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OVERTIME--September 2004 issue
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Dedicated to reflecting the collective wisdom of enlightened workers.
Linda Featheringill
4651 West 41st Street, Down
Cleveland, OH 44109
(216) 661-0794
lfeatheringill@hotmail.com
August 2004
Volume 5, Number 4
Greetings! This month we lead off with another look at the reasons for the Iraq war, including two different opinions on the role played by the US dollar. And in the Ecology section there is a report on what looks like a partial collapse of the food chain in the North Sea. And more. Enjoy.-- Linda Featheringill
War for cheap oil? Yes. War for a stable dollar? Maybe.
War to Protect the US Dollar: In the 1970s, the US agreed with Saudi Arabia that OPEC oil would be traded in (US) dollars. American governments have since been able to print dollars to cover huge trading deficits, with the further benefit of those dollars being placed in the US money markets. In return, the US allowed the OPEC countries to operate a production and pricing cartel.
Over the past 15 years, the overall US deficit with the rest of the world has risen to $2.7 trillion - an abuse of its privileged currency position. Although about 80% of foreign exchange and half of world trade are in dollars, the euro provides a realistic alternative. Euro countries also have a bigger share of world trade, including trade with OPEC countries, than the US.
In 1999, Iran started pricing its oil in euros and in late 2000 Saddam made the switch for Iraqi oil. In early 2002, Bush placed Iran and Iraq in his “axis of evil.”
If the other OPEC countries had followed Saddam’s move to euros, the consequences for Bush could have been huge. Worldwide switches out of the dollar, on top of the already huge deficit, would have led to a plummeting dollar, a runaway from US markets and dramatic upheavals in the US.
War to Protect US Oil Supplies: By invading Iraq, Bush has taken over Iraqi oil fields and persuaded the UN to lift production limits imposed after the Kuwait war. Production may rise to 3 million barrels day by year’s end, about double 2002 levels. More oil should bring down OPEC-led prices and if Iraqi oil production rose to 6 million barrels a day, Bush could even attack the OPEC oil-pricing cartel.
Control over Iraqi oil should improve security of supplies to the US and possibly the UK, with the development and exploration contracts between Saddam and China, France, India, Indonesia, and Russia being set aside in favour of US and possibly British companies. And a US military presence in Iraq is an insurance policy against any extremists in Iran and Saudi Arabia.
In Conclusion: The danger of Saddam possessing weapons of mass destruction was the reason given for the US/UK invasion of Iraq. That reason has now been exposed as false. Oil and the dollar were the real reasons for the attack on Iraq.
[From an article by John Chapman for The Guardian (London), July 28, 2004. Contributed by P.E.N., Colchester, England, UK.]
The Opposing View: Iraq and the Stability of the US Dollar
A variety of strategic reasons have been suggested for the US assault on Iraq, some plausible and others on the wilder fringes of speculation. One idea has been popular in the twilight world of conspiracy theorists is that the war was about protecting the US dollar's international economic dominance.
On this view, the "real reason" for the war on Iraq was Saddam Hussein's decision in 2000 to take Iraq's oil revenues in euros rather than dollars. The invasion, so this argument goes, was to warn away other OPEC member countries from doing the same.
One of the internet's conspiracy theorists, William Clark, put it this way: "Although completely suppressed by the US media, the answer to the Iraq enigma is simple yet shocking - it is an oil currency war." Sadly for the swivel-eyed conspirati, this "simple yet shocking" answer is completely wrong.
People who worry about the dollar's international primacy are confused about how exactly currencies are used, as well as exaggerating by how much the US economy benefits from oil sales between, say, Kazakhstan and South Korea being denominated in dollars.
Yes, international oil trade is generally conducted in US dollars, as is much other trade in commodities and goods, and the dollar's use in international transactions is larger than the US economy's share of world trade. But, then, so is the Swiss franc's share. All that tells you is that most companies and countries prefer to do business in some currencies (dollars, Swiss francs, euros) than others.
