Considering that I am both doing NaNoWriMo AND have just moved, I don't have time right now to formulate my utter (although predicted) disappointment in Obama's cabinet choices, especially his economic choices. Instead I'm offering my dear readers (are there any really??) a smattering of articles that might give some insight - especially for progressives who think Summers & Geithner are good choices (and I'm not even taking into consideration the fact that Summers thinks that women just aren't good at science):
About the Advisory Board - Paul Krugman's suggested picks. Why oh why Paul won't you do it??
Return of Wall Street Hustlers - Think that Rubin & Clinton aren't partially responsible for this economic mess? Think again.
State Banks Could Solve Financial Crisis - why not get the good part of 'socialism' (i.e. control) instead of the bad (i.e. the debt)?
Surprise! This Bank Refuses Fed Bailout - See? Integrity is possible.
Obama's Wall Street Woes - I don't agree that there is any evidence that Obama "gets this" but I agree that he "seems perilously close to following the same course as Bush in the banking bailout" (which is to say the same course ALL presidents have been following for the past 28 years).
That's just a smattering. Also, take a peek at some quotes from On the Wealth of Nations, Book 1. Not quoted is the part where Smith argues that corporations which take government subsidies will soon spend all their time and energy getting free money and not actually do anything else.
Even the Wall Street Journal called this crisis "Minsky's moment," so why aren't we putting post-Keysians or, hell, even a Keysian into positions of power? Hello?
Just for FYI --
Banks panics in the US:
1819
1837
1857
1873
1893
1907
Great Depression
80s & 90s Savings & Loans Crisis
1987 Black Monday
Tech Bust of 2000/2001
2008
Hmm ... seems like there is a large period missing from this list? 1945-1980? And yet, New Deal or Raw Deal?: How FDR's Economic Legacy Has Damaged America gets prominent billing in the Union Square Barnes & Noble. Seriously? Yes, America was so damaged by the New Deal that we became a singular super power and the most prosperous country in the world until Milton Friedman came along and made that same argument - and we are currently seeing just how well THAT worked out.
Well this went longer than planned ...
Showing posts with label historical event - great depression. Show all posts
Showing posts with label historical event - great depression. Show all posts
Wednesday, November 26, 2008
Friday, September 19, 2008
Wednesday, September 17, 2008
The Great Depression v2.0
I've been saying or hinting for a while now that the current fiscal crisis we are in is absolutely akin to the Great Depression. I think most people think (thought?) that I was overreacting. Well, now I'm, sadly, not the only one.
McCain & Hoover: The fundamentals are strong!
"The day before Hoover insisted that the fundamentals were strong was the day that came to be known as Black Thursday, when in heavy trading the Dow Jones Industrial Average lost about 9 percent of its value. And while, in endless stock-footage documentaries showing images of dumbfounded traders over a soundtrack of mournful jazz clarinets, the crash is supposed to begin the Great Depression, it wasn't quite so. The real cause was the collapse of the banking system, which followed the crash in part because Hoover believed strong fundamentals would protect the economy from disaster."
The panic sets in ...:
"At some point, the new president might have to do what FDR did in the wreckage of early 1933--declare a "bank holiday" and announce emergency rules to govern banking and finance until the crisis is broken. For the country's sake, I think this a better approach than buying up junked banks and failed financial firms, one by one. People have the right to ask: what exactly are the rest of us getting for our money?"
I know that after eight years of a President who respects neither the constitution or history I shouldn't be surprised. But really, who hasn't heard the old adage that those who fail to learn history are doomed to repeat it. (Actually, the quote is "Those who cannot remember the past are condemned to repeat it")
Mostly, when I employ this adage, I'm talking abou t the economy; about, what I see as, the fundamental lesson we learned during the Great Depression: that the government plays a fundamental role in the economy, both to ensure stability and to ensure true capitalistic competition or consumer protection when capitalistic competition is impossible (utilities for example). Ok, all of that didn't come directly out of the Great Depression. The latter came out of the Gilded Age but I thought I'd throw it in for good measure.
Anyway, my point is this: the financial crisis were are seeing is a) exactly what happened during the Great Depression (run on banks causing a crash of the economy), b) a direct result of the financial deregulation of the last two decades, especially the repeals of the Glass-Steagall Acts (a trend that, instead of being nipped in the bud by the government - you know, the one bailing out these free market corporations - is being continued by the process.), and c) is only not as a bad as the Great Depression (well, so far - fingers crossed) because we still have some remnants of the New Deal era regulations and safe guards in place.
