The Next Greece

Πηγή: FinancialPost
By Daniel J. Mitchell
Aug. 4, 2011 3:08 AM ET



America is on a path to becoming a Greek-style welfare state. Thanks to the Bush-Obama spending binge, the burden of federal spending has climbed to about 25% of national economic output, up from only 18.2% of GDP when Bill Clinton left office.

But that's just the tip of the iceberg. Because of a combination of demographic forces and poorly designed entitlement programs, federal spending could consume as much as 50% of economic output by the time the Baby Boom generation is fully retired.

One symptom of all this excessive spending is that Washington is awash in red ink. The United States is now in its third consecutive year of trillion-dollar deficits and the politicians just had to increase the nation's US$14.3-trillion debt limit.

But it wasn't easy getting there. Just as happened with the "government shutdown" debate in March, Republicans and Democrats had fierce disagreements over the right approach. They bickered until the last minute and then finally agreed to more than US$900billion of supposed spending cuts and the creation of a "super-committee" charged with proposing another US$1.5-trillion of deficit reduction.

So which side won this fight? Republicans are bragging that they got spending cuts today, a promise of spending cuts in the future, and no tax increases. Democrats, meanwhile, are chortling that they took the debt issue off the table until after the 2012 elections, protected their favourite programs and created a super-committee that will seduce the GOP into a tax increase.

Ignore that bragging. The easy answer is that politicians of both parties were the victors and taxpayers are the ones left in the cold.

In other words, the budget deal was a victory for the political establishment.

Here's why Republicans are winners. They get to tell their Tea Party activists that they forced Obama to cut spending. It doesn't matter that federal spending will actually be higher every year and that the cuts were based on Washington math (a spending increase becomes a spending cut if outlays don't climb as fast as some artificial benchmark).

They also get to tell their anti-tax activists that they held the line. Perhaps most important, the super-committee must use the "current law" baseline, which assumes that the 2001 and 2003 tax cuts expire at the end of 2012. But why are GOPers happy about this, considering they want those tax cuts extended? For the simple reason that Democrats on the super-committee therefore can't use repeal of the "Bush tax cuts for the rich" as a revenue raiser.

This means that most Republican incumbents are well-positioned to win re-election.

Here's why Democrats are winners. Thanks to the magic of government math, despite all the talk of budget cuts, discretionary spending will be more than US$100-billion higher in 2021 than it is this year. And since defence spending in Iraq and Afghanistan presumably is winding down, this means even more money will be available for domestic programs.

In addition to telling the pro-spending lobbies that the gravy train is still on the tracks, they also get to tell the classwarfare crowd that there's an improved likelihood of higher taxes for corporate jet owners and other "rich" people. Notwithstanding GOP assertions, nothing in the agreement precludes the supercommittee from meeting its US$1.5-trillion target with tax revenue. The 2001 and 2003 tax legislation is not an option, but everything else is on the table.

This means that most Democratic incumbents are well-positioned to win re-election.

It's worth pointing out that this doesn't mean all Republicans and all Democrats are happy about the deal. The hard-core conservatives are upset that the deal is mostly smoke and mirrors on the spending side and that there may be a tax-increase trap on the revenue side.

The hard-core liberals, by contrast, are angry that there are any spending cuts, even ones based on Washington math. Moreover, they want higher tax rates on upper-income taxpayers today, not a super-committee that may or may not follow through on soak-the-rich policies in the future.

One group of people, however, unambiguously got the short end of the stick in this budget deal. Ordinary Americans are caught in the middle. They're not poor enough to benefit from the federal government's plethora of income-redistribution programs. But they're not rich enough to have the clever lobbyists and insider connections needed to benefit from the highdollar handouts like ethanol subsidies and bank bailouts.

Instead, middle-class Americans play by the rules, pay ever-higher taxes, and struggle to make ends meet while the establishment of both parties engages in posturing as America slowly drifts toward a Greek-style fiscal meltdown.

