Friday, May 02, 2008

Bush's GOP Legacy: A Third World America

by Len Hart, The Existentialist Cowboy

As the US faces a very real prospect of utter collapse where millions may be may be made jobless and homeless, the GOP drags out a tired old lie that goes like this: 'Be happy! Recession is goooood for you!' If that were true, millions would be trying to move to a third world country instead of trying to get out of one.

If fact, the third world is coming to you! Millions have yet to recover from Ronald Reagan's 'recession' of some two years following an improvident tax cut which benefited only the nation's privileged elite. What Reagan failed to achieve was left to Bush Jr to polish off.
The trend begun in 1982 resumed shortly after Reagan's first tax cut. October 2003 figures from the US Census Bureau make stark reading:
  • Median household incomes are falling
  • The number of Americans without health insurance rose by 5.7 percent to 43.6 million individuals.
  • The number of people living below the poverty line ($18,392 for a family of four) climbed to 12.1 percent — 34.6 million people.
  • Wages make up the majority of income for most American families. As "Downward Mobility," NOW's report on workers and wages illustrates, many American workers are facing corporate efforts to cut pay and benefits, which could lead to more American families struggling to stay out of poverty.
Republicans, having taken the rap for a Great Depression that followed closely on the heals of Warren Harding, Calvin Coolidge and, of course, Herbert Hoover, were eager to shed their scales with Ronald Reagan --a man who, if he was not of the people, did the Hollywood version of it.

To be expected, nothing said by the GOP about Ronald Reagan is true. One of his adoring partisans was overheard telling reporters --"But he made us feel good about ourselves"! Thus, Reagan inspired and encouraged among his adoring partisans the very worst motives.

Truth is, Reaganites ought not feel good about themselves. They ought not be comfortable inside their gated "communities". They ought to have nightmares and night terrors! They ought to lose sleep at night! They ought to be troubled, neurotic and insecure. Stanford Studies say that, indeed, they are!

Because Reagan would not be bothered to think deeply about issues, it was, to be fair, his adoring multitudes who told most of the lies about him. The lingering myth, the one that is most firmly embraced, defended and spread far and wide is that the Reagan presided over a great economic boom. To drive home the point, Reagan partisans contrast what is called "Reagan's Prosperity" with Carter's "Stagflation".

The Truth About Reagan's 'Prosperity': there was none!

Reagan never presided over what the GOP would have you believe was a modern golden age. Truth is, his policies (GOP policies) triggered a depression of some 18 months or more, the longest since the Great Depression. It followed promptly on the heels of his tax cut of 1982. The results in black and white:
  • Twenty percent of the population owns 84% of our private assets, leaving the other 80 percent of the population with 15.6 percent of the assets.
  • In 1960, the wealth gap between the top 20 percent and the bottom 20 percent of Americans was thirty fold. Four decades later it’s more than seventy-five-fold.
  • Either way -- wealth or income – America is more unequal, economists generally agree, than at any time since the start of the Great Depression…
  • And more unequal than any other developed nation today.
  • Inequality.org
Bush's economic vampires alone have benefited from a war of endless death and carnage. In January George W. Bush deigned to acknowledge what the rest of us have known for years --the growing gap between rich and poor in America. America's GOP had always denied, ignored or excused the verifiable fact that the rich get richer and the poor get poorer. It is understandable that the GOP would do this. Inequalities are historically worse under GOP regimes since the regime of Herbert Hoover.

Bushies and Reagan-heads had embraced a failed theory called trickle down theory or supply side economics, not because it was true but because it made them feel good about themselves. Trickle down theory is the absurd notion that by shifting the proportionate tax burden to working class families while giving a tiny elite whopping tax cuts, the increase in investment capital will eventually increase and trickle back down.

Still Waiting after all these years

Wealth has never trickled down in America. It invariably trickles up --by design.
Why not "leave" that capital where it is working, supporting small business, hiring people and putting food on tables? Unfair tax cuts --GOP tax cuts favoring only the rich --have never trickled down. It is no coincidence that when the US was most egalitarian it was also most productive. The US led the world in numerous areas.

