Skip to main content

(Bumped. This terrific essay got buried this morning by the news of Colin Powell's endorsement of Obama. It deserves another round of readers. Susan)

The Mount Washington Hotel is a sprawling white structure that dates from the turn of the Twentieth Century. Sitting at the foot of the tallest (and windiest) mountain in the Northeast, the hotel today is usually occupied by visitors to a nearby ski lodge, or those that come to enjoy the grand architecture and grander view. But what makes the Mount Washington Hotel famous is something that happened there in 1944. That's where, with World War II still raging on both fronts, 730 delegates from the Allied Nations sat down to a conference that still bears the name of the town nearest that old hotel -- Bretton Woods.

The Bretton Woods conference was not about bombs or planes or soldiers, at least not directly. It was about economics. At the time, the rules that bound those nations together economically consisted of a few broadly acknowledged international agreements, a rat's nest of often conflicting treaties between individual nations, and a mass of tradition. Solving this wasn't just a matter of working out a "free trade" deal. The basic nature of global capital had been called into question by countries that had manipulated the value of their currency to bludgeon a competitor. The rampant inflation that struck many countries during the Great Depression had made transactions between nations essentially worthless. How could you loan money to a state that could pay you back in mounds of devalued bills? How could you compete with a nation that moved its currency's worth up and down to keep trade flowing in one direction? The delegates were intent that the system be rebuilt with more security and predictability.

Out of that conference came the International Monetary Fund, the World Bank, agreements on monetary standards, and much of the system that drives the world's economy today. If the Potsdam Conference shaped the political boundaries of the world following World War II, Bretton Wood defined the economic boundaries of the world outside the Iron Curtain (and for everyone once that curtain was lowered).

All of the decisions that came from that conference were designed to fit within an agreed upon framework: they would allow the market to work with minimal government intervention, they would limit barriers to trade, and they would accept the intervention of the newly created agencies to regulate national finances. The Allies agreed on this not because it defined the universal principles of all the nations involved. Many of the delegates gathered there would have preferred more regulation of markets, more state involvement in financial systems, more flexibility in protecting local markets, and less control from the new agencies. But they signed the agreements – because the United States asked them to.

The Allied Nations at that point were fiscally and physically exhausted. They were also genuinely grateful. When the conference was held, the Normandy Invasion was only a month in the past. In many cases, their survival as nations depended on the continued intervention of US military forces. There was also the example of the Great Depression and the political turmoil it had spawned. None of them wanted to repeat that experience in the aftermath of World War II. The United States demanded a position of international economic leadership, and a weary world handed it over.

The soaring industrial power of the United States that advanced so quickly during the war years, served as the centerpiece of a world wide expansion in the decades that followed. While the east bumbled along under Soviet mismanagement and corruption, the west experienced a period of unprecedented growth. The Breton Woods System, designed around what the United States wanted from the world, worked splendidly for almost three decades – until it was smashed by the United States.

What might have been the most important part of the system designed at the Mount Washington Hotel was the requirement that all national currencies be "convertible." That is, that they could be exchanged for an equal value of gold. That one step kept nations from assigning an arbitrary value to their currency to invalidate debts or manipulate trade. For the United States, the value of the dollar was pegged at $35 to an ounce of gold. But the supply of dollars grew at a rate much more quickly than US holdings of gold. The system that was designed to stabilize currencies was itself becoming more and more unstable. Several other currencies were forced to devalue themselves against gold while the US held stubbornly to the $35 price even though it didn't hold nearly enough gold reserves to meet its obligations under Bretton Woods.

Throughout the 1960s, the growing gap between US gold holdings and US dollars floating around the world placed an increasing strain on the system. By 1968, that strain was too great to sustain. While the United States was distracted by escalating violence at home and the escalating war in Vietnam, the economic action that year was in Rio de Janeiro. That's where the IMF created a new type of document in which nations were required to hold their US debts. These instruments could not be exchanged for gold, to keep nations from demanding some of the US reserves. These documents became a kind of "paper gold" used to prop up the system. The gratitude of the western nations was starting to run thin.

By 1971, the United States was, for the first time since World War II, running a trade deficit. Inflation was kicking into high gear. The war in Vietnam was exploding the federal budget.  In a single year, the numbers of dollars floating on the world market went from about twice as much gold as we held in reserve, to five times as much.  International confidence in the dollar collapsed.  On August 15, 1971, Richard Nixon changed the world. Americans who lived through the period remember the ninty day freeze Nixon placed on prices and wages in an effort to stem growing inflation. They're less likely to remember that Nixon imposed a 10% tariff on all imports in an effort to top the growing trade deficit. On the same day, he also put an end to the paper-thin illusion that US currency was still backed by gold. From that point on, the dollar would be allowed to float on the market.  So would gold. Those holding US notes would have to deal with the market to determine their value.

In one day, Richard Nixon had completely reshaped the world's economy, and he did so without consulting with either foreign leaders or the institutions created at Bretton Woods.  Within a year, the price of gold in dollars had doubled and was still rising. New agreements signed at the end of 1971 left the dollar as the world's "reserve currency." In essence, the US economy was left as the system by which all others were valued. The US had become like AIG – too big to fail. And no one was happy about it.

A year before those agreements, Nixon gave a speech in which he defended the US position in the world, railed against the protests at home, and demonstrated a level of paranoia all too familiar in this "Age of Terror."

"My fellow Americans, we live in an age of anarchy, both abroad and at home. We see mindless attacks on all the great institutions which have been created by free civilizations in the last 500 years. Even here in the United States, great universities are being systematically destroyed. Small nations all over the world find themselves under attack from within and from without.

If, when the chips are down, the world's most powerful nation, the United States of America, acts like a pitiful, helpless giant, the forces of totalitarianism and anarchy will threaten free nations and free institutions throughout the world."
--Richard M. Nixon

Nixon's worry about the "pitiful helpless giant" has been used over the nearly forty years since by those who defend vigorous American military actions abroad. But it has certainly been applied equally in the economic arena.

For our allies, the United States has seemed anything but helpless. Too often they've seen as more as a ravenous Cyclops, seeing only what's good for us without regard to the broad long-term consequences of our actions.

Certainly this has been true of the Bush administration. Far more than any president since Nixon – whose administration "gifted" its ideological follower with such luminaries as Dick Cheney and Donald Rumsfeld – George W. Bush has evinced a philosophy in which being self-centered is a virtue. Bush has trumpeted American exceptionalism on the battlefield and in the boardroom. When our allies signed onto the Kyoto Accord, the United States refused to participate, with no excuse but that our own short term economy is more valuable than the consequences to the globe. After proclaiming that he would demand that the members of the United Nations Security Council "put their cards on the table" in a vote over Iraq, Bush backed away without a vote. Which didn't stop him from carrying on with his invasion.

Under Bush, the United States hasn't just looked only to its own interests, it's held anyone who even considered the consequences of our actions on the world outside our borders under suspicion. A lack of international knowledge was elevated from a shortfall to an asset. A leader who can inspire the hopes of those nations we consider allies by definition can't be wholly American. Ignorance isn't just bliss, it's required. This is a philosophy rushing toward its ultimate expression in the nomination of Sarah Palin, where never having given a moment's thought to any nation but our own is equated with patriotism.

No modern Odysseus is required to test the Cyclops when the creature is voluntarily blind, but the world will not suffer us to lumber on unchecked.

If you were to pick up a paper and find yourself looking at foreign leaders proclaiming that the world needed to be protected from "infection" by the American system, that the United States needed to be "contained," that the United States was the source of disaster in their own land, you might be forgiven for thinking that you're listening in to Tehran or Moscow. But that's what the leaders of our greatest international friends have been saying. At home, we may have some doubt about the causes of the financial calamity we're now experiencing, but our allies have no doubt as to its origin.

"The United States is solely to be blamed for the financial crisis. They are the cause for the crisis, and it is not Europe and it is not the Federal Republic of Germany."
--German finance minister, Peer Steinbrück

While we are fretting about our plans to restore the broken economy, there's one point that isn’t making the debates, and only rarely making the news. In many ways, we will no longer be the masters of our own economic ship. The factors that will most affect us in the future may no longer be under our control, or in the hands of those inclined to place our needs very high on their list of concerns. In a study conducted by the Guardian newspaper, not one country could be found – not France, not Japan, not neighboring Canada, not our "special friends" the United Kingdom – where a majority of the people viewed their relationship with the United States as "friendly." More than the losses in Iraq, or the dollars going to the bailout, this may be the biggest cost of the last eight years. The conservative philosophy that America has an inalienable right to unilateral action has certainly earned our nation an exceptional position around the world – we're seen as exceptionally dangerous.

After sixty years of Bretton Woods, the world is looking for a less dollar-centric alternative to our current fiscal system. And they're not begging for our permission.  This past week has seen French President Nicolas Sarkozy demanding a new global summit to "recreate the capitalist system," and it's seen finance ministers from India to Africa scoffing at the idea that the United States can lecture them on how markets can be run.

Conservatives have made it fashionable to sneer at the rest of the world. That attitude hasn't gone unnoticed, and anyone looking for some lingering attitude of gratefulness and compliance is about to be disappointed.

We think of ourselves as a benevolent giant, more akin to the Jolly Green fellow than the character at the top of the beanstalk. But whether it's malevolence or merely carelessness, the inhabitants of the valley are tired of being stepped on. They're sharpening their sticks. We view ourselves as "first among equals," but even our closest allies are bitterly aware that there are no equals as long as there's a first.

As the world meets in global summit to "rebuild capitalism," the United States may host the event, but don't expect the rest of the world to turn to America for ideas. Instead, they will try and sort out if we are AIG -- salvageable, and possibly too large to fail -- or Lehman Brothers -- a former titan allowed to crash on the rocks. Whatever emerges from this summit, it's going to be a very different world than the one we've lived in since that meeting at the Mount Washington Hotel.

"Europe wants the summit before the end of the year. Europe wants it. Europe demands it. Europe will get it."
-- French President Nicolas Sarkozy

Originally posted to Daily Kos on Sun Oct 19, 2008 at 10:45 PM PDT.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Good. (8+ / 0-)

    It's time for a change.

    Lisa

    Avoid the drama, vote Obama.

    by Boston to Salem on Sun Oct 19, 2008 at 06:07:14 AM PDT

    •  Eorope may well get their Summitt (15+ / 0-)

      But ONLY if The President Elect(or his representatives) is at the table will what comes out of that summitt have any meaning.

      George W Bush may well be President until Jan 20 but the Europeons are snart enough to know if it is W who negotiates anything our new President and our country won't be bound by it

      http://dumpjoe.com/

      by ctkeith on Sun Oct 19, 2008 at 06:31:33 AM PDT

      [ Parent ]

      •  The Europeans are smart enough to know... (35+ / 0-)

        ... that the interregnum between administrations is precisely the time to exert their power to the maximum in such a summit.  They've been tired of chafing under the American boot for decades now, and people like Sarkozy clearly understand that now, with an economic crisis and a dead-duck American president, is their chance to change that.

        Can't blame them a bit.  But I agree, president-elect Barack Obama's people should be at that summit as well.  He may not be president yet, but nothing America signs on to should be done without his input and approval.  Obama can't wait, as FDR did, until his inauguration to assume responsibility.  He's got to fill the vacuum of leadership starting November 5th, and basically push George Bush aside when it comes to policy-making.

        I can't expect to live in a democracy if I'm not prepared to do the work of being a citizen.

        by Dallasdoc on Sun Oct 19, 2008 at 09:06:56 AM PDT

        [ Parent ]

        •  Nope. (2+ / 0-)
          Recommended by:
          Foxwizard, Hillblogger

          Obama should stay away until he assumes office.

          There's great strategic advange in having Bush go first.

          Jeesh, when will Dems learn how to negotiate?

          Ask me about my daughter's future - Ko

          by koNko on Mon Oct 20, 2008 at 02:24:39 AM PDT

          [ Parent ]

          •  Sarkozy can suck wind until... (0+ / 0-)

            Obama is sworn in...if Obama wins, which I hope he does.

            Today, 10/18/08, 4185 Americans, and untold Iraqis are dead, tens of thousands more maimed. Bush lied, how soon before your family pays the price for that?

            by boilerman10 on Mon Oct 20, 2008 at 03:17:57 AM PDT

            [ Parent ]

            •  You're being obtuse -- first of summit to (1+ / 0-)
              Recommended by:
              koNko

              be held immediately after US election with Bush but succeeding summits will be held with a President Obama.

              •  First post of the day and coffee not ready (3+ / 0-)
                Recommended by:
                koNko, eyesonly, sparxy

                obtuse reaction?  Please forgive me.

                I don't trust Bush to do anything beyond try to kneecap both Obama due to politics, and America due to rejection.

                Bush must be contained.

                Europe on the other hand should tread lightly.  One untalked about issue in this campaign season is the feeling that America has been shafted with Bush's ruinous trade and exchange policies.  There is a festering nationalism that I would advise the Europeans not to inflame.

                Today, 10/18/08, 4185 Americans, and untold Iraqis are dead, tens of thousands more maimed. Bush lied, how soon before your family pays the price for that?

                by boilerman10 on Mon Oct 20, 2008 at 04:47:16 AM PDT

                [ Parent ]

                •  the world has to move on and start addressing (1+ / 0-)
                  Recommended by:
                  koNko

                  the crises triggered in great measure by the United States -- Obama knows that this has to be done.

                  So, your bellicose take

                  "There is a festering nationalism that I would advise the Europeans not to inflame."

                  is totally unwarranted.

                  •  I disagree. (1+ / 0-)
                    Recommended by:
                    koNko

                    Perhaps the word is "being diplomatic" in the approach.

                    A return to Bretton Woods is a good idea.  But Sarkozy trying to bulldoze this is not going to work well.  

                    Let us proceed, but let it be with care.

                    Today, 10/18/08, 4185 Americans, and untold Iraqis are dead, tens of thousands more maimed. Bush lied, how soon before your family pays the price for that?

                    by boilerman10 on Mon Oct 20, 2008 at 05:03:21 AM PDT

                    [ Parent ]

                    •  After Bush-buldosed catastrophe, you really (1+ / 0-)
                      Recommended by:
                      koNko

                      believe that Sarkozy is "bulldozing" his way towards finding solutions to resolving the US induced financial crises? You gotta be kidding.

                      If the proposed summits towards reforms don't work it won't be because of Sarkozy -- it would be because there's bad faith somewhere.

                      Sarkozy is NOT bulldozing his way. Someone has to take the lead in formulating reforms ASAP to avoid repeating the same mistakes and to avoid another world great depression. Bush has absolutely no credibility left to even jumpstart this. Obviously, there is no guarantee that the initiative will be successful but it's time something were done to address the causes.

                      And if you were reading the news, you'll find that a SERIES OF SUMMITS will be held -- not just one -- to find solutions... so your fear that

                      ... Sarkozy (is) trying to bulldoze this is not going to work well.

                      is totally unfounded.

                      There's a saying: Don't cut off your nose just to spite your face.

                    •  House on Fire. (1+ / 0-)
                      Recommended by:
                      Hillblogger

                      The start of these talks is symbolic but very necessary to restore confidance in global credit markets. There is only so much money the world can throw at this problem.  Believe it or not, the world does not rotate on the axis of US electroral politics.

                      I think your concern is overblown and politically biased.

                      Overblown, because this meeting will not lead to substantial binding agreements, but a declaration of purpose to stand together and work through a process that will take years, and hopefully (for the US and the world) one guided by Democrats on the US side.

                      Let me give you a hypothetical: McCain wins, has a heat attack soon afterward, and you are holding the phone for Plain.

                      Happy?

                      Ask me about my daughter's future - Ko

                      by koNko on Mon Oct 20, 2008 at 07:26:20 PM PDT

                      [ Parent ]

                      •  Agree. Excellent synopsis (0+ / 0-)

                        Overblown, because this meeting will not lead to substantial binding agreements, but a declaration of purpose to stand together and work through a process that will take years, and hopefully (for the US and the world) one guided by Democrats on the US side.

