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TechnoratiThe new word of the week is "economic stimulus package." Everyone is for it.
The President wants it if only because he knows a worsening economic crisis will leave his Administration in deep doo-doo, the way it did his dad's back in '92. Ben Bernanke, chairman of the Federal Reserve, is all for it if only because all of his rate cuts and "injections" of money into the financial system have not turned the US economy around.
He told Congress Thursday: "put money into the hands of households and firms that would spend it in the near term." This is likely to take the form of tax rebates and direct assistance.
And all the candidates-well most of them---want it too. Or at least they want something upbeat that will stimulate voters. John McCain lost Michigan, it is said, because he was too negative. Mitt Romney won because he promised to wave a magic wand, repeal Globalization and make Detroit what it one was.
Dream on.
The stimulus idea is simple-give people some money to spend and, presto, our problems will disappear. This is the "Alka Seltzer solution." Take one tablet and when it fizzes, you're better in the morning.
The only problem is that the real world isn't so simple and simplistic solutions will not work.
We didn't get into this mess because one thing went wrong. Many things went wrong -and over a long time.
This crisis may seem brand new. It isn't. And please dump that word "recession" because it doesn't do justice to what we are talking about here. The highest inflation rate in 17 years and the biggest housing crisis in a quarter of a century didn't just happen. Major banks writing down billions of dollars practically every week is not normal. Wall Street going from boom to gloom almost overnight was not caused by somebody making a mistake.
The political causes of this are deep and long standing. Writer Robert Kuttner calls this "the most serious downturn since the Great Depression." He blames the rise of right-wing ideology, and "the domination of our politics by a financial elite, and the lack of a true opposition party."
You can't fix that with pathetic stimulus packages and minor tinkering.
This is a structural crisis that's been spawned by decades of shifting our economy from making things to buying things, from production to consumption. It has spawned "financialization' a well heeled credit and loan complex powered by legal and illegal shenanigans in an unregulated market-driven environment. Both parties have benefited from it and are complicit in its consequences. All of our biggest banks were part of the subprime/subcrime-led credit collapse which enriched so many before bringing so many down. This crisis is still unfolding, rippling, and infecting more sectors of the economy. It is a "contagion" that has yet to be contained.
Writes the Mclatchey Newspapers: "The unwinding of debt is all-encompassing. It's from the little homeowner out there to the big corporation," said Larry Moss, senior vice president for the Raymond James investment firm in Birmingham, Mich.
The credit crunch overlaps with other negative trends, most noticeably the poor housing market and weakening consumer spending. The fear is that tighter credit and weaker spending will reinforce and amplify each other, creating a downward spiral leading to a recession.
"Once you get in that cycle, then it becomes really, really scary," said Amiyatosh Purnanandam, a professor of finance at the Ross School of Business at the University of Michigan who has studied tight-credit periods."
For starters we need some stimulus from a study of history to understand how greed and corruption of any and all ethical principles stimulates this type of frightening business cycle. We need to stimulate a deeper debate.
Writes Satyajit Das, author of Traders, Guns & Money, explains: "Recent history has been a period of 'too much' and 'too little' - too much liquidity, too much leverage, too much complex financial engineering, too little return for risk, too little understanding of the risk."
He told one of India's leading newspapers, The Hindu, "This will reduce economic growth (the US looks likely to slow down sharply) and asset prices (houses and shares) around the world. It is perhaps the most serious crisis that we have faced in a very long time."
Let's break this down: Lets say we give every household $1000 bucks ($800 is the number under discussion). What happens? What do will recipients do first? What will they/we stimulate?
Will they rush out to the mall and buy the latest and the greatest? Unlikely. Why? Because so many of us are already in hock beyond our ears. Millions are drowning in debt and barely hanging on to homes, cars or even student loans. We are groaning under the burden of higher interest, higher prices and higher fees, as a recent study by United for A Fair Economy explained:
"Increases in the cost of housing, education, and health care, paired with an increase in payroll taxes of 25%, and massively decreased government investment in affordable housing, employment, and job training, have left most of America cash poor. Americans found the liquidity needed to pay daily bills through debt: credit cards, refinancing, subprime loans. The American middle and working classes are maintaining their lifestyle on a foundation of quicksand (debt they cannot afford). If current indicators are correct it is quite possible that the entire US economy will sink into the debt that the middle and working class have developed over the last twenty years."
This is not a very 'stimulating' environment. No wonder most Americans think the country is going in the wrong direction and have lost confidence in the economy. No wonder, crime is rising along with foreclosures. Let's not forget the wars that are also draining the economy, growing the deficit and pouring billions of dollars and so many lives into a rat hole without end.
So, please candidates, loose the cheery rhetoric of economic stimulus. Do nothing about the debt burden and you do nothing. We don't need stimulus; we need economic change, and economic justice. We need white-collar predators in jail. We need restructuring, not repossessions. We need mechanisms for the redistribution of wealth from the greedy to the needy. And just like the folks in Africa living under a crushing burden of debt we need genuine debt relief. We need to buck this system, not get a few bucks in the mail.
If we have any hope of getting out from under, we also need a media to tell the truth about how this crisis happened, and investigate those that profited on the destruction of our economy, the bankers and brokers that stole our treasure and future. We need movements to fight back and politicians that will stand up for economic fairness, especially on the day we honor Dr. Martin Luther King and the movements he led.
News Dissector Danny Schechter is "blogger-in chief" of Mediachannel.org, His new film is IN DEBT WE TRUST: America Before the Bubble Burst (Indebtwetrust.com) Comments to Dissector@mediachannel.org
62 Comments so far
Show Allhttp://www.trafford.com/07-2440
Dear Sirs and Mesdames,
This subject, in my mind, is the most immediate most urgent and serious matter confronting the Human Race. Despite the fact that many great minds, philosophers, politicians, academics and economists, have all created eminent careers based on their knowledge and understanding of how free enterprise, national economies and the human race interact, they have all failed to admit the obvious. It is glaringly obvious that we have large swathes of the human race that do not have access to money; it is that simple.
