Today's Stories

October 5, 2009

Pam Martens
Wall Street Titans Use Aliases to Foreclose on Families While Partnering with a Federal Agency

October 2-4, 2009

Alexander Cockburn
Geezer Renditions

Saul Landau
News From Raul Castro

Diana Johnstone
After the German Elections: Is Socialism Really Dead in Europe?

Greg Moses
Cramming for the Downside

William Blum
The Fall of the Berlin Wall: Another Cold War Myth

Brian Cloughley
Iran's Nuclear Program: Where's the Proof?

Russell Mokhiber
Welcome Back, Michael Moore

John Ross
Chomsky in Mexico

Ellen Brown
IMF Catapults From Shunned Agency to Global Central Bank

David Ker Thomson
Cop Shocks

David Macaray
The Audacity of Toyota

Gary Engler
Unions in a Rut

Robert Fantina
Meet the New Boss (Same as the Old Boss)

Lisa Stolarski / Naomi Archer
Pittsburgh: Still a (Coal) Company Town

Anthony Papa
Here is Your Chance to Help End the Failed War on Drugs

Joe Allen
The Good Wife: Bad View of a Corrupt System

Harry Browne
Tarantino Scalps His Audience

Ron Jacobs
Collective Fiction

Charles R. Larson
Cultural Warriors: Austrialian Aboriginal Art Triennial

David Yearsley
Hanns Eisler's Great National Anthem for East Germany is Available: Make It America's

Poets' Basement
Taylor, Gardner and Landau

Website of the Weekend
Wrongful Convictions of Youth

October 1, 2009

Andy Worthington
A Truly Shocking Gitmo Story

Carl Ginsburg
The Great Marginalization

Mary Lynn Cramer
Seniors on the Chopping Block

Col. Douglas Macgregor
The Bog of History in Afghanistan

Brian M. Downing
The Paradox of Financial Disorder

John V. Walsh
Mao's China at 60

Ramzy Baroud
The Big Diversion

Norman Solomon
Starting Another Year of War in Afghanistan

Dan Bacher
Undamming the Klamath

Brenda Norrell
Lazy Journalists are the Darlings of the Corporations

Website of the Day
Neoliberalism as Water Balloon

September 30, 2009

Vijay Prashad
McChrystal's Afghan Desolation

Gareth Porter
U.S. Story on Iran Nuke Facility Doesn't Add Up

Andy Thayer
The Fiasco Behind Chicago's Olympics Bid

Paul Craig Roberts
Another War in the Works

Dean Baker
Medicare Buy-In: What's Wrong With Giving People a Choice?

Ricardo Alarcón de Quesada
Mission Impossible

Laura Flanders
Punch in the Streets, But Not in the Suites

Dave Lindorff
The Baucus Excuse

Seumas Milne
Why British Workers Are Angry

Martha Rosenberg
What Integrity Means to Pfizer

Website of the Day
Why You Should Boycott Hyatt Hotels

September 29, 2009

Marshall Auerback
A Neoliberal Hijacking

Alan Farago
Recovery Without Feeling

Jeff Sher
Shopping for Health Care

Bruce Jackson
60 Minutes and the General

Gareth Porter
Fears of Defeat in Afghanistan

Jonathan Cook
Palestinians in the Israeli Army

Bouthaina Shaaban
Arabs in the International Balance

Dave Lindorff
Looking Under the TARP

Stephen Soldz
Spreading Hysteria About Swine Flu "Hysteria"

