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Who’ll bail out US economy?
The stimulus plan devised by the US president and Congress is not enough to help control recession which is likely to spill over next year, if strict fiscal policies are not followed by next administration in the United States. The people in the United States have been facing serious economic crisis as a result of wrong fiscal policies pursued by
the present Republican government,
writes Mohmmad Amjad Hossain
TO SAY the economy of the one of the world’s richest countries is in trouble will be an understatement. The United States used to be looked upon as the model for economic development of the underdeveloped countries. Today the people of the United States survive on borrowed money. That too comes from developing countries in Asia which were underdeveloped in the early part of the twentieth century. Some financial corporations in third world countries have come forward to bail out US banks. It is interesting to note that emerging economies in Asia today hold the key to the economic health of the United States. It is an irony indeed.
From Asia, Japan currently holds the largest portfolio of $610.9 billion worth of the US government’s treasury holdings followed by China. China is holding $407.8 billion of such bond. Other countries are Taiwan, Korea, Singapore, Thailand, and Israel, Malaysia and some oil producing countries, including Iran. China has a reserve of $1.2 trillion dollars. With the world’s largest reserves of dollars, China has been a major investor in US treasury bonds and debt securities. China divested about 5 per cent of its $407.8 billion treasury holdings and has set up a $200 billion investment fund to diversify its investments by purchasing stocks, equity ownership positions in companies around the world. If China today decides to cash in US treasury bonds it holds, the US economy will literally collapse. It is understood that the US today is paying $60 million a day to pay the interest on debt that China holds.
Total public debt of the United States stands at $5,003.7 billion. Of which 44 per cent comes from foreign countries as of September 2007, according to US treasury department. This situation has arisen because of continuous war in Afghanistan and Iraq since 2001. There is no sign of abandoning the battle in spite of the fact that winning the war is impossible. By now taxpayers in the United States have paid $1.3 trillion to this unproductive war which cost huge loss of manpower, materials, and destruction of infrastructures in both Afghanistan and Iraq. According to a congressional report, hidden cost of the war could top $3.5 trillion by 2017. The report by the Joint Economic Committee says ‘the $804 billion in war appropriations through 2008 would mask $1.6 trillion dollars in indirect war costs, including interest on the war debt, higher oil prices and displaced business investment.’
While commenting on the report Senate majority leader Harry Reid is reported to have said ‘full costs of this war to our economy are manifested in ways that have never been accounted for by this administration. We are funding this war with borrowed money, Americans are paying more at the gas pump, and it will take years for our military to recover from the damage of the President’s failed war strategy.’ Despite this economic condition the US president has placed request for $100 billion in increased spending for the wars.
Another gloomy picture is that dollar has lost its value in international markets against other major currencies across the world, including euro, British pound, Canadian dollar and Indian rupee. Some economists have attributed the decline in dollar to the American people spending more than they earn coupled with a huge federal budget and trade deficit. Inheriting a surplus of $234 billion budget in 2001, President George W Bush has pushed to $8 trillion external and $38 trillion internal deficits in seven years.
Along with the falling dollar, fuel price has been increasing rapidly. Presently, oil is sold in the market at $100 a barrel. It means a car owner pays more than 3 dollar per gallon petrol at gas station. Prices of imported goods are on the rise, even from countries whose currencies are pegged to dollar. According to the Department of Commerce, the price of all imports, including fuel, was up 9.6 per cent from a year earlier. The United States presently is importing 13.6 million barrels of oil each day, 40 per cent of it coming from Canada, Mexico and Venezuela. Mexico possibly will be out of the oil market in ten years. With the Venezuelan government of Hugo Chavez the present US government is having bad relations. Therefore, future prospect of oil appears to be critical for the United States unless alternative energy is explored urgently and seriously.
The subprime mortgage crisis actually has begun in the United States during the fall of 2006. Now the crisis has turned out to be global in nature. The surge in mortgage defaults is claiming more victims than just the thousands of subprime borrowers facing the prospect of losing their homes. The government, however, signed mortgage foreclosure debt relief act of 2007 on December 20 which might help homeowners in need of assistance to avoid foreclosure. New home sales fell to the lowest rate in 12 years, job creation slowed and the unemployment rate rose to 5 per cent in December from 4.7 per cent.
In Davos economists did not provide optimistic picture as they did in the past at the annual World Economic Forum. This year Davos was full of pessimism and every one agreed that US economy was heading for or already in recession. Now the financial corporations in the third world countries, such as Singapore, Kuwait and Saudi Arabia will bail out US banks. Recently Saudi Prince Alwaleed bin Talal, a nephew of the Saudi King, offered to bail out the biggest bank, Citi Group in the United States. The bank is reported to have lost $9.83 billion in December.
