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Bonddad has a diary today popular enough to make the recommended list: News Flash: WE'RE BROKE

I’m not disputing that we as a nation are broke. We are. We have been for a number of years.

But when Bonddad writes that

we can't afford a single new spending plan and we can't afford more tax cuts until we bring the national debt under control.

He’s just plain wrong. He’s promulgating nothing more or less than more Rubinomics.

Bringing the national debt under control is what President Bill Clinton and Treasury Secretary Robert Rubin did. The goal is to restore the confidence of investors. Bonddad writes that explicitly in a comment responding to Jerome a Paris:

The primary benefit from lowering the growth of public debt is confidence, which encourages people to take chances and grow the economy.  This was the primary benefit of the 1990s.

So, what’s wrong with that? Consider the case of Formation Capital, LLC, a private equity firm that specializes in "securitization programs for senior housing and care." What that means is that Formation Capital, LLC buys out and assumes control of nursing homes.

Then they start to "enhance profitability." That usually means cutting costs.

At one nursing home in Tampa, Fla., the number of clinical registered nurses at the home was cut in half within one year. Over three years, 15 at Habana died from what their families contend was negligent care in lawsuits filed in state court. Regulators repeatedly warned the home that staff levels were below mandatory minimums. When regulators visited, they found malfunctioning fire doors, unhygienic kitchens and a resident using a leg brace that was broken.

"They’ve created a hellhole," said Vivian Hewitt, who sued Habana in 2004 when her mother died after a large bedsore became infected by feces.

Why should we worry about whether or not Formation Capital, LLC and the people behind it -- the investing class -- should have confidence in the market? If the market is so corrupt and evil that senior citizens have to die for lack of care in order for investors to show a profit, then I don’t give a damn if investors have confidence in the market.

As far as I’m concerned, the only thing these investors should be confident of is our government’s ability to provide three square meals a day in a penitentiary.

Now, you can go along with Bonddad and just try to twiddle with the system, and hope the investing class will have enough confidence to stick around and play nice.

Or, you can accept the fact that the whole stinking financial system itself is actually the problem.

Everyone here wails on about how justice and fairness are missing in the U.S. economy. Well, justice and fairness, it seems to me, would demand that the people behind firms like Formation Capital, LLC be arrested and tried for murder. Do you really think doing THAT is going to make investors confident in the U.S. economy? You know damn well that the investing class will be falling all over themselves to get out of the United States and flee to their gated estates in the Bahamas and Cayman Islands.

I am a radical. I know that. I am not a Marxist, or a socialist, but I believe that the government, our government,  can be a positive force for good. I believe in free enterprise, and I believe in free markets that are tightly and fairly regulated. But I certainly am not a peasant. And a peasant is what the present financial system is making of all of us.

And if you don’t understand that, then you really have no idea of the brutal, bloody fight that lies ahead of us.

Originally posted to NBBooks on Sun Dec 23, 2007 at 11:40 AM PST.

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Comment Preferences

  •  tips, flames, rants (28+ / 0-)

    Reagan said: nothing is scarier than someone who says "I’m from the government, and I’m here to help." As someone pointed out in a comment I can’t find right now, what the Rethugs and corporatists are really afraid of is someone who says "I’m from the government, and I’m here to make sure you’re not screwing anyone over."

    A conservative is a scab for the oligarchy.

    by NBBooks on Sun Dec 23, 2007 at 11:41:48 AM PST

    •  What is possible or likely? (9+ / 0-)

      That is the question that Kossacks have to ask themselves.  

      John Edwards is right, of course.  We can't negotiate with these people, or some of them, anyway.  We have to take their power away.  

      But revolution requires revolutionaries.  So far, Americans as a group have not quite got up to speed on what is happening to them, let alone got mad enuf to act.

      With all his noble qualities...man still bears in his bodily frame the indelible stamp of his lowly origin--Darwin

      by MadScientist on Sun Dec 23, 2007 at 11:47:56 AM PST

      [ Parent ]

  •  Um... (9+ / 0-)

    ...the primary benefit of ending the national debt is taking the massive interest payments off our annual budget.  So both you and Bonddad are incorrect.

    Bonddad is correct that our present economic crisis is a liquidity crisis, and that little good can be achieved until we rectify the problems limiting liquidity in the United States.  Talking about private equity and nursing homes is irrelevant; if no one can borrow money and we're crippled by payments on debt, we're all fucked.

    The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

    by Jay Elias on Sun Dec 23, 2007 at 11:47:48 AM PST

    •  Liquidity at the Top (6+ / 0-)

      Insolvency at the bottom.

      I think Sen. Clinton would make a very good president.

      by bink on Sun Dec 23, 2007 at 11:49:03 AM PST

      [ Parent ]

      •  I don't follow... (1+ / 0-)
        Recommended by:
        Ducktape

        ...are you suggesting that we have such massive insolvency at the bottom that the entire economy is suspect?

        I don't think the data bears that out.

        The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

        by Jay Elias on Sun Dec 23, 2007 at 11:51:40 AM PST

        [ Parent ]

        •  It Is Indeed Massive (3+ / 0-)
          Recommended by:
          DCDemocrat, redstar, terabytes

          Entire economy suspect?  I do not know how to answer that.  But I think that there is enough bad debt that originated at the consumer level that simply trying to restore liquidity won't help things.

          Everything that rises has converged.

          I think Sen. Clinton would make a very good president.

          by bink on Sun Dec 23, 2007 at 11:55:19 AM PST

          [ Parent ]

          •  Well... (7+ / 0-)

            ...one of my favorite statistics is that over half of subprime mortgages are still making timely payments.  Most people are still meeting their debt obligations.  Most people are also still shopping, still working, still saving.  

            The problem is that banks are incurring massive losses independent of losses in the underlying assets, as my series is trying to demonstrate.  Convergence isn't the problem; it is instead that spreads are widening.  

            Now, personally, I am deeply opposed to debt, by the government or by people.  But the issue at hand is that government debt is so great as to eclipse any productivity gains and to strain the liquidity of world markets, at a time when there is nearly no liquidity in private markets.

            The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

            by Jay Elias on Sun Dec 23, 2007 at 12:00:31 PM PST

            [ Parent ]

            •  You might modify that remark about debt (8+ / 0-)

              The question is debt incurred to what exactly? When government incurs debt as part of its mandate to maintain and expand long-term infrastructure, that's good debt. Bad debt is incurring obligations that result in no appreciable benefit to the nation. The debts incurred by the federal government in prosecuting the war in Iraq or dent incurred by giving the super-rich a tax reduction are examples of bad debt. If you incurred debt to finance a healthcare system that reduced the cost of healthcare for employers and individuals that would be good debt for obvious reasons. So just railing against debt is not very useful.

              •  Well, I understand this argument... (1+ / 0-)
                Recommended by:
                Ducktape

                ...although I don't fully agree - the problem with government taking on debt to invest in infrastructure is that there is little motivation to stop.  Government debt is only, in my opinion, truly beneficial when used to make tax revenue inconsistencies irrelevant for government spending.

