Monday, July 6, 2009

Chrysler plants reopen as assault on auto workers deepens

Chrysler plants reopen as assault on auto workers deepens

By Jerry White

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Auto workers at seven of Chrysler’s twelve plants returned to work this week after a two-month shutdown following the company’s April 30 bankruptcy filing. The Detroit automaker emerged from Chapter 11 last month after a bankruptcy judge approved the creation of a “New Chrysler” based on the sale of most of its assets to Italian automaker Fiat.

Chrysler workers, along with their counterparts at General Motors, are facing a concerted attack on their jobs, living standards and working conditions as the Obama administration presses ahead with its plans to transform what remains of the auto industry as a highly profitable investment for Wall Street.

Chrysler’s so-called bad assets, including eight plants, remain under Chapter 11 protection where they are expected to be wound down and liquidated. Meanwhile, GM officials were in a New York bankruptcy court seeking approval of plans to sell the majority of its most profitable assets to the US Treasury.

Harry Wilson, a former hedge fund manager and one of several Wall Street investors on Obama’s Auto Task Force, testified Wednesday that the government planned to sell its holdings quickly and a “New GM” would be ready to make an initial public offering to investors by 2010. However, if the court failed to approve the sale of the company’s assets by July 10, Wilson warned, the Treasury would not provide any further financing to GM and would allow the liquidation of the century-old industrial giant. “We have no intention to further fund this company,” Wilson said. “That has been our position.”

GM is seeking approval of terms that would give the Treasury a 60 percent stake in $50 billion in bailout loans. The United Auto Workers was given a 17.5 percent share in exchange for accepting drastic reductions in retiree health care benefits and other wage and benefit concessions. The federal and Ontario provincial government in Canada would get 11.7 percent.

GM officials outlined their restructuring plans in court, which include the destruction of more than 20,000 jobs and the closing or “idling” of 14 plants. On Monday, GM added another plant to the list of those that would be left in the “Old GM” to be liquidated—the New United Motors Manufacturing Inc. plant in Fremont, California near San Francisco.

GM is pulling out of the 25-year-old joint operation with Toyota, which is expected to shift production to a nonunion factory in Mississippi, leaving 4,700 workers with jobs. The UAW is offering major concessions to keep operations going. The closing would mean the shutdown of the last auto factory on the West Coast.

Medical benefits cut, pensions imperiled

This week hundreds of thousands of GM and Chrysler retirees and their dependents also lost their dental and optical benefits, under the terms of an agreement demanded by the US Treasury and pushed through by the UAW. About 292,000 hourly retirees covered by UAW contracts are affected nationwide, as are about 358,000 of their spouses and dependents.

The vast majority of the hourly retirees—128,000—are in Michigan. Rounding out the top five states are New York with 14,300, Ohio with 29,000, Indiana with 28,000, and Florida with 10,500, a spokesman for Delta Dental told the Associated Press. Thousands filed into dentist and eye doctor offices before the July 1 deadline, which will impose hundreds of dollars in out-of-pocket expenses for future care or force retirees to do without. Delta Dental is laying off 10 percent of its staff due to lost business.

Another disaster in the making is the possibility that the automakers will run out of money to pay for retirement benefits. The New York Times reported that GM has used billions from its pension fund to finance severance packages and buyouts to get rid of higher paid workers under a 2007 agreement with the UAW. That agreement also allows the company to hire new workers at half the wage of current workers and escape obligations for pension and retiree healthcare benefits.

“GM basically raided the pension plan, by having a lot of these severance benefits paid through it,” Douglas J. Elliott, a fellow with the Brookings Institution who specializes in financial institutions and policy, told the Times.

Under the “30-and-out” benefit won in the 1970 GM strike, auto workers qualify for a $19,000 basic annual benefit, plus another $18,000 supplement until Social Security benefits kick in at age 62.

The raiding of the fund to pay for buyouts, plus the impact of the stock market losses of 2008, means the money could soon run out. “My guess is, they can probably go for 20 years before they run out of cash,” Elliott said. “That may sound like a long time, but with so many retirees and spouses still in their 50s, the plan needs resources for at least 50 years.”

The crisis takes place as June vehicle sales continue at their lowest pace in decades. US sales fell to an annualized total of 10 million, down from an average of nearly 17 million for most of the decade. All of the major manufacturers have seen double-digit declines since last year, including GM (34 percent), Chrysler (42 percent), Toyota (32 percent), Honda (30 percent) and Ford (11 percent).

In addition to the major automakers, the collapse of the auto market is triggering a wave of bankruptcies among auto suppliers. Michigan-based Lear Corporation, a seat and electronic supplier with 80,000 worldwide employees, filed for Chapter 11 Wednesday, becoming the 15th major supplier to do so in 2009. Last month, the Obama administration rejected a request from suppliers for a $10 billion bailout even though analysts predict 50 to 70 auto parts makers could go bust this year.

Chrysler Financial, once the financial arm of the new Chrysler Group LLC, also announced it would dismiss 350 employees, or 9 percent of its work force. More than 100 of the layoffs were effective Tuesday and will come primarily out of the company’s sales teams. Another 240 will come at the end of August, when a customer call center in Kansas City, Missouri, will be closed, the company confirmed.

A WSWS reporting team spoke with Chrysler workers at the Sterling Heights Assembly Plant in suburban Detroit this week. The factory, which employs 1,400 workers, is one of eight plants the company plans to close by December 2010. Workers expressed anger at the plant closing and unrelenting demands for concessions, yet they saw little means to resist since the UAW has collaborated fully with the Obama administration and the employers against auto workers.

The WSWS team passed out a statement calling for the formation of independent rank-and-file committees to mount a struggle to stop the plant closings and overturn the concessions agreed to by the UAW.

David Ratliff, a worker with 15 years at the plant, denounced the concessions forced on auto workers, “My grandfather worked for the company 38 years. Now he is 90 and he is losing his vision and dental.”

He expressed anger at the policies of the Obama administration, which intervened to force Chrysler and GM into bankruptcy. “We are the ones that make the economy run, not the banks—people who work every day, whatever they do, not the CEOs. We, the people, have got to stop thinking that there is nothing we can do about what is happening. But people have to get together, not just one person.

“The people who fund the elections get the representation. But we are the real America, we build the buildings, pave the streets, but we get the short end of the stick every time. Now they are saying we won’t have money for Social Security because of what they are doing in Iraq. War is all about money.

“The banks got us into this.”

Another worker, with 36 years in the auto plants, denounced the contract forced through by the UAW. “We got jammed.” Looking back on his experience over the last 30 years he added, “When they gave [former UAW President Douglas] Fraser a seat on the Chrysler board—I knew it was all over then.”

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Marrie, a worker with 26 years at Chrysler, added, “We assumed that Fiat was going to build here. We’re trying to get Fiat to come to our plant. Now we’re at the top of the line. We’re building. We’re at the top of the charts. They showed us all this stuff Monday at the big rally, at the Town Hall meeting—how we’re doing so good, how we made all these concessions and everything—and yet they’re still closing our plant. Why?

“Everybody’s making money but the rich want to get richer and make the poor poorer. They don’t want a middle class. They want rich; they want poor.

“Right now, I’m scared. I don’t know where they’re going to send me when the plant closes. I’m scared of that. In fact, if I got a package, I would take it and run, but I know I’m not going to get that package, so what am I going to do for the next four or five years?

“Where are they going to send me? I might wind up on the other side of Michigan, you understand? I stay in Monroe and I drive all the way out here. Now I could be at Trenton, I could be down the street, or I could be up North somewhere, I don’t know. Wherever they send me I’ve got to go. I don’t like it.”

Another worker, Tracy, added, “It’s pretty bad. We are back for this week and next week, then the factory is going to close again. Could be for a couple more weeks, could be indefinitely.”

US unemployment rate for June at 9.5 percent

US unemployment rate for June at 9.5 percent

Another 467,000 jobs lost

By Andre Damon

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The US economy lost far more jobs in June than had been predicted by economists, and the unemployment rate hit 9.5 percent, its highest level since 1983, according to data released by the Labor Department on Thursday. The June jobless report undercut the efforts of the Obama administration and the media to downplay the depth of the economic crisis and generate illusions of a rapid recovery.

Nonfarm payrolls fell by 467,000, compared to the 350,000 widely predicted by economic forecasters. June ended a four-month streak of declining—although still massive—job losses.

Net payrolls decreased across virtually the entire economy, with only education and health services registering an increase. Manufacturing lost 136,000 jobs, business services lost 118,000, and construction lost 79,000.

Employment in the government sector fell by 52,000, after dropping 10,000 in May. The sharp increase in public sector job cuts was due in part to the impact of spiraling budget deficits facing state and local governments.

The jobs report reflected an economy operating at near-depression levels, creating growing social misery for the working class even as the banks report a surge in profits and prepare to hand out record bonuses to executives and traders. According to the government, there are now 14.7 million unemployed people in the US. That is roughly equal to the combined populations of the nation’s three largest cities—New York, Los Angeles and Chicago.