                •  They are in no mood to wait. (1+ / 0-)
                  Recommended by:
                  Hillblogger

                  And there is more than a little paypack in the dictatorial tone of Sarkozy, which is for European consumption.

                  To be frank, this is a time for the US to eat a little humble pie and making Bush take the first bite will help Obama.

                  I assure you that people outside the USA (including me) strongly support Obama because he is exactly the prescription to the ills created by Bush, an intellegent leader with an ability to listen and negotiate.

                  Your warning to Europeans to tread lightly would be better directed to Americans who still seem to have difficulty treating others as equals. The world does not demand that the US come groveling; we understand there are numerous, complex issues such as trade where much work needs to be done, but that is only accomplished by dialogue and engagement, not by bullying.

                  I think Obama appreciates the facts of the multi-polar world we live in. I trust he will help explain that in the months to come to many Americans that don't quite get it.

                  Sarkozy is doing the US a favor by demanding it come to the table in an emergency situation, and giving the US a lot of face by agreeing the US host the event rather than demanding Bush come to a meeting in the Hague (small chance).

                  You are correct to say the rising tide of nationalism should be a concern; it is definately mine when I ready self-professed liberals spouting Cold War xenophbia on this site.  

                  The cure is not a world that continues to kowtow to the US every time it gets it's feelings hurt by situations of it's own making.  The cure is to treat the US as an equal and as an adult, crazy as that might bsound at this point.

                  Somtimes you let kids cry themselves to sleep. Builds moral character. They love you and respect you in the morning.

                  Ask me about my daughter's future - Ko

                  by koNko on Mon Oct 20, 2008 at 07:18:04 PM PDT

                  [ Parent ]

          •  Not strategic advantage but it's a tactical (1+ / 0-)
            Recommended by:
            koNko

            move that can only be good for him!

            •  Both. (1+ / 0-)
              Recommended by:
              Hillblogger

              Tactical, because it puts Republican stink on the process, which can provide Dems moral leverage that will be needed later to deal with the partisian politics Republicans will use as a means to poison the well and construct an opposition platform. Dems will surely be blamed for fixing the disaster created by Republican excess.

              Strategy, because it commits the US to the process sooner to help control the damage and puts the US in a leading role.

              In my fantasy world, Sarkozy demands Bush attend a meeting in The Hague, a suitably international venue, but methinks Sarkozy let practical necesseity get the better of him. I'm sure the thought crossed his mind to demand Bush report to Europe, that would be a gaurenteed second term for Mr. S.

              Ask me about my daughter's future - Ko

              by koNko on Mon Oct 20, 2008 at 07:36:30 PM PDT

              [ Parent ]

              •  Like you, I would like Mr Bush to be "invited" to (0+ / 0-)

                The Hague but Mr Sarkozy cannot do that -- if an "invitation" has to be issued, it must come from the tribunal in The Hague which is independent.

                Moreover (not that it would matter in the political scheme of things, i.e. inviting Mr Bush) Mr Sarkozy's term as EU Commission prez ends at the end of the year. Not much time to build a case even if there was an intention to do it.

                Finally, everyone is focused on trying to find ways and means to avert a potentially global economic catastrophe.

      •  i think you may be missing the point (14+ / 0-)

        The times have already changed, regardless of who's President, because the United States is not more powerful than the rest of the planet.

        Consent of the US is no longer needed for the economic summit to reach decisions and take actions.

        Nemo iudex in sua causa. -5.88,-7.90

        by Jurassic Game Warden on Sun Oct 19, 2008 at 11:58:40 AM PDT

        [ Parent ]

        •  Right! There will be a series of summits - (0+ / 0-)

          the first one will be held with incumbent albeit lame duck US prez after Nov 4 election and will be held in the US...

          Le premier de ces sommets «se tiendra aux États-Unis, peu après les élections américaines» du 4 novembre, précise ce communiqué. Cette rencontre au niveau des chefs de gouvernement visera à «examiner les progrès enregistrés pour faire face à la crise actuelle et à rechercher un accord sur les principes des réformes nécessaires pour éviter que se reproduise une telle crise», poursuit le texte. «Les sommets suivants se pencheront sur la mise en œuvre des mesures précises devant être prises pour concrétiser ces principes», lit-on encore.

          The first of these summits "will be held in the United States, immediately after the US elections on 4 November" according to the press release (issued jointly by US Sec of Treas Henry Paulson, his French counterpart Christine Lagarde and Condoleezza Rice."

          The meeting will be held among the heads of states and will examine the progress that will have been made in adressing the financial crisis and to agree on the principles of reforms required to prevent the occurrence of said crisis again.

          The press release also said,  "Succeeding summits will deal with the formulation of a set of measures to concretise these principles."

          (Translation mine.)

          http://www.lefigaro.fr/...

        •  Probably true. The US owes so much to so many, (2+ / 0-)

          and the cause of this crisis is so fundamentally stupid (and solely caused by the US), that this may well turn out to be a kind of Versailles, where the other nations design a system that isolates and punishes the US, like France and Britain did with Germany at the end of WWI.

          And mark this, if Bush makes an agreement the world will hold the new president to it, at risk of further aleinating the US from the world.

          This could, in fact, be the first act in the US becoming a 21st century "Sick Man", as the Ottoman Empire was at the dawn of the 20th.

          •  The US can still recover from its very tarnished (0+ / 0-)

            reputation if it can restore confidence and a president-elect Obama is key.

            and the cause of this crisis is so fundamentally stupid

            Agree!

            (and solely caused by the US),

            Not quite! All global financial institutions fed the Wall Street greed.

          •  There are some significant differences... (0+ / 0-)

            "...this may well turn out to be a kind of Versailles, where the other nations design a system that isolates and punishes the US, like France and Britain did with Germany at the end of WWI."

            First, the difference is that Germany was a militarily defeated country at Versailles. The US is not - it has massive amounts of weapons and no one can be completely sure about Bush's willingness to use them.

            Second, though the US is economically hampered, it still has enormous economica strength and is the largest market in the world.

            It might not be wise to overly antagonize a country with these qualities.

            "...Reality must take precedence over public relations, for Nature cannot be fooled." Richard Feynman

            by QuestionAuthority on Mon Oct 20, 2008 at 09:25:33 AM PDT

            [ Parent ]

            •  how long do you think (2+ / 0-)
              Recommended by:
              Foxwizard, Hillblogger

              the US is going to continue to be the largest market in the world?

              Also, it's unknown how much economic strength the US currently has. You don't know, I don't know, the US government doesn't know and the rest of the G8 doesn't know.

              Some circumstantial evidence does exist, however: the size of the national debt ceiling and the proportion of GDP that is due in fact to creative accounting.

              I'm not willing to go out on a limb and proclaim the United States economically strong. They'll have to prove it. Proving it to me is largely irrelevant, but proving it to the rest of the world is anything but irrelevant.

              Nemo iudex in sua causa. -5.88,-7.90

              by Jurassic Game Warden on Mon Oct 20, 2008 at 02:37:26 PM PDT

              [ Parent ]

              •  Agreed. The economic strength of the US (1+ / 0-)
                Recommended by:
                Jurassic Game Warden

                lies, at the moment, largely in the fact the dollar is the reserve currency, and the consumption habits of Americans powers the economies of the world.

                Once Americans realize how deeply in debt they are, become unemployed, just plain scared at losing their retirement money, or even come to their senses consumption will have to fall.

                In other words, our strength at the moment is in the fact that we purchase a lot. Once we have to stop buying, that strength disappears; and since we don't make anything anymore, a feedback cycle will emerge: less buying leads to high unemployment which leads to less buying. The world will want to collect on what we owe.

                American military strength will mean little in the absence of American economic strength. And how long, short of firing nukes, could our military really hold out against an alignment of nations intent on collecting what we owe them?

                And note I didn't say it would be Versailles; it will be like Versailles in that our creditors will dictate the terms and we will accept them because there is no alternative.

                That is what will make us the sick man, and put us on the path of the Ottomans. IF (big if here) a President Obama is unable to undo the damage, get us productive, lower the debt and put us on a path to a (second term) balanced budget. We'll also need to reverse the foreign trade deficit we've been building up since 1975 at a pretty hefty pace.

          •  fall of the Ottoman Empire (1+ / 0-)
            Recommended by:
            Hillblogger

            Excellent analogy.

            Looking back on history, you have to ask yourself why they ever thought they could even pull it off.

            Nemo iudex in sua causa. -5.88,-7.90

            by Jurassic Game Warden on Mon Oct 20, 2008 at 02:29:37 PM PDT

            [ Parent ]

        •  Sarkozy has taken the lead it seems, in the intl (0+ / 0-)

          fight for global reforms

          En revanche, le président américain, qui sera la puissance invitante du premier sommet, très certainement à New York, a refusé qu'il se tienne sous la houlette de l'ONU, comme le proposait Ban Ki-moon. Surtout, des divergences de fond sur l'ampleur des réformes devront être surmontées. «Il est essentiel que nous préservions les fondements du capitalisme financier», a dit George W. Bush, samedi. Certes, lui a répondu Nicolas Sarkozy, «mais on ne peut pas non plus continuer avec les mêmes causes qui produiront les mêmes effets».

          Meanwhile, the US president, who will be hosting the first summit which will most likely be held in New York, refused that it be held under the auspices of the UN. Diverging opinions on the magnitude of reforms are are expected.

          "It is essential to preserve the foundations of financial capitalism," Pres Bush said on Saturday. "Certainly, but we also cannot continue with the same causes which are bound to produce the same effects" Nicolas Sarkozy riposted.

          (Amateur translation mine.)

          http://www.lefigaro.fr/...

          •  Sarkozy: Recreating the Capitalist System (0+ / 0-)

            First of all, when world leaders speak, they are engaging in public relations diplomacy.  It's not surprising that when the U.S. economy is down, Sarkozy will give the U.S. a kick in the rear.

            Secondly, if a global summit establishes technical modifications that ensure the efficiency of the international financial markets, well that's fine and dandy.

            However, if Sarkozy and the French intend to attack capitalism itself -- and throw out the baby with the bathwater because the free market is having problems -- then I think they may well be the losers.

            Personally, I hope that Obama will solve the recession as much as possible by free market mechanisms and will have the confidence to support capitalistic methods even in a downturn.

            I think that Democrats often mistakenly attack  Republicans across the board as selfish and narrow-minded.  Not all Republicans are corporate fat cats.  Some simply believe that individual freedom and cultural diversity are best achieved via a commitment to free enterprise.

            Capitalist values and behaviors are in our blood as Americans; and this in fact may well be our strongest national asset during a period of economic transition.

      •  Play it Smart, Dems (1+ / 0-)
        Recommended by:
        Jurassic Game Warden

        There is great strategic advantage to having Bush start this and Obama finish it.

        No deals will get done so quickly so there's not much to worry about.

        What this will lead to is international accounting requlations, laws or legal standards, reform of the IMF and a banking system based on a basket of currancies not just the USD.

        I'm very certian the EU is pressing hard on this to drive the wedge of EU influance into the IMF which has been historically dominated by the USA.

        Bush the Social Consevative Conservative Socialist has no choice at this point. Let him put Republican fingerprints on this before it gets handed-off to a Democratic President and Congress.

        By the way, there would be no legal precident for candidates for office to be included, do you really want the US embarrased by the participation of McCain and Palin?

        Ask me about my daughter's future - Ko

        by koNko on Mon Oct 20, 2008 at 02:22:11 AM PDT

        [ Parent ]

      •  Your take is wrong. Anything negotiated & signed (1+ / 0-)
        Recommended by:
        Jurassic Game Warden

        by Bush is bound to be honoured by the president elect.

        Europeans are smart enough to concede that the US president-elect re-negotiates any agreement he inherits is another matter.

        The world has to move on - US election or no US election - and start addressing the world economic problems that was triggered in large part by the United States.

    •  Sorry to disagree ... (24+ / 0-)

      but it's easy to type "it's time for a change" without knowing what that change might be, or what it might mean for you and yours, not to mention us and ours.

      A single sentence, a single decision, could create fundamental change in the world, and not just in economics. IANAE (I Am Not An Economist), so I cannot predict what changes might be on the horizon -- but let's imagine one: the rest of the world demands that the US remove all tariffs, of any kind, or they will close their borders to us. Drastic? Sure. But guess what -- they might see enough advantage to their own economies to demand such a thing.

      I leave it to your own imagination to think through the consequences.

      There is palpable anger and political advantage afoot in the land, and we are the targets of both. We have drained our store of good will in the world, and can expect no mercy at this summit, I fear.

      I hope that the summit is a meeting of level-headed leaders focused on what is good for all. If it becomes, instead, an opportunity for the world to band together against us, the change we see may not be good.

      You can cause, and lose, many different types of wars. Not all of them use guns.

      Bruce in Louisville
      Visit me at brucemaples.com

      by bmaples on Sun Oct 19, 2008 at 06:31:34 AM PDT

      [ Parent ]

      •  sure - go to the worst case scenario (5+ / 0-)

        That makes "change" sound scary every time. But the reality is the status quo is not working. Of course we need change beneficial to us. But change is needed, for sure.

        Lisa

        Avoid the drama, vote Obama.

        by Boston to Salem on Sun Oct 19, 2008 at 06:44:06 AM PDT

        [ Parent ]

        •  Change is a neutral-value word (21+ / 0-)

          Getting a great new job is change, but so is getting run over by a truck.

          You are correct, we need change. Beyond that, change is coming anyway, whether we choose it or not. We do not have the option, so beloved by conservatives, of keeping things the way they are, or of returning them to some falsely-remembered earlier time when everything was better.

          The river flows on, as always. We happen to have just floated through a lengthy stretch that, for America as a whole, was pretty smooth and sweet. But that doesn't say much about what lies ahead, around the next bend.

          Since we know we need change, and that change will come regardless, it would behoove us to choose and shape the nature of that change to the best of our ability. That is really what this election is all about.

          •  "smooth and sweet" was a fiction, though (2+ / 0-)
            Recommended by:
            boilerman10, IreGyre

            That's what's brought on the spiraling financial crisis and the coming depression.

            Nemo iudex in sua causa. -5.88,-7.90

            by Jurassic Game Warden on Sun Oct 19, 2008 at 12:01:57 PM PDT

            [ Parent ]

            •  Well (9+ / 0-)

              I'm certainly not saying that everything was sweet and smooth, but mid-20th century America was, objectively, a kind of Golden Age for many.

              Our current troubles-- the spiraling financial crisis and the coming depression-- are the result of trying to continue to live as though the strong economic, cultural, and geopolitical fundamentals of that era continued into this one, when in fact they have been eroding for the last 40 years.

            •  Squandered and artificially extended (3+ / 0-)

              There were positive directions and policy before Bush II that could have been maintained. As the self-serving changes and manipulations and evasions of The past almost 8 years took hold, the fiction of smooth and sweet became more and more of a stretch and required more willful ignorance, short term selfish rewards for insiders and outright lies to everyone even themselves in order to maintain it. As if ignoring and denying what their stubbornly destructive economic myths were doing to the fundamentals of the US economy while the few plundered and skimmed as much as they could manage.

              And as for worst case tariffs mentioned above... I think the rest of the G8 and other movers and shakers of the world will not take a self-destructive and vindictive direction. They will not choose to bite their own noses off for short term benefits and petty payback to the US. They know all nations are in this together and as long as the USA can go to the table with a bit more humility as an equal mature partner a more realistic sustainable balance can be agreed. Just being a bit more realistic equal partner with the rest of the world would be change enough to salvage things and help build a more sustainable world economy.

              Pogo & Murphy's Law, every time. Also "Trust but verify" - St. Ronnie

              by IreGyre on Mon Oct 20, 2008 at 01:50:54 AM PDT

              [ Parent ]

        •  You don't understand... (0+ / 0-)

           This really is a change that will not be good for us.

           If the rest of the world has had enough, the the re-writing of the rules will crush the United States.

           Think Argentina. Think Post-Colonial Britain. Hell, think Weimar Republic Germany.
           
