Today's Stories

February 11, 2009

Neve Gordon
Few Peacemakers in the New Israeli Knesset

February 10, 2009

Kathy Kelly
How Do People Keep Going?

Nikolas Kozloff
The Stimulus Imbroglio

Uri Avnery
Dirty Socks

Michael J. Berg
Will South Carolina be the Center of the Nuclear Revival?

Russell Mokhiber
Et Tu, Atul?

Joe Bageant
A Commodity Called Misery

Gareth Porter
Petraeus' Subterfuge

Dave Lindorff
Seek Truth, But Prosecute Liars

Rannie Amiri
The Implications of Recognizing Israel's "Right to Exist"

Harvey Wasserman
Nukes and the Stimulus

Niranjan Ramakrishnan
What We Didn't Learn at Obama's Press Conference

Website of the Day
RIAA Takes Over DoJ Under Obama

February 9, 2009

Vicente Navarro
Why Sanjay Gupta is the Wrong Man for Top US Health Job

Paul Craig Roberts
Driving Over the Cliff

Julio Sanchez /
Feliz de Bedout
The Threat of Peace in Colombia: an Interview with Hollman Morris

National Lawyers Guild
Strong Indications of Israeli War Crimes

Jonathan Cook
Israeli University Welcomes "War Crimes" Colonel

Alana Smith
The Nightmarish Case of Fahad Hashmi

Binoy Kampmark
Taking the Bong

Sam Bahour
End the Occupation First

Nicole Colson
Can You Afford College?

Ron Jacobs
Remembering the Second Intifada

Website of the Day
The Legacy of Ed Grothus and the Black Hole

February 6-8, 2009

Alexander Cockburn
Obama's First Bad Week

Ishmael Reed
Saint Thelma's Book

James Abourezk
Obama, Mitchell and the Palestinians

William Blum
Obama and the Empire

Patrick Cockburn
Maliki's Triumph

Henry A. Giroux
Educating Obama

Manuel Garcia, Jr.
Darwin's Living Legacy

Mouin Rabbani
A New Low on Gaza?

David Yearsley
Ein Volk, Ein Reich, Ein Springsteen!

Saul Landau
The Wrestler: an American Tragedy

Jules Rabin
Israel's Disproportionate Responses

Raymond J. Lawrence
A Country Awash in Money But Going Broke

Janette Habel
Castro's Socialism in Crisis

Dave Lindorff
Economy on a Thread

Missy Beattie
Blackout at the Gaza Zoo Massacre

Dale Gieringer
The Opium Exclusion Act of 1909: Marking 100 Years of Failed Drug Prohibition

John Ross
Davos vs. Belem; Swine vs. Pearls

Richard Rhames
Jobs is a Four Letter Word

Bob Wing
Obama, Race and the Future of U.S. Politics

Robert Bryce
Corn Dog Update: Another Study Exposes Bio-Fuel Scam

David Macaray
AFL-CIO and Change to Win in "Re-Wed" Talks

James L. Secor
Inaugural Questions Nobody Asks: Notes from Kuala Lumpur

Jason Flom /
Anthony Papa
The Scourging of Michael Phelps

Norm Kent
Ten Reasons to Get High About Pot in 2009

Kim Nicolini
When Utopia Crumbles: Why Revolutionary Road was Shut Out of the Oscars

Lorenzo Wolff
Ridiculous Flow: How Cee Lo Green Sells Soul

Poets' Basement
Emily Dickinson (with Commentary by Daniel Wolff)

Website of the Weekend
S.J. Gould: Darwin's Untimely Burial

February 5, 2009

Michael Mandel
Self-Defense Against Peace

Saul Landau /
Philip Brenner
Killing the Monroe Doctrine

Ralph Nader
Tax the Speculators!

Robert Bryce
The Unraveling of the Ethanol Scam

Russell Mokhiber
Occupied Territory

Sameh Habeeb /
Janet Zimmerman
Innocents Lost

Dave Lindorff
Small Change

Carmelo Ruiz-Marrero
Beyond Green Capitalism

George Ochenski
A Blow to Big Coal in Montana

Website of the Day
Putting CEO Pay in Context

February 4, 2009

Arno J. Mayer
On Corruption

Paul Craig Roberts
The War on Terror is a Hoax

Patrick Cockburn
The Iraqi Elections

Jonathan Cook
An IDF Jihad?

