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Today's
Stories
March 13, 2008
Paul Craig Roberts
Republicans and "Free Market" Zealots Bring Disaster to America
Mike Whitney
Meltdown Looms Larger As Credit Markets Freeze
Assaf Kfoury
"One-State or Two State?"- Sterile Debate on False Alternatives
Andy Worthington
Afghan Hero Who Died in Guantánamo: The Background to the Story
Adam Federman
From Autopia to Autogeddon: Cars Reach the End of the Road
March 12, 2008
Dave Lindorff
Bringing Down Spitzer: It's the Big Brother Who Should Bother US
R.F. Blader
The Spitzer Backlash
Yonatan Mendel
How to be an Israeli Journalist. Never Write "Murder" or "Palestine"
Jonathan Cook
One State or Two? Neither. The Issue is Zionism
Bill and Kathy Christison
Fallon and Gates -- At Least One Cheer
James J. Brittain
Was the U.S. Involved in Killing the FARC-EP Leaders
Ron Jacobs
"All the Money You Make Will Never Buy Back Your Soul"
March 11, 2008
Paul Craig Roberts
How to End the Subprime Crisis
Ed O'Loughlin
How Israeli Troops Invade Homes in Gaza, Brutalize, Smash and Steal
Ramzy Baroud
'Unwavering Commitment' to Inequality
Kathy Christison
One State or Two? The Debate Over Israel and Palestine
China Hand
PRC Plays it Cool, as U.S. Tries to Amp Up Pressure on Iran
John Joslin
Thank You, Nafta! Welcome to Weirton, Home of the Discount Cigarette
Mike Averko
Serb Politics, Kosovo and the Moscow-Washington Divide
Ben Rosenfeld
Gavin Newsom's Kneejerk Plan
Thierry Paquot
High Rise, Low Spirits:The Curse of the Tower Block
March 10, 2008
Uri Avnery
"Kill A Hundred Turks and Rest": The Five-Day War in Gaza
Col. Dan Smith
Scoring the "Surge" and What Lies Beyond
R.F. Blader
Why "Lock Them Up and Throw Away the Key" is Losing its Sheen
Michael Neumann
The One-State Illusion: More is Less
Bob Fitrakis and Harvey Wasserman
Did the Republicans Give Hillary Her Victory in Ohio?
James J. Brittain
Anti-Uribe Protests in Colombia and the World
Missy Comley Beattie
The Passion of John McCain
March 8-9, 2008 Weekend Edition
JoAnn Wypijewski
The Only Way to Fight the Clintons
Mike Whitney
Sorting Through the Rubble in Post Bubble America
Peter Morici
Fed and Treasury Fiddle as Economy Plummets
Ralph Nader
The Silent Violence of Gaza's Suffering that Candidates Ignore
Jonathan Cook
The Meaning of Gaza's Shoah
Steve Niva
Behind the Israeli Escalation in Gaza
Bill and Kathy Christison
Crisis over Teheran's Alleged Nuclear Plans Nearing Climax
Hervé Do Alto and Franck Poupeau
Bolivia: Morales is Checked
Eric Walberg
To Leave and Stay at the Same Time: Putin to Medvedev to…?
Scott Johnson
City of A Thousand Foreclosures
Mark Scaramella
James Brown's Gate
Bill Clinton
President Clinton's Remarks on Naming William M. Daley as NAFTA Task Force Chairman
Poet's Basement
St. Thomasino, Engel, Davies and Willson
Website of the Weekend
Hillary Blackens Barack
March 7, 2008
Patrick Cockburn
Why Iraq Could Blow-Up in John McCain's Face
Robin Blackburn
Question for Barrack Obama: Why Afghanistan is the 'Right War'?
Saul Landau
The Stupid Economy
Binoy Kampmark
When Competition is Good: McCain and the Muddled Democrats
Chris Floyd
Crushing the Ants: Admiral Fallon and His Empire
Andy Worthington
Spanish Drop "Inhuman" Extradition Request for Guantánamo Britons
Will Potter
Before the Smoke Even Clears in Seattle: Bringing Out the T Word
March 6, 2008
Vincent Navarro
The
Next Failure of Health Reform
Forrest Hylton
High Stakes in the Andes: Colombia's Cornered President
Peter Morici
Why the Dollar is So Cheap
George Ciccariello-Maher
Counter-Attack of the Bureaucrats
John Ross
Taxi! Taxi! The Dark Side of the Oscars
Jacob Hornberger
No Standing to Lecture on Justice
Paul Watson
Illegal Japanese Whaling by the Numbers
Dan Bacher
Off the Deep End
Website of the Day
A Katrina Reader Online
March 5, 2008
Cockburn /
St. Clair
A
Great Day for John McCain (and Maybe Nader)
Joanne Mariner
After Guantanamo
Fidel Castro
The Raid on Ecuador: Underestimating Rafael Correa
Christopher
Brauchli
The Turkish Invasions
Steven Sherman
Obama and the Prospects for a Renewal of the Left
Dave Lindorff
Busting Bush & Co. in New England
James Murren
Bombing Somalia
Adam Engel
Necropolis Now
Website of Day
Remember Song
March 4, 2008
Wajahat Ali
Mumbo
Jumbo: Naming Names with Ishmael Reed
William Blum
How Could Hillary Have Known?