Sara Mann
The Party of No Meets the Island of No

Website of the Day
Cosmos, Autotuned

September 28, 2009

Laura Carlsen
The Sound and Fury of the Honduran Coup

Anthony DiMaggio
The U.S., Iran and Nuclear Terror

Paul Craig Roberts
More Lies, More Deceptions

Neve Gordon
On Palestinian Civil Disobedience

Bill Quigley
Street Report From the G20

Harvey Wasserman
Obama's LBJ Moment

Nicola Nasser
Stuck Between Two Failures

Ben Rosenfeld Murder in New Orleans: Remembering Kirsten Brydum

Website of the Day
The Short March

September 25-7, 2009

Alexander Cockburn
The Ruin of His Presidency

Daniel Wolff
Speculating on Education

Rev. William E. Alberts
How "White Magic" Makes the Ism of Race Disappear

Mike Roselle
Send Lawyers, Guns and Money

Saul Landau
Covert Memories From Miami

Eshan Azari
Why Afghan Intellectuals Live in National Despair

Winslow T. Wheeler
The Pentagon Feedlot

Robert Jensen
Is Obama a Socialist?

Jonathan Cook
Sleeping with the Enemy

Nelson P Valdés
Cuba, Hurricanes and the Internet

David Michael Green
Dumping Dubya

Ramzy Baroud
The Goldstone Report and Israeli Impunity

John V. Whitbeck
The Partition Straightjacket

Andy Worthington
Gitmo Trial Delayed ... Again

David Ker Thomson
The Lady Vanishes

Seth Sandronsky
Obama and Race Management

Jim Goodman
Why are Farmers Afraid of Michael Pollen?

Charles R. Larson
From Oppression to Opportunity

David Yearsley
Froberger's Travels

Kim Nicolini
Hardcore Capitalism

Lorenzo Wolff
Transparent Pink

Website of the Weekend
An Emergency Appeal in the Fight Against Big Coal

September 24, 2009

Steven Higgs
Even in Indiana, Doctors Support National Health Insurance

Christopher Brauchli
Death Pays

Marshall Auerback
The Shortfall at the FDIC

Stephanie Westbrook
Italy's Fallen Soldiers

Nadia Hijab
Know Your Dictator

Sen. Russell Feingold
Fixing the Patriot Act, Restoring the Constitution

David Macaray
Goodbye "Norma Rae"

Binoy Kampmark
Curry Bashings in Oz

Joe Allen
Dancing With the Hammer

Website of the Day
The Most Corrupt Members of Congress

September 23, 2009

Paul Craig Roberts
The Economy is a Lie, Too

Gabriel Kolko
The United States in Afghanistan: Eight Years Later

Uri Avnery
The Waldorf-Astoria Summit

Shamus Cooke
The First Shots of the Trade War

Missy Beattie
The Sound of Money

Gareth Porter
Taliban Rising

Mark Weisbrot
How Much Repression Will Hillary Clinton Support in Honduras?

Dr. Susan Block
The Murder of Annie Le

Norm Kent
Pot and the Right to Pursue Happiness

Richard Neville
Apocalypse Porno

Website of the Day
In Carver Country

September 22, 2009

Franklin C. Spinney The Huge Hole in Gen. McChrystal's Afghan Counterinsurgency Strategy

Russell Mokhiber
Who's the Pimp?

Greg Grandin
Zelaya's Brazilian Gambit

Nikolas Kozloff
Salvaging Democracy in Honduras Will Be Tricky

John Ross
Mexico Convulsed by Paranoia

Ron Jacobs
Gen. McChrystal's Salespitch

Tariq Ali
The Afghan Folly

Dave Lindorff
NYT Trashes Single-Payer

Harvey Wasserman
Tom Friedman's Idiocy Atomique

Vijay Prashad
Is Anything Better Than Nothing?

Kareem Shora
After the CIA Torture Report

Website of the Day
Did a State Dept Official Sell Nuclear Secrets?

September 21, 2009

JoAnn Wypijewski
Will Trumka or the Steelworkers Push Labor Into Battle?

