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Eamonn Fingleton gives a stunning account of how the elite press – the Wall Street Journal, The Economist, the New York Times and Washington Post - pilloried US autworkers while systematically concealing the hidden subsidies which have allowed Japan and Korea to destroy Detroit. All this with the connivance of the US government. Also in our latest newsletter: Michelle Obama comes to Merced. Bill Hatch, the Balzac of the Central Valley, gives an uproarious account of Michelle’s state visit to UC’s new campus. Get your new edition today by subscribing online or calling 1-800-840-3683 Contributions to CounterPunch are tax-deductible. Click here to make a donation. If you find our site useful please: Subscribe Now! CounterPunch books and gear make great presents.
How the U.S. Press Helped Destroy the Auto IndustryOrder CounterPunch By Email For Only $35 a Year !
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Today's Stories June 9, 2009 Winslow T. Wheeler June 8, 2009 John Ross Paul Craig Roberts Franklin C. Spinney Franklin Lamb Uri Avnery Jonathan Cook Eric Toussaint Jim Goodman Norman Solomon Reza Fiyouzat Website of the Day June 5 -7, 200 Alexander Cockburn George Galloway Paul Craig Roberts Jennifer Loewenstein Franklin Lamb Mike Whitney Andy Worthington Missy Comley Beattie Farzana Versey Stanley Heller John V. Whitbeck Robert Weissman Lee Sustar Dave Lindorff William Blum Ernest Callenbach / Greg Moses Ron Jacobs David Yearsley Tim Stelloh Belén Fernández David Ker Thomson Karyn Strickler Christopher Brauchli Charles R. Larson Kim Nicolini Lorenzo Wolff Poets' Basement Website of the Weekend June 4, 2009 Arno J. Mayer Mike Whitney Gareth Porter Ayesha Ijaz Khan Mouin Rabbani Jordan Flaherty Adam Turl Nikolas Kozloff Yifat Susskind Website of the Day June 3, 2009 Paul Craig Roberts Kathy Kelly Alan Farago Franklin Lamb Bill Hatch Nadia Hijab Dean Baker Binoy Kampmark Manuel Garcia, Jr. Remi Kanazi Behzad Yaghmaian Website of the Day June 2, 2009 Uri Avnery Robert Weissman Conn Hallinan Gideon Spiro Roger Burbach Dylan Quigley Dave Lindorff Ray McGovern Belén Fernández Martha Rosenberg Willie L. Pelote, Sr. Website of the Day June 1, 2009 Pam Martens Yitzhak Laor Mark Weisbrot Ramzy Baroud Saul Landau Eugenia Tsao Afshin Rattansi Debra Sweet Abdul Malik Mujahid Bill Quigley John Wright Website of the Day May 29-31, 2009 Alexander Cockburn Patrick Cockburn Vijay Prashad Gary Leupp Ray McGovern Rannie Amiri Bill Hatch Chellis Glendinning, Stephanie Mills and Kirkpatrick Sale Phyllis Pollack David Yearsley Jean-Christophe Servant Dave Lindorff James McEnteer Missy Beattie James C. Faris David Macaray Harvey Wasserman Adam Federman David Ker Thomson Mark Seth Lender Stephen Martin Joseph Nevins Sophia Mihic Lorenzo Wolff Poets' Basement Website of the Weekend May 28, 2009 Joan Roelofs Paul Craig Roberts Ralph Nader Mouin Rabbani Joe Bageant James McEnteer Dedrick Muhammad Richard Morse David Macaray Harvey Wasserman Website of the Day May 27, 2009 Joanne Mariner Paul Craig Roberts Walden Bello Dave Lindorff Brian M. Downing Carlos Villarreal Nadia Hijab Adam Federman Laray Polk Isabella Kenfield David Michael Green Website of the Day May 26, 2009 Manuel Garcia, Jr. Mike Whitney Sharon Smith Marjorie Cohn Dean Baker Deepankar Basu Fred Gardner Jordan Flaherty Josh Ruebner Brian Cloughley Website of the Day May 25, 2009 Diane Christian John Ross Kenneth Hartman Uri Avnery Fred Gardner Cindy Sheehan Sen. Russell Feingold Sibel Edmonds Franklin Lamb Dave Lindorff Daniel Wolff Website of the Day May 22-24, 2009 Alexander Cockburn Michael Teitelman Mike Whitney Ray McGovern Sonia Cardenas / Clive Hamilton Conn Hallinan Fred Gardner Carlo Cristofori Dean Baker Rannie Amiri Andy Worthington David Macaray Nadia Hijab Franklin Lamb Ted Newcomen David Ker Thomson David Rosen Mark Weisbrot Robert Fantina Heather Gray Farzana Versey Chris Genovali Ron Jacobs Jay Diamond Dr. Susan Block Ben Sonnenberg David Yearsley Lorenzo Wolff Poets' Basement Website of the Weekend May 21, 2009 Jeffrey St. Clair / Paul Craig Roberts Chris Floyd Gerald Paoli Zach Mason Uri Avnery Andy Worthington Niranjan Ramakrishnan Norman Solomon Dave Lindorff Website of the Day May 20, 2009 Michael Hudson Gary Leupp Michael D. Yates Jonathan Cook Peter Lee Binoy Kampmark Peter Zinn William Loren Katz Gary Lapon Trudy Bond Website of the Day May 19, 2009 Kristoffer Rehder Mike Whitney Ray McGovern Vijay Prashad Mirjam Hadar Meerschwam Mustafa Barghouthi Andy Worthington Binoy Kampmark John Walsh David Macaray Website of the Day May 18, 2009 Dave Lindorff Abdul Malik Mujahid Jonathan Cook Ben Rosenfeld Patrick Cockburn Ralph Nader Stephen Soldz Eugenia Tsao Walter Brasch Roberto Rodriguez Charlotte Laws Website of the Day May 15-17, 2009 Alexander Cockburn Jeffrey St. Clair David Rosen Mike Whitney Bruce Page Jeremy Scahill Fred Gardner Tom Barry Mats Svensson Ramzy Baroud Mark Engler Mark Weisbrot Farzana Versey Ron Jacobs Hannah Wolfe