Seriously, what is wrong with this country? Why do people buy this bullshit? How is it that I, a financial and economic lay person by most accounts, can say 'I told you so' and we have the top honchos of Wall Street scurrying around trying to justify their greed?
*Just because I know what people assume: I believe in capitalism. But, like, real capitalism. Capitalism that involves competition by many, consumer protections (because consumers are a part of the market too!), government regulation to ensure that competition exists and is fair or, in industries, that lend themselves to monopolies (utilities), ensure that corporations aren't taking advantage of consumers, and little to no government subsidies to private enterprises. I, particularly, believe in supporting and nurturing small business in America. Also, I do believe there are some things that do not benefit from being motivated by profit - education, health care, and the military in particular. Most importantly, though, I believe it's the role of the economy to serve society; not the other way around.
McCain & Hoover: The fundamentals are strong!
"The day before Hoover insisted that the fundamentals were strong was the day that came to be known as Black Thursday, when in heavy trading the Dow Jones Industrial Average lost about 9 percent of its value. And while, in endless stock-footage documentaries showing images of dumbfounded traders over a soundtrack of mournful jazz clarinets, the crash is supposed to begin the Great Depression, it wasn't quite so. The real cause was the collapse of the banking system, which followed the crash in part because Hoover believed strong fundamentals would protect the economy from disaster."
The panic sets in ...:
"At some point, the new president might have to do what FDR did in the wreckage of early 1933--declare a "bank holiday" and announce emergency rules to govern banking and finance until the crisis is broken. For the country's sake, I think this a better approach than buying up junked banks and failed financial firms, one by one. People have the right to ask: what exactly are the rest of us getting for our money?"
I know that after eight years of a President who respects neither the constitution or history I shouldn't be surprised. But really, who hasn't heard the old adage that those who fail to learn history are doomed to repeat it. (Actually, the quote is "Those who cannot remember the past are condemned to repeat it")
Mostly, when I employ this adage, I'm talking abou t the economy; about, what I see as, the fundamental lesson we learned during the Great Depression: that the government plays a fundamental role in the economy, both to ensure stability and to ensure true capitalistic competition or consumer protection when capitalistic competition is impossible (utilities for example). Ok, all of that didn't come directly out of the Great Depression. The latter came out of the Gilded Age but I thought I'd throw it in for good measure.
Anyway, my point is this: the financial crisis were are seeing is a) exactly what happened during the Great Depression (run on banks causing a crash of the economy), b) a direct result of the financial deregulation of the last two decades, especially the repeals of the Glass-Steagall Acts (a trend that, instead of being nipped in the bud by the government - you know, the one bailing out these free market corporations - is being continued by the process.), and c) is only not as a bad as the Great Depression (well, so far - fingers crossed) because we still have some remnants of the New Deal era regulations and safe guards in place.
Seriously, what is wrong with this country? Why do people buy this bullshit? How is it that I, a financial and economic lay person by most accounts, can say 'I told you so' and we have the top honchos of Wall Street scurrying around trying to justify their greed?
*Just because I know what people assume: I believe in capitalism. But, like, real capitalism. Capitalism that involves competition by many, consumer protections (because consumers are a part of the market too!), government regulation to ensure that competition exists and is fair or, in industries, that lend themselves to monopolies (utilities), ensure that corporations aren't taking advantage of consumers, and little to no government subsidies to private enterprises. I, particularly, believe in supporting and nurturing small business in America. Also, I do believe there are some things that do not benefit from being motivated by profit - education, health care, and the military in particular. Most importantly, though, I believe it's the role of the economy to serve society; not the other way around.
Wednesday, September 10, 2008
Life, Liberty, and the Pursuit of Bullshit ....
In writing my last post, I was googling to try to find the democratic party official or worker or something who said that while working for the democratic party, he didn't have to listen to the left at all. Instead, I came across a random blog - I guess it can't be that random if it showed up in google's first page search results - some guy wrote about how both the Democrats and Republicans have it wrong. Don't get me wrong, as evidenced by my voting for Nader, I think both parties have a lot of shaping up to do. However, this guy's reasons for why the democrats need to shape up are right out of the Fox News play book. Seriously, dude, seriously.
Before I, inappropriately, post a comment, I thought I'd share here my responses to his post:
Democrats still believe in higher taxes, especially the higher income people to spend on the "unfortunate". This is so stupid because
1. This reduces incentive to work. If one is "earning" without working, he'd rather not work and "earn" a little less, than work and earn a little more (and see a big chunk of earning taxed away).
