Double-Dip Recession? How Our Dysfunctional Political Class Has Made Another Grueling Collapse Far Likelier

Just a few short months ago, few analysts would say publicly that the American economy was likely to slide into another grueling period of recession. That's changed.
By Joshua Holland, AlterNet
Posted on August 10, 2011


The single bright spot in this anemic “recovery” had been steadily rising stock prices. Although the market staged a modest rally on Tuesday, news of the debt ceiling deal was followed by a massive sell-off in stocks – the S&P 500 saw its biggest one-day drop in more than a year the day the deal was announced. After losing $14 trillion in household wealth in the crash, Americans' nest eggs had rebounded to some degree, but whether their 401(K)s and investment accounts hold their value in the coming months remains to be seen.

The outlook for the economy is extraordinarily bleak. But we've pulled ourselves out of deep recessions before. What's different now is the profound, tea-party stained dysfunction plaguing our political class. As I wrote recently, if the economy does end up contracting in the near future, it will be a recession driven by the “age of austerity” embraced by Washington – and the contractionary policies it has ushered in.

That scenario appears more likely today. Just a few short months ago, there were very few analysts who would predict that the American economy stood a decent chance of sliding into another period of grueling recession. The consensus held that while we were recovering far too slowly in light of the depth of the crash, we were nevertheless on the rebound. But that thinking has changed. Last week, former Treasury Secretary Larry Summers estimated that there was a 33 percent chance of the economy once again falling into recession – the dreaded “double-dip.” Other economists put the likelihood a bit lower, but researchers at the Federal Reserve tell us that, since World War II, about half of the times the economy has grown as slowly as it has in the first half of this year, a recession has followed within twelve months.

For the majority of Americans, the official end of the last recession was merely an abstraction – it in now way reflected the profound economic pain tens of millions of working people continued to feel. Since 2009, when the wonks at the National Bureau of Economic Research (NBER) set the official end of the Great Recession, the unemployment rate has edged down tick, but most of that was due to people giving up and dropping out of the workforce. The share of the population that has a job today is about the same as it was in the early 1970s, before women entered the workforce en masse.

Housing prices bottomed in 2009, then had a brief and sputtering recovery, before hitting a new low early this year, well after the official end of the recession. Around one in four homeowners with a mortgage still owe more on their properties than they're worth, and the foreclosure crisis continues unabated. New business creation has ground to a halt, people are running up credit card debt to make ends meet and new grads aren't leaving home to start out on their own.

High oil prices have squeezed already strained household budgets -- consumer spending dropped in June and “consumer confidence” about the future plunged in July. The Japanese Tsunami caused supply disruptions, the eurozone is a mess and China's economy is slowing – with our trading partners slumping, we certainly won't see an export-led boom anytime soon.

The slump in demand for companies' goods and services remains our core problem, and that problem will only be magnified as the last of the stimulus funds dry up, the temporary payroll tax break expires and extended unemployment benefit run out later this year. Without more help from Washington, states and municipalities are expected to shed 450,000 public sector jobs next year.

Last year, with the private sector economy continuing to slump, an analysis by Moody's Analytics found that almost one in five dollars in American consumers' wallets came from one government program or another. The public sector has already seen deep cuts, and that trend will only worsen with Washington's relentless focus on deficit reduction. Without those dollars, there will be fewer consumers demanding American companies' goods and services, and the private sector will continue to have little incentive to hire. Although the cuts in the debt reduction deal are “backloaded” to some degree, $70 billion in cuts will hit before the end of next year, which will cost the economy hundreds of thousands of jobs, resulting in more people out of work, missing mortgage payments and not spending much money.

And they're not done. In downgrading America's debt last week, S&P relied on some dodgy economi analysis, but its view of the political situation is spot-on: the GOP's absolutism is making governing next to impossible. Not only are all revenue raises effectively “off the table,” in all likelihood any significant effort to kick-start the economy is as well. Senator Jim DeMint, R-South Carolina, said that the debt ceiling was simply “round one” in a 15-round brawl over spending and “entitlements.” If their position were that we need to pay down the debt as soon as unemployment drops below 7 percent and the housing market stabilizes, it wouldn't be an entirely insane position. Doing so in this economic climate is ideologically driven madness.

And the real danger is that we'll get into a disastrous kind of feedback loop if the economy starts contracting. That would certainly lead to higher deficits, as tax revenues sank to new lows and the demand for anti-poverty services grew. The deficit hawks will use that rising deficit to call for more cuts, and without some new engine of private sector growth emerging, we'll stay stuck treading water. We've already lost a decade – after the dot-com bust, median incomes only surpassed those in 1999 during one year – 2006 – and have only declined since then.

In his book, Collapse, Jared Diamond looked at a bunch of societies that had seen their physical climates change and tried to determine what made some die out while others persevered. It wasn't the severity of the change, or its speed that was the determining factor, but the foresight of those societies' leaders – their ability to properly diagnose the problem and adapt – to come up with proactive solutions to the problems they faced. The economic woes we're suffering are man-made, but we may look back on the era in which American prosperity collapsed and see the same kind of stubborn refusal to acknowledge reality as a proximate cause.

Both Parties Now in Dash for Anonymous Cash

(This is a fine example of how the Republicrats and Demacans are really the same party serving the same corporate agenda--the difference being that one wears red, the other wears blue, and they've sold the myth to most voters that they are in opposition to one another--with a terrible one-act play they perform daily--when in actuality, they are owned by the same corporations, sleep with the same people, drink at the same bars, keep their money in the same Wall Street accounts, eat at the same troughs, etc. No difference.--jef)

Tuesday, August 9, 2011 by Politico.com
by Kenneth P. Vogel

If anyone had doubts about the role that anonymous and untraceable money will play in the 2012 campaign ad wars, a flurry of recent reports and voluntary disclosures should put them to rest.

Right-wing independent groups are likely outpacing the left in collecting anonymous cash. The full extent of the anonymous giving is by definition impossible to know. But the recent disclosures as well as interviews with fundraising sources suggest that Republican-allied independent groups are outpacing Democratic ones in collecting undisclosed contributions to fund their political advertising, just as they did in 2010.

But, perhaps more significantly, they show that Democrats, who vociferously attacked that kind of fundraising last year, have set aside their qualms and are now active competitors in the anonymous donor arms race.

The three main anonymously funded Democratic outside groups – Priorities USA, American Bridge 21st Century Foundation and Patriot Majority – collected at least $3.7 million in untraceable contributions, and probably much more, in the first half of the year, according to voluntary disclosures and anecdotal information on ad buys.

While that’s not as much as the $5.8 million in fundraising reported in that same period by the sister organizations of those groups, which do disclose donors – Priorities USA Action, American Bridge 21st Century and Majority PAC — the feeling among some in Democratic fundraising circles is that the balance will likely tilt towards undisclosed donations as the groups seek to expand their donor bases.

And the fact that Democrats are soliciting undisclosed contributions at all at this early stage of the race illustrates the central role anonymous donors are expected to play in the run-up to the 2012 elections.

Democrats “don’t have a choice, because the other side is doing it – would you send David to fight Goliath without a slingshot?” said Erica Payne, a liberal strategist who helped create the Democracy Alliance, a network of major liberal donors.

Many such donors “feel more comfortable donating to groups that don’t disclose,” she said, because some are publicity averse and also because “as soon as their name appears in the paper as having contributed, their phone number goes on the speed dial of every congressmen, committee and party that wants to raise money.”

While it’s impossible to do an apples-to-apples comparison, conservatives seem to maintain a wide edge when it comes to anonymously funded political advertising, with groups that don’t disclose contributions including the U.S. Chamber of Commerce, Americans for Prosperity and the 60 Plus Association – which combined to spend tens of millions on ads boosting Republicans in 2010 – gearing up for even bigger campaigns headed into 2012.

And the biggest spending Republican group this year – Crossroads Grassroots Policy Strategies – is about midway through a two-month advertising binge attacking President Barack Obama and congressional Democrats that is expected to cost more than $20 million, alone.

Crossroads GPS, as the group is known, is registered under a section of the tax code – 501(c)4 – that does not require the disclosure of donors’ names, but it was actually started as a spin-off of another group that does disclose its donors – American Crossroads. That group, a new type of political action committee known as a super PAC, has seen its fundraising lag behind its non-disclosing sister group. In the first six months of 2011, according to a report filed late last month with the Federal Election Commission, it raised only $3.9 million.

The two-pronged structure of the Crossroads outfit was the model for the new Democratic outside efforts, which were created in response to the explosion of spending by a network of outside groups, including Crossroads, that were conceived by veteran GOP operative Karl Rove.

The Democratic outfits also pair 501(c)4 groups – including Priorities USA, American Bridge 21st Century Foundation and Patriot Majority – with super PACs, including Priorities USA Action, American Bridge 21st Century and Majority PAC.

Patriot Majority recently went up with $225,000-worth of ads in three states pushing back on Crossroads GPS’s attacks on Democratic senators, while American Bridge 21st Century Foundation and Priorities USA told POLITICO they’d raised $1.51 million and at least $2 million, respectively.

