Go to Original
By Robert Scheer
As we head into the Fourth of July weekend of patriotic bluster and beer swilling—but before we are too besotted with ourselves—might we also for once consider our imperfections? Why not take a moment to heed the cautions of our founding father, George Washington, whose true legacy will most likely be ignored during the flag-waving weekend?
Washington’s “Farewell Address” to the new nation was a warning about the threat of American imperial ambitions and a declaration of his high expectations for a republic of free men: “In offering to you, my countrymen, these counsels of an old and affectionate friend, I dare not hope they will make the strong and lasting impression I could wish; that they will control the usual current of the passions, or prevent our nation from running the course which has hitherto marked the destiny of nations. But, if I may even flatter myself, that they may be productive of some partial benefit, some occasional good; that they may now and then recur to moderate the fury of party spirit, to warn against the mischiefs of foreign intrigue, to guard against the impostures of pretended patriotism. ...”
We are drowning in the “impostures of pretended patriotism,” used to cover the lies that got us into Iraq, the defense of torture and the violation of our basic liberties. In the name of patriotism, we presume a God-given American right to reorder the world to our liking, masking the vice of unfettered greed as an obligation of national security.
Any doubts as to this later governing impulse of our imperial ambitions were shattered with the recent news that U.S. advisers to our puppet government in the Green Zone of occupied Iraq have worked out agreements for American oil companies to gain control of Iraqi oil fields. But, then again, what did we expect when we elected a Texas oil hustler, and a failed one at that, to be our president?
Only in an America dumbed down by constant propaganda about our innate moral superiority will anyone any longer believe that we didn’t invade Iraq for the oil, even though Secretary of State Condoleezza Rice came to the Bush administration from the board of directors at Chevron, where they named an oil tanker after her. Like Vice President Dick Cheney with those Halliburton contracts, Rice has stayed true to her corporate sponsors. That’s what the U.S. invasion of Iraq accomplished; for the first time in more than three decades after Iraq joined a worldwide trend of formerly colonized nations gaining control of their own resources, Big Oil is getting its black gold back. It was always about the oil—that’s why “we” invaded Iraq—only “we” aren’t getting any, at least not at a reasonable price. The oil companies are.
I know it’s difficult for the corporate media and politicians, both fueled generously by energy money, to grasp the distinction, but we the people and they the oil companies are not one and the same. While we suffer at the pump, they make record profits, which is the way they like it. Don’t think for a second that U.S. oil companies are rushing into Iraq to expand production to help lower world oil prices, thus making their investments less profitable. They just want to be on the winning side, which is why the CEO of Halliburton relocated his office from Texas to the United Arab Emirates, where I am certain he and his fellow corporate expatriates are able to happily celebrate the Fourth of July.
So, take that American flag off your lapel and replace it with a button bearing the Exxon or Chevron logo. C’mon, Dick Cheney and Condi Rice, be straight about what it is you are really pushing here. ’Fess up—it’s not the good old USA as represented by the sucker taxpayers conned by your patriotic blather. No sirree, what you would have Americans paying homage to is the majesty of the big multinational corporations that exploit American military power to rule the world.
But recognize that you have shamed the legacy of our first president. George Washington, who distinguished the promise of the new world from the corruptions of the old by shunning imperial conquest, said: “Our commercial policy should hold an equal and impartial hand; neither seeking nor granting exclusive favors or preferences; consulting the natural course of things; diffusing and diversifying by gentle means the streams of commerce, but forcing nothing.”
If Barack Obama or John McCain was to offer such words of wisdom this Fourth of July, he would be vilified as “weak,” and that is a fit measure of just how far we have descended from the high hopes of our first president.
Wednesday, July 2, 2008
Swedes outraged over new e - mail snooping law
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Swedes may cherish openness and transparency, but not enough to accept a new law giving the government the right to snoop on all e-mails and phone calls crossing the country's borders.
Outrage over the statute has led to 2 million protests -- filed by e-mail.
The online petition drive comes as other European Union countries consider granting authorities unprecedented spying powers over their own citizens amid fears of a mounting terror threat.
''This would have been totally unthinkable before Sept. 11,'' said Anne Ramberg, secretary-general of the Swedish Bar Association, calling for challenges to the law in Swedish and European courts.
Andreas Hellsten, a 37-year-old engineer, said the new law reminded him of something the dreaded East German police would have dreamed up had e-mail been around during the Cold War.
''It looks too much like the Stasi,'' he said. ''It is surprising when Sweden passes a law like this.''
While supporters say the legislation will help avert terrorist attacks by keeping tabs on suspect communications and financial transfers, opponents say the measures are just too intrusive.
Swedish telecommunications group TeliaSonera AB and U.S.-based Google Inc. have called the law passed June 18 the most far-reaching eavesdropping plan in Europe, comparable to snooping powers authorized in the United States.
The law narrowly passed Parliament in a 142-138 vote two weeks ago, despite protests that included demonstrators handing out copies of George Orwell's novel ''1984'' about a fictional futuristic police state.
