The 'Bailouts' were Frauds and Shakedowns

by Len Hart, The Existentialist Cowboy

The wrong people got the bailouts. One can find daily confirmation of that. Most recently, according to the L.A. Times, the Fed predicted that higher jobless rates, may become a long-term fixture, perhaps a permanent characteristic of the U.S. economy. This bad news follows the Commerce Department's revised estimate of third-quarter growth, up half a percentage point from 2 percent --nothing to write home about.

In fact, some Fed policymakers on Tuesday raised the specter of a permanently higher jobless rate for the U.S. economy, suggesting that many more workers will struggle to get back on their feet even as the economy continues to grow.

The Fed's forecast is an acknowledgment that the "healing process in the economy has slowed to a crawl," said Ethan Harris, an economist at Bank of America Merrill Lynch.

The central bank's predictions were released Tuesday as part of the minutes of its early November meeting, when the institution also approved its controversial bond-buying program to spur economic growth.

The nation's unemployment rate has been stuck at 9.6% since August.

Just a few months ago, Fed officials were more optimistic about the road ahead — for jobs and the overall economy. But now they see the economy growing by about 2.5% this year, not enough to make a dent in unemployment.

--Gloomy Fed employment forecast overshadows upbeat GDP data

To be expected, consumer spending will drop. People who have less money or, worse, no job at all, will cut spending. They have no choice. The very, very rich i.e, the ruling 1 percent, are just fine, thank you for asking! You made it possible. But --the party is over.

The wrong people got the bailouts! By 'wrong people' I mean the big banks, insiders, fat cats and leeches. By wrong people, I mean those who game the system, make a living by moving funny money around or --even worse --your money! In passing, I must ask: do you really think it a good idea to literally 'give' these shysters the monies that you have paid in to the Social Security Trust Fund? My quick response: not a chance!

An effective bailout would have put money into the hands of real people --not legal abstractions or Wall Street insiders. An effective bailout would have increased the supply of real money in circulation. A real bailout would have created jobs and stimulated real industries --not money changers, Wall Street shysters, insiders or funny money men!

Confidence remains low, and unemployment benefits, which have helped prop up spending, probably won't be extended by lawmakers, given the new political sensitivity to big government deficits. Hundreds of thousands of jobless workers will see their benefits expire this month.

But the biggest single drag on growth may be the state of the labor market. Even the more optimistic independent economists say unemployment will decline slowly, starting most likely in the second half of next year.

--Los Angeles Times, Gloomy Fed employment forecast

This is the 'ruling elite' so favored of late by bailouts and Wall Street. We should have driven the money changers from the Temple! Instead, we bailed out this 'New World Order', patted the money changers on their heads as we greased their extended palms.

So help me, I can perceive nothing but a conspiracy of rich men procuring their commodities in the name and title of the commonwealth

--St. Thomas More, Utopia

This is not an isolated case. This is not a temporary screw-up. This is a fundamental flaw in the system. This is a flaw that favors crooks and fast-buck artists, latter-day 'Enrons', money changers, the 'new world order'. The entire financial system of the United States is a Ponzi scheme, a scam: 'You give me real money and I will give you a worthless piece of paper in exchange'.

In a sad reminder of the sorry state of our country and in particular the sorry, heartless state of the modern Republican Party today Unemployment Insurance will end for hundreds of thousands of workers left out in the cold by Republican policies that crashed the economy. Yes, fresh off a victory in which the American electorate showed mass amnesia the very folks who crashed our economy are cutting off the aid to those folks who have suffered most for their policies. Even more outrageous than this is the priorities shown by Republicans after the election. You see, while they will let the unemployed suffer their incompetence, the one folks they constantly watch out for is their own, the very wealthy. Yes, Republicans have chosen to side with those who crashed the economy over those who suffer it.

--The Unemployed Suffer the Real Cause of Deficits

As John Maynard Keynes had said of 'pound notes' in England, the U.S. government might have done better had it put the $billions$ in mason jars, buried them in a land fill and let 'private enterprise' (real people) dig them up. Had that been done, real people would have spent those monies in ways that might have revived an economy on life support.

As I have reported: the U.S. economy --not gold --supports our currency But what happens when the economy is no longer producing, no longer employing the population? That is, in fact, the case as confirmed by the CIA's own World Fact Book. The U.S. is on the bottom of the list with the World's Largest negative Current Account Balance; China, who owns us, is on top with the world's largest positive Current Account Balance. If it had not been in China's interest over the short term to prop us us so that it might dump its goods on our shores thus robbing us of jobs, the house of cards might have collapsed already. That cozy arrangement was set up by Bush in advance of Nixon's infamous but largely ceremonial visit to the Forbidden City back in the 70s. The deal may be nearing the end of its usefulness to China. When China no longer benefits from this arrangement, it will pull the plug on the dollar.

Just look at us. Everything is backwards. Everything is upside down. Doctors destroy health, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the major media destroy information, and religion destroys spirituality."

--Micheal Ellner

Another lesson that might have been learned but will not be is that neither banks nor governments create 'wealth'. Wealth --as every credible economist from the conservatives Adam Smith and Ricardo to the left-leaning Karl Marx has said --is created by labor. That's worth repeating: labor creates wealth. Else, capitalists could not have made profits and fortunes upon the backs of those whose labor in fact created the wealth in the first place. Investments are made after the fact, by those wishing to skim some of the wealth off the top but only after it has been created and the major 'stockholders' made happy.

Conspiracy Theory Jesse Ventura S02E03 Wall Street 3/3

The Aristocracy and the New World Order

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How GOP Bigots Scapegoat Obama

by Len Hart, The Existentialist Cowboy

Hitler scapegoated jews! The American right wing now scapegoats Obama! Why are we surprised? The GOP/right wing is just doing what psychopathic screw-ups and habitual liars always do. They try to find someone else to blame.

Obama is an easy target! Because Obama is black the GOP can depend on getting the support of bigots without ever having to use that 'n' word themselves. They keep their collars lily white even as their motives are of darkest night! Their plans are drawn up on K-street; they don't have to get their hands dirty. Leave that to the rank and file bigots.

In response to my previous post, Noor al Haqiqa wrote:

That is probably one of the saddest vids [The Eagles, Last Resort] I have seen for awhile. Not because I don't delve into the mire a little too often, but because so much of that is part of my life. ...there are times I just want to hate the perpetrators of this situation, but I cannot for to do so would be giving them what they want ~ my soul.

I hear you. I am descended of Native Americans whom I believe were and would have been better stewards of this continent. At the same time, I am also descended of hard working Irish and Scottish immigrants who only wanted a chance in life. For many years --until the British lost the so-called 'Revolutionary War' --Native Americans and the new settlers lived peaceably. Several Native American chieftains were admitted to the Court of St James --Thayendanegea (Joselph Brant) most notably. Pocahontas, the Indian princess who helped the English colonists in Jamestown, Virginia, is buried in a churchyard in Gravesend, England. She died there in 1617 while trying to make her way back to her beloved native land --America.

I have often tried to fix a date on which we have all become pilgrims, the date on which we all lost 'our country'! What was the tipping point? When did we lose our grip? When did we find our 'Gravesend'? When did we lose our way among strangers?

I often recall the moment I witnessed in Houston's Jones Hall when amid thunderous applause Dan Rather introduced himself to a news conference attended by the media executives from across the nation. "Are you running for something," President Richard M. Nixon, already besieged by Watergate, asked Rather.

"No, Mr President!" Rather responded, "Are you?"

But it wasn't Watergate! We overcame and rose above Watergate. It was an old 'Western' in which the 'good guys' won. They did win, didn't they?

It was Reagan!

It was Reagan who finished the job. It was Reagan who stole the wealth of the nation and gave it to elites who did not produce it, did not deserve it and did nothing to earn it. The money changers were not driven from the temple. The temple was stolen by them. They call it the 'Fed'.

It was Reagan who pandered to ignorance, bigotry, hate, and prejudice. He could afford to pander; he was financed by a 'ruling elite', now just one percent of the entire population. It was Reagan who made psychopaths feel good about being psychopaths. It was Reagan who sold out America, broke the back of labor and exported U.S. industry and jobs to Japan and China.

