From Global Research
By Dr. Ellen Hodgson Brown

Last week, Congress passed a housing bill that gave the Treasury Department a blank check to inject billions of U.S. taxpayer dollars into mortgage giants Fannie Mae and Freddie Mac, snatching them from insolvency. To accommodate this blank check, Congress obligingly raised its debt ceiling by $800 billion. Ouch! That’s nearly a trillion dollars. Why was it necessary to incur this potentially crippling public debt to bail out two completely private, for-profit behemoths, which have run themselves into bankruptcy with their own risky investment schemes? Policymakers said it was essential to maintain the country’s creditworthiness with foreign lenders, which today hold about one-fifth of Fannie and Freddie securities. According to a July 21 report by Heather Timmons in The New York Times:

One out of 10 American mortgages is, in effect, in the hands of institutions and governments outside the United States.1

Ten percent of American mortgages are now owned by foreigners? Doesn’t that defeat the whole purpose of Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Mortgage Corporation)? They were supposedly set up to fund “the American dream” – home ownership by Americans. Today, American homes are owned by anonymous pools of private investors, many of whom are foreign governments and foreign central banks. How did we manage to give away the farm? And why are we bowing to the interests of foreign investors to the point of driving our own government into bankruptcy? The federal debt is already nearly ten trillion dollars, more than the government can ever possibly repay with taxes.

According to analysts, the bailout of the two mortgage giants is necessary “because America’s relations with a host of countries are intricately tied to Fannie and Freddie,” and because we need to assure “Americans’ future ability to gain access to credit. If foreign companies and governments abandon United States investments, home, auto and credit card loans will be much more difficult to come by.”2

Read more Mortgage Crisis

From The Regressive Antidote
By David Michael Green

Any American who’s been on the planet for more than a few years has lived through a series of economic ups and downs – what economists call the business cycle. These booms and busts seem to follow one another as inevitably as sunset does sunrise.

Phil Gramm hasn’t apparently noticed, but we’re now pretty deep into an economic downturn – whether or not it officially qualifies as a recession yet or is simply on the way to becoming one.

But two things are especially striking about this particular iteration of our economic malaise. One is that we never quite seem to have had the boom we were supposed to get in between this bust and the last one. Gross domestic product, the key single indicator of economic health used to measure the state of the economy, has done reasonably well since the downturn that began in 2000. So has the stock market, and so, especially, have the one percent or so of the richest Americans, who have lately transitioned from being ridiculously rich to obscenely rich.

Most of the rest of us, on the other hand, may be excused for wondering when the good times hit, ‘cause we somehow missed it. It’s funny (hah-hah, right?), but in the go-go late 1990s, some economists were wondering whether Alan “The Second Coming” Greenspan and Robert “Token Wall Street Pseudo-Democrat” Rubin hadn’t actually killed the business cycle forever, with only good times to come for generations on end. Ironically, the subsequent decade may be considered to have posed the same question, only with a very different meaning. Given the absence of any serious recovery content in the latest alleged recovery, maybe the business cycle is dead – only not with permanent boom, but permanent bust, instead.

In truth, though, we may come to look upon years like 2004 or 2005 as the good ol’ days. That’s because the second unique thing about the present downturn is the depth of down to which we may now be turning. I’m sure somebody was relieved when George Bush recently informed the country that the economic fundamentals are solid, but it sure wasn’t me. Hard as it is to imagine that this president could get something wrong or speak, uh, somewhat less than candidly, my fear is that conditions are quite the opposite of those the cheerleader-in-chief portrayed. I remember well the recessions of the 1970s, 1980s and 1990s. This one doesn’t feel anything like those. It seems a lot bigger. My fear is that the bottom may be falling out. My fear is that it’s the fire this time.

