A New Way Forward – Restore the Economy in the Public's Interest

Big U.S. Firms Shift Hiring Abroad – WSJ
U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers, have been hiring abroad while cutting back at home, sharpening the debate over globalization’s effect on the U.S. economy.

The companies cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show. That’s a big switch from the 1990s, when they added jobs everywhere: 4.4 million in the U.S. and 2.7 million abroad.

Global capitalism isn’t working for the American middle class — Reuters(tx yves)
Spence and his co-author, Sandile Hlatshwayo, examined the changes in the structure of the U.S. economy, particularly employment trends, over the past 20 years. They found that value added per U.S. worker increased sharply during that period – 21 per cent for the economy as a whole, and 44 per cent in the “tradable” sector, which is geek-speak for those businesses integrated into the global economy. But even as productivity soared, wages and job opportunities stagnated.

The take-away is this: Globalization is making U.S. companies more productive, but the benefits are mostly being enjoyed by the C-suite. The middle class, meanwhile, is struggling to find work, and many of the jobs available are poorly paid.

Secret memos expose link between oil firms and invasion of Iraq — The Independent(tx t. ferguson)

The minutes of a series of meetings between ministers and senior oil executives are at odds with the public denials of self-interest from oil companies and Western governments at the time.

In March 2003, just before Britain went to war, Shell denounced reports that it had held talks with Downing Street about Iraqi oil as “highly inaccurate”. BP denied that it had any “strategic interest” in Iraq, while Tony Blair described “the oil conspiracy theory” as “the most absurd”.

But documents from October and November the previous year paint a very different picture.

Five months before the March 2003 invasion, Baroness Symons, then the Trade Minister, told BP that the Government believed British energy firms should be given a share of Iraq’s enormous oil and gas reserves as a reward for Tony Blair’s military commitment to US plans for regime change.

The papers show that Lady Symons agreed to lobby the Bush administration on BP’s behalf because the oil giant feared it was being “locked out” of deals that Washington was quietly striking with US, French and Russian governments and their energy firms.

On March 30, 2011, if you’re in Wisconsin, you can do something about the awful economic and governance mess we are in.

Here are the details:

Tired of Wall Street  crashing our economy,  trashing our public sector,  buying elections,  then becoming more monopolistic than ever?     Frustrated that  financial services lobbyists spent a million dollars per day to defeat even mild regulations of their gambling  habits?    And how about the 6 “Too Big to Fail” firms that now  control  60% of our GDP,  putting us at greater risk than ever?      If you thought the housing bubble and commodities speculation were outrageous,   wait for the next bubble/meltdown cycle…..

You CAN take things into your own hands… MOVE YOUR MONEY out of national banks,  and into local banks and credit unions.      JOIN US for a  “Move Your Money” action day,  presented by the Personal Finance Group of Transition Whatcom,  dedicated to improved community financial resilience.

New economy speaker Kristi Laguzza-Boosman of KLB Community Consulting,  author of “Plan B, Recalibrating an Economy in Decline:  Building and Economy in Balance”,    and Jared Gardner, of “Real Wealth” of Portland,  will speak on the re-localizing of our economy.      A panel of local banks and credit unions will answer your questions about their services,  and participants may switch their accounts at that time.

Imagine what Bank of America’s  holdings of $347.1 million of Whatcom County money could do for our local economy if the profit was kept here instead of North Carolina!

Co-sponsors:     Bellingham Unitarian Social Justice Committee,   Jobs with Justice,    Community Food Co-op,   Whatcom Progressive Grassroots Network

WHERE:        Bellingham Unitarian Fellowship,      1708   “I” St.       Contact: 671-3590
WHEN:         Saturday,   April 16th,   2011         1:00-3:30pm

“We aren’t broke,   Wisconsin is not broke.     The country is awash in wealth and cash.   It’s just not in your hands.  It has been transferred in the greatest heist in history,  from the workers and consumers,  to the banks and portfolios of the uber-rich.”              Michael Moore   3/21/11     Moveyourmoney.org

Sources:    Johnson,  Simon and James Kwak, “13 Bankers, the Wall Street Takeover and the Next Financial Meltdown”;
Taibbi,  Matt, “Griftopia”,   “Bubble Machines”,  “Vampire Squids, and the Long Con That is Breaking America”.