The ranks of the long-term unemployed rose in June by 433,000, bringing the total to 4.4 million—an all-time high. This means that 3 in 10 unemployed people have been jobless for 27 weeks or more.

The official unemployment rate of 9.5 percent does not take into account so-called “discouraged” workers who have given up looking for a job and those forced to work part-time because they cannot get full-time employment. According to the Labor Department report, when these workers are included, the jobless rate soars to 16.5 percent.

The Wall Street Journal reported Thursday that this figure is “above a discontinued and even broader measure that hit 15 percent in late 1982, when the official unemployment rate was 10.8 percent.” The Journal added that “... comparisons to the Great Depression (when 25 percent of Americans were out of work) may not look so wild, even if overall economic activity is holding up better.”

The US has lost 6.5 million jobs since the recession officially began in December of 2007. All growth in jobs over the last nine years has now been wiped out, and there are fewer jobs in the US today than in May 2000, according to a report by the Economic Policy Institute.

The global scope of the crisis was underscored by new jobs data from Europe, showing that unemployment in the 16-country Eurozone hit 9.5 percent in May, a ten-year high.

Thursday’s report followed similarly dire unemployment figures for major US cities released Wednesday by the Labor Department. Unemployment rates rose over the past year in all of the 372 metropolitan areas surveyed. Of these, 15 regions had jobless rates of 15 percent or more.

No less significant than the employment figures are those on wages and work hours. The June report reflected a systematic drive by big business to exploit the jobs crisis to drive down wages and cut labor costs by slashing the work week. Workers on average saw no wage gains in June, while average weekly earnings actually fell from their levels in May.

The pace of wage growth has slowed significantly. In 2008, average hourly earnings (as reported by the Labor Department) grew by an average of 0.057 percent each month. For the first six months of this year, however, wages have grown at less than one fifth that rate. (See accompanying chart). It is significant that in the midst of what has been billed as the beginning of a recovery, wages, when adjusted for inflation, are falling faster than during the height of the crash.

The Labor Department report showed that industries including wholesalers, retailers, utilities and leisure and hospitality cut average hourly earnings last month. “Scattered reports of outright wage deflation are becoming more widespread,” said Ian Morris, chief US economist at HSBC Securities USA, in a note to clients. “Workers appear willing to take wage cuts, which makes this recession very unusual,” he added.

Among major companies slashing jobs and wages, Gannett Co., the largest newspaper owner, said it will cut some 1,400 publishing jobs and reduce wages for broadcast employees this month by as much as 6 percent. Utility owner Exelon said it plans to slash about 500 jobs.

The average work week fell to 33 hours, the lowest ever recorded since records began in 1964.

Other economic indicators also continue to worsen. Sales of new vehicles in June fell by 28 percent from a year earlier, according to Autodata Corp. Year-on-year, Chrysler’s sales were down by 42 percent, GM’s by 33 percent, and Toyota’s by 32 percent.

House prices fell by 0.6 percent month-to-month in April, according to the S&P/Case-Shiller index of 20 major cities. House prices are down 18.1 percent year-on-year, according to the same index. Delinquencies are also rising, with the number of delinquent prime mortgages increasing last month to 2.9 percent, up from 1.1 percent a year ago, according to research cited by Bloomberg.com.

All of this found its reflection in the latest consumer confidence figures. The Confidence Board reported this week that its consumer confidence index fell to 49.3 this month, down from 54.8 in May. Only 17.4 percent of people surveyed said they thought more jobs would be available soon, down from 19.3 percent the month before.

More analysts are now acknowledging that any “recovery” will be marginal and entail years of high unemployment. William Gross, the head of the bond firm Pimco, said Thursday that “we are looking at stagflation or some type of stagnation in terms of 1 to 2 percent growth for a number of years.”

Gross’s counterpart at Pimco, Mohamed El-Eran, wrote in a Financial Times column on Thursday, “Notwithstanding its recent surge, the unemployment rate is likely to rise even further to 10 per cent by the end of this year and potentially beyond that. Indeed, the rate may not peak until 2010 in the 10.5-11 per cent range; and it will likely stay there for a while...”

President Obama responded to the latest figures with a perfunctory speech Thursday on the White House lawn, flanked by ‘green’ energy CEOs. Obama touted his stimulus package and made clear that he has no plans to provide relief for the millions who are being devastated by the crisis. He pointed to the millionaire executives lined up behind him as those “who will help lead us out of this recession and into a better future.”

The Obama administration’s economic policy was summed up in an unusually frank column published last month by BusinessWeek columnist Ed Wallace. He wrote: “What may be the most insidious part of this current downturn is that many organizations are not just downsizing their workforces, they’re cutting wages for those individuals lucky enough to be kept on... More likely, rehired workers’ pay in the future will be in line with the recently reduced wages of their co-workers... Washington had a choice: Either allow all loans that aren’t viable under current economic conditions to be written down to manageable levels, or allow workers and wages to be cut to free up enough cash to make those loans perform. It should be obvious to most by now which strategy Washington chose.”

The latest jobless figures expose the administration’s talk of an imminent recovery as a maneuver aimed at artificially fueling a run-up on the stock market. The main purpose of this campaign was to allow the financial elite to recoup some of its losses, generate the conditions for the banks to return to profitability, and create an environment in which the government could avoid imposing any restrictions on the speculative activities of Wall Street.

A political-economic oligarchy has taken over the United States of AmericaA political-economic oligarchy has taken over the United States of America

Whose Country is it anyway? A political-economic oligarchy has taken over the United States of America

by Prof. John Kozy

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A political-economic oligarchy has taken over the United States of America. This oligarchy has institutionalized a body of law that protects businesses at the expense of not only the common people but the nation itself.

CNN interviewed a person recently who was seriously burned when his vehicle burst into flames because a plastic brake-fluid reservoir ruptured. Having sued Chrysler, he was now concerned that its bankruptcy filing would enable Chrysler to avoid paying any damages. A CNN legal expert called this highly likely, since the main goal of reorganization in bankruptcy is preserving the company’s viability and that those creditors who could contribute most to attaining that goal would be compensated first while those involved in civil suits against the company would be placed lowest on the creditor list since compensating them would lessen the chances of the company’s surviving. This rational clearly implies that the preservation of companies is more important than the preservation of people. Of course, similar cases have been reported before. The claims of workers for unpaid wages have often been dismissed as have their contracts for benefits.

But there is an essential difference between a business that lends money or delivers products or services to another company and the employees who work for it. Business is an activity that supposedly involves risk. Employment is not. Neither is unknowingly buying a defective product. Workers and consumers do not extend credit to the companies they work for or buy products from. They are not in any normal sense of the word “creditors.” Yet that distinction is erased in bankruptcy proceedings which preserve companies at the public’s expense.

Of course, bankruptcy is not the only American practice that makes use of this principle. The current bailout policies of both the Federal Reserve and the Treasury make use of it. Again companies are being saved at the expense of the American people. America’s civil courts are notorious for favoring corporate defendants when sued by injured plaintiffs. Corporate profiteering is not only tolerated, it is often encouraged. The sordid records of both Halliburton and KBR are proof enough. Neither has suffered any serious consequences for their abysmal activities in Iraq while supplying services to the troops deployed there. Even worse, these companies continue to get additional contracts from the Department of State. “A former Army chaplain who later worked for Halliburton's KBR unit . . . told Congress . . . ‘KBR came first, the soldiers came second.’" [http://www.halliburtonwatch.org/news/deyoung.html] Again, it’s companies first, people last. But Major General Smedley Butler made this point in 1935. [See http://www.scuttlebuttsmallchow.com/racket.html] And everyone is familiar with the influence corporate America has over the Congress through campaign contributions and lobbying. For instance, “the U.S. Chamber of Commerce has earmarked $20 million over two years to kill [card check].” [http://www.latimes.com/news/nationworld/nation/la-na-card-check4-2009jun04,0,7195326.story?track=rss] Companies expect returns on their money, and preventing workers from unionizing offers huge returns. And on Thursday June 4, 2009 USA Today reported that, “Republicans strongly oppose a government run [healthcare] plan saying it would put private companies insuring millions of Americans out of business. ‘A government run plan would set artificially low prices that private insurers would have no way of competing with,’ Senate Minority Leader Mitch McConnell, R-Ky, said . . . .” (Kentucky ranks fifth highest in the number of people with incomes below poverty. Why is he worried about the survival of insurers?)

The profound question is how can any of it be justified?

