"Economists Forecast the End of Growth as We Know It..."

From The Guardian / By Nafeez Ahmed

Unlimited GDP growth is over as we enter a new age of resource scarcity - we must transition to a new economy.

The last few weeks has seen bad news for the global economy, with the US and Europe facing growth slowdowns, and even much vaunted economic powerhouses Brazil, Russia, India and China faltering unexpectedly. While mainstream economists continue to predict an ongoing 'recovery', other leading experts point to the end of growth as we know it for the foreseeable future.

Earlier this month, the International Monetary Fund (IMF) slashed its quarterly forecasts for global GDP growth from 3.3% to 3.1%, and revised down growth estimates for other major powers. The US forecast was downgraded from 1.9% to 1.7%, and Europe is expected to contract 0.6% rather than the originally estimated 0.3%. The IMF also downgraded growth forecasts for 2014.

Against this background, evidence has emerged that the era of booming economic growth is over, and that we are entering an age of permanently slow growth - at best.

A new paper in the journal International Productivity Monitor finds that underlying the US recession is a long-term decline in productivity growth, interrupted briefly by the "dot.com revolution" for eight years, followed by a slump "to 1.47 in the past eight years."

Study author US economist Prof Robert J Gordon of Northeastern University concludes:

"... we face a significant possibility that the disposable income growth for the bottom 99% of the income distribution could be as low as 0.5% per year, or perhaps even 0.2%."

This conclusion complements Gordon's previous prediction last year that by 2100, the US economy would return to an annual growth rate of 0.2%. He describes the second industrial revolution as the core driver behind rocketing growth experienced over the last 250 years, noting that the main factor behind the continuing slump since 1970 - escalating over "the last eight years", was a lack of sufficient industrial innovation capable of fundamentally "changing labour productivity or the standard of living."

He argued:

"Future growth in real GDP per capita will be slower than in any extended period since the late 19th century."

The "headwinds" holding growth back include key economic issues such as "rising inequality", the "end of the 'demographic dividend'", the "overhang of consumer and government debt", as well as "the consequences of environmental regulations and taxes that will make growth harder to achieve than a century ago."

While Prof Gordon has his naysayers, his outlook is surprisingly corroborated by other experts. HSBC Group chief economist Stephen D. King's new book, When the Money Runs Out: The End of Western Affluence, portends how the age of high economic growth will never return, largely due to the "exhaustion of various one-off productivity gains that boosted growth after World War II" and "a tripling in rates of consumer credit founded on an unsustainable increase in housing prices", among other factors. King disagrees with Gordon's worst-case scenarios, but agrees that the dividends that made high growth possible in the past appear largely "unrepeatable."

Last month, King and HSBC also slashed their global growth forecasts for 2013 from 2.2% to 2.0%, which they explained was due to unexpected slowdowns in emerging markets.

These downgrades are yet another example of the failure of mainstream economic models to keep up with the real nature and pace of global economic deterioration. Indeed, missing from the above analyses is recognition of a central factor: that the productivity gains driving industrial growth were enabled by the abundance of cheap fossil fuelsand other resources.

In his latest newsletter, legendary fund manager Jeremy Grantham - who made billions predicting every major stock market bubble of recent decades - warns that cheap resources are history:

"Our global economy, reckless in its use of all resources and natural systems, shows many of the indicators of potential failure that brought down so many civilisations before ours."

Industrial civilisation is currently "completely dependent on the availability of cheap energy." Therefore, resource depletion combined with "the wild cards of rising temperatures, slowly rising sea levels, ocean acidification, and, above all, destabilised weather for farming" could lead to "a rolling collapse of much of civilisation" - unless the world embarks on a "Manhattan project level of commitment" to transition to an alternative energy and agricultural system.  

However, Grantham now highlights two trends that could facilitate the transition to a more stable economy - declining fertility rates and the rise of renewable energy. Garnering data over the last 40 years, he demonstrates a "remarkable drop in fertility" in the US, Europe, the richer East Asian countries including China, and even South Asia and Africa. According to the more optimistic end of UN projections, if such trends continue global population would peak at 8 million by 2050 before declining to near 6 billion by 2100 - a process which could be sped up with appropriate policy measures.

Simultaneously, Grantham argues we may be on the cusp of "a great technological leap that for the first time is accompanied by less energy use – the technologies of solar, wind power, and other alternatives as well as electric grid efficiencies and improved energy storage." By 2025 to 2030, he observes:

"Both solar and wind power are likely to be cheaper than coal... once the capital is found and the project is built, a wind or solar farm delivers far cheaper energy than a coal-fired utility plant, at around one-third of the marginal cost of coal."

He estimates that "nonrenewable energy" could be completely replaced by renewables "in 30 to 50 years", during which the new technologies will become increasingly cheap and efficient.

But Grantham still concurs that these developments cannot herald a return to the era of high growth, although they might smooth the way toward a new economy that is "less overreaching, less hubristic, a lot humbler about growth and our use of resources, and more determined to live in balance with the natural energy we receive from the sun and the heat, food, and water with which we can sustainably be provided."

"It's All About the Wages -- Our Economy Would Be Fine If Everyone Made Their Fair Share"

By Robert Reich @AlterNet

Missing from almost all discussion of America's dizzying rate of unemployment is the brute fact that hourly wages of people with jobs have been dropping, adjusted for inflation. Average weekly earnings rose a bit this spring only because the typical worker put in more hours, but June's decline in average hours pushed weekly paychecks down at an annualized rate of 4.5 percent.

In other words, Americans are keeping their jobs or finding new ones only by accepting lower wages.

Meanwhile, a much smaller group of Americans' earnings are back in the stratosphere: Wall Street traders and executives, hedge-fund and private-equity fund managers, and top corporate executives. As hiring has picked up on the Street, fat salaries are reappearing. Richard Stein, president of Global Sage, an executive search firm, tells the New York Times corporate clients have offered compensation packages of more than $1 million annually to a dozen candidates in just the last few weeks.

We're back to the same ominous trend as before the Great Recession: a larger and larger share of total income going to the very top while the vast middle class continues to lose ground. And as long as this trend continues, we can't get out of the shadow of the Great Recession. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don't have enough purchasing power to buy what the economy is capable of producing.

America's median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class could boost its purchasing power was to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn't pay their bills, and banks couldn't collect.

Each of America's two biggest economic downturns over the last century has followed the same pattern. Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation's total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America's total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928 -- with 23.5 percent of the total.

We all know what happened in the years immediately following these twin peaks -- in 1929 and 2008.

Yes, China, Germany and Japan have contributed to America's demand-side problem by failing to buy as much from us as we buy from them. But to believe that our continuing economic crisis stems mainly from the trade imbalance -- we buy too much and save too little, while they do the reverse -- is to miss the biggest imbalance of all. The problem isn't that typical Americans have spent beyond their means. It's that their means haven't kept up with what the growing economy could and should have been able to provide them.

House Minority Whip Cantor (R-VA) "bets against U.S. Treasury bonds"

From ThinkProgress:

House Minority Whip Eric Cantor (R-VA) has often expressed concern for how Obama administration policies are supposedly a “grave danger to America’s prosperity.” Now, the Wall Street Journal finds that Cantor actually invests in an exchange-traded fund that “takes a short position in long-dated government bonds” — effectively betting against the U.S. Treasury bonds that the government uses to fund its operations:

[Cantor], the Republican whip in the House of Representatives, bought up to $15,000 in shares of ProShares Trust Ultrashort 20+ Year Treasury ETF last December, according to his 2009 financial disclosure statement. The exchange-traded fund takes a short position in long-dated government bonds. In effect, it is a bet against U.S. government bonds — and perhaps on inflation in the future.

If Cantor truly cares about “America’s prosperity,” one would have to wonder why he is literally betting against its financial future. The Washington Independent’s Annie Lowrey adds that “Cantor is not a very canny investor. The fund is down 31 percent this year.”