But such 501(c)4 groups won’t be required to file reports listing even basic information about their 2011 finances until well into next year — and they probably will never be required to disclose even a single donor’s name, making it likely that we’ll never know who funded many of the political ads aired in the run-up to the 2012 elections.

Meanwhile, the super PACs affiliated with those groups – combined with another linked super PAC called House Majority PAC – collected huge checks in the first six months of the year from labor unions and wealthy liberals in entertainment and finance, according to reports filed late last month with the FEC. And their donors are known.

The Service Employees International Union contributed a total of $1.1 million spread among the groups. Dreamworks Animation chief executive Jeffrey Katzenberg contributed $2 million to Priorities USA Action, Chicago media magnate Fred Eychaner gave $600,000 ($100,000 to House Majority PAC and $500,000 to Priorities USA Action), insurance magnate Peter Lewis gave $200,000 to American Bridge and billionaire financier George Soros gave $75,000 to House Majority PAC.

On the Republican side, American Crossroads received almost all of its cash in the first half of the year – $3.8 million – from just a handful of millionaires and corporations. Investor and former Univision chairman Jerry Perenchio gave $2 million through his trust. Dallas investor Robert Rowling, whose firm owns Omni Hotels and Gold’s Gym, gave $1 million. Texas homebuilder Bob Perry gave $500,000.

“Some people want their names listed because they want credit – they want that policymaker or candidate [supported by a super PAC] to know that they’re giving and they want them to know quickly,” said a Democratic operative involved in fundraising for independent groups. “Other people want to stay [anonymous] because they are afraid of retribution or controversy.”

Super PACs and 501(c)4s are barred from coordinating their spending with the candidates they intend to help. But the groups – which can accept unlimited contributions from individuals, corporations and unions – are often seen as a way for deep-pocketed donors to have more impact than by merely writing checks to candidates and parties, which are capped by federal rules that also bar union and corporate contributions to candidates.

It was the Supreme Court’s decision in Citizens United v. FEC that cleared the way for the advent of superPACs as well as the rise in popularity of 501(c)4s as vehicles for political advertising. The decision, which allowed corporations and unions to spend unlimited money on campaign ads, was widely criticized by Democrats, as was the explosion of advertising spending by anonymously funded conservative groups, which Obama called “a threat to our democracy. The American people deserve to know who’s trying to sway their election.”

But after the election, Obama’s allies dialed back their opposition to big-money outside spending and it wasn’t long before close allies of the president and Democratic congressional leaders had formed their own network of groups.

“We’re following all the same rules that Rove’s Crossroads is,” said Bill Burton, who served as deputy White House press secretary while Obama was attacking anonymous political spending, but now runs the Priorities groups. “We may not like the rules, but we’re not going to let Karl Rove and the (conservative billionaire) Koch brothers play by one set of rules while we are overrun with their millions.”

But Jonathan Collegio, a spokesman for the Crossroads groups, told POLITICO it’s “brazen hypocrisy” for the Democratic 501(c)4s to accept anonymous donations. “If they really believe it was a threat to democracy, I don’t think you’d get involved in one of these groups,” he told the St. Petersburg Times late last month.

Yet, back when Crossroads started out last year, it, too, shunned secret donations and extolled disclosure. Its chairman, Mike Duncan, described himself in May 2010 as “a proponent of lots of money in politics and full disclosure in politics,” and said Crossroads intended to “be ahead of the curve on” transparency.

Less than one month later, with American Crossroads struggling to raise money from donors leery of having their names disclosed, operatives spun off Crossroads GPS, and its fundraising team, led by Rove, began emphasizing to prospective donors the ability to give anonymous contributions.

Fundraising took off, and together, the groups ended up raising more than $70 million in 2010, with the majority of it – $43 million – going to Crossroads GPS.

Despite their increasing prominence in political advertising, Crossroads GPS and other 501(c)4 groups, which the IRS classifies as “social welfare organizations,” are still considered something of an uncertain legal proposition and also a somewhat more restrictive political vehicle, as a result of the tax code’s requirement that they spend more than half of their money on non-campaign-related activity.

Legalities aside, former Democratic Sen. Russ Feingold of Wisconsin, who for years was a leading crusader against big money in politics, suggested his party risked losing the moral high ground by joining the chase for undisclosed, unlimited cash.

Feingold – who last week launched a 501(c)4 group of his own but pledged to disclose all its contributions and to only accept only limited individual donations – told POLITICO “Democrats shouldn’t be in the game of influencing elections with anonymous, unlimited money. It’s dancing with the devil.”

Progressive Groups Unveil 'Contract For The American Dream'

Tuesday, August 9, 2011 by Huffington Post
by Sam Stein

WASHINGTON -- In the wake of the deal to raise the nation's debt ceiling, widely viewed as yet another setback for the progressive community, advocacy groups on the left are redoubling efforts to change the political narrative.

S&P's decision to downgrade the United States' debt and the market selloff that followed has only emboldened those voices who believe the main structural problem plaguing the economy has less to do with debt and more to do with a lack of economic growth.

On Monday afternoon, MoveOn.org and Rebuild the Dream announced a campaign to build up a popular movement that could match (if not surpass) the debt reduction crowd in both size and energy. And they have borrowed a concept from former House Speaker Newt Gingrich (R-Ga.) as their organizing principle.

The campaign, led by Van Jones, President of Rebuild the Dream; Justin Ruben, Executive Director of MoveOn.org; and Rep. Jan Schakowsky (D-Ill.), among others, is debuting a new Contract for the American Dream. They describe it as "a progressive economic vision crafted by 125,000 Americans … to get the economy back on track." Its debut will involve a nationwide day of action, as well as an ad in The New York Times to run sometime this week, organizers said.

The basic premise of the campaign is that America isn't broke, it's merely imbalanced. In order to stabilize the economy, politicians should make substantial investments in infrastructure, energy, education and the social safety net, tax the rich, end the wars, and create a wider revenue base through job creation.

"Many of our best workers are sitting idle, while the work of rebuilding America goes undone," reads one bullet point of the Contract. "Together, we must rebuild our country, reinvest in our people and jump-start the industries of the future. Millions of jobless Americans would love the opportunity to become working, tax-paying members of their communities again. We have a jobs crisis, not a deficit crisis."

The name of the campaign is, of course, a reference to the Contract for America that Gingrich authored in the run up to the 1994 congressional elections. In the context of the current debate in Washington, the principles it promotes resemble a liberal pipe dream more than an actual outline for potential legislation. President Obama and Democratic leaders in Congress have, after all, been openly willing to throw entitlement reforms into the debt reduction discussion. And the notion that this Congress will decide to make future stimulus-like investments ignores Republicans' complete dismissal of such measures.

And yet, if you look at the specific suggestions, there is overlap between what the Contract advocates and what the president has endorsed -- mainly on the transportation and clean energy fronts. More than that, the Contract fills the obvious need for liberal advocacy groups to build a popular movement in support for their ideological side of the debt debate, something that has been clearly and at times painfully missing as a counterpoint to Washington's current obsession with austerity.

Read the full Contract below:

ContractDream

Super Committee Picks in Place

Tuesday, August 9, 2011 by Politico.com
Super Committee Picks
by Manu Raju & John Bresnahan

In the first of what will be a closely watched selection process for a powerful new deficit panel, Senate Majority Leader Harry Reid announced he will appoint Democratic Sens. Patty Murray (Wash.), Max Baucus (Mont.) and John Kerry (Mass.) as his three choices for a super committee charged with finding more than $1 trillion in spending cuts by the end of this year.

Murray will serve as co-chair of the 12-member panel. Speaker John Boehner (R-Ohio) will select her co-chair and two other panelists, as required by the next debt limit agreement signed into law by President Barack Obama last week. Minority Leaders Nancy Pelosi and Mitch McConnell will each select three additional members.

“The Joint Select Committee has been charged with forging the balanced, bipartisan approach to deficit reduction that the American people, the markets and rating agencies like Standard and Poor’s are demanding,” Reid said in a statement. “To achieve that goal, I have appointed three senators who each posses an expertise in budget matters, a commitment to a balanced approach and a track record of forging bipartisan consensus.”

Reid’s three picks are intended to show the Nevada Democrat is serious about forging a bipartisan deal to head off $1.2 trillion in spending cuts required under the debt deal. The super committee was Reid’s contribution to the bipartisan agreement to end the debt limit fight.

Murray is the chairman of the Democratic Senatorial Campaign Committee and close to Reid and the rest of the Senate Democratic leadership. Baucus is the chairman of the powerful Finance Committee, while Kerry - the 2004 Democratic presidential nominee - has been lobbying for a spot.

Reid and Pelosi had been considering whether to install candidates who will draw a hard-line against deep entitlement cuts, particularly if Republicans don’t bend on new taxes. The Democratic leaders want loyalists who won’t give the panel majority support for a cuts-only approach, which could target popular programs like Medicare and Social Security.

