The full recent report from the Senate Permanent Subcommittee on Investigations, “Wall Street and the Financial Crisis: An Anatomy of a Financial Collapse” is a 650-page indictment that reveals the myriad of ways Wall Street lies, cheats, steals and defrauds on a routine basis.
Financial Crisis Report
Unfortunately, it’s too technical to get widely read. So the following Cliff Notes version comes from Les Leopold. His text follows:
"This study, broken into four case studies, forms a biblical tale of how toxic mortgages were born, nurtured and spread like the plague throughout the land, making money for the financial philistines every step of the way.
The first case study focuses on Washington Mutual (WaMu), the nation’s largest savings bank, and its overt strategic decision to go big into selling high risk, high profit mortgages. Here you will find a detailed description of every type of dangerous mortgage foisted onto the public. Your blood pressure also will climb when you read how the bank used focus groups to help its mortgage brokers find better ways to sucker customers into risky mortgages even though the applicants had qualified for and wanted safer fixed-rate mortgages.
The report also details outright fraud committed by brokers – forging documents, making phony loans, stealing money – who then got rewarded again and again by the bank for their high sales records, even after they were caught! Nobody cared because the loans quickly were sold to Wall Street – the riskier the loan, the higher the interest rates and the more Wall Street would pay.
The second case recounts the pathetic tale of the Office of Thrift Supervision, the regulatory agency that was supposed to halt WaMu’s shoddy and corrupt practices. The report shows that OTS knew of these deceptive practices in great detail for five full years and still failed to stop the pillaging. Why? Because OTS’s top regulators didn’t believe in regulations. Banks should regulate themselves. OTS only wanted to help. And one way it helped was by deliberately impeding other regulators like the FDIC from enforcing stronger regulations on WaMu. The OTS, which mercifully has been eliminated, believed it was partners with the banks it supposedly regulated --- a textbook example of regulatory capture combined with financial Stockholm syndrome.
The third case study which focuses on the two largest rating agencies (Moody’s and Standard and Poor’s) is a story of prostitution. Here we learn how the rating agencies turned trick after trick for the big Wall Street banks, doling out favors (AAA ratings) to thousands of “innovative” securities based on the junk mortgages that WaMu and others originated and packaged. Then when it became obvious to everyone that the crap was still crap, the whores went virtuous by drastically downgrading thousands of toxic assets overnight. This forced pension funds and insurance companies, who by law could only hold investment grade securities, to dump their downgraded assets all at once. The result was a rapid and deep collapse of all financial markets. (You read this section of the report and you have to wonder how anyone in their right mind could take seriously S&P’s recent “negative outlook” rating on the U.S. Who are they shilling for now?)
The last case study is the most pornographic as it strips bare two investment banks, Deutsche Bank and Goldman Sachs. The report accuses them of packaging and selling toxic securities while, at the same time, betting that those securities would fail. Furthermore, the report argues forcefully, that “Investment banks were the driving force behind the structured finance products that provided a steady stream of funding for lenders originating high risk, poor quality loans and that magnified risk throughout the U.S. financial system. The investment banks that engineered, sold, traded, and profited from mortgage related structured finance products were a major cause of the financial crisis.” (pg 19)
The Case against Goldman Sachs
It’s obvious that the subcommittee is gunning for Goldman Sachs, and for good reason. This elite investment house, the envy of all Wall Street, is shown to be corrupt to its core. Not only is it accused of creating toxic assets and unloading them on its own customers, but also, the report accuses GS of betting that the very assets they were selling would fail. They profited by selling the junk and then profited even more when the junk they were selling lost value. The deeper the financial destruction, the more they made. And of course, they didn’t tell the buyers of the toxic assets about GS’s hidden bets or the fact that their internal research showed that the assets were totally toxic. The report is the most detailed account ever written about the Goldman Sachs profitable trail of deceptions including lies that were told to Senate committees again and again.
Lie #1: 'Putting our Customers First'
The path of looting and destruction starts in 2006-'07 when the leadership of Goldman Sachs became convinced that the housing market was in decline and that they had to get rid of all their mortgage-related securities in a hurry. Well, how do you get rid of crap? You package it together, slice and dice it and get your favorite rating agency strumpets to kiss it with AAA-ratings. Then you send your sales force out on a mad scramble around the world to find customers. The problem was that by then most mortgage security buyers knew these assets were toxic AND that the ratings were phony. So GS told its sales agents to seek out customers who knew the least about mortgage-related securities. Nice.
Lie #2: 'Our interests are aligned with our customer’s interests'
Once the junk was packaged and sold, GS placed billions of dollars of bets that the mortgages contained or referenced in the securities would crash and burn. The more they crashed, the more the bets paid off for Goldman Sachs. However, GS failed to reveal this crucial information to its customers. Rather it said that GS’s interests were aligned with that of its customers, implying that GS was buying into the deal and holding the same garbage as the customers were buying. The report details many cases where GS bet big against what they were selling without providing this material information to its buyers.
The Goldman Sachs-Paulson Sting
The most egregious example of this swindle was the Abacus deal that GS cooked up with Paulson and Company, the hedge fund that bet billions that toxic mortgage-related assets would fail. Paulson approached GS with a plan to rig a bet that was sure to fail for the buyers and pay off big for Paulson. Without telling the buyers, Paulson was allowed to set the criteria for the selection of the toxic assets that were placed in the securities, and of course he picked the worst ones he could find. As the report says;
“With respect to Abacus, Goldman knew that the Paulson hedge fund wanted to take 100% of the short side and would profit only if the CDO lost value, yet allowed the hedge fund to play a major but hidden role in selecting the CDO assets.” (p 620)
To hide Paulson’s role, GS needed an independent “portfolio selection agent” to pretend to be the final arbiter of what mortgage pools became part of the security. They hoped that GHC Partners would play that role. But, as a key Goldman Sachs executive reported to his colleagues, GHC found the deal too unsavory:
“As you know, a couple of weeks ago we had approached GSC to ask them to act as portfolio selection agent for that Paulson-sponsored trade, and GSC declined given their negative views on most of the credits that Paulson had selected.” (p 564)
They soon found another shill agent to hide Paulson’s role. Within a year, the buyers of the security lost a billion dollars and Paulson made a billion on his bet. Goldman Sachs got the fees for arranging the deal. However, they later had to pay a fine of $550 million to the SEC for failing to disclose Paulson’s role. Meanwhile, Paulson became the most prosperous hedge fund manager in world. In 2010 he earned $2.4 million an HOUR.
Lie #3: 'Honest, we didn’t try to rig the market'
In order to place more and more bets against the toxic mortgages, Goldman Sachs wanted to purchase credit default swaps, which are like insurance policies. You pay a premium to buy a policy on a given toxic security. If that security fails, you get full value. And you don’t have to own the security to place this wager.
Around the time that Bear Stearns started to fail in 2007, GS wanted to buy up more and more of these bets. But first they wanted to drive down the insurance policy prices so they could get them on the cheap and make even more money. Well, it’s against the law to manipulate markets, but nevertheless GS tried to use its market power to “squeeze” the market downward. It didn’t work out because the cascading financial crash intervened. The Senate investigators found the following smoking gun (a self-evaluation from one of the key GS traders):
“In May, while we were remain[ing] as negative as ever on the fundamentals in sub-prime, the market was trading VERY SHORT, and susceptible to a squeeze. We began to encourage this squeeze, with plans of getting very short again, after the short squeezed [sic] cause[d] capitulation of these shorts. This strategy seemed do-able and brilliant, but once the negative fundamental news kept coming in at a tremendous rate, we stopped waiting for the shorts to capitulate, and instead just reinitiated shorts ourselves immediately.” (p 425).
He later denied this was really a squeeze by claiming to investigators that they placed too much emphasis on “words.” But, think about what this reveals. This GS employee in a self-evaluation to his superiors thought it would make him look good if he bragged about trying to engage in obvious illegalities. What does that really say about the venerable Goldman Sachs culture?
Lie #4: 'We’re only doing all this to make markets'
One of the biggest lies can be found in the concerted cover-up during the testimony before Congressional committees and investigators. After obvious coaching from their lawyers, GS executives stated again and again they are only trying to make markets so that sophisticated investors can make trades. The GS executives deny that they pushed the crap off their books onto investors. They were, instead, only trying to help investors find the deals they wanted. Some, GS argues, wanted to bet that the toxic assets would pay off and others that they would fail, and GS, they claim, only gave them both what they wanted. (They said this repeatedly because the disclosure rules for market making are much weaker than if they are promoting and selling securities to investors.)
Lies #5 ,#6, #7…….#101
The list goes on and on. GS manipulated assets to benefit themselves at the expense of their customers. They manipulated prices to benefit themselves at the expense of customers. As part of Abacus, they worked out a private deal with Paulson so that Paulson would pay less for his “insurance”, which in turn hurt the investors on the other side of the bet. And, even after all of these revelations, Goldman Sachs to this day continues to deny that it engaged in a strategy to bet big against the housing market.
In the end you come to one and only one conclusion. Every time Goldman Sachs had an opportunity to profit by cheating its customers, it did so.
What is to be done?
The Senate report calls for tighter regulations so that banks can’t play these games ever again. It calls for more effective regulatory agencies and rules, and it wants major reforms on the way the rating agencies work --- much of this already contained in the Dodd-Frank financial reform bill. But in addition, the subcommittee obviously wants more federal prosecution of Goldman Sachs and others as it asks that “Federal regulators…. identify any violations of law…” (p 638).
No way are these reforms and indictments going to work.
We could put all the crooks in jail (and we should), but Goldman Sachs would still be there. We could tighten regulations more and more, but the big banks would still be armed with enormous wealth and power to subvert them. Regulations and jail are not good enough unless we want to construct massive regulatory and enforcement agencies that rival the banks in size and scope.
Rather, the report proves why the entire financial edifice must come down. Our nation cannot survive economically unless we do away with the large Wall Street banks and investment houses. It’s not just that they are too big to fail. They are too big – period!
At a workshop I recently conducted, one student asked if I thought it possible to go back to a system of local and state banks. I had my doubts. But after reading this report I realized that the student was right. Congress should undo the 1994 bill that “explicitly authorized interstate banking, which allowed federally chartered banks to open branches nationwide more easily than before.” (p 15)
We should break up the big banks and replace them with state and local ones. We should limit financial firms to no more than $10 billion in assets instead of the trillions they now control. We should heavily regulate the hedge fund gamblers. And we should shrink the size of Wall Street through a financial transaction tax.
You just can’t read this report without concluding that big finance, by definition, is bad.
I never make predictions, but this report offers a sure bet: If we don’t bust them up and limit their size, there soon will be another financial crisis that will eat away what’s left of our middle-class way of life.
As this startling report makes all too clear, it’s us or them and there’s no way around it."
Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It (Chelsea Green, 2009).
Here is more information from Les Leopold, from another article he wrote a few months ago:
ReplyDelete" * The average real wage of the non-supervisory production workers (which comprise 82.4 percent of total private non-farm employees) actually declined by 9 percent between 1975 and 2010.
* Meanwhile the top 1 percent saw their share of national income rise from 8 percent in 1975 to 23.5 percent in 2005
* More amazing still, the wage gap between the top 100 CEOs and the average worker jumped from $45 to $1 in 1970 to an unbelievable $1,723 to $1 in 2006
* Today after the crash, financial incomes are so enormous that in 2010, John Paulson, the top hedge fund manager, earned $2.4 million an HOUR (not a misprint), and his tax rate is less than yours
I like Ike
These statistics turned me into an Eisenhower communist. I realized that our great, conservative general and president stood for policies that would never have let our nation’s productivity cookie jar get robbed. Under Ike, those earning $3 million or more (in today’s dollars) faced marginal tax rates of over 90 percent. (Yes, there were loopholes that bought the effective rates down to 70 percent. But, what’s the effective rate on the rich today? About 16 percent.) And Ike ended the Korean War. And he named and took on the military-industrial complex, which today would probably get you impeached."
LOU:\JOHN (and other bloggers of course)......... :-)
ReplyDeletewWould you to have a look at this mission statement, from a relatively new grass roots economic and scientific movement, that I have been analyzing for some time. Their approach is indeed attractive to me, as it does in some ways align with many of my own beliefs, as they have developed them over my lifetime. Their approach is at once "hopeful" as opposed to "despairing" which is somewhat the prevailing Global mood? Their appearance as a 'movement', will of course open them to the usual social criticisms. However I am attracted to their youthful, fresh and well thought out principles. Look forward to reading "all" your opinions
- MISSION STATEMENT [April 24th '11] -
Founded in 2008, The Zeitgeist Movement is a Sustainability Advocacy
Organization which conducts community based activism and awareness actions through a network of Global/Regional Chapters, Project Teams, Annual Events, Media and Charity Work.
The Movement's principle focus includes the recognition that the majority of the social problems which plague the human species at this time are not the sole result of some institutional corruption, scarcity, a political policy, a flaw of "human nature" or other commonly held assumptions of causality in the activist community. Rather, The Movement recognizes that issues such as poverty, corruption, collapse, homelessness, war, starvation and the like appear to be "Symptoms" born out of an outdated social structure......continued
continued:
ReplyDeleteWhile intermediate Reform steps and temporal Community Support are of
interest to The Movement, the defining goal here is the installation of a
new socioeconomic model based upon technically responsible Resource
Management, Allocation and Distribution through what would be considered The Scientific Method of reasoning problems and finding optimized solutions.
This "Resource-Based Economic Model” is about taking a direct technical
approach to social management as opposed to a Monetary or even Political one. It is about updating the workings of society to the most advanced and proven methods Science has to offer, leaving behind the damaging consequences and limiting inhibitions which are generated by our current system of monetary exchange, profits, corporations and other structural and motivational components.
The Movement is loyal to a train of thought, not figures or institutions.
In other words, the view held is that through the use of socially targeted
research and tested understandings in Science and Technology, we are now able to logically arrive at societal applications which could be profoundly more effective in meeting the needs of the human population. In fact, so much so, that there is little reason to assume war, poverty, 95% of most crime and many other money-based scarcity effects common in our current model cannot be resolved over time
The range of The Movement's Activism & Awareness Campaigns extend from short to long term. The long term view, which is the transition into a Resource-Based Economic Model, is a constant pursuit and expression, as stated before. However, in the path to get there, The Movement also
recognizes the need for transitional Reform techniques, along with direct
Community Support.
For instance, while "Monetary Reform" itself is not an end solution
proposed by The Movement, the merit of such legislative approaches are
still considered valid in the context of transition and temporal integrity.
Likewise, while food and clothes drives and other supportive projects to
help those in need today, is also not considered a long term solution, it is still also considered valid in the context of helping others in a time of
need, while also drawing awareness to the principle goal.
The Zeitgeist Movement also has no allegiance to a country or traditional
political platforms. It views the world as a single system and the human
species as a single family and recognizes that all countries must disarm
and learn to share resources and ideas if we expect to survive in the long
run. Hence, the solutions arrived at and promoted are in the interest to
help everyone on the planet Earth, not a select group.<
http://www.thezeitgeistmovement.com
Lou,
ReplyDeleteMy above post was prompted by your exposure of the "Financial crisis report". (Kudos to your for posting it)
I cannot however agree, that the solution to the "too big to fail" dynamic, is to regress backwards toward a pre 1994 system. Although perhaps a more attractive time, it is in essence "too late to listen to IKE?"
The reason is of course that banking and corporatism is now a "Global condition" and individual nations, regardless of military or other powers, can no longer simply implement jingoistic solutions, that cannot be easily avoided by the more flexible and speedy solutions of modern communication technology, and the combined demands of capital and commerce.
In this regard perhaps you will recall my piece on the need for a "new economic format" as well as my oft repeated appeals to dissemble socialist corporatism?
I have many times mentioned the narrowness of the viewpoint of the average American economist in this regard. It is of course an understandable narrow view, since for 50 years, how went America, so went the western economies and by natural consequence the rest of the world! I am sure you will now agree that has changed significantly?
America can no longer expect their previous position as the leaders of the world to be respected without question. At least not economically!
The transition to a new scheme of Global players is already underway. And unfortunately America thus far, is still somewhat too concussed by the recent economic catastrophes, to yet divine a functional national strategy to recoup that lost credibility, suffered at the hands of their once powerful and seemingly loyal, domestic corporate sector. Which has now moved on to greener pastures! As all non feeling, "accumulation at all costs" unfettered by any regulation to the contrary, capitalist entities will always do, given the freedom to do so! It is now a little late to consider tethering this runaway animal.
Especially given the fresh green fields it has discovered anew? So goes loyalty and so goes the security of the citizens of the nurturing nation(U.S.), betrayed by ruthless bureaucrats and idiotic economic policies (trickle down) initially spouted by a neurotic Russian 'femme fatale' Ayn Rand! Mr Ryans favorite budgetary philosophy by the way also follows this 'Randian' simplistic and idiotic libertarian nonsense.
As an aside I would dearly love to see the giants such as Goldman Sachs forced into some form of "mea culpa" admission. Perhaps even jail time. But it really matters little for the big picture and the future. They don't need our approval anymore!
ReplyDeleteThe only way is for the governments of the global powers via commonality of regulatory global control, to re tether these cretinous hedonistic and self serving animals......... maybe some day!
James,
ReplyDeleteThanks for the post on TZM. I am very intrigued. At first blush it seems cultish but some of the comentary seemed to fit well my beliefs as well. I hope to do much more research on it.
John C and Lou, I meant to share this item from my Financial times (English edition) which commentary as to the US Tax code I entirely agree with. Hope you enjoy it.....:-)
ReplyDeletehttp://www.ft.com/cms/s/0/eeb44ea6-6917-11e0-9040-00144feab49a,_i_email=y.html
Getting back on the topic of this post there are several good factual books on the subject. I have not read any of them but have read reviews and listened to interviews on two of them that lead me to believe that there are minimal hidden agenda in writing them. These are:
ReplyDeleteToo Big To Fail – Andrew Ross Sorkin
All The Devils Are Here – Bethany McLean & Joe Nocera
The Sorkin book is going to be an HBO special soon.
