It’s amazing how Obama was able to dupe the American people into believing that the weakest expansion in the postwar era, was an “economic recovery.” Frankly, it boggles the mind.
Think about it for a minute: Productivity, business investment, personal consumption, inflation and growth have all been either sputtering-along at half speed or at historic lows for the entire period, and yet, President Flimflam has been out taking bows and high-fiving for his stellar performance as premier steward of the world’s biggest economy. It’s ridiculous. The whole storyline is completely fake.
So let’s settle this once and for all. The economic machinations that transpired under Obama cannot be accurately called a ‘recovery’, which is merely the public relations handle he used to conceal what was really going on below the surface.
And what was going on below the surface?
Why structural adjustment of course. The economy was being rejiggered in a way that deliberately kept growth weak (by withholding fiscal stimulus) in order reduce upward pressure on wages that would have pushed inflation higher forcing the Fed to raise rates. That may sound complicated, but it’s actually a very simple and straightforward way to keep inflation at bay.
But why would Obama deliberately want to slow growth merely to keep inflation low?
It’s obvious, isn’t it? Because if inflation began to rise, then the Fed would be forced to raise rates and stop shoveling trillions of dollars to the big Wall Street investment banks which, by the way, happened to be drowning in red ink at the time. In other words, the economy was deliberately strangled in order to save the banks. But then you probably knew that already, didn’t you?
Looks like I picked the wrong week to quit drinking.
-Steve McCroskey, AIRPLANE (1980)
I have shared this sentiment on a daily basis during this absolutely absurd electoral circus year, particularly when engaging with lesser-evil Clinton boosters who seem to have come upon the finest batch of hallucinogenic mushrooms this side of the Rio Grande. These people, many of whom are pleading for a Clinton vote on the basis of the idea that a President Trump would ravage what remains of the social safety net, are simply refusing to accept or alternatively do no believe that the Democrats are aiming to privatize Social Security right now and have been for years.
Those who doubt this should do themselves a favor and examine the record. First, read through the excellent Counterpunch essay by historian Robin Blackburn, How Monica Lewinsky Saved Social Security, which explains how the neoliberal Democratic Party agenda regarding Social Security started to be rolled out by Bill Clinton when his intern forced him to pivot to the left in order to shore up his base as a defensive posture against the inquiries of Ken Starr.
This has been an agenda item for decades that can be traced back to the minds of the fiscal brain trust of Larry Summers and Robert Rubin. Both men have played major roles in Obama’s political career dating back to his early days as a “community organizer”, which was in fact a gentrification project done on behalf of the Chicago FIRE (finance, insurance, and real estate) sector. When Clinton was administering Rubin/Summers policies to benefit the FIRE sector, Obama was working on the ground in the Windy City as a foot soldier for this agenda.
Since the June 7 California primary, the historic upheaval that coalesced around Bernie Sanders’ campaign has continued to defy the demands of the political establishment, but has also increasingly turned into a search for the way forward. After a powerful, year-long mass campaign over the hostile terrain of a rigged primary, our political revolution is at a crossroads.
The post-California period began with a revolt, following the AP’s preemptive anointment of Clinton. In the hours and days after this corporate media assault and the initial ballot results, there was a wave of angry social media reaffirming Sandernistas’ rejection of the establishment’s demands for capitulation. Elizabeth Warren’s full-throated endorsement of Clinton came shortly thereafter, and hundreds of thousands of people un-liked her Facebook page and otherwise registered their disgust online. The petition that Movement4Bernie and I launched two months ago, calling for Sanders to run independent or Green, caught on fire. It tripled its number of signatures in just a few days time, at an initial rate of 1,000 people an hour, and now has over 115,000 total.
A huge debate is unfolding among millions of Bernie’s backers, providing an enormous opportunity for the left to raise the need for a political alternative to the Democratic Party. That’s why Movement4Bernie and Socialist Alternative are organizing a series of forums in dozens of cities across the country titled “Beyond Bernie: We Need a Party for the 99%.” These forums will both mobilize for the largest possible protests at the Democratic National Convention and create space for a broad-based debate on the way forward for the political revolution. My message at the events will be clear: If Bernie refuses to break from the Democratic Party, our movement should back Jill Stein as the strongest left alternative in the presidential election and use 2016 to prepare the ground for building a new movement-based political alternative.
Unfortunately, Bernie’s livestream speech a week after California pointed in a different direction. While Bernie refused to formally concede and reaffirmed his intention to continue the political revolution into the Democratic National Convention, he also sent the message that he was beginning to retire his campaign. His plan to contest the nomination in Philadelphia was left aside, while he took further steps toward Hillary in saying he looked forward to working with her to change the Democratic Party.
It was one part political revolution, one part concession, and five parts Democratic Party reform. Speeches by Bernie since then have further developed this changed approach. This has helped kick off a process that, no doubt, has some Sandernistas beginning to second guess their commitment to not support Wall Street’s favored candidate, Hillary Clinton.
But the rebellion is far from subdued. A Bloomberg Politics poll on June 14 showed that barely half of Sanders supporters are prepared to vote for Hillary.
