Save the Fed

By Capt. Fogg

Doomed to repeat history? Of course we are, but the fate I fear isn't the sort of doom that descends upon us from above unless you consider the cesspit of "Conservative" rhetoric to be a higher plane of thought. No, I'm not talking about the market bubble of the late 1920's that was brought about by slashing the top marginal tax rate or the deregulation of the markets that gave us the 1929 crash; I'm talking about where we were fourscore years ago in 1931 when the European banks began to fail and nobody was able or willing to do anything about it. Then as now, we had "Conservative" rhetoric attempting to blame the mess on the usual suspects, like lazy American workers and in Europe: the Jews. We had calls around the world for even more austerity, as if the world could save itself by saving money.

" Instead of easing monetary policy by cutting interest rates and buying bonds, the Fed tightened. The result was a catastrophic chain reaction of bank failures, which caused the money supply to contract by approximately a third, and economic output with it"

writes Niall Ferguson at the Daily Beast, lamenting the gross lack of knowledge of bankers, investors, fund managers, regulators, policymakers, and economists. Ferguson cites Milton Friedman and Anna Schwartz’s Monetary History of the United States, which argues that

"the stock-market panic of 1929 turned into a depression because of avoidable errors by the Fed. Instead of easing monetary policy by cutting interest rates and buying bonds, the Fed tightened. The result was a catastrophic chain reaction of bank failures, which caused the money supply to contract by approximately a third, and economic output with it."

The Gold Standard, the massive debt from The Great War, the partisan inability to compromise brought on the disaster we know as the Great Depression and only those countries that dropped that standard and began hiring while gearing up for war, began to recover. Germany led the way and the US followed.

With some Republican spokesmen demanding the return of the gold standard, demanding an end to the Fed, demanding more austerity, demanding that more capital be tied up in the hands of a tiny minority, the money supply diminished and the demand for goods and services curtailed, the few who understand what needs to be done are being shouted down by politicians who insist that the only solution is a bigger cut in the marginal rate, and the angry mob they feed.

"We are indeed fortunate that at least the world’s leading central bankers have studied this history: not only Ben Bernanke but also the heads of the Bank of England, the Bank of Canada, and the European Central Bank. The bad news is that so few politicians and voters understand what they are trying to do, or why. The even worse news is that central bankers by themselves may not be able to stop our depression from turning great."

Worse news even than that, is the fact that people like Dr. Ferguson, a professor of history at Harvard University, a senior research fellow at Oxford University, and a senior fellow at the Hoover Institution, Stanford University do not inform the Cains, Bachmanns, Palins or Gingrichs or the rabble who support them, nor would the public trust any "elitist" "Libtard" "pinhead" over the kind of small minded moral abomination now stumbling toward Washington.

(Cross posted from Human Voices)

Lady Blah-Blah

By Capt. Fogg

Contrived extrapolations from the trivial and inconsequential event to gross generalizations, sweeping condemnations and general non sequitur makes up so much of the right wing blather that I'm tempted to say that blissful silence would ensue if it were to stop, and inclined to pray for it.

What kind of "journalist" would pounce upon small children for giving away lemonade because they didn't truly understand the concept of profit? Lady Blah-Blah herself, Terry Savage, of course. Jumping from her car, she writes, she admonished them for not being capitalists and likely scared hell out of them. Of course that only constitutes being rude, self important and nasty and the verbal abuse of children. Yes, that's a prerequisite for being a Republican pundit, but what elevates her to the ranks of the truly despicable, is her blowhardian expose in the Chicago Sun-Times in which she rants about welfare, government subsidies for things other than oil drilling and the decline of America. She tilts at all the usual windmills with all the same old cliche arguments having nothing to do with the innocence of Kindergarteners and the righteousness of profits and all at the expense of some cute little kids who have yet to learn just how nasty, pompous, self-righteous, dishonest, stupid and bad at their jobs Right wing columnists can be.

"If we can't teach our kids the basics of running a lemonade stand, how can we ever teach Congress the basics of economics?"

The government does not exist to make a profit, and if, as you say, unemployment benefits will only impoverish the employed, you owe us an explanation of why your version of capitalism has done exactly that, why no new private sector jobs were created by it in 8 years and why each Republican administration has brought us ever increasing expense and debt and ever decreasing standards of living. Never mind tiny tots and lemonade -- explain that.