In my opinion the Dodd Frank bill did not go far enough to regulate financial institutions. I guess this is one of the failings of democracy especially in sophisticated subjects. In a democracy everyone has to be pleased, which includes the regulated. In sophisticated subjects like financial regulation smart bad guys will always find a way of getting around the rules especially when they help write them.
Also as an aside I post an article titled “The Orderly Liquidation of Lehman Brothers under the Dodd-Frank Act. It is long and I have not read it but the title is intriguing. I hope to soon.
http://www.fdic.gov/bank/analytical/quarterly/2011_vol5_2/lehman.pdf
I think that there are modern solutions for the current financial systems – I’m just not sure that a democratic society is capable of imposing them. Maybe the controlled environment of the Chinese is the solution. I guess we will know in the fullness of time.
PS to James: I’m not sure if you were aware but the articles you post from the FT require a subscription to read.
PS: Here is Les Leopold's bio just so you can see where his head is at:
ReplyDeleteAfter graduating from Oberlin College and Princeton University's Woodrow Wilson School of Public and International Affairs (MPA 1975), Les co-founded and currently directs two non-profit educational organizations: The Labor Institute (1976) and the Public Health Institute (1986). He designs research and educational programs on
occupational safety and health, the environment and economics. He also serves as a strategic consultant to the Blue-Green Alliance which brings together trade unions and environmental organizations. Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009
John, I am currently reading "All The Devils Are Here". It's very good. It pretty much lays out the facts in a chronoligical manner. As you might imagine, it covers a lot of detail. From what I've read so far, I'd say the book has no underlying political agenda.
ReplyDeleteI've seen good reviews of "Too Big To Fail", and it is on my reading wish list.
Les Leopold probably does have a political agenda. I think if you factor that in, you can still glean solid factual information from his writing. Although in in the pursuit balance and truth, I will read/listen to opposing points of view.
One thing I can do will be to take the time and actually read through the full document from the Senate Subcommitte. Leopold does make reference to specific pages in the document that he used to create his "cliff notes" version. It will take time, but I'll read through those pages and see if I concur with his assessments.
John C.
ReplyDeleteSorry about the FT article. It seems they have a very sophisticated firewall to protect material. I have a subscription through our corporate group (daily feed) but apparently I cannot copy or paste or transfer? I guess you will just have to buy a subscription? Maybe for christmas.....:-)
Lou,
ReplyDeleteNeat you are reading "All The Devils".
Also, I just noticed that the "Too Big To Fail" HBO special is currently running. I have it set to record on 5/3.
James,
Shame on those nasty corporations for protecting their content ;-)
Christmas sounds good... I'd get sooner but not sure I would have the time to read enough to benefit from it.
John C and Lou, Hope this link works. I would refer you to the comments section. A little free advice maybe....:-)
ReplyDeletehttp://www.moneyandmarkets.com/the-dollar-sliding-or-crashing-44386?sms_ss=email&at_xt=4dbc81699ff2a68d%2C0
I can't seem to send you guys anything of any "free" value...."The Money markets.com" site is also fire walled beyond my "leftie"ability to hack...:-) here is a copy and paste:
ReplyDeleteThe Dollar: Sliding or Crashing?
Bryan Rich | Saturday, April 30, 2011 at 7:30 am
Much has been made of the persistent slide in the dollar in recent months. Many proclaim it’s the end of its status as the primary world reserve currency. Others suggest it’s a notice of the demise of America. These viewpoints tend to quickly spread to Main Street, and that has a tendency to create panic.
How bad is it?
For some broader perspective, the Dollar Index (the dollar against a basket of major currencies) still sits 3.5 percent above the lows of 2008. Measured against over 75 currencies in the world, the dollar is weaker against 26, flat against 11 and stronger against 38 since the onset of the global financial crisis.
And it still commands 62 percent of global currency reserves — down only three percentage points from pre-crisis levels.
So, while it’s made new all-time lows against some currencies, it’s not a bloodletting like the media would have you believe. In fact, from a fundamental and technical perspective, it’s so stretched it has all of the makings of a market that’s going to snap-back violently.
Nonetheless, the drama surrounding the panic scenarios prompted journalists this week to prod a response out of Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke.
Geithner made an unusually defensive comment about the dollar saying, as long as he’s around the U.S. has a strong-dollar policy.
Bernanke maintained his rare but consistent comments on the dollar, saying a strong and stable dollar was important for the U.S. and the global economy and that the Fed’s policy efforts were consistent with achieving a strong dollar.
So if policymakers favor a stronger dollar, why aren’t they showing concern about its slide?
Some would suggest they just don’t get it. Others insist there is a covert operation underway by U.S. officials to broadly and desperately devalue the dollar....cont:
Here’s my take …
ReplyDeleteFirst, while some near-term weakness can be favorable for the U.S. economy, a more protracted decline in the dollar at the recent pace would mean very negative implications for both the U.S. and the rest of the world — no one wins. So a weak dollar conspiracy is not the answer.
Clearly U.S. policymakers like a weaker dollar in the near term. It helps stimulate exports and the growth of manufacturing, a historically important ingredient for recovering from economic recession and especially important in the effort of rebalancing the U.S. economy.
In fact, exports have become a big driver of economic growth throughout the “recovery” phase. The Wall Street Journal reports that exports have made the biggest 18-month contribution to U.S. GDP growth on record.
That’s the Good.
How about the Bad?
In addition to a supply shock associated with problems in the Middle East and commodity hoarding from China, a weaker dollar is adding to rising commodity prices.
The biggest threat of a weaker dollar though, if perceived as open-ended, is capital flight, which can set off a dangerous threat to the country’s solvency. Despite the many fears, that isn’t happening.
The truth is, growth in the U.S., even if it doesn’t hit the optimistic projections this year, continues to be among the top for major developed economies. Meanwhile, inflation (even headline inflation) and market interest rates remain low, and more stable than their counterparts — all solid underpinnings for the relative value of a currency in this environment.
So given the problems around the world and the reality that the world is in a slow, bumpy recovery, the slide in the dollar in recent months is consistent with just another ebb and flow within the currency markets.
To sum up: While there are significant risks, the facts argue that the weaker dollar isn’t a sign of a U.S. economic catastrophe. To the contrary, on a relative basis, the U.S. economy is still plugging along.
But Who Is That Hurting?
China.
China has been trying, unsuccessfully, to get a grip on inflation. And rising global asset prices, inflamed by a weaker dollar, puts pressure on China to finally look to its currency policy as a tool to curtail inflation. As such, we may soon see a dollar devaluation that the entire world would embrace: Against the Chinese yuan!
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After six years of consistent, but weak, global prodding of the Chinese to appreciate their currency, diplomacy hasn’t worked. The Chinese have allowed their currency to appreciate a measly 3.6 percent against the dollar on average per year since de-pegging in 2005. Meanwhile their economy has grown by nearly 250 percent in the same time frame.
Clearly, the Chinese have maintained a massive unfair advantage in global trade via their weak currency policy. And the world has always had two options in dealing with it:
Convince them to adjust for the greater good of the global economy, or
Export inflation to China to forcibly adjust up the cost of Chinese exports by driving up wages and input prices.
Now it appears that we’re seeing option number two play out. And China’s fight to gain control over inflation, isn’t going well. Perhaps soon, China will finally act to strengthen their currency in a meaningful way.
That would go a long way toward putting the global economy on a path of sustainable recovery, and correcting the continued booms and busts taking place in global economies and financial markets.
Bryan Rich.
James,
ReplyDeleteI just signed up for the free registration and as long as I sign in I appear to be able to read the article.
Keep them coming.
My comments to the above piece:
ReplyDeleteI agree, I agree, I agree. As a Canadian I am holding a % of my cash reserves in US dollars, with the expectation for a long term recovery. A definite stabilization of Global economies, with a clear leveling of the competitive balances is in process. And given the Chinese dynamic, their currency must increase to offset the normal pressures of their overheating economy. The current lower US dollar is a boon to the U.S domestic economy in the short term and will help greatly to “right the ship” eventually, provided the ideological nonsense from the extreme right in Washington, does not overshadow sensible and centrist fiscal planning.
To those that have posted a negative review of this piece. I have disagreed with Bryan many many times in the past, but I would add to my own assessment;
That one must “step back from the trees to clearly see the forest” The larger future Global picture, frankly cannot be envisioned without a rebounding and healthy US and Euro economies. They are a vital factor for Global economic stability. The time element may be up for debate, but any healthy Global planning cannot be envisioned or even functional, without these 2 key players!
I wanted to add that I have begun to unload my Gold holdings. I am convinced that with a leveling will come the inevitable increases in interest rates, which will drive the speculators from Gold and unhinge the upward trend on commodities and precious metals. I believe that new financial regulation will become the new Global reality, and their first target will be to dissemble the factors that permit speculators to unduly influence the stability of the commodities marketplace.
James, thanks for posting the URL to the Brian Rich article. Very interesting. I also read through the comments, and I came across this one - which I think is very good. I'm posting it here because I think it's worth of discussion. I'd like your take on these comments by Bill Denman:
ReplyDeleteBill Denman May 1, 2011 am31 3:48 am at 3:48 am
I always look forward to reading your post and appreciate the information contained therein. However I believe that some basic economic fundamentals are being overlooked in this article. As long as the Federal Reserve continues to expand the money supply, the long term outlook for the dollar will inevitably be DOWN. This conforms to the quantity theory of money which postulates that prices are a function of the ratio of the quantity of money in circulation to the quantity of commodities (dollars per pound of potatoes for example). When the quantity of money is increased faster than the quantity of commodities the purchasing power of money declines, which is simply another way of saying that prices rise.
I’m well aware that there are other factors which influence the rise in prices such as the objective exchange value, subjective exchange value, and the marginal utility value of money as explained in Ludwig von Mises’ book “The Theory of Money and Credit.” However, these have relatively short term effects on long term changes in prices.
From the beginning of our Constitutional Republic and the implementation of Hamilton’s First U.S. Bank, inflationary policies have been in effect and our government has been in debt. That debt was paid down to its lowest level during the Jackson Administration but the Civil War put an end to that. A significant part of that debt has been incurred by issuing fiat money which is simply a deceiving phrase for legalized counterfeiting.
continue on next comment due to space limitation. . . .
2nd of third part to this comment:
ReplyDeleteBeginning in 1914 the trend in U.S. inflation (expanding the money supply) moved into high gear. For example, wholesale prices rose 126.7 percent between 1914 and 1920. This is documented in a book titled “Economics and the Public Welfare” by Dr. Benjamin McAlester Anderson who was economist for the Chase National Bank from 1920 to 1939. In Chapter 7 of this book, Dr. Anderson says: (parenthetic words added)
“Money in circulation and bank credit in the United States were enormously expanded as compared with the prewar (WWI) situation. Commodity prices were enormously higher.”
The “roaring twenties” were caused by the FED’s policy of inflating their way out of the 1920 -1921 economic crisis during which wholesale prices dropped 107 points in one year. Changes in Federal Reserve policy is what caused the 1929 stock market crash – not overproduction as the American people were lead to believe. Again, quoting from Chapter 26 of Dr. Anderson’s book:
“Alarmed, the Federal Reserve authorities reversed their policy in the winter of 1927 -1928. They sold Government securities. They raised rediscount rates.”
In addition to that they raised margin requirements for securities purchases and marked down loan values. This had the effect of forcing many speculators out of the stock market – thus it crashed.
Contrary to public opinion, the FED expanded the money supply during almost the entire 1930′s depression. This expansion was primarily in the form of purchases of government securities to fund socialist programs such as the “New Deal.” But hoarding of money by the people created the illusion of a scarcity. People were afraid of bank failures and loss of jobs and therefore kept their money in locked dresser drawers – like my father who lost his savings when the local farming community bank closed its doors. In other words there was no shortage of money but it wasn’t circulating and this caused prices to drop. Again, quoting from Dr. Anderson’s book:
“On March 12, 1933, at 10:00 P.M., the President delivered over the radio an address to the people, calling upon them to bring their money back to the banks, and assuring them that the banks which reopened would be good.
“Immediately upon reopening of the banks and immense volume of hoarded currency poured in upon them.
“The Federal Reserve Bulletin of May, 1933 (page 265), states that between March 4 and May 10 the total volume of currency returned was $1,595,000,000″.
Of course expansion of the money supply continued during WWII and has never completely stopped but there was a reduction of the rate of increase during the 1980s.
So what’s the point of all this? The point is that an enormous amount of fraudulent money has been created between 1914 and now. The thing that makes this confusing is that a lot of that money has gone into foreign hands and has been held out of circulation in the U.S. – more than $7 trillion due to the trade deficit alone. This does not include all the foreign aid or bank loans to third world countries. In other words there’s an enormous amount of dollars sitting in foreign hands which will eventually come back to our shores – it is already under way. If all that money had stayed in the U.S., the dollar would already be worthless.
third of third part:
ReplyDeleteThere’s a delay between cause (expansion of the money supply) and effect (rising prices). In this case, almost a 100 year delay and this will blindside a lot of Americans. It should be clearly understood that once newly created money is injected into the economy, it is almost impossible to get it out again. It’s always in someone’s account, or possession, and banks can not simply take it out of people’s pockets. Therefore, deflation (reduction in the money supply) is very difficult and rarely happens. Contrary to popular opinion, a stock market crash does not create deflation if we define “deflation” correctly as a reduction in the money supply. But prices fall.
Socialists have succeeded in confusing our language. Calling rising prices “inflation” confuses cause and effect relationships. We “inflate” a balloon by injecting additional air into it; we “inflate” the economy by injecting newly created money into it. Injecting newly created money into the economy has many deleterious effects but the major is rising prices which steal from the producers by depreciating the purchasing power of the money they hold. When newly created money is injected, it competes with the money already circulating for an existing supply of commodities. Since the commodity supply has not yet increased, the additional demand drives prices up. Inflation is also a form of capital consumption which reduces our competitiveness in international markets at a time when we need to be very competitive. Yes, our export trade will be stimulated by the increasing foreign demand and our balance of trade will improve. Socialist economists will undoubtedly take credit for improvement in the trade balance, but the effects will be detrimental instead of beneficial. The money repatriated to our shores in demand for commodities will accelerate the rise in prices and everyone will suffer because of the depreciating purchasing power of the dollar. We already see this happening.
Deflation is the converse of inflation, it’s a reduction in the money supply, not falling prices. It’s true that deflation will cause prices to fall but so will a lot of other things. For example: hoarding money simply means that people reduce their purchases of commodities, this results in unemployment and falling prices. No deflation is taking place but real estate prices are falling. If we are confused about the meanings of words, we will be confused about the solutions to economic problems. In his great book “Human Action”, Ludwig von Mises was absolutely correct:
“What many people today call inflation or deflation is no longer the great increase or decrease in the supply of money, but its inexorable consequences, the general tendency toward a rise or fall in commodity prices and wage rates. This innovation is by no means harmless. It plays an important role in fomenting the popular tendencies toward inflation.
“… While merely fighting symptoms, they pretend to fight the root causes of the evil. Because they do not comprehend the causal relation between the increase in the quantity of money on the one hand and the rise in prices on the other, they practically make things worse.”
The quantity theory of money is still in effect and when all the foreign held money comes flooding back to our shores in demand for commodities, securities, etc., etc., in addition to all the money Bernanke is creating, prices will skyrocket and the value of the dollar will plummet. As a matter of fact, we are presently most likely looking at the early beginnings of hyperinflation. If this is allowed to run its full course, it will be disastrous for Americans – and foreigners. This will be a world – wide catastrophe unless we stop it now.
Bryan, you may be right about a short term “dead cat bounce” in the value of the dollar, but unless fiscal policies of the government change, and the FED is abolished, the long term trend will be inexorably down.
I highly recommend Ludwig von Mises’ book “The Theory of Money and Credit.”
LOU,
ReplyDeleteIt would be a gargantuan task for me to do any complete thesis in retort to this well argued American comment to Bryan Rich. Be that as it may and as I noted in my comments, I have argued with Bryan many times myself. in particular my position on the Euro was and is still diametrically opposed to his. I seemingly have been right thus far.....:-) I also believe I am right as to the recovery of the dollar in the long term. Here he and I agree. Rare, but still one must follow ones own belief system.
The introduction by Mr Denman of the Von MIses and what is commonly called the "Austrian school of theories" about money and credit, is always the typical fall back position of those usually opposed to the more popular and arguably more effective keynesian model for linear macro and micro capital and credit management, throughout the 20th century. Particularly the libertarian ideological belief system, and more modernly the Ayn Rand market modeling, as proposed during the arising of the "trickle down' philosophy for the last 25 years. I leave it to Mr Denman to tell us if he believes the results of this system of economic model has been acceptable? I never have nor do I now! Results are telling!
It is always of interest to me how they fall back upon the phrase "counterfeit money" to describe the activity of an economic capitalist democracy? They never offer an effective alternative to paper money as the essential promissory bridge for trade? Strange? Perhaps we will need to haul great bags of Gold bullion around? Probably on a horse and cart and with candles to light our path....:-)
There is of course some validity to all economic modeling theory and most especially, as refers to promissory notes or fiat money. That the Austrian school has any more validity than the Keynesian model, is of course the cause of our ongoing great ideological divide?
The choices made in the past, or even in the present capitalist and democratic systems, are supposedly and by intent to bring stability and leveling to the natural waves of the naturally turbulent dynamic, of the 'supply and demand' cycle.
