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Today's Stories March 8-9, 2008 Weekend Edition JoAnn Wypijewski The Only Way to Fight the Clintons Mike Whitney Sorting Through the Rubble in Post Bubble America Peter Morici Fed and Treasury Fiddle as Economy Plummets Jonathan Cook The Meaning of Gaza's Shoah Steve Niva Behind the Israeli Escalation in Gaza Bill and Kathy Christison Crisis over Teheran's Alleged Nuclear Plans Nearing Climax Hervé Do Alto and Franck Poupeau Bolivia: Morales is Checked Eric Walberg To Leave and Stay at the Same Time: Putin to Medvedev to…? Scott Johnson City of A Thousand Foreclosures Mark Scaramella James Brown's Gate Bill Clinton President Clinton's Remarks on Naming William M. Daley as NAFTA Task Force Chairman Poet's Basement St. Thomasino, Engel, Davies and Willson March 7, 2008 Patrick Cockburn Why Iraq Could Blow-Up in John McCain's Face Robin Blackburn Question for Barrack Obama: Why Afghanistan is the 'Right War'? Saul Landau The Stupid Economy Binoy Kampmark When Competition is Good: McCain and the Muddled Democrats Chris Floyd Crushing the Ants: Admiral Fallon and His Empire Andy Worthington Spanish Drop "Inhuman" Extradition Request for Guantánamo Britons Will Potter Before the Smoke Even Clears in Seattle: Bringing Out the T Word Eric Walberg To Leave and Stay at the Same Time: Putin to Medvedev to…? March 6, 2008 Vincent Navarro The Next Failure of Health Reform Forrest Hylton High Stakes in the Andes: Colombia's Cornered President Peter Morici Why the Dollar is So Cheap George Ciccariello-Maher Counter-Attack of the Bureaucrats John Ross Taxi! Taxi! The Dark Side of the Oscars Jacob Hornberger No Standing to Lecture on Justice Paul Watson Illegal Japanese Whaling by the Numbers Dan Bacher Off the Deep End Website of the Day A Katrina Reader Online   March 5, 2008 Cockburn / St. Clair A Great Day for John McCain (and Maybe Nader) Joanne Mariner After Guantanamo Fidel Castro The Raid on Ecuador: Underestimating Rafael Correa Christopher Brauchli The Turkish Invasions Steven Sherman Obama and the Prospects for a Renewal of the Left Dave Lindorff Busting Bush & Co. in New England James Murren Bombing Somalia Adam Engel Necropolis Now Website of Day Remember Song   March 4, 2008 Wajahat Ali Mumbo Jumbo: Naming Names with Ishmael Reed William Blum How Could Hillary Have Known? Bill Quigley The Cleansing of New Orleans Ralph Nader The Prince Harry Solution Patrick Irelan Oil and Health in Venezuela James J. Brittain / R. James Sacouman Uribe's Colombia is Destabilizing a New Latin America Norman Solomon The War Election Jacob Hornberger Hillary in Waco: the Missing Apology Andy Worthington Guantánamo and the European Parliament Mike Averko Kosovo and the Press Website of the Day Tex-Mex Primary   March 3, 2008 Jennifer Loewenstein Gazan Holocaust Alan Farago American Politics and the Faltering Economy Richard Gott Colombian Deaths in Ecuador Wajahat Ali Who Speaks for a Billion Muslims? Analyzing the World Gallup Poll with John Esposito Paul Craig Roberts The Mukasey Conspiracy: a Bi-Partisan Attack on the Constitution Robert Weissman When Multinationals Say Adieu Uri Avnery Good Morning, Hamas Martha Rosenberg When Your Meat is a Downer Eva Liddell Leave the Next Dance for Bill Michael Donnelly Will Ferrell Does Flint Website of the Day Muddy Waters: Train Fare Home Blues   March 1 / 2, 2008 Alexander Cockburn The Race Card Paul Craig Roberts The Political Trial of Don Siegelman Kathleen and Bill Christison Nader the Best Antidote to American Imperialism Nelson P. Valdés Cuba After Fidel Christopher Brauchli Meet Mr. Nursultan Nazarbayev: Friend of Bill, George and Dick Ron Jacobs Inside the Secret City: Bomb Making at Oak Ridge John Ross The New Conquistadores: Spain's Reconquest of Mexico Robert Fantina Posturing Over Patriotism: Obama and Those Lapel Pins Robert Weissman Hidden in Plain Sight: Human Rights Hypocrisy Mohammed Omer Fear in Gaza Remi Kanazi Barack Obama and the Politics of Xenophobia Bob Jackson Why is Yellowstone Destroying Its Bison Herd? Richard Rhames Casual Threats: Loaded with Mercury Franklin Lamb Lebanon Awaits the Arrival of the USS Cole Rannie Amiri Showboat Diplomacy: US Warships Steam Toward Lebanon David Michael Green The Three Faces of Hillary: the Politics of Flim-Flam Conn Hallinan Notes from the Southern Cone Faheem Hussain Prince Harry of Afghanistan and the Meaning of Normalcy Poets' Basement Gibbons, Orloski, Gardner and Ford Website of the Weekend The Palestine Chronicle Needs (and Deserves) Your Help!     