Today's Stories

August 7 - 9, 2009

Alexander Cockburn
It Pays to Have a Nuke

August 6, 2009

Ishmael Reed
Let's All Have a Beer

Paul Craig Roberts
The Expiring Economy

William Blum Assassinations and Coups: Keeping Track of the Empire's Crimes

Michael Donnelly
Rod Coronado: the Hardest Working Man in Animal Rights "Terrorism"

Jonathan Cook
Rabbis Ban Marriage for Israeli "Untouchables"

Dave Lindorff
The Health Care Reform Sell-Out

Ellen Brown
The Public Option in Banking

Website of the Day
Ellsberg on Hiroshima

August 5, 2009

Dedrick Muhammad /
Barbara Ehrenreich
The Destruction of the Black Middle Class

Norman Solomon
The Incredible, Shrinking Health Care Plan

William Blum
The Myths of Afghanistan: Past and Present

Gareth Porter
The ISI and the Taliban: US Officials Are Protecting Pakistani Aid to Taliban

Mary Lynn Cramer
The Myth of Medicare for All

Jim Goodman
Obama Needs to Take a Stand on Trade

Nadia Hijab
Playing From Strength in the Middle East

Gretchen Kroth
Guatemala's Garbage Dump Education System

Steve Macek /
Scott Sanders
Privatizing the Airwaves

Sarah Lazare
Inside G.I. Resistance

Website of the Day
The Locavore Myth

August 4, 2009

Mike Whitney
Bernanke's Shell Game

Dave Lindorff
The Recession Isn't Over, By a Long Shot

Patrick Cockburn
Did British Bomb Attacks in Iran Provoke Hostage Crisis?

Jonathan Cook
Israel's Campaign to Silence Human Rights Groups

Jeff Sher
Making a Mess of Health Care Reform

Dean Baker
Why Don't We Globalize Health Care?

Andy Worthington
Gitmo as Hotel California

Uri Avnery
A Jeremiad

Mark Weisbrot
U.S.-Brokered Mediation in Honduras Has Failed

Alvaro Huerta
Hold That Dustbin! So Much for the "End of Racism"

Website of the Day
Pentagon to Ban Facebook and Twitter?

August 3, 2009

Pam Martens
Millions of Americans Pushed Into No-Law System by Colluding Banks

Anthony DiMaggio
Media Backlash: Obama and the Settlements

Udi Aloni
And Who Shall I Say is Calling? A Plea to Leonard Cohen

Mike Roselle
See the Mountains of WestVirginia ... Before They're Blown Up!

Dr. Susan Block
Beat It! Sex, Death and Michael Jackson

Roy Bourgeois / Margaret Knapke
School of Coups

Joe Bageant
A Yard Sale in Chernobyl

Dina Jadallah
Hiding the State

Dave Lindorff
Of Blue Dogs and Jellyfish

Martha Rosenberg
Grand Closings in Evanston: How the Recession is Hitting Illinois

Website of the Day
Why We Can't "Afford" Health Care

July 31 - August 2, 2009

Alexander Cockburn
The Biden and Clinton Mutinies

Gabriel Kolko
Searching For Enemies

John Prados
The Intelligence Oversight Mess

Joe Bageant
The Bastards Never Die

Tim Wise
Rationalizing Racial Oppression

Carl Ginsburg
Frist First: Follow the Money (and Find the Plump Heart of "Health Care")

Michael Fox
The Honduran Coup as Overture

John Lindsay-Poland
Revamping Plan Colombia

Michael Winship
Pay-to-Play: Washington's Sport of Kings

Rev. William Alberts
White Men Can Jump ... to Conclusions

Andy Worthington
Judge Orders Release of Tortured Gitmo Prisoner

Steve Breyman
Counting the Unemployed

Cyrus Bina
Racism, Class and Profiling

Missy Beattie
Promises Ignored

Ron Jacobs
Into the Vapid: Consuming the Cultural Product

Willie L. Pelote, Sr.
Party of Concessions: Democrats Never Learn

Lucia Alvarez
Fall of the House of Kirchner? Return of the Right in Argentina

Dave Lindorff
David Brooks' White Guy Nightmare

Lawrence R. Velvel
Madoff: What Should be Done Now?

