Today's Stories

June 10, 2008

James G. Abourezk
Deadly Fallout From Obama's Groveling Before Israel Lobby

Saree Makdisi
Banned in the U.S.A. (Almost)

June 9, 2008

Uri Avnery
No, I Can't: Obama, Israel and AIPAC

Nikolas Kozloff
McCain & the Republican Insitute: Promoting Iraqi Occupation for "a Million Years"

Allan Nairn
Drawing Your Last Breath Hungry

Dennis Loo
Threats on Iran and the "Batterer's Defense"

Harry Browne
Irish Euro Vote Comes Down to the Wire

C. Hand
U. S. Bid to Hike Iran's Gas Prices Seems Doomed

Peter Morici
An Unsustainable Trade Deficit

Kenneth Couesbouc
A Ripe Time for Inflation

Martha Rosenberg
The Inconvenient Senator Grassley

James L. Secor
Chinese Superstition or Unconscious Oracle?

Website of the Day
Pay Bo Diddley!

June 7 / 8, 2008

Alexander Cockburn
Obama Goes Over the Top

Ishmael Reed
How Miles Davis Changed My Life

Jeffrey St. Clair
What a Miner's Life is Worth

Nikolas Kozloff
Meet the King the Beers: John McCain and Latin America

Dave Lindorff
The High Cost of a Single War-Like Remark: Oil Prices, Israel, Iran and the U.S.

Robert Fantina
When Truth is the Casualty

Conn Hallinan
Iran and Rumors of War

Neve Gordon
The Occupation and the Politics of Death

Tom Barry
The Deterrence Strategy of Homeland Security

Patrick Irelan
Raiding the Packing House

Tim Wise
Your Whiteness is Showing

David Ker Thomson
The Hard Question

Joshua Frank
"Socialist" Wins Republican Nomination in Montana

David Yearsley
Disaster Music

James T. Phillips
1968: Year of the Rat

Joe Allen
The Real Bobby Kennedy

P. Sainath
Making Life Brighter in Kondapur

David Macaray
Should Unions be More Democratic?

B.R. Gowani
Experience and the Two-for-One

Fred Gardner
What Happened (at the DA's Office)

Peter Harley
Technology to the Rescue? Kurzweil and the Human Machines

Michael Dickinson
Surrender the Bones of Geronimo!

Jen Roesch
Where are the Real Women in Sex and the City?

Poets' Basement
Gibbons, Landau, and Buknatski

Website of the Day
Partying with the Waltons

June 6, 2008

Frank Barat
An Interview with Ilan Pappé and Noam Chomsky on the Future of Israel / Palestine

Patrick Cockburn
U.S. Extorts Iraq to Approve Military Deal

Gary Leupp
Cheney Enrages Iraqis Over Security Deal

James Abourezk
Name That Terrorist

Peter Morici
Recession Grips the Jobs Market

Faheem Hussain
What is NATO Doing in Afghanistan?

Andy Worthington
Guantánamo's Britons Go on Hunger Strike

Ayesha Ijaz Khan
How Will Musharraf Go? Impeachment or Safe Exit?

Dave Lindorff
Congress Needs to Defend Itself

Website of the Day
Backstage with Bo Diddley

June 5, 2008

Patrick Cockburn
Bush's Secret Deal Would Ensure Permanent U.S. Occupation of Iraq

Sharon Smith
Hillary's Wreckage

Nikolas Kozloff
Obama's Electoral Dilemma: Latinos or Reagan Democrats?

Linn Washington, Jr.
Police Brutality and Cover-Up in Philly

Omar Barghouti
60 Years of Nakba, 41 Years of Occupation ...

Scott Pellegrino
Jim Crow Radio: Bob Grant's Lifetime Achievement Award

John Walsh
Obama Woos AIPAC

Dan Bacher
The Parching of California

DC Larson
Nazi Rockers ... F-Off

Robert Jensen
Masculine, Feminine or Human?

Website of the Day
Ohio Cops Attack Long Walkers

June 4, 2008

Eric Walberg
Princess Patricia and the Taliban

Gary Leupp
Iran and EFPs: Chronology of a Lie

Ralph Nader
Disenfranchised Youth

Dave Lindorff
Of Whiners and Poor Losers

George Wuerthner
Farm Economics

Victor M. Rodriguez
The Puzzle of Race and Politics

Remi Kanazi
Why a Cultural Boycott of Israel is Needed

Stephane Luçon
Renault's Romanian Fairyland Suspended

Farzana Versey
The Tablighi Jamaat Movement

Laray Polk
The Militarization of Space

Website of the Day
Red State Rebels

June 3, 2008

Paul Craig Roberts /
Lawrence M. Stratton
Legislating Tyranny

Mike Whitney
The Withering Economy

Steve Early
San Juan Showdown

Manuel Otero
Why Hillary Won Puerto Rico: the View from the Colony

George Bisharat
The Hope of a Victimized People

Nikolas Kozloff
Obama's VP Quandry

Dan Bacher
Death on the Salmon Highway

Website of the Day
Censoring Bill Knott?

