Financial Meltdown: Time For a Holiday From Progressive Politics?
Progressives usually fight for the interests of those at the middle and bottom at the expense of those on top. However, during this period of unprecedented financial crisis, when the Wall Street rich are begging for the helping hand of the government, most progressives appear to be on the sidelines. Rather than taking advantage of this extraordinary opportunity to reduce inequality and educate the public about how the economy really works, progressive voices have been unusually quiet.
While the basic story on the economic crisis should be well known, it is nonetheless worth repeating. The Federal Reserve Board allowed the growth of an $8 trillion housing bubble ($110,000 of housing bubble wealth for every homeowner) in the years from 1996 to 2006. While this bubble was easily recognizable to competent economists, the entire political and financial establishments managed to ignore the housing bubble until it began to burst last year.
The collapse of the bubble is now pushing the economy into a recession. This is the result of both the direct effect of the collapse on the housing market and, more importantly, because of the indirect effect the loss of trillions of dollars of housing wealth has on consumption. Homeowners are rapidly scaling back their consumption after losing much of their life’s savings in the last year.
The collapse of the housing bubble has inflicted enormous pain on tens of millions of people, but it is also inflicting pain on Wall Street and the financial sector. The honchos in this sector include many of the richest people in the country. With the collapse of the housing bubble, we are finding out they were far less financially sophisticated than any of us could have imagined. Many banks, brokerage houses and investment funds took highly leveraged bets that assumed the housing bubble would not burst. Now that it has burst, some of the richest people in the country face the risk of a middle-class lifestyle - unless the government comes to the rescue.
This is where things really get painful. Rather than taking this opportunity to tighten the screws, many progressives are standing by the sidelines or actually cheering on plans to bail out the ridiculously rich. The same people - who, on other days, are fighting to raise the income tax rate on the rich or for preserving the estate tax - are just watching as the Fed hands taxpayer dollars to Wall Street, and hoping Congress will come up with tens of billions for buying the bankers’ bad mortgage debt.
There is, of course, a cover story - there always is. We have to let the Fed bail out the banks or the financial system would collapse. This would hurt everyone, especially ordinary workers. And the mortgage bailout is supposed to help low- and moderate-income homeowners.
But the cover stories don’t hold water. We can keep the banks running without bailing out the incredibly rich people who drove them to ruin. England showed us the way earlier this year with its takeover of Northern Rock, a major bank that got itself in trouble with bad mortgage debt.
We can also help homeowners without bailing out the banks. The rescue proposals currently on the table would have the government buy or guarantee mortgages on homes that are still hugely overpriced. These proposals could give hundreds of billions of dollars to the banks, while providing little help to homeowners. Most would still be paying far more on their mortgage, property taxes and insurance than they would to rent a comparable home. Furthermore, the bailout conditions virtually guarantee they will never have a dime in equity.
As an alternative to bailing out the banks, we can temporarily change the rules on foreclosure to give homeowners the right to rent at the fair market rate. This would provide them with security in their home. More importantly, it would likely create a situation where most homeowners stay in their house as owners, since banks would rather renegotiate mortgage terms than end up as landlords.
The Wall Street boys got themselves in a huge mess through their own greed and stupidity. Now is the time to make sure they enjoy the fruits of their labor. These are the same people who don’t think they should have to pay higher taxes so kids can get health care and childcare. There is no reason the rest of us should pay higher taxes so they can keep their mansions in the Hamptons, their private jets and retinue of personal services. Let’s leave this one to the market.
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( www.conservativenannystate.org). He also has a blog, “Beat the Press,” where he discusses the media’s coverage of economic issues. You can find it at the American Prospect’s web site.
Well, I have a theory about the silence of progressives on this issue. I may be wrong, but I’d like to be shown the error of my thinking. Most progressives, it seems, have hitched their wagons to Barak Obama’s star and, unless I am mistaken, Obama (like Hillary Clinton) has taken no strong stance of opposition of buy-outs for the wealthy, maybe because both Democratic candidates are heavily financed by Wall Street firms, which have “bet” on a Democratic President and put most of their campaign dollars there, Goldman-Sachs for example having funded Obama and Clinton equally, when last I looked. This does not mean that progressives have to look the other way on these bail-outs just because “their” candidate does; but I suspect there’s more than a little of the attitude of: “let’s don’t rock the boat too much right now; because it’s so very important that we get our progressive guy into the White House.” Just a suspicion or, as I said, a theory, but one certainly worth examining.
how many “progressives” have retirement funds tied up in wall st? hmm . . . .
The bloodsucking republicans have sucked working people dry and are attempting to suck more. The well is dry. Now they will have to suck each other. This should be a good show.
Are progressives silent on this issue? That would be a shame. Why not point out the dissonance between the ears of investors who are strong believers of Darwinian economics when times are good, but when bad times come, turn to the government, whose regulations they scorned, cap in hand looking for a few billion dimes in hand-outs.
Nice article. Dean, I’m on your bandwagon. Though, sadly, I think you’ll see a dearth of Comments on your article here at one of the biggest progressive news and discussion sites going.
Lots of progressives have money, make no mistake, riverbird. What you will not find, though, are progressives in the crowd who are printing up money and keeping huge chunks of it for themselves. This is not the top 1%, as some like to say. It is more like the top 1% of 1% of 1%. Which leaves you with about 8000 people in the world. The other 99.99% of the top 1% are just regular people, and they are not responsible for the meltdown, any more than the bottom 1% are.
Whether you are left or right, liberal or conservative, progressive or that other thing, whether you are rich or poor, you have been taken for a ride and likely don’t know. Or care. Somebody has made off with a whole lot of money, you know who some of them are, simply by implementing a worldwide (global) Ponzi sceme, selling promises that can never be fulfilled. Now the money supply itself is growing more than 10%/year, to fulfill the short term promises and keep people from seeing plain and clear that the system’s state can really only be described as bankrupt. And because of the influence of the people who have made off with this magic money have over the media, you’re not about to find out about it.
Common Dreams has the insight to publish articles on this subject, and a few progressives seem to care. Sadly, beyond a fringe of cranky libertarians and a few broad-minded progressives, no one knows or cares in the slightest. And at this point, it hardly matters to care. The alternative to what they are doing now would be systemic collapse. And you can’t change what they did to get us to this point.