Ronald Reagan's orgy of union-busting, offshore tax havens and outsourcing is euphemistically called "globalization". This panoply of bullshit is responsible for the fact that the US imports most of its automobiles, appliances, and electronic goods --items that had been the staple of the US economic engine.

Compounding the tragedy, Ronald Reagan slashed taxes for millionaires and everyone else got poor. The US now pulls up the rear, behind China, behind Japan, behind Europe, behind much of the world. Everything from jeans to binoculars come from China; IT is outsourced to India. I see few Americans driving anything but Japanese cars. Where is Detroit these days? Is it still in Michigan. And, if not car makers, who lives there?

Given the hole dug over more than twenty years, I am as outraged as I am utterly unimpressed with the crumbs now thrown the rest of us by this profligate administration, this profligate, arrogant party.
Meanwhile, the nation’s official poverty rate declined for the first time this decade, from 12.6 percent in 2005 to 12.3 percent in 2006. There were 36.5 million people in poverty in 2006, not statistically different from 2005. The number of people without health insurance coverage rose from 44.8 million (15.3 percent) in 2005 to 47 million (15.8 percent) in 2006.
--US Census Bureau Release, AUG. 28, 2007
Capital "trickling up" to Bush's base is money lost to productive investment, lost to small business, lost to consumers who might have spent it in ways that would have created jobs here in the US. Lost to consumers who must pay higher prices as wealth concentrates among monopolists.
It has never been proven or supported that the increased wealth of those benefiting most from tax cuts has trickled down in any way whatsoever. There is no data at BEA or the Bureau of Labor Statistics to support the insane idea that tax cuts have ever in any way created more job or trickled down to benefit working, productive people. The reverse is true. The transfer of wealth, since Reagan's infamous "tax cut" of 1982, has been up and up to a tiny elite. As this elite grows richer, the GOP rewards the base by excluding them entirely from some forms of taxation.
For example, Senate Republicans have made ending the estate tax their number one priority. Supply-side economics has become the GOP's raison d'etre, a defining issue above even Iraq. Click the image for a larger, readable version.
Being wrong has never stopped the GOP, a party tha that has shown no interest in being right. Party faithful believe that if the right wing noise machine repeats something often enough and loudly enough, many will begin to think it true.

The GOP, meanwhile, trots out a tired, old labeling tactic. With a classic strawman, they label critics "liberals" or "commies" and they are accused of favoring the re-distribution of income. In fact, everyone favors the re-distribution of income and every government --right or left --does it! The GOP, especially, embraces the re-distribution of income upward and will support those policies which result in the transfer of wealth and income from middle and poorer families up to an increasingly tiny elite --the GOP base. The result: a less efficient economy! But that is a fact that is of no concern to the GOP and those who support them.

Indeed, I favor re-distributing the re-distribution. I support the un-doing of every stupid thing done by the GOP. I support efforts to undo every GOP policy. I favor a more efficient, productive and egalitarian society, in other words, the kind of society that might have resulted had the GOP not robbed the poor to give it to the very wealthy who did not need it, did not deserve it, did nothing to earn it and, upon receiving it have not used it wisely.
How did Reagan get away with it? It was an age of disillusionment and Iran-inflicted humiliation. Americans were suffering low self-esteem following the seizure of the US embassy in Iran and a failed helicopter rescue attempt in a desert sandstorm. Pat Buchanan's speech to the GOP National Convention in Houston in 1992 was designed to pluck up a party embarrassed by back to back scandals --BCCI, the Savings and Loan Debacle and Iran/Contra.

The 1992 GOP convention was a right wing circle jerk, remembered for a phrase about Ronald Reagan heard from the floor: "...he made us feel good about ourselves". But a two year recession, the effects of which are still with us, is a very high price to pay for a temporary "feel good". Media whore was a growth profession --and still is.