Today the middle class families are facing declining wages and rising prices for every thing from health care to gas to college tuition. More than 45 million are without health insurance. On top of this, 17,000 people have lost jobs in January this year, according the labour department. It is a clear signal that the market is either in or teetering on a recession. A Washington Post-ABC poll, conducted from January 30 to February 01, points out that ‘public view of the national economy is now more negative than at any point in 15 years.’ The stimulus plan devised by the US president and Congress is not enough to help control recession which is likely to spill over next year, if strict fiscal policies are not followed by next administration in the United States. The people in the United States have been facing serious economic crisis as a result of wrong fiscal policies pursued by the present Republican government.
Mohammad Amjad Hossain, former Bangladesh diplomat writes from Virginia
Super Tuesday’s vote for chaos
by Alexander Cockburn and Jeffrey St Clair
SUPER Tuesday was planned by both parties as the coronation of a candidate, followed by six months of furious fund raising to finance the fall race for the presidency. Such hopes were deliciously dashed on Tuesday as chaos descended on both parties.
John McCain won his Republican primary contests largely in states which will probably vote Democratic in the fall – New York, Delaware, Connecticut, New Jersey and California. In the ‘red states’ likely to vote Republican in the fall, he had to split the vote with both Romney and Huckabee and even when winning rarely rose above 40 per cent. Huckabee won Alabama, Arkansas, Georgia, Tennessee and West Virginia. Romney won Colorado, Massachusetts, Minnesota, Montana, North Dakota and Utah.
Across the last two weeks conservatives have paraded incredulity and disappointment that their party should have selected a traitor like McCain. At the end of last week, Ann Coulter, the Saxon Klaxon, announced if McCain gets the nomination she would not only ‘vote for’ Hillary, she would ‘campaign for her if it’s McCain’ because Clinton ‘is more conservative than he is.’
Rush Limbaugh has been frothing at the mouth about McCain for months. A few days ago the dirigible of drivel screamed to his vast audience that Senator Lindsay Graham of South Carolina was ‘so close to McCain he’s likely to die of anal poisoning.’ On Monday Richard Viguerie, one of the creators of the modern conservative movement, said McCain has only a short time to reach out to conservatives – to ‘stop the bleeding before it’s too late.’
The same day saw the most ominous message from all, from the mouth the Rev James Dobson, now the single most influential voice among evangelical Christians. He damned McCain conclusively: ‘I am deeply disappointed the Republican Party seems poised to select a nominee who did not support a constitutional amendment to protect the institution of marriage, voted for embryonic stem-cell research to kill nascent human beings, opposed tax cuts that ended the marriage penalty, has little regard for freedom of speech, organised the Gang of 14 to preserve filibusters in judicial hearings, and has a legendary temper and often uses foul and obscene language.’
Although the main newspaper in John McCain’s home state, the Arizona Republic, endorsed him earlier this month, the paper’s editorial verdict on McCain the last time he sought the nomination, in 2000, was being tossed around the internet:
‘But there are other aspects of McCain’s character, less flattering, also worthy of voter attention and consideration.... Many Arizonans active in policymaking have been the victim of McCain’s volcanic temper...McCain often insults people and flies off the handle....If McCain is truly a serious contender for the presidency, it is time the rest of the nation learned about the John McCain we know in Arizona. There is reason to seriously question whether McCain has the temperament, and the political approach and skills, we want in the next president of the United States.’
The conservative movement, which has dominated the Republican Party since Ronald Reagan, has been destroyed by the neocons and their war in Iraq, and by George Bush with his Clintonesque ‘No child left behind’ education bill, his multi-billion expansion of Medicare and his relatively enlightened position on immigration. Amidst this immolation McCain’s candidacy has flourished but at the probable expense of the Republicans taking the White House.
Against McCain the conservatives have had no reliable champion. Romney has no identifiable fixed position, except one of assurance that he had hundreds of millions in the bank. Mike Huckabee embarrasses the conservatives because he constantly stresses class issues and during his terms as Arkansas governor had an enlightened posture on immigration, parole, social services and public works projects. In fact, Huckabee is the only candidate, on either side of the fence, who speaks to the old LBJ model of rallying the voters by glorious visions of publicly financed employment – savagely denounced by McCain. Hillary and Obama never talk with any enthusiasm about big programmes to provide jobs, thus continuing Bill Clinton’s obeisance to Wall Street and grandstanding as a deficit buster. On Tuesday, for voters either side of the fence, the state of the economy was the paramount concern.