Therefore we need a system of economy that literally accommodates the needs and aspirations of every human being. A system that will not rely on taxing others' in order to provide all the multifarious forms of infrastructures, as well as our human and social obligations. A system of taxation in which the haves are continually being pressured to claw back those taxes from the have-nots. We must face the fact, once and for all; this system can never provide all human needs and infrastructures.
We have allowed right-wing ideology to dictate the terms and even if or when large swathes of populations may be fed and housed or have health needs addressed. We tolerate the fact that we have millions of working poor who will never earn enough to meet all of life's basic costs. Many of these are struggling to raise families the bedrock of our future. Those who work lead the most precarious of lives.
Precarious, because their work and income has become the plaything of corporate power, which moves production to lower waged economies. This makes the executives and the shareholders richer but at the cost of the misery they leave behind. Wages go down, but not prices, or costs of living, and the formerly free "social wage entitlements" are removed.
This is the "rationalized" world directed by Corporate Power and implemented by our Governments, the world of "user pays".
Take it or suffer the consequences. The Government calls this "work choices". Hear the Corporate applause? The consequences are total destitution for some; they could buy none of life's essential services.
Complete and total destitution for many unless they work, no shelter, no food, no health care, and no education, none of life's necessities.
So we need a system, which provides equal opportunity and care for all, overlaid with free enterprise. At the same time we can put in place a fair and equitable industrial relations system that eliminates employer employee antagonisms.
Our democracy is in serious trouble. Rich people and corporations channel funds into political parties in order to achieve their own commercial or ideological ends cleverly bypassing democratic inputs. It is happening in all democracies but that does not make it "worlds best practice" or "right". We can correct that quite easily. We make so-called free trade agreements under which corporations are exempted from government regulation that control workers rights, pay and working conditions. Is this democracy, is this really necessary, should corporations have such unbridled power, where will it end?
Introduction of The Universal Economy will immediately and substantially impact and improve such questions as Poverty, provision of universal education, health care, pensions, unemployment, housing and all public infrastructure (roads bridges schools hospitals etc). None of this will require the imposition of taxation.
The concept of The Universal Economy will be easy to introduce, because it benefits everyone, everyone will want it to work. It will be hardest to implement in third world nations, not impossible, just slower to implement. It will kick start economies wherever it is introduced.
This is a concept for the twenty-first century. Put to one side traditional thought processes and embedded conventions see only the greater-good and benefit of mankind then you will support this enterprise with the open heart and mind it deserves. Adopt this concept for the good of humanity.
Give your support, not money.
Yours Faithfully, THOMAS W ADAMS.
This is Bush's real sucker punch. People in this country are too comfortable. A small rebate and that keeps them complacent. If once in a while you pour on a bit of gravy, then the public thinks that they are getting a real deal. This then eases the burden just enough to avoid chaos. Without the means of truly educating the community on these issues, things will never change.
Where I work, no one even knows there is a war going on and I doubt they could even find it on the map. They cannot relate the dollars wasted on the war with their own troubles.
The educating has to start from the ground up. In our neighborhoods. Instead, we pit people against people. It's them against us. Immigrants, blacks, browns. These "feriners" are all bad and have to be stopped at the border. There are forty countries to the south of the United States. Get a grip!
What about our local problems, health, food, housing? And what about some, if not all of us being taken advantage of now and again by the banking and insurance institutions? Communities have the right to fight back. Any entity that weakens or decimates a neighborhood should be given fair warning and if they do not clean up their act, they then should be run out of town on a rail.
I listen to the BEST of my radio "news" stations and I want to barf. If it were not for my being well-informed by Pacifica, Common Dreams, and the Internet, I would be a dumb cluck too.
And hey! When do we get off of the political band wagon of the voting for the lesser of the two evils…Democrats are better than Republicans. That being said, how do you want your poison? Fast or slow?
Sure give everyone $1000 bucks, We need more made in China products.
Why do you rob banks? That's where the money is.
Boy, is that old school. Today you can rob the federal treasury of trillions of $ that aren't even there. Now that is a heist! We gotta get over our thinking that the powers-that-be have any allegiance to the good old USA. To the greediest and most ruthless people in the world and their powerful business interests our country has been nothing more than a base of operations. A staging ground where they fed our delusions of grandeur-Democracy, Rule of Law, Commonwealth, Equality, Level Playing Field, etc.-while they stole all our present and our future assets right out from under our smug upturned little noses. Welcome to the global plantation.
Well, sholkulan, many people I know received the $300. And they attributed it to Bush's tax cut. And in 2002, they voted Republican because of that $300!
Yes, I know many confused people. But I was one of them. I thought that it was Bush that gave us the $300 also. Of course, that didn't make me vote Republican. (I voted for Obama and now I'm sorry )But it turned out that it was the Democrats that insisted that the working class also benefit (yeah, right, $300) from the tax cuts.
So the Democrats insisted on buying the 2002 elections for the Republicans. (The people I know didn't vote Repub because of the war, contrary to popular Democrat belief). The only reason the people I know vote Repub is because they believe (contrary to fact) that the Repubs will lower their taxes.
So this is not just an economy stimulus. It's a bribe for McCain, or whoever the repub candidate will be. And it just may work on the yahoos.
NAFTA is a part of it, no doubt, but it's the overall bleeding of American manufacturing and IT to Asia and sweatshops in developing countries. Investors sit smugly in their mansions all across the US, Europe, and safe havens enjoying their stock returns from investing in "American" companies (where most of the labor is done elsewhere). Investors win, American workers lose.
Canada hasn't stolen many jobs. And they're the closest country culturally in the world to the US.
Probably Mexico is relatively small potatoes compared to the outsourcing our CEO's did to China and (increasingly with IT) India. How many high-paying engineering and programming jobs are in China or India (or elsewhere in Asia) now? Probably many tens of thousands.
NAFTA's greatest fault is the asymmetry it produces: it allows the freer flow of industry, capital, trade, etc. but not laborers themselves. In that sense, it's more like a dialing back to serfdom or nationalized plantations. Humans are considered "resources" (HR) but remain THE most penalized resource under NAFTA.
"Anna Schwartz, the revered economist, shares her views on the credit bubble with Ambrose Evans-Pritchard"
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/13/ccschw...
Be sure to read the comments following the article.