Bill Quigley
The Cleansing of New Orleans
Ralph Nader
The Prince Harry Solution
Patrick Irelan
Oil and Health in Venezuela
James J. Brittain
/
R. James Sacouman
Uribe's Colombia is Destabilizing a New Latin America
Norman Solomon
The War Election
Jacob Hornberger
Hillary in Waco: the Missing Apology
Andy Worthington
Guantánamo and the European Parliament
Mike Averko
Kosovo and the Press
Website of the Day
Tex-Mex Primary
March 3, 2008
Jennifer Loewenstein
Gazan Holocaust
Alan Farago
American Politics and the Faltering Economy
Richard Gott
Colombian Deaths in Ecuador
Wajahat Ali
Who Speaks for a Billion Muslims? Analyzing the World Gallup
Poll with John Esposito
Paul Craig Roberts
The Mukasey Conspiracy: a Bi-Partisan Attack on the Constitution
Robert Weissman
When Multinationals Say Adieu
Uri Avnery
Good Morning, Hamas
Martha Rosenberg
When Your Meat is a Downer
Eva Liddell
Leave the Next Dance for Bill
Michael Donnelly
Will Ferrell Does Flint
Website of the Day
Muddy Waters: Train Fare Home Blues
March 1 / 2,
2008
Alexander Cockburn
The
Race Card
Paul Craig
Roberts
The
Political Trial of Don Siegelman
Kathleen and Bill Christison
Nader the Best Antidote to American Imperialism
Nelson P. Valdés
Cuba After Fidel
Christopher Brauchli
Meet Mr. Nursultan Nazarbayev: Friend of Bill, George and Dick
Ron Jacobs
Inside the Secret City: Bomb Making at Oak Ridge
John Ross
The New Conquistadores: Spain's Reconquest of Mexico
Robert Fantina
Posturing Over Patriotism: Obama and Those Lapel Pins
Robert Weissman
Hidden in Plain Sight: Human Rights Hypocrisy
Mohammed Omer
Fear in Gaza
Remi Kanazi
Barack Obama and the Politics of Xenophobia
Bob Jackson
Why is Yellowstone Destroying Its Bison Herd?
Richard Rhames
Casual Threats: Loaded with Mercury
Franklin Lamb
Lebanon Awaits the Arrival of the USS Cole
Rannie Amiri
Showboat Diplomacy: US Warships Steam Toward Lebanon
David Michael
Green
The Three Faces of Hillary: the Politics of Flim-Flam
Conn Hallinan
Notes from the Southern Cone
Faheem Hussain
Prince Harry of Afghanistan and the Meaning of Normalcy
Poets' Basement
Gibbons, Orloski, Gardner and Ford
Website of
the Weekend
The Palestine Chronicle Needs (and Deserves) Your Help!
February 29,
2008
Matt Gonzalez
The
Obama Craze
Jonathan Cook
Academic Freedom? Not for Arabs in Israel
Joshua Frank
Obama and Israel
Anthony DiMaggio
The Unilateral Presidency: Signing Statements and the Rollback
of American Law
Linn Washington, Jr.
Cop Abuse in America
Binoy Kampmark
Hubris and Nemesis
Robert Bryce
Energy Efficiency May be a Good Thing, But It Won't Cut Energy
Use
Sonja Karkar
Australia's Government Continues Its Love Affair with Israel
Dave Lindorff
A Manchurian Candidate in the White House? Obama or Bush?
Website of
the Day
Olduvai George
February 28,
2008
Patrick Cockburn
"Iraq"
Falls Apart
Fred Gardner
The Birth of NAFTA
Michael Levitin
The Crisis in Kosovo is Just Beginning
William S.
Lind
The Fake State of Kosovo
David Macaray
A Ray of Hope for Organized Labor
Stephen Fleischman
Nader's Latest Run: Monkey Wrench or Cattle Prod?
George Wuerthner
The Myths of Forest Health: Why Ecological Logging is an Oxymoron
Laura Carlsen
The North American Union Farce
Carl Finamore
Why the Delta-Northwest Deal Hasn't Taken Off
Michael Dickinson
The Day I Bombed the House of Commons
Website of the Day
Plane Stupid
February 27,
2008
David Rosen
Playing
the Race Card: Obama, Love Across the Color Line and Political
Dirty Tricks
Vijay Prashad
Bomber John: McCain and the 100 Year War
Harvey Wasserman
Incident at Turkey Point: Did Florida Go to the Radioactive Brink?