“The number one criteria should be someone who fights for revenues and if Republicans continue to rule out revenues, then the Democrats have to play proper defense in response,” said a senior Democratic aide.

In an email sent to her colleagues Monday evening, Pelosi said her caucus was committed to “protecting” Medicare, Medicaid and Social Security - and said that the new panel should deliberate in public settings so that it achieves a “balanced” approach to deficit reduction.

“Many of you have expressed your interest in serving on the Joint Committee,” Pelosi told her colleagues. “I have and will be reaching out to each of you before making any decision.”

Leaders have until next week to announce their picks for the closely watched panel, although Reid’s opening move is expected to speed up that process.

The membership will be crucial, since any deal that receives a majority support will be fast-tracked through the House and Senate for consideration before year’s end.

All four party leaders face internal politics as they try to choose members who will both represent their caucus’ interests and try to show a level of seriousness amid a fiscal crisis that led Standard & Poor’s to downgrade the U.S. credit rating for the first time in history. And the appointees must be able to withstand withering criticism from their bases if they cut a compromise deal - or public outrage if they fail to reach an accord at a time of historic deficits.

Many Hill insiders believe vulnerable lawmakers won’t be appointed to the politically charged panel.

While most of McConnell’s GOP caucus is dead set against raising revenues, even by keeping income tax rates the same and eliminating preferences in the tax code, Reid has a much more diverse collection of colleagues, which made it more challenging for him to find members who will stay loyal to the party while also trying to cut an effective deal.

Reid also has to defend 23 Democratic-controlled Senate seats in 2012, versus only 10 for McConnell.

Democratic insiders said Reid came “under pressure” from several fronts - first, progressive and liberal members want at least one of their own named to the joint panel in order to ensure that their positions on spending and entitlement cuts are factored into any final recommendations.

“What I don’t like is revenues not being part of it, and I’m going to fight to make sure it’s included” in the super committee, Sen. Ben Cardin (D-Md.) said last week.

By choosing Baucus, Reid may unnerve some liberals who have been skeptical of the Montana Democrat’s deal-making with Republicans over the years. But Baucus also has held the party line on raising revenues and attacking GOP budget plans to overhaul Medicare, a role he played in the budget talks with Vice President Joe Biden.

And by choosing Murray, the DSCC chief, Reid opens himself up to GOP criticism for choosing the Democratic senator whose foremost concern is 2012 Senate politics heading into a daunting election year.

“It is shocking that Harry Reid appointed his chief fundraiser to a committee that will be the central focus of every lobbyist in town,” said one Republican official.

Kerry, who has drawn fire from the right for calling S&P’s move a “tea party downgrade,” has been eager to add to his Senate resume a sweeping domestic achievement.

Noticeably absent from Reid’s choices are the three Democrats who served as part of the bipartisan Gang of Six who proposed a sweeping budget deal, which the majority leader never embraced.

Senate Majority Whip Dick Durbin (D-Ill.), Reid’s top deputy and Gang of Six member, signaled his interest in serving on the super committee. Reid’s No. 3, New York Sen. Chuck Schumer, informed leadership he did not want a spot on the panel.

For McConnell, Senate Minority Whip Jon Kyl (R-Ariz.) is widely expected to get the nod, given his conservative credentials, ties to McConnell and his work in the Biden group.

But if Republicans stay united, they’d need one additional Democrat to break ranks and back a cuts-only approach - so McConnell may want to choose a senator with bipartisan appeal who is loyal to leadership, like either Sen. Lamar Alexander (R-Tenn.) or Sen. Rob Portman (R-Ohio).

At a townhall in Winchester, Ky. on Monday, McConnell told a crowd that he wanted “significant entitlement reform” to be part of the mix that the super committee proposes. Last week on Fox News, McConnell declared that tax increases were essentially off the table.

“What I can pretty certainly say to the American people, the chances of any kind of tax increase passing with this, with the appointees of John Boehner and I, are going to put in there are pretty low,” McConnell said.

Upping the rhetoric, House Majority Leader Eric Cantor (R-Va.) issued a memo to his colleagues on Monday evening to blast the S&P’s suggestion that revenue raisers be part of the mix and to insist that higher taxes should not be part of the super committee’s solution.

“I believe this is what we must demand from the Joint Committee as it begins its work,” Cantor said to House Republicans.

Cantor is a possible choice for the committee - and Boehner may choose similar hard-nosed conservatives to throw a bone to tea party-backed lawmakers skeptical of his handling of the debt ceiling debate.

Pelosi has not yet indicated who she will pick, but Rep. Chris Van Hollen (D-Md.), the top Democrat on the House Budget Committee, is a possible pick, according to Democratic sources. Other potential selections include Reps. James Clyburn (S.C.), the Assistant Democratic Leader, and Xavier Becerra (D-Calif.), the top Latino in the Democratic Caucus.

If the super committee reaches an accord, its recommendations would be quickly sent to the House and Senate floors, forcing lawmakers to cast an up-or-down vote on whether to send the proposals to President Barack Obama’s desk for his signature or veto; if it fails, it could trigger an across-the-board series of cuts, including to defense programs that Pentagon officials say are vital to national security.

Many Republicans are eager to avoid deep defense cuts, providing an incentive for their party to win Democratic backing on the panel.

Turning Poverty into an American Crime

Tuesday, August 9, 2011 by TomDispatch.com
Nickel and Dimed (2011 Version)
by Barbara Ehrenreich

I completed the manuscript for Nickel and Dimed in a time of seemingly boundless prosperity. Technology innovators and venture capitalists were acquiring sudden fortunes, buying up McMansions like the ones I had cleaned in Maine and much larger. Even secretaries in some hi-tech firms were striking it rich with their stock options. There was loose talk about a permanent conquest of the business cycle, and a sassy new spirit infecting American capitalism. In San Francisco, a billboard for an e-trading firm proclaimed, “Make love not war,” and then -- down at the bottom -- “Screw it, just make money.”

When Nickel and Dimed was published in May 2001, cracks were appearing in the dot-com bubble and the stock market had begun to falter, but the book still evidently came as a surprise, even a revelation, to many. Again and again, in that first year or two after publication, people came up to me and opened with the words, “I never thought...” or “I hadn’t realized...”

To my own amazement, Nickel and Dimed quickly ascended to the bestseller list and began winning awards. Criticisms, too, have accumulated over the years. But for the most part, the book has been far better received than I could have imagined it would be, with an impact extending well into the more comfortable classes. A Florida woman wrote to tell me that, before reading it, she’d always been annoyed at the poor for what she saw as their self-inflicted obesity. Now she understood that a healthy diet wasn’t always an option. And if I had a quarter for every person who’s told me he or she now tipped more generously, I would be able to start my own foundation.

Even more gratifying to me, the book has been widely read among low-wage workers. In the last few years, hundreds of people have written to tell me their stories: the mother of a newborn infant whose electricity had just been turned off, the woman who had just been given a diagnosis of cancer and has no health insurance, the newly homeless man who writes from a library computer.

At the time I wrote Nickel and Dimed, I wasn’t sure how many people it directly applied to -- only that the official definition of poverty was way off the mark, since it defined an individual earning $7 an hour, as I did on average, as well out of poverty. But three months after the book was published, the Economic Policy Institute in Washington, D.C., issued a report entitled “Hardships in America: The Real Story of Working Families,” which found an astounding 29% of American families living in what could be more reasonably defined as poverty, meaning that they earned less than a barebones budget covering housing, child care, health care, food, transportation, and taxes -- though not, it should be noted, any entertainment, meals out, cable TV, Internet service, vacations, or holiday gifts. Twenty-nine percent is a minority, but not a reassuringly small one, and other studies in the early 2000s came up with similar figures.

The big question, 10 years later, is whether things have improved or worsened for those in the bottom third of the income distribution, the people who clean hotel rooms, work in warehouses, wash dishes in restaurants, care for the very young and very old, and keep the shelves stocked in our stores. The short answer is that things have gotten much worse, especially since the economic downturn that began in 2008.

Post-Meltdown Poverty

When you read about the hardships I found people enduring while I was researching my book -- the skipped meals, the lack of medical care, the occasional need to sleep in cars or vans -- you should bear in mind that those occurred in the best of times. The economy was growing, and jobs, if poorly paid, were at least plentiful.

In 2000, I had been able to walk into a number of jobs pretty much off the street. Less than a decade later, many of these jobs had disappeared and there was stiff competition for those that remained. It would have been impossible to repeat my Nickel and Dimed “experiment,” had I had been so inclined, because I would probably never have found a job.

For the last couple of years, I have attempted to find out what was happening to the working poor in a declining economy -- this time using conventional reporting techniques like interviewing. I started with my own extended family, which includes plenty of people without jobs or health insurance, and moved on to trying to track down a couple of the people I had met while working on Nickel and Dimed.

