[Peace-discuss] State of play at tea-break...

[C. G. Estabrook]

The economic news in the near and medium term is ghastly... Retail sales crashed 
again in March, nowhere worse than in the car market, though electronics and 
building materials were way off too. They now reckon there’ll be just over two 
million housing foreclosures in 2009, up 400,000 from 2008. Industrial output is 
going through the floor at an annual rate of 20 per cent, the biggest quarterly 
drop since the end of the Second World War. US industry is now running at only 
70 per cent of capacity, the worst number since they started tracking this stat 
in 1967. Job losses are currently running at 650,000 a month.

Round the next corner is credit card delinquency and  the long-heralded slump in 
commercial real estate, where vacancy rates are already running at 15 per cent. 
Capital One, a huge issuer of Visa and Mastercard, just  said the annualized net 
charge-off rate for U.S. credit cards -- debts the company reckons will never be 
paid -- rose to 9.33 percent in March from 8.06 percent in February. In other 
words, Capital One – whose credit card promotions take up  hefty space in the 
mailbag of every US postman – is in big trouble, and  under one in ten of these 
credit card holders will have a messed up credit rating for several years to come.

Wall Street and its boosters are trying to pretend that indeed the worst is 
over. The Dow and S&P Index have been rallying for five weeks. Wells Fargo, the 
huge San Francisco-based bank, second biggest home lender, announced that first 
quarter net income rose 50 per cent to $3 billion.  No one seriously believes 
the bank is in anything other than continuing huge trouble, and will soon need – 
so Blomberg News surmises - $50 billion to settle near-term commitments. The 
profit figure stems from newly relaxed rules about the valuation of Wells 
Fargo’s assets.

In other words it’s thin economic ice from here to the horizon. Robert Reich, 
now teaching economics at Berkeley and formerly labor secretary in the Clinton 
administration, wrote a piece recently, titled "Why We're Not at the Beginning 
of the End, and Probably Not Even At the End of the Beginning". There are huge 
problems with the whole orientation of the US economy. The “free market” 
outsourcing model has failed. Even at the best of times the US consumers who 
account for over 70 per cent of all economic activity in the country, don’t have 
purchasing power to keep the whole show on the road, unless they put it on the 
credit cards which are now maxed out and going into default, or borrow on houses 
they can’t afford.

Amid a hail of well founded criticism from liberal and conservative economists 
alike, Obama, with Geithner, Summers and Bernanke at his elbow, remains 
absolutely committed to giving the bankers everything they ask for, trillion 
upon trillion.  As William Black, deputy director at the former Federal Savings 
and Loan Insurance Corp. during the thrift crisis of the 1980s, recently 
remarked in an acrid interview in Barron’s, "Unless the current administration 
changes course pretty drastically, the scandal will destroy Obama's 
administration, both economically and in terms of integrity. We have failed 
bankers giving advice to failed regulators on how to deal with failed assets. 
How can it result in anything but failure?"

In foreign policy the ice is just as treacherous. As the nation emerges from its 
disastrous adventure in Iraq, Obama redeploys to the Afghan-Pakistan theater. 
The administration delightedly touts claims that its remote-controlled missiles 
are decimating al-Q’aida. The Washington-based journalist Gareth Porter last 
Thursday cited here data leaked by the Pakistani government showing that only 
ten out of 60 drone attack in February and March hit al Qaida leaders and the 
rest did what bombs and missiles usually do, namely kill civilians, 537 of them 
– thus immeasurably strengthening the hand of the Taliban  in the battle for 
hearts and minds.

Obama is no doubt unworried by this since the hearts and minds he’s mostly 
interested in belong to the American people and especially opinion-forming 
elites, who remain unflustered when high explosive falls on a wedding party in 
Waziristan. Failure in Iraq was re-labeled “victory” and in terms of domestic 
politics the chickens only come home to roost when there’s film of people 
climbing off the roof of the US embassy into a helicopter, or when the casualty 
rates among US soldiers start soaring. Soaring Pentagon budgets are popular with 
Congress, whose members nix any effort to cut back.

Where the ice is giving way for Obama is among those who thought he might strike 
out in a new direction in foreign policy. There’s not much sign of that. Whether 
it’s a sell-out of Haiti’s poor or acquiescence in Israel’s grim plans for the 
Palestinians, Obama’s game is strictly business as usual, up to and including 
the Cuban blockade whose damage, as Fidel Castro said last week, “cannot be 
calculated only on the basis of its economic effects, for it constantly takes 
human lives and brings painful suffering to our people. Numerous diagnostic 
equipment and crucial medicines -- made in  Europe, Japan or any other country 
-- are not available to our patients if they carry U.S. components or software.”

Obama has welshed on promises that America will stop kidnapping its enemies and 
“rendering” them to secret prisons overseas. As under Bush, enemy combatants 
languish without rights or recourse in prisons like Bagram. The torturers who 
flourished in the Bush years will not be prosecuted. Electronic eavesdropping 
continues unabated. It seems [that] he and his attorney general are welshing on 
commitments not to harass medical marijuana operations in states where local 
laws sanction such activity.

Will the liberal-left mutiny? Never. Remember, Bill Clinton bombed Yugoslavia 
and kicked away life supports of America’s poorest and most of the liberal-left 
stayed loyal to the end and cherish his memory. The labor movement has already 
seen defeat for its cherished “card check” bill, designed to win a level playing 
field for union organizers, thus presumptively boosting effective purchasing 
power among working people, vital to the nation’s economic well-being.  They’re 
not really blaming this on Obama, even though it is his chief aide, Rahm 
Emmanuel who, in his years on the Hill, picked Democratic candidates who feel no 
loyalty to labor and refused to push for the card check bill, and though Obama 
recently stressed he is a “new” Democrat -- transparent code for someone 
distancing himself from the labor movement...

--from <http://www.counterpunch.org/>