Carl Finamore
Backstage at the AFL-CIO Convention

Uri Avnery
Sliming Goldstone and His Report

Nikolas Kozloff
Joe Wilson's Immigration Hypocrisy

Paul Simpson, M.D.
Why Your Doctor May Have PTSD

Alan Nasser
New Deal Liberalism Writes Its Obituary

Ray McGovern
CIA Torturers Running Scared

Dave Lindorff
Thoughts on Saving an Old Barn

Lina Thorne
Women, War and Afghanistan

Jeb Sprague
Confronting the G20

Website of the Day
Petition: Save the Yellowstone Grizzly

September 18-20, 2009

Alexander Cockburn
When Gossip Came Back and Our Modern Age was Born

Russell Mokhiber
Meet the Real Death Panels

Mike Whitney
The Post-Bubble Malaise

David Michael Green
Can America be Salvaged?

Jonathan Cook
Boycott Derails Jerusalem Rail Line

Nadia Hijab
Sinking the Goldstone Report

Mark Weisbrot
Recession, Recovery and Reform: Will Anything Change?

Michael Winship
Let's Make a Deal, Beltway Edition

Michael Leonardi
The Nuclear Dump in the Mediterranean Sea

Andy Worthington
The Kuwaiti Who Met Bin Laden

Fred Gardner
The Prohibitionists' Manifesto

David Macaray
What Happens in Congress Stays in Congress

David Rosen
System Failure and the Garrido Case

Jason Mark
Hacking the Sky

Mike Ferner
In Praise of Senator Baucus

Farzana Versey
The Great Indian Rope Trick

Ron Jacobs
Dr. Guillotin and Dr. Faustus: an Interview with Marc Estrin

elin o'Hara slavick
Flags for Hiroshima: Artist's Statement

Gilad Aztmon
Vengeance, Barbarism and Tarantino's Inglourious Basterds

David Yearsley
Mendelssohn as Organ Maestro

Charles R. Larson
Darkness, Dignity and Hope in Liberia

Lorenzo Wolff
Dialing Up The Clash

Website of the Weekend
Meet Your Conservative Movement

September 17, 2009

Joshua Frank
Max Baucus: the Slick Swindler

Brenda Norrell
Cry Me a River: Uranium and Genocide in Indian Country

Robert Weissman
The Financial Crisis, One Year Later

Pam Martens
The Filmmakers vs. the Capitalists

Franklin Lamb
Palestinian Camps Are Ready to Erupt

Ricardo Alarcón de Quesada
Cuban Five: An Insult to Humanity

Jed Bickman
Drone War Over Pakistan

Alan Farago
The Mayor of Coconut Creek Gets Butterflies

Website of the Day
C.R.O.C.

September 16, 2009

Ray McGovern
Torture and Accountability

Stephen Green
America's Strange Health Care Debate

Andy Worthington
Is Bagram Obama's New Secret Prison?

Dean Baker
Short Sellers: the Unsung Heroes of the Financial Crisis

Anthony DiMaggio
Killing the Messenger

Ricardo Alarcón de Quesada
Cuban Five: The Unheard Call

Benjamin Dangl
Justice Follows Direct Action

Robin Willoughby
The World Seed Conference: Good for Farmers?

Eric Walberg
EuroPeace, the Sounds of Silence

James Ridgeway
Bring That "Boy" Down

Website of the Day
Baucus' Bogus Bill

September 15, 2009

Mike Whitney
The Real Lesson of Lehman's Fall

Mutadhar al-Zaidi
The Story of My Shoe

Marshall Auerback
Government Spending is the Solution--Not the Problem

Afshin Rattansi
The Deal That Led to the Srebrenica Massacre: Former UN Spokeswoman Fingers Holbrooke and the Clinton Administration

Jonathan Cook
How US Tax Breaks Fund Israeli Settlers

Gareth Porter:
Niger Redux? IAEA Conceals Evidence Iran Nuke Docs Were Forged

Dave Lindorff
Congress Needs More Catcalls

Winslow T. Wheeler
Obama and Pentagon Pork

Franklin Spinney
Bin Laden's Latest Message and the Nuttiness of the War on Terror

Karen Korenoski /
Michael Yates
Up in Wood Smoke: Boulder's Dirty Little Secret

David Macaray
Government Cheese

Susie Day
President Mao-bama's Little Red Primer

Website of the Day
The Cotton Pickin' Truth: the Persistance of Slavery in Mississippi

