Saturday, September 27, 2008

Deficit Financed Delirium

The financial meltdown is one of those “once in a century” occurrences whereby the citizens could actually walk away with the upper hand, as there could be a massive reordering of how we live and share in the gains from productivity. Labor could regain its status as the primary driver of our economy rather than capital.

This is exactly why there is a rush among the Haves to get their asses bailed out and to move forward and away from this spectacular failure as quickly as possible. Nothing to see here, keep moving along. Don’t think about the systemic failures, the deregulation, and the greed that produced this situation.

The other option, as we're seeing play out, is the Republicans using this catastrophe, as they did 9/11, for political gains. They threatened to skip the debate so that John McCain could rush back to Washington to save the day. Political theater whereby when the (latest) bailout, whatever it may be, gets completed the McCain campaign will claim it's all thanks to good ole' Johnny-boy rushing back to seal the deal. More of the same old tricks: taking credit where none is due and claiming just the opposite of what actually happened. McCain's coming back to D.C. actually blew up the deal just so John could capture some headlines and theater. He was not trying to do what best for the country, but what was best for his campaign and his corporate paymasters.

Since Reagan we’re living in a one-bubble-after-another economy. We starve the services for the poor, the needy, the hungry, the sick, the uninsured, the working-class…but oddly we pay for new professional sports stadia, convention centers, the corporate and manufacturing giants’ offices and production centers, and a whole host of other expenses that theoretically should be paid for by the business owners. Public sector jobs have been outsourced to private firms, yet the work isn’t as timely or efficient, and the costs are higher, most of the time. Our military is working alongside an increasingly privatized force without much accountability. Our economic system is in collapse because of an unregulated, nontransparent player of the financial sector (the shadow banking system).

Today we live in a world of inverse Socialism. Citizens are working longer and harder (without much retirement or health care coverage) to produce more profits for their employers, but of which they ultimately do not share.

Republicans have repeatedly won office based on outright lies and falsehoods. Once in office they basically loot the Treasury. The government takes on huge deficits, inflating economic bubbles and enriching Republican cronies, while leaving the bill to be paid by the taxpayers.

Republicans continually talk of smaller government and spending less, but their record is just the opposite. They increase government spending and size. And the problem is that their spending adds nothing to productivity and long-term growth. It merely saddles us with debt, thereby decreasing future growth.

Republicans have, for decades, jeopardized the long-term economic health of the country for the sake of their own short-term gains.

This latest malady of epic proportions is yet another chance for the true public servants to stand up and for the citizens to say enough is enough. There is another way. Re-regulation and improvement of the social safety net, both of which we cavalierly dissected and destroyed, are among the highest of priorities.

Oversight of financial transactions and rules governing those transactions is a must. Also, allowing workers wages to move in lockstep with their productivity, as they did after WWII, would go a long way toward relieving inequality in our country. This would entail a strengthening and encouragement of unionization and collective bargaining.

The free marketeers are wrong. They don’t know what they’re doing. Empirical evidence over the last 40 years has shown the emperor has no clothes. Let’s take back our country from these false prophets whom seem to only want to run government so they can use it as their personal piggy bank.

We keep taking on deficits for the Haves, but we aren’t sharing in any of the bounty. Our wages are stagnating, our health insurance is declining, the pension system has all but disappeared, and retirement accounts are dwindling. Republicans are benefiting from these deficits and bubbles, while we are left holding the bill. Is it any wonder that their primary campaign contributors are the same companies that saw meteoric increases during the heyday of the bubbles and yet are the same ones with their hands out now looking for insurance of their (deflating) asset prices due to their own poor management and oversight, risky behavior, and deceitful financial packages?

It’s clear we’re living in a socialistic country. It’s our duty to at least make it socialism of the many and not just a few.

For Further Reading:
Privatization of War
Republican Debt and Deficits
Republicans Oversee Largest Deficits in History
Republican Policies Make Deficits Worse
The Military Industrial Complex and the Obsession with Privatization

The Nationalization of Risk

Supply-side economics and the accompanying policies of the last thirty years have produced great returns for Wall Street-ers while devastating the real economy and the folks on Main Street.