President Calvin Coolidge did say that the business of America is business and the American political class seems to have adopted this view, but the Constitution cannot be used to justify it. The word “business” in the sense of “commercial firm” occurs nowhere in it. Nowhere does the Constitution direct the government to even promote commerce or even defend private property. The Constitution is clear. It was established to promote just six goals: (1) form a more perfect union, (2) establish justice, (3) insure domestic tranquility, (4) provide for the common defense, (5) promote the general welfare, and (6) secure the blessings of liberty to ourselves and our posterity. Of course, the Constitution does not prohibit the government from promoting commerce or defending private property, but what happens when doing so conflicts with one or more of its six purposes? Shouldn’t any law that does that be unconstitutional? For instance, wouldn’t it be difficult the claim that a bankruptcy procedure that protects business and subordinates or dismisses the claims of workers and injured plaintiffs establishes justice? How can spending trillions of dollars to save financial institutions and other businesses whose very own actions brought down the global economy be construed as establishing justice or even promoting the general welfare when people are losing their incomes, their pensions, their health care, and even their homes? These actions clearly conflict with the Constitution’s stated goals. Shouldn’t they have been declared unconstitutional? Although the Constitution does provide people with the right to petition the government for a redress of grievances, it does not clearly provide that right to organizations or corporations and it certainly does not provide to anyone the right to petition the government for special advantages. Yet that is what the Congress, even after its members swear to support and defend the Constitution of the United States, allows special interest groups to do. Where in the Constitution is there a justification for putting the people last?

How this situation could have arisen is a puzzle? Haven’t our elected officials, our justices, our legal scholars, our professors of Constitutional Law, or even our political scientists read the Constitution? Have they merely misunderstood it? Or have they simply chosen to disregard the preamble as though it had no bearing on its subsequent articles? Why have no astute lawyers brought actions on behalf of the people? Why indeed?

The answer is that a political-economic oligarchy has taken over the nation. This oligarchy has institutionalized a body of law that protects businesses at the expense of not only the common people but the nation itself. Businessmen have no loyalties. The Bank of International Settlements insures it, since it is not accountable to any national government. (See my piece, A Banker’ Economy, http://www.jkozy.com/A_Bankers__Economy.htm.) Thomas Jefferson knew it when he wrote, “Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gain.” Mayer Amschel Rothschild knew it when he said, "Give me control of a nation's money and I care not who makes the laws." William Henry Vanderbilt knew it when he said, “The public be damned.” Businesses know it when they use every possible ruse to avoid paying taxes, they know it when they offshore jobs and production, they know it when the engage in war profiteering, and they know it when they take no sides in wars, caring not an iota who emerges victorious. IBM, GM, Ford, Alcoa, Du Pont, Standard Oil, Chase Bank, J.P. Morgan, National City Bank, Guaranty, Bankers Trust, and American Express all knew it when they did business as usual with Germany during World War II. Prescott Bush knew it when he aided and abetted the financial backers of Adolf Hitler.

Yet somehow or other the people in our government, including the judiciary, do not seem to know it, and they have allowed and even abetted businesses that have no allegiance to any country to subvert the Constitution. Unfortunately, the Constitution does not define such action as treason.

America’s youthful students are regularly taught Lincoln’s Gettysburg Address and are familiar with its peroration, “we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government: of the people, by the people, for the people, shall not perish from the earth.” If that nation ever existed, it no longer does. And when Benjamin Franklin was asked, “Well, Doctor, what have we got—a Republic or a Monarchy?” he answered, “A Republic, if you can keep it.” We haven’t. What we have ended up with is merely an Unpublic, an economic oligarchy that cares naught for either the nation or the public.

To argue that the United States of America is a failed state is not difficult. A nation that has the highest documented prison population in the world can hardly be described as domestically tranquil. A nation whose top one percent of the people have 46 percent of the wealth cannot by any stretch of the imagination be said to be enjoying general welfare (“generally true” means true for the most part with a few exceptions). A nation that spends as much on defense as the rest of the world combined and cannot control its borders, could not avert the attack on the World Trade Center, and can not win its recent major wars can not be described as providing for its common defense. How perfect the union is or whether justice usually prevails are matters of debate, and what blessings of liberty Americans enjoy that peoples in other advanced countries are denied is never stated. A nation that cannot fulfill its Constitution’s stated goals surely is a failed one. How else could failure be defined? By allowing people with no fastidious loyalty to the nation or its people to control it, by allowing them to disregard entirely the Constitution’s preamble, the nation could not avoid this failure. The prevailing economic system requires it.

Woody Guthrie sang, “This Land Is My Land, This Land Is Your Land,” but it isn’t. It was stolen a long time ago. Although it may have been “made for you and me,” people with absolutely no loyalty to this land now own it. It needs to be taken, not bought, back! America needs a new birth of freedom, it needs a government for the people, it needs a government that puts people first, but it won’t get one unless Americans come to realize just how immoral and vicious our economic system is.

Still no recovery in sight for workers

Still no recovery in sight for workers

By Fred Goldstein

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Bob Herbert, who is an op-ed columnist for the New York Times and also an African American, wrote in a recent piece: “There are now five unemployed workers for every job opening in the United States. The ranks of the poor are growing, welfare rolls are rising” and young male workers over a broad front “are falling into an abyss of joblessness.”

Herbert goes on to show that official unemployment, now 9.4 percent, is heading toward 10 percent at a good clip. He continues: “Economists are currently spreading the word that the recession may end sometime this year, but the unemployment rate will continue to climb. That’s not recovery. That’s mumbo jumbo.”

For the working class, employed and unemployed, truer words were never spoken.

Herbert shows that in November 2007 the officially unemployed numbered 7 million. Now the figure is about 14 million. He cites a study by the Center for Labor Market Studies at Northeastern University in Boston showing that, during this period, so-called “underutilized workers” had increased from more than 15 million to close to 30 million.

He points out that three quarters of the 6 million workers laid off in the last year were given permanent layoffs—meaning their jobs were destroyed. And he highlights the plight of young workers. Half of the 7 million job losses since November 2007 were sustained by workers under 30.

Herbert, one of the few Black voices allowed any expression by the rich-white-male-dominated New York Times, shows perplexed frustration: “Why rampant joblessness is not viewed as a crisis and approached with a sense of urgency and commitment the crisis warrants, is beyond me.”

To bosses, revival means profits

Of course, in a newspaper that is really one of the central organs of big business, it is natural that there could be no truthful discussion of this crisis. In the first place, the bosses regard this as a crisis of profits, of lost business. Uppermost in their minds and the minds of the vast majority of their economists and economic advisers is the revival of profits.

But in addition, this is a crisis of a new type. If there should be any sort of “capitalist recovery,” it will be a recovery for the capitalists, not the workers. This sort of recovery first showed itself after the 1991 downturn. It appeared again, even more strongly, after the 2000-2001 downturn in which the high-tech bubble had burst. These were the first “jobless recoveries.”

Herbert points out that the Obama administration is talking about a recovery this year—and yet, at the same time, the administration concedes that unemployment may go up to 10 percent!

The big business economists, when asked about this, mumble about the “lag” between the economic upturn and an upturn in employment. But, after the 1991 downturn, it took 18 months to get back to pre-downturn levels. After the 2001-2002 downturn, it took 27 months. During the present crisis, the drop of 7 million jobs in the 19 months of this recession is the biggest absolute decline and the largest percentage jump in the 68 years since the Great Depression ended. (Real Unemployment Rate Hits a 68-Year High, www.dollarsandsense.org)

What is behind this? There are many factors, but the most important is that this is the age of the scientific-technological revolution. The bosses are in a race to make more profits and reduce their labor costs; they do this by bringing in technology to replace workers. This shows itself in each boom-and-bust cycle.

Each new round of technology puts workers’ skills into machines. This lowers the workers’ skills required. Lower skills mean lower wages and more competition among workers. And the workers have less buying power.

At the same time the development of technology raises the productivity of labor. More goods and services are turned out in less time. With more productive labor, more commodities to sell and less buying power in society, it becomes more and more difficult for the capitalist system to start up the boom part of the boom-and-bust cycle.

It also means that it is harder and harder to bring jobs back into the economy after each bust is over.

With 30 million workers officially unemployed or underemployed—many of them discouraged from even looking for jobs or forced into part-time work— should there be an upturn in business (and that is not guaranteed at all!) massive unemployment will still remain, along with low wages.

Capitalism operates by the boom-and-bust cycle. But those cycles are changing—a lot less boom and a lot more bust, certainly as far as the workers are concerned. The bosses have more and more been relying on artificially created bubbles to revive the profit system. They increasingly rely on paper profits and speculation. This shows the sickness of the capitalist system, that it is in a stage of decline and decay.

Growth ‘based on bubbles’

This was expressed indirectly by one of the more renowned financial experts in the academic establishment, Nouriel Roubini of New York University. Roubini became a renowned figure after the present economic crisis broke out.

Prior to the crisis, in 2006, he challenged all the financial experts who said the housing bubble was no problem and would not really spill over into the economy. He predicted that the masses were overloaded with debt and that the problem was far larger than just the housing bubble. He predicted that the bubble would burst and be followed by a global economic crisis.

When he first put forward his prognosis at a conference of the International Monetary Fund, he was labeled “Dr. Doom.” Now, since the crisis he predicted in detail has materialized, he is one of the most celebrated economists on the lecture circuit.

An interview with Roubini by James Fallows, called “Dr. Doom Has Some Good News,” appeared in the April issue of the Atlantic Monthly. Toward the end of the interview, Fallows asked him about the economic future.

Roubini observed that “We have a growth model that has been based on bubbles. The only time we are growing is when there’s a big bubble. The question is, can the U.S. grow in a non-bubble way?”

