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Forum--Economic and Political Issues

Moderator will post articles and comments on Political and Economic Issues. Comments and discussion is invited

Members: 15
Latest Activity: Feb 14, 2012

Dear Members:
I want to start this discussion by emphasizing a very important contributor to our current economic crisis, namely; the dramatic rise of debt. I am of the view that in societies with developed financial markets (ie non-indigenous based societies) patterns of human behavior tend to repeat themselves over time. This is why much can be learned from reading and understanding economic history in conjunction with the cycles of human interaction. I will discuss this more as the council develops, but I wanted to leave you with a chart to ponder. The chart is of debt in the US to GDP. We are at the end of a long cycle of increasing debt with much effort being made to maintain asset prices and stimulate even more debt. Unfortunately, we have reached the point where the existing debt cannot be serviced out of income much less repaid. We must either increase incomes substantially, default on the debt,, restructure the debt radically, or create enough inflation to diminish the value of this debt over time.
We are locked in a great battle between the forces of inflation and deflation. All great debt bubbles have ended in deflation. The US government and the Federal Reserve are determined to not permit deflation to occur. This will be the major economic issue we face over the next several decades and will result in the evolution of a new values regime and hopefully the start of a new golden age of human interaction. This could also end in tragedy. The choice is ours. I will write more about this later.
Sorry--but I couldn't figure out how to attach the chart. I have a lot to learn.
Sylvia.

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Greetings 1 Reply

At the suggestion of Phil Lane I am trying to add this council to an ongoing list serve that I maintain that covers a variety of topics but mainly focusing on Economic and Political Issues. I cover a…Continue

Started by Sylvia Demarest. Last reply by Carol Petersen Jan 14, 2010.

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Comment by Phil Lane Jr. on January 21, 2010 at 1:44pm
Sylvia Demarest-From interesting postings on the web and my comments
The stated policy of our Central Bank is to allow asset bubbles to occur but fight any wage gains as they lead to "inflation". If one associates asset price gains with the rich and wages with the poor, there is a clear bias in favor of the rich and against the poor. Any attempt to improve wages is fought by while the asset-rich can enjoy capital gains as these do not enter the CPI as presently constituted (which is a scam anyway--constructed during Bush 1 to suppress actual inflation and allow a stealth cut in social security payouts). So the poor and middle class get shafted both ways because they can't gamble on asset bubbles, their wages keep getting squeezed. and their savings earn no interest. If the Marxists destroyed communism, pseudo-capitalists will destroy capitalism. These people readily accept corporate welfare--rampant in the system--but shun welfare assistance for that poor and disabled.
People are beginning to get the idea that the deck is stacked against them. Moral hazzard is trickling down. People are increasingly willing to default on debt to try and defraud merchants etc. The Republicans are running on the ticket of anti-big government, anti-bailout to all and anti-big deficits. This is hitting the sweet spot with the US electorate. This is almost a morality play about who they really are and what the Democrats should be but are not. It also foretells fiscal and monetary tightening which will be deflationary. This also signals huge political and economic changes ahead.
No virus found in this incoming message.
Comment by Carol Petersen on January 20, 2010 at 9:13pm
Dear Relatives
What is fair about a two party political platform? If it falls apart and the papal bulls are revoked with this last pope why not have nations in observance of ecology and the cycles of natural laws. Santa Fe has a permaculture credit union. Why not get back to the garden. Politics and Hollywood have been hand in hand for too long. The Fox is in the chicken coop. Was I blindsided into believing we are guided by the hand of one god. One love yes, but one god no, one spirit no...I believe in the ocean of spirits of men and women and the listening heart of a clairaudient silence. I am dreaming the 4th way into politics. All politicians need to be gardeners.
Comment by Carol Petersen on January 20, 2010 at 6:33pm
Dear Relatives,
Anyone noticing the blue spiral and the red spiral? Is there a connection? Why do I feel the weather was manipulated? Can you feel the difference between a cloud seeded rain storm and a naturally occurring one?
http://rense.com/general89/hait.htm
Comment by Phil Lane Jr. on January 20, 2010 at 6:19pm
Dear Relatives,
Another reality check article shared by Sylvia about the background of the human disaster in Haiti! For those who really want the background, please take the time to read.

Warm Love and greetings,

Brother Phil

*Discovered by Columbus, built by France – and wrecked by dictators

He ended years of brutal regime. Now an exiled ex-president wants to be the saviour again.*

By Andrew Buncombe

Haiti's former president, a man twice forced into exile but whose name has long been whispered like a prayer among the country's poorest citizens, is again trying to make his mark on his country.

