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12 February 2009

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Sidney O. Smith III

Believe I’ll defer to Zanzibar the Sage on this one. If only Zanzibar were Secretary of Treasury…

William R. Cumming

WOW!

Ormolov

Why do we have a large Federal government? Because the robber barons and fin de siecle monopolists had such power they turned entire states into their personal kingdoms. Only the power of a large Federal government could stand up to them 100 years ago.

In the intervening time we sure as hell have forgotten that fact. Instead we deride the inefficiencies of government and extoll the wonders of private enterprise. I've spent my whole adult life in discussions with otherwise intelligent people who are small government advocates allowing for the faults of big government but trying (and usually failing) to convince them that things really were much worse in the days of railroad towns and Pinkerton agents.

I'd be SO HAPPY to surrender this fight and tell the Republican shitheads-- go ahead. Take your laissez-faire Red State empire stripped of any oversight or morality. Somewhere in Alabama can be your capital. You can have your 12% of the manufacturing base of this country and your legions of Army recruits and your teenage pregnancies and your mega-churches and you can be some rich man's slave. Just don't come running when your rights vanish. What's that? You won't? Because you have a shotgun? Haha. Good luck with that.

greg0

Not only does business has it's cycles, the arguments do too.
When high government officials refuse to divest their business investments fully, and proceed to make millions from no-bid contracts, is it not greed? The complaint about Federal aid to the common people seems based upon class.
Of course, in the case of Cheney, there should be some sympathy. Imagine the maintenance costs for his Death Star!

Cloned Poster

Paragraph breaks would help to read this great article much better.

That said: I foresee this crisis as bigger than the 1928 crash.

The bankers and politicians who facilitated this "borrow on your family home" boom should meet the same fate as those that met their maker in the French Revolution.

Patrick Lang

all

because of some issue in the formatting of this piece as I received it, i wasforced to post it in other than rich text format. That eliminated the paragraph breaks. pl

DaveGood

A fine piece of writing.

Now that all we understand the causes of, and have some pointers towards those who caused, this catastrophe.

Can we bypass the fluffy, feel-good, tar and feathers stuff and go straight for burning torches and pitchforks?

DaveGood

William R. Cumming

Further note! Heard Paul Samuelson, PhD, now 94 on NPR and he states postively that there has never in economic history been the likes of this event. Past "solutions" just don't apply. My guess is that at 94 he has no reason to hide the truth. If the past is not prologue in this instance they NO ONE anywhere really knows what will happen. OK then that means total transparency so everyone has equivalent information to make decisions on facts. So far only insiders and government officials have any facts but my guess is even they don't know the full universe of what might or could face us. If true that at least $250 Trillion has to be found somewhere that alone is daunting problem. Looks like Weimar and total devaluation to me world wide but I am not an economist or knowledgeable about the entirety of the problem. I can read faces to some degree and the new Treasury Secretary always seems to look like a deer caught in the headlights. Certainly no aura of confidence whether deserved or not. Drs Roubini and Krugman appear to agree with Samuelson.

par4

I find it funny listening to American Fascists,like Shelby, talking about Socialism.

Leila Abu-Saba

My response to this: please read the work of Bob Waldrop, food & environment activist and devoted Catholic Worker in Oklahoma City:

http://www.depletion-abundance.blogspot.com/2008/02/bob-waldrop.html

He is all over the net but here's his currently maintained blog
http://www.bobwaldrop.net/

If you look around at his links you will find descriptions of the amazingly successful food coop he founded in OK. Also he's doing urban gardening, and frugal environmental living, and community building, and and and. A one-man revival of Depression-era survival techniques along with 21st century ideas on saving energy and healing the planet - all this and Catholic worship, too.

Redhand

Good piece.

I thought Obama was on target in his news conference pointing out that many Republicans had reverted to a pre-New Deal [fetal] position. Senator DeMint's "This is a spendiing bill!" critique was truly something out of the 1920s.

The one good thing that has come out of this crisis is the fall of the Wall Street Masters of the Universe. After destroying our economy with the connivance of Republican enablers in Washington over the last two decades, a complete loss of status (not to mention real restrictions on their compensation) is the least we should demand, and get.

In another age these thieves would have been grist for the guillotine.

I'll settle, for now, for the deepest public obloquy and financial payback that hurts.

Jon T.

Great Writing
How deep is the crisis?
I don't know.
I do know after seeing the 'BANKERS' testify, if you can get them on a bus, I will drop them off at Downstate Correctional Facility in Wappingers Falls. Let them stay in the yard there for a week, then come back and testify before Congress.

The people are REALLY pissed off. Not only scared, and retrenched.

ANGRY. Common people. People who voted for G. Bush in 2000. Working people.