           We are in an unbelievably bad position for negotiation here. Our credibility is gone on every front: Militarily, philosophically, economically, ecologically... We are about to plunge the rest of the world into economic chaos, and the rest of the world is pissed.

           The problem is that the comeuppance that Bush is rightfully due will affect your life, and the lives of your children, and their children, and so on for generations.
           I'm not saying that this is an unrelievedly bad thing... The world might eventually be a better place for the loss of American greed. But be clear what the consequences of this might be: This is not a small step. This -- for better or worse -- is the end of the American empire.  

      •  The rest of the world will not close their border (11+ / 0-)

        to us. And tariffs have fallen, lower and lower, over the past century and been proven to be ugly monsters for every nation.

        So yes, Change is coming, it always comes.  There is no stasis in the universe.  

        Obama will be at helm very shortly. He has good judgment. You know that. We all know that.

        Sarkozy, and the rest of the world, know that too.

        <div style="color: #a00000;"> Our... constitutional heritage rebels at the thought of giving government the power to control men's minds. Thurgood Marshal

        by bronte17 on Sun Oct 19, 2008 at 07:20:04 AM PDT

        [ Parent ]

        •  Why we need Obama (7+ / 0-)

          My sense is that America will be granted one more chance as a leader on the world stage. The legacies of the Founders, of Lincoln, and of Wilson and FDR are that powerful.

          Of course, the quality of that leadership, and of the "followership" of other nations, will be very different compared to 1944. But people need leaders, it is an evolved trait, and for all our flaws as a nation, America can still be that beacon of optimism and vigor, progress and humanity.

          Which is why we need Obama. The world is waiting for America to show that, as a nation, we have regained our senses, and are once again willing to provide, in a form appropriate to present circumastances, what they really want from us.

      •  Well the worst case (6+ / 0-)

        Would be economic sanctions - tariffs, boycotts, unfavorable currency exchange. And tit-for-tat removal of US military from Europe/NATO.

        And all of this devolving into a WWIII - which no one wins.

        It seems more likely that cooler heads will prevail. But we do have to recognize that Europe has the opportunity to get out from under the boot of the United States. An opportunity to cleaanly separate their foreign policies and objectives.

        I commented many moons ago (it seems) back in August that the United States was still conducting itself like it was 1948 and that the rest of the world has moved on while we haven't.

        One always has to remember that the leaders of those European nations have a duty to their own citizenry. It may be that in the interest to protect them that it will impact the United States.

        I won't get into anything really substantive on the subject lest I get branded a conspiracy theorist again. But I think that people can see from the protectionist actions undertaken, the rhetoric, and even what George Bush had to say that our nation is in for a change. A change the government won't like. A change the people will face the consequence for and take out on their government at the ballot boxes for the next election or three.

        Our long-term policies as a nation, which transcend presidencies are becoming unsettled. Some of our policies far removed from economics will also be affected. Right now, it will be critical that the Obama administration start reshaping those policies going forward. Those changes will be difficult to measure and difficult in some cases to even see as they are not often talked about, if at all.

        Don't get me wrong, the Europeans want to take advantage of the lame-duck Bush administration to better position themselves. But at the same time the Bush administration knows that in their last days they can polarize the American public unfavorably towards Europe if European actions can be blamed for further downturns (which would have occurred anyway) in the economy.

        There is much to be gained and lost by all of the interested parties. Some of whom are not even being invited to the big show. For this reason I think cooler heads will prevail. Perhaps with Europe absorbing some more shorter-term pain to help alleviate the pains of the American citizenry. At least until the new congress is seated and the Obama administration is sworn in.

        What's the difference between Sarah Palin and a Moose? One has a nice rack. The other is completely full of shit!

        by MindRayge on Sun Oct 19, 2008 at 05:41:04 PM PDT

        [ Parent ]

        •  Polyphemus (6+ / 0-)

          It's not just European governments which have a duty to their own citizens, it's the governments of the entire World who have those responsibilities.

          Compared to Europe, we here in Australia are just a blip on the radar as far as our economic impact on the American economy is concerned. We trade predominently with Asia these days, so the Chinese, Japanese, and South East Asian economies are far more important to us in that regard. However, having said that, there are also solid strategic regional security concerns which make it important for America to stay on good terms with it's traditional allies in the Asia-Pacific region.

          Unfortunately, many of us in this region do indeed get the impression that America is still behaving as if were 1948.

          It's DEFINITELY time for a change.
          Go America! Go Barack and 'Joe the Senator'!

      •  Really? (0+ / 0-)

        "...let's imagine one: the rest of the world demands that the US remove all tariffs, of any kind, or they will close their borders to us. Drastic? Sure. But guess what -- they might see enough advantage to their own economies to demand such a thing."

        Do you think that they might consider starting WW III over this? I can easily see the US taking it that way - as an economic strike as the prelude to war. This is an especially dangerous possibility if McCain somehow wins the election.

        That scares the Hell out of me. Let's hope the level-headed on all sides prevail.

        "...Reality must take precedence over public relations, for Nature cannot be fooled." Richard Feynman

        by QuestionAuthority on Mon Oct 20, 2008 at 09:29:20 AM PDT

        [ Parent ]

    •  Fool me twice shame on you, fool me 3 times shame (28+ / 0-)

      on me. Fool ne 4 times, I'll take you out and shoot you.

      - The American Republican party gave the World the Great Depression. The Great Depression gave the world untold suffering + paved the way for the rise of Hitler, a Militarized Japan, World War II and the Holocause.

      - The American Republican party floated the dollar without warning creating massive inflation in the 1970s.  No doubt leading to OPECs price gouging.

      - The American Repulican party created the Savings and Loan crisis and Stock Market crashes in the 1980s.

      - The American Republican party created the current financial melt down.  

      It seems to me that the world will at some time soon demand that we create structural impediments to Republican rule - just as the world has demanded the same of Germany and NAZI rule.  

      The current global economic and security system is based upon a hub and spoke architecture with America as the hub and the rest of the world as the spoke.  

      It's quite obvious that the United States can no longer be trusted.  

      In 1944 the world was grateful for the United States efforts to setting the world to rights.  In 2008 they are remembering that it was the United States policies (under Republicans) that set the world to wrong in the first place.

      It seems likely they will either: 1) insist on structural changes to our system to impede Republicans from coming to power 2) create a new system without a hub 3) Replace the United States as the hub, with some other nation more politically stable then the U.S.

      It should be noted that Keynes, at Bretton Woods, wanted an international currency to be created that would handle international transactions. But the U.S. negotiators insisted on the dollar being the currency of international commerce.  

      That era is coming to an end soon, unless Obama is elected and can provide true, real, structural reforms that will keep the Republicans from burning down the house one more time.
       

      •  Um, yeah. (3+ / 0-)
        Recommended by:
        skyounkin, kathleen518, Hillblogger

        Like I said - it's time for a change.

        Lisa :)

        Avoid the drama, vote Obama.

        by Boston to Salem on Sun Oct 19, 2008 at 06:44:54 AM PDT

        [ Parent ]

      •  EU = new hub. n/t (3+ / 0-)
        Recommended by:
        Boston to Salem, Dauphin, Spekkio

        Nemo iudex in sua causa. -5.88,-7.90

        by Jurassic Game Warden on Sun Oct 19, 2008 at 12:06:12 PM PDT

        [ Parent ]

      •  i like that idea (3+ / 0-)
        Recommended by:
        Boston to Salem, quotemstr, Spekkio

        keeping the Republicans out of control for good.  better yet, make it disappear.

        I'm a blue drop in a red bucket.

        by blue drop on Sun Oct 19, 2008 at 03:09:27 PM PDT

        [ Parent ]

        •  future of republican party (6+ / 0-)

          i disagree with the destruction of the republican party. we need two parties -- fighting for the center and keeping extremists out of power.  there was a time, when Eisenhower, an honest, decent man, an internationalist, a great compromiser, took the republican party away from robert taft, and turned it toward the useful and the good. his great mistake was nixon. i sincerely doubt that eisenhower would have got tangled up in vietnam. kennedy, charming as he was, could not control the cia or the military. we slid into vietnam, and johnson, on the advice of some foolish believers in the domino theory got us into a war that was too big to lose. dulles had a lot of responsiobility. we considered going in in 1954, as the french were losing dienbienphu.
          The democrats, and i am a lifetime democrat, never voted against them, fought in their wars, were far from perfect. if you remember the democratic party i remember from 1948 when Strom Thurmond led the dixiecrats out and henry wallace led the progressives out, leaving behind Truman with a champion disapproval rating was the first time as an adult i was really proud to be a democrat (although i was a wallace partisan).
          We need two centrist parties, with democrats being most of the let of center, and the republicans with most of the right of center, and a few per cent of mavericks on either side of the center who swing back and forth when one party was been in office so long as to be corrupt, warlike, or misguided.

          •  Huh? (0+ / 0-)

            i disagree with the destruction of the republican party. we need two parties -- fighting for the center and keeping extremists out of power.

            And what do you consider Bush and Cheney, if not extremists?  If the only reason that we need two parties is to keep the extremists out of power, it is pretty clear that the two party system has failed.

            I believe that we need two parties, but I would rather that each party provided a large enough umbrella to encompass both ends of the political spectrum.  I remember liberal Republicans and conservative Democrats.

            Piffle crack eat monkey snow. Really. Leonard Pitts, Miami Herald

            by Susan Grigsby on Sun Oct 19, 2008 at 05:54:05 PM PDT

            [ Parent ]

          •  you can have a second party (2+ / 0-)
            Recommended by:
            quotemstr, page394

            just not Republicans.  if they morph into something more moderate by a different name, fine.

            I'm a blue drop in a red bucket.

            by blue drop on Sun Oct 19, 2008 at 07:03:00 PM PDT

            [ Parent ]

          •  Your far to kind on the Eisenhower thing (5+ / 0-)

            In 1952 Eisenhower could have gone either way - Democrat or Republican.  In fact Truman offered to let Eisenhower run in 1948. (I read McCollough's Biography of Truman).  Eisenhower demurred. By 1952, the Republicans had been out of power for 20 years and were desperate. They wooed Eisenhower with everything they had.

            Because of the defections you raised above plus disapproval with the Korean war, the ball seemed to be swinging the other way and so Eisenhower went with the Republicans.  Dispite a long time very thin connection with the Republican party, he was a Republican in name only by 1952. As my father mentioned, the military is the most 'socialist function' organization in the United States (command economy, no market insentives, etc...). (In 1940 the Republicans nominated Wendall Wilkie of only a short persuasion with the Republican party - so pedigree was of dubious importance for the nominee).  

            During the 1950s the U.S. was already deeply invested in Vietnam.  This was the result of Republican hysteria that was created by McCarthyism scares. Republican cries of "Who lost China" - nobody wanted to be seen as soft on Communism or appeasing in the face of aggression. If you read Graham Green's book, or watch the more recent movie "The Quiet American" he predicted the history of the next 20 years in Vietnam as early as 1952.

            By the time Eisenhower left, its quiet evident that he realized that he had made a mistake in his party affiliations. You can see it in his eyes and hear it in his tone of voice as he's talking about the "military industrial complex" which even he was unable to control. Eisenhower was a great man, with a good mind. He predicted the collapse of Communism under its own weight in 1954. He had good foresight.  He looks truly afraid of what he sees coming at the United States in 1960, on the eve of his departure. A future he helped cement by his republican affiliation in 1952.

          •  Absolutely! Democracy requires it! (0+ / 0-)
      •  The Great Depression was not strictly our fault. (4+ / 0-)
        Recommended by:
        fladem, grollen, Geenius at Wrok, Klaus

        I'm all for blaming the Republican party for what they did wrong, but I don't think the worldwide Great Depression was their fault - or the exclusive fault of the United States, for that matter. The Great Depression had many causes. Truth be told, I don't think anybody agrees on what happened.

        In particular, I would highlight that great economic distress grew out of the devastation of the first World War, the failure of the international community at the end of the first World War to fix systemic issues, and the insistence on penalizing the Central Powers (the German Empire, the Austro-Hungarian Empire, the Ottoman Empire, and Bulgaria) - which included dissolving those empires, as well as vicious economic sanctions that all but guaranteed economic pain. Add on the Russian Revolution (1917), the Turkish Independence War, the break of Canada and Ireland from the United Kingdom...you get the idea - massive instability.

        •  Wealth was concentrated as wages did not keep up (5+ / 0-)

          with productivity.  

          It's the exact same thing as now.  People borrowed money to bridge themselves to the other side during a period of declining medium waqes.  This made demand soft. As wealth accumulated, and demand soften the wealthy leant money to those borrowing to cross the bridge.  When the bridge failed to make it to the other side, the financial collapse kicked in.  

          There were international in ballances and structural problems.  But the problem from the collapse of Ancient Egypts New Kindgom, the Fall of Rome, Pre-Islamic Mecca, Byzantium, Medieval Japan, Hapsburg Spain, Bourbon France, Romanov Russia, and Coolidge/Hoover U.S. and the current U.S. all has this same problem runnning through it.  Concentration of wealth and power, and the wealthy and powerful using their influence to avoid paying taxes further exasperating the problem.  

          If wages keep up with productivity growth, this kind of thing doesn't happen. Other problems happen, to be sure, but this problem does not.

          •  Seems So Obvious Does It Not? (1+ / 0-)
            Recommended by:
            Spekkio

            Certainly economic analysis is fraught with even more difficulty than attempts to determine the causes and remediation of global warming.  Any single isolated factor that neglects all other considerations may lead to totally false conclusions. Coincidence without regard to cause and effect is mostly meaningless.

            Given that, it seems to me ludicrous to give serious weight to supply side economics.  Who in their right mind would build factories to produce goods that few could buy?  A surplus of wealth with lack of investment opportunities tends to go to areas where the value may be stored.  Predominantly that tends to be into real estate.  The current housing bust might indicate that is not a panacea but rather an effect of distortions caused by the flow of money to the top.

            Best,  Terry

            •  My take is this.... (0+ / 0-)

              Supply side economics is just a gimmick to justify giving the rich more money through tax breaks and otherwise.  (The only conditions in which it might work is where you have inflation - true inflation - where too much money is chasing too few products, but that hasn't been a problem since 1980).  

              Bush spouted tax cuts as an Rx no matter what the condition was: too much prosperity, too little, too much of surpluss, too whatever.

              But the fact is they knew that without increasing demand the metrics measuring performance would tank. They looked around to see how they could 'gerry rig' demand into the economy short of increasing people's wages.  

              The answer came through mortgages manipulation. Its the one area that fiscal policy could manipulate.  It's also impacts housing/construction, an area of the economy that has a huge impact on the over all economy.  

              Foreign, especially China's, central banks proved willing to lend our treasury trillions of dollars at artificially low rates. This allowed the Fed to set low interest rates.  This allowed people to refinance their house at lower interest rates, releasing enormous amounts of money to 'create' demand (some of which went into stimulating a new housing construction boom - people moving up market thanks to lower rates).   When that string began to taper out, then floating point mortgages became the thing. When that string began to taper out then second mortgages became the thing. When that string began to taper out subprime loans became the thing.  Actually I feel there was alot of overlap but you get the idea.  

              The thing was, the 'demand' of the Bush boom (if you can call it that) was fabricated through cheap money from China, not from wage growth. So it was and is inherently unstable, to an enormous degree.  

              What we saw during the Bush years then was an enormous shift in wealth from the mass middle and working class to the wealthy. This was disguised and hid from site courtesy of China's central bank.

              I think they knew it couldn't go on forever. I think they hoped that they could kick the can down the road until after January 2009, where upon they thought it could be used to discredit a Hillary Clinton regime and thoroughly discredit liberal economics.  

              Unfortunately it didn't make it to 2009.  And no matter what happens, Bush and Republican 'supply-side' economics is likely to be saddled with the disaster that's erupted and depending upon how skillfully we can avert disaster, may very well discredit Supply-Side Economics for all time.

              Couldn't happen to a nice bunch of guys.