Jean-Bertrand Aristide, ousted by coups that received backing from the US, said he was ready to return to Haiti from South Africa in a jet filled with emergency supplies. "We feel deeply that we should be there, in Haiti, with them, trying our best to prevent death," Mr Aristide told reporters in Johannesburg.

Six years ago, the priest-turned-president was bundled out of the country as a small rag-bag force of former soldiers advanced on the capital, Port-au-Prince. He was driven to the airport in the early hours by US marines and diplomats; a chartered jet was waiting. They gave him little option. "Come with us or stay. Live or die," they said.

The forced exile of Mr Aristide plunged Haiti into fresh turmoil as an interim government imposed by the US, France and Canada oversaw two traumatic years, when supporters of the former president were attacked and killed, or summarily jailed.

But his enforced exile, first to the Central African Republic and then to South Africa, was just the latest in a series of crises – both natural and man-made – to befall the former French colony, which by the time Aristide was first elected in 1990 was already notorious as the poorest country in the western hemisphere. Indeed, on almost every scale used to measure quality of life – income, health, literacy and child mortality – only a handful of countries in sub-Saharan Africa were worse. Tens of thousands set sail in makeshift vessels to escape to a better life in the US.

It might, and ought, to have been quite different. Together with the neighbouring Dominican Republic, Haiti constitutes the island of Hispaniola discovered by Christopher Columbus in 1492. During the 18th Century, the island, divided between the Spanish and French, was a major source of the world's sugar, but conditions for the slaves, who were imported from Africa, were utterly brutal. A series of uprisings culminated in 1804 with the declaration of independence by Jean-Jacques Dessalines, a leader of the rebellion who, went on to become Haiti's first president.

The action was revolutionary. At that moment, Haiti became the first independent nation in Latin America, the first post-colonial black country anywhere in the world, and the only nation whose citizens were overwhelmingly former slaves.

In his history of the country, Avengers of the New World: The Story of the Haitian Revolution, Laurent Dubois writes: "[The revolution was] a dramatic challenge to the world as it then was."

Yet even at its birth, the seeds of hardship that would hold back and even cripple the country were being sown. As Bill Quigley, a veteran US-based Haiti democracy activist, recalled this week, the first response by France to its former colony was to enact a military blockade and force the new Haitian authorities to pay reparations – 150 million francs – in exchange for its freedom. From the start, Haiti was bankrupted. Up to 80 per cent of the country's budget went to pay off this debt. The US, which had secured its own independence in 1776, refused to recognise it [and actually invaded and occupied Haiti between 1915 and 1934.]

In a 2004 article in the London Review of Books, Paul Farmer, an agronomist who has spent several decades working to boost Haiti's agricultural sector, noted that the reparations to France – which, with no small irony, yesterday contacted other members of the so-called Paris Club of creditors to speed up cancelling Haiti's current debt – continued until well after the Second World War. Indeed, many supporters of Mr Aristide believe that his repeated demand to France that it pay back $21bn, the amount that he calculated was owed to Haiti for the reparations paid between 1825 and 1947, was a factor in France's support, at least tacitly, for those behind the 2004 coup.

Yet even after the reparations to France stopped, things barely got better.
Between 1957 and 1986, the country was ruled by the ruthless dictators François "Papa Doc" Duvalier and his son Jean-Claude. The years were stable but brutal. Haiti styled itself as an exotic Caribbean destination for celebrities ranging from Jackie Onassis to Truman Capote, who joined other guests to sip Barbancourt rum cocktails on the veranda of the Hotel Oloffson, but the Duvaliers accepted no dissent. The notorious Tonton Macoutes militia, used to carry out intimidation and killings, reported directly to the senior Duvalier. Indeed, Peter Hallward, author of Damming the Flood: Haiti, Aristide and the Politics of Containment, has estimated that up to 50,000 people lost their lives during these years.

It was against this backdrop of violence, an economy in which three-quarters of Haitians lived on less than two dollars a day, and a country where hope had vanished, that Mr Aristide emerged in the Port-au-Prince slum of La Saline. Preaching a mix of political empowerment and liberation theology from his pulpit in Saint John Bosco's church, he gradually built up so much popular support that his opponents felt threatened enough to firebomb his chapel during mass, with the loss of 12 lives.