"on the Threat of [Rich] Elites"

By Fred Branfman From TruthDig:

Noam Chomsky’s description of the dangers posed by U.S. elites’ “Imperial Mentality” was recently given a boost in credibility by a surprising source—Bill Clinton. As America’s economy, foreign policy and politics continue to unravel, it is clear that this mentality and the system it has created will produce an increasing number of victims in the years to come. Clinton startlingly testified to that effect on March 10 to the Senate Foreign Relations Committee:

Since 1981 the United States has followed a policy until the last year or so, when we started rethinking it, that we rich countries that produce a lot of food should sell it to poor countries and relieve them of the burden of producing their own food so thank goodness they can lead directly into the industrial era. It has not worked. It may have been good for some of my farmers in Arkansas, but it has not worked. It was a mistake. It was a mistake that I was a party to. I am not pointing the finger at anybody. I did that. I have to live every day with the consequences of the lost capacity to produce a rice crop in Haiti to feed those people, because of what I did, nobody else.

Clinton is to be praised for being the first U.S. president to take personal responsibility for impoverishing an entire nation rather than ignoring his misdeeds or falsely blaming local U.S.-imposed regimes. But his confession also means that his embrace of the International Monetary Fund, the World Bank, the World Trade Organization and NAFTA “neo-liberalization” destroyed the lives of many more millions well beyond Haiti, as U.S. support for heavily subsidized U.S. agribusiness damaged local agricultural economies throughout Latin America and beyond. This led to mass migration into urban slums and destitution, as well as increased emigration to the U.S.—which then led Clinton to militarize the border in 1994—and thus accelerated the “illegal immigration” issue that so poisons U.S. politics today.

Clinton might also have added that he and other U.S. leaders imposed such policies by force, installing military dictators and vicious police and paramilitary forces. Chomsky reports in “Hopes and Prospects” that in Haiti, semiofficial thugs empowered by a U.S.-supported coup murdered 8,000 people and raped 35,000 women in 2004 and 2005 alone, while a tiny local elite reaps most of the benefits from U.S. policies.

Clinton’s testimony reminded me of one of my visits with Chomsky, back in 1988, when, after talking for an hour or so, he smiled and said he had to stop to get back to writing about the children of Haiti.

I was struck both by his concern for forgotten Haitians and because his comment so recalled my experience with him in 1970 as he spent a week researching U.S. war-making in Laos. I had taken dozens of journalists, peace activists, diplomats, experts and others out to camps of refugees who had fled U.S. saturation bombing. Chomsky was one of only two who wept openly upon learning how these innocent villagers had seen their beloved grandmothers burned alive, their children slowly suffocated, their spouses cut to ribbons, during five years of merciless, pitiless and illegal U.S. bombing for which U.S. leaders would have been executed had international law protecting civilians in wartime been applied to their actions. It was obvious that he was above all driven by a deep feeling for the world’s victims, those he calls the “unpeople” in his new book. No U.S. policymakers I knew in Laos, nor the many I have met since, have shared such concerns.

Bill Clinton’s testimony also reminded me of the accuracy of Chomsky writings on Haiti—before, during and after Clinton’s reign—as summed up in “Hopes and Prospects”:

The Clinton doctrine, presented to Congress, was that the US is entitled to resort to “unilateral use of military power” to ensure “uninhibited access to key markets, energy supplies and strategic resources.” In Haiti, Clinton [imposed] harsh neoliberal rules that were guaranteed to crush what remained of the economy, as they did.

Clinton would have a cleaner conscience today had he listened to Chomsky then. Many more Americans may also benefit by heeding Chomsky today, as U.S. elites’ callousness toward unpeople abroad is now affecting increasing numbers of their fellow citizens back home. Nothing symbolizes this more than investment bankers tricking countless Americans out of their life savings by luring them into buying homes they could not afford that were then foreclosed on.

In doing so, Wall Streeters exhibited what Chomsky describes as a Western elite imperial mentality, dating back to 1491 (his first chapter is entitled “Year 514: Globalization for Whom?”). Only this time instead of impoverishing Haitians or Chileans, it was Americans who were afflicted by a “system” of “fuck the poor” (in the words of successful Wall Street trader Steve Eisman). [See Branfman’s review of “The Big Short” in Truthdig.]

The many Americans whose lives have been damaged by financiers’ single-minded focus on short-term profits at the expense of everyone else are only a harbinger of what is to come. Financial elites remain in charge, as evidenced by recent “financial reform” legislation that does not even reinstate the Glass-Steagall law separating investment and commercial banking. New York magazine has described how Obama officials blocked even inadequate reforms, let alone the stronger proposals from Nouriel Roubini, one of the few major economists to foresee the economic crash. Former International Monetary Fund chief economist Simon Johnson tells us “our banking structure remains—and the incentive and belief system that lies behind reckless risk-taking has only become more dangerous,” thus setting the stage for an even worse crash than that of 2008. And, as U.S. competitiveness continues to decline and it cannot afford its endless wars without drastically cutting social spending, countless more Americans will find themselves paying the price for U.S. elites’ imperial mentality.

This mentality described by Chomsky includes the following elements: (1) a single-minded focus on maximizing short-term elite economic and military interests; (2) a refusal to let other societies follow their own paths if perceived to conflict with these interests; (3) continual and massive violations of international law; (4) indifference to human life, particularly in the Third World; (5) massive violation of the U.S. Constitution, especially through the executive branch’s seizure of the power to wage unilateral and unaccountable war in every corner of the globe; (6) indifference to U.S. and international public opinion, which is often more progressive and humane than that of the elites; (7) a remarkable ability to “manufacture consent,” aided by the mass media and intellectuals, that has blinded most Americans to the truth of what their leaders actually do in their names....

In today’s system, Chomsky explains, to “stay in the game,” CEOs must maximize their own short-term profits while treating the costs of doing so as “externalities” to be paid by the taxpayer. In the case of climate change, however, “externalities happen to be the fate of the species.” An imperial mentality which has primarily threatened the Third World in the past, in other words, has now become a threat to the survival of not only America but all civilization as we know it....

Chomsky’s explanation of the American system’s imperial mentality also illuminates a seeming mystery: How could decent people like Jimmy Carter, Bill Clinton and Barack Obama commit so much evil? Our concept of evil is shaped by such paranoid psychotics as Hitler, Stalin and Mao, who all hated their victims and openly lusted for power. We do not yet understand that in today’s American system the problem we face is not so much inhumanity from the mad and evil as “ahumanity” from the sane and decent.....

At the moment, Chomsky’s proposed solutions are politically unthinkable. As the American economy and polity continues to unravel and suffering mounts at home and abroad, however, a mass movement may arise that is capable of saving America and the world. If so, such a movement is likely to attempt solutions of the sort Chomsky proposes. Here are two out of a far larger number:

State capitalism for the many: The American Enterprise Institute’s chief declared in a May 23 Washington Post Op-Ed that “America faces a new culture war,” between “free enterprise” offering “rewards determined by market forces” and “European-style statism.” “Hopes and Prospects” explains at some length, however, why this formulation is absurd. America’s “free enterprise” system has always been based on massive government aid, from the Army building 19th century railroads, to the Pentagon’s post-World War II role in building the Internet and Silicon Valley, to today’s “rewards” to Wall Street and oil companies determined not by market forces, but those companies’ political clout. America has been practicing “state capitalism” since the founding of the Republic, and will continue to do so for the foreseeable future no matter which party is in office.

The real choice, Chomsky makes clear, is not free enterprise versus statism, but state capitalism for (A) the few or (B) the many. The latter would include breaking up the banks, a focus on job creation and safety net expansion where needed, single-payer health insurance, higher taxes on the wealthy, far lower military spending, public members on corporate boards, greater employee workplace control and, above all, a new public-private partnership to see America become a leader in a clean energy economic revolution.