Yes, facts, truth, and reality always shine forth in the end, regardless of the spin. Most intuitively know when something is bad, even when liars and profiteers say it is good.
Maybe it had to come to this. It could have been avoided with sound fiscal policies coming from a responsible government, but the American people themselves did not do anything to stop it and went into debt too.
I think we have reached world wide peak oil at a time when India and China are increasing oil consumption. India is now producing a little car thats costs only $2,500 and that will increase the world wide drive for oil. ( small pun :) )
Transporation costs will increase as oil beomes more expensive. Food transported over distances will be more expensive now.
Anything transported using oil will become more expensive imo.
Imo the cost of oil will not go back to $50/ barrel. Its the end of cheap transportation.
The US is getting its wings clipped...sad..there was so much promise in this nation and it was lost with greed and selfishness.
I wonder if anyone can unite the US or whether people will continue to be out for themselves. My guess is that the philosophy that would bring Americans together is lacking. After all Bush was able to deny children a health care plan by saying it would hurt the insurance companies. What kind of values are those? How could he even dare to give such a reason and it would be accepted?
But we will see what will happen. There is a reality that exists no matter what the philosophies of people are.
it the jobs stupid.
this is the result of Nafta
You are right Golddogs! And it has always been. Try to go buy something NOT made somewhere else now; it is almost impossible (depending on where you shop, of course). Start buying ONLY what you need, and US whenever possible (good luck on that). And that's what will make this 'recession' deeper than any other, and probably even WORSE than the 'great depression.' My nieces and nephews have been brought up like spoiled rich kids (given everything, working for nothing), and I know it will be make or break for them. Wish I could be somewhere else when the sh*t really hits the fan, which it soon will.
MikeBinSC,
Good points. Unless a rebate came out of existing entitlement waste (such as the military industrial complex's tribute), it'll just add to the debt. But in any case, the net effect is the same. I don't really understand Americans any more. They elect leaders to piss on their country, and onto others.
This economy isn't even based on endless growth -- it's a shell game, ponzi scheme. Digging holes to make piles elsewhere.
I'm curious about the flat nature of the giveback, but the (ostensibly) progressive nature of the paying-in. The rebate would be unnecessary if they went to a far more progressive tax system in the first place:
* No taxes on people earning less than the median income in their state.
* A clean & simple curve equation from that point onward, capping out at perhaps 50% somewhere around the top 10% wage earners.
Always extra money in the hands of consumers, working/middle-class, students, the poor, etc. Demand-side economics.
hellodarling is the only one who mentions that bush already tried this before with the $300 giveaway. No one I knew got ever received the $300! For most of us, $300 would have only been a drop in the bucket. I certainly wouldn't have used it to buy more junk.
Bread and Circuses.
Daniel David January 18th, 2008 5:26 pm
"I don't attempt to write comedy."
Your right Daniel there is nothing funny about what you write, there is also nothing realistic either. The Democrats are just as complicit in creating the current economic crisis as the Republicans are.
Lobo Gris
Yeah! We need to fight for economic JUSTICE! Right on! Kill the corporations! Dismantle the universities! Tear down the military industrial complex! Power to the people!
Uh, where is everybody? Danny? Danny? I don't know where to start. Why does it seem like there is a bubble around every single person? Where's the march? Is this 1968, where there was actually social protest (by young folk who then went on to become the "enemy" they were protesting)?
Here's what I want the next NAME posting some shoehorned essay about some killing/suffering inflicted by the supersystem into CD's giant complaint machine to pledge: "Who knows how much moral complicity I have in the very problems I am about to identify..."
I never cease to be amazed by the dumbassedness of some of the comments I read here on CD. And some of the comments on this article have raised it to a new high! Just try to make a little space in your long-term memory for these figures, and PLEASE, keep the memory refreshed!
The federal government is carrying a deficit of $9 TRILLION!
That equates to $30,000.00 for EACH person in America!
The Bush administration is responsible for about HALF of it!
This is not money that Bush, Haliburton or Exxon owes!
This is money that YOU the taxpayer owes, and YOU pay interest on it with your taxes!
A $150,000,000,000.00 stimulus package is not a GIFT to YOU!
It is an extension of YOUR credit to the tune of $500.00 for EACH person in the country!
YOU or YOUR KIDS or YOUR GRANDKIDS will have to pay it back with interest!
Every year a large portion of your taxes goes to pay the interest on this debt!
A family of four owes $120,000.00 right now, and if the package passes that goes to $122,000.00!
They are in essence, putting YOU in more debt to bail THEM out!
It sure is a comforting feeling to know that we have so many rich people and corporations around to pick up their fair share of this debt!
What's that you say?
They've moved to Dubai and the Caymans?
HOLY $H!T! Where's my damned passport?!
I've gotta get the HELL outa HERE!!
I don't think that it has registered yet in the minds of economists that people are both unable to spend and unwilling to spend. That unwillingness is having an effect. It may yet be just a straw but it may be the straw. Good work !!!
it the jobs stupid.
this is the result of Nafta.
Well, I'm on disability @ $7,000 a yr so I will NOT get the $800(soon to be cut to $430,you really don't think they'd give you 800? just enough for a new 24' LCD digital TV)
But there is talk of upping food stamp beni's so I will stock up on dried split peas, beans, grains in preparation for the upcoming DEPRESSION.
Bush will make sure BIG business gets the majority of benefit from this "stimulus" package, and most of the half million new jobs will prolly put the soon to be sworn in ILLEGAL aliens to work at minimum wage, no beni's, registered Republican.
When it is decided we ARE in a depression, as hungry homeless people roam the streets looting stores and mugging anyone driving a shiny newer model car, Marshal Law will be kicked in, the election canceled and Dick Chaney sworn in as Dick-tator PERMANENTLY.
Even the abusive master must throw his dogs some scraps from time to time...
The stimulus in question is just a bottom up giveaway to the banks. First, our government is just as in debt as the consumer, only they just pay the interest on their loans, so they have to borrow what they give us. Second, the money they borrow from the Fed will be monetized which can then be multiplied by a factor of 10 to create new money that can bail out the banks and investment companies holding the bad loans, CDS, CDO, MBS, derivatives, etc. Third, they hope some of the critters struggling to make payments on mortgages or credit cards will use the money to make a couple of more payments and postpone the collapse until the end of the election.
