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AND so on the 29th day of his presidency, Barack Obama signed the stimulus bill. But the earth did not move. The Dow Jones fell almost 300 points. G.M. and Chrysler together asked taxpayers for another $21.6 billion and announced another 50,000 layoffs. The latest alleged mini-Madoff, R. Allen Stanford, was accused of an $8 billion fraud with 50,000 victims.
"I don't want to pretend that today marks the end of our economic problems," the president said on Tuesday at the signing ceremony in Denver. He added, hopefully: "But today does mark the beginning of the end."
Does it?
No one knows, of course, but a bigger question may be whether we really want to know. One of the most persistent cultural tics of the early 21st century is Americans' reluctance to absorb, let alone prepare for, bad news. We are plugged into more information sources than anyone could have imagined even 15 years ago. The cruel ambush of 9/11 supposedly "changed everything," slapping us back to reality. Yet we are constantly shocked, shocked by the foreseeable. Obama's toughest political problem may not be coping with the increasingly marginalized G.O.P. but with an America-in-denial that must hear warning signs repeatedly, for months and sometimes years, before believing the wolf is actually at the door.
This phenomenon could be seen in two TV exposés of the mortgage crisis broadcast on the eve of the stimulus signing. On Sunday, "60 Minutes" focused on the tawdry lending practices of Golden West Financial, built by Herb and Marion Sandler. On Monday, the CNBC documentary "House of Cards" served up another tranche of the subprime culture, typified by the now defunct company Quick Loan Funding and its huckster-in-chief, Daniel Sadek. Both reports were superbly done, but both could have been reruns.
The Sandlers and Sadek have been recurrently whipped at length in print and on television, as far back as 2007 in Sadek's case (by Bloomberg); the Sandlers were even vilified in a "Saturday Night Live" sketch last October. But still the larger message may not be entirely sinking in. "House of Cards" was littered with come-on commercials, including one hawking "risk-free" foreign-currency trading - yet another variation on Quick Loan Funding, promising credulous Americans something for nothing.
This cultural pattern of denial is hardly limited to the economic crisis. Anyone with eyes could have seen that Sammy Sosa and Mark McGwire resembled Macy's parade balloons in their 1998 home-run derby, but it took years for many fans (not to mention Major League Baseball) to accept the sorry truth. It wasn't until the Joseph Wilson-Valerie Plame saga caught fire in summer 2003, months after "Mission Accomplished," that we began to confront the reality that we had gone to war in Iraq over imaginary W.M.D. Weapons inspectors and even some journalists (especially at Knight-Ridder newspapers) had been telling us exactly that for almost a year.
The writer Mark Danner, who early on chronicled the Bush administration's practice of torture for The New York Review of Books, reminded me last week that that story first began to emerge in December 2002. That's when The Washington Post reported on the "stress and duress" tactics used to interrogate terrorism suspects. But while similar reports followed, the notion that torture was official American policy didn't start to sink in until after the Abu Ghraib photos emerged in April 2004. Torture wasn't routinely called "torture" in Beltway debate until late 2005, when John McCain began to press for legislation banning it.
Steroids, torture, lies from the White House, civil war in Iraq, even recession: that's just a partial glossary of the bad-news vocabulary that some of the country, sometimes in tandem with a passive news media, resisted for months on end before bowing to the obvious or the inevitable. "The needle," as Danner put it, gets "stuck in the groove."
For all the gloomy headlines we've absorbed since the fall, we still can't quite accept the full depth of our economic abyss either. Nicole Gelinas, a financial analyst at the conservative Manhattan Institute, sees denial at play over a wide swath of America, reaching from the loftiest economic strata of Wall Street to the foreclosure-decimated boom developments in the Sun Belt.
When we spoke last week, she talked of would-be bankers who, upon graduating, plan "to travel in Asia and teach English for a year" and then pick up where they left off. Such graduates are dreaming, Gelinas says, because the over-the-top Wall Street money culture of the credit bubble isn't coming back for a very long time, if ever. As she observes, it took decades after the Great Depression - until the 1980s - for Wall Street to fully reclaim its old swagger. Not until then was there "a new group of people without massive psychological scarring" from the 1929 crash.
In states like Nevada, Florida and Arizona, Gelinas sees "huge neighborhoods that will become ghettos" as half their populations lose or abandon their homes, with an attendant collapse of public services and social order. "It will be like after Katrina," she says, "but it's no longer just the Lower Ninth Ward's problem." Writing in the current issue of The Atlantic, the urban theorist Richard Florida suggests we could be seeing "the end of a whole way of life." The link between the American dream and home ownership, fostered by years of bipartisan public policy, may be irreparably broken.