"In a dark corner of our little world I take up my pen to write to you,"
Aristide would later write to his supporters. "The light I set by my side to illuminate my task is a faint light but it will grow stronger as I write because it is the light of solidarity."

Aristide was elected with a landslide in a 1990 election, but his tenure did not last long. His opponents, covertly supported by the CIA, carried out a coup the following year. The exiled leader would be reinstalled by the Clinton administration and then re-elected for a second term in 2000.

He remained highly popular among the Creole-speaking poor, but his policies calling for higher wages and resisting demands to liberalise the economy continued to anger Haiti's elite as well as powerful elements in Washington.

Loans worth $500m were blocked, and when his enemies turned on him a second time no-one was prepared to help. Indeed, there is evidence the Bush administration prevented additional private security guards, contracted to Aristide's government, from reaching Haiti. When René Préval, Haiti's current president, was elected in 2006, he said there was nothing preventing Aristide from returning to Haiti, though it is likely that a tacit understanding between the US and Aristide's opponents in Port-au-Prince has kept him in South Africa.

Aristide was not unblemished. There is evidence, for instance, that during his second term his supporters resorted to violence to silence his opponents. Yet were he to be given the opportunity to place his hands once more on the tiller of his country's history, it is likely he would receive a hero's welcome among those currently suffering the most.

Kevin Pina, a US filmmaker who was in Port-au-Prince two weeks ago, said.
"If he were to return, people would mobilise. Tens of thousands would mobilise like that. With just picks and shovels they would clean up the mess in just a month. They still love him that much."
Comment by Phil Lane Jr. on January 20, 2010 at 4:59pm
Beloved Relatives,

Tuesday has passed and what sister Sylvia clearly described has happened. For those relatives who really what to dive deep into the economic and political foundations of whats happening in our world, this is the place to be
.
With Warm and Loving Greetings,

Brother Phil

These comments don't necessarily relate to the Taibbi piece--below--I've just been saying I would write something--so here goes. There is a boom bust cycle throughout human history and we are in the bust phase. The boom and the bust phases are very similar to other periods of history--and even contains similar victims and villans--this seems to be what humans do.
We are all captives of the psychology of our time. Think about it--Hyman Minsky did--Fisher did--Kindelberger did--cycle theorists did. What did they find? We go through cycles--of varying length the most important being about the length of a long human life. The boom and bust cycle is apparent throughout human history occuring once every 80-100 years. Why does it occur?

Well, let's start with the aftermath of a bust ie the resolution of a crisis. Everyone is fiscally conservative--excesses have been cleared especially excess debt. Incomes have flattened and society is hungry for work and egalitarian and cooperative in outlook. Reforms have been implemented. The economy starts to grow--the first generation remembers the hard times and works hard--saves and avoids debt--this is the greatest generation of the 40's and 50's--but they are boring to their kids. The next generation looks back and says--hey that was too controlled--let's explore the unknown and live a little--this was the 1960's and 70's. Then comes the backlash and the unraveling of the old order as things start to get dicy--mistakes are made--wars etc. Institutions weaken--individualism rises and the religious right takes up the backlash baton. Inflation begins to unravel the social contract and to raise the prices of goods and services. This is when you get the culture wars and the beginning of the undoing of the reforms of the previous crisis--this is the Reagan era through Bush 11. Growth becomes harder to come by because the economy has matured and capital investment isn't as profitable--you get outsourcing as free market fundamentalism comes back into vogue along with globalization. Incomes flatten for most and becomes more and more concentrated at the top. Debt is used to spur growth and we see the beginnings of a permanent policy of easy money to grease the wheels--keep the profits flowing and the politicians re-elected. The consumer society grows in strength and the economy is financialized--inflation is more subdued--this enviornment is favorable to financial assets and the bankers and financiers take over again. People have forgotten the last market hozing and the ponzi scheme begins--it's really an asset inflation--but people don't see it that way. Their stocks and homes are going up--they are brilliant investors--everyone is going to be RICH!!. Then you get some "displacement" and the ponzi scheme really explodes. In the past it could have been railroads, the steam engine, telephones, cars etc this time--junk bonds--take overs--the internet--telecom--derivatives--emerging markets--and we are off to the races. Every bubble in history was the result of easy money--you can't have a bubble without easy money!!!!!! Who is going to stop this from getting out of control? No one can--no one will. Anyone objecting or trying to take away the punch bowl of easy money is a kill joy--keeping you from getting rich!!!! This growing cycle of easy money, opressive debt and exploding asset values continues so long as incomes can service the growing debt and sufficient liquidity exists to keep the market afloat. But things get out of hand--there's growing fraud and corruption--then comes the bust--the end of ponzi finance. During the boom things would happen but not bother the market for long--but some unexpected event occurs that changes the public mood and the bust begins. The bust begins the process of creating a new values regime that will define the resolution of the crisis and the beginning of a new era.