It gives Sweden's National Defense Radio Establishment, or FRA, the right to scan all international phone calls, e-mails and faxes without a court order as of January.
''Since 1766, we have had freedom of expression ... Can that be guaranteed if the FRA has the right to monitor, for example, all e-mails from abroad?'' Thomas Mattsson, digital editor of the major Swedish newspaper Expressen, wrote in his blog.
The newspaper provides a link that allows readers of its Internet edition to file a protest to lawmakers -- and so far more than 2 million Swedes have taken part in the campaign.
Under current law, e-mail and phone surveillance in Sweden require a court order in a suspected criminal case. Critics say the new law will encroach on privacy, jeopardize civil liberties and violate the European Convention on Human Rights.
Sweden's Defense Minister Sten Tolgfors defended the law in an online forum on the Expressen Web site Tuesday, saying data regarding individuals will be destroyed unless it is directly relevant to intelligence activities.
He also stressed the need to defend Sweden from terror attacks like those in New York, Madrid and London.
''The information is needed to evaluate, and meet, outside threats against Sweden,'' he said.
Even before the law was passed, TeliaSonera in April moved its e-mail servers to Finland because of the expected passage of the legislation.
Timo Lehtinen, of the Finnish Communications Regulatory Authority, said he expected other telecommunications groups to rethink how they handle cross-border traffic, and expressed doubts about the effectiveness of the Swedish measures.
''The amount of traffic is so vast that it would be like looking for a needle in a haystack,'' he said. ''If someone was planning some kind of terrorist activity they could make it extremely hard, or even impossible, to trace.''
Other EU countries have enacted or are mulling stronger government snooping rules.
Britain has some of the most extensive surveillance powers in the world, allowing law enforcement, intelligence agencies and others to monitor telephone calls, e-mails or mail, with special permission from the Home Secretary.
The evidence is not admissible in court; Prime Minister Gordon Brown wants to change that with new laws allowing use of some wiretap evidence.
In Germany, Parliament is expected to pass a new bill later this year giving officials the right to monitor some criminal suspects' e-mails, but only with a court order, as is the case now for telephone wiretaps in serious crimes.
In Italy, which experts call one of the world's most wiretapped democracies, the debate is going the other way -- now focusing on how to do more to protect privacy.
A Swedish opinion poll published last week indicated that 47 percent of Swedes opposed the new law, while 36 percent are for it; the rest were undecided. The margin of error was not available.
The protest could further erode already declining support for Sweden's center-right government, but is unlikely to cause a government crisis, since the coalition controls a solid parliamentary majority.
Niklas Wykman, chairman of the Conservative Party youth wing, told the Associated Press that he can't support his party on the law.
''We are against the general eavesdropping of all Swedish citizens, which paves the way for a surveillance society,'' he said.
Swedes may cherish openness and transparency, but not enough to accept a new law giving the government the right to snoop on all e-mails and phone calls crossing the country's borders.
Outrage over the statute has led to 2 million protests -- filed by e-mail.
The online petition drive comes as other European Union countries consider granting authorities unprecedented spying powers over their own citizens amid fears of a mounting terror threat.
''This would have been totally unthinkable before Sept. 11,'' said Anne Ramberg, secretary-general of the Swedish Bar Association, calling for challenges to the law in Swedish and European courts.
Andreas Hellsten, a 37-year-old engineer, said the new law reminded him of something the dreaded East German police would have dreamed up had e-mail been around during the Cold War.
''It looks too much like the Stasi,'' he said. ''It is surprising when Sweden passes a law like this.''
While supporters say the legislation will help avert terrorist attacks by keeping tabs on suspect communications and financial transfers, opponents say the measures are just too intrusive.
Swedish telecommunications group TeliaSonera AB and U.S.-based Google Inc. have called the law passed June 18 the most far-reaching eavesdropping plan in Europe, comparable to snooping powers authorized in the United States.
The law narrowly passed Parliament in a 142-138 vote two weeks ago, despite protests that included demonstrators handing out copies of George Orwell's novel ''1984'' about a fictional futuristic police state.
It gives Sweden's National Defense Radio Establishment, or FRA, the right to scan all international phone calls, e-mails and faxes without a court order as of January.
''Since 1766, we have had freedom of expression ... Can that be guaranteed if the FRA has the right to monitor, for example, all e-mails from abroad?'' Thomas Mattsson, digital editor of the major Swedish newspaper Expressen, wrote in his blog.
The newspaper provides a link that allows readers of its Internet edition to file a protest to lawmakers -- and so far more than 2 million Swedes have taken part in the campaign.
Under current law, e-mail and phone surveillance in Sweden require a court order in a suspected criminal case. Critics say the new law will encroach on privacy, jeopardize civil liberties and violate the European Convention on Human Rights.