Fred Gardner
Obama's Mixed Messages on Marijuana

Stan Cox
Slumwrecking Millionaires: India's Fragile New Temples

Margaret Kimberley
The Deepening Economic Crisis

Lawrence Velvel
Agony & Desperation: Madoff's Victims

Dave Lindorff
A Generals' Revolt?

Doug Giebel
A Helping of Bitter Beltway Baloney

Serge Quadruppani
Student Protests Sweep Italy

Website of the Day
The San Francisco 8

February 3, 2009

David Price
Counterinsurgency & Anthropology: Roberto Gonzalez on Human Terrain Systems

Bill Moyers
Obama's Wars: an Interview with Pierre Sprey and Marilyn Young

Kirkpatrick Sale
Obama's Lincoln Thing

Conn Hallinan
When Mind Wounds Don't Count

Peter Morici
The Slippery Slope of Stimulus

George Ciccariello-Maher
From Oakland to Santa Rita: "Fired Up, Can't Take It No More"

Muhammad Idrees Ahmad
The BBC's Nadir

Allan Nairn
What Does It Take to Get a Meal Here, an Earthquake?

Norman Solomon
Why are We Still at War?

David Macaray
The Late, Great UAW

Website of the Day
The Bloody Cove

February 2, 2009

Uri Avnery
Under the Black Flag: Israeli War Crimes

Ralph Nader
What to Do About Wall Street

Gareth Porter
Generals Move to Obstruct Obama's Iraq Withdrawal Orders

Paul Craig Roberts
The Death of American Leadership

Harvey Wasserman
The Nuclear Industry's Latest Money Grab

Rannie Amiri
Gaza and the Crimes of Mubarak

Cal Winslow
Stern's Gang Seizes UHW Union Hall

Steve Early
Checking Out of Stern's Hotel California

Alan Farago
Superbowl as Panopticon

Diane Farsetta
Banning Domestic Propaganda

January 30 / February 1, 2009

Alexander Cockburn
Obama and the Oddsmakers

Michael Hudson
Obama's New Bank Giveaway

Ismael Hossein-Zadeh
"Too Big to Fail:" a Bailout Hoax

Dave Lindorff
The Ugly Truth: the American Economy is Not Coming Back

Saul Landau
Freedom Fighters, Terrorists or Schlemiels?

Andy Worthington
Blame the Chef: How Cooking for the Taliban Can Get You Life in Gitmo

Subcomandante Marcos
Gaza Will Survive

Robert Jensen
Future Farming: an Interview with Wes Jackson

Ron Jacobs
Return of the Democrats

Gareth Porter
Is Gates Undermining Another Opening to Iran?

Allan Nairn
Hope for the Dump Cities?

Laura Carlsen
NAFTA's Dangerous Security Agenda

Rev. William E. Alberts
The Feelings of a Stranger

Christopher Brauchli
From Gitmo to Supermax?

Jules Rabin
Israel and the Bomb

Col. Dan Smith
Thoughts From an Inauguration Refugee

Missy Beattie
The US Garden of Evil

Tom Barry
Obama's Immigration Challenge

J. Michael Cole
The Downfall of an Academic

Manuel Garcia, Jr.
Burning the First Amendment

Dan Bacher
How Dam Removal Can Save the Klamath River

David Rosen
Last Gasp of the Culture Wars?

Don Monkerud
Religion in the American Bedroom

Binoy Kampmark
Updike: Apostle of the Middlebrows

Lorenzo Wolff
Playing Down a Bad Reputation: the Lovin' Spooful's Near Perfect Record

David Yearsley
When Orfeo and Euridice Lived Happily Ever After in Upstate New York

Poets' Basement
Valentine and Rihn

January 29, 2009

Peter Linebaugh
Tom Paine's Birthday

Paul Craig Roberts
Is It Time to Bail Out of America?

Riz Khan
The Future of Gaza: an Interview with Jimmy Carter

M. Reza Pirbhai
Pakistan: a New Cambodia?

Wajahat Ali
Obama's Al-Arabiya Interview

Gregory Vickrey
What About the Environment? Cap and Trade and Selling Out

Dina Jadallah-Taschler
Whither the Two State Solution?

