What Happens When Your Paycheck Comes from China

by Len Hart, The Existentialist Cowboy

In the 1930s, millions of Americans lost hope of getting a paycheck. Utterly disillusioned, Americans might have embraced full blown socialism. Now Americans may have no choice but to accede to the ownership of their country by China. Has there been another instance in history in which one nation has foreclosed upon another? Americans have two options: utter collapse or become slaves to your new Chinese landlords!

As the US emerged from the Great Depression, the 'right wing' was spooked as it often is and should be. The FBI considered 'It's a Wonderful Life' to be a subversive film because it "deliberately maligned the upper class" and demonstrated that "people who had money were mean and despicable characters". Aren't they?

Indeed, 'It's a Wonderful Life' was a subversive film. It threatened to subvert the lies and claptrap that is sold us by the Axis of Wall Street, K-Street and the GOP. 'It's a Wonderful Life' threatened to reveal the consequences of lies and perhaps worse the implications of truth about an entrenched establishment that is premised upon a pack of lies and propaganda. In the words of Albert Speer who should have known, the Third Reich was literally built upon 'meaningless platitudes'. The same is true of the US government, especially the fraudulent reigns of Ronald Reagan about which the right wing still lies. The truth about Reagan threatens the self-esteem of every stupid GOPPER and/or right wing knee-jerk who supported him and the Bush crime family.

A rational discussion of the Great Depression is still feared by the right wing because it will expose to the world the economic sand upon which is built their house of cards. The right wing and its willing culprits fear the implications of truth but cannot escape the consequences of their many lies.

The bad news in today’s jobs report is pervasive.

• Private and government payrolls combined have shrunk for 14 straight months, and net job losses since the start of the recession total 4.4 million. (Private sector payrolls have shrunk by 4.6 million jobs over the same period.)
  
• Job losses have averaged almost 650,000 a month over the last four months.
• The official unemployment rate, which was 4.9 percent at the start of the recession in December 2007, reached 8.1 percent last month.
• Other indicators show the breadth of labor market weakness. For example, the percentage of the population with a job (60.3 percent) has fallen to its lowest level since early 1986.
• The Labor Department’s most comprehensive alternative unemployment rate measure — which includes people who want to work but are discouraged from looking and people working part time because they can’t find full-time jobs — stood at 14.8 percent in February, up 6.1 percentage points since the recession began and the highest level on record in data that go back to 1994.
Well over one-fifth (23.1 percent) of the 12.5 million unemployed have not been able to find a job despite looking for 27 weeks or more. (Regular unemployment insurance benefits typically run out after 26 weeks.)

For the recovery law to stem the tide of job losses and lay the groundwork for a strong recovery as quickly and effectively as possible, federal, state, and local governments have to get programs up and running quickly. In particular, states must use the money that Congress provided to them as intended so that it will have maximum effectiveness as stimulus.

--CBPP Economic Recovery Watch: Statement on February Employment Report

Right wing cheerleaders for 'laissez-faire' economics must be chagrined by recent 'Marxist' bailouts of so-called 'free enterprise'. As economists conduct post-mortems on the ongoing crash and dive, economists read the 'bones' left in the wake of the earlier 'crisis', the stock market crash of 1929.

However, in 1963, Milton Friedman and Anna J. Schwartz transformed the debate about the Great Depression. That year saw the publication of their now-classic book, A Monetary History of the United States, 1867-1960. The Monetary History, the name by which the book is instantly recognized by any macro economist, examined in great detail the relationship between changes in the national money stock--whether determined by conscious policy or by more impersonal forces such as changes in the banking system--and changes in national income and prices.

--Ben S. Bernanke, The Federal Reserve Board, Money, Gold, and the Great Depression

What Bernanke fails to mention is that Friedman --despite his great reputation as a 'conservative' economist --leaned heavily upon the work of John Maynard Keynes in his analysis of the Great Depression. But, on the whole, he most certainly got it wrong.

[John Maynard] Keynes seemed to be the right man for the time as he was reflecting the increasingly common view that blamed the capitalists themselves for the situation. In the General Theory Keynes rejected the view that the boom-bust cycle was due to over-expansive government monetary policy and that the stubbornness of the Depression was due to government interference with market mechanisms. He labeled all economists who believed such views as “classical”—in other words, hopelessly out of touch with reality. Instead, Keynes proposed a “general theory” that he thought capable of explaining not only the good times but also the bad.

