Moon of Alabama Brecht quote
February 05, 2009

Trust And Interest Rates on Treasuries

Obama has an op-ed in the Washington Post promoting his 'stimulus' package. Boilerplate bipartisan stuff David Broder could have written.

The package is getting bigger by the day, but the effective part of - timely, temporary and targeted measures - is shrinking.

The economic team Obama assembled is certainly proving that it is as bad as many have feared. 'Bad bank' plans and buying up 'troubled assets' are simply the wrong measures.

Temporarily nationalize the banks under some bankruptcy rule. Write down their 'assets' to some realistic value, make the shareholders and debt-holders take the necessary big haircuts and in two a three years privatize those banks again.

Willem Buiter compares the U.S. and the UK's economies to emerging market economies in trouble. The only plus side the U.S. still has above an emerging market in trouble is the reserve status of the dollar.  But that status depends on trust. The U.S. and Obama's administration now have little credibility and doing all the wrong stuff risks a rout in treasuries and the dollar value. There are signs that the process already started:

The US Treasury on Wednesday opened the floodgates of government bond issuance, revealing plans for a record debt sale in February and more frequent auctions in the months to come.

The announcement came amid growing fears about US government deficits and sent the yield on the benchmark 10-year Treasury note rising to 2.95 per cent, up from just over 2 per cent at the end of December.

Buiter therefore now argues against any 'stimulus'. Better do nothing than all the wrong stuff.

Nouriell Roubini compares the U.S. to Japan in the 1990s and sees a repeat of all mistakes the Japanese made. Especially not cleaning up the banks will turn out to be disastrous.

In short: The Obama administration is trying its best to turn a sharp recession that could recover into a prolonged period of no or lower growth that will for many feel like a depression.

There is one guy who is supposed to advice Obama that still has international credibility. That would be Paul Volkers. But Obama's National Economic Council Director Lawrence Summers is shutting him out.

With trillions of new treasuries on offer this year but decreasing trust in the ability of an Obama administration do the right things now to later increase taxes to pay back all the new debt, interest rates might get out of hand pretty fast.

Posted by b on February 5, 2009 at 09:34 AM | Permalink

Comments

Now that the neolibs have joined forces with their kissing cousins, the neocons, in expanding their sphere of influence to include the Dems, the Rethugs can no longer be solely blamed for selling America down the river to the ports of Banana-Republic-Land.

Posted by: Cynthia | Feb 5, 2009 10:16:31 AM | 1

This Administration's economic team is composed entirely of Rubin acolytes and devotees -- the very people who drove the shadow economy off the cliff, which dragged the global economy along with it.

We can expect them to look out primarily (if not exclusively) for the existing corporatized power structure, and to assist in the ongoing corporatization of national government since these avenues are the source of their own wealth, prestige, and power. This holds for Congress as well, which demonstrably follows the Hamiltonian philosophy of protecting wealth and property, and letting excess wealth trickle down like a golden shower upon the working populace.

Well, trickle down has never resulted in anything but a whole lot of pissed on, pissed off people, and this time it has resulted in an economy on dialysis. Has this changed anyone's mind in Congress? Not really. They can and will wait out whatever this recession slash depression slash global economic collapse thing decides to do. These are well to do people, and well connected. Their concern is to be safe throughout, and to come out the other side of this thing heroes in the eyes of their contributors, which is done through protecting wealth and property, since it is the corporations and persons of wealth who contribute to political campaigns.

You are in the tender care of Congress, which does not care about you.

Gentle Reader, if you have not yet grasped that the common man and woman and child between these shining seas is adrift in this process, grasp it now for your own safety and survival. It is not going to be OK, and America is not going to climb back on the hyperconsumer gravy train we had going as recently as last spring. That is gone forever. The means, the money, the credit, the resources, the full faith and confidence of the consumer and the government have all been exhausted. We are living in the afterwards now.

Instead of a 'Bad Bank' to hide the shadow economy's toxic assets for a decade or two, what is needed is a 'Good Bank' in every working community in America. Take all the healthy loans, assets, insurance, pension and bond investments in the current banks, and set them up in one National Bank with branches in every Post Office. National Credit Unions, if you will. Take the rest of the assets in the nation's banks, and let them be sold to investors for what investors will pay for them. Give them 90 days to sell it or burn it.

What's being missed here is the opportunity to launch America in a new direction, away from oil, away from foreign empire, and away from hyperconsumer debt-fueled lifestyles.

The will of the people has long, long been the fringe element in America. It still is.

Posted by: Antifa | Feb 5, 2009 10:41:48 AM | 2

Obama is offering all the benefits of Socialism (free money from the government) with none of the drawbacks (government control of businesses). What more could a neolib wish for?

Posted by: ralphieboy | Feb 5, 2009 10:51:58 AM | 3

This is from a comment on the Buiter article referenced in this piece, and gives a simple mechanism to implement my long held belief that the only way to get through this crisis is to put all the money possible into the hands of the bottom half of income earners. Terrific idea, without a ghost of a chance to be implemented for reasons outlined by Antifa above:
--------------------------------------------------
There may be a way to stimulate private consumption/investment with a credible built-in mechanism to recover the amount spent.

The Federal Reserve could send every American a credit card with a (say) $50K limit subject to two conditions:
(a) any unused credit expires within one year;
(b) any used credit (plus interest) is repayable through the tax system if the person’s taxable income exceeds (say) $100K (e.g., 10% of the debt is repaid each year that taxable income exceeds $100K).

The credit may be used to buy anything (consumables, durables, education) but not financial products.

This stimulates consumption/investment because:
(a) it reduces any contraction in consumption particularly among the newly unemployed or those fearing unemployment;
(b) it is a source of cheap credit for funding investments (e.g., in education, to buy durables, invest in a small business).

The Fed would be extending credit directly to the public, by-passing the banks. The increase in consumption/investment (depending on the size of the credit extended) may be able to lift business confidence so that businesses are willing to borrow from banks at interest rates that the banks are comfortable to lend at.

The proposed approach has a further property of being highly progressive. The lower a person’s future taxable income, the cheaper the credit will be.

The stimulus should have a relatively low impact on the government budget. It is effectively a stimulus with a built in repayment schedule. Interest can be charged at the Treasury bond rate. Some debt will have to be written off as some borrowers will never reach the requisite taxable income threshold in the future to repay the debt. But overall, this scheme should have a large “bang for the buck” ratio.

The credit is a form of monetary stimulus (quantitative easing and qualitative easing). If the credit is issued by the Federal Reserve, it will expand the Fed’s balance sheet to include semi-risky assets. The risk of default is minimised through the tax system. If for some reason inflation returns as a significant threat, the Federal Reserve can contract money supply by offering to buy back any outstanding debt at a discount.

The concept of providing a loan repayable through the tax system is not entirely novel. The Australian government provides loans to students to fund the cost of tertiary education. The loan is repayable through the tax system. No repayment is required unless taxable income exceeds A$41,600. Where taxable income exceeds this threshold, a specified percentage of taxable income is collected by the Tax Office until the loan is fully paid off. For details of this program, see http://www.goingtouni.gov.au/

Posted by: Kien | February 5th, 2009 at 9:42 am | Report this comment

Posted by: David | Feb 5, 2009 11:32:08 AM | 4

What about this http://www.nybooks.com/articles/22151 from Paul Krugman?

Posted by: Mark Gaughan | Feb 5, 2009 11:54:38 AM | 5

This is a clash of world views. Neo-liberal tax cuts verses Keynesian stimulus and nationalization of failing banks. Papered over the top of the dung pile are the Wall Street acolytes working for President Obama trying to save their mentors' financial asses. Unfortunately, following his life history, the President is trying to join the implacable and spending a trillion dollars for nothing.

Add in a war that lost its supply line through Pakistan and not enough money or grunts. Without a basic strategy for conquering Afghanistan / Pakistan, or, if not possible, withdrawal; President Obama has many more mistakes to admit to in the future.

Posted by: VietnamVet | Feb 5, 2009 11:56:21 AM | 6

...and this from Brad DeLong:

August 24, 2008

Draft: To Spend Is to Tax

We economists have a scenario that we call "current policy plus Bush tax cuts." It is made up of (i) the laws currently in force in the United States of America, plus (ii) the assumption that the defense, veterans, and other spending currently appropriated year-by-year by the congress remains the same as a share of GDP, plus (iii) the assumption that the tax breaks like the R&D credit and the regular pruning-back of the Alternative Minimum Tax that are voted for year by year by overwhelming congressional majorities continue to be enacted year-by-year, plus (iv) the assumption that the tax cuts George W. Bush proposed in 2001 and 2003 but made time-limited and set to expire early next decade are renewed. This "current policy plus Bush tax cuts" scenario has the federal government taxing about 20% of GDP over the next seventy-five years. It has the federal government forecast to spend 28% of GDP on average over the next seventy-five years. This is the fiscal gap.

