The Virtual Recovery

October 29, 2012 | Paul Craig Roberts

Since mid-2009 the US has been enjoying a virtual recovery courtesy of a rigged inflation measure that understates inflation. The financial Presstitutes spoon out the government’s propaganda that prices are rising less than 2%. But anyone who purchases food, fuel, medical care or anything else knows that low inflation is no more real that Saddam Hussein’s weapons of mass destruction or Gadhafi’s alleged attacks on Libyan protesters or Iran’s nuclear weapons. Everything is a lie to serve the power-brokers.

During the Clinton administration, Republican economists pushed through a change in the way the CPI is measured in order to save money by depriving Social Security retirees of their cost-of-living adjustment. Previously, the CPI measured the change in the cost of a constant standard of living. The new measure assumes that consumers adjust to price increases by lowering their standard of living by substituting lower quality, lower priced items. If the price, for example, of New York strip steak goes up, consumers are assumed to substitute the lower quality round steak. In other words, the new measure of inflation keeps inflation down by reflecting a lowered standard of living.

Statistician John Williams (shadowstats.com), who closely follows the collecting and reporting of official US economic statistics, reports that consumer inflation, as measured by the 1990 official government methodology has been running at about 5%. If the 1980 official methodology for measuring the CPI is used, John Williams reports that the current rate of US inflation is about 9%.

The 9% figure is more consistent with people’s experience in grocery stores.

Officially the recession that began in 2007 ended in June 2009 after 18 months, making the Bush Recession the longest recession since World War II. However, John Williams says that the recession has not ended. He says that only the GDP reporting, distorted by an erroneous measurement of inflation, shows a recovery. Other, more reliable measures of economic activity, show no recovery.

Williams reports that the economy began turning down in 2006, falling lower in 2008 and 2009, and bottom-bouncing ever since. Not only is there no sign of any recovery, but “the economic downturn now is intensifying once again.” The absence of an economic recovery “is evident in the [official] reporting of nearly all major economic series. Not one of these series shows a pattern of activity that confirms the recovery [shown] in the GDP series.”

Williams concludes that “the official recovery simply is a statistical illusion created by the government’s use of understated inflation in deflating the GDP.” In other words, the reported gains in GDP are accounted for by price increases, not increases in real output.

The result of the US government’s economic deception is the same as the deception Washington has used to start wars all over the Middle East. The government propaganda produces a make-believe virtual reality that bears no relationship to real reality. In history there have been many governments who have prevailed by deceiving the people, but Washington has moved this success to a new peak. As long as Americans believe anything Washington says, they are doomed.

It is easy to see why there is no economic recovery and cannot be an economic recovery. Look at the chart below (courtesy of John Williams, shadowstats.com).



Real median household income at the end of 2011 is back where it was in 1967-68. Moreover, Williams has deflated household income to get its real value by using the official inflation measure, which substantially understates inflation. If Williams had used the 1990 or 1980 official government methodology for calculating the consumer price index, the real median incomes of households would show a larger decline.

Moreover, the low 2011 real median household income is the summation, in most cases, of two household earners, whereas in 1967-68 one earner could produce the same real income. As Nobel economist Gary Becker, my former colleague as Business Week columnist, pointed out, when both husband and wife have to work in order to maintain the same purchasing power, household income from the wife’s in-kind household services is eliminated. Therefore, the monetary measure of the dual household income overstates income, because it is not adjusted for the lost benefits formerly provided by the wife who at home managed the household.

Americans are far more oppressed by the power brokers in Washington than statistics display. Moreover, the young are born into the oppressive, exploitative American system and do not know any different. They are fed by the Presstitute media with endless propaganda about how fortunate they are and how indispensable their wonderful country is. Americans are kept in a constant state of amusement, and many never grasp the loss of their civil liberties, job and career opportunities, and respect that the US won during the decades-long cold war with Soviet Communism.

On September 13, Federal Reserve Chairman Ben “Helicopter” Bernanke announced Quantitative Easing 3. Bernanke said that the recovery is weak and needs more Fed stimulus. He said the Fed will purchase $40 billion of mortgage bonds per month in order to drive interest rates further below the rate of inflation and help to sell more houses.

But how do you sell houses to households who are getting by with 1967-68 levels of real income and who have absolutely no job security? Their company can be taken over and offshored tomorrow or they can be replaced by foreign workers on H-1B visas. Housing prices have dropped, but not to 1967-68 levels.

Bernanke’s announcement that the Fed’s purchase of mortgage bonds is to spur housing and the economy is disinformation. Bernanke is purchasing the bonds in order to boost the values of the derivatives and debt instruments in the banks’ portfolios. Lower interest rates raise the value of the debt instruments on the banks’ balance sheets. By depriving American savers of a real interest rate on their savings, Bernanke makes the busted banks look solvent.

This is what is happening in “freedom and democracy” America. The vast majority of Americans, especially the retired, are forced to consume their savings and draw down their capital because they can get no real interest on their savings. The beneficiaries are the banksters, who can borrow at near zero interest rates, charge consumers 16% on their credit cards, and use the Federal Reserve’s largess to speculate on interest rate swaps and credit default swaps. The American taxpayers hold the bag for the banksters’ uncovered gambles.

Would you not gamble if the American taxpayers had to cover your bets, but your winnings were yours alone?

The future of the American political order is in doubt. The Bush and Obama regimes have so badly abused the Constitution and statutory law, that the America that Ronald Reagan left to us no longer exists. America is on the path to collapse or tyranny.

Suppose that a miracle produces an economic recovery. What becomes of the enormous excess bank reserves that the Federal Reserve has provided the banks?

If these bank reserves are used for expanding loans, the money supply will outstrip the production of goods and services, and inflation will rise.

If the Fed tries to take the excess reserves out of the banking system by selling bonds, interest rates will rise, thus destroying the wealth of bond holders and draining liquidity from the stock market. In other words, another depression that wipes out the remaining American wealth.

The Federal Reserve’s announcement of QE3 shows that the Fed will continue to create new money in order to protect the values of the insolvent banks’ questionable assets. The Federal Reserve represents the banksters, not the American public. Like every other American government institution, the Federal Reserve is far removed from concerns about American citizens.

In my opinion, the Federal Reserve’s purchase of bonds in order to drive down interest rates has produced a bond market bubble that is larger than the real estate and derivative bubbles. Economically, it is nonsensical for a bond to carry a negative real interest rate, especially when the government issuing the bond is running large budget deficits that it seems unable to reduce and when the central bank is monetizing the debt.

The bubble has been protected by the euro “crisis,” which possibly is more of a virtual crisis than a real one. The euro crisis has caused money to seek refuge in dollars, thus supporting the dollar’s value even while the Federal Reserve prints money with which to purchase the never-ending flow of the governments’ bonds to finance trillion dollar plus annual budget deficits–about 5 times the “Reagan deficits” that Wall Street alleged would wreck the US economy.

Indeed, the US dollar’s exchange value is itself a bubble waiting to pop. The sharp rise in the dollar price of gold and silver since 2003 indicates a flight from the US dollar. (The chart is courtesy of John Williams, shadowstats.com.)

The bond market bubble will pop if the dollar bubble pops. The Federal Reserve can sustain the bond market bubble by purchasing bonds, and there are no limits on the Federal Reserve’s ability to purchase bonds. However, the endless monetization of debt, even if the new money is stuck in the banks and does not find its way into the economy, can spook foreign holders of dollar-denominated assets.

Foreign central banks can decide that they want to hold fewer dollars and more precious metals as their reserves. Other countries, sensing the US dollar’s demise,



are organizing to conduct their trade without the use of the world’s reserve currency. Brazil, Russia, India, China, and South Africa intend to conduct their trade with one another in their own currencies. China and Japan have also negotiated to settle their trade balances with one another in their own currencies.

These agreements substantially reduce the use of the US dollar in international trade and, thus, the demand for dollars. When demand falls, so does price, unless the supply shrinks. But the Federal Reserve has announced, essentially, unlimited supply of US dollars. So we are faced with a paradox. The US dollar is supposed to remain valuable despite its enormous increase in supply

In addition, China, America’s largest creditor and in the past a reliable purchaser of US Treasury bonds, holds some two trillion in dollar-denominated assets, primarily Treasury bonds. How is Washington treating its largest foreign creditor? Not with appreciation or deference. Washington is surrounding China with naval and air bases, interfering in China’s disputes with other countries, and bringing contrived actions against China in the World Trade Organization. Washington claims that US corporations are deserting the US not because of the lower cost of labor in China, but because of Chinese “subsidies” to the relocated US firms.

