Robert Reich - How to Avoid the Austerity Trap But Still Deal With the Budget Deficit

We now know austerity economics is bad for weak economies facing large budget deficits. Much of Europe is in recession because of budget cuts demanded by Germany. And as Europe’s economies shrink, their debts become proportionally larger, making a bad situation worse.

The way to avoid this austerity trap is to get growth and jobs back first, and only then tackle budget deficits. 

The U.S. hasn’t yet fallen into the trap, but it could soon. Last week the non-partisan Congressional Budget Office warned we’ll be in recession early next year if the Bush tax cuts end as scheduled on January 1, and if more than $100 billion is automatically cut from federal spending, as required by Congress’s failure last August to reach a budget deal. 

Predictably, Capitol Hill is deadlocked. Democrats refuse to extend the Bush tax cuts for high earners and Republicans refuse to delay the budget cuts. 

If recent history is any guide, a deal will be struck at the last moment – during a lame-duck Congress, some time in late December. And it will only be to remove the January 1 trigger. Keep everything as it is, the Bush tax cuts as well as current spending, and kick the can down the road into 2013 and beyond. 

Which means no plan for reducing the budget deficit. 

Read More:

http://robertreich.org/post/23939473049

Alexander Higgins - Exclusive – Wall Street Banks Are Secretly Building A Mega Private Army

Wall Street banks have secretly taken over US firearms and ammunition manufacturers and the world’s largest mercenary firms in a stealth build up private military force.

A Daily KOs article reveals that Wall Street banks have used private equity firms to acquire and launch a massive stealth takeover of private security firms, US ammo and gun manufacturers, uniforms, silencers and an army of mercenaries to build what amounts to the world’s largest private army.

At the same time the private mercenary companies they now control, which include the likes of  Dynacorp and the notorious name changing Blackwater/Xe Services/Academi,  have been authorized under Department of Defense DIRECTIVE NUMBER 3025.18 to actually conduct policing operations inside the United States.

The article reveals Citi Bank, Bank of America, Barclays, and Deutsche Bank have provide huge amounts of funding to two private Wall Street equity firms, Cerebus and Veritas Equity, which in turn have used umbrella companies such as Freedom Corp., to engage in stealth takeovers and weapons stockpiling which has consumed the likes of  several gun manufacturers and ammunition manufacturers including Remington, Cobbs, H&R, Marlin, Dakota, and Bushmaker.

Read More:

http://thetruthisnow.com/archives/political/exclusive-wall-street-banks-are-secretly-building-a-mega-private-army/

Andre Damon - Mounting Signs Of Deepening Global Slump

New economic figures point to a renewed downturn of the world economy amid a growing debt crisis in Europe and the threatened breakup of the euro zone.

The economy of the 17-member euro zone contracted sharply in May, according to the currency bloc’s purchasing managers’ index, which fell at its fastest rate since June 2009. Market, the issuer of the survey, said the figures indicate the euro zone economy will likely shrink by about 0.5 per cent in the current quarter.

The euro zone purchasing manager’s index fell to 45.9 in May, down from 46.7 in April. Germany’s index dropped to 49.6, down from 50.5, and that of France fell from 45.9 to 44.7. Figures below 50 indicate a contraction.

The euro zone’s gross domestic product remained flat in the first quarter of the year, avoiding a negative figure due only to the relatively stronger performance of the German economy, which expanded by 0.5 percent.

In May, however, even Germany’s economy likely shrank. Business confidence there fell last month to 106.9 from 109.9 in April, according to the Ifo institute, the second-biggest monthly drop since late 2008.

Read More:

http://www.wsws.org/articles/2012/may2012/econ-m26.shtml

Tina Dupuy - Why Mobility in America Is in the Dumpster

We’re a species that has gotten around; we’ve wandered, pioneered and migrated to every corner of the world. The spear tip of technology is how we can get somewhere else: the wheel, the sailboat, the rocket. In short: we’re movers.

We are now as mobile as we’ve ever been as a culture. Our phones are not tethered to any particular location. Our keepsakes, like photos and letters, are all saved on devices smaller than your average drugstore paperback. The bitter visual of a breakup – the splitting up of a couple’s CD collection – no longer exists since you both have copies of the same MP3s. Your computer fits comfortably in your lap – everything else is in your pocket. We now have the ability to go anywhere and bring with us more things utilizing less space than at any other time in human history.

We have the ability – the freedom – to roam more now than ever before. And yet our upward mobility is standing still.