The other day, I spent a moment trying to imagine that all the banks and big financial institutions had failed, gone bankrupt, gone away, and somehow or other, life went on. We all did what we did, used money issued by government fiat, with no banks inflating it for profit, and we all continued to develop new technologies and work and live and build and farm.
I’m sure the banks would say that could never happen.
“England showed us the way earlier this year with its takeover of Northern Rock, a major bank that got itself in trouble with bad mortgage debt”.
Huh? this IS bailing out! How is ‘England’ showing us anything but the same thing????
Perhaps the only way to get the system to change is to let it collapse. When enough people start feeling the pain, they will elect legislators with some realization that it’s not the rich “money managers” that cause prosperity, but rather the farmer, artist, mechanic, plumber, nurse, carpenter,….. et al, that produce the real wealth of humanity.
I completely disagree with Baker’s suggestion here. We need a solution which:
1) Recognizes the henious history of rent. It comes from the landless state of serfdom. Just as property is inherited, so is propertylessness. Abstenee Landlords, Big Boxes, distant economics that siphon money out of local economies. Read your Kropotkin for crying out loud.
2) We MUST let real estate prices fall to genuine levels of affordability. No bailout of any sort which keeps the bubble inflated.
3) Concept of “Moral Hazard”. Unless people — consumers and bankers alike — face the full repercussions of their mismanagement, greed or sheer stupidity, there’s no incentive for them to make clear-headed decisions.
In practical terms, I’d suggest this: anyone facing foreclosure should walk from the mortgage, and look for a new house which — if the prices are no longer kept artificially inflated — should be a lot more affordable.
Read Naomi Klien’s latest book … The Shock Doctrine.
There are wealthy people around who view any crisis as a time to steal anything that isn’t nailed down.
And, we really don’t have many progressives in government. We’ve got a lot of people who call themselves ‘liberal’ while they serve the interests of the wealthy. And of course, its not at all a surprise that these servants of the wealthy are silently cheering while the vaults of the Federal Reserve are opened to investment bankers to cover all their bad debts.
My guess is that in a few years Ms. Klien will write an addendum for a new addition of her book that describes how the ’shock’ of this economic collapse was used to pilfer billions of our taxpayer dollars.
I don’t see how anyone who walks away from one mortgage is going to be in any way shopping for a new house. Unless they were also rich enough to pay 100% cash for that next house, no bank would loan them the money for the next house after they just walked away from the mortgage on the last.
There’s a lot of people out there who did nothing wrong but might get hurt by this. People who got a loan they thought they could afford, and who made every payment on it. But the massive numbers of other foreclosures can drive down the market value of their home to less than what they borrowed for it. I’m not sure how cheering for these people to get hurt is a good idea. Easy for a renter to say, but that’s real pain being dumped on people who did nothing wrong because of all these other crooked games the mortgage bankers were playing.
I don’t need a weatherman to know which way the wind blows. I’ve read some of Klein’s articles and detect a weird memetic texture in some of them. I can’t quite point to it, even if I agree with more than 50% of what she’s saying.
In any case, none of this is new. Government — east, west, north or south — has perhaps ALWAYS been about some form of thievery. Furthermore, genuine progressives almost universally never get into positions to effect genuine genuine official change (because they aren’t thieves, and can’t win in a game designed to promote thieves).
The analysis that makes more sense to me goes like this:
Government has a natural tendency, like a magnet attracting iron, to do the most corrupt, tyrannical, powerhungry and kickback/slushy activity possible. Maxim: it will gravitate to that “event horizon”, to the extent it may hide it, that the public will tolerate without insurrection.
>>Perhaps the only way to get the system to change is to let it collapse.
Indeed.
Last time the Wall Street bubble, which bursted 80 years ago in 1929, brought about a great deal of New Deal and THAT was good. Since 30 years ago the shameless shock therapy was administered to so many peoples arount the globe for the sake of global order that using this great remedy against current generation of American fools will be only so much appropriate. Yours trully will be nocked down but so be it.
Progressives are just plain ignorant about class war and here Mr. Baker is wrong. When the Wall Street became its own gravedigger, we have to apploud. There is no way that even American Government can tame with its meager $2 Trillion budget the $350 Trillion mammoth of loose canon of hedge funds. From my point of view, the worse is the better. I readily admit that I did not come with that phrase; I borrowed it from Vladimir Lenin.
COMarc, They did do something wrong. They signed when they shouldn’t have signed. Their idiocy drove my property taxes and insurance into double-digit increases. People need to realize that it’s not fun and games when you’re buying a house.
Same goes for the bankers, lenders, usurers, international financiers, and that whole parasitic “industry”.
The big question is, if we are going to funnel billions into the system to prop it up, how are we going to do it?
The crowd in Washington, both Dem and Republican seem happy to funnel the money straight to the banks and investment bankers.
What this does is bail them out, while still leaving many ordinary Americans with either sucker loans they can’t afford or homes that are now worth less than what they borrowed. Nice for the bankers. Does nothing to help homeowners. They still get their house foreclosed on. So the banks end up with the property and our money to cover the bad loan. Win-win for the banks while the homeowner still loses.
The alternative would be to pump the same amount of money into the system through the homeowners. Let the money be used to refinance loans down to adjusted property values, or to take some of these crazy adjustable rate loans and convert them to fixed rate.
This way, the money would help homeowners. And at the same time, it would help prop up the banking system because it would convert the bad debts currently flooding the system into good debts being paid with this subsidy.
That would help ordinary Americans and the banks. But of course, our lovely little crowd in Washington doesn’t give a damn about ordinary Americans, so they favor a plan that lets the banks both suck in our tax dollars and steal the property for cheap as people can’t pay their debts.
Gee, people wonder why progressives only get 5% of the vote in elections. Maybe its this constant glee at seeing other people get hurt. If the alternative progressives offer people is just cheering while the system collapses, and that’s cheering while lots and lots of people get badly hurt, then heck, I’m surprised even 5% of the voters vote progressive.
Paul Bramscher March 25th, 2008 12:44 pm:
“Government has a natural tendency, like a magnet attracting iron, to do the most corrupt, tyrannical, powerhungry and kickback/slushy activity possible.”