Gillian Tett has a good piece in the FT about the Swiss National Bank:

After all, the balance sheets of central banks are always somewhat theoretical, the SNB has a spare capital cushion to (just) offset this blow – and, in any case, that SFr21bn paper loss may yet disappear, if currencies swing again. Indeed, since the SNB reported its numbers in late 2010, global markets have been so volatile that its “p&l” has already moved quite wildly (something which is not entirely obvious since the SNB only reports every quarter.) But these paper losses have already sparked a flood of all-too-tangible criticism of the SNB from Swiss bankers and politicians; indeed, there have recently been demands that Philipp Hildebrand, SNB governor, should resign. One reason for this anger is that the SNB has used the “profit” it booked on its gold holdings to distribute SFr2.5bn each year to the local cantons and Federal government – and those cantons fear they will now lose that income because of the 2010 losses.

But another crucial issue is that many local bankers are furious with the tough regulatory stance that Hildebrand (quite rightly) took towards them during the financial crisis. As a result, they are trying to use the debacle as a weapon to force Hildebrand out.

This is where the story gets potentially interesting – and cautionary – for the non-Swiss world. The losses at the SNB have come to light partly because it is relatively transparent – and currency swings can be monitored more easily than, say, price moves on bonds. But the SNB is not the only central bank that has recently taken bold gambits. The European Central Bank, for example, holds an (ever-swelling) pile of periphery eurozone bonds; the Fed’s balance sheet has more than doubled in size, to $2,500bn, as it has gobbled up mortgage-backed bonds and Treasuries; and the Bank of England also holds a large pile of gilts and mortgage assets.

…In the coming years, the price of Treasuries or gilts could plunge; some peripheral eurozone bonds could even default, creating losses. If that ever occurred, some central bankers think that any pain could still be offset. The Fed, for example, currently receives so much “income” from seigniorage that it may have considerable room for manoeuvre. But, there again, the Fed already faces virulent domestic political criticism; and at the ECB there is no clear agreement about who would indemnify it in event of losses. It is not impossible to imagine a scenario, then, where losses might stir up a row; particularly if political groups already had an axe to grind – as in Switzerland.

In a world where central bankers and politicians are now moving into uncharted waters, that row in Zurich may yet turn into the leading edge of a trend. Western central bankers had better hope that Hildebrand survives; even as SNB officials cross their fingers that Mideast tensions – or Irish woes – do not push the franc too much higher.

Two simple points on this: 1)The actions of the global central banks in the last few years have laid bare for anyone who cares to look of the completely undemocratic structure of these institutions and the entire money creation process; 2)The real money of the modern world is oil, and if the global oil supply begins contracting by millions of barrels a day, you’ll get massive inflation for a New York second, followed by tremendous  economic “deflation”. No one’s printing any oil. In regards to this latter point, who knew Muammar had in his last years become a Republican, blaming the revolt in Libya on Osama and hallucinogenic drugs?

“L’audace, l’audace. Toujours l’audace!”

It’s hard to imagine the present American economy getting healthy without the housing market being fixed. Even a Dow at 36,000 would have limited impact with housing prices down another 10-20%, as very few in America have any wealth in the stock market, if they have any savings at all, much of it is in their homes, and that continues to get eaten away. So, Chris Whalen’s Reuters piece accompanying his downgrading of Wells Fargo due to the continuing mortgage fiasco — Yves Smith continues with best coverage on this issue — is well worth the read.

Whalen makes an excellent point on the courts and mortgage crisis. He writes,

The US banking industry would have been far better off if they had allowed sane bankruptcy reform to be enacted with respect to restructuring of first mortgages. Over-burdened home owners could discharge unsecured debt and modify mortgage loans under the watchful eye of bankruptcy judges, who understand how to balance debtor and creditor rights.