Omar Barghouti /
Sid Shniad
United for Freedom and Universal Justice

James L. Secor
The Name of the Game is Wipe-Out

Belén Fernández
Zelaya in Nicaragua: Has Another Constitution Been Violated?

Jeffrey St. Clair
Frank Lloyd Wright in Hollywood: the Ennis House as Imperial Ruin

David Yearsley
Beauty in Dark Places: Berlin's Olympic Stadium

Brian J. Foley
Pre-Eating: a Threat to Restaurants Everywhere

Alan Cabal
Onward, Into the Fog: Thomas Pynchon's
"Inherent Vice"

Kim Nicolini
The Way War Feels

Lorenzo Wolff
The Way It Felt the First Time: the Jump Rope Magic of the Shangri-Las

Poets' Basement
Four Poems From the Chinese

Website of the Weekend
Obama's Ex-Doc Knocks ObamaCare

July 30, 2009

Patrick Cockburn
Victims of a Covert Tit-for-Tat War

Gareth Porter
Afghanistan's US-Backed Child-Raping Police

Saul Landau
Summer of Denial

Greg Grandin
Honduran Coup Over?

Diane Farsetta
Pentagon Pundits Get a Pass

Stephen Soldz
The King Case, the APA and the Missing Ethics Investigation

Alan Farago
Learning How to Survive in a Depression From "Weeds"

David Macaray
Cops and Labor Unions

Mike Howells /
Jay Arena
Volunteerism Will Not Rebuild the Gulf Coast

Christopher Brauchli
Oatmeal Envy

Website of the Day
Changing the SOFA

July 29, 2009

Carl Ginsburg
Our Crisis, Their Gain

Clifton Ross
From Tegucigalpa to El Paraiso: a Voyage From Curfew to State of Siege

Paul Craig Roberts
How Fake is the "Recovery"?

Franklin C. Spinney
Winning Hearts and Minds, Pentagon Style

James Bovard Lackawanna Six: Bogus Charges and Martial Law

Anthony DiMaggio
Health Care, the Media and Public Opinion

Bouthaina Shaaban
How Will Arabs Wake Up?

Greg Moses
A Catch and Trade Policy for Labor Costs

Wajahat Ali
No Racism in Obama's Post-Race America?

Gary Leupp
Beer Will Not Solve This

Ayesha Ijaz Khan
Musharraf, Imran Khan and Overseas Pakistanis

Website of the Day
Why Single-Payer Gets No Respect

July 28, 2009

Jean Bricmont
Bombing for a Juster World?

Uri Avnery
Obama, Netanyahu and the Settlements

Dean Baker
Right to Rent: a Remedy for the Foreclosure Crisis

Heather Gray
Stupid Cop Tricks: Driving Too Close to a White Female and Other Episodes in Racist Policing

Jonathan Cook
Can an "Arab Soul" Yearn for Israel's Anthem?

Winslow T. Wheeler
Beyond the F-22: the Future of Pentagon Reform

Belén Fernández
Thomas Friedman Does Afghanistan

Carl Finamore
The Hotel Workers' Kickass Local 2

Eli Jelly-Schapiro
Striking the World Cup

Harvey Wasserman
We All Stand Before Peltier's Parole Board

Website of the Day
Behind the Wheel

July 27, 2009

Ishmael Reed
Gates: Post-Race Scholar Yells Racism

Patrick Cockburn
Elections Shake Kurdistan

Roger Burbach
Hillary and Obama Nix Change in Honduras

Steve Breyman
Bomber Joe and Russia: Why is Biden Channeling Cheney?

Ramzy Kysia
Gaza: On the Right of Resistance

Stephen Soldz
Will the American Psychological Association Renounce the Nuremberg Defense?