June 2, 2008

Uri Avnery
The Olmert Scandal

Nikolas Kozloff
Obama's Latino Problem Getting Worse

Allan J. Lichtman
Revisionist History: Bush, Borah and Hitler

Malini Johar Schueller
The Color of Randomness: Returning to the US From Beirut Via Syria

Robert Weissman
What's Driving Skyrocketing Oil Prices?

Peter Morici
Bailing Out Wall Street

Manuel Garcia, Jr.
Don't Get Burned: How to Protect Yourself From Raytheon's Pain Gun

John Ross
Celebrating Catholic Fanaticism in Mexico

Ahmad Al-Akhras
Encounters with the Watch List

Website of the Day
Man on Earth

May 31 / June 1, 2008

Alexander Cockburn
The Worst is Yet to Come

Jeffrey St. Clair
Arkansas Bloodsuckers

Gary Leupp
How McClellan Prettifies Bush

Stan Cox
Broken Agriculture

Rannie Amiri
Lebanon: the Domino That Wouldn't Fall

P. Sainath
A Guaranteed Day's Work--in the Fields, at 110 Degrees, for $2 a Day

Binoy Kampmark
Going Bankrupt in Vallejo

Robert Fantina
Bush, Rice and McClellan

Seth Sandronsky
Will There be Water Riots, as Sacramento Goes Dry?

Corporate Crime Reporter
Death Penalty for Bush?

Anthony DiMaggio
Gaming the Ghetto: Grand Theft Auto IV, Racist Media and the Concrete Jungle

Karl Grossman
A Half-Trillion for Nukes

Matt Reichel
From Vegas to the Heartland and Back Again

Paul Myron Hillier
Of Gas and God

Andy Worthington
Suicide at Guantánamo

David Yearsley
And the Winner is ... Wayne Shorter

Daniel Cassidy
Free Lunch

Charles Thomson
If Hitler Had Been a Hippy ...

Gary Corseri
A Dream Deferred: Activism and the Arts

Wajahat Ali
Sex and the City Through a Man's Eyes

Ron Jacobs
Robins Weep

Poets' Basement
McNeill and Davies

Website of the Day
Last Charge of the Light Horse

May 30, 2008

Bassam Aramin
Here's the Truth You've Been Running From

Andrew Cockburn
Petraeus' Iran Obsession

Saul Landau
How We Got Into This Mess

Nikolas Kozloff
Meet South America's New Secessionists

Robert Sandels
Turning Back the Clock on Cuba

Dave Lindorff
Talk is Cheap

Martha Rosenberg
Raiding Big Meat; Arresting the Wrong People

Harvey Wasserman
Lieberman & McCain: Linking Internet Censorship and Atomic Reactor Terror

Doug Giebel
A Plague on Both Your Houses (of Congress)

Shaun Harkin
The Trial of the Raytheon 9

Website of the Day
The Once and Future Environmental Movement

May 29, 2008

Jeffrey St. Clair
Bill Clinton and the Rich Women

Nikolas Kozloff
Puerto Rico, Obama and the Politics of Race

Col. Dan Smith
Deceiving the Dead

Karl Grossman
The Most Lucrative Incentive for Nuclear Power in the History of the United States

William S. Lind
Inside the Washington Game

Robert Weissman
What to do About the Price of Oil

Dave Lindorff
Why Puerto Rico Won't Matter

David Macaray
A Union Fable

Chris Genovali
Fear and Loathing in the Northern Rockies

Laura Carlsen
Mexico's Battle Over Oil

Website of the Day
Support Antiwar.com

May 28, 2008

Wajahat Ali
The Libertarian Dark Horse: An Exclusive Interview with Ron Paul

Ralph Nader
What's Really Driving the High Price of Oil?

Brian McKenna
Why I Want to Teach Anthropology at the Army War College

Corporate Crime Reporter
Why Vincent Bugliosi Wants to Prosecute George W. Bush for Murder

Brian Cloughley
The Attack on Damadola

Eric Walberg
Opium for the Masses from Afghanistan

Michael Dickinson
Raytheon's Pain Ray: Coming to a Protest Near You

Ijaz Khan
Opening Windows in Pakistan

Website of the Day
Older Than America

May 27, 2008

Alexander Cockburn
In Her Mind She's Killed Before: the Plot to Assassinate Ralph Nader

Greg Kafoury
Is Obama Turning (Further) Right?