Pity our new president. As he rolls out one recovery package after another, he can't know for sure what will work. If he tells the whole story of what might be around the corner, he risks instilling fear itself among Americans who are already panicked. (Half the country, according to a new Associated Press poll, now fears unemployment.) But if the president airbrushes the picture too much, the country could be as angry about ensuing calamities as it was when the Bush administration's repeated assertion of "success" in Iraq proved a sham. Managing America's future shock is a task that will call for every last ounce of Obama's brains, temperament and oratorical gifts.
The difficulty of walking this fine line can be seen in the drama surrounding the latest forbidden word to creep around the shadows for months before finally leaping into the open: nationalization. Until he started hedging a little last weekend, the president has pointedly said that nationalizing banks, while fine for Sweden, wouldn't do in America, with its "different" (i.e., non-socialistic) culture and traditions. But the word nationalization, once mostly whispered by liberal economists, is now even being tossed around by Lindsey Graham and Alan Greenspan. It's a clear indication that no one has a better idea.
The Obama White House may come up with euphemisms for nationalization (temporary receivership, anyone?). But whatever it's called, what will it mean? The reason why the White House has been punting on the new installment of the bank rescue is not that the much-maligned Treasury secretary, Timothy Geithner, is incapable of getting his act together. What's slowing the works are the huge political questions at stake, many of them with consequences potentially as toxic as the banks' assets.
Will Obama concede aloud that some of our "too big to fail" banks have, in essence, already failed? If so, what will he do about it? What will it cost? And, most important, who will pay? No one knows the sum of the American banks' losses, but the economist Nouriel Roubini, who has gotten much right about this crash, puts it at $1.8 trillion. That doesn't count any defaults still to come on what had been considered "good" mortgages and myriad other debt, whether from auto loans or credit cards.
Americans are right to wonder why there has been scant punishment for the management and boards of bailed-out banks that recklessly sliced and diced all this debt into worthless gambling chips. They are also right to wonder why there is still little transparency in how TARP funds have been spent by these teetering institutions. If a CNBC commentator can stir up a populist dust storm by ranting that Obama's new mortgage program (priced at $75 billion to $275 billion) is "promoting bad behavior," imagine the tornado that would greet an even bigger bank bailout on top of the $700 billion already down the TARP drain.
Nationalization would likely mean wiping out the big banks' managements and shareholders. It's because that reckoning has mostly been avoided so far that those bankers may be the Americans in the greatest denial of all. Wall Street's last barons still seem to believe that they can hang on to their old culture by scuttling corporate jets, rejecting bonuses or sounding contrite in public. Ask the former Citigroup wise man Robert Rubin how that strategy worked out.
We are now waiting to learn if Obama's economic team, much of it drawn from the Wonderful World of Citi and Goldman Sachs, will have the will to make its own former cohort face the truth. But at a certain point, as in every other turn of our culture of denial, outside events will force the recognition of harsh realities. Nationalization, unmentionable only yesterday, has entered common usage not least because an even scarier word - depression - is next on America's list to avoid.
44 Comments so far
Show AllI sincerely hope that this 'stimulus package' will provide loans, grants, tax breaks or any other kind of financial aid to folks who are interested in bringing any kind of manufacturing back to America. It seems logical that reestablishing a productive manufacturing base would be vital to the long term recovery of the economy. In China many factories are built by the government and are state of the art. But, here in America? The multimillion bonus' received by the thieves on Wall Street could have gone to financing new business', proving that the 'trickle down affect' really works. I would just love to even find something to buy that is made in America. Free Trade? How about home made and home grown? As Striesand sings, "We'll get by with a little help from our friends.."
"G.M. and Chrysler together asked taxpayers for another $21.6 billion and announced another 50,000 layoffs."
Is that how capitalism is supposed to work? The taxpayers, not the stockholders who are the actual owners, are supposed to cough up 20 billion dollars to the owners who then lay off their workforce? So where does the money go? To build more state of the art auto assembly plants in Brazil (go google it) to provide jobs for Brazilians?