Because of trends begun by Reagan, the U.S. is now at the very bottom of the CIA's 'World Fact Book' with the world's largest Negative Current Account Balance, formerly called the 'balance of trade deficit'. At the very top --with the world's largest positive Current Account Balance --is China to whom we have now exported our wealth. But because China must prop up the buck in order to sell to us via Wal-Mart, we would already be prostrate and penniless.

It was Reagan and the psychopathic ilk who followed him blindly over the cliff. It was the neo-imperialists, parasitic partners of the Military-Industial Complex, who dared dream of empire in the PNAC document: REBUILDING AMERICA’S DEFENSES Strategy, Forces and Resources For a New Century [PDF]. It was these neo-imperialists, called NECONS, who pined for a new a 'catalyzing event', a new 'Pearl Harbor', that would be exploited to justify a campaign of aggressive wars, in fact, war crimes punishable by death even under U.S. Codes, Title 18, Section 2441.

(a) Offense.— Whoever, whether inside or outside the United States, commits a war crime, in any of the circumstances described in subsection (b), shall be fined under this title or imprisoned for life or any term of years, or both, and if death results to the victim, shall also be subject to the penalty of death.

A so-called Neo-conservative movement 'Kristolized' in the 1960s, an obvious knee-jerk over-reaction to what was called a 'radical cultural revolution' that was perceived to have been taking place in the United States. Others just called it the 'Woodstock Generation'. Irving Kristol wrote: "If there is any one thing that neoconservatives are unanimous about, it is their dislike of the counter-culture."

It is frightening to think that the US may now be poised on the brink of collapse because stuffed-shirts like William Kristol were hopelessly, awkwardly square, had never smoked a joint, and thought Woodstock was a little cartoon bird!

America might still change but only after it has had a sea change of heart and mind. But until wealth inequality is addressed, the media returned to the people and the anti-American-anti-Constitution imperialists tried for war crimes and mass murder, nothing will change for the better. A drunk who will not recognize his problem is just a hopeless drunk, a 'druggie' a hopeless druggie and a thief will steal again if he thinks he can get away with it.

There are no quick fixes and I expected none from Obama. He is just a man --not a miracle worker. And it requires a miracle to save us from the pox that has been visited upon us by the real 'enemy'. It was Pogo who deplored the waste dumped in his swampland home and said: "The enemy is us!" Pogo was right!

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Why this Crisis May be Worse than the Great Depression

by Len Hart, The Existentialist Cowboy

About one percent of the nation owning more than about 90 percent of the rest of us combined not only foresaw the impending crash but planned to benefit from it. GOP types have traditionally gotten rich by playing 'last man out loses'! A race to be first to 'get out' has triggered many a panic creating bargains to be picked up, fortunes to be made on the inevitable upside. The big difference now is that --this time --there may not be an upside.

The sheer size of this crisis is worrisome. During the Great Depression, the US still had viable industries that had not yet been exported to China by way of the Bushes and Wal-Mart. The US manufactured automobiles, refrigerators, radios and, later, televisions sets. The steel industry created Pittsburgh. Autos made Detroit. America's work and labor were the sources of its wealth. The right wing exploitation and export of that wealth is the source of our current poverty, the financial collapse and our impending slide into third world status. An increasingly tiny elite is the cancer upon the body politic and economic.

The US oligarchy demonstrates why it so foolhardy to transfer so much wealth to so few so quickly. These 'few' foresaw the crisis and triggered it by bailing out early. It is left to the rest of us to pick up the tab.

Something like 50 trillion dollars in derivative debt is far bigger than even the stock market. Derivatives are collateralized debt obligations, leading to the erroneous conclusion that 'debt is money'. The current crisis is proof that it is not. Moreover, anyone who has ever taken a course in accounting knows the accounting equation: net worth = assets - liabilities. That the money changers swapped these instruments did not change the accounting equation. Money owed you is not money in the bank --a lesson that is, of late, very expensive.
Many have said that 'we are doomed'! Our borrowing will be financed by our own savings. Already, Beijing is poised to become the financial capital of the world.

We can thank Wal-Mart and GOP policies for that outcome. In previous articles, I have traced the rise of the Axis of Wal-Mart/China to the faustian bargain Bush Sr cut with Chinese poohbahs as he paved the way for Nixon's infamous visit to the Forbidden city back in 1973. The quick rule of thumb: whenever the US is betrayed, you can be sure to find a GOPPER in hiding whenever the shit hits the fan.

Lately, it has become fashionable to 'spread the guilt' around! What's up with that? I suspect another scheme, another right wing tactic. Fact is GOP 'trickle down' policies have had the measurable effect of enriching just one percent of the nation's population. When the GOP has been caught holding the blood-dripping dagger over the corpse I am in no mood to listen to crap like: 'but Democrats are 'bad' too!' Not this time! Democrats were in office but eight years out of thirty! But in those measly eight years the trend in which wealth flows upward was reversed only to be undone by Bush Jr.

So --if you wish to dilute the open/shut case against Reagan/Bush/Bush Jr cite me some facts and spare me the bullshit!

It was not so long ago that a Democratic president had left to his incompetent GOP successor a whopping budget surplus, a growing economy, the lowest unemployment in decades, and --for Republicans --the most worrisome trend of all: the rich were no longer getting richer as they had done during the Reagan/Bush years. I can think of only one group of people who are most miserable when times are good! REPUBLICANS!

Historically, Republicans have always benefited from recessions.

1. Recessions are not caused by declining stock markets but seem always to be accompanied by them and are often predicted by them. Republicans play the game of 'last man out wind', taking their profits in numbers that often cause the panic. Only insiders benefit. Others are forced to take their losses.
2. A depressed market becomes an opportunity for the elite oligarchs to get back in. This elite, in fact, controls the market. Everyone else is exploited by the oligarchs.
3. It is easy to make money 'selling short' if you have an insider's knowledge of the market. That fortunes were made short-selling subsequent to the 911 attacks seems to me persuasive, perhaps conclusive evidence that 911 was an inside job. What was known by whom and when? No wonder Bush covered up 911. The answer to those questions would have exposed a murderous conspiracy, perhaps 'insiders' inside Bush's criminal and treasonous administration.
4. Unemployment always rises during times of recession. Should they survive, companies will hire from a larger labor pool at lower wages, lower salaries, reduced benefits, and less vacation or sick time. The GOP despises the Clinton years --not because they were bad but because they were good years and fondly remembered. Europe after the Black Death has that much in common with the Clinton years. The labor supply had been depleted by plague. A would-be employer often had to accede to a worker's demands--better working conditions, more money, a place to live! The serfs had been freed and it was the beginning of the end for Feudalism. I had hoped that a less traumatic cataclysm would have already freed modern day "corporate serfs." Alas! My hopes are dashed. If the US survives at all, you can rest assured that the ruling elite will hire from an impoverished and growing labor pool. Wages and salaries are sure to be inadequate and, as a result, the 'recovery' (should there be one) will be slower for it.
5. Only the oligarchs benefit when many businesses go out of business during depressions which have the effect of 'weeding out' the competition, consolidating oligarchical gains. A conservative, therefore, is someone who supports a free market when it benefits him and the oligarchy at every other time.
6. Recessions are not always accompanied by a decline in prices. As many businesses fail, competition is decreased and higher prices result. Given the demand for a particular product, a company may actually earn more money selling fewer units. The difference comes out of your ass. Such demand is called: inelastic, i.e. revenues increase as prices increase --even if total sales should fall.

Unless someone blows the whistle or exercises some clout, the increasingly tiny elite of just one percent of the US population will be even richer at the end of this ruinous and tragic financial collapse. You can be sure the oligarchs foresaw the collapse and hastened it. You can be sure that they alone will benefit from it as they have benefited from every other such crisis in US history.