Hi Paul, isn’t that a bit cynical? I hear something like that often coming from some nations, the US among them. Where does that sentiment come from? America was founded on noble (albeit perhaps bogus) principles. Are not those principles enough to draw in people of good will into government? Can government be good? Can we teach our politicians to be good?
jlocke, we probably can’t teach our politicians to be good. The mechanisms they must master in order to win elections make it very likely that an ambitious sociopath will win every time. I’ve wondered if members of government souldn’t be selected randomly from the populace, much like jurors. Politicians (the winning variety, anyway) are the very last people who should be guarding the hen-house.
Helicopter Ben is trying to find dry land in a swamp filled with rotting money…I’m betting he won’t find it and have stepped in alongside Thomas Jefferson as to what is going to happen and what will survive it all.
The politicians of today are ignoring the issue and so is the media. Damn, Jefferson was a great man….today’s politicians…not so much.
There is but one politician in the US who speaks the truth on this. Maybe the progressives don’t need so much a holiday, but a change of scene. http://www.ronpaul2008.com/
I think the meds we are getting in the water is not enough for some of us.
The deflation in the housing market is hurting every owner, whether or not foreclosure is at issue. The lack of oversight, greed, speculation, what-have-you is just a way to try to pin the blame on the correct party (parties.) It solves nothing. I haven’t been thrilled at any suggestion of how to deal with this mess, but the federal government is the only player at the table with the chips to do whatever it will take. We (all of us, lords and serfs alike) need help and then re-instituting the regulations that the lords got rid of would be sound policy. However, until the feds step up, it is just talk, smoke, and mirrors. Hillary’s plan has some merit, but it is not enough.
The allusion in the article to Britain’s Northern Rock should be the basis of a progressive’s response to any financial collapse. First, if a bank fails that’s too bad for the shareholders and the managers. Second, that failure shouldn’t spread throughout the financial system because that will eventually hurt those least able to protect themselves (that’s most of us). Third, when a failing bank gets bailed out, another bank doesn’t do it with Federal Reserve Money. The failing bank is nationalized so that the taxpayers who saved the bank have a chance to recoup their reluctant investment. At some future date, the bank can be privatized at a profit.
I must have been surfing the net minutes after Dean Baker’s article was posted on this site and unexpectedly found myself offered the opportunity to post the first comment, which I did. After about 18 other people have posted comments, I’m rather surprised that not one of them has addressed, either pro or con, my “theory” that progressivism has been sidelined on this issue because progressives have committed to a Borak Obama candidacy that will not really challenge the financial crisis for what it is. I can’t over-emphasize how important it is, in my mind, that my “theory” be critically examined. And it’s not just in the financial crisis, but other crises related to the corporacratic dominance of our politics may be just as relevant. Where, in this campaign, is there a progressive voice among the remainding “major” candidates to challenge the imperialistic foreign policies that have resulted in the Iraq/Afghanistan war and could lead to one in Iran. If there should be a “provocation” from Iran leading to a “retaliatory” U.S. response, would any voice be raised against this? Can you imagine Obama or Clinton not “patriotically” saluting and standing behind their commander-in-chief with any such action? Where are our other “progressive” issues? Where is the de-criminalization of drugs; abolition of the death penalty, more effective gun control, curbing weapons in space and the proliferation of needless but costly weapons systems, on and on, you name it; where are progressive Americans getting in the “game” with one “moderate” Republican and two “centrist” Democrats dominating the field? Dennis Kucinich was benched as “irrelevant” and Mike Gravel is regularly ignored by all concerned, though he is still technically a candidate. We are OUT of this race, folks, unless we somehow get back in it through Green or independent candidates. I sat on the bench for the football and basketball games in my high school years, so I have the splinters on my butt that go with sidelining and man, it hurts!
I’m with ya Jerry. There is no Democratic candidate who is progressive, and no progressive candidate or Democratic candidate who will touch this. It’s taboo for anyone but wing-nut-libertarian quasi-Republicans. Lots of heavy-duty progressives follow or support Ron Paul, for this very reason. I think most progressives, and Democrats for that matter, don’t want to “dirty” themselves by showing concern about the goings on in high finance. Just look at the turnout for this article, for example.
Jerry, there is little to address regarding your theory. You specify “most progressives” - however, there is no evidence how progressives are going to vote especially since Nader has stepped into the presidential race. If there is reliable evidence say, a poll, please post the link(s). The only inkling that I can glean from popular polls is that young people (age < 30) are more progressive than older folks.
Yes, progressives are out of this race. Personally, I am in two minds. On the one hand, I hope that Hillary will do us all a favor and become the nominee tearing the Democratic party apart, and allow for a progressive coalition to arise from the split. This should also give the evangelicals reason enough to split from the Republicans forming a fourth party.
On the other hand, I worry that McCain will become president and the set the Supreme Court back 20-30 years by appointing more right-wing conservatives to the bench, and further worsen the situation by commiting this country to long wars.
It is a mistake to view the current bailout at the taxpayer’s expense as some special case of the private sector looting the commons. It goes on all the time, has gone on since the start of the system. The current thievery is just a slightly different angle on a very old story and from most indications so far will also be tolerated by the sheep.
For the record, many progressives also detest corporate welfare. The recent moves by the Federal Reserve are just more events supporting the same system, nothing new.
I recently listened to a discussion on NPR concerning the bailout and the housing bubble. I don’t remember who the participants were, but they were all corporate supporters who insisted that it’s necessary for the government to give money to the big lenders because not doing so would hurt everyone. There was no one to put forth an argument in favor of bailing out real people.
One of the most outrageous statements made - and one that everyone seemed to agree with - was that there was no way to foresee that the bubble would burst because in the “entire history of the world” housing prices only ever have gone up.(This is a slight exaggeration of the actual conversation, but it’s in the spirit of the thing.) How absurd! I remember my husband, who is an artist and certainly not an economist, saying over and over that this situation cannot last. He knew several years ago that bubbles pretty much always burst.
It’s kind of like our government saying that no one could have known that Iraq would erupt into sectarian violence. All they would have had to do was ask the average taxi driver in New York City. I knew, my friends knew, and the European countries who refused to condone the US actions knew.
This meltdown was not an accident that no one could have avoided. It might have been carelessness, or it might have been callousness, but it was not a mystery that it would happen. The homebuyers who were convinced that they were getting a bargain have often been blamed for taking out loans they could not repay. But why are regular people with no background in finance or economics supposed to understand an impending collapse - what the experts now claim was a total surprise?
