TIME TO CHANGE BERNANKE'S MEDICATION?
Secret White House letter to G-20

by Greg Palast
Tuesday, September 22, 2009, New York

For The Huffington Post

I still get a thrill whenever I get my hands on a confidential memo with "The White House, Washington" appearing on the letterhead. Even when—like the one I'm looking at now—it's about a snoozy topic: This week's G-20 summit.

But the letter's content shook me awake, and may keep me up the rest of the night.

The 6-page letter from the White House, dated September 3, was sent to the 20 heads of state that will meet this Thursday in Pittsburgh. After some initial diplo-blather, our President's "sherpa" for the summit, Michael Froman, does a little victory dance, announcing that the recession has been defeated. "Global equity markets have risen 35 percent since the end of March," writes Froman. In other words, the stock market is up and all's well.

While acknowledging that this year's economy has gone to hell in a handbag, Obama's aide and ambassador to the G-20 seems to be parroting the irrational exuberance of Federal Reserve Chief Ben Bernanke who declared last week that, "The recession is very likely over." All that was missing from Bernanke's statement was a banner, "MISSION ACCOMPLISHED."

And the French are furious. The White House letter to the G-20 leaders was a response to a confidential diplomatic missive from the chief of the European Union Fredrik Reinfeldt written a day earlier to "Monsieur le Président" Obama.

We have Reinfeldt's confidential note as well. In it, the EU president says, despite Bernanke's happy-talk, "la crise n'est pas terminée (the crisis is not over) and (continuing in translation) the labor market will continue to suffer the consequences of weak use of capacity and production in the coming months." This is diplomatic speak for, What the hell is Bernanke smoking?

May I remind you Monsieur le Président, that last month 216,000 Americans lost their jobs, bringing the total lost since your inauguration to about seven million. And rising.

The Wall Street Journal also has a copy of the White House letter, though they haven't released it. (I have: read it here , with the EU message and our translation.) The Journal spins the leak as the White House would want it: "Big Changes to Global Economic Policy" to produce "lasting growth." Obama takes charge! What's missing in the Journal report is that Obama's plan subtly but significantly throttles back European demands to tighten finance industry regulation and, most important, deflects the EU's concern about fighting unemployment.

Europe's leaders are scared witless that the Obama Administration will prematurely turn off the fiscal and monetary stimulus. Europe demands that the US continue pumping the economy under an internationally coordinated worldwide save-our-butts program. As the EU's Reinfeldt puts it in his plea to the White House, "It is essential that the Heads of State and Government, at this summit, continue to implement the economic policy measures they have adopted," and not act unilaterally. "Exit strategies [must] be implemented in a coordinated manner." Translating from the diplomatique: If you in the USA turn off fiscal and monetary stimulus now, on your own, Europe and the planet sinks, America with it.

Obama's ambassador says, Non! Instead, he writes that each nation should be allowed to "unwind" anti-recession efforts "at a pace appropriate to the circumstances of each economy." In other words, "Europe, you're on your own!" So much for Obama channeling FDR.

The technical policy conflict between the Obama and EU plans reflects a deep difference in the answer to a crucial question: Whose recession is it, anyway? To Obama and Bernanke, this is a bankers' recession and so, as "stresses in financial markets have abated significantly," to use the words of the White House epistle, then Happy Days Are Here Again. But, if this recession is about workers the world over losing their jobs and life savings, the EU view, then it's still Buddy, Can You Spare a Dime.

If Bernanke and Obama were truly concerned about preserving jobs, they would have required banks loaded with taxpayer bail-out loot to lend these funds to consumers and business. China did so, ordering its banks to increase credit. And boy, did they, expanding credit by an eye-popping 30%, rocketing China's economy out of recession and into double-digit growth.

But the Obama Administration has gone the opposite way. The White House letter to the G-20 calls for slowly increasing bank reserves, and that can only cause a tight credit market to tighten further.

It's not that the White House completely ignores job losses. The US letter suggests, "The G-20 should commit to ...income support for the unemployed." You can imagine the Europeans, who already have generous unemployment benefits—most without time limits—turning purple over that one. America's stingy unemployment compensation extension under the Stimulus Plan is already beginning to expire with no live proposal to continue aid for the jobless victims of this recession.

The Europeans are so cute when they're angry, when they pound their little fists. Obama assumes he can ignore them. The EU, once the big player in the G-7, has seen its members' status diluted into the G-20, where the BRIC powers (Brazil, Russia, India and China) now flex their muscle. But Europeans have a thing or two to teach Americans about the economics of the twilight of empire.

Maybe the differences are cultural, not economic; that Europeans lack America's Manifest Destiny can-do optimism.