A number of policies could be enacted to eliminate this fiscal gap. Simply doing nothing and letting the Bush tax cuts expire as current law requires them to do would reduce the fiscal gap from 8 percent to 6 percent of GDP. Raising Social Security taxes or cutting back future Social Security benefits by the about 1/7 needed to get the Social Security system back into projected 75-year balance would further reduce the fiscal gap from 6 percent of GDP to 5 percent of GDP. Returning military spending to its late-1990s share of GDP--not fighting wars in Iraq, et cetera--would reduce the fiscal gap from 5% to 3.5% of GDP. And eliminating "excess" cost growth in the government health care programs Medicare and Medicaid--allowing Medicare and Medicaid spending per eligible beneficiary to grow only as fast as the rate of growth of income in the economy as a whole--would bring the federal government into projected balance.

I believe that when we Americans look deep into ourselves and ask us what we want our government--because it is our government: it is our agent to do what we want with our money just as the guy in Florida we hire to keep grandma's one bedroom condo in repair is our agent--to do, we conclude the following:

We want to let the Bush tax cuts expire.
We want to close the 75-year Social Security gap, half by raising the limit on earnings taxed by Social Security so that the upper middle class and the rich pay more for Social Security and half by reducing the rate of growth of benefits at retirement.
We want to stop sending our soldiers--the best-trained and best-equipped high tech armed forces in the world--abroad to be military police in countries riven by sectarian conflict where they do not speak the language--and so return defense spending to its late-1990s share of GDP.
We want to reduce but not eliminate the "excess" cost growth in Medicare and Medicaid: we believe our doctors, nurses, and druggists will learn how to do wonderful things over the next two generations, and we do not want those wonderful things in the way of medicine applied only to the rich but to the poor and old as well.
Whether or not we decide to do (1) through (4) above, we want to raise taxes to cover whatever of the long-run fiscal gap remains, and so bring the federal budget back into balance over the long run.
Note that (5) is not optional. As the late Milton Friedman liked to put it: to spend is to tax. If the government buys things, it must get the money to buy them from somewhere. It can get the money from three places. It can tax. It can borrow--but then the borrowing has to be repaid with interest, and the more is borrowed the higher the interest and the worse the value the taxpayers ultimately get for their money when they are taxed to repay the borrowing. Or it can print the money and so inflate the currency--but that too is a tax, and an especially unfair, painful, and destructive one, as lots and lots of people victimized by inflation find their wealth doesn't buy what it used to and what they expected.

We can argue over whether (1) through (4) is what we want to do--that is what politics is about. But whatever we decide to do with (1) through (4), (5) is not optional--not, that is, if we want to continue to have a rich country in the long run. And the politicians who have told you that (5) is optional from Ronald Reagan to George H.W. Bush to Robert Dole to George W. Bush and now John McCain are not your friends, or America's friends.

Posted at 02:35 PM

Posted by: Mark Gaughan | Feb 5, 2009 12:02:34 PM | 7

Did anyone else see a report this week that Fannie Mae's bad assets were recently sold off at 50cents on the $1? If big financial institutions were forced to write down their assets accordingly right now, Citigroup would go belly up, possibly others, and the vortex of that tsunami would likely take other financial institutions with it.

I'd love to see it all cleaned out that way. Certainly, one new regulatory rule needs to cap the maximum size of any financial institution. Simply, there should not be any institution that is "too large to fail."

But, like a tsunami, the effects would likely be swift and broadly devastating. The whole global financial system would come to an abrupt near-halt. All of us who don't live in largely self-sufficient, sustainable modes could find conditons become dire in a matter of a few months.

Given this scenario, I'd guess that Obama is trying to bargain for as much time as possible to keep commerce functioning, while switching systems into more sustainable, less greedy arrangements. Have to keep bankers cooperating, for that to happen. And the bankers and their buddies are just bargaining to stay afloat until they see the next scheme to preserve the status quo and enhance their fortunes and power.

Truly, the notion that the same people who led us into the maelstrom are the ones that can lead us out seems preposterous on the face of it, doesn't it? I don't see Obama winning that bargain with the devil. At least, not without massive popular mobilization.

It is hard to see any way that even the US govt can raise enough money to save the banks from their own debts and the black holes of fraud swirling around them. Don't think anyone is yet close to the $figure that would be required. And the more $ the US govt commits to spend on bailing, the less inclined our foreign creditors will be to sign the checks. As b has pointed out, they will certainly seize the opportunity to drive devastating bargains. And who, anywhere on the globe, has that sort of capital in a shrinking global economy?

I'd be curious to see a discussion of David/Kien's post at #4. If govt is going to spend vast sums, introducing it locally sounds much more productive to me. Of course, the PTB still have control of enough mechanisms of enforcement to ensure that such a plan never leaves the ground.

So, Catch 22? Anything that might actually help to ease the landing in the present collapse of empire will not be permitted to happen? Isn't that the usual path to destruction of empires? Power elites never cede an iota of power, control, wealth. Either it has to be wrestled from them, or eventually the weight of its accumlation drowns them and anyone in the ship with them.

Meanwhile, I am beginning to think that a remote corner of Burma might be the place to weather the deluge.

(Remember all the international brouhaha about Myanmar refusing much international aid? Yet with limited outside resources and much local self-organizing, reports say that the people and work of the Irrawady delta are largely back to normal. Which cannot be said of New Orleans today.)

The US narco-dollar laundry must be wide open right now. There will be no questions asked.

Posted by: small coke | Feb 5, 2009 1:28:36 PM | 8

Curious tangent: Who is and has been protecting Bernie Maddoff? Why? What rot is buried in that black hole?

Posted by: small coke | Feb 5, 2009 1:35:28 PM | 9

Banker’s salaries should not be seen as payment for work done, but as a percentage of the take.

Everyone talks about the bonuses distributed, but not the welcome package.

The fortune managers as they are called here when they move take their clients with them. In the US, UBS has been trying to seduce some of them. Of course the discourse is in terms of competence, etc. Really they just pay out to gather wealthy dupes and reward the runners who bring them in. (madoff style.)

- from news in the Swiss press, bloomberg must have something:

When these money managers move, they usually receive a welcome package of 200% of revenue generated in the past year. UBS is reportedly offering 260%.

Ex. Rick Link (you couldn’t invent that name if you tried) and Terry Beatty (not bad either) who have moved from Merrill Lynch to UBS Dallas on 29 jan manage 650 million dollars - bringing in 2.6 million in commissions every year. Their welcome package is thus 3.3 million each before they even order chairs for their offices or draw up with fanfare in a limo.

Ex. On 16 jan UBS-US hired 5 bankers from Goldman Sachs, who collectively manage 4 *billion*. Their welcome package is 78 million, or 15 million each.

Heh! Mafia gone global and official. Under the cover of - what exactly? Democracy, the free market, fictions sold to the public.

Fraud, manipulations, on a stupendous scale. As we all know it is the rich (well, pension funds, municipalities, charities, etc. also) who have lost half or all of their money. The poor outside the US are laughing. They live in the informal economy and have no wealth to protect or ‘grow’ and get a kick out of the dupes downfall.

Where did the bail-out money go to? What was it used for? Enquiring minds might like a little information...Obama? Drring riing?

Posted by: Tangerine | Feb 5, 2009 1:36:59 PM | 10

smallcoke, excellent post.

Posted by: slothrop | Feb 5, 2009 1:42:03 PM | 11

Part IV is germane to America's sad prospects, but I think Gowan underestimates Asia's ability to get together and reduce dependence on US intermediation. There's no practical bar to Asian banks making credit-enhanced CDOs out of Grameen Bank loans - the LDCs can sustain the labor-intensive origination process that broke down and crashed Western mortgage lending. It could get the immiserated lumpenproletariat of laid-off financial engineers back to work, and it would make US sovereign debt compete with LDC investment for global capital flows.