America needs a new political party

Πηγή: Pravda 
By John Stanton

08.08.2011 

General Marshall is a great American, but he is far more than that. . .He has always fought victoriously against defeatism, discouragement and disillusion. Succeeding generations must not be allowed to forget his achievements and his example." Winston Churchill

"Marshall's restrained and professional behavior during the politically explosive tangles with FDR over the tension between readiness and aid to Britain provides a polar star for members of America's armed forces to guide upon as they consider their civil-military responsibilities. He did not attempt to advance his cause through leaks to favored journalists. He did not attempt end runs of FDR to the president's congressional critics. And he did not publish in the New York Times or Washington Post op-ed pieces articulating alternative solutions to the administration's policies. Instead heprivately provided his commander-in-chief independent and candid advice, not partisan advocacy of alternative policies, and he loyally supported and actively assisted their execution once the presidenthad decided." Charles Brower

He is a patriot, a distinguished soldier, and the most selfless public servant I have ever met." Dwight Eisenhower

Making the Case

There are not enough pejorative adjectives in the known universe to describe American leadership as it takes the United States into the last four months of 2011.

The fourth quarter of 2011 promises to be one of the most volatile in American history, if not world history.

America's political, military and business leaders of all political persuasions, races, creeds and colors have shown they are not up to the task. They have no sense of the maturing global picture or America's role in it. The shenanigans of the debt ceiling deal reached by the executive and legislative branches of the US government early in August highlight this fact.

McGraw Hill's S&P merely put a fine point on what government & financial analysts around the world-Chinese, World Bank, Goldman Sachs included-have said for the past five years.

American media's analysis of the debt cling deal often focused on who won and lost like it all was some sort of sporting event. It was not.

The United States of America lost. Period.

The US is on the brink of another depression even as US corporate profits are at a high point. In fact, some US banks are charging corporations to store the billions they have earned. Who can blame them?

The G-7 and G-20 group of countries are holding emergency talks to discuss the troubled economies of Western Europe and the USA.

The official unemployment rate in the USA is at 9.1 percent but, by some estimates is closer to 20 percent. Jobs are being lost that will not resurface. The critical infrastructure of the USA, to include its human capital, is sickly. As the ever excellent Calcualted Risk said this:

"This was a crazy week that people will long remember. On the political front, the U.S. government finally agreed to raise the debt ceiling. Unfortunately there were clear indications that the process negatively impacted the economy over the last couple of weeks. [There] was another weak employment report and [it] reminds us that unemployment and underemployment are critical problems in the U.S. There are 6.8 million fewer payroll jobs now than before the recession started in 2007 with 13.9 million Americans currently unemployed. Another 8.4 million are working part time for economic reasons, and about 4 million more workers have left the labor force. Of those unemployed, 6.2 million have been unemployed for six months or more. Clearly the overall employment situation remains grim. Other data was mostly weak too. The ISM manufacturing index declined to the lowest level since July 2009, and the ISM non-manufacturing index fell to the lowest level since early 2010."

Of course accountability for any of the decisions leading to the economic disaster of 2008 was never going to be an issue, just as it wasn't for 9-11. No American resigns for a job poorly done. Responsibility for one's actions is now a quaint cliché, meaningless as saying "hello" to a stranger. It is all about "look at me!!" rather than quietly working to take care of the US homeland instead of the political party, some god, or a tax deduction.

Not in China though.

Is China Right?

The debt ceiling deal reached earlier this month by the US president and congress, arguably, vindicates the Chinese Model of capitalism. Investors and their money like to know where they stand no matter what the political or economic status of a country may be.

With China, the central government speaks with one voice, ensures a comfortable business climate, maintains and enforces accountability and is focused on national security; in particular its economic security.

At any rate, at least China has a plan for the future and, for that matter, so do corporations/investors, like Boeing, operating in China. G.I. from the Economist offers a compelling take on the US debt ceiling deal and Chinese Model of Capitalism:

"I never had much sympathy for the view that America's economy was about to be eclipsed by China's, and the main reason was our political institutions. Those checks, balances and laws provide an orderly means to change course in response to new challenges. China's authoritarianism deprives the government of a feedback mechanism to tell it when it is meeting the needs and aspirations of its people. That makes its system intrinsically fragile.Events of the last few weeks have forced me to reconsider. While the crash of a high-speed train highlighted many of China's ongoing weaknesses, it also revealed, in the vigorous reporting and commentary that followed in print and online, a nascent apparatus of accountability. Conversely, America's ostensible success in avoiding default in fact highlighted the growing dysfunction of its political institutions. If these events are portents of things to come, then the day when China displaces America as the world's economic superpower is closer than I thought."