According to Keynes, what drives the economy is aggregate demand or aggregate expenditures. Aggregate demand can be broken down into three main components: personal consumption (C), private investment (I), and government expenditures (G). The relationship can be summed up with this formula: AD = C + I + G. If Aggregate Demand is strong, the economy will be strong. However, if Aggregate Demand falters, businesses will end up with large unsold inventories and will cut back on production to avoid surpluses in the future. As they cut back they will of course need fewer inputs—including labor—and high unemployment will result.

The culprit in this story, the element that throws the entire system out of whack, is private investment. Private investment consists of business expenditures on machines, buildings, factories, and so on. In other words, investment is capital formation. Keynes claimed that private investment is inherently unstable due to what he called the “animal spirits” of businessmen/capitalists. He believed that businessmen are ultimately irrational and prone to herd-like behavior. Like sheep that blindly follow other sheep in the herd, it is easy for businessmen to become “irrationally exuberant”—as well as irrationally lethargic. Investment lethargy would trigger a large decrease in private investment, thus decreasing aggregate expenditures and triggering an economic downturn.

--Ivan Pongracic, Jr, The Great Depression According to Milton Friedman

In the motion picture 'It's a Wonderful Life', George Baily represents the 'private investment' part of the Keynes' equation. Had he jumped off the bridge, the picture of Bedford Falls as "Pottersville" might have come true. This is a picture of wealth benefiting the community. Potter, by contrast, represents the Axis of Wall Street/K-Street/GOP. This is wealth 'trickling up' by way of Reaganesque tax cuts that benefit only the ruling elite. Contrary to the lies with which this scheme is sold, this is wealth that finds its way to 'offshore' tax havens where it does not and cannot benefit the people of the United States by way of jobs or opportunities.

Here's how the model works. Unfair tax cuts are a windfall to rich elites. Despite the sales pitch, this 'windfall' is not re-invested in ways that will create new jobs or higher wages. The 'windfall' is instead invested offshore, in tax havens where it is forever lost to US consumers who might have used it to invest in better housing or in goods that are still manufactured in the US. Even if the consumer should decide to 'save' his windfall, the chances are good that his domestic 'bank' will sell his 'paper' to a larger institution and eventually offshore. Briefly, tax cuts benefiting only the nation's increasingly tiny elite are forever lost to domestic investment or domestic spending. These are dollars that are effectively removed from the economy. This is, in fact, a mechanism by which the supply of money contracts. Another word for it is 'depression'. All the official records, charts and data analyses prove that following every GOP tax cut is a recession/depression. Now you know why!

More than 83 corporations have offshore subsidiaries where their funds are protected in tax havens in the Caymen islands such as: The Bank of America, Citigroup, Morgan Stanley, AIG, JP Morgan Chase, Wells Fargo, and even Pepsi and General Motors who received 13.4 billion have hundreds of millions of dollars in tax havens offshore. All these corporations receive protection from paying the US government their taxes and the loss to the US is into the 100 billion dollars of lost tax revenue.

Senator Carl Levin a democrat from Michigan and Byron Dorgan, Democrat of North Dakota requested the report to be released and are pushing for new laws prohibiting these bailout scam corporations from being tax dodgers while asking for bailouts from the taxpayer.

The Government Accounting Office includes 63 of the 100 largest contractors who receive government contracts also have accounts in tax haven countries.

--Bailout Corporation Tax Havens in Caymen Islands

I see a Pottersville whenever I see Wal-Mart put the locals out of business. It required an intervening angel to save Bedford Falls from its fate at the hands of a greedy banker. Like John Maynard Keynes, we wonder: who will save "capitalism from itself”? Where is our guardian angel?

Her aim was to convince China to keep investing its foreign exchange reserves in US treasury securities in order to help finance the bailout of failing US banks and pay for the $787 billion US stimulus package. The US treasury has indicated it must raise nearly $500 billion in the first quarter of this year alone.