Posted by: ...---... | Feb 5, 2009 1:44:48 PM | 12

with each day that passes the crisis deepens. it is clear that the so called 'experts' do not know a thing about resolving the crisis. as slothrop suggests there is no resolution except socialism.

u s imperialism iss floundering in exactly the same way as british imperialism once did - - it tries to talk itself up - but unfortunately for them - everything is plain to see. they can give all the years they want as the year of recovery. it will not recover, at least not in the form it is today & there will be no 'reinvigorating' of capitalism. it is dying a maladorous death

the way people in the west have had the civic responsibilities emaculated - there is a very real fear of fascism. a fascism like israel - where there is no opposition - not in any fundamental sense - people will keep being told lies & the laziest will believe them. it is really fucked beyond belief. & as someone who has studied marx nearly all my life i cannot believe the rapidity of events - the rapidity in & of itself is spectacular

& the quite silly narratives the empire sells - like the 'great success' of the elections in irak is a joke told through a mouth full of blood. where there was once monsters - there are cretins. where there was once sordid salesmen now there are gangrenous gangsters - all the characters are from a james cain novel. criminals or criminals-to-be

the only choice the obama administration can make is how quickly the concentration of wealth takes place - their responsbility is chiefly that of a valet

Posted by: remembereringgiap | Feb 5, 2009 2:08:57 PM | 13

If I look hard enough into the setting sun - Stones

In short: The Obama administration is trying its best to turn a sharp recession that could recover into a prolonged period of no or lower growth that will for many feel like a depression.

Not.

The fraudsters, the rip off artists, the elites, etc. are making a last scramble for whatever they can get, care of Obaman, cashing in before the sh*t hits the fan. The end-point payer is the State, the Fed, care o/ Congress, Gvmt. and they aren’t paying single mothers, home owners, etc. and why should they, in their minds?

They are bailing out the rich, also paying off US debts, those creditors who simply won’t go away. What they have to pay to survive (i guess without any info.)

Bleak, but it looks much like that. Other interpretations are possible.

Posted by: Tangerine | Feb 5, 2009 2:34:56 PM | 14

tangerine

it is considerbaly more than bleak

the crisis, in brief, cannot be resolved

where i live the changes in the last 5 months are dramatic - i know the situation elsewhere is just as grave - & we are just at the beginning - it could even be said we are ephemeral to the real heart of the ctisis

Posted by: remembereringgiap | Feb 5, 2009 3:05:03 PM | 15

& what i find instructive is the way events that are occurring all across europe are not being 'shared' the strikes that are taking place in italy & greece for example let alone iceland. it's all falling apart & they do not want their public(s) to witness this deranged spectacle

Posted by: remembereringgiap | Feb 5, 2009 3:12:57 PM | 16

Harry Markopolos's Madoff/SEC fraud testimony yesterday before the House Financial Services Subcmte was the most fascinating spectacles I've witnessed in a loooooong time. Here's a short account...

http://tinyurl.com/cyccyu

One could do worse than catch it on C-Span here...

http://tinyurl.com/chgwrs

Better than the best thriller, bad guys, good guys, sleuthing, corruption, toady press (the WSJ spiked the story), drug money, Russian oligarch money, laundered money...
Markopolos also said that the SEC gets A+ for incompetence whereas FINRA (the private Wall Street watchdog) gets A+ for corruption. Obama's newly minted head of the Security and Exchange Commission, Mary Schapiro, formerly the head of...FINRA.

Posted by: Thrasyboulos | Feb 5, 2009 3:18:07 PM | 17

@9

Who is and has been protecting Bernie Maddoff? Why? What rot is buried in that black hole?

Harry Markopolos's Madoff/SEC fraud testimony yesterday before the House Financial Services Subcmte was the most fascinating spectacles I've witnessed in a loooooong time. Here's a short account, with good comments...

http://tinyurl.com/cyccyu

One could do worse than catch it on C-Span here...

http://tinyurl.com/chgwrs

Better than the best thriller, bad guys, good guys, sleuthing, corruption, toady press (the WSJ spiked the story long before their CYA story of a month or so ago), drug money, Russian "oligarch" money, laundered money...

Markopolos also said that the SEC gets A+ for incompetence whereas FINRA (the private Wall Street watchdog) gets A+ for corruption.

Obama's newly minted head of the Security and Exchange Commission, Mary Schapiro, formerly in charge of...FINRA.

Bonus link.

http://tinyurl.com/c95ym3

Posted by: Thrasyboulos | Feb 5, 2009 3:38:51 PM | 18

Apologies for the double post. Thought the first one got lost.

Posted by: Thrasyboulos | Feb 5, 2009 3:39:51 PM | 19

GREAT COMMENTS. PROBLEM? SITUATION HOPELESS. THE END OF LIVING THE BEGINNING OF SURVIVAL. THERE IS CHAOS ALL OVER THE EARTH AND ITS COMING HERE. ACT NOT REACT. I THINK EVERYONE SHOULD NOT DECLARE TAXES AND WE BECOME TO BIG TO FAIL- LIKE THE BANKS AND OTHERS . BIG BROTHER WOULD SHIT AND WE ARE ONLY FOLLOWING THEIR LEAD. . IF THEY HAVE NO ONE TO TAX THEY WILL FAIL AND AGAIN WE ALL MUST ACT NOT REACT. LETS NOT FORGET HOW THIS REPUBLIC WAS FORMED -- OVER TAXES. THROW DOWN YOUR GAME PIECE AND THEY WILL HAVE NOBODY TO PLAY WITH. DIDNT THEY PROVE THEY ARE ALL CROOKS? IF YOU WANT MORE STAY TUNED THEY WILL GIVE IT TO YOU! GOOD HEALTH- LUCK TO ALL. ALL THIS BULLSHIT TALK DOES NOTHING. WE MUST ACT IN NUMBERS AFTER ALL- THESE AH'S ARE JUST CIVIL SERVANTS SCREWING US ALL AND SMILING. WE MUST LIKE IT- WE TAKE IT!. RIGHT?

Posted by: winston smith | Feb 5, 2009 4:58:33 PM | 20

winston smith, why are you screaming?

Posted by: sabine | Feb 5, 2009 5:26:08 PM | 21

what is grim for him is good for me & yes there is no reason to shout here

Posted by: remembereringgiap | Feb 5, 2009 7:15:02 PM | 22

Why exactly the constant threats to make shareholders "take a haircut"? Is it any surprise that the market keeps going down? Does it really hurt the rich if my 403(b)(and those of all my co-workers) shrink away to nothing as a result?

Posted by: Tosk59 | Feb 5, 2009 10:32:31 PM | 23

Yes, good post, small coke.

b, as the US is not your country it is excusable to misread Paul Volker(s). It was he who presided over the kicking off of the macro-cycle we have been on the past three and a half decades, namely, that of destroying the middle class. Prior to the latest bankster shenenigans, Volker transfered more money upwards than anyone else.

Looking to Volker to "solve" the financial crisis is like looking to Negroponte to "solve" internal conflicts in invaded countries.

wsws on token executive pay limits:

According to the Treasury Department plan, the new guidelines would "distinguish between banks participating in any new generally available capital access program and banks needing ‘exceptional assistance.'" The restrictions would not apply to the firms that have already accepted an estimated $250 billion disbursed from the government through the Capital Purchases Program, by far the largest component of TARP. These firms are subject only to "proposed guidance" on executive pay from the Treasury.

It is conceivable that the new bailout that Geithner will propose next week—whose cost estimates range between $1 trillion and $4 trillion—will fall under the rubric of a "generally available capital access program." If so, executive pay rules pertaining to "exceptional assistance" would not apply, and the institutions would be able to waive the $500,000 limit with public disclosure and a "non-binding" shareholder vote.

Moreover, even the size of the so-called pay “limit”—$500,000—is startling. That a salary of a half million dollars—more than 10 times the median annual pay of an American worker—could be presented as punitive action testifies to the avarice of the ruling elite.

But in fact the rules allow executives to make far more. The Treasury Department guidelines include an exception that permits executives to be paid in stock options beyond the $500,000 limit, so long as they keep the stock until their firms have paid the government back for loans taken.

Once again, the full significance of this stricture will become clear only when Geithner presents the details of the new bailout. If, as is widely anticipated, the plan will feature the creation of a "bad bank" where financial institutions could sell their toxic assets at an inflated price, it would have the immediate effect of rapidly increasing the banks' stock prices—and with them the pay packages of the CEOs.

As Max Holmes, a finance professor at New York University and chief investment officer of an asset management firm, told the New York Times, "[T]he stock prices of the good banks are likely to soar, as they will be the four best capitalized and cleanest banks in the world."

Hmmm.... The four best capitalized and cleanest banks in the world....

And no meaningful limits to recompense "beyond the dreams of avarice."

slothrop informs us that this is merely the impersonal workings of the capitalist system, and, as such, could never be construed as chimeric imperialism or nationalism.

The four best capitalized and cleanest banks in the world....while the middle class have their cojones cut off, and the poor can't even find a structure that will allow them the freedom to jump from.

Again, it is all how you define "fix the mess."

