Posted inUncategorized

Rebalancing our national portfolio

The rich are finally afraid. You can see it in their eyes. They're laying off their nannies. The smart ones are fleeing into Treasury notes, even though the yield is zero. According to the New York Times,

While this will lower the cost of borrowing for the United States
government, economists worry that a widespread hunkering-down could
have broader implications that could slow an economic recovery. If
investors remain reluctant to put money into stocks and corporate
bonds, that could choke off funds that businesses need to keep
financing their day-to-day operations.

Perhaps. But it might, just might, jolt Americans back to reality. That means an economy based on producing things of real value. And a re-valuation of business, which in this country means a re-evaluation of our very lives. It won't be easy, perhaps not even likely, because the dead hand of the past rests oh-so-heavy on everything we do. If it happened, however, it might just save us.

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Posted inUncategorized

Worse than the Great Depression?

It's widely acknowledged by economists, and supported by mounting evidence, that we're in for the worst economic contraction since the Great Depression. This is not "negative news" the media are inventing, dear positive-thinkers. It is simply reality. Yet it won't be as bad as the Depression, right?

For months, I have been giving a qualified "no" to that question. First, because the safety nets of the New Deal and Great Society, although badly frayed by Republican misgovernance, are still in place. Second, Americans are more affluent — we don't have a third of the nation "ill clad, ill-fed and ill-housed" and millions lacking even electricity. My "no" was qualified because expert opinion got us into this mess and will continue to hold sway — watch as the proteges of Robert Rubin steer the Obama economic plan. Experts were flummoxed by the Great Depression and in many cases carried out policies that made it worse. Expertise is only useful when it grows, as when a man demanded to know why Keynes had changed his view on an issue. Keynes responded: "When the facts change, I change my mind. What do you do, sir?"

Now, however, I am starting to wonder about my reassurances. Friday's report that 533,000 jobs were lost in November alone, signaling that the pace of unemployment is accelerating fast, was a kick in the teeth. Could this recession turn into a depression to rival, or surpass, the 1930s?

It is possible.

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Posted inUncategorized

President Hoover and Depression thinking

I feel the need to come to the defense of Herbert Hoover, if for no other reason than this fundamental misreading of history will only set us up for costly mistakes in the future. The left long has labeled George W. Bush "President Hoover" for presiding over a historic economic crisis. Now the meme has been picked up by the right, as well.

Yet to paraphrase Lloyd Bentsen, President Bush, you're no Herbert Hoover. Among the differences: Hoover (1874-1964) was a self-made man, who worked his way through the new Stanford University, made a fortune as a brilliant engineer, then gained international acclaim for coordinating relief for refugees in World War I. Although a Republican, Hoover came from the party's Theodore Roosevelt progressive wing. He was mistrusted by Calvin Coolidge, and for good reason. Hoover wanted to move away from the rapacious capitalism of the 1920s to an ethic that embraced the common good and the obligations of business to society. He was a product of his time of scientific and engineering wonders: The Great Engineer, who could bring pragmatic, fact-based solutions to governing.

Unfortunately, Hoover was elected in 1929, not 1912 — the era in which his worldview had been shaped. After the great crash and with the gathering depression, Hoover was overwhelmed. His administration launched the greatest expansion of government intervention in the economy up to that point, including programs and ideas that would live on in the New Deal. Yet it did little good as unemployment reached a staggering 25 percent and Americans were forced into shantytowns they called Hoovervilles.

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Posted inPolitics: National

Who to blame

So Alan Greenspan is shocked, shocked that gambling was going on in the casino that he and his fellow radicals made of the capital markets. In his testimony before Congress Thursday, he talked about how stunned he was that the markets weren’t self-regulating, that speculation and greed led to this disaster, which he likened to a “once in a century” financial tsunami.

But this is no act of God. The ongoing financial collapse is the direct result of the deregulation, trade, privatization and tax policies enacted by Alan Greenspan and the other rigid ideologues of the Republican Party over the past quarter of a century. The longtime Fed chairman is a disciple of the author Ayn Rand, whose advocacy of a brutal individualism has been turned into a devil-take-the-hindmost reality that would make Atlas blush.

It’s important for the American voter to understand this. The collapse of their savings, the deferment of their retirement dreams, the loss of their homes, the decline in their earnings, the elimination of their jobs – all has been the result of very conscious policies. They were promised an "ownership society," but, as Barack Obama said, the reality is that most Americans are on their own.

If Americans understand this, the election will not be in doubt. And, God willing, the calamity will discredit this extremist philosophy, just as happened in 1932, for decades to come. For this orthodox ideological extremism is every bit as bankrupt and failed as all its false prophet predecessors. Alan Greenspan and company, including former Sen. Phil Gramm, the great – and greatly compensated by the banking industry – deregulator and economic guru to wealthy Republican John Sidney McCain III, are the most dangerous of men: true believers.

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