More War! The Road to Armageddon

August 11, 2011 by · Leave a Comment 

By Paul Craig Roberts

[Paul Craig Roberts was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury.  His latest book, HOW THE ECONOMY WAS LOST, was published by CounterPunch/AK Press. This article is from the Summer 2011 issue of the Trends Journal, a publication of Gerald Celente’s Trends Research Institute.]

As the second decade of the 21st century began, the US economy had not recovered from the Great Recession that began in December 2007.

The economy’s failure to recover was despite the largest fiscal and monetary stimulus in the country’s history. There was a $700 billion bank bailout, a $700 billion stimulus program, a couple of trillion in “quantitative easing,” that is, in debt monetization or the printing of money to finance the government’s expenditures. In addition the Federal Reserve’s balance sheet had expanded by trillions of dollars as the Fed purchased troubled mortgage bonds and derivatives in its effort to keep the financial system solvent and functioning. According to the Government Accountability Office’s audit of the Federal Reserve released by Senator Bernie Sanders, the Federal Reserve provided secret loans to US and foreign banks totaling $16.1 trillion, a sum larger than US Gross Domestic Product (GDP).
Despite the enormous fiscal and monetary stimulus, the economy remained dead in the water.

In 2011 the deficit in the federal government’s annual expenditures was 43 percent of the budget. In other words, the US government had to borrow, or the Fed had to monetize, 43 percent of federal expenditures during fiscal year 2011. Despite this unprecedented fiscal and monetary stimulus, the economy did not recover.

At the end of the first decade of the 21st century, the economy’s decline was temporarily halted by federal subsidies for car and home purchases. The $8,000 housing subsidy helped newlyweds purchase starter homes as the subsidy was a big chunk of the down payment in a depressed housing market. The car purchase subsidy moved future demand into the present. When these subsidies expired, the economy’s life support was turned off.

Problems with the statistical reporting of unemployment, inflation, and GDP disguised the worsening economy. Seasonal adjustments used to smooth the data over the course of the year were not designed for prolonged recession. Neither was the “birth-death” model used by the US Bureau of Labor Statistics (BLS) to estimate non-reported jobs from new start-up companies and losses from companies that have gone out of business. The birth-death model was designed for a growing economy and during downturns overestimates the number of new jobs created.

The “substitution effect” used in the consumer price index (CPI) underestimates inflation by assuming that consumers substitute cheaper foods for those that rise in price. For example, if the price of New York strip steak rises, this does not show up in the CPI, because of the assumption that people shift their purchases to a less expensive cut such as round steak.

Cooking the Books

The widely used “core inflation” measure does not include food or energy. Core inflation is a useful measure for those who want to put an optimistic spin on the outlook.

By underestimating inflation, the government can overestimate real GDP growth, thus creating a fictional rosy outlook. Similarly, by using the employment measure known as U.3, the government underestimates unemployment.

The “headline” unemployment rate, the one emphasized by the media and the financial press, stood at 9.2 percent in June, 2011. But this rate does not include any discouraged workers. A discouraged worker is a person who has ceased looking for a job, because there are no jobs to be found. A discouraged worker is not considered to be in the work force and is not counted among the U.3 unemployed. The federal government knows that this is phony and has a U.6 measure of unemployment that counts the short-term discouraged. This measure, seldom reported by the media, stood at 16.2 percent in June, 2011.

Statistician John Williams (shadowstats.com) continues to count also the long-term discouraged workers according to the way it was officially done in 1980. In June, 2011, this full measure of the US unemployment rate was 22.7 percent.

In other words, by 2011 between one-fifth and one-fourth of the US work force were without jobs.

As 2011 progressed, the United States faced three simultaneous economic crises. One crisis arose from the loss of US jobs, GDP, consumer income, and tax base caused by corporations off-shoring their production for the US market. Instead of making their products at home with American labor and providing Americans with jobs and states and localities with tax revenues, US corporations provided countries such as China, India, and Indonesia with GDP, jobs, consumer income and a tax base. This practice meant that economic stimulus was unable to revive the US economy as Americans cannot be called back to work jobs that have been moved abroad.

Another crisis was the financial crisis resulting from deregulation, fraud, and greed. Securitization of mortgages meant that issuers of mortgages no longer had any incentive to ascertain the credit worthiness of the borrower, because the issuers sold the mortgages to third parties who combined the mortgages with others and sold them to investors.