You see, unfortunately there is no way to bring the world to its knees without bringing the US public to their knees. But once that is done, the "Four Banksters of the Apocalypse" should be able to run the table, shoot the moon, clear the deck, herd the wayward sheep, even pick their own metaphor. Increase the money supply by loaning money to the world. Or is that control the world, and siphon off its productive profits, by having the entire world indebted to them.

You see, for some the glass is half empty, while for others it is half full.

Of course, the other alternative, is that Obama and his advisors who just invested close to a billion bucks in him (back when that was actually worth something) -- and boy, talk about ROI, did they ever get repaid fast! Turned a mighty nice profit, too -- are stupid. Yes, imagine that... Obama's economic advisors are stupid and what they are doing won't work.

I cannot predict whether this scheme -- admitedly a drastic one, risking high levels of social unrest -- will get the capitalist acumulation process/empire/US/whatever back on track. But I don't think they are just stupid and so doing the wrong thing to "fix the economy."

Posted by: Malooga | Feb 5, 2009 11:29:55 PM | 24

Once more for emphasis:

The four best capitalized and cleanest banks in the world....

And no meaningful limits to recompense "beyond the dreams of avarice."

Obama!!!!!!!!!!

Posted by: Malooga | Feb 5, 2009 11:34:20 PM | 25

You see, there is nothing sadder, more forlorn, in the entire world, than a banker who can't make a loan.

So, we engineer a global bust cycle, then we indebt everyone. Then suddenly the world economy takes off again, and we can "re-industrialize" the US.

And all just in time for the '12 elections.

Brilliant!

Posted by: Malooga | Feb 5, 2009 11:40:24 PM | 26

Just for the record, so you don't think I'm smart about this sort of thing, the kooky David didn't post #4, but another David did. But you probably figured that out...

Posted by: David | Feb 6, 2009 12:08:08 AM | 27

Paul Volcker was tasked by Jimmy Carter in 1878 to reduce inflation, running at 10 - 12%/year at the time. He did this by raising interest rates, but by not enough to make a large dent on inflation.

After Reagan was elected two years later, the Fed raised the discount rate overnight from 7% to 14%, setting off a fairly wide recession, which the supply side idiots claim would happen, to this day (morning). Congress also passed its 1981 Christmas Tree budget, sharply dropping tax rates. The Laffer Curve reigned supreme. The sharp rise of interest rate (22% mortgages) and the flood of tax cut money was equivalent of stepping on the brake and the accelerator at the same time.

The tax cuts did not do the trick, of course, because who'd want to dump money into the economy (on the supply side) during a recession. In late 1982, Reagan reversed some of these tax cuts, and this reduced the deficit somewhat, allowing for a drop in interest rates. Voodoo economics (the Laffer Curve) was defeated within a year, yet its essence is proudly espoused by Reagan's heirs and Reagan's media hagiographers, to this day, to this morning. Non regulation since Clinton and generalised collapse of the system really put the nail on the coffin of Friedmanite bullshit.

America is doomed to a political fight within these Keynesian parameters. Supply side vs demand side, and it's no use pining for bolivarian state solutions in the good old USA. Them's the iron rules of American politics. We are now at the apogee of this thirty year fight since the glory days of Margaret Thatcher and Ronald Reagan, and the Republicans are fighting for their ideological skin, within what is allowed in the American system.

Fascinating days in American politics. Not the bolivarean solutions we'd all like, of course, but that's like asking for ice cream when all that's available is coffee grounds on toast. You get entertained by the politics you have, not the politics you wish you had.

Will the demand side keynesians and lapsed (for the moment) friedmanites (Summers, Geithner, Orszag, Schapiro) put the deregulated humpty dumpty together again? Who the hell knows? I do know the Republicans are in panic mode. Politically speaking, of course. Obama took the gloves of tonight, in the biggest tour de force of political thuggery I have ever witnessed. The CNN hacks and the lone Republican "stategist" looked like someone dumped scalding water on their ass.

Lol!

If you want to witness the extent of the Friedmanite regulatory collapse and corruption on a grand scale since Clinton, you couldn't do better than listen to Harry Markopolos's testimony of yesterday. Links on my posts above.

Posted by: Thrasyboulos | Feb 6, 2009 12:16:47 AM | 28

Why is everyone refering to fascism as socialism?

The workers seem strangely absent from all these economic plans. Whether the government owns the corporations or the corporations own the government, in either case it represents a corporate merger and leveraged buyout at the highest level of the economy, and citizens lack even the status of penny-stock share-holders. Management, as usual, is taking care of itself, as first and only priority.

I am not complaining. Really, I am beyond that. Rather: When fascism is refered to as socialism, you know that political discourse is dead. All discourse. There will be no solutions. None. Really none.

Think about your food. Think about your water. Where are they going to come from? How can your friends and neighbors help you to get them. (And how can you help your friends and neighbors--don't shirk this!)

And: How can you evade the violent thrashings of the system as it goes down?


"Stimulus packages" do not matter: Such debate over whether it is better to destroy the dollar and wreck the economy in one year or two!

Yes, your pension plan is gone. But you already knew that.

Less obviously, growth is over. Resource limits have been reached. An economic system that depends on endless growth is no longer viable. We will rediscover why, back in the middle ages, charging interest was called usury and deemed a sin.

Because it was.

Because it is.

--Gaianne

Posted by: Gaianne | Feb 6, 2009 1:29:51 AM | 29

Perhaps we should refer to it as "National Socialism?"

Yes, discourse is dead; so is perspective, context, historical knowledge. It is very sad...

I'm not sure that growth is over yet, but the horizon is clearly visible. I think that after a good deal of shrinkage we may yet have one more cycle left in the quiver.

Posted by: Malooga | Feb 6, 2009 3:27:48 AM | 30

What a stimulating discussion. My 2 cents (or rials):

Since the end of WWII the U.S. system of capitalism suddenly switched gears and favoured 'brokering' rather than 'production' (the U.S. manufacturing base has shrunk 60 % since WWII), making it dependent on foreign manufacturing and labour, so the U.S. economy was always guaranteed to implode at some stage. With an over-emphasis on 'brokering' (euphemistically referred to as the 'service' industry, 72 % of GDP) the system became intrinsically corrupt as people could make more money by flipping corporations, stripping them and re-selling them than by actually taking the trouble to 'manufacture' anything of value.

As long as the 'brokers' and 'money-changers' were in charge, even the most technically bankrupt companies (GM alone owed $ 250 billion in 2001 when it achieved junk bond status) could continue obtaining loans from the increasingly powerful) brokers who were prepared to re-package and sell anything for an obscene fee.

Subprime loans were merely an extension of this ultra-capitalist, 'The Greater Fool' philosophy.

What is my point? Namely, that there is no short-term, and not even a medium-term, solution to the intrinsic and endemic ills of the U.S. economy. But there is indeed a long-term solution, which is getting the U.S. to adopt the socialist-capitalism system of, for example, Germany that combines common-sense lending (it's impossible to obtain a housing loan without a 30 % downpayment, property evaluation by the bank itself and rock-solid proof of debtor's repayment ability) with a nationwide emphasis on manufacturing.

But listening to the Senate debates and all the grandstanding and domestic 'talking up' of the economy, I simply don't see the national will necessary for a radical change of direction. This is not only a domestic but a global tragedy, because inevitably a weak U.S. will encourage military aggression by the Russians and Chinese, or may itself look to new foreign military ventures to detract the public's attention from the nation's problems. It's a lose-lose situation.

Posted by: Parviz | Feb 6, 2009 4:07:01 AM | 31

Even before the current crisis the national will/courage simply didn't exist to implement fundamental economic reforms, for example, the elimination of corporate tax loopholes, greater regulation, a reversal of tax breaks for the ultra-rich, establishment of a bipartisan campaign to eliminate budget "pork," imposition of stringent limits on corporate debt and speculative lending, a vast reduction in military expenditure and, finally, an additional 50 cent per gallon gasoline tax that would have slashed the federal deficit, curtailed energy waste and spurred technological breakthroughs.

So how can anyone expect genuine reform to occur under the current dire circumstances?

I recall a famous British soccer manager who, asked the secret of his success, replied (I'm paraphrasing):

"I always changed my team when it was doing well, because confidence was at its highest, belief in the Manager was at its highest and the team's success and money allowed me to even fire our best players for top fees if I deemed it necessary. When you're at the bottom of the table you have none of the advantages mentioned above and all you can do is scramble and pray."

The U.S. is now at rock-bottom (and maybe not even there yet). So everyone is fearful of the changes needed to generate long-term growth and economic independence and prosperity. Basically, the U.S. blew the chance to instigate reform when it was the world's sole economic and military superpower, when it basically owned the world, so the chances of doing so at this stage are negligible.

Posted by: Parviz | Feb 6, 2009 4:17:19 AM | 32

About that bailout, go here: http://www.neilyoung.com/forkintheroad/forkintheroadvideo.html and rock.