Open any reputable economics textbook and you will find a chapter on the role of money. They pretty much all say the same thing: money is a unit of account, a store of value and a medium of exchange. The US dollar is regarded a reliable store of value - in the same way that gold, sterling or Swiss francs are - because of the strength of the US economy and the stability of its institutional support.
But the "medium of exchange" and "unit of account" elements are just functions of liquidity and convenience. If South Korea buys oil from Kazakhstan by converting Korean won into US dollars, then Kazakhstan can either keep the payment in dollars or convert it into Kazakh tenge for domestic use. In any case, all that happens is a transfer from one bank account outside the US to another one.
For all three reasons of value, exchange and account, the world's central banks tend to hold large proportions of their foreign exchange reserves in US dollars - in part because, as in the Kazakhstan example, that's what they receive a lot of in the first place.
So what does the US gain from the dollar's international role? In theory it means the US can borrow money more cheaply, receiving a lower interest rate for dollar-denominated loans or bonds than would otherwise be the case, because those dollars have to go somewhere. Unfortunately, there is no evidence that US interest rates would be higher if the dollar were not a widely held reserve currency - for many years Germany paid lower interest rates on its bonds than the US, despite the German mark not being internationally as popular.
The only tangible benefit comes from forgone interest that would have been paid on US currency - actual notes - held outside the US. According to the Federal Reserve, about $300 billion in hard cash circulates outside the boundaries of the US, with much of it held by criminals and black-economy participants.
The US economy does gain a benefit from this, but it is only a tiny benefit. If this hoard were kept in interest-bearing assets, the US economy would be paying out about $10 billion a year in one way or another. Instead, the US economy is subsidized to that extent. In an economy the size of the US, that is chickenfeed - the equivalent of £25 a year to an average full-time wage earner in Britain.
If OPEC tomorrow switched to demanding that its contracts be paid in euros, would the US economy collapse, as some have predicted? No. The US economy has its own problems, but how Kuwait or Algeria gets paid for oil is not one of them. There are enough plausible, worrying justifications for why the US administration was so determined to invade Iraq without the US dollar being one of them.
[Richard Adams, The Guardian (London), May 5, 2004.]
On the other hand, everyone seems to agree that Iraq and the supply of cheap oil are connected.
World oil prices pushed towards the key $50 a barrel level yesterday as fighting raged in Iraq, although they came off the boil when Iraqi police said they had driven rebels out of the Imam Ali shrine complex in the city of Najaf. US light crude futures on the NYMEX exchange hit an all-time high of $49.33, up more than 60 cents for the day, while Brent futures jumped to a new record of $45.15 as traders feared further sabotage of Iraqi oil exports at a time when demand continues at record levels. Both contracts slipped back in later trade when an Iraqi government spokesman said police had entered the Imam Ali shrine and ended a two-week revolt. But soon after the seizure was announced, a spokesman for Mr. Sadr said the statement was untrue.
Oil prices have set records in 15 of the past 16 trading days and prices are up a third since the end of June, stoking fears that the world economy could be knocked off course by rising fuel costs. Attacks on Iraqi oil installations overnight by fighters loyal to Mr. Sadr had added to the tension in oil markets.
Exports from the southern port of Basra were reported to have restarted yesterday after having briefly halted on Thursday. Exports are running at around a million barrels a day, down from 1.7m barrels a day one month ago.
Oil prices have been driven higher by a combination of strong demand from the US and China at a time when problems in Russia and Iraq have left oil supplies tight. The price rise has been amplified by speculators piling into a volatile market, say traders. OPEC, the oil cartel, has increased production to around 30 million barrels a day and while that is enough to meet current demand, markets have been spooked by the lack of any more capacity and are moving higher on any possible disruption threat.
Analysts at the World Markets Research Centre in London said the oil market would remain nervous until it was clear that the Iraqi interim government had the Najaf situation under control.