In God We Trust

America's leaders are flustered and desperate. They have presided over winless, protracted wars abroad, created a wave of massive unemployment/underemployment, ushered in a political and socioeconomic environment defined by uncertainty, and quietly oversaw the exchange of liberty for security. American leadership is bereft of ideas. And those who place and keep them at the helm year after year are ignorant of the world around them and, as such, do their country no service at all.

Into this cauldron comes Old Time Religion. It says, "Well we cant figure anything out but that's the way God wants it. In God We Trust. Solutions to all troubles are right there in the Bible." The popular acronym for the Bible is this: Basic Instructions Before Leaving Earth. Great!

Just so. The governor of Texas holds a mass prayer fest on behalf of his state and the nation. The new secretary of defense, Leon Panneta, goes on record as saying, "God willing, we will not have to cut the defense budget." The Vice President of the United States, Joe Biden, holds a rosary while watching the Bin Laden kill operation and would later say after the kill, "We should all go to mass tonight."

The Obama Administration is once again talking up war with Iran. A former CIA intelligence officer who worked in Iran has claimed there will be an attack on Iran by Israel in the coming months. Of course, that has been predicted many times before by pundits everywhere. If such an attack comes, the USA will have sanctioned it as it controls the airspace in the region. And should the US State Department remove the Iranian MEK from its terrorist watch list, the chances for a war with Iran will increase.

A month from now, Iranian matters collide with the Palestinian State issue. There may be a vote in the United Nations to recognize the Palestinian State. The USA will likely stay with Israel or attempt to derail the vote in the UN. In any case, Israel has been producing and purchasing more weaponry to deal with the violence that may occur with Iran, Lebanon or the de facto Palestinian State. Many of the world's nations have already independently recognized the Palestinian State placing the USA out of touch with reality once again.

The USA has fanned the flames of instability in Central Asia and the Middle East. The political situation, for example, is unstable from the North of Africa to its Horn and up to Turkey's border. Kosovo, an artificial creation backed by the USA, has come alight again and NATO has had to send reinforcements there to quell disputes between the Serbs and Kosovars. The US continues to place missile defense systems near to Russian and Chinese borders using Iran and North Korea as false rationales.

Stovepipes

American leadership, at this moment, is not intellectually gifted enough to govern and lead in the world that is now and to come. But that is an issue for another day as it speaks to the under-education of Americans for their roles in the tough transition to a unified global system of production and employment and, ultimately, governance.

The USA is hamstrung in that it is governed by two political parties, or voices, that have become stovepipes (some argue one indistinguishable stovepipe). The metaphor stovepipes, as applied to a system, are often used to describe aging, rigid organizations disconnected from each other and unwilling, or incapable, of change. Such is the case with the Republican and Democratic parties who are doing more to undermine the United States than just about any other group on the planet.

The US Constitution, and the System of Government it has produced, will not continue to function properly if the two party system is not challenged in a most aggressive fashion. But that will not happen if the American people continue to believe that they have no choice but to vote. There other choices; don't vote, boycott, or better still, start a new political party based on selfless principles of public service.

George C. Marshall: The Party of Public Service

The public service of George C. Marshall provides a "polar star",a stellar example, of what American civilian and military leaders should be. In employment by country and service to it, Marshall is the definitive model of practice. If ever there is a new political party that emerges in the USA, Marshall's philosophy should be the foundation upon which it is based.

Marshall could have made millions of dollars selling the story of his public life to the highest bidder. He turned those offers down. His view was that his service to the country, and his country, was not for sale. One of Marshall's greatest skills-interpersonal relations--was captured best by Orson Welles in an interview with Dick Cavett (5:41 to the end).