February 29, 2008 Matt Gonzalez The Obama Craze Jonathan Cook Academic Freedom? Not for Arabs in Israel Joshua Frank Obama and Israel Anthony DiMaggio The Unilateral Presidency: Signing Statements and the Rollback of American Law Linn Washington, Jr. Cop Abuse in America Binoy Kampmark Hubris and Nemesis Robert Bryce Energy Efficiency May be a Good Thing, But It Won't Cut Energy Use Sonja Karkar Australia's Government Continues Its Love Affair with Israel Dave Lindorff A Manchurian Candidate in the White House? Obama or Bush? Website of the Day Olduvai George   February 28, 2008 Patrick Cockburn "Iraq" Falls Apart Fred Gardner The Birth of NAFTA Michael Levitin The Crisis in Kosovo is Just Beginning William S. Lind The Fake State of Kosovo David Macaray A Ray of Hope for Organized Labor Stephen Fleischman Nader's Latest Run: Monkey Wrench or Cattle Prod? George Wuerthner The Myths of Forest Health: Why Ecological Logging is an Oxymoron Laura Carlsen The North American Union Farce Carl Finamore Why the Delta-Northwest Deal Hasn't Taken Off Michael Dickinson The Day I Bombed the House of Commons Website of the Day Plane Stupid   February 27, 2008 David Rosen Playing the Race Card: Obama, Love Across the Color Line and Political Dirty Tricks Vijay Prashad Bomber John: McCain and the 100 Year War Harvey Wasserman Incident at Turkey Point: Did Florida Go to the Radioactive Brink? Andy Worthington Guantánamo's Shambolic Trials: Pentagon Boss Resigns, Ex-Prosecutor Joins Defense Wajahat Ali Pakistan for Sale: an Interview with Ayesha Siddiqa on Pakistan's Military Economy Peter Morici The Auction-Rate Securities Fiasco: a Drama of Greed and Betrayal Stephen Philion Conspiracy Theory, Fears of Betrayal and Today's Anti-War Movement Michael Donnelly Obama by Unanimous Decision Erica Rosenberg / Janine Blaeloch After the Land Deals: Will There be Any Wilderness Left to Protect? Website of the Day Dress Blues   February 26, 2008 Debbie Nathan Confessions of a Gitmo Guard Alan Dershowitz v. Frank Menetrez On Finkelstein Harvey Wasserman How Ohio Got Nuked Michael Colby Ralph Nader vs. the Fundamentalist Liberals Gary Leupp Condi vs. Putin on Bullying Belgrade David Orchard The New Conquistadors: Canada in Afghanistan Martha Rosenberg The Big HRT Fran Shor The Electoral Circus and Nader's Sideshow Serge Halimi The Dom Perignon Socialist Manifesto: Bernard Henri-Levy's Plan for the French Left Global Balkans Neo-Liberalism and Protectorate States in the Post-Yugoslav Balkans: an Interview with Tariq Ali Website of the Day Texistentialism   February 25, 2008 Roger Morris A Death in Damascus Anthony DiMaggio Military Bases, the Media and the Democrats Ralph Nader Why I'm Running Patrick Cockburn Iraq Broils Paul Craig Roberts Kosovo and the Empire Crazies Peter Morici Bernanke's Failing Policies: a Long Recession Looms Dave Lindorff General Welch's Whitewash: What We Still Don't Know About That Minot Nuke Incident Saul Landau / Farrah Hassen Fanatics, Mountebanks and Drillers: a Bloody Oil Film Heather Gray James Orange, Civil Rights Legend Robert Weitzel Accomodating Torture John Halle Kucinich Goes Down Website of the Day Do the Trunk Monkey! February 23 / 4, 2008 Alexander Cockburn The Mushrooming Clouds That Hang Over McCain Paul Craig Roberts Obama and Global Trade Wajahat Ali Omissions of the Commission: an Interview with Phillip Shenon on the 9/11 Commission Ralph Nader Neutering the FDA Jürgen Vsych "What Was Ralph Nader Thinking?" Fidel Castro Watching the US Presidential Campaign from Havana Andy Worthington Britain's Guantánamo David Macaray Unions Under Assault