In my April 30 column, “Brewing a Conflict with China,” I wrote that Washington would like to substitute a cold war with China for the hot wars in the Middle East. The problem with the hot wars is the loss of superpower face from Washington’s inability to prevail after eleven years, and although the hot wars are profitable for the military/security complex, the wars don’t generate the level of profits that would flow from a high-tech arms race with China. Moreover, Washington believes that diverting Chinese investment from the economy into a military buildup would slow the rate at which the Chinese economy is overtaking the US economy.

What if instead of taking the bait from Washington, China targets Washington’s Archilles heel–the dollar’s role as reserve currency–and decides it is cheaper to dump one trillion dollars of US Treasury debt on the bond market than to commit to a 30 year arms race? To keep the price of Treasuries from collapsing, the Federal Reserve could print the money to buy the bonds. But if China then dumps the printed one trillion dollars in the foreign exchange markets, Washington cannot print euros, British pounds, Russian rubles, Swiss francs, and other currencies in order to buy up the dollars.

Frantic, Washington would try to arrange currency swaps with foreign countries in order to acquire the foreign exchange with which to buy up the dollars that, otherwise, will drive down the dollar exchange rate and destroy the Federal Reserve’s control over interest rates.

But if the Chinese don’t want the dollars, will other countries want to swap their currencies for the abandoned US dollar?

Some of Washington’s puppet states will comply, but the wider world will rejoice in the termination of Washington’s financial hegemony and refuse the offer.

Sooner or later the dollar will collapse from Washington’s abuse of the dollar’s role as reserve currency, and the dollar will lose its “safe haven” status. US inflation will rise, and US political stability, along with America’s hegemonic power, will wane.

The rest of the world will sigh with relief. And China will have defeated the superpower without an arms race or firing a shot.

Unemployment And Marginal Tax Rates

What the Numbers Tell Us
by JOSHUA A. CUEVAS

We, as a nation, are now in our 5th year since the beginning of the greatest recession we’ve seen since the great depression (Federal Reserve Bank of Minneapolis, 2012). Indeed, at least one prominent economist and Nobel Prize winner has made the argument that we are in a second depression (Krugman, 2011). At the same time, perhaps predictably, U.S. school systems have been increasingly under funded with well over one hundred thousand teachers having been laid off nationally, even by the most conservative estimates (Kessler, 2012). But unemployment has been stubbornly high, above 8% for four years running (U.S. Department of Labor, 2012). People are out of work, therefore tax revenues are down, so schools, law enforcement, fire departments, etc. will have to survive on smaller budgets, while they are simultaneously expected to improve their services under increasingly austere conditions. Or so the argument goes. Tax revenues and tax rates cannot be augmented until we have a strong economy once again, so we will have to make due. We cannot possibly consider increasing taxes on anyone during a recession. This is a logical and persuasive argument, or so it would seem, one that many of us have heard trumpeted loudly in recent years.

This argument suggests that the strength of the economy is the driving force that determines the amount of revenue available to fund public services across the country. In other words, a stronger economy will bring in more tax dollars because more people will be employed. Simple enough. Except that for the last three decades, politicians, think tanks, and special interest groups have been making the case that lower taxes will strengthen the economy because it frees up capital for job creators and those in the private sector to then spend, thus keeping businesses thriving and people employed. This argument presupposes a cause and effect relationship. It suggests that low tax rates lead to more money circulating through the system, creating a stronger economy and lower unemployment. To test this claim we can examine, empirically, two essential parts of this equation: We can test the relationship between marginal tax rates and unemployment (with low unemployment acting as an indicator of a strong economy). We can ask the question; do low tax rates correlate with low unemployment and vice versa? If indeed they do, then it would lend validity to the argument that increased tax revenues should only take effect after the economy recovers and unemployment drops.

The Longitudinal Trend in Tax Rates: 1932 – Present

Before we answer this question it is worthwhile to examine recent trends in one part of this equation: marginal tax rates. Pundits, politicians, media personalities, and the person on the street may make the case that current tax rates are “sky high”, suggesting that Americans now pay a higher percentage of their incomes than the historical norms. But does the data support this notion? When we consider the top marginal tax rates since prior to World War II, the answer is an emphatic no (Tax Foundation, 2012). There has been a clear and continuous downward trend in the top marginal tax rates since 1932, and Americans now enjoy the lowest tax rates they have in three generations. The current marginal tax rate for those in the highest bracket is 35%, the same as it’s been for the last decade and the lowest it’s been in 80 years, with one brief exception that we will discuss shortly. When President Clinton was in office the highest bracket was 39.6%. Interestingly, when Reagan was president and tax reduction became a staple of the Republican platform, the highest bracket was 50% for most of his 8 years in office. The two decades prior to that it was 70%, and from 1963 back until 1945 it was 91%. In 1945 it was 94%. So the point is clear when you examine the actual numbers: Taxes have never in modern history been lower in the U.S., except for the following caveat.

There was an interesting anomaly from 1988 to 1992 when the highest tax rate dipped to between 28% and 31% (Tax Foundation, 2012). And what happened to the economy during that time of low taxes? There was a large recession beginning in 1990, one that pales by today’s standards, but a significant one by historical standards (The Economist, 2011). President G.H.W. Bush saw the harm this was doing to the economy and raised taxes, breaking his “Read my lips- no new taxes” pledge. This of course was one of the factors that caused him to lose the election in 1992. Prior to that, in 1982, there was another tax cut (Tax Foundation, 2012) and another deep recession (The Economist, 2011), leading to the two highest back-to-back yearly unemployment rates we have seen since the great depression- 9.7% in 1982 and 9.6% in 1983 (U.S. Department of Labor, 2012). Our latest tax cut went into effect in 2003 and within five years the Great Recession was well underway. It would seem that tax cuts correspond with big recessions. When you subtract the substantial amount of money that wealthy individuals and large corporations contribute to our federal government and the overall economy, bad things tend to happen to that economy.

But while the tax part of our equation shows a clear pattern- a consistent downward trajectory for 80 years, with tax cuts tending to correspond with recessions- the second part is less clear. Since World War II the unemployment rate each year has fluctuated with no discernable pattern to the naked eye, from a low of 2.9% in 1953 to a high of 9.7% in 1982, and a wide variety of levels across the years (U.S. Department of Labor, 2012). So it was determined that inferential statistics would be needed to analyze the relationship between the top marginal tax rates and unemployment since 1948, when the first unemployment statistics where available through the U.S. Department of Labor.

Analysis: Correlating Marginal Tax Rates and Unemployment

The data for the top marginal tax rates (Tax Foundation, 2012) and the unemployment rates for each year (U.S. Department of Labor, 2012) from 1948 to 2011 were compiled. These numbers were entered into a Pearson product-moment correlation analysis, two tailed, to test for the strength and direction of correlation and for statistical significance. The results indicated that there was a statistically significant negative correlation, r(64) = -.31, p = .013, in the relationship between top marginal tax rates and the unemployment rate in the 64 years from 1948 to 2011. This means that when taxes were high, during that same period unemployment tended to be low, suggesting a stronger economy. And when taxes were low, during the same period unemployment tended to be high, indicating a weaker economy. It is important to note that this is not a political argument; it is a mathematical one. This is what the numbers tell us when this statistical analysis is conducted.

Now there are a number of issues to consider in this analysis. First, 64 years is a relatively small sample size (N = 64). With a sample size this small we would often not expect to see a statistically significant correlation. In many cases there simply would not be enough data for the probability to reach .05, much less .013. But even with this relatively small sample size, the association between tax rates and unemployment did prove to be significant, which suggests that longer trend lines, perhaps 80 or 100 years, would reveal a more pronounced relationship between those variables. The more data you have, the clearer the relationship often becomes, as long as that relationship is not due to random chance. And this analysis suggests the relationship between the top marginal tax rates and unemployment is not due to random chance, or at least we are 98.7% certain that it is not.

Another thing to keep in mind is one of the first concepts we teach students in introductory statistics and research courses: correlation is not causation. We cannot make the claim that one variable in this equation causes the other variable, even though they clearly seem to be associated with one another. In fact, we know that unemployment rates do not cause the top marginal tax rates to be what they are at any given time. Top marginal tax rates are set (caused) by the laws implemented by state and federal legislatures. Even if one were to argue that law makers’ decisions on tax policies are influenced by unemployment rates, the election cycle and legislative cycle normally play out over a number of years, sometimes decades, when unemployment often fluctuates a great deal, so it is not reasonable to contend that unemployment rates cause the marginal tax rates to be what they are. However, it is quite plausible that top marginal tax rates have a causal effect on the unemployment rate, particularly since those tax rates have shown a steady and consistent downward pattern and may only change once or twice per decade. In other words, it is possible that the top marginal tax rates may be one of the primary factors that dictate the unemployment rate and the strength of the economy at any given time. But since we are dealing with a correlation, we cannot claim to have isolated that variable as a cause, and it is quite probable that other factors are in play despite the clear relationship between the two variables.

