http://select.nytimes.com/2006/05/19/opinion/19krugman.html?th&emc=th
Coming Down to Earth By PAUL KRUGMAN Published: May 19, 2006 Um, wasn't the stock market supposed to bounce back after Wednesday's big drop? We shouldn't read too much into a couple of days' movements in stock prices. But it seems that investors are suddenly feeling uneasy about the state of the economy. They should be; the puzzle is why they haven't been uneasy all along. The rise in stock prices that began last fall was essentially based on the belief that the U.S. economy can defy gravity - that both individuals and the nation as a whole can spend more than their income, not on a temporary basis, but more or less indefinitely. To be fair, for a while the data seemed to confirm that belief. In 2005, the trade deficit passed $700 billion, yet the dollar actually rose against the euro and the yen. Housing prices soared, yet houses kept selling. The price of gasoline neared $3 a gallon, yet consumers kept buying both gas and other items, even though they had to borrow to keep spending (the personal savings rate went negative for the first time since the 1930's). Over the last few weeks, however, gravity seems to have started reasserting itself. The dollar began falling about a month ago. So far it's down less than 10 percent against the euro and the yen, but there's a definite sense that foreign governments, in particular, are becoming less willing to keep the dollar strong by buying lots of U.S. debt. The housing market seems to be weakening rapidly. As late as last October, the National Association of Home Builders/Wells Fargo housing market index, a measure of builders' confidence, was still close to the high point it reached last summer. But on Monday the association announced that the index had fallen to its lowest level since 1995. Finally, there are preliminary indications that consumers, hard-pressed by high gasoline prices, may be reaching their limit. The National Retail Federation, reporting on a new survey, warns that "while consumers have seemed resilient in the face of higher energy costs, a tipping point may soon be in sight." I can't resist pointing out that the Bush administration's response to the squeeze on working families has been, you guessed it, to accuse the news media of biased reporting. On May 10 the White House issued a press release titled "Setting the Record Straight: The New York Times Continues to Ignore America's Economic Progress." The release attacked The Times for asserting that paychecks weren't keeping up with fixed costs like medical care and gasoline. The White House declared, "But average hourly earnings have risen 3.8 percent over the past 12 months, their largest increase in nearly five years." On Wednesday Treasury Secretary John Snow repeated that boast before a House committee. However, Representative Barney Frank was ready. He asked whether the number was adjusted for inflation; after flailing about, Mr. Snow admitted, sheepishly, that it wasn't. In fact, nearly all of the wage increase was negated by higher prices. Meanwhile, the return of economic gravity poses a definite threat to U.S. economic growth. After all, growth over the past three years was driven mainly by a housing boom and rapid growth in consumer spending. People were able to buy houses, even though housing prices rose much faster than incomes, because foreign purchases of U.S. debt kept interest rates low. People were able to keep spending, even though wages didn't keep up with inflation, because mortgage refinancing let them turn the rising value of their houses into ready cash. As I summarized it awhile back, we became a nation in which people make a living by selling one another houses, and they pay for the houses with money borrowed from China. Now that game seems to be coming to an end. We're going to have to find other ways to make a living - in particular, we're going to have to start selling goods and services, not just I.O.U.'s, to the rest of the world, and/or replace imports with domestic production. And adjusting to that new way of making a living will take time. Will we have that time? Ben Bernanke, the chairman of the Federal Reserve, contends that what's happening in the housing market is "a very orderly and moderate kind of cooling." Maybe he's right. But if he isn't, the stock market drop of the last two days will be remembered as the start of a serious economic slowdown. *** Alternet - May 17, 2006 http://www.alternet.org/story/36330/ Howard Zinn on Fixing What's Wrong By Shelly R. Fredman, Tikkun When I arrived at Boston University in 1978, it was like showing up at a party after all the guests had gone home. The Civil Rights movement and the Vietnam War protests were over, and everyone around me was studying business and honing their resumes. The Sixties had died. All the activists were gone. Except for Howard Zinn. You could sign up for Zinn's classes, "Marxism" and "Anarchism," and there, every Tuesday and Thursday, you could hear the stories no one else would tell you: Columbus's arrival on these shores from the Arawak Indian's point of view, Emma Goldman's message to the unemployed in Union Square, black students in Greensboro, NC, who one day sat down at the Woolworth's counter where only whites