The trade deficit with China is about $250 billion. China has engineered this competitive triumph by keeping its yuan even cheaper than the dollar, euro and gold. Annually, it sells at deep discount about $460 billion worth yuan for dollars, euros and other currencies in foreign exchange markets. That provides a 33% subsidy on Chinese exports and keeps Chinese goods cheap on the shelves at Wal-Mart...

The huge trade deficit must be financed either by attracting foreign investment in new productive assets in the United States or by printing IOUs. Investment has only provided about 10% of necessary cash, so each year the United States sells currency, bank deposits, Treasury securities, bonds, and the like to foreigners. Those claims on the U.S. economy now total about $6.5 trillion. That floods world financial markets with U.S. dollars and paper assets that function much like U.S. dollars-what economists call liquidity. And, it evokes an iron law of the universe. If you print too much money, it won't have any value. [More] . . read more

What we see is the result of a catastrophic loss of trust in the West. It goes well beyond economics and finance. It is the sincerity of political leaders of the West that is at stake. If those in power in Washington, London and elsewhere cannot be trusted on the critical matters of war and peace, law and justice and treatment of different sections of their own populations, their ability in other areas is bound to be questioned. The leaders of America and its allies have simply become captivated by a doctrine that leaves their economies at home, to be run by the large private institutions that they befriend, while they themselves go and fight wars abroad.

Today, America's wars are financed by money borrowed from China and the oil-rich Gulf states which are awash with petrodollars... And countries like China, Russia and Saudi Arabia, which have accumulated huge reserves in U.S. dollars, don't trust the West. The resentment in the Arab world against the treatment of Muslims by the West is strong. And the government of Iceland criticizes its 'friends' for not doing enough to help it and looks towards Russia to bail it out.

The West is simply broke – morally, politically and economically. [More] . . read more

The banks are hoarding cash to meet their capital requirements. They are trying to compensate for the loss of value to their (mortgage-backed) assets by increasing their reserves. At the same time, the system is clogged with trillions of dollars of bad paper which has brought lending to a halt. The huge injections of liquidity from the Fed have done nothing to improve lending or lower interbank rates. It's been a flop. The market is driving interest rates now. If the situation persists, the stock market will crash. [More] . . read more

After more than sixty years, the global bully is found to be incompetent. Just as the Cold War ended suddenly and unexpectedly in 1989, the American nightmare is imploding in 2008, even though it could take another twenty years to give up the ghost completely.

The trouble is that in the hands of this clueless giant are most of the weapons sufficient to obliterate the planet. But America wants more, ever more, and running out of credit could trigger a psychotic breakdown. We should be terrified. Not just because of the economic chaos to come, but because of what will happen when this highly armed political dinosaur starts thrashing about in its death spasms.

This time, will the world say "No" when the crunch comes? . . read more

It's holiday season in Manhattan and despite the economic downturn, there seems to be no shortage of well-dressed humans cavorting, laughing, and spending freely. Walking among them, a homeless man begs for money-shaking his tattered coffee cup (adorned with images of Greek architecture) to rattle the few coins therein. A veteran of the first Gulf War, this man is no longer concerned with yellow ribbons. Right now, he'd settle for a scrap of food and a dry pair of shoes.

The Department of Veterans Affairs (VA) estimates that nearly 200,000 veterans are homeless on any given night and nearly 400,000 experience homelessness over the course of a year. Forty-five percent of America's homeless veterans suffer from mental illness and half have substance abuse problems. According to the National Survey of Homeless Assistance Providers and Clients, veterans account for 23% of all homeless people in America.

The homeless vet is barely noticed by the 30-something corporate lawyer whizzing past him, on his way to dinner. It's a holiday gathering to celebrate hope, change, and all that good stuff. The lawyer-still proudly wearing his Obama button-is running late and his colleagues have already ordered appetizers: shrimp cocktails all around (for only $17 each).

The United Nations Environment Program has estimated that a quarter of the destruction of mangrove forests stems from shrimp farming. After the 2008 Burma cyclone, Association of South-East Asian Nations (ASEAN) Secretary-General Surin Pitsuwan blamed "encroachment into mangrove forests, which used to serve as a buffer between the rising tide, between big waves and storms and residential areas." He added: "All those lands have been destroyed. Human beings are now direct victims of such natural forces."