Andy Worthington
Guantánamo's Shambolic Trials: Pentagon Boss Resigns,
Ex-Prosecutor Joins Defense
Wajahat Ali
Pakistan for Sale: an Interview with Ayesha Siddiqa on Pakistan's
Military Economy
Peter Morici
The Auction-Rate Securities Fiasco: a Drama of Greed and Betrayal
Stephen Philion
Conspiracy Theory, Fears of Betrayal and Today's Anti-War Movement
Michael Donnelly
Obama by Unanimous Decision
Erica Rosenberg /
Janine Blaeloch
After the Land Deals: Will There
be Any Wilderness Left to Protect?
Website of
the Day
Dress Blues
February 26,
2008
Debbie Nathan
Confessions
of a Gitmo Guard
Alan Dershowitz
v. Frank Menetrez
On Finkelstein
Harvey Wasserman
How Ohio Got Nuked
Michael Colby
Ralph Nader vs. the Fundamentalist Liberals
Gary Leupp
Condi vs. Putin on Bullying Belgrade
David Orchard
The New Conquistadors: Canada in Afghanistan
Martha Rosenberg
The Big HRT
Fran Shor
The Electoral Circus and Nader's Sideshow
Serge Halimi
The Dom Perignon Socialist Manifesto: Bernard Henri-Levy's Plan
for the French Left
Global Balkans
Neo-Liberalism and Protectorate States in the Post-Yugoslav Balkans:
an Interview with Tariq Ali
Website of
the Day
Texistentialism
February 25,
2008
Roger Morris
A
Death in Damascus
Anthony DiMaggio
Military
Bases, the Media and the Democrats
Ralph Nader
Why I'm Running
Patrick Cockburn
Iraq Broils
Paul Craig Roberts
Kosovo and the Empire Crazies
Peter Morici
Bernanke's Failing Policies: a Long Recession Looms
Dave Lindorff
General Welch's Whitewash: What We Still Don't Know About That
Minot Nuke Incident
Saul Landau
/
Farrah Hassen
Fanatics, Mountebanks and Drillers: a Bloody Oil Film
Heather Gray
James Orange, Civil Rights Legend
Robert Weitzel
Accomodating Torture
John Halle
Kucinich Goes Down
Website of the Day
Do the Trunk Monkey!
February 23 / 4, 2008
Alexander Cockburn
The
Mushrooming Clouds That Hang Over McCain
Paul Craig
Roberts
Obama
and Global Trade
Wajahat Ali
Omissions of the Commission: an Interview with Phillip Shenon
on the 9/11 Commission
Ralph Nader
Neutering the FDA
Jürgen
Vsych
"What Was Ralph Nader Thinking?"
Fidel Castro
Watching the US Presidential Campaign from Havana
Andy Worthington
Britain's Guantánamo
David Macaray
Unions Under Assault
Jeremy Scahill
The Real Story Behind Kosovo's Independence
David Krieger
Stanley Sheinbaum
Caging the Cold War Monster
Ron Jacobs
Building for the Future
Michael Garrity
The Last, Best Hope for the Northern Rockies
Brian McKenna
Higher Ed's "Civic Engagements" Get Dumbed Down
Missy Beattie
Over the Hill with John McCain
Fred Gardner
American College of Physicians Takes Pro-Cannabis Stand (Mostly)
Boris Kagarlitsky
The Growth of the Russian Labor Movement
Mike Ferner
Kick That Barrel
Dan Bacher
On the Trail with the Border Angels
Christopher
Ketcham
Hillary Goes Where Obama Fears to Tread
Poets' Basement
Davies and Buknatski
Website of
the Weekend
Obama
Mariachi
February 22,
2008
Mike Whitney
The
Bonfire of Capital
Jason Hribal
Elephants and the Circus: The Story of Janet
Liaquat Ali Khan
Arresting Musharraf
Joshua Frank
That Obama Glow: the Nuclear Industry's Golden Child
Dave Lindorff
Vicki's John: Ask Not What She Did for Him, Ask What He Did for
Her!
Liliana Segura
When Torture is Old News: McCain's Blonde Diversion
Robert Fantina
Castro, Bush and Cuba: a Fiasco Waiting to Happen?
Yifat Susskind
The ABCs of Death: Bush vs. Africa's Women
Norm Kent
Pushing 60 with Pot
Website of
the Day
Bush Gets Down in Liberia
February 21,
2008
Saul Landau
Fidel
Steps Aside
Elizabeth Schulte
Left Behind, With No End in Sight: America's Long-Term Unemployed
Helen Redmond
Health Care as a Human Right
Benjamin Dangl
Undermining Bolivia
Michael Levitin
Kosovo's Dilemma
Liam Leonard
Fear and Loathing on the Emerald Isle
Patrick Irelan
Land and Food in Venezuela
Linn Cohen-Cole
Poor Ohio: a Second Letter to Hillary on Her Ties to Monsanto
Michael Simmons
Daydream Believer: John Stewart, the Miles Davis of Folk Music
CounterPunch
News Service
A Message from the Women of Okinawa to US GIs
Website of the Day
Cop Abuse in Shreveport
February 20,
2008
Paul Craig
Roberts
Lies
and Spies
Paul Krassner
My
Brief Encounter with Fidel Castro
Fawzia Afzal-Khan
The
Pakistani Elections
Farzana Versey
The
Great Dictator: Musharraf, Peace and the Autumn of the Patriarch
Allan Nairn
Dying for a Second Round: Israel's
New Plan to Attack Lebanon
John V. Whitbeck
If Kosovo, Why Not Palestine?