[Ashley Seager, The Guardian (London), August 21, 2004.]
ECOLOGY
The only way we can preserve the earth is to grant every living entity what it needs to thrive and take from it only what it can afford to give.
[The ocean food chain:
Vegetable plankton, which is eaten by
Animal plankton, which is eaten by
Small fish and crustaceans, which in turn are eaten by
Larger fish and birds, some of which are eaten by
Humans, bears, and other predators.]
The Birds of the North Sea
Until now, their deaths have defied explanation. What caused hundreds of seemingly healthy seabirds to perish in the North Sea has baffled scientists since the discovery of their corpses on the Norfolk coastline this spring. Fears of a major pollution incident such as an oil slick were quickly dispelled.
Now the mystery is close to being solved, however, and the answer has stunned ornithologists [scientists who study birds]. The North Sea is heating up at an alarming rate. The broody expanse of water, famous for its violent storms and freak waves, is slowly being transformed.
Using the oldest maritime data in the world, scientists have found that climate change is ridding the North Sea of its precious stocks of plankton, the microscopic organisms on which all life in the sea depends. As the very building blocks of the food chain disappear, fish and the birds that feed on them, such as the puffin and guillemot, are starving to death in what has been their natural home for thousands of years.
New research from the Sir Alistair Hardy Foundation for Ocean Science in Plymouth, which has been monitoring plankton around the British Isles for more than 70 years, reveals that the North Sea is undergoing a major ‘regime shift.’
Foundation director Dr. Chris Reid said: “What’s happening in the North Sea is it is becoming more like the east coast of Spain. As temperatures get warmer, we are starting to see a pattern that is more typical of the Mediterranean.”
Their concern is supported by another set of findings detailing how the sudden change of the North Sea is affecting Britain’s sea birds, many of whom breed in internationally recognized sites.
Seabird colonies off the Yorkshire coast and the Shetland Islands are headed for their worst breeding season on record. So far, a number of colonies have failed to produce any young at all. Starving chicks screeching for food from their cliff nests along the eastern coast of Britain are an increasingly common sight to alarmed bird watchers. In the Shetlands alone, thousands of kittiwakes and guillemots, regarded as one of the hardiest of species, have failed to return to old nesting sites.
Martin Heubeck, a researcher from Aberdeen University who has studied seabirds on Shetland for 28 years, said: “There just isn’t enough food. Until now, the North Sea has offered an ideal nesting place for 21 of the UK’s 24 species of seabirds, mainly because of the abundance of seafood thrown up by the cool tide of the North Sea mixing with the warmer waters of the Atlantic. The demise of cod stocks in the North Sea triggered the first concern that the sea’s ecosystem was changing, though the effects of over-fishing were blamed.”
The television show Countrylife will show evidence that seabirds are being wiped out by the effects of climate change, and confirm that a new and far greater threat has emerged. “The whole food web is being unraveled by climate change and this could be the biggest change in the North Sea since it was created 10,000 years ago,” said Euan Dunn, head of marine policy for the Royal Society for the Protection of Birds.
Officials in Whitehall, already nervous over the potential impact of global warming, are similarly worried. Environment Minister Elliot Morley said government-funded research was coming to the same fundamental conclusion as that of the foundation. “It does appear that there is a migration of plankton which is moving north into the colder waters and that the North Sea is progressively warming. This is very important information,” he said.
The rate of cold-water plankton migration though, according to the Plymouth-based scientists, is astonishing, suggesting that the vital food supply may have drifted up to 1,000 kilometres (621.4 miles) further north already, almost the length of Britain.
Average sea temperatures throughout the North Sea vary from about 4 to 8 degrees C. However, an astonishing 4 degrees C increase in winter sea temperatures has been recorded in recent years, a rise that experts predict will escalate to Mediterranean-style temperatures that average above 20 C during the summer.