This wasn’t easy, because most of the addresses and phone numbers I had taken away with me had proved to be inoperative within a few months, probably due to moves and suspensions of telephone service. I had kept in touch with “Melissa” over the years, who was still working at Wal-Mart, where her wages had risen from $7 to $10 an hour, but in the meantime her husband had lost his job. “Caroline,” now in her 50s and partly disabled by diabetes and heart disease, had left her deadbeat husband and was subsisting on occasional cleaning and catering jobs. Neither seemed unduly afflicted by the recession, but only because they had already been living in what amounts to a permanent economic depression.

Media attention has focused, understandably enough, on the “nouveau poor” -- formerly middle and even upper-middle class people who lost their jobs, their homes, and/or their investments in the financial crisis of 2008 and the economic downturn that followed it, but the brunt of the recession has been borne by the blue-collar working class, which had already been sliding downwards since de-industrialization began in the 1980s.

In 2008 and 2009, for example, blue-collar unemployment was increasing three times as fast as white-collar unemployment, and African American and Latino workers were three times as likely to be unemployed as white workers. Low-wage blue-collar workers, like the people I worked with in this book, were especially hard hit for the simple reason that they had so few assets and savings to fall back on as jobs disappeared.

How have the already-poor attempted to cope with their worsening economic situation? One obvious way is to cut back on health care. The New York Times reported in 2009 that one-third of Americans could no longer afford to comply with their prescriptions and that there had been a sizable drop in the use of medical care. Others, including members of my extended family, have given up their health insurance.

Food is another expenditure that has proved vulnerable to hard times, with the rural poor turning increasingly to “food auctions,” which offer items that may be past their sell-by dates. And for those who like their meat fresh, there’s the option of urban hunting. In Racine, Wisconsin, a 51-year-old laid-off mechanic told me he was supplementing his diet by “shooting squirrels and rabbits and eating them stewed, baked, and grilled.” In Detroit, where the wildlife population has mounted as the human population ebbs, a retired truck driver was doing a brisk business in raccoon carcasses, which he recommends marinating with vinegar and spices.

The most common coping strategy, though, is simply to increase the number of paying people per square foot of dwelling space -- by doubling up or renting to couch-surfers.

It’s hard to get firm numbers on overcrowding, because no one likes to acknowledge it to census-takers, journalists, or anyone else who might be remotely connected to the authorities.

In Los Angeles, housing expert Peter Dreier says that “people who’ve lost their jobs, or at least their second jobs, cope by doubling or tripling up in overcrowded apartments, or by paying 50 or 60 or even 70 percent of their incomes in rent.” According to a community organizer in Alexandria, Virginia, the standard apartment in a complex occupied largely by day laborers has two bedrooms, each containing an entire family of up to five people, plus an additional person laying claim to the couch.

No one could call suicide a “coping strategy,” but it is one way some people have responded to job loss and debt. There are no national statistics linking suicide to economic hard times, but the National Suicide Prevention Lifeline reported more than a four-fold increase in call volume between 2007 and 2009, and regions with particularly high unemployment, like Elkhart, Indiana, have seen troubling spikes in their suicide rates. Foreclosure is often the trigger for suicide -- or, worse, murder-suicides that destroy entire families.

“Torture and Abuse of Needy Families”

We do of course have a collective way of ameliorating the hardships of individuals and families -- a government safety net that is meant to save the poor from spiraling down all the way to destitution. But its response to the economic emergency of the last few years has been spotty at best. The food stamp program has responded to the crisis fairly well, to the point where it now reaches about 37 million people, up about 30% from pre-recession levels. But welfare -- the traditional last resort for the down-and-out until it was “reformed” in 1996 -- only expanded by about 6% in the first two years of the recession.

The difference between the two programs? There is a right to food stamps. You go to the office and, if you meet the statutory definition of need, they help you. For welfare, the street-level bureaucrats can, pretty much at their own discretion, just say no.

Take the case of Kristen and Joe Parente, Delaware residents who had always imagined that people turned to the government for help only if “they didn’t want to work.” Their troubles began well before the recession, when Joe, a fourth-generation pipe-fitter, sustained a back injury that left him unfit for even light lifting. He fell into a profound depression for several months, then rallied to ace a state-sponsored retraining course in computer repairs -- only to find that those skills are no longer in demand. The obvious fallback was disability benefits, but -- catch-22 -- when Joe applied he was told he could not qualify without presenting a recent MRI scan. This would cost $800 to $900, which the Parentes do not have; nor has Joe, unlike the rest of the family, been able to qualify for Medicaid.

When they married as teenagers, the plan had been for Kristen to stay home with the children. But with Joe out of action and three children to support by the middle of this decade, Kristen went out and got waitressing jobs, ending up, in 2008, in a “pretty fancy place on the water.” Then the recession struck and she was laid off.

Kristen is bright, pretty, and to judge from her command of her own small kitchen, probably capable of holding down a dozen tables with precision and grace. In the past she’d always been able to land a new job within days; now there was nothing. Like 44% of laid-off people at the time, she failed to meet the fiendishly complex and sometimes arbitrary eligibility requirements for unemployment benefits. Their car started falling apart.

So the Parentes turned to what remains of welfare -- TANF, or Temporary Assistance to Needy Families. TANF does not offer straightforward cash support like Aid to Families with Dependent Children, which it replaced in 1996. It’s an income supplementation program for working parents, and it was based on the sunny assumption that there would always be plenty of jobs for those enterprising enough to get them.

After Kristen applied, nothing happened for six weeks -- no money, no phone calls returned. At school, the Parentes’ seven-year-old’s class was asked to write out what wish they would present to a genie, should a genie appear. Brianna’s wish was for her mother to find a job because there was nothing to eat in the house, an aspiration that her teacher deemed too disturbing to be posted on the wall with the other children’s requests.

When the Parentes finally got into “the system” and began receiving food stamps and some cash assistance, they discovered why some recipients have taken to calling TANF “Torture and Abuse of Needy Families.” From the start, the TANF experience was “humiliating,” Kristen says. The caseworkers “treat you like a bum. They act like every dollar you get is coming out of their own paychecks.”

The Parentes discovered that they were each expected to apply for 40 jobs a week, although their car was on its last legs and no money was offered for gas, tolls, or babysitting. In addition, Kristen had to drive 35 miles a day to attend “job readiness” classes offered by a private company called Arbor, which, she says, were “frankly a joke.”

Nationally, according to Kaaryn Gustafson of the University of Connecticut Law School, “applying for welfare is a lot like being booked by the police.” There may be a mug shot, fingerprinting, and lengthy interrogations as to one’s children’s true paternity. The ostensible goal is to prevent welfare fraud, but the psychological impact is to turn poverty itself into a kind of crime.

How the Safety Net Became a Dragnet

The most shocking thing I learned from my research on the fate of the working poor in the recession was the extent to which poverty has indeed been criminalized in America.

Perhaps the constant suspicions of drug use and theft that I encountered in low-wage workplaces should have alerted me to the fact that, when you leave the relative safety of the middle class, you might as well have given up your citizenship and taken residence in a hostile nation.

Most cities, for example, have ordinances designed to drive the destitute off the streets by outlawing such necessary activities of daily life as sitting, loitering, sleeping, or lying down. Urban officials boast that there is nothing discriminatory about such laws: “If you’re lying on a sidewalk, whether you’re homeless or a millionaire, you’re in violation of the ordinance,” a St. Petersburg, Florida, city attorney stated in June 2009, echoing Anatole France’s immortal observation that “the law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges...”

In defiance of all reason and compassion, the criminalization of poverty has actually intensified as the weakened economy generates ever more poverty. So concludes a recent study from the National Law Center on Poverty and Homelessness, which finds that the number of ordinances against the publicly poor has been rising since 2006, along with the harassment of the poor for more “neutral” infractions like jaywalking, littering, or carrying an open container.

The report lists America’s ten “meanest” cities -- the largest of which include Los Angeles, Atlanta, and Orlando -- but new contestants are springing up every day. In Colorado, Grand Junction’s city council is considering a ban on begging; Tempe, Arizona, carried out a four-day crackdown on the indigent at the end of June. And how do you know when someone is indigent? As a Las Vegas statute puts it, “an indigent person is a person whom a reasonable ordinary person would believe to be entitled to apply for or receive” public assistance.

That could be me before the blow-drying and eyeliner, and it’s definitely Al Szekeley at any time of day. A grizzled 62-year-old, he inhabits a wheelchair and is often found on G Street in Washington, D.C. -- the city that is ultimately responsible for the bullet he took in the spine in Phu Bai, Vietnam, in 1972.

He had been enjoying the luxury of an indoor bed until December 2008, when the police swept through the shelter in the middle of the night looking for men with outstanding warrants. It turned out that Szekeley, who is an ordained minister and does not drink, do drugs, or cuss in front of ladies, did indeed have one -- for “criminal trespassing,” as sleeping on the streets is sometimes defined by the law. So he was dragged out of the shelter and put in jail.

“Can you imagine?” asked Eric Sheptock, the homeless advocate (himself a shelter resident) who introduced me to Szekeley. “They arrested a homeless man in a shelter for being homeless?”