A Nuclear Weapons-Free Zone and Two-State Solution in the Middle East: Chomsky proposes that rather than continuing to engage in senseless fighting and confronting Iran over nuclear weapons, U.S., Israeli, Arab and Iranian interests would be far better served by the U.S. using its enormous military and economic clout to create a Mideast nuclear weapons-free zone that Iran says it is willing to accept, and a comprehensive and fair Israeli-Palestinian settlement including Hamas’ promised recognition of Israel and cessation of rocket attacks. A major benefit to the U.S. would be to reduce the threat of domestic terrorism. For only a comprehensive new policy that addresses the source of anti-U.S. hatred—U.S. war-making on civilians and support of corrupt and vicious local regimes—can reduce it....

Free enterprise vs. government regulation

A partial response to America's new culture war: Free enterprise vs. government control By Arthur C. Brooks - the president of the American Enterprise Institute.

There are actually a lot of Untruths in that piece by Brooks trying to be truths. It's not true, for instance, that entrepreneurs cannot flourish amidst reasonable government regulations. As R.Reich states, "Corporations are organized to maximize profits, not to achieve public goals such as environmental protection, financial trust, safety, and so on." And it's silly to suppose that corporations are going to act for the public good without regulations by the government requiring them to do so.

The anti-regulatory stance of Republicans is responsible for the Financial Crisis and BP's Gulf Oil Spill disaster. Republicans have had anti-government, corporate cronies where they should have had regulators - so of course - the system as they controlled it was inept. Not that the likes of the American Enterprise Institute will admit that. It goes against their profit-loving, pro-materialism, yea-rah propaganda.

The only problem that I see with Obama is that he has been too much like a Republican - supposing that corporations will act in the public interest when they are not required to do so. And probably because the corporations and the money are too much in control of elections and politicians, in general.

My answer is to get the the corporations out of government - not to get government out of the way of the corporations.

This is not a "New" culture war. This is the war started by Reagan - getting the rich richer and the poor poorer. A pro-materialism war.

As R.Reich wrote in his piece, How Conservatives Made the Case for Increased Regulations:

Since Ronald Reagan first opined that government was the problem rather than the solution, right-wing Republicans have blasted all forms of regulation. Now we see the consequences of years of regulatory neglect.

I guess it figures that someone who is President of the American Enterprise Institute is going to be single minded in his push for materialism. Here Brooks takes issue with Obama and what is a typical commencement theme "it's not all about the money":

...entrepreneurship can flourish only in a culture where individuals are willing to innovate and exert leadership; where people enjoy the rewards and face the consequences of their decisions; and where we can gamble the security of the status quo for a chance of future success.

Yet, in his commencement address at Arizona State University on May 13, 2009, President Obama warned against precisely such impulses: "You're taught to chase after all the usual brass rings; you try to be on this "who's who" list or that Top 100 list; you chase after the big money and you figure out how big your corner office is; you worry about whether you have a fancy enough title or a fancy enough car. That's the message that's sent each and every day, or has been in our culture for far too long -- that through material possessions, through a ruthless competition pursued only on your own behalf -- that's how you will measure success." Such ambition, he cautioned, "may lead you to compromise your values and your principles."

I appreciate the sentiment that money does not buy happiness. But for the president of the United States to actively warn young adults away from economic ambition is remarkable. And he makes clear that he seeks to change our culture.

Brooks is trying to maintain the values that advertisers have been forcing on people since the early days of TV. Retail analyst Victor Lebow wrote in the 1950s, : "Our enormously productive economy... demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption... we need things consumed, burned up, replaced and discared at an ever-accelerating rate."  

This is what Arthur Brooks wants to maintain. And he doesn't want anyone messing with his materialism or his profits or his entitlement philosophy.

I rather agree with his assertion that people are happier when people are able to earn money and be successful without government help. The trouble with today's economy and the economy Americans have been forced to live with since Reagan- is that people in large businesses, especially in the financial sector, people at the top of the corporate hierarchy, whether they be in law or whatever - have made enormous profits - the rest of us have had stagnant wages. The world is increasingly polarized - we've actually returned to the era of the 20s - with income inequality. This is why there needs to be redistribution through taxes. The system is too far out of wack.

Wrote Brooks:

...The new statism in America, made possible by years of drift and accelerated by the panic over the economic crisis, threatens to make us permanently poorer. But that is not the greatest danger. The real risk is that in the new culture war, we will forsake the third unalienable right set out in our Declaration of Independence: the pursuit of happiness.

Free enterprise brings happiness; redistribution does not. The reason is that only free enterprise brings earned success...If unearned money does not bring happiness, redistributing money by force won't make for a happier America -- and the redistributionists' theory of a better society through income equality falls apart.

There are various means of putting the system back into "wack" - such as making equal wages for women a reality. Having subsidized daycare. Having more a more equitable education system. Having college be free for all who are study and work for it. Having a universal, single-payer health care system. Having good health and access to health, as a right as a citizen instead of as a handout - would make people happier - esp. those with mental illnesses such as depression.

And basically - instead of making people feel like they are having to get a handout - even when they are working a full week - but with inadequate wages- would make a lot of people happier. The only people who may be made "permanently poorer" in my scenario are those in the top 1% on the income bracket - those who are feeding off the labor of the permanently poor each and every day.

There are two parts to this. Regulating corporations and providing an equitable tax system and community programs so that everyone can live in dignity. Obama and the government needs to provide leadership in this and people need to see the big picture of what is going on with corporations merely fighting for their interests - which is basically the "value" of keeping as much money as possible sequestered and controlled by those at the who already have the most.

I agree with Reich:

It's also important for the President to connect the dots -- providing Americans a clear narrative for why government is so critically important. Corporations are organized to maximize profits, not to achieve public goals such as environmental protection, financial trust, safety, and so on...

The President has an opportunity now to express appropriate indignation and to assert the importance of reasonable regulation. He should waste no time doing so.

The Chicago Boys' Free Market Theology

By Michael Hudson in Counterpunch:

Many academics recently received a petition signed by 111 University of Chicago faculty members, explaining that “without any announcement to its own community, [the University] has commissioned Ann Beha Architects, a Boston firm, to remake the Chicago Theological Seminary building into a home for the Milton Friedman Institute for Research in Economics (MFIRE) and has renewed aggressive fund-raising activity for the controversial Institute.”

It would be hard to find a more fitting metaphor than what the press release characterizes as “conversion of the Seminary building into a temple of neoliberal economics.” Even the acronym MFIRE seems symbolically appropriate. The M might well stand for Money in Prof. Friedman’s MV = PT (Money x Velocity = Price x Transactions). And the FIRE sector comprises finance, insurance and real estate – the “free lunch” sector whose wealth the Chicago monetarists celebrate.

Classical economists characterized the rent and interest accruing to the FIRE sector as “unearned income,” headed by land rent and land-price (“capital”) gains, which John Stuart Mill described as what landlords made “in their sleep.” Milton Friedman, by contrast, insisted that “there is no such thing as a free lunch” – as if the economy were not all about a free lunch and how to get it. And the main way to get it is to dismantle the role of government and sell off the public domain – on credit.

As Charles Baudelaire quipped, the devil wins at the point where the world believes that he does not exist. Paraphrasing this we may say that free lunch rentiers achieve economic victory at the point where government regulators and economists believe that their returns do not exist – and hence, do not need to be taxed, regulated or otherwise subdued.

By “free market,” the Chicago Boys mean giving free reign to the financial sector – as opposed to the classical economists’ idea of freeing markets from rent and interest. Whereas traditional religion sought to lay down precepts for regulation, the Friedman Institute will promote deregulation. Physically replacing the theology school with a “temple of neoliberal economics” is ironic inasmuch as one tenet that all the major religions held in common at one point or other was opposition to the charging of interest. Judaism called for Clean Slates (Leviticus 25), and Christianity banned interest outright, citing the laws of Exodus and Deuteronomy.

The Chicago Boys thus have inverted traditional theology. Yet the teaching of economics as an academic discipline began as moral philosophy courses in the 18th and 19th centuries. The leading universities of most countries were founded to train students for the ministry. The moral philosophy course evolved into political economy, dealing largely with economic reform and taxation of the unearned income accruing to vested interests as a result of legal privilege. The discipline was stripped down into “economics” largely to exclude political analysis, and the distinctions between productive and unproductive investment, earned and unearned income, value and price.

