Oliver Stone's "Border" Shows Fall of South America's Berlin Wall

On April 13, 2002, an event occurred in Venezuela which was as world-historical for South America as the fall of the Berlin Wall was for Eastern Europe: a U.S.-backed coup against the democratically-elected government of Venezuela collapsed. The Bush Administration's efforts to promote the coup failed, in the face of popular resistance in Venezuela, and diplomatic resistance in the region.

The failure of the Bush Administration's effort to overthrow President Chavez was world-historical for South America because it sent a powerful new signal about the limits of the ability of the United States to thwart popular democracy in the region. In the years prior to the reversal of the U.S.-backed coup, popular movements in South America had suffered from a widespread "Allende syndrome": a key legacy of the U.S.-orchestrated overthrow of democracy in Chile in 1973 was the widespread belief that there was a sharp limit to the popular economic reforms that could be achieved through the ballot box, because the United States simply wouldn't allow formal democracy in the region to respond to the economic needs of the majority.

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Weekly Audit: The Unemployment Epidemic

By Zach Carter, Media Consortium Blogger

On Friday, we learned that the U.S. unemployment rate officially broke 10% for the first time since the early Reagan years. This is about as bad as it gets for a modern, developed economy. No economic force takes a heavier toll on a society than rampant joblessness, and few personal setbacks take a deeper psychological toll than being out of a job for months on end. If Congress and President Obama don't do something to create jobs fast, both are going to pay a hefty political price when next year's mid-term elections roll around.

So how bad is it? In October, the economy shed 190,000 jobs and the unemployment rate jumped from 9.8% to 10.2%. That percentage is the most optimistic reading of the labor market in Friday's report. If you take people who want full-time jobs but are settling for part-time work, then add those who have simply given up on finding a job, the rate is a massive 17.5%.

The problem is not that either Obama or Congress have failed to act on the problem, but rather that they have not done enough. When Congress was moving on Obama's $787 billion economic stimulus package back in February, we were shedding upwards of 700,000 jobs a month. So the stimulus package has worked--it's probably helped keep unemployment from jumping to 12% or 13%. But this is cold comfort to the nation's 15.7 million unemployed, 5.6 million of whom have been out of a job for more than six months.

As Robert Reich notes for Salon, Obama's economic advisers dramatically underestimated how bad things would get when they crafted the stimulus package. As a result, the package was too small and unemployment has remained high. Obama needs to go back to Congress and demand more economic relief funding. Republicans will continue to whine about government spending to excuse their obstructionism, of course, and conservative Democrats will probably start sweating, too--Sen. Ben Nelson (D-NE) helped cut back the original stimulus bill in February to help boost his "centrist" credentials. This of course had nothing to do with economics or policy. Government spending is what saves the economy in a recession. In a downturn as severe as this one, it takes a lot of spending to turn things around.

But as Reich notes, Nelson and his cohorts will have a lot more to worry about in the 2010 elections if the economy doesn't actually improve over the next year. And few economists think it will. The Congressional Budget Office, which is run by a conservative economist named Douglas Elmendorf, projects an average unemployment rate of over 10% in 2010. That's worse than this year. Democrats from swing districts need to support economic relief packages. Continued economic malaise will severely hurt them at the polls.

Congress finally took some action on joblessness on Thursday, voting to extend unemployment benefits for an additional 14 weeks. If we want the economy to recover, we need people to spend money, but if people aren't working, they don't have any money to spend. So the government cuts people checks to help them get by and stimulate a demand for goods and services. Even most conservative economists thinks this is a good idea.

But as Kevin Drum notes for Mother Jones, the soundness of the policy did nothing to prevent Republicans from fighting the effort to extend benefits tooth-and-nail. The bill had to overcome three--that's right, three--filibusters in the Senate from Republicans, who held up the bill for weeks for no apparent reason. In a blog post for The Washington Monthly, Steve Benen explains the economic cost of this obstructionism: In the weeks of delay, 200,000 people looking for work stopped receiving benefits.

But extending unemployment benefits will not solve our economic woes. The total program is just $2.4 billion, a drop in the bucket compared to the trillions of dollars the government put up to salvage Wall Street. $2.4 billion is not enough to reverse the unemployment trend. Cutting the checks certainly helps, but as Matthew Rothschild emphasizes for The Progressive, we need an economic policy that actually puts people back to work. We've known for months that the stimulus was too small and watched the labor market continue to deteriorate. We need more than tweaks at the economic margins, we need a robust job creation plan.

As Stephen Franklin notes for Working In These Times, we already know that the recession has created a significant jump in the nation's poverty rate. According to official government statistics, the rate climbed from 12.5% to 13.2% in 2008, the largest increase since 1991. But the National Academy of Science thinks the government statistics are misleading, as they account for rising costs associated with medical care, transportation, child care and different regional living standards, as Franklin notes. Taking these factors into account, the National Academy of Sciences calculates the actual poverty rate to be 15.8%. That's an additional 7 million people living in poverty, for a total of over 47 million. That's more than the entire population of the New York, Los Angeles, Chicago, and Philadelphia metropolitan areas combined. What's worse, we don't have poverty statistics for this year, when the most severe economic damage was been dealt.

Workers are facing tough economic prospects around the world. Writing for The Nation, Kristina Rizga details Latvia's economic turmoil. Just like the US, overexcited bankers in Latvia inflated a massive real estate bubble that took down the entire economy when it burst. But with the bubble burst, much of the country is now out of a job and stuck with a mortgage worth far less than what they paid for it. It's almost exactly the same story we've seen at home.

