The Coming Crash

Trapped between the Fed and Congress

By Mike Krauss

Despite the never ending assurances of the Federal Reserve that happy days are almost here again — the same tune the Fed has sung for nearly seven long years — there is mounting evidence that the U.S. is headed for another economic crash. It will be more terrible than the last.

The Washington Post headlined, “U.S. economic growth slows to 0.2 percent, grinding nearly to a halt.”

Fox News reported the real story of unemployment: the official, good news government figure of 5.4 percent is a fiction, achieved by not counting the millions who have given up looking for work, and those who can find only part-time work.

Fox was playing catch-up. That story has been out there for years, but ignored by the corporate media and clueless politicians.

Tyler Durden reports in his blog, Zero Hedge, that year-on-year sales at the big retailers have taken a precipitous drop. Most Americans have no disposable income to dispose of, after they pay the food bill, mortgage, rent and utilities.

Wholesale trade has fallen like a stone, dropping more than $100 billion over four months. Wholesalers provide the goods that retailers sell. If retail demand is off, wholesale trade is off. The last time it dropped like that was in 2008-2009. Post crash. Then it took seven months to go from the high to the low; now, only four.

New manufacturing orders indicate the future. Not good. In only one of the last seven months has there been growth in new orders. Things were not that bad during the 18-month-long credit crunch of late 2008 through 2009.

Poverty in the U.S. is off the charts. The number of children living in poverty is nothing less than shocking.

For almost seven years, seniors have seen their savings and pensions eaten alive.

Public and private debt are at record levels.

Durden reports that the median net worth of the American people is down 40 percent from where it was before the last collapse.

Tens of millions of Americans who are far worse off today than they were seven years ago will be brought to their knees in the next crash, while the wealthy will rest easy on an even greater cushion of wealth.

The people who know are running scared.

Former Fed Chairman Ben Bernake — now cashing in as an adviser to a couple of hedge funds — has sounded the alarm which he failed so spectacularly to sound before the last crash. Apparently, Fed chairs may speak the truth only after they have done their bit for Wall Street and the 1 percent.

The root cause of this terrible distress is the failure of Congress to do what everyone in Washington promised to do, talks endlessly about doing, but never gets around to actually doing: creating good paying jobs in the obvious place — infrastructure.

The need was obvious in 2008. It was obvious in 2012. It is obvious today. Jobs at a good wage are everything and infrastructure is the obvious place to start.

This is what the suddenly alert Bernake now urges: “…a well-structured program of public infrastructure development, which would support growth in the near term by creating jobs and in the longer term by making our economy more productive.”

But it is not going to happen. The Fed, which pumped upwards of $20 trillion into Wall Street after the last crash, has steadfastly refused to make even a fraction of that available to state and municipal governments — a move that could have stopped the “Great Recession” in its tracks seven long years ago.

And the GOP Congress will do nothing that might make President Obama and the Democrats look good before the next elections — like improve the lives of more than 300 million Americans by putting the nation back to work..

The American people are trapped between a Fed that works for Wall Street and a GOP Congress that can’t decide who it works for: Wall Street, the American people or itself.

The Trans Pacific Partnership

Another dagger to the heart of democracy

By Mike Krauss

Bucks County Courier Times

Thirty years ago I had my first experience of marketing for a corporation. I learned that the most often used word in marketing and advertising is “free.”  I recall this lesson as I follow the debate on the “Trans Pacific Partnership” (TPP), which is being sold as a “free” trade agreement. “Free” sells.

What exactly is being sold in the TPP ? To answer that question, you need to read the fine print. But you can’t.  TPP has been negotiated in almost total secrecy by a team of about 600 lawyers, working for the major trans-national corporations.

The text of the treaty has been classified as “Secret” by U.S. negotiators. Even members of Congress are not permitted access. The deal will be presented to Congress on a “fast track” – no opportunity for Congress to modify the details. One vote, yes or no on the entire  treaty as presented – a done deal.

But thanks to one or two alert member of Congress and WikiLeaks, which think that information about the deal should also be free to the people of the nations who will be bound by the treaty’s terms, there is some news.

What is being sold is not the duty free importation of goods and services across national boundaries; but instead, how the movement of these goods and services, and most especially finance and capital is managed, and by who.

It should surprise no one that a treaty negotiated by lawyers working for the major trans-national corporations stipulates that international commerce should be managed (regulated) by lawyers representing the trans-national corporations.

The purpose is not “free” trade; but rather, to protect and increase the profits of trans-national corporations. How does that work? Like this.

An industry wants to set up shop in your community. But you decide, based on your local zoning, where they can and cannot operate. Or you decide that their product or service is harmful to your health and welfare, and want to limit adverse impacts; or that female workers deserve some paid time off during pregnancy.

Whatever the issue, you want a say in what happens in your community. Democracy.

The public interest clashes with the private interest and costs the corporation money. So the private interest turns to the international tribunals set up to manage these disputes that get in the way of “free” trade. These tribunals are staffed by representatives from the corporations, because they are “experts.”

Guess who they rule for?

Outrageous, you say? Undemocratic? Yes and yes. But it doesn’t matter what you say, because your Congress has voted for our nation to abide by the “free” trade pact.

It’s already happening.

In an attempt to limit smoking and the related deaths and health care costs smoking causes its people, little Uruguay decided to increase the size and visibility of the anti-smoking messages on packs of cigarettes and in other public health advertising.

Under the terms of a “free” trade deal negotiated between Uruguay and Switzerland, where Phillip Morris moved its corporate office from the U.S., the tobacco company is suing Uruguay to be paid the anticipated profits it may lose because of lower sales.

As reported in the U.K. newspaper The Independent, “The litigation is allowed to be done in tribunals known as international-state dispute settlements (ISDS), ruled upon by lawyers under the auspices of the World Trade Organization.”

In a similar case, Bolivia (also little) is being sued by the giant international corporation Bechtel because Bolivia cancelled a contract with Bechtel for a privatized water system, when rates skyrocketed far above those that Bechtel had advertised, forcing already poor people to pay even more for their water.

 

Bechtel is suing Bolivia in the International Centre for the Settlement of Investment Disputes (ICSID), another tribunal that is part of the World Bank. The ICSID holds all of its meetings in secret. Neither the media nor the people affected may even witness the proceedings.

As CorpWatch reported, “The company filed the case with ICSID under a bilateral investment treaty between the Netherlands and Bolivia. Although Bechtel is a U.S. corporation, its subsidiary [which did the Bolivian water deal] recently established a presence in the Netherlands in order to make use of the treaty.”

Corporations can shop for places to do business and move money easily around the world for the best deal. People, on the other hand, find it more difficult, often impossible and sometimes life threatening to change countries.

There is a price tag for “free” trade agreements like the TPP: democratic government and the right of people to govern themselves in their own communities is sold out.