The re-distribution of income via GOP tax cuts is wasteful and inefficient. This nation's elite is an unproductive, economic vampire, living upon investments which, in themselves, produce absolutely nothing. Had tax cuts stimulated the economy, there would have been an increases in jobs. That did not happen. It has never happened. Reagan's tax cut of 1982, for example, was followed by a recession of some two years, the worst since Herbert Hoover's Great Depression. Unemployment rose. People lost homes and slept in tents. Even 'prosperous' Houston was not spared. Tent cities sprang up under freeway overpasses but --it was hoped --out of sight of the Bush crime family.

If tax cuts had worked as Reagan-heads predicted, more people would have joined the middle class. In fact, the reverse occurred: many in the 'middle class' joined those in the lower quintile! If tax cuts had stimulated the economy, inequalities would have decreased. Instead, wealth inequities increased and the gap between rich and poor widened; wealth, simply, trickled UP --not down! Blinded by the right, the GOP saw no people of any color but a whiter shade of pale.

The most pernicious effect of GOP economic policy is the effect of declining opportunity, a corollary of declining 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? The answer is simple: the GOP sales pitch is what David Stockman called a 'Trojan Horse'.

Like everything else GOP, tax cuts are sold disingenuously. GOP tax cuts always do precisely what GOP insiders know they will do, that is, they enrich the GOP base! It's a payoff.
The wealthy have always used many methods to accumulate wealth, but it was not until the mid-1970s that these methods coalesced into a superbly organized, cohesive and efficient machine. After 1975, it became greater than the sum of its parts, a smooth flowing organization of advocacy groups, lobbyists, think tanks, conservative foundations, and PR firms that hurtled the richest 1 percent into the stratosphere.
--Steve Kangas, The Origins of the Overclass
Over a ten-year period, the richest Americans—the best-off one percent—are slated togwb0602a.gif - 10559 Bytes receive tax cuts totaling almost half a trillion dollars. The $477 billion in tax breaks the Bush administration has targeted to this elite group will average $342,000 each over the decade. This is a calculated, deliberate transfer of wealth, legalized theft!

Only those already rich beyond almost everyone's ability to imagine will benefit [See: The L-Curve; L-Curve: The Video]. Bears repeating: this is planned! This is deliberate! This is by GOP design and conspiracy! This is a nation's privileged and crooked feeding upon the carcasses of those left behind by GOP profligacy, crookery, waste, and outright theft!
By 2010, when (and if) the Bush tax reductions are fully in place, an astonishing 52 percent of the total tax cuts will go to the richest one percent—whose average 2010 income will be $1.5 million. Their tax-cut windfall in that year alone will average $85,000 each. Put another way, of the estimated $234 billion in tax cuts scheduled for the year 2010, $121 billion will go to just 1.4 million taxpayers. That's less than half the population of Houston.
Although the rich have already received a hefty down payment on their Bush tax cuts—averaging just under $12,000 each this year—80 percent of their windfall is scheduled to come from tax changes that take effect after the year 2005 and beyond.
1968 was the year in which measured postwar income was at its most equal for families. The Gini index for households indicates that there has been growing income inequality over the past quarter-century. Inequality grew slowly in the 1970's and rapidly during the early 1980's. ...Generally, the long-term trend has been toward increasing income inequality. Since 1969, the share of aggregate household income controlled by the lowest income quintile has decreased from 4.1 percent to 3.6 percent in 1997, while the share to the highest quintile increased from 43.0 percent to 49.4 percent. Most noticeably, the share of income controlled by the top 5 percent of households has increased from 16.6 percent to 21.7 percent. Over the same time period, the Gini index rose 17.4 percent to its 1997 level of .459.