I argue that the destabilizing we have been suffering in this past environment of boom and bust cycles, is directly as a result of the pitfalls and very weaknesses of the Austrian school or the Trickle down model if you like, of supply side economic theorum!...continued
continued..........Mr Denman, although obviously astute, again limits himself to the purely narrow view of the current tragedy of the American economy. Much of what he says will indeed unfold domestically, and yes goods and services will inflate. But the overall effect of the leveling of the values of currencies Globally, will see I believe, an ultimate strengthening of the dollar against other currencies as the economy rebounds. One must never forget that the underpinnings of the US economy are still intensely strong and vibrant, and one must never underestimate them!
ReplyDeleteI believe Asian currencies will also be forced to escalate, as they must, to respond to their own set of unique inflationary challenges, brought on by the speed and intensity of their GDP growth. Again the child of their own supply and demand cycles. I am sure this has already begun just this week for China.
The necessary devaluation of the American dollar, results from a "hyper inflationary" cycle that has already occurred. That was what was commonly called, in a boastful way by the trickle downers, "conspicuous consumerism" which was actually an economy fueled by massive and deliberately engineered demand with access to easy credit. The resultant monetary policy of the FED is exactly the medicine that is required to 'right the ship and humble the crew'! Not very tasteful but I believe the essential steps to take.
I also have commented many times that the biggest danger to this recovery still remains ideological inanity. That forces on the extreme right would appear to deliberately and wantonly isolate and marginalize the American economy, at this crucial time, is to me paramount to national suicide! I wont repeat my many comments on this subject as I am sure you have become familiar with them by now?
The other essential matter is to let go of this hysteria about the FED and the narrow viewed economic jingoism, that will keep America down. Yours is a magnificent country and I know will arise stronger from this debacle of excessive greed and somewhat selfish arrogance. As light follows day all the analysis and second guessing in the world, will not change the fact that America is the essential economy needed for a healthy progressive Global community to prosper.
LOU and John C and any other readers.
ReplyDeleteHere is my latest posting to my own website. Enjoy and of course comment
http://www.jamesconvey.com/1/post/2011/05/corporate-tax-yay-or-nay.html
One other point LOU. There are 2 dollars that may ned to be considered for future debate. It is likely that a new reserve currency could make it's debut at some point in the future. While some sense of misplaced American pride may choose to feel injured and Ic an here the squawking of the ideological "boo birds". I for one can foresee a national US dollar being indeed an extremely powerful unit of trade, given my belief in a strong and resurgent US economy within the next 5 years.
ReplyDeleteIn that case and if I pass on beforehand, my 3 sons will have a bunch of old US dollars to get rid of.....:-)
LOU and John C.
ReplyDeleteFrom todays Forbes mag:
Atlanta Police Say “No Way” to Mayor’s 401(k)
May. 3 2011 - 2:29 pm
Over 200 Atlanta police officers jammed into a Committee Room at City Hall last Thursday for a workshop held by the Finance Committee of the City Council. By the end of the four and a half hour marathon session, hundreds of other city employees had lined the corridors watching the closed circuit broadcast on television monitors throughout the building.
Thursday’s workshop was an opportunity for the police to present their response to a pension proposal by Mayor Kasim Reed which had been introduced as a legislative ordinance by counsel. I was one of three experts asked to speak on behalf of the police and I spoke specifically about the 401(k) aspect of the proposal.
In case you missed it, across the country, states and cities are seeking to reduce pension benefits promised to public employees in response to looming budget deficits. Taxpayers, who are awakening to the magnitude of the shortfalls in their own private sector retirement accounts, are enraged that public employee retirement benefits seem superior and are guaranteed.
“We are on the precipice of the greatest retirement crisis in the history of the world,” I began my comments to the City Council by saying.
“In the decade to come, we will witness tens of millions of elderly Americans slipping into poverty. Too frail to work, too poor to retire will become the “new normal” for elderly Americans.
If you don’t believe me, watch to see who’s bagging your groceries. It used to be high school kids. Now it’s men and women in their 70s.”
I explained to the City Council that 401(k) defined contribution plans are largely to blame for this foreseeable tragedy and forcing public employees into 401(k)s will only ensure greater misery.
“401(k)s cannot and will not provide meaningful retirement security for the overwhelming number of workers and certainly not the public employees of the City of Atlanta.”..........continued;
continued:..
ReplyDeleteNotice that I did not refer to 401(k)s as “retirement plans” in my comments. That was intentional. 401(k)s were not meant to be retirement plans. They were initially envisioned as a way for management-level people to put aside extra retirement money — money in addition to their pensions — like 457 deferred compensation plans for government employees that rely primarily upon pensions for their retirement security.
Soon the 401(k) was embraced by big corporations in the 1980s as a replacement for costly pension funds. Suddenly, large companies were able to transfer the burden of funding employees’ retirement to the employees themselves. All the major employers jumped on the bandwagon. The vision of creating a nation of astute portfolio managers, each responsible for successfully directing his own investments took hold.
Unfortunately, things didn’t quite work out as well as the mutual fund companies promised. Recently Lockheed Martin; Boeing; Northup Grumman; General Dynamics; Deere; Edison International; Bechtel; ABB and Walmart, the largest employers in the world, have all been sued regarding their 401ks.
According to a 2010 survey, 84% of Americans today say it’s time for new, improved workplace retirement plans. 84% — that’s a staggering dissatisfaction rate.
continued:
ReplyDeleteAs I’ve said in my Forbes blog before, 401ks are the biggest investment fraud ever perpetrated upon America’s workers. I believe it ought to be a crime to call these plans “retirement” plans. Call them savings plans or rainy day accounts but don’t call them retirement plans and mislead workers into believing that 401ks will provide for their retirement security. They won’t.
“So if you do vote to force your city’s public employees into a 401k-type system, at least be honest about it and admit from the get-go that this is no retirement plan,” I concluded my remarks to the City Council by saying.
This is hardly the time to be moving workers into a defined contribution retirement scheme that 84% of the nation regards as a catastrophic blunder.
In my opinion, the city of Atlanta’s workers, police, firefighters and general employees, have plenty to lose if the Mayor’s pension proposal succeeds. Further, it is unclear, as a result of arcane actuarial conventions discussed by others at the City Council session, what, if any, costs will be reduced over the foreseeable future by the proposal.
The Mayor’s proposal includes a so-called “hard freeze” which freezes all pension benefits as of November 1, 2011. All current employees will no longer accrue defined pension benefits as of that date and will be forced into a 401(k)-type plan, as will new hires.
An employee with twenty years on the job (assuming an average public safety salary of $40,000) and ten years until he qualifies for retirement would have to rely on the newly established 401(k) to replace 25% of the pension he had been promised or $8,000 a year for his lifetime. In other words, he’s only going to get 75% of what he was promised in retirement as a defined benefit. How likely is it that he will make up the 25% he’s lost through his 401(k) investments? Not very.
We don’t know for certain what the performance of his account will be because the details of the 401(k) plan proposed, such as investment options and fees, have yet to be revealed by the administration. However, we do know that according to recent industry data the median household headed by a person aged 60 to 62 years old has accumulated approximately $149,000 in his/her or their 401(k) account.
$149,000 in an account to support decades of retirement; thirty years of private sector 401(k) experience reveals these dismal retirement account results.
In short, an Atlanta city employee with twenty years on the job (and ten years until he qualifies for retirement) is likely, based upon private sector experience, to accumulate only one-third of the amount stated above or $50,000 in his final 10 years of employment.
If annuitized, that $50,000 account will provide him with $275.00 every month or $3,300 annually. By my very rough calculations, that amounts to about a $5,000 annual reduction in benefits for life. That’s a deal workers of the City of Atlanta by and large simply cannot afford to acc
John C and LOU
ReplyDeleteWhen you read the above, please bear in mind that Forbes is decidedly not a left wing pundit .... by anyones definition. In essence every once in a while, something begins to occur that cannot be covered up by disingenuous punditry or spin... Truth will out!
LOU the middle piece of this atlanta item I have posted twice? It is still missing?...I am writing too fast for ykur server it seems....:-)
ReplyDeleteJohn C and LOU
ReplyDeleteI have a new buzz phrase for you that will become systemic on the corporate side of the spin punditry in coming weeks. For me the greatest "oxymoron" of the age............ "a jobless recovery".????
This will serve as a dual purpose weapon. First against O'Bama and his "failure" to create jobs, but also as a support for the fact that Americas wealthy corporatists, are doing a great job maintaining their competitive edge...:-) Improved profits from Global operations, unfortunately not benefiting from the domestic market in any way! Gee what a pity the American worker can't be productive and competitive!
This website will give you more labor data on the 07-09 US recession than you would ever want to know.
ReplyDeletehttp://www.bls.gov/opub/mlr/2011/04/
LOU and John C......Todays financial times header:
ReplyDelete"......US set to regain industrial crown
The era of widespread offshoring of manufacturing from the US to China is coming to an end, according to a study that forecasts a renaissance for American production industries over the next five years.... "
This jibes with my beliefs as I outlined in my previous comments of yesterday as to the "strong underpinnings" of the US economy... After some short term pain (5 years) and humble pie, a realistic and positive outlook for the future..........:-)
.........Now if we can just change this socialist corporate dynamic and delink them from the ideological debate.....????
ReplyDeleteJames, I hope you and the FT are correct about the US economy. The news from this morning (05/05/11) on the job front is still not good.
ReplyDeleteYour calls about the dollar and gold are looking good at the moment. I don't invest in precious metals at all because I believe they are too speculative; although obviously one can make (or lose) money on them like anything else. The drop in gold/strength of dollar, although currently slight, is based - I think, in part on the weaker Euro because now there is doubt that the Euro bank will raise rates as quickly as previously thought. There are so many intricate and subtle interconnected facets to all of this, it's like trying to predict global climate change. :)
I saw your note about one of your comments not getting published. It's the same issue as before. I don't know why it happens, but occasionally some comments get sent into the "spam bucket" and I have to publish it manually. I saw that you created two comments that were the same (that both went to the spam bucket for no apparent reason), so I published the first one.
ReplyDeleteLOU,
ReplyDeletenow you know a little as to why my job, and that of all analysts and economists, is so complex, intense and challenging..... :-)
Interesting article on the "Volker rule" and what our friends are Wall Street are trying to do about it.
ReplyDeletehttp://www.snl.com/InteractiveX/article.aspx?CDID=A-12716907-12589&KPLT=2
In case the link does not work here is the article:
<>
In case the link does not work here is the article (if I have done the copy/paste correctly)
ReplyDeleteThe proposed Volcker rule figured prominently in recent meetings between SEC Chairman Mary Schapiro and the heads of large Wall Street firms including Goldman Sachs Group Inc. and Morgan Stanley, Reuters reported May 4.
Face-to-face meetings between the likes of Goldman CEO Lloyd Blankfein and Morgan Stanley's James Gorman and regulators are unusual, but the potential implications of the Volcker rule — conceived to pre-empt a conflict of interest in companies that engage in proprietary trading concurrently with banking operations — have them "freaked out," the news services reported, citing a Goldman lobbyist.
Goldman spent $1.32 million on lobbying in the first quarter — up 15% year over year, according to the report, which also noted that Goldman's lobbyists include former Republican lawmakers Trent Lott and John Breaux as well as former Democratic House Majority Leader Dick Gephardt. In addition, Michael Paese, former deputy staff director for the U.S. House Financial Services Committee, heads the company's internal lobbying group.
According to Reuters, five regulatory agencies, including the SEC, are working on their respective interpretations of the Volcker rule. Under the Dodd-Frank Act, regulators have a July deadline to synthesize a specific, reconciled version of the Volcker provision. Banks will then have a two-year period to bring their operations into conformance with the rule.
JohnC.
ReplyDeleteI am of course aware of Paul V's rule and am very supportive of regulation, and particularly an erasure of these "black pools"(hidden) of derivative trading mechanisms. But once again I must point out the danger of a narrow view of implementing rules of order, that are not Global in scope. Jingoistic fervor on any one nations part, could adversely effect the necessary balancing or leveling of the competitive dynamic.
In economics for the future we must strive to achieve a "one for all, all for one" type of approach to regulations in any new economic format
James,
ReplyDeleteAgain I don't think I made my point clear. I was not making a point about the "Volker rule". My point was how my country is ruled by special interests and lobbyists. This is the very thing, in my opinion, that caused the financial crisis (the subject of Lou's post). I have refered to the "best government money can buy" and this is yet another example.
John C.
ReplyDeleteAs you notate and as I have reiterated many many times, they (special interests et al) will not give up their hedonistic ways easily. Their sense of entitlement is rigorous and avidly protected by layers of political influence, including substantial support now from your supreme court. That is why it will need Global 'political will' in my opinion, to break their ongoing attempts to control democracy itself!
Look to Stiglitz and his peers from Europe,Canada, Asia and south America, and see that this is not just my opinion.... American economists that may suggest a Global approach, are berated as socialists and commies or lefties in your political arena. It is why I have warned of the potential of America becoming a marginalized society. The extreme right wing element that holds to the basic premise, that it is America's destiny to lead the world in some empirical manner, still hold a strong jingoistic grip on the psyches of the American voter. It seems for them that the American dream is exclusive and must remain out of reach for any, but those who fit their idea of what constitutes an American?
James,
ReplyDeleteWhen you say Global approach do you mean countries working together to create a common economic system? Forgive me if you have addressed this before but I just want to be clear.
BTW I am not opposed to this approach but there are not many good working examples of it -- unless you feel that the Euro and the European Union is a sucess.
John C.
ReplyDeleteIt is not as simple as "countries working together to create a common economic system."
We already function under a "common economic system" if one considers todays economics. That is supposedly capitalism? Even China and India function under this "blanket definition". What is missing and is sorely needed, is a common approach to the economic terminology and those functions defined by this terminology.
These in general are (forgive any oversimplification); definitions of liquidity, asset valuations, common financial regulatory reform, currency valuations, speculative controls, growth dynamics, both GDP and corporate. Trading irregularity, Infrastructure sustainability (Transportation etc) Human resources management health and welfare, and most importantly the entitlements of the individual citizen in a leveling Global dynamic.
It is not fair, nor even reasonable for example, that an American or any western individual worker, should suddenly, through no fault of his/her own, be out of work or economically disenfranchised, simply because some worker in India or China or Timbuctu, is willing to do the same job at 10% of the wage rate? The pendulum of value of human labor alone needs some form of severe Global stability, to avoid ongoing civil commotions, anarchistic revolts, terrorism and wars, as economic power moves from one side of the Globe to the other, and back again every generation or so!
It is my belief, that to progress to that kind of a society, which holds compromise and human dignity as paramount, will require many steps of such progression. The example of the European Union is just such a step, which by the way, contrary to any opinion to the opposite, is a work in progress since WW2, and eventually I believe will include all of the countries of continental Europe, as well as Russia. That is from a conceptual economic viewpoint a given, I believe.
Politically of course great difficulties may still exist. But if one has any sense of history, it cannot be denied that human historical progress, as it is defined, is apparently so now in Europe, notwithstanding the difficulties! Not that may years ago, war might have already broken out between Germany and Greece and Spain for example, given the current trade realties! That they debate and find solutions is certainly progress, is it not?
They know that they must become essentially unified economically, to offset the competitive powers of the burgeoning economic unions currently being pursued by the ASEAN group led by China as well as India......continued
continued............I try to avoid an oversimplifying of the complexities of these challenges. But if one looks at the Americas for example, it can be easily seen that we live on a continent that is severely divided and separated. Canada and the US have fairly good trade relations, if somewhat defined (some say dictated) by the stronger nation (USA), but what of the vast number of other markets?
ReplyDeleteIn essence the US, having dominated the sphere for so long, and limited trade with it's neighbors, that the entire "American" community is economically rapidly falling behind. As a consequence of shortsighted development ideologies from the early 20th century and before, U.S "manifest destiny" policies of the 19th century replaced by an "empirical" status at the end of the "cold war," have no place in a 21st century economic reality!
Interestingly we see China and India and other ASEAN nations "poaching freely" in our hemisphere for material and trade from Brazil,Peru, Mexico and even Canada etc. Having the competitive edge of common market free trade ideals as their entry approvals, along with cheaper labor costs and currency advantages etc.
Meanwhile American politicians sit arguing about birth certificates and abortion and gays etc etc etc ad nauseum! They continue to attack without forethought, the very fibre of goodwill and the essential contract of good faith that existed with the nations working people for so long. I believe to distract from the fact that they have no real plan for Americas recovery?
It may be understandable and forgivable for a while, that Americans continue to treasure the ideals of that all powerful American republic, regardless of the developing practical realities of this new century.
It is not however I think, a very sensible path to follow, to highlight an ideological emphasis on this jingoistic marginalization of this great nation. Simply to serve some passe' and idiotic libertarian style fantasy of some "shining house on the hill".
Ronald Reagans ideal in this regard, has certainly already been realized. The people of the world need America to recognize that our admiration has already been earned, and it is now time to make the Global reality, with apologies to Reagan, " a shining Globe in the cosmos". America can lead this progressive movement, or become slowly more isolated and divisive. The American economic community must arise to become an equal player in Global economics for the 21st century. It is simply an essential !
At present it sits ideologically, somewhere on the fence between accepting it's natural leadership role of a partnership of nations, in the development of an "Americas economic community" to maintain a Globally competitive position economically, or attempting to dictate the path for humanity...... The ideological divide as I and others outside, read it, is annoyingly that at present..........
James,
ReplyDeleteThank you for taking the time to write such a detailed and understandable answer to my question. I appreciate your thoughts and discussions.
John C..... I have just been reminded of my report to my board written November 2008. Thought you might like to see that i have been at least constant in my predictions and analysis. Enjoy...:-)
ReplyDeletehttp://www.jamesconvey.com/uploads/3/3/8/3/3383644/forecastsforthe_future.pdf
John C...
ReplyDeleteThank you for your kind remarks and your stimulating questions. I can assure you that my response to you will appear as an item on my website in the coming days. Additionally John, it is continuously disconcerting to see the narrow viewed divisive candidates, again coming to the foreground of conservative politics in your country?