It’s unfortunate that in so many ways, non-human entities have more influence and are more supported by the American government than real human beings.
“Rather than taking advantage of this extraordinary opportunity to reduce inequality and educate the public about how the economy really works, progressive voices have been unusually quiet.”
Au contraire mon frere. It’s kind of hard to get progressive views out there past six conservative corporate media monopolies. We’ve been here screaming and ranting our hearts out on CD and the Internet, more and more, all the time.
jlocke123 mentioned Darwinian economics, the “survival of the fittest” metaphor for evolution and nature applied (often, but in very strained ways) to economics. I agree that it would be better to let the rich CEO’s and managers suffer the consequences of their irresponsible actions, but here’s how the Darwinian metaphor persists: If the rich can afford lobbyists to influence legislation to bail them out, then the irresponsible rich have proven themselves more cunning, more sly, more fit to be bailed out and to continue to be rich. Consequences are for little people, for the poor, for those in jail. If we let our government bail them out, then they survive (and because they survived, they will claim they deserved it — fittest).
In their own minds, although they are not producing goods, they see themselves as providing services (in this case, to the sub-prime consumer, and to investors eager to make an unregulated buck). They see wealth as its own justification, as proof of their fitness to survive; the wealthy make lots of money, by whatever means, and both by the process of their making money, and their spending of it, these things, in their minds, should be reason enough to bail them out and give them tax breaks. In their minds, the rest of the economic universe revolves around them. They are the gods, and if they fall, they’ll take the rest of us down with them, so it’s in our best interest to restore them to their pedestals, etc.
In order to have a more just economic order, you need more people who are ready to reject the above kind of thinking in favor of something else, such as the recognition that the rich benefit disproportionately already, so they should pay higher taxes, and they should suffer the consequences of their own irresponsibility. To raise that kind of awareness in the US, you’d have to get a large number of people to shut off “American Idol” and care more about what is happening, with access to good analysis. This is an uphill battle, with major media the way it is. You’d have to close down FOXNews with lawsuits for false advertising (”Fair and balanced”) for starters. You’d also have to work against the corporate interests of most TV, radio and newspaper, which makes its money from advertising. Progressives would need to come to an understanding that, to change things in the next 100 years (if the human race survives that long), we’d have to make it our second full-time jobs to be grassroots organizers, for many generations.
Roll up the sleeves and get to work.
Most of the progressives I know are raising chickens and vegetables in their backyards and preparing for the worst. After five years of trying through every means short of armed revolution to end a war that just won’t stop, we’ve decided to form our own alternative communities while America’s cash-strapped, celebrity-obsessed, corporate-controlled culture runs headlong off the rails. When you’re surrounded by a terminally ill society, sometimes the only thing you can do is quarantine yourself.
Well, well, well, isn’t it a fine pickle we find ourselves in. Wall Street and Washington suckered just about everyone in the game before they realized what was happening, whether intentional or not. What do you think was happening when corps started substituting 401k’s for pensions? Now, like it or not, their pain is our pain. If you borrow from your tax-deferred 401k, you’re expected to pay it back, or pay enormous penalties.
As hard as it may be, perhaps we need to let go and let these accounts take the inevitable hit. It’s only then that we’ll be able to take our focus off of Wall Street, which we must do if any semblance of ‘economic sanity’ is to be achieved in the direction of labor.
Paul Bramscher-Do remember that perhaps half of your property tax increase is due to Pawlenty’s no new taxes pledge.
Well,
I can retire in 3 years from my State Job, I just got the Deed to my modest 11,00 Square Ft house, and hope to add my SS to my retirement in 2016. Well thanks to Wall Street, I guess I will survive, I know I can, in spite of what might not be there like SS, and a dimished St. Retirement. I hate to wish all those Greedy Wall Street types what Can Soup and Grilled Cheese sandwiches taste like, but I can stomach that, I dont think those folks will handle such a life style change. We shall see.
Comarc opines:
If the alternative progressives offer people is just cheering while the system collapses, and that’s cheering while lots and lots of people get badly hurt, then heck, I’m surprised even 5% of the voters vote progressive.
**********************
A better alternative is to:
Starve the war beast by:
Eliminating all shopping except necessities for survival.
Eliminating all travel except for totally unavoidable.
Eliminating all commercial TV (and most non-commercial TV) and therby halting the conditioning of commercials to keep us buying things we really do not need.
As much as we can shrink the economy is how much we we reduce the capacity of the fascist few to steal from others in order to enrich themselves. This is introducing the corporate socialist pigs to a stict diet rather than slaughter. It is exactly what they have been doing to the rest of us for nearly 30 years.
And where, exactly, should progressives be screaming? Has the Big Corporate Media government military industrial complex suddenly welcomed progressive voices onto “their” tv and radio networks?
Ralph Nader’s been screaming loud and clear for decades - but he’s got an “ego” so he must be ignored. Kucinich, too - and he’s regularly kicked to the curb. Ever hear of Ron Paul, who’s been screaming for the madness to stop for over 22 years?
Have “progressives” formed their own political party? Have they ceased paying taxes en masse? Are they flooding the streets in weekly protest? Is this mythical group of people doing anything at all substantial besides blogging to the choir in between lattes?
Let’s just go ahead and declare Nader the last progressive in American and move on already.
I thin the very first poster hit right:
“Well, I have a theory about the silence of progressives on this issue. I may be wrong, but I’d like to be shown the error of my thinking. Most progressives, it seems, have hitched their wagons to Barak Obama’s star and, unless I am mistaken, Obama (like Hillary Clinton) has taken no strong stance of opposition of buy-outs for the wealthy,”
Obama is 100% on the side of the same “free traders” and “neo-classical liberal economists” that have run DP economic policy since 1988, or thre abts.
Obama clains he will keep us people in mind. We’ll see.
This is not a “Progressive” v “Conservative” issue. This is all about class warfare. And the “Rich Filth” are winning because they set all the rules. Unfortunately this economic model is not sustainable. It cannot be “fixed”. The entire world wide economy that is based on unlimited consumption of finite resources and unlimited growth has no choice but to fail. Just so happens we are now at the end of this particular cycle of a failed economic system.
What we are seeing now is just the end game to about 40 years of our American dream of materialism and wealth. As a society we threw out the values of community and the value of work. We are no longer citizens, only consumers in this ugly culture.