Income Inequality, Census Bureau
What is to be said of an entire class of people who are happiest when others are miserable?
Another “benefit” of a recession is that it purges the excesses of the previous boom, leaving the economy in a healthier state. The Fed's massive easing after the dotcom bubble burst delayed this cleansing process and simply replaced one bubble with another, leaving America's imbalances (inadequate saving, excessive debt and a huge current-account deficit) in place. A recession now would reduce America's trade gap as consumers would at last be forced to trim their spending. Delaying the correction of past excesses by pumping in more money and encouraging more borrowing is likely to make the eventual correction more painful. The policy dilemma facing the Fed may not be a choice of recession or no recession. It may be a choice between a mild recession now and a nastier one later.
--Does America need a recession?
The article quoted conveniently leaves out the millions who never fully recovered from the Reagan 'depression' of some two years following his tax cut, nor does it address the careers lost when the .dotcom bubble burst. If you happen to be among that top sliver of the population that earns more than the remaining 95 percent then --sure --recessions are gooood for you! For every one else, they stink!
On the one hand, environmentalists and those with a sound spiritual foundation rightly point out that over consumption is the cause of so many problems, from plundering the planet's resources to obsession with materialistic satisfactions.
On the other hand, two-thirds of the gross domestic product in the United States (and similarly elsewhere) is composed of personal consumption expenditures, by households; and the lower your income, the more of your income you tend to spend, rather than can save. Those two Econ 101 facts mean that the economy is naturally "demand sided" -- not "supply sided," as Reagan and the other big-business boys have had so many believe -- and that regressive taxes, taking more of the income of those at the bottom than at the top -- the opposite of what progressive taxes do -- are not only unfair but also unwise, "killing the goose that lays the golden eggs."
Doug Drenkow, Producer, Barry Gordon from Left Field, LA
Any credit given the GOP is unfounded. The administration of Ronald Reagan should have been the wake up call. The GOP has presided over worse economic growth married to increased federal spending at least since World War II. Reagan's tax cut of 1982 was followed by a depression of some two years. GOP types counter that following the recession, the economy rebounded with a boom.

Hardly!

At the end of two years of negative growth, in fact the worst "depression" since the crash of 1929, Americans were lucky that the economy had merely resumed an anemic 3 percent growth rate -- nothing to write home about. Big corporations could write off many if not most losses but individuals and families, as usual, were stuck on bottom with the tab. Many never really fully recovered.
The intellectually bankrupt GOP can be counted on to repeat failed strategies expecting a different outcome. Bush stays a failed course amid warnings that our nation is falling apart at the seams heading for third world status and catastrophe.

The warnings come amid the valid assessment that Bush's tax cut for the rich failed to make good on two empty promises: it did not trickle down or prime the economic pump and it did not pay for itself as Bush himself had promised it would. Just one year after Congress bowed to Bush and passed the tax cut of 2001, the Brookings Institution would write:
The official federal budget outlook has deteriorated dramatically since early 2001, due to last year's tax cut, the economic slowdown, and the terrorist attacks on September 11, 2001. In addition to the pressures from the long-anticipated increase in entitlement spending as the nation ages, the government now also faces growing spending needs for defense and homeland security. These trends imply that future taxes must rise, future spending outside of defense and the elderly must decline, or obligations to the elderly and to defense be reduced.

—Alan Auerbach, William G. Gale, and Peter R. Orszag, June 2002, The Budget Outlook: Options for Restoring Fiscal Discipline, Brooking Institution
But GOP supply side, trickle down economics also promises more opportunity, a growing economy, more jobs.
Some in Washington say we had to choose between cutting taxes and cutting the deficit….Today’s numbers show that that was a false choice. The economic growth fueled by tax relief has helped send our tax revenues soaring. That’s what has happened.
—George W. Bush
Bush knows that's not what happened. Any idiot knows that's not what happened. The GOP knows that's not what happened. What happened is an increasingly tiny elite got special treatment. Everyone else got screwed over. Wealth has never trickled down and there is no "higher pie". A Treasury Department analysis refuted Bush directly, confirming in its analysis what many experts and Bush critics had been saying all along: tax cuts do not come remotely close to paying for themselves. [PDF] . In other words, the two promises of "trickle down" theory are dead wrong: wealth does not trickle down and tax revenues do not increase to make up the short fall.