The classical economists saw rent and interest as a carry-over from Europe’s feudal conquest of the land and the privatization of money and finance into an institutionally based debt and monopoly overhead. The classical economists sought to tax away such “unearned income,” to regulate natural monopolies or shift them into the public domain.

Needless to say, this history of economic thought will not be taught at the Friedman Center. The first thing that the Chicago Boys did in Chile when they were given power after the 1973 military coup was to close down every economics department in the country – and indeed, every social science department outside of the Catholic University where they held sway. They realized that “free markets” for capital required total control of the educational curriculum, and of cultural media generally.

What free marketers realize is that without an Inquisition authority, you cannot have a “stable” free market – that is, a market free for the financial predators who presumably are targeted as the major potential donors to the U/C’s Friedman Center. Chicago School monetarists have achieved censorial power on the editorial boards of the major refereed economics journals, publication in which has become a precondition for career advancement for academic economists. The result has been to limit the scope of economics to “free market” celebration of rational choice theory and a narrow-minded “law and economics” ideology opposed to the ideas of moral justice and economic regulation that formed the basis of so much Western religion...

Who would have anticipated that economics would end up more right wing and authoritarian, more explicitly opposed to the very idea of human rights and distributive justice than theology? Or that the latter discipline itself would be so inverted? The classical economists were reformers, after all, seeking to free markets from unearned income – the “free lunch” of land rent by Europe’s hereditary aristocracies, and from monopoly rents administered by the royal trading corporations created by European governments to pay off their war debts. But the Chicago monetarists seek to deregulate monopolies and usury laws, favoring rentiers rather than the “real” economy of labor and capital. Their focus is on financial and property claims on income and on assets pledged as collateral: bank loans, stocks and bonds, for which they urge tax cuts. And to increase the market for leveraged buyouts, the Chicago Boys advocate privatizing the public domain, starting in Chile after 1973.

So what is inverted is not only the classical idea of free markets, but the economic core of early religion. Today, the Chicago Boys deem those most in need of salvation to be high finance, real estate and monopolies in their fighting to reverse the past seven centuries of classical economic reform since the Churchmen debated how to define a Just Price (socially necessary costs of production) for banks to charge back in the 13th century.

It seems largely about fund-raising, but isn’t that true of most religion nowadays? The University of Chicago was financed by John D. Rockefeller, prompting Upton Sinclair to call it “The University of Standard Oil” in The Goose Step...

Mr. Rockefeller at least duly gave his tithe to “those in need.” In a contrasting spirit, Herman Kahn’s wife, Jane, told me that once at a party, Milton Friedman replied to her suggestion of better public welfare and medical care, “Mrs. Kahn, why do you want to subsidize the production of orphans and sick people?” This is not exactly the classical religious spirit.

The problem with the Friedman Institute is that its economic doctrine rose to notoriety in the Pinochet period, the high tide of the Chicago Boys in Chile. Privatization of public enterprise, “freeing” markets from usury laws and promoting deregulation is the antithesis of nearly all religions, whose guiding purpose after all was to socialize their members and create a moral state.

Friedmanite monetarism has been characterized as a post-modern ideology which, like religion, has its own sacred cows and idols – and an Inquisition. In place of tithing of unbelievers as in Islam, we have the tax shift off the religion of finance capital onto labor standing outside its gates...

"What Do Empires Do?"

by Michael Parenti:

When I wrote my book Against Empire in 1995, as might be expected, some of my U.S. compatriots thought it was wrong of me to call the United States an empire. It was widely believed that U.S. rulers did not pursue empire; they intervened abroad only out of self-defense or for humanitarian rescue operations or to overthrow tyranny, fight terrorism, and propagate democracy.

But by the year 2000, everyone started talking about the United States as an empire and writing books with titles like Sorrows of Empire, Follies of Empire, Twilight of Empire, or Empire of Illusions--- all referring to the United States when they spoke of empire.

Even conservatives started using the word. Amazing. One could hear right-wing pundits announcing on U.S. television, "We're an empire, with all the responsibilities and opportunities of empire and we better get used to it"; and "We are the strongest nation in the world and have every right to act as such"---as if having the power gives U.S. leaders an inherent entitlement to exercise it upon others as they might wish.

"What is going on here?" I asked myself at the time. How is it that so many people feel free to talk about empire when they mean a United States empire? The ideological orthodoxy had always been that, unlike other countries, the USA did not indulge in colonization and conquest.

The answer, I realized, is that the word has been divested of its full meaning. "Empire" seems nowadays to mean simply dominion and control. Empire---for most of these late-coming critics--- is concerned almost exclusively with power and prestige. What is usually missing from the public discourse is the process of empire and its politico-economic content. In other words, while we hear a lot about empire, we hear very little about imperialism.

Now that is strange, for imperialism is what empires are all about. Imperialism is what empires do. And by imperialism I do not mean the process of extending power and dominion without regard to material and financial interests. Indeed "imperialism" has been used by some authors in the same empty way that they use the word "empire," to simply denote dominion and control with little attention given to political economic realities.

But I define imperialism as follows: the process whereby the dominant investor interests in one country bring to bear their economic and military power upon another nation or region in order to expropriate its land, labor, natural resources, capital, and markets-in such a manner as to enrich the investor interests. In a word, empires do not just pursue "power for power's sake." There are real and enormous material interests at stake, fortunes to be made many times over.

So for centuries the ruling interests of Western Europe and later on North America and Japan went forth with their financiers---and when necessary their armies---to lay claim to most of planet Earth, including the labor of indigenous peoples, their markets, their incomes (through colonial taxation or debt control or other means), and the abundant treasures of their lands: their gold, silver, diamonds, copper, rum, molasses, hemp, flax, ebony, timber, sugar, tobacco, ivory, iron, tin, nickel, coal, cotton, corn, and more recently: uranium, manganese, titanium, bauxite, oil, and--say it again--oil. (Hardly a complete listing.)

Empires are enormously profitable for the dominant economic interests of the imperial nation but enormously costly to the people of the colonized country. In addition to suffering the pillage of their lands and natural resources, the people of these targeted countries are frequently killed in large numbers by the intruders.

This is another thing that empires do which too often goes unmentioned in the historical and political literature of countries like the United States, Britain, and France. Empires impoverish whole populations and kill lots and lots of innocent people. As I write this, President Obama and the national security state for which he works are waging two and a half wars (Iraq, Afghanistan, and northern Pakistan), and leveling military threats against Yemen, Iran, and, on a slow day, North Korea. Instead of sending medical and rescue aid to Haiti, Our Bomber sent in the Marines, the same Marines who engaged in years of mass murder in Haiti decades ago and supported more recent massacres by proxy forces.

The purpose of all this killing is to prevent alternative, independent, self-defining nations from emerging. So the empire uses its state power to gather private wealth for its investor class. And it uses its public wealth to shore up its state power and prevent other nations from self-developing.

Sooner or later this arrangement begins to wilt under the weight of its own contradictions. As the empire grows more menacing and more murderous toward others, it grows sick and impoverished within itself.

From ancient times to today, empires have always been involved in the bloody accumulation of wealth. If you don't think this is true of the United States then stop calling it "Empire." And when you write a book about how it wraps its arms around the planet, entitle it "Global Bully" or "Bossy Busybody," but be aware that you're not telling us much about imperialism.

"Globalization Is Killing the Globe: Return to Local Economies

by Thom Hartmann

Globalization is killing Europe, just as it's already wiped out much of the American middle class.

Spain and Greece are facing immediate crises that many other European nations see on the near horizon: aging boomer workers are retiring with healthy benefit packages, but the younger workers who are paying for those benefits aren't making anything close to the income (or, therefore, paying the taxes) that their parents did.

Globalists/corporatists/conservative "free market" and "flat earth" advocates say this is a great opportunity to cut benefits for the old folks (and for the young folks in the future), thus bringing the countries budgets back into balance, and this story is the main corporate media storyline.