Not one single candidate appears to have any real general grasp, as to those challenges I outlined above? Certainly not in any public sense? It still appears as if it is cons vs dems in some crazy war of attrition? While the rest of the world moves faster and faster toward a new progressive methodology for trade and regulation and repairing the damage, that serves both individual nation states and the needs of the populations.
All politicians in the US appear currently to be only focused upon the inward competitive challenges, with President Obama as the focal point of all disputes? While no attention is being paid to the outer competitive realities of a fast moving Global economy, and the sinking values of American domestic assets? It is for me some form of mental illness that can only be defined as an illicit "paranoia" which can destroy the Nation if it is not checked quickly. Newt Gingrich again for Gods sake? Ron Paul again? Where are the futurists and dreamers of great dreams that used to lead the centrist movement in the U.S?.....As I said in my Gagarin piece ".... a kennedyesque moment is seriously needed........" and right now!
John C and LOU, Here is a snippet from todays Wapo. very interesting observation. Author RICHARD COHEN... oped piece. try and read the whole article. It is enlightening and truly an honest opinion.
ReplyDelete."..........It turns out, however, that some of those most inclined to exalt American exceptionalism are simply using the imaginary past to defend their cultural tics — conventional marriage or school prayer or, for some odd reason, a furious antipathy to the notion that mankind has contributed (just a bit) to global warming. Their enemy is what Gingrich calls “the secular left” — people who not only approve of gay marriage but also apparently don’t fly charter as he does.
The huge role of religion in American politics is nothing new but always a matter for concern nonetheless. In the years preceding the Civil War, both sides of the slavery issue claimed the endorsement of God. The 1856 Republican convention concluded with a song that ended like this: “We’ve truth on our side/ We’ve God for our guide.” Within five years, Americans were slaughtering one another on the battlefield.
Therein lies the danger of American exceptionalism. It discourages compromise, for what God has made exceptional, man must not alter. And yet clearly America must change fundamentally or continue to decline. It could begin by junking a phase that reeks of arrogance and discourages compromise. American exceptionalism ought to be called American narcissism. We look perfect only to ourselves.........."
Headline from todays Financial Times out of the UK.
ReplyDeleteBritain’s private for profit care faces crisis
FT Investigation: Britain’s care homes face a deepening crisis as some private-sector companies that piled into the sector struggle with their financial miscalculations amid fresh evidence that they provide worse quality care than their non-profit rivals..........
Lou et al: Here is a link to an excellent
ReplyDeletearticle...http://blogs.forbes.com/johntharvey/2011/06/05/how-to-destroy-the-us-economy/
James, thank you for posting what I think is a great article from John Harvey. I have to say, I posted (a link to) that article on my Facebook page and ended up having the following conversation: (I will have to create another comment to show the rest of the conversation, as it runs out of room). . . . . . . . .
ReplyDeleteAndrew Wetzel
Short-term or intermittent deficit spending with a PURPOSE is one thing (TARP was good) BUT to waste OUR hard-earned tax dollars (the stimulus was largely pork) on crony unionism and nanny-state entitlements while penalizing success (Joe the Plumber!) is opportunistic (see Rahm Emanual), misdirected and plain stupid. When does the budget get re-balanced? The problem now is that deficit spending has become a way of life so, when we need an EFFECTIVE way to do it, we keep hitting the debt ceiling. The author does say that both sides are wrong which is a good starting point for debate. Just my opinion, not looking for a long winded debate.
9 hours ago · Like · 1 person
Mike Stambaugh we wouldn't be in a deficit if we didn't have the burden of a huge, expensive, unnecessary war and tax levels for the wealthiest americans at their lowest since the great depression. it'll take time, but rational, not drastic, measures will bring the country out of its debt. the article makes great points. entitlement programs didn't bring this country down; unnecessary wars and irresponsible tax breaks did.
7 hours ago · Like
JoAnn Venuto Milone
@ Michael, your young views (antiwar) are commendable for your age but reality the world is a scary unsafe place, I do not want to argue with you but your vision is narrow and I pray that our gov't picks the correct battles to keep extremist from destroying the world. So in essences look seriously at gov't sending and as a country we need to make put limits on give aways....make people accountable for poor performance and behavior. If you get a handout you need to give back to the community or no more give me's, drug testing, birth control, etc..... So many things are wrong with the system in place right now so I commend the governors who are trying to balance compassion with accountability.
3 hours ago · Like · 2 people
continued: Lou Milone
ReplyDeleteI think it's the case that the U.S. is spending $4.4 billion per month on the "war" in Afghanistan. How about the hundreds of billions spent on Iraq: Who is doing the ROI on that? Meanwhile, millions of people here are un or under employed. It's absolutely true that the Americans with the highest income levels have almost never had as low an effective tax rate as they do now. Andy, while we usually (and respectfully) disagree, you point about "purpose" is good. How is the money being directed? One of the problems is that the money the U.S. is pumping into the economy, is not in fact actually getting into the economy. It's not in circulation. It is primarily used to bolster bank's reserves, but the banks are not lending it out (much). I'm not sufficiently informed on the reasons for that, but the basic reality is - the money is not in circulation. Housing is still going down. What little demand there is right now, will be greatly reduced further if the gov. severely cuts back on spending. That is the point that John Harvey is making. It's not socialism, it's just math.
56 minutes ago · Like · 1 person
Andrew Wetzel
I agree that we spend too much on what Ike (for the young ones, that would be Dwight David Eisenhower) called the "military-industrial complex" but, unfortunately, in times like these, we need all the R&D we can get to keep us safe and "boo...See More
48 minutes ago · Like · 2 people
Lou Milone
Here is a related issue: another good stat to show you that corporations are not being taxed like they used to be. In the 1950's of all income taxes collected, 61% were from individuals, and 39% were from corporations. Today, 81% of all income taxes collected are from individuals, and 19% are from corporations. Here is the reference for that data: http://americawhatwentwrong.org/stories/who-pays-taxes/
Add to that, the fact that the super rich are paying a lower percentage of their incomes in taxes than ever, and you see that the tax burden has shifted to the middle class. this has been happening since the 1980's. Don't forget, the Bush tax cuts are still in effect right now. They don't seem to be doing much good at creating jobs, but they are pretty good at making the rich even richer.
40 minutes ago · Like
Lou Milone
Andy, solar panels, memory foam, and many, many other technologies came out of the NASA. It creates useful R&D, promotes science, the money spent is primarily spent here in the U.S., and it doesn't kill anyone (except in the rare unfortunate accidents). How about trying to figure the $ costs for taking care of all the injured soldiers when they come back from war, let alone the emotional costs. I am all for protecting our country. I'm not fool enough to believe that we are beyond the era of wars, per say. But wars now are fought in cyberspace and in precision tactical battles. It is very likely that the era of WWII style mega battles is over. Technology has changed the nature and scope of the battlefield.
27 minutes ago · Like
JoAnn Venuto Milone @ Lou because you are a defense dept expert.....cyber war.... Boots on the ground are what converted Iraq into a semi-stable democracy, they tried the cyber war thing and got wack by the media for not having success fast enough the serge was the key! I really dislike it when Monday morning quarterbacks think they have a clue!
JoAnn Venuto Milone and if the world can get a handle on the fact that Iran may have nukes..YIKES... It's a Catastrophe maybe that is why we spent time, talent and treasure to position ourselves to surround the head of the snake "IRAN". Iran with nukes eliminates Israel and destroys Europe and so goes the West.
18 minutes ago · Like
So James, if you'd like to add a comment to this conversation, I'd welcome your thoughts. :)
ReplyDelete@Lou, (Welcome back)
ReplyDeleteWhat little I have seen of this current debate warns me to refrain as it is clearly an ideological issue only, for the main participants, who, it seems, are not really interested in historical factual economics nor current 21st century reality.
Comments such as "Iraq being a semi stable democracy" are patently and obviously a skewed view of the actual reality. What exactly does "semi stable" mean? It is ludicrous to suggest that the wars in Iraq and Afghanistan were viable investments in the progress and development of the region, or the security of the western world. They effectively bankrupted the treasury and as soon as we leave, all hell will again break loose! Nothing gained but much ventured and lost!
If anything the fog has thickened as to the future of the entire Arabian region, in no small part due to past US foreign intrusions and manipulations. And then to go in and totally destabilize these previous dubious "allies" of the U.S because it suited some mad version of US manifest destiny and global dominance politics from the right! Totally disregarding the proximate cause of 911, that being Afghanistan, and creating a new vacuum that is yet to be filled and by God knows what?
As to the economics. I wrote 2 articles among many on my site, (listed some time ago here)regarding the corporate intransigence and the banking industry failure to deliver upon it's promise to disperse the initial 780 billion capital input (TARP) into the general economy to maintain a stable base to begin the cleanup and recovery phases of the original intent of the bailout. (conspiracy of the corporations @www.jamesconvey.com)
I recommend Sorkins book "Too big to fail" (currently an HBO special) which outlines the events and the aftermath and clear breach of trust by the top bankers and corporatists in the nation!
The obvious disingenuous approach to the tax issue by your debater is an example of the extreme rights ideological intransigence, when it comes to sensible tax domains. They would rather see government starved and totally dysfunctional, in favor of equally totally dysfunctional corporate socialism? The difference is of course that we the people can vote out the government every so often, but the private criminals and hedonists can remain secretive behind the closed doors of their boardrooms! For some reason these pundits for extreme right ideals, cannot see this dynamic, nor that thissafety valve of "the vote" was the intent by the founders of the nation and indeed of democracy?
The example of this that stares us all in the face each and every day, is the continuing evidence of the ever increasing accumulation of wealth by so few, in the face of the nations otherwise stagnant and crippled economy! They of course love this, as it gives them ammunition to continue the assault, on what are non pressing issues economically, such as medicare and unions and middle class entitlements etc etc etc . All the while ignoring the real culprits of the nations economic demise. Two ill advised adventures into war and the erasure of the tax base needed to support the nation and which only served to enrich the top small % of the populace.
There is not an economist on the planet that disagrees with these equations.
The debate you are involved in LOU, is I am afraid once again an example of well meaning people ignorant of real facts but well schooled in partisan extremist right wing fallacies. Clearly it is a losing argument when one faces such stubborn insistence upon blind fealty to their own version of some God like ideology that has never succeeded in my lifetime in any democracy for any given length of time.
Also my "simple" reaction to someone's previous simplistic commentary.... If "maybe" ever could be depended upon, then maybe George Bush was right? Unfortunately the maybe about Iraq/Iran, that is commented herein is a long ways off of the reality and was still only guesswork. Not sufficient grounds for the killing of so many innocents. I should add not even well substantiated guesswork!
ReplyDeleteLOU, MY comment as posted to the Washington Post today which reported that the ( RYAN'S PLAN) House budget would definitely increase the deficit both in the short term and the longterm"
ReplyDelete.............. Ryans budgetary nonsense was never the solution to the nations problems. Any sane economist will still insist, that until the expenditures of the pentagon and the war committees are slashed, and the tax regime returns to a balanced and equitable system, whereby the costs of paying the nations debts, are not solely the responsibility of the middle and lower classes. But of all citizens, and especially those that have benefited most from the last 30 years of hedonism and tax free trickle down nonsense, prevalent since Reagan's first term and further exacerbated by Bush in his first and second term. There is no other solution that will solve the issue, and the republican's constant insistence that lowering taxes, results in higher income and job growth is proven to be and is clearly patently nonsense!
Surely no thinking person can possibly disagree with the evidence that still stares us all in the face every day? The corporate and banking sectors continue to reap the wealth for an ever shrinking group of wealthy patrons, while unemployment remains stagnant and the people en masse continue to see their assets shrink. Reaiity must surely sink in at some point and these ignorant (not stupid)people that support this line of thinking, will seek out the truth and recognize the 'conspiracy of illogic' that rules the jingoist republican position?
LOU though you and other readers might enjoy this little preview.
ReplyDeletePosting date to current affairs, june 12th 2011; www.jamesconvey.com. (preview)
A snippet from a Sunday SMS communication with a young up and coming captain of Industry.......... and his bemoaning of his recent score in a golf game...........
"................ You have a family and young kids, not to mention many other lunatic distractions to cope with......... In that case a nine hole 45 score can be a 35 with time well spent."
There are really only 2 types of people that make it to the top in business, as also perhaps in Golf ?..... "Selfish asses....... and those other more humble ' asses ' who now recognize they didn't get there on their own".... In the final analysis, business and life is like the game of golf. Full of challenges, for which most of us are emotionally ill suited and which we try to conquer with equipment also ill suited for the Task ".....:-)
I assure you, given your already substantial achievements, you have what it takes! I can only hope when you finally get there, that you choose to be a Warren Buffet or a Bill Gates or a Richard Branson, or a Steve Jobs, or a George Soros. Rather than a Koch brother or a Hickman or some other Wall street or Threadneedle street ass. That cadre of elitists who now believes, having achieved some modicum of success, has no need of humility or honor or decency. .....
Unfortunately so often the offspring try to emulate their power broker fathers, with limited real success. Like a Donald Trump or the Koch Bros etc etc! Instead they become well monied and boast shells of the fathers, with moronic nihilistic tendencies toward the access of power and control. There are many many examples of this modern 21st century strata of sociopathic hedonism. As so often seen with Golf, they may seem to play the game, but they honor not the rules, nor accept the fixed principles and intent of the challenge.
These unfortunate offspring of this elitist class, pose the greatest danger to social sobriety and decency. Having never experienced real need or the true diversity of a challenging life well lived. They initially blindly stumble around without fear of the consequences, as faced by the rest of average society. When confronted with any apparent hurdle to the satisfying of these self serving attitudes, they set about to dismantle or destroy it, as their selfish nature demands. Even though said "hurdle" may have been established for the safekeeping of a healthy and protective society for all.
And like the spoiled little children they are, seek only to advantage themselves to the detriment of the rest of their fellowman. They are the biggest danger to individual freedom and democracy as I see it.
Have a great Sunday,
james
LOU and John C and anyone interested. Todays Finanacial times London.
ReplyDeleteBreaking News
Bank chiefs’ pay rises by 36%
Bank chiefs’ average pay in the US and Europe leapt 36 per cent last year to $9.7m, according to data compiled for the Financial Times, despite variable performance across the sector..............
Here is another little tidbit for your consumption..... If this doesn't make you even more convinced as to the right or the wrong of these crazy GOP people, then nothing will! Between Ryans luncay and Pawlentys, I cannot decide which window we should all jump out of? What is scary is these guys really believe their nonsense. It is faux economics of the worst kind!
ReplyDeletehttp://blogs.forbes.com/leonardburman/2011/06/10/pawlentys-plan-half-million-dollar-tax-cut-per-millionaire/
From the Washington post today........
ReplyDeleteWith executive pay, rich pull away from rest of America
By Peter Whoriskey
It was the 1970s, and the chief executive of a leading U.S. dairy company, Kenneth J. Douglas, lived the good life. He earned the equivalent of about $1 million today. He and his family moved from a three-bedroom home to a four-bedroom home, about a half-mile away, in River Forest, Ill., an upscale Chicago suburb. He joined a country club. The company gave him a Cadillac. The money was good enough, in fact, that he sometimes turned down raises. He said making too much was bad for morale.............
To view the entire article, go to http://www.washingtonpost.com/business/economy/with-executive-pay-rich-pull-away-from-rest-of-america/2011/06/13/AGKG9jaH_story.html?wpisrc=emailtoafriend
LOU and John C. Hello again...........
ReplyDeleteI wrote this piece over a year ago.... Have things changed? Has any one listened?
http://www.jamesconvey.com/uploads/3/3/8/3/3383644/training_wheels.pdf
James, I've been reading your posts - and the articles from your own web site, with great interest. I was kind of amused after reading your essay "training_wheels", the link for which you just listed in your previous comment.
ReplyDeleteI was amused because you referenced Ayn Rand. My wife - who is a staunch conservative, just today sent me a link to an article that praises Rand, in typical conservative fashion.
I would like both you and John, (hope you're still with us John), to read this article and discuss it with me - here in text of course. I think it will be interesting to compare and contrast James article "training_wheels" with the conservative article here:
http://biggovernment.com/waroot/2011/06/21/ayn-rand-was-right-wealthy-are-on-strike-against-obama/
Please let me know your thoughts about it and lets discuss. Thanks.
Hi LOU,
ReplyDeleteAn article from Andrew Breitbart's website? Not surprising that this piece of disingenuous nonsensical rhetoric would originate from that source.....:-)
It is very interesting how the author (of whom I have no knowledge) of the article, makes no reference to recent history, in his ranting about Obama and how he is somehow singularly at fault, for the businesses and the wealthy wanting to leave America! As a result of the "flooding in of the socialist communist hordes" as envisioned by Rand in Atlas shrugged? It is at times funny, but also a very sad attempt to rewrite history. It is pure and simple, unsubstantiated political punditry. Slanted, opinionated inanity, basically!
The simple honest facts and easiest response to this pietistic idiocy, is that the wealthy in America, are currently taxed at the lowest rate in 50 years. That the export of Jobs began and continued under several republican administrations. That Global factors and inane unregulated financial (Wall street) manipulation, of the basic economic equations of supply and demand, within the American credit system, began under Reagan and continued apace under the just recently ended Bush administration and resulted in the mess we have today! Obama is nothing more than a minor dupe in this historical record.
That tax cheating, which has been in the news lately, (off shore rage) is hardly the crime of the poor and middle class? Also in several pieces I wrote earlier, I commented about the "conspiracy of the corporations" (@www.jamesconvey.com) as well as iterating the deliberate attack upon the US economy and it's middle class to, at all costs, defeat the Democratic party, by manipulating through lobbyists, the ideological schisms amongst a frightened populace. And push conditions to help sell their outdated ideas of smaller government etc etc etc 'ad nauseum'. And so the tea party was born! Now it seems as a result you have a split and seriously divided congress?