Jason DeParle in The New York Times wrote in January this year, “Countries with less equality generally have less mobility.” And as Occupy Wall Street successfully pointed out the top one percent “earn” nearly a quarter of the nation’s income. While they have enjoyed an increase in wealth and a decrease in taxes, the rest of the country has seen a flattening of their prospects. The U.S. ranks near the bottom in income inequality and therefore upward mobility.

Time noted, “The Pew Charitable Trusts’ Economic Mobility Project has found that if you were born in 1970 in the bottom one-fifth of the socioeconomic spectrum in the U.S., you had only about a 17 percent chance of making it into the upper two-fifths.”

Read More:

http://www.alternet.org/story/155505/why_mobility_in_america_is_in_the_dumpster

Barack Obama: Let’s Steal 150 Million Dollars An Hour From Our Children

Do you think that someone could steal 150 million dollars and get away with it?  Well, the truth is that such a theft is taking place every single hour of every single day.  The federal government is stealing 150 million dollars an hour from our children and our grandchildren and Barack Obama thinks that is a good thing.  The new Obama budget projects a $1.33 trillion federal budget deficit for the 2012 fiscal year.  That is significantly higher than the $1.15 trillion that the Congressional Budget Office was projecting because it includes a whole bunch of stimulus spending that the Obama administration plans to do.  So let's do a little math.  When you divide $1.33 trillion by 365 days, you get 3.6438356 billion dollars.  So on average, the United States will be adding more than 3.6 billion dollars to the national debt every single day during fiscal 2012.  And when you divide $3.6438356 billion by 24 hours, you get 151.8 million dollars.  So on average, the U.S. national debt will be going up by more than 151 million dollars every single hourduring fiscal 2012 if Obama has his way.  This is a theft from our children and our grandchildren that is so vast that it is almost unimaginable.

The 2012 budget deficit that the Obama administration is projecting would be equivalent to approximately 8.5 percent of GDP.  We simply cannot afford to be running these kinds of outrageous budget deficits year after year.

Read More:

http://endoftheamericandream.com/archives/barack-obama-lets-steal-150-million-dollars-an-hour-from-our-children

Sara Robinson - Capitalism Has Failed: 5 Bold Ways to Build a New World

As our political system sputters, a wave of innovative thinking and bold experimentation is quietly sweeping away outmoded economic models. In New Economic Visions, a special five-part AlterNet series edited by economics editor Lynn Parramore in partnership with political economist Gar Alperovitz of the Democracy Collaborative, creative thinkers come together to explore the exciting ideas and projects that are shaping the philosophical and political vision of the movement that could take our economy back.

The problem, in a nutshell, is this: The old economic model has utterly failed us. It has destroyed our communities, our democracy, our economic security, and the planet we live on. The old industrial-age systems -- state communism, fascism, free-market capitalism -- have all let us down hard, and growing numbers of us understand that going back there isn't an option.

But we also know that transitioning to some kind of a new economy -- and, probably, a new governing model to match -- will be a civilization-wrenching process. We're having to reverse deep and ancient assumptions about how we allocate goods, labor, money, and power on a rapidly shrinking, endangered, complex, and ever more populated planet. We are bolding taking the global economy -- and all 7 billion souls who depend on it -- where no economy has ever gone before.

Read More:

http://www.alternet.org/story/155456/capitalism_has_failed%3A_5_bold_ways_to_build_a_new_world

Arun Gupta - Has the FBI Launched a War of Entrapment Against the Occupy Movement?

With the high-profile arrest of activists on terrorism charges in Cleveland on May Day and in Chicago during the NATO summit there, evidence is mounting that the FBI is unleashing the same methods of entrapment against the Occupy Wall Street movement that it has used against left movements and Muslim-Americans for the last decade.

In Cleveland the FBI announced on May 1 that “five self-proclaimed anarchists conspired to develop multiple terror plots designed to negatively impact the greater Cleveland metropolitan area.” The FBI claimed the five were nabbed as they attempted to blow up a bridge the night before using “inoperable” explosives supplied to them by an undercover FBI employee.

Then on May 19, the day before thousands marched peacefully in Chicago to protest NATO-led wars, the Illinois State Attorney hit three men with charges of terrorism for allegedly plotting to use “destructive devices” against targets ranging from Chicago police stations to the home of Mayor Rahm Emanuel. Defense attorneys for the Chicago activists claim their clients, like the Cleveland activists, were provided with supplies for making Molotov cocktails by undercover agents in an operation that included the participation of the FBI and Secret Service. This was followed up on May 20 by the arrest of two other men on terrorism charges in Chicago for statements they made, which critics say amount to thought crimes. The Chicago cases are also reportedly the first time the state of Illinois is charging individuals under its post-September 11 terrorism law.