We are now in a crisis--it will last for a while. A crisis has been described as "a decisive era of secular upheaval, when the values regime propels the replacement of the old civic order with a new one." The new one can be an advance into a new era of growth and prosperity or a deterioration into total war--maybe even the breakup of our country.

This is an era of great discontinuity--it can be for the good or lead to great evil. The choice is ours. These moods repeat over history. Remember prohibition? That was reflective of the last culture war which was a backlash to the 20's era of flappers and frivolity. Mark Twain is reported to have said that history may not repeat but it rhymes. We have been here before and are rhyming with eras of previous crisis in our country.

History tells us that the result of a bust based on bubbles, debt and easy money is deflation. This time the Fed and the Administration is determined to keep the crisis and deflation at bay. Bernanke has pledged that he can do that and will even drop money from helicopters to defeat deflation if necessary. Aside from helicopters the available tools are fiscal and monetary policy, low interest rates and quantative easing. Will it work??? History says no -- that this could just make the inevitable bust even worse because it could erode our trust and respect for the government, the Congress and the Fed---OR it could simply prolong the resolution of the crisis. If the crisis worsens it could undermine the very foundation of our democracy and lead to social conflict and societal upheaval. I'm sure that the people running the govt and the fed understand all of this much better than I do and my hope is that they have a plan to make this work out for the best. Unfortunately, I don't see much evidence of that so far.

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Jan. 4 2010 - 11:52 am | 26,397 views | 10 recommendations | 166 comments
Fannie, Freddie, and the New Red and Blue

It has become conventional wisdom, perhaps even cliche, to pin the origins of the credit crisis on the big banks or, AIG or even the practice of financial modeling. Certainly, these actors have received the most play in the media, and have now endured the focus of populist ire for more than a year. We now think that the analysis leading commentators to focus blame on these entities is fatally flawed.

via Origins of an American Kleptocracy | zero hedge.

Over the Christmas holiday a nasty thing happened: Tim Geithner’s Treasury Department decided to lift the cap on aid to the Government-Sponsored Entities, Fannie Mae and Freddie Mac, apparently in response to Obama administration fears that the two agencies would become insolvent. The cap was raised from $200 billion on each and government backstopping of the mortgage market will apparently now extend into infinity for at least three years, through 2012.

The move has already inspired a mini-firestorm, with several outlets delving deeply into the recent history of the GSEs and uncovering some disturbing new facts. Chief among those were an analysis of the GSEs by a former chief credit officer of Fannie named Edward Pinto, who found that Fannie and Freddie routinely mismarked subprime or Alt-A (a sort of purgatory class of nonprime risky mortgage, resting between subprime and prime) mortgages as prime. The Wall Street Journal explains:

In general, a subprime mortgage refers to the credit of the borrower. A FICO score of less than 660 is the dividing line between prime and subprime, but Fannie and Freddie were reporting these mortgages as prime, according to Mr. Pinto. Fannie has admitted this in a third-quarter 10-Q report in 2008.

This is a damning fact and if true certainly supports the Journal claim that the GSE actions were a “principal cause of the financial crisis.” But having established this, the Journal then goes in this direction:

Market observers, rating agencies and investors were unaware of the number of subprime and Alt-A mortgages infecting the financial system in late 2006 and early 2007. Of the 26 million subprime and Alt-A loans outstanding in 2008, 10 million were held or guaranteed by Fannie and Freddie, 5.2 million by other government agencies, and 1.4 million were on the books of the four largest U.S. banks.

Sometimes I’m amazed at the speed with which highly provocative information like this GSE business can be converted into distracting propaganda in this country. In the right hands Pinto’s analysis of the GSEs — just like the revelations in the past few years about practices at AIG, Moody’s, Countrywide, Goldman Sachs, the Fed, and, hell, let’s add the offices of Senator Chris Dodd — would have been a starting point for a deeper investigation into a financial system that is clearly a complex and intimate symbiosis of state and private corruption.