It should be noted that government and the "military industrial complex" as envisioned by your great General Eisenhower, grew even more substantially under both the Reagan and the Bush years? That is just plainly a fact!
This ranting text is simply another example of an unintelligently prepared piece! That he would parrot Rand as his source of genius, shows the depths of the desperation the right has sunk to, to somehow try to verify a folly format of economics, that has failed significantly! And Globally has very little if any remaining support! It is this position if taken by the US right wing, and if they succeed, that will ultimately cause the economic marginalization of America and destroy any potential for a solid recovery, or a reestablishment of the US economy amongst the leading economies of a new Global dynamic.
In short LOU this is a piece of nonsense and comes as usual from a very narrow minded and stubborn and erred extremist vision of reality. It is amazing also that he would interpret the Arab spring uprising and other civil commotions around the world, as somehow a warning to Obama against the evils of social equality? (Refer to my piece from some time ago also; http://www.jamesconvey.com/uploads/3/3/8/3/3383644/riots_revolutions101.pdf).
His "clarion call" in Paul Revere style, that Americans would choose to leave their own nation, simply to avoid a return to a tax level, that the vast majority of them agree with (72% at last polling) and which has been clearly shown by the CBO and all economic experts from both sides of the spectrum, is patently ludicrous and also an extreme piece of idiocy! Then again what can one expect from someone steeped in this idiotic and twisted ideological bent?
By the way LOU I am now on Facebook. For better or worse. (Scary for an old man preferring a "hermit" existence...:-)
LOU, Forgive me.....Additional comment:
ReplyDeleteNormally I don't like to parse an item, but this line from the article jumped out at me and shows his lack of research.
"......Without capitalists motivated by profit, there are no discoveries to eradicate polio or create miraculous cancer and AIDS drugs....."
The errors in this statement are considerable. Firstly the Polio vaccine was discovered and disseminated "for free" by Dr jonas Salk, after whom it is named, and whose only desire was to cure the disease. No doubt had he been a capitalist, he could easily have blackmailed the planet for massive profits....:-)
Additionally most of the cancer drugs and aids drugs were discovered and made available originally, with research funding provided to various lab systems by desperate governments seeking cures. This is the cooperation that has always and must continue to exist between economic systems and the public purse, in order to maintain a healthy community and society. That is what TARP was all about and that wasa BUSH solution not an Obama plan!
To turn around and claim that without the capitalist element, none of these treatments would have occurred, shows the limitations of this mans belief system and in fact that of this whole extremist libertarian ideology! It is plainly childish to the extreme! We would still be living in candlelight and riding wagons and horses if capitalism was our only source of entrepreneurial motivation!
continued:
ReplyDeleteCapitalism alone did not take us to the moon! As in this and most cases of mans serious progression since the advent of the industrial revolution, it has always been the benevolence of a democratic form of cooperation, between government and private citizenry, that has paved the way toward any real progress. Capitalism is simply an ism and as I have often said it is simply a tool for the benefit of all, not for the few.
LOU, Here is my new posting to my website. Thank your wife for the inspiration. Hope she will find this of interest...:-) Sorry for the duplication.
ReplyDeletehttp://biggovernment.com/waroot/2011/06/21/ayn-rand-was-right-wealthy-are-on-strike-against-obama/
Here is my response as posted to the moderate perspective blog @ Blogsite.com and to the above mentioned article.
Basically my argument is that Ayn Rand was in fact nothing more than an excellent wordsmith, and was also a slightly paranoid and delusional eastern European (Russian) femme fatale, that having witnessed Stalinism first hand, felt a need to go to the other extremes in her support of capitalism. I hold that extremes of any nature, are the most dangerous states that humankind can ever find themselves in! It should also be remembered that "Atlas Shrugged" is nothing more than a philosophical novel. It is not some magical economic thesis of biblical proportion! And notably AYN RAND was a non believer. Which hardy fits with the evangelical nature of this Guys ranting nor of his fellow ideologues?
Thus this disingenuous article spurs me to make the following commentary.
(An article from Andrew Breitbart's website? Not surprising that this piece of nonsensical rhetoric would originate from that source? How else would it get published?)
It is very interesting how the author (of whom I have no knowledge) of the article,' Wayne Allen Root', makes no reference to any recent history, in his ranting about President Obama and how he alone is somehow singularly at fault, for the businesses and the wealthy wanting to leave America! As a result of the "flooding in of the socialist communist hordes" as envisioned by Ayn Rand in Atlas shrugged? It is at times funny, but also a very sad attempt to rewrite history. It is pure and simple, unsubstantiated political propoganda. Slanted, inaccurate and totally inappropriate in response to todays American economic challenges!
The simple honest facts and easiest response to the content of this pietistic idiocy, is that the wealthy in America, are in fact currently taxed at the lowest rate in 50 years. That the export of Jobs began and continued under several republican administrations. That Global factors and inane unregulated financial (Wall street) manipulation, of the basic economic equations of supply and demand, within the American credit system, began under Reagan and continued even more apace, under the just recently ended Bush administration, and resulted in the Global mess we have today! Simply put, this unfettered, unregulated free market system, as envisioned by Ayn Rand in Atlas shrugged, and implemented so arrogantly and empirically by the American ruling economic class, beginning in the 1980's, basically almost destroyed the entire capitalist system on a Global basis! Obama is nothing more than a minor dupe given this historical record. No more than a convenient whipping boy, for those with short memories or of dubious honesty and integrity...cont;
.....cont;
ReplyDeleteAlso the constant corporate and individual tax cheating , which has been in the news lately, (off shore rage) is hardly the crime of the poor and middle class? In several pieces I penned earlier, I commented clearly about the "conspiracy of the corporations" and "corporate crybabies"(@www.jamesconvey.com) as well as iterating the deliberate attack upon the US economy and it's middle class to, at all costs, defeat the Democratic party and it's support structures (Unions et al), by manipulating, through lobbyists, any ideological or spiritual schisms, amongst a frightened populace and to totally disregard the needs of the community, to act in a cooperative manner to solve this financial crisis!
Also to continue to push conditions to help sell their outdated and failed ideas of smaller government etc etc etc 'ad nauseum'. Simply to stall for as long as possible, (divide and thus conquer) until they could retrench themselves as a political force in the nation again. And so the tea party was born! Now it seems as a result, you have a split and seriously divided congress? Not to mention a rigid ideological and more polarized government, incapable of debating even the simplest of legislative activities without outbreaks of vehemence and mistrust. Even your supreme court has succumbed to this most recent form of corporate malfeasance.
It should also be noted that government and the "military industrial complex" as envisioned by your great General Eisenhower, grew even more substantially under both the Reagan and the Bush years? That is just plainly a fact!
This ranting text is simply another example of an unintelligently prepared piece! That he would parrot Rand as his source of genius, shows the depths of the desperation the extreme right has sunk to, to somehow try to verify a folly format of economics, that has just failed so significantly and spectacularly! And Globally has very little if any remaining support! It is these positions, if continued by the US right wing, if they should somehow succeed, that will ultimately cause the economic marginalization of America, and destroy any potential for a solid recovery, or a reestablishment of the US economy amongst the leading economies of a new Global dynamic.
In short this is a piece of dangerous propaganda and comes as usual from the very narrow minded, stubborn and erred extremist vision of reality. It is amazing also that he would go so far as to interpret the Arab spring uprising and other civil commotions around the world, as somehow a warning to Obama against the evils of social equality? Humorous if it was not so insanely stupid and completely opposite to the reality? (Refer to my piece from some time ago also; http://www.jamesconvey.com/uploads/3/3/8/3/3383644/riots_revolutions101.pdf).
His "clarion call" in Paul Revere style, that Americans would choose to leave their own nation, simply to avoid a return to a tax level, that the vast majority of them agree with (72% at last polling) and which has been clearly shown by the CBO and all economic experts from both sides of the spectrum, is patently ludicrous and also another extreme piece of idiocy! Then again what can one expect from someone steeped in this idiotic and twisted ideological bent?..........cont;
....cont;
ReplyDeleteNormally I don't like to parse an item, but this line from the article jumped out at me and shows his lack of research and integrity as to the whole truth.
"......Without capitalists motivated by profit, there are no discoveries to eradicate polio or create miraculous cancer and AIDS drugs....."
The errors in this statement are considerable. Firstly the Polio vaccine was discovered and disseminated "for free" by Dr jonas Salk, after whom it is named, and whose only desire was to cure the disease? No doubt had he been a capitalist, he could easily have blackmailed the planet for massive profits!
Additionally most of the cancer drugs and aids drugs were discovered and made available originally, with emergency research funding, provided to various lab systems by desperate governments around the world seeking cures. It is not private activity that monitors or funds the Global monitoring of the outbreaks of life threatening pandemics. Every year governments around the world provide inoculations against all manner of diseases. That is government at work! This is the real truth about social societies and the cooperation that has always and must continue to exist, between economic systems and the public purse, in order to maintain a healthy community and society. That is also what TARP was all about and that was a BUSH solution not an Obama plan! That is also what economic stimulus is all about,........ saving peoples lives and the communities they live in!
To turn around and claim that without the capitalist element, none of these treatments would have occurred, shows the limitations of this mans belief system and in fact that of this whole extremist libertarian ideology! It is plainly childish to the extreme! We would still be living in candlelight and riding wagons and horses, if capitalism was our only source of entrepreneurial motivation!
Capitalism alone did not take us to the moon! As in this and in all real examples of any of mans serious progression, since the advent of the industrial revolution, it has always been the benevolence of a democratic form of cooperation, between government and private citizenry, that has paved the way toward any real progress. Capitalism is not an ideology, but simply an "ism" and as I have often said, as such, it is simply a tool for the benefit of all, not for the few. This author and so many like him, seek out spurious texts such as Rand or Orwell, or other fictional novels and raise them to the level of some 'factual' almost biblical prophecies from the past, to support their idiocies for the present. It is in fact laughable. It is no less a figment of their own selfish imaginings, than someone claiming the world will end on Friday because "my elbow itched and told me so!"
James M. Convey
Senior Analyst
AYIKO GmbH
Hi LOU. Perhaps this will be of interest to your lady also....:-)
ReplyDeletehttp://www.bnet.com/blog/salesmachine/top-10-reasons-ayn-rand-was-dead-wrong/11984
Lou,
ReplyDeleteI am still around but I am not able to check in as often as I would like. Thanks for asking.
It is so very interesting that you post this article. Today I received the Who is John Gult? mug that I recently ordered.
Just so I don't get James in any more of a dither let me explain that my interpretation of Atlas Shrugged and why I ordered the mug. I interpret the book as study of human nature rather than economics. It is human nature to slack off when you notice some is doing the work for you. You don’t have to look very hard to see examples of this every day. People that carry the load don’t usually mind because they are too busy to notice but when the realization sets in its time to shift the burden.
I will close by saying that it is extremely disingenuous for people like Wayne Allyn Root to blame all the USA’s problems on Obama. This is just flat out political rhetoric. The problems in the USA are caused by both parties and a system that is so influenced by lobbyists and campaign contributions.
The following text is probably best suited for its own individual post, but since it is directly related to the topic at hand, I am posting this as an additional comment here. I read (and I'm copying/pasting) the following comment that was posted to the article "What Caused the Subprime Crisis" from a Boston University related web site. The basic article is good in itself, but the comment posted to it is even better. The information expressed also dovetails with the history of the crisis that is expressed in the book "All Devils Are Here", which was published long after these comments were posted in the Boston U. web site.
ReplyDeleteThe article (and subsequent comments)can be found here:
http://www.bu.edu/today/2008/02/12/what-caused-subprime-crisis
What follows is the text of the particular comment I find salient:
"I thoroughly researched the causes of the subprime crisis and was surprised at the paper trail that I found. Although the crisis has its roots in 1999, it was really the policies that were put in place between 2001 and 2006 that caused this crisis.
I reviewed White House, HUD, and Fannie Mae and Freddie Mace press releases and fact statements as well as many Acts that were passed during that time period. If you read down through this, I cite to and quote many of the important documents as well as include links to many of the documents at the end.
Republican Phil Gramm was the sponsor of the 1999 Gramm-Leach-Bliley Act which removed depression-era Glass-Steagall Act requiring a separation between banking, investment, insurance, and brokerage activities. Bush considered appointing Gramm as the Secretary of Treasury and now Gramm is considered as McCain’s frontrunner for the post. Gramm’s and the Republican Congress’ Act was the first key piece of de-regulation that put into place this economic crisis.
How did the repeal of this Act have a role in the current crisis? The Act allowed, for the first time since the Great Depression, banks to deal in securities which allowed them to purchase mortgage-backed securities. If not for the Gramm-Leach-Bliley Act being passed by the Republican Congress, banks could not have dealt in mortgage-backed securities.
Did Clinton have a role in this deregulation? Clinton did initially threaten to veto this Act, but eventually signed it into law. At that time, the Republicans had the majority in Congress, it was a Republican-authored Bill, and the Republicans had enough votes to override a veto by Clinton. Nonetheless, the Gramm-Leach-Bliley Act was only the first step that was taken to create this mess.
. . . . continued in next comment . . . .
In addition to the Gramm-Leach-Bliley Act, the Republican Administration and Congress furthered this mess between 2001 and 2006. In order to stimulate the economy, stave off a recession, and feed the market's huge demand for more mortgage-backed securities, Bush aggressively pushed the lending industry to make massive amounts of mortgage loans. To do so, he called for the most massive increase minority and low income homeownership in our history as part of his "Ownership Society" plan. In 2001/2002, Bush created "America's Home Ownership Challenge" in which he challenged the private lending sector as well as Fannie Mae and Freddie Mac to make more than 5.5 million new minority and low income mortgage loans.
ReplyDeleteTo meet his challenge to the private lending industry, 24 of our largest banking and lending companies pledged to make 1.1 trillion dollars in low income and minority loans. You can find all of the official documents in the White House Press Releases if you use "America's Home Ownership Challenge" as your search term in the White House archives. Bush aggressively pushed the private lending industry to make over 1.1 trillion in low income and minority lows and to "create more creative" loan products to do it. He pushed them to "loosen credit standards" and pushed them to make the most risky loan products available to the riskiest buyers.
Then, he turned to Fannie Mae and Freddie Mac and threatened to not rewrite their regulatory charters. The government-sponsored corporations created to increase the liquidity of mortgage markets, so more capital would be available for mortgage loans, are supposed to lead the market in reaching underserved populations.
While these corporations have increased their commitments to these efforts, they lag behind private lenders in this regard, according to government studies. The Administration will revisit the regulatory goals for these corporations’ purchases of affordable housing loans, which are set to expire in 2003. The federal government should demand more and should hold such publicly-chartered corporations accountable for better performance. (From Bush’s Press Release entitled “A Home of Your Own EXPANDING OPPORTUNITIES FOR ALL AMERICANS, PRESIDENT GEORGE W. BUSH JUNE 2002” regarding his “America’s Homeownership Challenge). The Bush Administration issued the following press release hailing its successes in pushing the private lending industry and Fannie Mae and Freddie Mac into making more low income and minority loans: Under President Bush's leadership, overall U.S. homeownership in the second quarter of 2004 reached an all-time high of 69.2 percent. Single-family housing affordability is at its highest level in 30 years, and minority homeownership set a new record-high of 51 percent in the second quarter. The President has called on Congress to work with him on additional steps to promote homeownership in America. He has set bold goals for homeownership, including his challenge to the Nation to create 5.5 million new minority homeowners by the end of the decade - and he has now set an additional goal of 7 million new affordable homes. (White House Press Release – “Increasing Affordable Housing & Expanding Homeownership).
. . . more to follow . . ..
Through the Republican Congress in 2003 and the Bush Administration's work through HUD and the FHA, the Bush Administration forced Fannie Mae and Freddie Mac to, for the first time, make available riskier loan products to minority and low income buyers. The Federal Housing Administration Mortgage Program. In 2002, the President issued America’s Homeownership Challenge to increase first-time minority homeowners by 5.5 million through 2010. The Federal Housing Administration (FHA) mortgage program is an important tool for reaching that goal.
ReplyDeleteIn 2006, 31 percent of those using FHA mortgages were minorities purchasing their first home. The 2008 Budget continues Administration efforts to modernize FHA by improving its ability to reach traditionally underserved homebuyers (aka those who do not normally qualify for loans), such as low- and moderate-income families, individuals with blemished credit, and families who have little savings for a down payment. (From Bush Administration’s White House Press Release entitled, “Focusing on the Nation’s Priorities – Meeting America’s Housing Needs”).
The Bush Administration through HUD, also required Fannie and Freddie to give a higher percentage of their loans to loan-income and minorities that otherwise would not qualify for the loans. " . . . . .
. . . the rest of the comments can be found directly at the web site I listed previously. It is a very long but well documented post, and definitely worth reading.
John C (and Lou)...... That Atlas shrugged may or may not be a philosophical treatise on human nature is a different debate, than the use of this so called 'philosophy' as a basis for an ideological and economic plan for the largest and most powerful nation on the planet? Nevertheless that is what occurred! And will continue to occur if these cretins are returned to power!
ReplyDeleteHuman nature being what it is, was never any great mystery to the centuries of leaders posed with the task of maintaining a society that also took that factor into account? That is why we have a system of laws.... historically enacted to offset the worst elements of human nature! All the way back to the Magna carta!
That these disingenuous followers, of some 'Randian' philosophy in the second half of the 20th century, should use it to implement an idea of a utopian economic scheme, and acting like power mad juvenile delinquents, overthrow a lifetime of protective laws and statutes, to implement this insanity and to inject this poison into the Global financial system, is what has driven myself and others of my discipline crazy for many years now! I have been raling against this idiocy since the 80's and the Charlie Keating mess!