Lord Trigo and the folks that he describes are on the right track, but for the wrong reasons. It’s not a matter of dropping out. It’s a matter of building a new society that rewards sustainable community efforts and true contibution by every member of the community at large for the survival of the whole.
Peace of mind came to me through recognizing that this economic collapse is unstoppable. It’s like a perfect storm: peak resources, climate change, and an unsustainable economy. And there is going to be a huge amount of hardship, death, disease, wars, and destruction. But I can’t change any of those outcomes. There is really not much I can do to stop any of it. All I can do is prepare and to help build my local community. The answer and the reward is right here with my neighbors. I no longer dispair. I no longer look to somebody else to solve these problems. Certainly not the federal government. I feel energized because I know that my efforts are worthwhile and will make a difference for my community and my family.
It’s just like my 87 year old father always told me when something really rotten happened: “Look at it as just another learning experience”. Well, I’m continuing to learn, but I’m ready to move on to the next phase of human life on this planet.
Poet has it right: Just stop shopping except for essentials and turn off the stupid boob tube!
I understand very little about macro economics. I spend much of my time in the so called natural world. I don’t understand why it has to be such a tragic event when there is a slowdown or a recession in the economy? Everything in nature has it’s time of expansion and flourishing then folds back into dormancy or hibernation. Why can’t we humans just get with the flow and adjust our lives appropriately? Isn’t it obvious that uncontrollable growth only leads to eventual catastrophe with severe readjustments?
I say let the whole stinking system collapse, maybe it’s what will finally get the ‘Murkin’ Idle’(sic) watching sheeple off their asses and out in the streets to take our country back.
When you can find a politician who ISN’T bought and paid for by Wall Street, put him/her in office!
It’s not England, it’s Britain, which England contributes to such misunderstanding, being arrogant about equating England with Britain, as Britain is four countries in one, England, Wales, Scotland, and Northern Ireland. Britain showed the USA by taking over the bank for all the British people, not simply handing over the people’s money, which is just what should have happened– nationalization. It’s all about letting the people run things including the economy.
Rebel Farmer March 25th, 2008 4:03 pm
I’ve been saying more or less the same thing for almost 20 years and I know I’m not alone. But so few people can take even the first few tentative steps to disengage from the corporate-controlled treadmill.
The world is doomed, not by petty financial crises, but by the presence of too many human beings. We could bring population under control in two or three generations of one child per family, but lemming-think will probably hold sway until long after the beauty, diversity and balance of the world is irrevocably destroyed … that’s if bu$hco doesn’t do it first.
The question of Dean Baker’s essay was: Why are progressives so silent on this issue?
Answer: We’re all exhausted from protesting the conquest of Iraq. A lot of progressive issues are being neglected right now. There just isn’t enough time in the day to tackle (or even stay informed on) the environment, worker’s rights, racism, education, health care, government accountability, media de-regulation, voting machine fraud, mortagage and credit card ripoffs… etc. etc.
… and still organize against war.
But since this is an election year we would all do well to inject the concept of “false prosperity” into the public conversation about Republican incompetence.
Wealth doesn’t just disappear. It ends up being transferred from the many to the few. This “crisis” is just like the savings & loan collapse under Ronald Reagan… somebody is laughing all the way to the bank.
frank1569 wrote: “Have “progressives” formed their own political party? Have they ceased paying taxes en masse? Are they flooding the streets in weekly protest? Is this mythical group of people doing anything at all substantial besides blogging to the choir in between lattes?
Let’s just go ahead and declare Nader the last progressive in American and move on already.”
Frank there unmistakable signs the American People are awakening from their 75 year political slumber. Check this out : http://www.qctimes.com/articles/2008/03/25/opinion/columnists/barb_ickes/doc47e884ee13767185626302.txt
With Ralph Nader positioned in the political arena to use his Presidential run to highlight issues important to the Average American we are presented with an excellent opportunity to Educate, Organize and Mobilize the citizens of this country for constructive change that will benefit us all.
Nader achieved his $50,000 goal to raise the funds necessary to get on the ballot in Arizona. It really is exciting to see how the American People are rallying around his campaign.
http://www.votenader.org/index.html
There are solutions….
As to the original ‘post’…yes, all politicians are subject to Wall Street money–so neither of them can bite the hand that feeds them and why ‘democracy’ is but a myth.
Change will not come from either of them–it can’t, but there is much that could be done if people banded together, ‘federalized’ the Fed (essentially busted the ‘debt’ game that keeps us all slaves).
Two books: Ellen Brown, Web of Debt shows in great detail the money system AND how it could be changed.
Riane Eisler, “Real Wealth of Nations…creating a caring economics”…which shows how we can transition the consumer economy to focus on the work that is truly necessary right now….caring for humans and the planet.
THe economic meltdown right now is like the Wizard of Oz…everyone is pointing at the ‘Wiz’….but this time, Toto pulled the curtain–and we can see once and for all that the whole thing is a sham. But the most important thing to remember–”there’s no place like home”…We need to focus our attention on what’s important–and not on the ‘fake’ wiz that’s going to protect us. Its us folks, we’ll do it for ourselves….
A lot of us knew the housing bubble was a fake economy.
If people could figure this out-with a lack of education the more educated knew this would happen too.
I do not feel sorry for people who over-speculate and do not think they should get any money back from the gov.
Funny how most of the people do not want to bail out the homeowners but see the banks and mortgage companies under a different light.
Maybe people should start making some legitimate money instead of depending on financial markets.
As someone who resides in the UK, I should point out some misconceptions about Northern Rock.
The Northern Rock situation was known about six months before it happened, but it happened when Tony Blair had retired, and the Chancellor who inherited the problem was not Gordon Brown but Alastair Darling.
I do not agree with the bank being bailed out by the bank of England, and I certainly do not agree that one bank should be nationalised and the rest of the banking World remain in private hands, because this does not permit equal market forces to apply.
There has recently been an announcement that 2000 Northern Rock jobs will go, and they will not be the incompetent managers who engineered this fiasco, but the poor foot soldiers, who can ill afford to be unemployed.
Furthermore, I don’t expect the top echelons of Northern Rock to be receiving reduced bonuses this year, or foregoing a pay rise for next year. This will of course mean little or no pay rises for the counter staff.
The very point, which I am trying to make, is that nothing much has changed for the mercenary, heartless people at the top of our financial institutions.