For what we’ve learned in the last few years as one scandal after another spilled onto the front pages is that the bubble economies of the last two decades were not merely monstrous Ponzi schemes that destroyed trillions in wealth while making a small handful of people rich. They were also a profound expression of the fundamentally criminal nature of our political system, in which state power/largess and the private pursuit of (mostly short-term) profit were brilliantly fused in a kind of ongoing theft scheme that sought to instant-cannibalize all the wealth America had stored up during its postwar glory, in the process keeping politicians in office and bankers in beach homes while continually moving the increasingly inevitable disaster to the future.

That is a terrible story and it is also sort of a taboo story, since we don’t really have a system of media now that is willing or even able to digest that dark and complicated truth. Instead, our media — which has always been at best an inadvertent accomplice to these messes — is basically set up to take every revelation about the underlying truth and split it down the middle, feeding half to one side of the political spectrum and one half to the other, where the actual point is then burned up in the useless smoke of a blame game.

The essentially complicit nature of the two ruling political parties was in this way covered up for decades, as the crimes of the Democrats were greedily consumed as entertainment by the Limbaugh crowd while the crimes of the Bushies became hot-selling t-shirts and bumper stickers for the Air America listenership. The abiding mutual hatred the red/blue groups shared consistently prevented any kind of collective realization about the structure of the overall scheme.

What worries me is that we’re now reverting to the same old pattern with the financial crisis story. We’re starting to see fault lines develop, where one side blames the government while another side blames Wall Street for the messes of the last two decades. The side blaming the government tends to belong to the free-marketeer class and divines in safety-net purveyors like the GSEs and in the Fed’s money-printing fundamental corruptions of the capitalist ideal, while the side blaming the bankers tends to belong to the left-liberal tradition that focuses on greed and seeming absence of community conscience among the CEO class as primary corruptors of the social contract.

In the former view the government is to blame for punting on its oversight responsibilities and for corrupting the financial bloodstream with market-altering guarantees, while in the latter view the bankers are at fault for lobbying the politicians to make exactly the same moves. The antigovernment folks like to focus on the irresponsible (and typically low-income or minority) home-borrower and their political allies in Washington as chief villains, while the anti-banker crowd looks at the massive personal profits and outsized influence of the executive class and waves the Cui bono? stick in that direction.

Both sides are right and both sides are wrong. I know that sounds like pox-on-both-their-houses pundit sophistry. But the point is that if you focus on one side and not the other, you miss the entire point. That’s why I get freaked out when I see an important story like this GSE thing come out, and have it be immediately accompanied by arguments that “market observers, rating agencies and investors were unaware of the number of subprime and Alt-A mortgages infecting the financial system,” as though the irresponsibility of the government agency precluded similar (and, I might add, intimately related) abuses on the private side.

I mean, really — market observers were unaware of the number of subprime mortgages infecting the system? Are we to understand that nobody caught on when outstanding mortgage debt grew by $3.7 trillion between 2003 and 2005, nearly equaling the entire value of all American real estate in the year 1990? They didn’t notice when subprime mortgages went from 3% of all mortgage lending in 1997 to 20% of the market in 2003? They didn’t notice when the volume of Alt-A loans and home equity loans surged through the early part of last decade?

Now I know that that’s not what Peter Wallison of the Journal is saying here; he’s saying that even if the market saw that increase in subprime loans, even those numbers were understated thanks to Fannie and Freddie’s deceptions. But the inference that the market was hoodwinked by the GSEs is absurd. It was plain to most everyone in the financial services industry that there was a bubble going on last decade, that something deeply fucked up was going on with the mortgage markets — just as it was plain to everyone in the late nineties that something was wrong with the stock markets, when companies like Theglobe.com with annual sales under $5 million could have a $5 billion stock valuation.

Everyone was involved in the mortgage scam. At the lender level the deceptions were myriad; liar’s loans, fraudulent income documentation, negative amortization loans, HELOCs, etc. The rush to get as many loans written as possible and then get those hot potatoes moved to the next sucker in the line was furious and extended from coast to coast, sinking one lender after another in Ponzoid debt and indictments.

Then there were the countless deceptions that emerged from the securitization process, the bad math that allowed banks like Goldman to do $474 million mortgage deals where the average equity in the home was just 0.71 percent, and sell 93% of that deal as investment grade paper.

Are we really to believe that the people who did those deals didn’t know what total crap they were selling? That the people who used CDO-squareds to magically turn BBB investments into AAA investments didn’t know how nuts that was?