Bush either lied or was stupid or both

We haven't seen incompetence on this scale since Warren Harding, Calvin Coolidge, Herbert Hoover, Ronald Reagan or Bush Sr. (all Republicans, need I remind?)
The time has come to bury forever two tired, old, worn-out GOP shibboleths: 1) Wealth does not and never will trickle down; 2) there is no invisible hand!

In the meantime, check out these budget deficits below, caused primarily by profligate tax cuts which have never stimulated the economy and have, in fact, never trickled down. Notice that the worst deficits --like terrorism --are worse during GOP regimes.
According to supply-side theory, these actions should have nudged the economy in the right direction, not plunged it into the worst recession in 40 years. Other problems involve timing: Reagan's first tax cuts went into effect in 1982, but this was also the summer that the Federal Reserve Board slashed interest rates and expanded the money supply. Most economists believe the Fed, not Reagan, was responsible for the following recovery. Finally, the recession of 1990 began four months before Bush broke his "no new taxes" pledge. The recession began in July 1990; Bush signed his tax increases into law in November 1990.
And supply-siders are careful to note that Reagan's was the longest peacetime expansion since World War II. In truth, the Kennedy-Johnson expansion was longer: 106 months compared to Reagan's 92.1

--The Reagan Years
Moreover, the Fed's "peace time expansion" following Ronald Reagan's "depression" of almost two years was uneven. The worst income disparities in American history had already been triggered. As if by design, Reagan's rich base got even richer; everyone else lost ground. They are still losing ground despite an all-to-brief respite in Bill Clinton's second term. The GOP has ruined the American economy, perhaps forever. The budget shown below --your money squandered by Bush.
The terms "liberal" and "conservative" are all but meaningless in the world apres Bush. Both terms already mean something different than they did in the 19th Century. For example, British economist John Maynard Keynes was until very recently scorned by the right wing; his brand of economics was called "liberal" and he was simplistically, perhaps, simple-mindedly, associated with Marx. Yet, Keynes took issue with Karl Marx on key points. "I don't want a social revolution", Keynes said. He went on to characterize poverty as a "...dysfunctional threat" to a capitalist system which he favored. Fact is, Keynes, for all his notoriety, was conservative.

Nevertheless, that Keynes denounced "poverty" is enough to earn him the enmity of modern conservatives who obviously like the feelings of superiority they experience when millions of others are without jobs and scrambling to feed themselves or, as Bush put it, to "...put food on your families".

It is Keynes' use of the phrase "...extending the traditional functions of government" that inspires conservatives to cross themselves and wear garlic. It was by "extending" those traditional functions that Keynes believed unemployment could be eliminated. This is, of course, anathema to laissez-faire throwbacks like Ron Paul whose economic thinking is stuck in 19th Century mud. The same conservatives are not bothered by "extensions of government" effected by Reagan, Bush Sr., and now the Shrub. Ronald Reagan's program would have been thought "liberal" had the same program been advocated by a Democrat. As Richard Nixon committed the nation to deficits of truly "liberal" proportions, he famously said: "We are all Keynesians now".

The GOP invoke the name of John Maynard Keynes in vain.

When Democrats practice Keynesian economics, it works. When the GOP does it, the nation slides into recession or depression as the rich get rich off the carcasses left behind. Check the chart! The reason for that is the fact that GOP "tax cuts" enrich an already elite. GOP knowledge of 'Keynes' is limited to its pronunciation.

The biggest spending "liberals" are the GOP, yet, unlike "big spending Democrats" whose deficits were accompanied by handsome and egalitarian growth, GOP big spending is invariably associated with depression, stagflation, outsourcing and rising unemployment! If this is done deliberately to enrich cronies, then the GOP leadership should be tried en masse for criminal conspiracy, pilloried as crooks, liars and/or incompetents.

Reagan had been our biggest spending liberal, tripling the national debt, running up historically high deficits, doubling the size of the Federal Bureaucracy. Bush has now put Ronald Reagan in the shade and achieved even less good --if that's possible! None of the GOP theories worked as planned because none of their theories benefited working Americans in fact.