Cal Winslow David Macaray Christopher Brauchli Mark Seth Lender Robert Fantina David Ker Thomson Stephen Martin Charles R. Larson Chase Madar Kim Nicolini David Yearsley Lorenzo Wolff Poets' Basement Website of the Weekend May 14, 2009 Michael Hudson Andy Worthington Paul Craig Roberts Jonathan Cook Ray McGovern Lance Selfa David Green Dave Lindorff Frida Berrigan Sue Udry Website of the Day May 13, 2009 Brian M. Downing Gareth Porter Robert Sandels Ricardo Alarcón Eric Walberg Dave Lindorff Deepak Tripathi William S. Lind Kevin Zeese Franklin Lamb Website of the Day May 12, 2009 Gary Leupp Richard Neville Wajahat Ali Dean Baker Franklin Lamb Norman Solomon Paul Craig Roberts Lisa M. Hamilton Bob Fitrakis / David Macaray Website of the Day May 11, 2009 Andrea Peacock Michael Hudson Patrick Cockburn Ralph Nader John Kelly Saul Landau Dave Lindorff David Michael Green Anthony Papa Paul Krassner Website of the Day
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June 9, 2009 Hanging By a ThreadIs Hyper-Inflation Around the Corner?By MIKE WHITNEY The Republicans are convinced that hyperinflation is just around the corner, but don't believe it. The real enemy is deflation, which is why Fed chief Bernanke has taken such extraordinary steps to pump liquidity into the system. The economy is flat on its back and hemorrhaging a half a million jobs per month. The housing market is crashing, retail sales are in a funk, manufacturing is down, exports are falling, and consumers have started saving for the first time in decades. There's excess capacity everywhere and aggregate demand has dropped off a cliff. If it wasn't for the Fed's monetary stimulus and myriad lending facilities, the economy would be stretched out on a marble slab right now. So, where's the inflation? Here's Paul Krugman with part of the answer:
Krugman believes that conservatives have conjured up the inflation hobgoblin for political purposes to knock Obama's recovery plan off-course. But even if he's mistaken, there's little chance that inflation will flare up anytime soon because the economy is still contracting, albeit at a slower pace than before. A good chunk of the Fed's liquidity is sitting idle in bank vaults instead of churning through the system. According to Econbrowser, excess bank reserves have bolted from $96.5 billion in August 2008 to $949.6 billion by April 2009. Bernanke hoped the extra reserves would help jump-start the economy, but he was wrong. The people who need credit, can't get it; while the people who qualify, don't want it. It's just more proof that the slowdown is spreading. That doesn't mean that the dollar won't tumble in the next year or so when the trillion dollar deficits begin to pile up. It probably will. Foreign investors have already scaled back on their dollar-based investments, and central banks are limiting themselves to short-term notes, mostly 3 month Treasuries. If Bernanke steps up his quantitative easing and continues to monetize the debt, there's a good chance that central bankers will jettison their T-Bills and head for the exits. That means that if he keeps printing money like he has been, there's going to be a run on the dollar. Now that the stock market is showing signs of life again, investors are moving out of risk-free Treasuries and into equities. That's pushing up yields on long-term notes which could potentially short-circuit Bernanke's plans for reviving the economy. Mortgage rates are set off the 10 year Treasury, which shot up to 3.90 per cent by market's close last Friday. The bottom line is that if rates keep rising, housing prices will plummet and the economy will tank. This week's auctions will be a good test of how much interest there really is in US debt. At some point in the next year, the dollar will lose ground and commodities will surge, causing uneven inflation. But for how long? That depends on the state of the economy. Dollar weakness and speculation can drive up the price of oil, (oil is up 100 per cent in the last two and a half months, from $34. to $68.) but falling demand will eventually bring prices back to earth. Presently, there's a bigger glut of oil sitting in tankers offshore than anytime in the last 15 years. Which brings us back to the original question; how bad is the economy? The answer is, really bad! As Dean Baker points out,