Sweden's Defense Minister Sten Tolgfors defended the law in an online forum on the Expressen Web site Tuesday, saying data regarding individuals will be destroyed unless it is directly relevant to intelligence activities.
He also stressed the need to defend Sweden from terror attacks like those in New York, Madrid and London.
''The information is needed to evaluate, and meet, outside threats against Sweden,'' he said.
Even before the law was passed, TeliaSonera in April moved its e-mail servers to Finland because of the expected passage of the legislation.
Timo Lehtinen, of the Finnish Communications Regulatory Authority, said he expected other telecommunications groups to rethink how they handle cross-border traffic, and expressed doubts about the effectiveness of the Swedish measures.
''The amount of traffic is so vast that it would be like looking for a needle in a haystack,'' he said. ''If someone was planning some kind of terrorist activity they could make it extremely hard, or even impossible, to trace.''
Other EU countries have enacted or are mulling stronger government snooping rules.
Britain has some of the most extensive surveillance powers in the world, allowing law enforcement, intelligence agencies and others to monitor telephone calls, e-mails or mail, with special permission from the Home Secretary.
The evidence is not admissible in court; Prime Minister Gordon Brown wants to change that with new laws allowing use of some wiretap evidence.
In Germany, Parliament is expected to pass a new bill later this year giving officials the right to monitor some criminal suspects' e-mails, but only with a court order, as is the case now for telephone wiretaps in serious crimes.
In Italy, which experts call one of the world's most wiretapped democracies, the debate is going the other way -- now focusing on how to do more to protect privacy.
A Swedish opinion poll published last week indicated that 47 percent of Swedes opposed the new law, while 36 percent are for it; the rest were undecided. The margin of error was not available.
The protest could further erode already declining support for Sweden's center-right government, but is unlikely to cause a government crisis, since the coalition controls a solid parliamentary majority.
Niklas Wykman, chairman of the Conservative Party youth wing, told the Associated Press that he can't support his party on the law.
''We are against the general eavesdropping of all Swedish citizens, which paves the way for a surveillance society,'' he said.
Iran 'seriously considering' new international nuclear offer
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By Warren P. Strobel
UNITED NATIONS — Iran's senior diplomat said Tuesday that Tehran was seriously considering a new offer from six world powers to resolve the dispute over its nuclear program, and he praised the package as "constructive."
The unusually positive remarks by Foreign Minister Manouchehr Mottaki to a small group of reporters raised hope that a negotiated solution can be found to defuse the crisis.
The U.N. Security Council has demanded that Iran suspend the enrichment of uranium that can be used for nuclear weapons, and the Bush administration has refused direct talks with Iran until it meets that condition.
During a 90-minute luncheon at Iran's United Nations mission, Mottaki dismissed the growing speculation that Israel or the United States will strike at Iran's nuclear facilities during President Bush's last six months in office.
He described news reports to that effect as part of a long-running campaign of "psychological warfare."
The chance that Israel will attack Iran "is almost nil," Mottaki said. As for a U.S. strike, he said there was little public support in this country for a new conflict. "The consequences of such an attack cannot be predicted," he said.
Yet there are signs of intensified debate within Iran's leadership about its nuclear program. Iran has long said that it has an inalienable right to enrich uranium for peaceful purposes. But Mottaki declined three opportunities to reiterate that position Tuesday, indicating that Iran is weighing its options.
"We are seriously and carefully examining" the proposal, Mottaki said.
The European Union's foreign policy chief, Javier Solana, conveyed the offer to Tehran two weeks ago. It essentially repackages a two-year-old proposal by Britain, China, France, Germany, Russia and the United States to give Iran political, economic and security rewards if it "verifiably suspends its enrichment-related and reprocessing activities."
Mottaki said that in addition to delivering the six-page offer, Solana made unspecified assurances to Iran's leadership. "We saw the potential for a new balance," he said.
Iran made its own proposal to ease the crisis in May, but it didn't mention ceasing uranium enrichment.
Several compromises have been floated. In one, negotiations would get under way, with the enrichment question the first item on the agenda. It's unclear whether Bush would sign on to such a deal.
While Mottaki is Iran's top diplomat, the final say on the nuclear issue belongs to the Shiite Muslim clerics who hold ultimate authority.
In a sign of apparent high-level debate in Iran, a top aide to the country's supreme religious leader made a veiled swipe Tuesday at Iranian President Mahmoud Ahmadinejad, who's used belligerent rhetoric to defend Iran's nuclear work.
"Officials ... should avoid illogical and provocative sloganeering," Ali Akbar Velayati, a foreign policy adviser to Supreme Leader Ayatollah Ali Khamenei, said in published remarks, Reuters reported. His remarks seemed targeted at Ahmadinejad, although he didn't mention the president by name.
Velayati called for continued talks with the six world powers. "America and Israel want to isolate Iran in the world by saying that Iran does not want to resolve the issue through talks," he said.
In the meeting with reporters, Mottaki also:
Dismissed the economic impact of increased U.S. and European sanctions, saying, "The easiest work to do in the world today is trade."