September 14, 2009

Paul Craig Roberts
The Health Care Deceit

M. G. Piety
The Danes Do It (Health Care) Better

Shamus Cooke
Wall Street Under Obama: Bigger and Riskier

Bouthaina Shaaban
Three Faces and a Homeland

Alvaro Huerta
In Defense of the Undocumented: Immigrants and Health Care

John Ross
Mexico Loses Its History

Harvey Wasserman
The Supreme Court and Corporate Money

Adam Federman
The Plight of the Bumblebee

Stephen Fleischman
The Federal Twist

Robert Jensen
Can Journalism Schools be Relevant in a World on the Brink?

Website of the Day
The Origin of Sex Offender Registries

September 11-13, 2009

Alexander Cockburn
Obama's Big Speech: Math Trumps Rhetoric

JoAnn Wypijewski
Trumka Takes Over AFL-CIO

Carl Ginsburg
The Patient as Profit Center

Leonard Peltier
I am Barack Obama's Political Prisoner Now

Franklin Lamb
Ted Kennedy's Changing Take on Israel

Benjamin Dangl
Throwing Bullets at Failed Policies

Mike Whitney
How to Fight Deflation

John Berger
In Search of Antonello

Saul Landau
Watergate and Modern Scandals

Russell Mokhiber
Disgraceful Democrats

Ricardo Alarcón de Quesada
Pryor's Judgment

Felice Pace
NPR's Linda Gradstein Has Done It Again on Gaza

Jordan Flaherty
The Battle Over Discriminatory Housing Laws in New Orleans

Ron Jacobs
It's Time to be Impolite About Afghanistan

David Macaray
The Utility of Boycotts

David Correia
Welcome to the Business-Friendly Carpenter's Union

Robert Bryce
Wind Turbines and Bird Kills

Christopher Brauchli
Defenders of the Classroom

Paul Krassner
Aha! A Few Words About the 9/11 Truth Movement

Charles R. Larson
Deracination

Kim Nicolini
"Extract:" An Exercise in Economic Realism

David Yearsley
Tall Buildings: the Sound and the Silence

Lorenzo Wolff
In Defense of the One Hit Wonder

Poets' Basement
McEnteer and Corseri

Website of the Weekend
Pizarchik: the Wrong Choice

September 10, 2009

Joshua Frank
Inside Hanford's B Reactor: a Tour of the World's Most Toxic Nuclear Site

Dean Baker
Bernanke's Bad Money

Brian M. Downing
The State of U.S. National Security

Franklin C. Spinney
Portrait of an Afghan Firefight: Up Close and Personal

Andy Worthington
No Escape From Guantánamo

Chase Madar
Samantha Power and the Weaponization of Human Rights

Farzana Versey
A Tale of Two Slums

Ronnie Cummins
Whole Foods, Fair Trade and Organics

Binoy Kampmark
Health Care, Obama and the System

Timothy Lebrón
The Conservative Case for Health Care Reform

Charles R. Larson
A Solution to the Health Care Dilemma

Website of the Day
The Debtor's Revolt Begins!

September 9, 2009

Richard Neville
Trigger-Happy in Afghanistan

Melissa Checker
Double Jeopardy: Carbon Offsets and Human Rights Abuses

Nadia Hijab
Settling for ... Settlements?

Robert Weissman
The Stakes at the Supreme Court

Jonathan Cook
Israeli Arabs Call for General Strike

Russell Mokhiber
Pollan, Mackey, Whole Foods and Single Payer

James Ridgeway
The Dotty Factor: Will Demented Geezers Wreck the Economy?