Reagan had in mind "extending the traditional functions of government" but only in order to benefit the wealthy and the corporate. When FDR extended the traditional functions of government, the nation experienced what Paul Krugman has called the 'Great Compression', arguably the most egalitarian period in American history. Sadly, it didn't last nearly long enough.

Even the GOP cannot ignore the effect of the Iraq war on the US economy. But, as John Dean points out, business folk, normally considered the GOP base, are just as fed up with the war as are most other, normal Americans. No one can now deny the fact that the war against Iraq has very nearly defeated the US economy, now on the brink of collapse.

Google the title: "Terrorism is always worse under GOP Regimes". That was originally my article and it would appear that it has gone "viral". I am grateful that those who have graciously published it on hundreds, if not thousands of blogs and other sites are kind enough to link back to the original which is parked right here on this cowboy's ranch. Let us hope that another irrefutable truth goes viral: the Republican party is bad for a good economy!
The idea that by cutting a robber baron's taxes, the economy will boom is just plain stupid on its face. The robber baron class has it all their own way anyway. More money in the hands of those who spend it, thus driving the economy might have a stimulus effect. But cutting taxes for privileged elites has never, ever in any way, put money into the hands of those who need the money and would, in fact, circulate it.

GOP tax cuts have never, ever trickled down!

In fact, the opposite has always occurred: wealth has trickled up! Those already rich have gotten richer still! I've got the stats to prove it and some of them are posted here. The 'middle class' must be slow learners. Most were not 'rich' enough to have qualified for Ronald Reagan's tax cut of 1982. No one I know benefited from it. At the end of a recession of two years, many 'middle class' had fallen into the bottom quintile, three or four rungs down the ladder, never to pull out again though they had paid dearly for the 'privilege' of joining Reagan's 'new poor'. Their crime? Not rich enough to qualify for GOP tax cuts!

Until now, China has had an interest in keeping the U.S. ponzi scheme propped up --they sell billions to U.S. citizens via Wal-Mart, the economic Kudzu that ate America.
Between 1989 and 2003, the ever-increasing US trade deficit with China has led to about 1.5 million jobs that either moved overseas or never were created in this country as production shifted to China, according to a report released Jan. 11, 2005, by the US–China Economic and Security Review Commission (USCC), a congressionally appointed panel. The pace of job losses has picked up since China joined the World Trade Organization in 2001, with about one-third of the total, or 500,000, occurring in the past three years.

Lower Wages for US Workers

By supporting foreign-made goods on such a massive scale, the company that trumpets its All-American image is creating incentives for corporations to destroy good jobs in the United States.
By purchasing such a large amount of goods produced in China, Wal-Mart indirectly supports continued workers’ rights abuses by Chinese authorities.
--Wal-Mart's Imports Lead to US Jobs Exports
Meanwhile, don't miss a Washington Post report that shows how Wal-Mart pits suppliers against one another and squeezes them for the lowest price. The result is that factories respond with longer hours and/or lower pay. Wealth, as we have learned the hard way, trickles UP --not down. The robber baron will always make up his losses out of your ass. In China, the workers have no choice: China forbids independent trade unions. That is a policy not unlike that of the US GOP and Ronald Reagan, specifically, who is not fondly remembered for his effective War on Labor and his ineffective war on terrorism and drugs. [See also: The Peace Tree]

Since a Chinese sub popped up undetected in the middle of the U.S. fifth fleet, it has been apparent that the honeymoon is over. The rest of the world had kept the U.S.S dollar afloat not because the dollar or the economy was strong but because they were not. China now leads the world in dumping dollars. The phrase "debtors death spiral" is used to denote what happens when consumers borrow to cover only the interest on previous loans. New debt compounds old ones and bankruptcy is just around the corner. The rest of the world is little better off. They cannot afford not to keep us afloat. What would happen to China if Wal-Mart suddenly went belly-up?

