The Economic Debate Has Yet to Target Key Issues

New York: There is still an air of unreality in the economic debate that is increasingly dominating the election.

For one thing, it is still "AAU" (All About Us) as if what happens in the US economy in a globalized world is somehow separate and disconnected to what happens to people "out there."

It is as if our growing deficit, subprime crisis, and dropping dollar only affects the United States. Of course, that's not true. OPEC has blamed the rising price of oil on speculators, the subprime scandal and the deliberate decline of drop the dollar.

The gigantic movements protesting US trade policy in South Korea shows that people worldwide do not want to be controlled by US corporate policies. All around the world, workers are also challenging rising gas prices. AFP reports:

"Auto plants in Spain were paralyzed and Portugal's main airport banned planes from refueling Wednesday as a third day of strikes by thousands of truckers caused heightened chaos and shortages.

Truckers in Thailand also threatened to strike next week while their counterparts in South Korea plan to stop work on Friday, as the outrage over soaring fuel prices intensified around the world."

So far, there has been little protest in the US. We are too busy watching prices go up on TV, focusing on the NBA finals or on horse races on the track and in politics.

Why aren't our leaders encouraging us to act?

Why aren't they offering a global perspective? The truth is that without loans and investments from China, the Persian Gulf and various sovereign wealth funds, our economy would have fallen much further, if not collapsed.

Face it; we do not have energy independence or, for that matter, financial independence. Why? Partly because we live as if we are an island empire in an interdependent world.

So far, planetary issues and global concerns -- climate change, global trade, energy, population, war and peace, and growing inequality have been largely rendered non-issues in our highly partisan economic debates. Last Saturday, the G-8 Finance Ministers meeting in Japan warned that surging oil and food prices threaten the world economy. They blame the collapse of the US housing market as a cause. They offered no solutions.

Speculators are now cashing in. There has been little reference here to what newspapers like Germany's Der Spiegel is reporting:

"After investing in high-tech stocks and real estate loans for years, legions of speculators have now discovered commodities like oil and gas, wheat and rice. Their billions are pushing prices up to astronomical levels -- with serious consequences for ordinary people's quality of life and the global economy."

(Maybe we should "twitter" these words to both campaigns!)

We are hearing mostly about meager stimulus checks, not strategies for sustainability. We are bombarded with polarizing issues, not probes into the interests behind them.

John McCain, the "free marketer" is blasting Barack Obama as a tax and spend liberal. Obama derides McCain for pushing tax cuts for the rich.

So far this sounds like just about every presidential race of the last 30 years, featuring the classic Democrat-Republican debate with the former posturing as populists and the latter claiming to stand for individual freedom.

What's missing of course is that this verbal duel is taking place in the middle of unending wars and three global calamities -- food, fuel, and finance -- that so far have not been really popularized or discussed with the voters.

Obama has touched on the housing crisis and the stranglehold that credit cards have over many of us. The AP reports:

"He would bar credit card companies from raising interest rates without the borrower's approval and from applying higher rates retroactively; establish a federal credit card rating system; and bar interest charges on items such as late fees."

This is a needed reform but does not address the consumption addiction in our country that leads us all to pile on more and more debt. Maybe Obama can't see that because, as he told CNBC: "Look. I am a pro-growth, free-market guy. I love the market."

McCain, meanwhile, as politicians tend to do, changes the subject and goes after Obama for suggesting that an end to NAFTA could hurt business. There's little concern about what this trade deal has done to American workers.

Explains Huffington Post blogger Jayne Stahl:

"Since 2001, the U.S. has lost more than 2 million manufacturing jobs, and nearly 1 million professional, and information service, positions, and NAFTA trade deficits alone have resulted in the loss of hundreds and thousands of jobs."

Nor does it come as breaking news to most of us that real wages have stagnated in the past thirty-odd years, and have actually fallen in the past year. ...It's the same old song, since the great Depression, of the rich getting richer while the rest of us shine their shoes, but not since the 1920's has the disparity between rich and poor been this great.... If things keep up at this rate, the U.S. Treasury may have to declare bankruptcy."

What we have here are really structural problems, not subject to clever slogans or minor adjustments. Tinkering won't help much!

Whoever becomes president will inherit a crisis, not a condition. It is the system that's out of whack, not just a policy here or there. The debate on the economy has to explain this to the American people. Don't the candidates see the same articles I do like this one in Banking Times:

"The Bank for International Settlements (BIS), the organization that fosters cooperation between central banks, has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s.

In its latest quarterly report, the body points out that the Great Depression of the 1930s was not foreseen and that commentators on the financial turmoil, instigated by the US sub-prime mortgage crisis, may not have grasped the level of exposure that lies at its heart."

It's time for more of us to start "grasping" the seriousness of the moment.

Recently, China was condemned for "marketization without democratization." How much democratization, accountability or even transparency is there in our private-sector dominated economic system in which most politicians have little leverage. Unelected financiers, bankers and Wall Street firms call the shots.