      •  2) create a new system without a hub (0+ / 0-)

        That's the answer surely ....  create a fiscal net .....

    •  Link here (4+ / 0-)

      The link to the Guardian newspaper international survey results referenced by Devilstower is here

    •  check out "the creature from Jekyll Island" (0+ / 0-)

      IS IT JAN. 20th 2009? Yet?

      by surfdog on Sun Oct 19, 2008 at 11:37:40 AM PDT

      [ Parent ]

    •  For God's sake (3+ / 0-)
      Recommended by:
      northsylvania, quotemstr, andrewj54

      there is absolutely no doubt that Nixon was right to junk the gold reserve requirement.  The first half of this critique I find highly questionable.  

      The gold bugs inhabit the far right of the neo-classical economics.  Nixon was a horrible President, but am I really reading a liberal critique of the economy that is berating Nixon on this issue?  

      As for the allies - it may be fun to blame the US - but Europeans damn well know the ECB has held interest rates far too high - and Europe was headed into a recession before this crisis emerged.

      There is much I REALLY hate about our economic policy.  But the European self-rightessnous is just silly around this issue.  

      And I speak as one who does a fair amount if business in Europe.  

      •  partly true (4+ / 0-)
        Recommended by:
        Creosote, Sam I Am, Dauphin, eyesonly

        The European banks: Northern Rock, UBS, Iceland (the world's biggest hedge fund!) were just as excited about the American banks' financial models as Lehman Bros. Nonetheless, the Europeans definitely perceive it was American habits and an American mindset that got them into trouble. They are more than happy to blame American collateral in the form of subprime loans, even though there was plenty of speculation and overvaluation on this side of the pond.
        The diarist is right that both the financial crisis and our exploits in Iraq have lost us both influence and sympathy and, as more countries follow Iceland into the poor house, as the Americans look the other way, this will only increase.
        We have an opportunity to grow out of this though as, if we are no longer banker to the world, we might be able to give up being its policeman as well. If money spent on our enormous defense infrastructure was put toward rebuilding the country instead, who knows what world opinion might be toward America in ten to twenty years.

        •  There is no doubt (0+ / 0-)

          that Iraq has cost the US enourmously in European perceptions.  I wouldn't argue that point.  

          It's funny, on the day of the elections in 2004 I was leading a meeting in Europe.  I work in the financial markets - and this was hardly a left wing group.

          But almost to a person the Europeans were all for Kerry.  

    •  This could actually contain some good news (7+ / 0-)

      although I doubt that it will be much fun for our standard of living once the dollar isn't currency numero uno.

      But the possible upside is that a smart administration would then have the excuse to completely shutter the ring of military bases across the globe, and to radically downsize the military and finally give us that peace dividend we didn't really get in 1993.

      If America continues to suffer from imperial delusions, and refuses to tackle the fundamental inefficiencies in our country, we're basically hosed. By fundamental inefficiencies I'm referring to these important facts:

      - We spend more on health care than anyone, but half the money -- about 7% of entire GDP -- is wasted

      - We consume 40% more energy per dollar of GDP than does Europe or Japan

    •  The problem is... (2+ / 0-)
      Recommended by:
      eyesonly, cachinnator

       That the only thing that has kept America from an Argentina-like meltdown is that the rest of the world is required to use the dollar for it's transactions.

       Without that, the United States needs to pay its own damn bills... And the deficits that the Republicans have saddled us with since Ronald Reagan are like crushing elephants; and the trade deficits we've let pile up are like arterial wounds.

       More than anything else that is a result of George W. Bush's reign -- this may be the thing that truly spells the end of America's Supremacy, the misbegotten birth of our breach of world trust. And no one even knows what's about to hit them.

      •  Putting the genie (1+ / 0-)
        Recommended by:
        Hillblogger

        back in the bottle is easy compared to putting the elephant back in the box. What I like about pain is that to many it is so unexpected..it is something we inflict not expecting to be a receptacle. We will either grow stronger or die, worse yet, submit.

        And the deficits that the Republicans have saddled us with since Ronald Reagan are like crushing elephants; and the trade deficits we've let pile up are like arterial wounds.

        The hope contained within our ignorance is that we will die before we have to face it.

  •  My apologies Devilstower, this is O/T. (10+ / 0-)

    Colin Powell just endorsed Barrack Obama on Meet the Press!
    McCain unsure of how to deal with the economic problems that face the country. Also concerned at the choice of Sarah Palin, she is not ready to lead.
    Obama showed steadiness an intellectual vigor.

    :)

    John McCain "Beware the terrible simplifiers" Jacob Burckhardt, Historian

    by notquitedelilah on Sun Oct 19, 2008 at 06:09:43 AM PDT

  •  UK and Spain Also to Blame (6+ / 0-)

    The housing bubble was focused upon the U.S., the U.K., and Spain.  It never happened in Germany, but it was there in other parts of Europe.  

    •  Yes and No (6+ / 0-)

      Germany has never been big on house ownership. It's a cultural thing. Therefore they were never susceptible to this kind of problem.

      Spain had a housing bubble due to its tourism industry and a new wave of retirement influx from across Europe driving prices up. However Spain has very strict banking rules having been through a similar experience to Sweden and so they are in a good position. The problem for most European countries is that they are all different but all subject to the European Central Bank which tends to look after France and Germany first.

      UK is susceptible to pretty much everything. UK has always espoused home ownership but combined with a lack of space, lack of housing stock and cheap money (low interest rates) pushed prices to form bubble. And the bank regulations are poorly enforced, the FSA is inept, the Bank of England made toothless and government with its head stuck in the sand.

      Gordon Brown's 1997 Budget Statement -
      "I will not allow house prices to get out of control and put at risk the sustainability of the recovery."

      Budget Statement, 21 March 2007 -
      "And we will never return to the old boom and bust."

      Guardian 2004 The return of big bonuses for the City's elite workers will plug the hole in the government's coffers and avoid the need for tax increases, Gordon Brown said yesterday.

      Brown at the Confederation of British Industry conference in 2005
      "no inspection without justification, no form filling without justification, and no information requirements without justification, not just a light touch but a limited touch."

      •  Bah (20+ / 0-)

        bollocks. I find Steinbrück, Merkel, Berlusconi and Brown's scapegoating of the US insufferable. And I'm European, Scandinavian, so I'm allowed. The nearly exact same set of economic conditions existed in Europe as in the US, and the political leaders did as much to anticipate the problems: Far too low prime rates, lax regulation of financial markets, and excessive leveraging, creating immense market bubbles. Our political leaders are simply shifting the blame to the US for populist reasons. Brown himself was Chancellor of the Exchequer of the UK in the entire period the housing bubble was created; he did nothing. I for one am not impressed by his damage control, when he was the one to forestall the crisis. Heads should roll; they won't.

        •  And (11+ / 0-)

          and with regard to Germany: Their banks have leveraged themselves up to a ratio of one-to-sixty. So much for European diligence.

          The key problem on this side of the Atlantic is that the largest European banks have become not only too big to fail but also too big to be saved. For example, the total liabilities of Deutsche Bank (leverage ratio over 50!) amount to around 2,000 billion euro, (more than Fannie Mai) or over 80 % of the GDP of Germany. This is simply too much for the Bundesbank or even the German state to contemplate, given that the German budget is bound by the rules of the Stability pact and the German government cannot order (unlike the US Treasury) its central bank to issue more currency. The total liabilities of Barclays of around 1,300 billion pounds (leverage ratio over 60!) surpasses Britain’s GDP. Fortis bank, which has been in the news recently, has a leverage ratio of "only" 33, but its liabilities are several times larger than the GDP of its home country (Belgium).

        •  Welcome to the world Ronald Reagan created (13+ / 0-)

          You and I have been living for 28 years in a world hammered by US propaganda and intimidation into the policies you decry.  The world capitalist class always rewards the country that obeys its anti-egalitarian ideology with excess capital; it did in the 1920s too.  That country then has a boom that makes everyone want to copy it.  But unlike the 1920s, the US this time used its national security apparatus and a whole host of tools of political manipulation to convert the entire world into a corporate whorehouse.  Read Naomi Klein's "The Shock Doctrine" to see how countries were bamboozled by the Friedman cult's propaganda into believing that Ecuador or Poland represented models for all mankind.

          The blame is on America, because we evangelized an unsustainable way of life as a world religion, and even used violence to exterminate heretics.  That applies to oil depletion, global warming, and the food crisis.

  •  Your excellent post reminds us of the (16+ / 0-)

    complexities of our world: no more good guy/bad guy but we are interconnected.

    This issue alone highlights the need of a Obama/Biden win  

    There is just as much horse sense as ever, but the horses have most of it. ~Author Unknown

    by VA Breeze on Sun Oct 19, 2008 at 06:13:43 AM PDT

  •  Good work and thanks (4+ / 0-)

    The global markets are so complicated it is a bit overwhelming.

    Hopefully the days of using economic blackmail to force other countries to bend to our will are over.

    The key ingredient in all of this mess is who can we trust.

    I don't think there is any way the Bush folks will be willing to give up the idea that free markets equal free people.

    Hopefully there will be some people with a vision for the future that will lead us into the 21st century with foresight.

    Overthrow the Government ~Vote~

    by missliberties on Sun Oct 19, 2008 at 06:13:50 AM PDT

  •  Colin Powell endorsed Obama on MTP!! (3+ / 0-)
    Recommended by:
    ezdidit, tmeyer, Stranded Wind
  •  Thank you Devilstower (15+ / 0-)

    Brilliant, as ever. This should be read by all reporters whose job it is to explain the significance to the American people.
    Otherwise, it's just another Bush photo opp, to salvage his "legacy".

  •  OT Powell endorses Obama (1+ / 0-)
    Recommended by:
    tmeyer

    It's official.

    ~War is Peace~Freedom is Slavery~Ignorance is Strength~ George Orwell "1984"

    by Kristina40 on Sun Oct 19, 2008 at 06:15:18 AM PDT

  •  Question - did Europe allow excess bank debt? (7+ / 0-)

    Did European banks follow US banks over the cliff? I honestly don't know.  

    Hank Paulson lobbied for excessive leverage for banks- allowing them to ramp up the risky loan practices of loaning $40 for every $1 in assets. They got the exemption in 2004.  Before that they could only loan $15 for every $1 in assets.

    Dillon Radigan, CNBC, Fast Money 10/17/08  

    You'll probably have noticed that I've had a few thoughts .. about how we got into this mess, the lack of transparancy about how we got into this mess and how it's curious how a few individuals were allowed to put the entire system at risk and  bonus themselves hundreds of millions of dollars.

    ...

    Among those who seem to warrant some questions, those who sought to raise the leverage limits on Wall Street so they could assume more risk and then it appears pass it along to the rest of us. ..

    ...remember the testimony of Hank Paulson, the CEO of Goldman Sachs. This is our current Treasury Secretary here, who at the time was the head of one of the most powerful investment banks in the world, lobbying in effect, to raise leverage limits.  

    Graphic

    PAULSON IN 2000

    "We [Goldman Sachs and other firms] and other global firms have, for many years, urged the SEC to reform its net capital rule [comment - that's Leverage]  to allow for more efficient use of capital.[comment - that's more Leverage] This is the single most important factor in driving significant parts of our business offshore, so that our firms can remain competitive with our foreign competitors ..."

    end Graphic

    Anyway that's the reason they said they needed it, because they said, other people were taking that leverage.  I should point out that  Mr. Levitt did not grant them that exemption that they sought.  However they were able to go back to the SEC in 2004 and get that exemption. They went from 15 to 1 to 40 to 1. They were able to then, assume more risk than anybody on Wall Street had ever been able to assume in the history of the financial markets. As a result we saw hundreds of millions of dollars in bonuses paid out to individuals who had assumed massive amounts of risk. ...

    .. Is it appropriate to assume those bonuses with the knowledge now that the risk assumed was so far in excess of the capacity of the firms that took it, such that you had to come back to me, you, and every other taxpayer in America, in order to bail those who took this risk out?

    Commentary - do you feel it's appropriate that they could retain the capital from excess risk with the knowledge that they could pass that risk to me and everyone else in America?  Look at AIG taking down $87 billion, more than the budget of the state of NY.   If you were nakedly long the housing market, you should think about giving that money back.  It's unconscionable that we're putting all this risk onto the balance sheet of America.... ....outrageous to me that they get to keep their bonuses..... that's not capitalism, that's stealing.

    •  Clearly, yes (5+ / 0-)

      But that's just a statement of empirical fact.

      It's really been a failure of leadership at many levels (in both corporates and government).

      Also a failure of incentives - if you pay people enough to retire after three years, but those same people have a limited downside (i.e. lose their existing wealth), that drives risky behaviour.

      Not enough people stepped in to say no, and if our bank (or for government, our country's banks) falls into the middle of the financial tables then so be it.

      •  Failure in the board room (7+ / 0-)

        Failure by the stockholders themselves.

        One of the reasons people have been screaming about CEO pay off the charts is that the salaries and golden parachutes are just a symptom of too much control by the CEOs and not enough responsibility in the board rooms.

        Then, when you start plucking people from the CEO suite and putting them on your cabinet, the foxes eat the chickens.

      •  Not only did they get the leverage (1+ / 0-)
        Recommended by:
        undersiege

        One of the bigger trends the last decade or so came in the form of risk management with companies creating Chief Risk Officers and such. Now you would think that risk management actually meant that there was a concern that firms were being too risky and that they needed to better control it. But risk management is one of those terms like military intelligence that means the opposite.

        What happened was that instead of categorizing risk into say 6 or 7 categories they went ahead and added new categories and striations within each to create 200,300, or more slices of risk. The intent was to free up the capital that was being "wasted" (just sitting) because the firm was being too conservative. This was done by making many more things less risky than they had been previously. It has/had the unfortunate consequence of leaving little margin for error or for changes in human behavior.

        I do believe that we need to go back to a simpler time and as much as the capitalists abhor it to allow some portion of capital to be "wasted" by just sitting there. The only entity that can make that happen is the government. The money-makers have no such desires.

        What's the difference between Sarah Palin and a Moose? One has a nice rack. The other is completely full of shit!

        by MindRayge on Sun Oct 19, 2008 at 06:12:57 PM PDT

        [ Parent ]

        •  Risk management is outcome (0+ / 0-)

          based. It is either a 1 or zero. Each decision has an outcome, and it is the consequences that determine the course. The Buschcos started with altering the consequences . Phil Gramm began changing the rules of the game. (Glass-Steagall, Gramm-Leach-Baily, Commodity Futures Modernization Act, Riegle Community Act). From housing, to bankruptcy, to deregulating credit and banking rules we shifted the risks from corporate America to "we the people", the ones who really make this all work, and make all possible.

          Wealth is meaningless unless it is in your bank account, and with all the talk about re-distribution of wealth, I never thought that WS would ever be able to re-distribute imaginary wealth. My mistake, the derivative markets exceeded the money supply..in the entire world. There is no bailout correction. There is only our money in their banks.

          The key to insulate oneself against greed is to have nothing...but then came the sub-prime loan markets...and in that fleeting time people thought they were getting a piece of the pie, the liquidity was sucked from their homes and now they have nothing, just like when they started, but now they have debt burden, created from nothing. Leave it to WS and give a big assist to the Bushcos...and their Democrat enablers.

    •  Wasn't it Paulson (5+ / 0-)

      who convinced the SEC to remove all capital requirements from the investment banks, which allowed them to get into this leveraged wonder land where they were 30:1 or worse?

      So, you go to the administration you're about to be a part of, flip a switch, and later, when you're Treasury Secretary, you blame that switch for billions in losses, which you then cover with tax payer money.

      Robber barons.

    •  that's stealing (0+ / 0-)

      "Property is theft."  --Pierre-Joseph Proudon

  •  We have an alternating theme developing here... (1+ / 0-)
    Recommended by:
    Stranded Wind

    heh.