There were the ratings agencies, who accepted all that bad math and slapped AAA ratings on crap mortgage-backed securities in exchange for the continued largess of the banks upon whom they were financially dependent — the same ratings agencies that later sputtered and coughed up bullshit my-dog-ate-my-homework excuses for mismarking mortgages, with the Moody’s revelation that a computer error caused them to misapply AAA ratings to billions’ worth of MBS being the comic low point.

Then further along in the chain you had crooks like the folks at AIG, who took advantage of the basic nonexistence of derivatives regulation to issue billions in guarantees for these mortgage investments that they had never had any intention of paying off, to say nothing of actually having the ability to do so. And of course underwriting the entire enterprise was the implicit guarantee of Alan Greenspan’s Fed, which made it known time and time again that its modus operandi was to refuse to recognize the existence of bubbles until after they blew up, at which point it would rush in and clean up the mess, bailing out all the chief actors out with easy money.

Everyone had a hand in the bubble, from the congressmen who killed regulatory initiatives to the regulators who snoozed at the wheel to the GSEs to the Fed to the banks to the ratings agencies to the lenders. I don’t think it’s really controversial to say that, but it does seem like there’s an argument brewing about what that across-the-board complicity means.

My own personal feeling is that our recent bubbles weren’t much different than pyramid scams and lotteries; they’re the handiwork of an essentially regressive and deeply cynical political organization that systematically hoovers up taxes and investment money mainly from middle-class suckers, where it eventually gets eaten in short-term cashouts and mostly blown on sports cars and tropical vacations and eye jobs for the trophy wives of Wall Street executives. Crackonomics: take literally all the spare money from four square city blocks and turn it into one tricked-out Escalade.

For me the basic dynamic of the mortgage bubble is some Ivy League dickwad hawking a billion dollars of securitized subprime mortgages to a pension fund, and then Hobie-sailing off into the sunset with a bonus after they all blow up. Of course my seeing it that way might have a lot to do with my own personal psychological prejudices, and I get that some other person with different hangups might choose to focus on Barney Frank deciding to “roll the dice on home ownership” with the GSEs.

But what I don’t see is how anybody can say that all of this happened because Fannie and Freddie rigged the game to get Mexicans in homes, and then the banks and the ratings agencies just reacted organically to the corrupted market and helped the bubble along through no fault of their own. That’s just another (albeit more convincing) version of the early attempt to pin the disaster on the Community Reinvestment Act, which in turn is just another way of playing the red-blue blame game, which in turn is missing the point.

This GSE story is a big one, but if it gets used as a path back to a “The Market Reacted Rationally” version of history, we’re screwed. It has to be looked at as an important part of a diabolical whole, a symbiotic scheme in which the banks and the state were irreversibly intertwined in an enterprise that on both sides was never about market economics, but crime. Because otherwise… the diversionary notion that one side or the other is wholly to blame is part of what makes the whole scam possible.

p.s. Just to get this out of the way, I love Zero Hedge, and Marla Singer has been really nice to me personally. I just don’t completely agree with this particular thing. I don’t see any reason why focusing blame on the banks and the ratings agencies and AIG was “fundamentally flawed,” because, well, shit, they were to blame. The fact that Fannie and Freddie now get to jump in the pigpen with them doesn’t change that for me.

I think in the end what we’re going to find is that all the relevant actors had their own motivations for getting involved in the bubble. Two and now three presidential administrations let the Fed overheat the economy for political reasons that should be obvious. Alan Greenspan, hell, he did it because he loves seeing himself on magazine covers and wanted to keep getting invited to the right Manhattan parties. There were congressmen that converted the expansion of cheap credit into low-income votes. The bankers and lenders went along because the system of compensation on Wall Street is fucked and rewards short-term thinking while ignoring long-term consequences.

To me all of these people were equally guilty of making bad decisions to benefit themselves in the here and now at the expense of the whole in the future. When it comes to bubbles, It Takes a Village, and blaming the whole mess on the “socialist” aims of a pair of government agencies seems off base — particularly since the Randian protocapitalists running the banks benefited every bit as much from this socialism as actual homeowners, and perhaps even more, when one considers that homeowners get foreclosed upon, while bonuses are forever.
Comment by Phil Lane Jr. on January 19, 2010 at 12:17pm
This is an email sent to me by Sylvia. Got me thinking, I hope you enjoy it, too!

