- 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
- 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 <http://www.gregpalast.com/PDF/europeancouncil/letter.pdf>here
, with the <http://www.gregpalast.com/PDF/europeancouncil/councilresponse.pdf>EU
message and <http://www.gregpalast.com/PDF/europeancouncil/councilresponse_en.pdf>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
- 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 <http://www.dli.state.pa.us/landi/lib/landi/cwia/releases/pghmesa_pr.pdf>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
- Greg Palast is the author of The Best Democracy Money
- Palast wrote the column, "Inside Corporate America"
for the business section of Britain's Observer newspaper.
- Sign up for Palast's investigative reports at <http://www.gregpalast.com>www.GregPalast.com
and subscribe to Palast's <itpc://www.gregpalast.com/Podcasting/podcasts.xml>podcast.