                But I'm an anti-debt partisan.

                The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                by Jay Elias on Sun Dec 23, 2007 at 12:10:22 PM PST

                [ Parent ]

                •  I wonder if you really understand debt then (4+ / 0-)
                  Recommended by:
                  walkshills, redstar, sravaka, cynndara

                  Are you buying a house? If so, you took on a mortgage. You went heavily into debt to buy an asset. Pretty stupid idea, no? It turns out that for lots of people, it has been a pretty good idea. In fact, reasonable debt in pursuit of a good objective is a demonstrably good idea. I think you are confusing the inherently corrupt structure of the US government with the general idea of government debt. Other countries do a much better job of managing debt because they simply have a much better governmental structure.

            •  This is ignores the formation of the debt. It has (3+ / 0-)
              Recommended by:
              walkshills, redstar, borkitekt

              been the mechanism to exchange public obligation for private fortunes. The liquidity has been moved from markets to private accounts and that is the only place one can look to restore it. We can no longer treat capital and earned income seperately. We can no longer categorize wealth. Every dollar regardless it's source must yield an equal and proportionate contribution to all of society's obligations.

              "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

              by java4every1 on Sun Dec 23, 2007 at 12:18:52 PM PST

              [ Parent ]

              •  Well, stritctly speaking.... (0+ / 0-)

                ...how the government incurred the debt doesn't matter.  The debt exists, and cannot be wished away.

                The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                by Jay Elias on Sun Dec 23, 2007 at 12:23:09 PM PST

                [ Parent ]

                •  That thinking will increase the debt. If you (1+ / 0-)
                  Recommended by:
                  redstar

                  don't understand how you accrued the debt you will not address it. It's the doing the same thing and expecting a different result syndrome.

                  "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

                  by java4every1 on Sun Dec 23, 2007 at 12:29:58 PM PST

                  [ Parent ]

                  •  Well, sure... (0+ / 0-)

                    ...you have to understand how we incurred debt to figure out how to get rid of it.

                    But the nature of the problem of the debt doesn't change based on what kind of debt it is.  It is debt.

                    The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                    by Jay Elias on Sun Dec 23, 2007 at 12:32:54 PM PST

                    [ Parent ]

                    •  My point is that once you understand it, you (4+ / 0-)
                      Recommended by:
                      DaleA, walkshills, redstar, sravaka

                      start to see that it is not the public's role to pay the debt down. the debt was incurred by the formation of private fortunes. They should now turn those resources into repaying the debt. They've already had the benefit of the returns on those ill gotten gains.

                      "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

                      by java4every1 on Sun Dec 23, 2007 at 12:46:42 PM PST

                      [ Parent ]

                •  Of course it can be wished away (5+ / 0-)

                  it's called repudiation or more politely inflation. Which seems to be the course Bush2 has set upon. A very high rate of inflation reduces the value of the debt pretty quickly. And speeds up spending. Not to mention capital flight and other bad things.

                  The Argentinians did so in the 90's, just walked away from their obligations. And began a reorganization of their society. Which appears to have worked.

                  •  Well, yes... (0+ / 0-)

                    ....that is true.  But it has huge negative repercussions as well.  I don't think we want to ape Argentina.

                    The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                    by Jay Elias on Sun Dec 23, 2007 at 01:02:49 PM PST

                    [ Parent ]

                    •  The US already is. (3+ / 0-)
                      Recommended by:
                      ManfromMiddletown, DaleA, sravaka

                      And there is only one way to wipe out that debtc equitably, and it involves re-establishing progressive taxation at the federal level. Or inflation the Argentine way.

                      There are no other options.

                    •  Is Argentina less democratic now? (2+ / 0-)
                      Recommended by:
                      DCDemocrat, redstar

                      Don't think so. From this mess, Argentina emerged as a left of center democracy. Seems to work for some countries.

                      What is missing here is that capitalism is a system of profit and losses. Looks like the major players are about to be major loosers. If we set it up so that the small players only take small losses, and the big ones bear most of the burden, that probably gets us over it. It will be painful, but that is how capitalism works.

                      •  Is democracy... (2+ / 0-)
                        Recommended by:
                        New Deal democrat, dmnyct

                        ...the only measure of good for a nation?  I don't think so.  The Argentine process required great suffering by Argentines.  We should try to avoid hurting similar percentages of our population.

                        The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                        by Jay Elias on Sun Dec 23, 2007 at 01:26:43 PM PST

                        [ Parent ]

                        •  There is no way out of this without (1+ / 0-)
                          Recommended by:
                          DCDemocrat

                          some people suffering. The estimated value is nowhere near the liquidation value. My proposal is that everyone get a modest exemption, say the first 100,000 is covered by the government. Over that, all losses are the individual's or company's problem. This will mean a lot of firms go under. Or go bankrupt.

                          When market values change, as property values have, everyone must adjust. Then we begin to see the chicanery and games that have been played. And the outright fraud.

                          There is no way around this. Either inflation or progressive taxation.

            •  Well, actually, that is the problem (3+ / 0-)
              Recommended by:
              badger, Jay Elias, borkitekt

              What Thomas Palley points out in "The Fallacy of the Revised Bretton Woods Hypothesis: Why Today’s System is Unsustainable and Suggestions for a Replacement is that "the current financial system is undermining the structure of the income and aggregate demand process and eroding manufacturing capacity."

              In other words, we're proceeding down the very same path that Franklin Roosevelt's Federal Reserve chairman, Marriner Eccles, said caused the Great Depression.

              A conservative is a scab for the oligarchy.

              by NBBooks on Sun Dec 23, 2007 at 12:32:01 PM PST

              [ Parent ]

              •  I'll read it... (1+ / 0-)
                Recommended by:
                DaleA

                ...but I find some of the ideas you mention unpersuasive without reading the detailed argument.

                Net US manufacturing is up, as is gross manufacturing.  So that the capacity is being eroded seems fallacious, even if the value created by said manufacturing is being decreased.

                The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                by Jay Elias on Sun Dec 23, 2007 at 12:35:11 PM PST

                [ Parent ]

                •  Depends on what time frame you're looking at (0+ / 0-)

                  Back in 1960, over 95 percent of all the shoes, boots, and other footwear used in the United States was produced here – 600.5 million pairs were produced in the U.S. in 1960, for a population of 180.6 million. In 2004, U.S footwear production was 35.2 million pairs, for a population of 290 million. Today, over 98% of the footwear we wear in the U.S. is imported.
                  https://www.apparelandfootwear.org/...

                  So, we’ve gone in 40 years from producing over three pairs of shoes for every man and woman and child in America, to producing one pair for every nine people.

                  A conservative is a scab for the oligarchy.

                  by NBBooks on Sun Dec 23, 2007 at 12:57:29 PM PST

                  [ Parent ]

                  •  Sure.... (0+ / 0-)

                    ...but what is the value of local manufacture?

