The Political Junkies
UPDATED: AUG 9, 2007
THE BANKER’S WAR
America’s Chinese banker delivered an ultimatum prior to launching economic war on the United States. Bush will either surrender or negotiate a Neville Chamberlin pyrrhic peace agreement that will neither stave off the war to come nor negate the effects of surrender. The Chinese ultimatum; the Banker controls the terms of trade or the Banker will wreak devastation on the American economy:
The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.
Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.
Shifts in Chinese policy are often announced through key think tanks and academies.
Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.
Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.
"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added. He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.
"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings
China’s threat would be economic Armageddon for Americans. As one adroit writer noted:
China’s action signals that we are entering a period of economic instability, where America’s future is largely in the hands of its creditors. Economic policy in China will now determine the interest rates on mortgages in America.
Welcome to the new world order, comrade.
If China starts a sell-off, its doomsday for the greenback. Japan would be forced to sell, with Germany close behind. The smaller nations would join the feeding frenzy, followed by the hedge and pension funds. It would be like a stroll through the Weimar Republic in the early 1930s.
So, what’s next?
“What’s next” indeed. The implications of the Banker’s threat of economic war are so staggering, that the American mainstream media has yet to treat the Chinese ultimatum seriously. While China can inflict a “nuclear” blow on America’s economy, there are dire consequences for China as well. Logic dictates that China, while it may threaten economic war, would never actually start such a war as it would not be in their economic interest.
But, China is clearly escalating the stakes by laying their ultimatum on the table. Bush will have to make the next move. One false step could spell disaster.
UNINTELLIGIBLE
The Bush administration is infamous for scrubbing scientific reports of research or opinions that are not in accord with Republican ideology. The most recent example of Bush’s far reaching drive to suppress the truth from Americans:
A surgeon general's report in 2006 that called on Americans to help tackle global health problems has been kept from the public by a Bush political appointee without any background or expertise in medicine or public health, chiefly because the report did not promote the administration's policy accomplishments, according to current and former public health officials.
The report described the link between poverty and poor health, urged the U.S. government to help combat widespread diseases as a key aim of its foreign policy, and called on corporations to help improve health conditions in the countries where they operate. A copy of the report was obtained by The Washington Post.
William R. Steiger has been identified as the HHS official who blocked the report on global health. (Courtesy Of Global Health Affairs)
Three people directly involved in its preparation said its publication was blocked by William R. Steiger, a specialist in education and a scholar of Latin American history whose family has long ties to President Bush and Vice President Cheney. Since 2001, Steiger has run the Office of Global Health Affairs in the Department of Health and Human Services.
Richard H. Carmona, who commissioned the "Call to Action on Global Health" while serving as surgeon general from 2002 to 2006, recently cited its suppression as an example of the Bush administration's frequent efforts during his tenure to give scientific documents a political twist. At a July 10 House committee hearing, Carmona did not cite Steiger by name or detail the report's contents and its implications for American public health.
Carmona told lawmakers that, as he fought to release the document, he was "called in and again admonished . . . via a senior official who said, 'You don't get it.' " He said a senior official told him that "this will be a political document, or it will not be released."
But Bush’s censorship of the truth goes so much further. Bush is censoring statements of foreign leaders. Consider this report:
"This is a relationship that allows us to discuss the most difficult and most sensitive issues in a way that is respectful and friendly," Secretary of State Condoleezza Rice told the media gathered at a joint press conference with Secretary of Defense Robert Gates and Saudi foreign minister Saud al-Faisal on Tuesday.
But the Secretary must not have found some of the foreign minister's comments to the press very respectful or friendly, since they were labeled "unintelligible" in a State Department transcript of the event.
According to the State Department, al-Faisal said in his opening statement:
“The Kingdom is keen on achieving peace in Iraq and maintaining its unity and stability. However, the success of these efforts are tied to achieving social stability, equality, and representation for all of Iraq’s people and all of the ethnic and religious groups there. Iraq bears a responsibility to (unintelligible).”
So what does Iraq bear a great responsibility to do?