I actually agree with a stimulus at this point, although it does not come close to going far enough and may be too late given we have probably been in a recesion for the last 2 years which is covered by fraudulent economic stats, and they should use debt free money (greenbacks) and not money issued by the private bankers who have caused the mess. The root cause of the problem needs discussion, but if it was, and the truth was discovered, we would throw most of our government and bankers in jail.
I suspect they are hiding a much bigger problem. Suspending the M3 numbers in the spring of 2006 is a clue. It might just be that most of the big banks and investment companies (which are one and the same now since repeal of the Glass-Steagall Act) are actually insolvent, but are hiding it behind the derivatives. Once they can not hide it any longer, we become a police state, and everything is in place for this.
Rumour has it that now that David Rockefeller, our leader for the last 50 years is no longer in charge, we are now taking instructions from the Anglo-Dutch banking powers, and the days of the dollar ruling the world are going to come to an end. There are 400 trillion dollars of derivatives and hedge funds operating in the Cayman Islands who control 50% of the trading in equities and currencies in the US and London. I say we invade them and take over from the British. We have the military to be an real empire, might as well use it and collect tribute, the alternative is to become, gulp, Mexico.
"Bush wants to pull a fast one to line his pockets"
For only $150,000,000,000 (that's a tax burden of $500 on EVERY American man, woman AND child) some American tax payers may get a $500 rebate while the remainder will go to the filthy rich along with their tax cuts and war profits. Why dosen't Bush and Congress just ask the American people to cut
their own throats?
We're acting like drug addicts, "tweakers" who just need one more fix to "lift them up."
This proves there really isn't much difference between Dems and Repubs when it comes to economic policy. They both BELIEVE money is the solution. They are both wrong.
What about that 9 trillion dollar debt? What about a balanced budget? What about "pay as you go" and "living without our means?" What about getting out of Iraq? What about impeachment? What about promoting energy conservation? What about developing energy alternatives? What about consuming less. What about an Article V convention to rationally discuss ALL of these issues and come up with a sound economic foundation for the future?
Oh that's right. It's an election year and the people are worried about a "recession." We
don't have time to "do what needs to be done" so we'll just throw money at people and hope that they will re-elect us. THROW THE BUMS OUT!
Recession? Depression? This is an economic COLLAPSE. 70 percent of the U.S. economy is consumer spending. What kind of moronic leadership let that happen to us?
It's time to start storing canned goods in the basement. Stop spending more than
absolutely necessary. Buy things that have REAL value, not paper assets. Stop
believing that your paycheck is going to continue forever more.
Consume less and share more. Teach virtue. We're going to need a lot of it.
Steve Moyer
http://stevemoyer.us
As he did in 2001, G.W. Bush is ready to pay some more hush-money to the people. Perhaps THIS will allow him to lengthen his term in office w/o much fuss.
When people ask why nobody does anything about seriously impeaching THE MAN, I have to wonder if THEY accepted the bribe in 2001.
The cost for the american citizen's dignity and respect and not to mention Al Gore's presidency was $300 per person (if eligible) in 2001. And how much of that $300 per person allowed the Sept. 11th attacks to occur? How much of it allowed the architects escape justice?
What will they be buying us off for this time?
Our freedom? Our lives? Something worse than 9/11?
It's too bad we can't all just say, "no thanks, we would prefer to have freedom and that other stuff". However, the truth is, $800 dollars seems like an awful lot. So I doubt many people will say no.
Too bad too.
"Stimulous Package"? BRIBE!!!
"This crisis may seem brand new. It isn't. And please dump that word "recession" because it doesn't do justice to what we are talking about here. The highest inflation rate in 17 years and the biggest housing crisis in a quarter of a century didn't just happen. Major banks writing down billions of dollars practically every week is not normal. Wall Street going from boom to gloom almost overnight was not caused by somebody making a mistake."
Remember the response of your gung-ho, pro-war republican ex-friends when you tried to talk to them about the damage the Bush policies would cause? Remember the hostility toward you for even suggesting such a thing? Remind them now, and their faces go blank.
The fact that these knuckleheads think spending is going to bail us out shows just how terrible things are going to become. Either they have absolutely no fecking clue that most consumers have net worths (including mortgage) less than zero, or they're pulling our chain.
Unlike the mints, we can't just print up more money when we need it.
Unlike central banks, we can't get bailed out by unnamed middle-eastern investors.
Unlike the government, we can't borrow endlessly into debt.
Whatever stimuli comes from these arrogant millionaire politicians will be too little, too late. Trying to rejuvenate an unsustainable way of life is little better than kicking a dead horse.
"Stimulate This: Why the Talk of Economic Stimulus Will Remain Talk"
Well, look at the bright side; there's always "viagra" to keep the male power structures happy.
Why is it that Bush always looks like he's trying to hold back a big laugh when he presents something like this STIMULUS PACKAGE, and then he leaves after a very brief presentation?
In Iraq, after invading, pillaging, and murdering countless innocent Iraqis and ruining their country he passed out $100 dollar bills on the streets to shut the Iraqis up for a while.
Now He's offering the people of America a STIMULOUS to shut them up for a while as he makes a beeline for the exit. Having looted the U.S. and Iraqui treasury and set the stage for a re- or even de-pression, He just needs a little time to retire to Dubai. What was Laura Bush really doing in Dubai recently? I wonder?
Recently in the news the Dubai government was threatening to switch to a basket of currencies instead of continuing to peg their currency to the dollar. Then they said that they had decided to stay with the dollar. Then almost immediately, Bush said he had reached an agreement with Dubai to sell them some of the latest U.S. weaponry. Halliburton recently moved their Headquarters to Dubai. Hm!
Once again, the greed-heads are at the bottom of the problem. We need a new Administration that will rewrite the tax code to the point that it actually achieves what it first started to do back in the Twenties - - redistribute the wealth, instead of providing the means and the tax breaks for the already wealthy who only hoard it - - a fundamental college course in Economics could provide many, if not most, of the solutions. But then, few have paid attention to the warnings of both george Washington and Dwight D. Eisenhower (after he had fallen into the trap) about the dangers of the military/industrial complex. No, the simpletons within the Beltway can just print up more money and throw it around, and that will fix things! Yeah, it will really fix things - - - you think we have problems now? Give the Shrub a few more unimperded months, and it will take a reasurrected Houdini to escape the mess!