However, a correlation does not rule out causation, of course, and if there is causation in this relationship, then it can only be unidirectional. The unemployment rate cannot dictate tax rates. We know what causes tax rates to be what they are: laws enacted by legislatures. So if there is a cause and effect relationship present, it could only be in the opposite direction, with tax rates influencing unemployment rates. But a critic could legitimately argue that examining tax rates and unemployment rates during the same year is ineffective because if tax rates were indeed affecting fluctuations in the unemployment rate, the impact would not appear until the following year or later. A proponent of the hypothesis that low tax rates allow job creators to expand their businesses could credibly make a case that when tax rates are reduced it takes at least a year or two for the effects to be seen in the unemployment rates, making a year-to-year comparison invalid. Essentially, the possible positive effects of the tax reduction haven’t had a chance to take hold yet in the same year that rates are reduced. The critic could assert that while comparing tax rates to unemployment rates in the same year may show a negative correlation, subsequent years may show a positive correlation once the job creators have had a year or two to put that extra capital back into the system.

For this reason a Pearson correlation was conducted comparing the top marginal tax rates for each year to the unemployment rates the following year for every year from 1948 until 2010 (as of 2012 when the analysis was done, the tax rates for 2011 could not be compared to unemployment rates from 2012 because that data had not been released yet). Put another way, the tax rate from 1948 was compared to the unemployment rate for 1949 and so on until 2010 to account for the possibility that any effect of the tax rates may not appear until the following year. The results again indicated that there was a statistically significant negative correlation between the top marginal tax rate and the unemployment rate the following year, r(63) = -.267, p = .034. Just as in the first analysis, these findings suggest that when top marginal tax rates are low, the unemployment rate the following year tends to be high, and when tax rates are high, the unemployment rate the following year tends to be low.

The question remained as to whether this pattern would hold true if the top marginal tax rates were compared to unemployment rates two years after the fact. In essence, did tax rates appear to influence the strength of the economy two years after those revenues were collected? Based on the initial findings, and to extend the analysis even further, the decision was made to explore the relationship between the top marginal tax rates and the unemployment rates two years, three years, and four years after the fact. When tax rates were compared to unemployment rates two years later, a statistically significant negative correlation again emerged, r(62) = -.259, p = .042. When tax rates were compared to unemployment rates three years later, a statistically significant negative correlation was also revealed, r(61) = -.265, p = .039. For the analysis of four years after the fact, a negative correlation appeared, but in this case it was not statistically significant, r(60) = -.245, p = .059. This final analysis did not meet the criteria for significance for two reasons: First, with each subsequent analysis the sample size was reduced by one year. For instance, for the 2011 tax rates, unemployment figures do not yet exist for two years after that time, so 2011 had to be removed from that analysis and so on for each succeeding analysis.

Likewise, for 2010, unemployment rates do not yet exist for three years after that time. The second and more important reason for the lack of significance in the final analysis is related to the first. With each analysis, when a year was removed for lack of an unemployment statistic to compare it to, the year removed was the next most current one, so the tax data for the years 2011, 2010, 2009, and 2008 were removed with each respective analysis. This was noteworthy because these were all years with historically low tax rates (35%), and when those extremes were removed from the data set the results gravitated towards the historically higher tax rates and the correlation appeared less significant. There is no doubt, however, that when the data for 2012-2017 become available in the coming years and the current low tax rates are compared to unemployment rates for four and five years later from 1948 until the present, there will indeed be a statistically significant negative correlation, just as in the other analyses.

Interpreting the Results

What we see when examining the whole of this data is a consistent pattern: When the top marginal tax rates are compared to unemployment rates for the same year, one year later, two years later, and three years later, nearly identical results emerge. Not only is there a negative relationship in each case, with low tax rates correlating with high unemployment and vice versa, the magnitude of each relationship is nearly identical. So between 1948 and 2011, there appears to be a clear and consistent relationship between top marginal tax rates and the unemployment rate. And since unemployment rates cannot dictate tax rates, any influence must go in the opposite direction, with tax rates influencing the unemployment rates. Because we are dealing with correlations, there is a possibility that a third variable or more variables are also at play, particularly in a dynamic as complex as the U.S. economy. Indeed, it is almost a certainty that other factors are involved. But the unmistakable and highly uniform pattern revealed in the analyses reported here would lead us to believe that the relationship between top marginal tax rates and unemployment is in fact present, even if other factors are also involved.

What we can say with absolute confidence, though, is that there is no evidence here that low tax rates are associated with low unemployment, and by extension, a healthy economy. Similarly, there is no evidence that high tax rates are associated with high unemployment, and by proxy a weak economy. There is simply no empirical basis to make those claims based on this historical data. In fact, everything we see here suggests that just the opposite is true. Low marginal tax rates do not appear to be beneficial to employment rates, and if they are in fact detrimental to employment rates one would be hard pressed to make the case that they are helpful to the economy. In the most basic terms, a healthy economy is one in which the vast majority of citizens who want to work can find that work.

If one were to accept the common contention these days that we must wait until we again have a strong economy before we are able to collect the tax revenues needed to adequately fund public sector services, the data simply does not support that claim. These numbers tell a far different story. They instead suggest that while tax rates remain at historical lows we will continue to have a weak economy and high unemployment. There is no data to suggest that by keeping top marginal tax rates low it will improve the economy or decrease unemployment. For those who insist on low taxes at all costs, it would be worthwhile for them to look at the numbers and realize that pursuing low marginal tax rates, and gutting education and other social services in the process, is not the answer to a weak economy. It may be one of the causes of it, and certainly appears to be a prime factor in the equation. If we continue on the trajectory that we as a country have been on for more than 30 years of demanding lower and lower tax rates in the hopes that it will keep money in our pockets and food on the table, the data tells us we are more likely to have empty pockets and less on the table.

References
Federal Reserve Bank of Minneapolis. (2012). The recession and recovery in perspective [data file]. Retrieved from http://www.minneapolisfed.org/publications_papers/studies/recession_perspective/
Kessler, G. (2012, June 12). Spinning the number of teacher layoffs. The Washington Post. Retrieved from http://www.washingtonpost.com/blogs/fact-checker/post/spinning-the-number-of-teacher-layoffs/2012/06/12/gJQAgAMdYV_blog.html
Krugman, P. (2011, December 11). Depression and democracy. The New York Times, pp. A23. Retrieved from http://www.nytimes.com/2011/12/12/opinion/krugman-depression-and-democracy.html
Tax Foundation. (2011). U.S. federal individual income tax rates history, 1913-2011 [data file]. Retrieved from http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2011-nominal-and-inflation-adjusted-brackets
The Economist (2011, July 29). Recessions compared. The Economist online. Retrieved from http://www.economist.com/blogs/dailychart/2011/07/american-recessions-and-recoveries
U.S. Department of Labor, Bureau of Labor Statistics. (2011). Labor force statistics from the current population survey [data file]. Retrieved from http://www.bls.gov/cps/prev_yrs.htm/

US growth slows as consumers cut back on spending

(* And really, since the govt counts goods that have been produced but not ordered or sold as "growth" if you discount those goods, we've not been experiencing slow growth, but the 4th year of an economic depression. --jef)

 

+++++++

GDP grew at 1.5% between April and June, government figures show, compared to 2% in the previous three months

• Dominic Rushe in New York

• guardian.co.uk, Friday 27 July 2012

Factories received fewer orders and exports were hit by a global slowdown, the commerce department reported.

 

The US economy slowed again during the second quarter of the year, government figures showed Friday.

The nation's gross domestic product (GDP) – the broadest measure of the economy – grew at a sluggish 1.5% between April and June, the US commerce department said. The latest figure compares to 2% growth during the prior three months, and 4.1% in the fourth quarter of 2011.

The slowdown came as consumers cut back, local governments cut spending, factories received fewer orders and exports were hit by a global slowdown and a stronger dollar.

The latest news comes as the number of jobs created each month has also fallen sharply. The GDP figure is likely to be a blow to president Barack Obama as the economy emerges as the key issue of the 2012 election.

A Wall Street Journal/NBC News poll released this week found the economy was the only issue for which voters expressed more confidence in Mitt Romney, Obama's Republican rival, than the president.

The GDP figure was slightly higher than many economists had predicted. Economists surveyed by Dow Jones Newswires had expected a rate of 1.3% in the second quarter.

Consumer spending slowed in the quarter. Personal consumption expenditures rose 1.5% during the quarter, down from a 2.4% in the first quarter and the smallest gain in a year.

Spending on durable goods – including cars and home appliances – fell 1.% in the second quarter.

Cuts in government spending, especially at the local level, also held back growth. State and local spending fell 2.1% during the quarter while federal spending declined 0.4%.

Non-residential fixed investment, including business spending on structures and equipment, increased 5.3% during the second quarter, down from 7.5% in the previous quarter.