                    I mean, if we are making more and simultaneously importing more, we're still making more.  We're just making different things, largely for export.  All this points out is that one commodity is largely produced elsewhere, not any broader statement about the state of US manufacturing.

                    The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                    by Jay Elias on Sun Dec 23, 2007 at 01:00:02 PM PST

                    [ Parent ]

                    •  It's not just shoes, it's almost everything (1+ / 0-)
                      Recommended by:
                      cynndara

                      admittedly there are not that many areas where the collapse is as horrible as in footwear. Textiles and all types of clothing -- inner wear and outer wear -- are as bad, though. But every industrial area has been whacked badly -- steel, auto, machine tools, printing equipment, power generators and distribution equipment, ship building, consumer electronics, housewares, and much more.

                      aerospace, aluminum, construction equipment, farm equipment, medical equipment, and a few others are the areas which have not been hot too hard.

                      The value of local manufacture is local employment, and reducing the costs of transportation and exchange interposing between the producer and the consumer.

                      A conservative is a scab for the oligarchy.

                      by NBBooks on Sun Dec 23, 2007 at 02:45:31 PM PST

                      [ Parent ]

                      •  For your last paragraph to be true... (0+ / 0-)

                        ...everything in economics from David Ricardo on, two centuries of work, must be false.

                        I do not believe that to be so.  The theory of comparative advantage remains true.

                        The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                        by Jay Elias on Mon Dec 24, 2007 at 11:58:43 AM PST

                        [ Parent ]

                        •  and if it is false, what will you do? (0+ / 0-)

                          I just read, a week or so ago, a paper that shredde comparative advantage in just a paragraph of two, Trying to find that, I came upon this, which is much longer, but also serves the purpose of showing that there are some economists out there that reject David Ricardo. In fact, Henry Carey, the leading U.S. economist in the mid-1800s, explicitly attacked Ricardo in his 1852 Harmony of Interests.

                          Anyway, the following long excerpt is from Financial Globalization, Exchange Rates, and International Trade, by Robert A. Blecker, Ph.D. Professor of Economics American University

                          Another key aspect of the classical view is the deliberate neglect of international capital
                          mobility—whether foreign direct investment in productive capital abroad, or portfolio
                          investment in foreign financial assets. The assumption of capital immobility supports both the
                          classical view of balance of payments adjustment and the classical theory of comparative
                          advantage. On the one hand, in the absence of capital flows, the only counterpart to commodity
                          trade is flows of international reserve assets (originally gold, later generalized to foreign
                          exchange), and one could plausibly claim that such flows induce adjustments that would
                          maintain balanced trade (e.g., the movements in price levels in Hume’s specie-flow mechanism,
                          or interest rate changes in later models).4 On the other hand, assuming that productive capital is
                          internationally immobile implies that capital owners cannot invest abroad in pursuit of absolute
                          competitive advantages (e.g., the lowest unit labor costs in labor-intensive assembly operations),
                          5
                          and hence capitalist firms can find no more profitable outlets for their investment than the
                          domestic sectors with comparative advantages (Brewer 1985).
                          No one could credibly claim that these assumptions provide a realistic account of the
                          contemporary global economy. Yet, the models that are based on these assumptions continue to
                          be taught to generations of students in college (and graduate-level) textbooks, and remain the
                          foundations for conventional policy advice. The case for free trade is usually stated in terms of
                          the efficiency gains from specializing according to comparative advantages, along with some
                          reassurance that (aside from a temporary adjustment period) no one ever loses a job due to
                          imports because the economy tends to remain at full employment (or, at least, the level of
                          employment is determined by factors other than the trade balance, such as central bank monetary
                          policy).5 Complaints about low-wage labor (today sometimes known as the "sweatshop labor
                          argument") are routinely dismissed as illogical because, if trade follows comparative labor cost
                          advantages à la Ricardo, relative wages merely track (average) relative productivities, and no
                          country can gain an overall competitive advantage in average unit labor costs (wages adjusted
                          for productivity).6
                          Similarly, popular concerns over trade deficits are often dismissed as unfounded because
                          trade imbalances are held to be self-eliminating. For countries with fixed exchange rates, the
                          standard automatic balance of payments adjustment mechanisms referred to earlier are invoked.7
                          For countries with flexible exchange rates, the story is even simpler: countries with trade deficits
                          should have depreciating currencies that eliminate the deficits, and conversely surplus countries
                          should have appreciating currencies. Indeed, the belief that flexible exchange rates would
                          provide such a simple way of ensuring balanced trade and thereby insulating countries from
                          6
                          external demand shocks was one of the main arguments in favor of flexible rates before they
                          were actually adopted in the early 1970s.
                          In the face of obvious evidence that exchange rates don’t behave this way and trade
                          imbalances can persist, the argument sometimes shifts to the view that current account deficits
                          that are offset by equal capital account surpluses are not a problem. In this view, countries that
                          have chronic trade deficits for goods and services simply have a "comparative advantage" in
                          selling their assets, or can be seen as exhibiting a preference for current consumption over future
                          consumption in an intertemporal context. Since net capital inflows represent a "vote of
                          confidence" in an economy, it is claimed, trade deficits are a sign of strength rather than
                          weakness. This view was widely promoted by conservative U.S. economists in the late 1990s8—
                          following earlier boasts of a similar nature by Mexican and Thai officials earlier in the decade,
                          prior to their countries’ currency collapses in 1994 and 1997, respectively.
                          Whatever the merits of these views, the fact that chronic trade imbalances sustained by
                          persistent capital flows invalidate the traditional comparative advantage theory of trade in goods
                          and services seems to go unnoticed. If a country has a chronic trade surplus, it must be exporting
                          some goods and services in which it does not have a comparative advantage—at least in a static
                          sense, i.e., ignoring intertemporal issues. Conversely, if a country has a chronic trade deficit, it
                          must be importing some goods and services in which domestic producers have a (static)
                          comparative advantage. In such a situation, it is hard to maintain that the pattern of international
                          specialization is guided by the law of comparative advantage, or that free trade policies
                          combined with open capital markets necessarily result in goods being exported by the relatively
                          most efficient national producers.

                          A conservative is a scab for the oligarchy.

                          by NBBooks on Wed Dec 26, 2007 at 05:33:00 PM PST

                          [ Parent ]

                    •  You miss the point of such a structure. (2+ / 0-)
                      Recommended by:
                      redstar, NBBooks

                      If everything you make is for export, the primary beneficiaries are the factory owners, as the workers' wages and benefits are bargained down against third world wages elsewhere. If you manufacture for domestic consumption, the workers have a level playing field and can bargain collectively and get a reasonable pie of the pie.

                      Again, producing for export is only good for the owners, not workers, and is clearly an inadvertent rope-a-dope strategy for the middle class. All of our trade policy since GATT is actually class warfare against the middle and working classes, and to think otherwise is to not see the forest for the trees.