Jeremy Scahill The Real Story Behind Kosovo's Independence David Krieger Stanley Sheinbaum Caging the Cold War Monster Ron Jacobs Building for the Future Michael Garrity The Last, Best Hope for the Northern Rockies Brian McKenna Higher Ed's "Civic Engagements" Get Dumbed Down Missy Beattie Over the Hill with John McCain Fred Gardner American College of Physicians Takes Pro-Cannabis Stand (Mostly) Boris Kagarlitsky The Growth of the Russian Labor Movement Mike Ferner Kick That Barrel Dan Bacher On the Trail with the Border Angels Christopher Ketcham Hillary Goes Where Obama Fears to Tread Poets' Basement Davies and Buknatski Website of the Weekend Obama Mariachi   February 22, 2008 Mike Whitney The Bonfire of Capital Jason Hribal Elephants and the Circus: The Story of Janet Liaquat Ali Khan Arresting Musharraf Joshua Frank That Obama Glow: the Nuclear Industry's Golden Child Dave Lindorff Vicki's John: Ask Not What She Did for Him, Ask What He Did for Her! Liliana Segura When Torture is Old News: McCain's Blonde Diversion Robert Fantina Castro, Bush and Cuba: a Fiasco Waiting to Happen? Yifat Susskind The ABCs of Death: Bush vs. Africa's Women Norm Kent Pushing 60 with Pot Website of the Day Bush Gets Down in Liberia February 21, 2008 Saul Landau Fidel Steps Aside Elizabeth Schulte Left Behind, With No End in Sight: America's Long-Term Unemployed Helen Redmond Health Care as a Human Right Benjamin Dangl Undermining Bolivia Michael Levitin Kosovo's Dilemma Liam Leonard Fear and Loathing on the Emerald Isle Patrick Irelan Land and Food in Venezuela Linn Cohen-Cole Poor Ohio: a Second Letter to Hillary on Her Ties to Monsanto Michael Simmons Daydream Believer: John Stewart, the Miles Davis of Folk Music CounterPunch News Service A Message from the Women of Okinawa to US GIs Website of the Day Cop Abuse in Shreveport   February 20, 2008 Paul Craig Roberts Lies and Spies Paul Krassner My Brief Encounter with Fidel Castro Fawzia Afzal-Khan The Pakistani Elections Farzana Versey The Great Dictator: Musharraf, Peace and the Autumn of the Patriarch Allan Nairn Dying for a Second Round: Israel's New Plan to Attack Lebanon John V. Whitbeck If Kosovo, Why Not Palestine? Niranjan Ramakrishnan A Balcony Seat to Our Own Balkanization? Steve Eckardt Cuba Sans Fidel: No News is Big News Lee Sustar Union-Busting at Freightliner Mike Ferner How Sick of It are You? Website of the Day The US Military Index   February 19, 2008 Uri Avnery Blood and Champagne Paul Craig Roberts Paying Insurgents Not to Fight Gary Leupp The Independence of Kosovo Fidel Castro The Moment Has Come David Macaray Management's Dirty Little Secret Reza Fiyouzat Buck the Circus! The Left and the Elections Valerie Morse The New Zealand Terror Raids: Land of the Long White Lie Walter Brasch Bush on Safari Website of the Day Don't Think Twice, It's Alright   February 18, 2008 Wajahat Ali Free Pakistan: an Interview with Imran Khan Diana Johnstone NATO's Kosovo Colony Paul Craig Roberts What Do We Stand For? Andy Worthington Gitmo: "We're Making This Up as We Go Along" Debbie Nathan Bernie Ward's Sex Tapes Anthony DiMaggio Following the Money Trail: the Democratic Party and the Business of Elections Bill Simpich Ten Years Ago, People Power Stopped Clinton in Iraq Eva Liddell A Short History of Super-Delegates: Hope, Yes! But Pay in Cash Christopher Brauchli The President Who Couldn't Keep His Word: Short-Changing Veterans Stephen Soldz Wikileaks is Under Attack! Johann Rossouw The Ouster of Thabo Mbeki: South Africa and the Costs of Neoliberalism Website of the Day Sick of It Day!   