When Fallows turned the question back to him, “he answered by returning to the damage caused by the boom-and-bust cycles and the need to find a different path.”

Capitalism has no “different path.” It has been following the boom-and-bust cycle since it began. Now the repetition of that cycle requires bigger and bigger bubbles which lead to bigger and bigger crises for the workers.

The bigger the crisis, the more the bosses try to push it off on the workers. Capital tries even harder to lower its labor costs as a means of restoring profits, lowering wages and replacing workers with machines. This destroys jobs, creating more poverty and more unemployment.

The working class needs a “different path,” all right. It needs a path that leads out of capitalist exploitation and production, a path out of this system where profits come before the rights and the very lives of the workers and the oppressed.

The present crisis must be fought by organizing, by international working class solidarity, by mass mobilization, by organizing the unemployed, by fighting to stop layoffs, by occupying plants before they can be shut down, by demanding the right to a good-paying job, by refusing to accept the capitalist scheme of things and, above all, by putting the rights of workers before the rights of bosses.

Goldman Sachs Behind Every Market Crash Since 1920s

Rolling Stone Expose Declares Goldman Sachs Behind Every Market Crash Since 1920s

By Daniel Tencer

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Goldman Sachs has played a crucial role in creating every market bubble since the 1920s -- and has profited from not only the bubbles, but from the crash that followed as well, says a new expose in Rolling Stone magazine.

An article in the July 9-23 issue of the magazine, written by Matt Taibbi, lists five asset bubbles that the 140-year-old investment bank helped create -- and one that Taibbi asserts the firm is currently working to make happen.

The five bubbles the article says Goldman was central to creating are the Wall Street stock bubble in the 1920s, which led to the Great Depression; the tech-stock bubble of the late 1990s, which ended in the 2001 recession; the housing bubble of the past decade, which resulted in the current economic crisis; the oil price run-up last summer, when oil shot up to $140 a barrel, likely helping tilt the entire world into recession; and what Taibbi describes as "rigging the bailout," when Goldman Sachs' well-placed alumni inside the U.S. government engineered last fall's bank bailout in such a way that the company profited massively.

Taibbi writes that Goldman Sachs has traditionally been a late arrival to market bubbles, getting in once others have started the trend, but, once in, the company quickly ramps up the bubble, predicts its bursting, and then hedges its bets so as to make money from the bubble crash.

The article, adds one more bubble to the list: the "global warming bubble," or specifically, the proposed cap-and-trade legislation that would allow companies to trade pollution credits on an open market.

Taibbi's argument suggests the Wall Street bank may well want to turn climate change policy into yet another Wall Street casino game.

Because emissions caps will continually be reduced, Taibbi argues, pollution credits will constantly be growing in value, and Goldman Sachs wants in on the ground floor.

Taibbi writes: "The plan is (1) to get in on the ground floor of paradigm-shifting legislation, (2) make sure that they're the profit-making slice of that paradigm and (3) make sure the slice is -- a big slice. Goldman started pushing hard for cap-and-trade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues."

On his blog, Taibbi has begun a discussion of the public reaction to his article. Some commenters have suggested that Taibbi's understanding of high finance is limited, accusing him of misreading Goldman Sachs' actions.

Why People Are Going Hungry in the Land of Plenty

Breadline USA: Why People Are Going Hungry in the Land of Plenty

By Sasha Abramsky

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From Breadline USA: The Hidden Scandal of American Hunger and How to Fix It © 2009 by Sasha Abramsky. Reprinted with permission from PoliPointPress, LLC, Sausalito, CA.

When the Month is Longer Than the Money

Billy MacPherson believed that for many of her friends and pantry clientele “the months are longer than the money.” What little income they brought in each month— from work, from Social Security or disability checks, in food stamps or welfare payments— was never quite enough to last a full four-plus weeks. And so they faced an unpalatable choice: try to stretch the family budget to cover the whole month, which involved scrimping on food and missing meals throughout the entire period, or eat semi-decently for the first two or three weeks of the month and pray that something, somehow, would come about to tide them through the lean times at the end.

Once gas prices started going up, food prices also headed north— at least in part because so much corn and arable land was diverted into biofuel production in response to the energy crunch; in part, too, because oil-based fertilizers soared in price and inflation took root throughout the broader economy. In the last years of George W. Bush’s presidency, that lean period at the end of each month began to grow. Instead of a few days, it became a week; then it became ten days, even two weeks. For low-income Americans, wages and government checks lagged far behind inflation, leaving them little choice but to watch as month after month their never particularly munificent purchasing power collapsed.

In the years following 2005, as the price of staples such as wheat and rice more than doubled, deadly food riots broke out in Bangladesh, Haiti, Cameroon, Yemen, Mexico, Egypt, Burkina Faso, and several other countries. People earning one or two dollars a day were facing starvation caused not by drought or plagues of locusts but by the workings of the international commodities market. In some nations, governments were brought to their knees by the disturbances; in others, panicked ministers met in emergency sessions to limit crop exports and try to shore up their populaces’ food supplies.

By 2008 America’s impoverished classes were, albeit to a lesser extent, facing a similar price-induced hunger. Unlike the destitute of countries such as Ethiopia and the Sudan, who too often went hungry because crops failed and what little food the was got bought up by their richer neighbors, America’s poor were being priced out of a market flush with excess eatables. Theirs was a hunger amid plenty, an inability to buy their way to seats at the most food-laden table in history. At the same time as hungry Milwaukee residents— on false rumors of free food deliveries— were fighting each other for access to hoped-for supplies in the spring of 2008, at the same time as immigrant shoppers in many neighborhoods were stampeding to buy up large bags of rice in the face of rising prices, hot dog–eating and fried asparagus–eating competitions were gaining in popularity from the Coney Island boardwalk in New York to the agricultural town of Stockton, California. One visit to any of these binge-eating orgies would have been enough to put paid to the notion that American hunger, twenty-first-century style, was in any way about the country as a whole facing food shortages. Yes, food prices were rising, but they were rising due to increased energy costs and growing global demand for American food exports rather than in response to a collapse in the nation’s food supply. The country’s growing epidemic of hunger was less a symptom of food market contractions and more one of the stealth spread of poverty and inflation into more and more corners of American life.

The U.S. government’s official poverty line in 2008 was $10,590 for a single person, $13,540 for a couple, $16,530 for a family of three, and $21,203 for a family of four. And the Census Bureau estimated that over 37 million Americans (including noncitizen residents) were living at or below these income levels. But that only hinted at the growing scale of American poverty. Economists such as Bob Pollin, codirector of the Political Economy Research Institute at the University of Massachusetts, believed many tens of million Americans more were living on incomes that, while they might meet a denuded government “minimum-wage” threshold, in reality couldn’t be expected to meet a family’s basic needs.

Pollin’s team calculated that a single person needed to earn ten dollars an hour to achieve even a semblance of economic security; and, as with the poverty line, so with this measure, which he called a “living wage,” the dollar amount would go up as the number of people in the family increased.

Guaranteeing a living wage was an ambitious goal, one that a number of localities had been trying to implement since the mid-1990s, when Baltimore’s city council passed a limited living-wage bill that impacted about fifteen hundred local workers employed by companies who did business with the city. And nowhere were such local measures more of a hot-button issue than in Santa Fe, New Mexico.

In the late winter of 2006, Santa Fe’s then-mayor David Coss sat behind his large desk discussing the city’s living wage, his long, wiry body draped in an expensive gray-brown linen suit, a cream shirt and dark-patterned tie, his hair neatly coiffed, his graying goatee smartly trimmed. A Georgia O’Keefe poster of a horned animal’s skull hung on the wall behind him. A second poster, in pastels, showed off a glorious Southwestern desert and mountain landscape— a world of swirling dreams and endless possibilities. Coss had a background as an environmental scientist and a union organizer; he had risen to power at City Hall at least in part because of his assertive championing of the most comprehensive living-wage statute in America.

Three years earlier, after a decade-long campaign by social justice activists, seven of the eight councilmen in the chic— and expensive— desert town voted to raise the city’s minimum wage to $8.50 an hour, with successive increases built in that would hike it up to $10.50 by 2008. In the years following, despite litigation from opponents of a living wage, the courts rejected challenges to the law, and public support for the change remained high— notwithstanding doom and gloom prognostications from the town’s tourism-dominated service industries. Santa Fe’s living wage was, Coss averred, “basic economic fairness in making the economy work for everyone and not just the people at the top.” When the chamber of commerce ran candidates against the four councillors most outspoken in their support of the living wage, the chamber’s candidates were all soundly beaten on Election Day.