Indicated that Iran is open to having the United States establish a diplomatic presence in Tehran. But the quid pro quo would be U.S. approval of Iran's request for direct flights between Tehran and New York.
By Warren P. Strobel
UNITED NATIONS — Iran's senior diplomat said Tuesday that Tehran was seriously considering a new offer from six world powers to resolve the dispute over its nuclear program, and he praised the package as "constructive."
The unusually positive remarks by Foreign Minister Manouchehr Mottaki to a small group of reporters raised hope that a negotiated solution can be found to defuse the crisis.
The U.N. Security Council has demanded that Iran suspend the enrichment of uranium that can be used for nuclear weapons, and the Bush administration has refused direct talks with Iran until it meets that condition.
During a 90-minute luncheon at Iran's United Nations mission, Mottaki dismissed the growing speculation that Israel or the United States will strike at Iran's nuclear facilities during President Bush's last six months in office.
He described news reports to that effect as part of a long-running campaign of "psychological warfare."
The chance that Israel will attack Iran "is almost nil," Mottaki said. As for a U.S. strike, he said there was little public support in this country for a new conflict. "The consequences of such an attack cannot be predicted," he said.
Yet there are signs of intensified debate within Iran's leadership about its nuclear program. Iran has long said that it has an inalienable right to enrich uranium for peaceful purposes. But Mottaki declined three opportunities to reiterate that position Tuesday, indicating that Iran is weighing its options.
"We are seriously and carefully examining" the proposal, Mottaki said.
The European Union's foreign policy chief, Javier Solana, conveyed the offer to Tehran two weeks ago. It essentially repackages a two-year-old proposal by Britain, China, France, Germany, Russia and the United States to give Iran political, economic and security rewards if it "verifiably suspends its enrichment-related and reprocessing activities."
Mottaki said that in addition to delivering the six-page offer, Solana made unspecified assurances to Iran's leadership. "We saw the potential for a new balance," he said.
Iran made its own proposal to ease the crisis in May, but it didn't mention ceasing uranium enrichment.
Several compromises have been floated. In one, negotiations would get under way, with the enrichment question the first item on the agenda. It's unclear whether Bush would sign on to such a deal.
While Mottaki is Iran's top diplomat, the final say on the nuclear issue belongs to the Shiite Muslim clerics who hold ultimate authority.
In a sign of apparent high-level debate in Iran, a top aide to the country's supreme religious leader made a veiled swipe Tuesday at Iranian President Mahmoud Ahmadinejad, who's used belligerent rhetoric to defend Iran's nuclear work.
"Officials ... should avoid illogical and provocative sloganeering," Ali Akbar Velayati, a foreign policy adviser to Supreme Leader Ayatollah Ali Khamenei, said in published remarks, Reuters reported. His remarks seemed targeted at Ahmadinejad, although he didn't mention the president by name.
Velayati called for continued talks with the six world powers. "America and Israel want to isolate Iran in the world by saying that Iran does not want to resolve the issue through talks," he said.
In the meeting with reporters, Mottaki also:
Dismissed the economic impact of increased U.S. and European sanctions, saying, "The easiest work to do in the world today is trade."
Indicated that Iran is open to having the United States establish a diplomatic presence in Tehran. But the quid pro quo would be U.S. approval of Iran's request for direct flights between Tehran and New York.
Deepening Cycle of Job Loss Seen Lasting Into ’09
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By PETER S. GOODMAN
As automakers dropped their latest batch of awful sales numbers on the market on Tuesday, reinforcing the gloom spreading across the economy, the troubles confronting American workers seemed to intensify.
Plummeting home prices have in recent months eliminated jobs for hundreds of thousands of people, from bankers and real estate agents to construction workers and furniture manufacturers. Tighter lending standards imposed by banks in the wake of huge mortgage losses have made it hard for many Americans to secure credit — the lifeblood of expansion in recent years — crimping the appetite of consumers, whose spending amounts to 70 percent of the economy.
Joblessness has accelerated, and employers have slashed working hours even for those on their payrolls, shrinking the size of paychecks just as workers need them the most.
Now, add to that unsavory mix the word from automakers that sales plunged in June — by 28 percent for Ford, 21 percent for Toyota and 18 percent for General Motors — a sharp sign that consumers are pulling back, making manufacturers more likely to cut production and impose more layoffs. Until recently, the weak labor market has been marked more by the reluctance of employers to create new jobs than by mass layoffs.
Among economists, the sense is broadening that the troubles dogging the economy will be stubborn, leaving in place an uncomfortable combination of tight credit and scant job opportunities perhaps well into next year.
“It’s a slow-motion recession,” said Ethan Harris, chief United States economist for Lehman Brothers. “In a normal recession, things kind of collapse and get so weak that you have nowhere to go but up. But we’re not getting the classic two or three negative quarters. Instead, we’re expecting two years of sub-par growth. Growth that’s not enough to generate jobs. It’s kind of a chronic rather than an acute pain.”