The viciousness of the official animus toward the indigent can be breathtaking. A few years ago, a group called Food Not Bombs started handing out free vegan food to hungry people in public parks around the nation. A number of cities, led by Las Vegas, passed ordinances forbidding the sharing of food with the indigent in public places, leading to the arrests of several middle-aged white vegans.

One anti-sharing law was just overturned in Orlando, but the war on illicit generosity continues. Orlando is appealing the decision, and Middletown, Connecticut, is in the midst of a crackdown. More recently, Gainesville, Florida, began enforcing a rule limiting the number of meals that soup kitchens may serve to 130 people in one day, and Phoenix, Arizona, has been using zoning laws to stop a local church from serving breakfast to homeless people.

For the not-yet-homeless, there are two main paths to criminalization, and one is debt. Anyone can fall into debt, and although we pride ourselves on the abolition of debtors’ prison, in at least one state, Texas, people who can’t pay fines for things like expired inspection stickers may be made to “sit out their tickets” in jail.

More commonly, the path to prison begins when one of your creditors has a court summons issued for you, which you fail to honor for one reason or another, such as that your address has changed and you never received it. Okay, now you’re in “contempt of the court.”

Or suppose you miss a payment and your car insurance lapses, and then you’re stopped for something like a broken headlight (about $130 for the bulb alone). Now, depending on the state, you may have your car impounded and/or face a steep fine -- again, exposing you to a possible court summons. “There’s just no end to it once the cycle starts,” says Robert Solomon of Yale Law School. “It just keeps accelerating.”

The second -- and by far the most reliable -- way to be criminalized by poverty is to have the wrong color skin. Indignation runs high when a celebrity professor succumbs to racial profiling, but whole communities are effectively “profiled” for the suspicious combination of being both dark-skinned and poor. Flick a cigarette and you’re “littering”; wear the wrong color T-shirt and you’re displaying gang allegiance. Just strolling around in a dodgy neighborhood can mark you as a potential suspect. And don’t get grumpy about it or you could be “resisting arrest.”

In what has become a familiar pattern, the government defunds services that might help the poor while ramping up law enforcement. Shut down public housing, then make it a crime to be homeless. Generate no public-sector jobs, then penalize people for falling into debt. The experience of the poor, and especially poor people of color, comes to resemble that of a rat in a cage scrambling to avoid erratically administered electric shocks. And if you should try to escape this nightmare reality into a brief, drug-induced high, it’s “gotcha” all over again, because that of course is illegal too.

One result is our staggering level of incarceration, the highest in the world. Today, exactly the same number of Americans -- 2.3 million -- reside in prison as in public housing. And what public housing remains has become ever more prison-like, with random police sweeps and, in a growing number of cities, proposed drug tests for residents. The safety net, or what remains of it, has been transformed into a dragnet.

It is not clear whether economic hard times will finally force us to break the mad cycle of poverty and punishment. With even the official level of poverty increasing -- to over 14% in 2010 -- some states are beginning to ease up on the criminalization of poverty, using alternative sentencing methods, shortening probation, and reducing the number of people locked up for technical violations like missing court appointments. But others, diabolically enough, are tightening the screws: not only increasing the number of “crimes,” but charging prisoners for their room and board, guaranteeing they’ll be released with potentially criminalizing levels of debt.

So what is the solution to the poverty of so many of America’s working people? Ten years ago, when Nickel and Dimed first came out, I often responded with the standard liberal wish list -- a higher minimum wage, universal health care, affordable housing, good schools, reliable public transportation, and all the other things we, uniquely among the developed nations, have neglected to do.

Today, the answer seems both more modest and more challenging: if we want to reduce poverty, we have to stop doing the things that make people poor and keep them that way. Stop underpaying people for the jobs they do. Stop treating working people as potential criminals and let them have the right to organize for better wages and working conditions.

Stop the institutional harassment of those who turn to the government for help or find themselves destitute in the streets. Maybe, as so many Americans seem to believe today, we can’t afford the kinds of public programs that would genuinely alleviate poverty -- though I would argue otherwise. But at least we should decide, as a bare minimum principle, to stop kicking people when they’re down.

Robbing the Poor to Pay the Rich

Grover Norquist: Robin Hood in Reverse?
By CHARLES R. LARSON

Last Thursday when the market crashed, the volume on the New York Stock Exchange was 7.5 billion shares, obviously much higher than usual. The Nasdaq volume was also unusually high. If we could levy a fee of one penny for each share bought and sold in the United States, the income from the NYSC Thursday's trades alone would have been $150,000,000.00—no insignificant amount—since each share of the volume has a buyer and a seller. But we can't do this because Grover Norquist would have a hissy fit, as would most of the care-free Republicans in Congress who support his madness and believe that Norquist is the real Chairman of the Federal Reserve as well as the head of the United States Treasury.

Applying this mini-fee, the three thousand shares I sold of one stock on Thursday would have cost me $30.00 but would have generated $60.00 in fees. The fifty shares of a stock I purchased that day would have added 50 cents to the government's tax coffers plus the same amount from the seller. I think I can afford this. I know I would even welcome this fee, which I would regard as a consumption tax, paid mostly by the rich and the middle class. The poor are not trading on the stock market. Figure how much could be generated every day from both stock exchanges and how much that would add up to in the course of a year—billions of dollars of revenue.

But we can't do this in the United States because cold-blooded Republicans believe that the solution to fixing the federal debt is simply to cut, cut, cut—everything. Miserly Grover Norquist, who many people believe is the Antichrist or at the very least the Devil, is like the Tea Party protester whom I heard scream that not one penny of her taxes should be spent on anyone else. That in itself is an interesting idea. Only what you pay in taxes can come back to you in benefits. That would make it possible to eliminate food stamps totally, since the poor do not pay taxes. It would also eliminate unemployment benefits and a host of other programs that Americans at one time regarded as the safety net to support the less fortunate in our country.

The undeclared culture war currently going on in the United States is not only over gay marriage, abortions, or even gun control, but between greedy Republicans and compassionate Democrats—two conflicting philosophies of life, two ways of regarding other people. Help others? Or hit them again harder? Share or take away? Think of yourself or think of someone else? Compassion or greed?

Let's return to the penny per share fee. Why can't we call it a fee instead of a tax? If you trade stocks, you pay a tiny user fee for each share. Banks, credit card companies, and airlines add fees to their services all the time, but I certainly don't hear any rumbling about that from self-centered Republicans. I can think of any number of other fees that would help us control our debt problem—if not substantially reduce it. And, yes, I can also hear those merciless Republicans responding that the difference is that the government is the government and businesses are, well, businesses.

All right, suppose we consider the government as a business, a business that's losing money and needs to levy a few fees in order to stay in the black. Would that placate un-sharing Grover or would he be against that also? I suspect he would because dispassionate Grover has a dream (and this is according to one of my economist friends): He won't be happy until he turns the United States into Haiti. That's his true vision for America. Sadly, he's succeeding, and he's keeping the profits for himself.

Throwing America Overboard

Time to Cap the Tea Kettle
By RALPH NADER

The Boston Tea Party in December 1773 threw the East India Company's tea overboard. The Republican Tea Party in August 2011 threw America overboard.

Only in Congress, with its rules for minority rule, can a minority of the Republican Party in the House of Representatives impose its havoc on the American people there, then on the Senate side and on Obama's wilting White House.

Leaving aside the psychiatric question of why a clutch of Republican Tea Partiers, many of them freshmen, terrify the veteran Republicans who outnumber them in the House, consider what they just pushed through the House against the American people.

For 150 million workers, Tea Partiers pushed through more cuts in the already starved federal programs that are aimed at diminishing the yearly 58,000 fatalities in workplace-related disease and trauma plus larger numbers injured and wounded.

There are 307 million eaters in America. More than 7,000 of them die from contaminated food and more than 300,000 are hospitalized each year. The Tea Partiers pushed cuts through the House to the already underfunded FDA food safety programs. They did this even though last year Congress strengthened the FDA's authority and expanded its responsibilities, including closer inspection of hazardous foodstuffs increasingly coming from communist China.

There are 60 million investors in company stocks in America. The Tea Partiers stomped their feet and cut the House appropriations for law enforcement against Wall Street's frauds by the Securities and Exchange Commission and the Commodity Futures Trading Commission. This cuts the number of federal cops on the Wall Street crime beat, especially on derivative scams.

All Americans breathe air and drink water. The Tea Partiers are cutting the budget of the federal agencies working to get the toxic pollution out of those two necessities for life on Earth. Don't even mention global warming and climate change to Tea Partiers who are willing to die laughing at such a prospect.

There are millions of women and children with special health needs who depend on federal programs for assistance. The House Tea Party members want to slash the modest budgets for these programs.

There are 200 million drivers in America. The Tea Partiers intend to cut the already measly auto safety budget of the Transportation Department. The auto safety budget is less than a third of the budget they allowed for guarding the U.S. embassy in Baghdad.