  •  Thank you ! n/t (0+ / 0-)

    "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." -Thomas Jefferson

    by ezdidit on Sun Oct 19, 2008 at 06:21:38 AM PDT

  •  Manichaean paranoia (15+ / 0-)

    The inevitable and unenviable result of the conservative view is that the world starts to line up the way you see it. The Manichaean paranoia, that we can do whatever evil we want because we're fighting evil, has brought us to a world that is, indeed, black and white in many of the ways these robber barons wanted to scare us into believing.

    But, in Euripidian tragedy, you become that which you hate. The conservatives became the evil they detested. And they dragged the rest of us with them.

  •  When I said (7+ / 0-)

    that Chimpy destroyed alliances that we spent seventy years building, a lot of this is what I meant.

    And yes, I know it's too glib to blame him, or even Republicans in general - but I don't want to start raving about "them".

    Besides, the Chimp wanted to be the "Commander-in-Chief". Well, one of the Commander-in-Chief's less enviable jobs is to be the guy responsible when it all goes pear-shaped. And it has gone seriously south for us in the international community, and continues to do so.

    I guess nobody told him about that part.

    Wouldn't you like to be a droogie too?

    by Moody Loner on Sun Oct 19, 2008 at 06:25:09 AM PDT

  •  American-style capitalism was always bankrupt (16+ / 0-)

    It has taken years to expose it, that's all.

    Adapting Milton Friedman's sterile axioms to politics has resulted in a win-at-all-costs attitude where the strong feast on the weak.

    What does it mean to be American anymore? What is this country about when it feasts on its own people, and tells them that it is the American way.

    We said we want change, and they gave us a handful.

    by MouseOfSuburbia on Sun Oct 19, 2008 at 06:26:21 AM PDT

    •  Survival of the Fittest (16+ / 0-)

      perpetuated by people who deny evolution.

      And they're not even, really, "the fittest." Their old money gives them an advantage to begin with, so all they have to do is coast, ala GW. There's no magic meritocracy. That would only exist if inheritances were illegal (or really heavily taxed).

      I'd like to see some of these silver spoon babies make it in the world I grew up in. The world where I had to sling beer to rednecks to pay my way through college, where I had to wash dishes in high school to help pay my way, where I had to work myself into an arthritic disability for 20 years only to wind up on welfare because the doctor says I can't work, but social security says it will be two years before I can have an appeal hearing.

      I'd like to see one of the trust fund babies make it through this winter with me, my wife, and son.

      People are only cogs in the capitalist system, just another interchangeable part that can be replaced at as low a cost as you can get away with.

      •  Rec'd for last sentence. (6+ / 0-)

        It's something everyone should understand.  So much else starts to make sense when you do.  

        They see me trollin'. They hatin'

        by obnoxiotheclown on Sun Oct 19, 2008 at 08:39:57 AM PDT

        [ Parent ]

      •  the whole "survival of the fittest" thing (8+ / 0-)

        has been usurped by anti-intellectuals as a postulate. So they're happily assuming that those who survived must be the ones who are fittest.

        What they fail to realize is that in real evolution, biological or cultural, things are not that simple. As you say, old money does give the plutocrats a fitness advantage. But the fitness of an individual does not operate in a vacuum.

        Today, being plugged into the blogosphere confers a fitness advantage to entire communities of individuals.

        Today, looking for non-violent solutions to regional problems confers a fitness advantage to entire nations.

        Today, engineering a robustly sustainable economy confers a fitness advantage to the entire human population.

        We're living in interesting times: It is the first time that networks of individuals, communities and nations have begun to achieve an overall objective fitness advantage over the plutocracy.

        If the plutocracy were to figure this out quickly enough and organized itself into new, even more virulent global institutions, then we would experience lock-down in the form of secular or religious fascism.

        What's saving our bacon -- no surprise to those of us who are into that arcane stuff about complex systems -- is cultural diversity. Even the plutocrats themselves are partially slaves to their own cultural heritage. The probability today of American, German, Russian, Chinese, Japanese and Korean plutocrats cooperating effectively in their own interest is practically zero.

        It all boils down to the one bit of math they never really got their heads wrapped around: There are a lot more of us than there are of them.

        They can run, but they can't hide.

        Nemo iudex in sua causa. -5.88,-7.90

        by Jurassic Game Warden on Sun Oct 19, 2008 at 12:44:57 PM PDT

        [ Parent ]

  •  You can't unbeat your wife (12+ / 0-)

     Having George Bush in the White House has ruined our economy and our reputation. We're a debtor empire with exhausted natural resources and we've exported all of our manufacturing. We are screwed.

  •  So glad to have articles like this one here (10+ / 0-)
    - excellent summary - thank you.

    Somewhere I read McCain had attacked Obama during the last two days or so as being a TRUE SOCIALIST. That makes me so happy, because so many European "conservatives" are now real good "socialists" and if the US wants to keep its allies, we can't wait to have a US president, who is one of us socialists (/sneakysnark from Joe the Plumber's wife, who is a closet socialist and wants a divorce).

    Based of my very representative poll among my German co-workers, who live in the diaspora of Washington DC, the German socialists would all vote for Angela these days, that should tell you something.

  •  Lets have such a (4+ / 0-)

    summit before the end of the year. No Way the next Prez should be the face of the death of the Jolly Green dollar-centric system.

  •  Wonderful, informative post! Thanks so much. n/t (3+ / 0-)
  •  good piece! (4+ / 0-)

    Thanks for taking the time to write this up. "No, USA; you can't have any more money. The money stores are closed now. Why don't you go take a nice little nap?"

    "Be kind, for everyone you meet is fighting a hard battle." - Plato

    by mieprowan on Sun Oct 19, 2008 at 06:30:07 AM PDT

  •  The relative decline of the USA's (14+ / 0-)

    power in the world economy was inevitable. Europe's productivity was destroyed by WW2 and the rest of the world had not yet begun to reap the rewards of industrialization.  It was only a matter of time before others would catch up. Advances in knowledge and information technology have quickly accelerated development of other nations. A world with more even distribution of wealth and opportunity is a better world. Even so there are still 3 billion people who live in poverty, half the world's population.

    President Sarkozy was in Canada the other day. The topic he and PM Harper discussed was Canada's relationship with the EU. Is it possible that Canada might some day join the European Union? Anything is possible.

    The Bush regime never acknowledged Canada's important relationship with the USA. Bush didn't seem to realize Canada is America's greatest trading partner and supplier of oil and gas. And Canada was snubbed, no longer BFF, when the Chretien government did not go along with the Iraq war.

    I've never understood why the many prize winning economists haven't spoken out against the USA's  outsized military spending and the inevitable drag it puts on the American economy.

    There is, indeed, a new era ahead, and the USA is going to have to accept a new role in the world. because It will be imposed by those the USA owes.

    •  Mmmmm (1+ / 0-)
      Recommended by:
      Justanothernyer

      Europe's productivity is a mixed picture. For example after the war Germany became a larger value exporter than the US. Certain areas of Europe's infrastructure is comparatively modern and efficient because of rebuilding after WW2.

      Canada will never join the EU because the British would welcome it wholeheartedly. That's reason enough for France and Germany to stop it. It was hard enough expanding the EU Eastward.

      Even economists realise the role America's military has played in protecting the right of the free world to conduct business.

      •  The rest of the world will catch up (7+ / 0-)

        Technology transfer is a large part of the globalization agenda.

        You've missed the point about European productivity. They are closing the gap.

        On Canada and the EU, here's Canada's most conservative newspaper, the National Post: Canada, EU agree to negotiate economic partnership by Marianne White

        The deal, which would be more comprehensive than a free-trade agreement, would harmonize regulations, lead to an open skies accord and allow the free flow of Canadian and European workers across the Atlantic Ocean.

        Mr. Sarkozy, who is currently also president of the EU, said Canada and the European Union share the same values. He said it is crucial that the two work toward the same goal of overhauling capitalism and the world financial system.

        A joint EU-Canada study into the benefits of an economic partnership released Thursday said that both economies would gain almost $32-billion per year through deeper ties. The EU would benefit by almost $19-billion, while Canada would gain $13-billion.

        On World Military Spending
        The USA is responsible for about 48% of all the world's military spending. The USA is no longer 48% of the world's economy as it was at the end of WW2 but down to about 25%. That's the change you fail to notice. If you want to protect the conduct of business there are less expensive alternatives, and better ones too.

        Finally, consider the opportunity costs, the alternatives that were not possible because the USA spent money on the military. Aren't there more worthy projects that would better contribute to the economy of the USA? (Education, infrastructure etc.)

        •  Millions of them.... (9+ / 0-)

          Aren't there more worthy projects that would better contribute to the economy of the USA? (Education, infrastructure etc.)

          Medical research, moonbase, getting off oil, but none of it will be funded.

          The federal budget deficit for this year is what, a trillion?  At some point, other countries will not be able to lend us additional money if they even want to.  Interest payments eat up a significant portion of the budget already and that number will only get higher unless things change.  

          We are getting to the point where nothing can be cut that isn't considered someone's sacred cow.  The level of political discourse has gotten to where no one can admit taxes will probably have to be raised and have a chance of getting elected.  Similarly, no one has had the balls to look the American people in the eye and point out that for several decades, they have been getting something for nothing and it's time to pay up now.  

          Fixing the mess would be political suicide so our "leaders" pass the buck every time.  

          They see me trollin'. They hatin'

          by obnoxiotheclown on Sun Oct 19, 2008 at 08:56:53 AM PDT

          [ Parent ]

          •  Keynes (2+ / 0-)
            Recommended by:
            paul2port, Spekkio

            An economically-informed (Keynesian) balanced budget amendment would go a long way towards forcing the government to fix that particular mess.

            Nemo iudex in sua causa. -5.88,-7.90

            by Jurassic Game Warden on Sun Oct 19, 2008 at 12:53:34 PM PDT

            [ Parent ]

            •  Balanced budget (1+ / 0-)
              Recommended by:
              cachinnator

              A balanced budget amendment is exactly the opposite of Keynes's economic views. In Keynesian economics, you want the government to engage in deficit spending during economic downturns in order to stimulate aggregate demand; what we do today doesn't resemble that at all: we use deficit spending all the time.

              Keynesian economics is wonderful. Don't misrepresent it.

              •  I think you misread what I wrote (1+ / 0-)
                Recommended by:
                quotemstr

                There are times when the budget should be balanced or writing a surplus, and there are times when we should be borrowing money to spend on stimulating the economy. That's what Keynes says, and I agree.

                There is no reason why that principle can't be written into a nuanced balanced budget amendment, which is why I explicitly called it "an economically-informed (Keynesian) balanced budget amendment". The obviously heterodox implication is that neoclassical or other anti-Keynesian approaches do not count in my book as "economically informed".

                I gather from what you say here that we're probably in violent agreement, so I'm unsure what you're complaining about unless you simply misread the post.

                It's also possible that you believe that anything called a "balanced budget amendment" has only one possible manifestation. That's what I was attempting to rebut in advance by explicitly invoking a Keynesian approach.

                I didn't expect to get yelled at by another Keynesian, though.

                If you check out a few of my diaries, you can establish my heterodox credentials fairly easily.

                Nemo iudex in sua causa. -5.88,-7.90

                by Jurassic Game Warden on Mon Oct 20, 2008 at 02:04:27 PM PDT

                [ Parent ]

          •  Krugman says (1+ / 0-)
            Recommended by:
            bigchin

            it is not the time to worry about balancing the budget.  

            I also heard a conservative economist on the radio say that there still is money for the US to borrow.

            "No way, no how, no Palin war with Russia." --KariQ

            by andrewj54 on Mon Oct 20, 2008 at 01:00:32 AM PDT

            [ Parent ]

      •  Whose empire is this? (9+ / 0-)

        When you say our military protected the free world's right to conduct business, which world are you talking about?

        The real democracies in Europe who became prosperous enough to pay for their own conventional armies to defend against a conventional Soviet attack by the 1960s?

        Or the Third World, where capitalist crimes led to the spread of revolutionary movements that the US assaulted to the tune of one to two million dead Vietnamese?  Why did we attack Vietnam when we knew its Communists had no intention of becoming Chinese puppets?  It was because the expansion of global capital required that we make a lesson out of those who defied us, one so horrible that all poor people would submit to corporate rape.

        Either our military spending was unneccessary because it defended those rich enough to protect themselves, or it was evil because it attacked those exploited enough to fight back.

    •  You're missing an even bigger line item (5+ / 0-)

      If you count the money we waste on health care ($1 trillion) and the money we waste on the military (order of magnitude is at least $400 billion), you get 10% of the entire US economy going to waste.

      You have to be really confident of your competitive advantage to flush 10% of your resources down a toilet bowl.

      But that's just what we've been doing for years and years now.

  •  Great Diary (6+ / 0-)

    This is a great diary DT, just the sort of thing that I come to DailyKos to read.  A terrific blend of history (which I recall imperfectly) and its present implications.  I've copied a link and I'm sending it to my friends.

    Sadly, with the Powell endorsement, it will be driven downt he front page, but a terrific job nonetheless.

    Happily it is sunny and cool here and I'm off to canvass starting at noon!

    "If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy" - James Madison

    by Hotspur18 on Sun Oct 19, 2008 at 06:34:28 AM PDT

  •  The public, even here, can't cope (1+ / 0-)
    Recommended by:
    tiggers thotful spot

    with imperative-lacking information such as this. It's beyond them. They're far too stupid to understand; their lives far too worthless.

    You have to tell them what to think simply, clearly, in little bits, and then you have to tell them what to do. They are automatons, tin soldiers, empty vessels. Use them as such.

    This will just flow across the screen unread like water over the sagging dam of American history.

    -9.63, 0.00
    Great spirits have always encountered violent opposition from idiotic American minds.

    by nobody at all on Sun Oct 19, 2008 at 06:38:33 AM PDT

  •  Exxon Valdez or the deck of the Titanic (3+ / 0-)
    Recommended by:
    supak, yoduuuh do or do not, cgirard

    Responsible people live their lives with a thoughtful strategy and the discipline to follow it. So it never ceases to impress me that that class of the wealthiest people disregard the rest of us who live on the periphery of their power and whims. I thought/hoped they were above acting stupidly.

    The majority of us live in the wake of those big boats; that’s the way it is. It’s unfortunate that the equivalent of the Exxon Valdez heads straight at us occasionally.

  •  The Washington Hotel is a magnificent place (4+ / 0-)

    I've spent a lot of time there; it was a special destination for birthday dinners when I was a kid, and I spent a very odd Passover week there many years ago (and spent the majority of time outside, trying to escape the very strange crowd my parents had decided we should hang out with for the week).  The building is incredible and the surrounding country even more so.

  •  Thank You for putting this in historical context (2+ / 0-)
    Recommended by:
    Spekkio, cgirard

    I have a close family member that is a Wall St. grunt.
    He said 18 months ago - "The U.S. standing as a leading economic power is facing a change - and not for the better."

    For the soul is dead that slumbers, And things are not what they seem. ~ Longfellow

    by NJ Yellow Dog on Sun Oct 19, 2008 at 06:41:10 AM PDT

  •  I remember the gold standard (6+ / 0-)

    and Nixon taking us off it.  I also remember the wage and price freeze:

    Americans who lived through the period remember the ninty day freeze Nixon placed on prices and wages in an effort to stem growing inflation.

    I was 17 years old and working part-time at a local Hallmark card and candy shop, making $1.00 per hour.  That was my starting salary, and I was scheduled to get a raise to $1.25 after I'd worked there two months.  My employer gave me the raise, but told me not to talk about it because it violated the freeze.

    McCain '08: Same crap, different asshole. -- Hunter

    by snazzzybird on Sun Oct 19, 2008 at 06:43:51 AM PDT

  •  All the more reason for Obama (5+ / 0-)
    Recommended by:
    quotemstr, Spekkio, cgirard, RJP9999, page394

    How would a Palin-McCain administration react to an economic world war?

  •  The conservatives that I know.. (12+ / 0-)

    are still under the illusion that the goodwill that we had at the end of WWII still exists, or perhaps more properly is still owed to us.  They still view the U.S. as having acted with altruistic motives, so they don't see the self-centered aspects of our behavior..