Mr. Harris expects tepid economic growth and a shrinking labor market to persist through the fall of 2009.
The national unemployment rate climbed a full percentage point over the last year to 5.5 percent in May, according to the Labor Department. That does not include people who are jobless and have given up looking for work, or people who have been bumped to part-time jobs from full-time. Add in those people and the so-called underemployment rate rises to 9.7 percent, up from 8.3 percent in May 2007, according to the Labor Department.
Goldman Sachs forecasts that the unemployment rate will peak at 6.4 percent late in 2009 before the picture improves, meaning that the painful process of shedding jobs may be only half-way complete.
“The labor market is clearly deteriorating, and it’s highly likely to keep deteriorating,” said Andrew Tilton, an economist at Goldman Sachs. “It’s clear that the housing downturn and credit crunch are still very much under way. Clearly, there are more jobs to be lost in housing, finance and construction — hundreds of thousands of more jobs to be lost collectively.”
On Thursday, the Labor Department will release its snapshot of the job market for June. Economists generally expect the report to show 60,000 more jobs lost, marking the sixth consecutive month of decline.
But many anticipate the unemployment rate will nudge down a little bit, swinging back from an abrupt climb that could have been exaggerated by survey glitches in the previous month, when the rate jumped by half a percentage point — the sharpest one-month spike in 22 years.
If the unemployment rate were to hold steady or rise, that would likely spook markets, underscoring the impact of the economic slowdown.
“Slowing wage growth and falling employment is absolutely toxic if your business is selling anything to consumers,” said Ian Shepherdson, chief United States economist for High Frequency Economics.
Recent indications lend credence to the view that the job market is in the grip of a sustained downturn. Three weeks in a row, new unemployment claims have exceeded 380,000, a level generally associated with recession. Construction spending fell in May. The University of Michigan Consumer Sentiment Survey, which tracks attitudes about business and personal finance, has dropped to a depth last seen in 1980.
On the factory floor, a weak dollar has been fanning export sales. The I.S.M. Manufacturing Index — a widely watched gauge of factory activity — nudged up in June to 50.2 from 49.6 in May, entering barely positive territory, which indicates a slight expansion.
But that mostly reflected a buildup of inventories and higher prices for raw materials, and not an improvement in orders for factory goods, said Stuart G. Hoffman, chief economist at PNC Financial Service Group in a note to clients. If business stays weak and orders do not materialize, factory layoffs could accelerate. Indeed, the employment component of the index declined to its lowest level in five years.
The slide in the labor market has become both symptom and cause of a weak economy, pulling many families into a downward spiral. Back when housing prices were still rising, Americans borrowed exuberantly against the value of their homes to finance renovations, vacations and shopping sprees. But that artery of finance has constricted considerably along with access to credit cards, forcing a reversion to the traditional limits of household finance. Millions of American families must now confine their spending to what they can bring home from work.
With job losses growing and working hours shrinking, many paychecks are eroding, prompting millions of families to cut their spending. Soaring prices for food and gasoline are overwhelming modest wage gains for most workers, leaving households with even less money to spend. All of which deprives struggling businesses of sales, prompting them to shed more workers, sending the cycle down another turn. Starbucks announced on Tuesday that it would close stores and eliminate up to 12,000 jobs, about 7 percent of its work force.
The fear of a downward spiral prompted the Bush administration to unleash $100 billion worth of tax rebates in the hopes that recipients would spend money and spur sales. The Treasury has already dispensed more than $78 billion, and the money appears to be finding its way into cash registers, with consumer spending climbing by 0.8 percent in May, according to the Commerce Department.
Economists expect the rebates will continue to help retail sales through the summer, fueling modest economic growth that spares some jobs and prevents an outright contraction.
But few expect these rebate-laced sales to expand the job market, because businesses understand that the one-time surge of money will wear off later this summer.
Many experts expect the economy to then be pulled back into the weeds by the same forces that have led the downturn — declining home prices, tighter credit and leaner paychecks.
“It’s going to be very hard to overcome those headwinds,” said Mr. Harris, the Lehman economist.
By PETER S. GOODMAN
As automakers dropped their latest batch of awful sales numbers on the market on Tuesday, reinforcing the gloom spreading across the economy, the troubles confronting American workers seemed to intensify.
Plummeting home prices have in recent months eliminated jobs for hundreds of thousands of people, from bankers and real estate agents to construction workers and furniture manufacturers. Tighter lending standards imposed by banks in the wake of huge mortgage losses have made it hard for many Americans to secure credit — the lifeblood of expansion in recent years — crimping the appetite of consumers, whose spending amounts to 70 percent of the economy.
Joblessness has accelerated, and employers have slashed working hours even for those on their payrolls, shrinking the size of paychecks just as workers need them the most.