Sorry, Terry, perhaps some of the 6 quarts of botox you pump into your aging face every morning has leaked into the parts of your brain concerned with basic human decency and has totally paralyzed any notions of honesty. Yes, Terry, we can teach our children about economics - they're already learning thanks to your having driven us over a cliff. No Terry, these are just babies, and sorry, we all know what a profit is and no we're not having a recession because we try to help struggling Americans and keep them from the Dickensian hell you dream about every night.

We're suffering high unemployment because of your insistence that Giving the very rich a tax break will create new jobs, raise government revenues, reduce the tax burden on the middle and working classes; because of your insistence that businesses will resist cheating and corruption and fraudulent activities if we no longer test their claims, audit their books and make fraud itself legal. We're suffering not because some kid you made cry hasn't been reading Ayn Rand, but because you're still reading it while each and every one of your and her bogus axioms has been proven false over and over and over again. At least the girls you're exploiting are giving away real lemonade instead of the toxic and even lethal witches brew you're giving away.

"The Declaration of Independence promised "life, liberty, and the pursuit of happiness." It didn't promise anything free. Something to think about this July 4th holiday weekend."

Stop me if I'm wrong, but it didn't say anything about subsidizing Oil Drilling or looking the other way while our resources are stolen; while we're sold fraudulent securities by fraudulent corporations, while the government starts wars for profit and gives away billions to friends of the Vice President either. It didn't promise corporate feudalism and it didn't suggest a Randian denial of responsibility or a great many other things you're trying to work into the discussion of a lemonade stand. If that's the best you can do, perhaps it's time to shut the hell up and send the RNC their check back.

A decent human being -- and by that I mean someone other than you -- would simply have given the girls a dollar and told them they would earn some money to replace their stolen bicycle by charging, but no, not you. You made it into a baseless condemnation, a sales pitch for calamity and a caustic attack on the innocence of childhood. You found it more important to bear false witness against your country than to protect the feelings of small children who will doubtless remember the nasty witch screaming NO! from her car for the rest of their lives.

If people like you can call our President Pol Pot and Hitler in the same breath simply for talking to them about making the future a better one, I can certainly call you worse for trying to perpetuate the same twisted economic madness that's brought us to our knees as it did in 1929 and screaming it at our kids. I can call you all kinds of things with a clear conscience but none can be so damning as the name you've made for yourself.


(Cross posted from Human Voices)

Plenty of time to tamper with stuff --

By Carol Gee

-- by the "party of whiners#," as Paul Krugman names the GOP. The next couple of weeks provide plenty of time for our current "Sarah Palin-like president" - #Lawrence Wilkerson's term - (OCP) to make hiring mischief#, to be inept, burnish his legacy#, and defend his record# of failures. I cannot wait to say goodbye to all that. The Republicans were defeated.

The past week has provided an opportunity for Israel to invade Gaza with impunity from OCP, a NYT analysis asserts. Despite world-wide protest, the current administration has come down almost entirely on the side of Israel. Ironically, there is every possibility that United States citizens protesting against either Israeli or Palestinian violence will have their civil liberties violated. They can easily be monitored by some arm of the government* for their potential as so-called "terrorist threats." If Maryland police could dream it up you can imagine that some other set of cowboys would try it.

While most Republicans will flee DC for the inauguration, Frank Rich's recent New York Times op-ed column, "A President Forgotten But Not Gone," reminds us painfully that OCP will still be in town until the White House changes hands. His piece is a searing indictment of OCP's failed presidency, along with a very perceptive analysis of the personality of OCP. And the Bush dynasty may not be over; Bush 41 is now touting Jeb for the top job#. "NO! NO! NO!," exclaims my regular contributor, Jon.

Put your money in gold# -- A study released last month by Celent , a Boston-based firm that provides independent information and advice to financial services companies, produced a "Fraudlent 'Credit Crisis' paves way for economic disaster#" MensNewsDaily headline that, to quote:

The analysis, Flawed Assumptions about the Credit Crisis: A Critical Examination of US Policymakers, concludes that the result of the unjustified massive federal intervention in the economy could be similar to the economic crisis in the Weimar Republic of 1922, where disastrous hyperinflation made the currency worthless and threatened the nation’s political system and stability.