The Slow Crash: When Global Economies are Run by Banks
I’m Bonnie Faulkner. Today on Guns and Butter, Dr. Michael Hudson. Today’s show: The Slow Crash. Dr. Hudson is a financial economist and historian. He is President of the Institute for the Study of Long-Term Economic Trends, a Wall Street financial analyst and Distinguished Research Professor of Economics at the University of Missouri, Kansas City, as well as at Peking University. His 1972 book, Super-Imperialism: The Economic Strategy of American Empire, is a critique of how the United States exploited foreign economies through the IMF and World Bank. His latest book isKilling the Host: How Financial Parasites and Debt Destroy the Global Economy. Due out soon, “J Is for Junk Economics.” Today we discuss in detail the concept of debt deflation; housing, student loan and automobile debt; the oil market; the stock market; negative interest rates; currencies; and the shrinking real economy.
Bonnie Faulkner: Michael Hudson, welcome.
Michael Hudson: It’s good to be here again, Bonnie.
Bonnie Faulkner: You have indicated that as a result of United States and European debt deflation, there is an economic slowdown. First of all, how would you define deflation?
Michael Hudson: There are two definitions of deflation. Most people think of it simply as prices going down. But debt deflation is what happens when people have to spend more and more of their income to carry the debts that they’ve run up – to pay their mortgage debt, to pay the credit card debt, to pay student loans.
Today, people are having to spend so much of their money, to acquire a house and to get an education that they don’t have enough to spend on goods and services, except by running into yet more debt on their credit cards and other borrowings.
The result is that markets are slowing down. Deflation means a slowdown of income growth. Markets shrink, new capital investment and employment also taper off, so wages decline. That is what’s happening as deliberate policy in Europe and the United States. Falling or stagnant prices are simply the result of having less income to spend.
Bonnie Faulkner: Well, thank you for that, because that is confusing, because I think a lot of people consider deflation simply a decrease in price. Does that have anything to do with it?
Michael Hudson: The price decline is a result of having to pay debts. That drains income from the circular flow between production and consumption – that is, between what people are paid when they go to work, and the things that they buy. Deflation is a leakage from this circular flow, to pay banks and the real estate, called the FIRE sector – finance, insurance and real estate. These transfer payments leave less and less of the paycheck to be spent on goods and services, so markets shrink. Some prices for some products go down when people can’t afford to buy them anymore. There are more sales, there’s shrinkage, but especially incomes go down. Real incomes in the United States have been drifting down for 30 years because there is slower and slower market demand.
That’s why Bernie Sanders and Donald Trump are getting so many votes. When Hillary Clinton said she’s going to do just what Obama does and we’re going to continue to recover, most people know that we’re not recovering at all. We’re shrinking.
Bonnie Faulkner: So then, deflation has more to do with disposable income than it does with prices.
Michael Hudson: That’s correct, and that’s what is rarely pointed out. People tend to think that paying a debt is like going out and buying a car, buying more food or buying more clothes. But it really isn’t. When you pay a debt to the bank, the banks use this money to lend out to somebody else or to yourself. The interest charges to carry this debt go up and up as debt grows. As you have to pay more interest and amortization on what you owe, you’re left with less and less money to buy goods and services – unless you borrow even more and go further into debt.
In June 1942, a pair of German university students formed The White Rose, a German resistance movement that used a series of leaflets to decry Nazi militarism and call for an end to the war. Hans Scholl and Alexander Schmorell wrote the first four leaflets between the end of June and beginning of July. In the fall, Hans’ sister, Sophie Scholl, discovered that her brother was one of the authors of the pamphlets, and joined the group. Shortly after, Willi Graf, Christoph Probst, and Kurt Huber became members.
More than twenty others offered technical support for printing, supplies of paper and ink, funding, and distribution of the leaflets. These leaflets were left in telephone books in public phone booths, mailed to professors and students, and taken by courier to other universities for distribution. The fifth (and final) leaflet was produced in 6,000–9,000 copies, using a hand-operated duplicating machine.
Their activities were highly dangerous. One White Rose member later reflected:
— William Shakespeare (1564-1616), ‘Julius Caesar’
“The Constitution supposes, what the History of all Governments demonstrates, that the Executive is the branch of power most interested in war and most prone to it. It has accordingly with studied care, vested the question of war in the Legislature…
—No nation could preserve its freedom in the midst of continual warfare.”
— James Madison (1751-1836), in a letter to Thomas Jefferson, 1798, (and, in ‘Political Observations’, 1795)
“Kings had always been involving and impoverishing their people in wars, pretending generally, if not always, that the good of the people was the object. This, our  Convention understood to be the most oppressive of all Kingly oppressions; and they resolved to so frame the Constitution that no one man should hold the power of bringing this oppression upon us.”
— Abraham Lincoln (1809-1865), in a letter to William Herndon, 1848
“…War is sometimes necessary, and war at some level is an expression of human folly.”
— Barack H. Obama (1961- ), Nobel Peace Prize acceptance speech, Dec. 2009
“As a nuclear power, as the only nuclear power to have used a nuclear weapon, the United States has a moral responsibility to act… today, I state clearly and with conviction America’s commitment to seek the peace and security of a world without nuclear weapons.”