Marshall was a master politician, military genius, and an involved citizen to the very end. He had no illusions about the human condition as it moved through high and low points. He was the architect of the allied victories over Germany and Japan. He oversaw the development and funding of the S-1 and Manhattan Projects, along with the US Army Strategic Air Forces that would drop the atomic bombs on Hiroshima and Nagasaki (and later become the USAF). His interest in air power began in 1909.

He was a canny politician who campaigned tirelessly around the country and in the US Congress to garner support for the Economic Recovery Plan (Marshall Plan) and, prior to that, to maintain a draft in preparation of the US entry into World War II. The US Congress passed the draft extension by one vote.

He served as Secretary of State, Secretary of Defense, Head of the Red Cross and a Special Representative to China. He was awarded the Nobel Peace Prize. During his acceptance speech he suggested that students at the high school level be taught about decisions that lead to the "horrors of war".

Marshall was instrumental in the development of the National Security Act of 1947 as Chief of Staff of the US Army. But later, in typical Marshall fashion, in his role as a civilian Secretary of State he would warn that if too much power went to the Department of Defense, the Secretary of State would be reduced "to an automaton."

Visit some of the links in this piece to learn more about Marshall. He really was that good. That said, his interest was always about the United States. The way he carried himself on that mission garnered the respect of every leader of his time from Stalin to Molotov and Churchill to Truman.

Ghost towns: Rural America accounts for just 16% of population

Πηγή: The Coming Depression
28/7/2011

In 1950 the countryside remained home to a majority of Americans, amid post-World War II economic expansion and the baby boom. However, once busy areas have been abandoned, in South Dakota for example, the town of Scenic is up for sale for $799,000 as today just eight people live there.

Vast swathes of the U.S. countryside are emptying and communities becoming ghost towns as rural America now only accounts for just 16 per cent of the population.

The 2010 census results suggest that by 2050 many of these areas could shrink to virtually nothing as businesses collapse and schools close.

This dramatic population implosion is the culmination of a century of migration to cities, as in 1910 the share of rural America was at 72 per cent. 

These soon to be ghost towns never get it. Instead of cutting services and expenses for a dwindling tax base/population they raise taxes. Instead of consolidating schools, they build new schools. Ron Parsons live in one of the ghost towns. His town’s population has declined by 30%, the demographics are skewed to an aging population, they floated a bond for $14-million to renovate a relatively new school. They have more cops than during our hay day. They have municipal employees for every conceivable function from street sweepers to parking meter cops.

As with all government, it takes on a life of its own. These local politicians can mull over a budget for months and not find a single dollar it can cut. They have repeatedly refused to give tax abatements to anyone who may want to use the abandoned industrial sites. Rural American is even worse because it’s must have projects are even bigger and grander for the people who will be long gone before the projects are completed.

We’re going to become a ghost country pretty soon if we don’t create sustainable middle class jobs. Corporations that have been outsourcing the labor to cheap foreign labor markets for 15-20 years are now seeing that they can’t have it both ways. They wanted the cheap labor abroad, but still sell goods to a vibrant U.S. consumption economy. The well has run dry, and many Americans have stopped consuming anything that isn’t critical to survival. I guess these historically U.S. corporations that have reaped all the benefits of being here for decades or more than a century may consider moving everything to China, Mexico, India, etc. etc. Its’ simple economics folks: if the bulk of the purchasing power is not with the majority of the people, then the economy can not sustain. We need a financially healthy middle class, that has some money left over to spend once the mortgage, utility, and grocery bills are paid.

The True Costs of America's Wars

Πηγή: GlobalResearch


By Jack A. Smith

During his speech on Afghanistan June 22, President Obama revealed that "Over the last decade, we have spent a trillion dollars on war." He knew this was a deceptive understatement, as did everyone who keeps close watch on the Bush-Obama wars all these years.

Few Americans , however, have closely followed Washington's 21st century wars of choice, so a trillion probably sounds right to them, but that amount in 10 years — when the annual cost of air conditioning alone for the U.S. in Afghanistan and Iraq amounts to $20.2 billion a year — is way off base.

(It's difficult to conceive of one trillion, so we'll repeat a method we've used before: Sixty seconds comprise a minute. One million seconds comes out to be about 11½ days. A billion seconds is 32 years. And a trillion seconds is 32,000 years.)