What a well written article. Short, concise and very telling no small accomplishment when you talking about trying to connect the dots of the Mortgage Meltdown, Iraq, our corrupt Government (Republican and Democrat alike) our disasterous consumer economy (or the ultimate "pyramid scheme" as I think of it these days) and dedication to massive debt at all levels. Now if you can also figure out how to join into your analysis all those other minor calamities at play - peak oil, eroding healthcare, the dangers of reckless exponential growth in all walks of life and of course the 8,000,000 pound gorilla in the room Global Warming into the conversation you would really be the man! This is the point though, once the first crack in the levee begins to spill out water it's already too late and you're basically left bailing water without enough buckets or any real well thought out plan for action (for a physical example see Hurricane Katrina). So these days I cringe when I read all these well written responses, about what "we" should do. If "we" could do anything "we" would not be in this mess to begin with. But "we" have zero say in these matters. "We" are not party to the oligarchy running this Empire. I'm afraid that the reality is that "we" as individuals need to begin to arm ourselves physically and intellectually and begin to disconnect from the oligarchy's systems (consumerism, imperialism, etc.) when and where possible. In other words, revolution, revolution. Stop talking about what "we" should do unless you're talking about taking the fight to "them" twice as hard as "they" have taken it to "us" or if you're ready to discuss what "we" will do once we're back in power (that is once we've taken back government under the premise of "a government for and of the people"). Didn't Jefferson warn us of the need for periodic revolutions in this country? They don't have to be violent ones of course but at some point it will boil down to "the ends justifying the means" I'm afraid. Logic and common sense are property of the middle class. The longer we wait to light the revolutionary fuse the less likely we are to succeed because in case you haven't noticed, that 52% of the Federal Budget dedicated to "defense" spending is not all going into Iraq. A lot of that money is being spent on "securing the homeland", which under the right circumstances means the ability to lockdown America under martial law and a police state. Don't scoff, I mean we are where we are today and who would have ever thought that possible? I'm personally having a realization lately that it doesn't have to be like this, my life was meant to be one of action, self realization, heroic and selfless deeds meant to better the next generations way of life. My life was not meant for just going shopping. Why can't we all have this realization and then act together to turn over the cart and start over? What's the other option, wait for what to change exactly? Please tell me why I'm crazy (other than my response here being a grammatical mess)?
Yo concur. A grand ain't nothin' but a dime on the credit card bill.
Last night I sent a few of our reps my proposal. Tax breaks are a load of crap esp. when you give them to the supply side so that they can trickle it down. The gov't should supply grants or spending accounts to homeowners that are on the order of several (3 to 10 or 20) thousand dollars which can be used exclusively for the purchase of building materials or existing home improvement costs. The money should be distruibuted to those who apply on a first come first serve 'till it's all gone basis. Since building matwerials are manufactured primarily in country and labor is of course paid in country, the money stays in country (vs. on a vacation in the carribean for some corporate J@X@$$) and is immediately infused into the economy (believe me, if the man said "you can buy ten grand worth of landscaping materials and new appliances but as soon as the $1B pool of cash is gone--and mind you there are more and more folks drawing on this account every hour," I could learnd to blow some cash quick). Not only would this provide an incredibly rapid infusion of money, it would provide a tangible and persistent product that would be enjoyed by the public and would increase the values of mortgaged homes thereby allowing poor schleps like me to drop PMI or sell their homes at better prices than they'd draw as is which would in turn alleviate the threat or the rate of foreclosure.
My credit rating is like 780, but if someone gave the a 100 dollar bill I'd just as soon wipe my bum with it as send it to my credit card company. A hundred bucks aint squat; neither is a thousand.
Or how about we just seize the assets of Haliburton and Blackwater and the Bush and Cheney families (and any other traitors we can dig up) and hand out the cash raised on street corners?
rebelnow,
I don't attempt to write comedy. Good comedy is hard to do. And the best of them, like Seinfeld or Larry, The Cable Guy, confine themselves to "no consequence" subjects where laughing at the punchline does not imply a slap in the face to any people's real lives. If you think a call for more Democrats is "funny", you are suffering a dearth of real humor in your life and ought to visit some sites where they might be better at amusement. You're laughing where there is no joke.
solutions2 for President.
Clearly, an economy based on endless growth is suicide, whether it be eco, economic, or both. Excessive spending got us into much of our current problems, especially the subprime credit crunch.
I see it like this. An economy dependant on consumer spending is like a person addicted to meth. Meth speeds you up, gives you energy, makes you productive. Then, you crash and productivity stops. This stimulus package is like giving that addict more meth to make him productive again. He will be at first, but then will crash even harder. The best bet is to suffer through the crash, build the person (or economy) back up, and then run on sustainable sources after that.
Only the meth dealer doesn't benefit. And politically, that's the problem...
I wrote of an economic stimulus package on my blog today, a 10-Point "Dream Stimulus" that Bush would support:
It's complete paradox to compare the promulgations of King George II and arrogant economists vs. consumer advocates and environmentalists.
The first group states that the backbone of our economy is consumer spending. Well, certainly it can't be manufacturing or IT, our corporate CEO's are offshoring that like there's no tomorrow. The US auto industry is in decline. We're still in a wartime economy since like WWI, but most of that money is just being pissed away to well-connected vendors on destructive projects, wars, etc. without "deliverables." So perhaps the backbone of our economy is indeed consumer spending by default? Oh yeah, we're supposed to be worried about houses becoming more affordable. Over-priced real estate is a good thing -- I forgot to slip that in. While we're at it, let's praise the FIRE industires (finance, insurance, real estate) in general. They may be parasites, and they don't actually produce anything at all, but they're a post-industrial means of trading wealth, and therefore of taxation.
Well, given that huge segments on our populace are up to their eyeballs in debt, real estate remains over-priced for most people, and most of us already have far more cheap plastic crap than is environmentally responsible, there's another side to the economy. This side suggests that debt, usury, and hyper-consumerism are actually what got us into this unsustainable mess (obviously it is not the way we get out of it).