could eat. Now, some twenty years later, in the wake of Katrina, mired in Bush's reckless reign and the ever-escalating death toll in Iraq, it seemed a good time to revisit Zinn. Best known for A People's History of the United States, Howard Zinn has been a professor, radical historian, social activist, and intellectual leader of the Left for forty years. In over twenty books, he has devoted himself to connecting America's past with its present, providing a frame for left-wing activism and politics. Praised by academics and lay readers alike, Zinn feels more at home on the streets than in the ivory tower. Zinn's message of hope is unflinching, and he is busier than ever. He has written a play, "Marx in Soho," is producing a People's History of the United States television series, and his new book, Original Zinn, will be released in July. He seems to have stashed De Leon's fountain of youth in his back pocket. Though we are seated at a small table drinking coffee, occasionally he still moves his large hands through the air, as he did in class, underscoring the urgency of his words. And at the end of his most radical sentences, a wry smile lights up his eyes, as if he's imagining the glorious trouble we the people can, and will, make. Shelly R. Fredman: I'd like to start by asking you about Michael Lerner's new book, The Left Hand of God. In it, Lerner says that, post 9/11, a paradigm of fear has gripped our culture and been used to manipulate the public into supporting politicians who are more militaristic. How would you characterize the post-9/11 world? Howard Zinn: Michael Lerner is certainly right about how fear has been used since 9/11 to push the public into support of war. "Terrorism" is used the way "communism" was used all through the Cold War, the result being the deaths of millions and a nuclear arms race which wasted trillions of dollars that could have been used to create a truly good society for all. SF: Lerner also claims that the parts of our cultural heritage that embody elements of hope are dismissed as naïve, with little to teach us. You must have had your own bouts with critics who see your vision as naïve. How do you address them? HZ: It's true that any talk of hope is dismissed as naïve, but that's because we tend to look at the surface of things at any given time. And the surface almost always looks grim. The charge of naïvete also comes from a loss of historical perspective. History shows that what is considered naïve in one decade becomes reality in another. How much hope was there for black people in the South in the fifties? At the start of the Vietnam War, anyone who thought the monster war machine could be stopped seemed naïve. When I was in South Africa in 1982, and apartheid was fully entrenched, it seemed naïve to think that it would be dissolved and even more naïve to think that Mandela would become president. But in all those cases, anyone looking under the surface would have seen currents of potential change bubbling and growing. SF: Has the Left responded adequately to the kind of fascism we see coming from Bush's people? Street protests seem to be ineffective; it's sometimes disheartening. HZ: The responses are never adequate, until they build and build and something changes. People very often think that there must be some magical tactic, beyond the traditional ones -- protests, demonstrations, vigils, civil disobedience -- but there is no magical panacea, only persistence in continuing and escalating the usual tactics of protest and resistance. The end of the Vietnam War did not come because the Left suddenly did something new and dramatic, but because all of the actions built up over time. If you listen to the media, you get no sense of what's happening. I speak to groups of people in different parts of the country. I was in Austin, Texas recently and a thousand people showed up. I believe people are basically decent, they just lack information.. SF: You have been outspoken against the war in Iraq. Despite all the chaos we've heard may ensue, do you still believe we should get out of Iraq now? HZ: Yes, we should immediately withdraw. There will be chaos . it is actually there already, and much of the chaos and violence has come about because of our involvement. But that doesn't change the fact that our occupation of Iraq is wrong. What's more troubling [than a military mistake] is that this is an administration that is impervious to pressure. If you listen to LBJ's tapes, where he discusses the escalation of the war in Vietnam, you can hear that he is torn.. Still, the good news is that more and more of us are becoming aware of Bush's true nature. Less than fifty percent of Americans are for the war, and forty percent are calling for [Bush's] impeachment. SF: Where do you see the Democrats in all this? What of their role, their responsibility? HZ: The Democratic Party is pitiful. Not only are they not articulating a spiritual message, as Lerner says, they don't even have a political message. The Democrats are tied to corporate wealth. And they are incompetent when it comes to understanding how to win elections. By the time Kerry ran, the public had actually shifted. Fifty percent were against the war. The Democrats should have been saying they would end the war, and