As mortgages were issued for fees, the more mortgages issued, the higher the income from fees. In order to collect fee income, some issuers faked credit reports for borrowers. With the housing market booming, many people took mortgages in order to make money on the resale of the properties. With housing prices rising rapidly, down payments and credit worthiness became concerns of the past. The financial crisis was made worse by the ability of investment banks to get around capital requirements and, thereby, leverage their equity by incurring enormous debt. When all the bubbles burst, the house of cards collapsed.

Economic Armageddon

The third crisis was the $1.5+ trillion annual federal budget deficits, which were too large to be financed without the Federal Reserve buying the Treasury’s new debt issues. Known as monetizing debt, the Federal Reserve purchased the Treasury’s bills, notes, and bonds by creating a checking account, which the Treasury would then draw upon to pay the government’s bills. The outpouring of Treasury debt raised concerns about the dollar’s exchange value and role as reserve currency, and it raised fears of inflation. Gold and silver prices rose as the dollar declined in foreign exchange markets.

Any one of these crises was serious. All together, they implied economic Armageddon.

There was no obvious way out, but even if one could be found, the government was focused elsewhere — on wars.

In addition to ongoing military operations in Iraq, Afghanistan, Pakistan, Yemen and Somalia, the US and NATO began military operations against Libya on March 19, 2011. As with the existing wars, the real purpose of the aggression against Libya was not acknowledged, but it became clear that the war’s purpose was to evict China from its oil investments in eastern Libya. Unlike the previous Arab protests, the Libyan rebellion was an armed uprising in which some saw the CIA’s hand.

The Libyan war upped the risk, because although hiding behind the veil of Arab protest, the US was actually confronting China. Similarly, in the US-supported armed rebellion in Syria, Washington’s target was the Russian naval base at Tartus. Overthrowing the Assad government in Syria and installing a US friendly regime would put paid to Russia’s naval presence in the Mediterranean.

By hiding its purposes behind Arab protests in Libya and Syria that it might have initiated, Washington avoided face-to-face conflicts with China and Russia, but nevertheless the two powers understood that Washington was striking at their interests. This elevated the recklessness of Washington’s aggressive policies by initiating confrontation with two nuclear powers, one of which held financial power over the US as America’s largest foreign creditor.

China’s oil investments in Angola and Nigeria were another target. To counter China’s economic penetration of Africa, the US created the American African Command in the closing years of the first decade of the 21st century. Disturbed by China’s rise, the US undertook to prevent China from having independent sources of energy. The great game that in the past has always led to war is being played out once again.

September 11, 2001, provided Washington with a new “threat” to replace the Soviet threat, which had expired in 1991. Despite the absence of the Soviet threat, the military/security budget had been kept alive for a decade. September 11, 2001, injected rapid growth into the military/security budget. A decade later the budget stood at approximately $1.1 trillion annually, or approximately 70 percent of the federal deficit which was crippling the dollar and threatening the US Treasury’s credit rating.

Focused on Middle Eastern wars, Washington was losing the war for the US economy.

As the expectation of economic recovery evaporated over the course of 2011, the need for war became more imperative.

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Battle over Circumcision Shaping Up in California

June 2, 2011 by · Leave a Comment 

By Sue Fishkoff

rabbi

Rabbi Gil Leeds, right, performs a brit milah in Palo Alto, Calif., in July 2010. The baby is held by Mitchell Ackerson; Rabbi Yitzchok Feldman looks on. (Alex Axelrod)

SAN FRANCISCO (JTA) — In November, San Franciscans will vote on a ballot measure that would outlaw circumcision on boys under the age of 18.

Although experts say it is highly unlikely the measure will pass — very few state propositions pass, much less one this controversial — the mere fact that it reached the ballot, and in such a major city, has caused much concern for Jews and their allies.

Opponents of the bill see it as a violation of the Constitution’s protection of religious rights and an infringement on physicians’ ability to practice medicine. More than that, however, the measure is being seen as a frontal attack on a central tenet of Judaism.

“The stakes are very high,” said Nathan Diament, director of the Orthodox Union’s Institute for Public Affairs. “Circumcision is a fundamental aspect of Jewish ritual practice and Jewish identity. While we certainly hope the prospect of its being enacted is remote, the precedent it would set and the message it would send would be terrible, not just in the United States but around the world.
“We don’t just want it defeated,” he said, “we want it defeated resoundly.”

Anti-circumcision activists have been around for decades, particularly on the West Coast.

They range from the Bay Area Intactivists, a loosely organized group that protests outside medical conferences in and around San Francisco, to MGM Bill (MGM stands for male genital mutilation), a San Diego-based advocacy group that has prepared anti-circumcision legislation for 46 states. MGM has managed to find a legislative sponsor in only one state: Massachusetts, last year. The bill didn’t even make it out of committee.

