding. According to political analyst F. William Engdahl, most of the garbage assets are concentrated in the nation's five biggest banks:

"Today five US banks according to data in the just-released Federal Office of Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activity, hold 96 per cent of all US bank derivatives positions in terms of nominal values, and an eye-popping 81 per cent of the total net credit risk exposure in event of default.

The five are, in declining order of importance: JPMorgan Chase which holds a staggering $88 trillion in derivatives (€66 trillion!). Morgan Chase is followed by Bank of America with $38 trillion in derivatives, and Citibank with $32 trillion. Number four in the derivatives sweepstakes is Goldman Sachs with a ‘mere’ $30 trillion in derivatives. Number five, the merged Wells Fargo-Wachovia Bank, drops dramatically in size to $5 trillion. Number six, Britain’s HSBC Bank USA has $3.7 trillion. ("Geithner’s ‘Dirty Little Secret’: The Entire Global Financial System is at Risk", F. William Engdahl, Global Research)

These five banking Goliaths are at the center of political power in America today. Their White House emissary, Timothy Geithner, has concocted a rescue plan--the Public-Private Investment Program--which will  provide  94 per cent funding  from the FDIC for the purchase bad assets. The program is designed to keep asset prices artificially high while transferring the bulk of the losses to the taxpayer. The plan has been widely criticized and has even raised a few eyebrows even among usually-supportive members of the establishment like the Financial Times:

"US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JP Morgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury’s $1,000bn (£680bn) plan to revive the financial system.

The plans proved controversial, with critics charging that the government’s public-private partnership - which provide generous loans to investors - are intended to help banks sell, rather than acquire, troubled securities and loans.

Banks have three options if they want to buy toxic assets: apply to become one of four or five fund managers that will purchase troubled securities; bid for packages of bad loans; or buy into funds set up by others. The government plan does not allow banks to buy their own assets, but there is no ban on the purchase of securities and loans sold by others." (The Financial Times)

It's a multi-billion dollar shell game with myriad opportunities for fraud. In theory, the banks could create their own off-balance sheet operations (SIVs or SPEs) and use them to purchase their own bad assets taking advantage of the government's 94 percent low interest non recourse loans.  It's a swindle and another windfall for Wall Street.

Geithner's plan does not fix the problems with the banks, it only delays the final outcome. The next leg-down in the recession will push many of the undercapitalized banks into receivership. Geithner's PPIP won't change that.  As housing prices fall and foreclosures rise, the capital position of many of the banks will become untenable leading to a rash of bank failures. An article in Monday's Wall Street Journal puts adds some historical perspective to today's financial crisis:

"The events of the past 10 years have an eerie similarity to the period leading up to the Great Depression. Total mortgage debt outstanding increased from $9.35 billion in 1920 to $29.44 billion in 1929. In 1920, residential mortgage debt was 10.2 per cent of household wealth; by 1929, it was 27.2 per cent of household wealth....

The causes of the Great Depression need more study, but the claims that losses on stock-market speculation and a monetary contraction caused the decline of the banking system both seem inadequate. It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt -- especially mortgage debt -- that was transmitted into the financial sector during a sharp downturn.

 Why does one crash cause minimal damage to the financial system, so that the economy can pick itself up quickly, while another crash leaves a devastated financial sector in the wreckage? The hypothesis we propose is that a financial crisis that originates in consumer debt, especially consumer debt concentrated at the low end of the wealth and income distribution, can be transmitted quickly and forcefully into the financial system. It appears that we're witnessing the second great consumer debt crash, the end of a massive consumption binge." (From Bubble to Depression? Steven Gjerstad and Vernon L. Smith, Wall Street Journal)

Two leading economic historians, Barry Eichengreen and Kevin H. Rourke,  have written an article "A Tale of Two Depressions" which has been widely circulated on the Internet. It illustrates (with graphs) how the global economy is plummeting faster now than during the 1930s.  

Stockbrokers aren’t selling apples yet, but the velocity of present downturn is worse than the Great Depression. Manufacturing, industrial production, foreign trade, capital flows, consumer confidence, housing, and even stocks are falling faster today than after the crash of 1929. So far, Bernanke's monetary bandaids have prevented the wholesale collapse of the financial system, but that could change. The economy continues its downhill slide and it looks like there's nothing to stop it from falling further still.

Mike Whitney lives in Washington state and can be reached at fergiewhitney@msn.com

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