For much less than that amount all of the common stock could be purchased. All of the common stock shares need to be called in by the government and held by the treasury. And if GM and Chrysler ever become profitable again, all the profit needs to go into the treasury until the 20 billion is repaid WITH INTEREST which must be an amount larger than the interest we taxpayers will be paying on that 20 billion which is of course BORROWED. Why are we BORROWING money to bail out failed corporations, not just the car companies but also the banks?
I am ENRAGED. And I'm not the only one. Are the "financial elites" so disconnected from reality that they can't see the mounting ANGER out here in the hinterlands? Or do they just not care?
d.k.shaw
The tree of liberty must be refreshed from time to time with the blood of
patriots and tyrants. ....Thomas Jefferson
And do not forget, as I mentioned on a different article, that these are the same companies that conspired to kill the electric car.
They do not care because they don't have to. Obama is controlled by the same financial interests that caused the crisis in the first place. A careful examination of his Homeowner Affordability and Stability Plan (HASP) reveals the following: HASP will in most cases depend on the voluntary participation of private banks. In other words, there will be almost no obligations by the banks to actually lend the money to homeowners. If you know anyone who's tried to a get a loan from one of the bailed out banks lately, it's easy to see what the new plan will entail. Innumerable hurdles designed to make it very difficult for homeowners to qualify will be erected by the banks while they take taxpayer money to build up their business in other ways. In particular, the bill says that anyone who is deemed able to "afford" their present rates will not qualify. If a mortgage company decides that refinancing a loan will cost them more than sending the house into foreclosure, moreover, they will be free to deny refinancing.
Instead of suffering for their bad judgement, the banks will not be required to write down the values of their vastly overpriced loans, much less relinquish control over the derivative securities (CDOs, SIVs, and all the rest of it). Instead of writing down the bad debt, as has been done in most previous crises, the banks will retain the unrealistic current value of their loans, with the difference paid for by the very taxpayers who are being thrown out of their homes.
In other words, the bill is mostly window-dressing to cover another mass transfer of funds to the banks. The financial elite that Obama represents brook no limit, however mild, to its power and prerogatives. It would appear that having bought into their own "free market" propaganda, they now find themselves staring into the void. They know that the old game is over and they are attempting to build up a cushion at taxpayer expense so that they can ride out the storm.
Why don't they have to care? Because the opinion of the American people counts for nothing in Washington and Wall Street. In a thousand ways, Americans have been socialized into accepting a certain image of themselves that makes rebellion against the system almost impossible. This has allowed the growth of a modern aristocracy which has now consolidated its control over every aspect of official political, cultural and economic life.
"'House of Cards' was littered with come-on commercials, including one hawking 'risk-free' foreign-currency trading - yet another variation on Quick Loan Funding, promising credulous Americans something for nothing."
The same sort of crap appears on the website of that paragon of progressive journalism, "The Nation."
Go figure.
drholmquist February 22nd, 2009 3:43 pm, it's a shame that left-wing publications operate on such a shoestring budget that they are forced to take such ads, but that's the reality. They don't have Sugar Daddies like Rupert Murdoch willing to take massive losses -- such as Rupert's perennial money-pits the New York Post (est. $50 million per year) and Weekly Standard ($1 million annually) -- to influence the country.
Of course, now that Murdoch has lost more than $6 billion in the last quarter, and now that he's married to a more liberal wife than the strict conservative Catholic he was previously hitched to, word is he's trying to sell the Enquirer-wannabe Post and the Weekly Strumpet. According to his biographer Michael Wolffe, Rupe wants to buy -- hold on to your hat -- the New York Times, and he'll probably succeed. (He'll make Punch Sulzberger an 'offer he can't refuse.') I wonder if he'll keep Frank Rich and Dick Cavett around? I wonder if he'll turn it into a tabloid? "The New York Times -- All the news that will kick your sorry butt and the daily Lotto numbers!"
Murdoch Posts More Than $6 Billion in Losses
Veronica Villafañe, MediaMoves, Feb. 8, 2009.
http://mediamoves.blogspot.com/2009/02/news-corp-posts-more-than-6-billion-in.html
Tuesdays with Rupert
Michael Wolff, Vanity Fair, Oct. 2008.
http://www.vanityfair.com/culture/features/2008/10/wolff200810
The Man Who Owns the News
Michael Wolff, Random House book
http://www.randomhouse.com/catalog/display.pperl/9780385526128.html
In Mexico, circa 1996, the banks were bailed out. This was done with the money borrowed (and now fully paid back) from the Clinton Administration.
The debt of course became a national debt, passed on to the general population.