This is not just a debate over different policies or priorities.

Why are three million families facing foreclosure? Why is inflation shooting ever upwards and unemployment rising. The recession and worse many Americans experienced didn't just happen -- it was caused by policies giving license to white collar criminals and unregulated speculators with the connivance of a media system that dumbs it down instead of smartening us up.

We need more than a debate over policy. We need an investigation and prosecution of the financial buccaneers and a discussion of the kind of fundamental changes that none of the major party candidates are talking about yet. Otherwise...

News Dissector Danny Schechter wrote the forthcoming book on the financial crisis called Plunder. He directed In Debt We Trust (indebtwetrust.org) Comments to [e-mail]

Comments

[shamaniceconomist]

I think it makes more sense to praise politicians for trying to come up with policy fixes than to criticize them for not having much of a solution. I'm afraid policy fixes are all the federal government will have to offer (let's not forget it may be facing insolvency itself if economic conditions get much worse). As scary as it might sound, the rest of the solution will have to come from elsewhere.

[outnow]

Sens. Byron Dorgan (D-N.D.)and Maria Cantwell (D-Wash) have proposals to remove the British FSA from all oversight of what are U.S futures markets. Both of these Senators are Democrats. But don't believe for an instant that all other Democrats support this oversight. The oil markets are involved so the CFTC does not want to designate banks and hedge funds as "speculators." The CFTC wants to pretend that the "dark markets" speculators are other than Goldman Sacks, JP Morgan, and Morgan Stanley, all of whom are trying to make up losses incurred elsewhere. Oil futures markets have become "London offshore" locations.

The island running the globalized markets is London. They are fighting any attempt to regulate these markets in energy and food. The Congressional proposals are intended to stop traders from evading position limits in the US by trading on ICE, a method known as the London loop. The price-cap measure already exists in the U.S. markets and is designed to prevent steep rises in specific asset prices. However, the FSA believes that the market should determine the price.

There is Republican support for oversight but many Democrats are not in favor of subjecting bank and funds to position limits.

[argeec]

Readers should pay close attention to Schechter.
He is usually right and usually early.

[seawolf77]

The problem is enormous and ominous. Cheap energy is a thing of the past and the world has grown and is still growing as if it is not. When you have to drill 5 miles down and in the ocean, you have to ask yourself, is this madness. And at what point is it madness. The same thing happened to the whaling industry and it is no concidence that the largest oil fields are called "whales". They had to go out further, stay out longer, to find fewer and fewer whales at rapidly diminsishing profits despite incredibly high prices. This is known as a death spiral...down the tubes. Couple this with increasing temperatures and rising seas and a population almost entirely near the sea, and you have a recipe for the end of the world. Just when we need the energy the most it will be gone.

[Chavez08]

As long as Friedman echoes through Washington, don't expect any change until the people revolt.

[outnow]

There is a systemic breakdown coming in the financial sector. "Unelected bankers, financiers and Wall Street firms call the shots." How true! When energy, food, water and the financial system are controlled by a few cartels, what democracy is possible?

[Chavez08]

Neoliberals (Nixon, Reagan, Bush1-2, Clinton) re-defined "Democracy" to mean Unchecked Capaitalism imposed by any means necessary.

This is exactly how it is supposed to work, this is order for them. They truly believe that "markets" take precedence over humanity (and everything else)

"On the boats and on the planes...."

[HotATL]

This is the kind of issue that I was looking for when I started searching for blogs on the internet. Maybe I’m wrong, but I think that the economy is the most important issue facing American today. Not whose president, not abortion, not even who is appointed to the Supreme Court! I believe the America is moving toward a third world nation. That’s just my belief. I hope that I’m wrong.

[maxkeiser]

great post Danny Schechter - I just posted something on huffpost that I think your readers might find interesting;

The People's Hedge Fund & Fighting For Economic Justice Using Boycotts Tied to Short-Sales: My Interview in Playboy France

http://www.huffingtonpost.com/max-keiser/the-peoples-hedge-fund-fi_b_107180.html

[Chavez08]

No, you're right. Neo-classic economics are pushed on Americans every so often because the Capitalist elite in this country know they can take advantage of the collective ignorance of history.

Simple rule - if you eliminate pro-labor/consumer laws and checks and balances on Capitalism, you get slavery, period.

Banker puppets like Reagan and Bush re-package the same failed Neo-classic economic theories and sell them to the stupid American public because they had the charisma to hypnotize us.

Americans are just now warming up to the fact that maybe, just maybe those New Deal policies weren't "Socialist Enablers" and those "Welfare Queens driving Cadillacs" weren't the biggest draws on our collective economic prosperity after all.

Did we wake-up from our nappy-poo? Did baby dream of actors and horses and big-bad Union bogeymen?

[americaforme]

More than two thumbs up to you...In other words do something, anything, to halt these crimes to humanity...