Here's a stimulus package that I think Bush might agree on, and that would get some major support from his enablers in the Democratic Party (which is about 90%+ of them):
1. Rollback corporate taxes, inheritance taxes, capital gains taxes. That'll be a boon to Big Money.
2. Spend more money on Iraq. Just throw it away if necessary. Start a war with Iran. Everyone "knows" that war is good for the economy. That'll be a boon to Big Bombs.
3. Raise interest rates. That'll be a boon to Big Banks.
4. Suggest that banks & developers demolish any home that is worth less than 5 times the median wage in a particular region. Make sure that everyone is paying 6 times+ their wage for a mortgage. Keep 'em running harder.
5. Put kids back into the factories. Dial back child labor laws. While we're at it, dial back OSHA, EPA, and a whole host of other useless regulations that prevent America from competing with countries which rely on sweatshops, child- and prison-labor.
6. Print money. A LOT of it. Make it basically worthless, so people will be FORCED to work more.
7. Double or triple the cost of food and gasoline. If you don't get a second (or third) job, you may not be able to afford to DRIVE to the first one.
8. Double the cost of college tuition and textbooks. Larger student debts will be a boon to the lenders. It'll help that "industry".
9. Make health insurance (a) legally mandatory to buy and (b) with terrible coverage. That'll be a boon to Big Insurance.
10. Shut down all second-hand stores and discourage reduce/reuse/recycle/repair so that people are forced to buy new.
Now THIS is a package that Bush could support!
Monetize the debt...I think they call that inflation..and sooner or later, it will have to happen...it IS the only way out (the Chinese and Arabs will have those worthless dollars so where does the liquidity come from?)
monetize the debt, and use the liquidity to rebuild the real economy: the only way out.
Posted on www.realwealtheconomy
We can't buy ourselves out of this! Time for a caring economy.
President Bush announced a "stimulus" package will be coming after Fed Chairman Bernanke, refusing to acknowledge we're in a recession, did tell Congress–it would be good to do something sooner than later.
So now, we're supposed to expect a check—with the caveat that you have to go out and spend it! Because a consumer economy that isn't consuming is an economy that isn't growing.
There's one huge problem though with this theory–it never ends. We get a check for $1600–what will it be next time…..$2500? We buy now, we buy more next time–but eventually the "unavoidable dilemma" comes true. We've bought enough and need to stop. PLUS there's one other little factor in this whole equation that's never been present before: global warming. A Consumer economy is a CARBON economy and the more carbon the more warming, the more warming–the more other problems start to arise.
Economic suicide or Eco-Suicide? Let's say neither! The fallacy that we continue to support is that there's no other choice than a consumer economy! That's simply not true–we have the option to make a tremendous shift on how we build an economy. Economy means "management of the household"–management of LIFE! Right now we've put ourselves into a consumer rat-race, oil-dependent and militarily focused. But we could switch that to a caring economy, alternative fuels dependent and life-focused.
The delusion that we can buy ourselves out of this mess and spend ourselves silly flies in the face of reality. Americans are already in massive quantities of debt, the GenY group is now being called "Generation Debt" because our economic policies have essentially pulled all the safety nets out from underneath them while we've been on this shopping spree.
The great news is, we can redirect our time and energy into creating a caring economy. Using technology, going more local, increasing alternative fuels, increasing small farmers and gardens, building businesses around education, child care, environmental clean-up, using our time more around building life than buy stuff.
The book, Real Wealth of Nations gives many ideas and shows how we got ourselves into this mess underneath a "dominator value system". It is very important to recognize this value system because it permeates everything we do. But once recognized, it becomes easy to see why, in changing to a caring value system, we set ourselves up for success!
Write the President, send a note to your Congressman–tell them to keep that money and redirect it towards building a new economy around CARING.
Daniel David says "We will need democrats for the long term to address the 'structural' problems described by the author."
DD, you must be a striking comedy writer, that's pretty funny.
The rapid increase in energy costs, combined with Bush's war /occupation without end, an increasingly corrupt financial sector are all battering the economic standing of most Americans.
With oil $90+ a barrel, what does that translate to for oil-heating houses- siphoning of the American economy by Big Oil and also Big Coal, because when costs of one item goes up, its substitutes go up too. And especially because of monopolies.
If we got of Iraq tomorrow, started an Apollo Program for renewable energy, reigned in the financial markets, had single payer health care taking the dysfunction out our health care system and implemented policies for sustainability, the near future would still be difficult.
The US is far behind other industrialized economies in sustainability, a rational health care system and is a more wasteful society than other countries.
America's mantra has been " Bigger is Better" and it isn't.
Better is Better. Sustainable is better. More sense of community is better.
Much less of the status quo is much better.
If they (the politicians and Congress) really wanted to do something effective to stimulate the economy, they would pass an emergency law that would put a halt to the blood sucking interest rates that the Banks such as Chase, registered (as all of them are) in Delaware where there is no limit to how much they can charge for credit cards. Some of these rates are outrageous, such as an increase from 16% to 30% if the mailman was one day late with your payment.
In today's unrealistic economy where everything is going up except wages and now because of the excesses and greed of Corporate America, many are losing their jobs and having to resort to using credit cards, these types of interest rates can drive a person into bankruptcy. So people have to cut their groceries and basic living expenses to satisfy the greed of the banks. The usury laws in Delaware guarantee Banks the right to literally steal from the public. Ralph Nader wrote an article on this once criticizing the practice but, of course nothing was done. As usual Congress and the Administration turned their usual deaf ear to the public.
Now Bush wants to give the Federal Reserve Banks more money by having them print more funny money (140 Billions), lend it to Congress at high interest rates, which the taxpayers have to pay back, and GIVE it to the American public and business as a phony temporary STIMULUS to keep things going until he is out of office.
Pull the plug! Let er rip! Lets have a good old fashioned depression and get it over with! Maybe that will bring Americans to their senses and they will do something about the gangsters that run our government today which includes deaf and dumb Congress. Never mind impeaching them, run them out of town on a rail.