In an interview on China's Dragon TV just before concluding her trip and returning to Washington Sunday, Clinton warned that if the US economy collapsed China would pay a steep price as well. "It would not be in China's interest if we were unable to get our economy moving," she told her interviewer.

"Our economies are so intertwined," she said on the talk show. "The Chinese know that in order to start exporting again to its biggest market ... the United States has to take some drastic measures with the stimulus package. We have to incur more debt."

Clinton added, "We are truly going to rise or fall together. By continuing to support American treasury instruments, the Chinese are recognizing our interconnection."

--Hillary Clinton presses China to keep buying US debt

It would appear then that America's only hope in the short term is that it continue to export American jobs and industries as it has done since Richard Nixon and the Bushes sold us all out to China. If what Hilary says is true, then --once again --the American labor movement will have to suck up the many harms that were in fact perped by the crooks on Wall Street, K-Street and 1600 Pennsylvania Avenue. It would appear that once again the weight of the US economy must be borne by the class of productive Americans who have been screwed silly by the Republican party and their legions of paid liars. If Hilary is correct, then In the longer term, we will have been owned lock, stock and barrel by China, the FOX Broadcasting/Wal-Mart of countries, the country that willingly made a Faustian pact with the Axis of Nixon/Bush/Bush. I simply must ask you: how do you feel about slaving away your life for waqes that will ultimately come from the nation that annexed Tibet, a nation in which there is most certainly no pictograph for 'human rights'?

While there are many analogies to be made with the Great Depression of 1929, the lessons themselves have obviously been missed. The right wing, for example, will never admit that their policies were simply dead wrong and incompetent. The Democrats will never admit that they might have effectively opposed the GOPs Four Horsemen of Economic Apocalypse. While even Nixon famously said 'We are all Keynesians now', the lessons of Keynes may never have been heeded and less so since the US entered into its faustian bargain with our new landlords --China.

It seems an extraordinary imbecility that this wonderful outburst of productive energy [over 1924-1929] should be the prelude to impoverishment and depression. Some austere and puritanical souls regard it both as an inevitable and a desirable nemesis on so much over expansion, as they call it; a nemesis on man's speculative spirit. It would, they feel, be a victory for the mammon of unrighteousness if so much prosperity was not subsequently balanced by universal bankruptcy. We need, they say, what they politely call a 'prolonged liquidation' to put us right. The liquidation, they tell us, is not yet complete. But in time it will be. And when sufficient time has elapsed for the completion of the liquidation, all will be well with us again.

I do not take this view. I find the explanation of the current business losses, of the reduction in output, and of the unemployment which necessarily ensues on this not in the high level of investment which was proceeding up to the spring of 1929, but in the subsequent cessation of this investment. I see no hope of a recovery except in a revival of the high level of investment. And I do not understand how universal bankruptcy can do any good or bring us nearer to prosperity... [p. 349].

While some part of the investment which was going on in the world at large was doubtless ill judged and unfruitful, there can, I think, be no doubt that the world was enormously enriched by the constructions of the quinquennium from 1925 to 1929; its wealth increased in these five years by as much as in any other ten or twenty years of its history... [p. 347].

Doubtless, as was inevitable in a period of such rapid changes, the rate of growth of some individual commodities [over 1924-1929] could not always be in just the appropriate relation to that of others. But, on the whole, I see few signs of any serious want of balance such as is alleged by some authorities. The rates of growth [of different sectors] seem to me, looking back, to have been in as good a balance as one could have expected them to be. A few more quinquennia of equal activity might, indeed, have brought us near to the economic Eldorado where all our reasonable economic needs would be satisfied... [pp. 347-48].>

--John Maynard Keynes, The General Theory and After: Part I, Preparation; Collected Writings of John Maynard Keynes, vol. 13, pt. 1, Donald Moggridge, ed., (Cambridge, U.K.: Cambridge University Press).

There is in America, then, a ruling class that willingly and knowingly lies to you not because they don't know the truth but because they do. This 'class' will never face up to the truth about tax cuts from which they alone benefited. This 'class' will forever blame others for a collapse that is well under way. This class denies the implications of the truth and in vain tries to avoid the consequences of their lies.