Now, add to that unsavory mix the word from automakers that sales plunged in June — by 28 percent for Ford, 21 percent for Toyota and 18 percent for General Motors — a sharp sign that consumers are pulling back, making manufacturers more likely to cut production and impose more layoffs. Until recently, the weak labor market has been marked more by the reluctance of employers to create new jobs than by mass layoffs.
Among economists, the sense is broadening that the troubles dogging the economy will be stubborn, leaving in place an uncomfortable combination of tight credit and scant job opportunities perhaps well into next year.
“It’s a slow-motion recession,” said Ethan Harris, chief United States economist for Lehman Brothers. “In a normal recession, things kind of collapse and get so weak that you have nowhere to go but up. But we’re not getting the classic two or three negative quarters. Instead, we’re expecting two years of sub-par growth. Growth that’s not enough to generate jobs. It’s kind of a chronic rather than an acute pain.”
Mr. Harris expects tepid economic growth and a shrinking labor market to persist through the fall of 2009.
The national unemployment rate climbed a full percentage point over the last year to 5.5 percent in May, according to the Labor Department. That does not include people who are jobless and have given up looking for work, or people who have been bumped to part-time jobs from full-time. Add in those people and the so-called underemployment rate rises to 9.7 percent, up from 8.3 percent in May 2007, according to the Labor Department.
Goldman Sachs forecasts that the unemployment rate will peak at 6.4 percent late in 2009 before the picture improves, meaning that the painful process of shedding jobs may be only half-way complete.
“The labor market is clearly deteriorating, and it’s highly likely to keep deteriorating,” said Andrew Tilton, an economist at Goldman Sachs. “It’s clear that the housing downturn and credit crunch are still very much under way. Clearly, there are more jobs to be lost in housing, finance and construction — hundreds of thousands of more jobs to be lost collectively.”
On Thursday, the Labor Department will release its snapshot of the job market for June. Economists generally expect the report to show 60,000 more jobs lost, marking the sixth consecutive month of decline.
But many anticipate the unemployment rate will nudge down a little bit, swinging back from an abrupt climb that could have been exaggerated by survey glitches in the previous month, when the rate jumped by half a percentage point — the sharpest one-month spike in 22 years.
If the unemployment rate were to hold steady or rise, that would likely spook markets, underscoring the impact of the economic slowdown.
“Slowing wage growth and falling employment is absolutely toxic if your business is selling anything to consumers,” said Ian Shepherdson, chief United States economist for High Frequency Economics.
Recent indications lend credence to the view that the job market is in the grip of a sustained downturn. Three weeks in a row, new unemployment claims have exceeded 380,000, a level generally associated with recession. Construction spending fell in May. The University of Michigan Consumer Sentiment Survey, which tracks attitudes about business and personal finance, has dropped to a depth last seen in 1980.
On the factory floor, a weak dollar has been fanning export sales. The I.S.M. Manufacturing Index — a widely watched gauge of factory activity — nudged up in June to 50.2 from 49.6 in May, entering barely positive territory, which indicates a slight expansion.
But that mostly reflected a buildup of inventories and higher prices for raw materials, and not an improvement in orders for factory goods, said Stuart G. Hoffman, chief economist at PNC Financial Service Group in a note to clients. If business stays weak and orders do not materialize, factory layoffs could accelerate. Indeed, the employment component of the index declined to its lowest level in five years.
The slide in the labor market has become both symptom and cause of a weak economy, pulling many families into a downward spiral. Back when housing prices were still rising, Americans borrowed exuberantly against the value of their homes to finance renovations, vacations and shopping sprees. But that artery of finance has constricted considerably along with access to credit cards, forcing a reversion to the traditional limits of household finance. Millions of American families must now confine their spending to what they can bring home from work.
With job losses growing and working hours shrinking, many paychecks are eroding, prompting millions of families to cut their spending. Soaring prices for food and gasoline are overwhelming modest wage gains for most workers, leaving households with even less money to spend. All of which deprives struggling businesses of sales, prompting them to shed more workers, sending the cycle down another turn. Starbucks announced on Tuesday that it would close stores and eliminate up to 12,000 jobs, about 7 percent of its work force.
The fear of a downward spiral prompted the Bush administration to unleash $100 billion worth of tax rebates in the hopes that recipients would spend money and spur sales. The Treasury has already dispensed more than $78 billion, and the money appears to be finding its way into cash registers, with consumer spending climbing by 0.8 percent in May, according to the Commerce Department.
Economists expect the rebates will continue to help retail sales through the summer, fueling modest economic growth that spares some jobs and prevents an outright contraction.
But few expect these rebate-laced sales to expand the job market, because businesses understand that the one-time surge of money will wear off later this summer.
Many experts expect the economy to then be pulled back into the weeds by the same forces that have led the downturn — declining home prices, tighter credit and leaner paychecks.
“It’s going to be very hard to overcome those headwinds,” said Mr. Harris, the Lehman economist.