Instead banks seeking foreclosure now face state court judges, who are elected by the people in their communities and not used to the intricacies of Wall Street finance. State courts are taking a much harsher line with banks than would federal bankruptcy judges. Banks seeking to conduct foreclosures are being met by a phalanx of judges that now say “show me the mortgage note and prove you are the one with the right to foreclose or I will not act on your pleadings.”

This is a lesson in democracy in America 101 — separation of powers. The genius of the American system was not to centralized power, but separate it, in DC — with three branches of government, but also balancing DC with the states, localities, and finally the ultimate power in the citizen — We the people. Now, the agrarian era architecture of our government set up by America’s founders always had a hard time dealing with the new industrial era, and its most powerful and insidious creation the corporation. In the 1930s, in response to crisis of the national/global economy, created by the industrial corporation, the New Deal was born, and liberals en masse headed to DC to rule briefly for a few decades, until the modern corporation and its entrenched interests could gain control, making present DC both eminently corrupt and dysfunctional, a fact our remaining liberals, continue to either ignore or discount.

Matt Taibbi has an excellent piece documenting the most open and not even the most egregious of crimes committed by banking and finance, which the complicit powers of DC ignore. No one goes to jail. It reminds me of the California Energy scam 10 years ago, where again no one went to jail, and the Clinton FERC sat on its hands as the people of California were fleeced by multiple energy companies and Wall Street. The fact is the American system is broken, paradoxically its redemption lies in restoring and evolving the American system. At this point, what is missing most is courage.

It is time to think much larger than worrying every day about what happens in DC, and to liberals, I can only point to a piece in the LA Times yesterday regarding Egypt,

Not wanting to be left out of the future government, two competing groups of young activists are meeting with the military and distancing themselves from longtime opposition figures they regard as inept and weakened from years of oppression by Egyptian security forces.

Obama’s big Goldman Sachs moment.. Up until this point, Obama has not felt like we could forget Goldman Sachs’ involvement in the crash. I guess now he thinks we have forgotten.

I’m an Asian American (0th generation) with some serious identity issues. I am offended Lloyd Blankfein, of Goldman Sachs fame, was at the White House dinner for China’s President Hu Jintao. Llyod? How about a banker who has done some good. Who the heck is this Obama? Nice pics – Lloyd is so smug and happy as if any and all criticism of Goldman Sachs’ work doesn’t factor into his conversation at all with Pres. Obama, doesn’t hurt a single White House fly.

Simon Johnson has a piece in Economix that sums up why it’s ridiculous to have Lloyd represent what our American financial system has and can do for China, the US, and the world. Johnson has had his voice in the financial crisis debate, helped to lead us to policies around limiting bank size for safety and efficiency in our economic system, and helped to get pass the many structural and stronger measures passed with the big financial regulation bill called the Dodd-Frank Act (and we so heavily worked on ourselves). I bring up Johnson’s remarks because it seems like China should be worried about the collapse / leadership of our financial system since they have a lot of US bonds, etc.

Johnson is reacting to a report by the Treasury Secretary Timothy Geithner, as chairman of the Financial Stability Oversight Council, who “has released an assessment on the costs and benefits of potentially limiting the size of banks and other financial institutions.”

Analytically weak, this report presents a skewed and incomplete assessment of the evidence. Given that the paper was prepared by some of the country’s top experts, who are well aware of the facts, the only reasonable inference is that our leading relevant officials prefer not to take the Dodd-Frank Act seriously with regard to reducing systemic risk.

Johnson points out that the big 6 banks are just as fiercely undercapitalized and fragile as they were, and maybe even more so, bloated with hidden taxpayer subsidies, in the run up to the crash and recession of our recent times. President Obama has certainly has done an about face on his position during the big debate on the economy when he was running for president against the backdrop of a crashing economy overseen by President George W. Bush and Republican Free Market Extremist Ideology. Obama made sense we he rallied people around sound regulatory practices, and worrying about whatever “Main Street” is. It arguably won him an election (he was trailing McCain in September – October, then the economy crashed and he started soaring to the finish line) over a Republican who more squarely represented the excesses of deregulation.