It's a Wonderful Life

A hat-tip to Crooks and Liars for the following vid and comment:

Rush Limbaugh Get his Sorry, Stupid, Arrogant Ass Kicked!!!

I found this clip this morning and thought I'd share it here at C&L. The clip is from 1990 when a much younger Rush Limbaugh got owned by the studio audience during his very brief career in television. The crowd eventually becomes so incensed by his nasty attacks on women that he can't get a word in edgewise and they are forced to clear the studio in order for Rush to actually finish the segment.

Rush has challenged President Obama to a debate, but only because he knows there isn't a hope in hell it will ever happen. He knows he wouldn't stand a chance, but that's not going to stop him from rallying his ignorant minions. He cares nothing for his party, this nation or its people, he's out for power,money and fame -- much like the party he now leads.

--Flashback: Limbaugh Gets Pwned By Studio Audience

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Media Conglomerates, Mergers, Concentration of Ownership, Global Issues, Updated: January 02, 2009

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Why "Invisible" Geno-Rape in Africa Is Everyone's Disaster

by Omyma

Now that the world is mostly connected by internet, satellite, air travel and more - now that the economy's meltdown means the global economy's meltdown - now that drought in, say, China, is a concern to people in, say, Kansas - and party affiliation is irrelevant - now when doing what's "good" for America has to also be somehow "good" for the rest of the planet - now we look at the "Invisible War", the unreported war, the conflict in the Congo where mass atrocities are a way of life, in a manner so unspeakable that it defies language.

The object of these atrocities are women. Women on a scale of sheer totality. The Democratic Republic of Congo's roving militias have essentially declared war against the Female in her totality. Any and all women are fair game. There appears to be no rhyme or reason to it, except unabashed, drug-fueled, abuse and poverty-driven, depravity and cruelty. In Bob Herbert's NYT op-ed, he describes some of these horrors:

This sustained campaign of mind-bending atrocities, mostly in the eastern part of the country, has been one of the strategic tools in a wider war that has continued, with varying degrees of intensity, since the 1990s. Millions have been killed.

Women and girls of all ages, from old women to very young children, have been gang-raped, and in many cases their sexual organs have been mutilated. The victims number in the hundreds of thousands. But the world, for the most part, has remained indifferent to their suffering.

How much coverage has this gotten in the media? How much outrage? A few articles last January, overwhelmed by economic and election news, not to mention the ugly Israeli massacre of Gazan civilians. These women have no spokespeople, no connections to us. When you read a title displaying the word "Congo" or "Congolese", do you seriously jump on the link, or, riveted, read the article? It's on the planet, but not particularly significant to most people's worlds. It's time for that to change. This is not just a war. It's a holocaust.

The war itself, between many groups, is over control of the country's wealth, and has been going on since the '90's. It is also directly linked to the famously genocidal war in Rwanda. In fact, news surfaced awhile back of its child soldiers, and at this moment war trials are being held in the Hague over previously reported atrocities. But the extent to which the war has brutalized women and families has just been released in a report by two humanitarians.

The report, "Women's Rights Violations During the Conflict in the Democratic Republic of the Congo," was written by Lisette Banza Mbombo and Christian Hemedi Bayolo of the Association for the Rebirth of Human Rights in Congo, based in Kinshasa, the capital. It might have gone unnoticed outside the country had it not come to the attention of the International Centre for Human Rights and Democratic Development in Montreal, an independent body created by the Canadian Parliament.

Women almost never get redress for rapes, and the devastating effect on children and families cannot be quantified, let alone remedied, avenged, or somehow alleviated.

The Congo report describes graphically the horrific abuses of a war fought out of sight, where the number of international peacekeepers is impossibly small. Mass rapes, often to demoralize enemies, seem to take place everywhere, the authors found. In the eastern region of South Kivu, the report said, a Congolese rebel army allied to Rwanda had buried women alive after ramming sticks into their vaginas, to terrorize the local population.

International organizations estimate that 2 million people may have died in the Congo war; this report speculates that women account for many of the victims.

