Switching the formulae - hiding stagflation
In 1995, under Bill Clinton, the Boskin Commission — led by a former economic adviser to the first President Bush — was formed to “fix” the way we measure CPI. Changes were quietly made, with little Congressional oversight; ostensibly, they were to improve accuracy, but their net result was a dramatic reduction of the “official” rate of inflation.
Lisa:
July 31, 2008
State, Local and Private Pensions
The Next Big Bail Out
By MICHAEL HUDSON
The great economic fight of our epoch is being waged by the FIRE sector – Finance, Insurance and Real Estate – against the industrial economy and consumers. Its objective is to maximize property prices and the volume of debt relative to what labor and industry are able to earn.
Rising debts and real estate prices go together, because asset prices depend on how much banks will lend. For creditors, the dream is to obtain an ultimate backup at public expense: government insurance that they will not lose when debtors are unable to pay. The political problem is how to get the government to insure and protect bankers rather than debtors, given that debtors are much more numerous when it comes to the voting booth. In such cases campaign contributions are the balancing factor. Governments are “privatized” and “financialized,” that is, turned from democracies into oligarchies. The banking system aims to make sure that the only losers are the customers it is supposed to serve: debtors, homeowners and employees of companies being “financialized” as the economy is de-industrialized. Indeed, financialization and de-industrialization are becoming almost synonymous. The trick is to get voters to think they are getting rich while actually they are being painted into a debt corner, along with their employers, local government and the federal government too.
Full article:
http://counterpunch.com/hudson07312008.html
31 July 2008, 10:37 amm.c.:
Conservatives & neolibs/neocons have long known that education level & union membership are the two leading indicators of how whites in the U.S. vote(particularly white men). College educated tend less to vote for GOP candidates & union members(even if less than college educated and in red states) don’t usually vote GOP. 1980 with the Reagan Dems was a major exception.
31 July 2008, 12:14 pmThus, neoliberal trade policies that gut manufacturing jobs including mostly women worker textile & clothing makers in places like SC & AL, wreck unionization. Its harder to unionize a 7-11 than a steel mill or a Levi’s factory. Some like Lou Dobbs and Pat Buchanan make many cring(is this a word?) on the starbucks left but Jesse Helms(as did Paul Wellstone) voted against NAFTA & Nancy Pelosi voted For It. Go figure. I give partial credit to those I otherwise don’t agree with.
Craig:
This is not a fringe concern by any means, as it’s gotten the attention of a bond market uber-insider like Bill Gross:
You can also throw in the ADP payroll numbers from yesterday and today’s announcement of downward revisions to past GDP numbers (which now suggest a recession started in Q4 of 2007).
31 July 2008, 9:54 pmStan:
Unemployment figures are cooked books, too. And the term GDP is a measure of heat more than light… it counts transactions, not wealth distribution, not off the books transactions (under the table work, “black” market), not even WHAT is being produced, and definitely not environmental impacts.
Its a matter of trying to use the power of suggestion to conjure a different reality.
Don’t expect any changes though. President Obama is as devoted to Wall Street as any Republican, and he’ll support this tissue of lies as enthusiastically as he supports bombing Afghans into modernist employees at US bases. In fact, Obama will not even order redployment from Iraq. He voted for the FISA outrage (hey, why should HE surrender the amplifications of executive power!?), showing how much he gives a shit about the Constitution. And I’ll make a wager that he and his cronies (like Pelosi) will soft-petal past any but the easiest indictments of the Bush cohort.
New face. Same slide into the abyss. There is no hope here. We will have to make it ourselves.
Compost the revolution.
1 August 2008, 5:28 amCharles:
Governments are “privatized” and “financialized,” that is, turned from democracies into oligarchies.
^^^^
1 August 2008, 12:33 pmCB; Actually, bourgeois goverments have long been privatized and financialized. Since the early 20th Century , the imperialist powers have had finance capitalism by which the financial oligarchs dominate the state powers through state-monopoly capitalism. There has been a twenty-five year uptick in state-monopoly in the US.
Stan:
When I first joined the Army, a government agency, soldiers cooked the food that soldiers ate. Soldiers ran the hospitals where soldiers received medical care. Now corporations are contracted to do both.