Richard W. Behan
Obama's Imperative in Afghanistan

James McEnteer
The Photo and the Secretary: How to Appall Robert Gates

Martha Rosenberg
Hatchery Horrors

Website of the Day
Belmondo Verité

September 8, 2009

Henry A. Giroux
The Corporate Stranglehold on Education

Stephen Soldz
Psychologist Accused of War Crimes Opposes Investigations

John Ross
Rituals of the Absurd

Jeff Leys
Health Care vs. Warfare: the Future of the Afghan War

Mike Whitney Ashcroft: Repugnant to the Constitution

Shamus Cooke
Obama's Empty Labor Day Speech

Ellen Brown
Did Lehman Brothers Fall or Was It Pushed?

Norman Solomon Men With Guns: In Kabul and Washington

Deepak Tripathi
The Axis of Evil and the Great Satan

Laray Polk
Personality Cults, Indoctrination and Inculcation

Charles R. Larson
Just Who Does He Think He Is?

Website of the Day
The President is Not a Guidance Counselor

September 7, 2009

Vicente Navarro
Obama's Mistakes in Health Care Reform

Bouthaina Shaaban
In Praise of Admiral Mullen

David Macaray
Obama's Labor Day Report Card

Paul Craig Roberts
Indefensible Nation

Jonathan Cook
Israeli Ads Warn Against Marrying Non-Jews

Conn Hallinan
Brazil Flexes Its Muscles

Walter Brasch
The Origins of Labor Day, the Unknown Holiday

Mark Weisbrot
IMF Gives Honduran Government $175 Million

Carl Finamore
China's Birthday Stimulation

C. G. Estabrook
Advance Text of Obama's Big Speech

Website of the Day
One Down, 20,000 to Go

September 4-6, 2009

Alexander Cockburn
Deeper Into the Tunnel

Carl Ginsburg
Saving New Orleans' Charity Hospital

Jonathan Cook
The Missing Link in Israeli Organ Theft?

George Wuerthner
The Unintended Consequences of Wolf Hunting

Marc Levy
The Bling They Curse and Carry

Ray McGovern
Holbrooke's Afghan Benchmark

Ricardo Alarcón de Quesada
It Happened in Miami

Joe Paff
Organizing the Mission

Gareth Porter
Taliban's Tank-Killing Bombs Came From CIA, Not Iran

Devin Beaulieu
Scaremongering About Bolivia and Islam

Anthony Papa
Why Leslie Crocker Snyder Should Not Become New York City's New DA

David Ker Thomson
Love and Dekes in Utopia

Don Fitz
The Case of the Biodevastation 7: What the Police Won't Apologize For

Lee Sustar /
S. Sepehri
The Fallout From Iran's Elections

Jim Goodman
Why Honor Organized Labor?

Wajahat Ali
Domestic Crusaders: Making Muslim American Theater

Ron Jacobs
Agitator Journalism: Remembering Ramparts

Helen Redmond
The Lion Sleeps Tonight: the Crimes and Misdemeanors of Teddy Kennedy

John V. Walsh
Obama to Cindy Sheehan: Get Lost

Charles R. Larson
Mandanipour's Masterpiece: Censoring an Iranian Love Story

Mark Scaramella
Ho-Bleeping-Hum: a Few Well-Chosen Words About Valerie Plame's Book

David Yearsley
Cameron Carpenter's Amazing Organ Transplants

Ben Sonnenberg
Hooking, Breaking Friendships, Cross-Dressing and, Above All, Delphine Seyrig

Poets' Basement
Davies, Orloski and Bready

Website of the Weekend
Architectural Semiotics with Glenn Beck

September 3, 2009

Marcus Rediker
Inside Auburn Prison

Ron Jacobs
Embedded With the Taliban

Mike Whitney
How Bad Will It Get?

Ricardo Alarcón de Quesada
Untold Story of the Cuban Five: Indictment À La Carte

Saul Landau
Moby Dick and Asian Typhoons

Anat Matar
Israeli Academics Must Pay a Price to End Occupation

Tanya Golash-Boza
How Immigration Enforcement is Weakening National Security

Dave Lindorff
Which Side Are You On?