No domestic economic problem is more pressing than our epic levels of unemployment. We need another round of stimulus to get people working again. If not, we'll see the same public unrest here as in Eastern Europe.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

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Will Speaker Pelosi Stand Up to the IMF?

It would be an exaggeration to say that Congress has a once-in-a-lifetime opportunity this week to reform the policies of the International Monetary Fund. If the future is like the past, if Congress misses this opportunity, another one will come along - in about 10 years or so.

This week, House and Senate leaders are meeting in a conference committee to work out the differences between the House and Senate versions of the supplemental appropriations bill.  The Senate version of the bill is likely to include $100 billion and new authorities for the IMF, but the House version of the supplemental bill did not include funds for the IMF. The Senate is debating amendments now as I write. The conference committee will almost surely meet soon after Senate passage; the stated goal is to pass the supplemental before the Memorial Day recess.

Concrete, observable reforms of the IMF's policies in poor countries should be part of any agreement: there should be no "blank check" for the IMF.

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Reform U.S. Foreign Policy. Pass the Employee Free Choice Act.

Sometimes an opportunity for reform comes along that is "strategic" in that it changes the playing field for efforts to win other reforms in the future. The passage of the National Labor Relations Act - establishing the right of American workers to organize unions and bargain collectively - was a strategic reform. It increased the power of people previously excluded from power, and thereby reduced the power of corporate interests.

But the right of workers in America to organize has been steadily eroded by unpunished abuses by anti-union employers. Passage of the Employee Free Choice Act is easy to justify on the basis of guaranteeing the basic human rights of working Americans.  When the Employee Free Choice Act is signed into law, millions of private sector workers will have greater protection from having their rights violated.

What difference would that make? Ask Steve Arney. He used to be a reporter at the Bloomington Pantagraph, a newspaper in Illinois owned by Lee Enterprises.

A majority of employees at the Pantagraph signed cards to support forming a union with the St. Louis Newspaper Guild. Lee Enterprises responded with a campaign to defeat the effort by Pantagraph employees to form a union.

As part of Lee's anti-union campaign, Steve Arney lost his job.

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The IMF and Eastern Europe

More than 10,000 protesters gathered in Kiev to protest against the government and against measures being imposed on the Ukraine by the International Monetary Fund. The police estimated the crowd at 8,000, but other estimates were as high as 20,000 and it is the second mass protest in as many weeks.

The demonstrations came at the end of a tumultuous week in a tumultuous country. On Wednesday, an overwhelming majority in Ukraine's Parliament, the Verkhovna Rada, voted to move up and hold presidential elections on October 25. On Thursday, deputies from the pro-Russian Party of Regions swarmed the podium in the legislature, blocking the doors ahead of an important vote on measures demanded by the International Monetary Fund (IMF) as a condition of further aid.

In November, the IMF extended a $16.4 billion loan to the Ukraine.  The IMF had approved the emergency loan package back on November 6, 2008 but suspended the credit's second tranche after disagreement over implementation of the programme. At issue was the size of the budget deficit. The Ukraine  received the first $4.5 billion tranche but the IMF will not release any further funds until the Ukraine agrees to steep budget cuts that would affect public sector salaries and pensions. The IMF loan was suspended last month due to Prime Minister Tymoshenko's reluctance to make the unpopular move of cutting social spending ahead of the presidential election.

The Ukraine had boomed in recent years benefiting from higher commodity prices and from an inflow of investment capital as the country undertook a liberalization of its property and financial sector embracing neo-liberal free market reforms. Now the Ukraine is among the countries hardest-hit in the global financial meltdown, which has depressed demand for the steel and chemicals that are crucial sources of its export income. Industrial output fell by nearly one-third in February, year-on-year, the national currency, the  hryvnia, has shed nearly half its value against the US dollar since September and the economy is expected to shrink by 6 percent this year.

What makes the Ukraine so interesting is that the country is a cleft country. It's split down the middle literally. The Ukraine is divided between the Orthodox East and the Catholic West, between a  Ukrainian-speaking West and a Russian-speaking East, and between those who look to be part of the West and those who seek to restore historic ties with Russia.  And the division is basically 50-50. Here's an assessment by Ibrahim Özturk in Today's Zaman, a Turkish newspaper:

The Ukraine is a country at a crossroads. Not only is it among those being hit hardest by the current global financial crisis, but it is now flirting with actual dissolution. The country's economy is fundamentally weak, and ongoing political strife has made economic reforms necessary but impossible. Furthermore, the country is the cornerstone of the geopolitical battle between the West and Russia. Its weakness makes Ukraine dependent on outside powers, but outside powers appear to be working to pull the country apart.

Ukraine's dependence on foreign capital for development has been badly abused by foreigners, international organizations and domestic oligarchs. Capital went to services (banking, trade and consumption sectors) rather than to the manufacturing industry to upgrade existing structures and increase productivity.

The country's budget deficit is 2.8 percent of its gross domestic product (GDP) and is likely to increase before it decreases, as declining industrial output triggered by the global recession will inevitably reduce expected tax receipts.

Moreover, Ukrainian currency problems are also quite severe. Foreign investment has been leaving Ukraine's equity markets and speculators have been attacking Ukraine's currency, the hryvnia. As confidence inside Ukraine slides, bank runs are taking place. In my view, this could be the worst news, as it will force the country into default and even into internal chaos.

The full story on the protests in the Ukraine in the New York Times.

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