Niranjan Ramakrishnan
A Balcony Seat to Our Own Balkanization?
Steve Eckardt
Cuba Sans Fidel: No News is Big News
Lee Sustar
Union-Busting at Freightliner
Mike Ferner
How Sick of It are You?
Website of the Day
The US Military Index
February 19,
2008
Uri Avnery
Blood
and Champagne
Paul Craig
Roberts
Paying
Insurgents Not to Fight
Gary Leupp
The Independence of Kosovo
Fidel Castro
The Moment Has Come
David Macaray
Management's Dirty Little Secret
Reza Fiyouzat
Buck the Circus! The Left and the Elections
Valerie Morse
The New Zealand Terror Raids: Land of the Long White Lie
Walter Brasch
Bush on Safari
Website of the Day
Don't Think Twice, It's Alright
February 18,
2008
Wajahat Ali
Free
Pakistan: an Interview with Imran Khan
Diana Johnstone
NATO's
Kosovo Colony
Paul Craig Roberts
What Do We Stand For?
Andy Worthington
Gitmo: "We're Making This Up as We Go Along"
Debbie Nathan
Bernie Ward's Sex Tapes
Anthony DiMaggio
Following the Money Trail: the Democratic Party and the Business
of Elections
Bill Simpich
Ten Years Ago, People Power Stopped Clinton in Iraq
Eva Liddell
A Short History of Super-Delegates: Hope, Yes! But Pay in Cash
Christopher Brauchli
The President Who Couldn't Keep His Word: Short-Changing Veterans
Stephen Soldz
Wikileaks is Under Attack!
Johann Rossouw
The Ouster of Thabo Mbeki: South Africa and the Costs of Neoliberalism
Website of
the Day
Sick of It Day!
February 16
/ 17, 2008
Alexander Cockburn
The
Terrorists Still at Ground Zero, 7 World Trade Tower, Lower Manhattan
Ralph Nader
We
the Corporations ...
David Macaray
The Big Buy Out: Did GM Drive Another Nail in Labor's Coffin?
William J.
Peace
Wheelchair Dumping
Ron Jacobs
War on the Psyche: Shellshock and Redemption
Diane Christian
War Corrupts
Alan Maass
Oil, Blood and Greed: Taking Upton Sinclair to the Big Screen
(and Beyond)
Ramzy Baroud
Iraq and the US Elections
Michael Donnelly
Genitalia First! Old Guard Feminists Play the XX Card
Cpt. Paul Watson
The Art of Finding Whalers
James L. Secor
China Diary: Spring Festival and New Year 2008
Eve Bachrach
Bush Returns to Africa
Nikolas Kozloff
Hugo Chávez's Anti-Imperialist Army
Stephen Gowans
Steven Spielberg, Faux-Humanitarian
Missy Beattie
To Vote or Not to Vote?
David Michael
Green
Warming Slowly to Obama
Wajahat Ali
Attack of the Info-tainment Circus
Poets' Basement
Gibbons, Willson, Mickey Z., Orloski and Reuther
Website of the Day
Yellowstone's Bison Need Your Help--NOW!
February 15,
2008
George Szamuely
The
Absurdity of "Independent" Kosovo
Patrick Cockburn
Ground-Truthing the Surge: Is the US Really Bringing Stability
to Baghdad?
Wajahat Ali
Pakistan is Burning: an Interview with Steve Coll on the Taliban,
Bin Laden and the Bush Administration
Mike Whitney
Henry Paulsen's Wild Ride on the Economic Hindenberg
Alan Farago
God and the Democrats
Chris Genovali
Alberta's Black Gold Rush
Jacob Hornberger
Courting Injustice: Scalia on Torture
Dave Lindorff
Snoops Always Ring Twice: Bush's Protect America Bill Bull
Website of the Day
Live From the Land of Hopes and Dreams
February 14,
2008
Kathleen and
Bill Christison
Palestine
in the Mind of America
Mike Whitney
Swan Song for NATO
Clancy Sigal
Strike Notes from a Screenwriter
George Wuerthner
A Bloody Sham: the Yellowstone Bison Slaughter
Peter Morici
Is Bernanke Headed for the Exit?