Raymond J. Lawrence
Sexual Hocus Pocus in the Episcopal Church

Greg Moses
The Color Line is Black

Binoy Kampmark
Swine Flu Panic

Kim Ives
Lavalas and Haiti's Student Union Unite

Website of the Day
Meet the Paid Assassins of Health Care

July 24-26, 2009

Alexander Cockburn
"A Damned Murder, Inc."

Clifton Ross
Surreal Honduras

Patrick Cockburn
Party of "Change" Challenges Old Guard in Kurdistan

William Polk
Report Card on Obama From a New Frontiersman

David Sterritt
Screening the Politics Out of the Iraq War

Ray McGovern
Hooded in Bush's Hood

David Lindorff
Cops Gone Wild

Hannah Mermelstein
"The War is With the Arabs"

Carl Ginsburg
The Actually Existing Health Care System

Helen Redmond
The Selling of Single-Payer Features

John Ross
The Song of the Guerrilla

Bill Simpich
Fair Play for Cuba and the Cuban Revolution

Mark Weisbrot
Learning From China on How to Beat the Recession

Lee Sustar
U.S. Labor in Crisis

David Macaray
Union Workers Forced to Accept Massive Cuts

Felipe Matsunaga
Obama's Slow (and Familiar) Dance With Cuba

Sara Mann
Why Health Care Will Kill My TV

Martha Rosenberg
Which is Worse? Germs in Our Food or the Antibiotics That Kill Them?

Missy Beattie
Cha-ching Culture

David Ker Thomson
Empty Nest: a Natural History of Now

Ron Jacobs
United4Iran, a Footnote

Stephen Martin
The Crying of Lots 1 Thru 50

David Yearsley
Psst, I Show You a Feelthy Gluck

Gilad Atzmon
Bruno: a Glimpse Into Zionism?

Kim Nicolini
Guilty Laughter in the Dark: Seeing Brüno Twice

Poets' Basement
Kakak and McLellan

Website of the Weekend
Dead Prez: Summertime

July 23, 2009

Jeffrey St. Clair
The Masters of Perfidy: AIG and the System

Saul Landau /
Nelson Valdés
Hypocrisy and the Honduran Coup: Term Limits Only Apply When Governments Help People

Jonathan Cook
The Reality of Israel's "Open" Jerusalem

Nadia Hijab
Israeli Warships in the Red Sea

Dave Lindorff
Living in a Police State: the Gates Incident

Laura Carlsen
21st Century Coups d'Etat

Steve Breyman
Bankers Beware?

Ellen Brown
How California Could Turn Its IOUs Into Dollars

Norman Solomon
Spinning Health Care

Jorge Mariscal
Youth Activists Demand Military-Free Schools

Website of the Day
Copy-Editing Sarah Palin

July 22, 2009

Bernard Chazelle
How to Argue Against Torture

Nikolas Kozloff
The Coup and the U.S. Airbase in Honduras

Carl Ginsburg
The Recovery, Phase Two

Clifton Ross
Back to the Future? Return to El Salvador

Anthony DiMaggio
Health Care, Media and the Case for Socialized Medicine

Michael Donnelly
The Whoppers Behind WOPR

Nadia Hijab
Memoirs of a Lost Arab World

Dedrick Muhammad
Structural Inequality: News Not Fit to Print?

Charles Thomson
Cronyism at the Tate

Alan Farago
Ted Williams and the Florida Keys

Website of the Day
Himmelstein: Howard Dean is a Liar

July 21, 2009

Sasan Fayazmanesh
The Iranian Election and Its Aftermath

Uri Avnery
Breaking the Silence on Israeli War Crimes

Dean Baker
Séance on Wall Street

Jonathan Cook
Team Twitter: Israel's Internet War

Dave Lindorff
Saving Private Bergdahl

Andy Worthington
Interrogating the Uighurs

David Macaray
Heat, Dust and OSHA

Carl Finamore
The Deferential Party

Harvey Wasserman
Cronkite and Three Mile Island

Walter Brasch
The Marie Antoinettes of Health Care

Website of the Day
Linebaugh: Magna Carta and the Commons

July 20, 2009

Pam Martens
Judicial Apartheid

Nikolas Kozloff
Honduras and the Big Stick: Obama's Bullish Behavoir in Latin America