We need to have tighter financial regulations on the types of products being sold, and independent ombudsmen to carry out regular audits.
Big_Money alluded to the fact that there are only 8000 people who are responsible for this kind of event - if only that were true. I would say that there are over 8000 people in the City of London, who receive multi million pound bonuses every year, and they are very capable, of influencing the stock markets, and causing heartache for millions of people.
Paul Bramscher: Government has a natural tendency, like a magnet attracting iron, to do the most corrupt, tyrannical, powerhungry and kickback/slushy activity possible.
That is a very unhelpful view. A government is not good/bad, but rather it’s the people who control it who take good/bad actions and they must be kept in or purged from the government accordingly. We can’t deny this. We can’t wish it away.
Anything, tools, ideas, institutions, maybe used for good or abused for bad. We have to ask ourselves why we focus on objects instead of the person weilding it. Maybe it’s because of cultural/social taboos against judging our fellow man. The general “live and let live” lesson of liberalism seems to get perverted into “abuse and let abuse”.
When are we getting over the liberal hangover? When are we going to join the steel-toed boot brigade and start kicking elitist butt? We’re changing the culture, we’re rearranging the social pressure gradients. We’re kicking around the elites and showing them who’s boss. You want to join the party?
Use your imagination. Starve them economically. Stop doing business with them. Start doing business with people you know and like, who you respect, who you can see are taking the lessons to heart. You don’t get somethign for nothing. You have to work to become part of the solution, instead of beiing part of the problem. Help purge the elites from the pinnacles of power.
Hi, AndyUK… ~Big_Money alluded to the fact that there are only 8000 people who are responsible for this kind of event - if only that were true. I would say that there are over 8000 people in the City of London, who receive multi million pound bonuses every year, and they are very capable, of influencing the stock markets, and causing heartache for millions of people.~
I’m speaking of those who set the rules, not those who play by the rules and win. Take Derivatives, as an example. Or Liar’s Loans. Or Collateralized Debt Obligations stacked up with Liar’s Loans. Or using crap like that as collateral to borrow many times more money. Should be illegal, should be that no bank would dare mess with such things. However, a very few influential bankers, lobbyists, regulators, and elected officials whipped up this way-too-huge armageddon machine, of infinite promises and opaque risk, even though no-one really know what it was or how it worked - or how it would turn out. The people who figured them out, and made a killing on them, and then got/get killed by them, were not the ones who made it possible. They were just playing by the rules. It’s the ones who make, or unmake, the rules who must be watched, who make the biggest gains, and who should be held to account. But there’s the catch - they make the rules, so can we really expect them to hold themselves to account? If it’s truly a free market, shouldn’t those with the resources to rig it be allowed to rig it? Clearly, even when the market itself tries to punish them for their foolish greed, they come running to their own rescue. All those BS employees, for example, out of high-paying jobs - and shareholders, sitting on massive losses - no-one’s coming to their rescue. Not big enough. No, the ones who make the rules, and are above the rules, are a very very very small group. They’re doing great through all this - and no matter how bad it gets for everyone else, they can fly their Mission Accomplished banners with swagger and arrogant pride. They are the Players. Traders, brokers and executives, even the big wheelers, are just pawns. And common people are just specks of dust on the board.
Unfortunately, Paul’s comments tend to be correct where there is little or no accountability, human nature being what it is. And gullible believers fall for it over and over while believing all the spin and propaganda. The govt employs the best con men (and women) in the biz.
For some sobering and informative comment about the economic mess I’ve found Elaine Meinel Supkis at Money Matters…. love her blog
http://elainemeinelsupkis.typepad.com/money_matters/
rtdrury & others,
I made my earlier comment about government naturally gravitating toward the most anti- working-class position possible, without losing control of the rudder, out of genuine observation, 20 years of my studies in anthropology and history, travels across the country, etc. Certainly not out of cynicism.
Let me elaborate on the economist’s term “moral hazard”. If the big bankers, lenders, etc. never really have to worry about losing their shirts (either they expect a bailout, or they have so much money that they couldn’t lose it all if they deliberately tried) what about government itself? What motivation, other than facing a possible direct confrontation with its electorate, keeps government honest? Check and balance? We have a Congress which, despite probably the most (openly) corrupt administration in 50-100 years, has taken impeachment off the table. Indeed, there is a moral hazard when there are no systematic checks and balances.
Thus, I reiterate — given such a moral hazard, and indeed we have one now — government seems to naturally gravitate toward the most antithetical policies (whether health care, economy, military, etc.) that it can push over on an extraordinarily boorish electorate. It’ll only be when the plague of civil unrest begins to grumble that politicians will be worried. Not about poor/middle-class people, but about losing control.
Back to the topic on mortgages. Moral hazards. If people make stupid decisions, they need to feel the repercussions — whether corrupt investment banker or foolish consumer. Anyone who owes more on his house than it’s worth is better off walking from the mortgage and going back to renting anyway. Zero equity is better than negative equity.
THIS progressive hasn’t been silent on the issue. I can’t speak for anyone else, and I’m certainly not buying into vague Obamism. Caught a glimpse of him tonight saying that he’s against caps on rising interest rates so the industry can “get back to what it does.” Good to know that he’s on the side of the usury “industry”.
I should add, further, that progressives might consider the concept of “tough love”. People losing their homes to their own foolishness is one thing. People losing them because we have a runaway usury industry, inherently hostile system predicated on our birthright to eviction — rather than membership — in our society is something else.
Only losing neoliberals would frame this as a “let’s help the poor people”. It’s a bluff, and patronizing too — protect stupid people from themselves. They’re too “foolish” to govern their own affairs?
Genuine progressives, I think, should instead frame this as “time to jail some lenders and prevent this from happening again.”
Where are those free market solutions now.Perhaps the banks ought to pull themselves up by their bootstraps.
REGULATE THE GREED!
We wouldn’t be in this crisis today if Congress didn’t pass the corporate greed bill, a/k/a as deregulation.
REGULATE THE GREED!
Damn.. lol it is soooo hard NOT to feed the male supremest misogynistic troll..
Stagflation in 1973 was caused by the Indochina Conflict.
Unlike the George Herbert Walker Bush savings bank collapse, this meltdown is severe and is not fixable because the Iraq Occupation (and Republican political corruption) has drained the national treasury. It’s now approaching time for a slow (or fast) meltdown of the United States dollar.