Now, he has certainly gone back on the biggest campaign promise he made to win the election –reforming our economy away from the Republican extremist ideological practices.

Public Citizen has a great response to Obama on his op-ed about regulation. Obama can be interpreted as being politic and leaning left as both the left and right think he is doing, or as this post suggests, is just leaning towards protecting big business.

Obama’s way is leading to even more bloated banks and businesses, funded in part by hidden taxpayer subsidies. Why don’t the Democrats fight back on the debt and deficit debates by pushing for ending these subsidies? That’s the big question, which when written out I guess turns out rhetorical even though that is not how I meant it.

On the eve of the Chinese President’s visit to the United States, and the intense speculation about his intentions—and ours—I found myself a dark room at the Anthology Film Archive in the East Village watching a spectacular documentary by Chinese filmmaker Zhao Liang called Petition.

It’s about the tens of thousands of people with grievances who seek redress in China at offices ostensibly set up to resolve their problems.

The right to petition is guaranteed by the Chinese Constitution—yes China has a Constitution, but it is unevenly enforced like our own. Falun Gong first tried, but failed, to bring its human rights claims to a Petition office like the bureaucratic centers shown in the film as do a small army of individuals who every day, bravely—sometimes fanatically— insist it is their human right to be heard. (In Falun Gong’s case, they were outlawed and systematically repressed for more than a decade with a large cost of lives.)

Listen to the description of Petition: “Since 1996, Zhao has documented the ‘petitioners’ who come from all over China to make complaints in Beijing about abuses committed by their local authorities. Gathered near the complaint offices, living in most cases in makeshift shelters, the complainants wait for months or years to obtain justice. Peasants thrown off their land, workers from factories which have gone into liquidation, small homeowners who have seen their houses demolished but received no compensation, they pursue justice with unceasing stubbornness, facing the most brutal intimidation and most often finding that their hopes are in vain.”

Before you put this down just to the authoritarianism and insensitivity in China, remember the song “before you ‘cuse me, take a look at yourself.”

Think of all the Americans who get nowhere fighting their City Halls or battling denials of claims by health insurance companies or foreclosures by banks. Think of the vast growth in poverty and the persistence of high unemployment. Think of the millions of Americans behind bars. We have no petitition office which I am sure must resolve some issues even if the film didn’t show that!

Our systems may be different but some of the top down ways our rulers operate are the same. Now, our two governments are about to sit down with each other to discuss common problems and stubborn differences.

“The U.S.-China summit this week could rank among the most pivotal in history,” writes Leslie Gelb who went from the New York Times to the Council on Foreign Relations to the appropriately named Daily Beast. “Presidents Barack Obama and Hu Jintao can either find fresh ways to work out increasing differences, or they can settle for friendly gasbag rhetoric that will bow to their mutual and mounting hawkish pressures. But failure to compromise on tough economic and security issues will have dangerous consequences for both leaders.”

Elite journalists tend to worry more about the tenure of elites then the well being the people. Yet, when you think about US-China relations, its not just governments that are wrestling over policy.

For example, whenever Washington summons up the courage to criticize China’s dismal and repressive human rights record, Beijing fires back with the scorecard of US police abuses and mass incarceration. They report regularly on Obama’s backpedaling on human rights here.

(And know well that the summit is being carefully stage managed by lower level officials on both sides who have already come up with some compromises that each side can use to show how flexible and responsive they are. Each side must save face after all.

In case you haven’t noticed, the world has changed with China’s economy growing faster and doing better—at least for now—than ours.

Money represents real power in this world, and ours seems to be declining while theirs is in the ascendancy.

China’s President Hu Jintao is sending contradictory signals. In one conciliatory statement, he called for the US and China to work out their mutual problems. He sounded reasonable and friendly.

“There is no denying that there are some differences and sensitive issues between us,” Hu told American newspapers, “We both stand to gain from a sound China-U.S. relationship, and lose from confrontation.”

At the same time, the Chinese are freaking out Wall Street and its cadre of henchmen in Washington by questioning the future of the dollar as the world’s reserve currency. Even as China’s investments in America’s bonds and other financial instruments has become essential for our well being and perhaps China’s as well, there are many in Beijing who don’t like the dependence on an American system that has lost them money and independence of action.