That it has always also been for some inexplicable reason the idiot child of the republican party, is one of the main reasons I find myself, as a fiscal conservative, completely shell shocked by the experiences of this period! That you John would want a MUG as a reminder is equally disturbing. From my generations economic and philosophical perspective, the sooner Rand is left to gather dust on the shelf of history as simply another poorly written text, will not be soon enough. That the right continue to grab onto such books of this nature, (Orwell, catchher in the Rye etc etc) and use them to renew their attacks upon the balancing factors that make a community a living reality, and a society inclusive of all humans, regardless of their flawed natures, is total insanity to me.
I do wish for you and them that the study of shakespeare might become a better choice and an appropriate mug with the visage of "Will" might sit on your table to remind you of the flaws that are present in human nature and can still be celebrated without extremist right wing rancour! And this indecent and selfish determination that the few successful are being somehow cheated by the vast majority, who are sitting around doing nothing important, is nothing more than arrogance and narcissistic egoism? They do the most important work of all of course! Working and raising families and going to church and basically living without the expectation of any greatness or great wealth that may drive the few. Are we to disavow our majority because they do not meet some utopian ideal of what Ayn Rand believes is the essential for all? A load of pietistic nonsense!
JohnC....Perhaps you have not noticed that your new congress has once again begun to demand more "deregulation" as well as a neutered and ineffective executive, purportedly in order to spur the economy onwards? MItchell or Boehner et al have not missed a beat, and seemingly will not be satisfied until they have completely destroyed the ability of government to protect the citizenry from the worst facets of human nature. That of greed, hedonism and what I call a "soylent green" concept for the future of the aged and the infirm. Next we will see again the arising of Eugenics as a boon to healthcare, as in the American 20's.
ReplyDeletea small quote from one of my older articles on my website>
"........ It is indeed a strange American community, and indeed any community, that would allow these pundits of economic "flim flammery" to continue to hold authoritative positions within the discipline, when their very philosophy has led to the existential devastation of the beneficial aspects for society, of the entire capitalist system! Creating a new have not level of poverty, not seen since the great depression! ......"
John C; ..... Sorry forgot to include reference. My essay on the poor, May 6th 2009;
ReplyDeletehttp://www.jamesconvey.com/uploads/3/3/8/3/3383644/the_poor.pdf
James,
ReplyDeleteMy MUG is to celebrate government kindness. My goal is to depart the working world shortly and collect my 99 weeks of unemployment here in the USA. When that runs out I'll move to Canada for the free healthcare until I turn 65 then its back to the USA for Medicare and Social Security. After all I worked very hard for this and I derserve it NO?
For this to work I need you an Lou to continue to work and pay taxes for me. Deal?
LOU: I assume this was an attempt at sardonic humor? Last stand of a despairing protagonist...:-)
ReplyDeleteIt appears inevitable that you must stay in your crazy comfort zone, convinced by the extreme right wing talking (ranting) points, that the very small % of people, that are in fact parasites on the public purse, somehow really represent the majority of hardworking Americans? Including anyone belonging to a union or working as a public servant (police, teachers, FDA EPA etc etc) and that by eliminating any and all fall back entitlements, it will somehow make for a more economically successful society? This is of course a load of poppycock!
Look at what is already happening in your country as this opinion becomes public policy of some newly elected republican governors that share this same bias? Civil commotions will increase if this continues I can assure you. The debt and consumer crisis has not even hit your shores yet! Think Egypt or Libya or etc, etc . People will eventual rebel against excessive abuse of the wealth dynamic.
For myself I have no problem paying taxes, when I am assured that the tax is essential and equitable. I also want my neighbors to be healthy and our seniors safe from economic trauma in their old age.
The problem again is that a small % of the population of both countries pay little or no tax, and yet continue to gain the greatest and ever increasing portion of the wealth of the society. This is the "inequitable" fact that prevails today across the entire spectrum of western society and more so in the U.S. People are dying and suffering in your nation from poor healthcare access. A fact that is totally unnecessary! As a businessman, capitalist and a fiscal conservative, I find this whole extremist dynamic socially irresponsible!
That you have obviously bought into the notion from the extreme right, that an equitable sharing of a society's wealth and it's burdens, is somehow wrong, and that the poor and middle class should carry the burdens alone? I cannot therefore expect you to learn, until you suffer sufficient indignity under the coming servile state, that will be America in 25 years,or sooner, given there is no change to the aforementioned dynamic.......... Unless of course you are part of the problem ( non taxpaying corporate lackey?)
Also just in the interests of truth in debate....
Point one:
Healthcare is not free in Canada. Neither is it perfect. But It is a single payer system and everyone pays actuarially the same,(Shares the costs) with no Insurance companies making obscene profits. AND Everyone is 100% covered, every single soul!!! There are health insurance companies in Canada that compete for the health excess market, accident and sickness travel coverage etc. and do so quite profitably.
Point 2:
We also don't have 99 weeks of UI?
Point 3:
If you spent 40 years paying into a retirement pool then yes you earned your social security.
Point 4:
U.S. Medicare is non essential in Canada?
I should point out that Canadian banks do not rule the nation! Canada is the single most financially stable nation of the old G8.We are however, bending somewhat, as the forces of the unstable wealth dynamic encroaches upon our economic dynamic as well. That is why I continue to fight! An Equitable society is a stable society and that is my conservative ideal for the planet!
JohnC: Setting aside your attempt at sardonic humor;...:-)
ReplyDeleteHealthcare in Canada is not free and while it is not bereft of some problems, (no system is), It is a single payer system and everyone pays the same based upon actuarial and familial tables. Everyone is covered! That is everyone John, 100% of the population! No insurance middle man taking a 30% slice! Canadian health Insurance companies do quite nicely selling supplemental specialty coverages, such as travel A&S private rooms etc etc. We even have quite a few private clinics that also do quite well as supplements to the national heath service.in heavy volume urban centers. I believe this is a more civilized approach to community health....don't you?
Our unemployment is not for 99 weeks?
And yes, if you have paid into a system for all of your working life why should you not expect a return in the form of old age security? Which includes healthcare. We don't need a U.S style medicare!
I don't mind paying taxes for quality services and a reasonably humane society..... Perhaps you will prefer the riots and rebellions that are certain to come, as the numbers of impoverished and broken citizenry continue to increase in your country? What is scary is that they will also all have a gun!
John C....I forgot to also mention John that we do not get to deduct the interest costs of our mortgages from our tax burden. You might want to take a look at this dynamic in your country, as one of the core reasons your revenue dynamic at the federal and state levels are so bereft of income.
ReplyDeleteThe housing sector has forever been a major burden in this regard.
No politician wants to go there but I believe, and have for years, that this is the proximate cause of the imbalance within your domestic economy. The whole original idea of the right to or the "necessity to own a home" as part of the American dream, is simply another ideological nightmare that is coming home to roost!...... Ask your local economist!
LOU and John C: On the theme of my "training wheels" idea. There is an excellent book on the intricacies of the human experience as regards short term gratification over long term commitment and ethics in business;
ReplyDeleteFlourish: martin Seligman, Free press; 349 pages. $30.00
P.S. Re Martin Seligman: It is seemingly unfair that he should be able to get $30.00 for something I have been saying and writing about for 30 years????....:-) Where is my royalty???...:-)
ReplyDeleteIn any event at least someone has been paying attention and recognizes that the current psychotic trend on Wall street needs to end!
Hey it is Canada Day today.....No congrats? I am disappointed. Happy 4th of July in any case! Check out my site for a comparative comment on Us vs Canadian conservatism.... James
ReplyDeleteJohn C...Hopefully your mug will say "Who is John GAlt?" ..:-)
ReplyDeleteJames,
ReplyDeleteThanks for catching my misspell of John Galt. I can’t believe I did that.
My worry about single payer is whether or not it is sustainable over the long haul. I believe that you and I disagree on the concept of nations taking on too much debt. I think that if you go back in history there are many examples of nations overextending their debt to the point where it ends badly – riots as you point out above. So if the single payer system results in this I would be concerned. Of course in the long haul we are all dead but I do worry about the people that come after us.
Having said that, any community health system has got to be more civilized then the system we have here in the USA. My wife and I are taking care of our elderly parents and I am seeing first hand what a mammoth machine the healthcare system is. I am cynically convinced that the healthcare monopoly is set up to pry as much money as possible from the government. As an example, my mother-in-law had no appetite and was not eating. She was loosing weight fast. The doctor put her thru every test known to man. When they could not find anything they decided it was possible depression and gave her a pill to help. It seems to be working as she has gained back her appetite and is gaining back some of the weight. Why did they not try this first? Humm….
After reading your comments on the mortgage deduction I re-read portions of the deficit commission report.
http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf.
I really like the approach that they outline and it makes me depressed that the conclusions have been ignored. We have really got to find a way to get our politicians to govern.
Belated Happy Canada Day. You live in one of the Great Counties on the earth.
Thank you John....In that we live in two of the greatest nations on earth. Happy 4th.... Hopefully one day all "Americans" north and south, can be equally as proud to have the term "American" affixed to their national identities. I live in hope.
ReplyDeleteThe sustainability of healthcare is an issue that we cannot afford not to address! That being agreed, nonetheless and certainly that some commercial interest, should stand in the way of a composite approach to management of the peoples right to health, is a formula for fiscal disaster. Buying power (demand)in the hands of the people, for what is a societal essential, cannot be left to the vagaries of speculation and the economic benefit of the few. The supply side of this equation is flawed, in that it is controlled behind the proverbial "closed doors" of the socialist corporatism we currently serve?
The size and complexities of the nations health should be within the sole purvue of the peoples representative governments. Commercial aspects and some profit making can still be permitted, based upon geographical demand and supply needs, but only as an adjunct to this essential equation. Otherwise fiscal disaster, as more and more "actuarially" uninsurable people will fall by the wayside. Result rebellion and civil strife! One cannot avoid this result in any lopsided social equation where the wealth dispersal of a nation is not equitably shared.
Given you may have some time (99weeks) on your hands, may I suggest a series of articles that although sometimes a little heavy, are nonetheless most informative, scientifically based, and are ideologically neutral. Also they are structured so you can read them in sequence.
http://www.slate.com/id/2266025/entry/2266027/...
John C......... on your feeling of despair as to politicians. It is not exactly new.....:-)
ReplyDelete".......And so the empire begins to dissemble from within. Attacked by those very men, who having honorably sworn before the Gods and the people, to protect its vitality and that of it's citizens, now in traitorous fashion and for only their own selfish welfare and motive, attack the very foundations of the republic and the central role of the senate and the peoples parliament......." Claudius Caesar"
JohnC and Lou:
ReplyDeleteI wrote this last year this time, and just reposted again to my site. It as is....... comments welcome on my site....:-)
http://www.jamesconvey.com/1/post/2011/07/-the-differences-between-canadian-and-american-conservatism.html
John C, Your comment. ".........I really like the approach that they outline and it makes me depressed that the conclusions have been ignored. We have really got to find a way to get our politicians to govern........."
ReplyDeleteI whole heartedly agree! The problem as always, is that they were entirely too practical in the assembly of this document. They as a group may have been able to temporarily disavow connection to their parties, for the sake of what amounts to nothing more than a "homework" exercise on economic common sense. There is nothing new here, that has not been already known for a long time by economists and analysts.
This is fine and good and they did prepare a fine report. One would think that all parties would be jumping up an down in relief and rushing to debate and implement these clearly sensible solutions? Why is it not so? Why has it never been so?
What they failed to do and miserably as far as I am concerned, is to remove their partisan blinders and highlight the central causes of the abuses of power that pushed the state into this current crisis , and they simply passed over these and other inherent flaws in the entirety of the body politic and the 'corpus economica' as is currently existing.
That of the total corruption at all central and state levels, caused by the excessive abuse of the very purpose of government, by well funded outside forces. Forces that have no interest in the survival of the U.S as some benign and loving and fiscally responsible nation, within a Global community of nations. Their only wish and support for any change, is if it guarantees their continued control of these processes of the administration of the republic.
From the white house to the senate to the congress. In other words the coup de'tat by the military industrial complex as envisioned by IKE! Their tentacles of power are now well wrapped around the body of the American republic and they will continue to suffocate any attempt to return the control of the nation to the people. They have had 30 really good years to effect their raison d'etre. That being the complete control of every essential facet of the nations engines of democracy. From educational curriculae, religiosity, to military idealism, to Government structures and even the indirect manipulation of your supreme court.
For this very practical financial report to ever see the light of day as a blue print for America, there will need to be in addition, a massive review of the concept of American democracy.
The "self evident truths" about individual rights and equality etc as posited by your constitution are not really evident in todays America......... are they? Is not your nation torn between extremists of all views, but mostly dominated by excessive wealth and power and the creatures of that evil dynamic. America is suffering as never before and it angers me that this so obvious idiocy continues to win out over sense and logic........ Conservative values need to be renewed in your nation as they once were, otherwise the compromise of insanity and illogic will continue as will the increasing control by that one segment of power hungry hedonists........ Happy "Independence" day
Well Said James,
ReplyDeleteAs I slowly wake up to the realization that our government is a club composed of well financed unions, corporations and others of monied influence. This club has no interest in doing what is right by the American people.
By the way I did watch an HBO special that both you and Lou might have some interest in watching. It is called "Hot Coffee" and it tells a story of corporate influence in tort reform. I thought it was prety biased but it did illustrate some interesting points.
John C..... I will hopefully have an opportunity to view "Hot coffee". at some point. HBO Canada has different schedules and content of course.
ReplyDeleteOn your point of what I fear appears to be despair, I would offer this observation. Regardless of the seeming intransigent furor that surrounds your body politic, I am witnessing the slight glimmerings of a more "moderate perspective" arising in this latest impasse, re debt ceilings etc.
A centrist presidential stance, is about to be rewarded I believe, by cooperation from the right. They really have no grounds to do otherwise, given the massive public poll numbers against their stubborn and economically ineffective positions?
Add to this the common sense commentary coming from more sensible republican members of the team that prepared the Financial report, Warner etc, and one can feel somewhat more optimistic that a sense of accountability to the American peoples needs, may indeed be the new dynamic?
I had a 'deja vue' moment and recalled my original discussion with LOU on Tim Carters tea party site back in December.
You can access this @ http://www.jamesconvey.com/1/post/2010/12/blog-interchange-recently-on-the-state-of-the-us-economy-wwwtimcartersfirepitcom.html
Hope you can see my points even back then.... "Chinup old chap and KBO" as Churchill would say at times of despair.......:-)
My last post to you John C is missing?
ReplyDeleteupcoming article to my website: Commented to Bryan Rich's article/Weiss management,
ReplyDeleteNovember 27th, 2010. Commentary.
Dear Bryan,
I am amazed at yours and other American advisors focus upon the Euro? One would think that the US is immune to such deficiencies? While one might understandably fall back upon a Friedman (An American economist) for comfort in ones opinions, (incorrectly I would suggest), one must remember the history of Europe! And that the very conditions enacted for the implementation of the single document protocols, was to avoid any such eventuality that Friedman, and now you are forecasting?
Let us not forget that the choices of a divided Europe in the past, had always been excessive jingoism, leading to conflagration and all out war! That was the genesis for the Eurozone and will, I believe, assure it's survival. The social structures and the populace, while angry, will choose frugality and fiscal conservatism over war and strife any day! This is after all their most recent history? Provided the future guarantees some hope of recovery and stability, and their leaders, as they seem to be doing, force some form of "mea culpa" and implement penalties and controls upon the culprits responsible for the disasters. Memories of War, that worst of all solutions, are still very fresh to the peoples of the common market.
I have every faith that the Euro will survive, and even begin to grow itself away from the threatening dangers, as a result of their higher understanding of fiscal accountability, and the real purposes of a healthy Capitalist model. Economic indicators also confirm that systemically, Europe has sufficient strength and the linear models show potential for sustainment of a healthier growth curve. That this may be burdened by a need to assure the solvency of a few minor partners is agreed, but in the long term they have an overall healthier outlook going forward!....continued
continued........
ReplyDeleteI now turn your attention to the US and the absence of comment in your piece, as to firstly it's banking and financial dynamic, as the singular root cause of this tsunami of "excessive exuberance"( to parody Greenspan) or criminality, as others have opined, and the resulting Global crises! And secondly to the weakness of all the leading indicators for a US recovery any time soon?
Add to that, the continuing ostrich, "head in the sand", approach to fiscal responsibility by both the U.S economic and political institutions, and I believe it might just as easily be posited that civil strife in the US could, more so than Europe, tear the Union apart? The seeming lack of accountability and the continuance, unabated on Wall street, of the very activities that caused this disaster, is not even mentioned by yourself, as well as being generally "out of focus" for others within the US sphere of financial advisors? This astounds me!
That the US holds a much lesser position of credibility than Europe, with the emerging markets and the new forces of Global growth, seems to have escaped your attention and others from within the US? This was also the problem with Friedman when he posited disaster for Europe. He did not understand it's history sufficiently, and also missed the long term forecasts and Global indications for his own nations potential for disaster, when he supported the "Greed is good" trickle down nonsense, that became the in vogue economic, and empirical U.S. dynamic of the last 30 years?
I do see difficult times ahead for Europe and I also see them "taking action" and therefore providing hope for improvement. I am certainly more convinced of their ability to weather the current and any encroaching storms.
My major concern as an analyst, remains the health of the US "stalled" dynamics. The seeming intransigence of Americas corporate sector, to focus their efforts upon investment in their own growth engines and entrepreneurial dynamic, is a frightening economic factor? That they seem more attentive to active participation in gaining control of the ideological direction of their nation, and are "playing politics," rather than doing the nations business, should certainly give many cause for concern for the future of the US, as an economic power on the Global stage for this century?
