The Political Junkies
archived: 4 - 10 Jun, 2006 Back Next
HE’S BACK ….. GREENSPAN
Former Federal Reserve Chairman Alan Greenspan testified before Congress today. His presentation outlines the consequences of the failure of Republican economic policy.
These are his major points:
Greenspan . . . offered a grim view on Wednesday of the world's rising vulnerability to high crude oil prices, saying he was skeptical that oil producers could pump enough crude to meet future demand. . . .
"The United States, especially, has been able to absorb the huge implicit tax of rising oil prices so far," Greenspan told the Senate Foreign Relations Committee in his first congressional testimony since leaving the U.S. central bank earlier this year. "However, recent data indicate we may finally be experiencing some impact." . . .
Greenspan warned that a big oil price increase could spur "a significant contraction in the economy."
Greenspan said that few of the world's dominant producers, aside from Saudi Arabia, see the danger that rising crude oil prices pose to the economy, and to their sustained ability to sell oil. . . .
Greenspan said while U.S. businesses had so far been able to improve productivity to compensate for costly energy, households were suffering from higher gasoline prices. . . .
Greenspan warned that the buffer between supply and demand was extraordinarily thin and that price spikes were a risk.
"The balance of world oil supply and demand has become so precarious that even small acts of sabotage or local insurrection have a significant impact on oil prices," he said, adding that global refining capacity was still too limited.
Mellody Hobson with ABC gives an excellent take on the bottom line:
After a period of robust (and unsustainable) growth during the past three years, the economy appears to be slowing. The question: Is the economy still strong or are we entering a period of slowed growth?
Both the Consumer Confidence and the Expectations indexes were down in May, according to the Conference Board. Another indicator of a slowdown was the May jobs report. Nonfarm payrolls rose only 75,000 during the month, as opposed to a predicted 180,000 gain. Additionally, consumer spending, which represents two-thirds of all spending, has slowed in reaction to higher oil prices. Lastly, the housing market, which has helped to fuel economic growth over the past few years, is cooling, partially in reaction to rising mortgage rates.
The bottom line is that we are at a tipping point. Our economic environment is shifting right before our eyes.
While the US Senate and House debate constitutional amendments to the constitution to enshrine discrimination, our “economic Rome” is burning. Average American families will pay the price.
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CAUSING PAIN
The financial markets roiled today as Federal Reserve Chairman Bernake warned Congress that interest rates may continue to rise because inflation is rising above levels the Federal Reserve considers acceptable. The Dow Jones Industrial average fell 200 points in a day.
Republicans have simply demonstrated their incompetence in not dealing with energy issues. The price of oil remains above $70.00 a barrel and gasoline is averaging about $2.78 per gallon nationally. High energy prices are driving up the cost of most goods and services. That spells inflation. The Federal Reserve will raise interest rates to keep inflation under control.
Americans will pay the price for Republican economic policy failures. As interest rates rise, business activity is falling, meaning less job creation. The pain comes with “stagflation,” rising prices and a weak economy in which wages do not keep up with prices.
Bernanke's comments unnerved investors because they raise fears of stagflation, an environment of rising prices and stagnating economic growth. His tough talk on inflation also increased concerns that the Fed will raise its target for short-term interest rates, currently 5%, again at the end of June, dashing hopes it would pause in its two-year-long rate-tightening campaign.
The sell-off was the latest example of sharp volatility in reaction to Bernanke's comments. . . .
"Here we have some suspicion the economy may be weakening ... and a struggling stock market," says Jim Paulsen, strategist at Wells Capital Management. "And the Fed chairman chooses (Monday) to inform everyone he has decided to get tough on inflation." That suggests the Fed will fight inflation even as the economy falters — "sort of a sense of stagnation," he says. "That's always a bad word for the stock market."
The question for Americans – “Had Enough?”
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REPUBLICAN TRICKLE DOWN ECONOMICS
For months, Republicans have touted the “sizzling” growth in the economy. The reality of Republican trickle down economics belies the Republican spin.
Republicans point to the Gross Domestic Product (GDP) growing by 5.3% in the first three months of 2006. Most Americans have simply not shared in the growth that they have worked to create. Consider these facts (emphasis added):
The American economy added a surprisingly weak number of jobs in May . . . . The net increase in nonfarm payrolls in May — 75,000 — is a significant falloff from April, when the Labor Department estimates that 126,000 jobs were added, a figure it revised downward today from the 138,000 it initially reported.