Paul Craig Roberts
Threatening Iran

Deepak Tripathi
Obama's Policy on China and Iran

Ira Glunts
Netanyahu's Time Bomb: Building in the Vineyard of the Mufti

P. Sainath
Put Your Money Down, Boys

Binoy Kampmark
The Moon Landing and the Cold War

Stephen Fleischman
The First Anchorman

Norman Solomon
Cronkite and Vietnam: Beyond the Hype

Andy Worthington
Predictable Chaos as Gitmo Trials Resume

Ron Jacobs
Out of the Haze, Into the Darkness: Recalling 1979

Website of the Day
Why Publishing Can't be Saved (as it is)

July 17-19, 2009

Alexander Cockburn
"Watch What We Do, Not What We Say"

Nikolas Kozloff
Chiquita in Latin America: From Arbenz to Zelaya

Joanne Mariner
CIA Apples: Bad at the Top of the Tree

Joe Bageant
America's White Underclass

Jonathan Cook
Israeli Road Signs: Wiping Arabic Names Off the Map

Saul Landau
Why So Much Sympathy for Madoff's Dupes and So Little for the Poor?

John Ross
Jurassic Fallout in Mexico

Sue Sturgis
Senator Sessions, Race and Impartiality

Anita Sinha /
Daniel Farbman
The Ricci Case and the Myth of Special Treatment

Peter Morici
Obama's Donut Economics

Pervez Hoodbhoy
Whither Pakistan? A Five-Year Forecast

Ramzy Baroud
Gaza and the Language of Power

Greg Moses
The Real Demand Crisis

Kia Mistilis
The Niger Delta Crisis

Missy Beattie
The Placebo President

David Ker Thomson
How Not to See: Things to Tell Your Eyeballs

James G. Abourezk
Evil Spirits: the Booze Strip in Indian Country

Paul Richards
Why Does Jon Tester Want to Log Wild Montana?

Dave Lindorff
Dark Days for Working People (With Three Small Rays of Light)

Marc Levy
Just Like Hanoi Jane

Matt Siegfried
The Good War Goes Hot

Stephen Martin
Panopticon Blues

Ben Sonnenberg
Sembène's Faat Kiné

David Macaray
Casablanca: When Melodrama Trumped History

Charles R. Larson
A Pakistani, Victorian Novel Celebrating Women

David Yearsley
That's Women for You: Abbas Kiarostami's Così

Lorenzo Wolff
Death Rattle and Roll: the Sound From England's Gutters

Poets' Basement
Payne, Anderson and Williams

Website of the Weekend
Hitler Learns of Sarah Palin's Resignation

July 16, 2009

Paul Craig Roberts
What Economy?

Afshin Rattansi Iranian Planes and the Hidden Toll of Economic Sanctions

Gregory V. Button
The Search for Environmental Justice in Perry County, Alabama

Evan Knappenberger
Profile of a Deserter

Michelle Bollinger
Why is Leonard Peltier Still in Prison?

Russell Mokhiber
White House to ABC News: No Obama Single-Payer Doc

Belén Fernández
Iranian Penetration, Oh My!

Alice Walker
What is Torture Like? A Letter to Obama

Nicholas Dearden
Paying the Climate Debt: the G-8's Troubling Model

Albert Osueke
Sotomayor and the Identity Mountain

Website of the Day
Sotomayor for the Prosecution

July 15, 2009

Manuel Garcia, Jr.
The Assassination Bureau

Vijay Prashad
A Political Recession

Dean Baker
Stimulus Arithmetic

Ray McGovern
Cheney Sweating Bullets

Jonathan Cook
Jenin's Model of "Economic Peace"