The US economy has grown for 12 consecutive quarters, but the gains have been small.*

"The current recovery has been utterly anaemic in relation to the average recovery in the post-war era. Real GDP is growing at a pace slower than virtually any recovery since the war," Dan Greenhaus, chief global strategist at BTIG, said in a note to clients.

100 Million Poor People In America And 39 Other Facts About Poverty

July 25, 2012

Every single day more Americans fall into poverty. This should deeply alarm you no matter what political party you belong to and no matter what your personal economic philosophy is.

Right now, approximately 100 million Americans are either "poor" or "near poor".  For a lot of people "poverty" can be a nebulous concept, so let's define it.  The poverty level as defined by the federal government in 2010 was $11,139 for an individual and $22,314 for a family of four.  Could you take care of a family of four on less than $2000 a month?

Millions upon millions of families are experiencing a tremendous amount of pain in this economy, and no matter what "solutions" we think are correct, the reality is that we all should have compassion on them.  Sadly, things are about to get even worse.  The next major economic downturn is rapidly approaching, and when it hits the statistics posted below are going to look even more horrendous.

When it comes to poverty, most Americans immediately want to get into debates about tax rates and wealth redistribution and things like that.

But the truth is that they are missing the main point.

The way we slice up the pie is not going to solve our problems, because the pie is constantly getting smaller.

Our economic infrastructure is being absolutely gutted, the U.S. dollar is slowly losing its status as the reserve currency of the world and we are steadily getting poorer as a nation.

Don't be fooled by the government statistics that show a very small amount of "economic growth".  Those figures do not account for inflation.

After accounting for inflation, our economic growth has actually been negative all the way back into the middle of the last decade.

According to numbers compiled by John Williams of shadowstats.com, our "real GDP" has continually been negative since 2005.

So that means we are getting poorer as a nation.

Meanwhile, we have been piling up astounding amounts of debt.

40 years ago the total amount of debt in the United States (government, business and consumer) was less than 2 trillion dollars.

Today it is nearly 55 trillion dollars.

So we have a massive problem.

Our economic pie is shrinking and millions of Americans have been falling out of the middle class.  Meanwhile, we have been piling up staggering amounts of debt in order to maintain our vastly inflated standard of living.  As our economic problems get even worse, those trends are going to accelerate even more.

So don't look down on the poor.  You might be joining them a lot sooner than you might think.

The following are 40 facts about poverty in America that will blow your mind....

#1 In the United States today, somewhere around 100 million Americans are considered to be either "poor" or "near poor".

#2 It is being projected that when the final numbers come out later this year that the U.S. poverty rate will be the highest that it has been in almost 50 years.

#3 Approximately 57 percent of all children in the United States are living in homes that are either considered to be either "low income" or impoverished.

#4 Today, one out of every four workers in the United States brings home wages that are at or below the poverty level.

#5 According to the Wall Street Journal, 49.1 percent of all Americans live in a home where at least one person receives financial benefits from the government.  Back in 1983, that number was below 30 percent.

#6 It is projected that about half of all American adults will spend at least some time living below the poverty line before they turn 65.

#7 Today, there are approximately 20.2 million Americans that spend more than half of their incomes on housing.  That represents a 46 percent increase from 2001.

#8 During 2010, 2.6 million more Americans fell into poverty.  That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

#9 According to the U.S. Census Bureau, the percentage of "very poor" rose in 300 out of the 360 largest metropolitan areas during 2010.

#10 Since Barack Obama became president, the number of Americans living in poverty has risen by 6 million and the number of Americans on food stamps has risen by 14 million.

#11 Right now, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.

#12 It is projected that half of all American children will be on food stamps at least once before they turn 18 years of age.

#13 The poverty rate for children living in the United States is 22 percent, although when the new numbers are released in the fall that number is expected to go even higher.

#14 One university study estimates that child poverty costs the U.S. economy 500 billion dollars a year.

#15 Households that are led by a single mother have a 31.6% poverty rate.

#16 In 2010, 42 percent of all single mothers in the United States were on food stamps.

#17 According to the National Center for Children in Poverty, 36.4 percent of all children that live in Philadelphia are living in poverty, 40.1 percent of all children that live in Atlanta are living in poverty, 52.6 percent of all children that live in Cleveland are living in poverty and 53.6 percent of all children that live in Detroit are living in poverty.

#18 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.

#19 Child homelessness in the United States has risen by 33 percent since 2007.

#20 There are 314 counties in the United States where at least 30% of the children are facing food insecurity.

#21 More than 20 million U.S. children rely on school meal programs to keep from going hungry.

#22 A higher percentage of Americans is living in extreme poverty (6.7 percent) than has ever been measured before.

#23 If you can believe it, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.

#24 A lot of younger Americans have found that they cannot make it on their own in this economy.  Today, approximately 25 million American adults are living with their parents.

#25 Today, one out of every six elderly Americans lives below the federal poverty line.

#26 Amazingly, the wealthiest 1 percent of all Americans own more wealth than the bottom 95 percent combined.

#27 The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to the bottom 30 percent of all Americans combined.

#28 At this point, the poorest 50% of all Americans now control just 2.5% of all of the wealth in this country.

#29 Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.

#30 Right now, the United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.

#31 Half of all American workers earn $505 or less per week.

#32  In 1970, 65 percent of all Americans lived in "middle class neighborhoods".  By 2007, only 44 percent of all Americans lived in "middle class neighborhoods".

#33 Federal housing assistance outlays increased by a whopping 42 percent between 2006 and 2010.

#34 Approximately 50 million Americans do not have any health insurance at all right now.

#35 Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, approximately one out of every 6 Americans is on Medicaid.

#36 It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

#37 Back in 1990, the federal government accounted for 32 percent of all health care spending in America.  Today, that figure is up to 45 percent and it is projected to surpass 50 percent very shortly.

#38 Overall, the amount of money that the federal government gives directly to the American people has risen by 32 percent since Barack Obama entered the White House.

#39 It was recently reported that 1.5 million American families live on less than two dollars a day (before counting government benefits).

#40 The unemployment rate in the U.S. has been above 8 percent for 40 months in a row, and 42 percent of all unemployed Americans have been out of work for at least half a year. (Though that's the bogus govt rate, the real unemployment rate is about 22%--see the previous article to see how badly the govt. distorts employment numbers.--jef)

Recently, I wrote a long article about why there will never be enough jobs in the United States ever again.

That means that a whole lot of Americans are not going to be able to take care of themselves.
As our economy gets even worse, there is going to be a tremendous need for more love, compassion and generosity all over the country.

Don't be afraid to lend a helping hand, because someday you may need one yourself.

Chris Hedges on Capitalism's "Sacrifice Zones": Communities Destroyed for Profit

Tuesday, 24 July 2012 By Bill Moyers, Moyers & Company | Interview

There are forgotten corners of this country where Americans are trapped in endless cycles of poverty, powerlessness, and despair as a direct result of capitalistic greed. Journalist Chris Hedges calls these places "sacrifice zones," and joins Bill this week on Moyers & Company to explore how areas like Camden, New Jersey; Immokalee, Florida; and parts of West Virginia suffer while the corporations that plundered them thrive.
These are areas that have been destroyed for quarterly profit. We're talking about environmentally destroyed, communities destroyed, human beings destroyed, families destroyed," Hedges tells Bill.

"It's the willingness on the part of people who seek personal enrichment to destroy other human beings... And because the mechanisms of governance can no longer control them, there is nothing now within the formal mechanisms of power to stop them from creating essentially a corporate oligarchic state."

The broadcast includes a visit with comics artist and journalist Joe Sacco, who collaborated with Hedges on Days of Destruction, Days of Revolt, an illustrated account of their travels through America's sacrifice zones. Kirkus Reviews calls it an "unabashedly polemic, angry manifesto that is certain to open eyes, intensify outrage and incite argument about corporate greed."

A columnist for Truthdig, Hedges also describes the difference between truth and news. "The really great reporters — and I've seen them in all sorts of news organizations — are management headaches because they care about truth at the expense of their own career," Hedges says.

TRANSCRIPT
Exploring parts of America "that have been destroyed for quarterly profit."

Bill Moyers: Welcome. Here we are, barely halfway through the summer, and Barack Obama and Mitt Romney have stepped up their cage match, each attacking the other, throwing insults and accusations back and forth like folding chairs hurled across the wrestling ring.
Governor Romney pummels away at the economy; President Obama pummels away at Mr. Romney—when he was or wasn't at his company Bain Capital, his tax returns and his offshore accounts. All the while, as they bob and weave their way through this quadrennial competition, punching wildly, the real story of what's happening to ordinary people as capitalism runs amok is largely ignored by each of them. But not in this book "Days of Destruction, Days of Revolt"—an unusual account of poverty and desolation across contemporary America. It's a collaboration between graphic artist and journalist Joe Sacco, about whom more later, and my guest on this week's broadcast, Chris Hedges.