In a town with a high percentage of practicing Catholics, the living wage in Santa Fe was pushed not just as a sensible economic move— as a way to stimulate spending and savings cycles along the bottom edge of the labor market— but as a moral imperative, reinforced by the authority of papal encyclicals dating back to Leo XIII at the tail end of the nineteenth century. “No one who works full time should have to live in poverty,” Monsignor Jerome Martinez stated. The monsignor was a middle-aged man with a shock of curly gray hair, a warm smile, and a deeply suntanned, slightly pocked face. He shared his cluttered office in an annex to the spectacular Cathedral of St. Francis with two large green cacti and several oil paintings of Jesus. “The dignity of the worker is more than just being a cog in the industrial machine. The Just Wage provides sustenance, housing, minimum health care, retirement benefits, and that the worker should have an opportunity to be generous. The ability to be generous is an important aspect of the church. It makes you feel more like a human being.” Smiling broadly, Martinez proudly recalled that, at a time when living-wage advocates dreamt of the $8.50 earnings floor, the church in Santa Fe paid none of its sixty-five employees less than $11.50 per hour.

Santa Fe’s move followed that of dozens of other municipalities in the decade since Baltimore kick-started the process in 1994. By the turn of the century, over sixty cities had followed Baltimore’s lead. And, in the years following, dozens more enacted such laws. In some cases, the living wage affected only city workers or businesses that contracted with city and state governments; elsewhere, they applied across the board. Yet, despite the movement’s progress, it remained marginal, enforced in a few scores of cities but not adopted by even one state. California’s statewide minimum wage, the highest in the country, was $8 an hour in 2008, still far short of what living-wage advocates claimed was needed to stabilize the lives of low-income workers. And in much of the country, a federal minimum wage prevailed. It was set at $5.15 an hour in 1997 and stayed at that level for ten years, its real value reduced by almost half, leaving recipients with less purchasing power than minimum-wage earners had had at any point in the previous half century. A new Democratic congressional majority finally passed a three-step minimum-wage increase in 2007; yet the increase envisaged only a $7.25 minimum wage by 2009, and it wasn’t inflation indexed. Consequently, the federal minimum wage remained a woefully inadequate method of fighting poverty.

That the minimum wage became so diluted hinted at profound changes within the nation’s political culture. In 1938, Franklin Roosevelt signed the minimum wage into law, calling for a “fair day’s pay for a fair day’s work” and declaring that goods produced in workplaces that did not pay a minimum wage “should be regarded as contraband.” Seventy years on, the minimum wage had lost close to half its real value and was seen as a political punching bag, attacked by conservative critics as impeding the workings of the free market.

By the early twenty-first century, reformers questing after Roosevelt’s vision had come to accept that any minimum wage passed at the federal level was likely to be inadequate to meet the needs of its recipients; instead, they opted to push for local and state living-wage ordinances.

The living-wage movement, however, has had only limited impact. While many states enacted a higher minimum wage than that mandated by the federal government in the years since 1997, none implemented one that genuinely met living-wage criteria. As a result, low-end wages continued to stagnate in a process exacerbated by the systemic underestimation of inflation, which allowed employers to minimize the pay raises they gave to employees. Thus, in a period of unprecedented corporate profits and rising worker productivity— up 2.5 percent per year during the 2000s— most working Americans experienced either stagnant real income or a fall in real income during the Bush presidency. Census Bureau numbers showed that the median household income for working-age households fell, in 2007 dollars, by $2,010 in the years from 2000 to 2007, the only economic cycle on record in which real income for American workers has fallen. For racial minorities, the trend was even worse: median income for blacks declined by over 5 percent during these years; for Hispanics the decline was 3.1 percent.

At the same time, the percentage of Americans, many of them employed, living below the poverty line steadily rose. In the absence of strong wage-protection laws, many employers continued to grievously underpay their employees. Indeed, Bob Pollin came up with a disturbing estimate of the extent of this problem: by the end of the Bush presidency, fully one in three American workers was earning below his living-wage benchmark.

These were the people— described by Princeton University sociologist Katherine Newman as “the missing class”— most impacted by soaring gas and food costs, people who in the best of times spent a higher proportion of their incomes on basic necessities than did any other part of the population. They were deemed by the government too affluent to qualify for food stamps, Medicaid, and the other welfare programs that collectively constituted the country’s frayed safety net. And yet, once oil prices doubled and then doubled again, once the cost of a gallon of milk, a dozen eggs, a pound of rice ballooned, these men, women, and children were the ones left most exposed to destitution. By trying to keep their jobs, low-wage earners and their families were in many ways rendering themselves worse off than those who never had, or couldn’t keep, paid employment and who therefore qualified for the maximum food stamp allotment and various other government subsidies.

Barack Obama campaigned on a promise to raise the minimum wage to $9.50 per hour by 2011; if he makes good on this promise as president, and indexes that minimum wage to inflation, America would finally come close to Roosevelt’s dream of a minimum wage that provided genuine economic security. Given the severity of the financial crisis and subsequent recession, however, it is more than likely this goal will continue to be a promise deferred. For now, at least, local living-wage ordinances and laws targeting the wages of public sector employees and workers for mega-companies like Wal-Mart continue to offer the best hope for creating a safety net for America’s most vulnerable workers.

U.S. Says It Will Preserve Secret Jails for Terror Case

U.S. Says It Will Preserve Secret Jails for Terror Case

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The government will agree to preserve the secret overseas sites where a defendant in a terror case was once held and, his lawyers say, subjected to harsh interrogation techniques after his capture in 2004, a prosecutor indicated in court in New York on Thursday.

Lawyers for the defendant, Ahmed Khalfan Ghailani, told a judge this week that they were afraid that the so-called black sites, which were run by the Central Intelligence Agency, would be demolished as the agency has said it will discontinue their use.

Mr. Ghailani, who was ordered by President Obama to be tried in civilian court, spent up to two years in the black sites before he was moved to the naval base at Guantánamo Bay, Cuba.

He has been charged with participating in a conspiracy that included the 1998 bombings of the United States Embassies in Kenya and Tanzania, attacks organized by Al Qaeda which killed 224 people and wounded thousands.

Prosecutors have charged that Mr. Ghailani, a Tanzanian believed to be in his mid-30s, helped obtain explosives and a truck and assisted with other logistics in the Tanzanian bombing.

He became a fugitive after the attacks, and later was a bodyguard and cook for Osama bin Laden, the military has said. He has pleaded not guilty.

The case has been seen as a test of President Obama’s goal to close Guantánamo and try terrorism suspects in the federal courts “whenever feasible.”

On Thursday, the judge, Lewis A. Kaplan of Federal District Court in Manhattan, making clear that he wanted the case to move expeditiously, set a trial date of Sept. 13, 2010.

“There’s a public interest in seeing justice done here,” Judge Kaplan said.

The prosecutor, David Raskin, chief of the terrorism and national security unit in the United States attorney’s office in Manhattan, also told the judge that the government would not use any statements Mr. Ghailani may have made “while he was in custody of other government agencies,” an obvious reference to his detention in the black sites and at Guantánamo.

The agency has never confirmed the locations or other details of the secret prisons, and a C.I.A. spokesman on Thursday declined to comment on the prosecutor’s statement in court. Prosecutors also declined to comment after the hearing.

It is unclear exactly what would be involved in preserving the secret sites for court cases, and it is possible that some sites may already have been demolished, stripped of equipment or altered for reuse.

In asking that the sites be preserved, Mr. Ghailani’s lawyers said they wanted to inspect them as part of their investigation into what had happened to Mr. Ghailani during his detention.

“It appears undeniable,” one lawyer, Peter E. Quijano, wrote, “that the defendant was subjected to harsh conditions and harsh interrogation techniques while detained in C.I.A. ‘black sites.’ ”

The lawyers said that they wanted to present “a detailed and accurate representation of the physical sites” where Mr. Ghailani was held as mitigating evidence against the death penalty if it is sought in his case.

Mr. Raskin at first suggested that the government would have to respond at least in part with classified information. But Judge Kaplan asked why prosecutors could not simply agree to the defense’s request that the government “preserve certain things,” as the judge put it.

“We will do that," Mr. Raskin said, adding that prosecutors should be able to resolve the issue with defense lawyers.

If they are unable to do so, the judge said, prosecutors should file their response to the defense.

The C.I.A.’s secret jails were created starting in 2002, after President George W. Bush assigned the agency responsibility for questioning high-level members of Al Qaeda. Working with friendly foreign intelligence services, the C.I.A. built or renovated buildings in several countries, including Afghanistan, Thailand and Poland, according to former agency officials.

After the location of the prisons in Eastern Europe was revealed in late 2005, C.I.A. officials scrambled to move the prisoners to other, still-secret places. It is not known where Mr. Ghailani was held, but it appears that many prisoners were held in more than one place at different times.

It was also revealed in court that the Justice Department has told Judge Kaplan that it was not prepared to rule out seeking the death penalty at this time in the case. The Defense Department had decided not to seek it when Mr. Ghailani was in the military commission system.

US credit card companies jack up rates

US credit card companies jack up rates

By Andre Damon

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Credit card companies have in recent months sharply raised the rates they charge customers, as credit card defaults have risen to record levels. Citigroup, the recipient of a $25 billion government bailout, has increased rates for millions of credit card customers by around one fourth. JPMorgan Chase & Co., the largest issuer of credit cards, also said it would raise its minimum payment rate from 2 to 5 percent for customers behind on payments.