Depressions are defined by a 'contraction' of the supply of money. It has been asked: 'where did all the money go?'. Much of it was exported to offshore bank accounts in anticipation of a domestic collapse. But much of that money didn't really exist. It was just paper. It became fashionable to consider DEBT as money. But debt is not money and never was. Anyone who has ever considered the significance of the accounting equation --capital equals assets MINUS liabilities knows the truth of it. Nor is 'debt' money for those holding the paper. Loans are good only when backed up by collateral or, in some cases, one's earnings and ability to re-pay. As in all crashes, a 'bill' has come due but cannot be paid.

If debt is not money, what is? A question that was debated just prior and during the Great Depression and, again, in the 1980s. At that time, there were attempts to create a stable ERM --an Exchange Rate Mechanism for European currencies. A gold standard was also discussed. In both cases, it was 'labor' that sucked up the costs of implementation which consisted of efforts to force manufacturers to keep costs down. Again --it is not wealth that trickles down. It is 'costs' that always trickle down and labor is always expected to suck up the costs and consequences of such schemes.

More recently, a 'gold standard' was discussed. Who would have borne the costs of such a scheme when it became clear that the US cannot back up but a fraction of its 'currency' with gold? Ron Paul, I believe, advocated a tax rebate for precious metals purchases. That would have hastened the collapse by encouraging a run on the dollar! But, in fact, the ordinary working person does not invest in precious metals and, if he had done, the decline in consumer spending would have brought about the collapse of our economy even sooner and, arguably, the effects would have been even worse.

Following is a PBS NEWS HOUR Interview with Nassim Nicholas Taleb of October, 21, 2008. A Famous economist, Taleb authored "The Black Swan". Also appearing on the video is Dr. Mandelbrot, professor of Mathematics. Both point out several reasons that make the current crisis worse, more serious than the Great Depression.

Worse Than the Great Depression

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Usurious Bastards

by Ed Encho

The history of the last century shows, as we shall see later, that the advice given to governments by bankers, like the advice they gave to industrialists, was consistently good for bankers, but was often disastrous for governments, businessmen, and the people generally.

-Carroll Quigley

As the conventional wisdom goes, the stock market is predicated on trust and as a crusty old uncle of mine once said to a young and impressionable teenager with zero knowledge of the way that the world really worked: “trust me is just another two letter word that means the same as fuck you.” Old Uncle Harvey’s words of wisdom came home to roost on this Monday morning in America when the finance oligarchs were able to use their inside juice to pull off the grandest and most audacious heist yet in this season of sleazy swindles. Obama Treasury Secretary and Wall Street fixer Timothy Geithner delivered the bacon for the bankers, gave the crack ho stock market a wonderful and intoxicating fix that sent the Dow screaming up by nearly 7 percent in a matter of hours and locked in the losses for the great grandchildren of every poor schmuck with the misfortune to be living through this period of plunder and wealth consolidation.

In phase two of the ongoing SPLURGE (any similarity to the con-game called the surge that allowed us to become winners in Iraq is fully intentioned), on Tuesday night, our very own national Teflon coated bullshit salesman, President Barack Obama, the banker’s gofer and shill for the new generation began to sell it to the saps and a marvelous job he is doing. This man my friends is no new Roosevelt, he is the devil in disguise and he (as many progressives had warned) is in the bag for the establishment. What we really have is a by proxy continuation of the Clinton administration, of course Hillary was to have been the one but in the waning days of the ruinous Bush-Cheney neocon war on America it was just too tough to pimp another dynasty so the crooks who run the system found another pitchman.

I cannot possibly articulate the sense of disgust and betrayal that I am experiencing as I write this, it is very difficult to restrain my gag reflex and keep from vomiting on my keyboard because once again the scum wins again and Americans have been played for chumps. Nobel Prize winning economist Paul Krugman(another Nobel Prize winner Joseph Stiglitz decried its "perverse incentives”) and columnist for the damned liberal New York Times put it best in his Monday column Financial Policy Despair:

Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

This is more than disappointing. In fact, it fills me with a sense of despair.

But the Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. So this isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.

The likely cost to taxpayers aside, there’s something strange going on here. By my count, this is the third time Obama administration officials have floated a scheme that is essentially a rehash of the Paulson plan, each time adding a new set of bells and whistles and claiming that they’re doing something completely different. This is starting to look obsessive.

But the real problem with this plan is that it won’t work. Yes, troubled assets may be somewhat undervalued. But the fact is that financial executives literally bet their banks on the belief that there was no housing bubble, and the related belief that unprecedented levels of household debt were no problem. They lost that bet. And no amount of financial hocus-pocus — for that is what the Geithner plan amounts to — will change that fact.

You might say, why not try the plan and see what happens? One answer is that time is wasting: every month that we fail to come to grips with the economic crisis another 600,000 jobs are lost.

Even more important, however, is the way Mr. Obama is squandering his credibility. If this plan fails — as it almost surely will — it’s unlikely that he’ll be able to persuade Congress to come up with more funds to do what he should have done in the first place.

This isn’t likely to win Krugman any friends in the Obama White House, especially with a sleazy little political gangster like Rahm Emanuel who I predict will eventually make even the Great Satan Karl Rove look like an amateur running the show and protecting the interests of his investment banker buddies. While Barack Obama may be the friendly Fozzie Bear face of this latest hostile takeover of the White House the real example of how things are really done is in this incredible NYT piece from back in January:

Early this month, Barack Obama was meeting with the House speaker, Nancy Pelosi, and other lawmakers when Rahm Emanuel, his chief of staff, began nervously cracking a knuckle.

Mr. Obama then turned to complain to Mr. Emanuel about his noisy habit.
At which point, Mr. Emanuel held the offending knuckle up to Mr. Obama’s left ear and, like an annoying little brother, snapped off a few special cracks.

The venomous cobra that is Emanuel is of course Mr. Obama’s minder and handler, note that he was the first announced member of the new administration, the first of a reoccupation of Washington by Clintonistas. The promised change, at least to this point has been strictly cosmetic, the wars still continue, more troops are headed to Afghanistan, the graveyard of empires past, Gitmo is still open, the new administration is engaging in Clintonian language manipulation regarding ‘torture’ that invokes memories of “it depends on what the meaning of is is”, the military is getting ready to be sent to the Mexican border and there has been no serious discussion of reigning in the run amok police state and the Stasi style high tech domestic spying operations. Yep, change has come to America alright, just like “the check’s in the mail”, “this won’t hurt a bit”, “I love you” and “I promise not to come in your mouth”…and it was all wrapped up in a big bundle of stinking dogshit with a $ sign on it and parked on the doorsteps of Americans and set afire by the Geithner-Bernanke-Paulson triad with the unarguable message that you are either cops or little people. Webster Tarpley had a good one that I heard that saving the banks is like trying to save one of Count Dracula's victims by giving the blood transfusion to the victim through the vampire when the real remedy is to just pull him off and drive a stake through his heart.

Now that it has become apparent that Obama is just more of the same and like Bush has his own legions of cultlike devotees and apologists we can all just take Bobby Knight's advice that if rape is intevitable relax and enjoy it because really what choice do we really have? Before it even really started the revolution has been hijacked, progressives are still getting the shaft, the Employee Free Choice Act is going to be dead on arrival, there is NO antiwar movement if the media refuses to acknowledge that there is a fucking war and even the Ron Paul movement libertarians have been marginalized by the old fool's proclivity to ghettoize himself and keep showing up at Nazi bund meetings like CPAC and regularly appearing on FOX.

The oligarchy has it's shit together, this is their homefield, they own the refs and there is no replay booth. Welcome to chumpland, when a show like HBO's Real Time With Bill Maher features Keith Olbermann as a guest and they both mock the very real detention camps by conflating their existence with the weeping, at the edge of sanity fascist basket case Glenn Beck it's a done deal that the agents have seized control of all phones and the only way out of the matrix will be in a body bag.