But it overlooks the real issue (and the real solution): how globalization is killing these nations' economies and what can be done about it.

From the days of Adam Smith, classical economics pointed out that manufacturing and extraction are the only two ways to "create wealth."

"Wealth" is different from "income." Wealth is value, which endures at least for some time. Income is simply compensation for work. If you wash my car for $10 and I mow your lawn for $10, we have a GDP of $20 and it looks like we both have income and economic activity. But no wealth has been created, just income.

On the other hand, if I build your car, I'm creating something of value. And if you turn my lawn into a small farm that produces food we can all eat, you're creating something of value. Not only do we have an "economy" with a "GDP," we also have created wealth.

A stick on the ground has no commercial value, but if you add labor to it by carving it into an axe handle -- a thing of commercial value -- you have "created wealth." Similarly, metals in the ground have no commercial value, but when you add labor to them by extracting, refining, and forming them into products, you "create wealth." Even turning seeds and dirt and cows into hamburgers is a form of manufacturing and creates wealth.

This is the "Wealth of Nations" that titled Adam Smith's famous 1776 book.

On the other hand, when a trader at Goldman Sachs makes a "profit" trading stocks, bonds, or currencies, no wealth whatsoever is created. In fact, to the extent that that trader takes millions in commissions, pay, and bonuses, he's actually depleting the wealth of the nation (particularly to the extent that he moves his money offshore to save or invest, as many do).

To use the United States as an example, in the late 1940s and early 1950s manufacturing accounted for a high of 28 percent of our total gross domestic product (and much of the rest of the economy like agriculture that, in a classical sense is "manufacturing" wasn't even included in those numbers), and when Reagan came into office it was at a strong 20 percent. Today it's about ten percent of our GDP.

What this means is that we're creating less wealth here, because we're not making much anymore. (And the biggest growth in American manufacturing has been in the military sector, where goods are made that are then destroyed when they explode over foreign cities, causing even more of our wealth to vanish.)

The main effect of the globalism fad of the past 30 yearrs -- lowering the protective barriers to trade that countries for centuries have used to make sure their own local economies are self-sufficient -- has been to ship manufacturing (the creation of wealth) from developed nations to developing nations. Transnational corporations love this, because in countries with lower labor costs and few environmental and safety regulations, it's more profitable to manufacture products. They then sell those products in the "mature" countries -- the places that used to manufacture -- and people burn through the wealth they'd accumulated in the earlier manufacturing days (home equity, principally, along with savings and lines of credit) to buy these foreign-manufactured goods.

At first, it looks like a good deal to consumers in developed nations. Goods are cheaper! But over a decade or two or three, as the creation of real wealth is reduced and the residue of the old wealth is spent, the developed nations become progressively poorer and poorer. At the same time, the "developing" nations become wealthier -- because those are the places that are producing real wealth.

Which brings us to Spain and Greece -- and the problem of all developed nations including the USA. So long as globalism continues apace, the transnational corporations and their CEOs will continue to become fabulously wealthy. But, more importantly, they also acquire the political power that comes with that control of economies.

So they tell us that instead of putting back into place tariffs, domestic content laws, and other "protectionist" policies that built America from the time the were first proposed by Alexander Hamilton in 1791 (and largely adopted by Congress in 1793) until they were dismantled by Reagan/Bush/Clinton/Bush, we should instead simple "accept the reality" that we're "living beyond our means" and we have to "cut back our wages and social programs."

In other words, they get richer, our nations become poorer, and national sovereignty is reduced.

Nations -- and in large countries like the USA, even states -- must again rebuild their manufacturing base and become locally self-sufficient, so their own consumers are buying products manufactured by their own workers.

"But won't that make Wal-Mart's stuff more expensive?" whine the flat-earthers.

Yes, it will. But most Americans (and Greeks and Spaniards) would gladly pay 10 percent more for the goods in their stores if their paychecks were 20 percent higher. And manufacturing paychecks have always been higher, because manufacturing is where "true wealth" is generated (thus the basis for most union movements, which further guarantee healthy worker income and benefits).

The transnational corporations benefiting from globalization are also, in most cases, the transnational corporations that own our media, so even the word globalization is rarely heard in reports on economic crises around the world.

But globalization is the villain here, and one that needs to be taken in hand and brought under control quickly if we don't want to see virtually the nations of the world end up subservient to corporate control, a new form of an ancient economic system known as feudalism.

_______________

My note- So the CEOs and execs have the wealth made overseas - having people doing the creating very cheaply. The CEOs, etc. reap the profits of selling those goods to us who have a different economic system (we can buy the stuff at a much greater price than the people making the stuff could pay) - and the rest of us are service providers for the CEOs and for each other.

Those of us who are service providers have very little clout, it seems. Esp. as so many services can be offshored. And those that can be done here are not seeing much of a rise in wages. The computer service providers do okay - most of the liberal arts and other service providers that keep a community going do not.

I don't really see it changing - the process of having people creating things cheaply overseas. If those countries where these things are made realized that they didn't need us - and they could create and distribute cheap good just fine on their own- that would be a problem for our system. In China - the minimum wage was recently raised to $140/month - about 1/8 of ours. But there are still other countries where things may be made cheaper than that - Vietnam, etc.

I think our system would be better if those who are making tremendous profits were taxed more heavily with the money going to health care and other services. It would inject some of the extra money that is produced by this system into the economy and allow for more jobs and services - and higher wages.

Meanwhile- there is getting to be a movement for local food. As the food is perceived as better (organic vegetables, grass-fed beef - less problems with pesticides, with antibiotics, ethics), as more people choose to buy things closer to home to avoid extra pollution involved in shipments - it could be a growing movement. It may be the way to reinvigorate local economies. If however, there is only a small segment of the population that feels they can afford it - it won't be widespread.

"JPMorgan Chase Cashes in on Destroying the Appalachian Mountains"

From AlterNet:

In light of last week's EPA ruling giving the go ahead to another mountaintop removal coal mine, and the subsequent report from a group of eminent scientists saying, in essence, that no remediation is ever enough to repair the damage mountaintop mining causes, it's worth reminding people that it's not just coal companies that stand to profit from the practice. Banks like JPMorgan Chase also are making a pretty penny from destroying Appalachia, as Gloria Reuben points out in an op-ed for Huffington Post:

Environmental & Social Destruction Funded

In the past two decades alone, mountaintop removal coal mining has destroyed roughly 470 mountains in the region. The debris from these blasts is dumped into surrounding valleys, destroying what were once serene and lush hollows. Or it's dumped into local rivers and streams, literally burying 1,200 miles of waterways.
Communities are decimated, as poverty has driven families out, leaving ghost towns where there used to be thriving homes, schools and businesses. Many who refuse to leave, because their families have been there for generations--or who are stuck in the vicious cycle of accepting very little, because they've been left with nothing--lead lives that are filled with high rates of cancer, asthma and other life-threatening illnesses. And they are witness to friends and loved ones who succumb to premature death.

So how does JPMorgan Chase profit from this? By funding six of the eight companies responsible for mountaintop removal coal mining, including $1 billion to Massey Energy, the largest MTR mining company.

Chase's Rhetoric Better Than Actions
Bank of America and Wells Fargo have severed ties with Massey, so why not Chase?

After all, Chase touts including environmental practices into their sustainable business model, but apparently fails to see the disconnect between that and funding practices and companies which continually destroy mountains and pollute rivers.

Graphic showing spread of unemployment 1/07->9/09

From the American Observer

"Try Nature, Not Tech, To Fix Economic Woes: UNEP"

Reuters:

GENEVA - The world is waking up to huge economic benefits of investing in nature, from forests to coral reefs, after one of the "great oversights" of the 20th century, the head of the U.N. Environment Program said on Friday.

Achim Steiner told Reuters that governments had long placed too much faith in technology to fix problems such as global warming, water pollution or erosion, instead of looking to natural solutions.

"At the beginning of the 21st century we are being thrown back onto nature because you can't fix all these problems with technology," he said.