The goal of the perpetrators was to humiliate and torture their victims, but also, apparently, to annihilate their humanity. And in that sense, their humanity's annihilation is ours - if we ignore it. The brutalizers cannot be left to gain power or get away with such atrocities. This goes beyond what most people think of as criminal behavior. It is the unspeakable - about which we should, in all conscience, be compelled to speak. Or as Bob Herbert reported,

“These women are raped in front of their husbands, in front of their children, in front of their parents, in front of their neighbors,” said Dr. Denis Mukwege, a gynecologist who runs a hospital in Bukavu that treats only the women who have sustained the most severe injuries.

In some cases, the rapists have violated their victims with loaded guns and pulled the triggers. Other women have had their organs deliberately destroyed by knives or other weapons. Sons have been forced at gunpoint to rape their mothers. Many women and girls have been abducted and sexually enslaved.

It is as if, in these particular instances, some window to what we think of as our common humanity had been closed.

It not only destroys the women's sense of their own humanity or worth as beings, but it does the same for everyone around them.

“The second consequence is that the whole family and the entire neighborhood is traumatized by what they have seen. The ordinary sense of family and community is lost after a man has been forced to watch his wife being raped, or parents are forced to watch the rape of their daughters, or children see their mothers raped.

“Neighbors are witnesses to this. Many flee. Families are dislocated. Social relationships are lost. There is no more social network, village network. Not only the victims have been destroyed; the whole village is destroyed.”

As we read this report, we too become witnesses to an unspeakable crime, about which we must speak. Our very humanity, our bond with each other and with the earth, has been hainously violated. It must not pass without consequence to the guilty.

All this horror for wealth and power? Is this not the "profit motive" gone awry? Is this not the anarchy at the end of extreme anti-government ideology? With the world's resources vanishing under a prolifirating horde of humanity, we need to get honest about values, what is sacred and what is ridiculous. Or we too, may be fighting a war against ourselves, our families, against women, against children, against anything that has real meaning or purpose.

This is your world without "liberal" compassion, without functioning government, all guns, guts, and "glory".... all dysfunctional holocaust.

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My Financial Back Pages: The News Behind the Headlines

by SadButTrue

The big headlines these days are about the continuing effort to forestall another Great Depression, and this week's news on that front is of course the DJIA falling below 8,000, to a level that it hasn't seen since 1997. Analysts are predictably predicting that the market will soon recover sharply as investors take advantage of the record low prices. Investment analysts are of course under a certain obligation to interpret all news in as upbeat a manner as possible. This is because their predictions have a measurable effect on the market's performance, due to psychological factors - more investor confidence equals a better market. I'm not an analyst, so I see things a little differently. In fact, I tend to see high finance as being distinguishable from piracy only in the fact that the former avoids the necessity of a ship and crew. The question I want to ask is; "which investors are in position to take the greatest advantage?"

The really important economic stories often don't make the headlines, because they're subtle, and it takes some thought to see their significance. Here's one aspect of the current economic crisis that hardly anybody seems to want to talk about - I wonder why? From a diary by the Coffin Brothers at Kitco.com (a gold/metals stock tracker and currency trader):

" While western banks continue to undergo a period of deleveraging and retrenchment, Chinese firms are making use of the oldest form of leverage – available cash in a down market. That has come to the aid of Rio Tinto (RTP-L) which went into debt to purchase Alcan (Aluminum Company of Canada) in 2007. Chinalco (Aluminum Company of China) has agreed to take various minority stakes in aluminum, copper and iron producing Rio subsidiaries for US $12.3 billion, which is a reasonable sum for interests that earned $2.2 billion in 2008. Added to this are $7.2 billion of convertible bond purchases, which at significantly above market strike prices would bring Chinalco’s stake in Rio Tinto Group to 18%. "

It's no coincidence that the Chinese ideogram for crisis = danger + opportunity. Having used their cheap workforce to accumulate cash while the US and other countries have accumulated debt, the Chinese are now very smartly using the cash to take advantage of the crisis caused by the debt. One could call this economic warfare with little fear of contradiction except for one thing. US corporations like WalMart have been the prime movers of the trade arrangements that have undermined the US economy, and US consumers have happily maxed out their credit cards for the unbelievably cheap tube socks and wide screen TVs that have been dangled as bait. Once feared as a communist threat to the US, the Chinese now appear to be a much greater threat as capitalists.