It is because Iran is accepting Euros for oil --not 'nukes' --that the country is now a target of the war criminals inside the Bush White House!

If this were mere recession staring back at us from a fun house mirror, it might be shrugged off. After all, the GOP has always loved recessions and benefited from them. A clue is found in the work of conservative Austrian-born economist Joseph Schumpeter who regaled his Harvard students in the mid-1930s with a pithy observation about how economic depressions actually benefit certain social and economic classes.
Chentleman, [sic ] you are vorried about the depression. You should not be. For capitalism, a depression is a good cold douche.
--Joseph Schumpeter, Economist, Harvard University Lecture, circa 1930s
Everyone who is not an initiate into the cult of gopperism gets douched. The administrations of Reagan, Bush and Bush are like lab experiments that prove the hypothesis: GOP policies are designed to benefit an increasingly tiny elite or, as Bush called it, "my base."
"During the late-nineteenth and early twentieth centuries in America, as labor unions organized and gathered power, as socialism grew in popularity among working and other oppressed peoples, industries owned by Rockefeller, Morgan, Harriman, Carnegie, and others, began hiring their own police forces and goon squads to infiltrate labor unions and spy on the political and personal activities of union organizers for the purpose of bringing arrests and convictions and eliminating all socialist activity in the nation. The most notorious example was the Homestead Strike of 1892, when Pinkerton agents killed several people while enforcing the strikebreaking measures of Henry Clay Frick, acting on behalf of Andrew Carnegie."
--Carolyn Baker, PhD, US Government Targets American Dissent - Part I
This is no mere recession but complete collapse.
As feared, foreign bond holders have begun to exercise a collective vote of no confidence in the devaluation policies of the US government. The Federal Reserve faces a potential veto of its rescue measures.
Asian, Mid East and European investors stood aside at last week's auction of 10-year US Treasury notes. "It was a disaster," said Ray Attrill from 4castweb. "We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed."
The share of foreign buyers ("indirect bidders") plummeted to 5.8pc, from an average 25pc over the last eight weeks. On the Richter Scale of unfolding dramas, this matches the death of Bear Stearns.
Rightly or wrongly, a view has taken hold that Washington is cynically debasing the coinage, hoping to export its day of reckoning through beggar-thy-neighbour policies.
--Ambrose Evans-Pritchard, Foreign investors veto Fed rescue, UK Telegraph
Bush, meanwhile, seems unconcerned, perhaps, like Nero, fiddling as Rome burns. Then again, the GOP 'class' has always benefited from US recessions, depressions, and other economic catastrophes.
  1. Recessions, though not caused by declining stock markets, are always accompanied and often predicted by a plunging stock market. Republicans sell out at the peak, taking their profits. Enough selling will trigger the plunge; less knowledgeable investors begin to follow suit from fear but too late. Last man out loses.
  2. Having taken their profits on the upside, a depressed market is but an opportunity for the rich Republican to get back in at lower prices. Guess who sells at the lower price: the poor schmuck who is 180 degrees out of phase and can only dream of being a rich Republican. In reality, those he aspires to join are exploiting him.
  3. Very knowledgeable investors make money "selling short", buying "put options". These investors get peak prices for stocks even as the price declines. Illegal insider information is executed with "calls" and "puts." The perpetrators of 911, for example, made millions, possibly billions, selling short the stocks of UA and AA. I defy anyone to come up with an 'innocent' explanation. The recipients of those profits had guilty foreknowledge of 911 --an inside job! The name 'Buzz' Krongard comes up in connection with a known terrorist organization: the CIA.Now --a planned financial meltdown might have presented the same opportunities. Historically, 'elites' have always emerged richer, stronger from recessions. On the other side of Ronald Reagan's recession of some two years, the rich had gotten richer while the middle class was all but wiped out. The ill-effects of that recession are still seen in the decline of middle class neighborhoods, the permanent loss of manufacturing base and the jobs it created.The profits and volume were most certainly outside norms, proof that those executing the options had precise foreknowledge of the attacks. Those making those profits had "guilty knowledge" of the attacks; they were at the very heart of a murderous conspiracy.