1 August 2008, 4:15 pmLisa:
The Real State of the US Economy
Henry Paulson has lost the control over US finance
By William F. Engdahl
Global Research, August 2, 2008
When Henry Paulson agreed to leave his job as chairman of the powerful Wall Street investment bank, Goldman Sachs to go to Washington as Treasury Secretary in 2006 he demanded extraordinary powers as de facto economic czar. He got it. Paulson is also head of the President’s Working Group on Financial Markets — the secretary of the treasury and the chairmen of the Federal Reserve Board, the Securities and Exchange Commission and the Commodity Futures Trading Commission. The Working Group is the financial world’s equivalent of the Pentagon war room. Paulson, not Fed chairman Bernanke, is the person running the Administration’s crisis management. And his recent actions indicate he has lost control as the snowballing problems from the semi-government mortgage companies Freddie Mac and Fannie Mae to the collapse of the multi-trillion dollar market in Asset Backed Securities (ABS) to the real economy are compounding into the worst crisis since the 1930’s Great Depression.
Full article:
http://globalresearch.ca/index.php?context=va&aid=9728
2 August 2008, 3:35 pmLisa:
Shifting China’s Export towards the Domestic Market
By
Henry C. K. Liu
Part I: Breaking Free from Dollar Hegemony
This article appeared in AToL on July 29, 2008
The vast expansion of US-led globalized trade since the Cold War ended in 1991 had been fueled by unsustainable serial debt bubbles built on dollar hegemony, which came into existence on a global scale with the emergence of deregulated global financial markets that made cross-border flow of funds routine since the 1990s. Dollar hegemony is a geopolitically-constructed peculiarity through which critical commodities, the most notable being oil, are denominated in fiat dollars, not backed by gold or other species since President Nixon took the dollar off gold in 1971. The recycling of petro-dollars into other dollar assets is the price the US has extracted from oil-producing countries for US tolerance for the oil-exporting cartel since 1973. After that, everyone accepts dollars because dollars can buy oil, and every economy needs oil. Dollar hegemony separates the trade value of every currency from direct connection to the productivity of the issuing economy to link it directly to the size of dollar reserves held by the issuing central bank. Dollar hegemony enables the US to own indirectly but essentially the entire global economy by requiring its wealth to be denominated in fiat dollars that the US can print at will with little monetary penalties.
World trade is now a game in which the US produces fiat dollars of uncertain exchange value and zero intrinsic value, and the rest of the world produces goods and services that fiat dollars can buy at “market prices” quoted in dollars. Such market prices are no longer based on mark-ups over production costs set by socio-economic conditions in the producing countries. They are kept artificially low to compensate for the effect of overcapacity in the global economy created by a combination of overinvestment and weak demand due to low wages in every economy. Such low market prices in turn push further down already low wages to further cut cost in an unending race to the bottom. The higher the production volume above market demand, the lower the unit market price of a product must go in order to increase sales volume to keep revenue from falling. Lower market prices require lower production costs which in turn push wages lower. Lower wages in turn further reduces demand. To prevent loss of revenue from falling prices, producers must produce at still higher volume, thus lowering still market prices and wages in a downward spiral. Export economies are forced to compete for market share in the global market by lowering both domestic wages and the exchange rate of their currencies. Lower exchange rates push up the market price of commodities which must be compensated by even lower wages. The adverse effects of dollar hegemony on wages apply not only to the emerging export economies, but also to the importing US economy. Workers all over the world are oppressed victims of dollar hegemony which turns the labor theory of value up-side-down..
Full article:
http://henryckliu.com/page165.html
2 August 2008, 4:34 pmFranklin:
Lisa, I printed W. F. Engdahl’s article yesterday and made copies, distributing them to friends without computers. Highlighting the various stores and companies closing and or going bankrupt is, I think, an effective way of showing how bad the situation really is. But getting back to Michael Hudson, he is one smart economics professor who explains things clearly and without pompous terminology.
It seems like the ruling class has a grand plan to turn the world back into a feudal state. More and more are joining the military for a steady paycheck with benefits and will justify carrying out the orders of the Bush Crime Family.
And todays headlines read, The US blames China and India for the failed WTO meeting. We have no real leadership in Congress, and it is overdue for an overhaul. Professor Hudson was Dennis Kucinich’s economic adviser, but was marginalized by the corporate MSM. His own party hasn’t been nice to him either.
Everything Michael Hudson writes or speaks about is worth reading and hearing.
3 August 2008, 5:32 pmLisa:
Inflation and the New World Order by Richard C. Cook
…So again, who exactly are these “wealthy people, or funds, or other entities” that may be manipulating the market of the world’s most important substance? Surely government regulators must know. Aren’t they able to trace market activity to the players involved?
The answer, Johnson said, is no, they can’t:
“The situation now is that the CFTC is sitting there looking at one screen, one piece of the picture, which is whatever is happening on the exchanges. Meanwhile, an increasing volume in dollars is taking place in the form of over-the-counter activity where no one can see it… there is still a blind spot with respect to the true over-the-counter activity that is going on, which represents billions and billions of dollars.”
