So, how are you doing? No, I mean really, how are you doing -- you and your family? Are you feeling prosperous, living the American dream? Are you on course for a secure retirement and with smooth going as you sail off into the sunset?

American families saw their real incomes fall 2.3 percent from 2001, according to a Federal Reserve survey of consumer finances released Thursday.

Bush will, of course, blame these negative figures on a "recession we inherited" (Translation: Blame Clinton) and being "attacked on 9/11." (Translation: Blame the terrorists.)

I wonder how many years have to pass before those excuses ring as hollow as they are?

Simply put, Bushonomics has been the most destructive set of economic policies to hit Americans since Herbert Hoover. No, wait. That understates the problem. Thanks to this administration we are all now stuck in a race between two looming catastrophes: an economic collapse or an ecological collapse. Who knows, it even might be a draw. Oh sure, you say, "There he goes again! Mr. Repent-The-End-Is-Near." Well, you tell me. Let's just look at the gauges on our economic dashboard and see what they tell us. The Federal Reserve study released Thursday provides us with the most current readings. "This is a tremendously detailed, comprehensive look at the American family's balance sheet and it ain't pretty," said Jared Bernstein, senior economist at the Economic Policy Institute.

Read "Paying employers not to end pensions" and "Paying for retirement." All of which are among the reasons I continue to believe we are living in the final months of a fool's economic paradise. The last time we teetered on such a precipice was at the end of the Reagan presidency. Conservatives like to point to the Reagan years as golden times, and for the wealthy and unscrupulous, they were. But Reaganomics, like Bushonomics, was fueled, not by genuine worker productivity and a healthy consumer spending, but hot money -- credit. During the Reagan administration, banks and savings and loans were deregulated and allowed to lend to anyone, even themselves. That fueled a building boom that was more often than not completely unrelated to housing demand.

Billions of dollars were pumped through the bank accounts of shady speculators and even shadier developers, for housing developments and commercial buildings for which there was no demand. Many of those developments went bankrupt and were later simply torn down. You know how that story ended. While all the free and easy dough pumped up economic indicators, it nearly killed the thrift industry, with almost half the nation's thrifts going under. And, it left future taxpayers with a $500 billion hole to fill. And, like Bush's tax cuts, Reagan's tax cuts did not, as promised, increase real economic activity resulting in higher tax revenues. They did just the opposite, they gutted the treasury, just as Bush's tax cuts have done today. How did we escape economic collapse after Reagan? Well, first his successor, George H.W. Bush, was left with no choice but to go back on his "read my lips, no new taxes," pledge, and raise taxes. It was either that or start boarding up government buildings.

That cost Bush I the love and support of the usual suspects that benefit from tax cuts, corporations and the wealthy. And that cost him reelection.

But even the Bush I tax increases proved a drop in the deficit bucket. So when Bill Clinton came to office, he raised taxes on the wealthiest Americans, and by the time he left office eight years later, the U.S. budget was in surplus.

Crisis averted.

Then Son of Bush and his team of economic Taliban arrived, and it was back to voodoo economics; the wrong tax cuts for the wrong people, deficits and profligate borrowing. Happy days were here again -- at least for those with the right connections, or the right lobbyist. All that loose cash has done it again -- distorted traditional economic indicators. The needles point to "full," but family bank accounts remain empty. Here we go again.

Deborah Reed, an economist at the Public Policy Institute shares my sense of deja vu. "The 1980s were marked by a similar paradox. The economy is growing, but the profits of that are not being shared with workers. They're going to the CEOs and the people owning stock," she said.

It was just lucky for us that Reagan's term in office ended before all his deficit chickens came home to roost at once. We are not likely to be as lucky. This time the perps have three more years at the till. By the time the next president is sworn into office he/she may have to take a crash course in Franklin Roosevelt's first years in office. Even if the next president is able to plug the holes in this ship of fools, it might be too late. Worldwide disruptions in food and energy, and human migration forced by global warming might well sink us anyway. On the bright side -- at least the water will be warm.

Stephen Pizzo is the author of numerous books, including "Inside Job: The Looting of America's Savings and Loans," which was nominated for a Pulitzer.

© 2006 Independent Media Institute. All rights reserved. View this story online at: http://www.alternet.org/story/32754/

The Bourse Conspiracy

For an administration that shrouds itself in the sophomoric secrecy of the Skull and Bones Club, its surprising how its plan to invade Iraq could be read like a book. With Iran though it's got the drapes closed and the shades drawn. In fact, guessing the administration's intentions has become a favorite parlor game the world over.

Is the US serious about making preemptive bombing strikes against Iranian nuclear facilities? Worse, is there any truth to Internet alarms that the US plans to attack sites like the uranium enrichment facility at Natanz with tactical "mini-" nukes?