The hikes come amid news that default rates for personal credit cards have hit record high levels. Fitch Ratings reported Tuesday that defaults on credit cards hit a record 10.4 percent last month amid rising unemployment, falling home values and reduced wages. Total losses on loans that credit card companies have given up on collecting have risen more than 62 percent from a year ago, according to the credit-rating agency.

On Tuesday, the Financial Times reported that Citi raised interest rates on 15 million cards co-branded with companies like Sears and Macy’s. Cardholders who did not pay off their entire balance saw their credit card rates increase by an average of 24 percent, according to research by Credit Suisse cited by the FT.

Meanwhile, JPMorgan Chase said that it would raise its balance transfer fees 3 percentage points, to 5 percent. It also announced plans to raise minimum payments for customers behind on their payments to 5 percent, up from 3 percent. The rate increase, scheduled for August, will come with additional fees for those borrowers who fail to make the minimum payment.

“I got a Citi credit card in college because they were offering zero percent interest rates for a year. They made it seem like you could just get credit for free,” one University of Delaware graduate told the WSWS. “Now, I’m out of college and have to pay my credit cards in addition to student loans. I’ve cancelled repayments on my student loans for a year just so I can pay the credit cards. Citi is charging something like 13 percent, and if I’m late on any payments the rate will be even higher.”

From the standpoint of the banks, the seemingly absurd and self-destructive practice of raising interest rates for people already behind on their payments only makes sense in the long term. These banks are ultimately betting that borrowers who are behind on their payments now will never pay back their principal amid falling wages and persistent unemployment. The banks are moving to extract the most in interest and fees that they can get away with, even at the consequence of their borrowers’ eventual default and bankruptcy.

Commentators noted that credit card issuers are raising rates preemptively to offset new federal regulations that would make it more difficult to raise credit rates for existing customers.

The Obama administration’s Credit Card Accountability Responsibility and Disclosure Act, signed into law in May and with some provisions taking effect next month, prohibits credit card companies from raising rates for existing customers unless they are at least two months behind on payments. (See “The credit card crisis and the false promise of the Obama administration”)

The window between the law’s signing and its adoption can only be seen as a deliberate loophole to allow credit card companies to raise rates to their preferred levels.

New York Democratic Senator Charles Schumer on Tuesday made a show of denouncing the act’s ineffectiveness, noting that the present outcome was entirely predictable. “This is what many of us feared about a law that didn’t take effect right away,” he said. “Issuers are using the delay in the effective date to wring more dollars out of their customers,” Schumer added.

Citigroup’s announcement on rate hikes comes a week after it said it would increase the salaries of its top executives by as much as 50 percent. (See “Record bonuses at bailed-out US banks”) Only a few days later, Forbes noted that Citi has already put aside $3 million as signing bonuses for two unnamed former Morgan Stanley executives, and likely had even bigger bonuses in the works for other new executives.

Citigroup received $25 billion in government aid during the height of the financial crisis, and in February the company announced that this stake would be converted into stock, making the US government in effect the company’s largest shareholder. Unlike banks such as Goldman Sachs and Bank of America, Citi has yet to pay back its nominal obligations to the government. This has not, however, prevented it from raising compensation for its executives.

The Obama administration has explicitly opposed all limits on executive pay, even for banks in which the US government is the largest shareholder. The government’s entire policy has been aimed at inflating the profit margins of the banking system, at the direct expense of working people. Even when the banks pursue policies—such as raising credit card rates—that hinder an overall economic recovery, the government has defended the most reckless short-term interests of Wall Street.

Should linking be illegal?

Should linking be illegal?

In a misguided attempt to aid newspapers, one of America's most influential judges is suggesting a new copyright law

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Those who wish to keep the internet free and open had best dust off their legal arguments. One of America's most influential conservative judges, Richard Posner, has proposed a ban on linking to online content without permission. The idea, he said in a blog post last week, is to prevent aggregators and bloggers from linking to newspaper websites without paying:

Expanding copyright law to bar online access to copyrighted materials without the copyright holder's consent, or to bar linking to or paraphrasing copyrighted materials without the copyright holder's consent, might be necessary to keep free riding on content financed by online newspapers from so impairing the incentive to create costly news-gathering operations that news services like Reuters and the Associated Press would become the only professional, nongovernmental sources of news and opinion.

Posner's notion set off an eruption from the likes of Jeff Jarvis, Matt Welch and Erick Schonfeld, among others. And they are right to be furious. Not only would Posner stop online media dead in their tracks, but he would also overturn long-established rules of fair use, which, among others things, allow for the reproduction of short excerpts of copyrighted material for the purposes of commentary, parody and the like – precisely what bloggers and aggregators do all the time.

And Posner, who sits on the seventh circuit court of appeals in Chicago, has a way of getting his way. A brilliant, provocative thinker and a frighteningly prolific writer, he was described in a 2001 New Yorker profile as "the most mercilessly seditious legal theorist of his generation". And if, at 70, Posner and his generation are not quite so influential as they once were, he is still a formidable presence on the legal scene.

In something of an irony for journalists who might be inclined to cheer Posner's latest, it was a 2003 opinion he wrote that helped cement journalists' modern status as cultural and social pariahs. Posner's decision in the case of McKevitt v Pallasch did more than any other to vanquish the idea that journalists called into court had some protection under the first amendment from having to reveal their confidential sources.

For a generation, journalists and their lawyers had relied upon the hazy wording of a 1972 supreme court case called Branzburg v Hayes, in which a bare majority ruled there was no reporter's privilege. One of the majority, Lewis Powell, wrote what his fellow justice Potter Stewart called "an enigmatic concurring opinion" suggesting that maybe, in some cases, there was a privilege. As retired New York Times lawyer James Goodale explained in the Frontline documentary News Wars several years ago, media lawyers used Powell's opinion to keep the reporter's privilege on life support for more than 30 years until Posner, finally, pulled the plug.

As an appeals court judge, Posner could not, of course, overrule the supreme court. In McKevitt, though, he didn't have to: he wrote that he had reread Branzburg and had come to the conclusion that, lo and behold, it meant what it said. No more reporter's privilege, although the states were free to create their own through shield laws and state court precedents. (All except Wyoming have done so, many of them long before McKevitt. And Congress may create a federal shield law later this year.)

Posner's opinion on copyright – expressed, thankfully, in a blog post rather than a ruling from the bench – has its roots in a celebrated essay he wrote for the New York Times Book Review in 2005 called Bad News. Although Posner was complimentary toward bloggers, and even asserted that their swarm-like verification system was superior in some ways to that of the traditional media, he nevertheless offered a few withering observations about where they get their material.

"The bloggers are parasitical on the conventional media," Posner wrote. "They copy the news and opinion generated by the conventional media, often at considerable expense, without picking up any of the tab. The degree of parasitism is striking in the case of those blogs that provide their readers with links to newspaper articles. The links enable the audience to read the articles without buying the newspaper."

Posner comes across as willfully blind to the ways in which bloggers and aggregators actually drive traffic to news sites, resulting in more readers seeing their content and, thus, their advertising. Yes, there are ways not to do it – the Boston Globe's wholesale, automated aggregation of a competitor's local content in a case settled out of court earlier this year comes to mind. But normal linking practices benefit everyone. The news business may be cratering, but it's not the fault of those who link to newspaper content.

Fortunately, Posner this time can't transform his desires into a judicial decree – his proposal would have to enacted in the form of an amendment to the copyright law. Unfortunately, such an idea is already making the rounds. Not to go all Kevin Bacon here, but Cleveland Plain Dealer columnist Connie Schultz, who supports it, is married to Democratic senator Sherrod Brown, which led Jeff Jarvis to demand that Schultz register as a federal lobbyist.

The thing is, Congress has been known to act with great alacrity on copyright matters when they affect corporate interests. And newspaper owners have been remarkably successful in calling attention to their plight.

But though tax breaks, special non-profit status and other federal goodies will likely go nowhere, a law aimed squarely at the linking practices of sites such as Google News and the Huffington Post would probably prove popular, the facts be damned.

It's ominous that those would push for such a law now have an ally as brilliant and influential as Posner. Keep a close eye on this one.

Court Filing Shows Evidence Cheney Swayed White House Response to CIA Leak

New Evidence Cheney Swayed Reaction to Leak

Discussions of CIA Agent Listed in Filing

By R. Jeffrey Smith

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A document filed in federal court this week by the Justice Department offers new evidence that former vice president Richard B. Cheney helped steer the Bush administration's public response to the disclosure of Valerie Plame Wilson's employment by the CIA and that he was at the center of many related administration deliberations.

The administration's discussion of Wilson's link to the CIA was meant to undermine criticism by her husband of administration allegations that Iraq attempted to acquire uranium, a matter that her husband had probed for the CIA, according to testimony presented in a 2007 trial.

A list of at least seven related conversations involving Cheney appears in a new court filing approved by Obama appointees at the Justice Department. In the filing, the officials argue that the substance of what Cheney told special prosecutor Patrick J. Fitzgerald in 2004 must remain secret.