A few years later, with the banks now no longer in the red, these banks were sold to Spanish enterprises, and the original holders got ALL the money from the sale proceeds.
Not one peso taken back from the sale proceeds to pay off the debt passed on the the population.
So the banks were only bailed out to be able to re-sell at full value, and the population got stuck with the loan to bail them out.
The original owners walked away with the full amount of the sale, and the people got stuck with the bill.
Now does this ring any similarity to current events ?
Thank you _ I G N A C I O _, and welcome to CD.
Yes, too often we're doomed to repeat our hidden history.
¿ Can we really blame the American public at large for being so numbed out with FEAR and nearly entirely enthralled with Brittany's latest "adventure" ?
Gov't ( taxpayer ) funded PSYOPS and propaganda are illegal ( this language is in every bill written since the 40s ) for good reason, but there are no enforcement provisions, nor any popularized reporting of the actual insidious events.
The myth of the public's airwaves is as accurate as the liberal bent of the media.
Just how liberal is the CIA manipulation ( manufactured consensus ) of the jacka$$ $ewer main $tream media and their a$$ociated collections of corporaping goons ?
My question about nationalization is: does the government have close to enough people who would know how to run these nationalized banks or new banks that were set up to replace them? Or would existing management be kept in place, or what? Is anyone planning how to do nationalization successfully?
Under nationalization, as the Swedes and the Brits have recently been doing, the government (i.e. "the people") buys up a percentage of the stock (80% for the Brits, I don't know the Swedes but probably the same) so they have a controlling interest without having to take more currently worthless shares than necessary. Then, with majority ownership, a government entity (Exchequer or Treasury) puts in qualified people, specialists in real banking and finance, to run the bank (for a straight salary)with the goal of bringing it back to solvency and stability.
That (solvency and stability)accomplished, the government floats the shares they bought on the Stock Exchange as an Initial Public Offering at the now greater value. As the bank is now more than solvent, people buy shares of that 80% stock held by the government and the bank is put back into non-government ownership. The government thus doesn't saddle itself (i.e. the People) with debt arising out of handing over masses of bailout money as a straight gift to the clowns who are already failures several times over.
Rainborowe
Why should people buy shares of that 80% stock from the government when public money was used to buy the banks in the first place?
Instead of nationalizing and giving politician clowns our shares (pol clowns who didn't represent the people but Wall Street), why not give these shares directly to the people instead of to them?
In what sense was "public money used to buy the banks in the first place?"
Rainborowe
What I mean is, what is your "first place?"
Rainborowe
Leave management as is except move the pres. or ceo to vp. Next take someone such as my old banker who it's true is probably heading for prison cause he stole a couple hundred thousand, but really that's just chickenfeed compared to the legal theft that has occured. So anyway that nearly makes him a saint. Are you listening Mr Pope? But, I digress. There's a few sharp guys around who could handle it.
Frank Rich is an excellent thinker and commentator.
Let's not forget, FDR himself attempted many approaches to help the American people out, not always scoring. But he tried and saw government as an instrument to help the American people. A sane and normal position, wouldn'y you agree?
Perhaps out of greed, going back more than a century, the American right sees government as "the problem." Why? Because this relative minority does not want to pay taxes or to be regulated. And honing and refining their arguments over the decades they have been most successful in establing a uniquely American mythology.
TV is the opiate of the American people! Is the web catching up? And what about religion? And the so-called "American dream," which promotes an unrealistic individualism and sense of self-reliance? And numerous phantom enemies? We have had them for decades, too. Including red scares, immigrant scares, fear of minorities (re black men and white women for example) and on and on.
Why, shucks, somebody could write a book on all this.....
This excellent article is about denial, but it does not even mention the most important issue of our time: climate change. It seems to me that the economic melt down is of far less consequence than the potential global environmental catastrophe that awaits us should we continue to deny it.
I point again to my earlier comment about Ben Stein and I both agreeing we need a carbon tax. This would both help fight climate change, but also would help with America's deteriorating financial situation i.e., by reducing fuel consumption and thereby importing less fuel.
Good point. People ask, what direction should this changed economy take next? To me its seems obvious. If we don't spend on energy infrastructure needed to maintain our economy and yet wean us from fossil fuels, we may face an economic calamity in our future with an environmental catastrophe on top of it. Such a disaster would be very difficult to recover from. Time for some forward thinking.