David Rosen
Shouts From the Gallery: the Sotomayor Hearings and the Culture Wars

Eric Walberg
Uighurs vs. Afghans: a Study in Contrast

Greg Moses
Three Dimensions of a Complete Stimulus Plan

Sousan Hammad
Decolonizing Israel

Binoy Kampmark
The Trial of Charles Taylor

Tracy McLellan
The Story of My Arrest

Website of the Day
11 Days in Saudi Gitmo

July 14, 2009

Eamonn McCann
The Emperors of Bombast: Bono, U2 and the Crisis of World Capitalism

Joanne Mariner
Obama's New Euphemism

Franklin Spinney
The Taliban Rope-a-Dope

Steve Heilig
Walking Mount Tam: an Interview with Gary Snyder

Ali Abunimah
Hamas' Choice

Dave Lindorff
The End of "Nice" Health Care Reform

Nikolas Kozloff
The Politics of Destabilization: McCain and Honduras

Ellen Brown
From Golden State to Subprime State

Alice Slater
How US Missile Defense Plans Sabotaged Nuclear Disarmament Talks With Russia

Ron Jacobs
Protest U.S. Aggression

Joe Allen
The Fight to Save James Hickman in Jim Crow-Style Chicago

Website of the Day
Mel Brooks Does the French Revolution

July 13, 2009

Uri Avnery
The Essence of the Regime

Mike Whitney
The Deflating Economy

P. Sainath
How the World Depression Hits Orissa

Gareth Porter
A US / Iraq Conflict on Iran

Paul Moore
Rap in the Streets, Rap in the Suites

Tim Wise
Off the Deep End: Private Clubs, Public Prejudice

Andy Worthington Former Insider Shatters Credibility of Military Commissions

David Macaray
Cartoon Voices: Serf's Up in Hollywood

Cal Winslow
The Healthcare Worker War

Niranjan Ramakrishnan
Spring in the Time of Obama

Website of the Day
Washington's Deep Game with China

July 10-12, 2009

Alexander Cockburn
Obama's Biden Problem

José Pertierra
The Cuban Five: a Cold War Case in a Post-Cold War World

John Ross
After the Honduran Coup

Conn Hallinan
The Settlements and the Quartet

Nikolas Kozloff
C Street Band: Sex Scandals, Moral Hypocrisy and the Far Right Agenda in Latin America

Clifton Ross /
Marcy Rein
U.S. and Honduras: Dr. Jekyll and Mr. Good Neighbor

Carl Ginsburg
Summers' Clouded Crystal Ball

Michael Neumann
Say It Loud, Say It Proud: There is No God!

Gilad Atzmon
The Left and Islam: Thinking Outside of the Secular Box

Jeffrey St. Clair
The Parable of the Golden Parachute

Ellen Hodgson Brown
California Dreamin': How the State Can Beat Its Budget Woes

Jim Goodman
Rural America Needs More Than Listening Sessions

Christopher Bickerton
Europe's New Politics of Hard Times

Wendell Potter
Health Care Industry Adopts Tobacco Lobby's Tactics

Dave Lindorff
CIA Lies: Why Isn't Congress in Open Revolt?

David Ker Thomson
Switchbacking Toward Bastille Day

Anthony DiMaggio
The Michael Jackson Feeding Frenzy

Raymond Lawrence
Michael Jackson as Sexual Pervert: the Calumnies of Peter King

Walid El Houri
Neda and Marwa: a Tale of Two Murdered Women

Stephanie Westbrook
Yes, We Camp

Roger Gaess
The Shades of Highgate Cemetery

David Yearsley
Tara, America's Dream House

Kim Nicolini
Caution: Men at Work, Robbing Banks

Poets' Basement
Five Poems From the Japanese

Website of the Weekend
Free Tiga and Hugh!

Weekend Edition
August 7 - 9, 2009

When "Not Bad" is the New "Good"

Economy on a Scaffold

By MIKE WHITNEY

We're making this way too complicated. It's simple really.