                      -7.25/-6.41 If you don't like what you hear on the news, go out and make some of your own. -Scoop Nisker

                      by sravaka on Sun Dec 23, 2007 at 02:46:07 PM PST

                      [ Parent ]

                      •  There is only a limited range (0+ / 0-)

                        of opportunity costs where what you describe makes sense.  At some point, you simply have to look at your money and think about what else you could be doing to make more money.  The premium for self sufficiency is pretty small in the real world.

                        -7.75 -4.67

                        "Freedom's just another word for nothing left to lose."

                        by Odysseus on Sun Dec 23, 2007 at 06:05:25 PM PST

                        [ Parent ]

                        •  That's the damn problem. (0+ / 0-)

                          Rather than being a part of a community, making more money than necessarily needed for a decent life becomes a driving force, driving wedges between people, families, and those who actually have a community of interests. The end result is that we are screwing up the earth, destroying whole countries, and perverting our own best self-interest in the pursuit of a higher return.

                          Hey, if we don't do it, somebody else will right? I think that is a classical definition of schizophrenia, listening to the little voices in your wallet and ignoring the voices of your neighbors.


                          -7.25/-6.41 If you don't like what you hear on the news, go out and make some of your own. -Scoop Nisker

                          by sravaka on Sun Dec 23, 2007 at 09:25:37 PM PST

                          [ Parent ]

                •  Jay (5+ / 0-)
                  Recommended by:
                  chrississippi, redstar, NBBooks, sravaka, sima

                  I've got some empty lots that used to be factories that I can show to demonstrate that US industrial capacity it being reduced.

                  My hometown used to crank out about a quarter of the transmissions in the United States, it earned us a place on the Soviet countervalue nuclear strike list.

                  What the Soviets couldn't due with atom bombs, our business elite has done with dollar bills.  These factories have been shifted offshore, first to Mexico, now increasingly to China.  

                  The United States was able to win 2 world wars because of our industrial base.  

                  Do you suppose that the Chinese will sell us the transmissions for the vehicles that move our military men and materiel around if we get into a war with them?

                  Our economic elites have betrayed us, and have damaged our ability to defend ourselves at the same time that they have turned our armed forces into mercenaries for oil companies. And have allowed the use of force to be shifted from the state to the private sector, erasing the distinction between public and private war, between the legitimate and illegitimate use of force.

                  It's time for this to end.  

                  •  First of all... (0+ / 0-)

                    ...anecdotal evidence is not evidence.

                    Second, part of the benefit of free trade is that it makes wars less likely.  But in the event war with China took place, it is hardly difficult to make more transmission factories.

                    As for your last paragraph, that is an interesting area of discussion, but I'm simply unable to attend to it in detail right now.

                    The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                    by Jay Elias on Sun Dec 23, 2007 at 01:30:22 PM PST

                    [ Parent ]

                    •  Jay (5+ / 0-)

                      You wrote:

                      Second, part of the benefit of free trade is that it makes wars less likely.  But in the event war with China took place, it is hardly difficult to make more transmission factories.

                      As history teaches us the position of France and Germany as one another's largest trading partners in 1914 prevented what could otherwise have been a disastrous world war.  Hmm...

                      As for the ease of starting up a transmission factory, I take it that you've never actually stepped in the door of one.  The amount of physical capital in the form of machine tools, and human capital in the form of skilled trades training to operate them efficiently is very large, and very costly.  Retooling requires a machine tools industry, and that's rapidly being destroyed in the US.  The ability to retool, and reorient production from the civilian to military sector has been America's greatest strength.  It is being destroyed by free traitors traders.

                    •  I'm not surprised that you can't deal with that (1+ / 0-)
                      Recommended by:
                      redstar

                      last paragraph since you would be exposed as an apologist for an exploitive economic system that is using the labor of Americans against themselves. Why don't you attend to that last paragraph.  It might wake you up.


                      -7.25/-6.41 If you don't like what you hear on the news, go out and make some of your own. -Scoop Nisker

                      by sravaka on Sun Dec 23, 2007 at 02:50:57 PM PST

                      [ Parent ]

      •  Dubai owns a chunk of Citigroup (7+ / 0-)

        Singapore owns a chunk of Bear Sterns.

        China owns a chunk of Morgan Stanley.

        Ummm, I think there's plenty of insolvency at the top to go around.

        In fact, when I first read the title of bonddad's diary, I thought that's what he was going to talk about.

        Am I the only one who thinks that reading headlines like the above, again and again in the course of only a month or so, suggests something of truly monumental proportions is underway?

        "When the going gets tough, the tough get 'too big to fail'."

        by New Deal democrat on Sun Dec 23, 2007 at 11:57:18 AM PST

        [ Parent ]

        •  No (3+ / 0-)
          Recommended by:
          badger, DaleA, redstar

          You aren't ...

          My question about sovereign wealth funds taking pieces of Citibank and the other banks in order to rescue them:

          Why is it okay to let the Chinese government take a five percent piece out of Morgan Stanley, whereas it's not okay for the U.S. government to do the same.

          If the banks need bailing out -- why not let the taxpayer take a piece of them?

          Why let the Chinese, the Singaporeans or a Gulf state do it instead?

          I think Sen. Clinton would make a very good president.

          by bink on Sun Dec 23, 2007 at 12:00:11 PM PST

          [ Parent ]

          •  Would you want... (1+ / 0-)
            Recommended by:
            bink

            ...a five billion non-voting stake in Morgan Stanley or Bear Stearns?

            These stakes were bought under very poor terms for the investors, to cover losses.  Seems like a poor investment to me.  Why encourage the taxpayers to make such bad calls?

            The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

            by Jay Elias on Sun Dec 23, 2007 at 12:03:23 PM PST

            [ Parent ]

            •  I know Jay (4+ / 0-)
              Recommended by:
              walkshills, redstar, sravaka, cynndara

              I imagine that all the countries forced to sell their national oil companies to get loans during the late 1990s when oil was at $20 barrel are glad they don't have them now when oil's running up to a hundred dollars a barrel.  I mean if they did they could be doing all sorts of things like free health care and education. And of course both of these are evil. Because the market is God.

            •  You're right, it is a bad bargain, but (0+ / 0-)

              they have to do something with those stinking dollars before those stinking dollars lose all of their value, and the US is the only place they can get rid of them.


              -7.25/-6.41 If you don't like what you hear on the news, go out and make some of your own. -Scoop Nisker

              by sravaka on Sun Dec 23, 2007 at 02:53:55 PM PST

              [ Parent ]

          •  I agree (4+ / 0-)
            Recommended by:
            DaleA, soros, redstar, sima

            If the US taxpayer has to bail out a financial player, why shouldn't the US taxpayer be every bit as entitled to a chunk of the equity as the Chinese government?