I'll put it out again.Tony
The MUSTHAVES and getting Economically Stimulated
I was wondering to myself how I could get with the program and get myself economically stimulated in these trying times for the MUSTHAVES there in the biggest privy in the world. The one with the name of Washington D.C. there are others and the one in New York City is right there. Of course there are others but it would take to much of my time and patience to list them all
In all these privies the MUSTHAVES take care of their biological needs and maintain a superb style of living by shitting on all the Don’thavesomuches which are more numerous and lack the little things in life that would put them at least closer to the MUSTHAVES and those thing are big greed, and of course with greed there are always lobbyists and bribes.
Now the MUSTHAVES were going merrily along stealing, bribing and lobbying for more when there was a more greedy entity out there and they had to go begging the Donthavesomuches for the means to keep on being the greedy cretins they are. Since this privy is like a big public house and has differing parts and has more than one loo and MUSTHAVES change names but do maintain the status quo they think it is the duty of the Donthavesomuches to keep the privy clean by taking all the shit on themselves so that the MUSTHAVES don’t have to wallow in all the shit and we are talking muncho.
This was bad enough but now the MUSTHAVES in other privies and the same one as before want to spread the shit a ton more by asking the donthavesomuches to carry more of the shit left by the MUSTHAVES lying, cheating and bribing thru the banks using bank usury, auto license fees by other MUSTHAVES, A mileage tax and other methods that have not been brought forward yet and since the Donthavesomuches are all so full of shit anyway they think it is only fair that they take care of this also
If the is what getting Economically Stimulated is then I think it is time for me to go into rehab. Tony 2/20/09
If you get the idea that this word is expressive and on my to write list…You are right.
NO to public bailouts in return for politician's campaign bribes.
NO to nationalization by politicians to fix banks with public money and give them back to Wall Street.
YES to public buyouts and equal shares of stock to all adult American citizens.
"The problem is the culture of American indebtedness and the suicidal need to maintain the Empire in a nation which no longer makes anything, believes that King Kong sized deficits don't count and lives in an environment where the temperature that melts plastic is now permanent."
I do not claim to be an expert on the subject, but the most convincing macro explanations I have read recently amounted to the following:
Continued US economic growth required continued consumer spending at a certain level, but since the middle class had a smaller and smaller share of the national wealth (more and more going to the top, partly because of manufacturing losses, partly because of tax policies, partly because of glorification of the culture of greed, and other factors), the middle class had to borrow more and more to keep up that level of spending, and that debt created a toxic mess when it became tangled up with the housing bubble. Then add to that the insane demands of the MIC, including those related to empire, oil, and Israel, and add a dose of unregulated creative financial engineering on Wall Street, and you have a perfect storm.
Now where has all that talk gone about turning a crisis into an opportunity?
Well said. The other aspect of our mess is our inability to export our way out of trouble, not only because of our reduced manufacturing base, but also because hucksters and rubes are a world-wide phenomenon. They bought Wall Street's pie-in-the-sky bs and now they can't afford to buy much of our stuff.
"I do not claim to be an expert on the subject"
Is anyone?
Economics is a subject profoundly conducive to cliche, resonant with boredom. On few topics is an American audience so practiced in turning off its ears and minds. And none can say that the response is ill advised.
John Kenneth Galbraith
The only function of economic forecasting is to make astrology look respectable.
John Kenneth Galbraith
In economics, hope and faith coexist with great scientific pretension and also a deep desire for respectability.
John Kenneth Galbraith
Economics is extremely useful as a form of employment for economists.
John Kenneth Galbraith
Sioux Rose
EZE: Was that 2nd quote really necessary?
S I O U X _ R O S E
I interpret that as meaning that ASTROLOGY is more scientifically accurate than mere ECONOMIC prognostication ( usually used as a subtly hidden technique of population manipulation, and control -- witness unemployment numbers ).
How much more, is the veiled insult from Gailbrieth ( sp ? ).
Based on millineaum of comparison, I'll go with ASTROLOGY any day or night.
Is it not true that the true power ( and accuracy ) of any knowledge is in the consciousness of the participants -- the words themselves have little meaning w/o the human beings interacting and learning ?
Namaste
And how about this one?
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."
John Kenneth Galbraith
And this:
"The process by which money is created is so simple that the mind is repelled."
John Kenneth Galbraith
You can tell when Obamna is lying - his lips move...
That was clever!