Chris Hedges: All of the true correctives to American democracy came through movements that never achieved formal political power.

Bill Moyers: This is just the latest battle cry from Hedges, who, angry at what he sees in the world, expresses his outrage in thoughtful prose that never fails to inform and provoke. As a correspondent and bureau chief for "The New York Times," he covered wars in North Africa, the Balkans and the Middle East—leaving the paper after a reprimand for publicly denouncing the 2003 invasion of Iraq.

In such books as "War Is a Force that Gives Us Meaning," his weekly column for the website "Truthdig" and freelance articles for a variety of other publications, Chris Hedges has taken his life's experience covering the brutality of combat and shaped a worldview in which morality and faith, and the importance of truth-telling, dissent and social activism take precedence, even if it means going to jail.

Welcome, Chris Hedges.

Chris Hedges: Thank you.

Bill Moyers: Tell me about Joe Sacco. He was your companion on this trip. And he was your, in effect, coauthor. Although he was sketching instead of writing.

Chris Hedges: I've known Joe since the war in Bosnia. We met when he was working on his book, "Gorazde." And I was not a reader of graphic novels. But I watched him work. And I certainly know a brilliant journalist when I see one. And he is one of the most brilliant journalists I've ever met.

He reports it out with such depth and integrity and power, and then he draws it out. And I realized that an extremely important component of this book was making visible these invisible communities, because we don't see them. They're shut out. They're frightening, they're depressing. And they're virtually off the radar screen in terms of the commercial media.

Bill Moyers: This is a tough book. It's not dispatches from Disneyworld. It paints a very stark portrait of poverty, despair, destructive behavior. What makes you think people want to read that sort of thing these days?

Chris Hedges: That wasn't a question that Joe Sacco and I ever asked. It's absolutely imperative that we begin to understand what unfettered, unregulated capitalism does, the violence of that system, which is portrayed in all of the places that we visited.

These are sacrifice zones, areas that have been destroyed for quarterly profit. And we're talking about environmentally destroyed, communities destroyed, human beings destroyed, families destroyed. And because there are no impediments left, these sacrifice zones are just going to spread outward.

Bill Moyers: What do you mean, there are no impediments left?

Chris Hedges: There's no way to control corporate power. The system has broken down, whether it's Democrat or Republican. And because of that, we've all become commodities. Just as the natural world has become a commodity that is being exploited until it is exhausted, or it collapses.

Bill Moyers: You call them sacrifice zones.

Chris Hedges: Right.

Bill Moyers: Explain what you mean by that.

Chris Hedges: Well, they have the individuals who live within those areas have no power. The political system is bought off, the judicial system is bought off, the law enforcement system services the interests of power, they have been rendered powerless. You see that in the coal fields of Southern West Virginia.

Now here, in terms of national resources is one of the richest areas of the United States. And yet these harbor the poorest pockets of community, the poorest communities in the United States. Because those resources are extracted. And that money is not funneled back into the communities that are sitting on top of, or next to those resources.

Not only that, but they're extracted in such a way that the communities themselves are destroyed quite literally because you have not only terrible problems with erosion, as they cause when they do the mountaintop removal, they'll use these gigantic bulldozers to push off all the trees and then burn them.

And when we flew over the Appalachians, and it's a terrifying experience, because you realize only then do you realize how vast the devastation is. Just as when we were both in the war in Bosnia, you couldn't grasp the destruction of ethnic cleansing until you actually flew over Bosnia, and village after village after village had been razed and destroyed.

And the same was true in the Appalachian Mountains. And these people are poisoned. The water is poisoned, it smells, the soil is poisoned. And the people who are making tremendous profits from this don't even live in West Virginia--

Bill Moyers: You said something like, "While the laws are West Virginia are written by the coal companies, 95 percent of those coal companies--"

Chris Hedges: Right.

Bill Moyers: "--are not in West Virginia."

Chris Hedges: That's right. They no longer want to dig down for the coal, and so they're blowing the top 400 feet off of mountains poisoning the air, poisoning the soil, poisoning the water.

They use some of the largest machines on earth. These draglines, 25-stories tall that are very efficient in terms of ripping out coal seams. But by the time they left, there's just a wasteland. Nothing grows. Some of the richest soil, some of the purest water, and these are the headwaters for much of the East Coast, You are rendering the area moonscape. It becomes inhabitable. And you're destroying you know, these are the lungs of the Eastern seaboard. It's all destroyed and it's not coming back.

And that violence is visited on these communities. And you see it played out. I mean, Camden, New Jersey, which is the poorest city per capita in the United States and always, the one or two in terms of the most dangerous, it's a dead city. There's nothing left. There is no employment. Whole blocks are abandoned. The only thing functioning are open-air drug markets, of which there are about a hundred.

And you're talking third or fourth generation of people trapped in these internal colonies. They can't get out, they can't get credit. And what that does to your dignity, your self-esteem, your sense of self-worth.

BILL MOYERS I was struck by your saying Camden is "beset with the corruption and brutal police repression reminiscent of the despotic regimes that you covered as a correspondent for the New York Times in Africa, the Middle East, and Latin America." You describe a city where the per capital income is $ll,967. Large swaths of the city, as Joe Sacco Shows us, are abandoned, windowless brick factories, forlorn warehouses.

Chris Hedges: At one point in the 50s, it was a huge shipyard that employed 36,000 people. Campbell's Soup was made there, RCA used to be there. But there were a variety of businesses it attracted in that great migration a lot of unskilled labor from the South, as well as immigrants from New York

Because without an education, it was a place that you could find a job. It was unionized, of course, so people had adequate wages and some protection. And then it just-- everything went down. With the flight of manufacturing overseas.

It's all gone. Nothing remains. And that's why it's such a stark example of what we've done to ourselves, without realizing that the manufacturing base of any country is absolutely vital to its health. Not only in terms of its economic, but in terms of its, you know, the cohesion of a society because it gives employment.

Bill Moyers: But give me a thumbnail sketch of Pine Ridge, South Dakota, the Pine Ridge Reservation.

Chris Hedges: Well, Pine Ridge is where it began, Western exploitation. And it was the railroad companies that did it. They wanted the land, they took the land, the government gave them the land. It either gave it to them or sold it to them very cheaply. They slaughtered the buffalo herds, they broke these people. Forcing a people that had not been part of a wage economy to become part of a wage economy, upending the traditional values.

And it really is about the maximization of profit, it really is about the commodification of everything, including human beings. And this was certainly true in the western wars.

And it's appalling. You know, the average life expectancy for a male in Pine Ridge is 48. That is the lowest in the Western Hemisphere outside of Haiti. At any one time, 60 percent of the dwellings do not have electricity or water.

Bill Moyers: You write of one tiny village, tiny village, with four liquor stores. And that dispense the equivalent of 13,500--

Chris Hedges: Right.

Bill Moyers: --cans of beer a day. And with devastating results.

Chris Hedges: Yes. And they start young and some estimates run that, you know, alcoholism is as high as 80 percent. This contributes, of course, to early death. That's in Whiteclay, Nebraska. There is no liquor that is legally sold on the reservation, itself. But Whiteclay is about two miles from Pine Ridge. And that's where people go. They call it "going south." And that's all they do, is sell liquor.

That's true everywhere. You build a kind of dependency which destroys self-efficiency. I mean, that's what the old Indian agencies were set up to do. You take away the livelihood, you take away the buffalo herds, you make it impossible to sustain yourself, and then you have lines of people waiting for lard, flour, and you know, whisky.

And that has been true in West Virginia. That's certainly true in Camden. And it is a form of disempowerment. It is a form of keeping people essentially, at a subsistence level, and yet dependent on the very structures of power that are destroying them.

Bill Moyers: One of the most forlorn portraits is in your description of Immokalee, Florida. You describe Immokalee as a town filled with desperately poor single men.

Chris Hedges: Most of them have come across the border illegally. Come up from Central America and Mexico, especially after the passage of NAFTA. Because this destroyed subsistence farms in Mexico, the big agro businesses were able to flood the Mexican market with cheap corn. Estimates run as high as three million farmers were bankrupt, and where did they go? They crossed the border into the United States and in desperate search for work. They were lured into the produce fields. And they send what money they can, usually about $100 a month home to support their wives and children.

Bill Moyers: And they make $11,000, $12,000--

Chris Hedges: At best.

Chris Hedges: It's brutal work, physically.

Bill Moyers: Yeah.

Chris Hedges: But they're also exposed to all sorts of chemicals and pesticides. And it's very hard to show the effects because as these workers age, you know, they're bent over eight, ten hours a day. So they have tremendous back problems. And by the time they're in their thirties, the crew leaders, they'll actually line up in these big parking lots at about 4:00 in the morning, the busses will come.