            "When the going gets tough, the tough get 'too big to fail'."

            by New Deal democrat on Sun Dec 23, 2007 at 12:03:29 PM PST

            [ Parent ]

        •  FWIW... (1+ / 0-)
          Recommended by:
          DaleA

          ...all these sales are within the last year.

          The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

          by Jay Elias on Sun Dec 23, 2007 at 12:01:12 PM PST

          [ Parent ]

    •  Not really sure that it's just a (3+ / 0-)
      Recommended by:
      Jay Elias, Pluto, redstar

      liquidity crises. That just means people don't want to lend. I've read some analysts who maintain we have an asset crises--there is no real tangible, or the tangibles are hugely overvalued, which is at the root of our problems.

      Not that I'm anything more than a rank amateur on understanding economy. But I would think if the crises were just about liquidity, all this new lending done by US & European banks (separately and in tandem passing half a trillion dollars in the last few weeks) would have put a stop to the fears, no?

      "Printing" new money might provide the cash to bail out some of the financial institutions in the short term, but at the cost of high inflation.

      We're in need of radical solutions, imnceo (in my not completely educated opinion), perhap's along the lines of forcing the banks into bankruptcy and reorganization, or even exercising Eminent Domain over the Fed Banks.

      A related issue, this from yesterday's NY Times, which I expected to here more commentary about:

      Big Fund to Prop Up Securities Is Scrapped

      Some of the country’s biggest banks have pulled the plug on a plan backed by the Treasury Department to rescue troubled investment vehicles that were leveled by the subprime mortgage crisis.

      The decision came Friday after it became clear that neither the banks nor the structured investment vehicles were willing to create a giant fund to bail out the SIVs.

      The reversal is a setback for Treasury Secretary Henry M. Paulson Jr., who had urged the banks to create the so-called super SIV to keep the crisis in housing-related debt from worsening.

      Somehow, I just have this feeling that the bankers are going to end up better off than they are now, and average people will be screwed. Not that that has ever happened before...

      Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

      by Jim P on Sun Dec 23, 2007 at 12:09:34 PM PST

      [ Parent ]

      •  Well, liquidity is not only lending... (2+ / 0-)
        Recommended by:
        Jim P, dmnyct

        ...but also purchasing.  An asset you cannot sell, such as a CMO, is an illiquid asset.  The fear here is the same as in 1998, that some markets will cease to function because no one will be willing to trade assets.

        Which is of huge importance.  One of the most fundamental principles of economics is comparative advantage, that trade itself creates value because the exchange of goods is beneficial to both parties.  So, if no one trades, then those gains disappear.

        The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

        by Jay Elias on Sun Dec 23, 2007 at 12:13:42 PM PST

        [ Parent ]

        •  So, if no one trades, (1+ / 0-)
          Recommended by:
          Jay Elias

          doesn't that lead us to depression and/or hyper-inflation/devaluation (excess cash lying around driving up the prices of tangibles)? I'm not clear on all this.

          Just remember a headline I saw early this year from, admittedly, a gold-bug: "Grab Your Commodities and Head for the Hills."

          Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

          by Jim P on Sun Dec 23, 2007 at 12:18:38 PM PST

          [ Parent ]

          •  No one trades... (2+ / 0-)
            Recommended by:
            Jim P, dmnyct

            ...leads exactly to depression.  That is the Great Depression in a nutshell; no one pays for machines to operate or for people to operate them, so both assets like infrastructure and labor are unused.

            The problem is commodities won't save us.  If markets break down, you can't sell your gold either.

            The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

            by Jay Elias on Sun Dec 23, 2007 at 12:21:51 PM PST

            [ Parent ]

      •  PS (2+ / 0-)
        Recommended by:
        akeitz, Jim P

        The odds are of course that you are right, and that this problem will be "solved" in a way that is good for the bankers.

        The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

        by Jay Elias on Sun Dec 23, 2007 at 12:18:30 PM PST

        [ Parent ]

        •  Just noticed your Mencken signature (1+ / 0-)
          Recommended by:
          Jay Elias

          and, appropos of nothing, it reminds me that I'm glad you didn't respond to me with his colleague Ring Lardner's famous: "Shut, up," he explained.

          Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

          by Jim P on Sun Dec 23, 2007 at 02:53:11 PM PST

          [ Parent ]

      •  Treat the banks like we treat corrupt unions. Let (1+ / 0-)
        Recommended by:
        DaleA

        the government take over operations until it's been cleaned up.

        "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

        by java4every1 on Sun Dec 23, 2007 at 12:25:11 PM PST

        [ Parent ]

        •  this government? n/t (0+ / 0-)
        •  Among the problems with this idea... (0+ / 0-)

          ...is first off, you have to establish criminal wrongdoing on the part of the banks, and second, you need to ensure that people keep hiring investment banks.  Unions taken over by the government still have captive memberships and valid contracts with employers.  What stops people from pulling their money from Bear Sterns after the government takes it over?

          The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

          by Jay Elias on Sun Dec 23, 2007 at 12:31:30 PM PST

          [ Parent ]

          •  Nothing stops them. Bear Stearns should have (2+ / 0-)
            Recommended by:
            Odysseus, DaleA

            considered that before they tried to pull a fast one. I feel zero obligation to protect Bear Sterns.

            "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

            by java4every1 on Sun Dec 23, 2007 at 12:40:03 PM PST

            [ Parent ]

            •  I'm not saying protect Bear Sterns... (0+ / 0-)

              ...I'm saying, what good is government taking it over if what that means is everyone bails from Bear and goes to work and invest somewhere else?

              Put it like this: the partners of Arthur Andersen all left Andersen and went to work at Ernst & Young, Price Waterhouse, and so on.  So what good was the breakup of Andersen, and how much less good would having had the government take it over done?

              The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

              by Jay Elias on Sun Dec 23, 2007 at 12:45:07 PM PST

              [ Parent ]

            •  I'm not saying protect Bear Sterns... (0+ / 0-)

              ...I'm saying, what good is government taking it over if what that means is everyone bails from Bear and goes to work and invest somewhere else?

              Put it like this: the partners of Arthur Andersen all left Andersen and went to work at Ernst & Young, Price Waterhouse, and so on.  So what good was the breakup of Andersen, and how much less good would having had the government take it over done?

              The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

              by Jay Elias on Sun Dec 23, 2007 at 12:45:35 PM PST

              [ Parent ]

              •  Maybe if the government ran (0+ / 0-)

                Arthur Andersen for awhile, it could have been salvaged. The investors that run to another investment firm would do so knowing that new firm will be conscious of the Bear Sterns dilemna and equally exposed, thus modifying their behavior.

                "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

                by java4every1 on Sun Dec 23, 2007 at 12:51:42 PM PST

                [ Parent ]

                •  They did run Andersen... (0+ / 0-)

                  ...after Andersen was convicted, the government had to approve Andersen's dealings.

                  It was just easier and more lucrative for everyone but a skeleton crew to abandon Andersen.  Nothing could force them to stay.

