There was Never Supposed to be Another Great Depression

Yes that's right. There never was supposed to be another great depression. It was never gonna happen. The rich guys were way too smart to ever let anything like that happen. This was part of the first advice I ever received about how to plan my finances for life. Sitting on the front porch in Bridgewater in the Spring of 1975 at the ripe age of 23, my new financial guru, kindly providing his services as a benefit of my employment, went on for quite a while about how the bankers and politicians had learned their lesson very well and that there would "never, no way, ever, be another Great Depression."

He is in grave danger of being wrong. Thirty-three years later we find ourselves at the precipice. We are in an economic crisis that is looking so deep and so wide that no one really understands it, and no one knows how to get us out of it. Our leaders have a plan and they are trying to implement it but the going is slow. Will the new law now going into affect slow the fall enough so that we can pull ourselves out of it? The reviews are mixed. There is a lot of debate and shouting on both sides. Can we spend ourselves out of the ditch we're in?

In a word, yes.

The fall into the throes of recession were a result of the "hands off" policies of the Federal Reserve and the Bush Administration, the greed of the investment banking community, and the political plutocrats who preached the virtues of the "free" market. They created a profit generating machine of immense proportions and managed to create an unbelievable and quite unsustainable level of wealth. The magic moment:

In 1999, Congress passed the Gramm-Leach-Bliley Act, which abolished “all of the significant rules put in place at the time of the Great Depression designed to prevent a repeat.” Specifically, this act “destroyed the Depression-era barrier to the merger of stockbrokers, banks and insurance companies.”

This one act of Congress more than any other has been identified by economists as the push that got the boulder rolling down the hill. It enabled deposit banks to join with their non-deposit brethren in the risky, creative financial wheeling and dealing that caused the bubble that has now finally burst. A truly Big Bang.

A group of economists, including Nobel Prize winner Joseph Stiglitz, slammed Gramm for having a “mentality that doesn’t understand the nature of systemic risks in financial systems,” and said that his bill helped create the current financial turmoil:

Economic experts say that Gramm and others are to blame for the current crisis that is shaking Wall Street.

Gramm’s successful effort to pass banking reform laws in 1999, which reduced decades-old regulations separating banking, insurance and brokerage activities, helped to create the current economic crisis.

“As a result, the culture of investment banks was conveyed to commercial banks and everyone got involved in the high-risk gambling mentality. That mentality was core to the problem that we’re facing now,” Stiglitz says.

Or as blogger Tim Westrich wrote in September '08,

The root cause of the financial mess is the hands-off approach towards mortgage and finance markets by the Bush administration, and its lack of action when a disaster was imminent.

The great depression was never supposed to happen again. The last one only faded when we spent enough money to get our selves out of it. All the talk of GNP, spending our grand children's money, stimulus or spending, the American Dream of everyone owning a home, and whose fault all of this is increasingly irrelevant and is completely drowned by the reality that we ARE in a recession that grows deeper by the day.

That first financial advisor advised us, before we bought our first [and only] home 34 years ago, to watch our debt carefully. We should never owe more than 30% of our net worth if we wanted to live conservatively. If we didn't mind a good bit of risk, we would probably be alright at 60%. We chose the 30% and only in the last 10 years have we fallen below that level. The United States is now in debt 65% of it's net worth. Even though we are a wealthy country with unlimited potential and can easily afford to take on more debt to help solve this crisis, this number alone raises a concern. Yet to get out of our last depression, the national debt skyrocketed to 120% of GNP! This incredible spending spree set up our economy for prosperity that lasted 50 years.

The "starve the beast" mentality plus the laissez-faire, tax cuts only, economic policies of creating obscene wealth have brought us to the brink. Ed Kilgore states the case eloquently in this article from 2002.

"Bipartisanship is another name for date rape."

"We are trying to change the tones in the state capitals-and turn them toward bitter nastiness and partisanship."

-- Grover Norquist

President Bush loves to talk about his favorite foreign policy doctrine of pre-emption, the radical notion that even in the absence of imminent danger the United States should use force against any nation that might pose a threat down the road. What the president won't admit is that his administration has adopted the same doctrine toward government -- and Democrats -- here at home. For conservatives, a government that's not mortgaged to the hilt poses too great a threat of social activism. That's why, in 2001 and again this year, the Bush administration has launched pre-emptive attacks on the national treasury designed to leave the U.S. government so deep in debt it poses no threat to the conservative status quo. Its motto is: Stop government before it can help again.

They've almost gotten away with it but it's always been a "pay me now or pay me later" scenario. Because of the benign neglect of so much of our domestic economy over the past 30 years, and especially in the last 8 it's finally come to time to pay up. Whining doesn't help. Obstructionism doesn't help. Losing courage in the face of crisis doesn't help. Treating the creation of wealth as a religion doesn't help. "All for me and none for all" has had it's time in the light. It's time to rebuild America. All together now... Pull!

Courage or Fear?

The True Cost Of The Stimulus: Totally Unbelievable: $3.27 Trillion [Posted 2009-02-19 in the Daily News Record by the editorial board.]