February 16 / 17, 2008 Alexander Cockburn The Terrorists Still at Ground Zero, 7 World Trade Tower, Lower Manhattan Ralph Nader We the Corporations ... David Macaray The Big Buy Out: Did GM Drive Another Nail in Labor's Coffin? William J. Peace Wheelchair Dumping Ron Jacobs War on the Psyche: Shellshock and Redemption Diane Christian War Corrupts Alan Maass Oil, Blood and Greed: Taking Upton Sinclair to the Big Screen (and Beyond) Ramzy Baroud Iraq and the US Elections Michael Donnelly Genitalia First! Old Guard Feminists Play the XX Card Cpt. Paul Watson The Art of Finding Whalers James L. Secor China Diary: Spring Festival and New Year 2008 Eve Bachrach Bush Returns to Africa Nikolas Kozloff Hugo Chávez's Anti-Imperialist Army Stephen Gowans Steven Spielberg, Faux-Humanitarian Missy Beattie To Vote or Not to Vote? David Michael Green Warming Slowly to Obama Wajahat Ali Attack of the Info-tainment Circus Poets' Basement Gibbons, Willson, Mickey Z., Orloski and Reuther Website of the Day Yellowstone's Bison Need Your Help--NOW!     February 15, 2008 George Szamuely The Absurdity of "Independent" Kosovo Patrick Cockburn Ground-Truthing the Surge: Is the US Really Bringing Stability to Baghdad? Wajahat Ali Pakistan is Burning: an Interview with Steve Coll on the Taliban, Bin Laden and the Bush Administration Mike Whitney Henry Paulsen's Wild Ride on the Economic Hindenberg Alan Farago God and the Democrats Chris Genovali Alberta's Black Gold Rush Jacob Hornberger Courting Injustice: Scalia on Torture Dave Lindorff Snoops Always Ring Twice: Bush's Protect America Bill Bull Website of the Day Live From the Land of Hopes and Dreams     February 14, 2008 Kathleen and Bill Christison Palestine in the Mind of America Mike Whitney Swan Song for NATO Clancy Sigal Strike Notes from a Screenwriter George Wuerthner A Bloody Sham: the Yellowstone Bison Slaughter Peter Morici Is Bernanke Headed for the Exit? John Ross Drug War Mayhem Boils Over from Border to Border Allan Nairn Mafia Rules in the Middle East: If You're Big Enough, You Can Whack Anyone Rannie Amiri Lebanon's Warmongers Niranjan Ramakrishnan The New Tractatus: Where Wittgenstein Meets Feinstein Donna Volatile Be Careful What You Vote For, You Just Might Get It Seth Sandronsky The Student Squeeze: Fighting California's Tuition Hikes Website of the Day Conventions: the Land Around Us   February 13, 2008 Nikolas Kozloff Meet John McCain: Mr. Big Stick in Latin America Alan Farago Hell to Pay: Warren Buffett on the Goal Line Christina Kasica King's Dream Foreclosed: the Subprime Crisis in Black America Vicente Navarro How to Read the U.S. Primaries Hall Greenland Australia's Finest Hour Lee Sustar Strange Stimulation: Too Little for Those Who Need It Most David Macaray The Writers' Strike Finally Ends Roderick Frazier Nash Celebrating Wilderness Patrick Irelan Hugo Chávez and High Anxiety at the NYT Anthony Papa Mean Mister Mukasey: AG Tries to Block Crack Cocaine Releases Carl Finamore Another Parade Passes Me By: Don't Let Your Movement be Coopted by Politicians Website of the Day John He Is   February 12, 2008 Frank J. Menetrez The Case Against Alan Dershowitz Paul Craig Roberts War Without End Dr. Trudy Bond The Elephant at Gitmo: Camp 7 and the Torturer's Shrink Andy Worthington The Guantánamo Six: Why Charge Them Now? What About the Torture? Col. Dan Smith The Psychology of Killing: Close In or Far Away? Ronnie Cummins Globalization: Standing at the End of the Road Ralph Nader Open the Government John V. Walsh Antiwarriors, Divided and Conquered Dave Lindorff Obama and Progressive Change: Let's Hope the Movement Transforms the Candidate Michael Donnelly Who's Pimping Whom? The Clintons' Selective No Talk Rules Ron Jacobs La Lucha Continua: Castro's "Life" Ben Tripp Beggars Collide Website of the Day Springsteen and Youngstown   February 11, 2008 Cockburn / St. Clair Lessons for Obama: When is a Delegate Not a Delegate? Wajahat Ali A Discussion with Walt and Mearsheimer on the Israel Lobby Ray McGovern Waterboarding for God and Country Allan Nairn The Shooting of Jose Ramos Horta Uri Avnery An End Foreseen? Chris Floyd American Psycho: the Meaning of Mitt Romney's Exit Speech Martha Rosenberg School Lessons in a Lunchbox: Lunchmeat from Tortured Cows Stephen Fleischman The Bonnie and Clyde of American Politics Marc Lamont Hill Not My Brand of Hope Liliana Segura Obama and Torture: the Sounds of Silence and Equivocation Peter Morici Challenges for the New President Christopher Brauchli A Drug Rant from a Former Taker Website of the Day Annie vs. the Blue Angels   