                  The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                  by Jay Elias on Sun Dec 23, 2007 at 12:54:21 PM PST

                  [ Parent ]

                  •  Andersen still exists (0+ / 0-)

                    The Q Center

                    You are overly concerned about protecting businesses. If they screw up they may very well fold. They are owed no guarantees. Yes, it's sad about the employees but we routinely prosecute and incarcerate parents without regard to the children. The concept is that you help more children by removing dangerous behavior from society as a whole. It's the same with corporate excesses. Ultimately you make businesses (and jobs) stronger and more secure by demanding ethical conduct.

                    "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

                    by java4every1 on Sun Dec 23, 2007 at 01:04:33 PM PST

                    [ Parent ]

                    •  I'm not trying to protect them... (0+ / 0-)

                      ...I'm just pointing out that government takeovers are pointless if the employees and clients are not captive.  If they can simply leave and go to a company the government doesn't run, then what difference does government control make?

                      The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                      by Jay Elias on Sun Dec 23, 2007 at 01:06:54 PM PST

                      [ Parent ]

                      •  Don't you think that other company would (0+ / 0-)

                        be on notice?
                        We have to redefine ethics in this country. Society is a collaboration which does not mean Marxist or Socialist except to the extent that we do have a common interest. That interest is best served when All benefit, not only huge capital concentrations or investors.

                        "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

                        by java4every1 on Sun Dec 23, 2007 at 01:13:27 PM PST

                        [ Parent ]

                        •  Why would they be? (0+ / 0-)

                          Again, you still have to establish a crime in order to have a government take over in the first place.  So, if the government took over Bear, after convicting them of a crime, it would only mean that other companies would be concerned about not getting caught in criminal wrongdoing.

                          But the government cannot simply take over an investment bank because it wants to or should.

                          The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

                          by Jay Elias on Sun Dec 23, 2007 at 01:25:07 PM PST

                          [ Parent ]

                          •  They seem to have no problem bailing (0+ / 0-)

                            them out in the public's name. The reverse should also be true. Or neither. If you need a crime, try "fraud". When a mortgage prospect that was eligible for a conventional mortgage was told they were not eligible and then sold n ARM. that's fraud. If you come into posession of stolen property, you are not protected. Bear Sterns purchased property (contracts) aquired by fraudulent methods.

                            "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

                            by java4every1 on Sun Dec 23, 2007 at 01:56:54 PM PST

                            [ Parent ]

      •  To back up Jim P some more (1+ / 0-)
        Recommended by:
        Jim P

        As the Financial Times of London, headlined its story on Monday last week: "Hold tight, the central banks have no plan."

        This has been the year when many deeply held beliefs have been challenged. One such belief was that central banks have the toolkit to sort out any conceivable economic or financial crisis.

        Last week’s co-ordinated liquidity action by five central banks taught us that this is not the case. The idea was that a co-ordinated response would reassure the markets, but it had the opposite effect. It turned out that market participants are not infinitely stupid. They know by now that this is not a liquidity crisis at its core. If it had been, it would be over by now.

        It is a fully fledged solvency crisis that has arisen because two giant and interlinked bubbles burst simultaneously – one in property, one in credit – leaving banks and investors on the brink of bankruptcy, some hanging on by their fingertips. Yet there is nothing the central banks are offering at this stage to alleviate a solvency crisis.

        Did you catch that? The banks aren’t just having a liquidity problem, meaning they’re a little tight for cash right now, but come back in two or three days, and we’ll have plenty. Noooo, this is a SOLVENCY crisis. As in, we don’t have any money right now, and we’re not sure when we’re going to have any.

        A conservative is a scab for the oligarchy.

        by NBBooks on Sun Dec 23, 2007 at 12:45:39 PM PST

        [ Parent ]

        •  I understand this... (1+ / 0-)
          Recommended by:
          Odysseus

          ....but the point that I'm making is that liquidity is not only in the lending area.

          The assets that these banks hold are not bad assets.  The problem is that they cannot sell them for anything resembling what they are worth, and in some cases cannot sell them at all.  Which means they are having problems meeting their own obligations.  But they still have the assets.  And those assets will have value; indeed, they still do.  The problem is no one will buy them.

          The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

          by Jay Elias on Sun Dec 23, 2007 at 12:52:51 PM PST

          [ Parent ]

          •  The problem seems to be (1+ / 0-)
            Recommended by:
            DCDemocrat

            that the book value as shown by Bear Stearns is nowhere near the actual market value. How to bridge the gap between the two is the problem.

            When I studied econ, long ago, the solution proposed was to auction off the assets, use the proceeds to satisfy some part of the creditor's demands and write off the rest. End of problem; beginning of whole new problems.

            Someone will buy them. It may be $200 per condo, but someone will come up with the money.

          •  Are you sure about the logic, terminology here? (1+ / 0-)
            Recommended by:
            Odysseus

            And those assets will have value; indeed, they still do.  The problem is no one will buy them.

            If what I have is of no value--meaning specifically no one will offer me anything in exchange for it--then in what sense can I be said to hold an asset?

            Even if it were a tomato, someone would offer me a coin or a donut (if they had lost all perspective). But if they offer me nothing...

            Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

            by Jim P on Sun Dec 23, 2007 at 02:57:54 PM PST

            [ Parent ]

          •  Wrong, wrong, wrong!! (0+ / 0-)

            These mortgages were leveraged at every step along the way to CDO squared and cubed, along with all the other debt insturments those creative geniuses on Wall Street came up with. Which means, to use Dorothy Parker's famous words about Oakland, "There's no there there." That's what all these banks are trying to hide by being 'illiquid', by not loaning each other any money.

            There's no damn assets! There is only debt, and everybody in on the hustle has made their boodle, their commish, but the banks themselves are broke. One estimate that I read was that $3.5 trillion in assets will be eventually shown to just not exist, which is one quarter of US annual GDP. I know what that tells me about what will happen to this economy as it tries to absorb that loss, what does it tell you?


            -7.25/-6.41 If you don't like what you hear on the news, go out and make some of your own. -Scoop Nisker

            by sravaka on Sun Dec 23, 2007 at 03:16:24 PM PST

            [ Parent ]

            •  Again.... (0+ / 0-)

              ...this is simply not borne out by the facts.

              As I keep mentioning, most subprime mortgage holders are still making timely payments.  Which means that the CMOs backed by their mortgages have value - it is the derivatives trades on them which have gone bad.  The problem is that there is no market for the CMOs, and their value is a fraction of their anticipated rate of return.

              A flight to quality does not mean that the low-quality assets lose all value, it means they cannot be traded at their value.  But just like in 1998, when the flight ends, those who still hold CMOs will make money.