It appears that the cost of the "spend-u-lus" package recently signed into law by President Obama is mind-blowingly large in the eyes of our feckless and fearful editorial board. Because Democrats are now in charge they'll surely make permanent the funding for

"Head Start, food stamps, Medicaid, IDEA special education and the like — in other words, welfare..."

Spending on these programs and others, like mortgage relief, bank and auto company bailouts, are wasteful and needless according to the editors. Spending on real folks, here at home, to help American citizens to actually build a better, more modern, safer, and more productive country for generations to come is regarded by the editors as "generational theft," a needless burden on future generations.

This is morbidly twisted. When the news that the true cost of the Iraq War [talking about real costs, both long and short term] would approach 3 - 5 TRILLION dollars, the calm, stoic, sober, serious conservatives [the editor] just nodded knowingly and clucked that because it was for national security [imperialist conquest, Pax America, a boost for the military industrial complex...etc] it is money well spent. 3 - 5 Trillion dollars spend largely on DESTRUCTION without anything left to show for the money.

Now we find that it will take 3 - 5 TRILLION dollars to keep ourselves out of a depression here at home and much more than that world wide. Now that the money is to be spent here at home to help US, rich and poor, city and town, farm and factory, it is considered outrageous, ill-spent, a true disaster, and financial suicide for generations to come. The fearful, cowering, outraged, shrieking, whining conservatives [including our fine editor] are now screaming with fright and outrage. Our jaws are supposed to drop and we are told to be afraid once again.

How much clearer can the editors state their fanatical support for the rich and powerful. The old Plantation system is in full flower, described beautifully in this short piece.

The purveyors of "No" are running amok. No to the poor, no to the hungry, no to the innocent civilians in Iraq who were slaughtered for our sake. No to the farmers, no to the factory workers, no to the clerks, the grocery baggers, the Wal-Mart greeters and the convenience store clerks. No to teachers, school boards, town councils, firefighters, police, and civil engineers. No to clean water, clean air, energy efficient automobiles and alternative energy.

The wealthy and their courtiers are indeed fighting valiantly to preserve their influence, wealth and power. How can you blame them? They are staring into the eyes of a nation and lots of good Americans are looking right back... unafraid.

This, friends and neighbors, is the essence of the "guns or butter" debate. The fearful see danger and want guns, the courageous see hunger and want butter. Courage or fear?

I'm ready for a call to courage. I'm ready for for my leaders to ask us to be brave and face our fear with courage and faith. I'm ready for a call to confidence and a steely resolve to MAKE THIS WORK. We ARE America! We are Americans and we CAN make this work.

Just Saying NO

Just this word of warning from Paul Krugman, an advocate of spending as a way of saving the economy:

Everyone should be paying attention to the political/fiscal catastrophe now unfolding in California. Years of neglect, followed by economic disaster — and with all reasonable responses blocked by a fanatical, irrational minority.

This could be America next.

And we hear from Congressman and fine Virginian, Eric Cantor, that he's adopting the Gingrichian method of politics. Because he's unable to to be original [I guess] he's going to "Just Say No" to anything that Obama tries to do on "principle." He's already indicated that he will be against the Housing initiative after he was for it. As it stands, he's a leader of the "radical, fanatical minority" blocking any reasonable solutions and who seem to be celebrating the fact that "only" 7% of homeowners have lost their homes to foreclosure. "Servicing" the poor, just saying no... Republican ideas you can count on.

Surprise, Surprise. It's not the Liberal Media! UPDATED

Anyone who has followed Glen Greenwald over the past few years knows that the idea of a "liberal media" is overblown. The mainstream media outside Washington, Chicago, New York and Los Angeles IS largely liberal in the sense that it covers a wide range of the political spectrum. Views for and against ideological arguments of both the right and the left are covered pretty well. The Big News Media, centered in Washington D.C., is another story all together. The increasingly conservative slant, starting with the drum beating for war in 2002 has only magnified since.

Whether it's the networks using Pentagon Generals on the DOD payroll as "independent" consultants, or the Washington Post (supposedly the liberal counterweight to the admittedly conservative Washington Times) adding William Kristol to its already long list of conservative editorial writers, or simply shilling for corporate bailouts and corporate business interests, the Washington media knows it's role is to help corporate America fight populism and to rail against so called "socialist" policies of the Obama Administration as the recent Newsweek headline proclaimed: WE ARE ALL SOCIALISTS NOW. This from Think Progress:

PUSHING THE CONSERVATIVE AGENDA: The media debate over the economic recovery has been reduced to one that is hostile to government spending and increasingly receptive to the conservative "tax-cut-only" line. Yesterday, for example, after Obama's press conference, CBS's Bob Scheiffer told Katie Couric, "He's got to somehow keep [Democrats] from loading up this bill with more spending -- so much spending." "As you know, there's a lot of people in the public, a lot of members of Congress who think this is pork-stuffed and that it really doesn't stimulate. A lot of people have said it's a spending bill and not a stimulus," remarked ABC's Charles Gibson last week. "I'm confused as to why we're being tricked into thinking this is a stimulus bill, when it’s packed with welfare programs," said MSNBC's Mika Brzenzski. The list goes on. The Progress Report has conducted two analyses of the debate showing that cable news is helping advance the right wing's message. During the Senate debate, between Feb. 2 and Feb. 5, Republican lawmakers outnumbered Democratic lawmakers 75 to 41 in interviews. During the House debate the week earlier, cable outlets hosted a 2 to 1 ratio of GOP to Democratic lawmakers.