February 8 / 10, 2008 Paul Craig Roberts Does the GOP Have Aces Up Its Sleeves? Patrick Cockburn Will Moqtada al-Sadr's Truce Hold? Mike Whitney The Great Bust of '08 Anthony DiMaggio How the Press Covers Waterboarding Andy Worthington The Guántanamo Trials: Where are the Terrorists? Linn Cohen-Cole Hillary, Will You Renounce Your Ties to Monsanto? Firmin DeBrabander Notes from the Foreclosure Front: Suing Your Way to Solvency Cpt. Paul Watson The Other Whaling Industry: How Greenpeace Cashes In on the Suffering and Deaths of the Great Whales Kenneth S. Pope Why I Resigned from the American Psychological Association Jacob G. Hornberger American Soldiers Will Pay the Price for Bush's Torture Policy Robert Bryce Beyond Group Think on Climate Change: If More CO2 is Bad ... Then What? P. Sainath The Last of the Buccaneer Editors Allan Nairn Give Me Back My Land Fred Gardner / Pebbles Trippet "The District Attorney of Shasta County Doesn't Know the Law!" Andrew Wimmer Growing Up Catholic: Ignorance is Death Robert Fantina America's Disgrace: the Case of Omar Khadr David Michael Green Partycide in Six Easy Steps: Watch the Democrats Destroy Themselves Kevin Zeese Is Dennis Kucinich Being McKinney'd? Peter Morici Wall Street Gives Bernacke a Vote of No Confidence Chris Driscoll Could Nader be the Come-Back Kid of 2008? Prairie Miller Black August: Bringing George Jackson's Life to the Screen Poets Basement Davies and Buknatski   February 7, 2008 Patrick Cockburn Why Baghdad Will Explode Again Bill Christison Potholes Bigger Than Ever for Palestinians David Anderson NBC's "To Entrap" a Predator: Perverting Justice for the Sake of Ratings Ron Jacobs Innocent Flesh: Recruiting Kids to Kill Nikolas Kozloff Hugo Chávez's Coca: It's the Real Thing Jane Rockefeller The Moral Economy of an Anti-Poverty Foundation Andy Worthington On Waterboarding: Two Questions for Michael Hayden         Subscribe Online

March 8-9, 2008 Fed and Treasury Chiefs Fiddle as Economy Plummets BY PETER MORICI On Friday, the Labor Department reported the economy lost 63,000 payroll jobs in February, after losing 22,000 jobs in January. Governments added 38,000 jobs and private sector employment contracted 101,000. Businesses have become too pessimistic about the outlook for the economy, and the capacity of the Bush Administration and Federal Reserve to manage it, to be adding new employees or replacing those that leave. The Labor Department reported a slight decrease in the unemployment rate to 4.8 percent. However, this statistic was greatly affected by the fact that so many adults have become discouraged and have stopped looking for work. Factoring in the decline in the number of adults participating in the labor force, the unemployment rate is closer to 6.8 percent. These poor jobs data are the strongest evidence yet that the economic expansion has ended. The economy has slipped into a recession of uncertain depth and duration. Weak retail sales and slow automobile sales indicate high gasoline prices and the subprime crisis have slowed down consumers. Along with weakness in housing and nonresidential construction, weak retail and automobile sales are causing businesses to trim second quarter production, investments in new capacity, and hiring plans. Exports are lifting sales and employment in durable goods and materials industries that support those industries, but overall a weaker dollar against the euro and other currencies and the resulting increase in exports are not enough to lift industrial production and employment from recession levels. Contribution of Federal Reserve Policy Rising prices for food, energy, metals, and other materials are pushing up inflation, but the Federal Reserve can do little to curb rising prices. The ethanol program is pushing up food prices, and robust growth in China and elsewhere in Asia are pushing up energy and raw material prices. The Fed could only marginally affect these pressures by constraining U.S. growth. The Federal Reserve’s aggressive interest rates cuts will have a limited effect on GDP and employment growth, and