Despite the rear guard cover that the corporate media is giving to the ongoing looting spree by laying poison bait for maxed-out marks and rubes to get back into the casino and start spending their money at usurious interest rates by rapacious banks that are fast approaching the same sort of deal that you can score at pay day lenders there are those who really get it, too bad that their observations are drowned out by Dancing With the Stars, American Idol and the rest of the standard bread and circuses that placate the masses of asses. Some very excellent work has been done for those with an inclination for the truth by alternative media types and dissenting with the official state line experts who have been consistently right about this catastrophic clusterfuck from the outset.
The gold standard in calling out the great robbery and financier's coup d'etat has to go to Matt Taibbi whose piece in the new issue of Rolling Stone magazine entitled The Big Takeover is a must read. I excerpt a few pieces of this long but brilliant expose:

It's over — we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

And

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.
The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.
The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

And

There are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That's the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers' credit card. 

The people who have spent their lives cloistered in this Wall Street community aren't much for sharing information with the great unwashed. Because all of this shit is complicated, because most of us mortals don't know what the hell LIBOR is or how a REIT works or how to use the word "zero coupon bond" in a sentence without sounding stupid — well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them.

That roll of the eyes is a key part of the psychology of Paulsonism. The state is now being asked not just to call off its regulators or give tax breaks or funnel a few contracts to connected companies; it is intervening directly in the economy, for the sole purpose of preserving the influence of the megafirms. In essence, Paulson used the bailout to transform the government into a giant bureaucracy of entitled assholedom, one that would socialize "toxic" risks but keep both the profits and the management of the bailed-out firms in private hands. Moreover, this whole process would be done in secret, away from the prying eyes of NASCAR dads, broke-ass liberals who read translations of French novels, subprime mortgage holders and other such financial losers.

In addition to Taibbi's magnum opus on the greedy pigs who have destroyed the economy I would also recommend Thomas Georghegan's treatise on the legalization of usury in the latest Harper's entitled Infinite Debt: How Unlimited Interest Rates Destroyed the Economy, the same April issue has Daniel Brook's article on the payday lending industry Usury Country, a piece in Washington Monthly by James K. Galbraith that calls bullshit on the 'the worst is over' folderol being foisted upon us by the high-rollers, the looters and the banksters where he speaks the forbidden heresy of No Return to Normal:

The most likely scenario, should the Geithner plan go through, is a combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil. Ultimately the losses fall on the public anyway, since deposits are largely insured. There is no chance that the banks will simply resume normal long-term lending. To whom would they lend? For what? Against what collateral? And if banks are recapitalized without changing their management, why should we expect them to change the behavior that caused the insolvency in the first place? 

The oddest thing about the Geithner program is its failure to act as though the financial crisis is a true crisis—an integrated, long-term economic threat—rather than merely a couple of related but temporary problems, one in banking and the other in jobs. In banking, the dominant metaphor is of plumbing: there is a blockage to be cleared. Take a plunger to the toxic assets, it is said, and credit conditions will return to normal. This, then, will make the recession essentially normal, validating the stimulus package. Solve these two problems, and the crisis will end. That’s the thinking.

But the plumbing metaphor is misleading. Credit is not a flow. It is not something that can be forced downstream by clearing a pipe. Credit is a contract. It requires a borrower as well as a lender, a customer as well as a bank. And the borrower must meet two conditions. One is creditworthiness, meaning a secure income and, usually, a house with equity in it. Asset prices therefore matter. With a chronic oversupply of houses, prices fall, collateral disappears, and even if borrowers are willing they can’t qualify for loans.

The other requirement is a willingness to borrow, motivated by what Keynes called the "animal spirits" of entrepreneurial enthusiasm. In a slump, such optimism is scarce. Even if people have collateral, they want the security of cash. And it is precisely because they want cash that they will not deplete their reserves by plunking down a payment on a new car.

The aforementioned pieces by Taibbi, Geoghegan and Brooks all merited appearances on Amy Goodman's Democracy Now the past three days but perhaps the greatest statement of all was made by former Reagan administration Assistant Treasury Secretary Paul Craig Roberts who in his latest column, Is the Bailout Plan Breeding a Bigger Crisis? is coming very close to actually endorsing - GASP - Socialism! Roberts mentions that ugly little story that flew below the radar that our number one creditor China is starting to make noises about dumping the dollar as the world reserve currency:

Rome eventually understood that its imperial frontiers exceeded its resources and pulled back. This realization has yet to dawn on Washington.

More budget savings could come from a different approach to the financial crisis. The entire question of bailing out private financial institutions needs rethinking. The probability is that the bailouts are not over. The commercial real estate defaults are yet to present themselves.

Would it be cheaper for government to buy the shares of the banks and AIG at the current low prices than to pour trillions of taxpayers’ dollars into them in an effort to drive up private share prices with public money? The Bush/Paulson bailout plan of approximately $800 billion has been followed a few months later by the Obama/Geithner stimulus-bailout plan of another approximately $800 billion. Together it adds to $1.6 trillion in new Treasury debt, much of which might have to be monetized.
Could this massive debt issue be avoided if the government took over the banks and netted out the losses between the constituent parts? A staid socialized financial sector run by civil servants is preferable to the gambling casino of greed-driven, innovative, unregulated capitalism operated by banksters who have caused crisis throughout the world.

Perhaps the Federal Reserve should be socialized as well. The notion of an independent, privately-owned Federal Reserve system was never more than a ruse to get a national bank into place. Once the central bank is part of the state-owned banking system, the government can create money without having to accumulate a massive public debt that saddles taxpayers’ and future budgets with hundreds of billions of dollars in annual interest payments.

Roberts has been ahead of the curve since his early realization that the Republican party had been taken over by drooling brownshirts in the early years of the Bush-Cheney nightmare and he consistently serves as a reminder of that bygone era when some conservatives actually had principles, ideas and a respect for intellectualism way back back before Joe the Plumber became the man.
The DOW was up 174 today, it's morning in America again, time to pull yerself up by those good ole star-spangled bootstraps, go shopping... but if you look around you will notice that gas prices are creeping up again too since speculation is back in vogue, it could crack 8000 tomorrow when Barack Obama goes to give a progress report (grovel) to his banker bosses.
But that's not important, hey, didja hear the one about the Michigan dude who just got 90 days for being caught with his dick in a car wash vacuum cleaner?

Move Along, Nothing to See Here...
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How the U.S. went from 'World's Number One Exporter of Terrorism' to Bankrupt

by Len Hart, The Existentialist Cowboy

The US is the world's number one exporter of world terrorism and, at the same time, sustains, by far, the world's largest NEGATIVE current account balance of $ -568,800,000,000. [See: CIA: The World Factbook] In every area but 'terrorism', the US trails the world. It has not helped America's case that monies 'earned' exporting death and destruction have not helped the US current account balance which remains negative. It is, however, clear that the US makes its living, 'killing'. Fat lotta good that has done the people of the US.

US Army documents detail the extent to which the US has become addicted to the export of death and destruction. According to that document, the US leads the world in the manufacture, sale and distribution of WMD, the use of 'terrorist' tactics and PSYOPS, and overt acts of aggression that when done by smaller nations are called 'terrorism'.

US military spending is greater than that spent by the rest of the world’s nations combined. As the US claims to 'defend' Democracy, it subverts it. How is the US truly concerned about terrorists acquiring WMD when it is the US that leads the world in the manufacture, sale and distribution of WMD? WMD are a big chunk of our GDP. Military spending, generally, is by far the biggest slice of the pie. The US is in the death business.

Anything said by the GOP about 'terrorism' or the failing US economy is either a bald-faced lie or said disingenuously, in bad faith. Anything said by the GOP about the economy must be weighed against the GOP agenda du jour: figure out a way to pin the rap on Obama! GOP focus groups have been tasked with coming up with up with plausible cover stories that can be 'sold' to the public.

Earlier, Bushie Reaganheads tried to blame Clinton for the consequences of twelve long years in which Reagan and Bush --by way of Reagan's tax cut of 1982 --looted the nation, transferred wealth upward from working folk to lazy, unproductive 'elites', offshore to tax havens and overseas to potential enemies and the MIC. As a result, the US will have no shortage of enemies and real 'terrorists' many of whom are financed with US monies and US government blessings.

There has been a very high price paid for years of GOP-Oh-nomics, an era defined by the preferential treatment shown the privileged class, an era in which 'real income' and purchasing power declined.