On the other hand, burned by Iraq, will the US settle for sabotage and commando raids? Or is the administration's saber rattling just psy ops, as some suspect, designed to put the fear of Allah in Iran?

Most of all, why, if Iran is ten years away from a bomb, the urgency? Reaching into its grab bag of rationales -- [Your nation's name here] backed terror, stockpiled WMDs, and/or committed human rights abuses -- does the US seek to seize the reins of yet another state's oil industry?

Or, as was speculated before the Iraq invasion, perhaps the administration's desire to secure an uninterrupted oil supply for the US is secondary to that of securing profits for oil companies. In other words, it's not about the oil, it's about the oil business. As Krassimir Petrov, Ph.D. pointed out on GlobalResearch.org before Iraq, US seizure of its oil fields was unnecessary because we "could simply print dollars for nothing and use them to get all the oil in the world [we need]."

The key word is "dollars." Recall Neocon contempt toward "Old" Europe. Perhaps it masks a fear that, however bedeviled by fanatical Islamists, Europe is beginning to rival us in strength. Though its accumulated military pales beside ours, Europe wields its power via the euro, now almost as almighty as the dollar.

First, however, consider the title of a recent piece of Dr. Petrov's: "The Proposed Iranian Oil Bourse." What in the name of God and Allah is a bourse?

It has a poetic ring: "Emerging from the wood, we burst upon a bluebell-strewn bourse." Though French and melodic, like arbitrage and tranche, it's a business term meaning stock exchange, as in France's Federation Internationale des Bourses de Valeurs. And, like the bomb, Iran wants one.

Dealing oil securities, an Iranian bourse, according to Dr. Petrov, would provide serious competition for New York's NYMEX and London's International Petroleum Exchange (IPE). Its currency of choice, of course, would be the euro.

Revisiting the recent past, prior to our invasion was Iraq too going euro? Indeed, Saddam Hussein had decided to use the euro for his Food for Oil program in November 2000. Lt. Col. (Retired) Karen Kwiatkowski, former Pentagon and NSA staffer maintained this was a prime reason for the US invasion. William Clark, the author of Petrodollar Warfare: Oil, Iraq and the Future of the Dollar, concurred.

In an article on Rense.com, he wrote: "The Real Reason [sic] for this upcoming war is this administration's goal of preventing further OPEC momentum towards the euro as an oil transaction currency standard." In an "incredibly bold" move, it planned to use the war on terror, he maintained, as a pretext to halt the spread of the euro and undercut OPEC by flooding the market with Iraqi oil to reduce its price.

What difference does it make what currency a state transacts in?

Travel back to America's Depression, when Franklin Roosevelt's response to deficits was to print more money than there was gold to back it up. Stripped of true value, the dollar was condemned to depreciate and the economy left vulnerable to inflation.

According to Petrov, the world needed a reason to acquire the dollar and, in the early seventies, Saudi Arabia provided one, when in exchange for US military protection, it agreed to accept only dollars for oil. The dollar may no longer have been as good as gold, but it was now good as black gold.

"If someone demanded a different payment [for oil]," Dr. Petrov writes, "he had to be convinced, either by political or military pressure, to change his mind." That certain someone (Saddam) was convinced all right -- if not to deal in dollars, to steal all he could before high-tailing it out of his presidential palaces. It didn't take long for President Bush to sign an executive order switching Iraqi oil back to the dollar.

But, petro- or not, the dollar depreciated anyway, thanks to our debt. Nations like China and Japan can scarcely be faulted for seeking to unhitch their wagons from our falling star. Should they choose to switch to euros, their crash landing would be softened by the proposed Iranian bourse.

A former director of the IPE, Chris Cook, actually tried to help Iran set up a bourse, though due to internecine conflicts he was unsuccessful. In an article on Asia Times Online, he discounted US fear of the euro. "It is with wry amusement" that he regards the "genesis of this 'Iran bourse' project [as] a wish to subvert the US dollar by denominating oil pricing in euros."

In a post on PeakOil.com, Cook writes that, instead, an Iranian bourse is intended to circumvent what he believes is actually driving up the price of oil: not OPEC, but investment banks and other intermediary parties. He maintains that "Oil markets are -- courtesy of hedge funds -- an accident waiting to happen."

He's echoed by Robert Looney, professor of National Security Affairs at the Naval Postgraduate School, in an article for the Center for Contemporary Conflict. The notion that the administration throws roadblocks in the way of the euro, Looney writes, is "little more than another web-based conspiracy theory."

He believes that 1. OPEC is unlikely to arrive at the consensus needed to switch currencies; 2. the consequences of devaluing the dollar would be too great for any country to try; and 3. the appreciation of the euro won't last forever.