Just as clever as it was when I heard it about Nixon, Reagan and both Bushes. The fact is, you can't point to anything that Obama has openly lied about.
Fear not, I was being sarcastic.
WereInThisTogether February 24th, 2009 12:00 am: "Fear not, I was being sarcastic."
Sorry, WITT, I'm not used to that kind of sarcasm from some of the ardent Obamaphobes here. (Not to say that you are one, of course.)
Perhaps the reason nationalization is the only thing Greenspan et al can think of is because we have proof right here, right now that Capitalism has Failed. Yes, the Street Wall has come crashing down just like the Berlin Wall where Reagan and innumerable since have declared Marxism dead. And it looks like nationalizing private institutions that are "too big to fail" is the correct response, since "too big to fail" loosely translates to "Public".
Ironically, the Capitalists have been unwittingly proving Karl Marx was right. He said that you cannot embrace communism without first experiencing the excesses of capitalism. The USSR proved part of it - they never experienced those excesses so they weren't ready for Communism. Wall Street has proved the rest - that Markets are free ONLY to those who own them; for the rest of us, they're rigged, even if we don't directly participate.
Americans are right to wonder why there has been scant punishment for the management and boards of bailed-out banks that recklessly sliced and diced all this debt into worthless gambling chips.
Most Americans have absolutely no idea how all this came about and are cocksure that the cavalry will eventually ride to the rescue. This ignorance and childish, baseless hope is temporarily Obama's ally as he and the Wall Street vampires he has around him rummage around, trying to come across something that will "work". How many bailouts can they throw against the wall, hoping some will stick? The problem is the culture of American indebtedness and the suicidal need to maintain the Empire in a nation which no longer makes anything, believes that King Kong sized deficits don't count and lives in an environment where the temperature that melts plastic is now permanent.
Another good article in today's Times is a business essay by the ever entertaining Ben Stein. He speaks of the need to implement either cap and trade carbon credits or simply tax them. After pointing out that cap and trade would likely see only tiny monetary sums in recessionary times and allowing another area for traders to suck money out of the system, Ben firmly comes down on the side of keeping things simple with straight carbon taxes. Bravo to him. And I say again, "End income taxes on the first $50k, replace the lost income with carbon taxes."
Yea, another entertaining scheme, like single-rate income tax and the Forbes sales tax which would end up forcing low-income people to shoulder a disportionate burden of taxes. Look, Ben Stein- the great spokesperson for dry-eye cures- is a total crackpot. You'd think that someone who spends just a modicuum of effort to follow the articles posted on commondreams would know that!
Ben Stein is a real mixed bag of ideas. He's not an ideology robot. I think most CDers understand that we need a carbon tax even though we 'I move therefore I am' car-loving Americans dislike the idea. If we shifted away from income tax on lower income people this would be relatively tax neutral for them.
Well, I don't think we really want Wall Street to "regain its old swagger". The expectation and hope that it will or at least should is what is, in the face of reality, driving the collapse of share prices which are now going as ridiculously low as they were ridiculously high before the collapse of the housing bubble. This is not necessarily a disaster, at least for people with sound, long-term investments who can hold on for a few years until prices stabilize at levels that actually reflect the productivity and real (rather than manipulated) profits of the companies in which they are invested.
I know its the "news hour" habit to report the daily ups and downs of the Wall Street market. They try to make out that these are an indication of the over-all health of the economy or an indicator of future prospects. In fact, these swings are just indicators of the corrupt psychology of traders operating pretty much in random and irrational ways. The assignment of causes for this or that rise or fall is completely arbitrary. We need to take a much more sensible approach to viewing the crisis.
Of course there is a crisis. But all is not completely lost yet. THe link between the American dream and home ownership is not irreparably lost. In fact the collapse of housing prices represents an opportunity for the next generation- much more affordable housing and, presumably, new regulations which will prevent many of the scams and frauds that got us into this mess in the first place.
Social Security is solvent. Many people will have benefits available when and if they become unemployed. Money is being pumped into the States to support Medicaid. Most bank deposits are insured by the Government. These are programs that were not in place when the last big crash occurred in 1929.
We face great challenges in this country, especially in the energy sector. In many respects the present downturn represents a great opportunity to redirect our efforts and attenton to potentially far more sustainable and profitable enterprises than existed previous to the crash. Alot of dead wood is being cleared away. The important thing is to stop crying about it or trying so hard to reconstitute everything the way it was before ( e.g. unregulated markets, "trickle-down" tax-cuts). We still have, as John Maynard Keynes might have put it, the great natural resiliency and animal spirits of the people.
