March 3, 2009, New York Times
The U.S. economy is in free fall, the banking system is in a state of complete collapse and Americans all across the country are downsizing their standards of living. The nation as we've known it is fading before our very eyes, but we're still pouring billions of dollars into wars in Afghanistan and Iraq with missions we are still unable to define. Even as the U.S. begins plans to reduce troop commitments in Iraq, it is sending thousands of additional troops into Afghanistan. The strategic purpose of this escalation, as Defense Secretary Robert Gates acknowledged, is not at all clear. We invaded Afghanistan more than seven years ago. We don't even have an escalation strategy, much less an exit strategy. An honest assessment of the situation ... would lead inexorably to such terms as fiasco and quagmire. Instead of cutting our losses, we appear to be doubling down. As for Iraq, President Obama announced last week that substantial troop withdrawals will take place over the next year and a half and that U.S. combat operations would cease by the end of August 2010. But, he said, a large contingent of American troops, perhaps as many as 50,000, would still remain in Iraq for a "period of transition." That's a large number of troops, and the cost of keeping them there will be huge. I can easily imagine a scenario in which Afghanistan and Iraq both heat up and the U.S., caught in an extended economic disaster at home, undermines its fragile recovery efforts in the same way that societies have undermined themselves since the dawn of time - with endless warfare.
Note: The strategic purpose of keeping the wars going is well known by the bankers and power elite. A top U.S. general revealed it all in a powerful book, of which we have a two-page summary available here. For revealing reports from reliable sources on the realities of the Iraq and Afghan wars, click here.
Hidden Pension Fiasco May Foment Another $1 Trillion Bailout
March 3, 2009, Bloomberg News
Public pension funds across the U.S. are hiding the size of a crisis that's been looming for years. Retirement plans play accounting games with numbers, giving the illusion that the funds are healthy. The paper alchemy gives governors and legislators the easy choice to contribute too little or nothing to the funds, year after year. The misleading numbers posted by retirement fund administrators help mask this reality: Public pensions in the U.S. had total liabilities of $2.9 trillion as of Dec. 16, according to the Center for Retirement Research at Boston College. Their total assets are about 30 percent less than that, at $2 trillion. With stock market losses this year, public pensions in the U.S. are now underfunded by more than $1 trillion. That lack of funds explains why dozens of retirement plans in the U.S. have issued more than $50 billion in pension obligation bonds during the past 25 years -- more than half of them since 1997 -- public records show. The quick fix for pension funds becomes a future albatross for taxpayers. The public gets nothing from pension bonds -- other than a chance to at least temporarily avoid paying for higher pension fund contributions. Pension bonds portend the possibility of steep tax increases. By law, states must guarantee public pension fund debts. "What appears to be a riskless strategy is actually very risky," says David Zion, director of accounting research for New York-based Credit Suisse Holdings USA Inc. "If the returns on the pension bond-financed assets don't exceed the cost of servicing the debt, the taxpayers bear the brunt."
Note: For lots more on the realities of the Wall Street bailout, click here.
Oil producers running out of storage space
March 3, 2009, MSNBC/Associated Press
Supertankers that once raced around the world to satisfy an unquenchable thirst for oil are now parked offshore, fully loaded, anchors down, their crews killing time. In the United States, vast storage farms for oil are almost out of room. As demand for crude has plummeted, the world suddenly finds itself awash in oil that has nowhere to go. It's been less than a year since oil prices hit record highs. But now producers and traders are struggling with the new reality: The world wants less oil, not more. And turning off the spigot is about as easy as turning around one of those tankers. So oil companies and investors are stashing crude, waiting for demand to rise and the bear market to end so they can turn a profit later. Meanwhile, oil-producing countries such as Iran have pumped millions of barrels of their own crude into idle tankers, effectively taking crude off the market to halt declining prices that are devastating their economies. Traders have always played a game of store and sell, bringing oil to market when it can fetch the best price. They say this time is different because of how fast the bottom fell out of the oil market. "Nobody expected this," said Antoine Halff, an analyst with Newedge. "The majority of people out there thought the market would keep rising to $200, even $250, a barrel. They were tripping over each other to pick a higher forecast." Now the strategy is storage. Anyone who can buy cheap oil and store it might be able to sell it at a premium later, when the global economy ramps up again.
Prison Spending Outpaces All but Medicaid
March 3, 2009, New York Times
One in every 31 adults, or 7.3 million Americans, is in prison, on parole or probation, at a cost to the states of $47 billion in 2008, according to a new study. Criminal correction spending is outpacing budget growth in education, transportation and public assistance, based on state and federal data. Only Medicaid spending grew faster than state corrections spending, which quadrupled in the past two decades, according to [a new report] by the Pew Center on the States, the first breakdown of spending in confinement and supervision in the past seven years. The increases in the number of people in some form of correctional control occurred as crime rates declined by about 25 percent in the past two decades. As states face huge budget shortfalls, prisons, which hold 1.5 million adults, are driving the spending increases. Pew researchers say that as states trim services like education and health care, prison budgets are growing. Those priorities are misguided, the study says. "States are looking to make cuts that will have long-term harmful effects," said Sue Urahn, managing director of the Pew Center on the States. "Corrections is one area they can cut and still have good or better outcomes than what they are doing now." About $9 out of $10 spent on corrections goes to prison financing (that includes money spent to house 780,000 people in local jails). One in 11 African-Americans, or 9.2 percent, are under correctional control, compared with one in 27 Latinos (3.7 percent) and one in 45 whites (2.2 percent).
Note: Crime is down 25%, yet prison spending is 400% of what it was 20 years ago. Is there anything strange here? The prison-industrial complex is mighty big and in many ways mighty corrupt.
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