The merchandise trade deficit reached a record $847 billion in 2007, but declined to $810 billion in 2008, as a depreciating exchange rate for the dollar against most major currencies discouraged US imports and made US exports more competitive abroad. The global economic downturn, the sub-prime mortgage crisis, investment bank failures, falling home prices, and tight credit pushed the United States into a recession by mid-2008. To help stabilize financial markets, the US Congress established a $700 billion Troubled Asset Relief Program (TARP) in October 2008. The government used some of these funds to purchase equity in US banks and other industrial corporations. In January 2009 the US Congress passed and President Barack Obama signed a bill providing an additional $787 billion fiscal stimulus - two-thirds on additional spending and one-third on tax cuts - to create jobs and to help the economy recover.

--CIA, World Factbook

If the US trails the world in exports, it is fair to ask how the US stays afloat. The answer is ugly. As the US ceased to export significant amounts of product during the Reagan years, China found, in our decline, an opportunity. They would buy bucks, so that the US could afford to buy the products of Chinese industry. Under the missrules of Herrs Reagan and Bush, the US became a vassal state of China.

The US benefited from the world addiction to oil. Demand for the dollar was supported by the fact that oil was traded in dollars on world markets, prominently, the Iranian Oil Bourse. If, for example, a nation's currency was francs, it had first to trade those francs for bucks in order to buy oil.

In the meantime, the US found another product that it could export: world terrorism!

• Acts of aggression and terrorism
• Material support of terrorist organizations
• The sale of arms and other military hardware
[See: Terrorism is worse under GOP regimes]

While the US is said to be 'defending' Democracy, it is, in fact, subverting it. As US exports declined, US 'militarism' increased. The US justifies imperial aggression with the pretext that terrorists may acquire WMD. That position is undermined by two facts: 1) the US leads the world in the manufacture, sale and distribution of it last remaining export: WEAPONS OF MASS DESTRUCTION! If the US were genuinely concerned about the proliferation of WMD, it would stop encouraging it and profiting from it; 2) The source for WMD among 'alleged' terrorists is the United States. Chances are good that so-called 'terrorists' will have obtained its weaponry with monies raised selling cocaine to one of the largest drug dealers on the planet Earth: the CIA!

Because of criminal, right-wing politics, US policy guaranteed an endless supply of enemies and real 'terrorists' many of whom were and continue to be financed with US monies originating inside the US, specifically, the CIA, the US Military, Military Contractors and professional 'dirty tricksters' who freelance for the CIA.

One of the 'smoking guns' indicting US policy and criminality is a 'manual' intended to be released only to 'students from foreign countries on a case-by-case basis'.The manual outlines a program of 'irregular warfare', in other words, US state sponsored terrorism, insurgency, and PSYOPS.

1-21. Waging protracted IW depends on building global capability and capacity. IW will not be won by the United States alone but rather through combined efforts with multinational partners. Combined IW will require the joint force to establish a long-term sustained presence in numerous countries to build partner capability and capacity. This capability and capacity extends U.S. operational reach, multiplies forces available, and provides increased options for defeating adversaries. The constituent activities of IW are:

• Insurgency.
• COIN.
• UW.
• Terrorism
• CT.
• FID.
• Stability, security, transition, and reconstruction (SSTR) operations.
• Strategic communication (SC).
• PSYOP.
• Civil-military operations (CMO).
• Information operations (IO).
• Intelligence and counterintelligence (CI) activities.
• Transnational criminal activities, including narco-trafficking, illicit arms dealing, and illegal financial transactions that support or sustain IW.
• Law enforcement activities focused on countering irregular adversaries.

1-22. The above list of operations and activities can be conducted within IW;

--Headquarters, Department of the Army, Army Special Operations Forces Unconventional Warfare, September 2008

Ignoring 1) the mountainous body of evidence that US policy and the CIA, specifically, is the root-cause of the vast majority of the what is commonly called 'world terrorism'; and 2) the equally impressive body of hard evidence that 911 was an inside job, the Army cites 911 as the pretext by which the US should embark upon the policy as outlined above.

1-18. The 9/11 terrorist attack on the United States highlighted the increased danger of warfare conducted by other-than-state enemies. Recognizing that such irregular threats by nonstate actors would be a likely and even dominant pattern throughout the 21st century, national policy makers dictated that planners must analyze and prepare for such irregular threats. It was clear that previous assumptions about the terms “conventional,” “traditional,” or “regular” warfare, and reliance solely on a “regular” or “conventional warfare” doctrine were inadequate. IW was a significant theme in the 2006 Quadrennial Defense Review Report. In April 2006, the Pentagon drafted the execution roadmap for IW as a means of combating this growing threat from actions beyond conventional state-to-state military conflict.

--Headquarters, Department of the Army, Army Special Operations Forces Unconventional Warfare, September 2008

Elsewhere, the document cites the threat posed to the US by "WMD—such as nuclear, chemical, or biological weapons. But I have yet to find a single word, phrase, sentence or paragraph in which the manual mentions the threat posed to the rest of the world by some forty years or more of US meddling, threats, covert operations, US sponsored assassinations, overt threats, bombing and/or war and invasion. Instead, we get platitudes that are made absolutely meaningless by the remainder of the Army document.

A-64. Democracy and the protection of fundamental liberties were the basis for the creation of the United States more than 200 years ago. Since then, a central goal of U.S. foreign policy has been to promote respect for democracy and human rights throughout the world. The DOS— .. Promotes democracy as a way to achieve security, stability, and prosperity for the entire world. .. Helps establish and assist newly formed democracies.

op cit

The US Army document is an arrogant, imperialistic and ill-considered response to a growing 'threat' --but a threat that is posed only to US monopolists and death merchants, i.e., the Military/Industrial Complex, a fancy name for Murder, Inc. The US has squandered the limitless goodwill that had been extended our nation at the end of World War II.

This blog predicted the impending financial collapse several times during Bush's illegal occupancy of the Oval Office. Here is one of them.

It's been over seven years since the US had real or competent leadership and now a neo-ape man may precipitate our return to the cave! Iran threatens Bush's simplistic view of the world as well as the coffers of "big oil". Iran, isolated by mysteriously cut internet cables, will this month begin trading oil in currencies other than the dollar. Bush's cave man solution: nuke Iran! Kill, kill!

On September 16 1985, when the Commerce Department announced that the United States had become a debtor nation, the American Empire was as dead, theoretically, as its predecessor, the British. Our empire was seventy-one years old and had been in ill financial health since 1968. Like most modern empires, ours rested not so much on military prowess as on economic primacy.

--Gore Vidal, Chapter Three of Imperial America (Nation Books, 2005)

Bush's response to Iran's "Oil Bourse", as you may recall, was, typically, pre-stone age. At the time I posted the article excerpted above, I predicted that the US empire would collapse and with it, the dollar. We will continue to pay and suffer the consequences for having let Bush get away with stealing the White House and occupying it illegally.

Addendum

I hate to say I told you so --but:

Sixteen years ago, two economists published a research paper with a delightfully simple title: “Looting.”

The economists were George Akerlof, who would later win a Nobel Prize, and Paul Romer, the renowned expert on economic growth. In the paper, they argued that several financial crises in the 1980s, like the Texas real estate bust, had been the result of private investors taking advantage of the government. The investors had borrowed huge amounts of money, made big profits when times were good and then left the government holding the bag for their eventual (and predictable) losses.

In a word, the investors looted. Someone trying to make an honest profit, Professors Akerlof and Romer said, would have operated in a completely different manner. The investors displayed a “total disregard for even the most basic principles of lending,” failing to verify standard information about their borrowers or, in some cases, even to ask for that information.

The investors “acted as if future losses were somebody else’s problem,” the economists wrote. “They were right.”

On Tuesday morning in Washington, Ben Bernanke, the Federal Reserve chairman, gave a speech that read like a sad coda to the “Looting” paper. Because the government is unwilling to let big, interconnected financial firms fail — and because people at those firms knew it — they engaged in what Mr. Bernanke called “excessive risk-taking.” To prevent such problems in the future, he called for tougher regulation.