As the financial sector has become a larger portion of the economy (representing somewhere between 15 to 20 percent of total sales, receipts, and shipments), market volatility has increased, which has led to a precarious existence for most Americans. Yet cranks preached these financial changes as increasing efficiency, improving liquidity, lowering rates...all of which would supposedly help retirement accounts, grow the economy faster, create jobs, and on and on. As empirical evidence of the last thirty years shows, this is a total fabrication.

The odd part of this story is that these supposed free marketeers want Government out of their way and off their back, and blame public sector regulation for any blips in the market, yet when their mismanagement and overly-risky investment strategies go belly-up and risk collapsing the whole economy, then Government must step in to save the day. Economists call this phenomenon moral hazard.

The really strange part of all this is the same characters that established the corrupt financial practices that led to the current mess are the same people offering advice and looking to make a profit off "fixing" the problem.

Robert Kuttner details the problems of deregulation and offers some necessary reforms.

With regards to the 2008 Presidential election: "McCain voted for abolishing all of the significant rules put in place at the time of the Great Depression designed to prevent a repeat," as Robert Scheer reports.

And, there is a need for prosecution of some sort for this corruption, malfeasance, lack of ethics and deceitfulness that has taken place.

Also, finally, rather than continuing to "bail out" the causes (corrupt businesses that are too big to fail) of these financial meltdowns, why not just provide a real stimulus check to every working-aged man and woman in the country? If we must nationalize businesses, let's at least do this alongside reforms to the financial system (reimplementing a 2008 version of the Glass-Steagall Act), and with language that assures a portion of the profits made from selling off the assets of these mismanaged corporations goes toward Social Security, pension & retirement plans, energy independence, public works infrastructure programs, etc. Or to at least assure that whatever amount we decide we must spend on bailouts, an equal dollar amount will go toward those aforementioned public concerns. As long as we're pumping all this money into the economy, we might as well get all the bang for the buck we can and also initiate a new New Deal.

For Further Reading:
A Crash Course in Economic Crashes
Big Rate Cuts and Fiscal Stimulus
Biggest Corporate Bailouts
Bush's Disastrous Rescue of the Finance Industry
Financial Crisis: Time for a Citizens Plan
Financial Meltdown Continues

Gaining With Trade
History of US Government Bailouts
NAFTA at Ten: The Recount
Paulson Bailout Plan a Historic Swindle
Progressive Conditions for a Bailout
Time to Take a Second Look at Our Free Trade Agreements

For Sale: Milwaukee County

No matter what the problem or the cause - cutting taxes, privatizing (or eliminating) public services, and/or eliminating programs always seems to be the Republican answer.

Redistributive policies seem to only flow upward these days (and most days). There’s never talk about controlling runaway executive pay (that’s just the “price of business”). There is no discussion of restoring equity between workers productivity and wages. Any mention of taxation, programs for improving Americans lives, money for infrastructure improvement, or what is generally regarded as investment in the public good and long-term sustainability, is immediately dismissed as socialistic and a slippery slope toward a welfare state.

When times are tough for workers…oh well, suck it up and hope for the best. When the Haves are presented with falling asset prices, measly stock returns, diminishing capital gains, or underperforming investment yields in general, then it’s time for the government to step in and spend.

If the last thirty years should have taught us anything, it’s that supply-side policies and privatization don’t work.

Scott Walker, like most Republicans, doesn’t understand this. This is why he wants to cut more Milwaukee County jobs and turn the services over to the private sector, while also selling off our airport. How convenient…more and more airlines will no doubt be facing bankruptcy due to increasing costs (fuel just being one of these). So the plan is to sell the private sector our airport, and then a few years down the line to have to bailout the private airlines, again, from the financial mess they have been creating, on and off, for many years with their mismanagement?