Alison Weir
Killing Palestinians Doesn't Count: Fact-Checking Ceasefire Breaches

Alan Farago
Economy Without Escape Routes

Walter Brasch
Taxing a House of Cards

Website of the Day
Madoff Inc.

January 28, 2009

Norman Finkelstein
Behind the Bloodbath in Gaza

Noam Chomsky
Obama's Emerging Policies on Israel, Iraq and the Economic Crisis

Patrick Cockburn
Is Mitchell's Mission Already Doomed?

Rob Larson
The Clinton Foundation Donors

George Wuerthner
Who Will Speak for the Forests?

Allan Nairn
South-East Asian Groups Threaten Retaliation Over Gaza Invasion

M. Junaid
Levesque-Alam
A Muslim's Memo to Obama

Stefan Simanowitz
The Silent Trade

Charles R. Larson
The Autumn of the Patriot

Website of the Day
Veggie Love: PETA's Banned Superbowl Ad

January 27, 2009

Winslow T. Wheeler
Save the Economy by Cutting the Defense Budget

Yigal Bronner /
Neve Gordon
Fueling the Cycle of Hate

Joshua Frank
Obama's Neocon: the Curious Case of Richard Holbrooke

Jordan Flaherty
Torture at a Louisiana Prison

Ralph Nader
Access to Economic Justice

Rev. José M. Tirado
How Iceland Fell: a Hundred Days of (Muted) Rage

Benjamin Dangl
Bolivia Looking Forward

Russell Mokhiber
What If Israel Were in Your Neighborhood?

Martha Rosenberg
Who Says Technology Transfer Doesn't Pay?

C. G. Estabrook
The Inaugural Address: the Digested Read

Website of the Day
Who Profits From the Occupation?

January 26, 2009

Paul Craig Roberts
Speaking the Truth is a Career-Ending Event

Deepak Tripathi
The BBC's Day of Shame

Vijay Prashad
The India Lobby: Drunk with the Sight of Power

Peter Lee
Geithner's Pop Gun Volley at China

Allan Nairn
The Torture Ban That Doesn't Ban Torture

Uri Avnery
On the Wrong Side of History

John Sayen
The Next Shoe to Drop

Dave Lindorff
Afghanistan is No Threat to America

Lawrence R. Velvel
Investing with Madoff

David Macaray
Obama vs. Labor

Roger Burbach
Winds of Change in Cuba

Norman Solomon
The Ghost of LBJ

Website of the Day
Landscapes of Occupation

January 23 / 25, 2009

Alexander Cockburn
The Ghosts at Obama's Side

P. Sainath
The Freefalling Economy

Patrick Cockburn
In Israel, Detachment From Reality is the Norm

Saul Landau
Reasons for War?

Sasan Fayazmanesh
Our Current Economic Crisis: the Monks' Cure

Alan Farago
The Problem with the Stimulus

Christopher Brauchli
When Due Diligence is a One-Way Street

Andy Worthington
Return to Law?

Ron Jacobs
Obama's Pentagon: Bowing to the Masters of War?

Lawrence Velvel
Investing with Madoff: My Experience (Part Four)

Henry A. Giroux
The Audacity of Educated Hope

David Yearsley
The Music That Wasn't There: Chamber Music for Obama's Masses

Raymond F. Gustavson
Here We Go Again: General Shinseki and Veterans

Dave Lindorff
The Way Forward

Roberto Rodriguez
Fighting for Migrant Justice in the Desert

Dina Jadallah-Taschler
The Struggle of an Un-People

Fidel Castro
Meeting Cristina

J. Michael Cole
Can Obama's Shift on Terror Succeed?

Bob Fitrakis /
Harvey Wasserman
It's Time to Free Leonard Peltier

Ramzy Baroud
Breaking Gaza's Will

Mohammad Ali Shabani
The Aftermath of the War on Gaza

Richard Rhames
Panning for Pyrite on a Cold Day at the Mall

Stephen Martin
Voices in the Mirror

Lorenzo Wolff
Jurassic Radio

Kim Nicolini
Katrina's Endless Loop

Poets' Basement
Fleming, Henson, First, Jaramillo and Glendinning

Website of the Weekend
Cartoon Love

January 22, 2009

Paul Craig Roberts
Another Real Estate Crisis is About to Hit

Kathy Kelly
Worse Than an Earthquake

Allan Nairn
US Intel Nominee Lied About Church Murders

Lawrence Velvel
Investing with Madoff: My Experience (Part Three)