All countries have their own interests although the United States likes to pretend that everything we want is in the world’s interest. Our PR may be better but our global image is severely tarnished by our wars and the Wikileaks disclosures.

The US has been pressing the Chinese to revalue its currency for years. The Chinese often sound as if they will—but, in the end, they haven’t because to do so would hurt their economy and spark more unemployment.

Now Congress is getting into the act to add pressure on Beijing. AP reports, “Three US senators announced plans Monday to renew their effort to penalize China for what they term currency “manipulation,” on the eve of a state visit by Chinese President Hu Jintao.

“Our message to President Hu is, ‘Welcome to America, but we want to make
sure we have a fair trading system,’” said Michigan Senator Debbie Stabenow,
who joined fellow Democrats Charles Schumer and Bob Casey in the
announcement.

The bill to be introduced in the new Congress would “vigorously address
currency misalignments that unfairly and negatively impact US trade,” the
three said in a joint statement.”

China will not be moved by this pressure move. They don’t like being bullied and have their own grievances with our economic polices including US cases filed against China at the World Trade Organization that they view as invalid and protectionist, as sops used for domestic political considerations.

The fact is that all of these get China maneuvers will not achieve what most Americans want more jobs. Writes Harvard Law Professor Mark Wu, it “is unlikely that a stronger renminbi would bring many jobs back home. Instead, companies would most likely shift labor-intensive production to Vietnam, Indonesia and other low-wage countries. And in any case many high-skilled jobs will continue to flow overseas, as long as cheaper talent can be found in India and elsewhere. Only in a few industries, like biomedical devices, would a stronger Chinese currency combined with quality issues tempt American companies to keep more manufacturing at home.”

Meanwhile, China is well aware of how to “win friends” in the US, as Reuters reports. Deals do it.

“The Chinese government kicked off a four-day U.S. trade mission on Monday by signing six deals in Houston with undisclosed U.S. companies worth $600 million, according to Chinese state media reports.

The deals came a day before Chinese President Hu Jintao arrives in the United States for a visit being billed as the most important U.S.-China summit since Deng Xiaoping’s visit to Washington 30 years ago.”

The future of our relations is not just dependent on what the leaders say or agree on at Summits. China is wary of US military power encircling them. They are being forced to spend more money than they want to on naval ships and stealth planes. This is a country that grew up with Mao’s dictum that “political power grows out of the barrel of a gun.”

As the Telegraph noted recently, “on virtually all the main issues that separate the two nations, (China) seems intransigent and uncompromising. The sense of threat is heightened by the fact that, while America is gripped by economic, social and political self-doubt, the Chinese have never been more certain of their ascendancy.”

It may be that both countries are shakier than we think. There may be no economic recovery in the United States for five years while some Hedge Funds fear, “China is a bubble close to bursting.” Reports another article in the Telegraph, “The world is looking to China as a springboard out of recession – but some hedge funds are betting the country’s credit and growth levels cannot be sustained.”

So far, neither Washington nor Beijing have realized the apocalyptic projections of their many critics. Both states still pay lip service to their ideal, but both can be unraveling.
A fancy State Dinner will not bridge the gaps that separate our two countries and “paths of development,” as the Chinese say.

The US says it wants more democracy in China but officials like Tim Geithner are upset by the debates taking place there, and pine for the days when they could deal with a dictator like Mao or Deng who, as the New York Times explained, “commanded basically unquestioned authority.”

Our leaders prefer dealing with that type of authority and wish they had it here.”

Back in Beijing, in the shabby Petition Villages where Chinese citizens soldier on in their fight for justice, or in this country where our citizens are frustrated and angry with an economic crisis appears to have no end, no one will expect much from this summit in faraway Washington where diplomatic dances produce kabuki plays filled with smiles but no real changes.

News Dissector Danny Schechter blogs for Mediachannel.org He directed the film Plunder The Crime Of Our Time (plunderthecrimeofourtime.com) Comments to dissector@mediachannel.org