We must design a way of living that embodies a positive thought process for the mass of people. Constant cultivation of shock, fear, disaster, loss, betrayal, disappointment has a spiral effect on creating its own manifestation more deeply. UNPLUG THE TV or build a new one, that is for the base of the people.

dilbert dogbert

I always thought the idea of small government was a bit strange in that its advocates wanted a military the size of a gigantic eagle and a government the size of a plucked capon. To me those two concepts can't coexist. It seems obvious to me that a small government must have a small empact on the world. Not that there is anything wrong with that.

Cold War Zoomie

Lots of folks here like to tear into Republicans. Let's not forget that the Dems basically rolled over and never bothered to function as an opposition. Their spineless inaction makes them just as culpable as the GOP knuckleheads.

Hell, the Republicans lost the election by a landslide and are already a much more effective opposition party in two weeks than the Dems ever were in eight years!

John Howley

Wonderful essay.

While there has been some debate lately about the efficacy of the New Deal spending programs, no one has questioned FDR's financial restructuring: bank holiday, FDIC, SEC, etc.

The financial wizards got whipped into shape, temporarily.

"Toxic assets," they say.

Ever wonder what that's a euphemism for?

Fraudulent mortgages, that's what.

Before we guarantee or purchase any more assets from the big banks, we (taxpayers) must have a thorough and honest audit of the big banks.

ASAP!

doug

The stock market bubble collapsed and was followed by the housing bubble. Combined with securitized debt we created a period where we simply lived beyond our collective means. Excess has consequences.

Arun

Obama had a good speech today, from which I take these words about Lincoln, "...this man, our first Republican President... “The legitimate object of government,” he wrote, “is to do for the people what needs to be done, but which they can not, by individual effort, do at all, or do so well, by themselves.”

Among these things must be counted the prevention and amelioration of financial crises.

Jose

Interesting essay, but check out this article from the New York Times.

"Clearly, it is not simply greed, but grave structural flaws that lie at the basis of our crisis, and if the government is the most efficient agent to correct these then let the government do it."

Maybe we structural problems that are the basis of crisis "lies not with them, but within our self's."


Cujo359

I largely agree with John Howley. I don't presume that "toxic assets" are fraudulent, but they certainly might be. They are certainly worth very little, and why so many came to be in the first place is a requisite subject of inquiry.

I'd also like it if Geithner, or whoever is actually doing this, tells us what will become of those assets once we've "bought" them. I put "bought" in quotes, because it seems to me that if you're buying something that's worthless, and you know it's worthless, you're really giving someone money.

Cujo359

I've reprinted this article at my blog, with paragraphs added at what I assume are the correct places.

To Messrs. Lang and Sales: If for some reason this is unsatisfactory, I'll remove the article or correct it.

Incidently, at Blogspot it's easy to insert paragraphs - you simply put the cursor in the right spot, and then hit the Enter key twice. If this continues to be a problem in the future with Typepad, you might want to open an auxiliary blog at Blogspot for postings such as this. Blogspot is free, by the way.

johnf

Interview with Simon Johnson, ex-economist at the IMF, who is used to dealing with bankrupt countries, and who argues that you can never get anywhere until you have broken in some way the ruling elite and their ideology:

http://www.talkingpointsmemo.com/archives/2009/02/the_oligarchs.php

johnf

Ann Pettifor, who presciently wrote "The Coming First World Debt Crisis" in 2006, and ran the 2000 Jubilee Forgive the Debt campaign on Africa, suggests ways of tackling the crisis:

Wall Street: Get Their Claws Out of the Real Economy

http://www.huffingtonpost.com/ann-pettifor/wall-st---get-their-claws_b_166133.html

johnf

As Leila posts above, much can be learnt from both people who have had dealings with Third World Debt, and from the way the Third World organizes itself for survival.

par4

I beleive it was WWII that saddled us with large Govt.Then we segued into the cold war and it's been bloated military/industrial complex since.

ISL

My take on the crisis is that it will be worse than anyone is expecting, and if the right solution is not chosen (and no one is certain what that solution is), then the US is unlikely to remain a super-power.

The entire problem was due to inflation of a giant debt bundle with nothing underlying it. So far, the solutions (Bush & Obama) are to attempt to reflate the bubble. Sort of like getting the flu, and then to get better visiting a neighbor with influenza. Nor do I think the US has years to muddle through.

I expect a debt shakeout in which countries with less unsecured debt move rapidly ahead in a relative sense (China, Japan, Germany), and those with more debt (Iceland, Czech, etc.) languishing in the best case. The US is unfortunately the worst of any major nation in this respect - we by and large just dont make anything others want and need their stuff (US current account deficit is almost 1 trillion per year).

Absent some solution where those who lost for us trillions become bankrupt and poor (free market, wow!), while the financial structure is recreated with new owners, well, Obama at this point is just trying what Bush did (at least 3 trillion dollars src:Bloomberg) with a smiley face, well IMHO we are not yet choosing the right solution.

Either Republicans dont get it, which may be their political fate, or are too well bought; but they are also highly obstructionist.

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