Read more Fire

From AlterNet
By Joshua Holland

There is nothing more terrifying to corporate America than the prospect of dealing with its workforce on an even playing field, and, along with allies on the Right, it’s pulling out all the stops to keep that from happening. At stake is much more than the usual tax breaks, trade deals and relentless deregulation; corporations are gearing up for a fight to preserve a status quo in which the largest share of America’s national income goes to profits and the smallest share to wages since the Great Depression — in fact, since the government started tracking those figures.

There will be many heated legislative battles if 2008 shakes out with larger Congressional majorities for Democrats and an Obama White House — fights over war and peace, energy policy, health care reform and immigration. But it may be a bill that many Americans have never heard of that sparks the most pitched battle Washington has seen since the Civil Rights Act. It’s called the Employee Free Choice Act (EFCA) — a measure that would go a long way toward guaranteeing working people the right to join a union if they so choose — and it has the potential to reverse more than three decades of painful stagflation, with prices rising and paychecks flat, for America’s middle class and working poor.

The Chamber of Commerce, D.C. lobbyists, firms that rely on cheap labor and a host of “astroturf” front groups are building a war chest that could reach hundreds of millions of dollars in an effort to build a firewall against EFCA and other efforts to put a check on corporate power and rebuild a declining middle class. A recent report on the front page of the Wall Street Journal about how Wal-Mart — the nation’s largest employer — is “mobilizing its store managers and department supervisors” in an effort to discourage its workers from voting Democratic this fall generated quite a bit of controversy. According to a report in the National Journal that received less attention, “several business-backed groups … (including) two fledgling coalitions fighting labor-supported legislation and the conservative political group Freedom’s Watch are trying to raise $100 million for issue advocacy and get-out-the-vote efforts to benefit about 10 GOP Senate races.”

It’s the EFCA — the idea that working people who want to join a union can — that has corporate America quaking in its collective boots. The bill passed the House easily in 2007 — by 56 votes — and had majority support in the Senate. But it didn’t reach the 60 votes required to kill a GOP-led filibuster, and that massive war chest being amassed by the corporate Right is, in part, an attempt to maintain a firewall of at least 41 anti-union senators — mostly Republicans joined by a few corporatist Dems — to kill the bill in the 2009 Congress. President Bush threatened to veto the legislation if it had passed in 2007, but this time around, they fear that a Democrat will be sitting in the White House. Obama was a co-sponsor of the 2007 legislation; McCain opposed it.

Read more Middle Class

From The BBC News

A serious oil supply crisis is looming, which could push prices above $200 a barrel, a think tank has warned.

A “supply crunch” will affect the world market within the next five to 10 years, the Chatham House report said.

While there is plenty of oil in the ground, companies and governments were failing to invest enough to ensure production, it added.

Only a collapse in demand can stave off the looming crisis, report author Professor Paul Stevens said.

“In reality, the only possibility of avoiding such a crunch appears to be if a major recession reduces demand - and even then such an outcome may only postpone the problem,” he said in The Coming Oil Supply Crunch.

Lack of funding

Prof Stevens warned that investment in new oil supplies has been inadequate as oil firms prefer to return profits to shareholders rather than reinvest it.

Furthermore, oil producing cartel Opec has failed to meet plans to expand its capacity since 2005.

Read more Oil

From The Washington Post
By Ruth Marcus

Barack Obama is cranking up the populist rhetoric.

He’ll sock oil companies with a windfall profits tax to give American families a $1,000 “energy rebate,” he tells voters at a town hall meeting in Youngstown, Ohio, on Tuesday.

Meanwhile, Obama says, John McCain would lavish “$4 billion more in tax breaks to the biggest oil companies in America — including $1.2 billion to Exxon Mobil . . . a company that, last quarter, made the same amount of money in 30 seconds that a typical Ohio worker makes in a year.”

This turn to populism is not an extreme political makeover. Rather, it’s a distinct tonal shift as the Democratic presidential candidate finishes a trip through three swing states — Michigan, Ohio and Indiana — where blue-collar voters aren’t necessarily on board. Listen to Obama, and you hear the distant strains of Al Gore 2000: “the people versus the powerful.”