2. The "unfortunate" (or anyone for that matter) does not appreciate something that is not hard earned.
Wow. Priviledged much? Would you stop working just so you could get welfare? I doubt it. Welfare and food stamps barely cover the cost of living. Welfare to "Work" is effectively slave labor - for example, Welfare to Work in New York City involves working sweeping parks for the New York City Parks and Rec. The New York City Parks and Rec has no incentive to hire anyone because they get workers for free and the workers aren't learning any valuable job skills. Also, you need to take into account the terrible education for the urban poor and that there are very few unskilled jobs where a worker can make enough to pay the bills anymore. Let's also not forget that Welfare to "Work" affected a lot of single mothers who were going back to school so they could improve their situation. So, yes, if I had a choice between working 3 jobs to barely pay the bills or going on welfare to barely pay the bills, I might take welfare.
3. Higher taxes are bad for the economy - they drive away the industry. Why would someone set up a true multinational in the US if the US is going to take 40% of their profit away, if setting up the same company in another country can reduce the tax liability by 90%. A case in the point, Schlumberger, the oil drilling company is moving to Dubai
The vast majority of corporations in the US don't pay any taxes at all so this argument doesn't make sense (and it makes it a bit comical that you think US corporations pay 40% of their profits in taxes). Companies are moving away even though they don't pay any taxes. Also, historically, all nations have had trade importation regulations which would encourage a company, especially one who wants to sell to the enticing American consumer, to stay. If no one is employed, no one can buy your product so it's not actually in a companies best interest to move away.
In fact, the most prosperous time in the US was '63 or so, when all the New Deal regulations were still strongly in place and might be considered the height of economic regulations. Post-WWII to the '80s saw the smallest gap between rich and poor; today the gap between the rich and the poor is as large if not larger than it was during the 20s ... an era that lead to the Great Depression, which is where we are now.
Last but not least, who said that the US supporting and bending over backwards to have "true multinational" corporations is the goal of the economy. I would argue that the purpose of the economy is to serve society - with jobs, products, education, health care - not the other way around.
5. What part of never kill the goose that lays the golden egg you don't understand?
Depends who you think the goose is. Clearly you think it's corporations. I'd argue it's consumers who make corporations profitable. So having an economic system that ensures capitalistic competition (which we currently don't have) and supports an ardent middle class, is in the best interest of the country.
6. This country was founded on the notion of "Life, liberty and the pursuit of happiness". It is pursuit of happiness, not provision of happiness.
I'd say it's pretty difficult to be happy when you cannot afford to eat. And I'm not sure how taxation really impedes your ability to pursue happiness ... unless you believe happiness is equivalent to money and then I just sort of feel sorry for you. Our founding fathers - you know, the ones that wrote the Declaration of Independence - also said "No taxation without representation" so they created a system of representation. Also, since the supreme court long ago ruled that a corporation is entitled to the benefits of being considered a "person" under the law; shouldn't corporations also be required to bare the burdens - such as taxation - of being a "person" under the law.
7. This is Capitalism, not Socialism. US is prosperous because of enormous wealth creation by Capitalism. Socialism didn't work in USSR, it didn't work in North Korea, it didn't work in East Germany, it didn't work in China (till it shunned its Socialist/Marxist policies in favor of Capitalism).
Well, we sort of have capitalism (just like China, the USSR, East Germany and North Korea sort of had socialism and just like China now sort of - very very sort of - now has capitalism). Capitalism is based on many, small entities competing which we generally don't have today given corporate consolidation, corporate welfare, and a systematic dismantling of consumer protections in the last 20 or so years. Also, Adam Smith, the father of capitalism, warned against the treachery of corporations in the same industry cohorting to manipulate the "invisible hand" which they do today, perfectly legally. There's nothing that says that the government does not play a role in a capitalist economy - in fact, that's a huge lesson we learned during the Great Depression and was the basis for the New Deal. Then there's NAFTA: a trade agreement, especially one that trumps government rules, is by definition not capitalistic. I could go on and on ...
Secondly, there's nothing to say that there aren't areas of society that should be socialized; areas that don't benefit from the motivation of profit - education or health care, for example. Moreover, even today, the amount of government money flowing through our economy - fire fighter, police, and teacher salaries, research grants, subsidies for corporations etc etc - is greater than the stock market, effectively making the US one of the most "socialist" countries in the world and thus making your argument absurd.
Also, our current "wealth" goes to about 1% of the population so in fact, your "capitalism" has made most Americans less wealthy.
In fact, I would argue that what we currently have - a system that both republicans and democrats support with ridiculous campaign contributions and corporate lobbyists - is much closer to fascism (by definition, a corporate run state) than socialism.