No such agreement was reached between Fitzgerald and Cheney at the time of their chat, according to a 2008 Fitzgerald letter to lawmakers. But the Bush administration rejected requests by Congress and a nonprofit group for access to two FBI accounts of the conversation, saying the material was exempt from disclosure under subpoena or the Freedom of Information Act.

The Obama administration has since agreed that the material should not be disclosed. A Justice Department lawyer at one point last month argued that vice presidents and other White House officials will decline to be interviewed in the future if they know their remarks might "get on 'The Daily Show' " or be used as fodder for political enemies.

U.S. District Judge Emmet G. Sullivan expressed doubt about that argument. To counter Sullivan's skepticism, Assistant Attorney General Lanny A. Breuer said in a supporting affidavit to the new court filing that the department needs the ability to interview White House officials informally in future law enforcement investigations, and that if the Cheney interview summaries are made public, "there is an increased likelihood that such officials could feel reluctant to participate." Breuer served as special counsel to President Bill Clinton during the Whitewater probe.

The nonprofit group pushing for disclosure, Citizens for Responsibility and Ethics in Washington, responded yesterday with a statement that the Justice Department has subpoenaed such officials without difficulty in the past. "It is astonishing that a top Department of Justice political appointee is suggesting other high-level appointees are unlikely to cooperate with legitimate law enforcement investigations. What is wrong with this picture?" said Melanie Sloan, head of the group.

A list of what Cheney and Fitzgerald discussed appears in a declaration to the court by Acting Assistant Attorney General David J. Barron, who oversees the department's Office of Legal Counsel. Barron said he thinks substantial portions of the chat are covered by "the deliberative process privilege," protecting advice, recommendations and other "deliberative communications" between government officials.

He mentioned in particular Cheney's discussion of his conversation with then-CIA Director George J. Tenet about "the decision to send Ambassador Joseph Wilson on a fact-finding mission to Niger in 2002." Wilson is the former CIA operative's husband, and a report he filed after the trip cast doubt on claims that Iraq had purchased uranium from Niger for a nuclear weapons program. President George W. Bush cited those claims as part of the justification for the Iraq war.

Barron also listed as exempt from disclosure Cheney's account of his requests for information from the CIA about the purported purchase; Cheney's discussions with top officials about the controversy over Bush's mention of the uranium allegations in his 2003 State of the Union speech; and Cheney's discussions with deputy I. Lewis "Scooter" Libby, press spokesman Ari Fleischer, and Chief of Staff Andrew H. Card Jr. "regarding the appropriate response to media inquiries about the source of the disclosure" of Valerie Plame Wilson's identity.

The declaration also said Cheney had helped resolve disputes about "whether to declassify certain information," including portions of a National Intelligence Estimate related to Iraqi weapons programs that Libby leaked to then-New York Times reporter Judith Miller.

Worker Uprising Against Wells Fargo Spreads

Worker Uprising Against Wells Fargo Spreads After Major Victory To Keep Factories Open

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This week, workers at Hartmarx Factory won a major victory against Wells Fargo, as Wells Fargo agreed to keep their factory open. The story of the Hartmarx workers had drawn national attention as they threatened to occupy their factory if Wells Fargo closed it. Their victory yesterday represents a major triumph in the growing trend of factory sit ins that started last December when workers, members of United Electrical, Radio, and Machine Workers (UE) occupied the Republic Windows and Doors factory in Chicago

Last January, Hartmarx, the maker of men's apparel and an employer of nearly 4,000 people, filed for bankruptcy after Wells Fargo refused to extend them a line of credit. Wells Fargo then pushed for the company to be liquidated in order to increase their short term profits. They favored liquidating the factory and laying off the 4,000 workers despite the fact that there were proposals by several groups to purchase the company and keep it running.

The workers, members of SEIU, refused to accept the bank's ruling and decided to do something about it. The workers said they were inspired after having gone to see a speaking tour of members of who had occupied Republic Windows and Doors in Chicago. They then decided that perhaps they should consider threatening to occupy their plant in order to force the bank to keep it open. The workers then voted to sit-in to occupy that plant if Wells Fargo decided to liquidate it and drew national media attention to their story.

As a result of the worker's resolve to fight the company, they received a large degree of political and community support. Over 43 members of Congress signed a letter calling on Treasury Secretary Tim Geithner to investigate Wells Fargo's use of bailout money. Congressman Phil Hare, a former worker at Harmarx, promised to be Wells Fargo's "worst nightmare" if they closed the plant. Finally, State Treasurer Alexi Giannoulias brought Wells Fargo to their knees when he threatened to cut off $8 billion dollars worth of business that the state does with Wells Fargo if they closed the plant

As a result of the union members' activism, community pressure and politicians' threat to take action against Wells Fargo, the union was able to force the bank to accept a bid from another company to keep the plant open. The final decision represents a major victory in the worker sit-in movement against the banks. The victory at Hartmarx confirms the growing trend that I wrote about last week that whenever these banks are challenged through direct action in a visible, public way that they always fold to demands.

Now the fight moves onto a plant across town from Hartmarx in Moline, Illinois. Wells Fargo has cut off credit to Quad City Die Casting factory. Workers at the plant, who are members of the United Electrical, Radio, and Machine Workers (UE), the same union that occupied Republic Windows and Doors last summer, are engaging in direct action against Wells Fargo as they call for Wells Fargo to keep the plant open. So far, Wells Fargo has refused to even sit down with the union and negotiate. The union though has not been dissuaded and promises to continuing fighting the banksters of Wells Fargo.

Last week, UE held protests at over 20 cities throughout the country to protest Wells Fargo. In addition, a delegation from their union visited over 100 congressional offices last week to call for an investigation into how Wells Fargo is using its bailout money. The union charges that after having received $25 billion in bailout money that Wells Fargo has an obligation to look to promote economic recovery by keeping the plant open. Speaking at the protest in Davenport, Iowa, UE Director of Organization Bob Kingsley said, "We can't let this giant bank default on its obligation to the American people and the people of the Quad Cities. Wells Fargo is a roadblock to economic recovery."

Now the question is whether we as the progressive movement will join them in solidarity to support keeping factories open. Please go to UE's website and send a letter to your congressmangrowing worker uprising to fight banks that have destroyed our economy. Keeping good American manufacturing jobs such as the union jobs at Quad City Die Casting in this country is key to creating a successful economic revival not built on the speculative bubbles of the past. Its time that banks like Wells Fargo get out of the way on the road to economic recovery. calling on them to investigate how Wells Fargo has refused to spend its $25 billion in bailout money to support economic recovery. Our resolve as a movement to support the struggle of workers at Quad City Die Casting will determine our ability to support this

US Job Losses Spike in June, Dampen Recovery Hopes

U.S. job losses spike in June, dampen recovery hopes

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U.S. employers cut far more jobs than expected last month and the unemployment rate hit 9.5 percent, the highest in nearly 26 years, underscoring the likelihood of a long, slow recovery from recession.

The loss of 467,000 jobs reported by the Labor Department on Thursday was 100,000 more than Wall Street economists had expected, with virtually no major economic sector spared.

Since the economy fell into recession in December 2007, 6.5 million nonfarm jobs have been lost and the unemployment rate has nearly doubled.

"It looks like the economy was still losing substantial momentum as the second quarter came to a close. This report is weak across the board," said William Sullivan, chief economist at the JVB Financial Group in Boca Raton, Florida.

Stock prices fell sharply, with the Dow Jones industrial average ending 2.6 percent lower as investors worried that the data darkened the recovery outlook. Prices for safe-haven U.S. government debt rose, pushing the yield on the benchmark 10-year note down briefly to levels not seen since late May.

The rise in the U.S. jobless rate from May's 9.4 percent took it to its highest since August 1983. In a further indication of weakness, the report showed the length of the average workweek shrank and wages were flat last month.

"The labor market is still in shambles," said economist Harm Bandholz of Unicredit Markets & Investment Banking in New York.

U.S. businesses have slashed payrolls sharply in an effort to protect their bottom line in the face of a plunge in consumer demand. Now, the deteriorating jobs market poses the biggest hurdle to a recovery that many economists expect to take root this quarter.

President Barack Obama said the June jobs report was "less devastating" than monthly losses in the first quarter, but added that was little comfort to millions of Americans suffering from unemployment.

"It took years for us to get into this mess and it will take more than a few months to turn it around," Obama said at the White House.

Monthly U.S. job losses peaked in January at 741,000 and had decreased each month since then until June, an indication that the pace of the economy's deterioration had been slowing.

The Labor Department revised figures for April and May to show a net 8,000 fewer jobs were lost in those months than previously reported. The May job losses were revised downward to 322,000, while April losses were revised upward to 519,000.

Data in Europe on Thursday also showed unemployment in the 16-nation euro zone rose to a 10-year high of 9.5 percent in May, adding to concerns about demand for U.S. exports.

SIGNS OF HOPE

A separate report, however, offered some hope that pressure on the labor market was starting to fade.

The Labor Department said first-time claims for state unemployment insurance benefits fell last week.

In addition, the number of people still on jobless aid rolls after claiming an initial week of benefits dropped to just over 6.7 million in the week ended June 20, only the third week this year that continued claims dropped.