              The urge to save humanity is almost always a false face for the urge to rule it. ~ H.L. Mencken

              by Jay Elias on Mon Dec 24, 2007 at 12:03:19 PM PST

              [ Parent ]

    •  Yes but (1+ / 0-)
      Recommended by:
      dmnyct

      Bondad is unwilling or unable to suggest that in fact immediate increase in taxes on the wealthiest with in fact excess profits taxes on the corporations particularly oil companies which benefit extremely from the OPEC cartel would be a good start. Reduction in spending on military bases, hardware, contractors etc and switching those savings to infrastructure and yes social spending/investment in education, healthcare and
      affordable housing. We read about housing foreclosures and empty condo complexes while we also read about homeless people. We have a horrible mis allocation of resources to things and warfare while we stifle investment in people and social goods, clean water, energy, air.

  •  I'm not understanding this diary (4+ / 0-)
    Recommended by:
    Odysseus, DaleA, redstar, java4every1

    I read Bonddad's diary and he says we can't have anymore tax cuts.

    I slightly disagree.

    Personally I think we should be raising taxes on the top 1% and the big corporations to pay for the debt.

    I'd also be looking for ways to cut taxes on the middle class and working poor.

    I don't see anything disastrous in Bonddad's solution other than my nuanced difference about looking for ways to cut middle class taxes SIMULTANEOUSLY with tax increases on the top 1%

    And in case you haven't been paying attention, GW Bush has clobbered the middle class.

    I shall not rest until right wing conservatives are 4th party gadflies limited to offering minor corrections on legislation once or twice a year.

    by davefromqueens on Sun Dec 23, 2007 at 11:55:11 AM PST

    •  In a comment in Bonddad's diary, I wrote (4+ / 0-)
      Recommended by:
      Odysseus, DaleA, Pluto, java4every1

      The budget deficit is a SYMPTOM of the problem. The two major problems that cause the deficit and other financial imbalances are de-industrialization and financialization. The full comment is here.

      At some point, any demand for payment in an economy has to come from what is physically produced. What we’ve done in the U.S. economy for the past half century is expand the potential demands for payment more than fifty-fold, while contracting the physical ability to pay those demands by about one third. So far, it has been the willingness of East Asia and the Middle East to accept our paper that has hidden this reality from view. A new phase has begun, with those investors starting to buy up entire chunks of the economy and the financial system, Once they run out of such things they want or are willing to buy, then another phase of even worse problems will begin.

      If you’re willing to delve into some very heavy economics, this is a good start:
      The Fallacy of the Revised Bretton Woods Hypothesis: Why Today’s System is Unsustainable and Suggestions for a Replacement.

      My summary of Thomas Palley’s article is here.

      A conservative is a scab for the oligarchy.

      by NBBooks on Sun Dec 23, 2007 at 12:18:22 PM PST

      [ Parent ]

      •  That's at least articulating your position (1+ / 0-)
        Recommended by:
        Odysseus

        And I think you make some valid points and I think Bonddad has some valid points.

        I think most people don't like the idea of you calling out a well respected diarist by name.  A better title might have been something like

        My Economic Solutions To Prevent A Disaster

        Then in your diary, you could have mentioned how you respectfully disagree with the assertion of Bonddad and then detailed your ideas and the reasoning behind them.

        Just my suggestion and idea.

        I shall not rest until right wing conservatives are 4th party gadflies limited to offering minor corrections on legislation once or twice a year.

        by davefromqueens on Sun Dec 23, 2007 at 01:02:09 PM PST

        [ Parent ]

  •  We need fundamental change (0+ / 0-)

    The place where we need the most change is in the organizing structures of corporations.

    We don't need to get rid of corporations, or turn the economy over to the ogvernment, as Marxists would argue.

    What we need, is to reform corporations so that they operate as loyal, republican organizations. And I don't mean, "loyal Republican Party" organizations. There's no "republican" in the Republican Party brand name. The Republican Party is actually ANTI-republican> It's the party touting a mongrel ideology that borrows from many anti-republican ideologies. They borrow the worst attributes from aristocracy, imperialism, fascism, soviet communism, theocracy, and authoritarianism.

    This ideological bastard child is afflicted with a sociopathic antagonism towards republican government, popular sovereignty, democratic elections and consensous-building, communal common interest, and even the rule of law.

    The source of power for this anti-republican movement, which I call "the fascist movement," is the organizing structure of corporations.

    Neither elections, nor legislation, nor regulation, nor court decisions, nor grass roots organizing are sufficient, by themselves, to rid ourselves of the anti-republican practices in the corporate world. It requires constitutional amendment.

    Corporations are chartered by the state governments. They are not "capitalist entities." They are not independent businesses in the merchant capitalist tradition. They are, in fact, overtly hostile to independent merchant capitalism. The power wielded by corporations is an extension of the power of state governments, though corporate power has completely outstripped the powers of the states to check them. In practice, that is, but not by law. They are the dog that has gotten off the leash and which bares fangs against it's former master.

    Imagine a federal government in which the president is also the chief justice, and also personally controls over half the seats in the Senate and the House, and also controls when or if elections will be held! That is the kind of power that corporate bosses control within the corporate organizing structure. It is a brazenly authoritarian and anti-republican power structure.

    If this structure was being practiced by an organization that was a merchant capitalist business, no one could argue with it. All risks and investments are in the hands of the one who has power. No special powers or privilidges accrue to such a business entity. Corporate advocates would like us to believe that corporations are in the same category, BUT THEY ARE NOT.

    As I said earlier, corporations wield an extension of state government power, and as such, they are, by law and common sense, an extension of government authority. The federal constitution expressly FORBIDS the establishment of anti-republican government by the states. All corporations organized in an anti-republican scheme are in fact and by law, unconstitutional. Even without constitutional amendment, they are unconstitutional. NOW. Today.

    But the constitution does not mention corporations. It is upon this lack of POSITIVE identification of anti-republican institutions that corporate power rests.

    So, we can challenge this state of affairs legally, now, but the legal precedents favoring current corporate law have become a nearly insurmountable obstacle. The REALITY of corporate power prevents it's challenge. Revocation of charter is the only populist remedy, and it is too weak to challenge the whole anti-republican power structure. Hence, the need for constitutional amendment.

    In my example above, one of the necessary reforms is clear: No single individual can be allowed to occupy more than one office of power within a corporation. There are other needed reforms to address interlocking boards and majority share-holding, but the reform I give in my example is the strongest example of anti-republican practice in the corporate world.

    We don't need to ABOLISH corporations. We need to reform them with republican checks and balances that widens the franchise of corporate power. That franchise rightly belongs to us all, not a social aristocracy.

    The truth of this is plainly seen when we consider where the authority to exercise corporate privilidge comes from. It comes from the corporate charter, and the corporate charter comes from the state government. Who gave that authority to the state government for distribution? WE DID. The People did.

    All corporate power, and wealth accumulation from the exercise of corporate power belongs to US. The state governments have no authority to transform our authority into anti-republican institutions. They have no authority to funnel our wealth into the creation of a social aristocracy which works against popular sovereignty. Doing so is treasonous.