. . . Paulson had claimed that, by mid-September, when he persuaded President Bush to go public with demands for Congress to approve a $700-billion bailout plan, the financial system had “seized up,” credit markets had “froze,” and interbank lending had been “substantially reduced.”

But none of this was true. “The freezing of the credit markets that Secretary Paulson cites is not visible” in the data, the Celent report shows . . .It declares, “Doubtlessly, a number of the leading financial institutions in the US are in serious trouble, as are a number of the leading industrial firms. However, credit difficulties surrounding a specific set of firms is not the same as a problem in the credit markets in the aggregate.” The study says that, “A clear and cogent analysis of the credit crisis has not been presented by policymakers, despite the fact that unprecedented levels of public funds are being deployed.” As a result, the “massive injection of funds could well exacerbate the problem rather than help.”

Fighting the Last Depression# -- "Banks have plenty of money; this is a crisis of confidence," is Time Magazine's analysis. Authors Lawrence and Ari Officer warn that the administration (s) should not fight this crisis like it is another Great Depression. AlterNet posits in similar posts# that the "credit crunch was a myth perpetuated to sell a trillion-dollar scam#." We will see how long it lasts after being exposed to the light of day.

Gates has guts -- Walter Pincus' article, "Pentagon Chief sees opportunities in Russia and the War on Terrorism," is a very welcome way for all of us to get some practice bridging out of the administration of OCP and into some sanity. We have just a couple more weeks to wait.

Hat Tip Key: Regular contributors of links to leads are "betmo*" and Jon#.

(Cross-posted at South by Southwest.)

As bad as 1929?

By Carol Gee

The global economic crisis is being compared to the "Crash of 1929," that began the Great Depression. But soon after this comparison is made the experts hasten to add that it is not the same. They say we have more laws and safeguards in place now. They say we have the wisdom and experience that President Franklin Roosevelt modeled for us back then.

Stock markets around the world have dropped precipitously, fearing a world-wide recession. We do not know if it is a panic but thousands are running towards U.S. treasury notes as the only safe bet. That is because people with money around the world remain willing to lend it to us. Because they have confidence in the full faith and credit capacity of the U.S. dollar, unlike the Euro, that enjoys much less confidence . And that gives us what seems like limitless money to throw at failing big financial institutions, the ones chosen by our government as worth saving.

And we want to understand what is going on and why. For that I turned today to a couple of resources that increased my understanding a bit. I share them in today's post.

"What now?" To quote from this wonderful writer, Jim Kuntsler# (written 10/10/08, it has generated over 300 comments to date):

All nations that have reached the fork-and-spoon level of civilization are now engineering a vast network of cyber-cables that lead directly from their central bank computers to the Death Star that is hovering above world financial affairs like a giant cosmic vacuum cleaner, sucking up dollars, euros, zlotys, forints, krona, what-have-you. As fast as the keystrokes create currency-pixels, the little electron-denominated units of exchange are sucked out of the terrestrial economies into the black hole of money death. That's what the $700-billion bail-out (excuse me, "rescue plan") and all its associated ventures are about.

To switch metaphors, let's say that we are witnessing the two stages of a tsunami. The current disappearance of wealth in the form of debts repudiated, bets welshed on, contracts canceled, and Lehman Brothers-style sob stories played out is like the withdrawal of the sea. The poor curious little monkey-humans stand on the beach transfixed by the strangeness of the event as the water recedes and the sea floor is exposed and all kinds of exotic creatures are seen thrashing in the mud, while the skeletons of historic wrecks are exposed to view, and a great stench of organic decay wafts toward the strand. Then comes the second stage, the tidal wave itself -- which in this case will be horrific monetary inflation -- roaring back over the mud flats toward the land mass, crashing over the beach, and ripping apart all the hotels and houses and infrastructure there while it drowns the poor curious monkey-humans who were too enthralled by the weird spectacle to make for higher ground. The killer tidal wave washes away all the things they have labored to build for decades, all their poignant little effects and chattels, and the survivors are left keening amidst the wreckage as the sea once again returns to normal in its eternal cradle.