Some have taken comfort in the findings for their role in explaining why up to 250 guillemots, puffins, razorbills and fulmar were washed ashore on the Norfolk coast in March. Up to 200 fatalities were found on the beaches off Northern France and Belgium at around the same time. It was impossible to gauge how many had sunk to the seabed.
Last year, scores of dead seabirds drifted ashore off Aberdeen, on the North Sea’s principal ports.
[Mark Townsend and Richard Sadler, The Observer
(London), June 20, 2004. Contributed by P.E.N., Colchester, England, UK.]
Global warming will bring change to California, American scientists report in the Proceedings of the National Academy of Sciences. A team of 19 researchers from a variety of institutions looked at two scenarios predicted by the Intergovernmental Panel on Climate Change - one, in which governments do something, and another, in which governments carry on as usual - and used two climate models to peer into the future.
Even at the most hopeful, heat-waves in Los Angeles quadruple, and deaths from extreme heat multiply two or threefold. Alpine and sub-alpine forests are reduced by 50 to 75% and snow on the mountains declines by 30-70%. But if governments do nothing, then forests shrink by up to 90%, and so does the snow pack on the Sierra Nevada mountains. This, along with quite modest declines in winter rainfall, could create a serious problem for California's water rights system.
"This could impact on 85% of California's population who are agricultural and urban users in the Central Valley, San Francisco Bay Area and the South Coast, about half of whose water is supplied by rivers of the Central Valley," they warn. Paradoxically, earlier runoff from the snow pack may also increase the winter flooding risk.
[The Guardian (London), August 19, 2004.]
Don’t Eat the Fish
One-third of the lakes and nearly one-fourth of the rivers in the US contain enough pollution that people should limit or avoid eating fish caught there. The Environmental Protection Agency (EPA) released a list of advisories issued by states that monitor lakes and rivers for pollution levels affecting fish caught during recreational and sport fishing. This does not include deep-sea fishing.
“It’s about trout, not tuna. It’s about what you catch on the shore, to what you buy off the shelf,” Mike Leavitt, the administrator of EPA. “This is about the health of pregnant mothers and small children - that’s the primary focus of our concern.”
Leavitt emphasized that monitoring by state officials in increasing, while pollution levels, particularly from mercury, are dropping. But he also said that every time state officials check for pollution, they find it. This means that eventually almost the entire US could have fish advisories.
Mercury pollution comes from industry such as coal-fired power plants, the burning of hazardous and medical waste, and the production of chlorine. It also occurs naturally.
This year, Ohio and 43 other states had a fish advisory for mercury, a persistent substance that affects the nervous system. Two more states, Montana and Washington, added statewide advisories to warn of the potential for widespread contamination of fish.
Adults and children should not eat more than one meal a week of fish caught in any body of water in Ohio, including Lake Erie, because of mercury pollution.
“No matter where you cast your line in Ohio, the catch of the day always includes a toxic serving of mercury,” said Jack Shaner, spokesman for the Ohio Environmental Council, a Columbus-based watchdog group. “Border to border, there is no escaping the mercury menace.”
[John Heilprin, Associated Press, August 25, 2004.]
A Nation Divided by the Vietnam War
Here are some thoughts on the current political battles being fought over John Kerry’s experiences during the Vietnam War.
Those of us who lived through the Vietnam War thought we would never see our nation so divided again. But we were wrong.
Vietnam never went away. The discos of the 1970s and the sit-coms of the 1980s and the stock market of the 1990s allowed new generations of draft-free, carefree American youth to enjoy a 24-hour attention span. So Vietnam became quickly yesterday’s sports score.
But now, 35 years later, Vietnam has become a central issue in the campaign for president. And, as happened 35 years ago, it is poisoned with lies.
What they ought to teach in high school is how easily the government can lie to us. Vietnam would be a textbook for that. We invaded the country over a trumped-up charge that we had been attacked. And then, for political face-saving reasons, we couldn’t pull out. So the death toll mounted while politicians ducked.
