Who Will Rescue Us as Economy Remains in Free Fall?

"In 1930, right before the depression hit John Maynard Keynes wrote,
'The world has been slow to realize that we are living this year in the
shadow of one of the greatest economic catastrophes of modern history.'"

- Economist James Galbraith, Congressional Testimony (Monthly Review)

Pilot Chesley 'Sully' Sullenberger has been given his own Facebook
page, which may be the equivalent these days to being inducted in some
heroes hall of fame. He became the rescuer who knew where he was, saw
where he was going, and touched his huge plane down into what he
calculated correctly would be a safe landing on the Hudson River.

Will President Obama be able to rescue us from the ongoing economic
collapse that has put the country and his plans at risk? Is he flying
blind or does he know how to achieve a safe landing, even in the
absence of flight controllers and people who know what is going on. Is
he going far enough?

Does anyone even know how bad the economy is, or how much worse it
will get? Can anyone see the "bottom" the way Sully saw the water
rushing up at him in the cockpit of his distressed aircraft? He handled
his crash; can we handle ours?

On Friday, after a crisis that's been going in full panic mode since
August 2007, the people who are supposedly in the know don't "seem" to
be. This AP report from late last week made that clear:

"WASHINGTON - The economy's downhill slide at the end of
last year was likely much steeper than the government initially thought
and it is probably doing just as poorly now - if not worse - as a
relentless slew of negative forces feed on each other, pushing the
country deeper into recession."

Reread the sentence and you can see, as a famous Hollywood
screenwriter wrote years ago, "Nobody knows nothing." The operative
phrases are "likely much steeper than the government initially thought"
and "it is probably doing just as poorly now." What? Duh?

The self-styled experts had what they call a "revision" of the
numbers. At first they thought the economy only dropped or "contracted"
by 3%, but when they looked again, it had more than doubled to 6.2%.
Oops! These new fourth-quarter figures showed the economy shrinking at
the fastest rate in a quarter century, far worse than expected.

There is a reason economics is called "the dismal science," although
the science part of all this is very shaky and may have to be separated
from the "dismal" part. There were economists like Nouriel Roubini
forecasting these trends, but he was marginalized by agencies that
thought they were so much smarter than the man they called "Dr. Doom."

Someone needs to take a deep breath and figure out what all of
economic stimulus efforts are stimulating, General Motors and many
banks have received and lost billions. Insurance companies are lining
up for more moolah. Fannie Mae needs another $15 billion.

It seems endless, and we are not even touching the surface of the
real economic time bombs on the horizon from credit default swaps,
derivatives and credit cards. Nomi Prins who worked as an analyst
for Bear Stearns and a managing partner for Goldman Sachs says the
official math is totally fuzzy:

"The media, like Washington hasn't a clue as to the way
in which the system leveraged itself. It talks about the home loans. It
talks about the homeowners. It talks about asset securities and
packaging and slicing and dicing as if it really understands what
happened with these securities. And it really doesn't talk about the
10, 20, 30 percent or whatever amount of leverage or borrowing that was
done on the back of them.

"And the fact that even the treasury, the Oval Office, no one in
Congress has actually been able to present an accurate description or
evaluation of the loss of the value these securities used to be, the
borrowing that was done on top of them and the way this nothing set of
loans - remember there was only 1 1/2 trillion dollars worth of sub loans
- subprime loans created - became $14 trillion worth of asset backs and
140 minimum trillion dollars worth of just stuff.

"And there is no way to quantify that because they're not asking
questions of the banks that created this stuff. They're not saying 'you
know what? Give us an accurate picture, every single one of you.' Which
is most of the banks in the country. Certainly ones participated more
than others and throughout the world. 'Tell us what you own. Tell us
what you borrow. Tell us what your loss is. Give us exact numbers.
Don't tell us you don't know how to evaluate it.'"

Political Scientist Ben Barber amplifies:

"There is somewhere between 50 and $600 trillion, nobody
knows how much, of that paper around. But that's because nobody even
knows what the paper is. Here's what happens. There are three defaults
on mortgages. The bank that holds those sells those at 10 cents on the
dollar to a second bank. That bank puts those together with three other
defaults and three other defaults and makes a second package and sells
it to a third Bank. The third Bank sells 6 of these things from 10
different - from five different banks to a hedge fund. The hedge fund
repackages them, bundles them and sells them to some investor who has
no idea what he has. And now we have a world of bad debt and no one can
even tell you what it's - you know, what it's worth."

How did this happen? Was anyone paying attention? Mo Sacirbey, a
former investment banker and Vice President at Standard and Poors, says
behind all of this is that the financial system itself changed with
more and more people making money from money, not investing in
companies that make things. He says the system became predatory and
markets and prices were manipulated:

"I think we had a transition from what truly was a
free-market system to something now that is out of control and probably
what I would define as a predatory system where we are not so much
dealing anymore about the notion of fair prices, and the notion of
markets that - that work transparently an open late but in fact
frequently markets that are manipulated for the end of maybe a few out
there - a few investors, mega-investors. It's even - even that's very
difficult to tell. We still don't know who in fact is making money
while so many are losing money on Wall Street right now."

Years ago, right after the American civil war, there was a bearded
prophet in Europe, who studied the system and demystified it. While his
predictions were off, his analysis still seems on target. Anyone
remember Karl "Das Kapital" Marx?

"Owners of capital will stimulate the working class to
buy more and more of expensive goods, houses and technology, pushing
them to take more and more expensive credits, until their debt becomes
unbearable. The unpaid debt will lead to bankruptcy of banks, which
will have to be nationalized, and the State will have to take the road
which will eventually lead to communism."

Today, long trips are taken not by road but by air, so we may need
Captain Sully to fly us away on some magic carpet. The right is
mobilizing against the sprectre of a phony socialism, while the
government is pumping money into the economy to save capitalism. They
are back to red-baiting falsely claiming the USA is becoming the next
USSR. We don't need more neo-cons or for that matter, neo-coms.

Wake up: government funding and private control do not socialism
make. A broader mobilization is needed to stop the "Big C's" system
meltdown.