The Democrats will be gravely wounded by being the party in power when the depth of this crisis becomes evident. They could lose Tuesday and
could be killed in the midterms. Unfortunately, this crisis should persist and even worsen. There is still plenty of time for the Republicans to
take over and totally screw everything up before we see a bottom. They want to cut taxes and spending. Great. What taxes--what spending???? Be specific
please--while you are running for office. Tax cuts would take a bad deficit and make it worse. Spending cuts would accellerate the ongoing
deflationary bust. Someone has to be in office when the public realizes that there are no easy answers or alternatives to drastic action and that
the "something for nothing" political shuffle is dead. But all of this is probably necessary if we are to see the death of the old paradigm and the birth of a new values regime. The Democrats have been disappointing at best and desperately need new blood, courage and ideas. Remember, FDR took office three years after the
crash and after worst of the crisis was past. He took office in March of 1933 after the market had fallen almost 90% and many banks had failed.
Today, I suspect the worst is still to come. I just hope that we get to keep our country, the peace, and our freedom.



Mass. Senate race's lesson for Obama
By E.J. Dionne Jr.
Monday, January 18, 2010; A17
In June 2008, a few months before the financial implosions began, I asked two smart financiers who happened to be Republican about the future of the seemingly shaky American economy.
Defying the moment's conventional predictions that we would somehow muddle through, one offered a dire and uncannily accurate forecast. He explained why banks would blow up, investments would crash and the federal government would have to spend "at least $300 billion" to bail out financial institutions.
The other financial expert listened closely, took a sip from his drink, and smiled. "This," he said, "would seem like an excellent time for the Democrats to take power."
It wasn't that he liked Democratic policies. He just wanted the other side in charge when things came tumbling down. I doubt that my friend is as surprised as others are over the trouble Democrats face in Tuesday's special Senate election in Massachusetts, which forced President Obama to Boston on Sunday for a last-minute campaign rescue mission.
I have thought often of that exchange while watching Obama and the Democrats struggle with the country's understandably cantankerous mood. Although the economy hit the skids on President Bush's watch, it's the party in office that suffers the consequences when things get really bad.
Underlying so much of the political analysis pouring forth over the Massachusetts showdown is a debate about the reasons for the decline of Obama's popularity from the heights of last spring.
Conservatives blame "liberalism" -- big government, big deficits, an overly ambitious health-care plan, a stimulus that spent too much and other supposedly left-leaning sins of the Obama regime.
The right is especially taken with the movement of political independents from guarded sympathy for the Democrats to outright opposition. Much of the analysis of Scott Brown's unexpectedly strong run for Ted Kennedy's Senate seat focuses on the Republican's strength among independent voters said to be alarmed over the ambition and reach of Obamaism.
Obama sympathizers counter that the president's approval ratings are quite healthy in light of an unemployment rate over 10 percent and a nearly unprecedented destruction of personal wealth.
The conservatives' focus on ideology, they say, is an opportunistic way of distracting attention from the mistakes of the Bush years and the role conservative policies played in bringing us to this point. To cite ideology rather than the economy in explaining the poll numbers is like analyzing the causes of Civil War without any reference to slavery or the rise of the New Deal without mention of the Great Depression.
It's not surprising that I lean toward the second set of explanations, and I wish my conservative friends would be as honest as the Republican investor was in acknowledging that presiding over bad times always hurts the party stuck with the job.
But the success of the conservative narrative ought to trouble liberals and the Obama administration. The president has had to "own" the economic catastrophe much earlier than he should have. Most Americans understand that the mess we are in started before Obama got to the White House. Yet many, especially political independents, are upset that the government has had to spend so much and that things have not turned around as fast as they had hoped.
It's also striking that most conservatives, through a method that might be called the audacity of audacity, have acted as if absolutely nothing went wrong with their economic theories. They speak and act as if they had nothing to do with the large deficits they now bemoan and say we will all be saved if only we return to the very policies that should already be discredited.
The few exceptions to this rule -- Bruce Bartlett and Richard Posner, the authors of two bravely dissident books, come to mind -- find themselves excommunicated from the conservative movement.
Yet the truth that liberals and Obama must grapple with is that they have failed so far to dent the right's narrative, especially among those moderates and independents with no strong commitments to either side in this fight.
The president's supporters comfort themselves that Obama's numbers will improve as the economy gets better. This is a form of intellectual complacency. Ronald Reagan's numbers went down during a slump, too. But even when he was in the doldrums, Reagan was laying the groundwork for a critique of liberalism that held sway in American politics long after he left office.
Progressives will never reach their own Morning in America unless they use the Gipper's method to offer their own critique of the conservatism he helped make dominant. It is still more powerful in our politics, as we are learning in Massachusetts, than it ought to be.
ejdionne@washpost.com