Reuters reports al-Faisal as saying: "The Iraqi government has a great responsibility ... to stop foreign interference."
It's as if US diplomats have a self-enforced collective deafness to the common Arab opinion that the presence of American troops in Iraq equals unwanted foreign occupation.
VOI's account of the press conference includes more of the foreign minister's statement, which, if accurate, calls into question the reliability of more than just the State Department transcriber's hearing.
"The Kingdom is keen on the continued support for regional and international efforts to achieve security and stability in Iraq, within the framework of its sovereignty, independence and unity of its territories,” al-Faisal told today's news conference.
However the Saudi Minister set as conditions for success of these efforts, “establishing social justice and national unity among all Iraqis from all sects, races, religions and political affiliations, a matter which burdens Iraqi government with great historical responsibilities, in order for these aims be achieved away from outside interventions.”
Question for Americans; Had enough?
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UPDATED: AUG 4, 2007Bush’s occupation of Iraq is inflicting domestic casualties of war too! Congress is about to pass legislation freatly expanding access to health insurance for children; State Children’s Health Insurance Program (SCHP). Bush will veto the legislation when it is passed arguing that the program is to expensive and is a step towards universal health insurance.
As one headline writer correctly framed it:
Bush to Uninsured Kids: Drop Dead
Another op ed writer:
Stealing healthcare from babies
More Americans than ever do not have access to health insurance. “Fewer employees receive health insurance through their employers now than in the past, as coverage has declined from 61.5% in 1989 to 58.9% in 2000 and down to 55.9% in 2004 (the latest data available). Less well known is the fact that those who continue to receive employer-provided coverage are paying a larger share of those insurance costs.” For children needing health insurance, the situation is dire as these facts attest: 9 million children are still uninsured and the Congressional Budget Office estimates that 5 million to 6 million currently uninsured children are eligible for SCHIP or Medicaid.
At the same time that Bush will attempt to deny American children reasonable heath care, he has spent Billions of tax dollars in Iraq on projects that the Iraqis are rejecting. The story:
Iraq’s national government is refusing to take possession of thousands of American-financed reconstruction projects, forcing the United States either to hand them over to local Iraqis, who often lack the proper training and resources to keep the projects running, or commit new money to an effort that has already consumed billions of taxpayer dollars.
The conclusions, detailed in a report released Friday by the Special Inspector General for Iraq Reconstruction, a federal oversight agency, include the finding that of 2,797 completed projects costing $5.8 billion, Iraq’s national government had, by the spring of this year, accepted only 435 projects valued at $501 million. Few transfers to Iraqi national government control have taken place since the current Iraqi government, which is frequently criticized for inaction on matters relating to the American intervention, took office in 2006.
The United States often promotes the number of rebuilding projects, like power plants and hospitals, that have been completed in Iraq, citing them as signs of progress in a nation otherwise fraught with violence and political stalemate. But closer examination by the inspector general’s office, headed by Stuart W. Bowen Jr., has found that a number of individual projects are crumbling, abandoned or otherwise inoperative only months after the United States declared that they had been successfully completed. The United States always intended to hand over projects to the Iraqi government when they were completed.
Although Mr. Bowen’s latest report is primarily a financial overview, he said in an interview that it raised serious questions on whether the problems his inspectors had found were much more widespread in the reconstruction program.
The Billions of tax dollars from hard working Americans that Bush has squandered; not on troops in Iraq, but just these civil projects is nearly 20% of the money that is needed for children’s health care in America. And the total cost of healthcare for America’s children is a fraction of the 1 Trillion Dollars that Bush’s occupation in Iraq will ultimately cost American tax payers:
The war in Iraq could ultimately cost well over a trillion dollars -- at least double what has already been spent -- including the long-term costs of replacing damaged equipment, caring for wounded troops, and aiding the Iraqi government, according to a new government analysis.
The United States has already allocated more than $500 billion on the day-to-day combat operations of what are now 190,000 troops and a variety of reconstruction efforts.
Message to Americans: there are reasons we are Democrats.
On Friday, Bush hailed the American economy as “strong.”