"The disproportion of investments in technological fixes versus investing in nature's ready-made solutions, tried and tested over millions of years, is one of the great oversights of the 20th century," he said.

A U.N.-backed study this week, for instance, indicated that tropical forests provide services worth an estimated $6,120 per hectare (2.47 acres) a year such as food, building materials, water purification or opportunities for tourism.

A new U.N. climate pact due for agreement in December in Copenhagen is set to encourage measures to safeguard tropical forests that soak up greenhouse gases when they grow.

Steiner said that governments should take an even wider view of the value of forests since storing heat-trapping carbon dioxide was only one aspect of a tree's worth.

COST BENEFITS

He said his advice to governments and investors was: "Don't just look at a forest as a watershed, or a carbon sink, or as helping biodiversity, or a tourism attraction. Put them all together and then make a cost-benefit analysis."

"The cumulative set of benefits you get from talking about a tree ... has to get economically captured," he said.

Among other natural systems, coral reefs provide services as nurseries for fish, protecting coasts from storms, or as scuba-diving holiday destinations. Or insects provide services, for instance, in pollinating crops.

"These services are not new. The problem was that we did not capture their value," Steiner said.

Among examples, he said that Kenya planned to raise its forest cover to 10 percent from 1 percent by planting 7 billion trees to help restore an environment degraded by erosion and dwindling water supplies.

Steiner also said a call by UNEP last year for a "Green New Deal" of investments in clean economic growth to revive struggling economies had helped but that it was too soon to judge if it marked a permanent greener shift.

"This concept struck a chord," he said of the idea, inspired by U.S. President Franklin D. Roosevelt's "New Deal" that helped end the Depression of the 1930s.

"Given that it was born out of a crisis I think it's had significant impact," he said, saying that economies such as China had given a high proportion of spending to green jobs.

He said it was "too early to predict" if the "Green New Deal" had become a "universal concept that will survive the calming down after the crisis."

"A lot will depend on Copenhagen. The greatest stimulus package could be a deal in Copenhagen," he said of the new U.N: climate pact. Steiner was an early guest for a Reuters Global Climate and Alternative Energy Summit on September 8-10.

"Physics-based analysis of the world economy"

From InsideScience.org:

A recent analysis of the 2007 financial markets of 48 countries has revealed that the world's finances are in the hands of just a few mutual funds, banks, and corporations. This is the first clear picture of the global concentration of financial power, and point out the worldwide financial system's vulnerability as it stood on the brink of the current economic crisis.

A pair of physicists at the Swiss Federal Institute of Technology in Zurich did a physics-based analysis of the world economy as it looked in early 2007. Stefano Battiston and James Glattfelder extracted the information from the tangled yarn that links 24,877 stocks and 106,141 shareholding entities in 48 countries, revealing what they called the "backbone" of each country's financial market. These backbones represented the owners of 80 percent of a country's market capital, yet consisted of remarkably few shareholders.

"You start off with these huge national networks that are really big, quite dense," Glattfelder said. “From that you're able to ... unveil the important structure in this original big network. You then realize most of the network isn't at all important."

The most pared-down backbones exist in Anglo-Saxon countries, including the U.S., Australia, and the U.K. Paradoxically; these same countries are considered by economists to have the most widely-held stocks in the world, with ownership of companies tending to be spread out among many investors. But while each American company may link to many owners, Glattfelder and Battiston's analysis found that the owners varied little from stock to stock, meaning that comparatively few hands are holding the reins of the entire market.

“If you would look at this locally, it's always distributed,” Glattfelder said. “If you then look at who is at the end of these links, you find that it's the same guys, [which] is not something you'd expect from the local view.”

Matthew Jackson, an economist from Stanford University in Calif. who studies social and economic networks, said that Glattfelder and Battiston's approach could be used to answer more pointed questions about corporate control and how companies interact.

"It's clear, looking at financial contagion and recent crises, that understanding interrelations between companies and holdings is very important in the future,” he said. "Certainly people have some understanding of how large some of these financial institutions in the world are, there's some feeling of how intertwined they are, but there's a big difference between having an impression and actually having ... more explicit numbers to put behind it."

Based on their analysis, Glattfelder and Battiston identified the ten investment entities who are “big fish” in the most countries. The biggest fish was the Capital Group Companies, with major stakes in 36 of the 48 countries studied. In identifying these major players, the physicists accounted for secondary ownership -- owning stock in companies who then owned stock in another company -- in an attempt to quantify the potential control a given agent might have in a market.

The results raise questions of where and when a company could choose to exert this influence, but Glattfelder and Battiston are reluctant to speculate.

"In this kind of science, complex systems, you're not aiming at making predictions [like] ... where the tennis ball will be at given place in given time," Battiston said. “What you're trying to estimate is … the potential influence that [an investor] has."


Glattfelder added that the internationalism of these powerful companies makes it difficult to gauge their economic influence. "[With] new company structures which are so big and spanning the globe, it's hard to see what they're up to and what they're doing,” he said. Large, sparse networks dominated by a few major companies could also be more vulnerable, he said. "In network speak, if those nodes fail, that has a big effect on the network."

Western Canada Drought

From the Economist:


DURING the Depression of the 1930s, drought turned much of Alberta and Saskatchewan, on Canada’s western prairies, into a dust bowl. The combination of poor harvests and low grain prices drove thousands of farmers off the land. Now some prairie dwellers reckon history is repeating itself. The fall in oil and gas prices from their record highs a year ago has brought an abrupt halt to Alberta’s energy-based boom. And while grain prices have picked up, drought has once again brought billions of dollars of losses to farms and ranches.

A huge swathe of farmland spanning central Saskatchewan and Alberta, and angling northwest into British Columbia’s Peace River valley has suffered its driest winter and spring in at least 50 years (and 70 in some districts). Rainfall has been less than 40% of its normal level. Ranchers are staring at dry water holes and desiccated pasture, forcing them either to sell cattle or buy feed. Farmers are kicking at shrivelled crops. Heavy rains in late June and early July may make some fields worth harvesting but many are already lost. Some 900 farmers around Kindersley, south-west of Saskatoon, have ploughed their crops under and claimed insurance, according to Stewart Wells, the president of Canada’s National Farmers Union. He foresees losses of up to 30% in wheat, barley, rapeseed and hay, and more if the drought continues.

Worse, such conditions may become the norm. David Schindler, an ecologist at the University of Alberta, says that evidence from tree rings and ancient algae suggests that the prairies were drought-prone in the past and that the 20th century was unusually wet. The prairies lie in the eastern rain shadow of the Rocky Mountains. Almost all their rivers flow eastward from the Rockies. As global warming melts mountain glaciers, the rivers’ summer flow has dwindled by up to 60% (more in one case) of their historical average. But more water is being drawn from them for cities, irrigation and the processing of oil from tar sands. Mr Schindler fears that unless these trends are reversed, the prairies risk becoming semi-desert.

Farmers grumble that their margins are so low that a bad year can bankrupt them. Last month their union urged the federal parliament to support family farmers and curb the power of agribusiness corporations. Perhaps prairie populism is on the way back, too.

Living Like Kings/Queens***

And how much ‘work’ is embodied in a gallon of gasoline, our most favorite substance of them all? Well, if you put a single gallon in a car, drove it until it ran out, and then turned around and pushed the car home, you’d find out. It turns out that a gallon of gas has the equivalent energy of 500 hours of hard human labor, or 12-1/2 forty-hour work weeks.

So how much is a gallon of gas worth? $4? $10? If you wanted to pay this poor man $15 an hour to push your car home, then we might value a gallon of gas at $7,500.

Here’s another example. It has been calculated that the amount of food that average North America citizen consumes in year requires the equivalent of 400 gallons of petroleum to produce and ship.

At $4/gallon, that works out to $1600 of your yearly food bill spent on fuel, which doesn’t sound too extreme. However, when we consider that those 400 gallons represent the energy equivalent of 100 humans working year round at 40 hours a week, then it takes on an entirely different meaning. This puts your diet well out of the reach of most kings of times past. Just to put this in context, as it is currently configured, food production and distribution use fully two-thirds of our domestic oil production. This is one reason why a cessation of imports would be, shall we say, disruptive.