The latest objective estimate for the wars in Iraq and Afghanistan, made public June 29, is between $3.7 trillion and $4.4 trillion (140,800 years), according to the research project "Costs of War" by Brown University's Watson Institute for International Studies.

The university assembled a team of economists, anthropologists, political scientists, legal experts, and a physician to do this analysis, which included future costs for veterans care and interest on war debts to be paid over the next few decades.

The medical costs are huge. "While we know how many U.S. soldiers have died in the wars (just over 6,000)," the report pointed out, "what is startling is what we don’t know about the levels of injury and illness in those who have returned from the wars. New disability claims continue to pour into the VA, with 550,000 just through last fall." This doesn't even include the thousands of deaths and injuries among quasi-military contractors. There are about as many contractors as troops in Iraq and Afghanistan.

It's impossible to precisely predict the interest costs on these wars. In 2010, $400 billion of our tax money went toward paying off past war debts as far back as the Korean War of the early 1950s. We'll pay war debts indefinitely because Washington is always borrowing to plan for or start new wars. So far, the U.S.-led NATO war for regime change in Libya is costing American taxpayers about a billion. The Pentagon has blueprints ready for many different kinds of future wars, from small counter-terrorism escapades, to cyberspace and outer space conflicts, to nuclear war, all the way up to World War III.

The Brown University figures may turn out to be underestimates. A few independent studies over the years have been somewhat higher but were brushed aside by the White House and the mass media. This may happen to the Brown calculations as well.

The respected Nobel Prize-winning economist Joseph Stiglitz and Harvard Professor Linda Bilmes wrote a book three years ago estimating the cost of the Iraq war only, based on data collected in 2006. It was titled "The Three Trillion Dollar War." They based their calculations on the "hidden" costs of the war that include enormous medical care expenses over the next 50 years for tens of thousands of badly wounded soldiers, other benefits, equipment replacement, and interest on war debts.

Stiglitz and Bilmes calculated in 2008 that the combined cost of the Iraq and Afghanistan wars would be between $5 and $7 trillion. They called these adventures the "credit card wars." Using a somewhat different methodology a few years ago, the Joint Economic Committee of Congress, estimated the Iraq war ultimately will cost $3.5 trillion. They didn't include the Afghan war.

Assuming Obama is reelected, the Bush-Obama wars — including Iraq, Afghanistan, Pakistan, Yemen (and Somalia, where the U.S. is now engaged in drone strikes), plus the wars in Obama's final years — will certainly top $5 trillion in real costs.

In this connection, we cannot forget that current Pentagon spending of around $700 billion a year represents a huge increase since 2001, when it totaled about $380 billion. (By comparison, during this same time period, military spending by Iran — portrayed by Washington, Tel-Aviv and Saudi Arabia as the greatest danger to peace in the Middle East — dropped from $9 billion in 2001 to $7 billion in 2010.)

But Defense Department expenses are only half the story. Double the Pentagon's $700 billion for a true estimate of the amount of money the U.S. spent on war-related issues last year. That's $1.4 trillion a year for the United States. How is this possible?

Instead of just discussing the Pentagon budget, it is essential to also consider Washington's various other "national security" budgets. That of course includes the costs of Washington's 16 different intelligence services, the percentage of the annual national debt to pay for past war expenses, Homeland Security, nuclear weapons, additional annual spending requests for Iraq and Afghan wars, military retiree pay and healthcare for vets, NASA, FBI (for its war-related military work), etc. When it's all included it comes to $1,398 trillion for fiscal 2010, according to the War Resisters League and other sources.

It's not enough just to take note of the money Washington spent on stalemated wars of choice. It's fruitful to contemplate where our $5 trillion Bush-Obama war funding might have been invested instead. It could have paid for a fairly swift transition from fossil fuels to a solar-wind energy system for the entire U.S. — a prospect that will now take many decades longer, if at all, as the world gets warmer from greenhouse gases. And there probably would have been enough left to overhaul America's decaying and outdated civil infrastructure, among other projects.