The Democrats and the Republicans together will do anything, anything to prevent the meltdown in an election year. For example, they will give you, the taxpayer, $600 cash. However, they have already voted to suck all of it right back the April 15 after the general election, crushing the economy. You didn’t know this?
Hello, Andy UK. I still favor the British government taking over that bank, but not only that but all banking and going back to having the people’s government run the damn banking industry and all industries for the people as real Labor used to do when it controlled the government. As for the City of London, you should make clear what you’re talking about is London’s financial district, which foreigners, especially us Yanks overwhelmingly won’t understand, myself excluded.
As usual , all posts except Poet March spout the same psuedo-intellectual message “here’s what happened , why and who’s to blame .
Poet March gives a very simple and very small list of suggestions to try for a singular , personal remedy
Buy necessities only
Travel only when necessary
Turn off the TV
Of course this could be difficult for Americans who don’t know a need from a want .
Big_money, I fully agree with what you say about the people who “enable” this to happen, and are in control of the system. We do have to have outside regulators, because the financial industry is not fit to regulate itself. In which other industry would you find such a conflict of interests, I can think of only two - Politics and the church, and we know how much they can be trusted.
AD, this brings me on to your point, about state control for the banking systems. This is the right way to go, and together with electoral reform, and a review of donations to politicians, this could help sort out banking and politics. I should have made clear that I was indeed talking about the financial centre of the UK, which is referred to as the “City of London” or “the City”.
It should not be a great surprise to anyone, that having stepped down as Prime Minister before the Northern Rock crisis, Tony Bliar then stepped right into a consultancy position with Morgan Stanley.
A bit better understanding of what underlies this latest ’scandal’ would be useful for many here, i think - Banketeering - how the banks have been stealing trillions from you, and the tap is still running http://www.rudemacedon.ca/dlp/box/box01-money.html
Let the bastards drown. They came up with all this fancy financing and played into everyone’s greed to buy the McMansion. Let them pay back their hefty commissions and salaries and leave the rest of us alone. Their failure of common sense and due diligence is stunning in its lack of enactment. Progressives have little to do with this mess as most of us believe in a balanced budget and fiscal restraint and don’t have any where near enough money to influence anyone. The issue with the bank in England speaks volumes with regard to the need for strong government regulation of the financial services industry in the US. Now that the party is over, the hangover will soon subside and soberity will become the desired state again.
As for electoral reforms, I’m skeptical of any that don’t use one person one vote or as John Smith when he was alive would say of voting within his party British Labor, one member one vote. Also proportional representational voting has given the far right and further right way too much of foothold and share of authority and influence in politics on the European continent. In the USA, Abraham Lincoln couldn’t have won his election in 1860 with proportional voting, but proportional voting insured the Nazis took control of the German government in the 1930s. Strict proportional voting also means voting strictly by party list and eliminates each local constituency having its own representative. This is in turns moves political control away from local people and tends to centralize control more at the top of various parties.
Published on Tuesday, March 25, 2008 by CommonDreams.org
Financial Meltdown: Time For a Holiday From Progressive Politics?
by Dean Baker
http://www.commondreams.org/archive/2008/03/25/7885/
Now that it has burst, some of the richest people in the country face the risk of a middle-class lifestyle - unless the government comes to the rescue.
Oh them poor little bastards, facing the risk of a middle-class lifestyle. There is a whole bunch of people in this country that wonders what it would be like to live a middle class life style. I think these so called rich people and a lot of people in the shrinking middle class should live a few years in poverty. Screw these people let them drown in their own greed.
Things in this country aren’t going to change until we have a complete meltdown. Progressives know this and are waiting in the shadows.
Besides look at it this way the wealth in this country right now (the US dollar) is really worthless and every day it becomes even more worthless. The truly wealthy in this country right now are those who don’t require much to live.
However [progressisves] feel or say on these topics doesn’t seem to have much affect on any of our elected and non elected leaders who are running this mess. We have watched this slow motion train wreck unfolding over the years. We continued to live’s the way we thought best and gave honest advice to our freinds and relatives. We voiced our political opinions to those who would listen. By the evidence it seems that those in power intended this destruction. Some of them unwittingly.
Whatever the case we are all in the same boat and will feel the effects regardless of culpability. I know I already do. Whatever happens to other people has an effect on you too.
Willo, you have summed up my feelings perfectly. I have talked to people for years about the impending financial crisis, and people looked at me as though I was a simpleton. I am feeling the pinch already, but I know that there are many, younger people who are going to suffer a lot more. There should have been more emphasis placed on personal responsibility, and I know at least one person who has taken out loans, complete with insurance, and they never intend to pay the money back.
The Capitalist dream, with it’s accent on private wealth and celebrity is falling apart, but I have a feeling that the rich elite will be comfortable for some time to come, because the system is based on lack of accountability by the people at the top.
You might want to check out this today in the Washington Post, an article about how the Clinton and Obama campaigns are accusing each of other being (gasp!) “liberals,” which is supposedly the same kiss of death that stopped such other alleged “liberals” as Dukakis and Kerry. Both campaigns think they have to tack toward the center on all issues lest the Republicans in November make that horrible label stick to whomever the Democrats nominate. http://www.washingtonpost.com/wp-dyn/content/article/2008/03/25/AR2008032503082.html?wpisrc=newsletter&wpisrc=newsletter&wpisrc=newsletter
Well, having done nothing effective in the class war waged against them for the last 40 years, the American people now have a choice - they can put Master’s chains onto themselves, or they can watch Master’s Plantation burn to the ground. Loving Master as we do and given the obedience training all slaves are given, America will kiss the whip, do the bail out and put the chains on themselves - and ask nothing in return. It’s what slaves do. Kiss the whip.
Pieces of 8.
As rebel farmer and poet point out: what an opportunity we have here! Butttttttttttt…WE have to CHANGE too! It’s not entirely true that THEY are GUILTY while WE are INNOCENT, is it? Look inside and see the truth: a big part of it is that many of us haven’t had the OPPORTUNITY to be as ‘greedy’ or ‘evil’ as ‘they’ are.