Iraq Oil Deals Fulfill Cheney's Goals
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By Jason Leopold
By Jason Leopold
Two years before the invasion of Iraq, oil executives and foreign policy advisers told the Bush administration that the United States would remain “a prisoner of its energy dilemma” as long as Saddam Hussein was in power.
That April 2001 report, “Strategic Policy Challenges for the 21st Century,” was prepared by the James A. Baker Institute for Public Policy and the U.S. Council on Foreign Relations at the request of Vice President Dick Cheney.
In retrospect, it appears that the report helped focus administration thinking on why it made geopolitical sense to oust Hussein, whose country sat on the world’s second largest oil reserves.
“Iraq remains a de-stabilizing influence to the flow of oil to international markets from the Middle East,” the report said.
“Saddam Hussein has also demonstrated a willingness to threaten to use the oil weapon and to use his own export program to manipulate oil markets. Therefore the U.S. should conduct an immediate policy review toward Iraq including military, energy, economic and political/diplomatic assessments.”
The advisory committee that helped prepare the report included Luis Giusti, a Shell Corp. non-executive director; John Manzoni, regional president of British Petroleum; and David O’Reilly, chief executive of ChevronTexaco.
Those companies now stand to earn tens of billions of dollars in no-bid contracts in a U.S.-brokered deal that was recently announced to drill Iraq’s untapped oil fields.
James Baker, the namesake for the public policy institute, was a prominent oil industry lawyer who also served as Secretary of State under President George H.W. Bush and was counsel to the Bush/Cheney campaign during the Florida recount in 2000.
Ken Lay, then chairman of the energy-trading Enron Corp., also made recommendations that were included in the Baker report.
At the time of the report, Cheney was leading an energy task force made up of powerful industry executives who assisted him in drafting a comprehensive “National Energy Policy” for President George W. Bush.
A Focus on Oil
It was believed then that Cheney’s secretive task force was focusing on ways to reduce environmental regulations and fend off the Kyoto protocol on global warming.
But Bush’s first Treasury Secretary, Paul O’Neill, later described a White House interest in invading Iraq and controlling its vast oil reserves, dating back to the first days of the Bush presidency.
In Ron Suskind’s 2004 book, The Price of Loyalty, O’Neill said an invasion of Iraq was on the agenda at the first National Security Council. There was even a map for a post-war occupation, marking out how Iraq’s oil fields would be carved up.
O’Neill said even at that early date, the message from Bush was “find a way to do this,” according to O’Neill, a critic of the Iraq invasion who was forced out of his job in December 2002.
The New Yorker ’s Jane Mayer later made another discovery: a secret NSC document dated Feb. 3, 2001 – only two weeks after Bush took office – instructing NSC officials to cooperate with Cheney’s task force, which was “melding” two previously unrelated areas of policy: “the review of operational policies towards rogue states” and “actions regarding the capture of new and existing oil and gas fields.” [The New Yorker, Feb. 16, 2004]
By March 2001, Cheney’s task force had prepared a set of documents with a map of Iraqi oilfields, pipelines, refineries and terminals, as well as two charts detailing Iraqi oil and gas projects, and a list titled “Foreign Suitors for Iraqi Oilfield Contracts,” according to information released in July 2003 under a Freedom of Information Act lawsuit filed by the conservative watchdog group, Judicial Watch.
A Commerce Department spokesman issued a brief statement when those documents were released stating that Cheney’s energy task force "evaluated regions of the world that are vital to global energy supply."
There has long been speculation that a key reason why Cheney fought so hard to keep his task force documents secret was that they may have included information about the administration’s plans toward Iraq.
‘Conspiracy Theory’
However, both before and after the invasion, much of the U.S. political press treated the notion that oil was a motive for invading Iraq in March 2003 as a laughable conspiracy theory.
Generally, business news outlets were much more frank about the real-politick importance of Iraq’s oil fields.
For instance, Ray Rodon, a former executive at Halliburton, the oil-service giant that Cheney once headed, said he was dispatched to Iraq in October 2002 to assess the country’s oil infrastructure and map out plans for operating Iraq’s oil industry, according to an April 14, 2003 story in Fortune magazine.
“From behind the obsidian mirrors of his wraparound sunglasses, Ray Rodon surveys the vast desert landscape of southern Iraq’s Rumailah oilfield,” Fortune’s story said. “A project manager with Halliburton’s engineering and construction division, Kellogg Brown & Root, Rodon has spent months preparing for the daunting task of repairing Iraq’s oil industry.”
“Working first at headquarters in Houston and then out of a hotel room in Kuwait City, he has studied the intricacies of the Iraqi national oil company, even reviewing the firm’s organizational charts so that Halliburton and the Army can ascertain which Iraqis are reliable technocrats and which are Saddam loyalists.”
At about the same time as Rodon’s trip to Iraq – October 2002 – Oil and Gas International, an industry publication, reported that the State Department and the Pentagon had put together pre-war planning groups that focused heavily on protecting Iraq’s oil infrastructure.