How often do we have to keep bailing out industry after industry before we realize they are not efficient, the market doesn’t have all the answers, and maybe, just maybe, government when run by people whom actually want to govern is a good thing? Maybe some things, like public infrastructure such as airports, are a public good and are not meant to make a profit.

James Rowen details Walker’s far-reaching incompetence regarding transit. Rowen also reports how amid all the talk of cuts and layoffs, Walker found money to give raises to some of his aides.

The problem with Walker’s shenanigans is that he won’t be the one to suffer from his policies, but his constituents in Milwaukee County will. The Republicans are a party so attached to ideology they are detached from reality.

For Further Reading:
Supply-side Economics

Sunday, September 21, 2008

Missing in Action

John McCain really is a maverick. If maverick was code for incoherent, know-nothing, oddball liar. He suspends his campaign, yet his apparatchiks continue to slander Obama on the news networks. He decides he’s not going to debate the first scheduled presidential debate. Since when did we appoint John McCain to decide how our democracy plays out? If you want to run our country, you need to shows up for the interviews and take the tests, Johnny!

Enough is enough. If McCain is such a capable leader, he needs to be able to multitask – fix the economy (even thought McCain has admitted many times he doesn’t understand the economy) and debate. You know, run your campaign and also do your job as a senator. [Also, if we’re supposed to have confidence in your Alaskan soul-mate, let her face some questions and explain her qualifications and opinions.]

All of this staged, photo-op drama appears to be the usual Republican smoke and mirrors. Again, Republicans are using the fear-card to try and scare people into voting for two unfit leaders. It seems each and every day McCain opens his mouth he either has to get back to the reporter about the questions asked, he concocts some delusional contradictory explanation, or he does the usual sidestepping. Whichever, he usually sees a decrease in the polls after he open his mouth in a televised appearance. [The two interviews – here and here - Governor Palin has acquiesced to have been train-wrecks. It’s no wonder the campaign is trying to hide her.]

Josh Israel wonderfully encapsulates our presidential debate system in an article on the Center for Public Integrity’s Buying of the President 2008 website. [Excerpted below.]

“Sixty-six million viewers watched the nation’s premiere televised presidential debate, a September 26, 1960, primetime event featuring John F. Kennedy and Richard M. Nixon. It was paid for by three major television networks, but broadcast regulations prevented them from continuing their sponsorship in the next several elections.

In 1976, the independent League of Women Voters, a nonpartisan organization dedicated to citizen education, took over. The League hosted three debates between Gerald Ford and Jimmy Carter and one between their running mates, and sponsored debates in the 1980 and 1984 elections as well. The debates became part of the quadrennial election process, but the League’s management style ruffled some feathers among party insiders who wanted more control of the process.

Republican David Norcross, who helped form the Commission, called the League’s debate organizers “too dictatorial” and criticized them for “ignoring or avoiding the politics of the whole situation.”

The Commission on Presidential Debates began hosting televised debates in 1988. The Commission is a largely secretive tax-exempt organization, created and run by former chairmen of the two major parties, funded by a small group of unidentified major donors, and designed, it seems, to exclude nearly all third-party candidates.”

The Christian Science Monitor notes, “The Presidential Commission on Debates…requires a candidate have at least 15 percent of support in national polls to qualify for inclusion in debates. The commission does that so that it can accept corporate contributions within FEC rules.” It would be nice if this commission had some teeth, which it obviously doesn’t if John McCain can just decide not to participate. It appears the commission is more about controlling whom can enter into presidential politics, what issues will be discussed, and to make sure the corporate money keeps flowing to both parties. Is this our incessantly ballyhooed democracy we’re always trying to export?

If McCain doesn’t show up, the American people should respond to his quest for the presidency with a polite, “Thanks, but no thanks.” Obama vows to have a town-hall-style meeting with the audience if McCain chickens out and skips the debate. Barack has shown he is a real leader. He shows up, he explains himself, and he’s accountable. John McCain, body and brain, is missing in action.