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When does so-called political "pragmatism," for expediency's sake, comprehensively cross the threshold into gross regulatory capture of our government by the status quo? From where I'm sitting, the answer to that question is: right about now.

What part of "The Time We Have Is Growing Short," don't people understand? Do you honestly think corporations are going to pay for the latest travesty du jour that they created? To them, it's always been about privatizing profits and socializing losses. And, regardless of the party in power, our totally captured government is always more than happy to oblige the powers that be.

Earlier today, we learned of this, "Source: HUGE Federal Gulf Public Works Project Coming." IMHO, it's a brilliant plan, and I truly hope it comes to fruition (no matter who ends up paying for it).  But, folks, it's time to stop kidding ourselves into thinking anyone other than that chump in the mirror is footing the bill (or laying down their lives) for our status quo's escalating transgressions.

Whether it's Goldman Sachs, Wellpoint, Massey or BP, the truth is they are NOT the real target of convenience. We are!

(SIDEBAR:  IMHO, there's a brilliant piece by Fred Branfman about Noam Chomsky, comparing him to Orwell's character in "1984," Winston Smith, currently linked on Alternet's front page, entitled, "A Warning From Noam Chomsky on the Threat Posed By Elites," which really sums up many of my sentiments today.  Historically speaking, it sure looks like just about everything, these days, truly IS about the same old story.)

With the Senate and the House now entering into reconciliation on supposedly "sweeping" financial reform legislation--IMHO, legislation which is woefully misguided, grossly ineffectual and anything but "sweeping" anything anywhere other than under a rug--many are questioning just how serious our government really is about changing anything as far as our country's undeniable history of corporate kleptocracy, now-record-breaking dominance of our status quo, and three decades of Reagan-induced, greed-gone-wild throughout our financial sector are concerned.

As I've noted in a couple of other, recent diaries, Paul Volcker, Elizabeth Warren, Joseph Stiglitz, Mark Thoma, John Mauldin,   John Judis, Gretchen Morgenson, Joe Nocera, and many others are flat-out telling us that the entire bill may have only modest or negligible real value.

Truth be told,  as William Cohan reminded us in Wednesday's Opinionator Blog in the NY Times, it doesn't matter if we're talking about BP or Goldman Sachs. It really is (as we're reminded by two diaries on the Rec List right now) all the same old story: "BP's Mess, and Wall Street's."

BP's Mess, and Wall Street's
Opinionator Column (Exclusive Online Commentary)
New York Times Blog
June 10, 2010, 6:32 pm

Just because you can do something, does that mean you should? It's a question that might have saved us a lot of pain in recent months if both Goldman Sachs and British Petroleum had asked it of themselves during the last decade.

Sure, Goldman, and other Wall Street firms, could -- and did -- create "synthetic C.D.O.s" to allow consenting investors, including Goldman itself, to gamble on the risk in the U.S. housing market. Sure, Goldman and others could -- and did -- package up mortgages that should never have been issued into mortgage-backed securities and sold them to investors around the world who, in turn, abdicated their responsibility to investigate the soundness of the investment because some rating agency -- paid by the underwriters -- had slapped a AAA-rating on them. That technology existed, and Goldman and others just availed themselves of it, right? Besides, they were simply supplying the demands of the marketplace, right? The Gulf of Mexico spill, like the financial implosion, was largely the product of people taking risks and knowing they wouldn't be held accountable if things went wrong.


What these two crises reveal is that some corporations and their leaders aren't very good at making decisions that take full account of the risks they and their companies are taking. It is a truism that human beings do what they are rewarded to do. But the corporate structure these days rewards bad behavior. The problem is that the corporate veil protects the decision makers from the consequences of their decisions and, accordingly, they are encouraged to take asymmetrical risks -- huge paydays for them if everything works out; huge consequences for us if they don't. As Senator Christopher Dodd correctly said in April 2008, during the first Senate hearing about the unfolding financial crisis, "We've socialized risk and we've privatized reward."

The truth is, IMHO, that we're quickly morphing from a society with a robust middle class into a two-class system: rich and poor (i.e.: the haves and the have-nots). Some are calling this the "Two-Track Economy." Others are referencing the term, "Third World America."

Meanwhile, along with numerous other credible sources in recent days, on Wednesday, investor/billionaire and noted financial backer of Democratic causes George Soros, among others (see about six or seven paragraphs up), informed us that as far as the current global economic crisis is concerned, "We've just entered Act II." Soros continues on to say that, ""The collapse of the financial system as we know it is real, and the crisis is far from over." (SEE: "Soros Says `We Have Just Entered Act II' of Crisis--Update2.)"

Soros Says `We Have Just Entered Act II' of Crisis (Update2)
Bloomberg Media
By Zoe Schneeweiss and Andrew MacAskill
June 10, 2010

June 10 (Bloomberg) -- Billionaire investor George Soros said "we have just entered Act II" of the crisis as Europe's fiscal woes worsen and governments are pressured to curb budget deficits that may push the global economy back into recession.

"The collapse of the financial system as we know it is real, and the crisis is far from over," Soros said today at a conference in Vienna. "Indeed, we have just entered Act II of the drama."

Soros, 79, said the current situation in the world economy is "eerily" reminiscent of the 1930s with governments under pressure to narrow their budget deficits at a time when the economic recovery is weak.


"...the effects are liable to be felt worldwide," Soros said.