The background for this depressing news cycle has been the CPAC conference featuring the bloated bloviations of the newly anointed Republican heir apparent Rush Limbaugh. One could hardly imagine that the conservative movement could retreat even further from reality than they already were, but they seem to have done so yet again. While choosing to blithely ignore the massive transfer of wealth upward that has been going on at an accelerated rate for nearly three decades, they express a shocked outrage at the slightest attempt to transfer the least bit of it back to the middle class. Because stealing from the middle class to give to the rich is The American Way™, don'tcha know, but turn it around and it becomes Class Warfare. If they are to be believed, Socialism, The Red Menace has come to America's shores personified as President Barack Obama.

What should be tragically obvious by now (but again, what nobody's even daring to talk about) is that mechanisms that transferred wealth from the American middle class to the ultra-rich didn't bother to ensure that they were transferred to America's ultra-rich. The most benefit went to Middle East oil sheiks and, of course, the Chinese. The scope of this economic treason is almost unimaginable, only measurable by the TRILLIONS of dollars being spent to try to deal with its consequences.

No matter how well-intentioned Barack Obama might be, he'll never be able to transfer that wealth back where it belongs. It's gone forever. His only option is to borrow even more foreign money to try to solve a problem that was created by the US government (and its people) borrowing too much foreign money. And to my mind borrowing money to try and solve a problem that was created to begin with by borrowing too much money has a very low probability of success.

"We can't solve problems by using the same kind of thinking
we used when we created them."
-- Albert Einstein --

A couple of years ago one of my first ever blog posts sought to compare the modern system of corporate feudalism with its eighteenth century counterpart - the system that patriots' blood was shed to overthrow in the American Revolution.

One distinction differentiates the modern corporate baron from the Peers of Olde England in the 18th century. The peers' capital was tied up in land, and could not conveniently be transferred to another country, whether that be a bank in the Caymans or a factory on the low-wage island of Saipan. This forced a noblesse oblige on the ruling class that is not in effect in this brave new world.

Project for the OLD American century posted this link today;

Cheneys Betting on Bad News
(The linked article deals with the fact that the Cheneys' investment portfolio includes instruments that pay off if the US dollar loses value - which, guess what, it DID some time after I wrote my post. As Condi would say, "who could have predicted that?")

The 'nobility' of old could not act as Cheney and his cohorts have, against the interests of their own country, for to do so would have been to act against their own interests. It has taken over two centuries, but the American system has finally achieved the worst of all possible worlds.

In the system we have seen emerge in America going back all the way to the Robber Barons there is no noblesse, no oblige, just a sense of entitlement without accountability that the Marquis de Sade himself would have envied. The conservative movement, in America and around the world, is no better than a gang of criminals. Should they continue to evade justice the system itself must be assumed to be complicit and in league. The only solution then is not political, but revolutionary. And I should warn you, the power structure that must be overthrown isn't confined to any one nation or even continent. This is a global problem that will require a global revolution.

The rhetorical question I asked in the first paragraph has some unexpected and unsettling implications. If you listen to Sparky and his gang, a large injection of foreign capital into the stock market will be a good thing. The market will go up, and the investment class (that diminishing segment of the population not struggling just to make their payments) will earn a profit. Confidence will rise. But the long term consequences are profound. As a greater proportion of American business is foreign owned, it becomes that much harder to pay back the enormous debt, and even if you do get to pay back some, it only gives China and other foreign interests more money to buy up more American business. The US now owes its soul to the company store, and that company's head office is in Beijing.

Under the current system this is a no-win scenario. Only by changing the system can there be any hope for a solution.

And for no better reason than that my title gives me an opening, I hereby present one of my favorite Bob Dylan songs - quite clear, no doubt, somehow.

MY BACK PAGES

UPDATE: Ellen Brown just came out with an article proposing what steps might be taken to get out of the fatal death spiral of debt. Not being a professional economist, Ms. Brown is in the habit of a) thinking out of the box and b) dealing with models that have a more practical than theoretical basis. It should come as no surprise considering what I've written above that her potential solution is NOT about saving the old system (and the privileged parasites who cling to it) but creating a whole new system where the central banks are owned and controlled by the government.

TAGS: Economic Crisis

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