    The difficulty that the rest of the world has is that if the U.S. completely tanks, that we will take down the rest of the world economies with us, so in a sense we are holding the rest of the world hostage.  Still, I suspect there is a sentiment in the world that we are out of control, and while they would like to impose conditions on us to bring us back under control, it isn't obvious what measures they could take without harming themselves at the same time.

    Nonetheless, I would agree that our position is very weak at the moment.  My guess is that an Obama victory will buy us some time.  Were McCain to win, I would expect that the rest of the world would feel obligated to act in some way.

    •  Whoever (6+ / 0-)

      the next president of the USA is, he's going to have to restore the world's faith in Wall Street.
      I live in Europe and right now American investments equal danger to the people here.
      Just the fact that a company has any ties to AIG or Lehman is enough to trigger a massive panic attack.

      We have no confidence in either Palin or McCain, as a result Europe will distance itself from the USA. (Sarkozy's attempts to establish economic ties with Canada are especially telling.)

      Investors here simply have no faith in the American stockmarket

      She's the prettiest governor in the world, but is she ready to lead?

      by subrosa on Sun Oct 19, 2008 at 08:36:27 AM PDT

      [ Parent ]

  •  I heard something yesterday (11+ / 0-)

    It was one of those, "I have a friend who works in finance..." kind of comments.  

    The idea was that the person who worked in the financial industry is European.  He apparently said that if McCain is elected president, there will be such a massive lack of trust in the US financial system that foreign nations will begin to remove their investments from the US.  

    It's kind of a scary notion, but it's true that we are not driving our own ship right now.

  •  Sarkozy knows damn well that January 20th (6+ / 0-)

    is the day of change.  High noon.

    We know that Obama has his finance people Lined Up - Ready to Go.  It will be the number one critical arena to be filled ASAP.

    <div style="color: #a00000;"> Our... constitutional heritage rebels at the thought of giving government the power to control men's minds. Thurgood Marshal

    by bronte17 on Sun Oct 19, 2008 at 07:12:01 AM PDT

  •  W is for Weak (5+ / 0-)

    Excellent post, much appreciated. Now we'll see W going to the meeting with the weakest hand ever held by a sitting US president. Sigh.

  •  Thank you (8+ / 0-)

    This is beautifully written -- thank you so much.  I understand global economic issues a whole lot better now.  What a pity that this diary is being drowned by the Powell endorsement (thrilled though I am that he did endorse Obama).  It'd be great if this could be re-posted later, so that more people get the full benefit.

  •  Michelle Bachman's gonna get you, DT (6+ / 0-)

    She's gonna sick the Patrio-Police after you.

    Paul Rudd from Australia, too, was aggressive in telling the US congress to quit bickering and save the world since it was "thier fault". I can't find the quote, it was a sound bite on NPR.

  •  this is why i prefer dKos to TV. (7+ / 0-)

    this may be the most inciteful thing i've read since this financial hooha erupted.
    thank you.

    "I aimed at the public's heart, and by accident I hit it in the stomach." - Upton Sinclair

    by kathleen518 on Sun Oct 19, 2008 at 07:20:05 AM PDT

  •  Oddly (4+ / 0-)

    Thank you for an outstanding read.

    The Mount Washington Hotel, which looks like it could host the cast of The Shining, has been in and out of bankruptcy over the years. Just the view as you await breakfast makes you feel like a master of the universe, at least until they bring the food, which last time I was there was terrible.

    I remember Nixon's freeze. The New York Daily Stupid News for Morons showed Nixon as a doctor sternly holding out a spoon of something. Yeah, right. Freaking medical malpractice.

  •  Excellent, devilstower (3+ / 0-)
    Recommended by:
    Creosote, barbwires, cgirard

    One of the BEST articles I've read here.  As low info voters are being distracted by the usual and predictable hatemongering of the Republican party, and voter fraud propaganda by lamestream media, the financial crisis is also being manipulated by the Bushies.  Watch how they manipulate the market so that right before the election, the stock market will show a huge recovery, gas prices will return to satisfactory levels, and people will be celebrating the enormous values of their 401K's just enough to vote Republican.  

    "The only thing necessary for the triumph of evil is for good men to do nothing." Edmund Burke

    by rlharry on Sun Oct 19, 2008 at 07:35:18 AM PDT

    •  Don't Count On It (8+ / 0-)

      Watch how they manipulate the market

      They have been trying frantically to do this, it isn't working. We still have what we have at the start of the meltdown, a 'crisis of confidence in the system'.

      the stock market will show a huge recovery

      To have a huge recovery, there has to be earnings. To have earnings, you have to have sales. To have sales, you have to have customers. To have customers, people have to have jobs.

      People are losing there jobs, and new jobs are not being created at anywhere near the rate of loss. This has been the case for almost two years now.

      gas prices will return to satisfactory levels

      It won't matter what the price of gas is if you don't have a job to be able to afford gas.

      The entire bubble of the past decade was built upon easy credit and debt. That is gone, nobody is going to be able to wave a magic wand and make it come back, no matter how much they may try to 'stabilize housing prices'.

      <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

      by superscalar on Sun Oct 19, 2008 at 08:37:12 AM PDT

      [ Parent ]

      •  It's telling that (1+ / 0-)
        Recommended by:
        truong son traveler

        gas prices have not just moved off the front pages, but have pretty much exited the news entirely.  Even the MSM knows that right now, it's not even remotely relevant to anything.  The single biggest reason most people have a car, is so they can drive themselves to work.

  •  Waking from the dream-world of empire. (8+ / 0-)

    Great diary, Devilstower.

    --Hello? Anybody there?

  •  Most Citizens do not know the scope of our debt (15+ / 0-)

    and Americas abuse of the world financial markets.  The Euro was created to provide a more stable alternative.  The last eight years have fully devolved the US to a weak, ridiculed and untenable last position place at the table.  Our leader has no credibility on any issue and we are close to being an also ran the way Germany was after world war one and Britain was after ww2.  That the rightists are calling us and our candidate traitors when the party they represent has done more to devalue our standing in the world on every measure, is truly astounding.
    The full downward slide started with Nixon then accelerated by Reagan.
    The use of our treasure to build useless weapons instead of better quality of life and infrastructure is the main difference between the political parties and it is a huge one.  We have been held captive by the nihilistic rhetoric of the Neocons for 40 years and people still listen to them.  Now exists a mediocre person running for national office who is calling out the demons of our recent past to promote a philosophy that she cannot understand and with consequences that she cannot gauge.
    We will pay for this recklessness for more than a generation and I hope we are patient with the leaders that are left with the debris of the once mighty American empire.  THe further devolvement into full authoritarianism is not farfetched. It is to be expected and guarded against.  Economic and climate chaos coupled with massive inflation is a frightening stew that can boil over in a myriad of ways.  I hope the left in this country is prepared to battle the gravity of what has become of us.  Hope is only the beginning toward the battling of intense propaganda a somewhat complacent or hostile media and a presidential battle that has lowered the bar on civility in a way I am shocked to witness and will make the wreckage wrought much more difficult to repair.

    Fool me once shame on you; fool me twice won't get fooled again. George Bush

    by ganymeade on Sun Oct 19, 2008 at 08:07:41 AM PDT

  •  A pleasure, always, to read your (4+ / 0-)

    reasoned and artistic essays!

    Find your own voice--the personal is political.

    by In her own Voice on Sun Oct 19, 2008 at 08:08:21 AM PDT

  •  I can't blame them one little bit. (4+ / 0-)

    I am getting a little tired of all the bullshit I hear about how America and American workers are the best in the world.  I see a bunch of spoiled brats living off other people's money eagerly swallowing a lot of convenient lies.

    They see me trollin'. They hatin'

    by obnoxiotheclown on Sun Oct 19, 2008 at 08:26:44 AM PDT

  •  Excellent history and analuysis. Thank you. n/t (2+ / 0-)
    Recommended by:
    cgirard, papabigdog
  •  Allowing more seats at the new table (9+ / 0-)

    "The Allies agreed on this not because it defined the universal principles of all the nations involved. Many of the delegates gathered there would have preferred more regulation of markets, more state involvement in financial systems, more flexibility in protecting local markets, and less control from the new agencies. But they signed the agreements – because the United States asked them to."

    Indeed, that is the crux of the problem. It pays to remember that in 1944, most of the best and brightest of the Allied nations was engaged in prosecuting the end of the Axis military machines. Bretton had some star power (Keynes was a participant) but by and large much of the American representation had not received their "Red Badges of Courage" in the battle to create the New Deal, and many of them took with them an internalized agenda that would take advantage of the United States being the only intact physical plant on the globe.
    Many of them were blinded by assumptions similar to the architects of the 1919 Treaty of Versailles: that the world they would shape would be the world unchanged for generations. Delusional ideas such as a permanently de-industrialized Germany were seriously entertained.
    Clearly it is time to revisit both the framework and the underlying assumptions that were essentially forced upon the others at Bretton Woods. It echos the same assumptions that were at work in most every IMF and World Bank decision that was imposed on Developing nations and which created the basic framework of NAFTA: that the intent was to maintain the status quo as opposed to creating a framework that would allow many nations to escape perpetual poverty.
    As a non-practicing economist, I used to argue that NAFTA was not the reason that organized labor has suffered in this country and world wide (Where, I asked rhetorically, can ANYONE show that Mexico and/or Canada got the better of the deal?) . Technically that remains true, but it is the mindset that created NAFTA that is the problem. I have only recently owned up to that personal blindspot in my advocacy of something closer to a playing field that encourages positive participation ("level playing field" for all intents and purposes ensures the status quo).
    The biggest danger we face is the impulse to create an "Economic Fortress America" in which the goal is to agree to deals and treaties that will demonstrably cripple our trading partners. A true free market capitalists would desire a framework that would make sure that there are no unaccounted for "externalities" (short-hand for the real cost of something that a handful of good lawyers and financiers can shift to some other entity.) A global framework that really works creates incentives for Zimbabwe to once again become the breadbasket of Southern Africa, that makes Eco-tourism more profitable than rain forest destruction in the various heads of the Amazon. That makes it so that the Palestinians biggest problem will become prying enough tourists from Tel Aviv to fund their government at a similar rate to South Florida from their own beachfront resorts on the Mediterranean. Most of that involves accepting certain polices that violate what we've been taught as classical economic theory.

    That theory is at best incomplete.

    Time to create a new framework that assumes that someone in Sri Lanka or Pretoria or Basra is a potential trading partner, and that someone in Bed-Stuy or Washington, PA or Buffalo, WY will realize a true net benefit from said trade. To prove once and for all that Nixon's fear of allowing the United States to become a "pitiful helpless giant" were the nightmares of a troubled, if brilliant mind, trapped in a self-imposed sphere of small vision.

  •  Polyphemus (16+ / 0-)

    You’re on the right track, but haven’t been bold enough.  This is the moment for a new Bretton Woods at which the Europeans will be able to seize back the monetary-unit and financial leadership of the world.  The euro is more solid than the dollar, and European economies are more broadly based (and therefore more solid) than the U.S. economy, which has become almost totally hostage to consumer purchases.  Also, many European countries have leapfrogged the U.S. in terms of providing stability to their citizens in affordable health care, better old-age pensions, and the ability to move around their countries by public transport so they are less dependent on imported oil.  During the past eight years of G. W. Bush, and the prior second term of Clinton, the U.S. has steadfastly refused to tackle these issues in any meaningful way.  Our loss of the financial leadership of the world is the least we’ll pay for that folly.  

  •  "there are no equals as long as there's a first" (6+ / 0-)

    "We view ourselves as "first among equals," but even our closest allies are bitterly aware that there are no equals as long as there's a first."  Amen to that!  Call me unpatriotic if you like, but I have never gotten the "America the best!" point of view of patriotism.  What about the idea of personal best - of proudly striving to be the best we can be, and the idea of teamwork - that we must be team players on the world team - we have to breathe the same air, drink the same water, and fortunately or unfortunately, take part in the same market.  Time to stop acting like a big spoiled baby and consider the good of all.  This is a great analysis, BTW.

  •  Thanks for this diary, Devilstower (5+ / 0-)

    I think one other point to observe is what happened to nominal GDP after 1971. It became non-linear with an upward curve. From 1950 to 1970, GDP increased at a steady, pretty linear rate. If you extrapolate that line to 2008, you come up with a number of around $7 trillion for US GDP. The nominal GDP is now about $14 trillion. I suspect that much of the gap has been financed through debt, and that we will start finding out now how big that number is. If, let's say, about half is debt through just printing more money, then we can expect about a 30% contraction in GDP over the next few years as that phantom money evaporates. How will we see this evaporation occur? Next year, we will start to see the inflationary effects of declining production collide with a $1 trillion injection of cash into the US economy along with a $1 trillion deficit. As inflation ramps up, money will be taken out of the economy and interest rates will start climbing. If you think there is a recession now, just wait until 2011.

    McCain: Out of touch and out of time.

    by Anne Elk on Sun Oct 19, 2008 at 09:54:02 AM PDT

  •  Odd that they would want the Summit (3+ / 0-)

    before January, knowing what is likely to come.  Frankly, I don't want the Bush admin making last minute policy positions that will extend into the future for years.

    Or perhaps they want to show the Bush admin. up before it goes??

    •  Possibly trying to take advantage (4+ / 0-)
      Recommended by:
      ganymeade, andrewj54, Spekkio, page394

      Bush is severely weakened right now and maybe the Europeans think that they can extract more from him now than from his successor, especially if that successor is Obama.

      Procrastination: Hard work often pays off after time, but laziness always pays off now.

      by Linnaeus on Sun Oct 19, 2008 at 01:06:01 PM PDT

      [ Parent ]

      •  Point (2+ / 0-)
        Recommended by:
        Creosote, Dauphin

        especially with Sarkozy.
        People here are angry and our politicians have so far been quite succesful directig that anger towards wall street.
        General concensus here is that your system has failed, so your system must be changed and regulated to be more like ours.
        Conveniently forgetting that our system has failed as well...
        But it's more than that. There is a sense of urgency about this. Don't forget that, unlike the USA, the EU is a singularly economic organisation. We have little diplomatic and no military power to speak of.
        People aren't just angry, they're scared. And if we wait,it'll only get worse. Leaders here need to restore faith in the markets and they need to do it yesterday. If not, the EU stands to loose a lot of prestige and influence.

        MILITANT AGNOSTIC : I don't know, and neither do you!

        by subrosa on Mon Oct 20, 2008 at 12:47:28 AM PDT

        [ Parent ]

  •  Consequences (2+ / 0-)
    Recommended by:
    yoduuuh do or do not, Spekkio

    I would expect the US delegates to any conference, slated for this year, to obstruct and dilute any affective world regulations.  Firstly because Paulson and Co.(including our Dear Leader) will fight tooth and nail to support their ideology (neo-liberal capitalism), no matter that it is counter intuitive to stable markets.  Second, The Powers That Be in Wall Street and Board Rooms across the nation will fight to protect their perks and prerogatives and investment packages.

    Too bad, because the US populous might have learned to  change the vary fabric of our thinking about our roll in the world e.g.. we are better than anyone else and keeping up with the Jones, regardless of debt.  

    •  I don't doubt that they will try. (1+ / 0-)
      Recommended by:
      adrianrf

      But at this point, they will likely fail.  The US needs the help of the EU and other nations right now.  $700 billion from Congress hasn't even slowed down the slide of the US markets.  If the US officials don't play nice, they may well find themselves locked out of any new agreements, and for the US that would be disastrous.

  •  Excellent post (2+ / 0-)
    Recommended by:
    ganymeade, papabigdog

    and nary a c.t. to be found. Disappointing it didn't draw more attention and comments.

  •  Waiting for Obama (2+ / 0-)
    Recommended by:
    Creosote, ganymeade

    The new finance meeting will be held "before the end of the year"  The world leaders have written off W and are awaiting the new Obama administration before decisions are made.  There is nothing to suggest that W will be anything more than the host for the meeting.