It’s becoming clear that as the economy tilts into recession prominent conservatives are coming to the conclusion that it might be no bad thing to have a Democrat win the White House this year, get stuck with recession and the mess in Iraq for four years, until the Republicans recapture the Congress in 2010 and the White House in 2012. On Super Tuesday Limbaugh came right out and said it in plain language: ‘If I believe the country will suffer with either Hillary, Obama or McCain, I would just as soon the Democrats take the hit rather than a Republican causing the debacle. And I would prefer not to have conservative Republicans in the Congress paralysed by having to support, out of party loyalty, a Republican president who is not conservative.’
The Democratic Party is also fractured. Super Tuesday left the nomination hanging until the Convention, when the ‘super delegates’ will tilt the balance, in a blizzard of under-the-table pledges and bribes in the smoke-free caucus rooms. The fissures were glaringly exposed in Tuesday’s votes. Hillary won eight states – Arkansas, Arizona, California, Massachusetts, New York, New Jersey, Oklahoma and Tennessee. Obama won thirteen – Alaska, Alabama, Connecticut, Colorado, Delaware, Georgia, Idaho, Illinois, Kansas, Minnesota, Missouri, North Dakota and Utah where polygamists presumably rallied for Obama in honour of his father.
Hillary won the white south in Arkansas, Tennessee, Oklahoma and maybe Missouri. She won the support of women, a commanding slice of the Hispanic vote and (in California) the Asian vote. Above all, she maintained a decisive grip on the white over-60s. The youth vote, long predicted but only this year materialising at the polls, is Obama’s. Courtesy of Bill Clinton’s outbursts in New Hampshire and South Carolina, the black vote has gone to Obama on a scale that dwarfs Jesse Jackson’s historic triumphs in 1984 and 1988. So if it comes to the nomination of Hillary Clinton by super delegates, there will be a lot of alienated and angry black and youthful voters.
Presidential elections these days are really decided by swing voters, classed by the pollsters as ‘independent.’ Super Tuesday showed Obama as the Democratic candidate who is more capable of winning this vote. It was independents and first-time voters who gave the Illinois senator his victories in states like Idaho.
Brace yourself for a funding scandal. The Clintons have to find money fast. Obama is out-raising Hillary by $3 to $1 and can continue doing so, since Hillary’s big donors have reached their legal limits whereas Obama’s legions of small contributors can go on giving him money.
Super Tuesday had some particularly pleasing features, such as the repudiation of the Kennedys by the Democrats voters of Massachusetts.
Looking ahead to the fall, John McCain will have the hard task of selling his 100-year American presence in Iraq to an electorate that by a majority of about 70 per cent wants the troops home. If Moqtada al Sadr and the Shia decide to fight it out in a summer and fall campaign against the Sunni New Awakening, and the Surge’s supposed success dissolves in a sea of blood he may fare even worse than Bob Dole against Clinton 1996.
Looking ahead to a Ms. Clinton administration, should it come to pass, we’d guess that the political price tag of an expanded health insurance programme will be the privatisation of social security, which was proceeding rapidly forward under Bill Clinton until the day that Monica Lewinsky snapped her thong.
CounterPunch, February 7.
Democracy on Bishwa Road
by Rumi Ahmed
During the last years of Ershad, a tide of road building projects went on throughout Dhaka. Bijoy Sarani, Panthapath and Malibagh Bishwa Road were all built during that time. Those beautifully paved roads were walled out from the neighbourhoods by ceramic brick and grilled walls. There was bougainvillea blossoming on steel-grilled structures in short intervals. They all really looked like parkways and malls rather than a city thoroughfare in a third world country.
Soon after Ershad’s fall, all the beautification vanished. Panthapath pavements and Bishwa Road footpaths turned into slums and fish markets. Those bougainvilleas were all gone in a very short time. The steel frames for bougainvilleas turned into structures holding the shanties. Some urban ‘bhodrolokes’ cited this as an example of how democracy had gone wrong and how we had been better off under Ershad.
Panthapath slums, however, disappeared over the next 15 years. Many people in those shanties moved to better housing farther from the pavements as they could afford a bit better places. This was helped by the construction boom on Panthapath. The construction boom helped those poor people get jobs. Some also got job in garment factories around.
But some shanties on Bishwa Road remained throughout the past 15 years as the inhabitants continued to struggle. Despite bhodroloke resentment of them, they hunkered down on the roadside with their family and children and probably waited for a construction boom around the Malibagh Bishwa road. The elected representatives from this area, the members of parliament and ward commissioners, protected them. Those politicians protecting the slums definitely had a vested interest. These slum dwellers are enthusiastic voters. Hence their voting right brought them the ticket to stay.