That’s what John Kerry said when he came back from Vietnam. He volunteered to go there, he was wounded, he saw and exchanged shots fired in anger, and maybe he even killed somebody - which is harder to do than it looks like on TV.
But after his taste of it, he thought the war stank. And when he came back, he protested against it. And he was right.
The hardest thing in the world to do is to tell a wife or a mother that her husband or her son died in vain. Everybody shrinks from that task. And that’s why Vietnam is still with us, so virulent and so strong.
[From an article by Dick Feagler for The Plain Dealer (Cleveland), August 25, 2004.]
And Divided by the Iraq War
Homeland, by Dale Maharidge.
Dale Maharidge, a Cleveland native, is an accomplished journalist whose work is almost always depressing in its focus on the underprivileged. Yet his work can be unexpectedly uplifting, too, because it gives his subjects voices and faces.
After the events of September 11, 2001, Maharidge wrote a “genie had been uncorked. I, of course, had no idea what the genie would do, but clearly we were about to see new evidence of what novelist Philip Roth calls the ‘indigenous American berserk.’”
The combination of attacks on US soil and worsening economic conditions has produced rages, Maharidge says, across the nation. He writes that September 11 was not a genesis but rather “an amplifier of unease that had long been building.”
If Maharidge’s dark thoughts sound melodramatic, the extensive reporting on which those thoughts rest is anything but melodramatic. The real-life characters are unforgettable, their plights poignant. A few of those characters are woven throughout this panoramic book, with Amy and Katie Sierra, mother and daughter in rural [and poor] West Virginia, probably the most memorable of all.
After 9/11, Katie spoke out in her high school in favor of peace. At first, her mother Amy found herself horrified by Katie’s words and actions. During the course of the book, though, Amy undergoes a change of heart as she watchers her daughter being persecuted by high school peers and adults in power.
Maharidge tells of his best friend from childhood. They met in first grade during 1962. They bonded, apparently for life. But while Maharidge was researching this book, the bond frayed. The childhood friend supported the US bombing of Iraq and supported policies that probably would further divide the two Americas.
The author ends his book with a letter to that childhood friend, writing “You and I have picked our sides. You have your Bible, which I read differently than you do. In terms that you seem to understand, it is you who are on the side of evil. If you come to your senses, great. I won’t try to reason with you. As far as I’m concerned, our friendship is a casualty of war.”
[From a book review by Steve Weinberg for The Plain Dealer, August 15, 2004.]
This and That:
Homeland security
The war in Iraq has cost about $144.4 billion. If the safety of US residents was the real goal, that money might have better been spent in all of the following ways:
--$7.5 billion to safeguard US ports. Since 9/11, the federal government has allocated less than $500 million.
--$5 billion to expedite upgrading the Coast Guard fleet of cutters, patrol boats, and communication equipment.
--$2 billion for improved cargo security, to fund increased inspection of incoming cargo.
--$10 billion to protect commercial airlines from shoulder-fired missiles. There are presently about 100,000 of these missiles circulating in the international black market.
--$5 billion for improved baggage screening equipment. Only 8 airports have the latest, best equipment and the federal government has asked congress for only $250 million to fund this equipment.
--$240 million for airport equipment that will detect explosives hidden in a person’s clothes.
--$7 billion for 100,000 police officers, in order to uncover plots and prevent attacks. The federal government has allocated only $97 million for this.
--$2.5 billion for fire departments, the “front line” of safety personnel in case of terrorist attacks.
--$3 billion to secure major roads and railways. The federal government provided only about $200 million for this in last year’s budget.
--$30.5 billion to secure from theft the world’s weapons grade nuclear material, both in the former-Soviet states and in other parts of the world.
--$2.25 billion for an international program that deactivates nuclear warheads. This year’s budget includes only $450 million for this program.
--$24 billion to add two divisions to the US Army.
--$15.5 to double the number of Special Operations Forces, which are employed in tracking down terrorists.