The homeless vet sees a Wall Street type-still proudly wearing his Obama button-approaching him. "Hey buddy," the vet tries, "how about a bailout?" The Wall Street type doesn't laugh. The Wall Street type doesn't even see the homeless vet. The Wall Street type tosses his half-finished Coke onto the sidewalk.

As labor activist Ray Rogers explains, "The reality is that the world of Coca-Cola is a world of lies, deceptions, corruption, gross human rights and environmental abuses!" Rogers told Democracy Now that Coke "contracted with paramilitary death squads to torture, kidnap, and murder union leaders at its bottling plants in Columbia." If geo-political issues aren't enough to move you, consider what Marion Nestle, author of Food Politics: How the Food Industry Influences says about Coke and its ilk: " The relationship between soft drink consumption and body weight is so strong that researchers calculate that for each additional soda consumed, the risk of obesity increases 1.6 times."

The homeless vet picks up the Wall Street type's Coke and downs it in one big gulp. Afterwards, he tosses the empty cup onto the sidewalk and glances to his left just in time to look through the restaurant window and see the corporate lawyer cheerfully biting into a piece of shrimp.

At that precise moment, an underwater tremor deep in the Pacific Ocean creates a powerful wave that will develop into a tsunami aimed directly for a popular vacation destination once protected by mighty mangroves.

Mickey Z. can be found on the Web at http://www.mickeyz.net/

The value of the trade, however, is illusory. We are exporting carbon emissions and importing job losses. It gets worse. Minerals require no value-add. Coal is coal is coal. So the boom is doing nothing to promote the knowledge economy – smart jobs for the creative classes which are driving economic growth elsewhere in the world.

Our government is doing very little to encourage the development of intangible national assets and innovation. Start up finance for new businesses is a joke, as is mezzanine funding for the fledgling operation which needs a kick. . . read more

Now I don't know what Obama has in mind to try and turn things around for these good people, but it's a start that he's at least talking to them, not down, but honestly. His talk in response to attacks on his statement about rural residents being "bitter and frustrated" is as good as anything Ralph Nader has said about the power and mendacity of the ruling political elite in America...

If Obama sticks to this rhetorical approach in the coming weeks, he will nail this nomination in spite of a concerted attack on him by the corporate media and by the combined forces of the Clintons and McCain. And if he does win the nomination, and resists the siren calls of the Democratic Party leadership to "move to the middle," and instead hones this populist message, he will go on to win the presidency. [More] . . read more

We are also told that the infusion of capital from foreign institutions into the banking system to cover up their mistakes is a sign of strength. That is mindless. All the foreigners are doing is dumping dollars, which are the wages of de-industrialization, de-regulation, free trade, globalization, offshoring and outsourcing... It has made us dependent on capital from the outside world. We have become junk-bond junkies.

[The U.S. is] no longer the most productive nation in the world. We have been converted into sniveling, pathetic debtors who have been betrayed by our large transnational conglomerates. Cities, towns, counties and states are slashing municipal services past the point of pain... Spending by states has fallen precipitously forcing communities to rely more on property tax revenues, or use savings or services. The loss in revenue and inflation are killing these entities. Wait until they have to cut real estate taxes due to falling values. That is when the real problems will begin. [More] . . read more

Does the banks' condition put the U.S. on the brink? What, because the banks won't lend without a bailout? I don't believe so. The banks remind me of the Sheriff in Blazing Saddles who takes himself hostage. The banks commit suicide by not lending. The banks won't lend without a bailout? Fine. Don't lend, banks. Don't lend starting now. You already have? Huh. Most banks in the DC area are advertising that they are not holding subprime mortgage-based assets and open for business to make loans.

If the banks won't lend and there is money to be made lending, someone else will lend, like the banks that are advertising. That's the free market, and the creative destruction should start now. If things are so bad that banks won't lend, the Taxpayers would be stupid to do so without the substantial potential for profit that the better plan provides. Paulson's plan provides only certainty, the certainty of losses. Why would anyone buy high for the certainty of selling low? [More] . . read more