John Ross
Drug War Mayhem Boils Over from Border to Border
Allan Nairn
Mafia Rules in the Middle East: If You're Big Enough, You Can
Whack Anyone
Rannie Amiri
Lebanon's Warmongers
Niranjan Ramakrishnan
The New Tractatus: Where Wittgenstein Meets Feinstein
Donna Volatile
Be Careful What You Vote For, You Just Might Get It
Seth Sandronsky
The Student Squeeze: Fighting California's Tuition Hikes
Website of
the Day
Conventions: the Land Around Us
February 13,
2008
Nikolas Kozloff
Meet
John McCain: Mr. Big Stick in Latin America
Alan Farago
Hell to Pay: Warren Buffett on the Goal Line
Christina Kasica
King's Dream Foreclosed: the Subprime Crisis in Black America
Vicente Navarro
How to Read the U.S. Primaries
Hall Greenland
Australia's Finest Hour
Lee Sustar
Strange Stimulation: Too Little for Those Who Need It Most
David Macaray
The Writers' Strike Finally Ends
Roderick Frazier
Nash
Celebrating Wilderness
Patrick Irelan
Hugo Chávez and High Anxiety at the NYT
Anthony Papa
Mean Mister Mukasey: AG Tries to Block Crack Cocaine Releases
Carl Finamore
Another Parade Passes Me By: Don't Let Your Movement be Coopted
by Politicians
Website of
the Day
John He Is
February 12,
2008
Frank J. Menetrez
The
Case Against Alan Dershowitz
Paul Craig
Roberts
War Without End
Dr. Trudy Bond
The Elephant at Gitmo: Camp 7 and the Torturer's Shrink
Andy Worthington
The Guantánamo Six: Why Charge Them Now? What About the
Torture?
Col. Dan Smith
The Psychology of Killing: Close In or Far Away?
Ronnie Cummins
Globalization: Standing at the End of the Road
Ralph Nader
Open the Government
John V. Walsh
Antiwarriors, Divided and Conquered
Dave Lindorff
Obama and Progressive Change: Let's Hope the Movement Transforms
the Candidate
Michael Donnelly
Who's Pimping Whom? The Clintons' Selective No Talk Rules
Ron Jacobs
La Lucha Continua: Castro's "Life"
Ben Tripp
Beggars Collide
Website of the Day
Springsteen and Youngstown
February 11,
2008
Cockburn /
St. Clair
Lessons
for Obama: When is a Delegate Not a Delegate?
Wajahat Ali
A Discussion with Walt and Mearsheimer on the Israel Lobby
Ray McGovern
Waterboarding for God and Country
Allan Nairn
The Shooting of Jose Ramos Horta
Uri Avnery
An End Foreseen?
Chris Floyd
American
Psycho: the Meaning of Mitt Romney's Exit Speech
Martha Rosenberg
School Lessons in a Lunchbox: Lunchmeat from Tortured Cows
Stephen Fleischman
The Bonnie and Clyde of American Politics
Marc Lamont Hill
Not My Brand of Hope
Liliana Segura
Obama and Torture: the Sounds of Silence and Equivocation
Peter Morici
Challenges for the New President
Christopher
Brauchli
A Drug Rant from a Former Taker
Website of the Day
Annie vs. the Blue Angels
February 8
/ 10, 2008
Paul Craig
Roberts
Does
the GOP Have Aces Up Its Sleeves?
Patrick Cockburn
Will Moqtada al-Sadr's Truce Hold?
Mike Whitney
The Great Bust of '08
Anthony DiMaggio
How the Press Covers Waterboarding
Andy Worthington
The Guántanamo Trials: Where are the Terrorists?
Linn Cohen-Cole
Hillary, Will You Renounce Your Ties to Monsanto?
Firmin DeBrabander
Notes from the Foreclosure Front: Suing Your Way to Solvency
Cpt. Paul Watson
The Other Whaling Industry: How Greenpeace Cashes In on the Suffering
and Deaths of the Great Whales
Kenneth S. Pope
Why I Resigned from the American Psychological Association
Jacob G. Hornberger
American Soldiers Will Pay the Price for Bush's Torture Policy
Robert Bryce
Beyond Group Think on Climate Change: If More CO2 is Bad ...
Then What?
P. Sainath
The Last of the Buccaneer Editors
Allan Nairn
Give Me Back My Land
Fred Gardner
/
Pebbles Trippet
"The District Attorney of Shasta County Doesn't Know the
Law!"
Andrew Wimmer
Growing Up Catholic: Ignorance is Death
Robert Fantina
America's Disgrace: the Case of Omar Khadr
David Michael Green
Partycide in Six Easy Steps: Watch the Democrats Destroy Themselves
Kevin Zeese
Is Dennis Kucinich Being McKinney'd?
Peter Morici
Wall Street Gives Bernacke a Vote of No Confidence
Chris Driscoll
Could Nader be the Come-Back Kid of 2008?
Prairie Miller
Black August: Bringing George Jackson's Life to the Screen
Poets Basement
Davies and Buknatski
February 7,
2008
Patrick Cockburn
Why
Baghdad Will Explode Again
Bill Christison
Potholes Bigger Than Ever for Palestinians
David Anderson
NBC's "To Entrap" a Predator: Perverting Justice for
the Sake of Ratings
Ron Jacobs
Innocent Flesh: Recruiting Kids to Kill
Nikolas Kozloff
Hugo Chávez's Coca: It's the Real Thing
Jane Rockefeller
The Moral Economy of an Anti-Poverty Foundation
Andy Worthington
On Waterboarding: Two Questions for Michael Hayden
|
March 13, 2008
Meltdown Looms Larger as Credit Markets Freeze
By MIKE WHITNEY
"It's another round of the credit crisis. Some markets are getting worse than January this time. There is fear that something dramatic will happen and that fear is feeding itself," Jesper Fischer-Nielsen, interest rate strategist at Danske Bank, Copenhagen; Reuters
Yesterday's action by the Federal Reserve proves that the banking system is insolvent. It also shows that the Fed is willing to intervene directly in the stock market if it keeps equities propped up. This is clearly a violation of its mandate and runs contrary to the basic tenets of a free market. Investors who shorted the market yesterday, got clobbered by the not so invisible hand of the Fed chief.