They just won't pick the older men. And so they become destitute. And they go back home physically broken. And it's hard to tell, you know, how poisoned they've become, because they're hard to trace. But clearly that is a big issue. They talk about rashes, respiratory, you know, not being able to breathe, coughing, it's really, you know, a frightening window into the primacy of profit over human dignity and human life.

Bill Moyers: Fit this all together for me. What does the suffering of the Native American on the Pine Ridge Reservation have to do with the unemployed coal miner in West Virginia have to do with the inner-city African American in Camden have to do with the single man working for minimum wage or less in Immokalee, Florida? What ties that all together?

Chris Hedges: Greed. It's greed over human life. And it's the willingness on the part of people who seek personal enrichment to destroy other human beings. That's a common thread. We, in that biblical term, we forgot our neighbor. And because we forgot our neighbor in Pine Ridge, because we forgot our neighbor in Camden, in Southern West Virginia, in the produce fields, these forces have now turned on us. They went first, and we're next. And that's--

Bill Moyers: What do you mean we're next?

Chris Hedges: Well, the--

Bill Moyers: We being—

Chris Hedges: Two-thirds of this country. We are rapidly replicating that totalitarian vision of George Orwell in "1984." We have an inner sanctum, inner party of 2 percent or 3 percent, an outer party of corporate managers, of 12 percent, and the rest of us are proles. I mean--
Bill Moyers: Proles being?

Chris Hedges: Being an underclass that is hanging on by their fingertips. And this is already very far advanced. I mean, numbers, I mean, 47 million Americans depending on food stamps, six million exclusively on food stamps, one million people a year going filing for personal bankruptcy because they can't pay their medical bills, six million people pushed out of their houses.

Long-term unemployment or underemployment-- you know, probably being 17 to 20 percent. This is an estimate by "The L.A. Times" rather than the official nine percent. I mean, the average worker at Wal-Mart works 28 hours a week, but their wages put them below the poverty line. Which is why when you work at Wal-Mart, they'll give you applications for food stamps, so we can help as a government subsidize the family fortune of the Walton family.

It's, you know these corporations know only one word, and that's more. And because the mechanisms of governance can no longer control them, there is nothing now within the formal mechanisms of power to stop them from the creating, essentially, a corporate oligarchic state.

Bill Moyers: And you say, though, we are accomplices in our own demise. Explain that paradox. That corporations are causing this, but we are cooperating with them.

Chris Hedges: This sort of notion that the corporate value of greed is good. I mean, these deformed values have sort of seeped down within the society at large. And they're corporate values, they're not American values.

I mean, American values were effectively destroyed by Madison Avenue when, after world war one, it began to instill consumption as a kind of inner compulsion. But old values of thrift, of self-effacement, or hard work were replaced with this cult of the "self", this hedonism.

And in that sense, you know, we have become complicit, because we've accepted this as a kind of natural law. And the acceptance of this kind of behavior, and even the celebration of it is going to ultimately trigger our demise. Not only as a culture, not only as a country, but finally as a species that exists, you know, on planet Earth.

Bill Moyers: As we came here, I pulled an article published in "Nature" magazine by a group of rather accomplished and credible scientists who have done all the technical studies they need to do, who come to the conclusion that our planet's ecosystems are careening towards an imminent, irreversible collapse. Once these things happen, planet's ecosystems as we know them, could irreversibly collapse in the proverbial blink of an eye. Connect that to what you've been reporting.

Chris Hedges: Well, because the exploitation of human beings is always accompanied by the exploitation of natural resources, without any thought given to sustainability. I mean, the amount of chemicals and pesticides that are used on the produce in Florida is just terrifying.
And that, you know, migrates from those fields directly to the shelves of our supermarkets and we're consuming it. And corporations have the kind of political clout that they can prevent any kind of investigation or control or regulation of this. And it's, again, it's all for short-term profit at long-term expense.

So the, you know, the very forces that we document in this book are the same forces that are responsible for destroying the ecosystem itself. We are watching these corporate forces, which are supranational. They have no loyalty to the nation state at all, reconfigure the global economy into a form of neo-feudalism. We are rapidly becoming an oligarchic state with an incredibly wealthy class of overlords.

Sheldon Wolin writes about this in "Democracy Incorporated" into what I would call, what he calls inverted totalitarianism, whereby it's not classical totalitarianism, it doesn't find its expression through a demagogue or a charismatic leader, but through the anonymity of the corporate state that purports to pay fealty to electoral politics, the Constitution, the iconography and language of American patriotism, and yet internally have seized all of the levers of power. This is what it means when lobbyists write all of our legislation, or when they stack the Supreme Court with people who serve the interests of corporations. And it's to render the citizen impotent.

Bill Moyers: And what is it, you think, led us to this point of this mind-boggling inequality, mind-boggling consumption, which obviously many of us like, or we wouldn't be participating? And the grip that money has on politics? What are the forces that got us to this?

Chris Hedges: I think it began after World War I. You know, Dwight McDonald writes about how after World War I, American society became enveloped in what he called the psychosis of permanent war, where in the name of anti-Communism, we could effectively banish anyone within the society who questioned power in a serious kind of way.

And of course, we destroyed populist and radical movements, which have always broadened democracy within American society, it's something Howard Zinn wrote quite powerfully about in "A People's History of the United States." It has been a long struggle, whether it's the abolitionist movement that fought slavery, whether it's the suffragists for women's rights, the labor movement, or the civil rights movement. And these forces have the ability to essentially destroy those movements, including labor unions, which made the middle class possible in this country. And have rendered us powerless. And--

Bill Moyers: Except for the power of the pen. You keep writing, you keep speaking, you keep agitating.

Chris Hedges: I do, but, you know, things aren't getting better. And I think, you know, like you, I come out of the seminary, and I look less on my ability to effect change and understand it more as a kind of moral responsibility to resist these forces. Which I think in theological terms are forces of death. And to fight to protect, preserve, and nurture life.

But you know, as my friend, Father Daniel Berrigan says, you know, "We're called to do the good, or at least the good insofar as we can determine it. And then we have to let it go." Faith is the belief that it goes somewhere.

Bill Moyers: So let's talk about you. You've been showing up in the news as well as well as just reporting the news, you took part in that mock trial down at Goldman Sachs.

Chris Hedges: Goldman Sachs is an institution that worships death, the forces of Thanatos, of greed, of exploitation, of destruction.

Bill Moyers: And I still remember the picture of you and the others sitting down, locking arms, and blocking the interests of the company. What was that about?

Chris Hedges: That was personal for me. Goldman Sachs runs one of the largest commodities index in the world. And I've spent 20 years in places like Africa, and I know what happens when wheat prices increase by 100 percent. Children starve. And I knew I was going to get arrested because, you know, I was, I covered the famine in Sudan and was in these huge U.N. tents and feeding stations trying to save.

And you know, the people who die in famines were usually elderly and children. The place was, I mean, everyone had tuberculosis. I have scars in my lungs from tuberculosis, which I successfully fought off. And those are sort of the whispers of the dead. All those children and others who couldn't didn't have the ability to go in front of a place like Goldman Sachs and condemn them.

Bill Moyers: But surely those people, as you were arrested, there were people working for Goldman Sachs looking down from the windows--

Chris Hedges: They were taking pictures--

Bill Moyers: Taking pictures, laughing. Surely you don't think they would wish that outcome in Africa or anywhere else, right?

Chris Hedges: Well, it's moral fragmentation. I mean, they blind themselves to what they do all day long, and they define themselves as good human beings by other criteria, because they're a good father or a good husband or because they go to church. But it is that human trait to engage in what I would have to describe as a system of evil. And yet, look at it as just a job.

Bill Moyers: But are we all then therefore, and I come back to this, aren't we all part of this system that in some way produces Pine Ridge, Immokalee, the coal fields, the inner-cities, and the starving children in Africa? Aren't we all who have jobs and participate in the culture and are in the economic game, aren't we all, in a way, as complicit as those people looking down on you from those windows at Goldman Sachs?

Chris Hedges: No. Because you know, the people who actually run the commodities index are very tiny, elite, and extremely wealthy group. And they're highly compensated. These people make hundreds of thousands, often millions of dollars a year. And most of us don't make that. And that personal enrichment, I think, is a powerful inducement to ignore their complicity in what is clearly a crime against other human beings.

Bill Moyers: But do you think what you did made any difference? Goldman Sachs hasn't changed.

Chris Hedges: Well, that doesn't matter. I did what I had to do. I did what I believed I should've done. And faith is a belief that it does make a difference, even if all of the empirical signs around you point otherwise. I think that fundamentally is what faith is about. And I'm not a very good Christian anymore. But I retain enough of my Christian heritage and my seminary training to still believe that.

Bill Moyers: What are you?

Chris Hedges: A, you know, a sinner.

Bill Moyers: Welcome to the clan.