Many economists have predicted that the unemployment rate will continue to rise even if recovery takes hold this year. But Chris Rupkey, chief financial economist at Bank of Tokyo/ Mitsubishi UFJ in New York, said in a research note that if current trends hold, "the odds are increasing that the unemployment rate has peaked for this recession at 9.5 percent."

WIDESPREAD LOSSES

While June's job losses were widespread, the steepest decline was in services, the backbone sector for the U.S. economy, where payrolls shrank by 244,000 positions after a 107,000 drop in May. Construction lost 79,000 job slots and government employment fell by 52,000.

Manufacturing was one of the few areas to show a smaller drop in June, down 136,000 after a 156,000 fall in May.

A separate government report on Thursday showed orders for U.S. manufactured goods in May rose 1.2 percent, the largest increase in nearly a year.

Still, it was the ninth straight month that more than 100,000 jobs were lost in that sector.

The median time all individuals were out of a job grew to 17.9 weeks in June, the longest on records dating to 1967.

The weak labor market also continued to undercut real wages. Average hourly earnings in June were flat with May at $18.53 an hour, while the length of the average workweek fell to 33.0 hours from 33.1 in May, pressuring consumer incomes.

Over the past year, average weekly hours have risen just 2.7 percent, the smallest 12-month change since the period ended September 2005.

Washington Post Offered Lobbyists Paid Access

Washington Post cancels lobbyist event

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Washington Post publisher Katharine Weymouth said today she was canceling plans for an exclusive "salon" at her home where for as much as $250,000, the Post offered lobbyists and association executives off-the-record access to "those powerful few" — Obama administration officials, members of Congress, and even the paper’s own reporters and editors.

The astonishing offer was detailed in a flier circulated Wednesday to a health care lobbyist, who provided it to a reporter because the lobbyist said he felt it was a conflict for the paper to charge for access to, as the flier says, its “health care reporting and editorial staff."

With the Post newsroom in an uproar after POLITICO reported the solicitation, Weymouth said in an email to the staff that "a flier went out that was prepared by the Marketing department and was never vetted by me or by the newsroom. Had it been, the flier would have been immediately killed, because it completely misrepresented what we were trying to do."

Weymouth said the paper had planned a series of dinners with participation from the newsroom “but with parameters such that we did not in any way compromise our integrity. Sponsorship of events, like advertising in the newspaper, must be at arm's length and cannot imply control over the content or access to our journalists. At this juncture, we will not be holding the planned July dinner and we will not hold salon dinners involving the newsroom. “

She made it clear however, that The Post, which lost $19.5 million in the first quarter, sees bringing together Washington figures as a future revenue source. “We do believe that there is a viable way to expand our expertise into live conferences and events that simply enhances what we do - cover Washington for Washingtonians and those interested in Washington,” she said. “ And we will begin to do live events in ways that enhance our reputation and in no way call into question our integrity.”

Executive editor Marcus Brauchli was as adamant as Weymouth in denouncing the plan promoted in the flier. “You cannot buy access to a Washington Post journalist,” Brauchli told POLITICO. Brauchli was named on the flier as one of the salon’s "Hosts and Discussion Leaders."

Brauchli said in an interview that he understood the business side of the Post planned on holding dinners on policy and was scheduled to attend the July 21 dinner at Weymouth’s Washington home, but he said he had not seen the material promoting it until today. “The flier, and the description of these things, was not at all consistent with the preliminary conversations the newsroom had,” Brauchli said, adding that it was “absolutely impossible” the newsroom would participate in the kind of event described in the solicitation for the event.

"Underwriting Opportunity: An evening with the right people can alter the debate," says the one-page flier. "Underwrite and participate in this intimate and exclusive Washington Post Salon, an off-the-record dinner and discussion at the home of CEO and Publisher Katharine Weymouth. ... Bring your organization’s CEO or executive director literally to the table. Interact with key Obama administration and congressional leaders."

The flier promised the dinner would be held in an intimate setting with no unseemly conflict between participants. “Spirited? Yes. Confrontational? No,” it said. “The relaxed setting in the home of Katharine Weymouth assures it. What is guaranteed is a collegial evening, with Obama administration officials, Congress members, business leaders, advocacy leaders and other select minds typically on the guest list of 20 or less. …

Brauchli emphasized that the newsroom had given specific parameters to the paper’s business staff that he said were apparently not followed. He said that for newsroom staffers to participate, they would have to be able to ask questions and that he would “reserve the right to allow any information or ideas that emerge from an event to shape or inform our coverage.” That directly contradicts the solicitation to potential sponsors, which billed the dinner as “off-the-record.”

“Our mission in the news department is to serve an audience,” Brauchli said, “not serve our sponsors.”

“We do not use the Post’s name or our journalists to gain access to officials or sources for the benefit of non-news purposes,” he continued.

Brauchli said that Post employees on the business side — not the newsroom — would have been responsible for seeking participants for this event. Reporters, he said, would not solicit sources or administration officials. Brauchli said that he did not know who was invited or who accepted.

Ceci Connolly, a Post reporter who covers health care, told POLITICO that she had been told there would be a dinner and that she would be invited. However, Connolly said, she “knew nothing about sponsorships and had not seen any flier or invitation.”

Brauchli declined to comment on whether anyone on the business side would be held responsible for the abortive plan. He said that would be a decision for either Weymouth or Stephen Hills, The Post’s president and general manager.

But regarding future events, Brauchli said: “I would hope that everybody in the Washington Post Company is always sensitive to the importance of the newsroom’s integrity and independence.”
Charles Pelton, The Post business-side employee listed as the event contact, seemed to dispute Brauchli’s version of events.

Pelton was quoted by Post ombudsman Andy Alexander in an online commentary as saying that newsroom leaders, including Brauchli, had been involved in discussions about the salons and other events.“This was well-developed with the newsroom,” Pelton told Alexander. “What was not developed was the marketing message to potential sponsors.”

According to Alexander, who called the flier a “public relations disaster,” Pelton told him: “There’s no intention to influence or peddle.” “There’s no intention to have a Lincoln Bedroom situation,” referring to charges that President Bill Clinton used invitations to stay at the White House as a way of luring political backing.

Pelton did not return a phone call from POLITICO.

If POLITICO had not reported on the flier this morning, Brauchli said he expects someone would have seen it before the event and, given the obvious ethical issue, it would have been canceled.

Kris Coratti, communications director of Washington Post Media, a division of The Washington Post Company, said the flier “came out of a business division for conferences and events, and the newsroom was unaware of such communication. It went out before it was properly vetted, and this draft does not represent what the company’s vision for these dinners are, which is meant to be an independent, policy-oriented event for newsmakers.

"As written, the newsroom could not participate in an event like this. We do believe there is an opportunity to have a conferences and events business, and that The Post should be leading these conversations in Washington, big or small, while maintaining journalistic integrity. The newsroom will participate where appropriate."

Earlier this morning, Brauchli sent an e-mail entitled “Newsroom Independence” to his staff explaining his position.

"Colleagues,” Brauchli said. “A flier was distributed this week offering an 'underwriting opportunity' for a dinner on health care reform, in which the news department had been asked to participate. The language in the flier and the description of the event preclude our participation.

"We will not participate in events where promises are made that in exchange for money The Post will offer access to newsroom personnel or will refrain from confrontational questioning. Our independence from advertisers or sponsors is inviolable. There is a long tradition of news organizations hosting conferences and events, and we believe The Post, including the newsroom, can do these things in ways that are consistent with our values."

The first "Salon" was to be called "Health-Care Reform: Better or Worse for Americans? The reform and funding debate." More were anticipated, and the flier described the opportunities for participants:
“Offered at $25,000 per sponsor, per Salon. Maximum of two sponsors per Salon. Underwriters’ CEO or Executive Director participates in the discussion. Underwriters appreciatively acknowledged in printed invitations and at the dinner. Annual series sponsorship of 11 Salons offered at $250,000 … Hosts and Discussion Leaders ... Health-care reporting and editorial staff members of The Washington Post ... An exclusive opportunity to participate in the health-care reform debate among the select few who will actually get it done. ... A Washington Post Salon ... July 21, 2009 6:30 p.m. ...

"Washington Post Salons are extensions of The Washington Post brand of journalistic inquiry into the issues, a unique opportunity for stakeholders to hear and be heard," the flier says. "At the core is a critical topic of our day. Dinner and a volley of ideas unfold in an evening of intelligent, news-driven and off-the-record conversation. ... By bringing together those powerful few in business and policy-making who are forwarding, legislating and reporting on the issues, Washington Post Salons give life to the debate. Be at this nexus of business and policy with your underwriting of Washington Post Salons."

White House press secretary Robert Gibbs was asked Thursday in the briefing room if anyone from the White House was invited to attend the salons, and what the policy is for attending such events.

"I don't know if anybody here was," Gibbs said. "I think some people in the administration, writ large, may have been invited. I do not believe, based on what I've been able to check, anyone has accepted the invitations."

Gibbs said that the White House counsel would review such invitations and that they "would likely exceed" what would be considered appropriate.