Andy Worthington
Halting the Gitmo Trials

Peter Morici
How to Fix the Banks

Joseph G. Davis
The First MBA Presidency and the Business Academy: a Damage Assessment

Adriana Kojeve
The Democrats on Israel: a Brief Oral History

Benjamin Dangl
Bolivia Poised for Historic Vote

Website of the Day
Support the Gaza Community Mental Health Program

January 21, 2009

Gabriel Kolko
Understanding Gaza

Harry Browne
Obama's Work Ethic

Michael Colby
Ready. Aim. Organize.

Lawrence R. Velvel
Investing with Madoff: My Experience

Audrey Stewart
Starting Over in Gaza

Wajahat Ali
Obama and the Muslims

Binoy Kampmark
The Marketing of Hope

David Kεr Thomson
Abolition

John Ross
In My Own Bones

Allan Nairn
Killer in Chief: Will This President Murder Civilians?

Sheldon Richman
The Peaceful Transfer of Violent Power

Website of the Day
Globistan

January 20, 2009

Chuck Spinney
Hosing Obama Israeli Style

Kathy Kelly
The Strongest Weapon of All

Raymond Deane
The EU, Gaza and the Lisbon Treaty

Ralph Nader
State Terrorism Against Gaza

Audrey Stewart
Why I am in Gaza

Jonathan Cook
Israel's Doctrine of Destruction

Harvey Wasserman
A Ten-Point Solar Agenda for Obama

Christopher Ketcham
Inauguration Ad Nauseam

Robert Jensen
A Citizen's Oath of Office

Dave Lindorff
Commie Chorus on the Mall: This Land Really is Made for You and Me

David Macaray
SAG Watches It All Slip Away

February 11, 2009

The Surging Trade Deficit and the Recession

Anatomy of a Hemorrhage

By PETER MORICI

The Commerce Department reported the 2008 deficit on international trade in goods and services was $677.1 billion. This is down from $700.3 billion in 2007 but still 4.7 percent of GDP. The trade deficit was smaller in 2008, becasue economic growth and consumer spending began to decline during the second half 2008.

Trade deficits and shoddy banking practices pushed the economy into recession, and until both trade and the banks are fixed, sustained economic growth cannot be accomplished. The trade deficit will rise again as the effects of the stimulus package are felt, but if its underling causes are not addressed, the trade deficit will drag the economy back down into a double dip recession.

Pushed up by the surge in oil prices and the ballooning trade gap with China, the trade deficit is reducing U.S. GDP by $400 billion, annually, and significantly adding to the pain imposed by the unfolding recession. The negative effects of the trade deficit on GDP and employment overwhelm the potential positive effects of President Obama’s proposed stimulus spending.

To finance the deficit of recent years, Americans have borrowed more than $6.5 trillion from foreign sources, including foreign governments, and the debt service comes to more than $1500 for each working American. In addition, foreign investors have at least $3.6 billion acquiring equities in U.S. businesses.

The flood of dollars into foreign government hands has bloated sovereign wealth funds that are now buying significant shares of U.S. businesses and other property, and threaten to compromise the loyalties of U.S. businesses.

The Chinese government alone holds about $2 trillion in U.S. and other securities, and these could be used to purchase about 20 percent of the value of publicly-traded U.S. companies. Add to that the holding of Middle East sovereigns and royal families, the potential purchases of U.S. businesses by foreign governments with interests unfriendly to the United States is alarming.

This should give Americans real pause for concern about Chinese and other foreign government intentions to diversify their foreign exchange holdings into U.S. stocks and other real assets.

Anatomy of the Hemorrhaging Current Account

In 2008, the United States had a $144.1 billion surplus on trade in services. This was hardly enough to offset the massive $821.2 billion deficit on trade in goods.

The deficit on petroleum products was $386.3 billion, up from $293.2 billion in 2007. The average price for imported crude oil rose to $95.23 from $64.28 percent from 2007, while the volume of petroleum imports fell 4.0 percent.