As for all the posturing and overtures by the likes of Clinton (ugh) and others, it's business as usual at election time. The real issues go begging and America sinks lower.
20 years later...
And Reagan's trickle down economic theories finally produces.
I'll get $1,000. I'm sure that will turn this economy around. I'm so glad the conservatives are still running our government.
The Failure of the American Narrative.
Economic Stimulus: Stop the war - get out of Iraq, leave Iran alone, direct ALL war funding monies back into our own country due to neglect.
Do I sound like a rocket scientist?
Karlof1...That link referenced WORLDWIDE refining capacity using BP statistical Review Of World Energy as its source??? Try this link/site http://www.eia.doe.gov/emeu/finance/mergers/refcap_tab1.html for changines in refining capacity in the US.. many fewer refineries and less output...Do you work for an oil company?
Why not stimulate the Bush Cabal with impeachment proceedings?
This item puts to death the idea that refinery capacity has shrunk and is the cause of high gas prices, http://www.theoildrum.com/story/2006/1/5/31649/28371
The topic of refineriy capacity/utilization rates is pretty constant at the above source.
Europe, being endowed with very little petroleum, artificially raised transport fuel prices to a level that roughly corresponds to oil at $300 and continues with BAU, although Europe certainly has issues with heating fuels and electricity generation (as does USA). Getting the USA to Europe's level of efficiency with liquid transport fuels is going to cause a lot of downsizing. Europe used the time between the politically induced oil shocks of the 1970s to insulate its economies; the USA built SUVs and did nothing. Japan did much the same as Europe.
Peruse this chart of percapita oil use, http://www.nationmaster.com/graph/ene_oil_con_percap-energy-oil-consumpt... It tells quite a story.
3 summers ago I saw a bumper sticker that said "Wake Up Alice, The Cowboys are Looting the ranch!"...I totally got it..since then I have told friends and relatives about it...saying I wanted to put one on my car...AND NONE OF THEM GOT IT??? I had to explain it...and then they just shook their heads... And as a result...I just shook mine, and watch the crack in my broken heart get bigger...the reality is.. Until most people (especially those over 40)hear it on the MSM they don't believe it..
A cash-rebate stimulus now can slightly increase the government's national debt and (we hope) slightly decrease the average debts of individuals. I think it's preferable to accumulate government national debt over the idea of poor and middle-class citizens personally going deeper and deeper into debt, because we can better address national debt with taxation at the high end than we can address the social problems of a swamped society with the rich getting ever richer.
The goal with this package that the president, Congress and the candidates now are obligated to politically support (for show), is to be sure we don't work in any rich-to-get-richer clauses in the process. There should be absolutely nothing sneaked in as long-term business tax relief, such as, for instance, the nutty suggestion of "reducing corporate tax rate by 10%" (something I think McCain called for yesterday.)
Let's hope we do this wisely in the short term and that citizens also use wisely whatever immediate dollars they get. (Yes, I know paying down debt or saving the cash is not "stimulating" in the macro--but it's still a good choice for many individuals and families in the micro---especially for citizens whose debts are high.)
We will need Democrats for the long term to address the "structural" problems described by the author.
rebelnow - I think I saw that movie. No...wait...didn't see it ... living it today!
As the bandits began to ride off, after looting the entire train, the ring leader looked back and tossed the desperate passengers a few gold coins, "see now? I ain't all that bad, heck I'm really lookin out for y'all, if it were'nt fur us protectin this train, who knows what could happen."
As a typical American on a fixed income I decided to participate in the new economic recovery program featured on the evening news last night by once again becoming a consumer.
Unfortunately economic reality does have limitations despite how cleverly our corporate media applies lipstick to the capitalist corpse of war inflation.
After reviewing my checking account (the credit card was maxed-out a year ago) to be sure I could cover a shopping spree, I wandered into a local thrift store. I found a slightly used paring knife for $.50 and a well-made 70's era Sony desk radio for $3.00.
Now I can listen to music in the kitchen while peeling potatoes purchased on sale.
I feel better already.
The proposed package of cash rebates and big-business tax breaks will supposedly amount to about 170 billion dollars. such a cash givaway is disaster! Think of the real, permanent, good job-creating things this money could make a substantial start toward:
1. A national high-speed intercity passenger rail system on it's own dedicated tracks.
2. A program of grants for urban neighborhood revitalization and public transportation.
3. A Manhattan Project for renewable energy.
4. A good start at the 1.7 trillion needed to repair our deteriorating transportation infrastructure of all kinds.
But, instead, this $170 billion it will go into the pockets of a Wal Mart and a few other big boxes, other importers of plastic crap, and the low wage service/entertainment industry for the rich. This lack of leadership is abnsolutely breathtaking.
Thankfully, I have a secure government job regulating (but too cozily at times) industry. I'll use the rebate to upgrade the battery pack on my electric motorcycles to advanced technoligy LiFePO4 chemistry. Thankfully, the Chinese are taking advantage of legal ambiguities to manufacture these batteries is sizes suitable for electric vehicles, while the corporations in the US who claim patents on this technology do nothing except use them in some power tools.
hazmat,
Great idea!!
i'm taking my rebate and buying canned food, water purification tablets and ammunition. i wonder what that'll stimulate?
"We don't need stimulus; we need economic change, and economic justice."
No argument that we need economic change and justice but we DO need stimulus. They aren't mutually exclusive.
Another problem is that the current situation shares characteristics of both the "gilded" robber baron age and lax regulation prior to the Great Depression and the Oil driven stagflation of the 70's. Add to that the wild card of globalization and unparalleled power of today's MNCs.
In addition to Mr. Schechter's suggestions, we need to deal with Oil - develop alternative fuels - AND develop a stimulus package that will benefit middle and lower class Americans.
Unfortunately, neither will be possible unless we reduce the influence of Corporations in our political process. ("Reversing" Santa Clara County vs. So Pacific would be a great start.)
karlof1, There are certainly a lot of factors at play in the worldwide and US oil/fuel markets...and the "peak oil" issue is one of them. However, I conted that China and India are "new" economies and can (and are) making the transition to alternate fuels much more wuickly than the US seems willing tro do. The price of oil worldwide has historically been traded in US dollars, and since the devalustion of the dollar against the euro is so drastic...that alone can account for the current price increase. (Some have argued that that is the real reason for our War with Iraq...Saddam was getting ready to broker oil in Euro's...Oil is our current Gold standard)...But all that aside...The US oil companies have bought up the US refineries and closed many down. We currently have fewer refineries than ever before. With the oil companies "vertically" integrated they can take their profits over and over again...and there is lots of room for price reductions and /or price manipulations...And peak oil or not...all the players seem willing to keep on pumping till the ground is empty...