Andy Worthington
The Story of Gitmo's Two Syrians

Website of the Day
Plundering Appalachia

September 2, 2009

John Ross
Mexico's Plagues

Vijay Prashad
Hey Ram, the Things the Financial Times Group Does!

Rev. Jim Rigby
Why is Universal Health Care "Un-American"?

Joanne Mariner
What the Inspector General Found

Missy Beattie
Hejira: At Martha's Vineyard with Cindy Sheehan

Soren Ambrose
Multilateral Money

Diane Farsetta
Water: the Newest Wave of Corporate "Social Responsibility"

Nadia Hijab
Mulling Mullen's Message

Shamus Cooke
How to Lower the Deficit Without Killing Social Security

Charles R. Larson
Is Dick Cheney Running Scared?

Website of the Day
Inside the Egg Hatchery

September 1, 2009

Jeffrey St. Clair
The Wolf at Trout Creek

Paul Craig Roberts
Why Not Sanctions for Israel?

Mark T. Harris
The Whole Foods Boycott: It's About More Than CEO Hypocrisy

Dean Baker
Bank Profits Are Up: Did You Hear Anyone Say, "Thank You"?

Jeffrey Buchanan
Ending the Human Rights Crisis in KatrinaRitaVille

Robin Mittenthal
A Sea of Monocrops: Old MacDonald Never Had a Farm Like This

Ellen Brown
Mercury Mischief

Martha Rosenberg
Vytorin Marketing is Back

Website of the Day
Crazy Town Hall Protester Interviews

October 5, 2009

Welcome to the US Economy

Dead Man Walking

By MIKE WHITNEY

Credit is everything. Without credit expansion there's no recovery because there's no pick-up in overall demand. But credit growth is going backwards. The banks have tightened lending standards and the pool of credit-worthy applicants has vanished. Bank lending is off 14 per cent since October 2008. Private credit is presently decreasing at a 10.5 per cent annual rate. The situation is getting worse, not better.

From the UK Telegraph:

  "Both bank credit and the M3 money supply in the United States have been contracting at rates comparable to the onset of the Great Depression since early summer, raising fears of a double-dip recession in 2010 and a slide into debt-deflation...

“Similar concerns have been raised by David Rosenberg, chief strategist at Gluskin Sheff, who said that over the four weeks up to August 24, bank credit shrank at an ‘epic’ 9pc annual pace, the M2 money supply shrank at 12.2pc and M1 shrank at 6.5pc.

"’For the first time in the post-Second World War era, we have deflation in credit, wages and rents and, from our lens, this is a toxic brew,’he said. (Ambrose Evans-Pritchard, "US credit shrinks at Great Depression rate prompting fears of double-dip recession", UK Telegraph)

Foreclosures, delinquencies and defaults are all up. Foreclosure activity is currently at 300,000-plus per month and rising. A huge shadow inventory is being kept off-market to maintain prices. The drip, drip, drip-effect of excess inventory dumped onto the market will keep housing in the doldrums for a decade. Homeowners are unable to borrow on underwater homes. Everything points to a long-term slump in spending.

Corporations are finding it harder to roll over their debt, bank loans are defaulting at a historic pace, and commercial real estate is imploding. Credit destruction is unprecedented, massive and ongoing. The capital hole is bigger than the Fed and bigger than the Treasury. It can't be plugged with liquidity alone.

For now, the government can fiddle GDP with $800 billion infusion of stimulus, but what happens when the political will for more deficit spending dissipates? What happens when foreign investors demand the Fed stop writing checks on an overdrawn account?

The Fed has fixed nothing. The banks are still underwater, output is at record lows, and unemployment is climbing towards 10 per cent. Fed chair Ben Bernanke's multi-trillion dollar rescue programs have kept a wobbly system upright, but nothing more. The economy's underlying problems are still the same. The Fed's quantitative easing (monetization) program has sent stocks surging, but done nothing to stimulate the economy.  That's because equities bubbles have negligible impact on aggregate demand; there's no knock-on effect. The real economy is still flatlining while Wall Street parties on. Bernanke's plan has been a total wash.