--$8.6 billion to rebuild Afghanistan, to help prevent this area from becoming a haven for terrorists in the future.
--$11 billion to finance crop conversion in Afghanistan from opium [their chief export] to other crops or other business enterprises.
--$10 billion to increase nonmilitary assistance to the world’s poorest countries.
And,
--$775 million for public diplomacy, with emphasis on the Arab and Muslim world.
[Information from a report by Center for American Progress, Washington, D.C.]
Military Doctors
Doctors working for the US military in Iraq collaborated with interrogators in the abuse of detainees at Baghdad’s Abu Ghraib prison, profoundly breaching medical ethics and human rights, a bioethicist charges in the Lancet, a medical journal. In a scathing analysis of the behavior of military doctors, nurses and medics, University of Minnesota Professor Steven Miles calls for a reform of military medicine and an official investigation in to the role played by physicians and other medical staff in the torture scandal.
He cites evidence that doctors or medics falsified death certificates to cover up homicides, hid evidence of beatings and revived a prisoner so he could be further tortured. No reports of abuses were initiated by medical personnel until the official investigation into Abu Ghraib began, he found.
“The medical system collaborated with designing and implementing psychologically and physically coercive interrogations,” Miles said in the Lancet article. “Army officials stated that a physician and a psychiatrist helped design, approve and monitor interrogations at Abu Ghraib.”
A US military spokesman said the incidents recounted by Miles came primarily from the Pentagon’s own investigation of the abuses.
“Many of these cases remain under investigation and charges will be brought against any individual where there is evidence of abuse,” said Lt. Col. Barry Johnson, US Army spokesman for detainee operations in Iraq.
In a related matter, two military officials in Washington said that a high-level Army inquiry will cite medical personnel who knew of abuse at Abu Ghraib but did not report it up the chain of command.
“The detaining power’s health personnel are the first and often the last line of defense against human rights abuses. Their failure to assume that role emphasizes to the prisoner how utterly beyond humane appeal they are,” Miles told the Associated Press.
He said that military medicine reform should be enshrined in international law, which should include more clout for military medical staff in the defense of human rights.
Miles gathered evidence from US congressional hearings, sworn statements of detainees and soldiers, medical journal accounts and news reports to build a picture of physician complicity and, in isolated cases, active participation by medical personnel in abuse at the Baghdad prison, as well as in Afghanistan and at the Guantanamo Bay detention center in Cuba.
[Emma Ross, Associated Press, August 20, 2004.]
And you thought your landlord was bad!
While Barb Jablonski was cleaning and getting ready to move into the house she leased last week, people kept driving by and giving strange looks. She was moving her son’s bedroom furniture into the house when a woman came up the driveway and asked what Jablonski was doing in her house. That’s when Barb knew something was wrong.
This week, she and others have been finding out just how wrong. The landlord (Mike Cahlik) had signed multiple leases renting out the house, police say. As far as they know, he rented the same house to at least four different families, and detectives are wondering if there are more would-be renters out there.
No one lives in the house now.
Rhonda Ervin’s belongings have been on a U-Haul truck since last Saturday. She and her children had expected to move in over the weekend after giving Cahlik $1900 in cash as security deposit and rent. They have already moved out of a rental in Cleveland Heights. Ervin and her family spent a night at her sister’s home in Maple Heights but they have no permanent place to say. She doesn’t know how she can come up with the money for deposit and rent at another place.
Nisha McCornell and her children are temporarily still in the house they were renting in Cleveland. She gave Cahlik $1590 for rent and security deposit.
Thomas Moore of Cleveland said he gave Cahlik $800 in cash last Thursday as a deposit on a lease. Moore planned to move his family into the house this weekend but now, of course, he cannot.
Jablonski was able to reach Cahlik by phone Monday morning and he offered to write her a check for the $2000 in cash she had given him as security deposit and rent. She refused to accept the check because Cahlik has convictions for forgery, theft, and passing bad checks.