In this current atmosphere of uncertainty, I believe that a new Global economic format will arise and hopefully all nations will be participant in it's formation. Without trade barriers or isolationist punditry, or most frightening of all, the appearance of the ugliness of jingoistic nationalism and manifest destiny idiocy. The U.S has a long way to go to regain Global credibility and regardless of the focus upon Europe, it is the U.S that could so more easily become a marginalized society, as the current problems will ultimately come "home to roost"!
With Respect,
James M. Convey
Senior Analyst, AYIKO GmbH
View This Issue On Weiss research/Management et al
The Euro Zone's Timeout Is Expiring!
by Bryan Rich
Lou and John C. A preview of an item for my website upcoming. www.jamesconvey.com
ReplyDelete"THE NEWS OF THE WORLD".....WHO IS REALLY TO BLAME?
The bastions of these extreme right wing ideologues, have for too long been able to get away with yellow journalism and sneaky attack dog tactics in the media. They have been singlehandedly managing a campaign to bring divisiveness and extremism to the public dialogue and debate, in all western democratic states.
Rupert Murdoch is the Defacto leader of a conspiratorial media dynamic designed to enforce extremist right wing policies upon an unsuspecting public "by hook or by crook", mostly by crook, and the buck must stop at his desk! Cretins Like Beck, O'reilly, Hannity, Ann Coulter and countless others of that Ilk, supported by this press baron and his financiers, have followed the formulas as laid down by the neocons of the nineties such as Carl Rove, and they believe in nothing else but control at all costs, and that "all's fair in war and politics".
Truth, Honesty and integrity mean nothing to these people. Decency has been undermined for the entire time they have been permitted to promote these tactics of evil, and have made a travesty of the whole environment. So much so that the "5th estate" is no longer respected by our communities as a source of reason, a watchdog of our democracies and as the voice of truth in our democratic estate. This is truly a Goebbels like propaganda campaign designed with Global intention and with Murdoch as the current archangel of this evil in our midst!
And when his evil is found out, as in the News Of the World scandal in Britain, he denies any knowledge and uses slash and burn business tactics to cover his evil ideology. What a piece of work this Murdoch truly is. That some of the News of the World employees were dirty may be a given, but he doesn't even wait until due process has been effected, before he uses his usual slash and burn approach and throws a pile of people out of work and closes a division, which brought over 1 billion net revenues into the British economy.
That these workers had nothing to do with the few criminals on the payroll, and that these criminals were his handpicked henchmen and women, following his orders and style, a la Fox news in the U.S.A etc, has also gone by unmentioned? The innocent employees suffering a worse fate than any of his guilty henchmen will ever no doubt feel!
It is another fine example of the abuse of privilege and Murdoch and his ilk, must someday be held accountable! Our society cannot any longer ignore the damage that is being done to our democratic foundations of decency, honor, integrity supported by an honest and unbiased free press! Free from the ideological influence of these excessively wealthy men, who having achieved their status of power seemingly forget, that they did not achieve their positions, solely upon their own merit, but are part of a society and as such they owe a duty to that society, to protect it from the very type of devious conspiracy that men like Murdoch continues to perpetrate.
I trust that the investigation will not stop until it uncovers the criminal path that leads directly to his desk!
James M. Convey
Lou and John C... Thought you might find this an interesting retrospective comment from May of 2009 to Nouriel Roubini's oped in Forbes......
ReplyDeletePosted by jamesmconvey | 05/21/09 12:05 PM EDT
I am heartened to see that Nouriel has almost exclusively reserved his "bad" news for the US audience, as I was a little tired of his predelictions of doom and gloom worldwide. I agree the "advanced economies", as he refers to them, will suffer a longer recovery period and most especially, I see the US lag behind even further in that group, for all the reasons he outlined, but also because of the totally dysfunctional political dynamic within the US.
I do believe the world power economically, is shifting rapidly away from the old "advanced" economies and that there will be a forced redefining of the "American dream" due to civil and labor unrest in the coming period. Asia is already positioned to fill the vacuum. They are moving rapidly ahead and their economies, contrary to what Nouriel thinks, are responding more speedily to internal stimulus, as well as to the revival of a new 'supply and demand' dynamic for the basic trappings of middle class existence, amongst their consumer base, which as he must know, brings "billions" of previous non consumers to the table of commerce?
These have been the signs that Nouriel has disregarded and indeed downplayed significantly in his analysis. Basically it is out with the old and in with the new! Europe will also find itself leaning toward a similar growth demand dynamic from the Eastern European economies on it's borders, and this will force expansion of the Eurozone more rapidly and with decentralization of political power as a result. This will be an uncomfortable change for many!
The bottom line is that the US and Europe are in for a much longer protracted recession, than the rest of the globe. It is however not the end of the world as we know it, but simply a realignment of the economic engines of growth and stability. Capitalism at work.
Don't Believe The Optimists
Think you see green shoots? You're wrong ...
By Nouriel Roubini
http://www.forbes.com/2009/05/20/depression-recession-green-shoots-housing-jobs-opinions-columnists-nouriel-roubini.html?partner=email
Louand John C..... Soon to be posted to my site @www.jamesconvey.com
ReplyDeleteFrom a private correspondence May 20, 2011. "The new Mein Kampf". Is the American extreme right moving ever closer to a rigid ' fascist doctrine'.........?
Hi Mary,
Frankly Mary, Len doesn't understand his own European history. Once again he parrots somebody else's idea that the soviet union was purely a "socialist" state! It was most assuredly not! It was right wing extremist thinking, that caused the origins of the socialist bolshevilk revolution, to become it's unfortunate ultimate expression! That of Stalinism!
I was born and raised in Europe as you know, and can tell you that our professors at school were adamant on this very point! It was mainy in America that ideologues (such as Mccarthy) used the image of a "socialist" Russia to frighten their people. Normal punditry for them. This vitriolic hatred and mistrust of Russians and many Europeans survives in America to this very day!
Subsequently the very word "Socialist"has become dirty and of course they include anyone who does not fit their idea of what constitutes American values, into their 'socialist' or 'leftie' or 'libtard' definitions. That their very nation has depended upon socialism to survive, through 2 world wars and several more since, is what makes people like Len and that ilk of idiocy so darned annoying. They do love to hang on to their "bogeymen".......................cont;
cont.......Believe me if I thought that their version of right wing ideology could better guarantee, no famine, no preemptive wars, no dead children around the world, no suffocation of our planets climate, jobs for everyone and health care and support for the elderly, as they approach death, the end of religious fanaticism, etc etc . Then I would join Len and his buddies and become a member of their master race!
ReplyDeleteIt is all such idiocy that their policies have any merit in todays new Global world, with it's social challenges.... Idiocy! It was socialism that took them to the moon! Built the hoover dam! The weapons of war in ww2! Highways. Airtraffic control system, schools, higher education standards, out of the depression and on and on. Their ilk have only one claim and that is, they represent the largest and wealthiest multinational corporations, and the still most corrupt banking system in the history of man!...........cont;
cont........Stalin and his cronies, kidnapped the bolshevik revolution and changed it forever with his imposed autocratic system! The original revolutionary concepts of Lenin and Marx, (another form of extremism)were to overthrow Czarist (Monarchist)power and institute a purely socialist state. Stalin was not in the least interested in that form of government. As is happening today in the U.S, he used the concepts of socialism and people power to enhance his own autocratic rule. Not a socialist system, but rather what he called a controlled communal dynamic.
ReplyDeleteAfter the initial revolutionary fervor for freedom from monarchistic tyranny ( and for food and an end to War) by the people, they fell under the extremist and jingoistic control of a central committee, which only worked toward increasing their own power over the "masses"! This is not a socialist dynamic, but simply another form of extreme right control thinking, as in Fascism and autocracies such as Hussein, Khadafi, Mubarak and the Saudi and Syrian forms of controlled right wing extremism. In essence, in the early 20th century monarchistic societies, were replaced by such systems throughout Europe, and parliamentary democracy only really flourished in Britain and the United States during that historical period.
Today in the middle east and also in parts of Europe, we are seeing again an arising of downtrodden people against such excessive power and control. What I worry about is not that the people have valid reasons and the courage to die for them, but what will come along to 'kidnap' their sacrifice and turn it against them and ultimately into a new system that will again abuse of their rights!
Len is caught up somehow in these quasi reality concepts of right and left, without having the slightest idea what he is talking about? He has become a pawn of punditry and extremist control tactics, propaganda exercised via media and hate ideology. Unfortunately what he is most afraid of, is exactly what he is supporting. A drive to a new "autocratic" form of control of the masses and power in the hands of a small clique, of excessively greedy and power hungry, misinformed radical right wing extremists. Supported of course by men of bloated wealth, with extremist viewpoints as to the destiny of the people. That is to serve their ilk as superior beings, because they are so convinced of their own right to lead!
He likes to believe that the greater good of mankind will be best served by this cadre of evil people, that hold these same old ideologies, that have destroyed civilizations over and over again in the history of mankind! Great greed shall only lead to social destruction. The right wing, particularly in America and some western powers, have going on at present, what I call a "conspiracy of the illogical". That is that they are truly convinced of the rightness of their positions, and that accumulation of wealth, under the existing models of the capitalist system, must be protected at all costs. They are totally blind to and are disregarding of the real needs of humanity.
I trust Mary that at some point Len will see the folly, of allowing himself to be so easily attracted to the lies and subterfuge of these very dangerous ideologies..........
regards
james
Lou JohnC........ Comment to Bryan Rich's latest on "Weiss money markets"
ReplyDeleteDear Bryan, Re: your latest issue on money and markets.
I do not agree with your ongoing and what I consider impractical and even a little inflammatory, condemnation of the political debate that European officials are conjoined in, as well as their suggested and highly sensible proposals and solutions for the future health of the European community.
Once again rather than rewrite I am attaching a link to my current reposting of a comment I made to you previously on this subject. As an aside you might want to consider seeking more commentary, opinion and advice from a broader economic perspective, than simply parroting Milton Friedman? Stiglitz might be more a living and current economic source, as well as several countless and leading European and Asian economists alive today, with a broader view of Global issues. The narrowness of your view is limiting as to the overall transition we are facing on a Global basis and to focus upon Europe is, in my opinion, doing a disservice to your readers and followers.
http://www.jamesconvey.com/1/post/2011/07/the-euro-debate-part-2.html
with respect
James M. Convey
Senior Analyst, AYIKO GmbH
Hi Lou and John C.......... all you need are two more items to top the 100 mark for comments..........? Is anybody out there.........Seti calling?...:-)
ReplyDelete#100............I wrote this communique some 2 years ago now, in response to an associate who at the time considered Obama as somehow evil personified, as well as an anathema to what has become euphemistically known as the "Reagan doctrine" . Given the Temper of current political discourse, wherein Reagan has actually become a "centrist poster boy" for the moderates in the US congress, it still offers I believe, both a current, as well as an historical perspective to the ongoing drama on the world's, as well as the American economic and political stage............
ReplyDeletePosting soon to www.jamesconvey.com, "letters to Len" ... Enjoy this preview and visit the site for other current affairs content................regards James
On Apr 1, 2009, James M Convey wrote:
Hi Len,
On your comments, O'Bama is a consummate politician and a pragmatist. If this makes you view him as a socialist, it is only because the challenges he faces are exactly those that need a "socialist" approach, as a result of the mess the world is in. You are witnessing the first acts of an "Historical Drama"!
Your remark about Reagan, the last 30 years, and free enterprise and capitalism, are the keys for you to think about and discern for yourself, why the world requires a totally new approach to the "Human" equation? You need to think back to what the world was like prior to Reagan, both politically and economically?
We had a 'cold' war with the soviet empire, there was virtually no free trade agreements of any consequence. China was still outside the world bank and did not participate in any meaningful trade with the west. Thus also with India and all of the third world, with the exception of the oil rich Fiefdoms in Arabia.(Secured by the US dollar) South America was effectively bankrupt. The Eurozone were still in the throes of establishing the single document protocols for free trade within Europe, and the Euro was an infant currency. The USA was undoubtedly the stand alone "super power" and richest country on earth, and the American dream appeared endless and secure. Every american was "rich"?...cont;
cont;..........Unfortunately along with Reagan came the redefinition of "Greed" and the virtual total erasure of banking and trade regulations, that had been in place since the 30's and strengthened every decade or so. The speed of communications with the advent of the computer, meant that trades and securities could move instantaneously from one zone to another in a blink of an eye, with no "watch dog"mechanisms to assure quality control! The US banker, like an excited little boy with his new "Gameboy", set about playing with the controls. They even invited a few "good friends", ( US friendly Democracies) to join in the game.
ReplyDeleteBolstered by their "victory" in the cold war, and an inate belief in their destiny as God's real chosen people, they began to do business in a careless and arrogant manner. They acted as economic dictators in "leading" the world into the American century. Other old world societies went along hand in hand, and who was there to stop this economic juggernaut? By the end of Reagan's reign the dye was cast. Subsequent administrations did nothing to correct the errors and by the time Geo W came along, his stupidity further exacerbated the problem, by adding the "conquering hero" syndrome to the equation, even further pissing off the rest of the world. Voila, the economy, and the patience of the global populace, finally hit the wall!
For some this is a blessing in disguise, as is being witnessed in London this week. Believe me there are more than just economic" bubbles" bursting all around President O'Bama? But do you know what I think..........I believe he gets it! I think he is more in tune than any president has been for the last 30 years! It is not just about socialism and capitalism Len, as I have been trying to get you to understand for some time now. It is finally about the big "little" question, how to do both at the same time, and not just for the "bluebloods" or elitists of the world, but for all mankind. Remember Plato and Aristotle? It is time for everyone to have access to what is euphemistically called "The American dream".
I don't think either republican or democratic politics has more importance than this single challenge. There are some however, who still will cling to an "America First"or "why should we share with those people" dogma, and that is the domestic problem that will dog O'Bamas presidency. And I dare say Harpers leadership as well, given the plethora of elitists we have in Canada who want to maintain their control over this country's economy and impoverish the middle class.
regards James
FYI........The following are OMB stats of U.S. increases of the debt ceiling since President J.F.Kennedy. The information is revealing.
ReplyDeleteKennedy raised the debt ceiling 4 times for a total increase of 5%; Johnson 7 times-18%; Nixon 9 times-36%; Ford 5 times-41%; Carter 9times-59%; Reagan 18 times-199%; ( Reagan tripled the National Debt), George H.W. Bush-48%; Clinton 4 times-44%; George W. Bush 7 times-90%; Obama 3 times-26%.
The Democrats’ total percentage increase is 152%. The Republican presidents, when added together, have raised the debt ceiling by a total of 414%.
I don’t have an axe to grind here but wouldn’t we all be better served if, instead of ideological propaganda, the truth were told?
Politics: posting to www.jamesconvey.com
ReplyDeleteThis is one of the finest articles on the subject of the folly of the current state of the American conservative movement. I have posted it complete as written by Fareed Zakaria (CNN etc), a truly well informed and intellectually honest journalist and unbiased observer of the issues. Please enjoy.
Subject: Americas conservative woes. Time magazine June issue 2011.
HOW TODAYS CONSERVATISM HAS LOST TOUCH WITH REALITY:
By Fareed Zakaria
"Conservatism is true." That's what George Will told me when I interviewed him as an eager student many years ago. His formulation might have been a touch arrogant, but Will's basic point was intelligent. Conservatism, he explained, was rooted in reality. Unlike the abstract theories of Marxism and socialism, it started not from an imagined society but from the world as it actually exists. From Aristotle to Edmund Burke, the greatest conservative thinkers have said that to change societies, one must understand them, accept them as they are and help them evolve.
Watching this election campaign, one wonders what has happened to that tradition. Conservatives now espouse ideas drawn from abstract principles with little regard to the realities of America's present or past. This is a tragedy, because conservatism has an important role to play in modernizing the U.S.
Consider the debates over the economy. The Republican prescription is to cut taxes and slash government spending — then things will bounce back. Now, I would like to see lower rates in the context of tax simplification and reform, but what is the evidence that tax cuts are the best path to revive the U.S. economy? Taxes — federal and state combined — as a percentage of GDP are at their lowest level since 1950. The U.S. is among the lowest taxed of the big industrial economies. So the case that America is grinding to a halt because of high taxation is not based on facts but is simply a theoretical assertion. The rich countries that are in the best shape right now, with strong growth and low unemployment, are ones like Germany and Denmark, neither one characterized by low taxes...........cont;
Many Republican businessmen have told me that the Obama Administration is the most hostile to business in 50 years. Really? More than that of Richard Nixon, who presided over tax rates that reached 70%, regulations that spanned whole industries, and who actually instituted price and wage controls?
ReplyDeleteIn fact, right now any discussion of government involvement in the economy — even to build vital infrastructure — is impossible because it is a cardinal tenet of the new conservatism that such involvement is always and forever bad. Meanwhile, across the globe, the world's fastest-growing economy, China, has managed to use government involvement to create growth and jobs for three decades. From Singapore to South Korea to Germany to Canada, evidence abounds that some strategic actions by the government can act as catalysts for free-market growth.
Of course, American history suggests that as well. In the 1950s, '60s and '70s, the U.S. government made massive investments in science and technology, in state universities and in infant industries. It built infrastructure that was the envy of the rest of the world. Those investments triggered two generations of economic growth and put the U.S. on top of the world of technology and innovation.
But that history has been forgotten. When considering health care, for example, Republicans confidently assert that their ideas will lower costs, when we simply do not have much evidence for this. What we do know is that of the world's richest countries, the U.S. has by far the greatest involvement of free markets and the private sector in health care. It also consumes the largest share of GDP, with no significant gains in health on any measurable outcome. We need more market mechanisms to cut medical costs, but Republicans don't bother to study existing health care systems anywhere else in the world. They resemble the old Marxists, who refused to look around at actual experience. "I know it works in practice," the old saw goes, "but does it work in theory?"