In his prepared statement, Bernanke announced that the Fed would add $200 billion to the financial system to shore up banks that have been battered by mortgage-related losses. The news was greeted with jubilation on Wall Street where traders sent stocks skyrocketing by 416 points, their biggest one-day gain in five years.
“It's like they're putting jumper cables onto a battery to kick-start the credit market,'' said Nick Raich, a manager at National City Private Client Group in Cleveland. ``They're doing their best to try to restore confidence.''
To understand the real meaning behind the Fed's action; it's worth considering some of the stories which popped up in the business news just days earlier. For example, last Friday, the International Herald Tribune reported:
“Tight money markets, tumbling stocks and the dollar are expected to heighten worries for investors this week as pressure mounts on central banks facing what looks like the “third wave” of a global credit crisis....Money markets tightened to levels not seen since December, when year-end funding problems pushed lending costs higher across the board.”
The Herald Tribune said that troubles in the credit markets had pushed the stock market down more than 3 percent in a week and that the same conditions which preceded the last two crises (in August and December) were back stronger than ever. In other words, liquidity was vanishing from the system and the market was headed for a crash.
A report in Reuters reiterated the same ominous prediction of a “third wave” saying:
“The two-year U.S. Treasury yields hit a 4-year low below 1.5 percent as investors flocked to safe-haven government bonds....The cost of corporate bond insurance hit record highs on Friday and parts of the debt market which had previously escaped the turmoil are also getting hit.”
Risk premiums were soaring and investors were fleeing stocks and bonds for the safety of government Treasuries; another sure sign that liquidity was disappearing.
Reuters: "The level of financial stress is ... likely to continue to fuel speculation of more immediate central bank action either in the form of increased liquidity injections or an early rate cut," Goldman Sachs said in a note to clients.”
Indeed. When there's a funding-freeze by lenders, investors hit the exits as fast as their feet will carry them. That's why the lights started blinking red at the Federal Reserve and Bernanke concocted a plan to add $200 billion to the listing banking system.
New York Times columnist Paul Krugman also referred to a “third wave” in his article “The Face-Slap Theory”. According to Krugman, “The Fed has been cutting the interest rate it controls - the so-called Fed funds rate – (but) the rates that matter most directly to the economy, including rates on mortgages and corporate bonds, have been rising. And that's sure to worsen the economic downturn.”...(Now) “the banks and other market players who took on too much risk are all trying to get out of unsafe investments at the same time, causing significant collateral damage to market functioning.” What the Times' columnist is describing is a run on the financial system and the onset of “a full-fledged financial panic.”
The point is, Bernanke's latest scheme is not a remedy for the trillion dollar unwinding of bad bets. It is merely a quick-fix to avoid a bloody stock market crash brought on by prevailing conditions in the credit markets.
Bernanke coordinated the action with the other members of the global banking cartel---The Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank---and cobbled together the new Term Securities Lending Facility (TSLF), which “will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS. The TSLF is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally.” (Fed statement)
The plan, of course, is wildly inflationary and will put additional downward pressure on the anemic dollar. No matter. All of the Fed's tools are implicitly inflationary anyway, but they'll all be put to use before the current crisis is over.
The Fed's statement continues: “The Federal Open Market Committee has authorized increases in its existing temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB). These arrangements will now provide dollars in amounts of up to $30 billion and $6 billion to the ECB and the SNB, respectively, representing increases of $10 billion and $2 billion. The FOMC extended the term of these swap lines through September 30, 2008.”
So, why is the Fed issuing loans to foreign banks? Isn't that a tacit admission of its guilt in the trillion dollar subprime swindle? Or is it simply a way of warding off litigation from angry foreign investors who know they were cheated with worthless toxic bonds? In any event, the Fed's largess proves that the G-10 operates as de facto cartel determining monetary policy for much of the world. (The G-10 represents roughly 85% of global GDP)
As for Bernanke's Term Securities Lending Facility (TSLF) it is intentionally designed to circumvent the Fed's mandate to only take top-grade collateral in exchange for loans. No one believes that these triple A mortgage-backed securities are worth more than $.70 on the dollar. In fact, according to a report in Bloomberg News yesterday: “AAA debt fell as low as 61 cents on the dollar after record home foreclosures and a decline to AA may push the value of the debt to 26 cents, according to Credit Suisse Group.