The Washington media are very much invested in the status quo (maintaining influence, power and wealth) and as such are out of touch with the rest of America. Very rarely does the "beltway elite" read or write anything other that what they hear or see inside the beltway. To them, reality is the next inside interview with a power player, or the gossip that everyone else is chattering about.

When the recent Gallup Poll came out indicating that mainstream America is OVERWHELMINGLY in favor of the stimulus package, some pundits were forced to swallow and admit that maybe they had over analysed a bit. Democrats even did a bit of polling themselves and found that:

Democrats looked at 29 districts that Democrats took over in either 2006 or 2009, districts that tend to be swing or conservative districts. Democrats determined that 92 percent of the local stories portrayed the stimulus in a positive light, touting the benefits the spending would bring to struggling local economies.

When we read about the pummelling that President Obama is getting on the Cable News and in the media on Sunday talk shows, it must be realized that the game in Washington is being played by its own rules. The Media Elite does not speak for America, it speaks for itself. I take great solace in the fact that as soon as Obama left Washington and began to speak forcefully for the stimulus plan to Americans outside the beltway, the tide began to turn and it is now the Media Elites that are being pummelled. I view it as significant that the stimulus package is now restoring provisions for infrastructure and education that were cut by by the "in crowd" as soon as Obama shone the light on them to the folks in Indiana and Florida. I only wish he had started talking to us sooner instead of trying to play the "inside" game. Here's hoping he's learned his lesson!

Update 2/12/09

Not only is Big Media largely conservative, but this just in from Media Matters indicates that the very idea of an economist sharing expertise is largely a forlorn endeavor. It is apparently much more fun just to be a screaming talking head.

"Lack of demand: Cable channels, Sunday shows leave economists on the sidelines in recovery debate
Summary: A Media Matters study of Sunday talk shows and 12 cable news programs from January 25 through February 8 found that few economists have been given time on television to talk about the economic recovery plan. During 139 1/2 hours of programming in which the economic recovery legislation was discussed, economists made 25 guest appearances out of a total of 460 -- only 5 percent."

Of Flag Pins and Shirt Sleeves

Just a whimsical post this morning. Several things of varying importance have occurred to me in passing this week. I share:

Obama is wearing a flag pin all the time now. I guess because he's wearing one regularly, the Republicans feel like they can't, since they must oppose him at every point. Of course this is just an informal, totally unreliable survey. Maybe you can help me. Check the news next week and just notice who is and who isn't wearing an American Flag pin. Remember the brouhaha? :)

Just one example:

I understand now that the Republicans, led by Andy Card, are upset that Obama is in the oval office in shirtsleeves? They feel that it disrespects the Oval Office. That's an interesting thing to complain about, but given the conservatives concern about purity, respect, and the trappings of democracy, completely understandable. Superficial. 'nuf said.

Michael Steele is the new Republican Party Chairman. A moderate, African-American Republican, he's faced with redefining and rebuilding the Republican Party. His acceptance speech announced the new direction for the Party.

And for those Democrats and others who just want to put up roadblocks and do the crazy typical play that they normally do — the name-calling, the obfuscation, and the sleight-of-hand — I don’t have time for it. Because there are important issues we have to face on the economy, the war, and issues that affect the poor, and I want to have this party in a position to move on those issues.

As Think Progress blogger Amanda Terkel points out,

"Ironically, what he described is exactly what House Republicans have been doing over the past week on the economic recovery package. President Obama repeatedly met with Republicans to get their input on the bill, but instead of working with him on “the economy…and issues that affect the poor,” they made a pact to all vote “nay.”

The second part of the strategy announced by Mr. Steele was to

"use the “Contract With America” — a 1994 document created by Tom DeLay and Newt Gingrich — as a model. But as Judd Legum notes, “polls showed the vast majority Americans had never heard of it. Of the few that did know, half said it made them less likely to vote Republican.”

So to review, obfuscate and accuse the Democrats of obfuscating, introduce new ideas by re-introducing policies of the past. Amusing......

The Republican strategy as always is to accuse the opposition of doing exactly what they themselves joyously admit is their own strategy. From Flag Pins [who's wearing them now] to informal dress at work, to the Republicans it's only a game. Attacking the opposition for whatever reason is what the opposition is SUPPOSED to do [according to them].... sigh. This to me is how you spell OBSTINATE:

[adjective; stubbornly refusing to change one's opinion or chosen course of action, despite attempts to persuade one to do so. OBSTINATE implies sticking persistently to an opinion, purpose, or course of action, especially in the face of persuasion or attack.

No matter how stubborn you are, you probably don't want to be called pertinacious, which implies persistence to the point of being annoying or unreasonable.

PERTINACIOUS! Use it to describe the "new" Republican strategy. They might have to look it up! :)