Posted by: Mark Gaughan | Feb 6, 2009 4:33:30 AM | 33

One thing for sure, this fuckers going down - I give it until June before all the cascading vicious circles are finally spun out, burnt out, and blankets the nation and the world like a green colored fire haze. Change is definitely on the way and it's not going to feel very good.

Posted by: anna missed | Feb 6, 2009 5:05:03 AM | 34

Parviz makes some good points, because it wasn't until the post Reagan, collapse of the USSR period, that the deregulation of capital markets really took effect. That era reinforced the legitimacy of unregulated capitalism fueled by the de-legitimacy of socialist/government that formerly acted as a hedge against unmitigated capital. And developed into its full flower worldwide through globalism. What Marx saw as the self destructive character of capitalism has only came into full exposure after capital had been released from all its restraints and was allowed to express its true and fully formed character. This development, as outlined on the other thread, can be construed as a conspiracy. Which of course it is, in so much as like thinking modes of thought reinforce each other into a trend with a mission based on a logic of human thinking and strategy. Or given their druthers, sociopaths might unite in common purpose.

Posted by: anna missed | Feb 6, 2009 5:44:45 AM | 35

What's being missed here is the opportunity to launch America in a new direction, away from oil, away from foreign empire, and away from hyperconsumer debt-fueled lifestyles.

I'd like to pick up on Antifa's thoughts, with the above being in my eyes a pretty profound statement.

The economic collapse the world is witnessing at the moment represents a once in a life time opportunity to grab the capitalist bull by its horns and wrestle it to the ground. It s now, in times of economic downturn, that we the concumers have the unique chance to exert immense pressure on big corporations. Let me quote a few lines I wrote on a different blog, Karl Marx Was Right, which I discovered some years ago after Uncle $cam linked to him here at B's marvelous hangout (much appreciated Uncle, your links alone are making the Moon a treaure chest, not to mention all you other barflies and the incredible linked network you are able to offer thanx to your mastery of internet surfery):

[...] How about multiple thousands making their way simultaneously to their local Wal Mart "to go shopping" and apart from filling up all car park spots, clogging up any traffic into the entire shopping centre district. We are not even protesting, just doing what we are meant to do as obedient citizens, out and about doing the good consumer thingy. Walking through Wal Mart, browsing, but due to lack of income not buying anything. Neither the police nor the military can force us to spend money there, and the willing customers can’t get a park. Entirely legal consumer protest, which if repeated often enough would kill that greedy pack of a retailer [...]
A similar approach could be taken not just to Wal-Mart, but also to any rip-off merchants you can think of, Kraft, Nestle, etc. It is at the retail end of the chain that we have the most power, and as much as I risk repeating myself, it is us, the taxpayers and consumers who wield the ultimate power.

As we are entering the year of the ox, let us save, as in not not spend money, in the right places.

Posted by: Juan Moment | Feb 6, 2009 5:48:11 AM | 36

I don't know if that's the right approach, Juan. Those who want to buy will do so, while preventing them from doing so by driving cars, unnecessarily using up fuel (which is also an environmentally unfriendly approach) to reach the parking lots and generally being a pain in the A$$ won't find many takers, and at most you'll achieve an hour of fame on a local news channel.

What is needed is a change in the national mindset via a grassroots refusal to buy things that are unnecessary. This will take education and time.

Posted by: Parviz | Feb 6, 2009 8:33:41 AM | 37

submerging markets, har har, last call for looting and capital flight!

Posted by: ...---... | Feb 6, 2009 9:23:49 AM | 38

C'mon, get a grip.

You can't fill up a Walmart parking lot. The environmental harm of such an approach would be minimal. Nobody is buying anything which is unecessary these days, except for the super wealthy.

This whole James Howard Kunstler neo-Malthusian rant about poor people buying things that are "unnecessary" really disturbs me for the covert liberal ugliness of its barely disguised classism.

It's not considered "unnecessary" for middle-class home owners to have complete woodworking workshops in their basements, or a dozen musical instruments, or all the accoutrements of a "hobby" like ceramics, or an antique car, or to buy whatever they want from Fancy Foods, or to take the yearly vacation to Europe/Carribean, or to send three children to college, or to go to "cultural" events like symphonies, opera, dance, theatre, or have all the latest electronic gear: Computers, tvs, stereos mp3 players, cameras, cell phones, the whole nine yards.

All of these things have significant, non-trivial environmental effects in the resources they consume and the by-products they produce.

But if some working class shlub stuck in a dead-end mindless toxic bone-breaking labor job which is slowly killing him buys a plastic swingset for his kids every fucking middle-class liberal feels it his moral imperative to harangue the poor sucker for "destroying OUR environment."

This stuff sickens me.

Parviz, you are obviously wealthy enough to travel all around the world and send your kids to elite foreign universities. Why is this consumption "necessary," but a toiler who purchases a plastic bin for the laundry at Walmart because it is cheaper engaged in "unnecessary" consumption?

For the record, I do not shop at Walmart, but that is because of their role in the neo-liberal drive to the bottom in every way which is killing the planet, not because their products are less "necessary" than the Valentine's Day slave-labor chocolates and agribusiness flowers that middle-class people will all buy their significant otheer(s) this Valentine's Day.

The wealthier one is, the more compelled he feels to force his values on those below hime in the pecking order. Just because the elite mandate obedience does not mean that the guy in the middle can't also feel some power by heaping it on those unfortunate enough to be below them.

Posted by: Malooga | Feb 6, 2009 9:30:47 AM | 39

What is needed is a change in the national mindset via a grassroots refusal to buy things that are unnecessary. This will take education and time.

Been happening for a while - one tiny example is already a reality tv show.

Google sustainable living and get over 683,000 results.

Proud to be prudent: Meet the new army of frugalistas

Posted by: Hamburger | Feb 6, 2009 9:50:17 AM | 40

Sustainable living involves changing the means of production, not the means of consumption.

This is complicated and I don't have anymore time today to flesh this out beyond the bare minimum:

The means of production in the world are owned by the super-wealthy top 1%, or less. (anna missed has a better grasp on the exact figures.) The current world system is based upon endless growth, constant competition between those elites who control the various centers of production in a race towards the bottom, the imposition of slave-like conditions upon the human component, the externalizing of environmental damage, the use of military force/state violence to enforce compliance and expand the system of production, propaganda to disguise the structural violence, and the medicalization of alienation to cope with it. Finance provides invisible constraint/structure/direction to this system. Hence, the Financial, Corporate, Military, Government, Media, Medical system we live under.

The means of consumption are entirely dependent upon the means of production. Virtually everything consumed was originally produced under the system described above.

Now, the system allows a certain amount of "leeway" for the wealthy and upper middle class (top 20%) of society -- both so that they can have some luxuries ("The best of things," as Wallace Shawn says), and more importantly, to provide a veneer of freedom of choice, so that the 20% management class can believe official propaganda. Hence, we see Organic Foods and local farms, alternative medicine, small artists, small business people, etc. In actuality all of these are dependent for survival on the trickle down of wealth from the producer wealth accumulation system described above. They comprise a small, but necessary humanizing component for that top 20%. The Frankfort School describes this well.

Seen this way, which IS how the world really works, and not some romantic notion we may have of how we wish it worked, do we really think that we can change/save the world by the top 20% members of the top 20% of nations recycling their plastic bags and installing heat pumps?

I'm not saying change is impossible, or that so-called "Green" efforts are not admirable (provided they do not penalize the poor, which they usually do), but that one must understand the world as it really exists to institute real change.

We must change what is important, the very structure of things, and not institute a thin veneer of stylistic change: Long hair, drugs and rock and roll in the sixties, and battery operated cars, non-toxic paint, and social networking now. Trendy social charities like micro-lending, Kiva, Heifer Int'l, etc. are designed to prevent meaningful structural change; the hundred thousand or so they touch a year pales before the millions killed every year by the relentless expansion of the means of production.

And a final word -- about science. We place innate faith that it is science that will -- in some unknown way -- ultimately resolve the contradictions described above. We were upset by Bush's marginalization of scientists. But we must watch carefully at the constraints put upon the problems which science is allowed to address under Obama.

The larger Leviathan which is consuming the future of life itself must, and will, remain unaddressed.

And so it goes...

Posted by: Malooga | Feb 6, 2009 11:00:29 AM | 41

Malooga, I shave with one of the cheapest shaving creams around because it's just as good but half the price of Gillette. When I'm in Germany I shop at Aldi and not Karstadt because the price difference reflects Karstadt's far higher rent. I use a really cheap but superb coconut oil soap manufactured in Iran that costs 10 cents a bar compared with the $ 1/bar imported stuff that's freely available. That's a small example that explains the lifestyle, and that's how I brought my children up. If I jet around the world Business Class it's because my company pays for it, otherwise for private trips I travel coach. This expains why I'm debt-free. So much for the personal stuff.