The government cannot deficit spend forever. Eventually, GDP will have to depend on wage growth and credit expansion. Given the political and institutional bias against labor, (and opposition to wages that rise with productivity) the only way to fuel the economy is through credit growth. And there's the rub. Households have lost nearly $14 trillion in wealth since the crisis began and are in no position to resume borrowing at pre-crisis levels. Consumers are cutting back on spending and paying down debt. They have no other choice.

  This is from Bloomberg News:

"Americans plan to refrain from boosting their spending even after the biggest drop in consumption since 1980, signaling concern about the direction of the economy over the next six months.

“Only 8 per cent of U.S. adults plan to increase household spending, almost one-third will spend less, and 58 per cent expect to ‘stay the course,’ a Bloomberg News poll showed. More than 3 in 4 said they reduced spending in the past year.

“Underscoring consumers’ austere attitudes, 77 per cent of respondents said they have cut back on spending during the past year, 59 percent said they have made a bigger effort to pay off debts and 48 percent have put more money aside as savings." (Bloomberg News)

     Savings are up and spending is down. The economy is headed into a long-term funk; the "new normal".  The Fed's sleight-of-hand programs and Obama's stimulus elixir haven't changed the prevailing downward trend. If anything, they have made matters worse. Consider this from Janet Tavakoli, author of "Dear Mr. Buffett" in an interview with Max Keiser:

"Regarding the outlook, my analysis is grim. I am not a doomsayer, I follow the cash, and so far, I’ve been correct, and the government has been wrong. Here’s the situation. We are at greater risk of a total meltdown due to a deflationary collapse than we were in 2007. After the greatest Ponzi scheme in the history of the capital markets, we’ve seen history’s greatest fiscal and monetary expansion, but it hasn’t worked. Debt levels of consumers and business exceed the capacity to repay."  (Janet Tavakoli On The Edge With Max Keiser)

The Fed has done nothing to restructure the financial system so the same problems which killed Lehman and thrust the global economy into a tailspin, persist today. When the stimulus runs out and the Fed ends its $1.25 trillion purchase  of (Fannie and Freddie) mortgage-backed securities and $300 billion in US Treasuries, interest rates will rise, housing prices will tumble, and the economy will nosedive.  Bernanke will be forced back to the printing presses, the only hope for reversing the deflationary spiral. This will trigger the next crisis, a run on the dollar.

This is from an article by Alice Schroeder of Bloomberg News:

 "In all the talk of inflation because the Treasury is printing so much money versus deflation because it may not print enough, there is one type of inflation that is rarely discussed. This is the mega-inflation caused by a sudden currency devaluation. Currency is like any financial innovation, an obligation secured by assets. When the obligation is perceived to have increased far beyond the level justifiable by the assets, which in this case make up a country’s economy, a bubble has formed......Right now, the American economy is worth less than the value implied by the market value of its obligations." (Gold Tells You U.S. Bubble Hasn’t Popped Yet: Alice Schroeder, Bloomberg)

The system crashed because it was built on the false assumption that an unregulated shadow banking system could generate an infinite amount of credit without sufficient capital. This proved to be wrong. Capitalism requires capital. The trillions of dollars in loans, complex debt-instruments, off-balance sheet operations and derivatives contracts were all stacked atop a tiny scrap of capital which eventually collapsed beneath the weight of the debt. This system (securitization) which created the mess, cannot be restored. It required a strong currency, artificially low interest rates, and credulous investors who were unaware of the inherent risks of illiquid assets. Those conditions no longer exist, nor have they for more than two years. Even so, the Fed continues to pump blood into a corpse hoping for some fleeting sign of life.  This is why an even bigger crisis cannot be too far off.

Mike Whitney lives in Washington state, and can be reached at fergiewhitney@msn.com. Looks like he got back from France in one piece.

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