© 2010 The Washington Post Company
Comment by Carol Petersen on January 18, 2010 at 2:48pm
I recently saw a program on the History channel that defined the religion of the Saudi elite. It is a corrupted version of Islam. Christianity has also been corrupted by the Political elite of the EU including the colonizing nations US. Those who terrorize base their convictions on a false faith. The tenants of all religions are on love. Unfortunately we have a polarizing society of those who actually believe there is honor in killing. We even believe angels war with angels for souls.
Just waking up on planet earth
Carol
Comment by Carol Petersen on January 18, 2010 at 2:28pm
Dear Sylvia,
Just for starters: I have the belief that what happens in the South will awaken in the North ie: Canada. It is the medicine wheel. The way Mother Nature politicizes her constituents. I have been following the Bolivarian Revolution.

The Take is a political thriller that follows Argentina's radical new movement of occupied businesses: groups of workers who are claiming the country's bankrupt workplaces and running them without bosses.

In suburban Buenos Aires, thirty unemployed auto-parts workers walk into their idle factory, roll out sleeping mats and refuse to leave.

All they want is to restart the silent machines. But this simple act - The Take - has the power to turn the globalization debate on its head.

http://www.linktv.org/programs/the-take

The dream is awakening in The Bear
Carol
Comment by Sylvia Demarest on January 18, 2010 at 1:55pm
I appreciate the comment from Kristin Amber--she describes a very serious issue. We can try to attack each issue individually or we can try to figure out a way to identify the underlying problems that create the conditions that Kristin describes. Brittan is rapidly becomming a country where surveilance of all citizens is very common as the "National Security State" grows in power. There are thousands of video cameras everywhere along with security agents. Once empowered by the NS State, it's just a small step to infringing on all rights including parental rights and forcing children to take medication against the will of their parents--or whatever else can be justified under the umbrella of stability or security. Brittan has suffered several terrorist attacks. What if the US were hit by sumultaneous terrorist attacks in several parts of the country including rural areas? The country would go crazy--new laws would be passed further restricting our freedoms. Secret courts could also be organized and soon we could see the same conditions here that Kristin describes. Why is this growth of the National Security State happening all around the world? Why is the US involved in two wars in the Arab world and using aerial bombing to attack insurgents in at least 3 other countries? What is causing young Arabs and Muslims to commit terrorist acts? The Nigerian underwear bomber was well educated and came from a wealthy family--yet he was so disaffected that he was willing to kill himself to harm American interests. Why? Since terrorism is at the root of the National Security Sate we should be asking what is the root of terrorism? What great moral wrong could possibly lead young Arabs and Muslims to do commit acts of terrorism? In Iraq and Afghanistan people are fighting to control the oil and other resources--inother words, they are fighting for political and economic power. Individual terrorists may or may not be part of that fight--we don't know because that subject is off limits. The terrorist who have attacked here are all educated Muslims--many from Saudi Arabia--a US ally. I think much of the cause could rooted in the suffering of Palestinians and the perception that the US supports the cause of that suffering coupled with the history of western colonialism and occupation of Middle Eastern countries. But this statement is extremely controversial. Given the cost of terrorism and the risk that terrorism presents to civilization itself, why are we afraid to have a rational conversation about what the terrorists themselves have said is the root of their anger and their motiviation to attack the US and it's allies???? Why???? Have we been blinded by our interests in Middle Eastern oil and resources--by our support of Israel?
This is all related to the problems Kristin describes and it's resolution should be part of the new values regime that will arise out of our current crisis.
Comment by Kristin Amber Dawn Maire Hill on January 17, 2010 at 11:22am
Have you guys heard what they are doing in the U.K with all the secret courts and puting gag orders on the news papers and the brave people fighting this Brian Greer has evidence tp prove these clams but no one will listen to him and he him self has a gag order but hes still fighting to protect the children and there familys children are being taken and once they are in ss they are under going drug testing and if they die body parts are missing !!! this is a politacal issue and also ecconmic becuse each person that touches a child in care is makeing money this is a recipy for disater as soon as money comes into the pictuer moralls go out the window these parents are fighting to get there children back and are being stone walled !!! 25.0000 children in 2009 have been taken now I ve just heard from some people in the U.S.A that have lost there children for refusing to put them on ritalen this needs to stop please share this info with every one you know let them know we are watching and arent going to allow these crime against children and parents to countinue !!!
 

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