The Fed has only one tool at its disposal; to create more money. Typically, the way the Fed adds to the money supply is by lowering interest rates. When the Fed lowers rates below the rate of inflation; they're basically selling dollars for less than a buck. That's a good deal, so, naturally, speculators jump on it and trigger a credit expansion. What follows is a frenzy of market activity that ends in a housing, credit, tech or equity bubble. Eventually, the bubble bursts and the economy goes into a tailspin. Then, after a period of digging-out, the process resumes again. Wash, rinse, repeat. It's always the same.

The moral is: Cheap money creates bubbles; and bubbles move wealth from workers to rich motherporkers. It's as simple as that. That's why the wealth gap is wider now than anytime since the Gilded Age. The rich own everything.

The Federal Reserve is the policy arm of the big banks and brokerage houses. Period. Ostensibly, its mandate is to maintain "price stability and full employment". Right. Anyone notice how many jobs the Fed has created lately? How about the dollar? Is it really supposed to zig-zag like it has been for the last decade? The central task of the Fed is to shift wealth from one class to another. And it succeeds at that task admirably.

The Fed's "mandate" is public relations claptrap. Bernanke hasn't lifted a finger for homeowners, consumers or ordinary working stiffs.  All the cash is flowing upwards...according to plan. The Fed is a social engineering agency designed to serve as the de facto government behind the smokescreen of democratic institutions. Does anyone that a black, two year senator with no background in foreign policy or economics is calling the shots?

Obama is a public relations invention who's used to cut ribbons, consoling the unemployed, and convincing Americans they live in a "post racial" society. Right. (Just take a look at that footage from Katrina again.)

The Fed has complete control over monetary policy and, thus, the country's economic future. Bernanke doesn't even pretend to defer to Congress anymore. Why bother? After Lehman caved in, Bernanke invoked the "unusual and exigent" clause in the Fed's charter and declared himself czar. Now he has absolute power over the nation's purse-strings.
The $13 trillion the Fed has committed to the financial system since the beginning of the crisis --via loans and outright purchases of mortgage-backed garbage and US sovereign debt--was never authorized by Congress. In fact, the Fed stubbornly refuses to even identify which institutions got the "loans", how much the loans were worth, what kind of collateral was accepted for the loans, or when the loans have to be repaid.

In truth, the loans are not loans at all, but gifts to the industry to keep asset prices artificially high so that the entire financial system does not come crashing down. Check this out:

"In an analysis written by economist Gary Gorton for the Federal Reserve Bank of Atlanta’s 2009 Financial Markets Conference titled, "Slapped in the Face by the Invisible Hand; Banking and the Panic of 2007", the author shows that mortgage-related securities ballooned from $492.6 billion in 1996 to $3,071.1 in 2003, while asset backed securities (ABS) jumped from $168.4 billion in 1996 to $1,253.1 in 2006. All told, more than $20 trillion in securitized debt was sold between 1997 to 2007. "

$20 trillion! How much of that fetid paper is sitting on the balance sheets of banks and other financial institutions just waiting to blow up as soon as the Fed asks for its money back? And the Fed will never get its money back because the prices of complex securities and derivatives will never regain their pre-crisis values. Why? Because these derivatives are linked to underlying collateral (mortgages) which have already declined 33% from their peak and are headed lower still. Also, these toxic assets were sold as risk-free (many of them were rated triple A) and have now been exposed as extremely risky or fraudulent. Because these assets were heaped together in bundles to strip out their interest rates, they cannot be easily separated which means that they are worth considerably less than the 33% that has been lost on the underlying collateral (mortgages) The securitization markets are not expected to rebound for a decade or more, which means that the Fed will have to find other more-creative way to goose the credit system to avoid a downward spiral.

But how?

Zero percent interest rates haven't worked because qualified borrowers are cutting spending and saving their disposable income, while people who need to borrow, no longer meet the banks' tougher lending standards. Bank credit is shrinking even though excess bank reserves are nearly $900 billion. When banks stop lending, the economy contracts, business activity slows, unemployment soars and growth sputters.

Presently, the economy is still contracting, but at a slower pace than before. "Less bad" is the new "good". All the recession indicators are still blinking red--income, employment, sales, and production--all down big! But it doesn't matter because it's a "Green Shoots" rally; plenty of cheap liquidity for the markets and a freeway off-ramp (for sleeping) for the unemployed.