Bush says the economy is strong. In a 351-word statement, he said "strong" seven times, sometimes twice in the same sentence, in case we missed it the first time around. His main basis for this assertion was Friday's news that the economy grew 3.4 percent in the second quarter of 2007, a sharp rebound upward from the first quarter's barely perceptible growth.
However, Bush refused to answer questions that challenged the rosy picture he adroitly tried to paint:
[H]e declined to respond to a question from a reporter about Thursday's 300-point market plummet. (Presumably, he would also be inclined to ignore Friday's 200-point drop.) And no reference whatsoever was made to by far the biggest economic story of the week: the implosion of Wall Street's credit markets.
The questions actually posed to Bush are not the only ones to which he must be held to account. Consider these looming economic issues:
Near record high crude oil prices have put the U.S. economy in the "danger zone" and the world's producers must boost supply to prevent shortages, U.S. Energy Secretary Sam Bodman said on Thursday.
Sustained U.S. crude oil prices near the $80 level could harm the U.S. economy, and both OPEC and non-OPEC producers should "look at what the facts are," Bodman told reporters.
"We're in a ... danger zone right now, so that's why I hope that both OPEC and non-OPEC nations will look carefully at the facts," Bodman told reporters.
It was one of the strongest warnings from a Bush administration official to date on the impact of high crude oil and gasoline prices, which are already starting to take their toll on U.S. consumer spending.
The harsh news for Americans is that OPEC will not increase oil production. "’Opec comments early [Thursday] signal they don't want to pump more oil and that is the main reason crude prices are rising again," said Phil Flynn, analyst at Alaron Trading in Chicago.’”
Job growth is lagging again:
Job growth was weaker than expected in July, as the nation's payrolls expanded by 92,000 jobs, well below analysts' expectations of around 130,000, according to today's report from the Bureau of Labor Statistics (BLS). Hours worked also dipped slightly and the unemployment rate ticked up, from 4.5% to 4.6%. Though key sectors continue to reliably generate jobs, the report also highlights several concerns about where the job market is headed. . . .
However, job growth has clearly downshifted for the year. Overall monthly gains in 2007 have averaged 136,000 compared to 189,000 last year. . . .
[B]arring an unexpected upturn in the overall economy, signs from today's and recent job reports suggest these key indicators are more likely to weaken than to strengthen in future months. As discussed below, two important reasons that unemployment has not climbed higher already are slower labor force growth and diminished participation (only persons actively seeking work are counted among the unemployed).
The number of unemployed, a volatile monthly series, spiked up by 188,000 in July. The share of the unemployed who were job losers (as opposed to new labor market entrants or re-entrants) jumped up to 50.9%, the highest share since September 2005. A one-month spike in the share of job losers by no means constitutes a worrisome trend, but this is a highly cyclical variable and warrants close watching in coming months.
Also, the share of long-term unemployed—persons who have sought jobs for at least 26 weeks—jumped in July, from 16.2% to 18.4%.
Given these weak results, why hasn't the unemployment rate gone up? In fact, job growth this year has been much weaker in the Household Survey, the database by which the BLS gauges unemployment. Monthly employment growth in this smaller survey is much more volatile than the payroll survey, but the monthly average job gains this year from this survey have been only 26,000, compared to 262,000 last year.
In order for the job market to stay even with new workers entering the job market, the economy must generate about 150,000 new jobs each month. The current economy is about 14,000 jobs short each month of just saying even. Perhaps the most telling number is that the number of people who have simply quit looking for jobs after six months is rising.
And, Republican “trickle down” economics is not working according to their theory. The top 5% of Americans are gaining, while the rest of hard working Americans are losing:
Since the beginning of the recovery in 2001, the income share of the top 1% grew 3.6 percentage points to 21.8% in 2005, greater than the 16.1% income share of the entire bottom half of all U.S. households. Correspondingly, the income shares of the bottom half and the upper-middle class dropped, respectively, by 1.4 and 2.3 percentage points. As a result, the top 1% of households gained $268 billion of total income and the bottom 90% lost $272 billion since 2001.