Jean Bricmont
Western Delusions

Tim Wise
Farrakhan is not the Problem

Ricardo Alarcón
Puerto Rico's Turn

Stephen Soldz
APA Supports Psychologist Engagement in Bush Regime Interrogations

Andy Worthington
The Guantánamo 16

Alan Singer
Vapid, Stupid and Insulting: Chuck Schumer Speaks to the Graduates

Richard Neville
Storm in an A-Cup

Susie Day
Gone with the W

May 26, 2008

Uri Avnery
The Syrian Option

Bill Quigley
War Immemorial Day

Col. Dan Smith
Retreating from Hell: a Different Memorial Day

Cindy Sheehan
Why Memorial Day is a Double-Whammy for Me

Marjorie Cohn
Hillary's Assassination Politics: Her Last Shot?

Fred Gardner
Does the VA Care?

Raymond J. Lawrence
Pain Pays: Getting Rich at NY Presbyterian Hospital

Harvey Wasserman
Mugging the Election System

Moncia Benderman
Truth Matters

David Rovics
In Praise of Utah Phillips

Website of the Day
Fox News Jokes About "Knocking Off" Osama and Obama

May 24 / 25, 2008

Alexander Cockburn
Death-Wish Hillary Primes Manchurian Candidate

Jeffrey St. Clair
Yellowstone: How Sununu Shrank the Ecosystem

Barbara Rose Johnston
Dam Legacies, Damned Futures

Nikolas Kozloff
U.S. Fourth Fleet in Venezuelan Waters

Adriana Kojeve
The Environment and the 2008 Elections

Robert Fantina
Justice Department's Revelations on Torture

Dave Lindorff
Bush's War on Children in Iraq

David Yearsley
The War on Kitsch

Nelson P. Valdés
The Buying of "Democracy" Agents in Cuba

Kathleen M. Barry
Celebrating Ethnic Cleansing

John Ross
Mexico's Narco Opera Reaches for High Point

Allison Kilkenny
Apathy Doesn't Live in Bronx

Fred Gardner
Orangeburg, 1968

Elizabeth Schulte
Can the Whole World be Fed?

Daniel Gross
Remembering the Wendy's Massacre: the Dangerous Side of Retail Work

Christopher Brauchli
The Search for a Token Right-winger

Richard Rhames
A Nation of Sheep

Daniel Cassidy
My Mother

Poets' Basement
Davies, Klipschutz and Willson

Website of the Weekend
Happy Birthday, Bob

May 23, 2008

Paul Craig Roberts
War Abroad, Poverty at Home

Alan Farago
The Radical Extremists of the Building Industry

Conn Hallinan
Ballots and Bullets: From Beirut to Bolivia

Mark Engler
The World After Bush

George Wuerthner
Cars and Cows: Living Large in America

Kamran Matin
The Kurds and American Neo-Imperialism

Sandy Boyer /
Shaun Harkin
The Long Incarceration of Pol Brennan

Robert Weitzel
A "Holey" Instrument of Peace in Iraq

Cindy Sheehan
An Uphill Battle

Liaquat Ali Khan
Pakistan's Futile Constitutional Amendment

Website of the Day
A Message from the Moral Compass of the McCain Campaign

May 22, 2008

Vijay Prashad
Racist Grammar

Joanne Mariner
A Military Commissions Cheat Sheet

Sharon Smith
60 Years of Apartheid

Jeff Birkenstein
Disaster Redux: Some Early Thoughts on the Earthquake in China

Brendan McQuade
From Obama to the PRTs in Iraq

Peter Morici
The Sorry State of the Banking Industry

Niranjan Ramakrishnan
Restoration Boulevard

Dave Zirin
What I Want to Ask Mary Tillman

Ron Jacobs
CPR for the Antiwar Movement

Stephen Lendman
Immoral Hazard

Website of the Day
Hagee: God Sent Hitler to Drive the Jews to Israel

May 21, 2008

Jeffrey St. Clair
The Gothic Politics of Hillary Clinton

Nikolas Kozloff
U.S. Military Bases in South America

Alan Farago
Miami, Cuba and the Presidential Campaign

Dave Lindorff
Big John and the Scary, Scary Iran Threat

David Model
Genocide in Iraq?

Eric Walberg
Afghanistan: Who is the Enemy?