This article was very refreshing to read as it is exactly what is needed. I have read so much garbage from the "candidates" and incumbant administrations , economists, pundits, journalists, left , right and middle about tax cuts as a resolution to the current economic problems. Tax cuts are just a knee jerk resolution by unimaginative, uninformed opportunists. The whole point of government is to pool our resources to provide a living standard greater than what we could have by ourselves.
Many people, but especially Karl Marx, pointed out that capitalism must expand or die.
This is unsustainable. There is a finite amount of demand, which used to be limited by worker's wages. They were unable to buy back that which they produced, leading to periodic crashes, or depressions.
Since WWll, the government has tried different ways to keep things going. A permanent war economy was tried first, coupled with higher wages for workers. They kept the war economy, but dropped the higher wages with Reagan.
The US switched to a FIRE economy and the manufacturing was done by cheap labor in other countries. US workers could afford more stuff for a while, because our wages were higher than others, but in the last decade, the economy has been kept going by private and public debt. Estimates vary, but I just googled one estimate of $48 trillion. http://mwhodges.home.att.net/nat-debt/debt-nat-a.htm
It's not a matter just of restructuring wealth. We must switch to a sustainable economy based on providing for basic needs for all people, with all people contributing to the whole. You know, socialism.
Thinkingmom--I insist you look deeper into the reality of the oil extraction/gasoline production assumptions you put forward. US demand for liquid fuels continues to increase at about .2% Y/Y despite rising prices. Crude plus condensate extraction peaked in 2004 and all liquids peaked in 2005/6. The major exporters are down about 1Mbpd since their peak in 2005, and declining at about 2%. The internal economies of China and India have reached stages of maturity where they don't require continued US consumption, and will thus continue to use more of ever scarcer commodities maintaining upward pressure on prices--thus bigtime stagflation problems on the horizon. (All of the above is discussed indepth at theoildrum.com).
The "structure" at the root of this "structural recession" is corporate led globalization. Keelhauling it ASAP is great, but that won't undo the damage already wrought. Any "stimulus" package is a red herring and will do nothing besides prolong BAU. Will politicos do what is necessary? Their behavior toward the twin threats of Climate Change and Peak Oil and the absolute MUST of holding BushCo acountable provide all the info needed to see that ZERO will be done. I believe it best to face the reality that what's already bad now will become worse, and then worse still.
We're gonna get Change all right. What's the nutritional value of Hope? If your job depends on discretionary spending, get a new job that fulfills actual needs, and get the most fuel efficeint vehicle you can afford. And if you live in an "Asphalt Wonderland," you might consider moving somewhere not dependant on massive food and energy imports.
A major devaluation of the doallar has already occurred and is in the midst of occurring...In 2002 1 Euro = .88 US dollars, today its $1.46 ...you don't see people out in the streets yet... (Paul Krugman's article today has a good explanaition for why the devaluation of the dollar isn't as noticable to the regular joe on the street.) I agree that the fundamental fixes mentioned in the above article are needed but will not be discussed or heeded..and so reality will bite sooner or later...but I forcast that regardless of the "stimulus package" and fixes finally offerred...you will see the prices of gasoline and fuel come down (this will free up billions to flow within the economy) .I believe these prices are artifically manipulated...and these companies are sitting on TONS of cash and can weather some losses for a while...they have sucked us dry for a while (perhaps they have miscalculated this time...time will tell), Noe they will free things up a bit to prolong the illusion and now, behind the scenes , by adding billions into the general economy, it will make it look like the proposed stimulus package is working....Remember...you heard it here first....
First, how would the President stimulate the economy? He'd give tax payers a temporary tax break and businesses an incentive for new investments. The goal? To increase consumer spending and business investments. In other words more of the same, big breaks for the corporations and like he advised after 9/11 "Go to the mall."
What would his economic stimulus package not do?
There would be no increases in spending; no help with skyrocketing heating bills, no help with skyrocketing prices at the gas pump, no breaks for increased unemployment benefits, no increase in food stamps, no help for job retraining, no help with a jobs program, no help with college tuition, no help to local school systems, no attempt to fix America's crumbling infrastructure, nothing to keep corporations from shipping even more jobs overseas, and no attempt to fix the disastrous mortgage foreclosure nightmare facing hundreds of thousands of home buyers lured into buying homes far beyond their means by unscrupulous lending policies.
As the economy slides further into recession business seek to reduce costs, very few decide to add additional capacity so the incentive for increased business investments amounts to little more than another round of unneeded corporate welfare.
Beyond that with most consumers already deeply in debt, a one time or short term tax break may well go toward paying down debt instead of a spending spree at the mall. Secondly with the majority of the merchandise at the mall manufactured in China or Mexico most of the new jobs created by an increase in spending will go to somebody fluent in Mandarin or Spanish instead of Joe Six Pack.
The current recession is fundamentally different that traditional business cycle recessions of the post World War II era, the current recession is a structural recession resulting from the destruction of the wealth of America's Middle Class and working poor, the concentration of wealth into fewer and fewer hands of the elite, outsourcing of America's manufacturing industries, absurd mortgage lending policies, a grossly over expanded supply of money, massive Federal deficits and the Iraq War.
With both political parties refusing to address the underlying causes of this recession don't expect to end any time soon.
Originally posted to Smirking Chimp
http://www.smirkingchimp.com/thread/12241
A major (say 25 or 50 percent)devaluation of the dollar would finally get everyone's attention and put millions of people out on the street ala Argentina. This is the most worrisome threat that I see coming from all this.
Any rebates we have gotten in the past have gone into our savings or to pay down the principle on our home. I'm not likely to use any "found" cash to buy the latest widget and my neighbors who are in debt to their eyeballs, are unlikely to do so, either.