Chris Hedges: You know, a doubter.

Bill Moyers: But you're driven by something. I mean, I talked to you when you wrote your first and remarkable book "War is the Force that Gives Us Meaning." I haven't seen anyone as affected in their life after their experience as a journalist as you had been. I mean, there have been others, I just don't know them. But somehow what you're doing today goes back to what you saw and did and felt and experienced in all those years you were overseas and on the frontiers of trouble.

Chris Hedges: Well, because when you spend that long on the outer reaches of empire, you understand the cruelty of empire, what Conrad calls, "The horror, the horror." And the lies that we tell ourselves about what is done in our name. Whether that's in Gaza, whether that's in Iraq, whether that's in Afghanistan, Yemen, Somalia, El Salvador, I mean, there's a long list.
And when you come back from the outer reaches of empire, you are, and I think, you know, many combat veterans feel this who come back, you're forever alienated. And you to speak a very unpleasant truth about who we are, a truth that most people don't want to hear. And yet I think to hold that truth in and to remain silent and not to speak that truth destroys you.

That it's better to get up and speak it even as you correctly point out, you know that Goldman Sachs, you know, everyone at Goldman Sachs gets up the next morning and does it. I mean, this was also true as a war correspondent. I mean, the Serbs would kill.

They'd block all the roads into the village, we'd walk in with our satellite phones, we'd file it, we never believe they weren't going to do it again the next day. But somehow not to chronicle it, not to take the risks to report it, was to be complicit in that killing. And I think that same kind of thought goes into what's happening here.

Bill Moyers: But do you think taking sides marginalizes your journalism? I mean, when you were being arrested, and some businessman was quoted in the paper passing by and looking at those of you being carried away and said, "Bunch of idiots." He needs to hear what you, read what you say. Do you think he will once he knows you've taken sides?
Chris Hedges: Well, I think that in life we always have to take sides.

Bill Moyers: Do journalists always have to take sides?

Chris Hedges: Yes. Journalists always do take sides. You know, you've been a journalist a long time. The idea that there's something objective and impartial is just a lie. We sell it. But I can take the same set of facts-- I was a newspaper reporter for a long time, and I can spin that story one way or another. We manipulate facts. That's what we do. And I think that the really great journalists--

Bill Moyers: Not necessarily to deceive though. Some do, I know, but--

Chris Hedges: Right, but we do.

Bill Moyers: We choose the facts we want to organize--

Chris Hedges: Of course, it's selective. And it's what facts we choose, how we place, where we put the quotes. And I think the really great journalists, like the great preachers, care fundamentally about truth. And truth and news are not the same thing.

And the really great reporters, and I've seen them, you know, in all sorts of news organizations, are management headaches because they care about truth at the expense of their own career.
Bill Moyers: What do you mean truth as opposed to news?

Chris Hedges: Well, let's take the Israel occupation of Gaza. You know, if I had a dinner with any Middle East correspondent who covered Gaza, none of us would have any disagreements about the Israeli behavior in Gaza, which is a collective war crime. And yet to get up and write it and say it within American society is not a career enhancer.

Because there's a powerful Israeli lobby, and it's a lobby that I don't think represents Israel, it represents the right wing of Israel. And you know it. But, the great reporters don't care. And they're there.

But you know, large institutions like "The New York Times" attract huge numbers of careerists like any other large institutions, the Church of course, being no exception. And those are the people who are willing to take moral shortcuts to promote themselves within that institution.
And when somebody becomes a headache, even if they may agree with them, even if they may know that they are speaking a truth, and it puts their career in jeopardy-- they will push them out or silence them.

So I think that one can take sides, and Orwell becomes the kind of model for this. But one can never not tell the truth. And I've often written stories that are not particularly flattering. And there's much in this book about people in Pine Ridge or Camden, you know, that is not flattering. I mean, we're interviewing people that are drug addicts and this kind of stuff. And--

Bill Moyers: Drug dealers--

Chris Hedges: --prostitutes and--

Bill Moyers: Yeah, drug dealers--

Chris Hedges: Yeah.

Bill Moyers: --prostitutes.

Chris Hedges: So we're not, you know, the lie of omission is still a lie. But I don't think any foreign correspondent who covers war, whether it was in Bosnia or whether it was in Sarajevo can be indifferent to the tremendous human suffering before them and not want that human suffering to stop.

Bill Moyers: But there is a price, as you have said, to be paid for stepping outside of the system that enabled your name and reputation and becoming a critic of that system. I mean, what price do you think you've paid?

Chris Hedges: I don't think I paid a price, I think I would've paid a price for staying in. I wouldn't have been able to live with myself. You know, I was pushed out of "The New York Times" because I was publicly denouncing the invasion of Iraq. And again, it comes down to that necessity to speak a truth, or at least the truth as far as you can discern it.

I've spent months of my life in Iraq. I knew the instrument of war. I understood in all the ways that this was going be a disaster-- including upsetting the power balance in the Middle East. It's one of the great strategic blunders of the United States, it's empowered Iran. And to remain silent would've been the price. Was it good for my career? Well, of course not.

But my career was never the point. I didn't drive down Mount Igman into Sarajevo when it was being hit with 2,000 shells a day because it was good for my career. I went there because what was happening was a crime against humanity. And as a reporter, I wanted to be there to chronicle it.

Bill Moyers: Well, you should. But, so you don't think journalism is futile?

Chris Hedges: I think journalism is essential. I think it's essential. And we're watching its destruction. You know, journalism, the power of journalism is that it is rooted in verifiable fact. You go out as a reporter, you seek to find out what is factually correct. You crosscheck it with other sources. It's sent to an editor. It's fact-checked, you put it out. That's all vanishing.
That's what we're really losing with journalism. Yes, you know, commercial journalism, there were things they wouldn't write about. You know, as Schanberg says, "The power of great newspapers like "The Times" is that at least it's stopped things from getting worse." I think that's right.

Bill Moyers: But can it make things better? I mean, do you think you can accomplish more as a dissenter, and I look up on you now, when I ask you what's your faith, I think your faith is in dissent, if I may say so. It's in "This far and no further." But do you think you can accomplish as much as a dissenter than as a journalist?

Chris Hedges: Yeah, it's not a question that I've asked. Because the question is, "What do you have to do?" I certainly knew after 15 years at "The New York Times" that running around on national television shows denouncing the war in Iraq was, as a news reporter, tantamount to career suicide. I mean, I was aware of that.

And yet, you know, as Paul Tillich writes about, you know, "Institutions are always inherently demonic, including the Church." And you cannot finally serve the interests of those institutions. That for those who seek the moral life, there will always come a time in which they have to defy even institutions they care about if they are able to retain that moral core. And in essence, what, you know, "The New York Times," or other institutions were asking is that I muzzle myself.

Bill Moyers: But all institutions do that, don't they?

Chris Hedges: All institutions do.

Bill Moyers: Intuitively or explicitly.

Chris Hedges: That's right. And I think for those of us who care about speaking, you know, the truth, you know, or if you want to call it dissent, we are going to have to accept that at one day, there's going probably mean a clash with the very institutions that have nurtured and supported us. And I have been nurtured and supported by these institutions.

Bill Moyers: But your columns, your essays, your recent book, this book, contained repeated calls for uprisings, for civil disobedience. You even say in here, quote, "Revolt is all we have. It is our only hope. It is our only hope." Unpack that from our viewers who are sitting there thinking, "What is he asking me to do? What does he mean by revolt? What's he talking about?"

Chris Hedges: Nonviolence civil disobedience. And accepting the fact that engaging in that process will mean arrest. I've lived in societies that are rent and torn by violence, and I don't want us to go there. And I think that we don't have a lot of time left. And that for those of us who care about veering off into another course, a course that's rational and sane and makes possible the perpetuation of not only the human species but the planet itself, we have to take this kind of radical action. And if we don't, then as things disintegrate and as the paralysis within the centers of power become more and more apparent, then we will fuel very frightening extremes.

You know, again, which I saw in places like Central America or Bosnia. And I look at this as many ways, a kind of, a preventive action. A way to respond peacefully. A way to respond, in a Democratic fashion, to the problems in front of us before it's too late.

Bill Moyers: Bear with me as I explore this, 'cause there's a paradox at two levels. One at a conceptual level, and the other at a practical level. You write in here, "Either you join the revolt or you stand on the wrong side of history. You either obstruct through civil disobedience, or become the passive enabler of a monstrous evil." But in an early book, "Death of the Liberal Class," which I think is one of your best, you wrote that, "The fantasy of widespread popular revolts and mass movements breaking the hegemony of the corporate state is just that, a fantasy."

Chris Hedges: I wrote that before Occupy. And I was writing out of a kind of belief that this was what was absolutely necessary and yet I saw no signs within the wider society that was happening. And then suddenly, on September 17th, Zuccotti Park appears. And mostly fueled by the young. And I was writing out of a present reality. And I didn't see Zuccotti coming. I was writing out of a kind of despair, for all of the reasons that I said.