This trading in what the industry calls “dark pools” amounts to a third of all commodities activity, easily enough for the manipulators to remain hidden. It takes place outside the regular commodities exchanges, where trading activity is relatively transparent. And it applies not only to trading in petroleum futures but also food crops and other vital commodities.
And who is it that has allowed this secret trading to take place? Johnson:
“In 2000 Congress decided that there were certain kinds of high-end investors that were big enough and smart enough that they shouldn’t be constrained to do all their business on the exchanges.”
Full article:
http://dandelionsalad.wordpress.com/2008/08/03/inflation-and-the-new-world-order-by-richard-c-cook/
3 August 2008, 8:36 pmLisa:
MORTGAGE MARKET MUSINGS: BUYING THE COUNTRY FOR NO MONEY DOWN, Catherine Austin Fitts
Friday, 25 July 2008
Tracking the mortgage mafia…
ORIGINAL BLOGPOST
Sometimes, it helps to step back and see the big picture.
Let’s say that I serve as the depository for a large government and I also own the central bank. I get my partners appointed to run the government’s treasury and key funds on a regular basis so I can also control financial system policies and regulation that help me finance what I want to do and mess up my competitors. Even that is getting cumbersome so I am arranging to move most of the regulatory control over to my central bank because I can control all of it privately.
Frustrated with having to deal with democratic processes, I decide to move a significant amount of money out of the government between 1997 and 2001 for reinvestment abroad. I and my partners and our syndicates engineer a serious of steps to bubble the economy so that when I move the money out the currency is high and because everyone was making money they did not notice that lots of capital was leaving. To ensure no one notices, I suppress the gold price which turns off the financial burglar alarm and shifts gold out of the government into my private control at below market prices.
Full article:
http://www.solari.com/blog/?p=1232
3 August 2008, 9:03 pmLisa:
Banking: Going Local
How to Find and Evaluate a Local Bank
http://www.solari.com/archive/bank_locally/find_local_banks/
3 August 2008, 9:14 pmLisa:
US Blackmailed By China?
Bloomberg is reporting Fannie’s Mudd Soothed Asian Investors as Bonds Rose.
Concerns about the financial health of the biggest U.S. mortgage finance company had driven Fannie Mae’s borrowing costs to the highest since March the previous week and its shares had tumbled 45 percent on the New York Stock Exchange. Investors in Asia, the biggest foreign owners of Fannie Mae’s $3 trillion of bonds, were asking the Treasury to bolster the government- sponsored company and its smaller competitor, Freddie Mac, said three people with knowledge of the talks…
The next afternoon, before financial markets opened Monday in Asia, Paulson announced the rescue plan, saying he would seek authority to buy unlimited equity stakes in the companies and their bonds if needed, while the Federal Reserve would lend directly to Fannie and Freddie…
Asian investors were among the most important groups to soothe because central banks, financial institutions and funds in the region own $800 billion of Fannie Mae and Freddie Mac’s $5.2 trillion in debt, according to data compiled by the Treasury…
Karl Denninger wrote a scathing attack of Paulson’s maneuver in Now We Know - There WAS A Threat. My thoughts on the so-called “confidence building measures” of this scheme follow…
Fannie Mae Chief Executive Officer Daniel Mudd called Paulson’s move a “confidence building measure”. Mudd cannot possibly be further from the truth.
Full article:
http://globaleconomicanalysis.blogspot.com/
5 August 2008, 12:25 pmLisa:
World Economy and Great Power Rivalry: The Challenge to U.S. Global Dominance
Shifts and Faultlines: What Is Happening and What It Might Mean
by Raymond Lotta
Global Research, August 5, 2008
What follows is a highly concentrated, though still developing, synthesis of some important trends in the world economy and inter-imperialist relations-and some of the manifestations of this in the structure, functioning, and posture of U.S. imperialism. Some illustrative, benchmark data are woven in.
This is a research essay about changes in global capitalist accumulation, newly emerging relations of strength among imperialist and regional powers, and the force of competitive pressures and tensions. It is about great-power rivalries in a world system based on exploitation. To use an analogy to the complex motions of large parts of the Earth’s crust and upper mantle, this is a discussion of shifting tectonic plates in the world economy: some of their longer-term movements and some of the more sudden and unexpected eruptions.
The analysis builds on the article “Financial Meltdown and the Madness of Imperialism”[1] and is an application, focused on issues of world economics, of Bob Avakian’s conceptualization of this period as one of “transition with potential for great upheaval.”