...

Above all, as Mr. Romer says, the federal government needs the power and the will to take over a firm as soon as its potential losses exceed its assets. Anything short of that is an invitation to loot.

Mr. Bernanke actually took a step in this direction on Tuesday. He said the government “needs improved tools to allow the orderly resolution of a systemically important nonbank financial firm.” In layman’s terms, he was asking for a clearer legal path to nationalization.

At a time like this, when trust in financial markets is so scant, it may be hard to imagine that looting will ever be a problem again. But it will be. If we don’t get rid of the incentive to loot, the only question is what form the next round of looting will take.

--NYT: The Looting of America’s Coffers

It all started when Cramer got perturbed by a segment TDS did on CNBC's financial network (Jon Stewart Eviscerates CNBC and Rick Santelli ).

He was so mad that he showed up on a bunch of NBC shows crying about the way he was portrayed. Stewart really just said what all of America wanted to say to Wall Street: F*&K You!

Tonight we had the big face-off, the heavyweight bout, the Super Bowl square-off between CNBC's Jim Cramer and Comedy Central's Jon Stewart. Cramer was especially upset about being included in a segment TDS produced on the horrible and almost criminal reporting CNBC has been airing as THE go-to business network after CNBC's Rick Santelli attacked average working-class people who got caught up in the sub-prime mortgage crisis. Santelli dubbed them as "losers." Well, the only loser tonight was Cramer and CNBC.

Jim basically sat there, starry-eyed like a lost puppy, and was virtually silent throughout the three-segment show featuring him. He basically waved the white flag and said, "You got me."

--Crooks and Liars, Jon Stewart creams Jim Cramer on the Daily Show!

Jon Stewart owns Jim Cramer, reveals how 'Wall Street Insiders' Gamed the Market and FUCKED YOU OVER!

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Screw the Big Banks! Bailout the Small Depositors!

by Len Hart, The Existentialist Cowboy

It was last fall, as Americans dared hope that a new administration would take office just in time to save America, Bush announced a first big 'bailout' which would, we were told, prevent a financial collapse, a great depression, a panic! Not least among many reasons the bailout failed is the fact that the wrong people got the money. 

Although Richard Nixon had famously claimed "We are all Keynesians now", nothing could be further from the truth now.Thanks to the misplaced reverence for Augustus Reagan, we are all still Friedman monetarists --not Keynesians. That is why the bailout failed and it is the reason future bailouts will fail unless something is done to address the root cause of collapse: the wrong people got the money! 

It was only last fall that the FED and officials of the Treasury Department 'rode to the rescue' of all the wrong people, specifically, the very financial institutions that created this mess to begin with. In the wake of all this failure, incompetence and criminality, there was great hand wringing, wailing, gnashing of teeth because the 'n' word had been uttered. Nationalize the banks! At this point, it won't make any difference.As 'the Who' famously said, 'the new boss, same as the old boss'. What is needed is not a new boss following the same, tired, failed policies. What is needed is some intelligent thinking about what drives economies! Here are some clues: banks do not drive economies. Rich elites do not drive economies. Governments do not drive economies. Big corporations do not drive economies though many board chairs are deluded and believe themselves to be 'captains of industry'. Bullshit!

More than 83 corporations have offshore subsidiaries where their funds are protected in tax havens in the Caymen islands such as: The Bank of America, Citigroup, Morgan Stanley, AIG, JP Morgan Chase, Wells Fargo, and even Pepsi and General Motors who received 13.4 billion have hundreds of millions of dollars in tax havens offshore. All these corporations receive protection from paying the US government their taxes and the loss to the US is into the 100 billion dollars of lost tax revenue.< Senator Carl Levin a democrat from Michigan and Byron Dorgan, Democrat of North Dakota requested the report to be released and are pushing for new laws prohibiting these bailout scam corporations from being tax dodgers while asking for bailouts from the taxpayer

The Government Accounting Office includes 63 of the 100 largest contractors who receive government contracts also have accounts in tax haven countries.
--Bailout Corporation Tax Havens in Caymen Islands

The bailouts failed because the wrong people got the money. The government would have done better had it just put billions of dollars in mason jars, buried them in a land fill and let the unemployed dig them up! That is as true now as when Keynes first proposed it back in the thirties. You can bet those folks would have spent the money and, by doing so, revived the collapsing, moribund GOP economy that Bush left us.  

Instead, Bush gave the money to fat cats who parked it in offshore tax havens --a fact that may be solely responsible for the worst contraction of the US economy in a quarter century, an annualised 3.8 percent in the fourth quarter of 2008! That's the worst result since 1982, the year of Ronald Reagan's big tax cut. It was also the year of the 'Reagan Recession', the worst since Herbert Hoover's GOP 'Great Depression'!

Of the 100 largest public companies, 83 do business in tax-haven hotspots like the Cayman Islands, Bermuda and the British Virgin Islands, where they can move their income into tax-free accounts. .In the list of 100 companies that GAO studied were 63 with major federal contracts, including Caterpillar, BearingPoint, Boeing, Merck & Co. and Kraft Foods. ...Legislators gave particular attention to the 14 companies on the list that received bailout money from the Treasury in the recent financial meltdown. 

--GAO Report: Off-Shore Tax Havens for Bailed-Out Companies and Government Contractors?

In the meantime, more banks are going bust. Let them fail! Fuck the banks.

With two of the nation’s largest banks buckling under yet another round of huge losses, the incoming administration of Barack Obama and the Federal Reserve are suddenly dealing with banks that are “too big to fail” and yet unable to function as the sinking economy erodes their capital.

Particularly in the case of Citigroup, the losses have become so large that they make it almost mathematically impossible for the government to inject enough capital without taking a majority stake or at least squeezing out existing shareholders.

And the new ground rules laid down by Mr. Obama’s top economic advisers for the second half of the $700 billion bailout fund, as explained in a letter submitted to

• Congress on Thursday, call for the government to play an increasing role in the major activities of the banks, from the dividends they pay to shareholders to the amount they can pay executives.

--New York Times, Rescue of Banks Hints at Nationalization

We should have been bailing out the depositors. By 'depositors', I am not talking about big corporations, who, like the banks, have taken monies out of the US economy. For example --General Motors which pocketed $13.4 billion and then promptly squirreled it away in 11 offshore subsidiaries. GM's 'financing arm, GMAC received $5 billion in bailout and quickly exported to two offshore units. 

GMACs majority owner is the private equity firm Cerberus Capital Management LP. Boycott them!If Obama were a part of the 'revolution', he would have already nationalized the crooks, seized their assets and put the monies back into the hands of original depositors whose expenditures would most certainly revive the ruined economy that the GOP thinks it has washed its guilty hands of. The trend in which an increasing tiny elite of about one percent of the total population would end up owning more than the rest of us combined is, at last, having the effect I warned about.

The Reagan years can be summed up briefly. He doubled the size of the Federal Bureaucracy and tripled the national deficit. The most pernicious effect of GOP economic policy is the effect of declining opportunity, a corollary of decline in wealth among all but the very rich.It is merely rhetorical to ask: why does the GOP seem to repeat ad nauseam utterly failed strategies that have never been shown to work? Reagan's Budget Director, David Stockman called Reaganomics a 'Trojan Horse'. He understood that tax cuts were not intended to trickle down. 

That's just how they are sold. Rather --the tax cuts always do precisely what the GOP insiders know they will do: they enrich the GOP base! They are 'laundered' pay offs. Thanks to enlightened tax policies during the administration of FDR, the US was at its most egalitarian throughout WWII and the post war era. Things did not change dramatically until the rise of 'Reagonomics', a polite word given the transfer of wealth upward to those already rich and will only invest it offshore where it cannot possibly help provide jobs at the local level. This is truly 'mainstreet' vs 'Wall Street'.