`The fact that they've kept those ratings where they are is laughable,'' said Kyle Bass, chief executive officer of Hayman Capital Partners, a Dallas-based hedge fund that made $500 million last year betting lower-rated subprime-mortgage bonds would decline in value. ``Downgrades of AAA and AA bonds are imminent, and they're going to be significant.'' Bass estimates most of AAA subprime bonds in the ABX indexes will be cut by an average of six or seven levels within six weeks.” (Bloomberg News) The Fed is accepting these garbage bonds at nearly full-value. Another gift from Santa Bernanke.
Additionally, the Fed is offering 28 day repos which -- if this auction works like the Fed's other facility, the TAF -- the loans can be rolled over free of charge for another 28 days. Yippee. The Fed found a way to recapitalize the banks with permanent rotating loans and the public is none the wiser. The capital-starved banksters at Citi and Merrill must feel like they just won the lottery. Unfortunately, Bernanke's move effectively nationalizes the banks and makes them entirely dependent on the Fed's fickle generosity.
The New York Times Floyd Norris sums up Bernanke's efforts like this:
“The Fed’s moves today and last Friday are a direct effort to counter a loss of liquidity in mortgage-backed securities, including those backed by Fannie Mae and Freddie Mac. Given the implied government guarantee of Freddie and Fannie, rising yields in their paper served as a warning sign that the crunch was worsening and investor confidence was waning. On Oct. 30, the day before the Fed cut the Fed funds rate from 4.75 per cent to 4.5 per cent, the yield on Fannie Mae securities was 5.75 percent. Today the Fed Funds rate is 3 per cent, and the Fannie Mae rate is 5.71 per cent, virtually the same as in October.....A sign of the Fed’s success, or lack of same, will be visible in that rate. It needs to come down sharply, in line with Treasury bond rates. Today, the rate was up for most of the day, but it did fall back at the end of the day. Watch that rate for the rest of the week to see indications of whether the Fed’s move is really working to restore confidence.”
Norris is right; it all depends on whether rates go down and whether that will rev-up the moribund housing market again. Of course, that is predicated on the false assumption that consumers are too stupid to know that housing is in its biggest decline since the Great Depression. Housing will not be resuscitated anytime in the near future, no matter what the conditions; and you can bet on that. The last time Bernanke cut interest rates by 75 basis points mortgage rates on the 30-year fixed actually went up a full percentage point. This had a negative affect on refinancing as well as new home purchases. The cuts were a total bust in terms of home sales.
Still, equities traders love Bernanke's antics and, for the next 24 hours or so, he'll be praised for acting decisively. But as more people reflect on this latest maneuver, they'll see it for what it really is; a sign of panic. Even more worrisome is the fact that Bernanke is quickly using every arrow in his quiver. Despite the mistaken belief that the Fed can print money whenever it chooses; there are balance sheets constraints; the Fed's largess is finite. According to MarketWatch:
"Counting the currency swaps with the foreign central banks, the Fed has now committed more than half of its combined securities and loan portfolio of $832 billion, Lou Crandall, chief economist for Wrightson ICAP noted. 'The Fed won't have run completely out of ammunition after these operations, but it is reaching deeper into its balance sheet than before."
Steve Waldman at interfluidity draws the same conclusion in his latest post:
“After the FAF expansion, repo program, and TSLF, the Fed will have between $300B and $400B in remaining sterilization capacity, unless it issues bonds directly.” (Calculated Risk)
So, Bernanke is running short of ammo and the housing bust has just begun. That's bad.
But that's only half the story. Bernanke and Co. are already working on a new list of hyper-inflationary remedies once the credit troubles pop up again. According to the Wall Street Journal, the Fed has other economy-busting scams up its sleeve:
“With worsening strains in credit market threatening to deepen and prolong an incipient recession, analysts are speculating that the Federal Reserve may be forced to consider more innovative responses -– perhaps buying mortgage-backed securities directly.
“As credit stresses intensify, the possibility of unconventional policy options by the Fed has gained considerable interest, said Michael Feroli of J.P. Morgan Chase. He said two options are garnering particular attention on Wall Street: Direct Fed lending to financial institutions other than banks and direct Fed purchases of debt of Fannie Mae and Freddie Mac or mortgage-backed securities guaranteed by the two shareholder-owned, government-sponsored mortgage companies. ( “Rate Cuts may not be Enough”, David Wessel, Wall Street Journal)
Wonderful. So now the Fed is planning to expand its mandate and bail out investment banks, hedge funds, brokerage houses and probably every other brandy-swilling Harvard grad who got caught-short in the subprime mousetrap. Ain't the “free market” great?
In fact, Bernanke is destroying the currency by trying to reflate the equity bubble. And how much damage is he inflicting on the dollar? According to Bloomberg, “the risk of losses on US Treasury notes exceeded German bunds for the first time ever amid investor concern the subprime mortgage crisis is sapping government reserves....Support for troubled financial institutions in the U.S. will be perceived as a weakening of U.S. sovereign credit.''
America is going broke and the rest of the world knows it.