They have also told others in Congress they are opposed to last year's auto and bus safety bill giving long-overdue authority to safety regulators. The bill was supported by Democrats and Republicans but was blocked by one Senator Tom Coburn, a physician no less, in the last December days of the session. Minority rule again blocking 99 senators who signed off on unanimous consent to get this life-saving legislation through the Senate.

There are 30 million American workers, polls show, who would like to have a trade union represent them in negotiations with giants like Walmart. The Tea Partiers hate unions of workers and were instrumental in blocking the budget for the FAA in late July and early August on a union organizing mechanism and $16 million in subsidies for a few rural airports. For almost two weeks, the Tea Partiers punished tens of thousands of American workers who had to stop working on airport improvement and repair projects, and with the law's expiration, the Tea Partiers let the U.S. government lose $30 million in a day in airline ticket taxes.

The Tea Partiers hate taxes, especially on the rich and corporations, even though they are the lowest rates in 20 years. They are extremists, mindlessly embracing Grover Norquist's no-tax pledge. They are even against giving the IRS funds it needs to collect $15 for every $1 it spends collecting taxes on the ever-more privileged. The number of Treasury auditors focused on these giant global companies is miniscule.

The Tea Partiers don't even care that 50 percent of Tea Partiers back home and 70 percent of Republicans polled thought additional tax revenues should be part of the deficit-reduction program passing through Congress.

You see, these House and Senate Tea Partiers are like mad dogs – at times even beyond control of their political and corporate masters. Fanatics neither think nor blink in their hostage politics. They're scarring Wall Streeters with their brinkmanship. Brandishing a historic moniker that symbolized rebellion against the then monarchial power, the Congressional Tea Partiers are anything but rebels against power – whether against the wars of empire, corporate welfare, sovereignty shedding NAFTA and WTO, corporate crime, the flouted war powers of Congress, or a runaway Wall Street.

Back home last year, Tea Party rhetoric did echo the people's concerns about these matters. It turned out to be just talk by those now in Congress. The Tea Party in Congress is more interested in wielding the axe against public works programs, education, housing, public health, drug safety and medical research. But they leave alone the hugely expensive, cost-over-run weapons systems – long after the dissolution of the Soviet Union. Raising money from the fat cats for next year's election, the Tea Partiers aren't about to challenge tax favoritism – officially known as tax expenditures – that Reagan's economist, Professor Martin Feldstein recently called the single largest source of wasteful and low-priority spending in the federal budget.

It is one thing for the Tea Party politicians in Congress—already well-to-do and consuming a pretty nice salary and a bevy of benefits – to lack empathy. But America needs to call them out on their downright ideologically-inebriated animosity toward the domestic necessities of the American people. Tea Party extremists in Congress may well sink the Republican Party but in the process take many Americans down with them.

They're taking the debt-limit vote to the cliff set up the Standard and Poor's (S&P) first-ever downgrade of the U.S. government's credit rating, last Friday. Call it the Tea Party downgrade.

It is time to put a firm cap on the kettle.

What the S&P Downgrade Really Means

The S&P Downgrade
By PAUL CRAIG ROBERTS

On Friday, August 5, the credit rating agency, Standard & Poors, downgraded US debt from AAA to AA+.

Gerald Celente’s view that S&P’s downgrade of the US Treasury’s credit rating reflects a loss of confidence in the political system was confirmed by the rating agency itself.

S&P explained the downgrade as the result of heightened political risks, not economic ones. The game of chicken over the debt ceiling increase and the GOP’s ability to block tax increases indicate that “America’s governance and policymaking is becoming less stable, less effective, and less predictable”

The reduction in the government’s credit rating to AA+ from AAA is a cosmetic change. It remains a very high investment grade rating and is unlikely to have any effect on interest rates. It is revealing that despite the downgrade, US bond prices rose. It was stocks that fell. The financial press is blaming the stock market decline on the bond downgrade. However, stocks are falling because the economy is falling. Too many jobs have been moved offshore.

Interest rates could fall further as investors flee into Treasuries from the euro because of sovereign debt worries, flee equity markets as they continue to tumble, and as large banks charge depositors for holding their cash. Indeed, the latter policy could be seen as an effort to drive people with large cash holdings out of cash into government bonds. Japan has a lower credit rating than the US and has even lower interest rates.

More hard knocks are on their way. As the economy weakens and the economic outlook darkens, new deficit projections will elevate the debt issue.

The psychological effect of the S&P’s downgrade is likely to be larger than its economic effect. Many will see the downgrade as an indication that America is beginning to slip, that the country might be entering its decline.

There is no danger of the US defaulting on its bonds. The bonds are denominated in US dollars, and dollars can be created without limit. Moreover, the problem with the debt is less with the size of the national debt, which remains a lower percentage of GDP than during World War II, than with the large annual budget deficits. If equities continue to fall, if flight continues from the euro, if bank fees drive people out of cash, it is possible that the inflows into Treasuries can finance, for awhile, the large annual deficit, removing the need for the Federal Reserve to monetize the deficit via Quantitative Easing.

On the other hand, the weakening economy, given traditional policy views, will likely lead to a renewal of debt monetization or QE in an effort to stimulate the economy.

Continued debt monetization threatens the dollar. Investors will move out of Treasuries and all dollar-denominated assets not because they fear default, but because they fear a fall in the dollar’s exchange value and, thus, a fall in the value of their dollar holdings.

Debt monetization can cause domestic inflation (and imported inflation for those countries that peg to the dollar) as, and if, the new money finds its way into the economy. This has not happened to any extent so far in the US, because the banks are not lending and consumers are too indebted to borrow. But the fall in the dollar’s exchange value results in higher prices of many imports. So far the inflation that the US is experiencing is coming from the declining exchange value of the dollar. However, there is little doubt that asset prices, such as those of Treasuries and stocks, have been inflated by the Fed’s monetization of debt.

To flee from the dollar, there must be someplace to go. There are not alternative currencies large enough to absorb the dollars, especially with China pegged to the dollar and the euro experiencing troubles of its own because of the sovereign debt crises in Greece, Spain, Ireland, Portugal, and Italy. Dollar flight has driven up the prices of bullion and Swiss francs. Despite the Swiss government printing francs to absorb the dollar inflow, the franc continues to rise in value. As of time of writing, one US dollar is worth only about 76 Swiss centimes or cents. In 1966 there were 4.2 Swiss francs to the dollar or 420 centimes to the dollar.

The rise in the franc is crippling Switzerland’s ability to export. The loss in the dollar’s exchange value from dollar creation causes other countries, such as Japan and Switzerland to inflate their own currencies in order to hold down their rise. The Fed’s dollar policy has resulted in Russian leader Putin declaring the US to be a parasite upon the world and the Chinese to call for other countries to control how many dollars can be printed.

In other words, the US policy is seen as adversely impacting other countries without doing any good for America.

What I have explained can be comprehended within existing ways of thinking. Within this way of thinking, as the debt ceiling imbroglio made clear, the policy choices are between eliminating Social Security and Medicare or eliminating wars and low tax rates on the mega-rich in order to eliminate the annual budget deficits that are threatening the dollar’s exchange value and enlarging the national debt.

However, it is often the case that more is going on than traditional thinking can know about or explain. It is always a challenge to get people’s thinking into a new paradigm.
Nevertheless, unless the effort is made, people might never comprehend the behind-the-scenes power struggle.

A half century ago President Eisenhower in his farewell address warned the American people of the danger posed to democracy and the people’s control over their government by the military/security complex. Anyone can google his speech and read his stark warning.

Unfortunately, caught up in the Cold War with the Soviet Union and reassured by America’s rising economic might, neither public nor politicians paid any attention to our five-star general president’s warning.

In the succeeding half century the military/security complex became ever more powerful. The main power rival was Wall Street, which controls finance and money and is skilled at advancing its interests through economic policy arguments. With the financial deregulation that began during the Clinton presidency, Wall Street became all powerful. Wall Street controls the Treasury and the Federal Reserve, and the levers of money are more powerful than the levers of armaments. Moreover, Wall Street is better at intrigue than the CIA.

The behind the scenes fight for power is between these two powerful interest groups. America’s hegemony over the world is financial, not military. The military/security complex’s attempt to catch up is endangering the dollar and US financial hegemony.

The country has been at war for a decade, running up enormous bills that have enriched the military/security complex. Wall Street’s profits ran even higher. However, by achieving what economist Michael Hudson calls the “financialization of the economy,” the financial sector over-reached. The enormous sums represented by financial instruments are many times larger than the real economy on which they are based. When financial claims dwarf the size of the underlying real economy, massive instability is present.

Aware of its predicament, Wall Street has sent a shot across the bow with the S&P’s downgrade of the US credit rating. Spending must be reined in, and the only obvious chunk of spending that can be cut without throwing millions of Americans into the streets is the wars.

Credit rating agencies are creatures of Wall Street. Just as they did Wall Street’s bidding in assigning investment grade ratings to derivative junk, they will do Wall Street’s bidding in downgrading the US credit rating. Wall Street might complain about downgradings, but that is just to disguise that Wall Street is calling the shots.