Besides, according to Looney, if the dollar were dethroned as the world reserve currency, it wouldn't even be that damaging ("around 0.5%") to the US gross domestic product. But his analysis, Clark wrote in an email to this author, "exemplifies the same one-dimensional perspective [as Cook] re petrodollar [and] petroeuro issues."

Returning to his article, should OPEC go euro, Clark wrote, "There'd surely be a run on the banks much like the 1930s." If the world acted in unison and abandoned the dollar -- "America's preeminent, inescapable Achilles Heel," he calls it -- our economy would be devastated.

Cook, however, calls it "merely a transactional issue." What "matters is in what assets. . . these proceeds are then invested." But Clark writes that by using our own currency to buy oil, we've been immune to "fluctuations of the dollar's valuation relative to other currencies." In his PeakOil.com post, he asks, "If oil pricing were merely a 'transactional' issue, why is it that the [EU has] begged Russia to switch to euro-based pricing [in their oil dealing]?"

In his post, Clark also quotes David Spiro, author of the Hidden Hand of American Hegemony: Petrodollar Recycling and International Markets, to the effect that we buy our oil from OPEC in dollars which we print anew while other nations pay for their oil in dollars they had to earn by trading goods and services.

Finally, Clark explains, we don't want the dollar to lose its status as world reserve currency, or sole guarantor of access to the world's most valuable commodity. The Iranian bourse has the potential to create a "de facto bi-polar world from an economic perspective," the last thing an administration hell-bent on hegemony wants.

Trying to prevent oil from being transacted in euros looks more and more like the act of an administration desperate to stall gathering worldwide momentum toward the euro. After all, Russia may be on the verge of pricing its oil in euros.

Meanwhile, in a speech before the House of Representatives on February 15, Texas Congressman Ron Paul gave a crash course on how printing money that's not backed by gold has put us on a collision course with the euro. "Using force," he said, "to compel people to accept money without real value can only work in the short run."

Whether or not it fought to keep the world safe from the euro, the administration is like a husband who can't remember what started his argument with his wife. Amidst all the pretexts for war it used, it may have lost sight of its original motive for intervention. At the end of the day, one can't help but wonder if the administration asserts its hegemony simply because it can. --posted Feb. 27, 2006

This article appeared in another form on BaltimoreChronicle.com. Reprinted by permission of the author.

It's The Dollar, Stupid!: Economic World Crisis Near The End Of March, Europe2020

[A major econonomic crisis during the month of March] results from the analysis of decisions taken by the two key-actors of the main on-going international crisis, i.e. the United States and Iran: On the one hand there is the Iranian decision of opening the first oil bourse priced in Euros on March 20th, 2006 in Teheran, available to all oil producers of the region, on the other hand, there is the decision of the American Federal Reserve to stop publishing M3 figures (the most reliable indicator on the amount of dollars circulating in the world) from March 23, 2006 onward [1]....

Iran's opening of an Oil Bourse priced in Euros at the end of March 2006 will be the end of the monopoly of the Dollar on the global oil market. The immediate result is likely to upset the international currency market as producing countries will be able to charge their production in Euros also. In parallel, European countries in particular will be able to buy oil directly in their own currency without going though the Dollar. Concretely speaking, in both cases this means that a lesser number of economic actors will need a lesser number of Dollars [2]. This double development will thus head to the same direction, i.e. a very significant reduction of the importance of the Dollar as the international reserve currency, and therefore a significant and sustainable weakening of the American currency, in particular compared to the Euro. The most conservative evaluations give €1 to $1,30 US Dollar by the end of 2006. But if the crisis reaches the scope anticipated by LEAP/E2020, estimates of €1 for $1,70 in 2007 are no longer unrealistic....

The end of the publication by the American Federal Reserve of the M3 monetary aggregate (and that of other components) [3] , a decision vehemently criticized by the community of economists and financial analysts, will have as a consequence to lose transparency on the evolution of the amount of Dollars in circulation worldwide. For some months already, M3 has significantly increased (indicating that « money printing » has already speeded up in Washington), knowing that the new President of the US Federal Reserve, Ben S. Bernanke, is a self-acknowledged fan of « money printing » [4]. Considering that a strong fall of the Dollar would probably result in a massive sale of the US Treasury Bonds held in Asia, in Europe and in the oil-producing countries, LEAP/E2020 estimates that the American decision to stop publishing M3 aims at hiding as long as possible two US decisions, partly imposed by the political and economic choices made these last years [5]:.... --more...