Like someone recovering from a major operation: time comes to get out of bed and start marching again, however painful it seems like its going to be. Hopefully we will be imbued with greater compassion and offer a more sturdy hand to those whom time and chance have left behind.
Not only is nationalization a proven method (Sweden); failure to nationalize (Japan) has predictable results. It is not a question of if, only when - the sooner the better.
Yes, and it should "mean wiping out the big banks' managements and shareholders." Tens of millions of Americans have seen their jobs and assets wiped out by this group of greedy leaches.
These bankers and their protectors will be just fine. They can always use the skills they have displayed to get to these positions to recover; after all, they were skilled when picking their parents, skilled when picking the schools they attended and skilled in choosing the right contacts and networks. They will be fine. They may have to depend on their trust funds or even their Swiss bank accounts; but, they will be fine.
The conversation should not stop with the "too big to fail" banks and financial institutions; it should include the Federal Reserve system. While the banks should be returned to private ownership as quickly as possible, the Federal Reserve must not.
"We must regulate undue accumulation of wealth and power into the hands of a few...for it will be the death of liberty….the growing power of corporations shall one day overcome our self-government"….Thomas Jefferson
They hate us because of our freedom! Right, and I have this bridge....
Well, the collapse of these guys Swiss Accounts is something on the order of about half of the problem here. If only the Brits, French, The Germans and Swiss had steered clear of credit default swaps and other dubious instruments of investment like the Canadians the world economy would be in far better shape. At the very least it would have prevented American investors from going as far into the shakey territory as they did.
And, of course, its not the corporations per se which has been the problem but particular types of corporate management and the type of rules and regulations they were allowed to operate under, even, for instance, the : "limited liabilities" of Law and Credit Rating partnerships which allowed liabilities for malfeasance to fall on the heads of responsible individuals only, not the firms altogether thus weaking the self-goveranace and in-house oversight of these institutions.
Up until recently, I jokingly would tell friends and family it might come down to how much yard u have to plow up to plant a REAL veggie patch to make ends meet. With the "private sector" collapsing around us daily that might not be a bad idea soon. Those lucky enough to have a public sector job shouldn't get to comfy quite yet though. If the private sector worsens, as many think it's likely too and soon , many public sector jobs could be hanging in the balance as well. The two sectors are tied together and I got news for you folks it's not the public sector that's pulling the cart here. If you think so, go talk to some of the former officials of the late great state of East Germany or the Soviet Union.
You're correct. It is the private banking sector that is pulling the cart here.
Into the abyss of a global depression.
Of course the whole point of the bailout and stimulus is to hook up the economy to the publc sector with far stronger traces than existed before, in the face of a private sector which is collapsing for a variety of reasons not the least of which has been extremely poor management and just downright fraud. Despite all the ideological horseswallow about 'the least government being the best goverment', 'taxes being nothing but theft', bureacratic inefficiency and expensive privileges ( like stable pensions, good health insurance, family leave and other important workplace benefits)- when push comes to shove the people naturally turn to their government for real help.
That's because in 9 cases out of 10 the government does a better and more compassionate job. For example, in health insurance, th administration represents 25% of the cost in investor-owned companies, 10% in the non-profits but 3% in Medicare. Citations for deficiencies in care in private, for-profit nursing homes are 56% greater, in non-profits 36% greater than in public nursing homes.
Vast sums have been allocated in the stimulus bill for developing electronic medical records. Yet the evidence suggests that they "have been successfully adopted only within institutions or organizations where physicians practice together under unified management, such as large group practices of the VA medical system. It is unlikely that this kind of clinical advance could be adopted (and paid for) by the large numbers of unorganized independent practicioners who now provide most of the medical care in our current system."(A Second Opinion; Rescuing America's Health Care; A Plan for Universal Coverage Serving Patients Over Profit. by Arnold S. Relman, M.D. The Century Foundation 2007)
In fact, even has far as what little spending is proping up our consumer dependant economy now, a large part of it is coming from people with jobs in the public sector. Cutting taxes and reducing public sector employment would be exactly the WRONG thing to do at this point.
"I don't want to pretend that today marks the end of our economic problems," the president said on Tuesday at the signing ceremony in Denver. He added, hopefully: "But today does mark the beginning of the end."
Does it?
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No. Everything that caused our latest set of economic problems is still in place.