    •  The problem is that free trade has (1+ / 0-)
      Recommended by:
      xaxado

      turned the nation into a state within the world nation. Our domestic laws are meaningless in this construct because the laws of the new federal government (world trade) supercede our own.

      "I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self." --Aristotle

      by java4every1 on Sun Dec 23, 2007 at 12:37:09 PM PST

      [ Parent ]

      •  I'm not worried about treaties (0+ / 0-)

        I'm worried about anti-republican organization.

        Treaties that are consistent with republican government are not a threat to republican government.

        Unfortunately, the people who have been given the authority to dictate the process by which these treaties are made are not republicans. They are anti-republicans.

        If we had republican corporate institutions, we would have republican representatives negotiating trade agreements.

        Neither better treaties, better laws, new politicians, better judges, nor all of the above will change the reality of the fascist movement.

        Addressing that is the key to effective means in all other areas.

        I'm not worried about national integration, like the EU, for example. I'm not worried about global integration.

        I'm worried that these mechanisms globalize an anti-republican power structure.  

  •  Standard bonddad fiscal conservatism. (0+ / 0-)

    No solutions, no suggestions of progressive redressment of the situation, no putting the situation in context. Just some cassandra calls about balancing the budget while forgetting about government getting involved in being part of the solution of problems working people face each day, in housing, healthcare, rising food price inflation, heating their homes and keeping the jobs with stagnating pay.

    The federal budget debt is not that far out of line with most other industrial countries. The structural nature of the current budget deficit is the problem, a problem which can be solved by simply getting the wealthy who profit the most from what the federal government does to pay their fair share for it.

    Bonddad may not be a Republican, but twenty years or so ago he, or at least people who think like him and talk like him, was.

  •  Tipped and rec'd because (0+ / 0-)

    you spoke for me when you wrote:

    "I am a radical. I know that. I am not a Marxist, or a socialist, but I believe that the government, our government,  can be a positive force for good. I believe in free enterprise, and I believe in free markets that are tightly and fairly regulated. But I certainly am not a peasant. And a peasant is what the present financial system is making of all of us.

    And if you don’t understand that, then you really have no idea of the brutal, bloody fight that lies ahead of us."

    During the Shrub's first four years, IIRC, Paul Krugman wrote more than a few columns about how WH economic policies were turning this into a banana republic.

    The transformation seems nearly complete.

    <snark: can we call the tent villages Bushbergs?>

    8 million New Yorkers can't be wrong: NOT RUDY!

    by Youffraita on Sun Dec 23, 2007 at 01:38:25 PM PST

  •  When I read diaries on some aspect of (3+ / 0-)
    Recommended by:
    Odysseus, New Deal democrat, NBBooks

    economics I can't keep up with all of the theories, disputes, opinions, and uncertainty.  So many people seem so sure of themselves.  There is a lot of lingo that must mean something to somebody, but not to me.

    I made my pile developing computer systems for large enterprises back in the day when computers were being used for the very first time by American business.  I was part of the generation that computerized America.  And what I saw over and over during 30 years of exposure to some of the nation's largest enterprises, both private and public, was that the successful enterprises had goals and plans to reach those goals, with measurable milestones, and budgets, and manpower plans, and training plans, and... you get it, they did the basic blocking and tackling that you have to do to get anywhere.

    What we don't have as a nation is economic goals.  Each enterprise has its own goals for itself, and to hell with the nation.  Capitalism first, last and always.  Without agreement on a common set of goals and without a plan, over years, to reach those goals there will be many more diaries like this one, and constant theoretical disagreement about how things work and what we need to do next.

    I think that our nation's general, high-level, economic goal ought to be that each enterprise should be aimed at developing and maintaining an economy that will enable American citizens to live very long lives and those lives will be worth living.

    If you don't have an earth-shaking idea, get one, you'll love building a better world.

    by hestal on Sun Dec 23, 2007 at 01:43:17 PM PST

    •  You raise a fine point here (1+ / 0-)
      Recommended by:
      Odysseus

      but the problem with neo-liberalism (which means free market economics) is that it makes it nearly impossible for the institutions of government to impose national goals on the economic institutions.

      Consider the foreign exchange markets, for example. Bush was asked a couple of weeks ago about the fall of the dollar, He replied that we believe in markets. But the Constitution clearly gives Congress the authority to "coin money and regulate the value thereof." So, on the face of it, relying on "free markets" to set the value of the dollar is an abrogation of national sovereignty. And that's the problem with Bonddad's solution. He is basically worried about investor confidence. But to win investor confidence now, you have to surrender economic sovereignty, and let the financial markets take you where they will.

      And any attempts to restore economic sovereignty are going to met with howls of outrage about destroying investor confidence. This is not going to be an easy fight.

      A conservative is a scab for the oligarchy.

      by NBBooks on Sun Dec 23, 2007 at 03:11:18 PM PST

      [ Parent ]

  •  Is it a big deal? (0+ / 0-)

    I think that USA is in a good fiscal position.

    The deficit is not all that large.

    There is a combination of big bloat in defense with starvation in many domestic programs which are not all that expensive in aggregate, so there are means to start progressively and responsibly.

    There is a room for quite painless tax increase, namely, treating all sources of income live the salaries are treated, with "pain" concentrated at the very top, and a modest tax increase on top income can give big return right now.

    Finally, I believe that we need some form of carbon tax for CO2 emission and hydrocarbon tax on the account of peak oil.  This gives room for some bridge financing for a progressive health care reform.

    To recap, no, as a government, we are not broke.  As a nation, perhaps, with huge current account deficit extending as the eyes can see, but it has little to do with the financial situation of the budget.

  •  I am a Marxist, and what you describe is Capital. (1+ / 0-)
    Recommended by:
    VelvetElvis

    It is the very nature of property relations that is the problem, not whether someone who wants a profit is driven to illegalities to get it. When you can rent land or time for money, you breed competition rather than cooperation. You breed a class structure that is pernicious to social consciousness. You breed a group of people who have little compassion for their neighbors, even though compassion is part of our very DNA. In short, you breed a Capitalist.

    Bondad's thoughts on the public debt are wacky, as you actually pointed out, because the government "prints" the damn money, so the debt is, in part, whatever the government says it is. The governement could create lots of new money and suddenly the debt as a percentage of GDP will go down. In some sense, debt is money, since all money starts its life as debt.

    I say, tax the rich (a lot) and provide healthcare and a job for everyone.


    -7.25/-6.41 If you don't like what you hear on the news, go out and make some of your own. -Scoop Nisker

    by sravaka on Sun Dec 23, 2007 at 02:28:59 PM PST

  •  Well done (0+ / 0-)

    I was trying to make the same point in that thread.  The Rubinistas didn't like it too much.

    If Hillary Clinton wins, the Democratic Party loses.

    by Paleo on Sun Dec 23, 2007 at 04:45:40 PM PST

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