The next month, November 2002, the Department of Defense recommended that the Army Corps of Engineers award a contract to Kellogg, Brown & Root to extinguish Iraqi oil well fires.
The contract also called for “assessing the condition of oil-related infrastructure; cleaning up oil spills or other environmental damage at oil facilities; engineering design and repair or reconstruction of damaged infrastructure; assisting in making facilities operational; distribution of petroleum products; and assisting the Iraqis in resuming Iraqi oil company operations.”
In January 2003, as President Bush was presenting the looming war with Iraq as necessary to protect Americans, the Wall Street Journal reported that oil industry executives met with Cheney’s staff to plan the post-war revival of Iraq’s oil industry.
“Facing a possible war with Iraq, U.S. oil companies are starting to prepare for the day when they may get a chance to work in one of the world’s most oil-rich countries,” the Journal reported on Jan. 16, 2003.
“Executives of U.S. oil companies are conferring with officials from the White House, the Department of Defense and the State Department to figure out how best to jump-start Iraq’s oil industry following a war, industry officials say.
“The Bush administration is eager to secure Iraq’s oil fields and rehabilitate them, industry officials say. They say Mr. Cheney’s staff hosted an informational meeting with industry executives in October [2002], with Exxon Mobil Corp., ChevronTexaco Corp., ConocoPhillips and Halliburton among the companies represented.
“Both the Bush administration and the companies say such a meeting never took place. Since then, industry officials say, the Bush administration has sought input, formally and informally, from executives and industry experts on how best to overhaul Iraq’s oil sector.”
Guarding the Oil Ministry
Despite the Bush administration’s denials about oil as a motivation for war, the Bush administration’s focus on Iraqi oil was firmly set.
On April 5, 2003, Reuters reported that the State Department’s “Future of Iraq” project headed by Thomas Warrick, special adviser to the Assistant Secretary of State for Near Eastern Affairs, held its fourth meeting of the oil and energy-working group.
Documents obtained by Reuters showed that “a clear consensus among expert opinion favoring production-sharing agreements to attract the major oil companies.”
“That is likely to thrill oil companies harboring hopes of lucrative contracts to develop Iraqi oil reserves,” the news agency reported. “Short-term rehabilitation of southern Iraqi oil fields already is under way, with oil well fires being extinguished by U.S. contractor Kellogg Brown and Root …
“Long-term contracts are expected to see U.S. companies ExxonMobil, ChevronTexaco and ConocoPhillips compete with Anglo-Dutch Shell, Britain’s BP, TotalFinaElf of France, Russia’s LUKOIL and Chinese state companies.”
After U.S. troops captured Baghdad in April 2003, they were ordered to protect the Oil Ministry even as looters ransacked priceless antiquities from Iraq’s national museums and stole explosives from unguarded military arsenals.
Now, the long-held dreams of U.S. dominance over the Iraqi oil spigot now seem close to fulfillment.
Last weekend, The New York Times reported that State and Commerce department officials have been secretly working with Iraq’s Oil Ministry in drawing up contracts between the Iraqi government and Western oil companies to develop Iraq’s oil fields.
Unacceptable Options
This outcome for U.S. and other Western oil companies now appears to have been foretold by the Baker Institute report more than seven years ago.
In April 2001, the report laid out a series of unacceptable options, including helping Iraq under Saddam Hussein extract more oil by easing embargoes that were meant to hem Hussein in.
“The U.S. could consider reducing restrictions on oil investment inside Iraq,” the report said. But if Hussein’s “access to oil revenues was to be increased by adjustments in oil sanctions, Saddam Hussein could be a greater security threat to U.S. allies in the region if weapons of mass destruction, sanctions, weapons regimes and the coalition against him are not strengthened.”
Iraq is a “key swing producer turning its taps on and off when it has felt such action was in its strategic interest,” the report said, adding that there even was a ’’possibility that Saddam Hussein may remove Iraqi oil from the market for an extended period of time’’ in order to drive up prices.
“Under this scenario, the United States remains a prisoner of its energy dilemma, suffering on a recurring basis from the negative consequences of sporadic energy shortages,” the report said. “These consequences can include recession, social dislocation of the poorest Americans, and at the extremes, a need for military intervention.”
The report recommended Cheney move swiftly to integrate energy and national security policy as a means to stop ’’manipulations of markets by any state” and suggested that his task force include “representation from the Department of Defense.”
“Unless the United States assumes a leadership role in the formation of new rules of the game,’’ the report said, ’’U.S. firms, U.S. consumers and the U.S. government [will be left] in a weaker position.”
Two years after the Baker report, the United States – along with Great Britain and other allies – invaded Iraq. Now, more than five years after that, with Hussein dead and a U.S. expeditionary force still occupying Iraq, the U.S. oil industry finally appears to be in a strong position relative to Iraq’s oil riches.
However, the price that has been paid by American troops, Iraqi civilians and the U.S. taxpayers has been enormous.
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