    But don't' look for sweeping changes just better coordination between the economic powders. The EU Ag subsidies have been as much a roadblock to fairer trade as the US hamfisted insistence on opening banking systems to US financial interest.

    But cooperation is a good start.

  •  Sarkozy was in Quebec this week (7+ / 0-)

    talking about its special ties to France and encouraging an even closer relationship. The Europeans are not taking kindly to the attempts by Goldman et al to gain control of European banks. Splitting Canada off from US influence feels to me to be part of the strategy to put the Goldmans of the world in their place.

    Bush has damaged this country in more ways than I can count.

    "Hatred paralyzes life; love releases it. Hatred confuses life; love harmonizes it. Hatred darkens life; love illuminates it." ML King

    by TheWesternSun on Sun Oct 19, 2008 at 11:00:34 AM PDT

  •  Digg it. Most excellent, Devilstower. (2+ / 0-)
    Recommended by:
    YucatanMan, OldLady in BC

    Thanks for clarifying this important walk through history, to this state of limbo we now find ourselves in.

    digg link

  •  Not conservatives. (3+ / 0-)

    "Conservatives have made it fashionable to sneer at the rest of the world."

    Not conservatives: fools have done this.

    Conservatives should have understood that building up the infrastructure of the country, using the existing revenue stream of taxing those most well off [by way of progressive taxation] to build up the poor and working class, was the correct course of action. It served the country through WWI, WWII and until the Vietnam Era, when it finally began to erode.

    The failure to understand this, and final breakaway from progressive taxation, the embrace of greed and VooDoo of Reaganomics was really the beginning of the end of 'conservatism'.

    Something that George Herbert Walker Bush could see in the primary battle in 1979/1980 as he coined that phrase "VooDoo economics" was rejected by his own adoption of this unsustainable path of greed in the course of his terms in Office.

    The rest of the world quickly followed suit in the 1980's, adopting tax policies which injected unprecedentedly huge amounts of money into speculation, and adding to the worldwide economic bedlam we see today.  

    A new economic summit must return to the conservative values of taxing those who can most afford to pay, and to severely limit the amount of unregulated speculation: if this format is not adopted, there will waves of revolution from the working and middle classes as the destruction of the fabric of their world becomes more apparent.

    2008, the Year the Republican Party dissolved into a puddle of goo

    by shpilk on Sun Oct 19, 2008 at 11:51:51 AM PDT

  •  wow (4+ / 0-)
    Recommended by:
    Creosote, barbwires, ganymeade, Spekkio

    I'd been wanting to write a diary -- in my poor, feeble way -- that connects the dots between Bretton Woods, the gold standard, American exceptionalism and the probability of a New World Order (just not "new" in the way the neocons had been expecting).

    Here, at your usual level of eloquence and erudition, you've done exactly that. The reminder and the warning are exceedingly important, and they deserve your brilliant front-page treatment.

    Thank you.

    Nemo iudex in sua causa. -5.88,-7.90

    by Jurassic Game Warden on Sun Oct 19, 2008 at 11:54:38 AM PDT

  •  This new world order (0+ / 0-)

    It might be more of the old world order, but dressed up in new clothes, with new methods (or new use of old methods) and maybe a few new players of the game.

    I don't think people (or nations) change all that much in 50 - 60 years in terms of their broader aspirations.  I think we're going to see the same kinds of struggle for supremacy as we've seen for so many, many years.  There are no saints out there.

    Procrastination: Hard work often pays off after time, but laziness always pays off now.

    by Linnaeus on Sun Oct 19, 2008 at 01:11:19 PM PDT

    •  I think it's different than it was in 1944. (4+ / 0-)
      Recommended by:
      Linnaeus, Creosote, YucatanMan, Dauphin

      In 1944, much of Europe was over a barrel. Der Blitzkrieg had laid waste to the European infrastructure and economy. (Hence the Marshall plan.) And Europe in 1944 was deeply divided. Old alliances, connections, rivalries, and animosities were still fresh in their minds - especially from the first World War.

      In 2008, much of Europe belongs to the European Union. European rivalries and animosities are not nearly as pronounced as they once were. Twenty-six countries use the Euro and ten more peg their currency to the Euro. Many countries that use the Euro aren't part of the EU, but since they use the same currency their loyalty (and self-interest) is more closely tied to them, not us. The Euro is now more powerful (and worth more) than the U.S dollar. The pound is worth more than the dollar, too. And hell's bells, Ireland (Ireland!) will guarantee all bank deposits in any bank that operates on Irish soil, providing that they work with the Irish government.

      So if you're right, and the desire to gain supremacy hasn't changed (and you may well be right) we're not competing with a bunch of separate nations - we're dealing with the EU.

      We're the ones over a barrel, and Europe knows it. But since the Dubya presidency has done such a good job of making friends and influencing people *cough*, I'm sure they won't take advantage of our position to spank us. *cough*

      •  They might a little (2+ / 0-)
        Recommended by:
        Dauphin, Spekkio

        I'm not sure how far they'd go.

        I think the EU would be more than happy to gain influence at the expense of the United States, but at the same time, I think most EU members understand that they share certain values with the United States.

        So the struggle will still be there, but it may be more of relationship between rivals who manage to stay on reasonably friendly terms rather than enemies.  At least I hope so.

        Procrastination: Hard work often pays off after time, but laziness always pays off now.

        by Linnaeus on Sun Oct 19, 2008 at 05:00:02 PM PDT

        [ Parent ]

        •  You're right (0+ / 0-)

          and on a more practical level, Europe has nowhere near the military power or the unity needed to take over the place of the USA.

          And we're quite aware of that, so yeah, the EU will probably demand more regulation and oversight (something you'd have to do anyway to regain the confidence of the investors), but other than that we're pretty much going to leave you alone.

          A spanking? Nah, more of a slap on the fingers...

          MILITANT AGNOSTIC : I don't know, and neither do you!

          by subrosa on Mon Oct 20, 2008 at 12:57:26 AM PDT

          [ Parent ]

  •  Good read. Thanks for sharing. (0+ / 0-)
  •  Polyphemus (3+ / 0-)

    What a well written article.

    We Australians ARE grateful for America's past assistance, and we value the friendship we have enjoyed with you over the years. Especially since world war 2 when the collective free world was facing one of it's darkest hours.

    However, America cannot keep trading on it's previous assistance forever. If America keeps going along the path it has followed for the previous few decades, you will exhaust the international goodwill you once enjoyed, and alienate some of your closest friends and allies.

    Most Australians still view the U.S. as a valuable friend and ally, but as the article said, you have just about sapped the patience of the international community with your stubborn refusal to adequately consider the welfare of your friends abroad.

    I believe that should a Democratic government be elected, they will be ready and able to begin repairing some of the damage which successive republican administrations have done to your international reputation.

    Go America. Now is your opportunity to begin restoring the bridges between you and your friends in the international community.

    I implore you, both as an Australian citizen, and as a citizen of the world, please vote for a Democratic government this time around.

  •  Times: BREAKING report on McCain's health (1+ / 0-)
    Recommended by:
    Creosote

    If Mr. McCain’s 2000 left-temple melanoma was a metastasis, as the Armed Forces pathologists’ report suggested, it would be classified as Stage III. The reclassification would change his statistical odds for survival at 10 years from about 60 percent to 36 percent, according to a published study.

    The greatest risk of recurrence of melanoma is in the first few years after detection. His age, his sex and the presence of the melanoma on his face increase the risk.

    Read more HERE.


  •  Thanks. The American century is now over. (3+ / 0-)
  •  Thanks for the diary. Do you (1+ / 0-)
    Recommended by:
    IreGyre

    suppose the other countries involved might be smart enough to invite President elect Obama to join them?

    "Everything in life is somewhere else, and you get there in a car." E. B. White

    by maggiejean on Sun Oct 19, 2008 at 11:02:16 PM PDT

  •  Compared to Powell, Powell more to the heart... (1+ / 0-)
    Recommended by:
    valadon

    and the head.

    Powell's comments during Meet the Press and after ward and the short news interview were astounding. He really went to the heart of what America is all about and how this election and the candidates relate to the country.

    Powell had some amazing lines.

    "He was 20 years old. And then, at the very top of the headstone, it didn't have a Christian cross, it didn't have the Star of David, it had crescent and a star of the Islamic faith.  And his name was Kareem Rashad Sultan Khan, and he was an American."

  •  Devilstower (5+ / 0-)

    As student of history, I always look forward to Devilstower entries.  I have visited Bretton Woods and I was (very generally) aware of the local history but Devilstower brought many new details and isnights to light in this piece.  
    Very interesting!

    As a photographer, I had to include a couple of photos I took at Devils Tower Natl' Monument as a token of respect to the author.  Keep up the good work and thank you for your insights.  

    The Palin/McCain ticket wouldn't be prudent at this juncture.

    by MaineMike on Sun Oct 19, 2008 at 11:04:21 PM PDT

    •  It is indeed a laccolith (2+ / 0-)
      Recommended by:
      Creosote, Thassa

      Laccolith

      Its a beautiful geologic monument.  Apparently it does well as a mashed-potatoe effigy.  When I was there, there were some folks climbing or descending the mount.  I couldn't tell their direction (up or down, I suspect UP), but what impressed me the most was the size of the bodies on the side of the laccolith.

      Great trail around it.

  •  Meanwhile, the conservative fairy-chasers (6+ / 0-)

    continue to bloviate about American sovereignty, such as Hudson Institute economist Diana Furchtgott-Roth on Washington Journal Sunday morning, who proclaimed that we simply cannot allow foreign beaurocrats from determining what American banks can and cannot do. Um, like the partially Dubai-owned Citibank, or the partially Mitsubishi-owned Morgan Stanley, or the fully Chinese-owned HSBC.

    Um, yeah, aside from these, great idea, expert!

    I swear, living in the conservative think tank bubble these past few decades has turned these alleged experts' minds to mush. It's no so much that all of their ideas are bad. It's just that, by refusing to engage in honest and serious debates with people having different outlooks, opening themselves up to criticism, and really only talking to each other, they're literally incapable of seeing reality as it actually is.

    She also predicted less than a year ago that there would not likely be a recession or serious economic troubles this year. Um, yeah. Great call, expert!

    To the GOP, change means doing a 360.

    by kovie on Sun Oct 19, 2008 at 11:14:59 PM PDT

  •  This is a great diary (0+ / 0-)

    However, there was zero mention of the members of the Shanghai Cooperative Organization - SCO.

    I am not faulting Devilstower whatsoever, but I do think that those folks in the east will want to have some influence.

    Things are happening so fast.  I cannot follow it all.  It used to be that we could read something and dwell on it awhile before forming an opinion.  Now it seems that things happen, opinions are formed and we are forced to dwell upon it.

  •  Summit (0+ / 0-)

    This is all the more reason we need to elect Barack Obama. Who will go to that summit and actually listen to the concerns of the world and try to come up with a multi-lateral solution.

  •  Europe often seems far too timid (2+ / 0-)
    Recommended by:
    northsylvania, Dauphin

    for my tastes (not unlike the Democratic Party). It is fallacy to believe that the economic crisis is somehow seperate from everything else done by the Bush administration. Bush has been aided in his recklessness by Blair, Berlusconi, Sarkozy, Merkel(and don't forget Poland). I'm glad to see some independence from 'across the pond' but (like the Powell endorsement) it's quite late.

    Love that "power of the purse!" It looks so nice up there on the mantle (and not the table) next to the "subpoena power."

    by Sacramento Dem on Sun Oct 19, 2008 at 11:58:38 PM PDT

    •  We have to agree first... (0+ / 0-)

      It's a common misconception in America, the EU is not as united as you think or as we'd like to be.
      You'll remember there was protest to war in Iraq here, a.o. from France and Belgium. Only other countries, like the UK and The Netherlands supported Bush anyway.

      It's extremely hard for us to find a stance all members can agree on. Well unless you start threatening our stockmarket, then we manage ;-)

      MILITANT AGNOSTIC : I don't know, and neither do you!

      by subrosa on Mon Oct 20, 2008 at 01:04:34 AM PDT

      [ Parent ]

      •  When the pain gets great enough (2+ / 0-)
        Recommended by:
        Creosote, subrosa

        I'm sure the EU will abandon the idea of unanimous consent. It is a bit galling that we can't get that kind of action against torture, secret prisons, or illegal invasions, but we can when the threat is to the stock-market.

        Love that "power of the purse!" It looks so nice up there on the mantle (and not the table) next to the "subpoena power."

        by Sacramento Dem on Mon Oct 20, 2008 at 02:35:36 AM PDT

        [ Parent ]

  •  I blame the Crimson Permanent Assurance (0+ / 0-)

    great post

    wish I could recommend it ...

  •  thanks susan, and (of course) Devilstower /nt (2+ / 0-)
    Recommended by:
    donailin, IreGyre
  •  Empathy (0+ / 0-)

    What does empathy look like?

    Arts Education is vital!

    by washingtonsmith on Mon Oct 20, 2008 at 12:33:47 AM PDT

  •  we'd better find some good ideas fast, because (0+ / 0-)

    we really do need to find some mix of safety nets and free markets, like bartering.  anyone have recs on books that address how the global markets might be remade  to support a sustainable earth and some level of support for those that aren't making it.

  •  "What if US collapses? Soviet collapse lessons (3+ / 0-)
    Recommended by:
    Creosote, IreGyre, gerbilmark

    ... every American needs to know" by Dmitri Davydov:
    http://madconomist.com/...

    See the Dutch children's chorus Kinderen voor Kinderen live October 11 in the Amsterdam ArenA!

    by lotlizard on Mon Oct 20, 2008 at 01:05:52 AM PDT

  •  Could You Wait Another Month? (1+ / 0-)
    Recommended by:
    IreGyre

    Sarkozy? Holding it before Bush leaves office is self-evidently stupid.

    We have to fix the fundamentals. Everything else that we do merely adds to the problem.

    The most basic fundamental is energy. We have to build energy production here, with solar, wind and geothermal. Paying three-quarters of a trillion dollars a year to import energy has been bankrupting us.

    We also have to find a way to bring wealth-creating jobs back to the States. Without that we can't pay off the debt, and without that the dollar will collapse.

    And, we have to pump money into the spending parts of the economy by eliminating the Bush tax cuts so that working people can start to spend it again. They don't have any more capacity to borrow. Without that, the economy will collapse.

    Those are what we call "the fundamentals". They have to be fixed or we can kiss it all good-bye.

  •  We have to learn how to compete again (1+ / 0-)
    Recommended by:
    Creosote

    I'm not sure that's such a bad thing.

  •  On Nixon and Bretton Woods: (1+ / 0-)
    Recommended by:
    Creosote

    John Ralston Saul, in The Doubter's Companion, A Dictionary of Aggressive Common Sense, averred that Nixon's unilateral abrogation of Bretton Woods was possibly the most evil act of any western leader in the post-war era. (that's a bit of a paraphrase, looks like my kid has wandered off with my copy, though i'm sure Saul used the word "evil". elsewhere, teh Google turns up this quote from a different Saul essay: "perhaps the single most destructive act of the postwar world. The West was returned to the monetary barbarism and instability of the 19th century.")

    I am further of the opinion that the President must be impeached and removed from office!

    by UntimelyRippd on Mon Oct 20, 2008 at 02:38:10 AM PDT

  •  A friend who's in finance says (1+ / 0-)
    Recommended by:
    Creosote

    things are one giant CLUSTERF**K hre now - that Paulson and COngress are CLUELESS.

    They SHOULD have shut everything down for a week and THOUGHT about it.  Instead we're literally throwing money at banks and financial firms withNO STRINGS attached.. they aren't REQUIRED to rewrite mortages, aren't REQUIRED to lend out funds to small businesses or anyone else.. IN FACT the banks havebeen holding onto Cash....

    NO improvements in liquidity while we're pumping up the money supply....

    and meanwhile NO CONSEQUENCES for the morons whose economic theories  created the mess (NO regulation, leverage yourself to the max, literally creating 'investments' out of thin air based only on debt (no real assets) - we're 'trusting' them to somehow get us OUT of the mess they created....  ANAD we'e letting them continue to collect obscene paychecks - at least they fired these people in Britain.