  4. Unemployment always goes up in a recession. At the end of a longer recession, companies have the luxury of hiring from a larger labor pool at lower wages and/or salaries. Some companies --citing hard times --may reduce benefits, cut vacation or sick time. Big business must hate good times; it is only during times of full employment that workers have any leverage at all. Offhand I can think of only two times in history that have come close: the Clinton years, and, interestingly, Europe after the Black Death. The labor supply had been depleted by plague. Employers were often forced to accede to worker demands for better conditions, money, a place to live! Serfs had been freed and it marked the beginning of the end for Feudalism and set the stage for 'corporate feudalism', an age in which we still labor and suffer.
  5. Admittedly, many businesses go belly-up during recessions. While lip service is given to 'free markets' and Adam Smith's 'invisible hand', die hard robber barons hate the 'free market'. They prefer 'monopoly' when they can create one and 'oligopoly' when they can't. Free competition among many sellers is the last thing they want. Recessions are welcomed. It's the 'cold douche', a ruthless flush, so beloved by Schumpeter and the robber barons of American capitalism.
  6. Don't expect recessions to bring down prices. More often, higher prices are the light that is seen at the end of the long, dark tunnel. In other words, those businesses fortunate enough to survive a 'downturn' are in the enviable position of raising prices on the other side. Higher prices benefit businesses that manage, even with government help, to stay in business during a recession. So much for laissez-faire capitalism. Those fortunate businesses now make more money per unit produced and will do so with fewer employees. The world is not so kind to everyone else, primarily smaller businesses and entrepreneurs, freelancers, and worker bees. Prices, we learned in Economics 101, are determined by supply and demand. If the demand is such that the market is quite willing to pay any price for it (prescription drugs, gasoline, certain rents) then demand is said to be inelastic.
  7. At the expense of over-simplifying, consumer demand is the arbiter of price only in markets characterized by diffuse competition. Recessions militate against a market of this sort, weeding out all but 'privileged' businesses, primarily those with juicy government contracts or GOP cronies in office. Only in the textbook model, is it assumed that the oligopolist's market demand curve becomes less elastic at prices below a certain point. In markets characterized by the continuing decline in the number of 'sellers', it is obvious that there are fewer motivations for oligopolists to reduce prices. In such a market, the oligopolist (an aspiring monopolist) makes more money selling fewer units at higher prices than could be earned selling more units at lower prices. How many people are out of a job makes no difference to the American right wing for whom Scrooge is their abiding inspiration.
"Are there no workhouses? Are there no prisons...then let them die and decrease the surplus population."
—Scrooge
For 'one brief shining moment' in Bill Clinton's second term a trend begun with Ronald Reagan not only slowed but reversed. The robber barons are not concerned that as a result of preferential treatment given them by the GOP they had starved the market for their consumer junk. America doesn't seem to be manufacturing anything anymore anyway. Steel, cars, and electronic geegews are made in Japan; oil is 'stolen' in Iraq; programming is done in India; and the shelves at Wal-Mart are stocked by China. Detroit neighborhood look like ghost towns. Nor can I image Pittsburgh exporting steel to the world. Pittsburgh was already on the rocks when I was a kid.

The legendary talk show host Brad Crandall (WNBC, deceased, 1991) said of the "Big Apple" that it was more properly a cow to be milked by Albany. We are Bush's cows though he is but a phony cowboy. What we spend does not circulate. It trickles up and out to China and India and the robber barons of big oil, i.e, Dick Cheney's consortium of oil thieves and war mongers.

Gore Vidal was correct: the Pentagon, which now, as the enforcement arm of the Military/Industrial complex, is an economic black hole. Our GDP, inflated by military spending, does not reflect the fact that we haven not been a net producer of real jobs nor a net exporter of "made in the U.S.A."  products since Ronald Reagan sold us down the river to fascists.


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