The rise of Ronald Reagan brought with it a spreading of wealth upward to the upper classes and Wall Street insiders, in fact, an increasingly tiny elite of just one percent of the nation which owns more than 90 percent of the nation's total wealth. That fact is graphically illustrated above. The result is factually documented by the government's own agencies --Census Bureau, Bureau of Labor Statistics, Department of Commerce-BEA, et al. Income inequality is measured by what economists call the GINI index. The higher the GINI, the greater the inequality. These numbers, recognized and cited by economists from Friedman to Krugman, from Keynes to Galbraith, invariably increase during GOP regimes.Now --as the late Steve Kangas pointed out, 'conservatives' will claim that correlation is not 'causation'. I think conservatives are wrong on that point, but if, in fact, GINIS always go up under GOP regimes, what difference does it make?The pragmatic solution is simply this: fire the GOP! Permanently! 

We cannot afford to continue to support both the GOP and its elite, pampered, privileged sponsors in business, industry and government. See more about 'income inequalities' at: What do liberals believe about income inequality? Also: Myth: The rich get rich because of merit.

The 'contraction' of an economy is typically called a 'depression'. The US economy is contracting due to 1) the transfer of wealth to but about one percent of the population; 2) this 'elite' has transferred most of its wealth offshore where it has absolutely no good effect on the domestic US economy. The current collapse of the US is the end result of a trend that was begun with the passage of Ronald Reagan's infamous tax cut for his rich, elite base. The year was 1982. Historians willl write of that date that it was the beginning of the end of the American empire.

________________________________________________________________________________________________

How the GOP, Reagan, Bush Sr, Bush Jr Betrayed, Pillaged, then Sold the U.S.

by Len Hart, The Existentialist Cowboy

George W. Bush's war of naked aggression against Iraq --a war crime --has not only bankrupted the US, it has brought the entire world to the brink of economic ruin. It is also an ignominious defeat and may one day be compared to Valens' loss to barbarians at Adrianople. One wonders: what sound is made by collapsing empires? Do they go boom or 'suck'?

As the most dominant empire since Roman times, America has helped to bring great wealth and prosperity to the world..

--Pat Robertson

Amid Robertson's 'celebration' of American empire, his death threats against Hugo Chavez or Americans daring to oppose his idiocy, Robertson forgot the rest of the story: Rome fell.

The various modes of worship, which prevailed in the Roman world, were all considered by the people, as equally true; by the philosopher, as equally false; and by the magistrate, as equally useful.

--Edward Gibbon, The Decline and Fall of the Roman Empire, Chapter 2

Rome fell for the same reasons the US will have lost empire and world influence. Like Rome, the US has despoiled the land, waged war upon both the small farmer and the laborer, outsourced it's industry, devalued the dollar and subverted the products of labor --the sole source of 'value' in any economy. That the US 'current account balance' --as officially recorded by the CIA --is the highest in the world proves that US is bankrupt and has been for years. It also proves that GOP economics have made the US less productive vis a vis the rest of the world.

Indeed, it is the rest of the world which keeps the US afloat. As long as the rest of the world can extend us credit, it can continue to sell to the US consumer. When the plug is pulled, China and Japan will vie for second place down the chute. Like short sellers on Wall Street, 'last man out' loses!

As Gibbon reminds us, Rome --like the United States of late --was full of 'Pat Robertson' types eager to invoke the power of 'God' on their side, eager to bring down God's wrath on those daring to dissent.

It was the fashion of the times to attribute every remarkable event to the particular will of the Deity; the alterations of nature were connected, by an invisible chain, with the moral and metaphysical opinions of the human mind; and the most sagacious divines could distinguish, according to the colour of their respective prejudices, that the establishment of heresy tended to produce an earthquake, or that a deluge was the inevitable consequence of the progress of sin and error.

--Edward Gibbon, The Decline and Fall of the Roman Empire, Chapter 26

Gibbon is famous for attributing Rome's fall to a 'loss of civil virtue' and, elsewhere states that, under the Empire of Rome, the 'labour of an industrious and ingenious people was variously, but incessantly employed in the service of the rich'. Gibbon correctly states that agriculture was for Rome, as it is for every culture today, the foundation of manufacturing.

Elsewhere, Gibbon described what we would call 'supply side economics' but fails to hold it responsible for Rome's fall.

But in the present imperfect condition of society, luxury, though it may proceed from vice or folly, seems to be the only means that can correct the unequal distribution of property. The diligent mechanic, and the skilful artist, who have obtained no share in the division of the earth, receive a voluntary tax from the possessors of land; and the latter are prompted, by a sense of interest, to improve those estates, with whose produce they may purchase additional pleasures. This operation, the particular effects of which are felt in every society, acted with much more diffusive energy in the Roman world.

Gibbon, op cit

Thus, Gibbon avoids the issue of how the wealthy obtained wealth initially that they might employ the 'diligent mechanic and the skilful artist'. In other passages, however, Gibbon clearly traces the origins of all wealth to 'land' and the human 'labor' expended making it fruitful. This is consistent with the 'Labor Theory of Value', espoused by almost every major economist from the conservative Adam Smith to the 'left leaning' Karl Marx. Rome's fall, therefore, may be traced to the rise of 'supply-side economics' or, as it is often called, 'trickle down theory'.

Rome fell because it became economically impossible. Wars of conquest ravaged the class of 'freeborn farmers' whose lands were seized whilst they were away at war. Slaves brought back to Rome permanently depressed, perhaps destroyed, the job market.

Eventually, the free-born farmer was forced by policy and circumstance to compete with slaves for jobs. Rome had forgotten or never knew the source of wealth itself: labor! It is among the many 'evils' of slavery that in addition to being cruel, it subverts the very value of labor and deprives society of it.

A slave was but a machine in which the 'elite' had made an investment. The elite landowners literally worked their slaves to death and replaced them with 'new models'. A 'slave', however, is an economic dead end.

Many free-born farmers tried to compete in the contracting market --sowing, planting, harvesting, taking crops to market. Because the large landowners (what we might call the corporate farmer today) worked their lands with slaves, they were able to underbid the free-born farmer. Many abandoned their farms when they became unprofitable. They swelled the ranks of the permanently unemployed in Rome. Slaves, arguably, were better off. There were, at least, employed.

That public virtue which among the ancients was denominated patriotism, is derived from a strong sense of our own interest in the preservation and prosperity of the free government of which we are members. Such a sentiment, which had rendered the legions of the republic almost invincible, could make but a very feeble impression on the mercenary servants of a despotic prince; and it became necessary to supply that defect by other motives, of a different, but not less forcible nature; honour and religion.

--Edward Gibbon, The Decline and Fall of the Roman Empire, Chapter 1

It is fashionable but flat wrong to say that Democrats are equally guilty. Trouble was in evidence even before World War I, the era of robber barons. The Great Depression resulted from a 'fever' --the idea that speculative riches were easy. It was thought that the bubble would last forever. The 'bubble' burst and a great depression ensued.

World War II put people back to work but it was also --as a result of fair, progressive taxation --the most egalitarian period in American history. As GOP policies eventually dominated following WWII, the rich were taxed less and less, and as a result, productivity fell.

Income disparities increased exponentially. In other words, the rich got rich and the poor, much, much poorer. Until Bush Jr, the most dramatic demonstration of those facts had been the administration of Ronald Reagan which doubled the Federal Bureaucracy and tripled the national deficit. Federal spending under Reagan was completely out of control; the budget ballooned. If any net wealth had been created, none of it trickled down: productivity declined, unemployment rose, job growth declined well below the Carter levels. [See: Bureau of Labor Statistics]

As recently as 2006, many blogs, newspapers and electronic media were reporting a 'global economic boom'. Bands might well have played 'The Charleston' or 'Varsity Drag', the newsreel soundtrack to heady days of fast bucks and faster women, rowdy days in which the belief that anyone could get rich was encouraged by the GOP. What was in it for them? Votes! The GOP was living in a past best remembered for the Stutz Bearcat and Racoon Coats soon to be followed by "Brother, Can You Spare a Dime?". [See video below]

A scheme in which the rest of the world would keep the US afloat so that it might buy their products might have worked, for a while, but for the ruinous, the disastrous effects of the US war of aggression against Iraq. America's 'unquenchable materialistic appetite' drove the world economy. The economies of several nations, including Japan, possibly China, will collapse when the US consumer is not employed sufficiently to buy their product. When the US consumer goes belly up, so too will the nations that depend upon those billions of US dollars.