Don't be fooled by the cheery news in the media. The economy is hanging by a thread and recovery is still a long way off. The only way to dig out of this mess is to address the underlying problems head-on. That means removing the toxic assets from the banks, revamping the credit system, and rebuilding battered household balance sheets. If these issues aren't resolved, the problems will drag on for years to come. And even if they are fixed, the economy is still facing a long period of deleveraging and retrenching followed by an anemic recovery. Obama's fiscal stimulus might give GDP a jolt in the third quarter, but without help from the government checkbook, economic activity will stay in the doldrums. Last month, personal savings increased to nearly 6 per cent while consumer credit fell by $15.7 billion, the second largest decline in debt on record. According to Brad Setser of the Council on Foreign Relations, "Total borrowing by households and firms fell from over 15 per cent of GDP in late 2007 to a negative 1 per cent of GDP in q4 2008." How can these losses to GDP be made up when private borrowing has vanished without a trace? Consumers have shut their wallets, locked their purses and are refusing to take on any more debt. Despite government efforts to restart the credit markets by backing up loans for 0 per cent financing on auto sales and $8,000 tax credit on the purchase of a new home, (which is tantamount to subprime lending) consumers are digging in their heels. All the hype about inflation hasn't sent them racing back to the shopping malls or the auto showrooms. Consumers have reached their saturation point and they are not budging. It's the end of an era. The unemployment picture is getting bleaker and bleaker. Last week's report from the Bureau of Labor Statistics concealed the real magnitude of the job losses by using the discredited "Birth-Death" model which exaggerates the number of people reentering the workforce. Here's what former Merrill Lynch chief economist David Rosenberg had to say about Friday's BLS report: "The headline nonfarm payroll figure came in above expectations at -345,000 in May - the consensus was looking for something closer to -525,000. The markets are treating this as yet another in the line-up of 'green shoots' because the decline was less severe than it was in April (-504,000), March (-652,000), February (-681,000) and January (-741,000). However, let's not forget that the fairy tale Birth-Death model from the Bureau of Labor Statistics (BLS) added 220,000 to the headline - so adjusting for that, we would have actually seen a 565,000 headline job decline." The BLS figures have been denounced by every econo-blogger on the Internet. The figures are another example of the government's determination to airbrush any unpleasant news about the recession. Here's a better summary of the unemployment numbers from Edward Harrison at credit writedowns:
Unemployment now stands at 9.4 per cent (16.4 per cent?) and will continue to rise whether there's an uptick in economic activity or not. Businesses are shedding jobs at record pace, and slashing hours at the same time. The average workweek slipped to 33.1 hours (down 2 hours from April) a new low. It goes without saying, that unemployment is highly deflationary because jobless people have to cut out all unnecessary spending. Beyond the 500,000 layoffs per month; wages and benefits are also under pressure, making a rebound in consumer spending even less probable. This is from Brian Pretti's article "Place Your Wagers":
From a worker’s point of view, things have never been worse. Demand is falling, employers are slashing inventory and handing out pink slips, and entire industries are being boarded up and shut down or shipped overseas. Economists Barry Eichengreen and Kevin O'Rourke make the case that, in many respects, conditions are deteriorating faster now than they did in the 1930s. Here's what they found:
Their conclusion: "Today's crisis is at least as bad as the Great Depression." Yeah, times are tough, but what happens when housing prices stabilize and the jobs market begins to pick up; won't that put the Fed's trillions of dollars into circulation and create Wiemar-type hyperinflation? Many people think so, but Edward Harrison anticipates a completely different scenario. The author takes into account the psychological effects of a deep recession and shows how trauma can have a lasting effect on consumer habits, thus, minimizing the chance of inflation. Seductive interest rates, lax lending standards and nonstop public relations campaigns, persuaded millions of people that they could live beyond their means by simply filling out a credit app. or fudging a few numbers on a mortgage loan. These are the real victims of Wall Street's speculative bubble-scam. For many of them, the agony of losing their home, or their job, or filing for personal bankruptcy will be felt for years to come. At the same time, the experience will keep many of them from getting in over their heads again. The same phenomenon occurred during the Great Depression. The pain of losing everything shapes behavior for a lifetime, which is why the savings rate has spiked so dramatically in the last few months. This bad for short-term recovery. Deflation will persist even while savings grow and consumption comes more into line with personal income. The dollar will fall hard if Bernanke continues to load up on Treasuries, but with a few slight adjustments, he should be able to avoid a full-blown currency crisis. Thus, hyperinflation is unlikely. Mike Whitney lives in Washington state. He can be reached at fergiewhitney@msn.net
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