Franklin Lamb
Lebanon Gets a President

Kenneth Couesbouc
Tax Against Tyranny

Website of the Day
Child Labor and War-Affected Children: a Photo Essay

May 20, 2008

Ralph Nader
A Trip Inside Google

Uri Avnery
With Friends Like These

Patrick Irelan
The Empire and the Fleet

Ray McGovern
Come Out, Admiral Fallon, Wherever You Are

David Macaray
The UAW Strike Against American Axle

Chris Genovali
Big Oil on the Water: Skating Around the Tanker Issue

Ibrahim Fawal
Birmingham, Israel and the Nakba

Christopher Ketcham
Let Us Now Praise Famous Suicides

Andy Worthington
Guantánamo Trial Delayed

Martha Rosenberg
Merck is a Repeat Offender

Website of the Day
Defend the Students Who Pied Tom Friedman

May 19, 2008

Saul Landau
Cuba Will Live

Paul Craig Roberts
The Metamorphosis of the Conservative Movement

Brian McKenna
Brotherly Love in Philly's Badlands

Patrick Cockburn
City of the Dead: Mosul on Lockdown

B. R. Gowani
The Central Problem Pakistan Needs to Tackle

Dr. Trudy Bond
Psychologists and Torture: If Not Now, When?

Cindy Sheehan
Whose War is It?

John Mohawk
The Warriors Who Turned to Peace

Remi Kanazi
When Free Speech Doesn't Come for Free

Robert Day
I Get a Horse

Website of the Day
Evolve or Die

Subscribe Online

Trade Deficit Soars

Bernanke Aggravates the Risk

By PETER MORICI

The Commerce Department reported the April deficit on trade in goods and services was $60.9 billion. This was up from $56.5 billion in March, substantially larger than the 59.5 billion consensus forecast.

The trade deficit was driven up by higher prices for imported oil and a dramatic surge in imports from China. At 5.1 percent of GDP, these pose a significant drag on the economy.

The trade deficit heightens the risk of recession and surging unemployment. Ben Bernanke’s recent comments about oil driven inflation only serve to distract attention from these issues and aggravate risks.

Simply, money spent on Middle East oil and Middle Kingdom consumer goods can’t be spent on U.S. made goods and services. The drag on aggregate demand is every bit as important as the credit crisis and housing adjustment in driving up unemployment. The combined effect of oil imports, the trade deficit and housing adjustment are pushing the economy into recession, and breaking inflation on non-energy products. That is why core inflation, prices less food and energy, stays in check.

Federal Reserve Chairman Ben Bernanke in recent comments has emphasized that western central banks stand ready to resist oil induced recession, when in fact oil price increases are far beyond the control of the Federal Reserve and other central banks to affect. This is causing markets to factor in Federal Reserve increases in the federal funds rate by the end of the year, just as the economy is sliding into recession.

China is subsidizing oil imports, without regard to spot prices in international markets, and controlling domestic gasoline prices with the dollars it purchases with yuan. It undertakes the latter purchases to keep the yuan undervalued against the dollar and boost exports. Hence, consumers in country contributing most to growing demand for oil, China, are wholly insulated from rising oil prices. As oil prices rises, the Chinese drive prices even higher with their subsidies. Bernanke should talk about that if he wants to do something about oil driven inflation.

Instead, Bernanke’s words cause markets to believe the Fed will raise interest rates as we travel into a recession and this drives equity prices down, compounding the panic created by rising oil prices.

Raising interest rates now would be the kind of policy the Federal Reserve pursued in 1929. Is that the kind of signal a central banker and student of the Great Depression wants to send to fragile markets?

If Bernanke wants to do something about both the recession and inflation, he should focus on Chinese purchases of dollars with yuan, which boost exports to the United States, and Chinese subsidies on oil imports with those dollars, which drive up global oil prices. Together, these are driving up the trade deficit, exacerbating the recession and driving up U.S. gas prices.

Were the Chinese yuan problem solved, the trade deficit could be cut by a third, and that would boost U.S. GDP by about $250 to $500 billion GDP.

Breaking down the Deficit

Together, petroleum, China and automotive products account for nearly the entire U.S. trade deficit, and no solution to the overall trade imbalance is possible without addressing these segments.

Petroleum products accounted for $34.5 billion of the monthly trade gap, on a seasonally adjusted basis, up from 30.2 in March. Since December 2001, net petroleum imports have increased $30.0 billion, as the average price of a barrel of imported oil has risen from $15.46 to $96.81, and monthly imports have increased from 353 million to 388 million barrels.

Retuning conventional gasoline engines and transmissions, hybrid systems, lighter weight vehicles, nuclear power, and other alternative energy sources could substantially reduce U.S. dependence on foreign oil. These solutions require national leadership, but both Republican and Democratic Party leaders have failed to champion policies that would reduce dependence on Middle East oil.