The parallels with the crash of 1929 are as valid as are analogies to Rome. US debt now tops the total debts of all the nations of the world at about 4.3 trillion dollars. Another nation might be bailed out by a bigger, richer nation. In this case, however, the entire world is not rich enough to bail out America. In 1929, the debt ratio in relation to the Gross National Product stood at a healthy 16%. In 1990, at the end of the ruinous and disastrous Reagan administration, the national debt had increased to 60% of the GDP. Insatiable America ran up a tab that is now due but there is no nation on earth capable or willing to pick up the tab. Wherever and whenever Rome 'pulled out' its legions because it could no longer support them in situ the Dark Age would begin.

The Republican Great Depression began in 1929, not 1932, and it was the direct result of 9 years of unrelenting trickle-down economics delivered under three Republican Presidents (Harding, Coolidge and Hoover) and their treasury Secretary, the anti-tax, anti-regulation corporate titan, Andrew Mellon.

As I write in the introduction of my new book, Yeah, Right: "This Economy Is Strong and Other Tall Tales:

Hoover came to the presidency in March 1929 after a campaign in which he insisted that a "continuation of the policies of the Republican party is fundamentally necessary to the future advancement of this progress and to the further building up of this prosperity."

When the market crashed in October 1929, the true cost of the Republicans' get-rich-today-and-don't-worry-about-tomorrow policies became all too apparent. Years of corporate deregulation, Wall Street manipulation, rampant speculation, cuts in taxation for the wealthy, and easy-credit expansion for consumers had fueled an unsustainable bubble of artificial wealth that popped with devastating effect.

But Hoover refused to acknowledge the collapse. The "fundamental business of the country," he insisted, was "on a sound and prosperous basis."

Compare those pre- and post- crash Hoover statements to these pre- and post-crash McCain statements:

He should be judged very, very well as far as the economy is concerned. We're in a long sustained period of economic growth.

- John McCain on George W. Bush, March 5, 2007

I still believe the fundamentals of our economy are strong.

- August 2008

Based on that record, there are few people in America who could more rightly claim to be the heir of Herbert Hoover than John McCain (if you're thinking Bush, you're close, but he's actually Calvin Coolidge's heir).

--Jim Oleske, Memo to McCain: Hoover was a REPUBLICAN, Daily Kos

I blame the GOP for this debacle, specifically the incompetent and venal administrations of Ronald Reagan and Bush Sr and, most recently, that of George W. Bush, the lesser idiot.

Let's take a look at the history before it gets re-written:

• Any Democratic President has presided over greater economic growth and job creation than any Republican President since World War II.
• When Bush Jr took office, job creation was worst under a Republican, Bush Sr, at 0.6% per year and best under a Democrat, Johnson, at 3.8% per year.
• Economic growth under President Carter was far greater than under Reagan or Bush Sr. In fact, economic growth in general was greater under Johnson, Kennedy, Carter, and Clinton than under Reagan or Bush. Democrats always outperform a failed party: the GOP!
  
• The job creation rate under Clinton was 2.4% significantly higher than Ronald Reagan's 2.1% per year.
• The "top performing Presidents" by this standard, in order from best down, were Johnson, Carter, Clinton, and Kennedy. The "worst" (in descending order) were Nixon, Reagan, Bush.
• Half of jobs created under Reagan were in the public sector--some 2 million jobs added to the Federal Bureaucracy. Hadn't he promised to reduce that bureaucracy?
• Reagan, though promising to reduce government and spending, tripled the national debt and left huge deficits to his successor. Bush Jr's record will be even worse.
• By contrast, most of the jobs created on Clinton's watch were in the private sector.
• Put another way: any Democratic President beats any Republican President since World War II.

Everything posted above is based upon official, government stats from the Census Bureau, Bureau of Labor Statistics, CBO, and BEA among others. They are 'official' and irrefutable unless someone wants to make the outlandish case that the Federal Bureaucracy, the numerous agencies which keep these stats, is somehow biased. That argument is absurd in light of the fact that of those 20 years from the election of Ronald Reagan to the stolen election of 2000, Democrats had the Presidency in only eight of them.

Following are just some of the 'accomplishments' of the GOP as they come to me. With any effort at all, you will find hundreds more. The following I dashed 'off the top of my head".

1. Total and humiliating defeat for the US in Iraq
2. The utter collapse of the US economy
3. The export of American jobs to China and anywhere BUT the US.
4. Selling out the American consumer to Wal- Mart; most Americans no longer earn enough to shop anywhere else. Wal-Mart depresses local economies, has forced employees to work 'off the clock', in other words, 'work for free'. Wal-Mart has destroyed the 'downtown' areas of small towns. You can still see them. But only in Norman Rockwell prints.
   
5. Dividing the US into those who have and those who have not where those who have not make up over 90 percent of the population and those have are but a about one percent and own MORE than 90 percent combined.
6. The dumbing down of America with 'faith-based' initiatives'; what had been needed was fact-based initiatives that encouraged intelligence --rather than gullibility and the belief in economic voodoo. Like 'trickle down theory' and other GOP 'economic voodoo', 'faith-based inititives' was a callous fraud exemplified by the "Houston Miracle" often attributed to Bush protoge Rod Paige. It was a fraud. The test scores were phony baloney. Like Enron, they cooked the books.
   
7. The destruction of New Orleans because black folk dared to live there. Recently it has been learned that residents of the white suburb of Algiers Point murdered black residents trying to escape rising flood waters in New Orleans. As New Orleans tried to recover, Bush infamously said: "Brownie, you're doing a heck of a job"
   
8. The subversion of American jurisprudence by packing SCOTUS with ideologues and idiots who clearly thought that it was their job to re-write the Constitution --not apply it. Clue: Antonin Scallia cannot carry James Madison's shit! Scalia had all but admitted his bias even before the debacle in Florida was taken to the high court. Scalia himself admitted that his aim was to prevent Bush from falling behind in the recount. He would try to undo the laws of common-sense and logic to do it: "Count first and rule upon the legality afterward is not a recipe for producing election results that have the public acceptance that democratic stability requires!" Excuse me, Antonin! The guy getting the fewer number of votes is SUPPOSED to lose, you idiot! Fact is, Antonin never had a stupid idea that he could not intellectualize with big words and bullshit! But --as Scallia himself opined: "I'm too smart for this court!" Of late, that may be true. And that is enough to give one night terrors.
   
9. The destruction of the US environment.
10. Presiding over US descent into third world, possibly fourth world status.
11. Turning American cities into sprawling out-of-control carbuncles the purpose of which was to inspire car sales and increased oil consumption. This is especially stupid as 'car making' was essemtially 'outsourced' to Japanese plants paying MUCH LOWER wages inside the US. Toyata was allowed to build cars in the US and pay much less than autoworkers would have made in Detroit. Workers who make less money, spend less mony --unless they are extended credit. Credit seems like FREE MONEY UNTIL THE BILL COMES DUE!
12. Gerrymandering congressional districts such that the GOP might get majorities in both houses of Congress.
13. Openly deriding the Constitution --as George W. Bush had done numerous times in various ways.
14. Encouraging stupidity, rewarding incompetence, elevating ideology above intelligence.
15. Turning American cities into ugly carbuncles in which robber baron corporations brainwash a captive audience in Potemkin villages called 'suburbs' or --worse --'planned communities' which come with an implicit guarantee that you will not see a 'negro'.
16. Becoming a blood-sucking parasite that killed its host.

In simpler times, goppers would have been denounced as being possessed by demons and subject to the 'trial by water'. Certainly --by defining their opposition as 'terrorist' in nature, the GOP had hoped to subject them to trial by water boarding.

Political dissent is one thing --but the outright subversion of the rule of law as institutionalized by the GOP is nothing less than high treason.

The GOP is not a political party. It's a crime syndicate and a kooky, malevolent cult.

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