-- End Inappropriate Comment --
Before I, inappropriately, post a comment, I thought I'd share here my responses to his post:
Democrats still believe in higher taxes, especially the higher income people to spend on the "unfortunate". This is so stupid because
1. This reduces incentive to work. If one is "earning" without working, he'd rather not work and "earn" a little less, than work and earn a little more (and see a big chunk of earning taxed away).
2. The "unfortunate" (or anyone for that matter) does not appreciate something that is not hard earned.
Wow. Priviledged much? Would you stop working just so you could get welfare? I doubt it. Welfare and food stamps barely cover the cost of living. Welfare to "Work" is effectively slave labor - for example, Welfare to Work in New York City involves working sweeping parks for the New York City Parks and Rec. The New York City Parks and Rec has no incentive to hire anyone because they get workers for free and the workers aren't learning any valuable job skills. Also, you need to take into account the terrible education for the urban poor and that there are very few unskilled jobs where a worker can make enough to pay the bills anymore. Let's also not forget that Welfare to "Work" affected a lot of single mothers who were going back to school so they could improve their situation. So, yes, if I had a choice between working 3 jobs to barely pay the bills or going on welfare to barely pay the bills, I might take welfare.
3. Higher taxes are bad for the economy - they drive away the industry. Why would someone set up a true multinational in the US if the US is going to take 40% of their profit away, if setting up the same company in another country can reduce the tax liability by 90%. A case in the point, Schlumberger, the oil drilling company is moving to Dubai
The vast majority of corporations in the US don't pay any taxes at all so this argument doesn't make sense (and it makes it a bit comical that you think US corporations pay 40% of their profits in taxes). Companies are moving away even though they don't pay any taxes. Also, historically, all nations have had trade importation regulations which would encourage a company, especially one who wants to sell to the enticing American consumer, to stay. If no one is employed, no one can buy your product so it's not actually in a companies best interest to move away.
In fact, the most prosperous time in the US was '63 or so, when all the New Deal regulations were still strongly in place and might be considered the height of economic regulations. Post-WWII to the '80s saw the smallest gap between rich and poor; today the gap between the rich and the poor is as large if not larger than it was during the 20s ... an era that lead to the Great Depression, which is where we are now.
Last but not least, who said that the US supporting and bending over backwards to have "true multinational" corporations is the goal of the economy. I would argue that the purpose of the economy is to serve society - with jobs, products, education, health care - not the other way around.
5. What part of never kill the goose that lays the golden egg you don't understand?
Depends who you think the goose is. Clearly you think it's corporations. I'd argue it's consumers who make corporations profitable. So having an economic system that ensures capitalistic competition (which we currently don't have) and supports an ardent middle class, is in the best interest of the country.
6. This country was founded on the notion of "Life, liberty and the pursuit of happiness". It is pursuit of happiness, not provision of happiness.
I'd say it's pretty difficult to be happy when you cannot afford to eat. And I'm not sure how taxation really impedes your ability to pursue happiness ... unless you believe happiness is equivalent to money and then I just sort of feel sorry for you. Our founding fathers - you know, the ones that wrote the Declaration of Independence - also said "No taxation without representation" so they created a system of representation. Also, since the supreme court long ago ruled that a corporation is entitled to the benefits of being considered a "person" under the law; shouldn't corporations also be required to bare the burdens - such as taxation - of being a "person" under the law.
7. This is Capitalism, not Socialism. US is prosperous because of enormous wealth creation by Capitalism. Socialism didn't work in USSR, it didn't work in North Korea, it didn't work in East Germany, it didn't work in China (till it shunned its Socialist/Marxist policies in favor of Capitalism).
Well, we sort of have capitalism (just like China, the USSR, East Germany and North Korea sort of had socialism and just like China now sort of - very very sort of - now has capitalism). Capitalism is based on many, small entities competing which we generally don't have today given corporate consolidation, corporate welfare, and a systematic dismantling of consumer protections in the last 20 or so years. Also, Adam Smith, the father of capitalism, warned against the treachery of corporations in the same industry cohorting to manipulate the "invisible hand" which they do today, perfectly legally. There's nothing that says that the government does not play a role in a capitalist economy - in fact, that's a huge lesson we learned during the Great Depression and was the basis for the New Deal. Then there's NAFTA: a trade agreement, especially one that trumps government rules, is by definition not capitalistic. I could go on and on ...
Secondly, there's nothing to say that there aren't areas of society that should be socialized; areas that don't benefit from the motivation of profit - education or health care, for example. Moreover, even today, the amount of government money flowing through our economy - fire fighter, police, and teacher salaries, research grants, subsidies for corporations etc etc - is greater than the stock market, effectively making the US one of the most "socialist" countries in the world and thus making your argument absurd.