    •  I'll go along with most of that, aside (0+ / 0-)

      from "shutting everything down."  

      They should have taken time to analyze what they were doing.

      But remember, the Bush administration is filled with people who believe "the government is not the solution. The government is the problem." and who want to "drown government in a (Katrina) bathtub."

      These are not people who think there should be any government oversight or control (which is how we got into this mess.)

      And, they enjoy shipping pallets of $100 bills from the Federal Reserve into Iraq, never to be seen again....

      So, we aren't dealing with people who:

      1. care about money in anyway, other than getting it in their pockets and their friends' pockets.
      1. have any grip on reality at all.
      1. have any sense of public responsibility or duty.

      They are basically theives, cronies, and white collar criminals. That's who's running this administration.

      droogie6655321 lives!

      by YucatanMan on Mon Oct 20, 2008 at 09:22:27 AM PDT

      [ Parent ]

  •  Great analysis, dt. (2+ / 0-)
    Recommended by:
    Creosote, jnhobbs
    And people wonder why some of us are upset about the undemocratic "theory" of the Unitary Executive. Mon Dieu.

    Book excerpts: nonlynnear; other writings: mofembot.

    by mofembot on Mon Oct 20, 2008 at 02:48:50 AM PDT

  •  to put it in colloquial terms... (0+ / 0-)

    ..."we might be too big to fail, but we're not too big to fall after we get our asses kicked"!

    UNalienable rights v. INalienable rights...

    ...We as Americans enjoy "certain UNalienable rights", that is to say, the right to "life, liberty, and the pursuit of happiness". These inherent rights cannot be rescinded, sold, or negotiated away. They are written in stone. As Jefferson most aptly put in the Declaration of Independence, they are a gift from the creator to the individual and cannot under any circumstances be surrendered or taken away. But they can be trampled upon, usurped, mangled beyond recognition, and made to none effect.

    Inalienable rights are those rights that are only fungible, meaning they can be bartered away, sold, or otherwise done away with, NOT without the consent of the ones possessing or owning them. Our government drives its just powers from the consent of the governed. Inalienable rights, therefore, are not inherent in man and can be alienated, and not just by our own legitimate elected government:

    Invasion, or a thermonuclear attack by Russia's MIRV'd ICBMs(yes they still have thousands of them!)by a foreign power and our military defeat on the battlefield, or an overthrow by a military coup d'etat, or a state of emergency followed by martial law and police state--planned, initiated, and carried out by traitors, or by a simple, dopified ignorance and complacency on the part of the electorate, can cause or enable these rights guaranteed by our Constitution to disappear, and become null and void without our express permission through due process of law. To a conquering power, our Constitution is nothing more than "the goddam piece of paper" Bush said it was; the operative "due process of law" meaning Arbeit Macht Frei, and then you all die!

    Finally, then there's inalienable rights of governments to live in peace, without fear of invasion or bullying by, and the murdering, displacement, imprisonment, and torture of,  its citizenry, by a foreign power who happens to presume to THINK it has unchecked military supremacy over it, and the rest of mankind!

    America does not have the inalienable, inherent right to wage aggressive wars of its own choosing, and by the timing of its own arrogant will. This may come as a most unwelcome shock to the neocon corporate fascists who have seized the reins of power today, but America is not the Roman Empire, and Mister Bush is not its Caesar!

    "Great men do not commit murder. Great nations do not start wars". William Jennings Bryan

    by ImpeachKingBushII on Mon Oct 20, 2008 at 02:58:52 AM PDT

  •  The architects of this disaster were (2+ / 0-)
    Recommended by:
    Creosote, jnhobbs

    actually kind (brazen) enough to lay out their agenda.  While some indexes suggest that the Project for a New American Century is defunct, they've still got a nifty web site where their global ambitions are neatly displayed.
    Who are these people?  Well, their number has grown since they started out in 1997 to include--

    William Kristol         Dick Thornburgh

    Morton Abramowitz       Andrew Y. Au       Maureen Aung-Thwin      

    Carolyn Bartholomew      Gary Bauer      Robert Bernstein      

    Max Boot      Ellen Bork       Steven C. Clemons      

    Midge Decter      Thomas Donnelly       Nicholas Eberstadt      

    Robert W. Edgar       Amitai Etzioni       Jeffrey L. Fiedler      

    Jeffrey Gedmin      Sam Gejdenson      Merle Goldman      

    Bruce Jackson      Robert Kagan       Max M. Kampelman      

    Penn Kemble      Craig Kennedy       Harold Hongju Koh      

    Louis Kraar       Anthony Lake       Perry Link      

    Connie Mack      James Mann       Will Marshall      

    Derek Mitchell      Wing C. Ng      James C. O'Brien      

    Robert Pastor      Danielle Pletka      Norman Podhoretz      

    John Edward Porter      Samantha F. Ravich      Sophie Richardson      

    Kenneth Roth      Randy Scheunemann      Gary Schmitt      

    John Shattuck      Sin-ming Shaw      Stephen Solarz      

    Leonard R. Sussman      John J. Sweeney      John J. Tkacik, Jr.      

    Jennifer Windsor      R. James Woolsey      Minky Worden      

    Yu Mao-chun

    If you've got nothing else to do you might find it interesting to see how many of these people are hoping to come into the limelight with McCain.

    How do you tell a predator from a protector? The predator will eat you sooner rather than later.

    by hannah on Mon Oct 20, 2008 at 03:03:30 AM PDT

  •  Thank you devilstower (0+ / 0-)

    I saw this earlier and didn't read all the way through. How is it that history is lost so easily... and how that history WILL haunt us.  This real America that we love and live in is in such danger and this post puts a spotlight on that.  Thank you again. We live in a reckless time and this needs attention. What is our dollar worth?
     

  •  This is excellent! (0+ / 0-)

    This is what's been ignored by most americans since bush came to office in 2000. Perhaps more americans were aware in 2004, but now I believe it's too obvious to ignore or pretend that it is not happening. It is absolutely true that our allies are watching and hoping we vote for Obama so that they do not have to leave us behind.

    "There are some things I don't understand. I don't understand how we ended up invading a country that had nothing to do with 9/11." - Next POTUS Obama

    by Cleopatra on Mon Oct 20, 2008 at 03:11:34 AM PDT

  •  Fantastic Essay (0+ / 0-)

    Concise yet eloquent.  I' learned something new before 6:30 AM on a Monday.  

  •  Currency, Money, and Tinker Bell (1+ / 0-)
    Recommended by:
    Eloise

    Another outstanding piece by Devils Tower which helps us (or at least me) to understand how we got where we are.  I nominate DT for Secretary of the Treasury and US Money Czar.

    I would invite him or anyone else knowledgeable to do so, to comment on the incredible level of leveraging that's happened to our "money."  NPR's resident expert, a week or so ago, commented that every dollar tied up in the mortgage game had been leveraged one hundred or more times.  I had thought there were specific laws on how many times a financial institution could leverage a liquid asset.  

    But, then, the dollar is only fiat currency.  Nothing stands behind it except the full faith and credit, blah blah blah.  That full faith and credit is getting a bit weak.  What stands behind the dollar?  Damned little, it seems.

    Maybe it's time to get off of the marginal value approach and return to the labor value approach.  Or (let's say it softly) something of a mutualist nature?  Worst case:  must we erect another cross of gold?

    Congress, that grand old benevolent institution for the helpless... -- Mark Twain

    by Stephen on Mon Oct 20, 2008 at 03:37:39 AM PDT

  •  Why Tinker Bell? (0+ / 0-)

    In my haste to spew forth my very inflated two cents' worth, I forgot the tie in between my incredibly clever post title and the substance of my comment.

    A dollar is valid currency today only as long as we believe it is valid currency.  Not only is it not barter, it doesn't even represent an accurate picture of .... anything.  There is no correspondence between the number of dollars on spreadsheets around the world and any liquid assets.  

    So if we keep believing in the dollar, it will survive, more or less.  If we stop, just like Tinker Bell, it will fade away and die.

    Trouble is, no one seems to be suggesting any other option, much less a better solution.  The Euro, the pound sterling, even the RMB, are all fiat currencies.  

    Maybe we do need that cross of gold after all.

    Congress, that grand old benevolent institution for the helpless... -- Mark Twain

    by Stephen on Mon Oct 20, 2008 at 03:46:28 AM PDT

  •  Outstanding work, Devilstower (0+ / 0-)

    Not exactly what I was expecting over morning coffee, mind you, but I'm glad I read through it all.

    Thanks for the history lesson.

    Changes aren't permanent, but change is - Rush

    by TigerMom on Mon Oct 20, 2008 at 03:50:31 AM PDT

  •  Pres. Kennedy spoke before the IMF (0+ / 0-)

    ...in Sept. 1963:

    Twenty years ago, when the architects of these institutions met to design an international banking structure, the economic life of the world was polarized in overwhelming, and even alarming measure, on the United States.  So were the world's monetary reserves. The United States had the only open capital in the world apart from that of Switzerland.  Sixty per cent of the gold reserves of the world were here in the United States. The war-torn nations of Europe and the Far East faced difficult tasks of reconstruction with depleted and inadequate capital resources. There was a need for redistribution of the financial resources of the world and the financial strength of the free world. And there was an equal need to organize a flow of capital to the impoverished and underdeveloped countries of the world.

    All this has come about. It did not come about by chance but by conscious and deliberate and responsible planning. Under the Marshall Plan and its successors, liberal assistance was given to the more advanced nations to help restore their industrial plant, and development loans were given to less developed countries. In addition, private American capital was made freely available, and there was a steady liberalization of our trade policies.  In this effort, your institution, and more recently a growing number of industrialized countries, have played an increasingly important role. We are now entering upon a new era of economic and financial interdependence. The rise of trading blocs such as the Common Market offers new and greater challenge for trade liberalization. The United States has prepared itself to take advantage of those opportunities by legislation permitting an unprecedented reduction of trade restrictions and trade barriers. Our gold reserves are a healthy but not excessive 40 per cent of the world's holdings.

    ...

    Today we all believe in the achievements of intelligent cooperation; and under the wise and imaginative leadership of the governors here assembled, I feel sure this cooperation can be enlarged and extended. There is no more important group, it seems to me, in the free world than you gentlemen who are here; no group it seems to me bears greater responsibility.

    Given that liberals have historically championed institutions like the IMF, favored free trade and globalization, it's ironic that the "liberal" position today is against free trade and globalization and demonizes institutions like the IMF.

  •  This is very good-except (1+ / 0-)
    Recommended by:
    Justus

    You don't address the role that John Maynard Keynes played in shaping the institutions of Bretton Woods or that Keynes actually wanted a more enhanced IMF.

    The original, underlying premise of Bretton Woods reflected Keynes' ideology-that of wisely managed capitalism. Similarly, while Keynes was free trade, he was not pro "capital mobility." The entire structure of Bretton Woods can only work when there are obstacles to capital moving freely across the globe. To a large extent, it was capital mobility that brought about the downfall of the gold-dollar peg. Another point that should also be addressed in this essay is the extent to which many of Keynes' goals and ideals have slowly slipped away from the IMF and its sister institutions as the scourge of monetarism reared its ugly head in the 1980's.

    In many respects, the current problems can be traced to the official death of Keynesian economics and the spread of the monetarist plague. Of course now we have the curious situation where in theory, central bankers are monetarists, but in practice, they are Keynesians.

    What Bernanke should have said is that there no atheists in trenches in war and no Monetarists during a crisis. We are all Keynesians now.

  •  Great diary! Thank you for the fine analysis. n/t (0+ / 0-)
  •  This is an excellent diary! (0+ / 0-)

    Thanks to the diarist for the detailed and insightful summary.  And thanks for reposting.

    "The only thing necessary for the triumph of evil, is for good men to do nothing."

    by Philly526 on Mon Oct 20, 2008 at 06:16:30 AM PDT

  •  Devilstower--this is why you're a front-pager! (0+ / 0-)

    Awesome essay that really puts what's going on in historical perspective.  I've been thinking a lot of this, too, since the big crash/implosion started, but couldn't figure out a way to summarize it all.  

    The sad, sad part is that the vast majority of Americans will have no idea what's happening or why--and they'll probably blame it all on anti-American liberals.

    "Going to church does not make us Christians any more than stepping into our garage makes us a car." --Rev R. Neville

    by catleigh on Mon Oct 20, 2008 at 06:37:12 AM PDT

  •  Was Nixon impotent? (0+ / 0-)

    "If, when the chips are down, the world's most powerful nation, the United States of America, acts like a pitiful, helpless giant, the forces of totalitarianism and anarchy will threaten free nations and free institutions throughout the world."

    I watched Richard Nixon say this on TV -- live, I think.  I had just started medical school, and as I remember I saw it in the TV watching room of the med school dorm.  
    When he got to the "pitiful, helpless giant" part it struck me that he was very likely identifying with his image of the nation, and was lamenting his own impotence -- literally, his inability to get up.  So I think Nixon extended the war into Cambodia and prolonged it as a psychological compensation.

    We're all pretty strange one way or another; some of us just hide it better. "Normal" is a dryer setting.

    by david78209 on Mon Oct 20, 2008 at 07:57:13 AM PDT

  •  Your diaries are always just top- top-notch, but (0+ / 0-)

    this one takes the cake.  It's your best ever.

    A historical lesson, a description of current events, and a prediction or foretelling of what is to come... all done with an economy of words and clarity of imagery that readily educates those who are seeking information. (i.e., it won't help any closed-minded Republicans chanting Limbaugh's latest refrains)

    In my line of work, I must predict the future, primarily the economic future. As both a land use analyst and an economic forecaster for well over 20 years, I have to read a wide-variety of professional sources, government data, and popular press reports and opinions.

    Again, this essay just takes the cake.  It puts into clear perspective the future we face.

    Without saying so directly, it points out the danger of McCain winning this election. If the Cranky One takes the chair in the Oval Office, we can chuck international cooperation out the window. Or rather, we can leave it out the window where George W Bush has tossed it.

    Under an Obama administration, there is a chance that Europe and Asia will see the USA in a different light.  We have the power to improve our nation's standing in the world with this election. And it appears that the great majority of the American people 'get it.'

    Thanks, Devilstower, for an absolutely top-notch essay. Work well done.

    droogie6655321 lives!

    by YucatanMan on Mon Oct 20, 2008 at 09:12:14 AM PDT

  •  Very relevant article (0+ / 0-)

    restoring respect for US in world fora has always been seen from the right as an exercise in civility than practicality. Many argues "guantanamo" is an internal affair and does not have much with international agreements but what US must see as best fits its needs.

    this is a relevant article in making the connection transparent and show how lack of friendships and trust is going to let US economy recover on its own.

  •  who won the cold war? (1+ / 0-)
    Recommended by:
    Bronx59

    did anyone?

    In 1990, the GOP claimed that victory as theirs.  And so it seemed from that point until ...well....now.

    Ironic indeed, that the cold warriors who claimed to have toppled the OTHER super power, have mismanaged affairs to such an extent that our position in that regard is similarly tenuous.

    No, there's no danger militarily....just as Russia maintained its deterrent after the cold war ended, so will we.  The danger is in losing our reputation, our standing....losing respect and the confidence of our neighbors and friends....truly tragic.

    As we cross into the global age, a global discussion of socialism and capitalism should be had...again....and this time without the "all or nothing" nonsense that has usurped the minds of our leaders.

    Balance, grasshoppers....it's what we need.

    If some human rights are truly inalienable, then the centerpiece of any global economic operating system should be recognition and guaranteeing of those rights by EVERY participating country. It is not okay to blame China for your lead based paint when you shipped the job to that Country to take advantage of labor and resources and skirt regulatory laws that would have made your business impossible here.  No, we need some social constraints and guarantees...call it return on investment if that helps....for the laboring class.

    simplicity is the most difficult of all things

    by RichardWoodcockII on Mon Oct 20, 2008 at 04:31:28 PM PDT

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site