Bill Moyers: Why did you take hope from that? Because after you'd been down there? You subsequently write that "By the end, even the most dedicated of the Occupiers in Zuccotti Park burned out."

Chris Hedges: Yeah.

Bill Moyers: "They lost control of the park. The arrival in cold weather of individual tents, along with the numerous street people with mental impairment and addictions," that you're nothing if not honest in what you write, even about those people you support, "tore apart the community. Drug use as well as assaults and altercations became common." So how is that square with what you said earlier that the Occupy Movement gave us a blueprint for how to fight back?

Chris Hedges: Because this is the trajectory of all movements. You know, it's not a linear progression upwards. And the civil rights movement is a perfect example of that. All sorts of failures, whether it's in Albany, Mississippi or anywhere else. You know, there were all sorts of moments within the civil rights movement where King wasn't even sure he was going to be able to hold it together. And what happened in Zuccotti is like what happened in 1765 when they rose up against the Stamp Act.

That became the kind of dress rehearsal for the rebellion of 1775, 1776, 1905. The uprising in Russia became again the kind of dress rehearsal. These movements, this process, it takes a very long time. I think the Occupy was movement and I was there.

I mean, I certainly understand why it imploded and its many faults and how at that size, consensus doesn't work, everything else. And yet it triggered something. It triggered a kind of understanding of systems of power. It, I think, gave people a sense of their own personal power. Once we step out into a group and articulate these injustices and these grievances to a wider public, and of course they resonated with a mainstream. I don't think it's over. I don't know how it's going to mutate and change, one never knows. But, I think that it's imperative that we keep that narrative alive by being out there because things are not getting better.

The state is not responding in a rational way to what's happening. If they really wanted to break the back of the opposition movement, rather than sort of eradicating the 18 encampments, they would've gone back and looked at Roosevelt. There would've been forgiveness of all student debt, $1 trillion, there would've been a massive jobs program targeted at those under the age of 25, and there would've been a moratorium on more closures and bank repossessions of homes.

That would've been a rational response. Instead, the state has decided to speak exclusively in the language of force and violence to try and crush this movement while people continue this dissent.

Bill Moyers: In one of your earlier books, you wrote that, quote, "We stand on the verge of one of the bleakest periods in human history, when the bright lights of civilization blink out, and we will descend for decades, if not centuries, into barbarity." Do you really think that's ahead?

Chris Hedges: If there's not a radical change in the way we relate to the ecosystem that sustains life, yes. And I see, if you ask me to put my money down, I see nothing that indicates that we're preparing to make that change.

Bill Moyers: But here's another paradox then, you present us with a lot of paradoxes. You just-- you and your wife a year and a half ago had your fourth child. How can you introduce another life into so forlorn a future?

Chris Hedges: That's not an easy question to answer. I look at my youngest son, and his favorite book is "Out of the Blue," which are pictures of narwhales and porpoises and dolphins. And I think, "It is most probable that within your lifetime, every single one of those sea creatures will be dead." And in so many ways, I feel that I have to fight for them.

That even if I fail, they'll say, "You know, at least my dad tried." We've deeply betrayed this next generation on so many levels. And I can't argue finally, you know, given the empirical facts in front of us that hope is rational. And I retreat, like so many people in my book, into faith. And a belief that resistance and fighting for life is meaningful even if all of the outward signs around us deny that possibility.

Bill Moyers: That faith in human beings?

Chris Hedges: Faith in that fighting for the sanctity of life is always worth it. Because you know, if we don't fight, then we are finished. Then we signed our own death sentence. And Camus writes about this in "The Rebel," that I think resistance becomes a kind of way of protecting our own worth as an individual, our own dignity, our own self-respect. And I think resistance does always leave open the possibility of change. And if we don't resist, then we've essentially extinguished that hope.

Bill Moyers: H. L. Mencken, the celebrated iconoclast of the early part of the last century once wrote, "The notion that a radical is one who hates his country is naïve and usually idiotic. He is more likely one who likes his country more than the rest of us and is those more disturbed than the rest of us when he sees it debouched. He is not a bad citizen turning to crime, he is a good citizen, driven to despair." Is that you?

Chris Hedges: Yeah--

Bill Moyers: A good citizen driven to despair?

Chris Hedges: Yes. And a good citizen driven to despair who will not remain apathetic and passive. And, you know, in every single place that we went to, Camden, West Virginia, Pine Ridge, we found these utterly magnificent human beings. I mean, this woman Lolly in Camden, African American woman, who you know, raised her own children. And I think by the time she was done, 19 others.

Her fiancé was shot and killed, one of her little seven-year-old daughters died of an asthma attack because they didn't have the right medicine. And I said, "Lolly, how do you do it?" And she said, "I never ask why." And when you spend time in the presence of people like that, and they were everywhere you know, they understood what they were up against.

It is deeply empowering. Because not to resist, not to fight back is on a very personal level to betray these people. And when you build relationships, as over the two years Joe and I did, with figures like that, it really, you know, almost comes down to something that simplistic. You can't betray Lolly. You can't betray any of these great figures who've stood up. Because their fight is our fight. And oftentimes they've endured far, far more-- well, they have endured far, far more than I have endured or ever will endure.

Bill Moyers: The Book is, "Days of Destruction, Days of Revolt." Chris Hedges and Joe Sacco. Thank you very much Chris for being with me.

Chris Hedges: Thanks Bill.

Bill Moyers: For all his power of expression, sometimes words fail even Chris Hedges, and a picture can say more in a single frame, well-drawn, than paragraphs of explanation. That's what makes his partnership with graphic artist Joe Sacco on their book, "Days of Destruction, Days of Revolt," so potent and so effective. Joe Sacco has traveled all over the world, using the techniques of the comic book illustrator as a tool of journalism, telling stories with insight and humanity.

Joe Sacco: My name's Joe Sacco and I'm a comics journalist. Drawing really often provides mood and atmosphere, and writing is that sort of precision. The facts. And you can put those two things together with comics, which I think is what makes the medium very powerful.
When I'm in the field, I meet people who are really in hard situations. I'm not interested in tears. I'm not even interested in sentimentality. But I am interested in telling people's stories as well as possible who are oppressed or are poor.

Chris and I had already worked on a magazine piece about Camden and we decided we would expand that. You can read about poverty. You can read about despair. Or you can read about resignation. But to see it is really, it's eye-opening.

I didn't do that many stories in the book, maybe five or six. They all moved me quite a bit. I think the one that was sort of hit me in this way, because it was so unfamiliar to me was the woman who came out from Guatemala, the one that we call Anna in the story.

Her waiting by the phone after her husband had made the long, arduous trip so the United States. Waiting eight days, knowing he had to cross a desert where many people die. And that sort of story really touched me. Because when we think of migrant workers, we can be so dismissive of them. They're just working in a fields. Oh, you see them bent over and they're just doing their job, and you know they're getting minimum wage. And you sort of feel sorry for them in a sense.

But to get a sense of, and to actually hear an individual story like that, for some reason that just really got to me when I was drawing it.

When I was about seven years old. I started drawing stories. Because I liked forms of self-expression and that was just one I never let go of. I never really drew just for the sake of drawing. There always had to be a story to go with it.

A story can be more true if you just let it be told. It's very important for me, with my work, not to create these angelic people. You want to show people as nuts and bolts. Those are the people who seem real. With the Michael Red Cloud's story, a story about his drug dealing days, making big money, partying, having women with him at all times. Now, he wasn't necessarily pleased with how he'd lived his past life, he wasn't. But to me, the idea is just to present the complete human being. You know, he's a real person. I was moved by his story, or I saw the changes that he made through his story. And then you see the hard things in the context of his upbringing, in the context of what was around him, in the context of what he learned from people around him.

You see the commonalities between people who have nothing around them but despair. They are born into a context which simply doesn't provide them opportunities or even the thought of opportunities. To me, it's incumbent upon the journalist to go and see for himself or herself what's actually going on. Journalism to me isn't like a tennis match, where you're just watching the ball, and each side is hitting it, hitting it back and forth to each other.

At some point, you have to arrest where the ball is, and that's where truth is, you know? And like I say, truth doesn't necessarily reside in the middle. And I've always had a problem with journalists who say things like, "Well, I pissed off both sides. I must be doing something right." That is the laziest sort of phrase I've ever heard.

You know, hundreds of stories that still need to be told. I'm interested in sort of answering questions that journalism doesn't really put its finger on.

To me, it's very important to remind ourselves of the costs of what is going on in this world. The human costs.

I feel like I wouldn't be where I need to be for myself if I didn't look to those things, and I didn't face them squarely. I just feel that's who I am, and what I have to do.