This is from Chris Martensons "Crash Course" about Energy & the Economy. He briefly mentions the Environment - but it's not a big thing about what he talks about. For him the big thing is the society collapsing - which I admit would have catestrophic impacts - but so does global warming, habitat destruction, the over-fishing, soil depletion/poisoning, the poisoning of the planet in general, and overpopulation. All of which are being caused by the same things he discusses - the temporary abundance of oil - with little concern to the effects of our actions. He does make some interesting points and connects many dots.

One good thing I saw on my drive home from the east coast were several wind turbine wings being transported on trucks.

"Without Superfund Tax, Stimulus Aids Cleanups"

From the New York TImes:

VINELAND, N.J. — The Superfund program to clean up the nation’s most contaminated industrial sites was established nearly 30 years ago on the principle that those responsible for toxic pollution should pay for it.

So why is the government spending $600 million in stimulus money to work on sites like the defunct arsenic-fouled Vineland Chemical Company plant here in South Jersey?

Environmental Protection Agency officials and environmentalists say the Superfund program has been chronically underfinanced since a tax that supported it expired in 1995.

What is more, the old Vineland plant, like hundreds of other toxic dumps, is a so-called orphan site, meaning that either no responsible party has been found or money from the original polluter has been exhausted. So the taxpayer is on the hook for the remedial work.

Vineland’s former owners, now deceased, paid $3 million toward a cleanup that began a decade ago and has already cost more than $120 million. The site will get $10 million to $25 million in stimulus money to speed a continuing project to purge arsenic and other chemicals from soil and water on the site’s 54 acres.

Lisa P. Jackson, administrator of the E.P.A., said the use of stimulus money would accelerate progress at 50 Superfund sites in 28 states, including eight abandoned industrial sites in New Jersey and two on Long Island.

“Under the Recovery Act,” Ms. Jackson said, using the formal term for the stimulus package, “we’re getting harmful pollutants and dangerous chemicals out of these communities and putting jobs and investment back in.”

Ronald Naman, the E.P.A. manager for the Vineland site, said the new money would create or save about 20 jobs and allow the current phase of the cleanup to be completed in as little as two years rather than four. As Mr. Naman spoke, three large earth-moving machines were scooping muck out of the Blackwater Branch creek, piling it up to dry so the toxic chemicals could be removed and shipped to landfills.

Mr. Naman said arsenic in soil and water from the company’s pesticide operations still posed a threat to human health and would take years to remedy. The agency, working with private contractors, has processed billions of gallons of tainted water and millions of pounds of polluted soil over the past several years.

Until 1995, cleanups at orphan sites like Vineland were paid in part from a trust fund based on taxes from polluting industries. But that year, the Republican-run Congress, responding to industry complaints, refused to reauthorize the Superfund tax, which once collected hundreds of millions of dollars a year from chemical and oil companies.

President Obama wants to restore the tax and assumes it will provide $1 billion in revenues for his 2011 budget...

"Global economy is expected to shrink this year"

(AP) The world economy is likely to shrink this year for the first time in six decades.

The International Monetary Fund projected the 1.3 percent drop in a dour forecast released Wednesday. That could leave at least 10 million more people around the world jobless, some private economists said.

"By any measure, this downturn represents by far the deepest global recession since the Great Depression," the IMF said in its latest World Economic Outlook. "All corners of the globe are being affected."

The new forecast of a decline in global economic activity for 2009 is much weaker than the 0.5 percent growth the IMF had estimated in January.

Big factors in the gloomier outlook: It's expected to take longer than previously thought to stabilize world financial markets and get credit flowing freely again to consumers and businesses. Doing so will be necessary to lift the U.S., and the global economy, out of recession.

The report comes in advance of Friday's meetings between the United States and other major economic powers, and weekend sessions of the IMF and World Bank. The talks will seek to flesh out the commitments made at a G-20 leaders summit in London last month, when President Barack Obama and the others pledged to boost financial support for the IMF and other international lending institutions by $1.1 trillion.

The IMF's outlook for the U.S. is bleaker than for the world as a whole: It predicts the U.S. economy will shrink 2.8 percent this year. That would mark the biggest such decline since 1946.

Among the major industrialized nations studied, Japan is expected to suffer the sharpest contraction this year: 6.2 percent. Russia's economy would shrink 6 percent, Germany 5.6 percent and Britain 4.1 percent. Mexico's economic activity would contract 3.7 percent and Canada's 2.5 percent.

Global powerhouse China, meanwhile, is expected to see its growth slow to 6.5 percent this year. India's growth is likely to slow to 4.5 percent.

All told, the lost output could be as high as $4 trillion this year alone, U.S. Treasury Secretary Timothy Geithner estimated.
Besides trillions in lost business, a sinking world economy means fewer trade opportunities and higher unemployment. It raises the odds more people will fall into poverty, go hungry or lose their homes. And while keeping a lid on interest rates and consumer prices, the global recession increases the risk of deflation, which would drag down prices and wages, making it harder for people to make payments on their debt.

The jobless rate in the United States is expected to average 8.9 percent this year and climb to 10.1 percent next year, the IMF said.

In Germany, the jobless rate is expected to average 9 percent this year and 10.8 percent next year. Britain's unemployment rate is projected to rise to 7.4 percent this year and to 9.2 percent next year....

The financial crisis erupted in the United States in August 2007 and spread around the globe. The crisis entered a tumultuous new phase last fall, shaking confidence in global financial institutions and markets. Total worldwide losses from the financial crisis from 2007 to 2010 could reach nearly $4.1 trillion, the IMF estimated in a separate report Tuesday.

The crisis has led to bank failures, wiped out Lehman Brothers and forced other big institutions, like insurance giant American International Group, to be bailed out by U.S. taxpayers.

And it's triggered radical government interventions — such as the United States' $700 billion financial bailout program and the Federal Reserve's $1.2 trillion effort to lower interest rates and spur spending.

Actions by the United States and government in other countries have helped ease the crisis in some ways. But markets are still not operating normally.

The 185-nation IMF, headquartered in Washington, is the globe's economic rescue squad, providing emergency loans to countries facing financial troubles. It has urged countries to take bolder actions to bolster banks...

Because the world economy won't be back to normal next year or perhaps even in 2011, Blanchard urged countries to spend money on big public works projects — something the Obama administration is doing — to bolster activity...

The Republican's April Fools Budget

"Insane Republicans Reveal An Insane Budget Plan" By Bob Cesca

It only makes sense that a party currently being wagged by fringe crazy people like Glenn Beck, Rush Limbaugh and Michele Bachmann would release its alternative budget on April Fools' Day.

Not only does the Republican plan freeze discretionary spending for five years in the midst of a recession which, by most accounts and proved by history, will countermand any sort of economic recovery, but it also cuts taxes by 10 percent for the same Wall Street executives whose actions largely got us into this economic mess in the first place. In other words: Congratulations, Republicans, you just released a budget that rewards wealthy corporate executives while blocking any attempt to dig us out of the economic catastrophe they created....

The marquee item, however, in the Republican plan is their inexplicably regressive tax cut for the super rich. Wealthy Americans in the top three tax brackets would see their tax burden cut to a flat 25 percent from previous rates of 35, 33 and 28. According to the Center for American Progress Action Fund, CEOs from any of the top 800 corporations would receive a tax break of around $1.5 million a year. Meanwhile, if you earn $15,000 a year, your tax break will be around $0 a year.

But get this. Under the Republican plan, Americans are given the option of paying the old tax rates instead of the new, expensive and regressive Republican rates. So, for example, if your household income is $100,000, you could pay the same tax rate as someone earning $15,000. Or you could be a swell egg and go back to your old rate. Aside from the utter lack of fairness in the notion of a $100,000 household paying the same rate as a $15,000 household, who in their right mind would voluntarily pay higher taxes?