In 2007, the Congress managed to push through the first increase in automobile mileage standards in 32 years but don’t cheer loudly. The 35 mile-per-gallon standard to be achieved by 2020 is far less than what is possible.

The bill also requires the production of about 2.4 million barrels a day of ethanol. Along with other conservation measures, the 2007 Energy Act could reduce U.S. petroleum consumption by 4 million barrels a day by 2030. Over the last 23 years, petroleum consumption has increased by about 5.5 million barrels a day, despite improvements in mileage standards, automobile and appliance technology, and conservation.

Being optimistic, in 2030 the United States will be just as dependent on imported oil as before without stronger conservation and alternative fuel policies. Factor in falling production from U.S. oil fields, the situation gets worse.

China accounted for $20.2 billion of the April trade deficit, up from $16.1 billion in March and $5.5 billion in December 2001. The bilateral deficit is rising, because China undervalues the yuan, and this makes Chinese exports artificially inexpensive and U.S. products too expensive in China. U.S. imports from China exceed exports to China by a ratio of 4.5 to 1.

China revalued the yuan from 8.28 to 8.11 in July 2005 and has permitted the yuan to rise less than 5 percent every twelve months. Modernization and productivity advances raise the implicit value of the yuan much more than 5 percent every 12 months, and the yuan remains undervalued against the dollar by at least 40 percent.

China’s huge trade surplus creates an excess demand for yuan on global currency markets; however, to limit appreciation of the yuan against the dollar and drive its value down against the euro, the Peoples Bank of China sells yuan and buys dollars, euros and other currencies on foreign exchange markets.

In 2007, the Chinese government purchased $462 billion in U.S. and other foreign currency and securities. This comes to about 14 percent of China’s GDP and about 35 percent of its exports of goods and services. These purchases provide foreign consumers with 3.5 trillion yuan to purchase Chinese exports, and create a 35 percent “off budget” subsidy on foreign sales of Chinese products, and an even larger implicit tariff on Chinese imports.

In addition, China provides numerous tax incentives and rebates, and low interest loans, to encourage exports and replace imports with domestic products. These practices clearly violate China’s obligations in the WTO, and it agreed to remove those when it joined the trade body.

Automotive products account for about 11 billion of the monthly trade deficit. Japanese and Korean manufacturers have captured a larger market and are expanding their U.S. production. However, Asian manufacturers tend to use more imported components than domestic companies, and GM and Ford are pushing their parts suppliers to move to China.

GM, Ford and Chrysler still carry a significant cost disadvantages against Toyota plants located in the United States, thanks to clumsy management and unrealistic wages, excessive fringe benefits and arcane work rules imposed by United Autoworker contracts. Recent negotiations have improved the Detroit Three’s cost position but did not wholly close the labor cost gap with Toyota and other Asian transplants.

Recently negotiated labor agreements should reduce, but not eliminate, these cost disadvantages. Even with retiree health care benefits moved off the books and a two tier wage structure, the cost disadvantage will remain at least $1000 per vehicle.

Also, the Bank of Japan has aggressively stepped up sales of yen and won for U.S. dollars and other securities to keep their currencies cheap against the dollar. This discourages Toyota and others from moving more auto assembly and sourcing more parts in the United States.

Deficits, Debt and Growth

Trade deficits must be financed by foreigners investing in the U.S. economy or Americans borrowing money abroad. Direct investments in the United States provide only about a tenth of the needed funds, and Americans borrow about $50 billion each month. The total debt is about $6.5 trillion, and at five percent interest, the debt service comes to about $2000 per U.S. worker each year.

High and rising trade deficits tax economic growth. Each dollar spent on imports, not matched by a dollar of exports, shifts workers into activities in non-trade competing industries like department stores and restaurants.

Manufacturers are particularly hard hit by this subsidized competition. Through recession and recovery, the manufacturing sector has lost 3.7 million jobs since 2000. Following the pattern of past economic recoveries, the manufacturing sector should have regained more than 2 million of those jobs, especially given the very strong productivity growth accomplished in technology-intensive durable goods industries.

Productivity is at least 50 percent higher in industries that export and compete with imports. By reducing the demand for high-skill and technology-intensive products, and U.S. made goods and services, the deficit reduces GDP by at least $250 billion a year or about $1750 for each worker.

Longer-term, persistent U.S. trade deficits are a substantial drag on growth. U.S. import-competing and export industries spend at least 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 10 years, the U.S. economy is about $1.5 trillion smaller. This comes to about $10000 per worker.

The damage grows larger each month, as the Bush administration dallies and ignores the corrosive consequences of the trade deficit.

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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