The increased inequality from 2001 to 2005—during a recovery no less—caused the bottom 90% of households to lose income (-$2,071) while the best-off 1% of households gained $183,902 on average.
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Sources
Congressional Budget Office (2006, at http://www.cbo.gov/ftpdoc.cfm?index=7718&type=2), Piketty and Saez (2007, update at http://elsa.berkeley.edu/~saez/TabFig2005prel.xls), and author's calculations. We apply the CBO income shares of the bottom half and the 50-90th percentile group in 2001 and 2004 to the Piketty and Saez shares for the bottom 90% (using the assumption that the middle fifths income is split evenly between the top and bottom halves) in 2001 and 2005, respectively.
Note
1. Market-based income excludes government transfers.
The implications for Americans who have a President who will not answer questions on the most fundamental economic issues facing Americans is are profound. Regardless of one’s political Party, any President must be accountable to the citizens. If not, do we truly have a constitutional government based upon time honored democratic principles?
There will be much at stake in the 2008 General Elections; and Bush’s refusal is a reminder of why citizens should vote Democratic. Mickey Walker, in his section of TPJ today, makes a compelling case that Bush and the Republican Party have simply abandoned average Americans. You do not want to miss Walker’s article.
The US House and Senate have now given Bush unprecedented power to conduct surveillance without judicial oversight. The vote in the House was 227-183 and in the US Senate the vote was 60-28. A body of Democrats joined with Republicans to pass the bill.
The House Democratic leadership had severe reservations about the proposal and an overwhelming majority of Democrats opposed it. Speaker Nancy Pelosi said the measure “does violence to the Constitution of the United States.”
But with the Senate already in recess, Democrats confronted the choice of allowing the administration’s bill to reach the floor and be approved mainly by Republicans or letting it die.
If it had stalled, that would have left Democratic lawmakers, long anxious about appearing weak on national security issues, facing an August spent fending off charges from Republicans that they had left Americans exposed to threats.
Despite the political risks, many Democrats argued they should stand firm against the initiative, saying it granted the administration far too much latitude to initiate surveillance without judicial review.
They said the White House was using the specter of terrorism to weaken Americans’ privacy rights and give more power to Attorney General Alberto R. Gonzales, an official Democrats say has proved himself untrustworthy.
“Legislation should not be passed in response to fear-mongering,” said Representative Rush D. Holt, Democrat of New Jersey.
The New York Times editorially makes the case why those Democrats who failed to oppose the measure have helped Republicans unnecessarily diminished the US Constitution:
Since the 9/11 terrorist attacks, the Bush administration has repeatedly demonstrated that it does not feel bound by the law or the Constitution when it comes to the war on terror. It cannot even be trusted to properly use the enhanced powers it was legally granted after the attacks.
Yet, once again, President Bush has been trying to stampede Congress into a completely unnecessary expansion of his power to spy on Americans. And, hard as it is to believe, Congressional Republicans seem bent on collaborating, while Democrats (who can still be cowed by the White House’s with-us-or-against-us baiting) aren’t doing enough to stop it. . . .
The White House, of course, insisted that Congress must do this right away, before the August recess that begins on Monday — the same false urgency it used to manipulate Congress into passing the Patriot Act without reading it and approving the appalling Military Commissions Act of 2006. . . .
[T]here are very clear lines that must not be crossed. . . .
The administration and its Republican supporters in Congress argue that American intelligence is blinded by FISA and have seized on neatly timed warnings of heightened terrorist activity to scare everyone. It is vital for Americans, especially lawmakers, to resist that argument. It is pure propaganda.
This is not, and has never been, a debate over whether the United States should conduct effective surveillance of terrorists and their supporters. It is over whether we are a nation ruled by law, or the whims of men in power. Mr. Bush faced that choice and made the wrong one. Congress must not follow him off the cliff.
Obviously, much remains left to be done before the onslaught against the Constitution will be stopped. The new law authorizes unprecedented surveillance for six months, by which time it is presumed that Congress will act again.
Will Democrats find their unity?
Last Update: 08/11/2007