To be more precise, it was not the MPs or the ward commissioners who helped them to stay in the roadside slums and struggle for a better life until they move on. It was democracy which protected them from being made homeless. Not going into further discussion about the perceived futility of ‘election-only democracy’ and the ‘functional autocracy’ in between two elections, it can be safely said with all its lapses and weaknesses, democracy at least ensured the basic right of accommodation, however shabby it is, for those street-side slum-dwellers.
The happenings on January 11, 2007 brought a badly needed relief for the people of Bangladesh. People held hostage to protracted political power struggle breathed a sigh of relief on the postponement of confrontational politics for the time being. But as democracy failed; the basic principle of democracy – voice of every single person in society – took a backstage. A select part of society, definitely not representing the slum dwellers and not needing the slum dwellers’ vote, took over the responsibility to run the state. Naturally, one result was thousands of were homeless in the January winter and some more thousands of street vendors robbed of their means of living suddenly.
The unintended consequences of 1/11 include much more.
Few weeks after January 11, 2007, hundreds of thousands of non-resident Bangladeshis suddenly found themselves disconnected as they no longer could make phone calls to the mobile phones of their families at home. Crackdown on illegal VoIP operations started without any pre-planning on how to manage the demand of high volume overseas incoming and outgoing calls.
And in the name of price control, small businesses were being raided and armed forces started guarding the market places and dictating prices to small traders. As a result, the whole business community went into hiding, creating an unprecedented business shutdown. The prices of essentials kept going up.
Despite the overwhelming perception of relief among the bhodroloke, so far, the postponement of democracy has failed to produce any convincing result. Prices of essentials remain high, Dhaka streets are as unsafe as before, and corruption in government offices have not stopped.
It is the time we remind ourselves that, with all its drawbacks, the much loathed democracy of the past fifteen years at least did allow the homeless a shelter, be it on the public pavement or that democracy did not have to resort to using force in the country’s marketplace. Whatever foul smelling rot it was, the democracy we had did at least ensure a free uncensored and undaunted press. Democracy may be blamed for many ills, but it did not destroy VoIP first and then think about what to do next. Rather, the nation observed a communication industry boom in Bangladesh over the past fifteen years. Reasoning is a by-product of democracy. We lose that with demise of democracy.
India generally did not try hiding its street slums by demolishing them. A democratic India cleaned itself inside out and now in many flourishing Indian cities, you won’t see much of a slum. Those which are still there, are also vanishing rapidly – not by bulldozers, but by slow but steady economic democracy.
At this juncture, it won’t be unfair to question ourselves whether we will breathe easier in a dirty but democratic Kolkata than in a picturesque but military-run Islamabad.
In Bangladesh, we need a democracy that will also ensure the right for a shelter of the poor, business for the street hawkers and a reality check in all government actions. Until recently we had this assurance.
Rumi Ahmed writes from Wisconsin, US and is a member of Drishtipat Writer’s Collective
High Court verdict on Sheikh Hasina
I am glad that the High Court has quashed the so-called corruption case against Sheikh Hasina. But I am not sure whether the Appellate Division of the Supreme Court will come out yet with another stay order. If the High Court Division and the Appellate Division of the Supreme Court keep behaving like this then, I am afraid people may lose faith in the judiciary system.
Waheed Nabi
England
EC and election
It was reported in the media that the EC has plans to hold elections to city corporations and pourasavas within the next couple of months. To pave the way for the election, voter registration activities in most of the areas of Dhaka city have been completed. In many areas, voters are said to have received ID cards. But unfortunately, no voter registration activities have taken place at Sector-11 in Uttara area. Once I made a phone call to a person, who is involved in voter registration activities, and wanted to know about the time of voters’ registration. He told me that the voters’ registration in the area will start after two to three months. But as per the election roadmap, Dhaka City Corporation election is supposed to take place during that time. Can the Election Commission explain what is going on to bury our confusion?
Asaduzzaman
Uttara, Dhaka
Iraq, all dreams shattered
Every time I think of the condition in Iraq, I feel deep sorrow and outrage by the happenings in that historical country, which was once called the seat of civilisation.
From my childhood days, I was fascinated by Iraq. I used to read about Baghdad, Basra and other cities, prosperous and bustling with activities. I learned about Khalifa Harun-ur-Rashid roaming the streets in disguise at night to see how everything was going and ensuring that all was well.
The childhood dream has turned into a nightmare. My heart bleeds when I think about the Iraqi people and I wonder what is in store for them in future.
Nur Jahan
Chittagong
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Next on Quick Comments
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a. No scope in constitution for national govt: Ariff: Amendments to Emergency Powers Rules depend on SC
ruling on Hasina writ (New Age, February 8)
b. SC defers hearing govt’s appeal against Hasina case verdict (New Age, February 8)
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