The struggle between the military/security complex and the financial sector comes down to a struggle over patronage. The military/security complex’s patronage network is built upon armaments factories and workforces, military bases and military families, military contractors, private security firms, intelligence agencies, Homeland Security, federalized state and local police, and journalists who cover the defense sector.

Wall Street’s network includes investors, speculators, people with mortgages, car, student, and business loans, credit cards, real estate, insurance companies, pension funds, money managers and their clients, and financial journalists.

As the financial sector has over-extended and must shrink, Wall Street is determined to have access to public funds to manage the process and determined to maintain its relative power by forcing shrinkage in its competitor’s network. That means closing down the expensive wars in order to free up funds for entitlement privatization and to keep the dollar’s role as reserve currency. Wall Street realizes that if the dollar goes, its power goes with it.

What insights can we draw from this analysis?

The insight that it offers is that although economic policy will continue to be discussed in terms of employment, inflation, deficits, and national debt, the policies that are implemented will reflect the interests of the two contending power centers. Their struggle for supremacy could destroy the rest of us.

Wall Street opened the game with a debt downgrade, implying more are to come unless action is taken. The new Pentagon chief replied that any cuts to the military budget would be a “doomsday mechanism” that “would do real damage to our security, our troops and their families and our military’s ability to protect the nation.”

Will Americans be so afraid of terrorists that they will give up their entitlements? Will false flag terrorist events be perpetrated in order to elevate this fear? Will Wall Street provoke crises that are perceived as a greater threat?

From whom do we need greater protection than from Wall Street and the military/security complex and from our government, which is the tool of both?

Rise of the Planet of the Apes

Rise of the Planet of the Apes is the best blockbuster of the summer of 2011, sez I. I thought Captain America was pretty good, too, but Caesar is a badass. A friend took me to see it, and I joked about how bad it would be all the way there. James Franco a scientist? Come on! Animated apes? Come on! Didn't the last Planet of the Apes redux suck? Well, I was wrong. There were some very compelling--and moving--moments in it that I did not expect.







If that isn't enough trailer juice, it doesn't exist!

Internet Footprint Driving Away Employers?

Tell Me More
by NPR Staff - August 8, 2011

Audio for this story

Social Intelligence Corp. scours one's public online activity from the past seven years and reports it to prospective employers. Its CEO Max Drucker explains what specific data the company looks for, how often monitoring occurs, and what this means in terms of privacy concerns. Also joining the conversation is Electronic Privacy Information Center Senior Counsel John Verdi.

Welcome to the Next Great Depression

(My next music project is also being called "The Next Great Depression." Hey, it's a very stark and drastic term--it's also our future, sadly. Because we let greedy bastards decide our economic fate. I truly hope none of us suffer as badly as it seems like we will.--jef)

+++++++

August 4, 2011 by CommonDreams.org
The Beast Is Starved
by John Atcheson

 

Since Reagan, Republicans have been on a “starve the beast” campaign – by which they mean eviscerate the government by taking away as much revenue as they can.

Starving the beast has been the biggest bait and switch con game that has ever been perpetrated on the American people.  And the most tragic. "Well, if past is prologue, welcome to the next Great Depression." 

As Paul Krugman pointed out, Republicans offered popular tax cuts so that they could later cut popular government programs “as a necessity.”  Oh, we’d love to continue providing low cost, effective medical care under Medicare, but you see, the country just can’t afford it … Of course we can’t.  Billionaire hedge fund managers and Wall Street traders pay less in taxes than their secretaries.  And most corporations pay little or no taxes.

Starve the Beast was coupled with a clever campaign to make government appear to be a collection of bumbling bureaucrats who wasted tax money for pure pleasure.  Long after it became politically impossible to stereotype racial and ethnic groups (with the possible exceptions of Muslims) it was – and is – quite acceptable to characterize government workers as shiftless, lazy and incompetent.

As a result, once the Republicans succeeded in cutting government revenue to the bone and beyond, it became impossible to raise taxes – who wants to give any more of their hard earned money to a bunch of lazy bureaucrats?

Never mind that most big government programs are far more efficient than their private sector equivalents.  That’s a mere fact.  Can’t let that get in the way of starving the beast.

Bait and switch.  Divide and Conquer.

So, after starting with a surplus in 2000, Republicans used two wars, two rounds of tax cuts, and a giant giveaway to big Pharma, to get the country racking up debt like a drunken sailor. 

Along comes the Bush recession, and the debt accelerates, and the Republicans declare the debt to be an “emergency” and right on schedule immediately attack popular programs like Medicare, Medicaid, Social Security, Student loans –and virtually anything that doesn’t help the uber rich or the corporations suddenly must be cut if we are to stay solvent.

Never mind that cutting Social Security to balance the budget is like attacking the mailman because your car doesn’t work.  It has nothing to do with the budget – but again, that’s a mere fact.  When you’re drowning the beast, facts don’t matter.

So OK.  The beast is drowned. Keynes is dead.  Now what?

Well, if past is prologue, welcome to the next Great Depression. 

See, the dirty little secret is that we never had a debt “crisis.”  We had a jobs crisis. 

While Republicans were arguing about the faux “crisis” and the press and Obama joined them, we got a series of disturbing economic signals. Consumer confidence was down, manufacturing was off, May and June’s job numbers were pathetic. In fact, if not for a hiring binge by McDonald’s there would have been a net job loss in May. That’s something to hang your hat on: McDonalds accounted for what little job growth there was.  What’s next, America gets saved by an uptick in Wall Mart greeters?

Look. This whole drown the beast strategy has been nothing more than a stealth tactic for instituting an extremist version of a laissez faire, market uber-alles policy designed by and for the Plutocracy.

And to be sure, it’s worked great for them. Today, the richest 1% owns 40% of the nation's wealth, and the top 10% owns nearly 75% of it.

The rest of us?  Not so much.

Income and wealth inequality in the US has been increasing rapidly since Reagan,  (with a slight break under Clinton). In terms of income inequality, the US now ranks about the same as Ivory Coast, Uganda and Cameroon – countries not exactly noted for being prosperous, equitable and just societies.

News flash for all the debt mongers, Tea Partiers and other assorted ignoramuses. You can’t run a consumer-based economy when the vast majority of consumers don’t have enough money to buy anything.  After all, Paris Hilton can only buy so many yachts; Corporate CEOs can only purchase so many jetliners – even with their special jet tax credits; and Wall Street traders can only buy so many Bugattis.  But middle and working class Americans need to spend their money on food, lodging, and other necessities. 

Here’s the dirty little secret: Republicans want the economy to fail.  They want Obama to fail, and they don’t care who gets hurt in the process.  They want these things, because the beast is in the bathtub and they can almost taste its demise.

The pieces are in place for the Plutocrats final victory … an industry friendly Supreme Court; a Democratic Party that is either in collusion with the plutocrats, or so cowardly as to be neutered; a press that reports outlandish lies and objective facts as if they were equivalent; and a public that is dazed and confused and convinced the government is their enemy.

 But government isn’t the enemy.  Laissez faire economic policies are. Every time we’ve tried them, they've produced profound income inequalities and the severe economic downturns that inevitably follow.

With private industry sitting on top of some $2 trillion in profits, exporting jobs, and shutting down plants, only government spending stood between us and an economic Armageddon. 

Now, nothing does.

So, congratulations, America.  You’ve finally gotten big bad gubmint off your back.

Enjoy the coming Great Depression.

Flames, Rioting Engulf London for Third Day

Monday, August 8, 2011 by Agence France-Presse
by Guy Jackson

Violence spread across London for a third day on Monday with riot police tackling youths setting fire to cars and properties and looting shops in some of the worst rioting in the capital in years.

Buildings were in flames in Peckham, Lewisham and Croydon in the south of the capital while gangs of looters roamed the streets of Hackney in the east.

Hundreds of riot police poured into Hackney to try to contain the violence in a district just a few miles (kilometers) from where the 2012 Olympics will take place this time next year.

As darkness fell, police wielding batons pushed the youths back, while local residents hoping to return to their homes were kept behind police cordons.

In Croydon, an entire block of buildings was ablaze, sending flames leaping into the night sky.

The violence first erupted on Saturday in the multi-ethnic neighborhood of Tottenham in north London after a man was shot dead by police two days earlier.

Copycat violence then spread to other areas of the British capital on Sunday before reaching to new districts on Monday.

Home Secretary Theresa May, who cut short her holiday to return to London, condemned the riots as "sheer criminality" and vowed that the perpetrators would face justice.

"The violence we've seen, the looting we've seen, the thuggery we've seen -- this is sheer criminality," she said.

"These people will be brought to justice, they will be made to face the consequences of their actions."

Police said they had arrested 215 people before Monday's violence, including an 11-year-old boy. At least 35 police officers were injured in the unrest at the weekend.

The violence even spread beyond London after police said a group of youths in Birmingham, central England, smashed shop windows in the city center and stole merchandise, but reports said the violence was under control.