Even if society falls and we resurrect it; without self-knowledge, we are doomed to repeat the same or similar pattern. Just look at history; the evidence is as plain as a pimple on our nose. Again and again, the poor revolt against the rich, and even when they ‘win,’ they become the next ‘rich’ which are in turn revolted against… And THAT is the only cycle that matters. Why? Because, psychologically, the inner determines the outer, and the outer in turn either reinforces the negativity of the inner or awakens it to the positive; it all depends upon whether awareness and attention are operating or not. In the absence of inner awareness, we are the slave to practically everything we meet. Even if we set a goal and achieve it, we are are DRIVEN by that ambition, are we not? Where is the freedom in that, and how can we expect to be free outwardly, if we are unconsciously imprisoned? It simply cannot happen. All we will get is a temporary ILLUSION of freedom.
Therefore, we need an inner revolution. J. Krishnamurti pointed this out years ago. He said the whole world is in a severe crisis, and on the brink of catastrophe; confusion and conflict are increasing exponentially, while we slumber and blame outer events.
I certainly don’t feel one bit sorry for the pain and anguish the rich are experiencing. Rats that they are, let them drown. Let them experience to the fullest extent what they are inflicting on us. All those obscene ‘end of year’ bonuses should be returned and given to the workers - they deserve it more.
Mr Bramscher,
Through democratic government, we have:
Mimimum wage laws (in more civilized countries it is high enough to live on) - is this anti-worker?
Enironmental laws - is this anti-worker?
Antiracism laws - is this anti-worker?
Workplace safety laws - is this anti-worker?
Antitrust Laws - Is this anti-worker
Stock anssecurities fraud laws - is this anti worker?
Laws protecting the right to organize and collectively bargain for better wages - is this anti-worker?
Public, and publically-accountable utilities and transportation infractructirue - is this anti-worker?
Universal, free, public education -is this anti worker?
In the more civilized countries - universal, free healthcare - is this anti-worker?
In the more civilized (and at one time several US states) - free university education - is this anti-worker?
What’s your alternative?
I’ll tell them to their face; WE ARE BEING ROBBED!
I’m not silent! I ask them if they are happy about their choices.
The greedy suckers are the ones that “HATE AMERICA” because they are too in-love with themselves. For a while there they thought they were god.
Then reality set in and the truth comes out.
Get ready for more charicter assinations as the rich ask for bailouts. They know the corporate Media will back their claim it was the “greedy working class” who borrowed more than they could afford.
Bruce Marks of NACA - Neighborhood Assistance Corporation of America is demonstrating today on Wall Street at JP Morgan in New York to protest the bailout. More info at the Democracy Now website link below.
P.S. their non-profit offers homeowners 5% fixed rate mortgages.
http://www.democracynow.org/2008/3/26/homeowners_plan_demonstration_at_nyc_offices
Oh BIOYA! This is all part of the plan to strip America of it’s wealth so that power becomes the driving force and ordinary folks are reduced to peonage. What does it look, taste, feel and smell like.
I think we’ll figure out how to turn all that paper into meaningless mush and learn to rely on each other’s strength. The source of all true wealth is labor.
USAn-I often agree to some extent with Paul Bramscher, but I, like you, find his strong streak of libertarianism very troubling. Advocating small government merely gives the rich and corporate interests their dream situation. While it’s quite right that the rich often buy our government and own it anyway, at least we have a chance and as you say, there have been a lot of small victories.
chessgames56 it would be great if we could all just get enlighened. There’s an insight in what Lord Trigo said way up there. Only by applying progressive solutions can progressive attitudes spread. I believe conservation should be - for the present human predicament - the first priority of progressives. Next should be looking at the mechanisms of wealth transfer in our society. Industrialization and urbanization have obliterated most of the securities of extended family. As individuals in corporate aging institutions our meager middle-class retirements are siphoned away, and our children must begin below where we began in an increasingly predatory economic scheme. Not many below the top 30% will have much to leave their children.
Dream of the Stern Bear
A bear of sorts was
resting on it’s fleshy parts
asleep on yonder stern
while a tide of money is for nothing
came washing up their tidy loss
Some didn’t have to ‘eat their cake’
for being on the make is good for heavens sake!
A short term gain merely a bit of long term pain
So please indulge your self
be a serf for surfeit
so you don’t forfeit
the heady dream of well to do
Do to others like they did to you
don’t forget to rip off labor too
Lever every step along the way
drown them so they won’t have any say
and give thanks to TINA
since there is no other way
AndyUK March 26th, 2008 9:21 am
“Willo, you have summed up my feelings perfectly. I have talked to people for years about the impending financial crisis, and people looked at me as though I was a simpleton.”
AndyUk:
This simpleton can relate! But as we know, it was a just a matter of time before their “Security Investment Vehicles” and manipulation of prescious metals and other markets would be their demise. Their greedy fingerprints permeate the unending fraud which has taken place in this and other countries around the globe; and which will inevitably destroy pension plans and other types of investments everywhere in their wake-of destruction.
As John O’Donohue has written in his book, “Anam Cara”: “To the greedy eye, everything can be possessed……It desroys the natural innocence of desire, dismantles its horizons, and replaces them with a driven and atrophied possessiveness……This greed is now poisoning the earth and impoverishing its people….. HAVING has become the sinister enemy of BEING.”
USAn,
I believe in progressive taxation, progressive regulation, and progressive governance. The poorest up to the middle-class should pay virtually no taxes and enjoy the most freedom. The wealthiest should be taxed and regulated the most — since their capability to cause widespread harm (economic or otherwise) is greatest.
FINE post -the author is right,ocurse-the bank of england bailed nothern rock-at a “penal rate of interest”-reflecting the culpability of the banks greedy-assed bod.in this country the government has created a hedge fund at taxpayers’ expense to save a corrupt banking system-with no precondition that any meaningful steps be taken to provide relief for the actual families facing ruin in the aftermath of this “crisis”,meltdown”,”scam” or whatever name suits you.mr.baker did,however,neglect to mention those obscene year end bonuses the major brokerage houses paid their high end employees in 2006,when it was obvious that market indicators were tolling the day of reckoning on this latest era of free-market freebooting.notheastern univ,jack clark,doug henwood,and bob herbert,to name a few,noted that the jig was up,but the bailout was written into the scam itself.abe lincoln and jeremiah wright might have noted that”they was ridin’ dirty ,so that this government of the hamptons,by the hamptons,and for the hamptons shall not perish from the earth.” the scam is dead,long live the scam.