The traditional transition from primary to general election campaigning involves stepping gingerly, preferably unobtrusively, toward the center. Obama swiftly executed that pivot, from backing the warrantless wiretapping compromise to speaking supportively of a Supreme Court ruling expanding gun rights to criticizing another ruling that invalidated the death penalty for child rape.

But much as John McCain needs to cultivate his party’s still-skeptical base, Obama needs to tend to the anxieties of blue-collar Democratic voters in states such as Ohio who voted overwhelmingly for Hillary Clinton in the primary. More broadly, he needs to speak to the cascading economic worries felt by voters of both parties, or no party at all.

Read more Obama

From The Khaleej Times
By Jonathan Power

The cream of America’s black population has never done so well as in the last 10 years — two secretaries of state, a national security adviser, chief of the armed forces, heads of major companies from American Express to Time/Warner, the world’s largest media and entertainment conglomerate, congressmen and congresswomen, rectors of major universities, bishops, newspaper editorial writers.

The list goes on and on, and perhaps later this year it will be capped by the election of a black president. What a difference from as recently as the 1960s when only sport, the arts and preaching were open to ambitious blacks. Even in the 1970s, as I long ago documented in Encounter magazine, (few believed me), middle class professional blacks in sizable numbers were beginning to roar ahead, closing the gap with their white peers. Thank you Martin Luther King.

But like America’s infrastructure, neglect has meant that the cracks and strains beneath are once again coming to the surface, if not, as in the past, in civil rights agitation or riots, but in the shearing of family, in educational failure and in its appalling state of health and morbidity. The “benign neglect”of Patrick Moynihan, then social affairs adviser to president Richard Nixon, has moved to malign neglect.

Not that recent presidents ignored the issue, but what they initiated paled before the ambitions of America’s one and only big presidential plan, Lyndon Johnson’s “War on Poverty”, a farsighted plan of action, which was sabotaged by the Vietnam war. Another such war on poverty is now needed.

The basic statistics have been thrown into relief by a new report, “The Measure of America”, published by the American Human Development Report, modelled on the UN annual report of the same name. The UN report was the brainchild of the late Pakistani economist Mahbub ul Haq and based on the work of the Nobel laureate in economics, the Indian, Amartya Sen.

Read more Poverty

From True Blue Liberal
By Joel S. Hirschhorn

Once upon a time when governments no longer served most of their citizens it was the most economically disadvantaged that could be counted on to rebel against tyranny and injustice. Times have changed, for the worse, despite the spread of democracy.

Here we are with a two-party plutocracy that preferentially serves corporate and wealthy interests and lets the middle class suffer and sink. Plausibly, the middle class is unready to revolt because it still maintains a relatively good standard of living despite rising economic insecurity. But what about the lowest 40 percent of Americans that are the working poor?

A recent survey of this group by the Washington Post, the Henry J. Kaiser Family Foundation and Harvard University conducted this past June looked at the beliefs of adults ages 18 to 64 working 30 or more hours a week, not self-employed and who earned no more than $27,000 in 2007. The results show a fascinating dichotomy. Though there is widespread pain and discontent there is also a stubborn faith in the American dream despite little help from government.

Ninety percent of this group sees the current economy negatively, either not so good or poor, with 52 percent feeling financially insecure and 50 percent feeling less secure than a few years ago. The fractions saying they have difficulty affording basic things are severe, including: 88 percent that cannot save money for college or other education for their children, 82 percent paying for gasoline or other transportation costs, 81 percent saving money for retirement, 65 percent paying for health care and health insurance, 65 percent handling child care, close to 60 percent paying credit card bills, monthly utility bills and rent or mortgage costs, and 47 percent buying food. Three quarters say it has gotten harder to find good jobs and nearly that fraction for finding affordable health care, and 68 percent finding decent, affordable housing. Read the rest of this entry »

From True Blue Liberal
By Shepherd Bliss

Slow Food Nation leader Alice Waters–founder of Berkeley’s famous Chez Panisse Restaurant and author of eight food books–spoke at the small town (8000 people) Sebastopol Farmers’ Market in Northern California August 3. She was interviewed about the August 29-31 SFN celebration to happen around San Francisco by KRCB public radio host Michelle Anna Jordan for her “Mouthful” program to run that evening.