Deputy Prime Minister Nick Clegg on Monday visited homes and businesses burned down during the riots in Tottenham.

Tensions remained high in the area following the shooting on Thursday of 29-year-old Mark Duggan, amid fresh doubts about the original account of his death during a police operation against gun crime within the black community.

The father-of-four was shot in a taxi in what was initially said to have been an exchange of gunfire. But reports said it was possible that police officers were not under attack when they opened fire.

The Independent Police Complaints Commission (IPCC), the watchdog probing Duggan's death, was expected to release the test results on Tuesday.

On Sunday, shops were looted and police officers pelted with stones in the southern district of Brixton; in Enfield, Walthamstow and Islington in the north and east, and on Oxford Street in the city centre.

Clegg -- who is officially in charge while Prime Minister David Cameron is on holiday in Italy -- said there was "no excuse whatsoever" for such attacks.

"The violence we saw last night (Sunday) had absolutely nothing to do with the death of Mr Duggan. It was needless, opportunist theft and violence -- nothing more and nothing less," he said.

During a tour of Tottenham, Clegg struck a more conciliatory tone, saying: "Clearly this is something that leaves big scars and we need to work together to start to heal those scars."

Although police and politicians said much of the violence was opportunistic, community leaders and many residents in Tottenham said it pointed to deep social unease in the area, one of the poorest in London.

David Bennie, in his late 40s, was riding his bicycle on his way up to look at the damage.

"Quite a few people were expecting riots this summer here. The economic situation has been building up and all it needed was a spark."

Tottenham was the scene of severe rioting on the Broadwater Farm housing estate in 1985 when police constable Keith Blakelock was hacked to death.

After Duggan's death, rumors spread online that he had been killed in an assassination-style execution with shots to the head -- something the IPCC was forced to deny in a statement.

Cheryline Lee, a Tottenham resident in her 50s, told AFP: "The police did not give the community any information about this man who was shot.

"But burning buildings like this is much too much. People have lost their houses and people have lost their jobs as well."

US Stocks Plunge In Sixth Biggest DJIA Decline In History; DJIA Falls 634.76

By Brendan Conway Of DOW JONES NEWSWIRES AUGUST 8, 2011,

• DJIA plunges more than 634 points, closing at lows in first trading since S&P downgrade late Friday

• "Panic" selling is seen; President Obama cites "renewed sense of urgency" to handle deficit, cannot quell market worries

• S&P's follow-on downgrades stoke further worries; Russell 2000 stages its biggest-ever single-day point drop

NEW YORK (Dow Jones)--U.S. stocks tumbled in a Monday rout that sent the Dow Jones Industrial Average plunging to the sixth biggest point drop in its history, reflecting a toxic brew of investor fears over government debt and the chances that the economy will slide into another recession.

The Dow Jones Industrial Average sank 634.76 points, or 5.55%, to 10809.85, falling beneath 11000 for the first time since November and adding to last week's steep losses. The blue-chip measure ended exactly on session lows in the biggest single-day point and percentage loss since Dec. 1, 2008.

Monday was the stock market's first trading day since Standard & Poor's downgraded the federal government's credit rating late Friday. Investors fled risk assets far and wide. They traded 9.71 billion shares in New York Stock Exchange composite volume, the fourth largest single-day total in history.

Most-active December gold futures soared to a record settlement of $1,713.20, up $61.40. U.S. Treasurys were a winner despite the credit downgrade, with the yield on the 10-year note falling to the lowest levels since January 2009.

"Everybody is looking for whatever they perceive as a safe haven, even if it's just plain illogical," said David Kelly, chief market strategist for J.P. Morgan Funds. "Things are pretty dismal right now."

Major stock indexes cascaded lower throughout much of the session, as S&P downgraded clearing bodies, entities such as Fannie Mae and Freddie Mac and lowered outlooks for companies including Warren Buffett's Berkshire Hathaway following S&P's downgrade of U.S. credit to double-A-plus from triple-A late Friday.

The Standard & Poor's 500 stock index tumbled 79.92 points, or 6.66%, to 1119.46, the 10th decline in 11 sessions. Financial components fell 10% while S&P 500 energy stocks slumped 8.3%. Not a single component of the 500 stocks that make up the broad index finished in positive territory. The Nasdaq Composite slumped 174.72 points, or 6.9%, to 2357.69.

The Russell 2000 index of small-capitalization stocks fell the most in a single session in its history, plummeting 63.67 points, or 8.91%, to 650.96. Small caps tend to make more exaggerated moves and are generally viewed as riskier than the widely held shares of large companies.

The fact that Monday's swoon came right on the heels of the Dow's biggest weekly point loss since the financial crisis in 2008 set up many market participants for forced sales and margin calls, traders said. That made some of the losses self-perpetuating. It also raised the prospect of capitulation, the point when losses snowball and sentiment craters, helping markets find a bottom.

"There is a lot of forced liquidation," said Lorenzo Di Mattia, manager of Sibilla Global Fund, and such actions "might last another day perhaps."

In one early sign that Monday's action would be volatile, the New York Stock Exchange invoked the little-used Rule 48 before the start of trading. The procedure lets market makers refrain from disseminating price indications ahead of the bell, making it easier and faster to open trading in the stock market.

Bank of America plunged $1.66, or 20%, to 6.51, to lead blue-chip decliners, stung by both a steep selloff in financial stocks and by word that American International Group is suing the company, along with a host of other prominent financial institutions, as it seeks to recover losses on mortgage-backed securities. AIG's stock fell 2.52, or 10%, to 22.58.

Gold miners and precious-metals exchange-traded funds bucked the broader trend as they followed the precious metal higher. AngloGold Ashanti rose 20 cents, or 0.5%, to 42.01 and SPDR Gold Trust gained 5.37, or 3.3%, to 167.12. Newmont Mining gained early but ended down 28 cents, or 0.5%, at 54.13.

President Barack Obama did little to assuage investor fears Monday afternoon as he said that the S&P downgrade should provide a "renewed sense of urgency" to tackle the deficit. Indexes hit fresh lows while the president spoke, and again afterward.

Worries about the strength of the global economy loomed just as large, if not larger, than credit matters for many investors. Fears of a slowdown have reverberated in recent weeks.

"The market is probably more concerned with the economic risk than with the S&P credit rating," said Bernie McDevitt, vice president of institutional trading at Cheevers & Co.

Truth Music for the Revolution

A National Debt Of $14 Trillion? Try $211 Trillion

All Things Considered
by NPR Staff - August 6, 2011

Listen to the Story

When Standard & Poor's reduced the nation's credit rating from AAA to AA-plus, the United States suffered the first downgrade to its credit rating ever. S&P took this action despite the plan Congress passed this past week to raise the debt limit.

The downgrade, S&P said, "reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics."

It's those medium- and long-term debt problems that also worry economics professor Laurence J. Kotlikoff, who served as a senior economist on President Reagan's Council of Economic Advisers. He says the national debt, which the U.S. Treasury has accounted at about $14 trillion, is just the tip of the iceberg.

"We have all these unofficial debts that are massive compared to the official debt," Kotlikoff tells David Greene, guest host of weekends on All Things Considered. "We're focused just on the official debt, so we're trying to balance the wrong books."

Kotlikoff explains that America's "unofficial" payment obligations — like Social Security, Medicare and Medicaid benefits — jack up the debt figure substantially.
Laurence J. Kotlikoff served as a senior economist on President Ronald Reagan's Council of Economic Advisers and is a professor of economics at Boston University.
Courtesy of Boston University

Laurence J. Kotlikoff served as a senior economist on President Ronald Reagan's Council of Economic Advisers and is a professor of economics at Boston University.

"If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That's the fiscal gap," he says. "That's our true indebtedness."

We don't hear more about this enormous number, Kotlikoff says, because politicians have chosen their language carefully to keep most of the problem off the books.

"Why are these guys thinking about balancing the budget?" he says. "They should try and think about our long-term fiscal problems."

According to Kotlikoff, one of the biggest fiscal problems Congress should focus on is America's obligation to make Social Security payments to future generations of the elderly.

"We've got 78 million baby boomers who are poised to collect, in about 15 to 20 years, about $40,000 per person. Multiply 78 million by $40,000 — you're talking about more than $3 trillion a year just to give to a portion of the population," he says. "That's an enormous bill that's overhanging our heads, and Congress isn't focused on it."

"We've consistently done too little too late, looked too short-term, said the future would take care of itself, we'll deal with that tomorrow," he says. "Well, guess what? You can't keep putting off these problems."

To eliminate the fiscal gap, Kotlikoff says, the U.S. would have to have tax increases and spending reductions far beyond what's being negotiated right now in Washington.

"What you have to do is either immediately and permanently raise taxes by about two-thirds, or immediately and permanently cut every dollar of spending by 40 percent forever. The [Congressional Budget Office's] numbers say we have an absolutely enormous problem facing us."

2 Days of Northern London Riots