It is unclear whether Cahlik even owns the house. A mortgage company filed a foreclosure lawsuit last year but county records still show Cahlik as the owner.
[Mark Rollenhagen, The Plain Dealer, August 25, 2004.]
Is it possible to win the war in Iraq
but still lose the struggle for cheap oil?
[An economic “bubble” is a boom that seems like real prosperity at first but then shows itself to be worthless and misleading, so the whole thing collapses, like a soap bubble. A recession or depression is likely to follow.]
China might go pop, but it won't help our factories. In the eighth century the Chinese mixed sulphur, charcoal and saltpeter and made a bang. Now that they're mixing communism and capitalism to make a bubble, the bang won't be far behind.
Oil is approaching $US50 a barrel, mostly because of China's investment bubble. This was just the latest installment in a 25-year series that has kept investors interested and consumers happy, propped up the global economy, and had central bankers running between the coal scuttle and the hose [alternately trying to fuel the fire and douse it]. It began with Japan's property bubble, continuing with the South-East Asian Tiger economies' capital inflow bubble of the 1990s, the internet mania of the late '90s, and the global property boom of the past few years.
As each bubble bursts, central bankers cut rates to maintain liquidity and prevent deflation. The excess money inflates the next bubble, during which central bank hands are wrung worrying whether to prick it or not.
Now it's China's turn. Property values and manufacturing capacity are in excess and the monetary authorities have got their hoses out.
China's entry into the global trading system has been a key factor driving productivity growth and supporting economic growth while holding end prices (inflation) down. At the same time it has created a commodity and energy price shock, to the vast benefit of the minerals and energy export cartels.
The first three oil shocks were supply shocks initiated by the OPEC export cartel and prompted by revolutions and wars (the Yom Kippur war in 1973, the Iranian revolution and the Iraq-Iran war of 1979-80, and the first Gulf War of 1990).
The fourth, this one, is primarily a demand shock led by China. As an example: in the Yangtze River Delta there are three to four power cuts a week because the electricity industry is unable to cope with the explosion in manufacturing. More and more factories are therefore running on diesel generators instead; as a result demand for fuel is exploding.
All this makes the current oil shock different in character, but perhaps not in effect.
But perhaps it will be different in effect. The first three oil shocks each helped cause global recession. The 2004 version might not do that because oil is a smaller proportion of the world economy and because China's explosive demand for energy and other raw materials is based on high consumer demand for cheap Chinese manufactured goods.
China thus demonstrates the truism that labour is a far greater proportion of the end price of a manufactured product than the raw material, so that cheap labour outweighs the impact of the commodity price shock. As a result, end prices are not rising and central banks will not have to create recessions to retrench demand and control inflation as before. On the other hand, rates are rising and the US economy looks more vulnerable than it ever has to any kind of shock, given the lack of savings, and the record current account deficit and federal budget deficit.
The likelihood of a fourth oil shock is predictable. But the effect of such a shock is not.
[From an article by Alan Kohler for the Sydney (Australia) Morning Herald, August 21, 2004.]
Remember what Dick Feagler (page 9) said about the Vietnam War: “The hardest thing in the world to do is to tell a wife or a mother that her husband or her son died in vain.” It is sad that people have died in Iraq. It is even sadder that they died for the wrong reasons, for money or for oil or for something else that is equally stupid. But it would be bitterly ironic if they died for all the wrong reasons and it still didn’t do any good.
Tell me again why we need federal governments that serve the interests of big business. I seem to have forgotten why.
[Linda Featheringill]
Next month: We’d love to know what you think. These are our usual classifications:
-- Open - questions, comments, tirades, etc.
-- RSVP. React to previous statements.
-- The ecology.
-- Clippings from newspapers, etc.
On the Web:
Overtime is included in the website of Socialism for a Real Labor Union at:
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[Socialism Marx DeLeon for a real union]
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And, to Everyone, thank you, thank you, thank you. Linda Featheringill.