make those dollars available for healthcare. SF: What about the upcoming crop of presidential candidates -- Hillary Clinton, for instance? HZ: Hillary Clinton is so opportunistic. She goes where the wind is blowing. She doesn't say what needs to be said. And Barack Obama is cautious. He's better than Clinton, but I'd suggest Marian Wright Edelman as the Democratic candidate for president. She's the epitome of what we need. A very smart black woman who deals with children, poverty.. She's in the trenches, and she ties it in with militarization. But she doesn't come out of government. That's another problem -- the Democratic Party is a closed circle. It may take a threatening third party to shake things up. SF: Many people believe that history is a pendulum, and that we are overdue for a swing to the Left. Lerner, for instance, views American history as an oscillation between the voices of hope and the voices of fear -- the fear after the stock market crash in 1929, the hope of the New Deal, the fears of McCarthyism, the hope of the Civil Rights movement and social change movements in the sixties. Is this a compelling view of history? HZ: Without making it chronological, like a roller coaster, with predictable ups and downs, it's certainly true that in any period there are voices that demand maintenance of the status quo, and other voices demanding change. In other words, it isn't so much a period of hope, then a period of fear, etc. But in every period there are both tendencies, with one or another dominant and the dominant characteristic often leads to a simplified picture of an era. My differences with Lerner, though, reside in the proportion of attention he pays to spiritual values. These are important, but they're not the critical issue. The issue is how are people living and dying. People are dying in Iraq and our wealth is being squandered on war and the military budget. SF: Don't you believe the Left needs to address spiritual needs to win? How else can we galvanize the heartland, people taken in by the religious rhetoric of Bush? HZ: Yes, there are special needs and they need to be addressed. But after the last election there was a kind of hysteria among liberal pundits about a "failure" to deal with the moral issues. There is a hard core for whom religion is key. They are maybe twenty-five percent of the population. It's a mistake to try to appeal to that hard core. I define the spiritual in emotional terms -- to the extent that religion can draw on the Ten Commandments (for example, thou shalt not kill), it is important. And I find the spiritual in the arts, because they nourish the spirit and move people. Artists like Bob Dylan and Joan Baez, for example, and now Eddie Vedder of Pearl Jam. We need more of these. It's not that people are turned off by the Left. The Left hasn't reached out to people with a clear, coherent, and emotional message. The Left often does not know how to talk to other people. Tikkun magazine appeals to intellectuals. I've never spoken the language of ivory tower academics. And there are other voices on the Left that speak in understandable language. For instance, Barbara Ehrenreich's Nickel and Dimed, in which she took menial jobs across the country and wrote about those lives, was a bestseller. There's an emotionalism to her message that makes contact and touches thousands. Michael Moore's movies have been seen by all sorts of people. GI's in Iraq watched his movie. We just have to do more along those lines. SF: Many on the Left seem to identify religion with the fundamentalist versions of it we see in the worst moments of human history. Do you see value in religious ideas and traditions? If I can get personal: do you identify at all as a Jew, with the Jewish story? Is there anything in it that's meaningful to you? Are there any thoughts of the world beyond this one -- where, for example, you can sit with Marx in Soho and eat Deli Haus blintzes together? HZ: If I was promised that we could sit with Marx in some great Deli Haus in the hereafter, I might believe in it! Sure, I find inspiration in Jewish stories of hope, also in the Christian pacifism of the Berrigans, also in Taoism and Buddhism. I identify as a Jew, but not on religious grounds. Yes, I believe, as Pascal said, "The heart has its reasons which reason cannot know." There are limits to reason. There is mystery, there is passion, there is something spiritual in the arts -- but it is not connected to Judaism or any other religion. For those who find a special inspiration in Judaism or Christianity or Buddhism or whatever, fine. If that inspiration leads them to work for justice, that is what matters. Shelly R. Fredman's work has appeared in Best Jewish Writing, First Harvest, the Chicago Tribune Magazine, and the Forward. © 2006 Independent Media Institute. NY Transfer News Collective * A Service of Blythe Systems . Since 1985 - Information for the Rest of Us . .339 Lafayette St., New York, NY 10012 http://www.blythe.org .List Archives: https://olm.blythe-systems.com/pipermail/nytr/ .Subscribe: https://olm.blythe-systems.com/mailman/listinfo/nytr ------------------------ Yahoo! Groups Sponsor --------------------~--> Get to your groups with one click. 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