Conservatives used to be the ones with heads firmly based in reality. Their reforms were powerful because they used the market, streamlined government and empowered individuals. Their effects were large-scale and important: think of the reform of the tax code in the 1980s, for example, which was spearheaded by conservatives. Today conservatives shy away from the sensible ideas of the Bowles-Simpson commission on deficit reduction because those ideas are too deeply rooted in, well, reality. Does anyone think we are really going to get federal spending to the level it was at under Calvin Coolidge, as Paul Ryan's plan assumes? Does anyone think we will deport 11 million people?
We need conservative ideas to modernize the U.S. economy and reform American government. But what we have instead are policies that don't reform but just cut and starve government — a strategy that pays little attention to history or best practices from around the world and is based instead on a theory. It turns out that conservatives are the woolly-headed professors after all!
It feels somewhat lonely to visit this site?..... Hope all are having a good vacation,...... perhaps?.....:-)
ReplyDeleteJames, excellent stuff. I've been on vacation with my wife most of the past two weeks. I'm still catching up to the great stuff you've posted recently. I am up to your OBM stats. Where did you find those numbers? . . Or, did you calculate them yourself? Either way, I'd love to see your source for the underlying data.
ReplyDeleteI came across this comment from Robert Rubin, which I think is yet more logical proof that the conservatives are very disingenuous on the issues of taxes and the economy.
"Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://blogs.ft.com/the-a-list/2011/07/28/americas-success-depends-on-a-sound-fiscal-regime/#ixzz1TSNUWWsU
The argument against raising taxes during a recession is a red herring given the deferred effective date, and in any case would apply equally to spending cuts. Opponents of President Bill Clinton’s 1993 deficit reduction programme also said that the tax increases – almost entirely on the most affluent – would lead to recession or worse. Instead, we had the longest economic expansion in the nation’s history – in part because of the confidence created by sound fiscal conditions – with massive job creation, widespread income increases, and ultimately the first fiscal surplus in 30 years. That notwithstanding, the ideological opposition to revenue increases continues, creating deeply counter-productive pressure on programmes critical to our economic future and the economic security of our people.
It is delusional to think that our fiscal problems can be solved predominantly by cutting non-defence discretionary spending, which can be roughly defined as the regular functions of government apart from defence, social security and the healthcare programmes. The numbers simply won’t work – the Congressional Budget Office estimates that on a realistic appraisal of our current policy outlook, our deficit will be 7.5 per cent of GDP in 2021, and non-defence discretionary spending is roughly 4.4 per cent of GDP today. Moreover, the damage to our economic future from focusing predominantly on non-defence discretionary spending (which includes education, infrastructure and the many other aspects of public investment) would be enormous."
I also came across some interesting articles in a blog called "Economists View".
http://economistsview.typepad.com/economistsview/2011/07/paul-krugman-corporate-cash-con.html
http://economistsview.typepad.com/economistsview/2011/07/reckless-endangerment-of-the-truth.html
Please keep posting your informed and inspired comments. I will read the article by Zakaria as soon as I can.
Opps, I meant "OMB" , not "OBM".
ReplyDeleteHi Lou welcome back:
ReplyDeleteUnited states Office of Management and Budgets (OMB) is the source, although I access these numbers as a matter of course for economists and analysts through normal access channels. Our Department of the Treasury here in Canada as well....cheers
Just a point of order Lou. I am still not willing to accept this current brand of American conservatism, being practiced by this Republican party, as any form of conservatism with which I am familiar. My material has been arguing this point for a very long time....:-) Their actions both now and over the past decade, have thrown the entire capitalist system into an energy killing stall which will destroy the US economy and set the entire western world on a downward spiral..... I know that Asia was destined to arise and become a new Global juggernaut, but we certainly did not need to make the competition as easy as these boneheads are doing! Borderline fascism appears to be their main ideology, I believe.
ReplyDeleteJames, I know you said the source of the data is the OMB. My question is more specific: is there a URL (some specific page within a specific report) that lays out the data in the way you listed it here? If so, could you list that URL for me please? I just want to be able to reference the source of the data in case someone asks me where that data comes from or how it is calculated.
ReplyDeleteWith regards to your comments about "current brand of American conservatism", I agree with you. I think we've both been saying that in all of our comments since the beginning of this blog. What I find dishartening about the current political landscape is that so many people seem to believe the mantras of the ultra-conservatives about "government is the problem" and "lower taxes on the rich creates jobs", like they are in a religious revival meeting; despite the fact that there is no data to back up those claims, but plenty of data to prove the opposite. I don't get it.
I believe a lot of the religious ferver is based on underlying prejudices. In that kind of environment, things will only continue to deteriorate. Part me of thinks - let it happen, the quicker the better. Once the middle class is completely dismantled, perhaps these dummkoffs will finally wake up and realize what's been going on.
To JohnC. Did you ever watch "Too Big To Fail"? If so, what are your thoughts about it?
ReplyDeleteJohnC, in one of your previous comments, you said ". . wake up to the realization that our government is a club composed of well financed unions, corporations and others of monied influence.".
I almost let this comment slip by. :) I know you are against unions because of the situation with the public unions in your home state - which you listed an article about. But outside of a few public unions, what power do the unions hold today? How well financed are they when such a small % of U.S. workers belong to unions today, particularly private sector unions? I believe your comment is correct with respect to corporate power though. Even within the last year or so, (since we've been chatting on The Firepit and here), things have gotten worse for the average individual and much better for large corporate interests - and the people who run them. Is there any denying that fact?
Lou.....OMB.......Historical data all sections can be accessed @
ReplyDelete.http://www.whitehouse.gov/omb/budget/Historicals
You can do a little digging there. Comaparatives are all there! Good luck.....:-)
Hi Lou,
ReplyDeleteThere has been quite a few new comments since I last checked in and I have not read them all. I wanted to answer your questions to me in your most recent comment of July 29. Forgive me if I am not answering in the contest of previous comments.
I did watch “Too Big to Fail” and enjoyed it. I felt that it was not able to fully tell the story in the time allotted. It also seemed a bit mellow dramatic to me. I am sure that the book is a much better accounting of the crisis than the documentary.
I think you are a little blinded by your singular focus on the evil of corporations. I believe you need to be a little more objective and consider all the influences that are in our government. Unions have a tremendous influence on American politics. You cannot necessarily say that just because only a small % of workers belong to unions that they are not well financed. Actually, your statement supports the contention that their influence is way more than their % of the population.
Take a look at www.Opensecrets.org and the money influence in politics. There are many many union organizations that contribute a large amount of money in politics. I highlight a couple of the webpages.
http://www.opensecrets.org/orgs/list.php?order=A
http://www.opensecrets.org/527s/index.php
Additionally, union influence goes well beyond the contribution of money. I don’t know if you belong to a union but I’ll bet that if you do you have been heavily recruited to work phone banks or walk precincts for the favorite Democratic candidate. Unions, as a part of their function, organizing people – they do it to fight big corporations and they also do it to influence politicians. The GM bailout was a huge payback for Union support.
Finally, I really cannot comment on your “average individual” comment until I know your definition of “average individual”. I say this because I consider myself an “average individual” and I am better off now than at any point in my life. I am not a corporation and do not run one. I don’t compare my circumstances to corporate executives because I would not want that job. What is an “average individual”?
I will say that educated people, risk takers and people with skills in high demand (like CEO’s and other executives) always do better during recessionary times. Alos, your comparison would make more sense if you compared it to recessionary or sluggish economies during the period coming out of the Depression or other major recessions. Were average individuals “better off” than corporate executives during these periods?
Lou and John C.......This article has great kinship to my earlier piece on "Time to refit the training wheels" @www.jamesconvey.com (archives)
ReplyDeleteEnjoy. James
July 31, 2011 9:32 pm
Bleak realism is no way to run a company
By Paul Collier
Greed and fear have shaped the design of the modern Anglo-American company. Belief in the potency of greed drove the trend to tighter...
The full article can be found at: http://www.ft.com/cms/s/0/b69128d4-bba9-11e0-a7c8-00144feabdc0.html
Today the debt limit increase is agreed and a lousy deal for the American people is made.........
ReplyDeletePerhaps a comment on the state of the American union today.......... circa 2011?
".......And so the empire begins to dissemble from within. Attacked by those very men, who having honorably sworn before the Gods and the people, to protect its vitality and that of it's citizens, now in traitorous fashion and for only their own selfish welfare and motive, attack the very foundations of the republic and the central role of the senate and the peoples parliament......." james m. convey
Hi Lou,
ReplyDeleteThere has been quite a few new comments since I last checked in and I have not read them all. I wanted to answer your questions to me in your most recent comment of July 29. Forgive me if I am not answering in the contest of previous comments.
I did watch “Too Big to Fail” and enjoyed it. I felt that it was not able to fully tell the story in the time allotted. It also seemed a bit mello-dramatic to me. I am sure that the book is a much better accounting of the crisis than the documentary.
I think you are a little blinded by your singular focus on the evil of corporations. I believe you need to be a little more objective and consider all the influences that are in our government. Unions have a tremendous influence on American politics. You cannot necessarily say that just because only a small % of workers belong to unions that they are not well financed. Actually, your statement supports the contention that their influence is way more than their % of the population.
Take a look at www.Opensecrets.org and the money influence in politics. There are many many union organizations that contribute a large amount of money in politics. I highlight a couple of the webpages.
http://www.opensecrets.org/orgs/list.php?order=A
http://www.opensecrets.org/527s/index.php
Additionally, union influence goes well beyond the contribution of money. I don’t know if you belong to a union but I’ll bet that if you do you have been heavily recruited to work phone banks or walk precincts for the favorite Democratic candidate. Unions, as a part of their function, organizing people – they do it to fight big corporations and they also do it to influence politicians. The GM bailout was a huge payback for Union support.
Hi James,
ReplyDeleteThere are a couple of technicalities I would like to clear up in your “truth” post of July 27 10:06.
First, Presidents do not raise the debt ceiling – That is the sole constitutional job of the Congress. To truly score which party raised the debt ceiling the most you would have to look at the composition of the Congress at the time of the vote.
Second, raising the debt ceiling has nothing to do with raising the debt. Raising the debt ceiling only allows the administration to borrow and spend what has been previously allocated by Congress.
The real “truth” is that both parties are guilty of borrow and spend politics. They do not do this for the good of the people -- they do it to get reelected. Raising the debt by 566% (by your figures) since 1960 is insanity.
James,
ReplyDeleteI would not be too distressed about today’s debt ceiling vote. If debt is what you covet that there will still be plenty to go around. All this deal means is that instead of being $25 trillion debt by 2021 we be $22.3 trillion in debt. Big F***ing deal. Was it really worth all the drama?
Lou and James,
ReplyDeleteI believe that I have promoted Kiva to you in the past. They are now offering a limited time free trial that you may be interested in at the link below. Check it out and apply if you feel it is worthwhile. Join the "Stuff You Should Know" team if you are so motivated.
http://kiva.org/invitedby/john3593
Yes John C...
ReplyDeleteI know that the president must apply to the congress for approval to raise the debt ceiling. MY point was the number and frequency of the historical requests from the sitting presidents during the periods noted? Statistical truisms cannot be denied. It was not for me a "pissing contest" about ideologies, but simply pointing out the historical references to highlight the disingenuous actions from the right, in this current debate? Once again I find you nit picking for excuses to defend these idiots?
Secondly: From a global outsider perspective, one cannot be so easily assuaged by your splitting of hairs about the raising of the debt ceiling as opposed to actual debt. I believe we can understand that for ourselves and that is why the US may well suffer a serious economic blow in the coming weeks, as regards it's RATING as a trustworthy borrower?
After all with each increase in the debt ceiling historically, the entire record of the U.S Govt, has been to immediately proceed by foolish juvenile trickle down policies, to reach that ceiling. Why should this time be any different? It still remains a fact that the only sitting president, in cooperation with a responsible congress and senate, to produce a surplus, was Clinton. That is a curious and undeniable comparative fact!
The problem obviously arose more with the advent of this new century, and the cowboy philosophies of the Bush administration. 8 years of spend spend spend and the acme or apex of the conspicuous consumer dynamic, and the impossible idiocy of a nation entranced by Trickle down mania, that declared that "deficits do not matter!" Well here we are!
John C this is my post to todays WAPO. a comment from a very frustrated observer.
ReplyDeletejmconvey
It is going to be a sad day when a lot of these people begin to realize that the true benefactors of their misguided support, for dissembling the protections offered by governments involvement in society, are quite simply Wall street and the Pentagon.
While corporations continue to report bloated profits and increasing layoffs, as domestic jobs continue to be resettled upon cheaper overseas labor, and the unemployment lines grow at home. Who will they turn to, to reenergize the nation? Wall street? The pentagon?
Who will pay for the deterioration of the nations infrastructure and health costs? Without a healthy revenue flow? it won't be the government and it won't be the Chinese or the Europeans, and it sure won't be the Multi national corporations? Who then? Massive unemployment and a disappearing safety net for the sick and the poor and the unemployed? Nice future for the great American Dream?
Reality bites and believe me it is going to bite even harder than any of these jingoistic fools could even dream of, as they continue to parrot the extremist right wing hate all things social propaganda, that continues to endanger the health of their republic! I despair for the United States of America.
Today 8/2/2011 1:37:33 PM PDTRecommendReplyReport
jmconvey
Perhaps a comment on the state of the American union today.......... circa 2011?
".......And so the empire begins to dissemble from within. Attacked by those very men, who having honorably sworn before the Gods and the people, to protect its vitality and that of it's citizens, now in traitorous fashion and for only their own selfish welfare and motive, attack the very foundations of the republic and the central role of the senate and the peoples parliament......."
perhaps some ancient Roman senator? or maybe the ghost of Lincoln?
John C.......... In retrospect, one wonders if perhaps the single most important economic event to have occurred in American modern history, at the advent of the new "American century" circa 2000, might well be the supreme courts acceptance or exclusion of the evidence of some "hanging chads" in Florida .....:-)
ReplyDeleteJohn C..... Perhaps you could also recommend my website as a source of "other stuff you should know" from an old and wizened veteran of both corporate and political wars, and who has the scars to prove it...:-)
ReplyDeleteAnd hey mine is free and therefore not ideologically polluted.... I am open to bribery however.....:-)
I want to thank you for your humorous response to Lou as regards Unions and the massive role they play in electing democratic candidates? It made me laugh heartily....:-)
ReplyDeleteThe comparative economics will astound you, if you would compare the corporate wealth that flows to the Republican party. I leave this issue to you and Lou to debate, but I found your response incredibly naive as regards the overall issue of lobbyists and financial political influence? In any case you and I have already gone around on this issue before. cheers james
Hi James,
ReplyDeleteLou really does not really debate. He says a few things about evil corporations or wealthy individuals and then moves on. I don't think he has the time to do a lot of research.
And I am glad you laugh ocassionally.
I really think you missed my point about Kiva. If you have checked out the site and find it objectionable I would be really interested in your reasons. The "Stuff You Should Know" referance is a team I belong to on the site. If you go to the site and click community it may become clearer. We are 19th in loaning and I would like that to be higher if possible.
John, sorry that you think that I don't debate. I thought that is what we were doing here. :)
ReplyDeleteI try to list data to back up my claims. Isn't that how one makes an argument? I think I do put in a lot of time researching these issues. I am careful about the data sources I reference. Do they seem credible? Are they corroborated by other data sources and trends? Does the premise seem logical based on emperical evidence?
Then you are welcome to post a counter argument, hopefully with data to back it up.
One of my biggest hot buttons recently - and probably for a long time off and on, is the notion that lowering taxes on the rich benefits everyone. Since this topic is not directly related to this financial crisis topic thread that we are currently using, I'm going to create a new post - which is overdue anyway, and hopefully we can talk about it there.
But on the topic of the financial crisis, I will reiterate my recommendation that you read "All The Devils Are Here". Talk about research; this book is a great source of detailed information.
You had said that you watched "Too Big To Fail" and called it good but melodramtic. So, what does that mean with respect to the information in the story? You didn't really say.
I really do appreciate both you and James' participation in this blog.
Lou,
ReplyDeleteA lot of the information and data that you post and site is biased (in my opinion of course). This post is a good example – you site Les Leopold and if you read his bio (see my April 30/8:02 comment) you will find that he has a political agenda. I think you admit so in the next comment. You site Robert Reich often and he is not objective. He is a political animal with an axe to grind. Terribly biased. I notice that a lot of your information comes from labor leaning and public policy groups. I don’t consider these groups objective. Again, in my opinion I think you have an agenda and you try to find data to support it. An objective person has an agenda and tries to find data to disprove it.
I posted two web pages as back-up for my contention that unions do have money influence in our political system. Do you intend to comment on them? I would be curious your thoughts on them. If you could be specific as to why you feel they are irrelevant (in lieu of just diving into the corporations and wealthy individuals are evil thing) that would be helpful.
I am not trying to draw a relative comparison between corporate influence and union influence. I don’t think that there should be any influence AT ALL of our government officials. Influence of government officials is a major flaw in our system of government and why we need a constitutional convention. We had a good run for a while but our system of government needs to be updated and modernized.
I look forward to reading your new post but I don’t think you will get any argument from me on the “trickle down” philosophy. It is a foolish premise that has been completely disproven, unfortunately at our expense. What you may want to do more research on is the effect of raising taxes on economic decisions and whether or not there is a point where you can tax wealthy individuals and corporations too much. If we had a government that would look at this problem from an objective point of view and other matters instead of who they owe favors to we would be much better off.
The “To Big To Fail” documentary basically confirmed most of what I had heard, read and suspected about the crisis. I think that we came EXTREMELY close to collapse and Berneke and Paulson and others in the government do not get nearly enough “credit” for saving the system. I am going on vacation in a month or so and I am making a commitment to read “All The Devils Are Here” when I do.