Now you might be asking, given that the Republicans are all about fiscal responsibility, how much does this Republican tax cut for the wealthiest three brackets actually cost? Some estimates, according to Steve Benen, project upwards of a $4 trillion price tag. At the very least, according to their own projections, the Republican plan would run up a $500 billion annual budget deficit through at least 2080. Again, the Republican grasp of fiscal responsibility is about as firm as their grasp of reality and sanity. The subtext here being: The trillion dollar Bush tax cuts weren't irresponsible enough. Let's go crazy! WOOO!

"In the future, economists will return to Earth"

From Greenpeace:

The year 2009 will witness a tsunami of economic appeals to fix, as disgraced Federal Reserve Chairman Alan Greenspan put it, the 'flaw' in their thinking. Most will get it wrong.

The proposals for bailouts, regulations, and government spending sprees all share one tragic flaw: They assume no physical or biological limits to human growth. Most economists cling to an 18th century mechanical universe that conjured an 'invisible hand' of God, which would allegedly convert private greed into public utopia.

Indeed, a few got rich but the meek inherit an Earth featuring child slavery, sweatshops, a billion starving people, toxic garbage heaps, dead rivers, exhausted aquifers, disappearing forests, depleted energy stores, lopped-off mountain tops, acid seas, melting glaciers, and an atmosphere heating up like a flambé.

Meanwhile, a rigorous sub-culture of scientists and economists have been working to free economics from its eighteenth century quagmire by reconciling human enterprise with the laws of physics, biology, and ecology....

Dr. Albert Bartlett, Emeritus Professor of Physics at Colorado University, urges economists to learn the laws of nature. Non-material values - creativity, dreams, love - may expand without limit, but materials and energy in the real world remain subject to the requirements of thermodynamics and biology. "Growth in population or rates of consumption cannot be sustained. Smart growth is better than dumb growth," says Bartlett, "but both destroy the environment."

What about technology? Some economists imagine that computer chips or nanotechnology will save us from the laws of nature, but every technical efficiency in history has resulted in more consumption of energy and resources, not less. Remember when computers were going to save paper? That never happened. Computers increased paper consumption from about 50 million tonnes annually in 1950 to 250 million tonnes today. Meanwhile, we lost 600 million hectares of forest.

Nor is the internet a celestial realm where ideas are exchanged for 'free'. Computers require copper, silicon, oil, toxic chemicals, massive energy for server networks, and garbage heaps for techno-trash. In every industrialised nation, energy and material consumption is increasing, not decreasing. Technology is not energy. It costs energy....

In the 1970s, World Bank economist Herman Daly wrote Steady-State Economics to outline the future of ecological economics. Daly makes a distinction between 'sustainable growth', which is 'impossible', and 'sustainable development', which is natural. "The larger system is the biosphere and the subsystem is the human economy," says Daly. "We can develop qualitatively, but we cannot grow beyond the biosphere's limits."...

"We are dying of consumption," says Peter Dauvergne, sustainability advisor at UBC and author of The Shadows of Consumption. "The unequal globalisation of the costs of consumption is putting ecosystems and billions of people at risk."

To honestly achieve a "sustainable" economy, humanity must step through a paradigm shift, as profound as the transition in the sixteenth century when Copernicus showed that the Earth is not the centre of the universe. Likewise, ecology teaches us that humanity is not the centre of life on the planet. Just as the Pope's henchmen refused to look through Galileo's telescope, some economists avoid looking out the window to see what keeps humanity alive: photosynthesis, precious materials, and concentrated energy.

"Sooner or later," as ecologist David Abram puts it, "technological civilisation must accept the invitation of gravity and settle back … into the rhythms of a more-than-human Earth."

"French, German Leaders Call for "Moralization" of Capitalism"

From Deutsche Welle:

The destruction of capitalism would be catastrophic, but the system had to undergo an overhaul to stay viable, French President Nicolas Sarkozy said in Paris at the opening of the economic symposium "New World, New Capitalism," which he established as a response to the economic crisis.

He said modern-day capitalism based on speculation had been "perverted" and was "an immoral system". He said a new role should be created for governments and moral values.

"Either we re-found capitalism or we destroy it," Sarkozy said as he called for an economic system based on the value of work rather than finance.

"Purely financial capitalism has perverted the logic of capitalism," the French president said. "Financial capitalism is a system of irresponsibility and ... is amoral. It is a system where the logic of the market excuses everything."

The French leader said the structure of a new system of regulation should be agreed on before April's G20 summit in London.

Sarkozy: US dominance at an end


World leaders are hopeful Obama will come to the table
Sarkozy and German Chancellor Angela Merkel collectively used the summit to urge the US not to stand in the way of tighter controls on world financial markets.

"I've always in my political life been a supporter of a close alliance with the United States but let's be clear: in the 21st century, a single nation can no longer say what we must do or what we must think," Sarkozy said.

The Wall Street Bailout/Swindle

Paulson's Swindle Revealed by WILLIAM GREIDER

The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm. But, if you look more closely at Paulson's transaction, the taxpayers were taken for a ride--a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public's money was a straight-out gift to Wall Street, for which taxpayers got nothing in return......


The Bailout: Bush's Final Pillage by NAOMI KLEIN

In the final days of the election, many Republicans seem to have given up the fight for power. But that doesn't mean they are relaxing. If you want to see real Republican elbow grease, check out the energy going into chucking great chunks of the $700 billion bailout out the door. At a recent Senate Banking Committee hearing, Republican Senator Bob Corker was fixated on this task, and with a clear deadline in mind: inauguration. "How much of it do you think may be actually spent by January 20 or so? Corker asked Neel Kashkari, the 35-year-old former banker in charge of the bailout.

When European colonialists realized that they had no choice but to hand over power to the indigenous citizens, they would often turn their attention to stripping the local treasury of its gold and grabbing valuable livestock. If they were really nasty, like the Portuguese in Mozambique in the mid-1970s, they poured concrete down the elevator shafts.

The Bush gang prefers bureaucratic instruments: "distressed asset" auctions and the "equity purchase program." But make no mistake: the goal is the same as it was for the defeated Portuguese--a final frantic looting of the public wealth before they hand over the keys to the safe.

How else to make sense of the bizarre decisions that have governed the allocation of the bailout money? When the Bush administration announced it would be injecting $250 billion into America's banks in exchange for equity, the plan was widely referred to as "partial nationalization"--a radical measure required to get the banks lending again. In fact, there has been no nationalization, partial or otherwise. Taxpayers have gained no meaningful control, which is why the banks can spend their windfall as they wish (on bonuses, mergers, savings...) and the government is reduced to pleading that they use a portion of it for loans.

What, then, is the real purpose of the bailout? I fear it is something much more ambitious than a one-off gift to big business--that this bailout has been designed to keep pillaging the Treasury for years to come. Remember, the main concern among big market players, particularly banks, is not the lack of credit but their battered share prices. Investors have lost confidence in the banks' honesty, and with good reason. This is where Treasury's equity pays off big time.

By purchasing stakes in these institutions, Treasury is sending a signal to the market that they are a safe bet. Why safe?

Because the government won't be able to afford to let them fail. If these companies get themselves into trouble, investors can assume that the government will keep finding more cash, since allowing them to go down would mean losing its initial equity investments (just look at AIG). That tethering of the public interest to private companies is the real purpose of the bailout plan: Treasury Secretary Henry Paulson is handing all the companies that are admitted to the program--a number potentially in the thousands--an implicit Treasury Department guarantee. To skittish investors looking for safe places to park their money, these equity deals will be even more comforting than a Triple-A rating from Moody's.

Insurance like that is priceless. But for the banks, the best part is that the government is paying them--in some cases billions of dollars--to accept its seal of approval. For taxpayers, on the other hand, this entire plan is extremely risky, and may well cost significantly more than Paulson's original idea of buying up $700 billion in toxic debts. Now taxpayers aren't just on the hook for the debts but, arguably, for the fate of every corporation that sells them equity....