'Tough' Economic Times, Ya' Think..

The White House says the U.S. economy is struggling to grow and generate jobs, despite aggressive steps taken by the federal government to prop up financial institutions and unfreeze tight credit. VOA's Michael Bowman reports from Washington, the Bush administration's comments come amid further signs that the number of Americans looking for work is growing.

As a rule, White House spokespeople strenuously avoid economic predictions, particularly when the nation's financial outlook is dim.

So it was all the more remarkable that President Bush's press secretary, Dana Perino, all but stated that the United States could be in a recession.

"We are in for a rocky road on the employment front, and expect our GDP [gross domestic product] number next week not to be a good one," she said. "And the next quarter could probably be tough, as well."

Two consecutive quarters of negative economic growth meet the technical definition of a recession.

Earlier in the day, the Labor Department reported another jump in the number of people filing for government unemployment benefits. The news came as a wide variety of U.S. companies - from Internet firms to investment houses to auto manufacturers - announced cuts in their workforces. Many of America's best-known corporations have recently announced disappointing earnings that point to a broad economic slowdown.

On Capitol Hill, former U.S. Federal Reserve Chairman Alan Greenspan said the United States is facing a "once-in-a-century tsunami" of tight credit and housing woes. He predicted the economy will get worse before it gets better.

Perino did not challenge Greenspan's assessment, saying current economic conditions make it all the more important that the financial rescue package President Bush signed into law earlier this month be implemented as quickly as possible.

"I do not forecast from here [the podium], but looking at reality and how long it is going to take for people to return this country to job growth, it could be a while," she said. "The president knows that we are in for a rough ride, which is why he has asked us to work everyday to try to make sure that we are doing everything we can to pull us out of this slowdown."

In February, when the first signs of economic weakness were emerging, Congress passed an economic stimulus plan consisting mainly of rebate checks to American taxpayers. Asked about the prospects of rapidly enacting a second stimulus package, Perino noted that Congress will not be in full session until after the November elections.

Anti-Democratic Nature of US Capitalism is Being Exposed

THE SIMULTANEOUS unfolding of the US presidential campaign and unraveling of the financial markets presents one of those occasions where the political and economic systems starkly reveal their nature.

Passion about the campaign may not be universally shared but almost everybody can feel the anxiety from the foreclosure of a million homes, and concerns about jobs, savings and healthcare at risk.

The initial Bush proposals to deal with the crisis so reeked of totalitarianism that they were quickly modified. Under intense lobbyist pressure, they were reshaped as "a clear win for the largest institutions in the system . . . a way of dumping assets without having to fail or close", as described by James Rickards, who negotiated the federal bailout for the hedge fund Long Term Capital Management in 1998, reminding us that we are treading familiar turf. The immediate origins of the current meltdown lie in the collapse of the housing bubble supervised by Federal Reserve chairman Alan Greenspan, which sustained the struggling economy through the Bush years by debt-based consumer spending along with borrowing from abroad. But the roots are deeper. In part they lie in the triumph of financial liberalisation in the past 30 years - that is, freeing the markets as much as possible from government regulation.

These steps predictably increased the frequency and depth of severe reversals, which now threaten to bring about the worst crisis since the Great Depression.

Also predictably, the narrow sectors that reaped enormous profits from liberalisation are calling for massive state intervention to rescue collapsing financial institutions.
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