— Barack H. Obama (1961- ), in a speech in Prague, Czech Republic, on April 5, 2009, [N.B.: On May 27, 2016, Pres. Obama repeated essentially the same commitment at Hiroshima’s Peace Memorial Park, in Japan, calling for a “world without nuclear weapons”.]
“As commander-in-chief, I have not shied away from using force when necessary. I have ordered tens of thousands of young Americans into combat…
I’ve ordered military action in seven countries.” [Afghanistan, Iraq, Libya, Syria, Pakistan, Yemen and Somalia]
— Barack H. Obama (1961- ), in a speech at the American University, Aug. 5, 2015
Ever since Neoconsde facto took over American foreign policy, after the collapse of the Soviet empire in 1991, rejecting the ‘Peace Dividend’ that many had expected, the cry in Washington D.C. has been to impose an America-centered New World Order by military means.
Successive administrations, both republican and democratic, have toed the line and dutifully pursued the same policy of world domination by launching a series of direct or covert wars of aggression around the world, in violation of international law. This explains why the United States has over 1,400 foreign military bases in over 120 countries, and why they are being expanded.
First there was the Iraq war of 1991, when Saddam Hussein’s regime felt into a trap, thinking it had Washington’s tacit go ahead to integrate Kuwait, a territory that had been part of Iraq throughout the nineteenth century and up until World War I. Then there was the 1998-1999 U.S. military intervention in Yugoslavia’s ethnic conflicts, in order to undermine Russian influence. The “Pearl Harbor” type attack of 9/11, 2001, was a “god-given” event on the march to the New World Order, since it justified huge increases in the U.S. military budget and served as a justification to launch the 2001 war inAfghanistan, eventually leading to a U.S.-led “preventive war” to “liberate” Iraq, in 2003.
All this was followed by a string of covert operations to overthrow governments, elected or not, and to impose regime changes in independent countries, such as in Syria, Libya, Ukraine, Honduras, Haiti, Somalia… etc.
“Contrary to the rising-tide hypothesis, the rising tide has only lifted the large yachts, while many of the smaller boats have been dashed on the rocks.” Joseph Stiglitz, economist
American plutocrats and their political lackeys in congress have implemented a plan that’s putting pressure on wages and further decimating the already-battered middle class. By sustaining high levels of unemployment over a long period of time, US elites have “restructured the labor force”, which is a pretentious-sounding expression that means they’ve created a permanent underclass that’s willing to slave-away at demeaning, part-time jobs for mere peanuts without uttering a peep of protest. This metamorphosis of the workforce has taken place mostly in the shadows, concealed behind a thick fog of state propaganda touting the fictitious “recovery”, a recovery in which long-term jobless workers have abandoned all hope of finding gainful full-time employment and resigned themselves to a lifetime of scrambling from one odious task to the next just keep a roof over their heads and the wolves away from the door.
After eight years of applying this coercive ‘starvation strategy’, the plutocrat’s ‘grand plan’ is finally coming into focus. According to economists Lawrence F. Katz and Alan B. Krueger’s new paper titled “The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015″:
“All of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements.”
“Alternative work arrangements”? You mean there’s been zero growth in ordinary 9 to 5, 40-hour-per-week jobs in the last 10 freaking years???
In a new survey by the Pew Research Council, half of the registered voters surveyed (51%) said they think the future for the next generation will be worse, while just 24% said life will be better for the next generation. The survey indicated this pessimistic sentiment is spread across racial and economic lines.”
30 years of wage stagnation followed by one wealth-eviscerating asset bubble after another has drained the optimism from the collective American psyche. Most people now think things are going to get worse for themselves and their children. This pervasive pessimism shows up in other surveys as well, like this recent Gallup poll in which the sample-group was asked, “In general, are you satisfied or dissatisfied with the way things are going in the United States at this time?”
You’d think that would be a slam-dunk for President Obama who never misses a chance to boast about his great economic recovery. But the fact is, 71 percent of the people said they were dissatisfied with the way things are going. Only 27 percent said they’re satisfied. That’s not just a knock on Obama, it’s also a powerful statement about the abysmal condition economy. The vast majority of people are clearly frustrated that they can’t get ahead because the economy isn’t improving. At the same time, they can’t help but notice that more and more of the nation’s wealth is being shifted to the people who least need it, the 1 percent elites at the top.
Well, what do you know? Everywhere the global bank cartel has its tentacles, wages are either flatlining or drifting lower.
“Coincidence”, you say?
Not bloody likely, I say. There’s either policy coordination between the various heads of state and their central banks or wealthy elites have secretly seized the levers of power and imposed their neoliberal dogma when no one was looking. Either way, it’s pretty easy to see the effects of “extraordinary monetary accommodation” on wages. It’s done absolutely nothing, which is why inflation has stayed in check. Because if wages aren’t rising, then inflation remains subdued which gives central bankers an excuse for launching another one of their trillion dollar QE programs that further enriches their crooked friends on Wall Street.
Yipee! More free money for Wall Street and the investor class!