“We want to lift a loud voice to change our food system,” Waters responded when asked about SFN, where over 50,000 people are expected. “We need to change the ways we grow, distribute, and eat food, which needs to be good, clean, and fair. Things are at a crisis point with respect to health and the environment.”

Waters described how the lawn in front of San Francisco’s Civic Center, one of the sites for SFN, has been replaced with a victory garden. “We have been talking about a vegetable garden on the White House lawn. This would be a way to talk about stewardship and nourishment. Thomas Jefferson had such a garden.”

“A big message of Slow Food Nation is that we all need to be planting gardens,” Waters noted. Addressing global climate change issues, she commented, “We need to have more greenhouses in the future, whether it gets too hot or too cold.”

“How we eat can change the world,” Waters has said elsewhere. By combining fresh produce from local farms with European cuisine, Waters helped create a food revolution and transform eating habit. At the Sebastopol market she also signed copies of her newest book “The Art of Simple Food.” Read the rest of this entry »

From Der Spiegel
By Mark Scott

The bureaucrats that run the European Union’s day-to-day business aren’t known for taking risks. Yet back in 2005, when they devised the EU Greenhouse Gas Emission Trading Scheme (EU ETS), these pencil pushers gambled that a cap-and-trade scheme would help cut the EU’s carbon dioxide emissions. Now, three years on, the environmental benefits from the EU ETS remain unclear: The continent’s CO2 output actually rose 1.1 percent last year.

Moreover, its impact on the European economy is far from clear. Optimists think Europe’s early adoption of a cap-and-trade CO2 market will give local companies a competitive advantage when other regions of the world finally start trading carbon. Under the EU ETS, companies are given a set number of carbon allowances (the “cap” in cap and trade), which then can be bought and sold on the open market. In theory, this provides a financial incentive for firms to become more energy efficient, giving European businesses a head start in cutting overhead just as fuel costs begin to hit company profits.

This goal will be put to the test ahead of next year’s U.N.-backed meeting in Copenhagen to negotiate a global agreement on climate change. For Europeans, the summit holds particular importance. The continent has banked its financial future—and moral authority—on creating a low-carbon economy. This gamble’s efficacy now depends on the likes of China, India, and the U.S. deciding whether to embrace carbon trading. “Copenhagen will play a big part in showing that Europe’s creation of a cap-and-trade carbon market will pay off,” says Mark Spelman, global head of strategy at consultancy Accenture (ACN).

Read more CO2 Emissions

From The Baltimore Sun
By Steve Chapman

Former Texas Sen. Phil Gramm got in trouble when he said Americans are mired not in an economic contraction but in a “mental recession.” He soon had to step down as co-chairman of Sen. John McCain’s campaign for committing the ultimate political sin: telling the truth about a misperception that happens to be very popular.

Americans feel as though the economy is in a recession and want the government to do something about it. In reality, it is expanding. In the second quarter, it grew at a respectable inflation-adjusted rate of 1.9 percent, double the pace of the first quarter. Unemployment was up, but it’s still a pretty mild 5.7 percent.

The recession cures being bandied about by the presidential candidates and others miss the real source of our pain and what can be done about it - which is not much.

“There’s a great misunderstanding of what’s happened,” says economist Allan Meltzer. The main trouble, in his view, is not that Americans are suffering from weak or negative economic growth, but that they have suffered a loss of wealth, a very different ailment. He explains that the loss stems from two major factors. The first is high oil prices, which are the equivalent of a huge tax increase. The second is the housing bust, which has vaporized more than a trillion dollars worth of assets.

What does all this mean? Our standard of living has declined. We can’t afford all the things we used to, because so much of our income is going to pay for gas.

Read more Standard of Living