Matthew Hess, who founded MGM Bill in 2003 and spearheads its legislative efforts, says he is trying to protect boys from what he considers a barbaric mutilation of their bodies. He became an activist in his mid-20s, he says, when he decided that his own circumcision as an infant resulted in diminished sexual sensitivity as an adult.

“Freedom of religion stops at another person’s body,” he told JTA.

Last fall, MGM Bill changed its tactics, deciding to bypass the U.S. Congress and go straight to voters. The group gathered more than 12,000 signatures in San Francisco, enough to have the measure placed on the Nov. 8 ballot. If it passes, anyone who circumcises a boy under the age of 18 within city limits faces a $1,000 fine and up to one year in jail. The only exception would be for “compelling and immediate medical need.”

A similar effort is under way in Santa Monica, Calif., for that city’s November 2012 election. Hess says no other cities are being targeted — for now.

The Jewish community responded immediately and loudly to the San Francisco ballot initiative, with denunciations from across the nation. The American Jewish Committee called it a “direct assault on Jewish religious practice” that was “unprecedented in American Jewish life.” The Orthodox Union said the measure is “likely illegal” and is “patently discriminatory against Jews and Muslims.”

Locally, the San Francisco Jewish Community Relations Council organized a wide-ranging coalition of religious, medical, legal and political leaders to oppose the ballot measure. It was the first time that the Jewish community organized a formal counter effort because it was the first time that such a measure has made it to the ballot, according to Abby Porth, the JCRC’s associate director and the force behind the Committee for Parental Choice and Religious Freedom.

The newly formed committee, which also includes Muslim and Christian leaders, is still organizing its legal strategy; Porth declined to provide details.

Muslims also practice ritual circumcision on boys, although it can take place at any time before puberty.

The fight against the San Francisco ballot measure has brought a number of Muslim organizations into the JCRC-led coalition, including the Council on American-Islamic Relations. Bay Area director Zahra Billoo notes that CAIR rarely finds itself on the same political side as groups such as the Orthodox Union.

It’s the assault on religious freedoms that brings the two together, Billoo said.

“The civil rights of Jewish and Muslims are being impacted,” she told JTA. “We don’t agree on all things all the time, but we do find common cause in many areas. An attack on one religion is an attack on all religions.”

A popular local mohel, Rabbi Gil Leeds, director of the Chabad Center of the University of California, Berkeley, says he’s been fielding calls and e-mails from all over the area expressing concern.

“Jews from across the spectrum of Jewish observance, as well as many non-Jews, have responded in shock at this attempt to undermine our basic human rights as parents and as Jews,” Leeds said.
Proponents and opponents of a ban on circumcision argue over the health benefits and legal aspects of the practice.

“To say it has no medical benefit and so should be outlawed is completely untrue,” said Dr. Mark Glasser, a retired Bay Area ob-gyn who estimates that he has performed hundreds of circumcisions during his 35 years in practice.

Glasser notes that the World Health Organization supports circumcision as a preventative measure against HIV transmission, and several Centers for Disease Control studies show the same result. The American Academy of Pediatrics is neutral, as is the American College of Obstetrics and Gynecology. But Glasser says those positions have not be revisited since the most recent AIDS studies.

“The unfortunate part is that people laugh — they say the San Francisco crazies are at it again. But this is no laughing matter,” he said. “Circumcision is very low-risk and has tremendous benefits, including life-saving benefits.”

Joel Paul, professor of constitutional law and associate dean of the University of California Hastings School of Law, says the law likely would not survive a court challenge — which could come even before the Nov. 8 ballot.

The proposed measure appears to violate the First Amendment protection of the free exercise of religion, and entangles the state in religious matters by putting the state in the position of judging whether a certain religious practice is permissible. Moreover, putting such a matter to a popular vote contravenes the Constitution’s many protections of the rights of individuals and minorities.

“This proposition would let the majority decide religious practice for a religious group,” Paul told JTA. “It’s not part of our politics. No one should have to go into an election and be asked to defend their religion.”

Hess argues, on the other hand, that the law is on his side. Noting that female genital mutilation is illegal in this country, he says boys should get equal protection under the law, no matter the religious beliefs of their parents.

That is a false and dangerous analogy, Porth says.

“Female genital mutilation is illegal because it is a cruel practice, medically harmful and performed for the explicit purpose of preventing female sexual satisfaction,” she said. “In contrast, there’s no credible medical evidence that male circumcision is harmful or that it prevents sexual satisfaction. Its purpose is for health reasons and religious belief.”

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