Malooga, I think Hamburger understands what I was driving at a lot better than you do. I was talking long-term. Obviously it's difficult to preach 'frugality' to the 600,000 U.S. citizens who just lost their jobs this month, so by insinuating that I'm looking down my nose at them you do both them and me a disservice.

Whether I'm rich or poor is irelevant to the fact that the U.S.A. is THE Consumer Society 'per se' and people throw one-third of their edible food into the waste bin (In my household, though I could afford it, NO food gets thrown away). Americans buy what they can't afford and what they don't need and what they shouldn't be eating (junk food) because they are bombarded 24 hours a day by corporations who invent new and more sophisticated ways daily to perpetuate the cycle of spend, spend, spend.

As I said (though you obviously missed my point) there is neither a short-term nor a medium-term solution to America's ills. Teaching people the very basic principles of economics from kindergarten upwards is what's needed, and then in 20 - 30 years you'll have a new generation that's less consumer oriented and less goddamned naive and susceptible to corporate brainwashing.

Meanwhile, all I can do is commiserate with those people who have become victims of the extremist dog-eat-dog capitalism which the U.S. has always preached and boasted to the rest of the world "boosts growth and creates jobs". What a sick joke. Give me European-style capitalism anytime.

Posted by: Parviz | Feb 6, 2009 11:35:57 AM | 42

Malooga, your blaming everything on the means of production is too simplistic. Obviously there is a supply-demand relationship that influnces cosumer spending and pricing, but a new day is dawning in which consumers are gaining 'consumer-power', forcing the producers to adjust production and products accordingly.

Why else do you think that major U.S. companies fell flat on their faces trying to expand in Germany? Blockbuster folded in the late Nineties with a $ 200 millioon write-off, because Germans weren't prepared to use expensive fuel to drive to Blockbuster and rent expensive videos. They saved money by staying at home and reading or watching TV.

Nobody in Europe would be caught dead buying a U.S. house made of 'matchsticks' whose roof flies off in the wind. In Europe things are built to last. It's a whole different CONSUMER philosophy, to which companies have to adapt. Planned obsolescence is frowned upon and usually fails.

I could go on forever, and in the end it all boils down to education and values, including the rejection of naked materialism which has driven U.S. spending until now.

Posted by: Parviz | Feb 6, 2009 11:46:45 AM | 43

Maybe we can learn from old people: Depression breakfast.

Posted by: Hamburger | Feb 6, 2009 12:41:38 PM | 44

Parviz,

no to mention that Wal-Mart also withdrew from Germany: the philosophy of "go out and buy some cheap consumer crap and when it breaks, just go out and buy some more" did not catch on.

Plus the fact that retail clerks are unionized here or covered by collective bargaining agreements, which made it hard for Wal-Mart to use its labor realtions policies, which can be summed us as "Work 'til you drop and just be thankful you have a job in this town."

Posted by: ralphieboy | Feb 6, 2009 1:16:52 PM | 45

Following on from 44,

Start here: no-knead bread. It's a life-changer.

The way we eat, and particularly how we obtain and prepare our food, is a massive part of our dependence on, for want of a better phrase, The System (Malooga puts it better upthread). There is a vast machine spreading over all disciplines and into all facets of life that is dedicated to nothing more than feeding us garbage, and making us come back for more. The infantilizing of our culture is an obsession of mine, but no-where is it so obvious than in food. We are told we cannot make, we must purchase. Walk around your local supermarket and take a look at what's on the shelves. Now assess each item according to how much the manufacturer is relying on your perceived helplessness or ineptitude. For instance, they're saying you're not up to grating your own cheese, let alone slicing or, Kraft forbid, making it.

The bread above: all you need is flour, yeast, water and an oven. No skill, very little time. It isn't Gandhi and his spinning wheel, but it's a start (and the bread is unbelievably good).

Posted by: Tantalus | Feb 6, 2009 1:32:31 PM | 46

Yesterday, I heard sales at McDonalds were trending way up, and would imagine the same for Wal-Mart/Sams Club. The erosion of consumer spending is made up by more, looking for cheaper. I think it's been shown conclusively that the U.S.percent personal income spending on consumer goods is actually significantly less now (pre-meltdown)than in the past - that would include clothing, appliances, and even cars. Whats gone way up is non-discretionary spending like mortgages, insurance, etc.

Posted by: anna missed | Feb 6, 2009 1:32:56 PM | 47

Statistics for above:
U.S, citizens spend
32% less on clothing
18% less on food/eating out
52% less on appliances
24% less on per car average
and:
76% more on mortgage
74% more on health care
52% more on car transport (because of going from 1 to 2 cars)
25% more on taxes (because of 2 workers per family)

Posted by: anna missed | Feb 6, 2009 1:52:43 PM | 48

Oh Gawd....

Another person who thinks that European shits don't smell.

I'm with slothrop in this battle for sure.

And I know that I'll make a lot of enemies for this post. But here we go.

I lived in Europe as a child; and I was married to a "European" -- a Dane if you want to know -- so I know a little about Europe.

Yes, it's great that things are made better in Europe. Many systems and standards are different between Europe and the US, and they are generally -- not always -- better in Europe. But to say that there is no planned obsolescence is strange. After all, one can purchase European appliances in the US, and they do not last as long as things once did. I had an American washing machine for thirty years, and it only needed one repair -- a belt replacement -- in all that time. Newer European appliances will not last that long or be that simple to fix. So swear the many repairmen I speak with. Vacuums, too. I still own a forty year old Electrolux -- works great, one simple bearing replacement, and I use it in the shop too! Cotton shirts purchased in Denmark used to last decades. Not anymore; same shit as America.

I'm all for renewable energy and recycling and better built houses. But then, why do European countries have larger ecological footprints than the planet can sustain?

But, the deeper point is that Blockbuster has little to do with the means of production as I am speaking of it.

Covert military and financial destabilizations benefit Europe just as much as the US. The European-run IMF has just as bloody a history as the US-run World Bank. Does not the wealth from third world structural adjustment programs flow into European coffers? How can you separate this method of wealth accumulation from European civilization? Are not the wealth of the Icelandic people and the Turkish people, both suffering from IMF-led structural adjustment and enforced cutbacks to social programs an expression of European values? Check out this list of European supported dictators who indebted their nations to European capital. It reads like a who's who list of world misery: Haiti, Argentina, Chile, Indonesia, Congo, Somalia, Sudan. Who is profiting from this system? What corporation owned the water rights in Bolivia that so impovershed the population to cause the revolt? And from what country did it hail? Is that not an expression of European values and largesse. Are not the young women of Eastern Europe who resort to prostitution and pornography to make ends meet an expression of European values? How about the bombing of Kosovo? How about the young women who toil in Chinese factories producing cheap goods under slave-labor conditions for goods which are imported into Europe -- are they an expression of European values?

I made a good friend this past summer who was a high level executive consulting with ministers of government for large-scale European engineered infrastructure projects -- the kind of boondoggles which IMF loans are expected to be spent on to improve the infrastructure for export related industry against the will of the populace who will be displaced and immiserated. Is this not an expression of European values?

European cows are subsidized to the tune of $2/day, more than 50% of the world lives on. Is this not an expression of European values?

Don't get me wrong, European people are very nice. I am not attacking them personally. Their governments are as anti-democratic as the US's.

Is Europe not, in many ways, far more civilized than the US? Absolutely. And it is a far better place to live. I only live in the US because, as a native, I feel compelled to offer the fruits of my resistance here -- not for pleasure.

But for the wretched of the Earth, there is little difference between the policies of Europe and the US. Soft power/Hard power; it is all coercion.

As long as .1% of the world owns controlling interests in the means of production -- the finance, mines, factories, infrastructure, water, seeds, land -- forcing billions into poverty and servitude, there will never be a sustainable planet. Without human justice there can be no environmental justice.

By the way, the "ex" called me up several years ago, after about 16 years, in order to berate me personally -- who never served in the military --for the US invasion of Iraq. When I calmly informed her that "lille Danmark" had the same percentage of troops, per capita, in Iraq as the US, she hung up on me.

Because we all know that Europe is better. It's obvious. Despite the racism against the Turks and the Africans, despite the cartoons of Muhammad, despite Churchill gasing Arabs from airplanes, despite all of the internecine wars to end all wars, we all know that Americans are racist savages and Europeans are open and suave and cultured. I mean, it is just obvious.

And so it goes.