COMMENTARY:

Nuking the Economy

Forget Iran—Americans Should be Hysterical About This

Job growth over the last five years is the weakest on record. The US economy came up more than 7 million jobs short of keeping up with population growth. That’s one good reason for controlling immigration. An economy that cannot keep up with population growth should not be boosting population with heavy rates of legal and illegal immigration.

Over the past five years the US economy experienced a net job loss in goods-producing activities. The entire job growth was in service-providing activities--primarily credit intermediation, health care and social assistance, waiters, waitresses and bartenders, and state and local government.

US manufacturing lost 2.9 million jobs, almost 17% of the manufacturing work force. The wipeout is across the board. Not a single manufacturing payroll classification created a single new job.

The declines in some manufacturing sectors have more in common with a country undergoing saturation bombing during war than with a super-economy that is “the envy of the world.” Communications equipment lost 43% of its workforce. Semiconductors and electronic components lost 37% of its workforce. The workforce in computers and electronic products declined 30%. Electrical equipment and appliances lost 25% of its employees. The workforce in motor vehicles and parts declined 12%. Furniture and related products lost 17% of its jobs. Apparel manufacturers lost almost half of the work force. Employment in textile mills declined 43%. Paper and paper products lost one-fifth of its jobs. The work force in plastics and rubber products declined by 15%. Even manufacturers of beverages and tobacco products experienced a 7% shrinkage in jobs.

The knowledge jobs that were supposed to take the place of lost manufacturing jobs in the globalized “new economy” never appeared. The information sector lost 17% of its jobs, with the telecommunications work force declining by 25%. Even wholesale and retail trade lost jobs. Despite massive new accounting burdens imposed by Sarbanes-Oxley, accounting and bookkeeping employment shrank by 4%. Computer systems design and related lost 9% of its jobs. Today there are 209,000 fewer managerial and supervisory jobs than 5 years ago.

In five years the US economy only created 70,000 jobs in architecture and engineering, many of which are clerical. Little wonder engineering enrollments are shrinking. There are no jobs for graduates. The talk about engineering shortages is absolute ignorance. There are several hundred thousand American engineers who are unemployed and have been for years. No student wants a degree that is nothing but a ticket to a soup line. Many engineers have written to me that they cannot even get Wal-Mart jobs because their education makes them over-qualified.

Offshore outsourcing and offshore production have left the US awash with unemployment among the highly educated. The low measured rate of unemployment does not include discouraged workers. Labor arbitrage has made the unemployment rate less and less a meaningful indicator. In the past unemployment resulted mainly from turnover in the labor force and recession. Recoveries pulled people back into jobs.

Unemployment benefits were intended to help people over the down time in the cycle when workers were laid off. Today the unemployment is permanent, as entire occupations and industries are wiped out by labor arbitrage as corporations replace their American employees with foreign ones.

Economists who look beyond political press releases estimate the US unemployment rate to be between 7% and 8.5%. There are now hundreds of thousands of Americans who will never recover their investment in their university education.

Unless the BLS is falsifying the data or businesses are reporting the opposite of the facts, the US is experiencing a job depression. Most economists refuse to acknowledge the facts, because they endorsed globalization. It was a win-win situation, they said.

They were wrong.

At a time when America desperately needs the voices of educated people as a counterweight to the disinformation that emanates from the Bush administration and its supporters, economists have discredited themselves. This is especially true for “free market economists” who foolishly assumed that international labor arbitrage was an example of free trade that was benefitting Americans. Where is the benefit when employment in US export industries and import-competitive industries is shrinking? After decades of struggle to regain credibility, free market economics is on the verge of another wipeout.

No sane economist can possibly maintain that a deplorable record of merely 1,054,000 net new private sector jobs over five years is an indication of a healthy economy. The total number of private sector jobs created over the five year period is 500,000 jobs less than one year’s legal and illegal immigration! (In a December 2005 Center for Immigration Studies report based on the Census Bureau’s March 2005 Current Population Survey, Steven Camarota writes that there were 7.9 million new immigrants between January 2000 and March 2005.)

The economics profession has failed America. It touts a meaningless number while joblessness soars. Lazy journalists at the New York Times simply rewrite the Bush administration’s press releases.

On February 10 the Commerce Department released a record US trade deficit in goods and services for 2005--$726 billion. The US deficit in Advanced Technology Products reached a new high. Offshore production for home markets and jobs outsourcing has made the US highly dependent on foreign provided goods and services, while simultaneously reducing the export capability of the US economy. It is possible that there might be no exchange rate at which the US can balance its trade.

Polls indicate that the Bush administration is succeeding in whipping up fear and hysteria about Iran. The secretary of defense is promising Americans decades-long war. Is death in battle Bush’s solution to the job depression? Will Asians finance a decades-long war for a bankrupt country? --posted Feb. 27, 2006