So, to give the visitors a taste of the yes-we-can spirit, Obama should invite Pittsburgh's 93,700 jobless to the G-20 meet to celebrate that 35% rise in the stock market.

Or -- my own suggestion -- change Bernanke's medication.

********

For the entirety of the White House-EU exchange, go to GregPalast.com.

Surrender of sovereignty? We whore ourselves for Mobil and act purely their interests internationally? Canada and Mexico are totally in the light weight category.

Pawlenty/Perry --- Part 3

Don't forget that Bob J. Perry ALSO funded the Swiftboat Vets:

http://www.msnbc.msn.com/id/5844156/

DDay,

I think it's time for me to write to Rachel Maddow about MN Gov. Pawlenty and his "under-the-radar" financial backing. He's adapting to right-wing "crazyhood" more and more in his Manchurian candidate bid for Republican presidential backing. Video (Minute 7:00):

http://www.msnbc.msn.com/id/26315908/ns/msnbc_tv-rachel_maddow_show#3296...

"WE'RE SCREWED": Media Heist Blankets NY with 'Special Edition' NY Post
Early this morning, nearly a million New Yorkers were stunned by the appearance of a "special edition" New York Post blaring headlines that their city could face deadly heat waves, extreme flooding, and other lethal effects of global warming within the next few decades. The most alarming thing about it: the news came from an official City report.

Distributed by over 2000 volunteers throughout New York City, the paper has been created by The Yes Men and a coalition of activists as a wake-up call to action on climate change.

http://www.theyesmen.org/blog/screwed

New PSA: Protect Insurance Companies
http://www.funnyordie.com/videos/041b5acaf5/protect-insurance-companies-psa

Goes nicely with the Billionaires for Wealthcare campaign.

I mentioned on this page that one reason why men account for the majority of the homeless population (one study claims that 80 percent of single homeless adults are male, many of them Vietnam vets) is the relative dearth of community and public services that have their problems in mind, quite unlike the rows and rows of services catering to women (with or without children). But in these hard times when many people consider themselves one paycheck from destitution, it seems that even women’s services must resort to subterfuge to get attention and funding. I heard an advertisement on a radio station recently by an organization I knew to be a women’s advocacy group. The ad, however, mentioned only homeless children, painting a picture of such destitution that you thought they were describing a Jacob Riis photograph .

That is until the end, when the vision was spoiled by a small “catch”: the aid was for “Children—with their mothers.” The "with their mothers" line was read out as if it was one of those "terms of service" messages that you are not suppose to catch the meaning of. The intended effect behind the wording seems to have been to emphasize helpless children, and de-emphasize the not so helpless accompanying adult. The deviousness was rather off-putting (although understandable); children were being offered-up as cheap props by adults to elicit money to give to other adults, money that might not end-up helping those children at all. Such tactics are necessary, I suppose, when confronted by an unwillingness to suffer prejudicial political advocacy when it is the welfare of the children that is at stake.

Our media only reinforces these dysfunctional, dangerous impulses. Maybe it IS hopeless...

TO ALL MINNESOTANS:

Quick "Public Service" Announcement ('Just received):

Health Care for America Now and our partners are doing rallies all over the country to make the fundamental choice crystal clear.

You can help by coming out to fight for quality affordable health care at a rally TOMORROW in Minneapolis:

Big Insurance: Sick of It
March for Health Insurance Reform

Tuesday, September 22

Minneapolis

9:00 AM

Minneapolis United Labor Center, Room 218
312 Central Ave. (corner of Central Ave. and University Ave.)

Minneapolis, MN

(map)

Speakers include those who have suffered from the insurance companies and their relentless pursuit of profits.

Parking is available at: St. Anthony Municipal Parking, 210 Second Ave. SE, Minneapolis (corner of University Ave. and Second Ave. SE). The cost is a flat rate of $2.50. Cash, checks and all major credit cards accepted.

RSVP to chris@takeactionminnesota.org

Re: racisim

We are hard wired to recognize "Us vs them". Racism is a special case of this. The tactics used the the hard right exploit our brain's ability to identify a "them" whenever they identify some "enemy" or undeserving group, whether it be illegal immigrants, blacks, the poor, welfare queens, liberals, etc. The Republican leadership may not intend to be racist, but using these tactics naturally triggers the same errant thought process that leads to racism. And they are smart enough, or should be smart enough, to know this.

Gerald Socha,

I think America lost her soul when we handed it over to the corporations (the late nineteenth-century supreme court case Thom discovered that gives corporations the rights (MORE, actually) of humans.

Gerald Socha,

You know, the last major war (the Civil War) on this continent still has repercussions in our culture --- most of them not good. It seems that we only learned how to take advantage of each other as a result. Today's carpetbaggers and plantation politicians are still wreaking havoc in today's world.