"Strange Liberators Militarism, Mayhem, and the Pursuit of Profit,"* is a review of Gregory Elich's Book at Global Research (10/3/08) This excellent review concludes with the following:

As the U.S. loses its luster as the great democratic liberator, like Russia was once the great communist savior, the new country with the influence and clout is mainland China. Flush with cash, minimizing its former communist rhetoric, growing a red-hot economy, and maintaining a population of 1.5 billion that supplies both cheap labor and high consumerism, China is courting the Middle East, South America, and Africa. It is approaching regions often ignored by the west. China has built new alliances in the Pacific rim with South Korea and Japan. The combined alliance of China and Russia still holds sway, enough to keep the U.S. at bay. Gregory Elich’s book is provocative, accusatory, inflammatory, thoughtful and dead serious. This is sober reading. It shows the reader a very big picture of global cause-and-effect. What happens ten thousand miles away does impact us.

‘Strange Liberators’ is a disturbing read. It can be interpreted as a lengthy indictment of what U.S. policies on national interest have done to developing countries. He has solid evidence to back his claims, by research, public information, and from personal experiences in Africa, Yugoslavia, and Korea.

Gregory Elich, Strange Liberators: Militarism, Mayhem, and the Pursuit of Profit, Llumina Press, Coral Springs (FL), 2006 ISBN # 1-59526-5708

Now in my seventh decade of life, I am still shaking my head in disbelief that my country is doing these things. And I lay blame at the feet of these gods: militarism, corporatocracy, and greed. I also blame us because we neglected holding our public servants accountable for ineptitude, laxity and corruption along the way. In ten days we have another chance. If you have not voted yet, do so that day. Vote Democratic for a better shot at economic survival, but even then it will be a tough slog for Obama and the best people he can gather about himself. I will remain mad at Bush for the remainder of my years. And I do not welcome him back into my neighborhood.

Hat Tip Key: Regular contributors of links to leads are "betmo"* and Jon#.

(Cross-posted at South by Southwest.)

Palin in Iowa

By Capt. Fogg

If you've taken Economics 101, you've heard of Adam Smith and the "invisible hand," the principle that causes markets to be self-regulating. It's usually considered to be at least a vertebrum in the backbone of conservative philosophy, but people (if we use the term loosely) like Sarah Palin apparently aren't aware of Smith or of principles of any kind, even if she can see a library from her window.

Adam Smith, whom some consider to be the father of capitalism, thought it fair, right, and proper that the wealthy should pay proportionately more in taxes than the less wealthy. By Sarah's dim light, however, the father of capitalism would be a socialist. In the crepuscular gloom of her perky little mind, any kind of tax is socialism: It's spreading the wealth around. Handing out government cheques as a stimulus isn't socialism, but to reduce taxes is the same as to increase taxes because it is socialism if it's taxes. Okay, so you're not from a small town and probably not a real American, so to make it perfectly clear, Obama's proposed tax cut for 95% of Americans is:

the philosophy of government taking more, which is a misuse of the power to tax.

Got that? Less is more and more is less and together it's socialism. Spreading $600 cheques around isn't socialism, because it's just giving (real) people back the money wealthier people paid in, but lowering taxes on nearly everybody is socialism because not only is it spreading money around, but a "massive tax increase":

It leads to government moving into the role of taking care of you, and government and politicians and, kind of moving in as the other half of your family to make decisions for you.

It's really impossible to make any sense of this gibberish, other than to infer from it that she's opposed to funding anything the government does, opposed to having the government do anything but pay for her husband's basketball tickets and her feloniously padded expense account -- opposed to government itself.

Who knows if it makes sense to her or to her audience or whether either of them care? It's a hate session. It would be less effective if it made sense. It's the kind of mockery that used to precede pogroms and purges and witch hunts and various slaughters of various innocents in the more primitive dream world Mad Sarah looks backward to as a guide. As pure chant-and-response shamanism, it seems to be as effective at eliciting shrill cries of "kill him" and "socialism" from the howling jackals as it is at scaring the hell out of anyone rational. Indeed, is anyone rational not terrified of allowing this simple-minded sociopath anywhere near Washington?

(Cross-posted from the Swash Zone.)