Posted by: Malooga | Feb 6, 2009 1:59:38 PM | 49

(it's impossible to obtain a housing loan without a 30 % downpayment, property evaluation by the bank itself and rock-solid proof of debtor's repayment ability)

Parviz,

Now I'm sure of it. You're one of those there Eyranian extremists, aren't you? Maybe even a commie. :-)

Posted by: Thrasyboulos | Feb 6, 2009 2:01:09 PM | 50

Thank you anna missed for adding a little sanity to the discussion. Kunstler and Bageant are not representative of America. Finance is part of the means of production.

Oh! And ALDIs is hardly the recipe for a sustainable planet. (Althought the two brothers make $2.5B/yr.) Nor is IKEA. Or Walmart. Or any other manifestation of gross globalization, whether European or American.

Posted by: Malooga | Feb 6, 2009 2:07:33 PM | 51

@Malooga - I agree that Europe is a monster that eats off the world. Still it is the little monster while the U.S. is the big one and a lot of European policies are not European but U.S. controlled.

The consumer behavior, at least what I can tell from my travels, is quite different. But the European traditional behavior is trending to the U.S. version which I think is bad.

Maybe the crisis will change that.

Posted by: b | Feb 6, 2009 2:51:32 PM | 52

the crisis, in brief, cannot be resolved - rgiap at 15

it will be resolved in some way that does not suit us.

the countries that will do better will be those who support the unemployed in one way or another. those who - either for ethical or simply practical reasons - believe that ‘the common good’ is still worth something. and all the guff about ‘bad banks’ etc. has nothing to do with any solution.

Posted by: Tangerine | Feb 6, 2009 2:56:23 PM | 53

what an interesting read, thanks to all.

what astonished me more than anything else is that people/businesses/governments thought it could go on and on and on. How? and more importantly Why?
Society in large, citizens and government have lived and created (mainly junk) on virtual funds. And no one dared to say stop, we can't pay this back?

Where I live, everyone tries to buy a house as soon as they turn 18. Literally. The houses are often of shotty value, and prices inflated with the arrival of oversees buyers buying up investment for residence, or buying property to get away (Shania Twain and other rich people, or purely buying for speculation.
Prices are now thru the roof, and people on fixed, normal income can't compete. And before unraveling of the great shitpile, mortgages and %rates where a thing out of one of Dantes hells. And everyone thought that prices would go up forever, as renting is made extremely unpleasant in NZ (crappy spaces, leaking buildings, no rental laws that matters, no tenant rights etc) Why?

The price for any good is what a potential buyer will pay at any given moment. When you have no buyer because the price aint right, you either drop the price or hold until you find a better offer. When no - one buys chances are there won't be a better offer.
This is the same with every thing else.

Repeat after me:

I am to poor to buy Junk.
If i can't pay for it in cash I can't afford it.
If my life does not depend on it, chances are I don't need it


living by these three principles sounds drab, but it is not. It is liberating. I don't have much, but what i have is generally of good quality, and more importantly I own it.


I still would like to know who called in the loans at the beginning of the last year, and collapsed lehman bros, and started the avalanche.

As for the upcoming crisis, my solution - University. Just got accepted for the courses of my choices( all languages - french and english, still looking at te reo, and a bit of philosophy and political science for good measure, and will finally get an education after my tastes. + a bit of a student loan and part time work should get me thru.
Not bad for a Hauptschueler - PHD Bitch that is going to be me.

Posted by: sabine | Feb 6, 2009 3:01:56 PM | 54

as for our future consumerism

buy local, support your local butcher, baker and cabinet maker.

If it can be made where you live, support that business, as they are going to support your business, schools, infrastructure etc. via taxes and charges and their own purchases.

Buy and make local, pay in cash and in full. Trade service for service.
If you can't pay in cash and in full, do a lay-by. Weekly down payments, in cash, until payed full and then take it home. Lay-by are interest free!!
I have bought clothes, furniture, rugs, jewelry and even a car this way, currently i have a savings pig for plane ticket home to germany that i am feeding this way. every week 25 NZ or more.
Heck the extension of my tattoo is payed the same way. It is cheaper than any loan.
As for savings, very small amount. The interest rates are not enough to give the banks my hard earned cash.

Be creative.

Posted by: sabine | Feb 6, 2009 3:10:21 PM | 55

malooga

i'll say what i have sd before & there is not a national chauvinist bone in my body. i have lived, physically lived as an internationalist all my life but an analysis wich does not see u s iperialism as the central problem is blind

the project of u s imperialism has devoured the heart of peoples everywhere - the cultural anhilation is almost total wherever you live. i will not enter into this namby pamby 'international capital' of slothrops because it is studiously stipid. it has no detail. contains no specificity. understands even less the inter elite struggle. on the nature of contradiction (antagonistc & non antagonistic) it is completely ignorant

he wants to take marx but without class, without the tensions between comprador bourgeoisie & national bourgeoisie of contradictions between them etc etc

it is as clear to me today as it was in 1967 - u s imperialism is the principal enemy & though its collapse wil be catastrophic to many - the reality will be a liberation as the fall of all other empires have illustrated

we remain friends malooga, obviouslly but i could not be further removed from your analysis

Posted by: remembereringgiap | Feb 6, 2009 3:12:40 PM | 56

& sabine - it is a good time for study - university

where the world wants to be negligent with you - you must do the contrary - nourish, nourish - the what & the who of you

Posted by: remembereringgiap | Feb 6, 2009 3:15:53 PM | 57

malooga

given that the collapse is irrevocable - i think the question you & others have posited here of solidarity(ies) is the more important question

whether someone here believes or not that we are witnessing the downfall of the u s empire is beside the point. empirically we know what we are living

Posted by: remembereringgiap | Feb 6, 2009 3:19:36 PM | 58

Malooga, you sound like a nihilist at best and an anarchist at worst. If the world's problems are going to be solved we have to start somewhere. We can't just go on saying everything's crap, the Europeans are just as bad as the Americans, the Chinese and Russians are even worse and let's just blow the world up and start again, because that isn't practical either.

What I'm offering are practical solutions that will COMMENCE the corrective process and are not an end in themselves. I haven't heard one positive comment or recommendation from you on this particular thread (on other threads you're great), only that the U.S. is bad and the Europeans are even worse.

You should use your considerable intelligence and knowledge to push for change via the Blogs, the media and in gatherings. My wife tells me I'm wasting my time, but there isn't an appeal I don't respond to, a crazy media article I don't criticize or a forum where I don't try to contribute in my own way. Just saying everything's crap isn't helpful. And, yes, Americans can learn a lot from the Europeans who are far more advanced than the U.S.A. infrastructurally AND environmentally: Where I lived in Germany 15 years ago there was a DM 20,000 mark ( $12,000) fine for failure to separate trash, and that was 15 years ago. The fine in Austria was ASH 100,000 -- $ 10,000 -- for the first offence). Americans still get plastic shopping bags for free in most supermarkets and don't separate their household trash properly. In Germany 80 % of all paper is recycled, we have rediscovered tap water that can be purified with a filter at a net cost that is one-third of buying bottled water (not to mention the transport savings), and so on .....

Hamburger and Tantalus above give good examples of the decadent buying and eating habits of Americans that are both wasteful, unhealthy and expensive. Americans buy fat-free, cholesterol-free, iron-free foods and then swallow mountains of pills to replace all the goodness that has been artificially and expensively extracted from the heavily processed food they eat. These are some of the things that have to change, i.e., the entire mindset, before one can start attending to the more complicated problems.

Yes, Malooga, European shit smells better than U.S. shit, IMHO.

Posted by: Parviz | Feb 6, 2009 3:20:04 PM | 59

@49 Mucho confusion about how the Bretton Woods IFOs work. You are blaming the IMF and IBRD (while confusing their roles in a phantasmagoric way) for something that would have happened anyway. In fact this certain something is a natural homeostatic mechanism that effectively checks the excesses of corrupt, fanatical or insane dictators such as those you cite. Pshaw, you will say. But this very mechanism went to work on America's corrupt, fanatical and and insane regime starting in the summer of 2006. It's still at work - this homeostatic mechanism is hard to stop once it gets started and it entails a great deal of suffering but if all else fails, financial collapse always saves the day. Such collapse is a necessary precursor if you want to palliate the lot of the poor and oppressed over time. So now, Europe, with your very nice and pleasant civilization and your felicitous influx of violet-eyed Russian whores with turned-up noses, and all you Bolshy cadres with your slogans and your B.O., and all you foreign creditors, here is your chance to fuck America up enough that abiding improvements can result. There's never been a better and more fragile time than now.