the stimulus package is likely to be too little and arrive too late to head off a recession. The stimulus package at $152 billion is only about half as large as the losses taken by the major New York banks and their customers on subprime securities. Its value will be to lessen the pain imposed by whatever slowdown or recession the economy endures, not to head it off entirely. The Federal Reserve is in crisis, because its mix of policies addresses an old style recession, one premised on inadequate demand but solid financial institutions. This recession has its origins in questionable banking practices and a breakdown of investor trust in the integrity of Wall Street’s most venerable banks and investment houses. Federal Reserve regulators, apparently lacking appreciation for the gravity of these problems, have focused mostly on urging banks to raise new capital without effective parallel efforts to reform bank business models and practices. Often, new capital has been provided by sovereign wealth funds or private equity firms, which lack sophistication in the intricacies of commercial and mortgage banking and demand few changes in bank management policies. The result is sophisticated buyers of fixed income securities, such as insurance companies, remain unwilling to accept loan-backed securities from the banks. The market for mortgage backed securities issued by commercial banks has evaporated. The housing sector is already in recession, in large measure, because the market for mortgage-backed securities has broken down. At this time, banks can only write conforming loans that can be sold to Fannie Mae or held on their balance sheets. The bond market will not accept mortgage-backed securities underwritten by the major Wall Street banks, and this significantly curtails the market for less than prime securities. The whole chain that creates financing for mortgages and other consumer loans has been corrupted from loan officers to banks that bundle loans into securities, to bond rating agencies like Standard and Poor’s who demand payments from banks instead of charging investors to evaluate mortgage-backed securities. The Federal Reserve and Treasury need to prod the private banks to reform lending practices, and to encourage bond rating agencies to return to investor financed ratings. Unfortunately, Henry Paulson and Ben Bernanke have been shy to do this. That is why the stock market has not been much moved by recent interest rate cuts, the dollar is so weak against the euro and gold prices continue to rise. The economy is sailing through dangerous, unchartered waters, and Henry Paulson and Ben Bernanke, the helmsmen, seem confused and unsteady, adding to pessimism about the outlook for GDP growth and jobs. This pessimism is depressing stock prices and the exchange rate for the dollar against the euro, and it is pushing up the price of gold. The weak dollar and high price for gold are a financial market vote of no confidence for Paulson and Bernanke. Further Federal Reserve interest rate cuts are certain but these will do little to improve the growth prospects for the economy or the job market for ordinary workers. Weak Wage Growth and Unemployment Construction, manufacturing, finance, and retail trade displayed weakness, reflecting a contracting economy. Wages decreased one cent per hour, or 0.1 percent. Wage stagnation and strong labor productivity growth should help keep core inflation in check, and this should help abate Federal Reserve concerns about nonfood and nonenergy price inflation, so-called core inflation, as it navigates the fallout from the subprime crisis. What problems the Fed faces in the core will be pass-through from higher food energy prices, which its policies can little affect. The unemployment rate was 4.8 percent in January. However, these numbers belie more fundamental weakness in the job market. Discouraged by a sluggish job market, many more adults are sitting on the sidelines, neither working nor looking for work, than when George Bush took the helm. Factoring in discouraged workers raises the