Full article:
http://globalresearch.ca/index.php?context=va&aid=9747
6 August 2008, 1:49 pmLisa:
Free pdf book and slideshow:
The new power brokers: How oil, Asia, hedge funds, and private equity are shaping global capital markets
http://www.mckinsey.com/mgi/publications/The_New_Power_Brokers/
(Requires an initial free registration)
6 August 2008, 1:52 pmLisa:
The Greenback Blues: Something’s Gotta Give
By Mike Whitney
19/08/08 “ICH” — - In a matter of weeks, the euro has been pounded into ground-chuck while the dollar has regained much of its former glory. What gives? The mighty greenback has surged 6% in the last month alone. Apparently, the early reports of the dollar’s demise have been greatly exaggerated. The euro is caught in the same recessionary downdraft that is buffeting a number of currencies, all of which are unwinding at the same time although unevenly. Currency markets don’t move in straight lines. But, don’t be fooled, most paper money is steadily losing value due to the wild expansion of credit which started at the Federal Reserve. Investors are moving to cash and hunkering down. Who can blame them? As the massive equity bubble loses gas, balance sheets will have to be mended and lending will slow to a crawl. At present, Germany’s slowdown and Spain’s housing crash are drawing most of the attention but, just wait, the spotlight is shifting fast. Next week it could be shining down on the America’s failing banking system or poor corporate-earnings reports in the US. Then it will be the dollar marching off to the gallows.
Full article:
http://www.informationclearinghouse.info/article20547.htm
19 August 2008, 7:01 pmLisa:
Crunch Time
By Mike Whitney
22/08/08 “ICH’ — - Sharp contractions in the money supply and recession are two spokes on the same wheel. When the money supply shrinks, there’s less economic activity, and the economy slows. An article in this week’s UK Telegraph by Ambrose Evans-Pritchard removes any doubt that a deep recession can still be avoided.
From the UK Telegraph:
“The US money supply has experienced the sharpest contraction in modern history, heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months. Data compiled by Lombard Street Research shows that the M3 ”broad money” aggregates fell by almost $50bn in July, the biggest one-month fall since modern records began in 1959.
“Monthly data for July show that the broad money growth has almost collapsed,” said Gabriel Stein, the group’s leading monetary economist.” (Ambrose Evans-Pritchard,”Sharp US Money Supply contraction points to a Wall Street crunch ahead”, UK Telegraph)
Full article:
http://www.informationclearinghouse.info/article20595.htm
22 August 2008, 5:49 pmLisa:
August 29, 2008
An Interview with Michael Hudson
How the Chicago Boys Wrecked the Economy
By MIKE WHITNEY
Mike Whitney: The United States current account deficit is roughly $700 billion. That is enough “borrowed” capital to pay the yearly $120 billion cost of the war in Iraq, the entire $450 billion Pentagon budget, and Bush’s tax cuts for the rich. Why does the rest of the world keep financing America’s militarism via the current account deficit or is it just the unavoidable consequence of currency deregulation, “dollar hegemony” and globalization?
Michael Hudson: As I explained in Super Imperialism, central banks in other countries buy dollars not because they think dollar assets are a “good buy,” but because if they did NOT recycle their trade surpluses and U.S. buyout spending and military spending by buying U.S. Treasury, Fannie Mae and other bonds, their currencies would rise against the dollar. This would price their exporters out of dollarized world markets. So the United States can spend money and get a free ride.
Full article:
http://www.counterpunch.org/whitney08292008.html
29 August 2008, 2:04 pmLisa:
Mikhail Khazin: U.S. will soon face second “Great Depression”
Renowned economist Khazin predicted U.S. financial crisis in 2000
By Yevgeniy Chernyx
November 10, 2008 “KP.RU” - — Five years ago, I ran the cultural section at Komsomolskaya Pravda. Publishing houses used to send me their new releases now and again for review. One day, after digging through the latest shipment of such literature, I stumbled upon a book titled, “Sunset of the Dollar Empire and the End of the Pax Americana.”
I remember reading the title over to myself several times in disbelief. Way back when, Soviet Americanologists loved to debate the collapse of the U.S. financial empire. But this book was published in 2003.
I flipped through the pages, skimming over the text. The conclusions of the author — an economist named Mikhail Khazin — seemed convincing enough. So I gave the book to our economics columnist at KP Jenya Anisimov, who wrote a review and interviewed the author later at our editorial offices.
All these years, I kept Khazin in the back of my mind, and followed his career as he spoke at various conferences throughout Russia. He seemed certain the U.S. was teetering on the verge of an economic collapse, while other analysts were quick to refute his theory. Now, as his once unfathomable prognosis begins to come true, KP contacted Khazin for an interview.
Full article:
http://www.informationclearinghouse.info/article21189.htm
10 November 2008, 5:07 pm