The Fed's lending facilities are designed to pump liquidity into the system and inflate another bubble by generating more debt. Unfortunately, most people accept Bernanke's feeble defense of these corporate-welfare programs and fail to see their real purpose. An example may help to explain how they really work:

Say you bought a house at the peak of the bubble in 2005 and paid $500,000. Then prices dropped 40% (as they have in Calif) and your house is now worth $300,000. If you only put 5% down, ($25,000) then you are underwater by $175,000. Which means that you own more on the mortgage than your house is currently worth. (This is essentially what has happened to the entire financial system. The equity has vaporized, so institutions are using dodgy accounting tricks instead of reporting their real losses.) So Bernanke comes along and gives you $175,000 no interest, rotating loan to you so that no one knows that you are really busted and you can continue spending just as you had before. Not bad, eh? This is what the lending facilities are all about. It is a charade to conceal the fact that a large portion of the nation's financial institutions are insolvent and propped up by state largess.

But there's more, too.

Now that Bernanke has given you $175,000 no interest, rotating loan; you expect that eventually he will ask for his money back. Right? So your only hope of saving your home, in the long run, is to engage in risky behavior, like dabbling the stock market. It's like playing roulette, except you have nothing to lose since you are underwater anyway.

This is exactly what the financial institutions are doing with the Fed's loans. They're betting on equities and hoping they can avoid the Grim Reaper.
Here's how former hedge fund manager Andy Kessler summed it up last week in the Wall Street Journal:

"By buying U.S. Treasuries and mortgages to increase the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn't put money directly into the stock market but he didn't have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. Stock and bond funds saw net inflows of close to $150 billion since January. The dollars he cranked out didn't go into the hard economy, but instead into tradable assets. In other words, Ben Bernanke has been the market." (Andy Kessler, "The Bernanke Market" Wall Street Journal)

Only a small portion of the money that has gone into the stock market in the last 6 months (since the March lows) has come from money markets. The fed's loans are being laundered into stocks via financial institutions that are rolling the dice for their own survival. The uptick in the markets has helped insolvent banks raise equity in the capital markets so they don't have to grovel to Congress for another TARP bailout.

Everybody's elated with Bernanke's latest bubble except working people who have seen their wages slashed by 4.5%, their credit lines cut, the home values plunge, and their living standards sink to third world levels.

And the Fed's spending-spree is not over yet; not by a long shot. The next wave of home foreclosures (already 1.9 million in the first half of 2009) is just around the corner--the Alt-As, option arms, prime loans. The $3.5 trillion commercial real estate market is capsizing. The under-capitalized banking system will need more assistance. And there will have to be another round of fiscal stimulus for ailing consumers, otherwise, foreign holders of US Treasurys will see that the US can no longer provide 25% of global demand and head for the exits.

Bernanke's back is against the wall. The only thing he can do is print more money, shove though the back door of the stock exchange and keep his fingers crossed. The rest is up to CNBC and the other media cheerleaders.

The Fed chief has committed $13 trillion to maintain the appearance of solvency, but the system is bankrupt. The commercial paper market, money markets, trillions of dollars of toxic debt instruments, and myriad shyster investment banks and insurance companies are now backed by the "full faith and credit" of the US Treasury. The financial system is now a ward of the state. The "free market" has deteriorated into state capitalism; a centralized system where all the levers of power are controlled by the Central Bank. If Bernanke's Politburo withdraws its loans--or even if he raises interest rates too soon-- the system will collapse.

The economy is now balanced on the rickety scaffolding of the dollar. As the Obama stimulus wears off, the rot in the economy will become more apparent. Household red ink is at record highs, so personal consumption will not rebound. That means US assets and US sovereign debt will become less attractive. Foreign capital will flee. The dollar will fall.

The world needs a breather from the US. And they'll get it sooner than many think.

Mike Whitney lives in Washington dtate. He can be reached at fergiewhitney@msn.net

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