Anything below about 150,000 net new jobs a month is regarded as too little to keep up with population growth, so in effect, workers are losing ground. . . .
May's job growth figures were the weakest in nearly two years. . . .
Over the last year, weekly wages have risen by 3.7 percent, or only slightly faster than inflation. And last month, the average number of hours worked decreased.
"When hourly wage growth is tepid," Mr. Bernstein said, "the only way working families can get ahead is by working more hours. And if labor demand is contracting, that is going to put downward pressure on living standards."
In laymen’s terms, the Republican economy is not even generating enough new jobs to keep up with those entering the job market. For those who are working, they are more productive than ever. Wages are going up, but barely able to keep up with inflation, primarily driven by rising gasoline and energy prices for which Bush and the Republicans have taken no action. In order to maintain their existing standard of living, Americans will have to work longer hours.
The chart below graphically demonstrates the rising inflation during Republican control of government:
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SOURCE: US BUREAU OF LABOR STATISTICS; RICH CLABAUGH - STAFF |
The “trickle” in Republican trickle down economics is merely a drop for most citizens, except the wealthy! A citizen writing the Salt Lake Tribune makes the point:
According to the Joint Committee on Taxation, the tax cuts over the last five years have increased the deficit by $929 billion - dwarfing even the costs of Iraq and Katrina. Most of these cuts have gone to the wealthiest Americans, and they have not "trickled down" to the average citizen or stimulated the economy as Bush promised.
A recent Economic Policy Institute study found that "over the last four and a half years, nearly every indicator - from job gains to economic output to spending - has fallen far short when stacked against comparable periods in past cycles," including cycles with tax increases.
Bush's unconscionable tax cuts are affecting not only Utah's national parks but numerous other programs such as job training, low-income rental subsidies, meals for shut-ins, Head Start, college Pell grants, No Child Left Behind and health care for low-income children.
The question for Americans, “Had enough?”
DEADLY IDEOLOGY
The aids virus has now killed 25 million people in 25 years. The statistics are appalling:
The new report says sixty-five million people have become infected with H.I.V. in the past twenty-five years. Twenty-five million of them have died of AIDS-related sicknesses.
These numbers include four million new infections last year and almost three million deaths. Around the world, about thirty-eight million people are now living with the virus that causes AIDS.
The United Nations is struggling to develop a plan to meet this epidemic over the next five years. The plan initially included programs for distributing condoms and needle exchanges. The Republican response:
The Bush administration, heavily influence by the Christian right, is blocking key proposals for a new United Nations package to combat Aids worldwide over the next five years because of its opposition to the distribution of condoms and needle exchanges and references to prostitutes, drug addicts and homosexuals.
The United States is being supported by many Muslim countries, including Egypt, and various conservative African and Latin American nations. "There are a lot of unholy alliances all over the place," said a European official attending UN talks in New York last night. . . .
Fraught negotiations were continuing to try to salvage as much of the package as possible. . . .
Although the US is the world's highest spender in combating the virus, much of the money goes towards sex abstinence campaigns rather than the distribution of condoms or needle-exchange programmes.
Hilary Benn, the [British] international development secretary, who flew to New York last night and will address the UN general assembly today, distanced himself from the US approach.
He said: "We have to take action on the evidence of what works, on what saves people's lives, and not on ideology. That means making condoms available and reducing harm to people at risk: injecting drug-users, sex workers and men having sex with men."
The Las Vegas Sun editorially makes the point:
Abstinence is an important part of an overall AIDS prevention plan. What's unnerving is that the Bush administration is pushing this as the first and nearly exclusive line of defense against a disease that has killed more than 25 million people worldwide since 1981. One expert says the position frustrates European allies and undermines efforts to distribute condoms among teens, making it "impossible" to prevent the spread of AIDS in that age group.
In fact, Bloomberg News reports, the Bush administration's tiresome abstinence-above-all-else philosophy is embraced only by the Vatican and Middle East countries such as Syria and Iran. These are the United States' allies in the global fight against AIDS?
It doesn't matter who Bush sends to deliver his sadly one-dimensional solution to an epidemic that needs a comprehensive global approach. The messenger isn't the problem. The president's message would be wrong no matter who delivered it.
And the Republican Christian conservatives play on!
Last Update: 06/10/2006