Read More:

http://www.alternet.org/story/155581/has_the_fbi_launched_a_war_of_entrapment_against_the_occupy_movement

Mike Whitney - CRASH ALERT: The Stock Market is Falling like a Stone

As you might have noticed, the stock market is falling like a stone. As of 9 AM PST, the Dow Jones has dropped 172 points while all the other indices are down sharply. German 2-year debt (bund) has dipped below 0% this morning at auction, signalling an acceleration in the bank run taking place in southern Europe. Depositors in Spain, Greece, Italy, Portugal, etc would rather take a loss on their investment, then risk not their money back at all. The European Central Bank (ECB) does not guarantee deposits, so people are withdrawing their money en masse and getting out of Dodge pronto. What we're seeing is a real-time panic.

The ostensible trigger for the panic is known, but you won't read about it in the financial media where the news is dumbed down to the point of incoherence. What's really going on is that the German central bank (The Bundesbank) has indicated that it's ready to pull the plug on Greece which means that future bailouts will probably not be forthcoming. That's bad. It means that Greece will run out of money some time in June; their banking system will implode, and the "birthplace of democracy" will be reduced to 3rd world status overnight. Here's a blurb from the Bundesbank's communique:

"Current developments in Greece are extremely worrying. Greece is threatening not to implement the reform and consolidation measures that were agreed in return for the large-scale aid programmes.

Read More:

http://www.globalresearch.ca/index.php?context=va&aid=31027

Obama's Five Trillion Dollar Lie

Why isn't the U.S. economy in a depression right now?  The number one reason is because the federal government has stolen more than five trillion dollars from future generations since Barack Obama was elected and has used that money to pump up our grossly inflated standard of living.  Whether the federal government spends money wisely or foolishly, the truth is that the vast majority of it still ends up in the pockets of the American people who then use it to buy the things they need for their daily lives.  If the U.S. government had not borrowed and spent an extra five trillion dollars that we did not have over the past several years, we would be in the middle of a rip-roaring economic depression right now.  So any talk that Barack Obama is "improving the economy" is a total farce.  It is a five trillion dollar lie.  The reality is that Barack Obama and the U.S. Congress have been stealing trillions of dollars from future generations in order to make things tolerable in the present.  If the federal government adopted a balanced budget next year, the debt-fueled prosperity that we are currently enjoying would start disappearing very rapidly and all hell would break loose in America.

At this point, the U.S. national debt is over 15.7 trillion dollars.

When Ronald Reagan took office it was less than a trillion dollars.

If you were to divide the national debt up equally, it would come to more than $50,000 for every man, woman and child in the United States.

So the share of the national debt for an average family of four would be about $200,000.

Read More:

http://theeconomiccollapseblog.com/archives/obamas-five-trillion-dollar-lie

Taylor Lincoln - Wall Street Wants Congress To Roll Back Financial Derivatives Regulations

Revisiting the lessons from deregulating derivatives is particularly important right now because Congress seems to have forgotten them. A report we just issued provides a road map of how derivatives wrecked the economy in 2008 and could do so again if Wall Street gets its way.

Nine bills that would roll back the derivatives reforms created in the wake of the financial crisis are moving in Congress. These proposals, most of which have already passed in committee, have been put forth in the name of furthering the competitiveness of U.S. companies and creating jobs for Main Street. These are quite brazen claims, since deregulating derivatives arguably did more to harm economic competitiveness and job creation than anything Congress has done for a very long time.

Here is the history, in brief: At the end of the Clinton administration, financial derivatives were relatively new and sat in a regulatory netherworld. In practice, they were not regulated. But they bore all the hallmarks of traditional futures, which by law must be traded on regulated exchanges.

Federal Reserve Chairman Alan Greenspan and successive Treasury Secretaries Robert Rubin and Lawrence Summers (a trio Time magazine dubbed The Committee to Save the World) argued that financial derivatives investors were too “sophisticated” to require oversight. Regulating derivatives would “cause the worst financial crisis since World War II,” Summers claimed.

Read More:

http://www.alternet.org/story/155528/wall_street_wants_congress_to_roll_back_financial_derivatives_regulations