Posted by: ...---... | Feb 6, 2009 3:27:46 PM | 60

Thrasyboulos (50), well I'm certainly eye-rainian, but extremist ...???

Posted by: Parviz | Feb 6, 2009 3:29:46 PM | 61

@ 60
There's never been a better and more fragile time than now.

of this, i am absolutely convinced

Posted by: remembereringgiap | Feb 6, 2009 3:31:59 PM | 62

parviz

he was joshing

Posted by: remembereringgiap | Feb 6, 2009 3:33:18 PM | 63

And, finally, Malooga, before I turn in for the night, I don't think it's appropriate for you to make comments like:

Because we all know that Europe is better. It's obvious. Despite the racism against the Turks and the Africans, despite the cartoons of Muhammad, despite Churchill gasing Arabs from airplanes, despite all of the internecine wars to end all wars, we all know that Americans are racist savages and Europeans are open and suave and cultured. I mean, it is just obvious.

After all, Europe offers all its citizens and foreign residents free education, universal health care and better job security than the U.S.. As for the wars you mentioned, the Europeans have largely learned from their mistakes that occurred long ago. Judging from the events of the past 8 years, America hasn't.

Posted by: Parviz | Feb 6, 2009 3:36:22 PM | 64

r'giap, I know because it was accompanied by a smiley!

Posted by: Parviz | Feb 6, 2009 3:37:58 PM | 65

rememberinggiab, i just downloaded the Roman De La Rose, what an amazing thing of beauty. I am still giggling with happiness and excitement.
I speak french and can read it, and i write it but i fear i savagely butcher the language, it is trust in my ability that i lack more than anything.
Despite the sorrow and fears of the world, i will be happy in this new found universe of books and teachers and fellow students. The books, the smell, the touch. shivers

Posted by: sabine | Feb 6, 2009 3:53:06 PM | 66

sabine

at one point here i was sorely tempted to return to university here to do law - because that life i loved for all the reasons you have named. in the end the exigences of life & my commitment to my work made it impossible

this world is a butchershop, this crisis will deepen profoundly & a time for study (formal or non formal) is required - i envy you

Posted by: remembereringgiap | Feb 6, 2009 4:14:44 PM | 67

Sorry, Parviz, maybe a bit heavyhanded. I was trying to point out the absurdity of the last ten years or so, re liar's mortgage loans. The quote seemed so quaint, somehow, in the Summers/Rubi derivatives mambo everyone's dancing to nowadays.

I read not so long ago where a WaMu mortgage executive was fired early 2008 for not approving a liar's mortgage. WaMu, sixth largest bank in the US, was broken up into tiny pieces in Sept/08, the biggest piece swallowed by JP Morgan Chase.

Anyway, I'm trying to find a picture of an anti consumerist street warrior of last December with the Nike logo prominently emblazoned on his back. For a connoisseur of irony, a prize indeed.


Posted by: Thrasyboulos | Feb 6, 2009 4:18:51 PM | 68

Correction. Should read....

of an anti consumerist street warrior during the Greek riots last December

Posted by: Thrasyboulos | Feb 6, 2009 4:21:10 PM | 69

Here it is, that photo I mentioned. Number 29. Best collection of the greek anarchist riot photos I know of.

http://tinyurl.com/6hlbx8

Posted by: Thrasyboulos | Feb 6, 2009 4:35:02 PM | 70

rememberinggiab, envy me, oh you silly thing, you who knows so much.

i left school at 15 to go work, and have worked ever since. It is just now, with the changes in this world, with the obvious bullshittery that i have finally have had enough and worked up the guts to undergo University testing and meeting the criteria i applied and got accepted.
The fear i have of institutions, any institution - anything governmental, is profound (a ward of the state hardly ever forgets the state), but there comes a moment of realization that one can not be fearful all the time, and that the fear was instilled in one on purpose.
And here i go, welcomed to a world of learning.

The state is a system designed to hold us down, to hold us back, it is a system that traumatizes us into forgetting our dreams and ability.
I will be much older, most likely the oldest in my class, than my fellow students. It will be interesting to see the difference of the young ones learning as a job training and me learning for the sake of learning.

I will have to work till the day i die, and so do all of us. the states of this world are bankrupt, the social nets of family and friends are mostly destroyed and/or made hard to reach. This too is reality, so why should i not amuse myself?

Posted by: sabine | Feb 6, 2009 4:38:29 PM | 71

sabine

what i work against here in the first instance - is against negligence - where individuals have absorbed the state & society's negligence into their bodies - that they are neither sick, mad, condemned, marginal etc etc. it is important to be that even under the crisis we are going through that they nourish themselves - i practically force people to take late entry exams into the universites & here in france mature age study is rare & i imagine a little uncomfortable. i want these people to understand how their interior richesse can be transformed into concrete knowledge - that it is not the metaphysics of misery. they do not do it to laud the institution but to understand well the context og their individuality in the lived world

it is not an unimportant thing to happen when everything in this society tries to impoverish people - even spiritually. in 20 years of living here - i've watched how this society has been culturally laid waste by u s imperialism & all its works - there would be no substantial difference between foxnew & the information on television here - they do not pretend to be anything other than spokespeople for govt or dominant ideology. & its such crap

the more people are being squeezed the more they should fight for solidarities but it is also time for people to feed themselves with the wisdom that the world & the wolrd of books can provide

speaking of solidarity - i do not know how far debs is from you in nz but i imagine he could be of help in the moments of doubts which are integral to learning but which are sometimes difficult humanely (i say this having helped an algerian man enter the university to study philosophy where he was uncomfortable with the infantilism of the environment - he was not judging - simply he felt maldroit, clumsy when i had to convince him that far from being clumsy he was refined & knowledge needed him as much as he needed knowledge)

know it is o t - but then really it isn't

Posted by: remembereringgiap | Feb 6, 2009 5:01:33 PM | 72

sabine 66,

it is trust in my ability that i lack more than anything

I went back at 31 and slogged through to a PhD by 49. Truly opened up my life. You will be a success - it's clear in your writing here. Keep in mind that universities need students - the more mature the better. Don't wait to be "advised". Read the catalogue front to back, pick out the good profs, jump through the hoops one by one. I'm excited for you!

Posted by: Hamburger | Feb 6, 2009 5:21:12 PM | 73

remembereringgiap, feeling maladroit and clumsy, yes i know this feeling. To know i understand something instinctively with my guts, belly feeling but not to phrase it correctly. And this is how most of us under-educated feel, this is how we are held in our assigned place/class/caste.

Luckily there are good University Programs for Adult Students here in AKL to make it easier and less scary for late students especially women and/or minorities.
It is by far the most welcoming learning experience i have seen anywhere. I had to chuckle at the constant question: And you never had any formal training in french, english etc. And me answering: No, i did not. The following questions: How did you learn it then. So very funny.
I know that France faults many of its children (same as Germany, US and many other Countries), having watched the children of my friends struggle with school, teachers, and their environment. It is because the kids know that they are not in school/university to learn about the world and the universe and human kind, but to get job trained, to stand a chance, to get a job. they are not there to broaden their mind and learn about the generosity and diversity of humankind, but to learn of fear, fear of grades, fear of failure, fear of joblessness, fear of not being like the other.

I have been angry with those that raised me for the longest of time, for having cheated me out of that class room that i liked so much, for having kept me dumb.
But anger never solves anything, and eventually I had to realize that am I am the maker and owner of my destiny. Not for money, not for acceptance or any of the fake nonsense sold to us, but for my well being for the happiness of my soul. I am the flowers in my own garden, and i must make sure to water regularly and to remove the weeds to keep it in good order.(always remembering that weeds are only plants that grow in the wrong part of the garden, they to are very pretty and necessary)

This current crisis, with the man in expensive suits singing their mantra of: who would have thought, and we never realized, well fuck ya, i knew, i realized, and i don't hold a degree - just yet.

sorry to everyone for having derailed the thread.

peace to all.

Posted by: sabine | Feb 6, 2009 5:51:22 PM | 74

Hamburger, only 18 years ey? Thats about the plan, by then i will be close to what ever will be retirement then.

But i truly believe that humanity needs people to study, for themselves and above all to be able to teach others, like rememberinggiab or Did, or all other posters that frequent this bar, I have learned so much from everyone here, have had my anger cooled, my fears alleviated, and always felt in good company.
it is important to share knowledge gained, not to keep it hidden, guarded jealously.


Posted by: sabine | Feb 6, 2009 5:57:46 PM | 75

musta felt that way.

39. I was 39 when done.

Posted by: Hamburger | Feb 6, 2009 6:25:08 PM | 76

hamburger, i fully intend to take my time, its about the only thing i got in surplus.

Posted by: | Feb 6, 2009 7:28:21 PM | 77

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