Also, the American appetite for inexpensive imported consumer goods and cars is a huge factor driving up the trade deficit. The trade deficit with China was $266.3 billion, a new record and up from $256.2 billion in 2007.

The deficit on motor vehicle products was $107.1 billion. Ford and GM continue to push their procurement offshore and cede market share to Japanese and Korean companies. However, the automotive trade deficit was down from $120.9, as Asian automakers continued to expand production in North America and demand for autos fell with the recession.

The trade deficit should ease in 2009 with lower oil prices and as the recession bears down on consumer spending. However, China is not permitting its currency to rise in value, despite its trade surplus and has beefed up subsidies on its exports in an effort to export its unemployment to the United States and other industrialized countries. China’s beggar-thy-neighbor protectionism threatens to ignite a global trade war of devastating proportions.

In 2010, as stimulus spending in the United States and elsewhere lifts economic activity the trade deficit will increase again, oil prices will surge and China’s exports will rise above 2008 levels, thanks to an undervalued currency and larger export subsidies. The U.S. trade deficit will rise beyond its peak of 5.1 percent of GDP, and this may well pull the U.S. economy back into recession.

Dollars spent on imported oil and cars and consumer goods from China cannot be spent on U.S. goods and services, and every dollar that U.S. imports exceed exports negates at least one dollar of federal stimulus spending. Overall the trade deficit overwhelms the positive effects of the Obama stimulus package on demand for U.S. goods and services, GDP and employment. Along with the banking crisis, the trade deficit is a primary cause of the U.S. recession.

The dollar remains at least 40 to 50 percent overvalued against the Chinese yuan and other Asian currencies. Although China adjusted the yuan from 8.28 per dollar to 8.11 in July 2005 and permitted it to rise gradually to 6.84 by July 2008, the value of the yuan has not changed since.

To sustain an undervalued currency in 2008, China purchased approximately $600 billion in U.S. and other foreign securities, creating a 40 percent subsidy on its exports of goods and services. Other Asian governments align their currency policies with China to avoid losing competitiveness to Chinese products in lucrative U.S. and EU markets.

Consequences for Economic Growth

High and rising trade deficits tax economic growth. Specifically, each dollar spent on imports that is not matched by a dollar of exports reduces domestic demand and employment, and shifts workers into activities where productivity is lower.

Productivity is at least 50 percent higher in industries that export and compete with imports, and reducing the trade deficit and moving workers into trade-competing industries would increase GDP.

Were the trade deficit cut in half, GDP would increase by at least $400 billion, or about $2750 for every working American. Workers’ wages would not be lagging inflation, and ordinary working Americans would more easily find jobs paying higher wages and offering decent benefits.

Manufacturers are particularly hard hit by this subsidized competition. Through the recent economic expansion and recession, the manufacturing sector has lost 4.6 million jobs since 2000. Following the patterns of past economic expansions, the manufacturing sector should have kept at least 2 million of those jobs, especially given the very strong productivity growth accomplished in durable goods and throughout manufacturing.

Longer-term, persistent U.S. trade deficits are a substantial drag on growth. U.S. import-competing and export industries spend three-times the national average on industrial R&D, and encourage more investments in skills and education than other sectors of the economy. By shifting employment away from trade-competing industries, the trade deficit reduces U.S. investments in new methods and products, and skilled labor.

Cutting the trade deficit in half would boost U.S. GDP growth by one percentage point a year, and the trade deficits of the last two decades have reduced U.S. growth by one percentage point a year.

Lost growth is cumulative. Thanks to the record trade deficits accumulated over the last 20 years, the U.S. economy is about $3 trillion smaller. This comes to about $20,000 per worker.

Had the Administration and the Congress acted responsibly to reduce the deficit, American workers would be much better off, tax revenues would be much larger, and the federal deficit would be much smaller. The recession would be much less severe

If the Obama Administration relies on stimulus and bank reform alone, the economy will fall back into recession once the spending has run its course. A pattern of false recoveries, much as occurred during the Great Depression, will likely emerge. Conditions will not be as bad, unemployment will stay at unacceptable levels.

Peter Morici is a professor at the University of Maryland School of Business and former Chief Economist at the U.S. International Trade Commission.

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