Timothy Geithner, President of the New York Fed put it like this:
“The self-reinforcing dynamic within financial markets has intensified the downside risks to growth for an economy that is already confronting a very substantial adjustment in housing and the possibility of a significant rise in household savings. The intensity of the crisis is in part a function of the size of the preceding financial boom, but also of the speed of the deterioration in confidence about the prospects for growth and in some of the basic features of our financial markets. The damage to confidence—confidence in ratings, in valuation tools, in the capacity of investors to evaluate risk—will prolong the process of adjustment in markets. This process carries with it risks to the broader economy.”
Without a hint of irony, Geithner talks about the importance of building confidence on a day when the Fed has deliberately distorted the market by injecting $200 billion in the banking system and sending the flagging stock market into a steroid-induced rapture. Astonishing.
The stock market was headed for a crash this week, but Bernanke managed to swerve off the road and avoid a head-on collision. But nothing has changed. Foreclosures are still soaring, the credit markets are still frozen, and capital is being destroyed at a faster pace than any time in history. The economic situation continues to deteriorate and even unrelated parts of the markets have now been infected with subprime contagion. The massive deleveraging of the banks and hedge funds is beginning to intensify and will continue to accelerate until a bottom is found. That's a long way off and the road ahead is full of potholes.
"In the United States, a new tipping point will translate into a collapse of the real economy, final socio-economic stage of the serial bursting of the housing and financial bubbles and of the pursuance of the US dollar fall. The collapse of US real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down massively.” (Statement from The Global Europe Anticipation Bulletin (GEAB)
Is that too gloomy? Then take a look at these eye-popping charts which show the extent of the Fed's lending operations via the Temporary Auction Facility. The loans have helped to make the insolvent banks look healthy, but at great cost to the country's economic welfare. http://benbittrolff.blogspot.com/2008/03/really-scary-fed-charts-march.html
The Fed established the TAF in the first place; to put a floor under mortgage-backed securities and other subprime junk so the banks wouldn't have to try to sell them into an illiquid market at fire-sale prices. But the plan has backfired and now the Fed feels compelled to contribute $200 billion to a losing cause. It's a waste of time.
UBS puts the banks’ total losses from the subprime fiasco at $600 billion. If that's true, (and we expect it is) then the Fed is out of luck because, at some point, Bernanke will have to throw in the towel and let some of the bigger banks fail. And when that happens, the stock market will start lurching downward in 400 and 500 point increments. But what else can be done? Solvency can only be feigned for so long. Eventually, losses have to be accounted for and businesses have to fail. It's that simple.
So far, the Fed's actions have had only a marginal affect. The system is grinding to a standstill. The country's two largest GSEs, Fannie Mae and Freddie Mac, which are presently carrying $4.5 trillion of loans on their books, are teetering towards bankruptcy. Both are gravely under-capitalized and (as a recent article in Barron's shows) Fannies equity is mostly smoke and mirrors. No wonder investors are shunning their bonds. Additionally, the cost of corporate bond insurance is now higher than anytime in history, which makes funding for business expansion or new projects nearly impossible. The wheels have come of the cart. The debt markets are upside-down, consumer confidence is drooping and, as the Financial Times states, “A palpable sense of crisis pervades global trading floors.” It's all pretty grim.
The banks are facing a “systemic margin call” which is leaving them capital-depleted and unwilling to lend. Thus, the credit markets are shutting down and there's a stampede for the exits by the big players. Bernanke's chances of reversing the trend are nil. The cash-strapped banks are calling in loans from the hedge funds which is causing massive deleveraging. That, in turn, is triggering a disorderly unwind of trillions of dollars of credit default swaps and other leveraged bets. Its a disaster. Economist Nouriel Roubini predicted the whole sequence of events six months before the credit markets seized and the Great Unwind began”. Here's a sampling of his recent testimony before Congress:
Roubini's Testimony before Congress:
“There is now a rising probability of a "catastrophic" financial and economic outcome; a vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe. The Fed is seriously worried about this vicious circle and about the risks of a systemic financial meltdown....Capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices will ensue leading to a cascading and mounting cycle of losses and further credit contraction. In illiquid market actual market prices are now even lower than the lower fundamental value that they now have given the credit problems in the economy. Market prices include a large illiquidity discount on top of the discount due to the credit and fundamental problems of the underlying assets that are backing the distressed financial assets. Capital losses will lead to margin calls and further reduction of risk taking by a variety of financial institutions that are now forced to mark to market their positions. Such a forced fire sale of assets in illiquid markets will lead to further losses that will further contract credit and trigger further margin calls and disintermediation of credit.
To understand the risks that the financial system is facing today I present the "nightmare" or "catastrophic" scenario that the Fed and financial officials around the world are now worried about. Such a scenario – however extreme – has a rising and significant probability of occurring. Thus, it does not describe a very low probability event but rather an outcome that is quite possible.”
Roubini has been right from the very beginning, and he is right again now. Bernanke can place himself at the water's edge and lift his hands in defiance, but the tide will come in and wash him out to sea anyway. The market is correcting and nothing is going to stop it.
Mike Whitney lives in Washington state. He can be reached at: fergiewhitney@msn.com
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