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Exacerbating these harsh truths--at least as far as any good believer in Keynesian economic thought will tell you, and I would consider myself to be an ardent Keynesian believer--a recently-released Gallup poll is telling us that the rightwing deficit hawks are winning the propaganda narrative, as we're learning that the majority of those on the right and in the center now (at least for the moment) view our growing national debt as the most pressing societal issue at hand. More precisely, the poll describes it as "Perceived Threats to Future U.S. Wellbeing." Somewhat redeemingly, as we also learn from this poll, when you segregate self-described Democrats from the rest of the pack (i.e.: Republicans and Independents), other issues trump the deficit, such as healthcare, the environment (including global warming), terrorism, unemployment and our troops in combat in Irag and Afghanistan.  

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(Diarist is authorized by Naked Capitalism Publisher Yves Smith to reprint her blog's diaries in their entirety.)

Pete Peterson Has Won: Americans Rate Federal Debt as Top Threat
Yves Smith
Naked Capitalism
Thursday, June 10, 2010

A fresh Gallup poll reports that Americans are most worried about....federal debts (hat tip Marshall Auerback via the Atlantic):

SEE CHART HERE: Perceived Threats To Future U.S. Wellbeing

Gallup also provided a tally of how members of each party view the issue:

SEE CHART HERE: Perceived Threats To Future U.S. Wellbeing--by Party ID

It would appear the ground has been laid rather effectively for (among other things) an assault on Social Security and Medicare. As we have pointed out before, Social Security is not under any immediate stress, and it would take only some minor tweaks to alleviate the (well off in the future) strains. And contrary to popular perception, the reason Medicare spending will get out of hand is due to projected medical cost escalation, not demographics. In other words, the "crisis" in Medicare is a symptom of our broken health care system, and not an entitlements problem per se. But in addition to the continued ability of Big Pharma and the health insurance industry's ability to make a bad situation worse, as witness our healthcare "reform," consumers have also been deeply conditioned to see more treatment as better. From both a cost and side effects perspective, this is simply not often the case. As reader Francois T stated apropos a New York Times article that caused consternation among people who know the terrain:

My oh my! One could write a volume or two about that. I'll limit myself to the obvious, at the expense of the details.

Their [Abelson and Harris] article and the saga surrounding its writing:

is a prime example of, when it comes to health care, Americans in general harbor very deeply rooted preconceived notions that pretty much preclude any meaningful and long-lasting reform.

The one operating in the minds of Abelson and Harris is the most toxic: More is always better. They cannot possibly bring themselves to admit, despite the overwhelming evidence of 30 years (!!) of solid, peer-reviewed research demonstrating there are ways to provide better health care outcomes while doing less, but in a SMARTER way. The evidence is crystal clear, but so are the prejudices. Since this is politics, prejudices win, hands down. Being journalists for the NYT, Abelson and Harris seem incapable of going beyond the vulgus populus.

It is important to note here that the attacks on the Dartmouth research were almost inexistent during the period post Clinton failure to reform health care...until Obama started his own attempt. A cursory Lexis-Nexis search is quite convincing in this respect. Those who stand to lose income or power during a health care reform will first and foremost attack it. Mind you, they have the tremendous advantage of playing on those preconceived notions I alluded to above.

So ingrained are these, that even senators and congresspersons who know the Dartmouth very well (yes, there are some that do) will never, ever tout the evidence publicly. Press them a bit about why they don't, and one shall witness oratory escape maneuvers that would put Houdini to shame. It is just not (yet) "politically feasible", as they say.

Apart from the Dartmouth research, there is another irrefutable piece of evidence that, when it comes to health care, smart beats more: The VA system.

Now, before everyone jump at my throat with the Walter Reed scandal, I would recommend reading Best Care Anywhere, by Philip Longman (updated edition 2010)

As per Maggie Mahar:

In the 2010 edition of Best Care Anywhere Longman also recounts how the Bush administration attempted to dismantle the open-source VistA software culture that Kizer had built, "doing its best to recreate the dysfunctional VA of the 1970s." Meanwhile, as more vets turned to the VA for care (in part because the care was so much better than it had been in earlier years), the Bush administration failed to provide enough funding, leading to long lines and not a few complaints.

Fortunately for the veterans, the situation has dramatically improved since the change in Administration. (There is still a lot of work to be done, but the trend is toward improvement)

The bottom line is this: Since 1994, the turnaround of the VA system demonstrate it is possible to provide good outcomes with high patient satisfaction (except in psychiatric services, but this is another long and complex story) by following what the evidence provides, instead of being guided by which reimbursement schemes is the flavor du jour.

Similarly, the fear about rising deficits is misplaced right now. As George Soros pointed out in a speech today in Vienna, the action of righting an economy when it faces serious financial stresses is a lot like straightening out a car that has gone into a skid: you need to turn the wheels into the skid, which looks like taking it further off the track where you want it to go, until it regains traction and you can then steer it back to its proper path. In this case, we need an expansion of public debt to offset the needed contraction in private sector debt, and then to (Soros did point out that this was a tricky operation). Otherwise, a resumption of the crisis is in the cards.

There is considerable evidence that the deficit fears in general, and the attack on entitlements in particular, has been marketed actively...

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Yes, George Orwell is rolling in his grave.

Bring on the spill-cams.  And, please, much more boom! Not just down in the Gulf of Mexico, but in lower Manhattan, corporate boardrooms everywhere, and on Capitol Hill.

The stench and the toxicity are everywhere. You can see and smell the greed. It is beyond palpable.

Isn't it time that we ALL started listening to our own Winston Smith?

What's he telling you?

Originally posted to on Sat Jun 12, 2010 at 12:22 PM PDT.

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