But while the big corporations, Wall Street and the wealthy are thriving, global warming and infrastructure repair have been brushed aside. States are cutting back on schools and healthcare. Counties and towns are closing summer swimming pools and public facilities. Jobs and growth are stagnant. The federal government is sharply cutting the social service budget, and Medicare et al. are nearing the chopping block.

Meanwhile, be assured that despite a bit of fixing here and there, the military and national security budgets will remain essentially unchanged.

The CIA’s exoneration and Holder’s reckoning

Πηγή: The Washington Post

By Marc A. Thiessen, Published: July 4

This Fourth of July weekend, some of the CIA’s dedicated counterterrorism officials will be celebrating more than our nation’s freedom from oppression — they will be celebrating their own. On Thursday, after a grueling two-year investigation, the Justice Department announced that a special prosecutor appointed by Attorney General Eric Holder found no criminal wrongdoing by the CIA officials involved in the agency’s Rendition, Detention and Interrogation program.

Almost every news report led with the fact that the prosecutor, John Durham, was continuing his inquiry into two detainee deaths that took place outside the CIA interrogation program. But the real news was that, after an exhaustive look into the handling of some 100 high-value terrorists held in the CIA program, Durham found no crimes to prosecute. The agency’s interrogators, whose work stopped numerous terrorist attacks and led us to Osama bin Laden, have now been exonerated by the Justice Department for a second time.

Therein lies the outrage. During the Bush administration, career prosecutors from the Eastern District of Virginia conducted an exhaustive inquiry into allegations of abuse in the CIA program and decided against prosecutions in all but one case (a CIA contractor, not in the official interrogation program, who was later convicted of assault). The prosecutors drafted “declination memos” explaining precisely why they decided not to pursue charges. Not only did Holder, a political appointee, overrule the decisions of these career prosecutors, according to The Post, “Before making his decision to reopen the cases, Holder did not read detailed memos that prosecutors drafted and placed in files to explain their decision to decline prosecutions” (emphasis added).

Holder charged ahead over the vigorous objections of seven former CIA directors, who declared in a letter to President Obama that “Holder’s decision to re-open the criminal investigation creates an atmosphere of continuous jeopardy for those whose cases the Department of Justice had previously declined to prosecute” and “will seriously damage the willingness of many other intelligence officers to take risks to protect the country.” Joining their objections was Obama’s then-CIA director, Leon Panetta, who reportedly made his views known in a “profanity-laced screaming match” at the White House.

None of this deterred Holder from pursuing his ideologically driven crusade against the CIA’s interrogators. During the 2008 presidential campaign, Holder had told the left-wing American Constitution Society that “our government authorized the use of torture” and promised the crowd, “We owe the American people a reckoning.” Now — after two years of wasted resources and untold grief for these dedicated intelligence officers — Holder has come up empty. The special prosecutor he assigned to deliver that day of “reckoning” came to the same conclusion as the career prosecutors under the Bush administration: Further investigation of the CIA’s interrogation program “is not warranted.”

The two remaining cases reportedly involve a detainee who froze to death in his cell in Afghanistan in 2002 and another who died in American custody in Iraq in 2003. As Panetta noted in a statement last week, “Both cases were previously reviewed by career federal prosecutors who subsequently declined prosecution.” According to former senior intelligence officials I spoke with, both were battlefield detentions that took place early in the war, and neither had anything to do with the CIA’s interrogation program.

The CIA created a well-run, highly disciplined interrogation and detention regime, where clear guidelines were established, the safety of the detainees was ensured, invaluable intelligence was uncovered and any deviations from approved techniques were stopped, reported and addressed. Now the special prosecutor assigned by Holder to investigate that regime has affirmed — once again — that this program operated completely within the law.

The CIA officers who ran the agency’s interrogation program have been cleared, but their lives will never be the same. They have spent much of the decade since Sept. 11 under threat of prosecution, fighting to defend their good names even as they worked to keep us safe. As a result of the witch hunt Holder unleashed, some of our most talented, capable counterterrorism officials have left government service — and countless others, who might have contemplated such service, have chosen other careers instead. The damage this investigation has done is incalculable.

For this, the American people are indeed owed a reckoning.