Also, our current "wealth" goes to about 1% of the population so in fact, your "capitalism" has made most Americans less wealthy.
In fact, I would argue that what we currently have - a system that both republicans and democrats support with ridiculous campaign contributions and corporate lobbyists - is much closer to fascism (by definition, a corporate run state) than socialism.
-- End Inappropriate Comment --
Monday, July 28, 2008
America: The New India?
One of the things I've always hated about liberal intellectuals is the glorification of non-Western culture. I'm not saying that eastern cultures don't have positives - they have plenty - but they also have many many negatives (just as we do).
I remember talking with a friend of mine who was preparing to head to grad school for Indian History. She began telling me about how the Indian government was so responsive to the people - responsive in a way that the American government isn't. Specifically, she was talking about the Indian government's attempts at dealing with the exponential increase in suicides among poor farmers.
I looked at her quizzically. In America, I said, we would never get to a point where poor farmers are so desperate that they start killing themselves - we subsidize farmers, we have welfare. I wasn't saying that any of these solutions were perfect - the subsidies of Reagan should surely be replace by the revolving loans of Roosevelt; welfare plus promotion/creation of middle class jobs should surely replace welfare-as-slave labor, i'm sorry, i mean "welfare to work" - but the point was that in American, for better or worse, we generally keep people from killing themselves because of financial ruin.
Turns out that I was wrong. In the wake of the recent mortgage crisis (and I mean recent in the sense that it's the direct result of 20 years of deregulation of financial markets and tearing down social safety nets of the New Deal), people have begun killing themselves rather then watch their houses - likely the accumulation of their life's work - be sold off to the lowest bidder.
Is this seriously what America - and it's lofty ideals - has come to? Seeing suicide as an effective solution - for debtors and creditors alike - to what generally amounts to wall street's speculation and predatory lending? During the Great Depression - and don't kid yourselves, this is Great Depression #2, we just have enough of the safety nets enacted by the New Dealers in place to keep the economy from complete and utter collapsie - people shot the bankers and cops who came to foreclose houses, not the other way around. The people said, fuck you - if you're going to sell my house for a fraction of what I owe you and not give me the opportunity to buy it, I'm taking to the streets with guns and fire and stuff. Or something like that.
Ever since Bush got into office, I just cannot help constantly thinking of the old adage: "Those who cannot learn from history are doomed to repeat it." It's become my sad sad mantra as I watch people throw away the very solutions to problems they are claiming to solve.
And repeat it we will.
Read the article The Suicide Solution by Barbara Ehrenreich at TheNation.com.
I remember talking with a friend of mine who was preparing to head to grad school for Indian History. She began telling me about how the Indian government was so responsive to the people - responsive in a way that the American government isn't. Specifically, she was talking about the Indian government's attempts at dealing with the exponential increase in suicides among poor farmers.
I looked at her quizzically. In America, I said, we would never get to a point where poor farmers are so desperate that they start killing themselves - we subsidize farmers, we have welfare. I wasn't saying that any of these solutions were perfect - the subsidies of Reagan should surely be replace by the revolving loans of Roosevelt; welfare plus promotion/creation of middle class jobs should surely replace welfare-as-slave labor, i'm sorry, i mean "welfare to work" - but the point was that in American, for better or worse, we generally keep people from killing themselves because of financial ruin.
Turns out that I was wrong. In the wake of the recent mortgage crisis (and I mean recent in the sense that it's the direct result of 20 years of deregulation of financial markets and tearing down social safety nets of the New Deal), people have begun killing themselves rather then watch their houses - likely the accumulation of their life's work - be sold off to the lowest bidder.
Is this seriously what America - and it's lofty ideals - has come to? Seeing suicide as an effective solution - for debtors and creditors alike - to what generally amounts to wall street's speculation and predatory lending? During the Great Depression - and don't kid yourselves, this is Great Depression #2, we just have enough of the safety nets enacted by the New Dealers in place to keep the economy from complete and utter collapsie - people shot the bankers and cops who came to foreclose houses, not the other way around. The people said, fuck you - if you're going to sell my house for a fraction of what I owe you and not give me the opportunity to buy it, I'm taking to the streets with guns and fire and stuff. Or something like that.
Ever since Bush got into office, I just cannot help constantly thinking of the old adage: "Those who cannot learn from history are doomed to repeat it." It's become my sad sad mantra as I watch people throw away the very solutions to problems they are claiming to solve.
And repeat it we will.
Read the article The Suicide Solution by Barbara Ehrenreich at TheNation.com.
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