unemployment rate to about to 6.8 percent. As the economy slows further this figure will likely exceed 8 or even 9 percent. Overall, the pace of employment growth indicates the economy is contacting. First and second quarter growth in GDP should be in the range of negative 0.6 percent. Ford and GM have announced second quarter production cutbacks and builders have a 10 month supply of unsold new homes. Auto production and housing starts should not improve much until the third quarter, and those conditions will feed into the rest of the economy. The jobs outlook should not markedly improve until at least the second half of this year. Most forecasts of likely GDP and jobs growth are premised on econometric models, whose parameters were estimated using historical data. These historical estimates reflect a sound banking system and functioning credit market for mortgage and auto loan backed securities, but both the banking system and the securitized debt market are in disarray. Treasury Secretary Henry Paulson is studying the problem, and Federal Reserve Chairman Ben Bernanke has been mysteriously silent. Therefore, the rebound most econometric models predict for the third quarter may prove tepid indeed, and the economy could even continue to contract through the third quarter. The bottom line is that labor markets will remain slack and keep wage increases down in months ahead. Recent increases in energy prices have passed through to core, nonenergy and nonfood, prices but these shocks are not becoming built into wage setting behavior and expectations for future inflation. The Federal Reserve can focus on managing the credit crisis, and further interest rate cuts are a virtual certainty. Manufacturing, Construction and the Quality of Jobs Going forward, the economy will add some jobs for college graduates with technical specialties in finance, health care, education, and engineering. However, for high school graduates without specialized technical skills or training and college graduates with only liberal arts diplomas, jobs offering good pay and benefits remain tough to find. For those workers, who compose about half the working population, the quality of jobs continues to spiral downward. Historically, manufacturing and construction offered workers with only a high school education the best pay, benefits and opportunities for skill attainment and advancement. Troubles in these industries push ordinary workers into retailing, hospitality and other industries where pay often lags. Construction employment fell by 38,000 in February. This is a terrible indicator for future GDP growth. In December, manufacturing has lost 52,000 jobs, and over the last 91 months manufacturing has shed more than 3.6 million jobs. Were the trade deficit cut in half, manufacturing would recoup at least 2 million of those jobs, U.S. growth would exceed 3.5 percent a year, household savings performance would improve, and borrowing from foreigners would decline. The dollar remains too strong against the Chinese yuan, Japanese yen and other Asian currencies. The Chinese government artificially suppresses the value of the yuan to gain competitive advantage, and the yuan sets the pattern for other Asian currencies. These currencies are critical to reducing the non-oil U.S. trade deficit, and instigating a recovery in U.S. employment in manufacturing and technology-intensive services that compete in trade. Sadly, Treasury Secretary Henry Paulson in a speech to the Economics Club of Chicago expressed the view that the employment situation in manufacturing is healthy. With such apathy from the Administration it is small wonder that blue collar workers and their unions question the efficacy of U.S. trade policy. A crisis of confidence has emerged, and the Administration and Ben Bernanke ignore it at peril of the nation. Peter Morici is a professor at the University of Maryland School of Business and former Chief Economist at the U.S. International Trade Commission. He can be reached at pmorici@rhsmith.umd.edu

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